Item 3: PH and Action: FY10 Supplemental Budget #1

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These adjustments are described by fund in the attached Transaction Summary (Attachment A). The audited adjustment to the City of Eugene’s FY10 Budgeted Beginning Working Capital for all funds is a $26.2 million reduction, meaning that the aggregated beginning resources were overestimated. Most of the reductions occur in those funds with revenues dependent on bond sales, grants and payments from other jurisdictions that have not yet occurred. In the General Fund, the Marginal Beginning Working Capital Adjustment is an increase of $6.97 million; $6.60 million in the Main Subfund and $.37 million in the Cultural Services Subfund. Prior Year Encumbrance Reconciliation This supplemental budget reconciles the estimate of unpaid purchase orders at year end with the actual outstanding purchase orders at the end of FY09. In the General Fund’s Main Subfund, the amount set aside for prior year encumbrances was $698,491. The Main Subfund’s reconciliation of the encumbrances distributes $537,520 to departments to pay outstanding FY09 orders, leaving $160,971 in excess carryover, either because goods were received and paid for by the end of FY09, or orders were cancelled. Reappropriations Reappropriation transactions recognize appropriations for programs initiated or projects authorized in previous years by the council, but not completed in the last fiscal year and for which a purchase order had not been issued by June 30, 2009. They also include dedicated revenues received that must be spent according to local, state or federal guidelines and agreements, such as the federal e-rate program and the regional radio and dispatch resources in Police. The General Fund (Main) reappropriations to departments are $1.36 million. Total reappropriations by department in the General Fund are shown on Attachment A. They include: the balance in the General Fund Equipment Replacement account ($477,745); equipment purchases and hydrant maintenance funding in Fire and EMS ($74,500); unspent neighborhood program funds for the Neighborhood Initiative newsletters, matching grants and Neighborhood Empowerment Initiative ($169,000), River Road/Santa Clara newsletter and transition grant commitments ($84,908), council-approved funding for Opportunity Siting and Infill Compatibility Standards ($84,000) and a Eugene Comprehensive Land Assessment ($79,777) in Planning and Development; Regional Radio System Maintenance Fees ($181,860), Fire Dispatch radio equipment replacement resources ($45,190), and funds received in FY09 from the Law Enforcement Federal sharing program and unclaimed property disposal ($131,571). The typical $900,000 transfer to the General Capital Projects Fund from the excess MBWC in the General Fund is not included on this Supplemental Budget, and instead the entire surplus in the General Fund is placed in the Reserve for Revenue Shortfall (RRSF). Maintaining as large a balance in RRSF as possible during preparation of the FY11 General Fund Budget, which continues to face significant financial challenges and uncertainty (the Budget Committee will meet in early 2010 to discuss this) is a more appropriate use of the prior year surplus. This is an exception to the City’s Financial Management Policy B.11 that states: “The highest priorities for use of Marginal Beginning Working Capital (difference between Actual Ending Working Capital in the prior year and Budgeted Beginning Working Capital in the current year) are: General Capita Projects Fund; Unappropriated Ending Fund Balance (up to target amount as defined in Policy B.7); General Fund Contingency (not in priority order)”. After the carryover reconciliations, the General Fund (Main) unallocated carryover surplus is $5.06 million. This amount is added to the Reserve for Revenue Shortfall (RRSF). Z:\CMO\2009 Council Agendas\M091214\S0912143.doc 2