Memorandum

City of Lawrence

City Manager’s Office

DATE:	June 17, 2011
TO:	David L. Corliss, City Manager
FROM:	Cynthia Wagner, Assistant City Manager
CC:	Casey Toomay, Budget Manager Diane Stoddard, Assistant City Manager
RE:	General fund overview and possible reductions

As you are aware, the 2012 budget requests for the general fund exceed the 2011 budget by $1.2 million.  These increases are reviewed in more detail in a memo from Budget Manager Casey Toomay.  Below is a list of the primary factors contributing to this increase:

Increase in KP&F employee retirement costs                   $ 455,000

Increase in KPERS employee retirement costs                  $  58,000

Public Safety/Public Works Radio Equipment                   $ 250,000

Payout for Oread TIF property and sales tax increment    $ 500,000

Increased fuel costs                                                   $ 142,000

Over the last four years, the expenditure budget has increased by more than $4 million to address City Commission priorities relating to public safety and street maintenance.  Over this same period, budgets for non-public safety departments have been reduced by approximately $600,000. 

As previously reviewed, a number of efforts also have been undertaken over the past several budget cycles to reduce costs, including the elimination of 26 non-public safety positions from the general fund budget since 2008. 

• Responsibilities of the Human Relations Department were transferred to a division of the Legal Department, resulting in the elimination of three positions, including a department director. 
• The Administrative Services Department was consolidated within the City Manager’s office, also eliminating a department director position. 
• A director position was also eliminated when the Neighborhood Resources Department was consolidated with the Planning Department to become the Planning and Development services Department. 
• Two vacant Planner positions in the Planning and Development Services department were eliminated with the 2010 budget; a Planner II position was eliminated in the 2009 budget.  Two Zoning Enforcement Officer positions were also eliminated in 2009.
• A Management Analyst position in the Finance Department was eliminated in 2009.
• Two positions have been eliminated in the Information Systems Department.
• A Municipal Court Clerk position was eliminated from the Municipal Court Budget.
• Since 2008, nine parks maintenance positions have been eliminated.
• Three positions have been eliminated from the Public Works budget.

These reductions in personnel costs reduce the overall percentage of total General Fund expenditures dedicated to personnel than in past years.  Before any compensation adjustments are added, the 2012 budget anticipates personnel costs as a percentage of General Fund Budget expenditures (excluding transfers of the 2008 sales tax and fund balance transfers) at 65.96%.

In addition to personnel reductions, staff has undertaken efforts to make reductions in the remaining 34% of budget expenditures.  Staff has reduced energy costs, implemented new policies to reduce overtime and other costs, purchased cost saving or technology enhancing equipment, and reviewed contracts for consolidation in order to gain economies of scale.  These efforts are outlined in previous communications to the Commission.

Even with more efficiencies and continued monitoring of expenditures, a gap remains between anticipated revenues and expenditures necessary to continue to support an appropriate level of city services. 

Efforts to continue to reduce the expenditure budget could include the following cost saving options.

Reduce funding to social service agencies – The general fund budget in 2011 funded social service agencies in an amount of $556,472.  A level funded amount was originally anticipated in developing the 2012 budget, however, reducing this level by half would result in a reduction of $278,236.

Reduce the total provided for mill and overlay – The 2011 general fund budget includes $2,040,919 in mill and overlay work and the 2012 budget currently includes this same level of funding.  Reducing the budget could be an option but would have an impact on our ability to improve street quality, rated in the recently completed citizen survey as the highest priority for improvement.

Remove vehicle requests from the budget – The 2012 budget as submitted includes $207,752 for purchase of eight police department vehicles.  No other vehicle replacements have been included in the 2012 budget requests.   

Delay the beginning of the next police department recruitment class – There are currently five vacant police officer positions.  The estimated cost of each position is $58,300.  Delaying recruitment and beginning of a recruitment class of five results in a savings of $291,500 in the 2011 budget.  Savings in the 2011 budget would enhance the 2011 ending fund balance and affect balances available to address future budget needs.

Reduce Non- Core Service Areas -   When the Community was faced with a possible reduction in liquor tax distributions from the State in 2009, City staff developed a list of possible reductions to non-core services.  The possible reductions included reduction or elimination of longevity pay, closure of the Prairie Park Nature Center, and reduced hours at Parks and Recreation facilities throughout the community.  While some of the reductions were implemented (see beginning of memo), the vast majority of possible reductions were viewed as highly unpopular and were not implemented.