10-12-18
(Below is a copy of an email from Phil Koen to the Town Council on 10-12-19 asking the Council to pull the Staff’s request to approve a major additional cost of salaries and benefits issue as a consent item. If it passed as a consent item, there would be no discussion of accepting this budget adjustment. It is the responsibility of the Council to know exactly what the Staff has proposed before accepting the Staff’s proposal to pass the request to adjust the budget.)
Dear Town Council Members,
I am writing to you on behalf of a number of concerned residents of the Town.
In reviewing Items 4, 5 and 6 on the October 16 agenda, the Staff is requesting the Town Council to approve salary increases (equity and salary adjustments) for the Police Officers Association, the AFSCME and the unrepresented employees (which includes management and confidential employees) and to authorize FY 2019 budget adjustments totaling $1,044,381. This would be in addition to the salary and budget adjustments already approved by the Town Council in August for the TEA totaling $440,106 and for the AFSCME totaling $53,417.
Taken all together, this would bring the total salary adjustments for FY 2019 to $1,537,904. This represents just the impact for FY 2019, since there are additional increases planned for FY 2020.
If correct, this is a staggering number, the magnitude of which has never been clearly presented to the residents of the Town.
Using the information provided by the Staff, this $1,537,904 increase represents a 6.2% increase for salaries alone (the impact on increased pension costs is not included). The 6.2% increase is computed by dividing the $1,537,904 by the FY 2018 estimated salary and benefits expenditures of $24,700,282 (this is the number reported in the attached schedule).
What is even more alarming is that in the FY 2019 budget document (again refer to the attached schedule) the residents were told “salary increases are not reflected in the proposed budget as labor negotiations with the Town’s unions are pending”. Apparently this is why the Staff is now requesting the Town Council to increase the FY 2019 budget for salary and benefit expenditures by $1,537,904. This would bring the FY 2019 budget for salary and benefit expenditures to $28,884,998.
If correct, the year over year increase (actual to budget) in salary and benefit expenditures is now a mind blowing $4,184,716 or 17%!
Three members of this Town Council (Mayor Rennie and Council Members Leonardis and Jensen) have submitted a written ballot argument (which they also attested to the accuracy of all statements) stating that compensation increases in 2019 will only be 1.2%. This claim doesn’t appear to square with the facts.
Since facts matter, transparency matters and honesty matters, it is time for the Town Council to clearly state what is the “all in” increase in salary and benefit expenditures for FY 2019 that this Council has or will be approving. Is it the 1.2% that Mayor Rennie has publically claimed, or is it the 6.2% that I have computed or is it something else? This is a legitimate question that deserves a straight answer.
In addition, we would like to know what the budget for FY 2019 for total salary and benefit expenditures will be as a result of all of the proposed budget adjustments. Is it still $27,347,094 as reported on C-15 of the FY 2019 budget, or is it $28,884,998 after giving effect to the $1,537,904, or is it some other number? The voters in Los Gatos deserve to know so they can make an informed decision when they vote for the next Town Council.
We would also appreciate an explanation regarding the increase in the FY 2019 budget (whatever that number is) for salary and benefit expenditures versus the reported FY 2018 of $24,700,282. Please do not provide an explanation of the FY 2018 budget to FY 2019 budget increase since you have already done this and frankly it is not relevant.
Lastly, we respectfully request that agenda items 4, 5 and 6 be removed from the consent calendar because of the materiality of the requests and the lack of clarity as to the impact on the FY 2019 budget for salaries and benefit expenditures. This is a sufficiently important matter that the public deserves to hear the critical thinking of the Town Council and have the ability to comment on this matter.
I plan to attend the October 16 meeting and if the agenda items have not been removed from the consent calendar prior to the meeting, I will formally request this action.
Thank you for your attention to this matter.
