02-05-2019 - AGENDA ITEM 07 BUDGET AMENDMENT FOR FISCAL YEAR 2018-19AGENDA ITEM NO. 7
AGENDA STAFF REPORT
City of West Covina I Office of the City Manager
DATE:
February 5, 2019
TO:
Mayor and City Council
FROM:
Chris Freeland
City Manager
SUBJECT:
BUDGET AMENDMENT FOR FISCAL YEAR 2018-19
RECOMMENDATION:
It is recommended that the City Council adopt the following resolution:
RESOLUTION NO.2019-10 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
WEST COVINA, CALIFORNIA, ADOPTING A BUDGET AMENDMENT FOR THE FISCAL
YEAR COMMENCING JULY 1, 2018 AND ENDING JUNE 30, 2019
DISCUSSION:
During the first half of Fiscal Year 2018-19, the City experienced several substantial expenditures in its general
liability, fleet maintenance, park maintenance, and utilities programs that were not anticipated. As a result,
these programs are currently operating with significant budget shortfalls and additional funding is needed to
maintain these programs through June 30, 2019. The following details the issues these operations have
experienced during the current fiscal year and the additional funding needed to maintain these operations for
the remainder of Fiscal Year 2018-19.
General Liability
The City's general liability program experienced several unanticipated claims that resulted in significant legal
and settlement costs to the City during the first 7 months of the fiscal year. Of particular note, the City settled
two high exposure tort claims against the Police Department that totaled $192,360 in legal fees and $1,025,000
in settlements. The cost for these two claims depleted the general liability program budget and resulted in an
immediate budget deficit of $737,360. These two claims were anomalies and their impact on the current fiscal
year budget could not be anticipated.
Due to these unanticipated expenditures, staff is requesting a general fund appropriation of $1,726,663 to cover
the City's general liability program for the July 1, 2018 through June 30, 2019 period. This appropriation will
cover the following:
$1,167,628..... appropriation needed to cover current program budget deficit.
$ 299,035 ..... appropriation needed to cover pending program expenses / invoices.
$ 260,000 ..... appropriation needed to cover program expenses for February 1 - June 30, 2019.
Fleet Maintenance - Uninsured Losses
The City's fleet maintenance operations have experienced abnormally high expenses due to an increase in
patrol vehicle accidents during the first seven months of Fiscal Year 2018-19. The original budget amount for
this item was $60,000 and over the course of the current fiscal year, this item has been supplemented with an
additional $93,119 through internal budget transfers. To date, fleet maintenance expenses have averaged
$20,000 per month for the fiscal year. The current rate of expenditures is expected to result in an $87,000
budget deficit at fiscal year-end.
In addition to the ongoing costs for operations and projected year-end budget deficit, there is also an immediate
need to replace one police vehicle and one civilian service vehicle that were recently totaled. The replacement
costs for these two vehicles are $52,000 and $40,000 respectively. Because these vehicle losses were
unexpected, the fleet maintenance uninsured loss budget covers the replacement costs.
Due to these unanticipated expenditures, staff is requesting a general fund appropriation of $292,119 to cover
the City's fleet maintenance operations for the July 1, 2018 through June 30, 2019 period. This appropriation
will cover the following:
$ 93,119..... appropriation needed to replenish prior internal budget transfers.
$ 107,000 ..... appropriation needed to cover projected year-end program budget deficit.
$ 92,000 ..... appropriation needed to cover vehicle replacements.
Park Maintenance
The unanticipated need to complete several park maintenance projects arose during the first seven months of
Fiscal Year 2018-19. Specifically, the City was required to complete wood chip replenishments at Del Norte,
Friendship, and Cameron Parks to meet health and safety standards. The need for this project was unknown to
staff at the beginning of the fiscal year and it added $6,000 of unanticipated expenditures to the the City's
park/landscape maintenance budget. In addition to the wood chip replenishment project, a grass reseeding
project at Cortez Park was needed for the local sports leagues and was not previously budgeted. Due to these
unanticipated expenditures, staff is requesting a general fund appropriation of $14,500 to cover these projects
and adequately fund park/landscape maintenance operations through June 30, 2019.
Utilities
During the current fiscal year, staff discovered a stopped (faulty) water meter at City Hall after Suburban Water
did an audit of the City's account. It was determined that this meter was underreporting actual water usage at
City Hall for the past few years and as a result, the City's water bill are now significantly greater than previous
years. Suburban Water has since replaced the faulty meter and correct water usage is now being recorded and
billed. Staff is requesting an appropriation of $60,000 to cover the unanticipated water utility expense for the
remainder of the year.
Attached for your review and consideration is Resolution No. 2019-10 approving an appropriation of funds and
budget amendment to cover unanticipated expenditures for general liability, maintenance and utilities in Fiscal
Year 2018-19 (Attachment No. 1).
Prepared by: Edward M. Macias, Human Resources Director
Fiscal Impact
FISCAL IMPACT:
This appropriation of funds will require a withdrawal of $2,093,282 from the City's general fund reserves. The
appropriation will be allotted as follows:
$1,726,663..... for unanticipated general liability legal defense and settlement expenses.
