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 facing local government is finances and our district is no different.
Starting the 2018-19 Fiscal Year (June 2018)
- Spending More Than We Are Bringing In
The district’s Actual Expenditures for FY 2017-18 were $759,360. The estimated revenue for the current year (FY 2018-19) is $838,875. This means that we will have an estimated $79,515 more to work with this year than we spent last year (without dipping into reserves).
The funds to pay for the raises given to staff in early 2018 were budgeted at $81,336. This means that spending exactly what we did last year, but with the additional staff costs, the total will be $1,821 more than we expect to bring in.
According to the latest Annual Valuation Report from CalPERS (dated August 2018), the district has a total unfunded liability of $257,985. This unfunded liability is currently being paid down by the district on a 30-year schedule. Over those 30 years, the district will pay the $257,985 principal plus $252,153 in interest for a total of $510,138.
Alternatively, switching from a 30-year amortization to a 15-year amortization would cost the district more in the short term, but the long term savings would be greater. Over those 15 years, the district will pay the $257,985 principal plus $174,347 in interest for a total of $432,332 (which PERS estimates would result in a savings of $77,805).
- The Emergency Fund
As of the start of the fiscal year, the district had a General Reserves balance of $204,581. The approved budget plans to spend $108,069 of that, leaving an adjusted fund balance of $101,906. With all of the unfunded liabilities facing the district,
It just doesn’t make sense to plan to spend half (52.8%) of our emergency reserve in a year that we’re expected to bring in more revenue than we have in the past few years.
More Information (October 2018)
- In October 2018, the board was informed about another liability that money would have to be set aside for. According the California law, employees are eligible to be paid for unused vacation when they leave employment. The Arcade Creek Recreation and Park District has an existing policy that allows employees to (on retirement) cash our their accumulated sick leave at 1/2 of the “on-paper” value. This liability currently totals about $32,000, which has not been set aside in our budget.
This means that rather than having an Emergency Fund of $101,906, the amount that we can safely spend (while keeping enough in reserve to pay out this obligation) is actually closed to $70,000.
Late Adjustments (January 2019)
- At our January 2019 meeting, at the request of the Finance Committee, the Park District Board voted to approve budget reductions reductions of $59,353 from the approved 2018-19 Budget. This means that after spending all the funds that we received this year, we will still be spending about a third of our available Emergency Fund ($48,716) to catch up on various deferred maintenance and cover other expenses, we will have about $129,300 to carry over to next year.
Even Later Adjustments (March and April 2019)
- Not great news. The siding on the aging Margi Herzog Community Center is deteriorating quickly. Park District staff requested a bid for the repairs, which came back at $84,419.61. At the February board meeting, the board declined to proceed, citing what appeared to be excessive cost and insufficient remaining funds. At the March meeting, the board (I was unable to attend) approved the project and approved taking out a $39,419.61 loan from a bank to pay for it. The $39,419.61 will be paid off at the start of the new fiscal year in June. This brings our Emergency Reserve down to somewhere near $45,000.