Below is the item listed as an “attachment” above A better graphic can be seen here: Budget 2019 Total Town Expenditures:
Total Town Expenditures
By Category
FY 2018/19 Budgeted Expenditures
| Expenditures | 2014/15
Actuals |
2015/16
Actuals |
2016/17
Actuals |
2017/18
Adopted |
2017/18
Estimated |
2018/19
Proposed |
% of Total | ||||||
| Salaries and Benefits | $ | 21,972,399 | $ | 22,766,441 | $ | 25,344,865 | $ | 27,005,920 | $ | (24,700,282 | $ | (27,347,094 | 40.5% |
| Operating Expenditures | 14,618,759 | 15,342,699 | 16,085,203 | 15,993,014 | 16,574,844 | 20,864,268 | 30.9% | ||||||
| Grants | 197,074 | 194,155 | 209,381 | 209,800 | 201,520 | 227,000 | 0.3% | ||||||
| Fixed Assets | 355,799 | 958,991 | 402,807 | 877,161 | 962,469 | 1,798,038 | 2.7% | ||||||
| Interest | 938,055 | 897,398 | 802,166 | 809,740 | 809,739 | 759,073 | 1.1% | ||||||
| Internal Service Charges | 3,330,792 | 3,546,185 | 3,558,503 | 3,988,278 | 3,915,437 | 2,490,028 | 3.7% | ||||||
| Capital Projects | 3,639,640 | 2,293,247 | 6,863,375 | 4,015,509 | 5,344,584 | 8,598,140 | 12.7% | ||||||
| Successor Agency Pass Thru | 1,196,966 | 786,362 | 673,323 | 670,694 | 804,040 | 673,696 | 1.0% | ||||||
| Debt Services | 990,000 | 1,025,000 | 1,065,000 | 1,105,000 | 1,105,000 | 1,150,000 | 1.7% | ||||||
| Total Expenditures | $ | 47,239,484 | $ | 47,810,478 | $ | 55,004,623 | $ | 54,675,116 | $ | 54,417,915 | $ | 63,907,337 | |
| Transfers Out | 9,353,932 | 3,070,585 | 7,907,692 | 3,627,063 | 3,725,063 | 3,630,056 | 5.4% | ||||||
| Total Uses of Funds | $ | 56,593,416 | $ | 50,881,063 | $ | 62,912,315 | $ | 58,302,179 | $ | 58,142,978 | $ | 67,537,393 | 100% |
Total Budgeted Expenditures (exclusive of Transfers Out) include budgeted Capital Improvements, which can vary significantly from year to year. Net of Capital Projects and the IRS Trust payment of $3.2 million, total expenditures reflect a 3.0 % increase for FY 2018/19 compared to the prior year adopted budget. Expenditures of note include:
Salaries and Benefits – The FY 2018/19 budget reflects an increase in salaries and benefits attributed to increased CalPERS and medical benefits rates. Salary increases are not reflected in the proposed budget as labor negotiations with the Town’s unions are pending. Staffing modifications include eliminating certain vacant positions and reclassifying them to better align with service delivery within the existing budget, including the 0.25 FTE Library Specialist position in the Library Program. The 1.0 FTE IT Analyst position and the 0.125 FTE increase for the Deputy Town Attorney are permanent additions to the budget. Staff also proposes one-time temporary hours within Police Department and Community Development Department.
Fixed Assets – Budgeted fixed asset costs stem primarily from scheduled vehicle and equipment replacements. The variance in expenditures from year to year does not impact current year charges to the Departments, only the actual cash out to replace the asset.
Internal Service Charges – These expenditures represent the service program costs charged back to the operational programs for Liability Insurance, Office Equipment, Information Technology, Vehicle Maintenance, and Building Maintenance services. The FY 2018/19 budget reflects a decrease in the Internal Service Charges since all personnel that were previously funded in Internal Service Fund Programs are programmed starting in FY 2018/19 in the General Fund, increasing total General Fund salaries and benefits expenditures while decreasing the Internal Service Fund charges by the same amount.
Debt Service – Debt service charges reflect the Redevelopment Agency’s two outstanding Certificates of Participation (2002 and 2010) through a leasing expenditure and reimbursement revenue which nets to zero for the Town, while Successor Agency (SA) to the Los Gatos Redevelopment Agency funds provide the actual debt payment for the bond issues. The SA reimburses the General Fund for the debt service payment. The 1992 COP for Parking Lot #4 was paid in full in early FY 2012/13.
C – 15
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