$ 292,119..... for unanticipated fleet maintenance expenses.
14,500..... for unanticipated landscape maintenance expenses.
60,000..... for unanticipated water utility expense.
Staff recognizes that this appropriation will result in a significant reduction in the City's general fund reserve
and is actively working to mitigate future impacts.
Attachments
Attachment No. 1 - Resolution No. 2019-10 Approving Appropriation of Funds and Budget Amendment
ATTACHMENT NO. 1
RESOLUTION NO.2019-10
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST
COVINA, CALIFORNIA, ADOPTING A BUDGET AMENDMENT FOR THE
FISCAL YEAR COMMENCING JULY 1, 2018 AND ENDING JUNE 30, 2019
WHEREAS, the City Manager, on or about August 21, 2018, submitted to the City
Council a proposed budget for the appropriation and expenditure of funds for the City of West
Covina for Fiscal Year 2018-19; and
WHEREAS, following duly given notice and prior to budget adoption, the City
Council held public meetings, considering and evaluating all comments, and adopted a budget
for the fiscal year commencing July 1, 2018 and ending June 30, 2019; and
WHEREAS, amendments must periodically be made to the budget to conform to
changed circumstances following adopting of the budget.
NOW, THEREFORE, the City Council of the City of West Covina does resolve as
follows:
SECTION 1. That the budget amendments for Fiscal Year 2018-19 are hereby
approved as reflected in Exhibit 1 and Exhibit 2 attached hereto.
SECTION 2. That this resolution shall be effective immediately upon passage and
adoption.
SECTION 3. The City Clerk shall certify to the adoption of this Resolution.
PASSED, APPROVED AND ADOPTED on this 5' day of February 2019.
Lloyd Johnson
Mayor
APPROVED AS TO FORM: ATTEST:
Scott E. Porter Nickolas S. Lewis
City Attorney City Clerk
I, HEREBY CERTIFY that the foregoing resolution was duly adopted by the City
Council of the City of West Covina, California, at a regular meeting thereof on the 51h day of
February 2019, by the following vote of the City Council:
AYES:
NOES:
ABSENT:
ABSTAIN:
Nickolas S. Lewis
City Clerk
Exhibit 1
Date:
Requested by:
Dept/Div:
F3rPFNl7 /T/ /RFS
CITY OF WEST COVINA
BUDGET AMENDMENT
2/5/2019
Edward M. Macias
Human Resources
BA #
Posted By:
Date Posted:
Fiscal Year: 2018-19
Amount: $1,726,663.00
Description: GL Legal & Claims Funds
Account Number
Dept/Account Description
Current Budget
Proposed
Amendment
Amended Budget
361.15.1520.6111
General Liab - Legal Services
280 000.00
441 084.00
721 084.00
361.15.1520.6419
General Liab - Claims Paid
200 000.00
1,285,579.00
1,485,579.00
REVENUES
Proposed
Account Number Account Description Current Budget Amendment Amended Budget
REASON/JUSTIFICATION Please be specific)
Unanticipated claims against the City (WCPD) that resulted in substantial legal and settlement costs that depleted
the general liability program budget prior to mid -year. The $1,726,663 will come from General Fund fund balance.
APPROVALS
City Council Approval Date (if required, attach minutes): o Approval Not Required
Dept Head Approval: see attached Date:
-inance Director: Date:
-unds Available? o Yes No
-ity Manager: see attached Date:
if over $100,000)
o Approved o Denied
Exhibit 2
Date:
Requested by:
Dept/Div:
F3rPFNl7 /T/ /RFS
CITY OF WEST COVINA
BUDGET AMENDMENT
2/5/2019
Nikole Bresciani
Public Services - Maintenance
BA #
Posted By:
Date Posted:
Fiscal Year: 2018-19
Amount: 366,619.00
Description: Fleet, Landscape & Utilities
Account Number
Dept/Account Description
Current Budget
Proposed
Amendment
Amended
Budget
110.41.4142.6130
Service Contracts
240
025.00
8,500.00
248
525.00
110.41.4142.6143
Water Utility
30
000.00
60 000.00
90
000.00
110.41.4142.6270
Other Supplies / Materials
65
000.00
6,000.00
71
000.00
365.41.4170.6329
Other Vehicle Sublet Repairs
482
939.69
67 862.00
550
801.69
365.41.4170.6325
Parts
30
000.00
20 000.00
50
000.00
365.41.4170.6270
Other Supplies / Materials
743.00
5,257.00
6,000.00
365.41.4170.6417
Fleet Maint - Uninsured Loss
153
119.31
199 000.00
352
119.31
REVENUES
Proposed
Account Number Account Description Current Budget Amendment Amended Budget
REASON/JUSTIFICATION Please be specific)
To cover unanticipated expenses related to Fleet maintenance, landscape maintenance, and utilities. The
$366,619 will come from General Fund fund balance.
APPROVALS
City Council Approval Date (if required, attach minutes): o Approval Not Required
Dept Head Approval: see attached Date:
-inance Director: Date:
-unds Available? o Yes No
-ity Manager: see attached Date:
if over $100,000)
o Approved o Denied