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To:  Sunrise Recreation and Park District Community - UPDATE

Via  Advisory Board of Directors

From:  Lisa Rudloff, District Administrator

Date:  March 10, 2009

Subject: UPDATE from the March 5, 2009 Special Board Meeting regarding the approval of the 2009-10 preliminary District Budget.  The 2009-10 Preliminary Budget was approved by the Advisory Board of Directors as described below.

Background/Discussion:

It is the responsibility of the Advisory Board to recommend to the Board of Supervisors the annual budget.  The budget includes: salary schedules; maintenance and operations programs; itemized list of fixed assets proposed for purchase with estimated costs; the numbers, types and costs of personnel to be employed by the District; and, a description of proposed capital outlay projects.

Unfortunately like many businesses and families, the Sunrise Recreation and Park District has been negatively affected by the downturn in the economy.  Declines in property tax revenues, State bond grant funding, program registrations, and building rentals have required a series of recommended cuts to balance the budget.  The preliminary budget for fiscal year 2009/2010 is balanced at $10,101,709; however, there are significant revenue reductions and some program and facility closures that were recommended in order to accomplish this.  We are expecting a revenue reduction of 13.61% or $1,487,530 over the prior year’s operating budget that has been accounted for within the reduced preliminary budget. 

Significant Revenue Reductions

• Property tax revenues are no longer rising like we have experienced in the past.  A 5% decline in property tax revenue ($214,776) is projected over the prior year due to declining property values and the current housing crises. 
• The District applied for state grant funding for two projects.  At this time funds have been suspended and it is unclear if the District will receive the remaining grant money for Antelope Community Park ($214,065 balance) and Robert Frost Park ($251,000).
• An 11.09% decline in recreation program revenue ($393,442) over the prior year due to reduced registrations.
• A 35.38% decline in building rentals ($25,000) as well as long term lease revenue ($44,000) over the prior year.
• All of the above have necessitated a series of thoughtful cuts to balance the budget.

Expenditures 

Wages and Benefits projected to decrease by 6.96%

This account decreases from the approved allocation of $6,219,490 in 2008-09 to $5,786,590.  The decrease is due in part to:

• Savings from the suspension of a COLA for 2009-10.
• Salary and benefits savings from freezing the Recreation and Community Services Superintendent position for 6 months ($72,470 – FY 2008-09).
• Salary and benefits savings from freezing the Recreation and Community Services Superintendent position for FY 09-10 ($147,370).
• Salary savings from freezing the positions of two construction specialists ($48,360).
• Salary savings from freezing the position of one part time customer service representative ($31,500).
• Savings related to the closure of Tempo Pool.

Services and Supplies projected to decrease by 6.99%

This account decreases from the approved allocation of $2,766,960 in 2008-09 to $2,573,530.  The decrease is due in part to:

• Closure of Tempo Pool
• Tempo pool enrollment has declined over 30% the past three years and has a variety of infrastructure issues that would require repairs over $60,000.  Tempo Pool is recommended to close due in part to general fund subsidy of over $57,000.  District staff is confident that Rusch Pool and the Antelope Aquatic Complex will accommodate aquatic programming for the Sunrise Community.  The District will offer a variety of aquatic programs for the 2009 spring/summer seasons that includes:
• Over 880 sessions of swim lesson offered
• Over 530 hours of Public swim
• Recreational swim teams
• Youth diving
• Variety of aquatic classes, clinics, and camps
• Aquatic facility rentals
• Although there is no money identified to replace Tempo pool with another feature staff will meet with the community in the next couple of months to discuss options in the event outside funding sources are available such as grants in the future.
• Adult programming is to be 100% cost recovery (direct & indirect costs)
• Reductions and modifications to youth, teen, adult, and senior recreation programming

   Significant projects/programs completed or in progress for 2008-09:

• Create a master plan for Arcade Creek Park Preserve.
• Prepare a master plan and ADA review/evaluation for Northwoods Park.
• Completion of first phase construction and begin operation of Antelope Community Park Joint Use Area.
• Paving project at Eugene H. Ahner Park.
• Second phase of construction at Robert Frost Park.
• Parking lot expansion for Tempo Park.

