Volume One Operating Budget City of Scottsdale, Arizona FY 2017/18 Budget Adopted FY 2017/18 Budget City of Scottsdale, Arizona Volume One Budget Summary City Council W.J. “Jim” Lane, Mayor Suzanne Klapp, Vice Mayor Virginia Korte Kathy Littlefield Linda Milhaven Guy Phillips David N. Smith Administrative Staff Jim Thompson, City Manager Brent Stockwell, Assistant City Manager Jeff Nichols, City Treasurer Judy Doyle, Budget Director TABLE OF CONTENTS FY 2017/18 Adopted Budget – Volume One Budget Summary Table of Contents Annual Report to Citizens ........................................i City Organization.....................................................v Mayor and City Council .......................................... vi Charter Officers .................................................... viii Community Profile ................................................. ix Demographics ...................................................... xiii Assets and Facilities .......................................... xvii Overview Final Budget Transmittal ........................................ 1 Proposed Budget Transmittal ................................. 4 Budget Award ....................................................... 7 ICMA Performance Measures Award ..................... 8 Executive Summary ............................................... 9 How to Use This Book.......................................... 21 Budget Development Process .............................. 23 Budget Calendar .................................................. 35 Budget/CIP Liaisons............................................. 36 Comprehensive Financial Policies & Governing Guidance ..................................... 37 Budget by Fund Fund Accounting - Fund Types ............................. 43 Total Budget Overview ......................................... 45 Total Budget Appropriation ................................... 48 General Fund .......................................................... 50 Special Revenue Funds .......................................... 81 Transportation Fund ......................................... 83 Preservation Fund ............................................ 95 Special Programs Fund .................................. 103 Tourism Development Fund............................ 117 Debt Service Fund .............................................. 127 Debt Service Expense ................................... 138 Long-term Debt Outstanding........................... 141 Property Tax Supported Debt ......................... 144 Legal Debt Margins ......................................... 145 Enterprise Funds ................................................ 149 Water & Water Reclamation Funds................. 151 Solid Waste Fund ........................................... 167 Aviation Fund .................................................. 177 Internal Service ................................................... 189 TABLE OF CONTENTS Fleet Management Fund ................................ 191 PC Replacement Fund ................................... 203 Risk Management Fund ................................. 209 Healthcare Self-Insurance Fund..................... 219 Grants & Special Districts Funds ........................... 229 Grant Fund ............................................................ 230 Special Districts Fund ............................................ 237 CIP Funds ............................................................. 243 A REPORT TO OUR CITIZENS FISCAL YEAR 2016/2017 About Scottsdale The voters elect a mayor and six councilmembers to govern Scottsdale. The City Council appoints six officers to advise them on policy issues and run daily operations. 2,711 city employees and 5,509 volunteers serve the 238,000 citizens of Scottsdale. What was accomplished? These are a few selected accomplishments from the past year, grouped by strategic goal: VALUE SCOTTSDALE’S UNIQUE LIFESTYLE AND CHARACTER ENHANCE NEIGHBORHOODS • New Scottsdazzle holiday and Western Week events focus attention on Downtown Scottsdale • Back to school program provided 992 children with clothing and backpacks filled with supplies • New monthly downtown e-newsletter provides info on city efforts to 1,500+ subscribers • More than 4,000 participate in Library’s fourth Ultimate Play Date for families SEEK SUSTAINABILITY • Improved green waste recycling from singlefamily homes by 7 percent • Improved safety and reduced risk in four city buildings by installing new fire alarms PRESERVE MEANINGFUL OPEN SPACE • Police and Fire departments hosted successful 5-day interactive teen academy SUPPORT ECONOMIC VITALITY • Attracted, retained or expanded 14 businesses with 1,019 jobs with average wages of $62,744 How our residents rate Scottsdale Percent “excellent” or “good” • Acquired 400+ acres of state land for Scottsdale’s McDowell Sonoran Preserve As a place to live • Opened 7½ miles of new preserve trails north of Dynamite Boulevard 94% 96% 98% 2006 2010 2016 ADVANCE TRANSPORTATION • Adjusted traffic signals to reduce commutes by 15+ percent on 4 major roads • Began designing project to add bike lanes along McDowell Road corridor Quality of life 90% 94% 96% 2006 2010 2016 For complete results go to ScottsdaleAZ.gov and search “survey.” ANNUAL REPORT CITY OF SCOTTSDALE i How do we compare with our neighbors? Scottsdale is part of the Phoenix metropolitan area, and taxes and rates vary across the eight largest cities. Scottsdale’s rates are lower than all but two or three of the largest cities. Scottsdale’s rates are also at or below last year’s levels. CITY PROPERTY TAX ON A $250,000 HOUSE This is the amount of city-only property tax on a home assessed at $250,000 in area communities. About 10 percent of the total tax bill goes to the city. The rest goes for public schools, the county, and other special districts. $257 Gilbert $271 Scottsdale $391 Average $623 Tempe Source: City budget offices CITY SALES TAX ON A $25,000 CAR This is the city sales tax that would be due on a new car valued at $25,000 in area communities. In Scottsdale, the city portion is 1.65% of the total 7.95% charged. The rest goes to the state and the county. $375 Chandler & Gilbert $413 Scottsdale $444 Average $550 Glendale Source: Arizona Department of Revenue MONTHLY RESIDENTIAL UTILITY BILL This includes water, wastewater (sewer) and solid waste (trash and recycling) for a single-family residential customer in each community. Actual bills may vary based on actual usage and size of property. Source: City of Tempe $64 Gilbert $71 Scottsdale $79 Average $114 Mesa How are we doing? This is a snapshot of measures from the city’s Quarterly Performance Report. For more measures, go to ScottsdaleAZ.gov, search “performance.” 705,000 2.2 705,000 2.2 42,926 705,000 2.2 705,000 2.2 42,926274 274 42,926 274 42,926 274 visits to the million transit visits to million transit visits to the million transit to million transit visits tovisits the million transit visits to the million transit visits visits to the the to the the million million transit transit Scottsdale McDowell riders Scottsdale McDowell riders Scottsdale McDowell riders Scottsdale McDowell riders Scottsdale McDowell riders Scottsdale McDowell riders Scottsdale Scottsdale McDowell McDowell riders riders Sonoran Preserve Sonoran Preserve Sonoran Preserve Sonoran Preserve Sonoran Preserve Sonoran Preserve Sonoran Sonoran Preserve Preserve non-local flights at event days non-local flights at special event days non-local flights at event days non-local flights special event days non-local flights at special event days non-local flights at at special event days non-local non-local flights flights at special at special special special event event days days Scottsdale Airport at WestWorld Scottsdale Airport at WestWorld Scottsdale Airport at WestWorld Scottsdale Airport at WestWorld Scottsdale Airport at WestWorld Scottsdale Airport at WestWorld Scottsdale Scottsdale Airport Airport at WestWorld at WestWorld TARGET: 750,000 2.4 MILLION TARGET: 750,000 TARGET: 2.4 TARGET: 750,000 TARGET: 2.4 TARGET: 750,000 TARGET: 2.4 TARGET: 43,500 TARGET: 270 TARGET: 43,500 TARGET: 270 TARGET: 43,500 TARGET: 270 TARGET: 43,500 TARGET: 270 TARGET: 750,000 TARGET: 2.4 MILLION TARGET: 750,000 TARGET: 2.4 MILLION MILLION TARGET: TARGET: 750,000 750,000 TARGET: TARGET: TARGET: 2.4 MILLION MILLION 2.4 MILLION MILLION SI TARGET: 43,500 TARGET: 270 SI X IC OA LLG S GOALS TARGET: 43,500 270 SI X STR S SIX STRATE GIC TARGET: TARGET: 43,500 270 270 SI XXATE STR GGATE IC LG SIX STRATEGIC GOAL SS GOAL SI XXG STR G IC OA SIX STRATEGIC GOAL S X STR STR ATE GATE IC G OA SOA SIX STRATEGIC GOALS SI STR ATE IC43,500 GATE OA LSSIC SIXTARGET: STRATEGIC GOAL SI STR SI XG ATE STR ATE IC G IC OA LG G LS SOA OA LLSIX S STRATEGIC SIXTARGET: STRATEGIC SIXTARGET: STRATE GIC GOAL GOAL S S S NEIGHBORHOODS SUSTA I NSUSTA A B I L I TI N YSUSTA CIT ER SUSTAI AB I LI T N YSUSTAI CIT NEIGHBORHOODS A B IYL ICHARACT TNEIGHBORHOODS YCIT Y CHARACT CIT Y CHARACT NEIGHBORHOODS ER NSUSTAI ITNA BIYL ICHARACTER T YCIT Y CHARACTER CIT Y CHARACTER NEIGHBORHOODS A B I L I TI N YSUSTA NEIGHBORHOODS ER AB I LI T N YSUSTA NEIGHBORHOODS A BYI LCHARACT I ITNYCIT NEIGHBORHOODS ER ABYI LICHARACTER YCIT NEIGHBORHOODS SUSTA I NSUSTA A B I L I TIYN CIT ER SUSTAI AB I LI T YN CIT NEIGHBORHOODS A B I L I ITN YA BYI LCHARACT CIT NEIGHBORHOODS ER AB I LI TN YABYI LCHARACTER NEIGHBORHOODS NEIGHBORHOODS SUSTA SUSTA IITNYA B I YL I CHARACT TNEIGHBORHOODS YCIT Y CHARACT CIT Y CHARACT NEIGHBORHOODS ER NEIGHBORHOODS ER N SUSTAI SUSTAI SUSTA IITNA YCIT BI YL I CHARACTER T YCIT Y CHARACTER CIT Y CHARACTER 67.0 67.0 28% 67.0 28% 4:37 4:37 4:48 4:48 67.0 28% 4:37 4:48 28% 4:37 4:48 TARGET: 69.5 million TARGET: 69.5 million TARGET: 69.5 million TARGET: 69.5 million TARGET: gallons 69.5 million TARGET:gallons 69.5 million TARGET:gallons 69.5 TARGET: million gallons 69.5 million gallons gallons gallons gallons O P E N S PACES NPOEM VNIO TAMELICICTOYVNIO NOM I CSPACES VI TALI TRANSPORTATION NEICC SOPACES ELTRANSPORTATION CIICTOYN MLTRANSPORTATION I CI T V I T Y N SPACES TRANSPORTATION OPE N ECO MLTRANSPORTATION IC IT Y TRANSPORTATION O P E N S PACES TAM OPE N SPACES ECO NOM I CT YVI TALI O P EE NCSOO PACES V IOTA Y I TA LOPE TRANSPORTATION OPEECO N SPACES ECO NOM I CT YNO VITA IT V Y I TA LTRANSPORTATION O P E N S PACES NPOEM NOM I CSPACES VINOM TALI TRANSPORTATION O P E N SO PACES OVNI TA OM V IOTA LI C IOTNYV O OPE N SPACES ITCYNOM VI TALI YVI TA P EENCSOOPACES NEI C S PACES EL ICTCOYN M ETRANSPORTATION C I TA M LITRANSPORTATION CI TVYI TA LOPE TRANSPORTATION I T Y N SPACES TRANSPORTATION OPEECO N SPACES OPE NECO ECO ECO I CTNO MLITRANSPORTATION CI T VYI TA LTRANSPORTATION IT Y TRANSPORTATION million gallons of million percentage of for average minutes for average million gallons of percentage minutes for average minutes for average million gallons percentage minutes for minutes for percentage minutes for average minutes for average million gallons of gallons percentage of of minutes for average minutes for average million gallons of of million million gallons gallons of of of percentage of of minutes for average average minutes for average average percentage percentage of of of minutes minutes minutes for for average average minutes minutes for for average average water produced daily water produced daily household waste fire response time police response time water produced daily household waste fire response time police response time water produced daily household waste fire response time police response time household waste fire response time police response time water produced daily household waste response time police response time water produced daily water water produced produced daily daily household waste response time police response time household household waste wastefire fire fire fire response response time time police police response response time time that is recycled that is recycled that is recycled that is recycled thatthat is recycled is that recycled that is recycled is recycled TARGET: 67.5 MILLION TARGET: 67.5 MILLION 30% TARGET: 67.5 GAL TARGET: TARGET: 67.5 MILLION TARGET: 30% TARGET: TARGET: 67.5 MILLION GAL TARGET: 30% TARGET: 67.5 MILLION MILLION GAL GAL TARGET: TARGET: 67.5GAL 67.5 MILLION MILLION GALGAL GAL TARGET: TARGET: 30% 30% TARGET: TARGET: 30% 30% 30% ii CITY OF SCOTTSDALE TARGET: 4:39 TARGET: TARGET: 4:39 TARGET: TARGET: 4:39 TARGET: 4:39 4:39 TARGET: TARGET: 4:39 4:39 4:39 TARGET: 5:11 TARGET: TARGET: 5:11 TARGET: TARGET: 5:11 TARGET: 5:11 5:11 TARGET: TARGET: 5:11 5:11 5:11 What does it cost to run the city and how are those costs paid? Scottsdale is required by law to adopt a budget each year, and cannot spend more than that total amount. This includes all city funds for the fiscal year ending June 30. These numbers are as adopted by the City Council on June 2017. The city’s financial statements are audited annually by an independent auditor. The most recent audit for 2016 received a clean opinion. 4% What financial resources are available for the City of Scottsdale? (in millions of dollars) 4% 2017 2018 FORECAST 31% 4% BUDGET 31% 31% What are the expenses for running the City of Scottsdale? (in millions of dollars) 2017 2018 4% 4% The fund balance consists of 4% the accumulated surpluses from prior years held in contingency and reserve. 31% 31% 31% FORECAST 14% 14% 14% 14% 14% 14% $395.7 41% $475.4 27% 27% Other financing sources includes funds carried over from prior years for capital and utilities designated purposes. $61.0 $168.2 41% $184.8 41% 41% 41% 41% The city sets aside about 14% of the total budget for contingency and reserves. This is the city’s savings account. The capital budget is used to acquire or construct major facilities including buildings, roads and water infrastructure. 27% 27% 27% 27% $468.0 BUDGET $415.2 4% 38% Property taxes are collected to support city services, and also to pay for debt service on property, buildings and infrastructure. 38% 31% 38% The city receives revenue from local sales and business taxes, and service charges from customers. Key breakouts below. $61.8 38% 38% 38% 45% $641.0 45% $522.6 45% 45% 45% 45% 14% The operating budget is used to pay for city services and to pay employees that provide those services. Key breakouts shown below. $131.0 – UTILITY SERVICES FOR CUSTOMERS AND CITY INFRASTRUCTURE MAINTENANCE $212.3 – LOCAL TAXES $179.2 – ALL OTHER CITY SERVICES SUCH AS PLANNING, PARKS, LIBRARIES AND ADMINISTRATION $171.7 – UTILITIES AND ENTERPRISES $77.9 – GRANTS, TRUSTS AND INTEREST EARNINGS $83.0 – STATE AND REGIONAL TAXES $605.6 $588.8 $43.7 – LICENSES, FINES & FEES 27%Total financial resources available $136.7 – POLICE AND FIRE SERVICES 41% $554.1 $572.4 2017 FORECAST 2018 BUDGET 2017 FORECAST 2018 BUDGET $1,530.3 $1,541.3 $1,363.3 $1,279.8 $125.4 – LONG-TERM DEBT Maximum expenditure limit CITY OF SCOTTSDALE iii What are our priorities for Fiscal Year 2017/18? The city’s mission statement is Simply Better Service for a World-Class Community. The city has six long-term strategic goals and six short-term priorities. Selected objectives that advance these efforts are listed below. Simply Better Service for a World-Class Community PRESERVE MEANINGFUL OPEN SPACE • Initiate site design and public input process for new trailhead at Pima and Dynamite • Acquire remaining private parcel within the Preserve recommended study boundary area SUPPORT ECONOMIC VITALITY • Develop and carry out strategies that support new investment in key employment centers • Implement Downtown Marketing plan to attract regional visitors and support local business ENHANCE NEIGHBORHOODS • Create new grant-funded Family Resource Center to provide library and human services • Build 3 new fire stations and refurbish another with bond financing approved by voters in 2015 ADVANCE TRANSPORTATION • Begin planning and acquisition for Cactus Trolley, Airpark Trolley and Scottsdale Limited Bus service • Invest additional $20 million to replace aging pavement to restore streets to pre-recession standard using bond financing approved by voters in 2015 SEEK SUSTAINABILITY • Increase residential recycling diversion rate to 30% or more over next two years • Improve citizen access to services and data through new online app and open data portal VALUE SCOTTSDALE’S UNIQUE LIFESTYLE AND CHARACTER • Improve pedestrian and disabled access along sidewalks and improve lighting Downtown PHOTOS: BOB BENNETT, SEAN DECKERT, MAUREEN ISREE, W. SCOTT MITCHELL • Expand Canal Convergence event to two weekends and move event to Fall 2018 This report provides a snapshot of information available in the budget and comprehensive annual financial report documents which are available at ScottsdaleAZ.gov and search “finance.” This report is prepared according to AGA citizen centric reporting standards. iv CITY OF SCOTTSDALE Please contact the City Manager’s Office if you have comments or suggestions on how we can improve this report. Scottsdale’s City Manager’s Office 3939 N. Drinkwater Blvd. Scottsdale, AZ 85251 480-312-2800 citymanager@ScottsdaleAZ.gov Guiding Scottsdale Forward An Introduction to Our Leadership The City Council is the governing body for Scottsdale. The council consists of the mayor and six council members who are elected to represent the city at large and serve overlapping, four-year terms. These seven citizens oversee the operations of city government and set policy, approve programs, appropriate funds, enact laws, select charter officers, and appoint residents to serve on advisory bodies. The mayor is the chair of the Scottsdale City Council and presides over its meetings, which are typically held on Tuesdays in the City Hall Kiva Forum located at 3939 N. Drinkwater Boulevard in downtown Scottsdale. The City Council hires six officers to advise them on policy issues and run day-to-day operations. They are collectively known as the charter officers, because their positions are spelled out in the City Charter, a voterapproved document which describes the organization and authority of city government in Scottsdale. These positions are the city attorney, city auditor, city clerk, city manager, city treasurer and presiding city judge. Citizens of Scottsdale Organization Chart July 2017 Mayor & City Council Boards, Commissions & Task Forces City Attorney City Auditor City Clerk City Manager City Treasurer Civil Accounting Prosecution Budget Victim Services Business Services Presiding Judge City Court Finance Risk Management Public Safety Administrative Services Community & Economic Development Community Services Public Works Water Police Communications Airport Human Services Capital Projects Pipeline & Treatment Agreements Fire Human Resources Economic Development Libraries Facilities Planning & Engineering Information Technology Planning & Development Parks & Recreation Fleet Reclamation Services Purchasing Tourism & Events Preserve Solid Waste Technology & Admin Street Operations Water Quality Transportation Water Services WestWorld CITY LEADERSHIP CITY OF SCOTTSDALE v Scottsdale City Council W. J. “Jim” Lane served for four years on the Scottsdale City Council beginning in June 2004, and began his third term as mayor in January 2017. Mayor Lane currently represents the city as a member of the Flinn Foundation Arizona Bioscience Roadmap Steering Committee. He is the current Treasurer and Secretary of the Arizona Municipal Water Users Association, a member of the Governor’s Arizona Workforce Committee, member of the Executive Committee of the League of Arizona Cities and Towns, and a Chairman of the Maricopa Association of Governments Economic Development Committee. He serves on the Scottsdale Leadership Advisory Board, Arizona Game and Fish Appointment Recommendation Board, he is a member of the Phoenix Committee on Foreign Relations and an honorary member of the Taliesin West Board of Stewards. He came to Scottsdale from New Jersey in 1973 to take a position with KPMG (Peat Marwick), an international CPA firm. He worked as an Arizona CPA for 20 years with five of those years in public accounting as a financial statement auditor. Mayor Lane has owned and operated businesses in construction, mining, computer technology, telecommunications, regional aviation and financial consulting. Mayor Lane is also a former adjunct professor of Business and Accounting at Scottsdale Community College. He holds a Bachelor of Science degree in Accounting from Saint Joseph’s University in Philadelphia. MAYOR W. J. “JIM” LANE jlane@ScottsdaleAZ.gov | 480-312-2466 Suzanne Klapp began her first term on the Scottsdale City Council in January 2009, and began her third term in January 2017. She has more than 40 years of management experience in manufacturing, distribution and retail operations. She began her career with Whirlpool Corp. where she worked COUNCILWOMAN for 14 years in a variety of SUZANNE KLAPP positions in marketing, communications, human resources, production and material control. Later, she owned a custom plastics manufacturing plant in Indiana. She moved to Scottsdale in 1998 and since then has owned custom framing stores in Scottsdale and Phoenix. She is Chairman of the Valley Metro RPTA board and is a founder of the Scottsdale Gateway Alliance. She is a graduate of Valley Leadership and is on the Scottsdale Leadership Advisory Board. She serves as Chairman of the City Council’s Audit Subcommittee. She holds a Bachelor of Arts degree in English and Journalism from the University of Evansville and Master of Business Administration from Southern Methodist University. sklapp@ScottsdaleAZ.gov | 480-312-7402 vi CITY OF SCOTTSDALE Virginia Korte began her second term on the Scottsdale City Council in January 2017. She has an extensive background in business and nonprofit management as well as community service. In 1981, she joined Ray Korte Chevrolet to work with and learn from her father where she served in various roles COUNCILMEMBER until becoming general VIRGINIA KORTE manager and dealer in 1991. In 1998, Virginia became the first executive director of the Center for Native & Urban Wildlife at Scottsdale Community College, serving until 2002, when she was hired as President and CEO of the Scottsdale Area Chamber of Commerce. She left the chamber in 2008 to serve as President and CEO of Scottsdale Training and Rehabilitation Services until 2014. She is currently a member of the board for Arizona Town Hall and Business United for Scottsdale Schools. Throughout her time in Scottsdale, Virginia has also served on a wide variety of volunteer boards and committees focused on serving the community. vkorte@ScottsdaleAZ.gov | 480-312-7456 Kathy Littlefield began her first term on the Scottsdale City Council in January 2015. She has 25 years of financial and management experience. She co-founded (with her husband Bob Littlefield, who served three terms on the Scottsdale City Council from 2002 to 2015) and continues to manage COUNCILWOMAN a successful ScottsdaleKATHY LITTLEFIELD based computer company, NetXpert Systems, Inc. Her previous professional experience includes several years working in the Budget Office of the City of Plano, Texas. Councilwoman Littlefield was President of her Civitan Club (an organization that helps developmentally disabled and underprivileged children) and was chosen “Civitan of the Year” for her efforts during her term of office. Currently she is active in the Daughters of the American Revolution working to help veterans and their families. Councilwoman Littlefield is a Scottsdale native who attended Ingleside Elementary and Arcadia High. She graduated with distinction from Arizona State University in 1970 with a bachelor’s degree in business education. Linda Milhaven began serving on the Scottsdale City Council in January 2011 and was re-elected to a second term that began in January 2015. She has served in numerous volunteer capacities including Chair of the Board of Trustees of the Scottsdale Cultural Council, Chair of the Board of the Scottsdale Area COUNCILWOMAN Chamber of Commerce LINDA MILHAVEN and Chair of the Board of the Better Business Bureau. She was a member of Class VIII of Scottsdale Leadership and in 2009 earned their Frank B. Hodges Alumni Achievement Award. As part of her 30 year banking career, she was a community bank president in Scottsdale from 1993 to 2005. Councilwoman Milhaven graduated from Paradise Valley High School. She holds a Bachelor of Arts degree in Psychology from Wellesley College in Wellesley, Massachusetts, and a Masters in Business Administration from Columbia University in New York. lmilhaven@ScottsdaleAZ.gov | 480-312-7402 klittlefield@ScottsdaleAZ.gov | 480-312-7456 Guy Phillips began his second term on the Scottsdale City Council in January 2017. Councilman Phillips was raised in Phoenix where he graduated from Camelback High School in 1977. He moved to Scottsdale in 1994. He attended Maricopa Community College and subsequently started the air conditioning contracting COUNCILMAN business that he still owns GUY PHILLIPS and operates. He was a general contractor and homebuilder whose business was one of the first to implement Scottsdale’s Green Building Program. He is a member of the Better Business Bureau, the Arizona Small Business Association, the North Scottsdale Chamber of Commerce, the Heritage Foundation, the National Rifle Association, and the Arizona Archaeological Society. He has created many startup businesses with a patent pending. Scottsdale is where Guy Phillips met his wife Cora, and together they raised a family of five children who all attended Scottsdale public schools. gphillips@ScottsdaleAZ.gov | 480-312-2374 David N. Smith began his first term on the Scottsdale City Council in January 2015. Councilman Smith has more than 40 years of senior financial management experience, mostly in the public service and not-for-profit sectors. He served as Scottsdale’s city treasurer and chief financial officer from October 2009 COUNCILMAN until he retired in July DAVID N. SMITH 2013. Prior to that, he served as vice chair of Scottsdale’s citizen budget review commission. Before his service with the city of Scottsdale, Councilman Smith was the chief financial officer for Amtrak from 2004 to 2007 and served as the CFO for the Tennessee Valley Authority, the nation’s largest electric utility, from 1995 to 2003. He and his wife Diana owned and published the Scottsdale Airpark News from 1986 to 1997. Councilman Smith earned a bachelor’s degree in business administration and accounting from Northwestern University and a master’s degree in finance from Northwestern’s Kellogg School of Management. dnsmith@ScottsdaleAZ.gov | 480-312-7423 CITY OF SCOTTSDALE vii Charter Officers JIM THOMPSON City Manager BRUCE WASHBURN City Attorney 480-312-2800 480-312-2659 jthompson@ScottsdaleAZ.gov bwashburn@ScottsdaleAZ.gov SHARRON WALKER City Auditor CAROLYN JAGGER City Clerk 480-312-7867 480-312-2411 swalker@ScottsdaleAZ.gov cjagger@ScottsdaleAZ.gov JEFF NICHOLS City Treasurer JOSEPH OLCAVAGE Presiding Judge 480-312-2364 480-312-7604 jenichols@ScottsdaleAZ.gov jolcavage@ScottsdaleAZ.gov Scottsdale employees honored for performance and commitment to community in 2016. For more information about Scottsdale’s organization and leadership, go to ScottsdaleAZ.gov and search “directory.” viii CITY OF SCOTTSDALE Welcome to Scottsdale, Arizona A world-class community Located in the beautiful Sonoran Desert, Scottsdale is nestled between Paradise Valley and the McDowell Mountains. Scottsdale is a premier community known for a high quality of life with attractive residential, working and shopping areas. It is an internationally recognized visitor destination and a thriving location for business. Scottsdale consistently ranks among the nation’s best places to live, with top-rated schools, award winning parks, low crime and a vibrant economy. Downtown Scottsdale is home to many restaurants, retail shops, art galleries, and hotels. Scottsdale’s McDowell Sonoran Preserve, in the city’s northern reaches, throughout Scottsdale, is the largest municipally-owned park or preserve in the United States. There are recreational opportunities for everyone with many golf courses, tennis courts, parks, pools, bike paths, and trails. Scottsdale was founded by Army Chaplain Winfield Scott in 1888, but was not incorporated until 1951 when Scottsdale was a small community of 2,000 residents situated on about two square miles of land. Today, Scottsdale has more than 230,000 residents spread across 185 square miles. COMMUNITY PROFILE CITY OF SCOTTSDALE ix All Work and All Play Business Scottsdale is one of the state’s leading job centers with a diverse economy built on medical research, high-tech innovation, tourism and corporate headquarters. Scottsdale is home to nearly 18,000 businesses supplying more than 150,000 jobs. The high-tech innovation center SkySong, located just a few miles from Downtown, is designed to help companies grow through a unique partnership with nearby Arizona State University. Downtown is an emerging center for high-tech businesses. Farther north, the Scottsdale Cure Corridor is a partnership of premier health care providers and biomedical companies seeking to advance medicine and patient care through cutting-edge research. Tourism With great weather, fantastic scenery and a calendar full of special events, Scottsdale is among the most popular tourist destinations in Arizona. About 9 million people visit Scottsdale annually. The city boasts many hotels and resorts, restaurants, and spas. That activity adds up to big business. The annual economic impact of Scottsdale visitors is estimated at more than $4 billion. Annual tax revenue generated by visitors was estimated around $38 million — representing about one in every five city tax dollars. Special Events Every January through March, Scottsdale captures the national spotlight with an eclectic mix of sport and cultural events that draw thousands of spectators and millions of television viewers. Scottsdale resorts annually host Fiesta Bowl teams and the city’s Downtown becomes the focal point for pep rallies and fan parties. The Barrett-Jackson Collector Car Auction headlines a week of local automotive attractions and becomes the star of more than 40 hours of live TV coverage. The Waste Management Phoenix Open unfolds at the TPC Scottsdale, featuring more national TV coverage and the largest, loudest galleries in golf. The All Arabian Horse Show — among the largest horse shows in the nation — and Scottsdale’s festive Parada del Sol Parade and Rodeo follow later. In March, Major League Baseball takes center stage. Downtown Scottsdale serves as the spring home of the San Francisco Giants and makes the city a headquarters for visiting fans and media from across the nation. PHOTO BY: MAUREEN ISREE x CITY OF SCOTTSDALE Scottsdale Top Attractions 1. Pinnacle Peak Park 11 6 2. Preserve Gateway 3. TPC Scottsdale 4. WestWorld 5. Scottsdale Airport / Airpark 8 6. McCormick-Stillman Railroad Park 7. Indian Bend Wash Greenbelt 1 8. Scottsdale Fashion Square 12 9. Downtown Scottsdale 10. Scottsdale Historical Museum 11. Western Spirit: Scottsdale’s Museum of the West 3 12. Scottsdale Stadium 7 13. SkySong, the ASU Scottsdale Innovation Center 4 9 1 5 2 3 4 6 7 8 9 11 10 12 13 2 5 PHOTOS BY: BERNARD GAGNON, KEN GRESHOWAK, MAUREEN ISREE, LOU PARKER, MCDOWELL SONORAN CONSERVANCY, DANIEL ORTEGA, BILL TIMMERMAN 10 13 CITY OF SCOTTSDALE xi A Museum without Walls Simply Better Service Scottsdale’s innovative and longstanding public art program makes the city a special place, contributing to the community’s creative, cultural, and economic vitality. The program is one of several managed by the Scottsdale Cultural Council, the non-profit agency focused on art and culture in Scottsdale. The public art pieces featured below highlight the important role that water plays in our World-Class Community. Soleri Bridge and Plaza Water Mark PHOTO BY: BILL TIMMERMAN PHOTO BY: ANNA HUBBARD Horseshoe Falls Water to Water for a World-Class Community ARTIST: PAOLO SOLERI ARTIST: MICHAEL MAGLICH ARTISTS: LAURA HADDAD AND TOM DRUGAN ARTIST: CHRISTINE TANZPAUL EDWARDS Woman and Fish ARTIST: ABBOT PATTISON Floating World ARTIST: CALVIN ABESYLVIA TIDWELL PHOTO BY CHRIS LOOMIS Canal Convergence The Scottsdale Waterfront shimmers and glows during Canal Convergence, an annual weekend of engaging and inspiring events and innovative large-scale installations by local and international artists. Canal Convergence is hosted by Scottsdale Public Art and has quickly become a regional attraction, adding to Scottsdale’s cachet as Arizona’s premier arts and cultural destination. PHOTO BY: SEAN DECKERT xii CITY OF SCOTTSDALE Scottsdale By The Numbers A Demographic Summary Scottsdale’s elevation rises by nearly 4,000 feet from south to north Scottsdale is the 45th largest city in the U.S. by area. Source: City of Scottsdale and Scottsdale Airport Weather Station WIN L L FA 1,510 ft 1,150 ft PHOENIX 184.5 SQUARE MILES FOUNTAIN HILLS PARADISE VALLEY TEMPE 1 31 MILES LONG 105o 81o SCOTTSDALE AIRPORT LOWEST POINT MCDOWELL MOUNTAIN REGIONAL PARK 88o 65o Mayor 6 Council Members 6 Appointed Officers 163 238,000 Board and Commission Members 546 2,165 Part-time Employees Citizens are Served by 11.4 4,877 ft Change in Elevation Scottsdale’s SALT RIVER PIMA INDIAN COMMUNITY HIGHEST POINT ER SCOTTSDALE 87o 60o SUMM CAREFREE 67o 47o NG TONTO NATIONAL FOREST CAVE CREEK SP R RI TE Source: U.S. Census and City of Scottsdale 5,346 MILES WIDE Scottsdale is the 85th largest city in the U.S. by population, and is forecast to pass 300,000 by 2050. Full-time Employees Volunteers Source: U.S. Census and Arizona Office of Economic Opportunity 1951 1960 2,021 10,026 1970 67,841 1980 88,364 1990 130,069 2000 202,705 2010 217,365 2016 238,000 2050 311,900 PHOTOS: THOMAS PREZKOP, EUGENIA VALENTINE DEMOGRAPHICS CITY OF SCOTTSDALE xiii Scottsdale’s Residents Scottsdale’s median age of 46.9 is 9 years older than the U.S. median age of 37.8. Source: U.S. Census Bureau Birth to 5 20 8,024 12,780 31,420 Median Age: 46.9 25 55 75 96,790 Residents 64,300 24,530 While most residents are white, about 1 in 10 are Hispanic or Latino. There are more women than men in Scottsdale Source: U.S. Census Bureau Hispanic or Latino: 10% – 24,400 Source: U.S. Census Bureau Asian: 4% – 9,200 49% MALE African American: 2% – 5,200 51% Two or more races: 2% – 5,100 FEMALE Native American: 1% – 2,700 White: 81% – 190,025 While most homes are owner-occupied year-round, about 16,000 homes (12 percent) are for seasonal residents. Source: U.S. Census Bureau Total Housing Units - 134,516 Seasonal Housing & Vacant Units 26,051 (20%) Occupied Housing Units 108,501 (80%) Owner Occupied 70,199 (65%) Renter Occupied 38,302 (35%) Homeowner vacancy rate 3.4% Rental vacancy rate 10.3% More than half of Scottsdale adults have earned a bachelor’s degree or higher. Source: U.S. Census Bureau 184,631 (Population 25 years and older) LESS THAN HIGH SCHOOL HIGH SCHOOL GRADUATE GRADUATE 10,030 (5%) 23,940 (13%) xiv CITY OF SCOTTSDALE ASSOCIATE DEGREE/ SOME COLLEGE BACHELOR’S DEGREE OR HIGHER 48,988 (27%) 101,673 (55%) Almost 40% of Scottsdale households make more than 100,000 a year. More than 40% of Scottsdale’s land area is dedicated as Open Space. Source: U.S. Census Bureau LESS THAN $25,000 $200,000+ 14% 15,365 15% 16,210 18% 25% $100,000– $199,999 Source: Scottsdale General Plan 20,002 27,321 $25,000– $49,999 27% 29,550 $117,204 Mean Household Income $50,000– $99,999 $75,364 43% Open Space Median Household Income 47% Residential 3% Mixed Use 7% Commercial/ Employment/Office/Public (non-residential) Scottsdale has the highest median housing price of any of the large Valley cities. Source: U.S. Census Bureau Phoenix Mesa Chandler Glendale Scottsdale Gilbert Tempe Peoria $200,800 $188,100 $273,600 $181,000 $434,700 $284,800 $246,200 $223,000 CITY OF SCOTTSDALE xv Health care, finance and technology firms dominate the list of large employers. Source: Economic Development Department communications with employers, July 2017. 6,273 2,721 2,911 2,587 2,696 1,899 2,369 Most residents work in management or office jobs. 1,200 1,587 1,000 More workers come to Scottsdale than leave to work in other communities. Source: U.S. Census Bureau Source: U.S. Census Bureau 52% Scottsdale has about 100,681 jobs Management, Business, Science and Arts 64,002 26% Sales and Office 14% 32,069 Service 16,780 3% Natural Resources, Construction and Maintenance 3,618 5% 143,143 WORKERS ENTER 29,282 WORK/LIVE 71,744 WORK ELSEWHERE Production, Transportation and Material Moving 5,593 More demographic information is available at ScottsdaleAZ.gov and search “about.” xvi CITY OF SCOTTSDALE Simply Better Service for a World-Class Community The mission of the City of Scottsdale is to provide Simply Better Service for a World-Class Community. Scottsdale employees provide services that help keep the community clean and healthy. 6 facilities water 68.5 million gallons of water delivered daily 51 TRUCKS solid waste 2,102 miles of water mains 1,456 miles of sanitary sewers SIMPLY BETTER SERVICE CITY OF SCOTTSDALE xvii Scottsdale employees provide Simply Better Services that help keep our World-Class Community safe. 4 POLICE stations 15 FIRE 344 police vehicles stations response vehicles 39fire 295 traffic signals 12' wide lane t n ad e l o a r m v f i i l o e s qu e 6 4 2,8 11,135 fire hydrants xviii CITY OF SCOTTSDALE Scottsdale employees provide Simply Better Services that enhance the quality of life of residents and visitors. 30,500 41 975 total acres 1 baseball stadium 4 aquatic facilities acres of preserve land 11 trailheads a nd 190 miles of 70 non motorized tr ails 53 6 centers community 2 skate 2 11 1 parks railroad park 101 m iles 7spray features 30 39 basketball volleyball courts courts of p ave dp 37 playgrounds 2 centers athways 5public libraries senior 3off-leash areas 3 equestrian facilities CITY OF SCOTTSDALE xix Scottsdale has a vibrant business community and is a destination for arts, dining and tourism. 21,300+ 50 HOTELS 8,971 ROOMS BUSINESSES 150+ ART GALLERIES, ART DEALERS & MUSEUMS 37 PUBLIC SCHOOLS 26,233 ENROLLMENT trolley routes e e r 4f 800+ RESTAURANTS 11 bu s ro u t e s 1 airport 51 GOLF COURSES xx CITY OF SCOTTSDALE 274 days of Special Events at WestWorld Table of Contents City of Scottsdale FY 2017/18 Adopted Budget - Volume One -1- Table of Contents City of Scottsdale FY 2017/18 Adopted Budget - Volume One -2- Table of Contents City of Scottsdale FY 2017/18 Adopted Budget - Volume One -3- Table of Contents City of Scottsdale FY 2017/18 Adopted Budget - Volume One -4- Table of Contents City of Scottsdale FY 2017/18 Adopted Budget - Volume One -5- Table of Contents City of Scottsdale FY 2017/18 Adopted Budget - Volume One -6- Table of Contents City of Scottsdale FY 2017/18 Adopted Budget - Volume One -7- Table of Contents This Certificate of Excellence is presented to Scottsdale, AZ for exceeding the standards established by the International City/County Management Association in the identification and public reporting of key outcome measures, surveying of both residents and employees, and the pervasiveness of performance management in the organization’s culture. Presented at the 103rd ICMA Annual Conference in San Antonio/Bexar County, Texas 23 October 2017 Mar c A. Ot t I C MA Ex e c utive Di r e ctor Le e Fe ldman I C M A Pr e s i de n t City of Scottsdale FY 2017/18 Adopted Budget - Volume One -8- Table of Contents OVERVIEW | Executive Summary OVERVIEW | How to Use This Book Executive Summary The City of Scottsdale’s three budget volumes provide a comprehensive picture of the city’s financial plan for FY 2017/18. This Executive Summary complements that information, highlighting items, issues and trends that shaped the budget. Current year City Council policy decisions The following are the major policy items included in the city’s adopted FY 2017/18 budget. Each of these items was discussed during City Council’s public budget review sessions:  $2.2 million general fund ($3.2 million all funds), or the equivalency of 3 percent to the max of position ranges, for a citywide pay program, through which employees may receive pay increases up to 4 percent, based on performance (excluding police officers, police sergeants, firefighters, fire engineers and fire captains).  $1.3 million general fund was included to continue the Police Officer up to 5 percent “step program”, which allows annual pay increases up to 5 percent based on performance.  $0.4 million general fund was included for the Police Sergeant up to 5 percent “step program” for compensation increases within the established range based on performance. This is the first year this program is being offered and was instituted to create parity with Fire Captains.  $0.8 million general fund was included for the Firefighter, Fire Engineer and Fire Captain up to 5 percent “step program” for compensation increases within the established ranges based on performance. This program is designed to help the department remain competitive in the market from a personnel and recruiting standpoint.  $0.6 million general fund ($0.7 million all funds) is included to help cover an estimated $0.9 million increase in health care costs. Through premium increases, city employees will pay an additional $0.2 million.  $7.8 million general fund for one-time funds for the impact of a court decision (“Parker Case Ruling”) related to the settlement of statewide sworn personnel (police and fire) and elected officials’ retirement contributions paid in prior years.  $3.5 million general fund was included for pension reform related to sworn public safety personnel. Through this pension reform Public Safety Personnel Retirement System (PSPRS) increased employer rates significantly creating ongoing impacts for these retirement expenses. City of Scottsdale FY 2017/18 Adopted Budget - Volume One -9- Table of Contents OVERVIEW | Executive Summary OVERVIEW | How to Use This Book  $0.1 million general fund was included for a classification and compensation study. This one-time cost is to assess positions and pay ranges citywide and ensure a competitive, equitable, and consistent classification and compensation plan is available for employees. An additional $0.4 million general fund is included for possible mid-year adjustments depending on the outcome of the study.  In FY 2017/18, the amount collected for the 1.1 percent sales tax on food for home consumption will be transferred to the Capital Improvement Plan in an effort to ensure the city’s assets are properly maintained. This is year two of a three year phase in with the current year transfer expected to total $5.0 million. The full phase in is expected to occur during FY 2018/19 and is estimated at $7.7 million.  An additional $0.8 million for the primary property tax levy in FY 2017/18 includes the 2 percent statutory adjustment and new construction on the tax rolls.  The secondary property tax levy will remain flat for FY 2017/18 and uses $0.6 million of accumulated secondary property tax reserves to reduce rate impacts to taxpayers.  Water and Water Reclamation include water rate and charges updates as well as adjustments to the base fees to reflect the recovery of fixed operating costs and to capture the demands placed on the system. Additionally, included is an increased water reclamation surcharge and increases to miscellaneous charges to also address cost recovery.  Rate/fee adjustments are included for the Community and Economic Development, Community Services, and Public Safety – Fire divisions. How the adopted budget will affect citizens’ property tax rates The FY 2017/18 adopted primary property tax levy will be used to support General Fund activities such as police and fire protection, operation and maintenance of parks and libraries, and other general governmental functions. The primary property tax levy also includes a repayment to the Self-Insurance Fund (Risk Management) reserve of $1.0 million for tort liability claim payments made during calendar year 2016. For FY 2017/18, the city’s total adopted primary property tax levy of $28.2 million is an increase of $0.8 million over the prior year levy mainly due to the 2 percent statutory adjustment. Additionally, the levy reflects new growth that occurred in the city. Due to an increase in the city’s assessed valuation, the prior year primary property tax rate of $0.5071 cents decreased by $0.0115 to $0.4956 cents per $100 of assessed valuation in FY 2017/18. For FY 2017/18, the city’s adopted secondary property tax levy is remaining flat with the FY 2016/17 adopted budget of $33.6 million. The prior year secondary tax rate of $0.6219 decreased by $0.0330 to $0.5889 per $100 of assessed valuation in FY 2016/17 (mainly due to the use of $0.6 million of reserves). The combined tax levy is the aggregate of the primary (limited) and secondary (unlimited) levies. For FY 2017/18 the city’s total adopted combined property tax levy increased over FY 2016/17 by approximately $0.8 million. In FY 2017/18, citizen tax bills will reflect an estimated combined property tax rate of $1.0845 which is $0.0445 less than the adopted combined FY 2016/17 rate of $1.1290. The management of the combined property tax rate is included in the city’s adopted financial policies for debt management, which states that the combined tax rate will not exceed $1.50 per $100 of assessed value. Based on this combined rate, an owner of a home with a County Assessor’s real property value of $100,000 will pay approximately $108.45 in city property taxes, applying the proposed combined property tax rate. The Maricopa County Assessor’s Office, not the City of Scottsdale, determines real property values used to calculate property tax bills. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 10 - Table of Contents OVERVIEW | Executive Summary OVERVIEW | How to Use This Book How the adopted budget will affect compensation and staffing levels Compensation and benefits – The budget includes $3.2 million ($2.2 million General Fund) for performance based salary increases up to 4 percent for city employees (excluding police officers, police sergeants, firefighters, fire engineers, and fire captains). Included in the budget is funding for the 5 percent police officer step program which totals $1.3 million for annual performance based increases. Police officers with satisfactory performance will continue to earn 5 percent increases each year until they reach the top of their pay range. New in FY 2017/18 is funding for a 5 percent step program for police sergeants totaling $0.4 million. Police sergeants are eligible to earn up to 5 percent increases annually until reaching the top of their range as long as there is satisfactory performance. This program was created to ensure parity with fire captains. Also included in the budget is $0.8 million for a 5 percent step program for firefighters, fire engineers and fire captains for annual performance based increases. Firefighters, fire engineers and fire captains are eligible to earn up to 5 percent increases annually until reaching the top of their range as long as there is satisfactory performance. Additionally, the amounts that the city and employees will pay for health insurance premiums have increased by $0.9 million. While the city will see premiums increase by $0.7 million ($0.6 million General Fund) employees will pick up the remaining $0.2 million. These increases help cover normal inflationary increases related to claims expenses experienced in the Maricopa County market area and the growing usage of high cost specialty drugs. A tobacco surcharge of $20 per month for employees and/or family members who self-report the use of tobacco products remains in effect. Employees and applicable spouses can earn an incentive payment of up to $240 by completing a wellness exam and health risk assessment. New for FY 2017/18 and to help offset the increase to employees, is an additional $20 per month incentive available to employees who, through their doctors, report blood pressure results within certain approved ranges. Staffing Changes – The city’s total FTE count for FY 2017/18 is 2,491.22 which is a net increase of 12.97 FTE from the prior year adopted budget. This represents a slight increase over the prior year with these increases related to key positions in priority programs. A total of 3 positions were eliminated through budget adoption, which included; Revenue Specialist, Revenue Collector, and an Enterprise Finance Manager. These positions were eliminated due to reduced workloads as a result of the Arizona Department of Revenue taking over sales tax collections and by adjusting the responsibilities in existing roles and operational changes within the organization. A total of 15.97 FTE were added for FY 2017/18 through budget adoption and were spread across the divisions where needs were determined to warrant ongoing additions to staff. For example, 5.00 FTE positions were added in Public Works Fleet Management due to changing the current practice of contracting out maintenance for city owned trolleys and bringing the maintenance responsibilities in house all while being cost neutral to the city. Additionally, several positions transferred from Administrative Services and Community and Economic Development to the City Manager to create the Citizen Service Department. These 8.00 FTE are now centrally located with a common mission to aid citizens through efforts and communications in a more efficient way. Through this reorganization the citywide FTE count remained unchanged. These staffing changes are summarized in the following schedule, using full-time equivalent positions (FTEs). City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 11 - Table of Contents OVERVIEW | Executive Summary OVERVIEW | How to Use This Book FTE Changes from Prior Fiscal Year by Division FY 2016/17 Adopted FTEs 2,478.25 CITY MANAGER ADMINISTRATIVE SERVICES City Volunteer Program Manager (1.00) GF Telecom Policy Coordinator (1.00) GF Citizen Liaison (1.00) GF GF Neighborhood Resource Supv (1.00) GF 2.00 GF Citizen Services Assistant (2.00) GF 1.00 GF Intern (3 at 0.11 FTE) 0.33 Citizen Liaison 1.00 GF Neighborhood Resource Supv 1.00 GF Citizen Services Assistant 2.00 GF PNT Manager 1.00 Citizen Advisor City Volunteer Program Manager CITY TREASURER COMMUNITY & ECONOMIC DEVELOPMENT PNT Manager (1.00) GF Citizen Advisor (2.00) GF Payroll Specialist (1.00) GF Airport Operations Tech, Sr. 1.00 Revenue Collector (1.00) GF Telecom Policy Coordinator 1.00 GF Human Services Specialist (2 at 1.0 FTE) 2.00 GF Recreation Leader III 1.00 Administrative Assistant 1.00 Enterprise Finance Manager COMMUNITY SERVICES (1.00) PUBLIC WORKS Fleet Technician Crew Chief 1.00 Coordinator - Family Resource Center (FRC) 1.00 * Fleet Technician II 1.00 Human Services Specialist - FRC 1.00 * Fleet Technician III 2.00 Early Learning Specialist - FRC (2 at 0.5 FTE) 1.00 * Equipment Parts Technician 1.00 Part-Time Hours in Recreation Positions 0.45 GF PUBLIC SAFETY - POLICE WATER RESOURCES Forensic Scientist II 2.00 GF Intern 0.19 Forensic Computer Examiner 1.00 GF Instrument & Controls Tech II 1.00 Police Officer (1.00) GF Forensic Scientist II (1.00) Net Change All Divisions FY 2017/18 Adopted FTEs 12.97 2,491.22 GF = General Fund Fund Highlights The remainder of this Executive Summary highlights the key elements of each fund in the FY 2017/18 budget. The General Fund is presented first and in more detail because of the size and importance. