BOARD MEETING DATE: May 7, 2010
AGENDA NO. 29
PROPOSAL:
Adopt Executive Officer’s FY 2010-11 AQMD Budget and Work Program
SYNOPSIS:
The Executive Officer's Budget for FY 2010-11 represents the input over the past several months from Board members, staff, and the public. This year's process included meetings of the Budget Advisory Committee; a public hearing on February 5, 2010 to receive input on the AQMD's Program Goals and Objectives; and two budget workshops, one for the public held on April 22 and one for the Board held on April 30, 2010. This submittal transmits the required appropriations and reserves necessary to adopt the proposed budget.
COMMITTEE:
Administrative, April 9, 2010, Item deferred to Governing Board Budget Workshop, April 30, 2010
RECOMMENDED ACTIONS:
Remove from Reserves and Designations all amounts associated with the FY 2009-10 Budget;
Approve appropriations in the Major Objects for:
Approve a projected June 30, 2011 Fund Balance of the following:
Approve revenues from the following:
Appropriate $179,000 from the Undesignated Fund Balance to the FY 2009-10 Executive Office Budget, Services and Supplies Major Object, Public Notice and Advertising Account to reimburse the budget for the initial expenditures related to the Advertising and Public Outreach Initiative to Minority Communities to Increase Awareness of Impacts of Air Pollution approved by the Board in December 2009.
Approve the deletion of 23 vacant authorized positions as detailed in the Draft Budget.
Set up a new Designation for Other Post Employment Benefit (OPEB) and transfer $2,952,496 from the Undesignated Fund Balance to this new Designation.
Barry R. Wallerstein, D.Env.
Executive Officer
Background
The Executive Officer’s Budget for Fiscal Year (FY) 2010-11 represents the input over the past several months from staff, Board members, and the public. This year’s process included meetings with the Budget Advisory Committee; a public hearing, held on February 5, 2010 to take input on the AQMD’s FY 2010-11 Program Goals and Objectives; and two budget workshops, one held for the public on April 22, 2010 and one held for the Governing Board on April 30, 2010.
Since the early 1990’s, the AQMD has implemented regulatory reform to introduce market-based principles in cleaning up urban air, streamlined aspects of permit processing, privatized some functions to improve operational efficiency, and remained committed to treating regulated businesses fairly. This year’s budget proposal includes 832 positions which is 28% (331 FTEs) below FY 1991-92 levels, and program expenditures which are $2.9 million below the FY 2009-10 adopted budget. Using inflation adjusted dollars, this year’s proposed expenditures are 41% less than the budget approved in FY 1991-92.
Proposal
This balanced budget request is based on the goals and objectives presented to the Board at the February 5, 2010 meeting. These goals emphasize continued efforts for improving efficiency and productivity; implementing the 2007 SIP, the Board’s Helping Hand and Permit Amnesty initiatives, the Fleet Rules; reducing air toxics; and continuing to address other priority issues.
This year’s budget proposal reflects current labor agreements which expire on June 30, 2010. The results of new labor negotiations will be incorporated into the final budget upon Governing Board approval. In response to declining revenues, staff is proposing the deletion of 23 vacant positions and a six-month hiring freeze of non-critical positions. In Services and Supplies, the proposal for FY 10-11 is 21% below the FY 09-10 amended budget. Capital Outlays have been reduced by over $900,000 (nearly half of the FY 09-10 level). In total, the proposed FY 10-11 budget is $2.9 million (2%) below the budget adopted by the Board in June 2009, and $10.5 million (8%) below the FY 09-10 amended budget.
At its December 4, 2009 Meeting, the Board approved Agenda #14, authorizing the Executive Officer to implement the minority advertising and outreach initiative at a cost not to exceed $400,000. At that time, funding was identified in the Undesignated Fund Balance to carry out this Legislative & Public Affairs and Media Office initiative but was not appropriated. Staff has initiated purchase orders totaling $179,000 for advertising through June 2010 with the balance of the $400,000 ($221,000) included in the FY 2010-11 Budget request. Staff is recommending the Board appropriate $179,000 to the Executive Officers FY 2009-10 Budget to reimburse it for the initial cost of the program.
As part of the consolidation of the four county APCDs in February 1977, the AQMD inherited an Other Post Employment Benefit (OPEB) obligation from the County of Los Angeles. The County of Los Angeles offers Retiree Health Care to its employees who retire from the Los Angeles County Employees’ Retirement System (LACERA) based on service time. The AQMD currently has two active employees in the LACERA system and 72 retirees currently receiving this benefit. In 1983 the AQMD set-up a separate fund to begin saving for these long-term healthcare costs based on the actuarial analysis at the time. With the rising cost of healthcare the amount necessary to meet its obligation is insufficient to cover the projected expenses. Staff is recommending that a new Designation for Other Post Employment Benefit (OPEB) be set up, transferring $2,952,496 from the Undesignated Fund Balance to meet the current actuarial valuation of the program costs. The system has been closed to new employees since February 1977, and the majority of retirees retired in the mid 1980s and early 1990s.
Resource Impacts
Staff is recommending a 2.1% across the board fee increase consistent with the change in the California Consumer Price Index to help maintain AQMD programs. However, to ease the burden on businesses as they continue to experience the economic downturn, and in keeping with the Board’s current actions to minimize the impacts on businesses (e.g., the Helping Hand Initiative and the Permit Amnesty Program), a one-time rebate of the 2.1% CPI-based increase will be given on facilities who pay annual fees. In order to balance the FY 2010-11 Budget request, staff is proposing an appropriation of $1,624,080 in prior year revenues set aside (Designated) in the Fund Balance for permit streamlining, enhanced compliance, equipment replacement, and retirement actuarial increases, along with $4,534,232 in prior year penalties and settlements from the Undesignated Fund Balance to offset the lower estimated revenues.
Copies of the proposed budget have been transmitted to the Board under separate cover. Copies for public review have been available in the AQMD Library since mid April. The Draft Budget and Work Program are available via AQMD’s web site at http://www.aqmd.gov/finn/PDF/drftbdgt10-11.pdf. Budget abstracts are available by request from the Public Information Center (909) 396-3600.
Attachment (Doc, 108k)
Errata sheet