Staff Report 5.1Adjustment to Fiscal Year 2019-20 Adopted Budget

Analysis 

Background

The LAFCO budget is maintained as a separate fund in the County’s accounting and reporting system. The 2019-20 Adopted Budget, which the Commission approved in June 2019, totals $762,295, including $612,630 for Salaries and Benefits and $149,665 for Services and Supplies. Staff projects that the total expenditure for Salaries and Benefits will be under budget by year-end. However, overall Services and Supplies expenditures are projected to exceed the budgeted amount for that category and are anticipated to be at a level to cause the overall expenditure to exceed appropriations.

The Auditor’s Office will not allow expenditures to exceed appropriations, i.e., once expenditure requests or submitted claims – whether for payroll or any internal or outside vendor invoices – are greater than the bottom-line budgeted amount, the Auditor will not pay.

Reasons for Over-Expenditures

In previous reports to the Commission, staff had projected over-expenditures in several Services and Supplies accounts. These accounts and an explanation for the overage in each is found below:  

• Account 51206 (Auditing Services): This account is used for payment of fees to outside accountants to conduct the Commission’s bi-annual audit. The most recent audit, for the period July 1, 2016-June 30, 2018, was initiated and completed in FY 2018-19; however, since final payment was not made until the beginning of Fiscal Year 2019-20, the cost has been reflected as an expenditure in the 2019-20 budget, with no amount allocated.  

• Account 51211 (Legal Services): Expenditures are projected to be $21,000, compared to the budgeted $20,000. Counsel has provided extensive support in areas associated with the several complex fire district reorganizations as well as the discussions relating to the Palm Drive Health Care District.  

• Account 51249 (Professional Services): Expenditures in this account this year have covered the costs of: (1) payments to the State Board of Equalization for processing boundary changes; (2) services to translate into Spanish notices of hearing for the numerous fire district reorganizations and protest hearings during 2019-20; and (3) consultant fees for work on two Municipal Service Reviews (Town of Windsor and Timber Cove Water District) and an organizational assessment for the Commission. The translation services were needed for notices of hearing associated with fire district reorganizations and were billed to the fire districts that initiated the proposals. Consultant work had been anticipated, when the Commission adopted the 2019-20 budget in June 2019, but, because start dates and contract amounts had not been determined at that time, the Commission directed that Fund Balance monies be used, as necessary, to cover the costs, with the understanding that the account would reflect a greater-than-budgeted expenditure.  

• Account 51301 (Legal Notices): The projected expenditure reflects greater costs for publication of notices of hearing for fire district reorganizations: earlier in the fiscal year, for Geyserville Fire Protection District and, for Glen Ellen Fire Protection District and Sonoma County Fire District, in English and Spanish, in November and December, for sphere of influence amendments and in March and May, for reorganizations and protest hearings. The agencies initiating the proposals pay the costs as part of their processing fee; the actual expenditure is billed to this account.  

• Account 51911 (Postage): The higher projected expenditures in this account reflect substantial costs associated with mailing to all property owners notices of protest hearings, in English and Spanish, for Glen Ellen Fire and Sonoma County Fire associated with reorganizations that the Commission approved. State law requires owner mailing when a previously-authorized tax or assessment would be applied across territory proposed to be annexed to an agency.    

• Account 51915 (Printing ): The higher expenditure in this account reflects the cost of printing notices, in English and Spanish, of protest hearings for proposals from the Sonoma County Fire District and Glen Ellen Fire Protection District for reorganizations which the Commission approved in March. Pursuant to state law, when a reorganization would result in the extension of a previously authorized tax to the affected territory, notice of the protest hearing must be mailed to each landowner. Staff contracted with a local company to print staff-written notices of hearing, stuff envelopes, and prepare the mailing, using owner lists submitted by the applicant agencies. The fire districts initiating the proposals pay the costs as part of their processing fee.      

Requested Commission Action

From discussions with the Auditor’s Office, it is staff’s understanding that, in order to process a budget adjustment request from the Commission, changes to specific line-item accounts must be identified. To that end, staff requests adjustments, as shown in the table below:

It should be noted that the expenditures in some accounts, whether those shown in the table or others, might exceed the line-item budget. That is acceptable to the Auditor as long as the overall expenditure does not exceed appropriations.  

Source of Funding  

Sufficient funds are available in the Commission’s Fund Balance to cover the additional expenditures.

Recommendation 

Staff recommends that the Commission authorize and direct the Executive Officer to work with the Auditor’s Office to adjust the 2019-20 Adopted Budget by an amount not to exceed $38,000 for operational expenditures beyond the Adopted Budget appropriations.  A draft resolution authorizing this action is attached, for Commissioners’ consideration. 

Alternative to Recommendation

No alternative is recommended.  The County Auditor’s Office will not pay bills that are outstanding prior to final accounting of Fiscal Year 2019-20 expenditures, if sufficient appropriations are not available in the Commission’s budget.

Attachments 

1.       Draft Resolution
2.       Fiscal Year 2019-20 Adopted Budget, with Proposed Adjustments and Year-End Projections