Employee Medical/Dental/Vision costs continue to creep upward –

While many Piedmonters enjoyed a gorgeous day on Saturday, May 19, four City Council members, Budget Advisory and Financial Planning Committee (BAFPC) members, and a few interested citizens huddled with City staff in the basement of the Police Department, poring over the 100+ page 2012-13 budget that will govern the future of our city for the next 12 months.  (absent: Vice Mayor Margaret Fujioka)

In his budget message, City Administrator Geoff Grote said Piedmont “is in reasonably good shape given the circumstances facing local governments in California in 2012.”  He expects the City’s operational revenues to exceed expenses by $698,000.  When the capital reserve of $900,000 is set aside, as recommended by the Municipal Tax Review Committee, this will result in a slight operating deficit of $200,000.    Highlights of the proposed 2012-13 budget include:

FRINGE BENEFITS:

Fringe benefits were acknowledged as “not so fringe anymore”  and continue to edge upwards. Employees will not be contributing any portion of the anticipated increase in medical costs (7%), dental costs (5%), or vision costs (3%) in the 2012-13 Budget.   These increases affect every department and were noted by Council members throughout the budget review.

LIBRARY  SERVICES:

Continued annual payment of $350,000 to the Oakland Public Library for an additional year is proposed.  The monies are not specifically earmarked for Oakland libraries and, traditionally, have not been placed by Oakland in its Library Budget.  Discussions noted:

•  Oakland has made no request for 2012-13
  
•  The Piedmont Avenue Library is scheduled to be shut down and possibly moved to a portable.

FIRE 

it was noted 3 firefighter positions have recently been filled (the 7^th person for 3 shifts).  The option of 6 versus 7- person shifts, a $400,000+ issue raised in prior years was not mentioned.  Employee contract negotiations with firefighters continue.  Grants are being vigorously pursued, including a grant of $845,000 to purchase a new fire engine (the City would contribute $55,000 toward the total cost).

5 YEAR PROJECTIONS – uncontrolled future costs

For the first time, the City budget includes 5-year projections.  The Budget Advisory and Financial Planning Committee (BAFPC) emphasized the City faces some uncontrolled future costs, such as employee pension contributions determined by PERS.  The Committee will be forwarding a letter to the City that points out “substantial and moderate financial risks” and provides the City Council with options for turning these uncontrollable costs into controlled costs.

THE SEWER FUND 

The Sewer Fund will be operating on a “break even” basis, without a cash reserve to cover unanticipated expenses.   (An ending balance of -$100,000 on $10+ million in revenues through 2017 is projected.)  The BAFPC pointed out an increase in revenues or a decrease in expenses may be required before 2016-17.

STREETS AND SIDEWALKS – half of past levels

Funding of $350,000 has been budgeted, approximately half the $500,000 to $700,000 amount the City has historically spent on these tasks.

POOL

The General Fund subsidy of the pool is budgeted at $200,000 for 2012-13.  Currently, revenues are running ahead of expectations, but the need for a new roof and ventilation system for the locker rooms has been discovered, and no monies are in the budget for major capital improvements such as this.  Staff also warned pool staffing costs may increase substantially.  Neighboring communities have received 30,000 mailers and are expected to purchase over 100 passes.

The cost of use by the Swim Team and Piedmont Unified School District (PUSD) was discussed, and staff is negotiating increased fees to cover these deficits.

+++++++++++++++++Cost of Pool Hours*           Pool Fees Paid

• Swim Team                     $44,000                                $16,000
• PUSD                               $35,000                                 $0

*Hourly cost based on operating costs divided by total pool hours times hours of use; does not include major capital improvement costs. Staff indicated looking at “marginal cost” would not be a standard industry calculation.

KCOM – No expanded service

Franchise fees of $180,000 cover almost all KCOM costs of $190,000.  Expansion of service to cover more meetings was not mentioned.

RECREATION – Schoolmates struggles

Bus transportation has reduced Schoolmates usage by residents for the past 3 years, but it will no longer be impacting the program.  An increase in program fees has been requested, prompting a Council request for a usage study. Staff confirmed that  children  of City staff (currently 2) enjoy the use of Schoolmates without charge.

CITY PARCEL TAX RENEWAL

The parcel tax is expected to raise $1.6 million in revenues.  If not passed in November, 2012, non-priority items such as the Oakland library payment, the pool subsidy, animal control and more will be on the chopping block.

POLICE

Overtime and workers compensation costs were high in 2011-12, due to an unusual number of workers compensation claims, and 3 people are still out.  The K-9 unit is being discontinued.  Purchase of 5 police cars, a captain’s car, and a new Animal Rescue Truck is requested.  This is a planned expenditure out of the Equipment Fund that has been delayed 3 years to extend the life of the vehicles.

CAPITAL IMPROVEMENT PROJECTS (CIP) – $1 million balance

Without considering any Blair Park expense, this fund will have a $1 million available cash balance as of 7/1/12.  A reference was made to “closing out” this fund, which has enjoyed robust contributions in the past during years with surpluses.

BLAIR PARK – $800,000 total cost

A full up-to-date accounting is included in the budget.  Blair Park expenses have totaled $800,000 to date.  Of this total, costs of $200,000 were incurred prior to March of 2011.  They represent the Blair Park/Coaches Field EIR and other Coaches studies.  Of the total, $600,000 was incurred after March, 2011 when “City Council order” directed staff to bill Piedmont Recreational Facilities Organization (PRFO) for Blair expenses.  PRFO has paid all but $200,000 of the $600,000 incurred since March, 2011.  Discussions with PRFO are ongoing regarding payment of the final $200,000.

In his overview message, Grote pointed out, “Initiatives are being undertaken to control PERS and retiree medical costs. It is noted that on the same day this budget is presented, agreements with miscellaneous employment groups, requiring them to pay the 1-2% PERS cost increase scheduled for July 2012 and make a $100/month contribution toward the cost of retiree medical, are being considered by the Council.”

LINK – Council Direction to Staff on various budget items.

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