Consider and adopt the proposed LAFCo Budget for fiscal year (FY) 2023/24 and set May 25, 2023, as the public hearing date to approve the final budget

1. Receive staff presentation and public comments on the Draft LAFCo Budget for FY 2023/24;
2. Close the public hearing, provide staff direction as desired, and set May 25, 2023, as the public hearing to consider approval of the Final Budget.

The attached LAFCo budget (Attachment A) includes proposed revenues, expenditures and projected fund balance for LAFCo for the next fiscal year. This proposed budget maintains adequate support for the Commission to meet its responsibilities under the Cortese-Knox-Hertzberg (CKH) Act and the shared services priorities identified in the LAFCo Annual Work Plan.

Yolo County LAFCo adopts an annual budget with notice to the four cities and Yolo County. In accordance with the CKH Act, a proposed budget must be adopted by May 1 and final budget by June 15 of each year. Following approval of the final budget and no later than July 1, the County Auditor requests payment from each agency. In order to meet these timelines, the final budget is scheduled to be adopted at the May 25, 2023 LAFCo Commission meeting and invoices will go out thereafter.

In accordance with the CKH Act, the cities and County split the cost of LAFCo funding 50/50. A formula for the split of the cities’ share is outlined in Government Code Section 56381 (b)(1); which would be in proportion to a city’s tax revenue or an alternative method approved by a majority of the cities. Beginning in FY 2007/08, the cities developed an alternative formula to apportion its 50% of LAFCo funding by averaging a city’s general tax revenue and population.

A more detailed table showing the formula for agency apportionment is attached for review (Attachment B).  In summary, the breakdown of agency apportionment of the LAFCo budget for FY 2023/24 is as follows:

City of Davis - 16.16%
City of West Sacramento - 17.25%
City of Winters - 1.62%
City of Woodland - 14.97%
County of Yolo - 50.00%

Draft Budget Increase
The draft budget shows an overall appropriation increase of 4% compared to last year with a total appropriation amount of $540,186. In addition, $5,000 would be transferred into reserves as a set aside for our next audit in FY 24/25 (i.e. every 3 years). Therefore, the total uses would be $545,186. Salaries and Benefits costs are going up 8%, with a 5% pay increase plus a 2% cost of living adjustment approved by Yolo County plus benefits. The Services and Supplies appropriation is decreasing by 8% due to minimal decreases anticipated for legal, travel, and computer costs. Overall, this results in an increase of 7% in agency costs on average, ranging from 5% - 11% each with fluctuations among cities per the allocation formula. 

The following itemizes the draft budget cost for each agency (and net increase as compared to the previous fiscal year):

City of Davis = $78,098 (increase of $4,055)
City of West Sacramento = $83,367 (increase of $4,384)
City of Winters = $7,832 (increase of $549)
City of Woodland = $72,329 (increase of $6,960)
County of Yolo = $241,627 (increase of $15,949)

Draft Budget Considerations
Our Administrative Specialist ll/Commission Clerk plans to retire on December 31, 2024, which is next calendar year. In order to hire a new employee and have approximately one month of overlap time for training and paying out unused vacation leave (approximately 2 months total), staff anticipates a bump of approximately $30,000 in Salaries and Benefits costs next budget year. The question for this budget year is: Does the Commission wish to increase our reserve, say by half or $15,000 this year to smooth out that bump or should LAFCo absorb it with our existing reserve and build it back up over following years? Staff recommends the Draft Budget has $100,000 in contingency plus fund balance which could be used to partially offset this bump with fund balance next fiscal year, i.e. dip into reserves next year and hopefully use carryover balance to build it back up over a few years. 

One other minor cost savings item that could be considered by the Commission is the $1,648 cost for records storage of old files (21 bankers boxes total), which increases somewhat every year. Last year all the records in storage were scanned and in theory are no longer needed. Per Government Code Section 56382, the commission may authorize the destruction of any duplicate record, paper, or other document if the original or a photographic or electronic copy of the record, paper, or other document is retained in the files of the commission, and the commission may authorize the destruction of original records more than two years old if a photographic or electronic copy of the original record is made and preserved.

Next Steps
Following Commission direction on the draft budget, staff will make any changes as directed by the Commission and send the proposed budget to the city/county managers for review and comment. Staff will report on all feedback received and any changes during the final budget hearing on May 25, 2023.