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 12 - Table of Contents OVERVIEW | Executive Summary OVERVIEW | How to Use This Book General Fund - Sources The General Fund supports core services and is the largest fund with the greatest potential for revenue fluctuations. Forecasted General Fund sources for FY 2017/18 are $282.6 million, approximately $6.7 million (2.4 percent) more than the FY 2016/17 year-end forecasted budget. The following chart summarizes the major sources. General Fund Sources FY 2017/18: $282.6 Million Note: Rounding difference may occur Listed below are the descriptions and forecasting context for these major revenues: Sales Tax – Scottsdale’s total city sales tax rate is 1.65 percent. Of that amount, 0.55 percent is dedicated to the specific purposes related to transportation and preservation (which are accounted for in Special Revenue Funds discussed later) and 0.10 percent is dedicated to public safety (accounted for in the General Fund). The remaining 1.0 percent of the sales tax is also accounted for in the General Fund and is available to fund basic municipal services such as police, fire, libraries, and parks. This general-purpose sales tax is the city’s single largest revenue source and is susceptible to peaks and valleys, based on events in the national, state and local economies. The regional economy is showing consistent economic patterns over the past few years and sales tax is expected to grow moderately in the five-year revenue forecast. For FY 2017/18, the anticipated 1.1 percent sales tax revenue is budgeted at $120.7 million, approximately $5.7 million, or 5.0 percent, over the FY 2016/17 year-end forecast of $114.9 million. Both amounts have been adjusted to incorporate the effect of Arizona Department of Revenue (ADOR) taking over administration, collection, and reporting of sales tax as of January 1, 2017. Payments from ADOR are received weekly rather than daily which resulted in a one-time reduction in City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 13 - Table of Contents OVERVIEW | Executive Summary OVERVIEW | How to Use This Book collections related to the timing of payments being received. Additionally, beginning in FY 2016/17 the portion of sales taxes collected related to food sold for home consumption was transferred to the city’s Capital Improvement Plan. The current fiscal year represents year two of a three year phase-in, with the expected transfer for FY 2017/18 totaling $5.0 million. The final year phase-in transfer is estimated at $7.7 million, at which point slight annual adjustments will occur based on the forecasted sales tax collections. State Shared Revenue – These revenues are derived from the portion of the state’s sales and income taxes that are shared with Arizona cities and towns, based on a statutorily determined formula, primarily driven by population. These revenues are also derived from part of the vehicle license fees collected by Maricopa County (25 percent of the net revenues collected for the licensing of motor vehicles by the county are distributed back to the cities and towns based on population). Charges for Services/Other – Charges for Services include numerous revenues such as, building permit fees/charges, recreation fees, fire department fees, WestWorld fees, property rentals, and court and library fines. Certain components of this revenue source are subject to dramatic peaks and valleys from year to year. For example, building permit fees are based on developers’ interest in construction projects and ability to secure financing for the projects. Construction activity is expected to grow modestly, but as the city reaches build-out this funding will transition from new construction to redevelopment. Franchise Fees & In-Lieu – This category represents revenues from the utility providers and is fairly constant from year-toyear. Transfers In – This category represents authorized exchanges between funds. Enterprise in-lieu franchise fees of $7.2 million account for 79 percent of the General Fund transfers in. Property Tax – For FY 2017/18, the city’s total adopted primary property tax levy in the General Fund is $27.2 million, which is an increase of $0.9 million over the prior year levy mainly due to the 2 percent statutory adjustment and new construction. The prior year primary property tax rate of $0.5071 cents decreased by $0.0115 to $0.4956 cents per $100 of assessed valuation in FY 2017/18. General Fund - Uses The adopted FY 2017/18 General Fund uses budget is projected to be approximately $318.9 million (including $29.8 million in contingency and reserves). Included this coming year is $8.7 million to be used for one-time items such as: the Parker Case Ruling settlement regarding retirement contributions for sworn and elected personnel ($7.8 million); maintaining or improving city owned assets and other capital improvements ($0.8 million); and a class and compensation study ($0.2 million). The following chart provides a summary of the General Fund uses. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 14 - Table of Contents OVERVIEW | Executive Summary OVERVIEW | How to Use This Book General Fund Uses FY 2017/18: $318.9 Million Note: Rounding difference may occur General Fund Ending Balance The FY 2017/18 budget includes the following: General Fund Reserve – This reserve is budgeted to be $26.8 million at June 30, 2018; or 10 percent of annual General Fund operating expenses per City Council adopted financial policy. Use of the reserve requires City Council approval and will only be used to protect Scottsdale in times of unforeseen emergencies or catastrophic impacts to the city. Maintaining a sufficient Genera Fund reserve also preserves the city’s highest possible bond ratings from all three major rating agencies. Operating Contingency – The budget includes a $3.0 million operating contingency to meet unforeseen expenses during the year. The operating contingency can only be used after it is determined that existing resources could not be used and requires City Council approval. Undesignated, Unreserved Fund Balance – An undesignated, unreserved fund balance of $16.4 million is expected at June 30, 2018. The undesignated, unreserved fund balance represents accumulated surpluses of prior years. Special Revenue Funds The city accounts for sources earmarked for specific purposes – by law or city policy – through Special Revenue Funds. There are four Special Revenue Funds – Transportation Fund, Preservation Fund, Special Programs Fund, and the Tourism Development Fund. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 15 - Table of Contents OVERVIEW | Executive Summary OVERVIEW | How to Use This Book The Transportation Fund accounts for Highway User Revenue Fund (HURF) dollars shared with cities from state gas taxes. The fund also includes revenues from sales tax (0.20 percent) and the State’s Local Transportation Assistance Fund, which is funding from lottery proceeds and it is distributed to cities and towns through an annual application process. Total sources are expected to be about $39.2 million. Uses total about $36.6 million; $26.1 million represents operating expenses and $10.5 million for transportation capital projects, which per financial policy is 50 percent of the transportation sales tax revenue. The operating expenses are those necessary to operate and maintain the city’s transportation system. The largest expenses include transit contracts, trolley maintenance and the street overlay program. The Preservation Fund is used to account for sources and uses related to the acquisition of the Scottsdale McDowell Sonoran Preserve. Funding comes from the 1995 (0.20 percent) and 2004 (0.15 percent) voter-approved sales tax. Under the sales tax ballot language, the preservation sales tax revenues are to be used only for preserve acquisition, preserverelated construction and trailheads. These sales tax revenues are forecasted to be $37.8 million. Approximately $31.9 million of this amount will be required for debt service payments for debt already issued for land purchases. The ending fund balance on June 30, 2018 is expected to be $30.0 million. The timing and amount of any future preservation bond issuances depends on revenue and the availability and price for state lands. The Special Programs Fund is a collection of smaller restricted sources dedicated to specific uses. The services included in these various programs are intended to be self-supporting and not subsidized by the General Fund. Examples of these funds include Public Safety - Police racketeering influenced corrupt organization (RICO) funds, the City Court’s court enhancement funds (CEF), and the McCormick-Stillman Railroad Park funds. The Tourism Development Fund is a special revenue fund created to account for transient occupancy (bed) tax revenues and Fairmont Princess Hotel Lease payments both of which are to be used for tourism related activities and General Fund support. Ordinance No. 4018, approved by Scottsdale City Council in May 2012, identifies the authorized expenditures to be made from this fund. The fund currently has annual sources of $21.1 million, annual uses of $19.2 million and a projected June 30, 2018 ending fund balance of $14.6 million. Debt Service Fund Debt Service Funds are designated for payment of long-term debt. Total sources are $89.1 million for FY 2017/18. A total of about $86.0 million is planned for debt service payments in FY 2017/18, which is approximately $2.9 million more than the FY 2016/17 year-end forecast. Enterprise Funds Enterprise funds account for the city’s water and water reclamation, solid waste and aviation services, which operate as stand-alone businesses. User fees are assessed to cover cost of services. Water & Water Reclamation Funds – Revenue requirements for the water enterprise fund are significantly impacted by the rising cost of raw water provided by the Central Arizona Project (CAP). The cost of CAP water is projected to rise substantially through the five year planning period. Other cost factors affecting the Water Fund revenue requirements over the five year planning period include:  Long term capital and associated operating impacts costs of federal water quality regulations (i.e., arsenic and disinfection by-products) enacted by the U.S. Environmental Protection Agency (EPA)  Capital costs for rate-funded water treatment and distribution system improvements to address aging infrastructure replacement needs identified through the asset management program effort City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 16 - Table of Contents  OVERVIEW | Executive Summary OVERVIEW | How to Use This Book Operating cost increases for preventative maintenance Increases to base fees were adopted for FY 2017/18 to better reflect the recovery of fixed operating costs and were adjusted to capture the demands placed on the system. Overall, the water base fee and rate adjustments are forecasted to generate an annual revenue increase of approximately $2.6 million, or 2.9 percent, and are effective November 1, 2017. Additional water rate and charges updates were also adopted for FY 2017/18 such as: an increase of the out of city water surcharge; an increase to the bulk water rate; a new automatic meter reading technology turn-off charge; a new commercial private fire suppression charge; and a new residential/commercial water hauler base fee. Finally, to address cost recovery, several increases to water miscellaneous charges were adopted to meet the city’s financial policy that charges recover all direct and indirect costs of service. Miscellaneous water charges, i.e. water meter installation, hydrant meter installation and removal, etc., are assessed to specific users of the service so that general rate payers do not bear the burden. Cost drivers that affect water miscellaneous charges include installation of smart meters and the rising cost of water meters. Other water miscellaneous charges have increased due to higher labor rates and equipment costs which have risen due to general inflation. Water Reclamation Fund – Revenue requirements for the Water Reclamation Fund are significantly impacted by the Sub Regional Operating Group (SROG) multicity water reclamation plant operating costs. Other cost factors affecting the Water Reclamation Fund revenue requirements over the five year planning period include:  Capital costs for rate-funded water reclamation treatment and collection system improvements to address aging infrastructure replacement needs identified through the asset management program effort  Wastewater collection system maintenance and improvements that are essential to ensure regulatory compliance with Capacity, Management, Operations and Maintenance (CMOM) regulations and minimize wastewater system overflows  Operating cost increases for compliance with federal regulations  Operating cost increases for preventative maintenance To address cost recovery and to account for the fixed costs demands related to the relative flows and loading experienced by the water reclamation system, the city approved modifications to the water reclamation rates which will increase revenue by 2.6 percent, or approximately $1.0 million. In addition, a water reclamation surcharge increase to out-of-city customers has also been adopted for FY 2017/18 to cover higher labor rates and equipment costs which have risen due to general inflation. Solid Waste Fund – There residential solid waste program indicates that existing rates and fees will generate sufficient revenues to cover forecasted costs and fund an operating reserve; therefore, no residential solid waste adjustments were included for FY 2017/18. During the FY 2016/17 commercial rate increase, a second rate increase in the commercial program was expected in FY 2017/18. However, even with current projections indicating that the revenue in the commercial program has declined slightly, operational improvements have led to lower operating costs. Therefore, no commercial rate increases were included in FY 2017/18. Commercial rate increases will be reassessed in FY 2018/19 and considers the current rate base, operational improvements and continued efforts on the community solid waste and recycling strategic plan. Aviation Fund – The current five year financial plan indicates that existing rates and fees will generate sufficient revenues to cover the forecasted costs and fund an operating reserve; therefore, no adjustments to the aviation rates were included in the FY 2017/18 adopted budget. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 17 - Table of Contents OVERVIEW | Executive Summary OVERVIEW | How to Use This Book Internal Service Funds Internal Service Funds account for services and equipment provided to all city divisions by centralized departments. The Fleet Management Fund accounts for the costs of operating, maintaining, and acquiring all of the city’s vehicles and other rolling stock. User divisions are assessed maintenance and operation costs ($8.6 million), acquisition costs ($8.0 million), and fuel costs ($3.3 million). Fleet Management establishes, collects, and manages funds to provide acquisition and/or replacement of approved City of Scottsdale fleet assets based on life cycle cost analysis performed on each equipment class. Fleet Management, in cooperation with the using division, calculates an annual rate for each individual asset based on condition, suitability for the service, current economy, the repair history, the actual utilization rate of each asset and other applicable factors. The fund balance of about $7.8 million estimated at June 30, 2018 represents funds previously collected for maintenance, operations and vehicle/equipment acquisitions that will be expended in future years. The Personal Computer (PC) Replacement Fund accounts for the uses associated with purchasing computers, monitors and printers. Acquisition of computers, monitors and printers is charged to the city divisions as an internal operating charge based on the quantity and type of hardware used. For FY 2017/18, user divisions are assessed estimated costs of $1.0 million – leaving an estimated ending fund balance of $1.7 million on June 30, 2018. The Risk Management Fund accounts for the activity related to the city’s property, liability, and workers compensation programs. User divisions are assessed estimated costs of $9.7 million. The estimated ending fund balance on June 30, 2018 of about $20.8 million is within the actuarial estimate of the reserves required to ensure the long-term sustainability of the fund and complies with the governing body’s (Loss Trust Fund Board) requirement to maintain an 85 percent confidence level in the actuarial assessment. The Healthcare Self-Insurance Fund accounts for the activity related to employee healthcare programs (medical and dental). The estimated $30.9 million in healthcare costs is shared by the city, its employees and public safety disabled retirees. For FY 2017/18, there was a 1.3 percent premium rate increase, or $0.9 million, in healthcare. The benefits plan includes a tobacco surcharge of $20 per month for employees and/or family members who self-report the use of tobacco products. Additionally, employees and applicable spouses/partners can earn an incentive payment of up to $240 by completing a wellness exam and health risk assessment to help offset the increase in premiums. New in FY 2017/18 is an additional $20 per month incentive available to employees who, through their doctors, report blood pressure results within certain approved ranges. Beginning in FY 2017/18 the city implemented an annual city contribution to a Health Savings Account (HSA), changed prescription benefits to include more cost effective options, and added an additional health plan that offers reduced premiums for those that utilize only those doctors in the network. The estimated ending fund balance on June 30, 2018 of $8.0 million includes a reserve for large claims beyond what was anticipated and for incurred but not reported claims and an operating contingency used only for unforeseen emergencies. Grant Funds and Special Districts Fund Each year the city receives Grant Funds from a variety of federal, state, regional and local agencies. Within the $12.1 million total grants are two larger grants – Section 8 Housing at $6.1 million and the Community Development Block Grant (CDBG) at $2.2 million. In addition to numerous identified smaller grants, the city includes $4.5 million in the grant budget for anticipated and/or unidentified future grants. This gives the City Council the budget authority to accept and spend grant funds that are not specifically known at the time the budget is adopted. This practice also allows the city to comply with state budget laws regarding annual expenditure limits. The ending fund balance of the individual grants is carried forward to future periods, re-budgeted, and is available to be spent solely for the intended purposes. A Special Districts Fund is used to account for the proceeds received from property owners in the city’s more than 355 street light districts. The intention is that only the amount needed to provide the service is assessed to the customer. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 18 - Table of Contents OVERVIEW | Executive Summary OVERVIEW | How to Use This Book Sources and uses are estimated at $0.6 million for FY 2017/18. If an ending fund balance of the Special Districts Fund exists, it is carried forward to future periods and is available to be re-budgeted but must be spent solely for the intended purposes. The fund balance is used to lower assessments. Capital Improvement Plan A separate, key component of the city’s annual financial plan is the five-year Capital Improvement Plan (CIP) for infrastructure and public facilities – including roads, water and water reclamation improvements, parks, buildings and information technology. Projects listed in the capital budget are funded by a combination of funding sources and typically take multiple years to complete. Some of the various funding sources include the city’s transportation sales tax; voter approved general obligation bonds, user fees, grants, Proposition 400 regional transportation sales tax, voter-approved preservation sales tax, development impact fees and General Fund transfers. The city established a fund for each funding source to account for the diverse resources used to pay the acquisition or construction of major capital facilities. Below is a brief summary of the $522.6 million capital budget highlights by program, along with some notable examples in each capital program area: Community Facilities ($17.5 million) – focuses on providing parks, park improvements, multiuse paths, neighborhood enhancements, youth sports lighting, aquatic centers, library facilities and senior centers. Approximately 3.3 percent of the CIP addresses the needs of this program. Significant Community Facilities projects include the initiation of the design to Renovate Vista del Camino Park/Indian Bend Wash Area and the continuation of the design and construction of the various Downtown sidewalk and lighting projects. Preservation ($47.6 million) – addresses the goal of preserving the character and environment of Scottsdale. This goal is met by land acquisition activities for the Scottsdale McDowell Sonoran Preserve for the purpose of maintaining scenic views, preserving native plants and wildlife, and providing public access to the McDowell Mountains and Sonoran Desert. Approximately 9.1 percent of the CIP addresses this program. Significant preserve projects include the North Area Access Control and Stabilization, the North Area Trail Construction and the Pima/Dynamite Trailhead. Drainage and Flood Control ($8.8 million) – addresses flood plain mapping, meeting regulatory requirements, and identifying and correcting hazards to reduce future flood damage potential. This is accomplished through the use of detention basins, culvert and channel projects, and a program of neighborhood drainage improvements. Approximately 1.7 percent of the CIP addresses the drainage and flood control needs of the city. Major Drainage and Flood Control projects include the initiation of construction for the Granite Reef Watershed Phase 1 improvements between Indian School and McDonald Drive. Public Safety ($18.6 million) – addresses the construction, acquisition, and purchase of capital assets for the Police and Fire Departments, such as fire and police stations, training facilities and automation systems related to fire and police operations. Approximately 3.6 percent of the CIP addresses the public safety needs of the city. The Public Safety budget includes key projects such as the design of the relocation of Fire Station 613, the design and construction of Fires Station 616 and the Closed Circuit Television Security Camera System and Access Control Replacement. Service Facilities ($20.1 million) – addresses the goal of coordinating land use and infrastructure planning. These programs achieve this goal through the renovation of current facilities and technology necessary for the efficient and effective operations of the city. Approximately 3.8 percent of the CIP addresses this program. Service Facilities projects include Facilities Repair and Maintenance Program, Network and Server Infrastructure replacement program and begin design and construction of a Fleet Fuel site. Transportation ($163.5 million) – addresses the multi-modal transportation needs. Approximately 31.3 percent of the CIP addresses the transportation needs of the city. Significant Transportation projects include an Airport Terminal Remodel, the City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 19 - Table of Contents OVERVIEW | Executive Summary OVERVIEW | How to Use This Book extension of Raintree Drive from Scottsdale to Hayden Roads, the Mustang Transit Passenger Facility and the Pavement Overlay Program. Water Management ($246.6 million) – focuses on the capital needs required to deliver safe, reliable water and providing water reclamation services. This program also addresses the requirement to achieve federal and state regulations. Approximately 47.2 percent of the CIP addresses the water and water reclamation needs of the city. Significant projects such as Reclaimed Water Distribution System (RWDS) Improvements, the Wastewater Treatment Facility Improvements, the Booster Station Upgrades, the Frank Lloyd Wright 24-inch Transmission Main and Booster Station 83B Modifications and the Thomas Groundwater Treatment Facility. The five-year CIP uses conservative financial forecasts and reflects only those high priority projects expected to be started and often completed during the next five years. This approach helps the city manage operating costs for new facilities and avoids raising expectations for projects that are not well defined. The budget continues the practice of leveraging one-time elastic revenue from the General Fund (e.g., construction sales tax and development fees) to help pay for capital projects. The municipal bond rating agencies view this as a sound fiscal practice. In FY 2017/18, the budget assumes the General Fund will transfer a total of $8.2 million to the CIP. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 20 - Table of Contents Overview OVERVIEWHow | How to Use ThisBook Book to Use This The City of Scottsdale’s FY 2017/18 budget is comprised of three volumes: Volume One - Budget Summary includes the city’s award winning annual report. The report is produced for taxpayers and demonstrates the city’s commitment to good government and responsible fiscal action in a citizen-centric format. The Overview section of Volume One includes the City Manager’s Adopted and Proposed Budget Transmittal letters. The letters are used to transmit the adopted and proposed budgets to City Council and highlight the prevailing economic condition under which the budget was prepared. The section also includes an Executive Summary which highlights items, issues and trends that shaped the FY 2017/18 budget. This section describes in further detail the city’s budget development process including: • Roles and responsibilities of City Council, divisional staff and review teams • Budget adoption, implementation and amendment processes • Use of contingency/reserves • Basis of accounting used to prepare the budget • Operating and capital budget relationship This section includes a budget planning and development calendar to offer a visual timeline of the strategic planning process along with the city divisional staff that support the budget development efforts. This section concludes with a summary of the city’s adopted Comprehensive Financial Policies and Governing Guidance, which are used to build the budget and manage the city’s finances. The Budget by Fund section begins with Fund Accounting - Fund Types which provides a description of the generic governmental fund types used by the city. The remainder of this section provides a total budget overview, total appropriation, fund overview, fund summary and Five Year Financial Forecast as well as information on the sources, uses, transfers, fund balance/reserve/contingency, including Sales Tax Five Year Forecast by Business Category, Debt Service Expense, Long-Term Debt Outstanding, Property Tax Supported Debt, and Legal Debt Margins. Volume Two - Division Operating Budget provides detailed information on each of the city’s divisions, prior year highlights, priorities, staffing, and a summary of the operating budgets by expenditure category and the applicable funding sources. This volume provides the following detailed information: • Authorized personnel pie charts displaying personnel by division and funding source • A listing of all authorized personnel positions by division and by division and fund • A listing of all authorized personnel positions by division, department and title • The city’s FY 2017/18 classification/compensation schedule • Summaries of the operating budget by division, department and account category/funding source • A summary of each division’s/department’s relationship with the city’s strategic goals • Operating projects listed by division • Charted staffing and expenditure summaries, descriptions of services provided, prior year achievements, current year objectives, charted performance measures, operating budgets by expenditure category and the applicable funding sources, as well as significant changes, performance measures, and volunteer information Volume Three - Capital Improvement Plan provides the basis for control of expenditures for the acquisition of significant city assets and construction of all capital facilities. A five-year Capital Improvement Plan is developed and updated annually, including anticipated funding sources. This volume provides the following detailed information: • A summary of CIP sources and use of funding • CIP Financial Summary & Five-Year Forecast • Project lists displayed by division and program • CIP operating impacts Volume Three concludes with the Appendix, which includes the City Council’s ordinances reflecting the adoption of the city’s FY 2017/18 budget and property tax levy, a list of Acronyms and a Glossary of terms used throughout the city’s budget. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 21 - Table of Contents FY 2017/18 Adopted Budget City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 22 - Table of Contents Overview City of Scottsdale’s Budget Process Recommended Budget Practices The City of Scottsdale’s budget process incorporates the recommended practices promulgated by the National Advisory Council on State and Local Budgeting (NACSLB). The NACSLB was created to provide tools for governments to improve their budgeting processes and to promote their use. In fulfilling that role, the NACSLB set forth a framework that has provided the context for the development of a set of budget practices for state and local governments. The significance about the practices is that they represent an unprecedented cooperative effort by several organizations with diverse interests to examine and agree on key aspects of good budgeting. The NACSLB was founded by eight organizations representing elected officials, government administrators, and finance professionals at both the state and local government level. The NACSLB’s work focused on long-term financial planning and encourages governments to consider the longer consequences of actions to ensure that impacts of budget decisions are understood over a multi-year planning horizon and to assess whether program and service levels can be sustained. Practices encourage the development of organizational goals, establishment of policies and plans to achieve these goals, and allocation of resources through the budget process that are consistent with goals, policies and plans. There is also a focus on measuring performance to determine what has been accomplished with scarce government resources. The following are excerpts of the NACSLB’s guiding principles and budget practice recommendations. Budget Definition The budget process consists of activities that encompass the development, implementation, and evaluation of a plan for the provision of services and capital assets. A good budget process is characterized by several essential features:  Incorporates a long-term perspective Budget Development Process OVERVIEW | Budget Development Process    Establishes linkages to broad goals Focuses budget decisions on results and outcomes Involves and promotes effective communication with stakeholders These key characteristics of good budgeting make clear that the budget process is not simply an exercise in balancing revenues and expenditures one year at a time, but is strategic in nature, encompassing a multi-year financial and operating plan that allocates resources on the basis of identified goals. A good budget process moves beyond the traditional concept of line-item expenditure control, providing incentives and flexibility to managers that can lead to improved program efficiency and effectiveness. Mission of the Budget Process The mission of the budget process is to help decisionmakers make informed choices about the provision of services and capital assets and to promote stakeholder participation in the process. The term stakeholder refers to anyone affected by or who has a stake in government. This term stakeholder includes, but is not limited to: citizens, customers, elected officials, management, employees, businesses, vendors, other governments, and the media. The budget process should accomplish the following:  Involve stakeholders  Identify stakeholder issues and concerns  Obtain stakeholder support for the overall budgeting process  Achieve stakeholder acceptance of decisions related to goals, services, and resource utilization  Report to stakeholders on services and resource utilization, and serve generally to enhance the stakeholders’ view of government The importance of this aspect of the budget process cannot be overstated. Regular and frequent reporting is necessary to provide accountability and educate and inform stakeholders. Communication and involvement are essential components of every aspect of the budget process. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 23 - Table of Contents Overview Principles and Elements of the Budget Process The budget process consists of four broad principles that stem from the definition and mission previously described. These principles encompass many functions that spread across a governmental organization. They reflect the fact that development of a balanced budget is a political and managerial process that also has financial and technical dimensions. Each of the principles of the budget process incorporates components or elements that represent achievable results. These elements help translate the guiding principles into action components. Individual budgetary practices are derived from these elements and are a way to accomplish the elements. The principles and elements provide a structure to categorize budgetary practices. 1. Establish Broad Goals to Guide Government Decision Making – A government should have broad goals that provide overall direction for the government and serve as a basis for decision-making.  Assess community needs, priorities, challenges and opportunities  Identify opportunities and challenges for government services, capital assets, and management  Develop and disseminate broad goals 2. Develop Approaches to Achieve Goals – A government should have specific policies, plans, programs, and management strategies to define how it will achieve its long-term goals.  Adopt financial policies  Develop programmatic, operating, and capital policies and plans  Develop programs and services that are consistent with policies and plans  Develop management strategies 3. Develop a Budget Consistent with Approaches to Achieve Goals – A financial plan and budget that moves toward achievement of goals, within the constraints of available resources, should be prepared and adopted.  Develop a process for preparing and adopting a budget  Develop and evaluate financial options Budget Development Process OVERVIEW | Budget Development Process  Make choices necessary to adopt a budget 4. Evaluate Performance and Make Adjustments – Program and financial performance should be continually evaluated, and adjustments made, to encourage progress toward achieving goals.  Monitor, measure, and evaluate performance  Make adjustments, as needed The NACSLB’s work goes on to identify 59 practices to achieve the higher-level activities identified in the principles and elements of budgeting. Scottsdale’s budget process attempts to incorporate all of the NACSLB’s recommended practices. Budget Roles and Responsibilities Every City of Scottsdale employee plays a role in the city’s budget — whether in its formulation, preparation, implementation, administration, or evaluation. Ultimately, of course, each division director, through the city manager, and the charter officers, is accountable to the City Council for the performance of program personnel in meeting City Council’s broad goals and specific work plan objectives within allocated resource limits. The actual budget responsibilities of the employees are identified more specifically below: The program manager is responsible for preparing an estimate of cost requirements and revenues, if applicable, for the current fiscal year, projecting the base budget requirements for the next fiscal year, and developing other requests that change or revise the program so that it will be more effective, efficient, productive, and economical. The city divisions have budget liaisons that coordinate the day-to-day budget management within their respective divisions along with the budget staff. The budget liaisons serve as the vital communication link between their city division and the Budget Department on matters related to their specific operating budget. Budget liaisons are responsible for revenue and expenditure forecasts, monthly expenditure and revenue variance analysis, calculating user fees, monitoring the budget, support to the Accounting Department in the Comprehensive Annual Financial Report preparation, and City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 24 - Table of Contents Overview preparing budget review materials for the city treasurer, division directors, city manager, City Council, media and citizens. The capital improvement plan (CIP) liaisons essentially serve the same role as the budget liaisons; however, their focus is on the coordination of capital projects, multi-year capital planning and capital project operating impacts with the budget staff. In some cases, the same individual serves as both the divisional budget liaison and CIP liaison. A list of budget liaisons and CIP liaisons and their area of responsibility appears later in this section. The CIP technology review team and CIP construction review team are comprised of supervisors and managers from various city divisions. These cross-divisional teams are responsible for the initial review of all of the city’s capital projects. Their reviews are focused on timing and cost considerations, compiling lifecycle costs, and preparing a preliminary capital improvement plan recommendation for review and revision by the division directors, budget staff, city treasurer, city manager, City Council and various citizen boards and commissions. The division directors and charter officers are responsible for reviewing historical performance, anticipating future problems and opportunities, considering alternative solutions, and modifying and assembling their program data into a cohesive budget information package. Each division director is responsible for evaluating, reviewing, justifying and prioritizing all operating and capital budget requests for their division. Only those requests that a division director believes support the City Council’s broad goals, the city’s general plan, city manager’s work plan, administrative direction and program objectives are to be submitted to the budget staff. The senior budget analysts are responsible for preparing the multi-fund short-range and long-range revenue and expenditure forecasts, coordinating with budget liaisons in calculating user fees, calculating the indirect cost rate, developing the process and related forms for preparing and monitoring the budget, coordinating the compilation of budget data, analyzing operating and capital budget requests, supporting the Budget Development Process OVERVIEW | Budget Development Process Accounting Department in the Comprehensive Annual Financial Report preparation, asset monitoring, evaluating and summarizing budget requests from divisions and preparing budget review materials for the city treasurer, division directors, city manager, City Council, media and citizens. The city treasurer and division directors collaborate in developing programmatic, operating, and capital policies and financial plans that help define how Scottsdale will achieve its long-term goals. They are responsible for reviewing the program operating budget and capital budget requests and working with program managers to develop service recommendations that are consistent with City Council’s broad goals, management strategies and the city’s adopted comprehensive financial policies. The city manager is responsible for reviewing the multiyear, multi-fund financial plan and submitting a balanced citywide proposed budget to the Mayor and City Council, which supports their broad goals. From December through May, the city manager holds bi-weekly meetings with the budget director and city treasurer to ensure the staff is preparing a proposed budget that addresses City Council’s priorities and to provide guidance on key policy issues related to the budget development. The Mayor and City Council set the direction for staff related to the forthcoming budget by establishing broad goals for the organization to serve as a basis for decisionmaking. The City Council reviews key aspects of the city manager’s proposed budget such as -- the city’s multiyear financial plan including an examination of the revenue forecast and related assumptions, employee compensation including healthcare and retirement costs, changes to rates and fees, comprehensive financial policies, debt schedules, property tax rate and the capital budget. The budget process culminates in late spring with the Mayor and City Council holding public budget hearings. The Mayor and City Council are ultimately responsible for the review of the city manager’s proposed budget, tentative budget adoption (mid-May) and final adoption of the budget (early June). All City Council budget discussions are open to the public for comment and are broadcast on CityCable 11 and the city’s web page. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 25 - Table of Contents Overview The CIP Subcommittee is comprised of a subset of members of the City Council. Subcommittee meetings are held regularly over the course of the fiscal year. In the fall, members identify city capital needs and funding sources and discuss long term CIP financial planning. In the spring, members review the city’s proposed CIP and make funding recommendations to the full City Council. Ultimately, their recommendations are discussed at public meetings prior to budget adoption. Needs Assessment and Financial Capacity Phase In this phase, which begins in the late summer and continues up to the final budget adoption, the staff compiles and updates on an ongoing basis the city’s multi-fund, multi-year revenue forecast. The first year of the revenue estimates is the most critical in the process, as that will ultimately define the expenditure limitations for the forthcoming budget year. The multi-year revenue perspective further refines the city’s planning for current and future period expenditures — with the goal of not adding service areas, services or staff which do not have a ‘sustainable’ funding source over the five year planning timeframe. The preliminary assumptions are used to forecast the city’s fiscal capacity and provide the financial framework within which the proposed division budget service levels, capital budget operating impacts and capital infrastructure project budgets must be developed. Policy/Strategy Development and Prioritization Process Phase In the fall and winter, City Council typically reviews citizen input, citizen board and commission feedback, financial policies, citizen survey results and the most current financial forecast. They discuss broad organizational goals, priorities, and constituents’ suggestions and expectations for Scottsdale. From this, the City Council establishes broad goals and strategic directives, which are the cornerstone for the development of the budget. These broad goals provide the overall direction for Scottsdale and serve as a basis for decision-making. The division directors and senior management staff update city financial policies, plans, programs, and management Budget Development Process OVERVIEW | Budget Development Process strategies to define how the city will achieve the broad goals. It is within this framework that the city staff formulates the proposed operating and capital budgets. Budget Development and Prioritization Process Phase In the early fall, the capital improvement plan (CIP) development begins in conjunction with the city’s multiyear financial forecasts. Initial divisional capital project requests and changes to existing capital projects are reviewed by cross-divisional teams for accurate costing, congruence with city objectives and prioritized using a set of pre-determined criteria. Financing sources are then sought for the highest-ranking projects. The teams involved in this process include the CIP technology review team and the CIP construction review team. The CIP technology review team is made up of mid-level technology managers from various city divisions. The CIP construction review team is made up of mid-level capital project management staff with expertise in public building planning and construction, street improvements, stormwater management, landscaping, etc. The staff, when developing their division operating budget plans, closely considers the ongoing operating impacts of current and proposed capital projects. Staff also considers City Council’s broad goals and strategic directives as they develop program objectives and work plans for the budget period. Later in the fall after the CIP is underway, the city staff update their proposed performance measurements. The performance measurements are developed to assess results and ensure accountability, which enable managers and policy makers to evaluate progress towards stated goals and objectives. The staff also prepares their proposed program operating budgets at this time, using a modified zero-based budget approach, which requires that the budget be prepared solely at the existing service operating levels – no modifications are permitted at this stage of the budget development process. The divisional staff is also asked to evaluate their programs and/or positions for possible trade-offs, reductions or eliminations, or service level changes to offset inflation, contractual, compensation, and benefit cost increases. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 26 - Table of Contents Overview Under the city’s modified zero-based budget approach, any proposed changes in service levels, new programs, population/service growth, additional staff, and program trade-offs resulting in service level reductions/increases must be submitted to the Budget Department in a decision package. A decision package provides extensive analysis and justification for the division’s request and is reviewed by the city manager, city treasurer and budget director during the budget development and prioritization process. In the later stages of the city’s budget development process, decision packages are considered and balanced among numerous competing demands within the city’s available, ongoing resources. When funding needs exceed the city’s funding limits, remedies may include one or more of the following: reduce the base budget, identify new revenues, employ process management tools, and/or form partnerships with other city programs or non-profit organizations. City Management Review and Modification Phase In the early winter, the divisions submit their proposed operating budget and capital project budget requests to the Budget Department. The initial multi-faceted review focuses on ascertaining the divisions complied with the Budget Department’s budget instructions, reviewing the mathematical accuracy and logic of the divisional base budget and capital project requests, and any decision packages. The review also includes a broader assessment of whether the divisional budget proposals address City Council’s broad goals, strategic directives, and service needs while maintaining a citywide perspective ensuring the fiscal integrity of the city (not exceeding forecasted resources/limits). The city manager, division directors, city treasurer, and budget staff collaborate on the development of a recommended five-year financial plan and proposed budget for each fund and then submit the plans to the City Council for review and adoption. The City Council also reviews the proposed multi-year revenue forecasts for reasonableness and the expenditure budgets for efficiencies and alignment with community needs and expectations. Budget Development Process OVERVIEW | Budget Development Process City Council Budget Review and Adoption Phase Throughout the fiscal year, the CIP Subcommittee meets to discuss citywide CIP needs from a policy perspective. In the spring, funding recommendations are discussed at public meetings. Staff presents an overview of the proposed operating and capital budgets to the City Council and citizens for consideration and further public input. The budget is also communicated to the general public through televised public meetings, internet and/or a combination of these formats. The City Council holds public meetings to review key operating and capital budget policy items. The discussions also focus on the city’s five-year financial plans and how the divisions’ operating and capital budgets address citizens’ priorities and City Council’s broad goals. Additionally, the City Council holds meetings to review rates and fees, financial policies and compensation, including benefits. Next, a series of required public budget hearings are held and the City Council adopts the budget and property tax levy consistent with the City Charter and state law. Per the City Charter, the City Council must have tentative adoption of the proposed budget, on or before the second regular City Council meeting in May each year. This meeting is usually held in mid-May. (Note: state law requires on or before the third Monday in July of each fiscal year, the City Council must adopt the tentative budget). Tentative adoption sets the legal maximum expenditure limit (i.e., appropriation) for the coming fiscal year budget. Under the City Charter, final adoption of the budget must occur at the first regular City Council meeting in June. (Note: There is no specific date set by state law for adoption of the final budget. However, for jurisdictions with a property tax, such as Scottsdale, the deadline for adoption of the property tax levy is the third Monday in August. Since state law requires a period of at least 14 days between adoption of the final budget and adoption of the property tax levy, the budget should be adopted by City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 27 - Table of Contents Overview the first Monday in August of each year). Arizona state law requires a “balanced” budget, which is “all-inclusive”. Arizona State Revised Statute (ARS 4217151) defines a “balanced” budget as follow: “Fix, levy and assess the amount to be raised from primary property taxation and secondary property taxation. This amount, plus all other sources of revenue, as estimated, and restricted and unrestricted unencumbered balances from the preceding fiscal year, shall equal the total of amounts proposed to be spent in the budget for the current fiscal year.” Under Arizona state law “all-inclusive” means if an item is not budgeted (i.e. does not have an appropriation), it cannot legally be spent during the fiscal year. Therefore, the budget must include sufficient appropriation and contingency provisions for expenditures related to revenues (e.g., possible future grants) that cannot be accurately determined or even anticipated when the budget is adopted in June. This budgetary flexibility allows the city to comply with the Arizona state law and to pro-actively pursue emerging revenue sources as the budget year unfolds. Expenditures (i.e., appropriations) associated with items such as possible future grants/revenues may not be spent without City Council’s prior approval at a public meeting. Arizona State Revised Statutes only requires communities to prepare budgets for two funds — the General Fund (ARS 42-17101) and Highway User Revenue Fund (ARS 28-6533) (See the Transportation Fund). In addition to these two funds the city prepares budgets and requests legal appropriation for the following funds — Special Revenue, Debt Service, Enterprise, Internal Service, Grants, and Capital Improvement Plan Funds. The ordinance adopting the annual budget requires City Council authorization for expenditures from the aforementioned funds, which in the aggregate constitute the city’s total operating, capital budget and contingency/reserves for purposes of complying with the state’s balanced budget and legal maximum appropriations requirements. Budget Development Process OVERVIEW | Budget Development Process Implementing, Monitoring, and Amending the Budget Phase In July, the city staff begins the process of implementing the newly adopted budget and is accountable for budgetary control throughout the fiscal year. Sources and uses patterns are examined, compared to budget plans, and corrective action, if necessary, is taken during the fiscal year. The senior budget analysts and divisional budget liaisons meet every month to review current demographic, economic and financial trends, which may impact the city, and to discuss possible strategies to ensure the city’s fiscal integrity. City management and City Council are also provided monthly financial updates and reports disclosing actual revenue, expenditure, and fund balance performance as compared to the budget plan. Upon the final adoption of the budget, staff implements the operating budget and the capital improvement plan. The final operating budget and capital improvement plan books are typically published by September. Scottsdale’s programs and activities are periodically reviewed to determine if they are achieving City Council’s broad goals, accomplishing strategic objectives and making efficient use of limited resources. City values of “plan and innovate for the future” and “focus on quality customer service” along with city manager directed studies of several programs during the next budget year help communicate this expectation. The City Treasurer’s staff, division directors, and the internal audit staff all provide assistance in their review of programs. The staff of every city program is expected to conduct self-assessments and develop cost and quality measures of efficiency and effectiveness. Internal performance measurements are developed, reviewed and reported on quarterly. Scottsdale’s culture, along with the city value of “listen, communicate, and take action” stresses open communication and stakeholder involvement determining satisfaction with programs and in identifying areas needing additional attention. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 28 - Table of Contents Overview Budget Development Process OVERVIEW | Budget Development Process Ongoing monitoring of the city’s financial performance is required of all program managers on a monthly basis. Written budget to actual expenditure variance reports must be submitted monthly by all city divisions explaining any significant variances and provide a solution for corrective action. Additionally, the divisions must be able to explain in writing to the Budget Department the projected year-end budget savings and/or fund balances. The City of Scottsdale’s operating budget is adopted at a division level and the capital improvement plan is adopted at a project level. All amendments to the budget that require a budget transfer from the Contingency/Reserve Funds require City Council’s prior approval at a public meeting before the adjustment can be made by staff. If approved, the transfer is processed in the budget system by the Budget Department. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 29 - Table of Contents Overview Budget Development Process OVERVIEW | Budget Development Process Needs Assessment and Financial Capacity A ugust - June Involve Public and Gather Input Forecast Multi-Year Revenues Identify and Evaluate Infrastructure Needs Create Fiscal Forecasting Assumptions Develop Financial Trends Review Monthly Financial Updates Policy/Strategy Development and Prioritization Process Se pte mbe r - Ja nuary Hold Public Budget Forums and Hearings Establish City Council's Broad Goals and Strategic Directives Update Financial Policies, Plans, Programs, Management Strategies Present Key Issues Oc tobe r - Ja nuary Capital Improvement Plan Five-Year Financial Plan Operating Budget City Management Review and Modification Janua ry - Ma rc h Capital Improvement Plan Five-Year Financial Plan Operating Budget Address City Council's Broad Goals Strategic Directives Maintain Citywide Perspective Ensure Fiscal Integrity of the City City Council Budget Review and Adoption A pril - June Present Proposed Operating Budget and Capital Improvement Plan Implementation, Monitoring and Amending the Budget July - June Implement Adopted Budget Monitor Citywide Financial Performance Budget Process Review & Adjustment City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 30 - Hold CIP Subcommittee Public Meetings Budget Development and Prioritization Phase Table of Contents Overview Use of Contingency/Reserve Funds Contingency/Reserve Funds are strictly defined in the city’s financial policies adopted by City Council annually and used when additional funds are necessary to offset unexpected expenditure increases so that budgeted citizen service measures can be maintained; unanticipated grants are received; and when unanticipated and/or inadequately budgeted events threaten the public health or safety. Use of Contingency/Reserve Funds is to be utilized only after all alternative budget funding sources and other options have been fully considered. All Contingency/Reserve Fund requests require a written justification and an explanation of the fiscal impact, which is reviewed and approved in writing by the city treasurer, budget director, the applicable division director, and city manager before being presented to City Council for consideration in a public meeting. Budgetary and Accounting Basis Scottsdale’s budget is prepared on a basis generally consistent with Generally Accepted Accounting Principles (GAAP). The city’s governmental funds consist of the General Fund, Special Revenue Funds, Debt Service Funds and Capital Projects Funds. Governmental fund type budgets are developed using the modified accrual basis of accounting. Budget Development Process OVERVIEW | Budget Development Process  Certain revenues, expenditures, and transfers are not included in the budget, but are accrued and reported in the CAFR. For example, increases or decreases in compensated absences are not included for budget purposes, but are presented in the CAFR.  Franchise fees charged to the Enterprise Funds are accounted for as transfers in or out in the budget, but are recorded as revenues and expenses in the CAFR.  Capital outlays in the Enterprise Funds are presented as expenses in the budget, but are recorded as assets along with associated depreciation expenses in the CAFR.  Debt service principal payments in the Enterprise Funds are expenses in the budget, but reported as reduction of long-term debt liability in the CAFR.  Certain debt service principal and interest payments are accounted for as expenses in the General Fund for the budget, but are reported as expenses in the Debt Service Funds in the CAFR.  For budget purposes the Risk Management Fund presents claim expenditures on a cash basis, while in the CAFR the claim expenditures reflect an accrual for “incurred but not reported” (IBNR) claims. Under the modified accrual basis, revenues are estimated for the fiscal year if they are accrued (amounts can be determined and will be collected within the current period). Principal and interest on general long-term debt is budgeted as expenditures when due, whereas other expenditures are budgeted for based on the timing of the receipt of the good or service. All actual amounts in the budget document are shown on the budgetary basis to facilitate meaningful comparisons. Budgeted funds include the General, Special Revenue, Debt Service, Enterprise, Internal Service, Grants, and Capital Improvement Plan. Proprietary fund budgets – Water, Water Reclamation, Solid Waste, Aviation and Internal Service Funds – are adopted using the full accrual basis of accounting whereby revenue projections are developed recognizing revenues earned in the period. Expenditure estimates are developed for all expenses incurred during the fiscal year. The City of Scottsdale’s Budget for FY 2017/18 is comprised of three volumes: The major differences between the budget and the Comprehensive Annual Financial Report (CAFR) are: Operating and Capital Budget Relationship Volume One – Budget Summary includes the City Council’s mission statement and broad goals, the city manager’s transmittal letters, executive summary, and adopted financial policies. Volume One also contains a budget by fund section which includes five-year financial forecasts that cover the period FY 2017/18 through FY 2021/22. This section also provides five-year historical summaries for sources and uses by fund. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 31 - Table of Contents Overview Volume Two – Division Operating Budget contains descriptions of services provided by each division staffing summaries, operating budgets by expenditure category and the applicable funding sources, current fiscal year objectives, as well as prior year achievements, significant changes, and performance measures. In addition, included are department operating budgets and their relationship with the broad goals and the general plan Volume Three - Capital Improvement Plan includes the Capital Project Budget and Five-Year Capital Improvement Plan with more detailed information for each project. Capital Project Budget funding sources are matched with budgeted expenditures. Future year projected operating impacts are also included. Finally, there is an appendix which includes the signed budget adoption and property tax levy ordinances, final state forms, lists of acronyms and a glossary. Governmental accounting procedures and state law require expenditures for the five-year capital improvement plan to be budgeted at an amount sufficient to pay for an entire contract, meaning the legal authority is available and appropriated in the period in which a contract is entered into by the city. Therefore, capital expenditures are presented on a budget basis reflecting the total appropriated amount, as opposed to a cash flow basis, which may take several fiscal years to be paid out. For example, a 180-day construction contract entered into in May of fiscal year one would have cash expenditures from May of fiscal year one through October of fiscal year two, however, the entire budget for this contract must be appropriated in fiscal year one, the year in which the contract was entered; any unspent funds at the end of fiscal year one would be carried forward and re-budgeted again in fiscal year two. Funding sources for the five-year capital improvement plan are presented on a budget basis, except for cash transfers in from the operating budget, which are presented on a purely cash basis. These resources are presented in the period that the cash funding will be transferred in order to provide continuity between the operating budget and the capital improvement plan. As a result of presenting the cash transfers in on a purely cash basis, the funding sources may not equal the budgeted expenditures in each period, creating a fund balance as Budget Development Process OVERVIEW | Budget Development Process cash accumulates each year for planned larger capital expenditures in later fiscal years. For further information regarding capital project funding sources and uses, refer to Volume Three - Capital Improvement Plan. Five-Year Financial Plan The city’s five-year financial planning process used to develop the proposed budget is a year-round process. The budget process begins in the early fall with the Budget Office’s initial updating of the five-year financial plan for each of the city’s major funds. The staff reviews the five-year financial plans for the following funds that appear in the budget – General, Transportation, Preservation, Special Programs, Tourism Development, Special Districts, Debt Service, Water & Water Reclamation, Solid Waste, Aviation, Fleet, PC Replacement, Risk Management, and Healthcare. Using the latest fiscal, operational, and legislative information, the staff works collaboratively with the city divisions to update the forecast for the current fiscal year related to the most recently adopted budget and to create a forecast for the coming budget year. The forecasts serve as the basis for the development of the city’s proposed five-year financial plan. In April, the city manager provides the City Council with the updated five-year financial plans for their review and consideration. The staff works with the City Council to review the underlying assumptions and reasonableness of the plans. The plans are used to develop the budget for the coming year (i.e. the first year of the plan) and subsequent years of the five-year financial forecast period. This time is also used to identify future service and financial issues requiring attention during the budget planning process. The five-year financial plans provide the City Council, city management, citizens and municipal bond rating agencies with the benefits of a long-term financial perspective of revenues, expenditures, cash transfers in/out, fund balances, and capital financing options. They also serve as the basis to test the potential impacts of proposed policy and operational modifications and pending legislative changes all intended to avoid City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 32 - Table of Contents Overview subjecting citizens to wide or irregular fluctuations in rates/fees and service levels. Proposed future operating impacts of capital projects are also included in the forecast, which facilitates the planning, integration, and timing of the capital projects into the city’s five-year financial plans. The City Council and city management use the plans to assess the impact of their proposed decisions in a long-range financial context. These decisions may include the proposed addition of new staff, new debt issuances and debt refunding, tax rate changes, the desire to create, modify or eliminate rates/fees, new or expanded services and state legislation changes. Based on the fiscal impact of these decisions, City Council has an opportunity to modify the proposed plans. As noted above, the development and updating of the five-year financial plans is a year-round process. The staff monitors the current budget on a monthly basis and makes adjustments to the estimated annual revenues and expenditures based on the latest economic information, legislative changes and City Council priorities. The revenue and expenditure variances, estimated ending fund balances and the status of the current year contingency usage are reported monthly to the City Council, city management and other stakeholders via the Monthly Financial Update and Monthly Financial Report. The staff also monitors and identifies changes in the financial and economic climates and considers solutions to negative trends, thereby preserving the financial health of Scottsdale. Revenue Forecasting The City of Scottsdale uses both qualitative and quantitative methods for forecasting revenues, blending various techniques to develop conservative and prudent revenue projections. Qualitative revenue forecasting methods used by staff to develop multi-year financial plans include consensus, judgmental, and expert forecasting, while trend analysis is used as a quantitative technique. This balanced approach to revenue forecasting is strongly encouraged by the Government Budget Development Process OVERVIEW | Budget Development Process Finance Officers Association (GFOA), since research shows that forecasting accuracy is improved by combining qualitative and quantitative techniques. According to the GFOA, each method by itself has inherent weaknesses: qualitative methods can be too subjective at times and may be subject to wishful thinking and selective perception on behalf of the forecasters; quantitative methods may fail to consider changing conditions inside and outside a jurisdiction and also tend to discount important historical events. By combining qualitative and quantitative methods, forecasters integrate judgmental assumptions within the forecasting framework to produce more realistic revenue projections. To enhance the revenue forecasting process and gain the broader input into the planning process, the Budget Department staff works collaboratively with the city divisions throughout the year to prepare the revenue estimates. This multi-disciplinary approach and continual reassessment creates a synergy between the central Budget Department staff and the division field staff, which reduces the likelihood of miscommunications in formulating the revenue estimates. The field staff’s participation in the revenue estimates also increases their ownership and accountability for achieving the proposed plan. Expenditure and Year-End Savings Forecasting Each month throughout the fiscal year, the Budget Department staff works with the city divisions to monitor year-to-date actual expenditures against the year-to-date approved budget and prior year actual expenditures. Each division is also required to forecast their year-end expenditures and related expenditure savings. All significant actual or forecasted variances are researched and a reason for the likely variance as well as possible alternatives to resolve the variance is considered by the staff. Pro-active management of the budget to actual/forecasted expenditures allows staff the opportunity to promptly notify city management and the City Council of potential budget concerns. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 33 - Table of Contents FY 2017/18 Adopted Budget City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 34 - Table of Contents OVERVIEW | Budget Calendar BUDGET PLANNING AND DEVELOPMENT FISCAL YEAR 2017/18 CALENDAR Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Strategic Planning Process Conduct Needs Assessment & Financial Capacity Forecast Multi-Year Revenues Evaluate Infrastructure Needs Develop Broad Goals & Strategic Directives Create Fiscal Forecasting Assumptions Develop Financial Trends Update Financial Policies Develop Management Strategies Collect Citizen Input Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Capital Improvement Plan Budget Process CIP Subcommittee Meetings Update Budget Planning Guide Kick-off Meetings Division Review & Preparation Peer Construction & Technology Review Advisory Team Review City Management Review City Council Review & Adoption Tentative/Final Budget Public Hearings Final Adoption Implement Adopted Budget Monitor Citywide Financial Performance Budget Process Review & Adjustment Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Operating Budget Process Update Budget Planning Guide Budget Liaison Update Meetings Internal Service Rates Finalized Kick-off Meetings Division Budget Development User Training: Budget Databases Update Performance Measurements Division Budget Request Submission Line Item Analytical Review City Management Review Finalize Proposed Five-Year Financial Plans Budget Review Sessions with Council Tentative/Final Budget Public Hearings Final Budget Adoption Implement Adopted Budget Monitor Citywide Financial Performance Budget Process Review & Adjustment City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 35 - Table of Contents Overview Budget Liaisons and CIP Liaisons OVERVIEW | Budget Liaisons & CIP Liaisons Budget Liaisons and CIP Liaisons coordinate the budget within their respective divisions/departments. The Budget Liaisons serve as the vital communication link between their city divisions/departments and the City Treasurer’s Office on matters related to their specific operating budget. Budget Liaisons are responsible for the review, analysis, and coordination of information; ensuring the proper completion and submission of forms and documentation; monitoring the internal review process to meet timelines; and facilitating problem resolution throughout the budget process. The CIP Liaisons (identified with an asterisk) essentially serve the same role; however, their focus is on coordination of capital projects and multiyear capital planning with the City Treasurer’s Office staff. In many cases the same individual serves both roles. Division / Department Mayor & City Council City Attorney City Auditor City Clerk City Court City Manager City Treasurer Administrative Services Community Services Community & Economic Development Aviation Economic Development Planning and Development Tourism and Events Transportation WestWorld Public Safety – Fire Public Safety – Police Public Works Water Resources Budget / CIP Liaison Kelli Kuester Danielle Taebel * Sharron Walker Cathleen Butteweg Ken Kung * Brent Stockwell Jaqua Davis * Jennifer Jensen * Bryan Bundy * Carmen Williams * Paula Guidry * Dan VandenHam * Rose Rimsnider / Karen Churchard * Monica Staats * Jennifer Bowley * Teresa Martin / Ryan Freeburg * Christy Alonzo * Monica Staats * Gina Kirklin / Ron Dolan * City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 36 - Table of Contents OVERVIEW | Comprehensive Financial PoliciesComprehensive & Governing Guidance Overview Financial Policies & Governing Guidance Operating Management 1. All divisions will participate in the responsibility of meeting policy goals and ensuring long-term financial health of the city. Future service plans and program initiatives will be developed to reflect current policy directives, projected resources and future service requirements. In order to ensure compliance with policy, sunset provisions will be required on all grant program initiatives and incorporated into other service plans, as appropriate. 2. The budget process is intended to weigh all competing requests for city resources, within expected fiscal constraints. Requests for new, ongoing programs made outside the budget process will be discouraged. 3. Annual budgets shall include documentation that departments met intended objectives (“effectiveness criteria”) and provide value in terms of dollars allocated (“efficiency criteria”). 4. The budget shall be considered balanced if all sources of revenue, as estimated, are equal to, or exceed, the total of amounts proposed to be used in the operating budget for the current fiscal year, by fund. To the extent unencumbered balances from the preceding fiscal year are required to achieve a balanced budget, use of unencumbered balances from the preceding fiscal year will be only as authorized by City Council. 5. The full City Council will solicit citizen input and review the operating and capital budget recommendations from a divisional, program, and goals perspective. 6. Revenues will not be dedicated for specific purposes, unless approved by City Council or required by law. All non-restricted revenues will be deposited in the General Fund and appropriated by the budget process. 7. A diversified and stable revenue system will be developed to protect city services from short-term fluctuations in any single revenue source. 8. Balanced revenue and expenditure forecasts will be prepared annually and include a five-year plan for each fund to demonstrate the city’s ability to adapt to forecast changes in the economy, service demands, and capital improvements. 9. Enterprise (Water, Water Reclamation, Solid Waste Management, and Aviation) user fees and charges will be examined annually to ensure that they recover all direct and indirect costs of service, debt service, provide adequate funding for future capital needs and be approved by the City Council. Any unfavorable balances in cost recovery will be highlighted in budget documents. Rate adjustments for enterprise operations will be developed pursuant to a multi-year financial plan that levels the impact of user rate changes. 10. All other user fees and charges will be examined periodically to determine the direct and indirect cost of service recovery rate, excluding voterapproved debt service. The acceptable recovery rate and any associated changes to user fees and charges will be approved by the City Council. 11. Development impact fees, as permitted by state law, for capital expenses attributable to new development will be reviewed periodically with an engineering assessment to ensure that fees recover all direct development-related expenses and be approved by City Council. Any unfavorable balances in cost recovery will be highlighted in budget documents. 12. The use or replacement of Fleet and Information Technology (PC, phones and copier systems) will be accounted for through the use of a direct or a “rental” rate structure. The rates will be revised annually to ensure that charges to operating divisions are sufficient for operation and replacement of vehicles and other equipment. Replacement costs will be based upon equipment lifecycle financial analysis. 13. Grant funding will be considered to leverage city funds. Inconsistent and/or fluctuating grants should not be used to fund ongoing programs. Programs financed with grant monies will be City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 37 - Table of Contents OVERVIEW | Comprehensive Financial PoliciesComprehensive & Governing Guidance Overview Financial Policies & Governing Guidance budgeted in separate cost centers, and the service program will be adjusted to reflect the level of available funding. In the event of reduced grant funding, city resources will be substituted only after all program priorities and alternatives are considered during the budget process. 14. Alternative means of service delivery will be evaluated to ensure that quality services are provided to our citizens at the most competitive and economical cost. Divisions, in cooperation with the City Manager, City Auditor and City Treasurer, will identify activities or services that could be provided over the long-term more efficiently or effectively by another source and review options/alternatives to current service delivery. The review of service delivery alternatives and the need for the service will be performed on a reasonably periodic or on an “opportunity” basis. 15. Cash and Investment programs will ensure that proper controls and safeguards are maintained. City funds will be managed in a prudent and diligent manner with an emphasis on safety of principal, liquidity, and financial return on principal, in that order. 16. Uncollectible accounts, excluding City Court, will be no more than 0.5 of one percent (1%) of revenue on an annual basis unless otherwise approved by City Council. 17. Any year-end General Fund operating surpluses not needed to restore contingency reserves or cover unforeseen shortfalls in the budget, but in no case less than (1) twenty-five percent (25%) of construction privilege tax revenues; (2) one hundred percent (100%) of net interest income in excess of $1.0 million; and (3) one and one tenths percent (1.1%) sales tax collected on food for home consumption (phased in over three years beginning in FY 2016/-17) will be transferred to the General Fund Capital Improvement Program in the following fiscal year unless otherwise directed by City Council. 18. Addition of personnel will only be requested to meet program initiatives and policy directives; after service needs have been thoroughly examined and it is substantiated that additional staffing will result in increased net revenue or enhanced operating efficiencies. To the extent feasible, personnel cost reductions will be achieved through attrition. 19. Benefits and compensation will be administered in accordance with policy given by City Council. As part of a cost-containment strategy, total costs for health insurance premiums will be shared between the employer, employees and public safety disabled retirees. Total premiums will be evaluated on an annual basis to ensure they are reasonable and competitive and that total premiums are expected to provide adequate funding of anticipated claims and a reasonable level of loss reserves. 20. An annual General Fund transfer will be made to the Benefits Healthcare Self-Insurance Fund to subsidize the cost of providing healthcare benefits to sworn public safety accidental disabled retirees. 21. Property tax will be levied to recover: (1) general obligation debt service and (2) revenues required for the General Fund equal to (a) the prior year’s revenue plus new growth added to the tax role and (b) the prior year’s tort liability payments as approved by City Council. Council may also approve the legally allowable maximum over the previous year’s primary levy. 21A. One hundred percent (100%) of the transient lodging (bed) taxes received by the city shall be deposited into the Special Revenue Fund for Tourism Development. Additionally, the Special Revenue Fund for Tourism Development shall receive one hundred percent (100%) of Princess Hotel lease revenues. As approved by the voters, fifty percent (50%) of the transient lodging (bed) tax revenues will be used for tourism-marketing. Use of the remaining Special Revenue Fund for Tourism City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 38 - Table of Contents OVERVIEW | Comprehensive Financial PoliciesComprehensive & Governing Guidance Overview Financial Policies & Governing Guidance Development revenues will be allocated annually as follows: • $1,500,000 for the General Fund; • $1,200,000 for Events and Event Development; • $500,000 for tourism-related administration and research; • $500,000 for one-time commitments to capital projects, events and event development, or administration and research; • The balance for tourism-related capital projects, in the form of one-time commitments or multi-year annual commitments, not to exceed $600,000 per project. At the end of each fiscal year, any unused funds in the Special Revenue Fund for Tourism Development will be available for use in following years for any of the non-marketing tourism categories (except the general fund category) and may be allocated without limitations, except that they may not be leveraged for multi-year annual commitments, such as debt service payments. 22. Any year-end Transportation Fund operating surpluses not needed to restore contingency reserves or cover unforeseen shortfalls in the budget will be transferred to the Transportation Fund Capital Improvement Program in the following fiscal year unless otherwise directed by City Council. 23. For the purpose of preparing the annual operating budget, the City Manager will include funds sufficient to provide increases of up to five percent (5%) based on performance for each qualified sworn police officer, firefighter, fire engineer and fire captain up to the maximum salary of the pay range unless otherwise directed by City Council. Capital Management 24. A five-year Capital Improvement Plan will be developed and updated annually, including anticipated spending as well as funding sources. Capital improvement projects are defined typically as multi-year efforts which may include purchases or construction of infrastructure or equipment which results in a new capitalized asset costing more than $25,000 and having a useful life of five years or more. No funding commitments will be made for any project in the CIP unless the project has sufficient budget authority in the current budget year to meet the entire amount of the commitment. For each year of the CIP, total anticipated expenditures and commitments will not exceed projected starting fund balance plus total anticipated revenues for that year. 25. Pay-as-you-go Capital Improvement Plan financing should account for a minimum of twenty-five percent (25%) of all capital improvement projects, excluding Preservation and Enterprise, for each five-year planning period. Pay-as-you-go financing is defined as all sources of revenue other than city debt issuance, i.e., fund balance contributions, developer contributions, grants, endowments, etc. 26. Proposed capital projects will be reviewed and prioritized by a cross-divisional team regarding accurate costing (design, capital, and operating), prevention of existing infrastructure deterioration before the addition of new infrastructure and overall consistency with the City’s General Plan and City Council’s goals and objectives. 27. Dedicated two-tenths of percent (0.2%) privilege tax revenue for transportation improvements will be restricted to funding the planning, design, construction and acquisition costs associated with building, renovating, or enhancing capital projects for streets, highways, traffic control, and transit; and for transportation improvement City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 39 - Table of Contents OVERVIEW | Comprehensive Financial PoliciesComprehensive & Governing Guidance Overview Financial Policies & Governing Guidance operating expenses. No more than fifty percent (50%) of the privilege tax revenue for transportation improvements will be allocated to transportation improvement operating expenses. 28. Future operating, maintenance, and capital costs associated with new capital improvements and contractual obligations approved by Council will be forecasted and included in the Operating Budget, five-year financial plan and the Capital Improvement Plan. Debt Management 29. General Obligation debt, which is supported by property tax revenues and grows in proportion to the city’s assessed valuation and/or property tax rate increases, will be utilized only as authorized by voters. Other types of voterapproved debt may also be utilized only when they are supported by dedicated revenue sources. 30. General Obligation debt issuances (excluding Preserve General Obligation debt) will be managed on an annual basis to match funds to Capital Improvement Plan cash flow requirements. The city will not exceed $1.50 combined property tax per $100 assessed value unless otherwise directed by City Council. 31. Non-voter approved debt will be utilized only when a dedicated revenue source (e.g., facility revenue and bed tax) can be identified to pay, or reimburse the city for paying, debt service expenses. City Debt Service (excluding enterprise, general obligation and preservation) costs (Municipal Property Corporation, Revenue Bond, and Contractual Debt) should not exceed five percent (5%) of the city’s current or future annual operating revenue in order to control fixed costs and ensure expenditure flexibility. The following considerations will be made to the question of pledging of project (facility) revenues towards debt service requirements: a. The project requires monies not available from other sources. b. Matching fund monies are available which may be lost if not applied for in a timely manner. c. Catastrophic conditions. d. The city shall not give or loan its credit in aid of, nor make any donation, grant or payment of any public funds, by subsidy or otherwise, to any individual, association, or corporation, except where there is a clearly identified public purpose and the city either receives direct consideration substantially equal to its expenditure or provides direct assistance to those in need. 32. McDowell Sonoran Preservation debt service will be funded by the dedicated 0.35% privilege tax. The city’s privilege taxes to revenue bond debt service goal will be at least 1.5:1 for senior lien debt to ensure the city’s ability to pay for preserve debt from this elastic revenue source. 33. Improvement District (ID) and Community Facility District (CFD) Bonds shall be permitted only when there is a general city benefit. ID and CFD bonds will be utilized only when it is expected that they will be issued for their full term. It is intended that ID and CFD bonds will be primarily issued for existing neighborhoods desiring improvements to their property such as roads, water lines, sewer lines, streetlights, and drainage. a. Improvement District debt will be permitted only when the full cash value of the property, as reported by the Assessor’s Office, to debt ratio (prior to improvements being installed) is a minimum of 3/1 prior to issuance of debt and 5/1 or higher after construction of improvements. Should the full cash value to debt ratio not meet the minimum requirements, property value may be determined by an appraisal paid for by the applicant City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 40 - Table of Contents OVERVIEW | Comprehensive Financial PoliciesComprehensive & Governing Guidance Overview Financial Policies & Governing Guidance and administered by the city. In addition, the city’s cumulative improvement district debt will not exceed 5 percent of the city’s secondary assessed valuation. Bonds issued to finance improvement district projects will not have maturities longer than ten years. b. Community Facility District debt will be permitted only when the full cash value of the property, as reported by the Assessor’s Office, to debt ratio (prior to improvements being installed) is a minimum of 3/1 prior to issuance of debt and 5/1 or higher after construction of improvements. In addition, the city’s cumulative facility district debt will not exceed 5 percent of the city’s secondary assessed valuation. The landowner/developer shall also contribute $0.25 in public infrastructure improvement costs of each dollar of public infrastructure improvement debt to be financed by the district. 34. Bond interest earnings will be limited to funding changes to the bond financed Capital Improvement Plan, as approved by City Council, or be applied to debt service payment on the bonds issued for construction of this plan. 35. While considering the bond rating impacts, the effect on short-term user rates and the level of cash reserves, the Water and Water Reclamation Enterprise Funds will use longterm debt when prudent to achieve a ratio of long-term debt to tangible fixed assets (capital assets net of depreciation plus equity in joint venture) of no more than fifty percent (50%). Reserve Management 36. All fund designations and reserves will be evaluated annually for long-term adequacy and use requirements in conjunction with development of the city’s balanced five-year financial plan. 37. The following stabilization reserves will be maintained for unforeseen emergencies or catastrophic impacts to the city: a. General Fund Stabilization Reserve of 10 percent of annual General Fund operating expenditures; b. Transportation Fund Stabilization Reserve of 10 percent of annual Transportation Fund operating expenditures. c. An Excise Tax Stabilization Reserve will be funded at no less than $5.0 million to be temporarily used for unforeseen emergencies or catastrophic impacts to the city. 38. Debt Service Reserve will be funded with secondary property taxes, levied by City Council, sufficient to pay the bonded indebtedness for General Obligation bond principal and interest (excluding Preserve General Obligation bonds). A debt service sinking fund will be maintained to account for these restricted revenues and debt payments, as well as any additional debt amounts deemed to be advisable and necessary for any public or municipal purposes. 39. Contingency Reserves for each fund to be established annually will be maintained to offset unexpected expenditure increases. Contingency reserves may also be used for unanticipated and/or inadequately budgeted events threatening the public health or safety. Use of contingency funds should be utilized only after all budget sources have been examined for available funds, and subject to City Council approval. 40. Separate Operating Fund Reserves will be maintained for the city’s Water, Water Reclamation, Solid Waste Management, and Aviation Enterprise Funds. Such reserves shall be funded between 60 and 90 days of budgeted operating expenditures, excluding expenditures City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 41 - Table of Contents OVERVIEW | Comprehensive Financial PoliciesComprehensive & Governing Guidance Overview Financial Policies & Governing Guidance for debt service. Operating Fund Reserves shall be maintained to provide contingency funding and expenditure flexibility in the event of unexpected declines in revenue or increases in costs. 41. Replacement and Extension Reserves will be maintained by the Water and Water Reclamation Enterprise Funds to ensure adequate resources for replacement of water and water reclamation infrastructure. Such reserves shall equal two percent (2%) of the gross book value of all tangible fixed assets of the system and shall be utilized only to provide contingency funding and expenditure flexibility during times of unusual circumstances. 42. Self-Insurance Reserves will be maintained at a level that will adequately fund the city’s financial obligations for the payment of property, workers’ compensation, liability, and health benefit losses. A qualified actuarial firm shall be retained on an annual basis to project and develop losses in order to recommend appropriate reserve levels. The Loss Trust Fund Board’s target is to maintain a Risk Management reserve fund balance equivalent to the actuaries 85 percent confidence interval of projected total outstanding claims liability. 46. Accounting methods will include essential policies, procedures and internal controls to monitor all general ledger activity on an ongoing basis. 47. Prior to the end of each fiscal year the Council shall designate certified public accountants who, shall perform an independent audit of the city’s annual financial statements in accordance with generally accepted government auditing standards. The certified public accountants shall be independent of the city government, having no personal interest, direct or indirect, in the fiscal affairs of city government or any of its officers. The certified public accountants shall submit their reports to the Council. All such audit reports shall be a matter of public record. 43. The Fleet Fund and PC Replacement Fund will be maintained to ensure adequate funding for systematic replacement and operational needs. 44. Any intentional drawdown of fund reserves requires City Council approval. Financial Reporting 45. The city’s accounting and financial reporting systems will be maintained in conformance with all state and federal laws, generally accepted accounting principles (GAAP) and standards of the Governmental Accounting Standards Board (GASB). The City Treasurer shall issue timely monthly financial reports to City Council. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 42 - Table of Contents Budget by Fund Fund Accounting – Fund Types BUDGET BY FUND | Fund Accounting - Fund Types Fund Accounting Structure Special Revenue Capital Improvement Plan To ensure legal compliance and financial management for the various restricted revenues and program expenditures, the city’s accounting and budget structure is segregated into various funds. This approach is unique to the government sector. Fund accounting segregates functions and activities into separate self-balancing funds that are created and maintained for specific purposes. For example, Special Revenue Funds are used to account for the expenditure of restricted revenues, while Enterprise Funds account for self-sustaining “business” related activities for which a fee is charged to cover all costs associated with that business. The General Fund is the city’s chief operating fund and is used to account for all financial resources, except those that are legally required to be accounted for in another fund. Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. The city maintains the following six Special Revenue Funds: Transportation, Tourism Development, Preservation, Special Programs, Special Districts and Grants. Capital Improvement Plan Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities. The city maintains several Capital Improvement Plan Funds to ensure legal compliance and financial management for various restricted revenues. Examples of restricted revenue funds are: A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The city, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. General Debt Service Debt Service Fund is used to account for the accumulation of resources and for the payment of, general long-term debt principal and interest. It does not include contractual obligations accounted for in the individual funds. Enterprise Enterprise Funds are used to account for operations, including debt service, which are financed and operated similarly to private businesses, where the intent is that the service is self-sufficient, with all costs supported predominantly by user charges. The city maintains three Enterprise Funds to account for Water & Water Reclamation, Solid Waste, and Aviation activities. Bond Capital Funds – used to account for bond proceeds to be used only for approved bond projects. Transportation Sales Tax Capital Funds – used to account solely for transportation projects. Enterprise Capital Funds – used to account for utility rates and development fees for specific projects. General Capital Funds – used to account for transfers-in from the General Fund operating budget and for any other activity for which a restricted revenue fund has not been created. Internal Service Internal Service Funds are used to The General Fund is the primary account for the financing, on a costoperating fund of the city. It exists to reimbursement basis, of account for the resources devoted to commodities or services provided by finance the services traditionally one program for the benefit of other associated with local government. programs within the city. The city Included in these services are police maintains Internal Service Funds to and fire protection, parks and account for Fleet Management, PC recreation, planning and economic Replacement and Self-Insurance development, general administration activities. of the city, and any other activity for which a special fund has not been created. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 43 - Table of Contents FY 2017/18 Adopted Budget City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 44 - Table of Contents Budget by Fund Total Budget Overview BUDGET BY FUND | Total Budget Overview Adopted Budget $1,279.8Million (a) Operating Budgets $557.9M (a) (a) (b) Grants & Special Districts $15.2M Capital Improvement $522.6M Contingencies / Reserves $184.0M General Fund $265.6M Grant Funds $14.6M Community Facilities $17.5M General Fund $29.8M Special Revenue $46.5M Special Districts $0.6M Preservation $47.6M Special Revenue $7.1M Debt Service Funds $125.4M Drainage / Flood Control $8.8M Debt Service Funds $20.3M Enterprise Funds $112.4M Public Safety $18.6M Enterprise Funds $73.2M Internal Service $8.0M (a) $60.7M (b) Service Facilities $20.1M Internal Service $36.0M Transportation $163.5M Grant Funds $2.0M Water Management $246.6M Capital Projects $15.6M Adopted Budget and Operating Budgets include Internal Service Funds offsets (reductions) of $52.7M Internal Service Funds Budget prior to Internal Service Funds offsets of $52.7M Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 45 - Table of Contents Total Budget Overview BUDGET BY FUND | Total Budget Overview The total Scottsdale budget consists of $1,065.9 million in revenue including, $344.3 million in prior year CIP unexpended funds, $71.0 million in anticipated bond proceeds, $61.8 million in property taxes, and $588.8 million in other operating and capital revenues. A complete detail of revenues can be found on the Total Budget Appropriation schedule. Below is the revenues breakdown by fund type. The total Scottsdale adopted budget appropriates $1,279.8 million, which includes $184.0 million in contingencies/reserves. The Capital Improvement Funds account for the largest portion of the annual budget appropriation at $522.6 million. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 46 - Table of Contents Total Budget Overview BUDGET BY FUND | Total Budget Overview The largest expense category in the FY 2017/18 budget is for Capital Outlay, expenses for Personnel Services, Contractual, and Commodities together account for $479.5 million, or approximately 37 percent of the total authorized budget. Sources Beginning Balance Revenue Uses Transfers In Personnel Contractual & Commodities Debt Service Capital Outlay Other* Transfers Out Ending Balance General Fund 52,601,967 273,525,326 9,116,167 197,855,739 61,705,024 8,415,626 456,778 29,843,300 20,584,437 16,382,556 Special Revenue Funds Transportation Preservation Special Programs Tourism Development 10,512,986 27,604,130 11,047,183 12,671,579 38,868,181 38,165,920 8,961,478 21,128,886 300,000 10,000 - 6,682,322 1,710,497 267,129 18,233,877 2,200 3,097,118 12,947,131 1,077,564 1,539,267 4,820 153,250 257,000 520,354 3,114,701 1,500,000 2,500,000 10,491,407 35,734,473 451,552 5,491,763 9,928,046 30,033,377 11,463,227 12,069,268 Debt Service Funds 21,508,163 37,190,364 51,874,249 20,329,026 4,210,537 Enterprise Funds Water/Water Reclamation Solid Waste Aviation 67,926,514 9,430,318 8,523,408 151,289,665 20,144,807 3,973,622 54,280,429 - 20,297,365 7,270,866 1,272,546 65,151,139 11,287,256 3,361,211 30,835,853 627,310 78,360 556,500 27,299 500,000 69,882,234 7,008,511 3,972,330 86,773,517 10,500 215,570 3,343,383 3,097,013 Internal Service Funds Fleet Management PC Replacement Risk Management Health Self Insurance 8,605,917 1,422,810 18,547,371 7,992,248 836,653 1,471,624 8,731,187 230,000 3,974,922 835,704 98,052 1,654,802 8,133,973 30,474,665 6,871,577 87,336 348,192 7,527,000 709,200 - (13,239,592) (521,072) 10,959,682 (13,967,474) 1,571,544 2,300 - 1,082,317 1,234,682 - 25,469 16,638,456 598,296 1,005,871 - 11,050,595 623,765 52,089 - 4,526,101 - 3,800 - Capital Improvements 216,973,676 447,839,788 15,600,100 16,620,147 176,339,263 Total All Funds 475,393,739 1,069,364,253 182,161,547 141,507,847 182,161,547 264,973,132 Grants and Special Districts Grants Special Districts 66,350,702 - 241,271,013 86,033,213 - - - 313,755,969 - 522,604,656 49,937,994 533,312,037 - - Total Budget Appropriation** 1,279,784,860 *Other includes Operating Contingency, Reserve Appropriations, Internal Service Offsets and Indirect Costs **Total Budget Appropriation excludes Transfers Out and ssumes use of reserve appropriations City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 47 - Table of Contents BUDGET BY FUND | Total Appropriation General Beginning Fund Balance Revenues Taxes - Local Sales Tax (1.00%) Sales Tax - Transportation (0.20%) Sales Tax - Preservation (0.20%) Sales Tax - Preservation (0.15%) Sales Tax - Public Safety (0.10%) Property Tax Transient Occupancy Tax Electric & Gas Franchise Cable TV License Fee Salt River Project In Lieu Tax Stormwater Water Quality Charge State Shared Revenues State Shared Sales Tax State Shared Income Tax Auto Lieu Tax AZ STA/MCSD Revenue Highway User Tax Internal Service Charges Fleet Management PC Replacement Charges Self-Insurance Licenses, Permits & Fees Building Permit Fees & Charges Recreation Fees WestWorld Fire Service Charges Business Licenses & Fees Fines & Forfeitures Attorney Svc. Enhancement Fee Court Fines Photo Enforcement Parking Fines Library Fines & Fees Interest Earnings/Property Rental Interest Earnings Property Rental Utilities & Enterprises Water Service Charges Water Reclamation Svc. Charges Non-Potable Water Svc. Charges Solid Waste Svc. Charged Airport Fees & Charges Other Revenue Indirect/Direct (Fire) Cost Allocation Grants, Trust & Special Districts Intergovernmental Revenue Miscellaneous/Reimbursements Special Programs Revenue Bond Proceeds/MPC Spring Exhibition Surcharge CIP Unexpended Year End Less Internal Service Funds Offset Subtotal Transfers In Operating Transfers From General Fund Special Revenue Funds Debt Service Funds Enterprise Funds Internal Service Funds Grants Capital Improvement Funds Subtotal Other Activity Reserve Appropriations Operating Contingency / Reserves Subtotal Total Sources 52,601,967 109,876,026 10,790,420 27,197,112 8,467,000 3,637,100 225,000 916,878 Special Revenue Debt Service 61,835,878 21,508,163 Enterprise 85,880,240 Internal Service Grants & Special Districts 36,568,346 25,469 Capital Total 216,973,676 109,876,026 20,933,413 21,580,838 16,185,629 10,790,420 61,802,700 19,441,159 8,467,000 3,637,100 225,000 1,185,378 20,933,413 21,580,838 16,185,629 19,441,159 33,558,964 1,046,624 268,500 23,131,809 29,726,061 10,278,542 16,381,995 475,393,739 23,131,809 29,726,061 10,278,542 3,486,400 16,381,995 3,486,400 20,791,591 1,021,072 40,926,108 20,791,591 1,021,072 40,926,108 14,998,399 4,160,102 4,763,504 703,630 1,892,612 14,998,399 4,160,102 4,763,504 703,630 1,892,612 309,090 3,283,272 3,019,803 226,401 304,100 309,090 3,283,272 3,019,803 226,401 304,100 1,615,319 3,103,273 399,453 1,667,227 1,215,943 103,059 1,572,646 91,774,100 39,894,800 16,217,900 20,053,480 3,811,312 6,896,702 557,773 804,500 1,750,989 2,252,182 980,000 35,500 7,461,478 1,264,500 91,774,100 39,894,800 16,217,900 20,053,480 3,811,312 15,236,752 105,624,465 37,190,364 1,901,727 10,000 300,000 12,111,151 35,552,561 4,210,537 7,214,440 9,116,167 282,641,493 310,000 1,500,000 1,500,000 107,434,465 51,874,249 89,064,613 14,035,274 11,132,005 5,884,848 70,950,000 145,000 273,525,326 175,408,094 (52,745,931) 11,039,464 344,265,015 15,236,752 230,000 229,688,523 447,839,788 8,233,286 14,414,907 37,660,282 16,620,147 54,280,429 4,803,361 4,873,559 42,124,865 1,573,844 3,800 230,000 11,269,464 2,000,000 2,000,000 17,236,752 City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 48 - 66,350,702 514,190,490 8,258,975 29,272,026 13,862,994 9,437,030 7,461,478 70,950,000 145,000 344,265,015 (52,745,931) 1,065,864,253 20,584,437 52,169,195 4,210,537 86,999,587 1,573,844 3,800 16,620,147 182,161,547 3,500,000 3,500,000 1,251,525,800 Table of Contents BUDGET BY FUND | Total Appropriation General Expenditures Divisions Mayor and City Council City Attorney City Auditor City Clerk City Court City Manager City Treasurer Administrative Services Community & Economic Development Community Services Public Safety - Fire Public Safety - Police Public Works Water Resources Savings From Vacant Positions Leave Accrual Payments Parker Case Ruling Utilities Compensation Adjustments Fire 5 Percent Step Police Officer 5 Percent Step Sergeant 5 Percent Step Citywide Pay Program Preservation Professional Services Indirect/Direct Cost Allocation Internal Service Fund Offsets Subtotal Grant and Trust Activity Grants Trust and Special Districts Subtotal Capital Improvements Community Facilities Preservation Drainage / Flood Control Public Safety Service Facilities Transportation Water Management Subtotal Debt Service General Obligation Bonds Preserve Authority Revenue Bonds Revenue Bonds MPC Bonds Contracts Payable Certificates of Participation Subtotal Other Activity Reserve Appropriations Operating Contingency Solid Waste Aviation Self-Insurance Water/Water Reclamation Subtotal 630,584 6,854,484 908,926 757,912 4,724,457 2,432,791 6,232,292 17,110,377 24,054,328 35,525,762 37,094,259 97,732,710 11,925,387 (3,953,520) 2,150,000 7,783,645 8,554,237 395,341 791,017 1,309,608 393,427 2,150,685 265,558,709 - - Special Revenue Debt Service 29,843,300 TOTAL BUDGET Transfers Out Capital Improvement Program Operating Transfers To General Fund Special Programs Funds Debt Service Funds Internal Service Funds Enterprise Funds Enterprise Transfers Franchise Fee Subtotal Sources Over/(Under) Uses Ending Fund Balance * * Assuming Use of Reserve Appropriations Capital Total - 638,084 6,854,484 908,926 757,912 6,204,230 2,432,791 18,322,586 48,737,999 50,297,357 39,800,693 37,097,950 99,483,864 64,045,620 63,918,663 (5,638,983) 2,783,601 7,783,645 26,538,134 395,341 791,017 1,309,608 393,427 3,109,659 2,200 8,258,996 (52,745,931) 432,481,873 - 14,611,357 623,765 15,235,122 1,479,773 3,054,608 23,579,866 4,274,931 3,691 1,751,154 13,817,597 2,663,163 (159,400) 51,100 18,184,191 63,918,663 (1,301,063) 532,501 1,479,665 16,504,232 204,452 2,200 622,553 46,492,529 - - 8,258,996 - - - 7,114,701 112,437,844 - - 20,019,776 4,565,088 31,956,194 86,033,213 36,521,282 20,118,445 (225,000) 50,000 108,670 23,299 (52,745,931) 7,969,492 23,299 - 14,611,357 623,765 15,235,122 - - - - - 59,883,474 6,129,963 4,565,088 51,975,970 325,779 2,548,679 125,428,953 29,843,300 7,114,701 20,329,026 35,977,475 2,000,000 15,600,100 53,607,230 106,362,239 222,128,780 43,946,967 17,258,421 538,204,756 1,279,784,860 8,233,286 14,414,907 42,124,865 1,573,844 3,800 4,210,537 15,600,100 17,459,860 47,589,469 8,751,079 18,632,159 20,056,559 163,549,401 246,566,129 522,604,656 298,276,467 5,188,696 3,972,330 2,000,000 17,459,860 47,589,469 8,751,079 18,632,159 20,056,559 163,549,401 246,566,129 522,604,656 64,008,628 73,169,654 1,801,727 400,000 35,552,561 20,329,026 9,035,686 31,627,622 74,887,127 5,188,696 3,972,330 35,977,475 64,008,628 184,034,256 10,000 12,111,151 230,000 Total Uses Grants & Special Districts 7,500 59,883,474 6,129,963 325,779 2,548,679 2,874,458 Enterprise Internal Service 35,977,475 37,660,282 66,350,702 900,000 1,801,727 410,000 105,254,678 230,000 900,000 15,720,147 20,584,437 52,169,195 4,210,537 7,214,440 86,999,587 1,573,844 3,800 16,620,147 7,214,440 182,161,547 318,860,904 105,776,425 110,572,776 309,128,367 45,520,811 17,262,221 554,824,903 1,461,946,407 (36,219,411) 1,658,040 (21,508,163) (79,439,844) (34,251,347) (25,469) (40,634,413) (210,420,607) 16,382,556 63,493,918 6,440,396 2,316,999 - 176,339,263 264,973,132 - City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 49 - Table of Contents Budget by Fund Total Budget Overview BUDGET BY FUND | General Fund Overview Adopted Budget $1,279.8Million (a) Operating Budgets $557.9M (a) (a) (b) Grants & Special Districts $15.2M Capital Improvement $522.6M Contingencies / Reserves $184.0M General Fund $265.6M Grant Funds $14.6M Community Facilities $17.5M General Fund $29.8M Special Revenue $46.5M Special Districts $0.6M Preservation $47.6M Special Revenue $7.1M Debt Service Funds $125.4M Drainage / Flood Control $8.8M Debt Service Funds $20.3M Enterprise Funds $112.4M Public Safety $18.6M Enterprise Funds $73.2M Internal Service $8.0M (a) $60.7M (b) Service Facilities $20.1M Internal Service $36.0M Transportation $163.5M Grant Funds $2.0M Water Management $246.6M Capital Projects $15.6M Adopted Budget and Operating Budgets include Internal Service Funds offsets (reductions) of $52.7M Internal Service Funds Budget prior to Internal Service Funds offsets of $52.7M Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 50 - Table of Contents Budget by Fund General Fund Overview BUDGET BY FUND | General Fund Overview Fund Purpose The General Fund exists to account for the activity associated with traditional local government services such as police, fire, parks and recreation, planning and economic development and general city administration. Under Arizona State law, each city and town must maintain a General Fund and account for Highway User Revenues (see the Transportation Fund in the Special Revenue Fund section). The General Fund is the largest operating fund, includes the most diverse operations and because its use is unrestricted is typically the fund of most interest and significance to citizens. General Fund Sources (in $ millions) Property Tax Sales Tax (1.10%) State Shared Revenue Charges for Services/Other Franchise Fees & In Lieu Total Revenue Transfers In Total Sources 27.2 120.7 63.1 49.3 13.2 273.5 9.1 282.6 General Fund Uses (in $ millions) Personnel Services Contractual Services Commodities Capital Outlays Debt Service Contingency/Reserves Adopted Budget Transfers Out Debt Service CIP Other Total Uses 197.9 58.8 8.4 0.5 2.9 29.8 298.3 12.1 8.2 0.2 318.9 Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 51 - Table of Contents BUDGET BY FUND | General Fund Summary General Fund Actual 2015/16 Adopted 2016/17 Approved 2016/17 Forecast 2016/17 Adopted 2017/18 Beginning Fund Balance General Fund Reserve Operating Contingency Undesignated, Unreserved Fund Balance 23,482,847 3,000,000 23,833,525 24,391,300 1,732,000 28,146,576 24,003,700 3,000,000 33,356,624 24,003,700 3,000,000 33,356,624 25,625,900 3,000,000 23,976,067 Total Beginning Fund Balance (a) 50,316,372 54,269,876 60,360,324 60,360,324 52,601,967 104,994,603 10,294,057 107,088,035 10,495,414 107,088,035 10,495,414 104,653,628 10,277,342 109,876,026 10,790,420 20,647,067 26,173,125 8,991,309 22,318,898 29,009,725 9,213,063 22,318,898 29,009,725 9,213,063 22,318,898 28,985,984 9,463,063 23,131,809 29,726,061 10,278,542 25,868,439 26,395,890 26,395,890 26,347,083 27,197,112 8,552,437 3,815,573 249,699 912,891 8,393,572 3,619,900 241,000 907,800 8,393,572 3,619,900 241,000 907,800 8,393,572 3,619,900 230,900 907,800 8,467,000 3,637,100 225,000 916,878 13,218,898 4,145,899 4,243,600 903,545 1,838,176 14,665,400 3,861,743 4,590,798 790,920 1,946,800 14,665,400 3,861,743 4,590,798 790,920 1,946,800 14,665,400 3,861,743 4,590,798 790,920 1,946,800 14,998,399 4,160,102 4,763,504 703,630 1,892,612 304,603 3,764,497 3,080,897 301,715 338,860 306,030 3,405,984 3,782,951 271,121 341,800 306,030 3,405,984 3,782,951 271,121 341,800 306,030 3,405,984 3,132,951 271,121 341,800 309,090 3,283,272 3,019,803 226,401 304,100 1,382,402 2,879,647 1,398,824 3,231,020 1,398,824 3,231,020 1,398,824 3,570,844 1,615,319 3,103,273 5,966,387 1,271,374 5,705,524 1,528,674 261,373,898 6,416,104 1,271,577 892,619 953,713 265,810,701 6,416,104 1,271,577 892,619 265,810,701 6,416,104 1,601,577 892,619 953,713 263,345,398 6,896,702 1,750,989 1,101,589 1,150,593 273,525,326 394,464 1,500,000 2,443,225 370,776 7,051,278 11,759,743 368,288 1,500,000 3,454,425 7,211,400 12,534,113 368,288 1,500,000 3,454,425 7,211,400 12,534,113 368,288 1,500,000 3,454,425 7,256,155 12,578,868 301,727 1,600,000 7,214,440 9,116,167 273,133,641 278,344,814 278,344,814 275,924,266 282,641,493 Revenues Sales Taxes Sales Tax (1.00%) Sales Tax - Public Safety (0.10%) State Shared Revenues State Shared Sales Tax State Shared Income Tax Auto Lieu Tax Property Tax Property Tax Franchise Fees & In-Lieu Electric & Gas Franchise Cable TV License Fee Salt River Project In Lieu Tax Stormwater Quality Fees Charges for Services/Other Licenses, Permits & Fees Building Permit Fees & Charges Recreation Fees WestWorld Fire Service Charges Business Licenses & Fees Fines & Forfeitures City Attorney Service Enhancement Fee Court Fines Photo Enforcement Parking Fines Library Fines & Fees Interest Earnings/Property Rental Interest Earnings Property Rental Other Revenue Indirect / Direct (Fire) Cost Allocation Intergovernmental Revenue Miscellaneous Reimbursements Subtotal Transfers In Special Programs Fund (30-Day Tow Program) Tourism Development Fund Debt Service - Spring Training MCSD & AZSTA Funded Other Enterprise Franchise Fees Subtotal Total Sources (a) Excludes accrued liabilities of $6.2 million in FY 2015/16 and unknown accrued liabilities in current and future years. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 52 - Expenditures Divisions Mayor and City Council City Attorney City Auditor City Clerk City Court City Manager City Treasurer Administrative Services Community & Economic Development Community Services Public Safety - Fire Public Safety - Police Public Works CIP Operating Impacts Estimated Personnel Savings from Vacant Positions Leave Accrual Payments Citywide Pay Program / Citywide Pay Program Tail Subtotal Contracts Payable & Certificates of Participation (COPs) Contracts Payable Certificates of Participation - Radio Financing Subtotal TOTAL OPERATING BUDGET Subtotal (a) Actual 2013/14 Adopted 2014/15 Forecast 2014/15 Adopted 2015/16 833,962 5,671,563 737,499 1,032,433 3,693,924 989,563 4,882,501 14,831,179 22,979,458 33,113,482 31,485,238 84,808,267 19,668,559 263,651 224,991,279 761,731 5,923,923 848,781 1,000,448 4,044,001 1,046,891 5,314,877 15,358,147 23,252,414 34,039,350 32,036,337 87,013,834 18,308,732 (3,800,000) 1,900,000 4,585,954 231,635,420 725,148 6,084,403 865,457 1,017,822 4,012,592 1,056,016 5,331,577 15,559,090 24,323,148 34,441,266 32,676,037 88,893,538 18,277,474 (1,538,187) 696,535 232,421,916 759,996 6,353,215 873,324 719,164 4,327,911 1,279,424 5,899,008 15,893,388 24,216,806 35,037,966 33,566,605 94,442,353 18,259,676 (3,800,000) 1,900,000 3,094,557 242,823,393 293,880 2,548,679 2,842,559 227,833,838 Transfers Out Debt Service Fund - MPC Excise Debt CIP - Stadium CIP - PAYGO Special Programs Fund - CDBG Special Programs Fund - Preservation Rehab Total Uses Sources Over/(Under) Uses Ending Fund Balance General Fund Reserve Operating Contingency Unreserved Fund Balance Total Ending Fund Balance (a) 281,420 2,548,679 2,830,099 234,465,519 281,420 2,548,679 2,830,099 235,252,015 12,284,874 67,400 13,048,602 60,000 25,460,876 11,518,368 67,400 12,807,427 60,000 24,453,195 11,927,077 67,400 6,089,839 60,000 18,144,316 259,926,395 259,705,210 263,811,880 3,333,287 (5,531,144) 25,312,415 5,000,000 15,966,809 46,279,225 23,446,552 3,000,000 8,011,112 34,457,664 (62,929) 23,525,202 2,200,000 20,491,094 46,216,296 Table of Contents 295,492 2,548,679 2,844,171 245,667,564 12,844,607 64,082 5,828,888 351,588 60,000 19,149,166 246,983,004 65,098 24,566,800 3,000,000 18,714,594 46,281,394 Excludes revenue accruals of $7.9 million in FY 2013/14 and unknown revenue accrual amount in current and future years. BUDGET BY FUND | General Fund Summary General Fund Actual 2015/16 Expenditures Divisions Mayor and City Council City Attorney City Auditor City Clerk City Court City Manager City Treasurer Administrative Services Community & Economic Development Community Services Public Safety - Fire Public Safety - Police Public Works CIP Operating Impacts Savings from Vacant Positions Leave Accrual Payments Parker Case Ruling Utilities Compensation Adjustments Fire 5 Percent Step Police Officer 5 Percent Step Sergeant 5 Percent Step Citywide Pay Program Subtotal 735,292 7,080,428 819,101 1,133,841 4,027,991 1,088,025 5,627,438 15,559,386 23,085,028 34,406,029 34,483,131 90,914,721 18,232,308 237,192,719 Contracts Payable & Certificates of Participation (COPs) Contracts Payable Certificates of Participation Subtotal TOTAL OPERATING BUDGET Transfers Out Debt Service Fund - MPC Excise Debt Debt Service - Spring Training MCSD & AZSTA Funded CIP Stadium CIP 25% Construction Sales Tax CIP Food Tax CIP Excess Interest Earnings CIP PAYGO Other Healthcare Retirees Healthcare Public Safety (Disabled) Subsidy Special Programs Fund - Preservation Rehab Subtotal Total Uses Adopted 2016/17 789,960 7,074,203 913,455 1,033,601 4,742,649 1,303,590 6,285,074 17,066,162 25,778,927 35,789,470 35,873,511 96,527,651 21,092,624 (3,876,000) 1,947,500 869,339 1,290,311 2,563,831 257,065,858 Approved 2016/17 797,847 7,217,025 930,184 1,050,035 4,665,113 1,180,241 6,254,710 17,251,019 25,704,227 36,090,500 36,873,009 97,839,597 21,045,824 (477,620) 375,987 17,550 256,815,248 Forecast 2016/17 797,847 7,117,025 930,184 1,050,035 4,665,113 1,180,241 6,153,658 17,251,019 25,291,850 36,183,012 37,422,158 94,812,625 17,660,144 (477,620) 375,987 2,986,332 253,399,610 Adopted 2017/18 630,584 6,854,484 908,926 757,912 4,724,457 2,432,791 6,232,292 17,110,377 24,054,328 35,525,762 37,094,259 97,732,710 11,925,387 (3,953,520) 2,150,000 7,783,645 8,554,237 395,341 791,017 1,309,608 393,427 2,150,685 265,558,709 295,491 2,548,679 2,844,170 310,266 2,548,680 2,858,946 310,266 2,548,680 2,858,946 310,266 2,548,680 2,858,946 325,779 2,548,679 2,874,458 240,036,889 259,924,804 259,674,194 256,258,556 268,433,167 11,922,724 2,443,225 75,483 2,567,895 0 382,402 4,584,711 194 693,000 323,166 60,000 23,052,800 12,015,182 3,454,425 67,400 2,340,723 2,484,263 398,824 5,000,000 400,000 60,000 26,220,817 12,015,182 3,454,425 67,400 2,340,723 2,484,263 398,824 5,000,000 400,000 60,000 26,220,817 12,012,002 3,454,425 67,400 2,470,087 2,365,714 398,824 6,430,982 214,633 10,000 27,424,067 12,111,151 67,400 2,539,667 5,010,900 615,319 230,000 10,000 20,584,437 263,089,689 286,145,621 285,895,011 283,682,623 289,017,604 Sources Over/(Under) Uses 10,043,952 (7,800,807) (7,550,197) (7,758,357) (6,376,111) Ending Fund Balance General Fund Reserve Operating Contingency Undesignated, Unreserved Fund Balance Total Ending Fund Balance (a) 24,003,700 2,005,000 34,351,624 60,360,324 25,992,500 3,000,000 17,476,569 46,469,069 25,967,400 2,880,000 23,962,727 52,810,127 25,625,900 2,880,000 24,096,067 52,601,967 26,843,300 3,000,000 16,382,556 46,225,856 (a) Excludes accrued liabilities of $6.2 million in FY 2015/16 and unknown accrued liabilities in current and future years. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 53 - Table of Contents BUDGET BYGeneral FUND | General Fund Five-Year Financial Forecast Fund Adopted 2017/18 Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 Beginning Fund Balance General Fund Reserve Operating Contingency Undesignated, Unreserved Fund Balance 25,625,900 3,000,000 23,976,067 26,843,300 3,000,000 16,382,556 26,809,800 3,000,000 15,401,956 27,337,300 3,000,000 16,275,356 27,609,900 3,000,000 22,599,356 Total Beginning Fund Balance (a) 52,601,967 46,225,856 45,211,756 46,612,656 53,209,256 109,876,026 10,790,420 113,269,900 11,126,000 116,540,100 11,448,900 119,881,500 11,778,800 123,510,900 12,137,600 23,131,809 29,726,061 10,278,542 23,825,800 30,023,300 10,278,500 24,540,500 30,623,800 10,278,500 25,276,800 31,236,300 10,278,500 26,035,100 31,861,000 10,278,500 27,197,112 29,084,000 31,032,400 33,044,300 34,121,800 8,467,000 3,637,100 225,000 916,878 8,541,000 3,655,300 216,000 926,000 8,616,000 3,673,600 207,400 935,300 8,691,000 3,673,600 199,100 944,700 8,767,100 3,673,600 191,100 954,100 14,998,399 4,160,102 4,763,504 703,630 1,892,612 15,295,200 4,222,500 4,851,500 706,400 1,905,100 15,597,900 4,285,600 4,941,300 709,300 1,917,300 15,906,600 4,349,500 5,032,800 712,300 1,929,300 16,224,100 4,414,200 5,126,600 715,500 1,937,800 309,090 3,283,272 3,019,803 226,401 304,100 309,100 3,319,500 3,050,000 230,000 304,100 309,100 3,360,100 3,080,500 234,600 304,100 309,100 3,413,900 3,112,400 238,300 304,100 309,100 3,474,800 3,130,300 242,100 304,100 1,615,319 3,103,273 2,346,000 3,218,500 3,198,400 3,208,400 3,546,900 3,261,900 3,776,700 3,315,900 6,896,702 1,750,989 1,101,589 1,150,593 273,525,326 7,241,500 1,757,900 1,104,100 1,159,300 281,966,500 7,603,600 1,764,800 1,106,800 1,168,400 290,686,700 7,983,800 1,772,000 1,109,400 1,177,300 299,164,200 8,383,000 1,779,300 1,112,200 1,186,500 306,963,000 301,727 1,600,000 7,214,440 9,116,167 261,800 1,600,000 7,420,700 9,282,500 260,200 1,600,000 7,586,600 9,446,800 258,700 1,600,000 7,755,900 9,614,600 256,900 1,600,000 7,929,800 9,786,700 282,641,493 291,249,000 300,133,500 308,778,800 316,749,700 Revenues Sales Taxes Sales Tax (1.00%) Sales Tax - Public Safety (0.10%) State Shared Revenues State Shared Sales Tax State Shared Income Tax Auto Lieu Tax Property Tax Property Tax Franchise Fees & In-Lieu Electric & Gas Franchise Cable TV License Fee Salt River Project In Lieu Tax Stormwater Quality Fees Charges for Services/Other Licenses, Permits & Fees Building Permit Fees & Charges Recreation Fees WestWorld Fire Service Charges Business Licenses & Fees Fines & Forfeitures City Attorney Service Enhancement Fee Court Fines Photo Enforcement Parking Fines Library Fines & Fees Interest Earnings/Property Rental Interest Earnings Property Rental Other Revenue Indirect / Direct (Fire) Cost Allocation Intergovernmental Revenue Miscellaneous Reimbursements Subtotal Transfers In Special Programs Fund (30-Day Tow Program) Tourism Development Fund Debt Service - Spring Training MCSD & AZSTA Funded Other Enterprise Franchise Fees Subtotal Total Sources (a) Excludes accrued liabilities of $6.2 million in FY 2015/16 and unknown accrued liabilities in current and future years. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 54 - Table of Contents BUDGET BYGeneral FUND | General Fund Five-Year Financial Forecast Fund Adopted 2017/18 Expenditures Divisions Mayor and City Council City Attorney City Auditor City Clerk City Court City Manager City Treasurer Administrative Services Community & Economic Development Community Services Public Safety - Fire Public Safety - Police Public Works CIP Operating Impacts Savings from Vacant Positions Leave Accrual Payments Parker Case Ruling Utilities Compensation Adjustments Fire 5 Percent Step Police Officer 5 Percent Step Sergeant 5 Percent Step Citywide Pay Program Subtotal Contracts Payable & Certificates of Participation (COPs) Contracts Payable Certificates of Participation Subtotal TOTAL OPERATING BUDGET Transfers Out Debt Service Fund - MPC Excise Debt Debt Service - Spring Training MCSD & AZSTA Funded CIP Stadium CIP 25% Construction Sales Tax CIP Food Tax CIP Excess Interest Earnings CIP PAYGO Other Healthcare Retirees Healthcare Public Safety (Disabled) Subsidy Special Programs Fund - Preservation Rehab Subtotal Total Uses 630,584 6,854,484 908,926 757,912 4,724,457 2,432,791 6,232,292 17,110,377 24,054,328 35,525,762 37,094,259 97,732,710 11,925,387 (3,953,520) 2,150,000 7,783,645 8,554,237 395,341 791,017 1,309,608 393,427 2,150,685 265,558,709 Forecast 2018/19 636,500 6,895,300 916,500 1,163,000 4,755,800 2,350,500 6,274,600 17,848,500 24,043,200 35,682,700 37,399,400 98,548,700 11,821,900 251,600 (4,032,600) 2,193,000 8,639,800 956,000 1,569,500 2,429,900 744,000 4,119,200 265,207,000 Forecast 2019/20 643,800 6,938,000 925,300 767,800 4,795,800 2,363,600 6,342,000 17,982,700 24,158,400 36,004,500 37,689,400 99,240,600 11,957,500 253,700 (4,113,200) 2,236,900 8,726,100 1,122,100 2,151,500 3,303,000 1,045,600 5,930,400 270,465,500 Forecast 2020/21 650,800 6,979,500 934,400 1,173,500 4,835,800 2,391,900 6,413,200 18,335,600 24,428,800 36,323,400 37,936,000 99,806,700 11,695,000 285,700 (4,195,500) 2,281,600 8,813,600 1,286,300 2,540,000 4,002,800 1,195,000 7,608,100 275,722,200 Forecast 2021/22 658,500 7,024,400 943,600 779,100 4,878,800 2,393,000 6,488,100 18,475,800 24,717,100 36,650,800 38,201,400 100,536,700 11,738,300 285,700 (4,279,400) 2,327,200 8,901,500 1,438,100 2,703,300 4,610,800 1,261,500 9,182,900 279,917,200 325,779 2,548,679 2,874,458 342,000 2,548,700 2,890,700 359,200 2,548,700 2,907,900 377,200 377,200 396,000 396,000 268,433,167 268,097,700 273,373,400 276,099,400 280,313,200 12,111,151 67,400 2,539,667 5,010,900 615,319 230,000 10,000 20,584,437 12,220,800 67,400 2,539,700 7,741,500 1,346,000 240,000 10,000 24,165,400 12,330,000 67,400 2,539,700 7,973,700 2,198,400 250,000 25,359,200 12,455,900 67,400 2,539,700 8,212,900 2,546,900 260,000 26,082,800 12,598,400 67,400 2,539,700 8,459,300 2,776,700 270,000 26,711,500 289,017,604 292,263,100 298,732,600 302,182,200 307,024,700 Sources Over/(Under) Uses (6,376,111) (1,014,100) 1,400,900 6,596,600 9,725,000 Ending Fund Balance General Fund Reserve Operating Contingency Undesignated, Unreserved Fund Balance Total Ending Fund Balance (a) 26,843,300 3,000,000 16,382,556 46,225,856 26,809,800 3,000,000 15,401,956 45,211,756 27,337,300 3,000,000 16,275,356 46,612,656 27,609,900 3,000,000 22,599,356 53,209,256 28,031,300 3,000,000 31,902,956 62,934,256 (a) Excludes accrued liabilities of $6.2 million in FY 2015/16 and unknown accrued liabilities in current and future years. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 55 - Table of Contents BUDGET BY FUND | General Fund Sources General Fund Sources General Fund Sources include both revenues and transfers-in from other fund types such as the Special Revenue, Tourism Development and Enterprise Funds. For FY 2017/18 estimated General Fund revenues and transfers-in equal $282.6 million, an increase of approximately $6.7 million, or 2.4 percent, from the FY 2016/17 year-end forecast of $275.9 million. This increase reflects an additional $5.7 million in Sales Taxes, an increase of $0.9 million for Property Tax resulting from the allowable statutory adjustment and the new construction, and an increase of $2.4 million in State Shared Revenues. These are offset by Debt Service Transfers In related to spring training with this activity being removed from the General Fund and now occurs in Debt Service Funds which is more appropriate and results in a decrease of $3.5 million in both Transfers In and Transfers Out having an overall neutral effect. Certain components of the revenue sources are subject to dramatic peaks and valleys from year to year. Scottsdale continues to experience positive trends in revenue recently, with the majority of revenue categories projected to maintainth current many activity levels with many increasing. Revenues and transfers-in determine ide Scottsdale’s capacitytotocitizens. provideThe program program services major services resources,to citizens. The resources, fund theservice, program budget,are debt service,in and capital projects, are identified in this which fund themajor program operatingwhich budget, debt andoperating capital projects, identified this section. section. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 56 - Table of Contents BUDGET BY FUND | General Fund Sources Sales Tax (1.00%) Sales Tax (1.00%) represents the 1.00 percent General Fund share of the city’s total 1.65 percent sales tax that is available for any municipal purpose. This revenue also includes sales tax application and penalty fees. It is the General Fund’s largest revenue source, which is used to pay for general governmental operations as well as the repayment of excise debt. For FY 2017/18, the anticipated revenue budget is $109.9 million, approximately a $5.2 million or a 5.0 percent increase over the FY 2016/17 year-end forecast of $104.7 million. Both amounts have been adjusted to incorporate the effect of Arizona Department of Revenue (ADOR) taking over administration, collection, and reporting of sales tax as of January 1, 2017. Payments from ADOR are received weekly rather than daily which resulted in a one-time reduction in collections related to the timing of payments being received. The 1.00 percent fiveyear Sales Tax forecast is shown in detail in the following table by major business category. Staff forecast the privilege tax collections by category to arrive at more precise total sales tax revenue. The revenue forecasts for each business category use various assumptions that combine historical elements as well as emerging fiscal, economic and legal considerations. Beginning in in FY FY 2016/17 2016/17the theFood FoodStores Storescategory categoryof of Sales thethe Sales Tax will transfer to CIP to to fund fund various various projects, projects,this thisyear yearisisyear year 2 of 2 ofa a3 3year yearphase-in phase-intotaling totaling$5.0 $5.0million. million. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 57 - Table of Contents BUDGET BY FUND | General Fund Sources Sales Tax - Public Safety (0.10%) Sales Tax - Public Safety (0.10%) represents the 0.10 percent of the total 1.65 percent sales tax rate and is dedicated exclusively to public safety. The Sales Tax Public Safety (0.10%) revenue budget for FY 2017/18 is $10.8 million, which is an increase over the FY 2016/17 yearend forecast of $10.3 million. Both amounts have been adjusted to incorporate the effect of Arizona Department of Revenue (ADOR) taking over administration, collection, and reporting of sales tax as of January 1, 2017. Payments from ADOR are received weekly rather than daily which resulted in a one-time reduction in collections related to the timing of payments being received. This designated sales tax covers 7.4 percent of the FY 2017/18 Public Safety Police and Fire General Fund budgets combined. The 0.10 percent five year Public Safety Sales Tax is shown in detail by business category in the following table. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 58 - Table of Contents BUDGET BY FUND | General Fund Sources State Shared Sales Tax The formula for distribution of State Shared Sales Tax is based upon the relation of the city's population to the total incorporated state population. Cities and towns share in a portion of the 6.0 percent sales tax collected by the State. The distribution base (shared portion) varies by category. For example, retail sales is 40 percent shared and 60 percent nonshared (retained by the State). Of the shared portion, 25 percent is returned to incorporated cities and towns, 40.51 percent is returned to counties, and 34.49 percent is returned to the State General Fund. The FY 2017/18 revenue budget is $23.1 million versus the FY 2016/17 year-end forecast of $22.3 million, an increase of $0.8 million. State Shared Income Tax The formula for distribution of the State Shared Income Tax is based upon the relation of the city's population to the total incorporated state population. Cities and towns in Arizona are prohibited by law from levying a local income tax; however, 15 percent of the state income tax collections are shared with the cities and towns. There is a two-year lag between the time citizens report income to the State and when the State remits shared income tax revenues to cities and towns. Revenue from State Shared Income Tax is budgeted at $29.7 million for FY 2017/18, an increase of $0.7 million from the FY 2016/17 yearend forecast of $29.0 million. Auto Lieu Tax Auto Lieu Tax is part of the vehicle license fees collected by Maricopa County, but it is actually a State revenue source. 25 percent of the net revenues collected for the licensing of motor vehicles by the county are distributed back to the cities and towns based on population. The only stipulation on the use of this revenue is that it must be spent on a public purpose. The revenue budget for FY 2017/18 is $10.3 million, which is $0.8 million more than the FY 2016/17 year-end forecast of $9.5 million. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 59 - Table of Contents BUDGET BY FUND | General Fund Sources Property Tax Property Tax represents the General Fund’s portion of the Property Tax which is levied on the assessed value of all property within the city to help pay for city general governmental operation costs. By Arizona State Statute, the primary property levy is limited to a 2 percent increase per year, plus an allowance for annexations and new construction. Primary property tax accounts for approximately 9.6 percent of the total adopted FY 2017/18 General Fund sources. The FY 2017/18 revenue forecast of $27.2 million represents an increase of $0.9 million from the FY 2016/17 year-end forecast of $26.3 million due to the 2 percent statutory adjustment and new construction. The adopted primary property tax rate of approximately 50 cents per $100 of assessed valuation represents a 0.01 cent decrease from the FY 2016/17 rate. Electric & Gas Franchise Electric & Gas Franchise includes franchise taxes charged on revenues from utility companies for use of city right-of-ways and in-lieu property tax for municipal utilities. The adopted FY 2017/18 budget for Electric & Gas Franchise totals $8.5 million while the FY 2016/17 forecast is anticipated to be $8.4 million. This revenue has remained consistent over the past few years due to the nature of the activity. Cable TV License Fee Franchise Fees & In-Lieu include Cable TV License Fee which is a franchise tax charged on revenues from cable companies for use of city right-of-ways. The FY 2017/18 budget is $3.6 million with FY 2016/17 forecasted to match the current year. The slight decrease reported over the last few years is due to more people utilizing streaming services. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 60 - Table of Contents BUDGET BY FUND | General Fund Sources Salt River Project In Lieu Tax Salt River Project In Lieu Tax are franchise taxes charged on revenues to Salt River Project (SRP) a local utility provider for the use of city right-of-ways and in-lieu property tax for municipal utilities. Revenues have been consistent in prior years and both the adopted FY 2017/18 revenue and the FY 2016/17 forecasted revenue total $0.2 million. Stormwater Water Quality Charge Stormwater Water Quality Charge revenue relates to the water quality charge to help pay a portion of the city’s Stormwater Management program costs. These costs are driven by unfunded federal mandates that require the city to operate under a National Pollution Discharge Elimination System (NPDES) permit and to address the quality of stormwater runoff. Charges are forecasted at $0.9 million for FY 2017/18 which is flat when compared to the FY 2016/17 forecast. Building Permit Fees & Charges Building Permit Fees & Charges include fees assessed to developers/builders that recover the cost of four primary functions: 1) reviewing/processing development applications, 2) plan review of construction documents, 3) the issuance of building, electrical, mechanical and plumbing permits, and 4) the inspection of buildings/structures in the construction phase. The FY 2017/18 revenue budget of $15.0 million has increased by $0.3 million over the FY 2016/17 year-end forecast. While multi-family housing has slowed in recent months, single family residential new home construction has strengthened and continues to exceed expectations. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 61 - Table of Contents BUDGET BY FUND | General Fund Sources Recreation Fees Recreation Fees are budgeted at $4.2 million for FY 2017/18 and include revenue from the various recreational programs, classes, and entry fees. In accordance with the city’s adopted financial policies, recreation fees are reviewed and adjusted annually as needed to meet cost recovery targets as approved by City Council. WestWorld WestWorld fees include revenue (general facility rental, concessions, parking fees, etc.) from events such as horse shows, auto auctions and car shows, consumer and home shows, as well as RV space rental income. Revenues of $4.8 million are budgeted in FY 2017/18 versus the FY 2016/17 year-end forecast of $4.6 million. The FY 2017/18 revenue budget is based on future confirmed bookings for WestWorld, feed and bedding. The continual increase in revenues from FY 2013/14 is primarily due to the expansion of the Tony Nelssen Equestrian Center. The facility now includes approximately 300,000 square feet of climate-controlled enclosed space, which allows for additional events year round as well as additional areas to accommodate multiple users. Fire Service Charges Fire Service Charges include service fees for the cost recovery of fire and medical standbys at special events, after hours inspections, ambulance staffing, and medical enhancement costs associated with the ambulance agreement. In addition, the fire department collects fees for CPR classes, permits and incident reports. The FY 2017/18 revenues are budgeted at $0.7 million, which is slightly lower than the FY 2016/17 yearend forecast of $0.8 million and is due to the ambulance contract being under extension and the city seeking a long term renewal during the current fiscal year. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 62 - Table of Contents BUDGET BY FUND | General Fund Sources Business Licenses & Fees Business Licenses & Fees include the licensing of business activity and the associated fees relating to the licensure and regulation of specific activities. Revenues of $1.9 million are budgeted for FY 2017/18, which is flat when compared to the FY 2016/17 year-end forecast. City Attorney Service Enhancement Fee This fee was adopted in FY 2014/15 by City Council as part of the annual analysis of Rates and Fees. A fee of $10 is imposed on every civil and criminal citation, excluding parking violations. The intent of the fee is to have enhanced services such as diversion, probation and home monitoring be paid for by those incurring extra costs associated with providing the enhanced services. The FY 2017/18 revenues are budgeted at $0.3 million, which stays flat versus the FY 2016/17 year-end forecast. Court Fines Court Fines are the General Fund portion of penalties or fees assessed by state statute, city ordinance or the Presiding Judge. Examples include: fines, a portion of the registration fee to attend Defensive Driving School, bonds forfeited to the city and default fees. The other portions of the fines are included in the Special Revenues Fund for Court Enhancement and the Judicial Collections Enhancement Fund (JCEF), or remitted to the State of Arizona. Revenues of $3.3 million are budgeted for FY 2017/18, which reflects a slight decrease from the FY 2016/17 year-end forecast of $3.4 million. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 63 - Table of Contents BUDGET BY FUND | General Fund Sources Photo Enforcement Photo Enforcement Fines are the General Fund's portion of Photo Enforcement penalties as assessed by the Presiding Judge. Examples include: red light and speeding fines and a portion of the registration fee to attend Defensive Driving School. The other portions of the fines are included in the Special Revenues Fund for Court Enhancement and the Judicial Collections Enhancement Fund (JCEF), or remitted to the State of Arizona. Revenues are budgeted at $3.0 million for FY 2017/18, which is a slight decrease when compared to the FY 2016/17 year-end forecast of $3.1 million. The use of photo enforcement by Public Safety - Police is designed as a deterrent to unsafe driving and to modify driving habits, not as a revenue producer. Parking Fines Parking Fines are the General Fund portion of parking fees assessed per city ordinance and are budgeted at $0.2 million for FY 2017/18. The other portions of the fines are included in the Special Revenues Fund for Court Enhancement and the Judicial Collections Enhancement Fund (JCEF). The revenue budget is down slightly compared to the FY 2016/17 year-end forecast and is due to addressing ongoing parking challenges in the downtown area. Library Fines & Fees Library Fines & Fees are monies collected when library materials are returned after their due date, are lost, and/or are damaged. The FY 2017/18 revenues are budgeted at $0.3 million, which is relatively flat compared to the FY 2016/17 yearend forecast. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 64 - Table of Contents BUDGET BY FUND | General Fund Sources Interest Earnings Interest Earnings are generated on General Fund cash balances throughout the year. This revenue is a function of the relationship between the city’s available cash balance and the interest rate. The city earns interest on funds through various investment vehicles in accordance with Arizona Revised Statutes and City Ordinance. The city’s investment policy stresses safety above yield and allows investments in U.S. Treasury and Agency obligations, certificates of deposit, commercial paper, bankers’ acceptances, repurchase agreements, money market funds, high-grade corporate notes, and the State of Arizona’s Local Government Investment Pool. Interest earnings applicable to bond proceeds and the Capital Improvement Plan accrue to the CIP budget and are not included in General Fund revenues. Interest Earnings revenue is budgeted at $1.6 million in FY 2017/18 an increase of $0.2 million due to more favorable market conditions. Per financial policy No. 17, 100 percent of net income in excess of $1.0 million will be transferred to the General Fund CIP. Property Rental Property Rental revenues are rental fees on facilities such as the Scottsdale Stadium, as well as amounts received from the Tournament Players Club (TPC) for a percent of revenue on gross sales agreements. The FY 2017/18 revenue of $3.1 million is $0.5 million lower than the FY 2016/17 year-end forecast of $3.6 million related to one-time stadium usage fees and TPC rental revenue including taxes when the budget did not account for these, both in FY 2016/17. Indirect/Direct (Fire) Cost Allocation The Indirect Cost Allocation is the payment for services provided by the General Fund to other operating areas within the city. These services include Accounting, Human Resources, Information Technology, etc. Of the $6.9 million budgeted for FY 2017/18, the indirect cost allocation component is $6.5 million, which reflects a $0.4 million increase from the FY 2016/17 year-end forecast of $6.1 million. And $0.4 million of the $6.9 million budgeted in FY 2017/18 is for the direct cost of fire services at the Scottsdale Airport, which is a slight increase over the FY 2016/17 year-end forecast. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 65 - Table of Contents BUDGET BY FUND | General Fund Sources Intergovernmental Revenue Intergovernmental Revenue is related to School Resource Officers from the Scottsdale Police Department servicing local area schools, an intergovernmental agreement with the Scottsdale Unified School District for shared use of Palomino Library, and revenue received from the County Library District for reciprocal interlibrary use. FY 2017/18 revenues are budgeted at $1.8 million. Miscellaneous Miscellaneous revenue includes various revenues the city receives during any given year that are not attributable to one of the specific revenue categories noted previously, such as Other Sale of Property, Miscellaneous Revenue, Passport Fees, and Copies of Materials. The FY 2017/18 miscellaneous revenue is $1.1 million, which is $0.2 million higher than the FY 2016/17 year-end forecast of $0.9 million. This significant reduction from FY 2014/15 and FY 2015/16 is due to the receipt of one-time funds related to the sale of various city properties. Reimbursements This category represents General Fund reimbursements from outside sources. FY 2017/18 revenues are budgeted at $1.2 million, of which the most significant reimbursement revenue is related to jail fees. Reimbursements from defendants who are sentenced to county jail are approximately $0.6 million for FY 2017/18. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 66 - Table of Contents BUDGET BY FUND | General Fund Sources Transfers In The Transfers In for FY 2017/18 are budgeted at $9.1 million and includes: 1) $0.3 million from the Special Programs Fund to pay for the General Fund costs associated with administering the 30-Day Tow Program, including the enforcement of the State Statute related to suspended driver's licenses, driving under the influence offenses and driving without insurance; 2) $1.6 million from the Tourism Development Fund to comply with Financial Policy 21A and annually transfer funds to the General Fund ($1.5 million) and to help support the marketing efforts and Westworld ($0.1 million); and 3) $7.2 million from the Water and Water Reclamation Fund for Enterprise Franchise Fees, which is 5 percent of Water Service and Water Reclamation Charges revenue. The city charges all utility companies, including the city's Water and Water Reclamation Fund, for use of the right-of-ways and medians. The FY 2017/18 Transfers In budget is a decrease of $3.5 million over the FY 2016/17 year-end forecast due to an accounting change related to the debt that was issued for improvements to the Scottsdale Stadium. The Maricopa County Stadium District and Arizona Sports and Tourism Authority funding, which is used to service the debt, was collected in the Debt Service Fund, transferred to the General Fund, and then transferred back to the Debt Service Fund to pay the debt service. Transferring the revenue in and out of the General Fund was an unnecessary step with this funding. Therefore, the transfer in and corresponding transfer out were eliminated. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 67 - Table of Contents BUDGET BY FUND | General Fund Uses General Fund Uses The General Fund uses are presented by the following major divisions, additional operating categories, debt service and transfers out. Mayor and City Council Mayor and City Council include the voter elected mayor, six Council members and operational support staff. Expenditures have decreased in the current year with FY 2017/18 budget of $0.6 million, which is a $0.2 million decrease from the FY 2016/17 forecast. During FY 2017/18 certain memberships and other professional contracts such as Global Ties were transferred to City Manager which reduced ongoing costs for this division, even though the costs still remain within the city. City Attorney The City Attorney is the city's chief legal advisor and includes Civil, Prosecution and Victim Services. Expenditures saw a decrease in FY 2017/18 of $0.2 million from the prior fiscal year resulting in a budget of $6.9 million. In FY 2017/18 the division saw an overall decrease which related largely to Property, Liability and Workers' Comp costs which were higher in previous years due to settlements of significant litigation. The decrease in FY 2017/18 from FY 2016/17 is also the result of the completion of the one time purchase of a case management system. The increase between FY 2014/15 and FY 2015/16 was due to increased settlements affecting this divisions share of Property, Liability and Workers' Comp costs and the expected purchase of a new case management system which was then delayed and carried forward into FY 2016/17. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 68 - Table of Contents BUDGET BY FUND | General Fund Uses City Auditor The City Auditor conducts audits to independently evaluate the operational efficiency and effectiveness, compliance and accountability of the city. Expenditures have remained relatively flat in the current fiscal year with a budget of $0.9 million. Additionally, in FY 2014/15 the city's costs related to the external financial audit were transferred from the City Treasurer's Division to the City Auditor's Divisions resulting in an increase of approximately $0.1 million with a corresponding decrease in the City Treasurer's Office. City Clerk The City Clerk conducts all local elections, gives notice of all City Council meetings, keeps the records of Council proceedings, administers the city's records management program, authenticates ordinances and resolutions, and provides administrative support to the Council. The Clerk's expenses fluctuate from year to year due to elections. The Clerk conducts and oversees the election process for municipal elections, referendums and initiatives within the city resulting in increased costs when these activities occur. At times elections are known such as when Council seats are up for election, other times the elections may not be known such as new debt issuances being taken to the voters, which occurred in FY 2015/16. The FY 2016/17 forecast included $0.3 million in elections for a November 2016 general election as the Mayor and two Council member seats were up for re-election. The FY 2017/18 Adopted budget of $0.8 million does not include any expenses for elections which is why a decrease occurred in the current year. City Court The City Court is part of the integrated judicial system for Arizona, and is the judicial branch for the city efficiently resolving civil traffic and misdemeanor violations, petty offenses, city ordinance and code violations, and issuance of protective orders. Additionally, the Court had been transferring two positions per year from the Court Enhancement Fund in the Special Programs Fund back to General Fund operations, which was completed in FY 2016/17. These were originally removed from General Fund to aid in the balancing of the citywide budget and as the economy has improved these positions have been returned to the General Fund, increasing the budget over the past few years. There is a total of $4.7 million budgeted for FY 2017/18. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 69 - Table of Contents BUDGET BY FUND | General Fund Uses City Manager The City Manager's Office provides the organizational leadership necessary to successfully implement the policy direction of the City Council, communicates that direction to the organization, ensures the efficient, effective and economical delivery of services to citizens, builds relationships with other governments, fosters diversity, and coordinates citywide preparation and response to local disaster. Over the past few years Personnel Services costs have increased in the City Manager's Division as existing operations have moved to the division from other divisions for a citywide net $0 impact including; Office of Diversity, Emergency Management, and most recently Citizen Services which coordinates various community outreach programs. There have also been additions to Contractual Services as certain costs have been transferred here from other divisions including memberships, professional contracts such as Global Ties and other consulting type expenses. The budget totals $2.4 million for FY 2017/18 which has increased significantly from the FY 2016/17 forecast of $1.2 million due to the reasons noted above. City Treasurer The City Treasurer, the city's chief financial officer, is responsible for providing City Council and management with timely financial reports as well as oversight of the Accounting, Budget, Finance, Risk Management and Business Services functions. There has been a decline in FTEs due to efficiencies and legislative changes affecting workloads at the municipal level. Included in the FY 2017/18 Adopted Budget of $6.2 million is an additional $0.2 million in funding for ongoing costs associated with the payroll systems implementation. These increases are offset by a decreases in costs budgeted for the Arizona Department of Revenue for the Transaction Privilege Tax Simplification implementation (HB 2111) related to ongoing technology and aid in the division remaining relatively flat when compared to the FY 2016/17 forecast of $6.2 million. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 70 - Table of Contents BUDGET BY FUND | General Fund Uses Administrative Services Administrative Services comprises several functional areas including the Office of Communications, Human Resources, Information Technology and Purchasing. These service areas are responsible for a wide breadth of activities but include the sharing of information; training, recruiting and hiring employees as well as benefits and compensation; the design, support and maintenance of a variety of citywide systems and hardware; and the purchasing of goods, warehouse and graphics/print shop. FY 2017/18 has a slight $0.2 million decrease from the FY 2016/17 year-end forecast of $17.3 million. The significant increase from FY 2015/16 to FY 2016/17 is primarily due to the operating impacts of a new data center. Community & Economic Development Community & Economic Development works to preserve Scottsdale as a great community, offering value-added programs to stimulate the economy, sustain, revitalize, and build upon the community's unique lifestyle and character. The departments with General Fund budgets include Economic Development, Planning and Development, Tourism & Events and WestWorld. The FY 2017/18 Adopted Budget is $24.1 million which is less than the prior year forecasted results of $25.3 million. The decrease is due to transferring the budget for activities related to community outreach to the City Manager's Office. Additionally, the decrease is due to an administrative change that took affect beginning in FY 2017/18 of moving the utilities budgets (water, electric, sewer, gas, solid waste and recycling services) from individual divisions to a citywide macro level account in an effort to provide greater efficiency in monitoring the utilities budget. Finally, the elimination of one-time funding that was included in FY 2016/17 for Experience Scottsdale facility upgrades and improvements. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 71 - Table of Contents BUDGET BY FUND | General Fund Uses Community Services Community Services is comprised of five departments including; Parks and Recreation, Human Services, Library Systems, Planning and Administration, and Preserve Management, all of which work to improve the quality of life of Scottsdale residents. The FY 2017/18 total budget of $35.5 million is a $0.7 million decrease from the FY 2016/17 forecast of $36.2 million. The decrease is primarily due to the extra 27th pay date which occurred in FY 2016/17 based on the timing of the payroll calendar and does not occur in FY 2017/18 and the elimination of one-time FY 2016/17 funding for deferred maintenance for lifecycle replacement of playground equipment. Public Safety - Fire Public Safety - Fire responds to emergencies through timely, skilled and compassionate service including; fire, emergency medical, chemical, biological, nuclear and radiologic, wild land and technical rescue. The FY 2017/18 budget is staying relatively flat to the FY 2016/17 budget. Beginning in FY 2016/17 all firefighters, fire engineers, and fire captains participate in a 5 percent step program, increasing compensation annually based on performance. The Public Safety - Fire's actual expenditures have exceeded budget for the last few years as a result of a significant number of sworn employees out on various leaves, which negatively impacts overtime due to constant staffing requirements. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 72 - Table of Contents BUDGET BY FUND | General Fund Uses Public Safety - Police The Scottsdale Police Department provides efficient and effective police services to the community confronting crime, responding to any needs, and seeking citizen involvement and partnerships. The operating areas include Police Uniformed Services, Investigative Services, Operational Services and Office of the Police Chief. The total FY 2017/18 budget is $97.7 million or $3.0 million more than the FY 2016/17 forecast. Beginning in FY 2015/16 all police officers began participating in a 5 percent step program to increase compensation annually based on performance. Beginning in FY 2017/18 police sergeants are also participating in a 5 percent step program to increase compensation annually based on performance, with all other Police employees falling under the citywide pay for performance plan. Additionally, the contribution rates to the Public Safety Personnel Retirement System (PSPRS) for sworn personnel have increased significantly over the past few years leading to increased costs and FY 2017/18 includes the settlement of statewide pension litigation which resulted in additional increases to the city pension rates. Public Works Public Works General Fund includes Capital Project Management which oversee the design and construction of capital improvement projects (also includes the city's real estate services area) and Facilities Management which includes the repair and maintenance on 3.0 million square feet of city-owned facilities provided by building maintenance, strategic space planning and contract administration. The FY 2017/18 adopted budget of $11.9 million is significantly less than the FY 2016/17 forecast of $17.7 million. The decrease of $5.8 million is largely due to an administrative change that began March 2017 to move the utilities budgets (water, electric, sewer, gas, solid waste and recycling services) from individual divisions to a citywide macro level account in an effort to provide greater efficiency in monitoring the utilities budget. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 73 - Table of Contents BUDGET BY FUND | General Fund Uses Savings from Vacant Positions Personnel Savings is the amount of savings achieved from vacant positions and the General Fund experiences approximately 100 vacant positions at any given time. The FY 2017/18 General Fund estimate for vacancy savings is ($4.0) million. The FY 2016/17 forecast number of ($5.3) million reflects that there was a larger number of positions vacant through-out the year than anticipated. Leave Accrual Payments These payments include accumulated medical and/or vacation leave paid out at the time of retirement or separation from the city. FY 2017/18 leave accrual payments have increased when compared to FY 2016/17 with $1.4 million budgeted for medical leave accrual payouts and $0.8 million budgeted for vacation leave accrual payouts. Parker Case Ruling The Parker Case Ruling is the result of statewide litigation related to pension reform which occurred in 2011 and was determined to be unconstitutional by the Arizona Supreme Court. The settlement of this case is an extension of a ruling issued in Hall v. Elected Officials Retirement Plan related to the same pension reform in 2011. Both lawsuits are due to current employees having their pension contributions increased to a higher rate which resulted in a diminished benefit for existing employees. While there are numerous provisions related to the settlements, this payout is to retroactively compensate employees who had their pension rates increased. This impacts Tier 1 employees (those hired prior to July 1st, 2011) in both Police and Fire and also impacts Elected Officials, resulting in a large one-time payout which the city has chosen to absorb versus further increasing the unfunded liability that currently exists in the respective pension plans. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 74 - Table of Contents BUDGET BY FUND | General Fund Uses Utilities In an effort to provide greater efficiency in monitoring the budget to actual expenses for utilities as well as forecasting year end results, beginning March 2017 an administrative change moved the utilities budgets (water, electric, sewer, gas, solid waste and recycling services) from individual divisions to a citywide macro level account, by fund. Similar to the leave accrual payouts process, monthly as expenditures occur in the applicable divisions, a budget transfer will be completed to move the needed budget from the macro level holding accounts to the respective divisions. Compensation Adjustments In FY 2017/18 City Council approved a citywide job classification study to be completed by an outside contractor who is yet to be determined. Once the results of this study are available certain adjustments to various job classifications may need to occur. Since the results are not expected until later in FY 2017/18, $0.4 million was set aside to fund the remainder of the year with additional budget set aside for future years. Fire 5 Percent Step An up to 5 percent pay for performance increase within established salary ranges totaling $0.8 million for eligible firefighters, fire engineers and fire captains. The program began in FY 2016/17 with costs totaling $0.9 million and slightly decreasing in the current year due to staff reaching the maximum allowed within their respective pay grades. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 75 - Table of Contents BUDGET BY FUND | General Fund Uses Police 5 Percent Step An up to 5 percent pay for performance increase within the established salary range for police officers totaling $1.3 million in FY 2017/18. The program began in FY 2015/16; however, the first year was to ‘fix’ and adjust salaries based on years of service and was achieved through varying increase amounts. The 5 percent merit/step increase was new beginning in FY 2016/17. Sergeant 5 Percent Step New and beginning in FY 2017/18 an up to 5 percent pay for performance increase within the established salary ranges for Police Sergeants totaling $0.4 million. Citywide Pay Program A citywide pay for performance program, through which employees may receive increases within their established salary ranges based on performance, totaling $2.2 million. In FY 2014/15 all employee increases were budgeted here, including the Public Safety Fire and Police positions, some of which are now reported separately in their respective step programs. In FY 2013/14 of the $5.3 million budgeted, $2.5 million was one-time funding to address sworn police personnel salary inequity issues of which the department used $0.6 million. Additionally, the FY 2016/17 forecast and the FY 2013/14 - FY 2015/16 actuals are at $0 due to the actuals being allocated into the divisions. At the time the budget is adopted it is unknown which employees will receive an increase and for how much. Therefore, the citywide pay program is budgeted at a macro level and then paid based on actual increases. The actual amount spent each year was at or below the adopted budget. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 76 - Table of Contents BUDGET BY FUND | General Fund Uses Debt Service - Contracts Payable Contracts Payable is primarily contractual debt related to sales tax development agreements, and will vary based on the actual sales tax collections at each developed site. The FY 2017/18 Contracts Payable budget of $0.3 million is related to various sales tax development agreements. The budget in FY 2013/14 included funds to service debt obligations which had been met in full in the prior year. Debt Service - Certificates of Participation Certificates of Participation (COPs) are instruments whereby the city enters into a lease-purchase agreement for the acquisition, operation and/or maintenance of a project. COPs are secured by a budgeted appropriation made each year by the city. At the completion of the lease period, the city owns the project. In FY 2010/11 the city issued $20.0 million of COPs for a public safety radio system. The FY 2017/18 budget of $2.5 million is related to the FY 2010/11 COPs issuance, with the final payment made in FY 2019/20. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 77 - Table of Contents BUDGET BY FUND | General Fund Uses Transfers-Out Transfers Out are the authorized movement of cash to other funds and/or capital projects. Transfers Out in FY 2017/18 total $20.6 million and include: 1) $12.1 million to the Debt Service Fund for the annual debt service payment for the Municipal Property Corporation (MPC) bonds issued that used Sales Tax as the dedicated revenue source to service the debt; 2) $8.2 million to the Capital Improvement Plan (CIP) to ensure compliance with Financial Policy 17 ($2.5 million or 25 percent of the construction sales tax, $5.0 million for year 2 of a 3 year phase in of the 1.1 percent tax collected on food for home consumption, and $0.6 million for 100 percent of net interest income in excess of $1.0 million); 3) $0.2 million to the Healthcare Self-Insurance Fund to subsidize the costs of providing disabled public safety retiree healthcare benefits, per City Council direction; 4) $0.1 million to the CIP for an agreement related to the Scottsdale Stadium; and 5) $10,000 for the preservation and maintenance of properties on Scottsdale’s Historic Register. The FY 2017/18 Transfers Out budget is a decrease of $6.8 million over the FY 2016/17 year-end forecast. This is primarily due to the net of the following: 1) a reduction of $3.5 million related to the debt that was issued for improvements to the Scottsdale Stadium. The Maricopa County Stadium District and Arizona Sports and Tourism Authority funding, which is used to service the debt, was collected in the Debt Service Fund, transferred to the General Fund, and then transferred back to the Debt Service Fund to pay the debt service. Transferring the revenue in and out of the General Fund was an unnecessary step with this funding. Therefore, the transfer in and corresponding transfer out were eliminated. This change had a net $0 impact; 2) a reduction of $6.4 million of additional Pay as You Go (PAYGO) funding transferred to the CIP, which was included in FY 2016/17 and not included in FY 2017/18; and 3) a $2.6 million increase for the second year of a three year phase in to transfer the 1.1 percent tax collected on food for home consumption to the CIP. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 78 - Table of Contents BUDGET BY FUND | General Fund Ending Fund Balance General Fund Reserves The General Fund reserves are presented by the following major categories and include all different reserve types. General Fund Reserve The General Fund Reserve complies with Reserve Management Financial Policy 37. The policy states the General Fund will maintain a stabilization reserve of 10 percent of the annual General Fund operating expenditures and is to only be used for unforeseen emergencies or catastrophic impacts to the city. Maintaining a sufficient General Fund Reserve level is financially prudent and aids in retaining the city’s AAA bond rating. Based on the operating budget expenditure estimate, the ending FY 2017/18 General Fund Reserve is $26.8 million. Operating Contingency Operating Contingency includes $3.0 million of budget authorization in the event that unforeseen expenses occur during the fiscal year. Contingency funds are utilized only after all budget sources have been examined for available funds, and requires City Council approval. Additionally, in FY 2014/15 the annual budget for Contingency was reduced from $5.0 million to $3.0 million to align more with historical, expected usage. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 79 - Table of Contents BUDGET BY FUND | General Fund Ending Fund Balance Undesignated, Unreserved Fund Balance Undesignated, Unreserved Fund Balance accounts for any funds remaining after the designation of all other reserves/uses. The FY 2017/18 ending undesignated, unreserved fund balance is $16.4 million, which represents the cumulative General Fund revenues not designated for a specific purpose. This balance represents an accumulation of one-time revenues and is most appropriately used for one-time expenditures. Under prudent fiscal management practices, this amount should not be used to fund new or expanded programs with ongoing operating expenses. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 80 - Table of Contents Budget by Fund Total Budget Overview BUDGET BY FUND | Special Revenue Overview Adopted Budget $1,279.8Million (a) Operating Budgets $557.9M (a) (a) (b) Grants & Special Districts $15.2M Capital Improvement $522.6M Contingencies / Reserves $184.0M General Fund $265.6M Grant Funds $14.6M Community Facilities $17.5M General Fund $29.8M Special Revenue $46.5M Special Districts $0.6M Preservation $47.6M Special Revenue $7.1M Debt Service Funds $125.4M Drainage / Flood Control $8.8M Debt Service Funds $20.3M Enterprise Funds $112.4M Public Safety $18.6M Enterprise Funds $73.2M Internal Service $8.0M (a) $60.7M (b) Service Facilities $20.1M Internal Service $36.0M Transportation $163.5M Grant Funds $2.0M Water Management $246.6M Capital Projects $15.6M Adopted Budget and Operating Budgets include Internal Service Funds offsets (reductions) of $52.7M Internal Service Funds Budget prior to Internal Service Funds offsets of $52.7M Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 81 - Table of Contents Special Revenue Funds Overview Budget By Fund BUDGET BY FUND | Special Revenue Overview Special Revenue Funds Description Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. Examples of restricted revenues that must be spent on specific purposes are Sales Tax - Transportation (0.20%), Sales Tax - Preserve (0.35%), Highway User Tax, Transient Occupancy Tax, and Special Programs, such as Police 30-Day Towing. The sections to follow discuss each of the funds in more detail. Economic Overview Economic conditions play a major role in the city’s ability to provide services and build needed infrastructure for current and future residents. Similar to the General Fund, the Special Revenue Funds are particularly vulnerable to shifts in the economy due to high reliance on elastic revenues. As in all funds, operating expenditures are carefully developed, documented and reviewed to ensure the most cost-effective and efficient method of providing services. Special Revenue Funds Sources (in millions) Sales Tax - Transportation (0.20%) Sales Tax - Preservation (0.35%) Highway User Tax Transient Occupancy Tax Intergovernmental Revenue Fines, Fees, Forfeitures Other Total Revenues Transfers In Total Sources 20.9 38.2 16.4 19.4 1.0 7.5 2.3 105.6 0.3 105.9 Special Revenue Funds Uses (in millions) Personnel Services Contractual Services Commodities Capital Outlays Contingency / Reserve Adopted Budget Transfers Out Operating Debt Service CIP Total Uses 8.7 34.3 2.6 0.9 7.1 53.6 2.2 35.6 14.4 105.8 Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 82 - Table of Contents Budget by Fund Transportation Fund Overview BUDGET BY FUND | Transportation Fund Overview Fund Purpose The State of Arizona requires the city to establish and maintain an accounting for Highway User Revenue funds. The Transportation Fund receives and expends the city’s allocation of the Arizona Highway User Revenue Fund (HURF) as well as the city’s Sales Tax Transportation (0.20%) revenue and other transportation related revenues. The amount of HURF available to each city is allocated based on population, which is determined by the latest federal census. These monies must be used for street construction, reconstruction, maintenance, or transit. The fund also accounts for the 1989, voter approved Sales Tax - Transportation of 0.20 percent, which is dedicated funding for transportation improvements and operations. Transportation Fund Sources (in $ millions) Sales Tax - Transportation (0.20%) Highway User Revenue Fund (HURF) Intergovernmental Miscellaneous Direct Cost Allocation - Alley Maintenance Total Revenues Transfers In Total Sources 20.9 16.4 0.3 0.7 0.6 38.9 0.3 39.2 Transportation Fund Uses (in $ millions) Personnel Services Contractual Services Commodities Capital Outlays Contingency/ Reserve Adopted Budget Transfers Out CIP Total Uses 6.7 18.2 1.1 0.2 3.1 29.3 10.5 39.8 Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 83 - Table of Contents TRANSPORTATION FUND BUDGET BY FUND | Transportation Fund Summary Actual 2015/16 Beginning Fund Balance Operating Contingency Operating Reserve Undesignated, Unreserved Fund Balance Total Beginning Fund Balance Adopted 2016/17 Approved 2016/17 Forecast 2016/17 Adopted 2017/18 500,000 2,394,008 7,561,384 10,455,392 500,000 2,448,700 4,886,377 7,835,077 500,000 2,447,600 6,002,821 8,950,421 500,000 2,447,600 6,002,821 8,950,421 500,000 2,534,900 7,478,086 10,512,986 19,937,961 14,060,028 655,039 535,415 236,777 354,656 35,779,876 20,361,102 14,328,134 645,000 578,949 500,000 30,000 300,000 36,743,185 20,361,102 14,328,134 645,000 578,949 500,000 30,000 300,000 36,743,185 19,938,044 14,896,757 645,000 578,949 500,000 30,000 36,588,750 20,933,413 16,381,995 655,000 557,773 325,000 15,000 38,868,181 - - - - 300,000 300,000 Total Sources 35,779,876 36,743,185 36,743,185 36,588,750 39,168,181 Expenditures Public Works Community and Economic Development Community Services CIP Operating Impacts Citywide Pay Program Savings from Vacant Positions Leave Accrual Payments Utilities Subtotal 14,392,792 7,371,718 1,456,676 23,221,186 14,685,174 9,170,288 1,450,671 151,560 (159,400) 51,100 25,349,393 14,671,022 9,174,292 1,450,671 19,325 99,520 (65,437) 25,349,393 13,908,431 8,988,847 1,450,671 709,214 25,057,163 13,567,597 9,477,946 1,574,301 155,804 (159,400) 51,100 1,479,665 26,147,013 23,221,186 25,349,393 25,349,393 25,057,163 26,147,013 Transfers Out Operating Transfer Out Transfer Out - CIP Transfers Out-CIP Technlgy Citywide Subtotal 40,481 14,023,181 14,063,662 10,216,151 10,216,151 10,216,151 10,216,151 9,969,022 9,969,022 10,466,707 24,700 10,491,407 Total Uses 37,284,847 35,565,544 35,565,544 35,026,185 36,638,420 Sources Over/(Under) Uses (1,504,971) 1,177,641 1,177,641 1,562,565 2,529,761 500,000 2,447,600 6,002,821 8,950,421 500,000 2,534,900 5,977,818 9,012,718 500,000 2,534,900 7,093,162 10,128,062 500,000 2,534,900 7,478,086 10,512,986 500,000 2,614,701 9,928,046 13,042,747 Revenues Sales Tax - Transportation (0.20%) Highway User Tax Local Transportation Assistance Fund Indirect/Direct Cost Allocations Intergovernmental Miscellaneous Grants (a) Subtotal Transfers In Operating Transfer In (b) Subtotal TOTAL OPERATING BUDGET Ending Fund Balance Operating Contingency Operating Reserve Undesignated, Unreserved Fund Balance Total Ending Fund Balance (a) In FY 2016/17 Adopted/Approved, revenue for transportation related grants were inadvertently budgeted in the Transportation Fund. However, the actual receipt and use of the grants monies were recorded appropriately in Grant Funds. (b) Council has authorized $0.3 million of Tourism Development Funds to be dedicated to the downtown trolley. Previously, the Transportation Department was charging the Tourism Development Fund directly for his program. However, beginning in FY 2017/18, the preference is to transfer funds from the Tourism Development Fund to the Transportation Department, which will allow for better monitoring at the fund level. Effectively, this has no change in funding or amount budgeted. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 84 - Table of Contents TRANSPORTATION FUND BUDGET BY FUND | Transportation Fund Five Year Financial Forecast Adopted 2017/18 Beginning Fund Balance Operating Contingency Operating Reserve Undesignated, Unreserved Fund Balance Total Beginning Fund Balance Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 500,000 2,534,900 7,478,086 10,512,986 500,000 2,614,701 9,928,046 13,042,747 500,000 2,679,050 12,354,797 15,533,847 500,000 2,716,370 13,115,177 16,331,547 500,000 2,778,910 15,319,637 18,598,547 20,933,413 16,381,995 655,000 557,773 325,000 15,000 38,868,181 21,584,200 16,697,800 655,000 566,200 325,000 15,000 39,843,200 22,210,800 17,610,100 655,000 574,900 325,000 15,000 41,390,800 22,851,100 16,758,400 655,000 584,300 325,000 15,000 41,188,800 23,547,200 17,093,600 655,000 594,100 325,000 15,000 42,229,900 300,000 300,000 300,000 300,000 300,000 300,000 300,000 300,000 300,000 300,000 Total Sources 39,168,181 40,143,200 41,690,800 41,488,800 42,529,900 Expenditures Public Works Community and Economic Development Community Services CIP Operating Impacts Citywide Pay Program Savings from Vacant Positions Leave Accrual Payments Utilities Subtotal 13,567,597 9,477,946 1,574,301 155,804 (159,400) 51,100 1,479,665 26,147,013 13,800,100 9,594,300 1,472,200 235,500 292,900 (162,600) 52,400 1,494,400 26,779,200 13,621,700 9,715,000 1,494,200 493,700 419,500 (165,900) 53,700 1,509,300 27,141,200 13,793,400 9,838,900 1,517,100 660,800 537,700 (169,200) 55,000 1,524,400 27,758,100 13,974,400 9,968,400 1,540,700 1,323,000 645,100 (172,600) 56,400 1,539,700 28,875,100 26,147,013 26,779,200 27,141,200 27,758,100 28,875,100 Transfers Out Operating Transfer Out Transfer Out - CIP Transfers Out-CIP Technlgy Citywide Subtotal 10,466,707 24,700 10,491,407 10,792,100 80,800 10,872,900 13,705,400 46,500 13,751,900 11,425,600 38,100 11,463,700 11,773,600 65,100 11,838,700 Total Uses 36,638,420 37,652,100 40,893,100 39,221,800 40,713,800 2,529,761 2,491,100 797,700 2,267,000 1,816,100 500,000 2,614,701 9,928,046 13,042,747 500,000 2,679,050 12,354,797 15,533,847 500,000 2,716,370 13,115,177 16,331,547 500,000 2,778,910 15,319,637 18,598,547 500,000 2,891,710 17,022,937 20,414,647 Revenues Sales Tax - Transportation (0.20%) Highway User Tax Local Transportation Assistance Fund Indirect/Direct Cost Allocations Intergovernmental Miscellaneous Grants (a) Subtotal Transfers In Operating Transfer In (b) Subtotal TOTAL OPERATING BUDGET Sources Over/(Under) Uses Ending Fund Balance Operating Contingency Operating Reserve Undesignated, Unreserved Fund Balance Total Ending Fund Balance (a) In FY 2016/17 Adopted/Approved, revenue for transportation related grants were inadvertently budgeted in the Transportation Fund. However, the actual receipt and use of the grants monies were recorded appropriately in Grant Funds. (b) Council has authorized $0.3 million of Tourism Development Funds to be dedicated to the downtown trolley. Previously, the Transportation Department was charging the Tourism Development Fund directly for his program. However, beginning in FY 2017/18, the preference is to transfer funds from the Tourism Development Fund to the Transportation Department, which will allow for better monitoring at the fund level. Effectively, this has no change in funding or amount budgeted. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 85 - Table of Contents BUDGET BY FUND BUDGET BY FUND | Transportation TRANSPORTATION FUND sources Fund Sources Transportation Fund Sources Transportation Fund sources for FY 2017/18 equal $39.2 million which is an increase of $2.6 million from the FY 2016/17 year-end forecast mostly due to a higher estimate of Highway User Revenue Fund (HURF), including an additional allocation called for in State statue. The same methodology for developing the Sales Tax budgeted in the General Fund is also used for the Transportation Fund. Sales Tax - Transportation (0.20%) Sales Tax - Transportation (0.20%) represents the 0.20 percent of the city’s sales tax dedicated solely to transportation. Please note that while the rate is the same for the transportation and 1995 preservation sales tax, there is a difference between the revenue amounts, which is attributable to differences in the taxing provisions for each of the revenues. The adopted FY 2017/18 budget of $20.9 million represents an increase of $1.0 million, or 5 percent, over the FY 2016/17 year-end forecast. Both amounts have been adjusted to incorporate the effect of Arizona Department of Revenue (ADOR) taking over administration, collection and reporting of sales tax as of January 1, 2017. Payments from ADOR are received weekly rather than daily. The following table is a five year forecast by business category for the transportation sales tax, which reflects about a 3 percent increase annually for total collections. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 86 - Table of Contents BUDGET BY FUND | Transportation Fund Sources Highway User Revenue Fund (HURF) Highway User Revenue Fund (HURF), also known as gas tax, is distributed by the State of Arizona. The State constitution requires that all highway user revenue be used solely for street, highway or transit purposes. Cities and towns receive 27.5 percent of the highway user revenue fund, of which one half of the monies are distributed based on population of all incorporated cities and towns in the State. The remaining half is distributed based on ‘county of origin’ of gasoline sales and the relation of the city or town's population to the total incorporated population of Maricopa County. The adopted FY 2017/18 budget of $16.4 million represents a 10 percent or $1.5 million increase from the FY 2016/17 year-end forecast due to a higher highway user revenue estimate by the Arizona Department of Transportation and a one-time allocation of $0.6 million. Local Transportation Assistance Fund Local Transportation Assistance Fund supports the development and operation of a comprehensive multi-modal public transportation program in Arizona. The funding to this program comes from lottery proceeds and it is distributed to cities and towns through an annual application process. The amounts available to cities and towns are capped based on population. The FY 2017/18 budget for this revenue is $0.7 million, which represents the entire allocation available to the city. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 87 - Table of Contents BUDGET BY FUND | Transportation Fund Sources Indirect/Direct Cost Allocations Indirect/Direct Cost Allocations represent charges to the Solid Waste Fund to cover the costs associated with alley maintenance performed by the Street Operations department for the benefit of Solid Waste operations. The budget for this revenue in FY 2017/18 is $0.6 million. Intergovernmental Intergovernmental represents the city’s allocation of the halfcent sales tax for transportation improvements approved in Proposition 400 by Maricopa County voters in November 2004. This revenue, through the Public Transportation Fund funds the ADA Cab Connection Rides program, which addresses the transportation needs of people with disabilities within the city. The FY 2017/18 budget is $0.3 million, which is 35 percent less than the FY 2016/17 year-end forecast. The reduction is due to a decline in participation in the past couple of years that has stabilized at the level estimated for FY 2017/18. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 88 - Table of Contents BUDGET BY FUND | Transportation Fund Sources Miscellaneous Miscellaneous includes various revenues the city receives in the Transportation Fund during any given year that are not attributable to one of the specific revenue categories previously noted. The FY 2017/18 budget of $15,000 includes transportation vehicle auction proceeds and other miscellaneous revenues. The FY 2014/15 reconciliation of transit service contracts resulted in a favorable $0.4 million, received in FY 2015/16. Operating Transfer In Beginning in FY 2017/18, the $0.3 million council authorized use of Tourism Development Funds for the operation of the downtown trolley will be received as an Operating Transfer In, which will allow a better monitoring of the program at the fund level. In previous years, the Transportation Department charged the Tourism Development Fund directly for this program. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 89 - Table of Contents BUDGET BY FUND BUDGET BY FUND |FUND Transportation Fund Uses TRANSPORTATION uses Transportation Fund Uses by Division The Transportation Fund uses are presented by division, plus additional operating categories to include contingencies, utilities and transfers out to other funds. Public Works The expenditures for Public Works include alley maintenance, streets cleaning, lighting maintenance, and traffic signal maintenance. The adopted FY 2017/18 Public Works budget of $13.6 million is a decrease of $0.3 million from the FY 2016/17 year-end forecast of $13.9 million mostly due to an administrative change beginning March 2017 to no longer budget utilities (water, electric, sewer, gas, solid waste and recycling services) within divisions but at a citywide macro level. Community & Economic Development The Community & Economic Development budget includes administrative expenses for the division related to transportation and the various transit agreements with the City of Phoenix ($1.9 million), Valley Metro ($0.4 million), and trolley contractors ($2.6 million), among others. The adopted FY 2017/18 budget of $9.5 million is an increase of $0.5 million from the FY 2016/17 year-end forecast, which is the net result of moving the maintenance of the city trolley fleet in-house instead of outsourcing it. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 90 - Table of Contents BUDGET BY FUND | Transportation Fund Uses Community Services This budget is used for the contracted landscaping of medians and right of ways. The FY 2017/18 adopted budget of $1.6 million is an increase of $0.1 million form the FY 2016/17 yearend forecast to cover cost increases due to market demand. Citywide Pay Program Citywide Pay Program through which employees may receive increases within their established salary ranges based on performance total $0.2 million in FY 2017/18 for the Transportation Fund. Additionally, the FY 2016/17 forecast and FY 2013/14 – FY 2015/16 actuals at $0 are due to actuals being allocated into the appropriate departments. At the time the budget is adopted it is unknown which employees will receive an increase and for how much. Therefore, the citywide pay program is budgeted at a macro level and then paid based on actual increases. The actual amount spent each year has been at or below the adopted budget. Savings from Vacant Positions Savings from Vacant Positions is the amount of savings achieved from vacant positions. The FY 2017/18 Transportation Fund estimate for vacancy savings is $0.2 million. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 91 - Table of Contents BUDGET BY FUND | Transportation Fund Uses Leave Accrual Payments These payments include accumulated medical and/or vacation leave paid out at the time of retirement or separation from the city. FY 2017/18 leave accrual payments of $51,100 are relatively flat compared to FY 2016/17, with $33,100 budgeted for medical leave accrual payouts and $18,000 budgeted for vacation leave accrual payouts. The large amount of leave accrual payments in FY 2015/16 and FY 2016/17 is due mostly to retirement of long term employees. Utilities In an effort to provide greater efficiency in monitoring the budget to actual expenses for utilities as well as forecasting year end results, beginning March 2017 an administrative change moved the utilities budgets (water, electric, sewer, gas, solid waste and recycling services) from individual divisions to a citywide macro level account by fund. Similar to the leave accrual payouts process, monthly as expenditures occur in the applicable divisions, a budget transfer will be completed to move the needed budget from the macro level holding accounts to the respective divisions. Transfers Out Transfers Out is the authorized movement of cash or other resources to other funds and/or capital projects. The FY 2017/18 budget includes $10.5 million transfer of the Sales Tax - Transportation (0.20%) revenue, which is 50 percent of the budgeted revenue per financial policy No. 27, to the Capital Improvement Plan (CIP) to fund transportation related capital projects. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 92 - Table of Contents BUDGET BY FUND | Transportation Fund Ending Fund Balance Transportation Fund Reserves Fund balance/reserves protect the city’s financial condition and provide for unexpected economic challenges. The specific make-up of the city’s Transportation Fund balance and reserves are noted in the following: Operating Contingency Operating Contingency includes $0.5 million of budget authorization in the event that unforeseen expenses occur during the fiscal year. Contingency funds are utilized only after all budget sources have been examined for available funds, and requires City Council approval. No contingency was budgeted in FY 2013/14. Operating Reserve Per financial policy No. 37 - established in FY 2014/15, the city's transportation operating reserve shall be 10 percent of the annual Transportation Fund operating expenditures, and shall be used for unforeseen emergencies or catastrophic impacts to the city related to transportation. Based on the operating budget expenditure estimate, the FY 2017/18 Transportation Fund operating reserve is $2.6 million. Undesignated, Unreserved Fund Balance The Undesignated, Unreserved Fund Balance accounts for any remaining funds after the designation of all other reserves/uses. The FY 2017/18 ending undesignated, unreserved fund balance is $9.9 million. Under prudent fiscal management practices, this balance should most appropriately be used for one-time expenditures, not to fund new or to expand programs with ongoing operating expenses. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 93 - Table of Contents FY 2017/18 Adopted Budget City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 94 - Table of Contents Budget by Fund Preservation Fund Overview BUDGET BY FUND | Preservation Fund Overview Fund Purpose The Preservation Fund accounts for the portion of the city’s Sales Tax – Preservation (0.35%) dedicated to the purchase of about 34,000 acres of land within the McDowell Sonoran Preserve. In 1995, voters approved increasing the city’s sales tax rate by 0.20 percent for the purchase of land within the McDowell Sonoran Preserve. In May 2004, voters approved an additional 0.15 percent in the city’s sales tax rate dedicated to the McDowell Sonoran Preserve land acquisition. Differing from the 1995 tax, the 2004 tax also allows the construction of essential preserve related necessities such as proposed trailheads. Revenue collections and contractual debt associated with purchased land are accounted for in this fund. A Transfer Out is made to the Debt Service Fund or Capital Improvement Plan (CIP) projects to pay debt service payments associated with bonds issued for land purchases or general capital preserve projects. Preservation Fund Sources (in $ millions) Sales Tax - Preservation (0.20%) Sales Tax - Preservation (0.15%) Interest Earnings Total Sources 21.6 16.2 0.4 38.2 Preservation Fund Uses (in $ millions) Contractual Services Adopted Budget Transfers Out Debt Service CIP Total Uses 0.0 0.0 31.9 3.9 35.7 Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 95 - Table of Contents BUDGET BY FUND | Preservation Fund Summary Actual (a) 2015/16 Beginning Fund Balance Undesignated, Unreserved Fund Balance Total Beginning Fund Balance Adopted 2016/17 Approved 2016/17 Forecast 2016/17 Adopted 2017/18 31,313,744 31,313,744 26,489,991 26,489,991 36,326,942 36,326,942 36,326,942 36,326,942 27,604,130 27,604,130 20,582,718 15,441,106 337,907 36,361,730 20,990,827 15,743,120 334,388 37,068,335 20,990,827 15,743,120 334,388 37,068,335 20,554,686 15,416,014 334,388 36,305,088 21,580,838 16,185,629 399,453 38,165,920 36,361,730 37,068,335 37,068,335 36,305,088 38,165,920 - 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 - 2,200 2,200 2,200 2,200 Transfers Out Transfer Out - CIP Transfer Out-Debt Svc GO Bonds Transfer Out-Debt Svc Rev Bonds Subtotal 741,264 20,686,844 9,920,424 31,348,532 3,880,000 25,975,095 6,115,863 35,970,958 3,880,000 25,975,095 6,115,863 35,970,958 15,176,000 23,733,837 6,115,863 45,025,700 3,880,000 25,724,510 6,129,963 35,734,473 Total Uses 31,348,532 35,973,158 35,973,158 45,027,900 35,736,673 5,013,198 1,095,177 1,095,177 (8,722,812) 2,429,247 Ending Fund Balance Undesignated, Unreserved Fund Balance 36,326,942 27,585,168 37,422,119 27,604,130 30,033,377 Total Ending Fund Balance 36,326,942 27,585,168 37,422,119 27,604,130 30,033,377 Revenues Sales Tax - Preservation (0.20%) Sales Tax - Preservation (0.15%) Interest Earnings Subtotal Total Sources Expenditures Professional Services Subtotal TOTAL OPERATING BUDGET Sources Over/(Under) Uses (a) FY 2015/16 Sales Tax - Preservation (0.20%) actuals adjusted to match general ledger. Revenue transferred to cover tax preparation and audit fee's. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 96 - Table of Contents BUDGET BY FUND | Preservation Fund Five Year Financial Forecast Adopted 2017/18 Beginning Fund Balance Undesignated, Unreserved Fund Balance Total Beginning Fund Balance Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 27,604,130 27,604,130 30,033,377 30,033,377 35,991,677 35,991,677 43,560,477 43,560,477 51,601,877 51,601,877 21,580,838 16,185,629 399,453 38,165,920 22,251,700 16,688,800 588,000 39,528,500 22,897,800 17,173,400 807,800 40,879,000 23,557,900 17,668,300 899,800 42,126,000 24,275,300 18,206,400 961,900 43,443,600 38,165,920 39,528,500 40,879,000 42,126,000 43,443,600 2,200 2,200 2,200 2,200 2,300 2,300 2,300 2,300 2,300 2,300 2,200 2,200 2,300 2,300 2,300 Transfers Out Transfer Out - CIP Transfer Out-Debt Svc GO Bonds Transfer Out-Debt Svc Rev Bonds Subtotal 3,880,000 25,724,510 6,129,963 35,734,473 1,380,000 26,040,500 6,147,500 33,568,000 380,000 26,767,400 6,160,500 33,307,900 380,000 27,525,200 6,177,100 34,082,300 28,235,400 6,207,000 34,442,400 Total Uses 35,736,673 33,570,200 33,310,200 34,084,600 34,444,700 2,429,247 5,958,300 7,568,800 8,041,400 8,998,900 Ending Fund Balance Undesignated, Unreserved Fund Balance 30,033,377 35,991,677 43,560,477 51,601,877 60,600,777 Total Ending Fund Balance 30,033,377 35,991,677 43,560,477 51,601,877 60,600,777 Revenues Sales Tax - Preservation (0.20%) Sales Tax - Preservation (0.15%) Interest Earnings Subtotal Total Sources Expenditures Professional Services Subtotal TOTAL OPERATING BUDGET Sources Over/(Under) Uses City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 97 - Table of Contents BUDGET BY FUND BUDGET BY FUND FUND | Preservation PRESERVATION SOURCESFund Sources Preservation Fund Sources The Preservation Fund sources for FY 2017/18 are budgeted at $38.2 million, an increase of $1.9 million from the FY 2016/17 yearend forecast. The same methodology for developing the transaction sales tax budgeted in the General Fund is also used for the Preservation Fund. Sales Tax - Preservation (0.20%) Sales Tax - Preservation (0.20%) represents the 1995 voter approved 0.20 percent of the city’s sales tax dedicated to the purchase of land within the McDowell Sonoran Preserve. The FY 2017/18 budget of $21.6 million represents an increase of $1.0 million, or 5 percent, over the FY 2016/17 year-end forecast. Both amounts have been adjusted to incorporate the effect of Arizona Department of Revenue (ADOR) taking over administration, collection, and reporting of sales tax as of January 1, 2017. Payments from ADOR are received weekly rather than daily. The following table is a five year forecast by business category for the preservation sales tax, which reflects a 3 percent increase annually for total collections. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 98 - Table of Contents BUDGET BY FUND | Preservation Fund Sources Sales Tax - Preservation (0.15%) Sales Tax - Preservation (0.15%) represents the 2004 voter approved 0.15 percent of the city’s sales tax dedicated to the purchase of land within the McDowell Sonoran Preserve, plus construction of essential preserve related necessities such as proposed trailheads. The FY 2017/18 budget of $16.2 million represents an increase of $0.8 million, or 5 percent, over the FY 2016/17 year-end forecast. Both amounts have been adjusted to incorporate the effect of Arizona Department of Revenue (ADOR) taking over administration, collection, and reporting of sales tax as of January 1, 2017. Payments from ADOR are received weekly rather than daily. The following table is a five year forecast by business category for the preservation sales tax, which reflects a 3 percent increase annually for total collections. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 99 - Table of Contents BUDGET BY FUND | Preservation Fund Sources Interest Earnings Interest Earnings is a function of the relationship between the available cash balance and interest rate. The city earns interest on funds through various investments in accordance with Arizona Revised Statutes and City Ordinance. The city’s investment policy stresses safety above yield. The FY 2017/18 budget of $0.4 million is developed by staff based on current interest rates and the available cash balance. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 100 - Table of Contents BUDGET BY FUND | Preservation Fund Uses PRESERVATION FUND USES BUDGET BY FUND Preservation Fund Uses Almost all of the uses in this fund are Transfers Out for debt service expenses on Preserve General Obligation Bonds, Revenue Bonds and capital projects such as land acquisition and construction of essential preserve related assets such as trailheads. Professional Services Professional Services expenditures adopted budget for FY 2017/18 is $2,200 to cover operating financial expenses related to servicing the preserve debt, which is consistent with FY 2016/17 year-end forecast. Transfers Out Transfers Out are the authorized movement of cash or other resources to other funds and/or capital projects. The adopted budget for FY 2017/18 is $35.7 million, which consists of $31.9 million in transfers out to the Debt Service Fund for debt payments on general obligation and revenue bonds and $3.9 million in transfers out to the CIP Fund for general capital preserve projects. FY 2016/17 forecast shows an increase of $9 million from FY 2016/17 adopted budget, to account for the acquisition of 420 acres of State Trust Land for McDowell Sonoran Preserve. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 101 - Table of Contents BUDGET BY FUND | Preservation Fund Ending Fund Balance Preservation Fund Balance Preservation Fund Balance is the accumulation of revenue received from Preservation Sales Tax (0.35%) and interest earnings. Growth of the fund balance occurs when sources exceed uses. Undesignated, Unreserved Fund Balance The Undesignated, Unreserved Fund Balance for FY 2017/18 is $30.0 million. This balance represents an accumulation of revenues, which will be used for future debt service payments. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 102 - Table of Contents BUDGET BY FUND | SpecialSpecial Programs Fund Overview Programs Fund Budget by Fund Fund Purpose In accordance with the Governmental Accounting Standards Board (GASB) 54, this fund is used to account for dedicated funding sources and donations earmarked for specific purposes pursuant to constraints imposed by formal action of the City Council or restricted by an outside source. All revenues not expended in the current fiscal year are carried over to the next fiscal year to continue funding the intended purpose. Special Programs Sources by Program Area (in $ millions) City Court Comm. & Econ. Development Community Services Mayor and City Council Fire Police Public Works Contingency/Reserves Total Revenue Transfer In Total Sources 1.8 0.3 2.6 2.5 0.3 1.5 9.0 9.0 Special Programs Fund Uses (in $ millions) Personnel Services Contractual Services Commodities Capital Outlays Contingency/ Reserves Adopted Budget Transfers Out Operating Debt Service CIP Total Uses 1.7 3.1 1.5 0.3 1.5 8.1 0.3 0.1 0.0 8.6 Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 103 - Table of Contents BUDGET BY FUND | Special Programs Fund Summary Actual 2015/16 1,500,000 Adopted 2016/17 1,500,000 Approved 2016/17 1,500,000 Forecast 2016/17 1,500,000 Adopted 2017/18 1,500,000 4,622,093 2,095,751 1,876,842 117 7,933 1,098,858 58,024 9,759,618 4,943,831 858,284 1,803,271 617 1,833 469,114 58,024 8,134,974 5,788,829 2,068,633 1,932,073 6,000 6,211 1,002,089 50,093 10,853,928 5,788,829 2,068,633 1,932,073 6,000 6,211 1,002,089 50,093 10,853,928 6,221,314 2,255,799 1,602,565 9,000 3,391 901,993 53,121 11,047,183 Subtotal 2,101,597 314,192 2,495,806 6,500 984 2,160,208 273,535 7,352,822 1,925,665 420,307 2,449,305 500 500 2,347,500 253,028 7,396,805 1,925,665 420,307 2,449,305 500 500 2,347,500 253,028 7,396,805 1,925,665 835,653 2,449,305 9,500 1,100 2,347,500 253,028 7,821,751 1,804,654 278,307 2,572,351 7,500 300 2,529,857 268,509 7,461,478 Subtotal 1,104,492 20,920 1,125,412 60,000 60,000 60,000 60,000 10,000 10,000 10,000 10,000 8,478,234 7,456,805 7,456,805 7,831,751 7,471,478 Appropriation Contingency (a) Beginning Fund Balance Reserve - City Court Reserve - Community and Economic Development Reserve - Community Services Reserve - Mayor and City Council Reserve - Public Safety - Fire Reserve - Public Safety - Police Reserve - Public Works Total Beginning Fund Balance Revenues City Court Community and Economic Development Community Services Mayor and City Council Public Safety - Fire Public Safety - Police Public Works Transfers In Operating Transfer In Transfers In - CIP Total Sources (a) The Appropriation Contingency for the Special Programs Fund is an unfunded contingency that allows for the expenditure of unanticipated revenues from a dedicated funding source and is not included in the beginning or ending fund balance. Any use of this contingency requires City Council's approval. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 104 - Table of Contents BUDGET BY FUND | Special Programs Fund Summary Actual 2015/16 Expenditures City Court Community and Economic Development Community Services Mayor and City Council Public Safety - Fire Public Safety - Police Public Works Citywide Pay Program Adopted 2016/17 Approved 2016/17 Forecast 2016/17 Adopted 2017/18 930,372 231,985 2,316,509 617 2,706 1,799,525 5,281,713 1,105,714 554,662 2,761,341 500 2,300 1,940,115 250,000 40,928 6,655,560 1,121,992 554,662 2,777,813 500 2,300 1,945,608 250,000 6,652,875 1,121,992 554,662 2,777,813 6,500 3,920 1,945,608 250,000 6,660,495 1,479,773 371,150 2,700,630 7,500 3,691 1,751,154 250,000 39,984 6,603,882 5,281,713 6,655,560 6,652,875 6,660,495 6,603,882 1,727,421 268,464 106,325 2,102,210 368,288 505,888 103,825 978,001 368,288 505,888 103,825 978,001 368,288 505,888 103,825 978,001 301,727 43,500 106,325 451,552 Total Uses 7,383,924 7,633,561 7,630,876 7,638,496 7,055,434 Sources Over/(Under) Uses 1,094,310 1,499,383 (176,756) 1,500,000 (174,071) 1,500,000 193,255 1,500,000 416,044 1,500,000 5,788,829 2,068,633 1,932,073 6,000 6,211 1,002,089 50,093 10,853,928 5,376,440 680,104 1,472,794 617 33 367,178 61,052 7,958,218 6,221,314 1,890,453 1,602,565 6,000 4,411 901,993 53,121 10,679,857 6,221,314 2,255,799 1,602,565 9,000 3,391 901,993 53,121 11,047,183 6,505,527 2,066,631 1,456,802 9,000 1,353,637 71,630 11,463,227 Subtotal TOTAL OPERATING BUDGET Transfers Out Operating Transfer Out Transfer Out - CIP Transfer Out - Debt Svc MPC Bonds Subtotal Appropriation Contingency (a) Ending Fund Balance Reserve - City Court Reserve - Community and Economic Development Reserve - Community Services Reserve - Mayor and City Council Reserve - Public Safety - Fire Reserve - Public Safety - Police Reserve - Public Works Total Ending Fund Balance (a) The Appropriation Contingency for the Special Programs Fund is an unfunded contingency that allows for the expenditure of unanticipated revenues from a dedicated funding source and is not included in the beginning or ending fund balance. Any use of this contingency requires City Council's approval. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 105 - Table of Contents BUDGET BY FUND | Special Programs Fund Five-Year Finacial Forecast Adopted 2017/18 1,500,000 Forecast 2018/19 1,500,000 Forecast 2019/20 1,500,000 Forecast 2020/21 1,500,000 Forecast 2021/22 1,500,000 6,221,314 2,255,799 1,602,565 9,000 3,391 901,993 53,121 11,047,183 6,505,527 2,066,631 1,456,802 9,000 1,353,637 71,630 11,463,227 6,897,727 1,883,131 1,223,102 9,000 1,386,037 95,530 11,494,527 7,569,327 1,722,231 995,302 9,000 1,402,737 124,930 11,823,527 8,242,327 1,559,331 736,902 9,000 1,420,037 159,830 12,127,427 Subtotal 1,804,654 278,307 2,572,351 7,500 300 2,529,857 268,509 7,461,478 1,829,800 278,300 2,516,000 7,500 300 1,713,100 273,900 6,618,900 1,857,800 278,300 2,544,100 7,500 300 1,543,600 279,400 6,511,000 1,883,300 278,300 2,571,700 7,500 300 1,367,400 284,900 6,393,400 1,896,700 278,300 2,597,200 7,500 300 1,311,000 290,600 6,381,600 Subtotal 10,000 10,000 10,000 10,000 - - - 7,471,478 6,628,900 6,511,000 6,393,400 6,381,600 Appropriation Contingency (a) Beginning Fund Balance Reserve - City Court Reserve - Community and Economic Development Reserve - Community Services Reserve - Mayor and City Council Reserve - Public Safety - Fire Reserve - Public Safety - Police Reserve - Public Works Total Beginning Fund Balance Revenues City Court Community and Economic Development Community Services Mayor and City Council Public Safety - Fire Public Safety - Police Public Works Transfers In Operating Transfer In Transfers In - CIP Total Sources (a) The Appropriation Contingency for the Special Programs Fund is an unfunded contingency that allows for the expenditure of unanticipated revenues from a dedicated funding source and is not included in the beginning or ending fund balance. Any use of this contingency requires City Council's approval. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 106 - Table of Contents BUDGET BY FUND | Special Programs Fund Five-Year Finacial Forecast Adopted 2017/18 Expenditures City Court Community and Economic Development Community Services Mayor and City Council Public Safety - Fire Public Safety - Police Public Works Citywide Pay Program Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 1,479,773 371,150 2,700,630 7,500 3,691 1,751,154 250,000 39,984 6,603,882 1,128,200 368,200 2,714,100 7,500 300 1,388,100 250,000 80,800 5,937,200 1,137,300 333,400 2,717,800 7,500 300 1,230,100 250,000 119,600 5,796,000 1,146,900 333,400 2,757,000 7,500 300 1,048,900 250,000 159,000 5,703,000 1,155,800 333,400 2,788,700 7,500 300 997,600 250,000 198,500 5,731,800 6,603,882 5,937,200 5,796,000 5,703,000 5,731,800 301,727 43,500 106,325 451,552 261,800 295,000 103,600 660,400 260,200 20,000 105,800 386,000 258,700 20,000 107,800 386,500 256,900 20,000 104,600 381,500 Total Uses 7,055,434 6,597,600 6,182,000 6,089,500 6,113,300 Sources Over/(Under) Uses 416,044 1,500,000 31,300 1,500,000 329,000 1,500,000 303,900 1,500,000 268,300 1,500,000 6,505,527 2,066,631 1,456,802 9,000 1,353,637 71,630 11,463,227 6,897,727 1,883,131 1,223,102 9,000 1,386,037 95,530 11,494,527 7,569,327 1,722,231 995,302 9,000 1,402,737 124,930 11,823,527 8,242,327 1,559,331 736,902 9,000 1,420,037 159,830 12,127,427 8,906,327 1,399,631 452,402 9,000 1,427,937 200,430 12,395,727 Subtotal TOTAL OPERATING BUDGET Transfers Out Operating Transfer Out Transfer Out - CIP Transfer Out - Debt Svc MPC Bonds Subtotal Appropriation Contingency (a) Ending Fund Balance Reserve - City Court Reserve - Community and Economic Development Reserve - Community Services Reserve - Mayor and City Council Reserve - Public Safety - Fire Reserve - Public Safety - Police Reserve - Public Works Total Ending Fund Balance (a) The Appropriation Contingency for the Special Programs Fund is an unfunded contingency that allows for the expenditure of unanticipated revenues from a dedicated funding source and is not included in the beginning or ending fund balance. Any use of this contingency requires City Council's approval. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 107 - Table of Contents BUDGET BY FUND BUDGETSPECIAL BY FUND | SpecialFUND Programs Fund Sources PROGRAMS SOURCES Special Programs Sources Sources received in the Special Programs Fund consist of various Fines, Fees, Forfeitures and Permits; Racketeering Influenced Corrupt Organization (RICO) revenue; Contributions/Donations; Other Revenues; and Operating Transfers In. The revenues by division are detailed in the following sections. City Court City Court revenue originates from four sources: Court Enhancement, Judicial Collections Enhancement Fund (JCEF), Fill-the-Gap (FTG) and Jury Fee Donations. The Court Enhancement is established by Scottsdale City Ordinance 2570 section 9-7.2 and provides funding to enhance the technological, operational, and security facilities of the Court. JCEF and FTG were established by Arizona Revised Statutes (ARS) 12-116 (A) (B) and Senate Bill (SB) 1013, which provide funding for maintaining and enhancing the Court’s ability to collect and manage monies. Jury Fee Donation revenue is a program established in FY 2014/15 which allows jurors to donate their portion of jury pay, which will be used to enhance the experience of citizens serving on juries. The FY 2017/18 budget for restricted City Court revenue is $1.8 million, which is $0.1 million lower than the FY 2016/17 year-end forecast. Community and Economic Development Community and Economic Development revenue is generated from the following sources: contributions and donations, lease agreements, revenue from Bureau of Reclamation, and gross sales from McDowell Mtn. Golf Course. The estimated special revenue for FY 2017/18 is $0.3 million. FY 2016/17 forecast shows an increase of $0.4 million from FY 2016/17 adopted budget, due to unbudgeted revenue received for Tournament Players Club (TPC) and an additional one-time council approved transfer from Bureau of Reclamation to install arenas at WestWorld. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 108 - Table of Contents BUDGET BY FUND | Special Programs Fund Sources Community Services Community Services special revenues include donations, contributions, user fees and charges that are restricted to specific uses per the revenue source. Restricted uses of special revenue include library and human services, afterschool and summer programs, enhancing parks, youth sports field and pool sponsored team allocations, Handlebar Helpers, Silverado Golf Surcharge, Charros/Giants for capital improvement, providing memorials, special events, funding community support agencies (Scottsdale Cares), and maintaining and operating the train, carousel, and park facilities at the McCormick-Stillman Railroad Park. The estimated special revenue for FY 2017/18 is $2.6 million. Mayor and City Council Mayor and City Council began receiving contributions and donations to fund the yearly Mayor's Constitution event in FY 2014/15, which was previously recorded in the Trust Fund. In FY 2015/16 the Trust Fund revenue were transferred to the Special Programs Fund due to a change in Accounting standards. Additionally, the budget for this fund was established in FY 2016/17. The estimated special revenue for FY 2017/18 is $7,500. Public Safety – Fire Public Safety - Fire revenue includes donations and contributions that are to be used for the specific purpose indicated by the donors. Categories include public education support, equipment acquisition, and fire station enhancements. The estimated revenue through restricted revenue sources for FY 2017/18 is $300. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 109 - Table of Contents BUDGET BY FUND | Special Programs Fund Sources Public Safety – Police Revenue estimated through restricted revenue sources for FY 2017/18 is $2.5 million, which is an increase of $0.2 million from the FY 2016/17 year-end forecast. Police revenue is generated from the following seven sources: 1) Racketeering Influenced Corrupt Organization (RICO) funds, which are strictly regulated for law enforcement purposes only; 2) Forensic Services Intergovernmental Agreements (IGA) with communities neighboring Scottsdale for full cost recovery of services provided at the crime laboratory; 3) donations made specifically for the Mounted Unit and Family Advocacy Center, as well as general donations to the Police Department that includes the Canine Unit; 4) drug conviction assessments, for the purpose of crime laboratory analysis; 5) Police 30-Day Tow Program that enforces and enhances the State Statute related to suspended driver’s licenses, driving under the influence offenses, and driving without insurance; 6) Officer Safety Equipment established by Senate Bill 1398 that imposes a $13 assessment ($4 to the investigating/arresting agency) on all criminal charges, civil traffic and parking charges to purchase additional safety equipment for officers; and 7) Second Hand and Pawn Transaction Fee established by Ordinance 3966 in May 2012 that requires electronically processed pawn tickets and related fees that will be used to recover costs related to the administration of the program. Public Works The city receives annual payments from Southwest Gas Corporation for a Gas Franchise Agreement allowing for the use of city right of ways. These payments are used to offset costs associated with maintaining various city right-of-ways. The estimated revenue for FY 2017/18 is $0.3 million, which is consistent with FY 2016/17 year-end forecast. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 110 - Table of Contents BUDGET BY FUND | Special Programs Fund Sources Transfers In Transfers In to the Special Programs Fund represents support for specific programs from the General Fund. The FY 2017/18 budget includes a transfer in of $10,000 for the preservation and maintenance of properties on Scottsdale's Historic Register. The decrease in FY 2016/17 forecast reflects the completion of the $50,000 financial commitment authorized by City Council in 2004. FY 2015/16 actuals reflect: 1) the restructuring of programs in Community and Economic Development, which included a transfer of the programs fund balance; and 2) the transferring in of excess funds from a completed CIP project in Community Services. FY 2013/14 actuals reflect a CIP transfer in for savings achieved in the completed City Courts Document Management System project. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 111 - Table of Contents BUDGET BY FUND BUDGET BY FUND | Special Programs Fund Uses SPECIAL PROGRAMS FUND USES Special Programs Uses The expenditures by Division and Transfers Out are as follows: City Court City Court expenditure budget for FY 2017/18 is approximately $1.5 million and includes the following specific uses: 1) Enhancements to the Court’s technological, operational, and security facilities, as allowed under the Court Enhancement established by Scottsdale City Ordinance 2570 section 9-7.2; 2) Additional expenditures, as allowed by Judicial Collections Enhancement Fund (JCEF) and Fill-the-Gap (FTG) established by Arizona Revised Statutes (ARS) 12-116 (A) (B) and Senate Bill (SB) 1013, for the maintenance and enhancement of the Court’s ability to collect and manage monies; and 3) Beginning in FY 2014/15 the City Court accepts jury donations with proceeds to be spent on services to enhance the experience of citizens serving on juries. Community and Economic Development The expenditures related to Community and Economic Development are used to further downtown cultural and community arts events, preserve and maintain properties on Scottsdale's Historic Register, support Art in Public Places (AIPP), and to preserve and maintain Sanctuary and TPC golf courses. The adopted budget total for FY 2017/18 is $0.4 million, which has decreased by $0.2 million from FY 2016/17 year-end forecast. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 112 - Table of Contents BUDGET BY FUND | Special Programs Fund Uses Community Services Community Services expenditure budget for FY 2017/18 is $2.7 million. Expenditures include youth sports field and pool maintenance, Charros/Giants for capital improvements, Silverado golf course maintenance/improvements, Handlebar Helpers program, special events, providing memorials, funding community support agencies (Scottsdale Cares), afterschool programs, summer programs, library programs and operations, and maintaining and operating the train, carousel, and park facilities at the McCormick-Stillman Railroad Park. Mayor and City Council Mayor and City Council began receiving contributions and donations to fund the yearly Mayor's Constitution event in FY 2014/15, which was previously recorded in the Trust Fund. In FY 2015/16 the Trust Fund expenses were transferred to the Special Programs Fund due to a change in Accounting standards. Additionally, the budget for this fund was established in FY 2016/17. The estimated expense for FY 2017/18 is $7,500. Public Safety – Fire Public Safety - Fire expenditures include public education support, equipment acquisition, and fire station enhancements. The FY 2017/18 adopted budget is $3,691. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 113 - Table of Contents BUDGET BY FUND | Special Programs Fund Uses Public Safety – Police Public Safety - Police expenditure budget for FY 2017/18 is $1.8 million and includes the following specific uses: 1) Law enforcement enhancements through the use of Racketeering Influenced Corrupt Organization (RICO) funds; 2) Expenses incurred by the city for Crime Laboratory Services provided to surrounding communities. The city recovers the full cost of the crime laboratory service through Forensic Services Intergovernmental Agreements (IGAs); 3) Crime laboratory analysis as outlined in drug conviction assessments; 4) Veterinary costs, specific training, education and supplies as specified by the donor for the Mounted Unit, Canine Unit, School Resource Education and Family Advocacy Center; 5) Administrative costs including transportation, associated with administering the 30-Day Tow Program that enforces ARS §283511; 6) Equipment that enhances officer’s safety while on duty; and 7) cost recovery for administration and enforcement of City Ordinance 3966 (Second Hand and Pawn Transaction Fees). Public Works The city receives annual payments from Southwest Gas Corporation for a Gas Franchise Agreement allowing for the use of city right-of-ways. These payments are used to offset costs associated with maintaining various city right-of-ways. The FY 2017/18 budget is $0.3 million. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 114 - Table of Contents BUDGET BY FUND | Special Programs Fund Uses Citywide Pay Program A citywide pay for performance program, through which employees may receive increases within their established salary ranges based on performance totals $39,984 or FY 2017/18. Additionally, the FY 2016/17 forecast and FY 2013/14 - FY 2015/16 actuals at $0 are due to the actuals being allocated into the divisions. At the time the budget is adopted it is unknown which employees will receive an increase and for how much. Therefore, the citywide pay program is budgeted at a macro level and then paid based on actual increases. The actual amount spent each year was at or below the adopted budget. Transfers Out Transfers Out are the authorized movement of cash or other resources to fund programs in the General Fund supported by Special Programs (Police 30-Day Tow) and to fund debt service and/or capital projects. The FY 2017/18 budget for transfers out of $0.5 million consists of $0.0 million to the Capital Improvement Fund for City Court and Police projects; $0.3 million goes to the General Fund for the Police 30-Day Tow program support; $0.1 million to MPC Bonds for debt service related to McDowell Mountain Golf Course. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 115 - Table of Contents BUDGET BY FUND | Special Programs Ending Fund Balance Special Program Fund Reserves Special Program Fund Reserves protect the city's financial condition and provide for unexpected economic challenges. The specific make-up of the city's Special Program Fund reserves are noted in the following: Appropriation Contingency Appropriation Contingency for the Special Program Fund is an unfunded contingency that allows for the expenditure of unanticipated revenues from a dedicated funding source and is not included in the beginning or ending fund balance. Any use of this contingency requires City Council's approval. The adopted Appropriation Contingency for FY 2017/18 is $1.5 million. Special Programs Fund Balance Special Programs Fund ending balance of $11.5 million for FY 2017/18 represents the following individual ending fund balances: $6.5 million for City Court, $2.1 million for Community and Economic Development, $1.5 million for Community Services, $1.4 million for Public Safety - Police, and $0.1 million for Public Works. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 116 - Table of Contents BUDGET BY FUND |Tourism TourismDevelopment DevelopmentFund Fund Sources Overview Budget by Fund Fund Purpose The Tourism Development Fund is a special revenue fund created to account for transient occupancy tax revenues, Princess Hotel lease payments and other related miscellaneous revenues all of which are to be used for tourism related activities. Ordinance No. 4018, approved by Scottsdale City Council in May 2012, identifies the authorized expenditures to be made from this fund. This fund became active after the start of FY 2012/13. Tourism Development Fund Sources (in $ millions) Transient Occupancy Tax Property Rental Miscellaneous Total Sources 19.4 1.7 0.0 21.1 Tourism Development Fund Uses (in $ millions) Personnel Services Contractual Services Commodities Capital Outlays Contingency/Reserves Adopted Budget Transfers Out Operating Transportation Debt Service Total Uses 0.3 12.9 0.0 0.5 2.5 16.2 1.6 0.3 3.6 21.7 Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 117 - Table of Contents TOURISM DEVELOPMENT FUND BUDGET BY FUND | Tourism Development Fund Summary Actual 2015/16 Beginning Fund Balance Operating Contingency Undesignated, Unreserved Fund Balance Total Beginning Fund Balance Revenues Transient Occupancy Tax Property Rental Miscellaneous Subtotal Total Sources Expenditures Destination Marketing Contract Event Retention and Development Hospitality Trolley/Banner Program Mayor and Council Support - Bed Tax (a) Tourism Dev One Time Commitments Tourism Development - Bed Tax Tourism Development Carryover Trolley-Downtown Tourism Fund (b) Operating Projects Citywide Pay Program Subtotal TOTAL OPERATING BUDGET Adopted 2016/17 Approved 2016/17 Forecast 2016/17 Adopted 2017/18 2,500,000 7,296,287 9,796,287 2,500,000 7,682,195 10,182,195 2,500,000 7,943,108 10,443,108 2,500,000 7,943,108 10,443,108 2,500,000 10,171,579 12,671,579 17,396,331 1,531,012 19,017 18,946,360 18,714,000 1,618,667 20,500 20,353,167 18,714,000 1,618,667 20,500 20,353,167 18,838,333 1,618,667 18,000 20,475,000 19,441,159 1,667,227 20,500 21,128,886 18,946,360 20,353,167 20,353,167 20,475,000 21,128,886 8,698,166 991,014 17,455 75,000 169,089 436,642 674,457 300,000 11,361,823 9,357,000 1,200,000 327 75,000 500,000 500,000 1,815,354 300,000 5,164 13,752,845 9,357,000 1,200,000 327 75,000 500,000 505,700 1,815,354 300,000 1,125,628 14,879,009 9,419,166 1,000,000 18,000 75,000 50,000 500,000 800,000 300,000 875,628 13,037,794 9,720,580 1,200,000 20,500 500,000 488,336 1,551,354 250,000 8,664 13,739,434 11,361,823 13,752,845 14,879,009 13,037,794 13,739,434 1,500,875 1,846,900 3,589,941 6,937,716 1,500,000 3,589,363 5,089,363 1,500,000 3,589,363 5,089,363 1,500,000 119,372 3,589,363 5,208,735 1,900,000 3,591,763 5,491,763 18,299,539 18,842,208 19,968,372 18,246,529 19,231,197 646,821 1,510,959 384,795 2,228,471 1,897,689 2,500,000 7,943,108 10,443,108 2,500,000 9,193,154 11,693,154 1,255,000 9,572,903 10,827,903 1,192,834 11,478,745 12,671,579 2,500,000 12,069,268 14,569,268 Transfers Out Operating Transfer Out (b) Transfer Out - CIP Transfer Out-Debt Svc MPC Bonds Subtotal Total Uses Sources Over/(Under) Uses Ending Fund Balance Operating Contingency Undesignated, Unreserved Fund Balance Total Ending Fund Balance (a) Council authorized $0.1 million of Tourism Development Funds to be dedicated to the Global Ties contract. Beginning FY 2017/18 this contract will be funded with General Funds. (b) Council has authorized $0.3 million of Tourism Development Funds to be dedicated to the downtown trolley. Previously, the Transportation Department was charging the Tourism Development Fund directly for his program. However, beginning in FY 2017/18, the preference is to transfer Tourism Development Funds to the Transportation Department, which will allow for better monitoring at the fund level. Effectively, this has no change in funding or amount budgeted. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 118 - Table of Contents TOURISM DEVELOPMENT FUND BUDGET BY FUND | Tourism Development Fund Five Year Financial Forecast Adopted 2017/18 Beginning Fund Balance Operating Contingency Undesignated, Unreserved Fund Balance Total Beginning Fund Balance Revenues Transient Occupancy Tax Property Rental Miscellaneous Subtotal Total Sources Expenditures Destination Marketing Contract Event Retention and Development Hospitality Trolley/Banner Program Mayor and Council Support - Bed Tax (a) Tourism Dev One Time Commitments Tourism Development - Bed Tax Tourism Development Carryover Trolley-Downtown Tourism Fund (b) Operating Projects Citywide Pay Program Subtotal TOTAL OPERATING BUDGET Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 2,500,000 10,171,579 12,671,579 2,500,000 12,069,268 14,569,268 2,500,000 15,485,968 17,985,968 2,500,000 19,241,668 21,741,668 2,500,000 23,324,668 25,824,668 19,441,159 1,667,227 20,500 21,128,886 20,063,300 1,708,900 20,500 21,792,700 20,665,200 1,743,100 20,500 22,428,800 21,285,100 1,760,500 20,500 23,066,100 21,923,700 1,778,100 20,500 23,722,300 21,128,886 21,792,700 22,428,800 23,066,100 23,722,300 9,720,580 1,200,000 20,500 500,000 488,336 1,551,354 250,000 8,664 13,739,434 10,031,600 1,200,000 20,500 500,000 482,400 631,000 17,500 12,883,000 10,332,600 1,200,000 20,500 500,000 473,000 631,000 26,800 13,183,900 10,642,500 1,200,000 20,500 500,000 463,200 631,000 36,400 13,493,600 10,961,800 1,200,000 20,500 500,000 456,900 631,000 42,600 13,812,800 13,739,434 12,883,000 13,183,900 13,493,600 13,812,800 1,900,000 3,591,763 5,491,763 1,900,000 3,593,000 5,493,000 1,900,000 3,589,200 5,489,200 1,900,000 3,589,500 5,489,500 1,900,000 3,593,900 5,493,900 19,231,197 18,376,000 18,673,100 18,983,100 19,306,700 1,897,689 3,416,700 3,755,700 4,083,000 4,415,600 2,500,000 12,069,268 14,569,268 2,500,000 15,485,968 17,985,968 2,500,000 19,241,668 21,741,668 2,500,000 23,324,668 25,824,668 2,500,000 27,740,268 30,240,268 Transfers Out Operating Transfer Out (b) Transfer Out - CIP Transfer Out-Debt Svc MPC Bonds Subtotal Total Uses Sources Over/(Under) Uses Ending Fund Balance Operating Contingency Undesignated, Unreserved Fund Balance Total Ending Fund Balance (a) Council authorized $0.1 million of Tourism Development Funds to be dedicated to the Global Ties contract. Beginning FY 2017/18 this contract will be funded with General Funds. (b) Council has authorized $0.3 million of Tourism Development Funds to be dedicated to the downtown trolley. Previously, the Transportation Department was charging the Tourism Development Fund directly for his program. However, beginning in FY 2017/18, the preference is to transfer Tourism Development Funds to the Transportation Department, which will allow for better monitoring at the fund level. Effectively, this has no change in funding or amount budgeted. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 119 - Table of Contents BUDGET BY FUND BUDGET BYTOURISM FUND | DEVELOPMENT Tourism Development Fund Sources FUND sources Tourism Development Fund Sources There are two main sources for the Tourism Development Fund: Transient Occupancy Tax and lease revenue from the Fairmont Scottsdale Princess Hotel. Additionally, there is miscellaneous revenue related to tourism activities. More specific information on these sources is detailed below. Transient Occupancy Tax Transient Occupancy Tax reflects a voter approved tax of 5 percent on hotel and motel room rentals in addition to the sales tax. Beginning January 1, 2017 the Arizona Department of Revenue (ADOR) has taken over administration, collection and reporting of transient occupancy tax. Payments from ADOR are received weekly rather than daily. The FY 2017/18 budget of $19.4 million is $0.6 million or 3 percent higher than the FY 2016/17 year end forecast. Property Rental The Fairmont Scottsdale Princess Hotel has a ground lease agreement with the City of Scottsdale. During the current period of the lease, the Princess Hotel shall pay a rate of 1.50 percent of the adjusted gross revenue above $100.0 million in addition to a set amount of $1.5 million annually. The FY 2017/18 budget for property rental is $1.7 million, which represents a slight increase from the FY 2016/17 year-end forecast, based on gross sales projections. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 120 - Table of Contents BUDGET BY FUND | Tourism Development Fund Sources Miscellaneous Miscellaneous includes the reimbursement for the banner program and other additional revenues that are not attributable to one of the specific revenue categories previously noted. The FY 2017/18 budget is $20,500. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 121 - Table of Contents BUDGET BY FUND BUDGET TOURISM BY FUNDDEV | Tourism Development Fund Uses FUND uses Tourism Development Fund Uses Tourism Development Fund uses are presented by use of funds according to Financial Policy No. 21A. Destination Marketing Contract 50 percent of the Transient Occupancy Tax received by the city is used for destination marketing through a contract with Experience Scottsdale. The adopted FY 2017/18 budget for Destination Marketing Contract is $9.7 million, which is a $0.3 million increase from the FY 2016/17 year-end forecast. Event Retention and Development Event Retention and Development per Financial Policy No. 21A, includes $1.2 million for events and event development. The funds are allocated toward new event development, community events, matching event advertising, event venue fee, and event notification program. Anticipated events for FY 2017/18 include the Fiesta Bowl and the Scottsdale International Film Festival, among others. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 122 - Table of Contents BUDGET BY FUND | Tourism Development Fund Uses Hospitality Trolley/Banner Program The Hospitality Trolley route is no longer in service. This line item also includes expenses related to the banner program that are reimbursed by event producers. The FY 2017/18 budget is $20,500. Mayor and City Council Support - Bed Tax Beginning FY 2017/18, the payment to the Arizona Council for International Visitors was moved back to the General Fund where it was previously budgeted prior to FY 2014/15, and also moved to the City Manager division’s budget. The funding is used to assist international visitors, provide protocol services and provide office space for the Scottsdale Sister Cities Association. Tourism Dev One Time Commitments Financial Policy No. 21A allocates $0.5 million from the Transient Occupancy Tax monies to one-time commitments to capital projects, events and event development, or administration and research. No expenses occurred for onetime commitments in 2013/14 and FY 2014/15. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 123 - Table of Contents BUDGET BY FUND | Tourism Development Fund Uses Tourism Development - Bed Tax Financial Policy No. 21A allows for $0.5 million to be allocated from the Transient Occupancy Tax revenues for tourism-related administration and research expenses. The significant actual of $1.2 million in FY 2014/15 was due to FY 2013/14 and FY 2014/15 invoices related to the Museum of the West matching program totaling $0.8 million that were recorded in this category instead of in Events & Event Development. Tourism Development Carryover Financial policy No. 21A allows the balance of the Transient Occupancy Tax monies to be allocated for tourism-related capital projects, in the form of one-time commitments or multiyear annual commitments, not to exceed $0.6 million per project. The FY 2017/18 budget is $1.6 million and includes $0.3 million for events to promote downtown per council direction; $0.4 million for the last year of matching payment for the Museum of the West; $0.5 million of carryover funds from FY 2016/17 to install conduit and electrical outlets within downtown; and $0.3 million for strategic plan related expenditures. Trolley-Downtown Tourism Fund Beginning in FY 2015/16, City Council authorized $0.3 million of Tourism Development Funds to be dedicated to the downtown trolley, with transportation sales tax covering the remainder of the cost. These authorized expenses were charged directly to the Tourism Development Fund. The preference beginning in FY 2017/18 is to transfer Tourism Development funds to the Transportation department, which will allow for better monitoring at the fund level. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 124 - Table of Contents BUDGET BY FUND | Tourism Development Fund Uses Operating Projects Beginning in FY 2016/17, specific projects authorized by council are recorded as operating projects to allow better monitoring of these funds. The FY 2017/18 budget is $0.3 million, which corresponds to carryover of a portion of the FY 2016/17 council approved funds for the Strategic Planning - Year 4 project. Citywide Pay Program A citywide pay for performance program, through which employees may receive increases within their established salary ranges based on performance totaling $8,664 for FY 2017/18. Additionally, the FY 2016/17 forecast and FY 2015/16 actuals at $0 are due to the actuals being allocated into the division. At the time the budget is adopted it is unknown which employees will receive an increase and for how much. Therefore, the citywide pay program is budgeted at a macro level and then paid on actual increases. The actual amount spent each year has been at or below the adopted budget. Transfers Out Transfers Out are the authorized movements of cash or other resources to other funds and/or capital projects. The FY 2017/18 budget of $5.5 million includes a $1.5 million transfer out to the General Fund per financial policy No. 21A; $0.3 million council approved transfer out to the Transportation Fund for downtown trolley maintenance; $0.1 million transfer out to the General Fund to cover part of the marketing contract for WestWorld; and a $3.6 million transfer out to the Debt Service Fund to cover debt service payments on debt issued for tourism projects. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 125 - Table of Contents BUDGET BY FUND | Tourism Development Fund Ending Fund Balance Tourism Development Fund Balance The adopted FY 2017/18 Tourism Development Fund ending fund balance is $14.6 million and includes the following reserves. Operating Contingency Operating Contingency includes $2.5 million of budget authorization in the event that unforeseen expenses occur during the fiscal year. Contingency funds are utilized only after all budget sources have been examined for available funds, and requires City Council approval. Undesignated, Unreserved Fund Balance Undesignated, Unreserved Fund Balance accounts for any funds remaining after the designation of all other reserves/uses. The FY 2017/18 ending undesignated, unreserved fund balance is $12.1 million, which represents an accumulation of one-time revenues. Under prudent fiscal management practices, this amount should most appropriately be used for one-time expenditures, not to fund new or expanded programs with ongoing operating expenses. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 126 - Budget by Fund Debt Service Funds Overview Adopted Budget $1,201.7 Million (a) Operating Budgets $517.5M (a) Grants, Trust,& Special Districts $15.9M General Fund $245.7M Grant Funds $15.3M Special Revenue $45.3M Trusts & Special Districts $0.6M Debt Service Funds $83.0M Enterprise Funds $137.4M Internal Service $6.1M (a) $58.6M (b) Capital Projects $490.4M Community Facilities $9.7M Preservation $176.7M Contingencies / Reserves $177.9M General Fund $27.6M Special Revenue $7.1M Drainage / Flood Control $17.1M Grant Funds $2.0M Public Safety $4.3M Enterprise Funds $75.2M Service Facilities $12.1M Internal Service $31.2M Transportation $84.2M Capital Projects $34.9M Table of Contents Water Management $186.3M (a) Adopted Budget and Operating Budgets include Internal Service Funds offsets (reductions) of $52.5M (b) Internal Service Funds Budget prior to Internal Service Funds offsets of $52.5M Note: Amounts are rounded in millions; therefore, differences may occur. Budget by Fund Total Budget Overview BUDGET BY FUND | Debt Service Fund Overview Adopted Budget $1,279.8Million (a) Operating Budgets $557.9M (a) (a) (b) Grants & Special Districts $15.2M Capital Improvement $522.6M Contingencies / Reserves $184.0M General Fund $265.6M Grant Funds $14.6M Community Facilities $17.5M General Fund $29.8M Special Revenue $46.5M Special Districts $0.6M Preservation $47.6M Special Revenue $7.1M Debt Service Funds $125.4M Drainage / Flood Control $8.8M Debt Service Funds $20.3M Enterprise Funds $112.4M Public Safety $18.6M Enterprise Funds $73.2M Internal Service $8.0M (a) $60.7M (b) Service Facilities $20.1M Internal Service $36.0M Transportation $163.5M Grant Funds $2.0M Water Management $246.6M Capital Projects $15.6M Adopted Budget and Operating Budgets include Internal Service Funds offsets (reductions) of $52.7M Internal Service Funds Budget prior to Internal Service Funds offsets of $52.7M Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 127 - Table of Contents FY 2017/18 Adopted Budget City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 128 - Table of Contents Budget by Fund Debt Service Fund BUDGET BY FUND | Debt Service Fund Overview Fund Purpose This fund accounts for the accumulation of resources for, and the payment of, long-term debt principal and interest not serviced by the proprietary funds, with the exception of the General Fund. The General Fund includes Contracts Payable and certificates of participation for contractual debt such as related to sales tax development agreements, and will vary based on the actual sales tax collections at each development site. The applicable specific sources, uses, and fund balance of the Debt Service Fund are described in the following sections. Debt Service Fund Sources (in $ millions) Property Tax Other Governmental Units Share Surcharge Total Revenue Transfers In Total Sources 33.6 3.5 0.1 37.2 51.9 89.1 Debt Service Fund Uses (in $ millions) GO Debt Service MPC Excise Debt SPA Debt Service Adopted Budget 59.9 20.0 6.1 86.0 Total Uses 4.2 90.2 Transfers Out Debt Svc Stabilization Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 129 - Table of Contents BUDGET BY FUND | Debt Service Fund Summary Actual 2015/16 Adopted 2016/17 10,976,317 12,172,349 2,579 23,151,245 11,406,846 12,172,349 2,579 23,581,774 10,718,115 11,529,233 22,247,348 10,718,115 11,529,233 22,247,348 10,541,870 10,966,293 21,508,163 Subtotal 32,098,384 2,019,287 167,739 34,285,410 33,575,842 3,236,263 145,000 36,957,105 33,575,842 3,236,263 145,000 36,957,105 33,515,986 3,133,180 145,000 36,794,166 33,558,964 3,486,400 145,000 37,190,364 Subtotal 24,117,587 18,062,216 6,489,681 48,669,484 25,975,095 19,162,795 6,115,863 51,253,753 25,975,095 19,162,795 6,115,863 51,253,753 23,733,837 19,159,615 6,115,863 49,009,315 25,724,510 20,019,776 6,129,963 51,874,249 82,954,894 88,210,858 88,210,858 85,803,481 89,064,613 56,859,086 18,064,799 6,489,681 81,413,566 60,052,746 19,162,795 6,115,863 85,331,404 60,052,746 19,162,795 6,115,863 85,331,404 57,812,763 19,159,615 6,115,863 83,088,241 59,883,474 20,019,776 6,129,963 86,033,213 81,413,566 85,331,404 85,331,404 83,088,241 86,033,213 2,445,225 2,445,225 3,454,425 3,454,425 3,454,425 3,454,425 3,454,425 3,454,425 4,210,537 4,210,537 83,858,791 88,785,829 88,785,829 86,542,666 90,243,750 Sources Over/(Under) Uses (903,897) (574,971) (574,971) (739,185) (1,179,137) Ending Fund Balance Debt Stabilization Reserve G.O. Debt Service Reserve MPC Excise Debt Reserve Total Ending Fund Balance 10,718,115 11,529,233 22,247,348 11,336,263 11,670,540 2,579 23,006,803 10,644,953 11,027,424 21,672,377 10,541,870 10,966,293 21,508,163 9,962,733 10,366,293 20,329,026 Beginning Fund Balance Debt Stabilization Reserve G.O. Debt Service Reserve MPC Excise Debt Reserve Total Beginning Fund Balance Revenues Property Tax Other Governmental Units Share Surcharge Transfers In Transfer In - Debt Svc GO Bonds Transfer In - Debt Svc MPC Bonds Transfer In - Debt Svc Rev Bonds Total Sources Debt Service GO Debt Service MPC Excise Debt SPA Debt Service Subtotal TOTAL OPERATING BUDGET Transfers Out Transfer Out - Debt Svc Stabilization Subtotal Total Uses Approved 2016/17 City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 130 - Forecast 2016/17 Adopted 2017/18 Table of Contents BUDGET BY FUND | Debt Service Fund Five Year Financial Forecast Adopted 2017/18 Beginning Fund Balance Debt Stabilization Reserve G.O. Debt Service Reserve MPC Excise Debt Reserve Total Beginning Fund Balance Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 10,541,870 10,966,293 21,508,163 9,962,733 10,366,293 20,329,026 7,162,033 10,366,293 17,528,326 7,819,633 10,366,293 18,185,926 6,114,833 10,366,293 16,481,126 Subtotal 33,558,964 3,486,400 145,000 37,190,364 33,795,841 3,672,400 145,000 37,613,241 32,247,642 7,822,000 145,000 40,214,642 30,378,535 145,000 30,523,535 26,161,318 26,161,318 Subtotal 25,724,510 20,019,776 6,129,963 51,874,249 26,040,500 22,535,500 6,147,500 54,723,500 26,767,400 23,334,400 6,160,500 56,262,300 27,525,200 18,003,000 6,177,100 51,705,300 28,235,400 16,296,900 6,207,000 50,739,300 89,064,613 92,336,741 96,476,942 82,228,835 76,900,618 59,883,474 20,019,776 6,129,963 86,033,213 59,836,341 22,535,500 6,147,500 88,519,341 59,015,042 23,334,400 6,160,500 88,509,942 57,903,735 18,003,000 6,177,100 82,083,835 54,396,718 16,296,900 6,207,000 76,900,618 86,033,213 88,519,341 88,509,942 82,083,835 76,900,618 4,210,537 4,210,537 6,618,100 6,618,100 7,309,400 7,309,400 1,849,800 1,849,800 - Total Uses 90,243,750 95,137,441 95,819,342 83,933,635 76,900,618 Sources Over/(Under) Uses (1,179,137) (2,800,700) 657,600 (1,704,800) - Ending Fund Balance Debt Stabilization Reserve G.O. Debt Service Reserve MPC Excise Debt Reserve Total Ending Fund Balance 9,962,733 10,366,293 20,329,026 7,162,033 10,366,293 17,528,326 7,819,633 10,366,293 18,185,926 6,114,833 10,366,293 16,481,126 6,114,833 10,366,293 16,481,126 Revenues Property Tax Other Governmental Units Share Surcharge Transfers In Transfer In - Debt Svc GO Bonds Transfer In - Debt Svc MPC Bonds Transfer In - Debt Svc Rev Bonds Total Sources Debt Service GO Debt Service MPC Excise Debt SPA Debt Service Subtotal TOTAL OPERATING BUDGET Transfers Out Transfer Out - Debt Svc Stabilization Subtotal City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 131 - Table of Contents BUDGET BY FUND BUDGET BY DEBT FUNDSERVICE | Debt Service Fund Sources FUND SOURCES Debt Service Sources Debt Service Fund sources for FY 2017/18 equal $89.1 million which is an increase of $3.3 million from the FY 2016/17 year-end forecast. This is mainly due to the issuance of new bonds. It includes Property Tax, Other Governmental Units Share, Surcharge and Transfers In. Property Tax Property Tax represents the secondary portion of the property tax that is limited and levied to pay debt service. While the growth is unlimited, the city’s use of this portion of the property tax is restricted by State Statute to solely pay debt service on voter-approved general obligation bonds. The FY 2017/18 levy amount (revenue) of $33.6 million is slightly higher when compared to the FY 2016/17 year-end forecast. Other Governmental Units Share Other Governmental Units Share consists of revenue received from Maricopa County Stadium District (MCSD) and the Arizona Sports and Tourism Authority (AZSTA) contributions made to the city to pay debt service associated with the Cactus League spring training facilities (San Francisco Giants professional baseball practice facility). MCSD contributions are derived from a $2.50 surcharge on car rentals in Maricopa County; AZSTA contributions are derived from a 1.0 percent hotel room tax and a 3.25 percent car rental surcharge (net of the $2.50 MCSD surcharge). The FY 2017/18 Other Governmental Units Share adopted budget is $3.5 million, which is an increase of $0.4 million over FY 2016/17, based on the AZSTA's projected forecast. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 132 - Table of Contents BUDGET BY FUND | Debt Service Fund Sources Surcharge Surcharge represents the $1 ticket surcharge assessed on San Francisco Giants spring training games held in Scottsdale. The FY 2017/18 budgeted revenue is $0.1 million. The surcharge is used to help pay for capital projects and/or debt service related to professional baseball facilities. Transfers In Transfers In is the authorized movement of cash or other resources from other funds and/or capital projects. These transfers originate from the General Fund, Special Programs Fund, Tourism Development Fund for Municipal Property Corporation (MPC) debt service payments and the Preservation Fund for the payment of Preserve General Obligation (GO) and revenue bond debt service. Total Transfers In for FY 2017/18 equal $51.9 million (GO bonds $25.7 million; MPC bonds $20.0 million; and Revenue Bonds $6.1 million). Included in the Debt Service MPC bond Transfer In amount is a transfer to provide funding to cover the difference in the MCSD and AZSTA revenue contribution amounts for Cactus League spring training facilities. This is an internal transfer between two Debt Service Funds and so there is a corresponding Transfer Out of the same amount reflected in Transfer Out - Debt Svc Stabilization having a net $0 impact. FY 2016/17 was the first year this transfer was budgeted for. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 133 - Table of Contents BUDGET BY FUND BUDGET BY FUND | Debt Service Fund Uses DEBT SERVICE FUND USES Debt Service Fund Uses by Debt Type The Debt Service Fund uses include debt service for GO Bonds, MPC Excise Bonds and SPA Bonds as well as Transfers Out for debt service stabilization. GO Debt Service GO Debt Service consists of two bond types, General Obligation (GO) Bonds and Preserve General Obligation Bonds. General Obligation Bonds are voter authorized debt issued for capital projects. General Obligation Debt is repaid by Property Tax (Secondary). Under state law, cities and towns are allowed to levy a Secondary Property Tax for the sole purpose of retiring the principal and interest on general obligation indebtedness. Preserve General Obligation Bonds represent debt issuances related to land acquisition in the McDowell Mountain Sonoran Preserve. Preserve debt is repaid by a dedicated 0.20 percent sales tax authorized by voters in 1995 and a 0.15 percent sales tax authorized by voters in 2004. For FY 2017/18 the General Obligation Bonds debt service is forecasted at $59.9 million, which is an increase of $2.1 million from the FY 2016/17 year-end forecast of $57.8 million due to FY 2017/18 being the first year budgeted to pay the principal on the 2012 G.O Bonds Preserve and to reflect the issuance of new debt in the form of the 2017 G.O. Preserve Bonds. General Obligations in FY 2014/15 were higher than normal due to an additional principal and interest payoff for a mature bond refunding in the amount of $59.5 million. MPC Excise Debt MPC Excise Debt represents Municipal Property Corporation (MPC) Bonds which are non-voter approved and issued by the City of Scottsdale Municipal Property Corporation, a nonprofit corporation created by the city in 1967 for the sole purpose of constructing, acquiring and equipping buildings, structures, or improvements on land owned by the city. The debt incurred by the corporation is a city obligation and the repayment of debt is financed by General Fund excise taxes, Tourism Development Fund bed tax receipts, etc. Per financial policy No. 31, nonvoter approved debt will be utilized only when a dedicated revenue source can be identified to pay or reimburse the city for paying debt services expenses. Debt Service payments for FY 2017/18 total $20.0 million, a $0.8 million increase over the FY 2016/17 year-end forecast. The increase is mainly due to the issuance the 2015 MPC Refunding Spring Training MCSD and AZSTA Funded bond. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 134 - Table of Contents BUDGET BY FUND | Debt Service Fund Uses SPA Debt Service Preserve Revenue Bonds (SPA) Debt Service represent prior debt issuances related to land acquisition in the McDowell Mountain Sonoran Preserve. Preserve Authority Revenue debt is repaid by the dedicated 0.20 percent sales tax authorized by voters in 1995 and the 0.15 percent sales tax authorized by voters in 2004. Obligations for FY 2017/18 total $6.1 million, which is flat when compared to the FY 2016/17 year-end forecast. Transfers Out Transfers Out is the authorized movement of cash or other resources to other funds and/or capital projects. The FY 2017/18 adopted budget includes $4.2 million in Transfers Out to the MPC Excise Debt Fund for Debt Service Stabilization to cover the difference in the MCSD and AZSTA revenue contribution amounts for Cactus League spring training facilities. This is an internal transfer between two Debt Service Funds and so there is a corresponding Transfer In of the same amount reflected in Transfer In - Debt Svc MPC Bonds having a net $0 impact. FY 2016/17 was the first year this transfer was budgeted for. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 135 - Table of Contents BUDGET BY FUND | Debt Service Fund Ending Fund Balance Debt Service Fund Balance Fund balance/reserves protect the city’s financial condition and provide for unexpected economic challenges. The Debt Service Fund balance varies primarily due to the timing of debt issuances and related repayment schedules. Growth of fund balance occurs when sources exceed uses. The specific make-up of the city’s Debt Service Fund balance is noted in the following: Debt Stabilization Reserve Debt Stabilization Reserve of $10.0 million is projected for the end of FY 2017/18. As with the other reserves, the Debt Stabilization Reserve balance varies primarily due to the timing of debt issuances and related repayment schedules associated with the MPC Excise Debt. GO Debt Service Reserve Debt Stabilization Reserve of $10.4 million is projected for the end of FY 2017/18. As with the other reserves, the GO Debt Service Reserve balance varies primarily due to the timing of debt issuances and related repayment schedules associated with GO Debt Service. Actuals in FY 2013/14 and 2014/15 are much higher than Adopted due to unexpected proceeds of refunding bonds received during those fiscal years. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 136 - Table of Contents BUDGET BY FUND | Debt Service Fund Ending Fund Balance MPC Excise Debt Reserve MPC Excise Debt Reserve Fund balance was previously dedicated to fiscal agent fees. Because actuals and budgets were sporadically applied, beginning in FY 2017/18 fiscal agent fees are included in the Debt Stabilization Reserve. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 137 - Table of Contents BUDGET BY FUND | Debt Service Expense Budget 2016/17 General Fund Contracts Payable BOR Administration/Westworld BOR Administration/TPC Total Contracts Payable Forecast 2016/17 Adopted 2017/18 Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Final Payment Date Forecast 2021/22 155,133 155,133 310,266 155,133 155,133 310,266 162,889 162,890 325,779 171,000 171,000 342,000 179,600 179,600 359,200 188,600 188,600 377,200 198,000 198,000 396,000 2032 2035 Certificates of Participation Police/Fire Radio Communication Total Certificates of Participation 2,548,680 2,548,680 2,548,680 2,548,680 2,548,679 2,548,679 2,548,700 2,548,700 2,548,700 2,548,700 - - 2020 Total General Fund 2,858,946 2,858,946 2,874,458 2,890,700 2,907,900 377,200 396,000 5,351,250 3,409,125 1,601,400 8,567,628 12,064,118 3,080,295 3,835 34,077,651 5,351,250 3,409,125 1,601,400 8,567,628 12,064,118 3,080,295 5,110 34,078,926 5,643,000 3,506,625 1,617,200 8,191,178 12,116,631 3,080,295 4,035 34,158,964 3,580,600 7,972,300 11,719,700 9,160,300 1,359,341 3,600 33,795,841 3,719,100 5,667,900 11,822,900 9,242,100 1,792,042 3,600 32,247,642 3,851,600 4,440,100 11,397,000 8,905,900 1,780,335 3,600 30,378,535 3,972,000 10,958,900 9,451,100 1,775,918 3,400 26,161,318 2018 2030 2018 2021 2023 2028 2038 Preserve General Obligation Bonds - Preserve Sales Tax Supported 2002 G.O. Refunding Bonds Preserve 2008B G.O. Bonds Preserve ($20.0M Apr 2008) 2011 G.O. Bonds Preserve ($22.5M Feb 2011) 2011 G.O. Refunding Bonds Preserve ($34.4M Apr 2011) 2012 G.O. Bonds Preserve ($50.0M Feb 2012) 2012 G.O. Refunding Bonds Preserve ($44.5M Jul 2012) 2013 G.O. Bonds Preserve ($75.0M Feb 2013) 2014 G.O. Bonds Preserve ($14.0M May 2014) 2014 G.O. Refunding Bonds Preserve ($9.4M May 2014) 2015 G.O. Refunding Bonds Preserve ($74.0M Apr 2015) 2017 G.O. Preserve Bonds ($17.4M Feb 2017) Fiscal Agent Fees Total Preserve General Obligation Bonds 1,832,192 680,813 1,673,500 2,842,850 1,601,250 1,581,047 2,365,200 984,881 1,559,032 8,349,555 2,500,000 4,775 25,975,095 1,832,192 680,813 1,673,500 2,842,850 1,601,250 1,581,047 2,365,200 984,881 1,559,032 8,349,555 257,577 5,940 23,733,837 1,822,193 679,250 1,661,100 2,883,250 3,001,250 1,581,047 2,365,200 983,781 1,551,419 8,370,355 820,600 5,065 25,724,510 1,798,300 1,652,900 3,934,100 1,573,300 1,581,100 3,365,200 986,800 1,552,300 8,770,800 820,600 5,100 26,040,500 1,643,700 7,983,800 3,073,300 2,294,400 3,825,200 986,600 1,550,000 4,585,200 820,600 4,600 26,767,400 1,638,500 3,755,500 3,028,300 2,977,900 3,765,200 983,700 1,544,900 9,006,000 820,600 4,600 27,525,200 1,627,100 3,753,500 1,468,300 4,833,300 4,205,200 985,400 1,561,800 8,975,400 820,600 4,800 28,235,400 2019 2018 2034 2024 2034 2025 2034 2034 2023 2034 2034 Scottsdale Preserve Authority Bonds - Preserve Sales Tax Supported 2010 Scottsdale Preserve Revenue Refunding Bonds 2011 Scottsdale Preserve Revenue Refunding Bonds Fiscal Agent Fees Total Scottsdale Preserve Authority Bonds 4,709,063 1,401,800 5,000 6,115,863 4,709,063 1,401,800 5,000 6,115,863 4,725,763 1,399,200 5,000 6,129,963 4,737,500 1,405,000 5,000 6,147,500 4,748,200 1,407,300 5,000 6,160,500 4,760,600 1,411,500 5,000 6,177,100 4,784,500 1,417,500 5,000 6,207,000 2024 2022 Municipal Property Corp. (MPC) Bonds - Excise Tax Supported 2006 MPC Refunding SkySong 2014 MPC Refunding SkySong ($2.6M) 2005 MPC Spring Training MCSD and AZSTA Funded 2015 MPC Refunding Spring Training MCSD and AZSTA Funded 2006 MPC Refunding WW/TPC Land Acquisition 80-acres 2015 MPC Refunding WW/TPC Land Acquisition 80-acres 2015 MPC Refunding WW/TPC Land Acq. 80-acres Tourism Funded 2006A MPC TPC ($10.0M) 2014 MPC Refunding TPC ($4.2M) 2015 MPC Refunding TPC 2006B MPC WW/TPC Land Acq 52- and 17-acres ($32.5M) 2014 MPC Refunding WW/TPC Land Acq 52- and 17-acres ($16.0M) 2015 MPC Refunding WW/TPC Land Acq 52- and 17-acres 2013A MPC SFS Garage Payoff ($31.0M) 2013B MPC McDowell Golf ($1.6M) 2013C MPC TNEC ($41.9M) 2013C MPC TNEC Tourism Funded 2015A MPC Revenue Museum Tourism Funded 2015A MPC Revenue Taxable TPC Tourism Funded 2015A MPC Revenue Taxable TPC Golf Surcharge Fiscal Agent Fees 2,703,250 61,308 286,688 3,167,737 2,379,250 68,350 600,000 357,000 165,520 96,884 1,286,250 633,035 383,392 2,196,900 103,825 1,505,375 1,200,000 889,363 900,000 163,063 15,605 2,703,250 61,308 286,688 3,167,737 2,379,250 68,350 600,000 357,000 165,520 96,884 1,286,250 633,035 383,392 2,196,900 103,825 1,505,375 1,200,000 889,363 900,000 163,063 12,425 1,438,000 1,339,130 4,210,537 2,419,000 68,350 600,000 524,908 96,884 1,930,824 383,392 2,260,400 106,325 1,479,375 1,200,000 891,763 900,000 161,463 9,425 1,438,000 1,335,700 6,618,100 2,459,000 68,300 600,000 524,900 96,900 1,951,200 383,400 2,327,900 103,600 1,461,400 1,200,000 893,000 900,000 164,700 9,400 2,813,000 7,309,400 2,494,000 68,400 600,000 514,900 96,900 1,933,700 383,400 2,398,900 105,800 1,455,900 1,200,000 889,200 900,000 161,500 9,400 2,814,300 1,849,800 2,524,000 68,300 600,000 518,700 96,900 1,948,000 383,400 2,472,900 107,800 1,457,100 1,200,000 889,500 900,000 162,900 9,400 2,817,000 2,544,000 68,300 600,000 518,300 96,900 1,988,400 383,400 2,544,400 104,600 1,464,600 1,200,000 893,900 900,000 163,700 9,400 2034 2019 2017 2021 2030 2035 2035 2017 2027 2031 2017 2027 2031 2028 2033 2033 2033 2034 2034 2034 12,015,182 3,589,363 103,825 3,454,425 12,012,002 3,589,363 103,825 3,454,425 12,111,151 3,591,763 106,325 4,210,537 12,220,800 3,593,000 103,600 6,618,100 12,330,000 3,589,200 105,800 7,309,400 12,455,900 3,589,500 107,800 1,849,800 12,598,400 3,593,900 104,600 - 19,162,795 19,159,615 20,019,776 22,535,500 23,334,400 18,003,000 16,296,900 85,331,404 83,142,699 86,033,213 88,519,341 88,509,942 82,083,835 76,900,618 Debt Service Funds General Obligation Bonds - Property Tax (Secondary) Supported 2008A G.O. Various Purpose ($100.0M Apr 2008) 2010 G.O. Various Purpose ($50.8M Apr 2010) 2011 G.O. Refunding Bonds ($8.6M Apr 2011) 2012 G.O. Refunding Bonds ($38.5M Jul 2012) 2014 G.O. Refunding Bonds ($73.8M May 2014) 2015 G.O. Refunding Bonds ($86.4M Apr 2015) Future G.O. Bond: $28.9M issue Feb 2018 Fiscal Agent Fees and Arbitrage Fees Total General Obligation Bonds Subtotal: MPC - General Fund/Excise Tax Funded MPC - Tourism Funded MPC - Special Program (McDowell Golf) Funded MPC - MCSD and AZSTA Funded Total Municipal Property Corp. (MPC) Bonds Total Debt Service Funds City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 138 - Table of Contents BUDGET BY FUND | Debt Service Expense Budget 2016/17 Forecast 2016/17 Adopted 2017/18 Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 Final Payment Date Water and Water Reclamation Funds Water and Sewer Revenue Bonds 2008 Water Sewer Revenue Refunding Bonds-Water Reclamation Fiscal Agent Fees Total Water and Sewer Revenue Bonds 4,549,438 400 4,549,838 4,549,438 400 4,549,838 4,564,688 400 4,565,088 4,566,200 400 4,566,600 4,574,200 400 4,574,600 4,583,600 400 4,584,000 4,592,300 400 4,592,700 2023 Municipal Property Corp. (MPC) Bonds 2006 MPC Refunding Bonds-Water 2006 MPC Refunding Bonds-Water Reclamation 2008A MPC Bonds-Water 2008A MPC Bonds-Water Reclamation 2010 MPC Bonds-Water 2010 MPC Bonds-Water Reclamation 2015A MPC-Water Reclamation 2015 MPC Refunding Bonds-Water 2015 MPC Refunding Bonds-Water Reclamation Fiscal Agent Fees Future Revenue Bonds - Water Reclamation ($15.0M Jan 2018) F Future Revenue Bonds - Water ($42.1M Jan 2018) Total Municipal Property Corp. (MPC) Bonds 11,341,748 1,351,502 3,902,474 1,207,901 951,392 3,245,308 1,350,763 1,787,358 553,229 10,825 25,702,500 11,341,748 1,351,502 3,902,474 1,207,901 951,392 3,245,308 1,350,763 1,787,358 553,229 9,825 25,701,500 11,282,106 1,344,394 3,920,609 1,213,516 986,213 3,364,087 1,348,963 1,787,358 553,229 11,825 656,250 3,666,644 30,135,194 11,235,400 1,338,800 933,800 289,000 1,019,300 3,477,000 1,348,100 4,680,400 1,448,700 11,900 1,143,000 3,074,000 29,999,400 11,186,900 1,333,100 933,800 289,000 1,055,300 3,599,500 1,352,400 4,699,200 1,454,500 11,900 1,093,000 3,068,000 30,076,600 11,136,000 1,327,000 933,800 289,000 1,093,800 3,730,900 1,349,600 4,642,400 1,437,000 11,900 1,090,000 3,059,000 30,100,400 11,086,400 1,321,100 933,800 289,000 1,132,500 3,863,000 1,350,900 4,600,600 1,424,100 11,900 1,083,000 3,040,000 30,136,300 2030 2030 2032 2032 2036 2036 2034 2028 2028 30,252,338 30,251,338 34,700,282 34,566,000 34,651,200 34,684,400 34,729,000 1,014,936 1,014,936 1,014,936 1,014,936 1,820,000 1,000 1,821,000 1,954,000 1,000 1,955,000 1,918,000 1,000 1,919,000 1,882,000 1,000 1,883,000 1,846,000 1,000 1,847,000 119,457,624 117,267,919 125,428,953 127,931,041 127,988,042 119,028,435 113,872,618 Total Water and Sewer Funds Aviation Fund Future MPC Revenue Bonds - Aviation ($27.0M Jan 2018) * F Fiscal Agent Fees (Future Bonds @ $1,000/bond) Total Aviation Fund GRAND TOTAL DEBT SERVICE City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 139 - 2037 2037 2037 Table of Contents BUDGET BY FUND | Debt Service Expense Debt Service Expense FY 2016/17 vs. FY 2017/18 Type of Bond Contracts Payable Certificates of Participation General Obligation Bonds Preserve General Obligation Bonds Scottsdale Preserve Authority Bonds Municipal Property Corporation (MPC) Bonds Water and Sewer Revenue Bonds Water/Sewer MPC Bonds Aviation MPC Revenue Bonds Total FY 2016/17 310,266 2,548,680 34,078,926 23,788,295 6,115,863 19,159,615 4,549,838 25,701,500 1,014,936 117,267,919 Adopted FY 2017/18 325,779 2,548,679 34,158,964 25,724,510 6,129,963 20,019,776 4,565,088 30,135,194 1,821,000 125,428,953 (in millions) $34.1 $34.2 $35 $30.1 $30 $25.7 $25.7 $23.8 $25 $19.2 $20 $20.0 $15 $10 $5 $‐ $6.1 $6.1 $2.5 $2.5 $4.5 $4.6 $0.3 $0.3 Contracts Payable $1.0 Certificates of Participation General Obligation Bonds Preserve General Obligation Bonds Scottsdale Municipal Preserve Authority Property Bonds Corporation (MPC) Bonds FY 2016/17 Water and Sewer Revenue Bonds Adopted FY 2017/18 City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 140 - Water/Sewer MPC Bonds $1.8 Aviation MPC Revenue Bonds Table of Contents BUDGET BY FUND | Long-Term Debt Outstanding Long-Term Debt Outstanding - All Funds As of 6/30/17 through 6/30/21 Balance at 6/30/17 General Fund Contracts Payable & Service Concession Arrangements BOR Administration/Westworld BOR Administration/TPC Total General Fund Contracts Payable Balance at 6/30/18 Balance at 6/30/19 Balance at 6/30/20 Final Payment Date Balance at 6/30/21 1,199,405 1,329,804 2,529,209 1,119,445 1,255,926 2,375,371 1,039,484 1,182,048 2,221,532 959,524 1,108,170 2,067,694 879,564 1,034,292 1,913,856 2032 2035 7,264,240 7,264,240 4,913,857 4,913,857 2,493,145 2,493,145 - - 2020 9,793,449 7,289,228 4,714,677 2,067,694 1,913,856 5,400,000 41,700,000 1,555,000 24,074,993 60,478,964 86,400,000 219,608,957 39,800,000 16,779,993 50,681,535 86,400,000 28,850,000 222,511,528 37,750,000 9,484,993 40,987,116 80,320,000 21,196,152 189,738,261 35,500,000 4,238,329 30,898,620 73,915,000 20,445,142 164,997,091 33,050,000 20,832,541 67,590,000 19,667,626 141,140,167 2018 2030 2018 2021 2023 2028 2038 Preserve General Obligation Bonds - Preserve Sales Tax Supported 2002 G.O. Refunding Bonds-Preserve 2008B G.O. Bonds-Preserve 2011 G.O. Bonds-Preserve 2011 G.O. Refunding Bonds-Preserve 2012 G.O. Bonds-Preserve 2012 G.O. Refunding Bonds-Preserve 2013 G.O. Bonds-Preserve 2014 G.O. Bonds-Preserve 2014 G.O. Refunding Bonds-Preserve 2015 G.O. Refunding Bonds-Preserve 2017 G.O. Bonds-Preserve Total Preserve General Obligation Bonds 3,405,000 650,000 18,665,000 20,665,000 50,000,000 44,020,007 74,000,000 12,435,000 8,156,036 62,305,000 17,410,000 311,711,043 1,725,000 17,835,000 18,685,000 48,600,000 44,020,007 74,000,000 11,870,000 6,918,465 56,065,000 17,410,000 297,128,472 16,980,000 15,575,000 48,600,000 44,020,007 73,000,000 11,285,000 5,642,884 49,175,000 17,410,000 281,687,891 16,100,000 8,310,000 47,100,000 43,306,671 71,500,000 10,690,000 4,331,380 46,195,000 17,410,000 264,943,051 15,190,000 4,970,000 45,600,000 41,880,000 70,000,000 10,080,000 2,972,459 38,675,000 17,410,000 246,777,459 2019 2018 2034 2024 2034 2025 2034 2034 2023 2034 2034 Scottsdale Preserve Authority Bonds - Preserve Sales Tax Supported 2010 Scottsdale Preserve Revenue Refunding Bonds 2011 Scottsdale Preserve Revenue Refunding Bonds Total Scottsdale Preserve Authority Bonds 29,745,000 6,105,000 35,850,000 26,485,000 5,000,000 31,485,000 23,100,000 3,845,000 26,945,000 19,535,000 2,630,000 22,165,000 15,800,000 1,350,000 17,150,000 2024 2022 28,760,000 2,590,550 17,880,748 24,380,000 14,457,510 4,185,241 2,162,411 15,959,209 8,557,600 22,405,000 1,245,000 32,215,000 11,130,000 13,190,000 199,118,269 28,760,000 1,312,727 14,530,748 23,180,000 14,457,510 3,825,853 2,162,411 14,661,420 8,557,600 21,155,000 1,190,000 30,855,000 10,670,000 12,600,000 187,918,269 28,760,000 8,639,208 21,880,000 14,457,510 3,455,723 2,162,411 13,304,277 8,557,600 19,775,000 1,135,000 29,445,000 10,195,000 11,995,000 173,761,729 27,385,000 1,761,720 20,480,000 14,457,510 3,089,038 2,162,411 11,940,962 8,557,600 18,255,000 1,075,000 27,970,000 9,700,000 11,375,000 158,209,241 25,940,000 18,980,000 14,457,510 2,707,643 2,162,411 10,522,357 8,557,600 16,585,000 1,010,000 26,420,000 9,180,000 10,735,000 147,257,521 2034 2019 2021 2030 2035 2027 2031 2027 2031 2028 2033 2033 2034 2034 766,288,269 739,043,269 672,132,881 610,314,383 552,325,147 Certificates of Participation 2010 Certificates of Participation - Public Safety Communications Total Certificates of Participation Total General Fund Debt Service Funds General Obligation Bonds - Property Tax (Secondary) Supported 2008A G.O. Various Purpose 2010 G.O.Various Purpose Bonds 2011 G.O. Refunding Bonds 2012 G.O. Refunding Bonds 2014 G.O. Refunding Bonds 2015 G.O. Refunding Bonds Future G.O. Bonds Total General Obligation Bonds Municipal Property Corp. (MPC) Bonds - Excise Tax Supported 2006 MPC Refunding SkySong 2014 MPC Refunding SkySong 2015 MPC Refunding Spring Training 2006 MPC Refunding WW/TPC 80-acres 2015 MPC Refunding WW/TPC 80-acres 2014 MPC Refunding TPC 2015 MPC Refunding TPC 2014 MPC Refunding WW/TPC 52- and 17-acres 2015 MPC Refunding WW/TPC 52- and 17-acres 2013A MPC Garage 2013B MPC McDowell Mnt 2013C MPC TNEC 2015A MPC Museum 2015A Taxable TPC Total Municipal Property Corp. Bonds Total Debt Service Funds City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 141 - Table of Contents BUDGET BY FUND | Long-Term Debt Outstanding Long-Term Debt Outstanding - All Funds As of 6/30/17 through 6/30/21 Balance at 6/30/17 Water and Water Reclamation Funds Water Sewer Revenue Bonds 2008 Water Sewer Revenue Refunding Bonds Total Water Sewer Revenue Bonds Municipal Property Corp. (MPC) Bonds 2006 MPC Refunding Water/Sewer MPC Bonds 2008A Water & Sewer MPC Bonds 2010 Water & Sewer MPC Bonds 2015A Water & Sewer MPC Bonds 2015 Refunding Water & Sewer MPC Bonds 2017 Refunding Water & Sewer MPC Bonds Future MPC Bonds Total MPC Bonds - Water and Sewer Supported Total Water and Sewer Funds Aviation Fund Municipal Property Corp. (MPC) Bonds Future MPC Bonds 2017 MPC Bonds - Airport Supported Total Aviation Fund TOTAL LONG-TERM DEBT OUTSTANDING Balance at 6/30/18 Balance at 6/30/19 Balance at 6/30/20 Balance at 6/30/21 Final Payment Date 23,085,000 23,085,000 19,715,000 19,715,000 16,175,000 16,175,000 12,450,000 12,450,000 8,520,000 8,520,000 2023 95,630,000 3,725,000 16,330,000 16,860,000 46,811,731 79,970,000 42,105,000 301,431,731 87,785,000 15,230,000 16,165,000 46,811,731 79,970,000 40,262,906 286,224,637 79,600,000 13,940,000 15,450,000 43,023,271 79,970,000 38,799,758 270,783,029 71,060,000 12,440,000 14,695,000 39,020,759 79,970,000 37,283,978 254,469,737 62,150,000 10,710,000 13,905,000 34,892,479 79,970,000 35,715,566 237,343,045 2030 2032 2036 2034 2028 2036 2037 324,516,731 305,939,637 286,958,029 266,919,737 245,863,045 27,000,000 26,350,000 25,450,000 24,550,000 23,650,000 27,000,000 26,350,000 25,450,000 24,550,000 23,650,000 1,127,598,449 1,078,622,134 989,255,587 903,851,814 823,752,048 City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 142 - 2037 Table of Contents BUDGET BY FUND | Long-Term Debt Outstanding Outstanding Bonds By Type Forecast at June 30, 2017 Type of Issuance General Obligation Bonds (Combined) 6% Capacity 20% Capacity Total General Obligation Bonds Contracts Payable Certificates of Participation Governmental Municipal Property Corporation Bonds Scottsdale Preserve Authority Bonds Water & Sewer Revenue Bonds Enterprise Municipal Property Corporation Bonds Aviation Municipal Property Corporation Bonds Principal Bond Amount 26,116,267 505,203,733 531,320,000 2,529,209 7,264,240 199,118,269 35,850,000 23,085,000 301,431,731 27,000,000 1,127,598,449 Total Contracts Payable >1% Certificates of Participation 1% Scottsdale Preserve Authority Bonds 3% Governmental Municipal Property Corporation Bonds 18% Total General Obligation Bonds 47% % Total Water & Sewer Revenue Bonds 2% Enterprise Municipal Property Corporation Bonds 27% Aviation Municipal Property Corporation Bonds 2% City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 143 - 5% 95% 47% 0% 1% 18% 3% 2% 27% 2% 100% Table of Contents BUDGET BY FUND | Property Tax Supported General Obligation Bonds Property Tax (Secondary) Supported FY 2017/18 34,158,964 FY 2018/19 33,795,841 FY 2019/20 32,247,642 FY 2020/21 30,378,535 FY 2021/22 26,161,318 (in millions) $35 $34 $33 $34.2 $32 $33.8 $32.2 $31 $30 $30.4 $29 $28 $27 $26.2 $26 $25 FY 2017/18 FY 2018/19 FY 2019/20 FY 2020/21 City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 144 - FY 2021/22 Table of Contents BUDGET BY FUND | Legal Debt Margins COMPUTATION OF LEGAL DEBT MARGINS Forecast at June 30, 2017 Net Assessed Valuation Forecasted as of June 30, 2017 5,398,913,387 Debt Limit Equal to 20% of Assessed Valuation 1,079,782,677 General Obligation Bonded Debt Subject to 20% Debt Limit (net of amounts available in Debt Service Funds forecasted for payment on July 1, 2017): 2002 Refunding 2008A 2008B 2010 2011 2011 Refunding 2012 2012 Refunding 2013 2014 2014 Refunding 2015 Refunding 2017 3,405,000 5,400,000 650,000 33,800,000 18,665,000 22,220,000 50,000,000 68,095,000 74,000,000 12,435,000 50,418,733 148,705,000 17,410,000 Net Outstanding Forecasted Bonded Debt Subject to 20% Limit 505,203,733 (A) Forecasted Legal 20% Debt Margin (Available Borrowing Capacity) 574,578,944 (C) Debt Limit Equal to 6% of Assessed Valuation 323,934,803 State Regulation The Arizona Constitution (Article 9, Section 8), provides that the general obligation bonded indebtedness for a city for general municipal purposes may not exceed 6% of the assessed valuation of the taxable property in that city. In addition to the 6% limitation for general municipal purpose bonds, cities may issue general obligation bonds up to an additional 20% of the assessed valuation for supplying such city with water, artificial light, or sewers, for the acquisition and development of land for open space preserves, parks, playgrounds and recreational facilities, public safety, law enforcement, fire and emergency services facilities and transportation facilities. General Obligation Bonded Debt Subject to 6% Debt Limit (net of amounts available in Debt Service Funds forecasted for payment on July 1, 2017): 2010 2014 Refunding 7,900,000 18,216,267 Net Outstanding Forecasted Bonded Debt Subject to 6% Limit Forecasted Legal 6% Debt Margin (Available Borrowing Capacity) 26,116,267 (B) 297,818,536 (D) City of Scottsdale Compliance with State Regulation This schedule indicates the assessed valuation of property tax within the City of Scottsdale allows a maximum legal bonding capacity of $1,079,782,677 for projects subject to the 20% limitation and $323,934,803 for projects subject to the 6% limitation. Legal Debt Capacity Used Based on the City's current outstanding general obligation debt, it is forecasted as of June 30, 2017, the City has used (borrowed) the following legal debt capacity by percentage limitation: 20% limitation 6% limitation (A) $505,203,733 or 47% (B) $26,116,267 or 8% Legal Capacity Available Based on the City's current outstanding general obligation debt, it is forecasted as of June 30, 2017, the City has available (for borrowing) the following legal debt capacity by percentage limitation: 20% limitation 6% limitation (C) $574,578,944 or 53% (D) $297,818,536 or 92% City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 145 - Table of Contents BUDGET BY FUND | Legal Debt Margins General Obligation Bond Capacity Available as of June 30, 2017 Under Arizona Constitution Article IX, section 8 (amended by Proposition 104 in 2006), cities may issue General Obligation Bonds for streets and transportation facilities, public safety, law enforcement, fire and emergency services facilities, water, water reclamation, artificial light, acquisition and development of land for open space preserves, parks, playgrounds and recreation facilities up to an amount not exceeding 20% of secondary assessed value. Cities may also issue General Obligation Bonds for all other general purposes not included in the 20% debt margin category up to an amount not exceeding 6% of the secondary assessed value. Outstanding General Obligation Bonds Subject to 20% Limit Maturity Date FY 2017/18 FY 2018/19 FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33 FY 2033/34 Total Principal Payable 28,832,570 30,091,163 38,485,000 39,545,000 39,420,000 41,495,000 44,720,000 45,005,000 32,745,000 28,435,000 29,485,000 20,335,000 21,050,000 15,675,000 16,165,000 16,665,000 17,055,000 505,203,733 Interest Payable 18,537,636 17,471,379 16,356,944 14,814,944 13,192,519 11,605,969 10,294,194 8,744,444 7,162,088 5,946,900 4,902,725 3,817,825 3,102,294 2,357,000 1,810,550 1,242,650 633,450 141,993,508 Fiscal Total 47,370,206 47,562,541 54,841,944 54,359,944 52,612,519 53,100,969 55,014,194 53,749,444 39,907,088 34,381,900 34,387,725 24,152,825 24,152,294 18,032,000 17,975,550 17,907,650 17,688,450 647,197,241 (in millions) $60 $50 $40 $16.4 $18.5 $14.8 $13.2 $11.6 $10.3 $8.7 $17.5 $7.2 $30 $20 $28.8 $38.5 $39.5 $39.4 $41.5 $5.9 $4.9 $28.4 $29.5 $45.0 $44.7 $10 $‐ FY 2017/18 FY 2018/19 FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 Principal Payable Bonded Debt 505,203,733 $3.1 $3.8 $32.7 $30.1 FY 2025/26 FY 2026/27 FY 2027/28 $20.3 $21.1 FY 2028/29 FY 2029/30 $2.4 $1.8 $1.2 $0.6 $15.7 $16.2 $16.7 $17.1 FY 2030/31 FY 2031/32 Interest Payable Available Borrowing Capacity 574,578,944 Available Borrowing Capacity, $574,578,944 Bonded Debt, $505,203,733 City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 146 - FY 2032/33 FY 2033/34 Table of Contents BUDGET BY FUND | Legal Debt Margins Outstanding General Obligation Bonds Subject to 6% Limit as of June 30, 2017 Maturity Date Principal Payable FY 2017/18 11,697,430 FY 2018/19 10,468,837 FY 2019/20 2,250,000 FY 2020/21 1,700,000 Total 26,116,267 Fiscal Total 12,504,168 10,905,652 2,372,750 1,755,250 27,537,820 Interest Payable 806,738 436,815 122,750 55,250 1,421,553 (in millions) $14 $0.8 $0.4 $12 $10 $8 $6 $11.7 $10.5 $4 $0.1 $2 $‐ $2.3 FY 2017/18 FY 2018/19 FY 2019/20 Principal Payable Bonded Debt 26,116,267 $0.1 $1.7 FY 2020/21 Interest Payable Available Borrowing Capacity 297,818,536 Available Borrowing Capacity, $297,818,536 Bonded Debt, $26,116,267 City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 147 - Table of Contents FY 2017/18 Adopted Budget City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 148 - Table of Contents Budget by Fund Total Budget Overview BUDGET BY FUND | Enterprise Funds Overview Adopted Budget $1,279.8Million (a) Operating Budgets $557.9M (a) (a) (b) Grants & Special Districts $15.2M Capital Improvement $522.6M Contingencies / Reserves $184.0M General Fund $265.6M Grant Funds $14.6M Community Facilities $17.5M General Fund $29.8M Special Revenue $46.5M Special Districts $0.6M Preservation $47.6M Special Revenue $7.1M Debt Service Funds $125.4M Drainage / Flood Control $8.8M Debt Service Funds $20.3M Enterprise Funds $112.4M Public Safety $18.6M Enterprise Funds $73.2M Internal Service $8.0M (a) $60.7M (b) Service Facilities $20.1M Internal Service $36.0M Transportation $163.5M Grant Funds $2.0M Water Management $246.6M Capital Projects $15.6M Adopted Budget and Operating Budgets include Internal Service Funds offsets (reductions) of $52.7M Internal Service Funds Budget prior to Internal Service Funds offsets of $52.7M Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 149 - Table of Contents Budget by Fund Enterprise Funds Overview BUDGET BY FUND | Enterprise Funds Overview Enterprise Funds Description Scottsdale uses three separate Enterprise Funds to account for the activity of the proprietary funds. The individual funds are Water and Water Reclamation, Solid Waste, and Aviation. In aggregate, the Enterprise Funds are the city’s second largest source of revenues, which are derived from user fees and charges. User fees and charges are established to promote efficiency by shifting costs to specific users of services and avoiding general taxation. The applicable revenues of the individual funds, along with each fund’s purpose, are described in the sections that follow. Overview of User Fees Revenue Policy Rate adjustments for Enterprise User Fees are recommended based upon five-year financial plans developed for each operation and are reviewed annually per Scottsdale’s adopted financial policies to meet the stated objectives of: • Equity – to ensure that charges are borne by the beneficiaries of a product or service. • Rate Stability – to level distribution of necessary cost increases to avoid large rate increases in any one year. • Financing – to manage the level of debt to ensure the city can meet bond coverage requirements, provide for capital financing needs and remain financially healthy. • Rate Design – to encourage efficient use of city resources and conservation where applicable. Enterprise Funds Sources (in millions) Water & Water Reclamation Solid Waste Aviation Total Revenue Transfers In Total Sources 151.3 20.1 4.0 175.4 54.3 229.7 Enterprise Funds Uses (in millions) Personnel Services Contractual Services Commodities Capital Outlays Direct/Indirect Costs Debt Service Contingency/ Reserves Adopted Budget Transfers Out General Fund AWT Debt Service Fund CIP Total Uses 28.8 42.7 31.5 1.1 8.3 36.5 79.6 228.6 7.2 3.0 34.7 42.1 315.6 Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 150 - Table of Contents Budget by Fund Water & Water Reclamation Funds BUDGET BY FUND | Water & Water Reclamation Funds Overview Fund Purpose These funds account for the transactions related to the city’s water and water reclamation business activities, including operating sources, uses and debt service payments. Capital uses are accounted for in various Capital Improvement Plan funds (see Volume Three for project details). Water & Water Reclamation Funds Sources (in millions) Water Service Charges Water Reclamation Service Charges Non-Potable Water Service Charges Miscellaneous Interest Earnings Indirect Costs Stormwater Quality Fees Total Revenue Transfers In AWT Debt Service RWDS Total Sources 91.8 39.9 16.2 1.3 1.1 0.8 0.3 151.3 3.0 50.4 0.9 205.6 Water & Water Reclamation Funds Uses (in millions) Personnel Services Contractual Services Commodities Capital Outlays Debt Service Indirect Cost Allocation Department Indirect Cost Allocation Contingency/ Reserves Adopted Budget Transfers Out AWT CIP CIP Technology Debt Service Fund Franchise Fees Total Uses 20.3 30.5 30.8 0.6 34.7 5.1 0.8 64.0 186.7 3.0 41.8 0.1 34.7 7.2 273.5 Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 151 - Table of Contents BUDGET BY FUND | Water & Water Reclamation Funds Summary Actual 2015/16 Adopted 2016/17 Approved 2016/17 Forecast 2016/17 Adopted 2017/18 14,323,102 37,914,174 4,691,838 4,028,535 23,949,845 84,907,494 14,933,121 38,244,900 4,604,688 5,149,276 62,931,985 14,933,121 38,244,900 4,604,688 5,149,276 2,709,998 65,641,983 14,933,121 38,244,900 4,604,688 5,149,276 2,709,998 65,641,983 16,320,824 38,244,900 4,604,688 5,063,991 3,692,111 67,926,514 91,698,399 38,843,243 12,256,750 3,171,710 946,265 759,727 111,878 147,787,972 91,418,800 38,677,500 13,256,800 1,180,000 899,138 866,900 267,000 146,566,138 91,418,800 38,677,500 13,256,800 1,180,000 899,138 866,900 267,000 146,566,138 91,868,800 38,852,500 13,256,800 1,180,000 899,138 866,900 267,000 147,191,138 91,774,100 39,894,800 16,217,900 1,264,500 1,065,365 804,500 268,500 151,289,665 27,615,040 900,000 2,749,667 15,595,296 900,000 2,749,667 15,595,296 900,000 2,749,667 45,847,634 900,000 2,960,000 50,420,429 900,000 176,303,012 165,811,101 165,811,101 196,688,439 205,570,094 91,166 2,066,669 55,111,649 4,443,590 759,727 - 2,242,080 61,361,923 4,836,310 866,900 476,914 (1,130,000) 2,186,417 61,324,216 4,836,310 866,900 13,866 (397,832) 2,186,417 61,324,215 4,836,310 866,900 (397,832) 2,136,143 63,918,663 5,069,106 804,500 443,056 (1,152,600) Subtotal 14,549,848 77,022,650 566,000 16,281,900 85,502,027 391,800 16,281,900 85,503,577 391,800 16,281,900 85,489,710 466,001 16,329,312 88,014,181 Subtotal 7,227,322 18,169,639 4,455,282 87,205 29,939,449 7,714,285 17,988,215 4,549,838 30,252,338 7,714,285 17,988,215 4,549,838 30,252,338 7,714,285 17,988,215 4,549,838 30,252,338 8,484,992 21,650,202 4,565,088 34,700,282 106,962,099 115,754,365 115,755,915 115,742,048 122,714,463 Total Uses 67,776,888 81,375 13,696,883 7,051,278 88,606,424 195,568,523 2,749,667 38,295,657 108,043 7,211,400 48,364,767 164,119,132 2,749,667 38,295,657 108,043 7,211,400 48,364,767 164,120,682 2,749,667 38,295,657 108,043 30,252,338 7,256,155 78,661,860 194,403,908 2,960,000 41,822,695 76,100 34,700,282 7,214,440 86,773,517 209,487,980 Sources Over/(Under) Uses (19,265,511) 1,691,969 1,690,419 2,284,531 (3,917,886) 14,933,121 38,244,900 4,604,688 5,149,276 2,709,998 65,641,983 14,946,509 39,789,235 4,604,688 5,283,522 64,623,954 14,946,509 39,789,235 4,604,688 5,283,522 2,708,448 67,332,402 16,320,824 38,244,900 4,604,688 5,063,991 3,692,111 67,926,514 17,278,888 41,302,123 4,604,688 822,929 64,008,628 Beginning Fund Balance Operating Reserve Repair/Replacement Reserve Revenue Bond Debt Service Reserve Special Contractual Fund Balance Undesignated, Unreserved Fund Balance Total Beginning Fund Balance Revenues Water Service Charges Water Reclamation Service Charges Non-Potable Water Service Charges Miscellaneous Interest Earnings Indirect Costs Stormwater Quality Fees Subtotal Transfers In AWT Debt Service(a) RWDS Total Sources Expenditures Mayor and City Council City Treasurer Water Resources Citywide Indirect Cost Allocation Department Indirect Cost Citywide Pay Program Estimated Personnel Savings from Vacant Positions Leave Accrual Payments Utilities Debt Service MPC Bonds Debt Service-Sewer MPC Bonds Debt Service-Water Sewer Revenue Bonds Water Revenue Bond TOTAL OPERATING BUDGET Transfers Out AWT CIP CIP Technology Debt Service(a) Franchise Fees Subtotal Ending Fund Balance Operating Reserve Repair/Replacement Reserve Revenue Bond Debt Service Reserve Special Contractual Fund Balance Undesignated, Unreserved Fund Balance Total Ending Fund Balance (a) Development fee revenues are receipted in the Capital Fund and paid by developers when new construction developments are permitted. A portion of these revenues are then transferred to the operating budget to pay for debt service costs associated with providing additional infrastructure to serve new development areas. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 152 - Table of Contents BUDGET BY FUND | Water & Water Reclamation Funds Five Year Financial Forecast Adopted 2017/18 Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 16,320,824 38,244,900 4,604,688 5,063,991 3,692,111 67,926,514 17,278,888 41,302,123 4,604,688 822,929 64,008,628 17,863,171 42,831,470 4,604,688 833,999 66,133,328 18,509,541 43,895,164 4,604,688 845,335 67,854,728 18,732,828 44,592,168 4,604,688 856,944 68,786,628 91,774,100 39,894,800 16,217,900 1,264,500 1,065,365 804,500 268,500 151,289,665 94,499,800 41,042,100 16,542,100 1,289,800 1,568,300 820,600 271,200 156,033,900 96,374,400 42,223,100 16,873,200 1,315,400 2,154,600 837,000 273,900 160,051,600 98,286,400 43,439,300 17,210,400 1,341,900 2,400,100 853,600 276,600 163,808,300 100,236,600 44,691,400 17,554,800 1,368,800 2,565,400 870,900 279,400 167,567,300 2,960,000 50,420,429 900,000 2,989,600 50,191,700 900,000 3,019,500 50,399,900 900,000 3,049,700 50,466,500 900,000 3,080,200 50,563,900 900,000 205,570,094 210,115,200 214,371,000 218,224,500 222,111,400 2,136,143 63,918,663 5,069,106 804,500 443,056 (1,152,600) 2,179,400 66,781,100 5,322,600 820,600 865,000 (1,169,700) 2,208,600 67,844,900 5,588,800 837,000 1,266,800 (1,187,200) 2,237,800 70,698,600 5,868,200 853,600 1,644,200 (1,205,400) 2,268,800 73,613,900 6,161,500 870,900 2,005,000 (1,224,000) Subtotal 466,001 16,329,312 88,014,181 472,700 16,812,400 92,084,100 480,000 17,310,000 94,348,900 487,400 17,822,700 98,407,100 494,900 18,698,100 102,889,100 Subtotal 8,484,992 21,650,202 4,565,088 34,700,282 9,049,200 20,950,200 4,566,600 34,566,000 9,126,100 20,950,500 4,574,600 34,651,200 9,228,100 20,872,300 4,584,000 34,684,400 9,335,600 20,800,700 4,592,700 34,729,000 122,714,463 126,650,100 129,000,100 133,091,500 137,618,100 2,960,000 41,822,695 76,100 34,700,282 7,214,440 86,773,517 209,487,980 2,989,600 36,114,700 249,400 34,566,000 7,420,700 81,340,400 207,990,500 3,019,500 38,248,800 143,400 34,651,200 7,586,600 83,649,500 212,649,600 3,049,700 38,593,500 117,600 34,684,400 7,755,900 84,201,100 217,292,600 3,080,200 37,766,500 201,000 34,729,000 7,929,800 83,706,500 221,324,600 Sources Over/(Under) Uses (3,917,886) 2,124,700 1,721,400 931,900 786,800 Ending Fund Balance Operating Reserve Repair/Replacement Reserve Revenue Bond Debt Service Reserve Special Contractual Fund Balance Undesignated, Unreserved Fund Balance Total Ending Fund Balance 17,278,888 41,302,123 4,604,688 822,929 64,008,628 17,863,171 42,831,470 4,604,688 833,999 66,133,328 18,509,541 43,895,164 4,604,688 845,335 67,854,728 18,732,828 44,592,168 4,604,688 856,944 68,786,628 18,928,876 45,171,029 4,604,688 868,835 69,573,428 Beginning Fund Balance Operating Reserve Repair/Replacement Reserve Revenue Bond Debt Service Reserve Special Contractual Fund Balance Undesignated, Unreserved Fund Balance Total Beginning Fund Balance Revenues Water Service Charges Water Reclamation Service Charges Non-Potable Water Service Charges Miscellaneous Interest Earnings Indirect Costs Stormwater Quality Fees Subtotal Transfers In AWT Debt Service(a) RWDS Total Sources Expenditures Mayor and City Council City Treasurer Water Resources Citywide Indirect Cost Allocation Department Indirect Cost Citywide Pay Program Estimated Personnel Savings from Vacant Positions Leave Accrual Payments Utilities Debt Service MPC Bonds Debt Service-Sewer MPC Bonds Debt Service-Water Sewer Revenue Bonds Water Revenue Bond TOTAL OPERATING BUDGET Transfers Out AWT CIP CIP Technology Debt Service(a) Franchise Fees Subtotal Total Uses (a) Development fee revenues are receipted in the Capital Fund and paid by developers when new construction developments are permitted. A portion of these revenues are then transferred to the operating budget to pay for debt service costs associated with providing additional infrastructure to serve new development areas. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 153 - Table of Contents BUDGET BY FUND BUDGET BY FUND | Water & Water Reclamation Funds Sources WATER AND SEWER FUND SOURCES Water & Rater Reclamation Funds Sources Water & Water Reclamation Funds sources for FY 2017/18 equal $205.6 million which is an increase of $8.9 million from the FY 2016/17 year-end forecast mainly due to rate and fee increases and development fees that are collected in the Capital Fund and then transferred to the operating budget to pay for debt service costs. The sources include Water Service Charges, Water Reclamation Service Charges, Non-Potable Water Service Charges, Miscellaneous, Interest Earnings, Indirect Costs, Stormwater Quality Fees and Transfers In. Water Service Charges Water Service Charges revenue for FY 2017/18 totals $91.8 million, a $0.1 million decrease from the FY 2016/17 year-end forecast due to a decrease in the volume in water charges anticipated. The decrease in revenue due to volume was offset somewhat by rate and fee increases. Rate and fee increases for FY 2017/18 vary by meter size, user types and categories. Monthly water billings consist of a base charge according to meter size and a monthly quantity usage charge based on the amount of water consumed. Rates and fees are reviewed annually to determine if they cover the costs of the services provided. Water Reclamation Service Charges Water Reclamation Service Charges revenue adopted for FY 2017/18 totals $39.9 million, a $1.0 million increase compared to the FY 2016/17 year-end forecast. The water reclamation revenues are greater than last year due to assumptions derived from a review of the prior three year actuals adjusted for rate structure changes. Monthly water reclamation billings consist of a base fee and a flow charge for capital costs and operation and maintenance expenses that vary by customer classification determined by relative wastewater loadings. Rates and fees are reviewed annually to determine if they cover the costs of the services provided. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 154 - Table of Contents BUDGET BY FUND | Water & Water Reclamation Funds Sources Non-Potable Water Service Charges Non-Potable Water Service Charges revenue adopted for FY 2017/18 totals $16.2 million, reflecting a $2.9 million increase from the FY 2016/17 year-end forecast due to an anticipated volume increase in non-potable water use associated with higher Advanced Water Treatment Reverse Osmosis (AWT RO) and Reclaimed Water Distribution Sales (RWDS) and a higher water rate. Non-Potable Water Service Charges revenue includes advanced water treatment and effluent sales related to water treated to irrigation standards at the city’s Water Reclamation Plant for 23 golf courses in north Scottsdale that are part of the RWDS, and the city’s Gainey Water Reclamation Plant for irrigation use at the Gainey Ranch Golf Club. Other non-potable water sales include three golf courses in north Scottsdale that are part of the Irrigation Water Distribution System (IWDS), the McDowell Mountain golf course and three city recreation facilities. The costs related to contractual obligations to provide water for irrigation are recovered through rates charged. Miscellaneous Miscellaneous revenue adopted for FY 2017/18 totals $1.3 million, reflecting a $0.1 million increase from the FY 2016/17 year-end forecast. Miscellaneous revenue includes the sale of excess property no longer in use, rental income, recovery of various line extension agreements and recovery of expenses from outside parties. