I was elected to the Arcade Creek Recreation and Park District Board in 2016 and am now in my second year as Vice Chair and as a member of the Finance Committee. One of the most important issues in local government is finances and our district is no different. [LINK: For a look at last year’s budget]
Starting the 2019-20 Fiscal Year (June 2019)
Let’s begin by looking at the district’s financial situation as of the start of the fiscal year. We started last fiscal year with a General Reserve balance (the total carried over from prior years) of $204,581. As of the June 2019, the “on paper” General Reserve is down to $101,906.
- It’s important to note that approximately $32,000 of this is on standby to be used to pay for vacation and sick leave credits of retiring employees. (see: More Information (October 2018) on the 2018-19 budget page)
- Around $25,000 was received through the after-school program run by the district and can only be spent on expenses related to after-school activities.
This means that our “actual spendable” General Reserve is only about $45,000 (which is about 5% of the the proposed annual expenditures for the district).
- An existing Unfunded Liability with CalPERS, which currently totals $257,985. It’s important to note that the total amount that the district will have to pay (over a 30 year period) is $510,138.00
- A Side Fund (previously with CalPERS) that was transferred to a bank loan in 2017. As of June 2019, we still owe $265,200 to pay off this loan (which, over a 10 year payoff) will cost $316,425.80.
- What I like: Starting with the 2019-20 fiscal year, the board of directors included funding ($29,000) in the budget for an accelerated pay-off of the CalPERS unfunded liability. This means that in 2019-20, the district will be paying $26,400 for the Side Fund, $28,000 in accelerated pay-offs on our unfunded liability at CalPERS, and $15,548 for current employer contributions (and the 30-year payoff). Although that’s almost $70,000 on employee retirements alone, making these payments now will reduce the overall cost that the district pays.
- What I have issues with: There are two specific issues that I have with the budget this year; it spends more than we expect to receive and it will create additional unfunded liability.
- Although the district is receiving $23,600 more than last year, it appears likely that we will once again be spending more than we will receive, and our General Reserve will continue to decline in a growth year.
- The proposed budget includes funding for a 2% Cost-Of-Living Adjustment which, (as I understand it) when combined with the raises that staff received in late 2017, will exceed the CalPERS salary growth projections, resulting in additional unfunded liability.
The change between the proposals;
- Salaries and Employee Benefits: $506,710 -> $501,435 (a decrease of $5,275)
- Services and Supplies: $292,138 -> $288,683 (a decrease of $3,455)
- Residing Project: $0 -> $60,399 (an increase of $60,399)
- Contingencies: $34,000 -> $24,978 (a decrease of $9,022)
- Provision for reserve increase: $5000 -> $10,000 (an increase of $5,000)
- Fund Balance Available Decrease: $14,000 -> $61,525 (an increase of $47,525)
- Total Budgetary Requirement: $876,475 -> $924,077 (an increase of $47,602)
- General Reserve Start: $113,906 -> $174,305 (an increase of $60,399)
- Other Fund Balance Decrease: $14,000 -> $61,525 (an increase of $47,525)
- 2018-19 Decrease to the General Reserve: $102,675 -> $30,276 (a decrease of $72,399)
- 2019-20 Decrease to the General Reserve: $9,000 -> $51,525 (an increase of $42,525)
The proposed Capital Improvement Fund budget would spend a total of $600,000 (including all of the Proposition 68 funding) and about 70% of the existing balance in the 339-D account. The breakdown of the proposed spending is;
- $200,000 – Hamilton Street Park – Construction of a new restroom and ADA accessibility improvements (Prop 68 Funds)
- $130,000 – Hamilton Street Park – Construction of an off-leash dog park and a new picnic shelter (Impact Fees)
- $125,000 – Arcade Creek Park – Construction of a picnic shelter and grill (Impact Fees)
- $125,000 – Hamilton Street Park – Construction of a new swing set (Impact Fees)
- $20,000 – Jo Smith Nature Trail – Completion of the bridge project (Impact Fees)
Ultimately, I withheld my support for the Capital Improvements budget for two major reasons;
- Lack of Community Input: Our district has discussed a number of ways to spend the accumulated capital improvements funds (including a new community center, a splash pad, etc). I think that we should have more input from our neighbors before we moved ahead with spending more than two-thirds of that money.
- Taking Large Projects Off The Table: My second issue was a subset of the first; because our park district is relatively small (5 square miles) and has a relatively small budget, we will likely never be able to afford some of the larger projects that we’ve discussed unless we save up for them. Spending 2/3 of our accumulated funds on small projects (even though we’re getting additional money in the next few years) would effectively take those large projects off the table. I don’t think that’s an action we should have taken so quickly.
- Approving Excess Funding/Lack of Oversight: Once the board approves the budgeting of this money, any excess funds can be spent without the approval of the board on projects of less than $25,000. So, in order to maintain financial oversight, we should only budget slightly more than the anticipated costs of the projects. This budget doesn’t do that.
- The budget allocates $125,000 for improvements at Arcade Creek Park, but only one project has been identified; a picnic shelter and grill with a total of $51,108.57. Passing this budget and only allocating $51,000 means that $74,000 is left available. From the item explanation: “$125,000.00 is approved in the 339-D Budget for improvements at this park, this project as it is currently designed uses $51,108.57 of that amount. This provides for the opportunity to do more at the site this year, or for the Board to divert funds to another park site.”
- Similarly, $125,000.00 would be used for the construction of a new swing area at Hamilton Street Park. No exact price has been identified yet, but that sounds excessive.