Despite the budget situation, the District is projecting to fund $704,600 in fixed assets/capital improvements in order to maintain commitments to the community and continue planning for the future when hopefully the economy has improved. The District has been able to rely on “in-lieu” fees to acquire land and construct/renovate parks.  These one time, restricted fees, have been reduced to the point that very little is left to fund capital projects.  The ability to successfully secure alternative funding sources will become increasingly critical if the District is to adequately maintain existing facilities much less develop new facilities. 

• Significant projects anticipated for 2009-10:
• Parks & Facilities Master plan
• Parking lot expansion for Tempo Park
• Twin Creeks Tot Lot

Contingency

The contingency is an amount of money that is held in reserve for unforeseen expenditures.  It is very important to have money on hand for unforeseen any emergencies that might occur.  Our strategy with the year end contingency is to make as many tough decisions now as possible to help us get through whatever the future holds.  The Contingency is projected to be $1,010,539 in 2009-10, down from $1,578,490 in 2008-09. 

Fund Balance

The Fund Balance is the amount of money that is left over at the end of the one Fiscal Year, and is the opening balance for the next Fiscal Year, which is then increased by actual revenues and decreased by actual expenditures.   The Fund Balance for 2009-10 is projected to be $1,803,508, and will be used to augment new revenue that is anticipated to be available in 2009-10.  This figure can move up or down depending on the actual revenues and actual expenditures that occur throughout the entire Fiscal Year. 

For example:          

The beginning fund balance for the 2009-10 preliminary budget is $1,803,508.  This figure, plus the anticipated revenue for 2009-10 of $8,298,201, minus the anticipated expenditures for 2009-10 of $9,091,170, equals the anticipated Contingency of $1,010,539, for the 2009-10 Preliminary budget.  

As a part of approving the 2009-10 District budget, a contingency level will be adopted that is no less than the projected shortfall between the operating revenues and expenditures.

NOTE:  As the required information to determine the final contingency level will not be known until late July, it is recommended that if the fund balance amount is determined to be insufficient to achieve the above stated policy, that certain items in the budget be “frozen” or adjusted thereby assuring an acceptable contingency level.

Regardless of the recommended budget cuts, the District remains committed to providing parks, programs and services to the Sunrise community.  As we tighten our belt, we have set the following parameters to help guide our decisions.

1.  Youth programs and activities are core services and will be protected over adult activities.

2.  All programs and facilities have been reviewed for efficiency and long-term sustainability. 

3.  Adult programs must completely pay for themselves with no subsidy by the District’s General Funds. 

4.  Expense Reductions

Most of these cuts are from a reduction in personnel, programs, materials, supplies, travel and training, and service level reductions. Adult programs will be reduced, modified, or eliminated to ensure there is a 100% cost recovery of direct and indirect costs.

5.   Core Services

During the coming year, the District will be focusing our efforts on providing core services.  Core services include keeping our parks and facilities open to the public and safe, clean and green.  The District will also maintain programs and services to serve youth, teens, and seniors.

6.   Reducing Operating Hours

Some days and hours of operation of community centers and swimming pools may be adjusted or reduced.  This will be done when attendance numbers warrant a change.

7.   Reduced Staffing & Service Levels

The public may notice a slight drop in customer service levels, longer lines or a reduction in some programs that are dependent on staff.

8.   Maintenance

The frequency and level of maintenance to our parks and facilities will be reduced or modified to match available revenues.  Reduced frequencies of mowing, watering, aeration, fertilization, shrub & tree pruning and trash pick up may be noticeable.

9.   Revenue Generation

User fees and rental rates will be increased in some programs to offset the cost of providing the service.  The Hearts for Parks non-profit Foundation will continue to offer the Recreation Activity Assistance Fund to income eligible families that provide children an opportunity to participate in a supervised recreation program.

Financial Analysis:

The proposed 2009-10 preliminary budget does not include enough cuts to balance the budget in future years (2010-11 and 2011-12).  Assuming the budget cuts identified in the 2009-10 preliminary budget would result in the District having a contingency of $217,570 for 2010-2011 and a negative contingency of <$575,399> for 2011-2012.  Both of these contingencies are contrary to the proposed contingency policy. 

District staff is recommending to wait until year end fund balances are know and report back to the board with budget adjustment recommendations prior to approving the 2009-10 final budget presented at a Special Board Meeting in July or August.