Andrew M. Thompson, CGFO
Director, Financial Services 

Rhea Rivera, CGFM
Asst. Director, Financial Services 

Issue Statement: Reallocation of appropriations needed to maintain required level of budgetary control for FY 18 (October 1, 2017 - September 30, 2018).  Minor adjustments to the FY 19 budget are also needed to reclassify some items within the personnel services cost into operating expenditures of the CRA Department and to provide for the initial carry-over of unspent  capital improvement funds.

Recommended Action:  Adopt the recommended year-end budget amendment for FY 18  and the proposed adjustment amendment for FY19.

In September 2017, the City Commission adopted via resolution the FY 18 budget. This budget was appropriated on the departmental/division function level, establishing spending limits for every departmental functional area (personal services, operational, capital outlay, etc.). The approved budget expenditures at this level cannot exceed actual expenses at the end of the fiscal year.

Pursuant to Section 166.241(3) of the Florida Statutes, a municipality may amend its budget any time during the course of the year or within 60 days following the end of the fiscal year. As such, a year-end budget amendment to the FY 18 budget is recommended to reflect expenditure changes that occurred during the fiscal year and ensure all expenditures occur within the budgetary control established by the Commission.

Appropriation adjustments are necessary as unanticipated events occur that affect the budgeted amounts needed at the functional level for each department to ensure sufficient funds are available. Examples of such events can include the unexpected resignation of a staff member; the value of his or her accrued leave payout would be an unbudgeted expenditure, as would the need for additional overtime to cover the vacant position while going through the hiring process.

The purpose of the proposed budget amendment is to bring the FY 2018 Annual Budget into statutory and accounting requirement compliance and to finalize any outstanding budgetary issues which arose since the approval of the budget in September 2017. The proposed adjustments are detailed in Exhibit “A”.  It should be noted that the budget amendment is not intended to function as "true-up."  The City will continue to receive invoices for work attributable to FY 2018 and such payments will be accrued back appropriately.  A final comparison of actual expenditures and expenses to budget for FY 18 will be included in the Management Discussion and Analysis section of the Comprehensive Annual Financial Report (CAFR); and explanations of budget overrun, if any, will be disclosed in the Notes to Financial Statements of the CAFR. 

The majority of the changes are administrative in nature, reflecting transfers between departments, functional areas, and funds that now require Commission-approved amendments.   

In addition to adjustments to the FY18 Budget, minor adjustments to the FY19 budget are also recommended for adoption in a separate budget amendment, which is attached as Exhibit B.  The amendment contemplates the initial roll-over adjustment of unused  Bid Pack 8 project contingency funds to accommodate a minor change order and the use of available fund balance, also within the capital projects fund, to provide funding for Lakeside Road closure.

No additional use of General Fund balance is contemplated in the amendment. 

As shown in Exhibit A, the proposed budget amendment for FY 18 serves to largely re-allocate funding to ensure that no fund, division, or function exceeds its budget. As the result of Hurricane Irma, the budget for many divisions needs to be adjusted to reflect overages related to emergency protective measures, debris removal, and other related activities. Disruption related to the Hurricane has also resulted in delays with vendors submitting emergency and non-emergency related invoices for work already performed. As a result, many of the increases shown in the proposed budget amendment reflect the need to accommodate potential costs that have not yet been realized, but will be attributable to FY 18.

All eligible Hurricane-related costs are being documented and are included in the City's application to the FEMA Public Assistance Grant and for which the City will eventually receive reimbursement.

FY18 BUDGET ADJUSTMENTS
The total increase in the budget is $4.2m.  Of this amount, $3.3 million is attributable to the purchase of the property at 1300 NE 38th Street, the former Omega Church parcel.  The value of acquisition and related costs was approximately $1.66 million, which was offset by the same amount in loan proceeds.  Loan revenue was received in the general fund and transferred to the Capital Improvement Fund, which recognized the value of the transfer and the value of the actual property purchase.  As such, the value of the $1.66 million is reflected twice in accordance the fund-based accounting required.  The remaining $0.9 million is in reference the Water/Sewer, Solid Waste, and Special Revenue funds.

General Fund - $1.6 Million Increase

The total General Fund budget is increased by $1.63 million. This increase primarily reflects the net effect for recognizing loan proceeds in the amount of $1.66 million that provided funding for the purchase of the Omega Church property which was approved by the City Commission on March 7, 2018, and the reduction in the budgeted use of prior year fund balance. Other increases reflect increased legal expenditures as reported in the monthly financial activity reports, additional special event costs, vehicle and facility repairs related to accidents and system failures, additional grant writing costs, and other minor changes, such as the reclassification of certain expenditures from “operating” to “capital” in accordance with accounting guidelines. These additional costs are offset almost entirely through savings identified within the General Fund. Overall, increased operational, personnel, and capital costs were covered entirely by savings. The net increase in the General Fund is almost entirely attributable to the recognition of the $1.66 million Omega Church property purchase revenue (the loan) and expenditure (the transfer to the Capital Improvement Fund).

Special Revenue Funds - $46,150 Increase
- Parks Impact Fee Fund: Increase of $43,300 is part of the budget  previously  approved in FY17 but were only spent in FY18 due to timing.
- Summer Food Program: Reflects additional funding for expenditures in the amount of $1,800 which is provided to show the actual grant reimbursement and costs incurred.

Water & Sewer Fund - $475,000 Increase
There is an increase of $475 thousand within the Water & Sewer Fund, which is largely attributed to the arbitration award with Ocean Bay project and increased wastewater processing costs. Other changes reflect staffing adjustments between the Water and Sewer divisions and increased overtime costs within the Water Division. These costs were largely offset by capital savings and increased revenues.

Solid Waste Fund – $404,500 Increase
Storm-related debris removal efforts for Hurricane Irma continued to occur in October 2017. The budget amendment includes these additional costs related to debris contractor response, disposal fees, and staff time, which have a net cost of $404,500. The operating and personnel service costs will eventually be largely recoverable as part of the City's Public Assistance Grant application to FEMA.


Other than the FY18 budget adjustments outlined above, no other changes are made to any other funds.

FY19 BUDGET ADJUSTMENTS

Minor adjustments to the FY 19 budget are also recommended to reclassify some items within the personnel services cost into operating expenditures of the CRA Department and to provide for the initial carry-over of unspent  capital improvement funds, as follows:

The amendment is to utilize some budgeted personnel cost items to be used for operating expenditures. 

Capital Projects Fund - $35,135 Increase

The amendment contemplates the use of FY18 savings of $19,108 from the Oakland Park West project  to be used for Lakeside Community Road closure.  The amendment also contemplates the carry-over of the Bid Pack 8 contingency funds of $16,027 (General Fund based) for use in FY19.

Water & Sewer Fund - $266,897 Increase

This increase is to carry over the Bid Pack 8 contingency funds of $266,897 (water/sewer based) for use in FY19.

Stormwater Fund - $42,460 Increase

This increase is to carry over the Bid Pack 8 contingency funds of $42,460 (stormwater based) for use in FY19.

No other changes are made to any other funds of the FY19 Budget.

Staff recommends the Commission adopt a resolution approving the amendment to the FY 2018 budget as shown in Exhibit A and the amendment to the FY 2019 budget as shown in Exhibit B.