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 155 - Table of Contents BUDGET BY FUND | Water & Water Reclamation Funds Sources Interest Earnings Interest Earnings revenue adopted for FY 2017/18 totals $1.1 million, a $0.2 million increase from the FY 2016/17 year-end forecast. Interest earnings are generated on Water & Water Reclamation Funds cash balances throughout the year. This revenue is a function of the relationship between the available cash balance and interest rate. The city earns interest on funds through various investment vehicles in accordance with Arizona Revised Statutes and City Ordinance. The city’s investment policy stresses safety above yield, and allows investments in U.S. Treasury and Agency obligations, certificates of deposit, commercial paper, bankers’ acceptances, repurchase agreements, money market funds, and the State of Arizona’s Local Government Investment Pool. Indirect Costs The FY 2017/18 adopted budget for Indirect Costs is $0.8 million, which $0.1 million less than the FY 2016/17 forecast. The Indirect Costs represent internal charges to the RWDS Fund, Inlet Silverado Golf Course Fund, Irrigation Water Distribution System (IWDS) Fund, McDowell Mountain Golf Recharge Fund, Gainey Ranch Fund, and PCX/NGTF Fund for central operations under the Water & Water Reclamation Funds. Prior to FY 2015/16, Indirect Costs were budgeted as Transfers In, but due to a change in accounting methodology, are now budgeted as a source. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 156 - Table of Contents BUDGET BY FUND | Water & Water Reclamation Funds Sources Stormwater Quality Fee Stormwater Quality Fees revenue for FY 2017/18 totals $0.3 million. This is flat when compared to the FY 2016/17 year-end forecast. This revenue is collected to support capital improvements and permit compliance costs supported by the Water Reclamation Fund. The revenue source was first established in FY 2015/16. Transfers In Transfers In is the authorized movement of cash or other resources from other funds and/or capital projects. There are three Transfers In budgeted for Water & Water Reclamation, totaling $54.3 million, a $4.8 million increase from the FY 2016/17 year-end forecast: 1) AWT, which is an internal transfer between water funds reimbursing the Water Reclamation Fund for operating and maintenance costs for the Advanced Water Treatment Plant is $3.0 million; 2) Debt Service of $50.4 million, which are development fees collected in the CIP Fund and then transferred to the operating budget to pay for debt service costs; and 3) RWDS of $0.9 million from the CIP Reclaimed Water Distribution System (RWDS) Fund for debt service payments. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 157 - Table of Contents BUDGET BY FUND BUDGET BY FUND | WaterWATER & Water Reclamation Funds Uses AND SEWER FUND USES Water & Water Reclamation Funds Uses By Division The Water & Water Reclamation Funds uses are presented by the following major groupings: Mayor and City Council, City Treasurer, Water Resources, Citywide Indirect Cost Allocation, Department Indirect Cost, Citywide Pay Program, Estimated Personnel Savings from Vacant Positions, Leave Accrual Payments and Utilities. Additionally, there are debt service payments and Transfers Out to other funds. Mayor and City Council Mayor and City Council uses are related to the payment of membership fees to the Arizona Municipal Water Users Association (AMWUA). Starting in FY 2016/17, these fees are paid out of Water Resources. City Treasurer The adopted FY 2017/18 budget of $2.1 million is about $0.1 less than in FY 2016/17. City Treasurer uses are for utility billing services, remittance payments, revenue recovery and other water and water reclamation related payments that are handled by City Treasurer staff. The staff who perform these services have a set percentage of their salary paid out of the Water & Water Reclamation Funds based on the time they are expected to work on water and water reclamation related tasks. These percentages are as follows: those involved with Utility Billing: 100 percent, Remittance Processing: 48 percent, Revenue Recovery: 34 percent and Tax and License: 14 percent. In addition, executive and management staff who oversee employees who perform water and water reclamation functions have a portion of their salaries charged to those funds as well. Finally, any non-personnel services related charges (including contractual services, commodities and capital outlay) incurred by these employees will be charged similarly to the Water & Water Reclamation Funds. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 158 - Table of Contents BUDGET BY FUND | Water & Water Reclamation Funds Uses Water Resources The adopted FY 2017/18 Water Resources budget of $63.9 million reflects an increase of $2.6 million over the FY 2016/17 year-end forecast. The increase is mainly due to the increased rates for the Sub Regional Operating Group (SROG) Multicity Water Reclamation Plant, the cost of Central Arizona Project (CAP) raw water, effluent and Advanced Water Treatment and the creation and provisioning of 1.19 FTE positions. The Water Resources division is where water and water reclamation functions are performed. Water functions include the production and management of drinking water, the storing and upkeep of drinking water sources and the maintaining of drinking water quality for Scottsdale's customers. Water reclamation functions include the efficient processing and treatment of sewage, recharging of effluent, the upkeep and maintenance of sewage treatment facilities and the compliance with regulatory and environmental requirements. Citywide Indirect Cost Allocation In FY 2017/18, the Citywide Indirect Cost Allocation budget is $5.1 million which reflects a $0.3 million increase from the FY 2016/17 year-end forecast. This is due to higher Indirect Cost Rates due associated with the increased cost of providing services to Water Resources. Indirect Cost Allocation represents Enterprise Funds charges for specific General Fund central administrative functions which benefit the Enterprise operations (e.g., City Manager, Information Technology, Human Resources, Legal, etc.). The city’s indirect costs are allocated to the Enterprise Funds based upon a combination of relative benefits received and the proportion of the overall operating budgets for direct service providers. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 159 - Table of Contents BUDGET BY FUND | Water & Water Reclamation Funds Uses Department Indirect Cost The FY 2017/18 adopted budget for Department Indirect Cost is $0.8 million, which $0.1 million less than the FY 2016/17 forecast. This mirrors the budget and actuals from the Indirect Costs source detailed in the Sources section. The Department Indirect Cost represents internal charges from the RWDS Fund, Inlet Silverado Golf Course Fund, Irrigation Water Distribution System (IWDS) Fund, McDowell Mountain Golf Recharge Fund, Gainey Ranch Fund, and PCX/NGTF Fund for central operations under the Water & Water Reclamation Funds. Prior to FY 2015/16, Department Indirect Cost was budgeted as Transfers Out, but due to a change in accounting methodology, is now budgeted as a use. Citywide Pay Program Water & Wastewater Funds portion of a citywide pay program, through which employees may receive increases within their established salary ranges based on performance, totaled $0.4 million for FY 2017/18. The FY 2016/17 forecast and FY 2013/14 - FY 2015/16 actuals at $0 are due to the actuals being allocated into the divisions. At the time the budget is adopted it is unknown which employees will receive an increase and for how much. Therefore, the citywide pay program is budgeted at a macro level and then paid based on actual increases. The actual amount spent each year was at or below the adopted budget. Estimated Personnel Savings from Vacant Positions Personnel Savings is the amount of savings achieved from vacant positions. The FY 2017/18 Water & Water Reclamation Funds estimate for vacancy savings is ($1.2) million. Estimated Personnel Savings from Vacant Position was first budgeted in the Water & Water Reclamation Funds in FY 2015/16. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 160 - Table of Contents BUDGET BY FUND | Water & Water Reclamation Funds Uses Leave Accrual Payments These payments include accumulated medical and/or vacation leave paid out at the time of retirement or separation from the city. FY 2017/18 leave accrual payments of $0.5 million include $0.2 million budgeted for medical leave accrual payouts and $0.3 million budgeted for vacation leave accrual payouts. Leave Accrual Payments were first budgeted in the Water & Water Reclamation Funds in FY 2015/16. Utilities The adopted FY 2017/18 Utilities budget of $16.3 million is flat when compared to the FY 2016/17 year-end forecast. Beginning in FY 2016/17 the Water & Water Reclamation Funds utilities budget (water, electric, sewer, gas, solid waste and recycling services) began being reported separately to allow for better transparency and accountability. Prior to FY 2016/17 utilities were reported in Contractual Services within individual departments which limited oversight of utilities spending. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 161 - Table of Contents BUDGET BY FUND | Water & Water Reclamation Funds Uses MPC Bonds Debt Service – Sewer The adopted FY 2017/18 Municipal Property Corporation (MPC) Bonds Debt Service-Sewer's budget is $8.5, a $0.8 million increase over the FY 2016/17 year-end forecast. This increase is driven by debt service schedules which fluctuate from year to year. MPC Bonds Debt Service-Sewer represents the repayment of bonds and fiscal agent fees associated with water reclamation capital projects. The funding is derived from revenue generated from water reclamation rates and fees paid by Scottsdale residents and businesses to the City of Scottsdale Municipal Property Corporation (MPC), a non-profit corporation created by the city in 1967 to finance the construction or acquisition of certain capital improvement projects. MPC Bonds Debt Service – Water The adopted FY 2017/18 Municipal Property Corporation (MPC) Bonds Debt Service-Water's budget is $21.7 million a $3.7 million increase over the FY 2016/17 year-end forecast. This increase is driven by debt service schedules which fluctuate from year to year. MPC Bonds Debt Service-Water represents the repayment of bonds and fiscal agent fees associated with water capital projects. The funding is derived from revenue generated from water rates and fees paid by Scottsdale residents and businesses to the City of Scottsdale Municipal Property Corporation (MPC), a non-profit corporation created by the city in 1967 to finance the construction or acquisition of certain capital improvement projects. Sewer Revenue Bonds The adopted FY 2017/18 Sewer Revenue Bonds budget is $4.6 million which is $0.1 million higher than the FY 2016/17 yearend forecast. Sewer Revenue Bonds represents the repayment of bonds and fiscal agent fees associated with water reclamation capital projects. The funding is derived from a public vote authorizing the use of revenue generated from water reclamation rates and fees paid by Scottsdale residents and businesses for capital projects. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 162 - Table of Contents BUDGET BY FUND | Water & Water Reclamation Funds Uses Water Revenue Bond The last of the Water Revenue Bond previously issued was paid off in FY 2015/16. No new Water Revenue Bonds are expected to be issued in FY 2017/18. Water Revenue Bonds represents the repayment of bonds and fiscal agent fees associated with water capital projects. The funding is derived from a public vote authorizing the use of revenue generated from water rates and fees paid by Scottsdale residents and businesses for capital projects. Transfers Out Transfers Out is the authorized movement of cash or other resources to other funds and/or capital projects. There are five Transfers Out budgeted for Water & Water Reclamation Funds in FY 2017/18, totaling $86.8 million, an $8.1 million increase from the FY 2016/17 year-end forecast: 1) AWT is an internal transfer of $3.0 million between Water Funds reimbursing the Water Reclamation Fund for operating and maintenance costs for the Advanced Water Treatment Plant; 2) CIP of $41.8 million to pay for general water and water reclamation capital projects; 3) CIP Technology of $0.1 million to pay for water and water reclamation technology projects; 4) Debt Service (a new transfer first occurring in FY 2016/17), of $34.7 million from various water & water reclamation debt service funds to the Water & Water Reclamation Funds to better account for debt service payments; and 5) Franchise Fees of $7.2 million to the General Fund to represent an estimate of the fees a private utility organization would incur while conducting business in the city. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 163 - Table of Contents BUDGET BY FUND | Water & Water Reclamation Funds Ending Fund Balance Water & Water Reclamation Funds Balance Fund balance protects the city’s financial condition and provide for unexpected economic challenges. Growth of fund balance occurs when sources exceed uses. Fund balances are similar to a company’s net equity (assets less liabilities). Prudent fiscal management dictates fund balances should only be used for nonrecurring (non-operational) uses. Once fund balances are spent, they are only replenished by future year sources in excess of uses. The city’s budget planning, bond indenture and adopted financial policies call for the establishment of reserves as part of the resource allocation/limit setting process. This process allows the city to set aside savings before allocated or spent as budgeted uses. The specific make-up of the city’s Water & Water Reclamation Funds balance is as follows: Operating Reserve Operating Reserve of $17.3 million is projected for the end of FY 2017/18. This reserve is intended to ensure adequate funding for operations for a minimum of 60 days and a maximum period of 90 days as detailed in Financial Policy No. 40. Operating reserves shall be maintained to provide contingency funding and use flexibility in the event of unexpected declines in revenue or increases in costs. Repair/Replacement Reserve Repair/Replacement Reserve of $41.3 million is projected for the end of FY 2017/18. This reserve is required per the term of the revenue bond indenture to ensure that funds are set aside to preserve the assets, which in turn, are the collateral for the Sewer Revenue Bonds. There shall be deposited an amount equal to at least 2 percent of the revenues received during the year into the reserve until such time as the reserve equals 2 percent of the value of total tangible assets. The reserve may be used in times of unusual circumstances for replacement or extension of the assets. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 164 - Table of Contents BUDGET BY FUND | Water & Water Reclamation Funds Ending Fund Balance Revenue Bond Debt Service Reserve Revenue Bond Debt Service Reserve of $4.6 million is projected for the end of FY 2017/18. This reserve is required per the term of the revenue bond indenture to ensure that funds are set aside as collateral for the Sewer Revenue Bonds debt service payments. Special Contractual Fund Balance Special Contractual Fund Balance of $0.8 million is projected for the end of FY 2017/18. This balance reflects reserves established in accordance with various contractual agreements for delivery of non-potable water by the Water Resources Division. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 165 - Table of Contents BUDGET BY FUND | Water & Water Reclamation Funds Ending Fund Balance Undesignated, Unreserved Fund Balance The FY 2017/18 Undesignated, Unreserved fund balance is $0.0 million. While there is no balance in FY 2017/18, it historically represents the cumulative Water & Water Reclamation Funds sources not designated for a specific purpose. This balance represents an accumulation of one-time sources and it is most appropriately used for one-time uses. Under prudent fiscal management practices, this amount should not be used to fund new or expanded programs with ongoing operating uses. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 166 - Table of Contents Budget by Fund Solid Waste Fund BUDGET BY FUND | Solid Waste Fund Overview Fund Purpose This fund accounts for the transactions related to the city’s solid waste and recycling business activities, which includes operating sources and uses. Capital expenditures are accounted for in a separate Solid Waste Capital Fund. Solid Waste Sources (in millions) Solid Waste Service Charges - Residential Solid Waste Service Charges - Commercial Interest Earnings Total Revenue Transfers In CIP Total Sources 16.5 3.5 0.1 20.1 20.1 Solid Waste Uses (in millions) Personnel Services Contractual Services Commodities Capital Outlays Citywide Indirect/Direct Cost Allocation Operating Reserve Adopted Budget Transfers Out CIP Technology Total Uses 7.3 11.3 0.6 0.0 1.8 8.5 29.6 0.0 29.6 Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 167 - Table of Contents BUDGET BY FUND | Solid Waste Fund Summary Actual 2015/16 Beginning Fund Balance Operating Reserve Undesignated, Unreserved Fund Balance Total Beginning Fund Balance Adopted 2016/17 Approved 2016/17 Forecast 2016/17 Adopted 2017/18 4,866,295 5,697,204 10,563,499 5,785,316 3,269,126 9,054,442 5,785,316 4,055,861 9,841,177 5,785,316 4,055,861 9,841,177 5,322,000 4,108,318 9,430,318 Subtotal 16,392,656 3,727,071 78,032 20,197,759 16,462,467 4,071,243 92,717 20,626,427 16,462,467 4,071,243 92,717 20,626,427 16,462,467 3,373,300 92,717 19,928,484 16,540,000 3,513,480 91,327 20,144,807 Subtotal 1,875,000 1,875,000 - - - - Total Sources 22,072,759 20,626,427 20,626,427 19,928,484 20,144,807 Expenditures Public Works City Treasurer Citywide Direct Cost Allocation Citywide Indirect Cost Allocation Citywide Pay Program Estimated Personnel Savings from Vacant Positions Leave Accrual Payments Utilities Subtotal 18,238,801 852,967 535,415 1,044,973 20,672,156 18,925,302 941,154 578,949 1,082,786 144,827 (115,013) 10,000 21,568,005 18,799,000 914,088 578,949 1,082,786 30,338 200,667 (39,333) 21,566,495 17,800,323 914,088 578,949 1,082,786 (63,747) 891 10,453 20,323,743 18,184,191 918,465 557,773 1,262,042 149,038 (118,463) 50,000 29,500 21,032,546 20,672,156 21,568,005 21,566,495 20,323,743 21,032,546 2,047,500 37,800 37,625 2,122,925 15,600 15,600 15,600 15,600 15,600 15,600 10,500 10,500 22,795,081 21,583,605 21,582,095 20,339,343 21,043,046 Sources Over/(Under) Uses (722,322) (957,178) (955,668) (410,859) (898,239) Ending Fund Balance Operating Reserve Undesignated, Unreserved Fund Balance Total Ending Fund Balance 5,785,316 4,055,861 9,841,177 5,322,000 2,775,264 8,097,264 5,322,000 3,563,509 8,885,509 5,322,000 4,108,318 9,430,318 5,188,696 3,343,383 8,532,079 Revenues Solid Waste Service Charges - Residential Solid Waste Service Charges - Commercial Interest Earnings Transfers In CIP TOTAL OPERATING BUDGET Transfers Out CIP CIP Technology Other Subtotal Total Uses City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 168 - Table of Contents BUDGET BY FUND | Solid Waste Fund Five Year Financial Forecast Adopted 2017/18 Beginning Fund Balance Operating Reserve Undesignated, Unreserved Fund Balance Total Beginning Fund Balance Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 5,322,000 4,108,318 9,430,318 5,188,696 3,343,383 8,532,079 5,284,000 2,416,879 7,700,879 5,414,000 2,514,079 7,928,079 5,525,038 2,629,641 8,154,679 Subtotal 16,540,000 3,513,480 91,327 20,144,807 16,665,600 3,863,900 134,400 20,663,900 17,740,000 4,249,300 184,700 22,174,000 17,754,400 4,673,600 205,700 22,633,700 17,754,400 5,139,800 219,900 23,114,100 Subtotal - - - - - Total Sources 20,144,807 20,663,900 22,174,000 22,633,700 23,114,100 Expenditures Public Works City Treasurer Citywide Direct Cost Allocation Citywide Indirect Cost Allocation Citywide Pay Program Estimated Personnel Savings from Vacant Positions Leave Accrual Payments Utilities Subtotal 18,184,191 918,465 557,773 1,262,042 149,038 (118,463) 50,000 29,500 21,032,546 18,370,700 936,300 566,200 1,325,100 302,900 (122,000) 51,600 29,800 21,460,600 18,603,000 947,000 574,900 1,391,400 453,200 (125,700) 53,000 30,100 21,926,900 18,837,600 957,600 584,300 1,461,000 594,700 (129,400) 54,600 30,400 22,390,800 19,084,900 969,100 594,100 1,534,000 733,700 (133,300) 56,200 30,700 22,869,400 21,032,546 21,460,600 21,926,900 22,390,800 22,869,400 10,500 10,500 34,500 34,500 19,900 19,900 16,300 16,300 27,800 27,800 21,043,046 21,495,100 21,946,800 22,407,100 22,897,200 Sources Over/(Under) Uses (898,239) (831,200) 227,200 226,600 216,900 Ending Fund Balance Operating Reserve Undesignated, Unreserved Fund Balance Total Ending Fund Balance 5,188,696 3,343,383 8,532,079 5,284,000 2,416,879 7,700,879 5,414,000 2,514,079 7,928,079 5,525,038 2,629,641 8,154,679 5,670,000 2,701,579 8,371,579 Revenues Solid Waste Service Charges - Residential Solid Waste Service Charges - Commercial Interest Earnings Transfers In CIP TOTAL OPERATING BUDGET Transfers Out CIP CIP Technology Other Subtotal Total Uses City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 169 - Table of Contents BUDGET BY FUND BUDGET BY FUND | Solid Waste Fund Sources SOLID WASTE FUND SOURCES Solid Waste Fund Sources Solid Waste Fund sources for FY 2017/18 equal $20.1 million which is an increase of $0.2 million from the FY 2016/17 year-end forecast. It includes Solid Waste Service Charges for both residential and commercial customers, Interest Earnings and Transfers In. Solid Waste Service Charges – Residential Solid Waste Service Charges – Residential includes charges for both scheduled and on-demand service. Scheduled services include solid waste service charges and recycled material fees for residential customers. Residential customers are billed a flat fee per month for the pickup of solid waste and the fees are reviewed annually to determine if they cover the costs of the services provided. On-demand services include residential refuse and recycle container charges, initiation charges, and late charges. The FY 2017/18 adopted budget is $16.5 million, remaining flat with the FY 2016/17 year-end forecast. In FY 2016/17, both residential and commercial Solid Waste service charges were reported together, while scheduled and ondemand services were reported separately. However, starting in FY 2017/18, residential and commercial service charges will be reported separately to better portray how customer services are tracked. Solid Waste Service Charges – Commercial Solid Waste Service Charges – Commercial includes charges for both scheduled and on-demand service. Scheduled services include solid waste service charges for commercial customers. Commercial customers are charged based upon the size of the container and the number of pickups per month and the fees are reviewed annually to determine if they cover the costs of the services provided. On-demand services include commercial roll-off charges, initiation charges, late charges and commercial recycled materials fees. The FY 2017/18 adopted budget is $3.5 million, increasing $0.1 million from the FY 2016/17 yearend forecast. In FY 2016/17, both residential and commercial Solid Waste service charges were reported together, while scheduled and on-demand services were reported separately. However, starting in FY 2017/18, residential and commercial service charges will be reported separately to better portray how customer services are tracked. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 170 - Table of Contents BUDGET BY FUND | Solid Waste Fund Sources Interest Earnings Interest Earnings revenue adopted for FY 2017/18 is $0.1 million, which is relatively flat from the FY 2016/17 year-end forecast. Interest earnings are generated on the Solid Waste Fund cash balance throughout the year. This revenue is a function of the relationship between the available cash balance and interest rate. The city earns interest on funds through various investment vehicles in accordance with Arizona Revised Statutes and City Ordinance. The city’s investment policy stresses safety above yield. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 171 - Table of Contents BUDGET BY FUND | Solid Waste Fund Uses SOLID WASTE FUND USES BUDGET BY FUND Solid Waste Fund Uses The Solid Waste Fund uses are presented by division (Public Works and City Treasurer), Citywide Direct and Indirect Cost Allocations, Citywide Pay Program, Estimated Personnel Savings from Vacant Positions, Leave Accrual Payments and Utilities. Additionally, there are Transfers Out to other funds. Public Works Public Works provides solid waste collection, transportation, disposal, compliance and education. The goal is to provide these services at the lowest practical rate with the highest possible customer satisfaction. The adopted FY 2017/18 budget of $18.2 million is $0.4 million more than the FY 2016/17 yearend forecast due to the uncertainty of the effect the loss of roll off customers would have on the landfill contract. The increase is also due to the expansion of the Household Hazardous Waste program from 3 to 10 events annually. City Treasurer Expenses for utility billing services, remittance payment, revenue recovery and solid waste related payments that are handled by the City Treasurer. The staff who perform these services have a set percentage of their personnel services and the related expenses needed to perform their jobs paid out of the Solid Waste Fund based on the time they are expected to work on solid waste related tasks. The adopted FY 2017/18 budget of $0.9 million remained relatively flat from the FY 2016/17 year-end forecast. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 172 - Table of Contents BUDGET BY FUND | Solid Waste Fund Uses Citywide Direct Cost Allocation The Citywide Direct Cost Allocation represents charges for the direct cost of alley maintenance performed by the Street Operations Department for the benefit of the Solid Waste operations. The alley maintenance expenses are budgeted in the Transportation Fund, which then receives 100 percent cost recovery from the Solid Waste Fund for this function. The budget for this allocation for FY 2017/18 is $0.6 million which has remained relatively flat from the FY 2016/17 year-end forecast. Citywide Indirect Cost Allocation Reimbursement to the General Fund for centralized services provided to the Solid Waste Fund for payroll, accounts payable, human resources, information technology, city administration, etc. The citywide indirect cost allocation methodology includes factors such as full-time equivalents (FTE) for human resources overhead, information technology (IT) equipment counts for the IT overhead calculations and square footage calculation to determine the building maintenance costs. The FY 2017/18 adopted budget is $1.3 million, which is an increase of about $0.2 million from the FY 2016/17 year-end forecast because of the higher costs of providing services to Solid Waste by other city departments. Citywide Pay Program A citywide pay program, through which employees may receive increases within their established salary ranges based on performance. The FY 2017/18 adopted budget is $0.1 million. Additionally, the FY 2016/17 forecast and the FY 2013/142015/16 actuals are at $0 due to the actuals being allocated into the divisions. At the time the budget is adopted it is unknown which employees will receive an increase and for how much. Therefore, the citywide pay program is budgeted at a macro level and then paid based on actual increases. The actual amount spent each year was at or below the adopted budget. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 173 - Table of Contents BUDGET BY FUND | Solid Waste Fund Uses Estimated Personnel Savings from Vacant Positions The amount of savings estimated to be achieved from vacant positions. The FY 2017/18 Solid Waste Fund estimate for vacancy savings is ($0.1) million which is consistent with FY 2016/17. Estimated personnel savings from vacant positions was first budgeted for and accounted for in the Solid Waste Fund beginning in FY 2015/16. Leave Accrual Payments These payments include accumulated medical and/or vacation leave paid out at the time of retirement or separation from the city. FY 2017/18 leave accrual payments budget of $50,000 include $25,000 budgeted for medical leave accrual payouts and $25,000 budgeted for vacation leave accrual payouts. The increased budget from FY 2016/17 is because more retirements are expected to occur in FY 2017/18. The Solid Waste Fund began including a budget for Leave Accrual Payments in FY 2015/16. Utilities In an effort to provide greater efficiency in monitoring the budget to actual expenses for utilities as well as forecasting year end results, beginning March 2017 an administrative change moved the utilities budgets (water, electric, sewer, gas, solid waste and recycling services) from individual divisions to a citywide macro level account, by fund. Similar to the leave accrual payouts process, monthly as expenditures occur in the applicable divisions, a budget transfer will be completed to move the needed budget from the macro level holding accounts to the respective divisions. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 174 - Table of Contents BUDGET BY FUND | Solid Waste Fund Uses Transfers Out Transfers Out is the authorized movement of cash or other resources to other funds and/or capital projects. Transfer amounts vary greatly each year. The large transfer amount in FY 2015/16 and FY 2013/14 was for a new Compressed Natural Gas Transfer Station and equipment for Solid Waste vehicles. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 175 - Table of Contents BUDGET BY FUND | Solid Waste Fund Ending Fund Balance Solid Waste Fund Balance Fund balance/reserves protect the city’s financial condition and provide for unexpected economic challenges. Growth of fund balance occurs when revenues exceed expenditures. Fund balances are similar to a company’s net equity (assets less liabilities). Prudent fiscal management dictates fund balances should only be used for nonrecurring (non-operational) expenditures. Once fund balances are spent, they are only replenished by future year resources in excess of expenditures. The city’s budget planning, bond indenture and adopted financial policies call for the establishment of reserves as part of the resource allocation/limit setting process. This process allows the city to set aside savings before allocated or spent as budgeted expenditures. The specific make-up of the city’s Solid Waste Fund balance and reserves are noted in the following: Operating Reserve The FY 2017/18 ending fund balance includes an Operating Reserve of $5.2 million. This reserve is intended to ensure adequate funding for operations for a minimum of 60 days and a maximum period of 90 days. Operating reserves shall be maintained to provide funding and expenditure flexibility in the event of unexpected declines in revenue or increases in costs. Undesignated, Unreserved Fund Balance The FY 2017/18 undesignated, unreserved fund balance is $3.3 million. This balance represents an accumulation of one-time sources and it is most appropriately used for one-time uses. Under prudent fiscal management practices, this amount should not be used to fund new or expanded programs with ongoing operating expenses. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 176 - Table of Contents Budget by Fund Aviation Fund BUDGET BY FUND | Aviation Fund Overview Fund Purpose This fund accounts for the transactions related to the city’s aviation business activity at the Scottsdale Airport, which includes operating sources and uses. Capital expenditures are accounted for in a separate Aviation Capital Fund. Aviation Fund Sources (in millions) Airport Fees Jet Fuel Property Rental Interest Earnings Transfers In Total Revenue Total Sources 3.6 0.2 0.1 0.1 4.0 4.0 Aviation Fund Uses (in millions) Personnel Services Contractual Services Commodities Capital Outlays Direct/Indirect Cost Allocation Contracts Payable Contingency/ Reserves Adopted Budget Transfers Out CIP Total Uses 1.3 1.0 0.1 0.5 0.6 1.8 7.1 12.3 0.2 12.5 Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 177 - Table of Contents BUDGET BY FUND | Aviation Fund Summary Actual 2015/16 Beginning Fund Balance Fleet Replacement Reserve Operating Reserve Repair/Replacement Reserve Undesignated, Unreserved Fund Balance Total Beginning Fund Balance Adopted 2016/17 Approved 2016/17 Forecast 2016/17 Adopted 2017/18 1,026,588 397,722 2,188,222 2,182,573 5,795,105 1,642,200 727,970 1,065,155 3,779,590 7,214,915 1,642,200 727,970 1,065,115 4,712,805 8,148,090 1,642,200 727,970 1,065,115 4,712,805 8,148,090 1,020,000 452,500 1,100,000 5,950,908 8,523,408 Subtotal 4,254,064 144,863 100,029 50,469 29,150 4,578,575 3,594,800 165,090 102,039 48,771 3,910,700 3,594,800 165,090 102,039 48,771 3,910,700 3,594,800 165,090 102,039 48,771 3,910,700 3,644,423 166,889 103,059 59,251 3,973,622 Subtotal 418,884 418,884 - - - - 4,997,459 3,910,700 3,910,700 3,910,700 3,973,622 Subtotal 1,899,471 313,896 163,928 2,377,295 3,099,840 314,869 182,139 30,264 (30,000) 16,500 3,613,612 3,116,613 314,869 182,139 806 (5,523) 4,668 3,613,572 2,124,651 314,869 182,139 (5,997) 4,668 91,962 2,712,292 2,663,163 350,000 215,575 30,459 (30,000) 16,500 145,420 3,391,117 Subtotal - 1,014,936 1,014,936 1,014,936 1,014,936 - 1,821,000 1,821,000 2,377,295 4,628,548 4,628,508 2,712,292 5,212,117 3,500 263,680 267,180 823,090 823,090 823,090 823,090 823,090 823,090 212,170 3,400 215,570 Total Uses 2,644,475 5,451,638 5,451,598 3,535,382 5,427,687 Sources Over/(Under) Uses 2,352,985 (1,540,938) (1,540,898) 375,318 (1,454,065) Ending Fund Balance Fleet Replacement Reserve Operating Reserve Repair/Replacement Reserve Undesignated, Unreserved Fund Balance Total Ending Fund Balance 1,642,200 727,970 1,065,115 4,712,805 8,148,090 1,020,000 1,141,000 1,100,000 2,412,977 5,673,977 1,020,000 1,141,000 1,100,000 3,346,192 6,607,192 1,020,000 452,500 1,100,000 5,950,908 8,523,408 1,380,055 1,286,018 1,306,257 3,097,013 7,069,343 Revenues Airport Fees Jet Fuel Property Rental Interest Earnings Miscellaneous Transfers In Transfers In - CIP Total Sources Expenditures Community and Economic Development Citywide Direct Cost Allocation Citywide Indirect Cost Allocation Citywide Pay Program Savings from Vacant Positions Leave Accrual Payments Utilities Debt Service Contracts Payable (a) TOTAL OPERATING BUDGET Transfers Out Operating Transfer Out Transfer Out - CIP Transfers Out-CIP Technlgy Citywide Subtotal (a) Issuance of MPC Bonds to be used for the Airport Terminal Building and Aviation Business Center redevelopment project was originally planned in FY 2016/17. However, due to delays was carried forward into FY 2017/18. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 178 - Table of Contents BUDGET BY FUND | Aviation Fund Five Year Financial Forecast Adopted 2017/18 Beginning Fund Balance Fleet Replacement Reserve Operating Reserve Repair/Replacement Reserve Undesignated, Unreserved Fund Balance Total Beginning Fund Balance Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 1,020,000 452,500 1,100,000 5,950,908 8,523,408 1,380,055 1,286,018 1,306,257 3,097,013 7,069,343 1,700,055 1,237,044 1,230,949 3,091,895 7,259,943 1,900,055 1,269,099 1,407,894 3,255,695 7,832,743 2,230,055 1,244,984 1,405,064 3,687,040 8,567,143 Subtotal 3,644,423 166,889 103,059 59,251 3,973,622 5,291,600 168,600 104,100 87,200 5,651,500 5,334,700 170,200 105,100 119,800 5,729,800 5,378,500 171,900 106,200 133,500 5,790,100 5,449,800 173,700 107,200 142,700 5,873,400 Subtotal - - - - - 3,973,622 5,651,500 5,729,800 5,790,100 5,873,400 Subtotal 2,663,163 350,000 215,575 30,459 (30,000) 16,500 145,420 3,391,117 2,225,700 357,000 226,400 59,200 (30,400) 16,700 196,300 3,050,900 2,352,500 364,100 237,700 82,100 (30,900) 17,000 199,100 3,221,600 2,249,800 371,400 249,600 102,000 (31,400) 17,200 202,300 3,160,900 2,238,000 378,900 262,000 120,300 (31,900) 17,600 205,900 3,190,800 Subtotal 1,821,000 1,821,000 1,955,000 1,955,000 1,919,000 1,919,000 1,883,000 1,883,000 1,847,000 1,847,000 5,212,117 5,005,900 5,140,600 5,043,900 5,037,800 212,170 3,400 215,570 444,000 11,000 455,000 10,100 6,300 16,400 6,600 5,200 11,800 424,700 8,900 433,600 5,427,687 5,460,900 5,157,000 5,055,700 5,471,400 (1,454,065) 190,600 572,800 734,400 402,000 1,380,055 1,286,018 1,306,257 3,097,013 7,069,343 1,700,055 1,237,044 1,230,949 3,091,895 7,259,943 1,900,055 1,269,099 1,407,894 3,255,695 7,832,743 2,230,055 1,244,984 1,405,064 3,687,040 8,567,143 2,447,055 1,244,392 1,674,290 3,603,406 8,969,143 Revenues Airport Fees (a) Jet Fuel Property Rental Interest Earnings Miscellaneous Transfers In Transfers In - CIP Total Sources Expenditures Community and Economic Development Citywide Direct Cost Allocation Citywide Indirect Cost Allocation Citywide Pay Program Savings from Vacant Positions Leave Accrual Payments Utilities Debt Service Contracts Payable TOTAL OPERATING BUDGET Transfers Out Operating Transfer Out Transfer Out - CIP Transfers Out-CIP Technlgy Citywide Subtotal Total Uses Sources Over/(Under) Uses Ending Fund Balance Fleet Replacement Reserve Operating Reserve Repair/Replacement Reserve Undesignated, Unreserved Fund Balance Total Ending Fund Balance (a) The Airport Terminal Building and Aviation Business Center redevelopment project will be completed towards the end of FY 2017/18; therefore, the increase in revenue associated to the project is budgeted starting in FY 2018/19. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 179 - Table of Contents BUDGET BY FUND | Aviation Fund Sources BUDGET BY FUND AVIATION FUND sources Aviation Fund Sources Aviation Fund sources for FY 2017/18 are $4.0 million, most of which is received from Airport Fees. Other sources include Jet Fuel, Property Rental, Interest Earnings, Miscellaneous and Transfers In. Airport Fees Fees imposed for the aeronautical use of airport facilities, including aircraft overnight tie-down fees, transient parking fees, fuel flowage and transient landing fees. The Airport Fees are reviewed annually to determine if they cover the costs of the services provided. The FY 2017/18 adopted budget is $3.6 million which remains relatively flat compared to the FY 2016/17 year-end forecast and assumes no fee increases in FY 2017/18. Jet Fuel A jet fuel tax of 0.18 cents is charged to every gallon of fuel purchased at the airport. The adopted FY 2017/18 budget is $0.2 million, which remains relatively flat from the FY 2016/17 year-end forecast. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 180 - Table of Contents BUDGET BY FUND | Aviation Fund Sources Property Rental Property Rental includes private hangar/T-shade and office rentals, fixed tenant rents, and land leases. The FY 2017/18 budget of $0.1 million is flat compared to the FY 2016/17 yearend forecast. Interest Earnings Interest earnings are generated on idle Aviation Fund cash balances throughout the year. This revenue is a function of the relationship between the available cash balance and interest rate. The city earns interest on funds through various investment vehicles in accordance with Arizona Revised Statutes and City Ordinance. The city’s investment policy stresses safety above yield. Miscellaneous Miscellaneous includes other types of revenue such as the FY 2015/16 insurance settlement proceeds from an aviation incident. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 181 - Table of Contents BUDGET BY FUND | Aviation Fund Sources Transfers In Transfers In is the authorized movement of cash or other resources from other funds and/or capital projects. There are no anticipated Transfers In for FY 2017/18. FY 2013/14 includes $1.1 million of transfers from CIP due to closed, inactive or over funded projects. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 182 - Table of Contents BUDGET BY FUND | Aviation Fund Uses BUDGET BY FUND AVIATION FUND uses Aviation Fund Uses The Aviation Fund uses are presented as a portion of the Community & Economic Development division's operating budget. Additionally, there are uses related to debt service, citywide pay program, indirect and direct cost allocation, savings from vacant positions, leave accrual payments, utilities and transfers out to other funds. Community & Economic Development – Aviation Includes costs related to the operation and maintenance of the city's airport. The FY 2017/18 adopted budget of $2.7 million is $0.5 million higher than the FY 2016/17 year-end forecast, mostly due to the purchase of an airport dedicated fire truck originally budgeted in FY 2016/17. Due to delays occurred with the purchase, the budget has been carried forward to FY 2017/18. Citywide Direct Cost Allocation Citywide Direct Cost Allocation represents Aviation Fund charges for the direct cost of fire service at the airport performed by General Fund personnel. The FY 2017/18 budget for this allocation is $0.4 million, which is slightly higher than the FY 2016/17 year-end forecast. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 183 - Table of Contents BUDGET BY FUND | Aviation Fund Uses Citywide Indirect Cost Allocation Citywide Indirect Cost Allocation represents charges to the Aviation Fund for specific General Fund central administrative functions, which benefit the Enterprise operations (e.g., City Manager, Information Technology, Human Resources, Legal, etc.). The city’s indirect costs are allocated to the Enterprise Funds based on relative benefits received. The indirect cost allocation for the FY 2017/18 adopted budget is $0.2 million. Citywide Pay Program A citywide pay program, through which employees may receive increases within their established salary ranges based on performance totaling $30,459 for the Aviation Fund. Additionally, the FY 2016/17 forecast and FY 2013/14 - FY 2015/16 actuals at $0 are due to the actuals being allocated into the division. At the time the budget is adopted it is unknown which employees will receive an increase and for how much. Therefore, the citywide pay program is budgeted at a macro level and then paid based on actual increases. The actual amount spent each year was at or below the adopted budget. Savings from Vacant Positions Savings from Vacant Positions is the amount of savings resulted from vacant positions. The FY 2017/18 Aviation Fund estimate for vacancy savings is ($30,000). Additionally, the FY 2016/17 forecast number of ($37,758) reflects that there was a larger number of positions vacant through-out the year than anticipated. Savings from Vacant Positions was first budgeted for the Aviation Fund in FY 2015/16. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 184 - Table of Contents BUDGET BY FUND | Aviation Fund Uses Leave Accrual Payments Leave Accrual Payments include accumulated medical and/or vacation leave paid out at the time of retirement or separation from the city. The FY 2017/18 leave accrual payments include $7,500 budgeted for medical leave accrual payouts and $9,000 budgeted for vacation leave accrual payouts. Leave accrual payments were first budgeted for the Aviation Fund in FY 2015/16. Utilities In an effort to provide greater efficiency in monitoring the budget to actual expenses for utilities as well as forecasting year end results, beginning March 2017 an administrative change moved the utilities budgets (water, electric, sewer, gas, solid waste and recycling services) from individual divisions to a citywide macro level account, by fund. Similar to the leave accrual payouts process, monthly as expenditures occur in the applicable divisions, a budget transfer will be completed to move the needed budget from the macro level holding accounts to the respective divisions. Contracts Payable Contracts Payable represents the repayment of Municipal Property Corporation (MPC) bonds, along with the applicable annual fiscal agent fees. The adopted FY 2017/18 budget is $1.8 million. The bonds will be used for the airport terminal redevelopment project (see Volume Three for project details). The FY 2015/16 and FY 2016/17 budgets of $0.4 million and $1.0 million respectively, were adopted pending Council approval of the bond issuance, which happened in late FY 2016/17. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 185 - Table of Contents BUDGET BY FUND | Aviation Fund Uses Transfers Out Transfers Out is the authorized movement of cash or other resources to other funds and/or capital projects. The FY 2017/18 transfer out of $0.2 million is to fund General and Enterprise Capital Projects that will benefit the city's airport. The FY 2013/14 and FY 2014/15 transfers out to CIP updated the funding for the Council approved design and construction of the new operations and maintenance building at the airport. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 186 - Table of Contents BUDGET BY FUND | Aviation Fund Ending Fund Balance Aviation Fund Balance Fund balance protect the city’s financial condition and provide for unexpected economic challenges. The city’s budget planning, and adopted financial policies call for the establishment of reserves as part of the resource allocation/limit setting process. This process allows the city to set aside savings before allocated or spent as budgeted expenditures. The specific make-up of the city’s Aviation Fund balance and reserves are noted in the following: Fleet Replacement Reserve The Fleet Replacement Reserve is intended to ensure adequate funding for the replacement of fire equipment specific to fire operations dedicated to the Airport. The FY 2017/18 ending fund balance is $1.4 million. Operating Reserve The FY 2017/18 ending fund balance includes an Operating Reserve of $1.3 million. This reserve, per financial policy No.40, is intended to ensure adequate funding for operations for a minimum of 60 days and a maximum period of 90 days. The purpose of the reserve is to provide for emergencies and potential grant matches, and to ensure that General Fund subsidies are avoided. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 187 - Table of Contents BUDGET BY FUND | Aviation Fund Ending Fund Balance Repair/Replacement Reserve The Repair/Replacement Reserve ensures adequate funding for emergency repair and replacement needs at the airport. The FY 2017/18 ending fund balance is $1.3 million. Undesignated, Unreserved Fund Balance The Undesignated, Unreserved Fund Balance accounts for any remaining funds after the designation of all other reserves/uses. The FY 2017/18 ending undesignated, unreserved fund balance is $3.1 million. Under prudent fiscal management practices, this balance should most appropriately be used for one-time uses, not to fund new or to expand programs with ongoing operating expenses. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 188 - Table of Contents Table of Contents Budget by Fund Total Budget Overview BUDGET BY FUND | Internal Service Funds Overview Adopted Budget $1,279.8Million (a) Operating Budgets $557.9M (a) (a) (b) Grants & Special Districts $15.2M Capital Improvement $522.6M Contingencies / Reserves $184.0M General Fund $265.6M Grant Funds $14.6M Community Facilities $17.5M General Fund $29.8M Special Revenue $46.5M Special Districts $0.6M Preservation $47.6M Special Revenue $7.1M Debt Service Funds $125.4M Drainage / Flood Control $8.8M Debt Service Funds $20.3M Enterprise Funds $112.4M Public Safety $18.6M Enterprise Funds $73.2M Internal Service $8.0M (a) $60.7M (b) Service Facilities $20.1M Internal Service $36.0M Transportation $163.5M Grant Funds $2.0M Water Management $246.6M Capital Projects $15.6M Adopted Budget and Operating Budgets include Internal Service Funds offsets (reductions) of $52.7M Internal Service Funds Budget prior to Internal Service Funds offsets of $52.7M Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 189 - Table of Contents Internal Service Funds Overview Budget by Fund BUDGET BY FUND | Internal Service Funds Overview Fund Purpose Internal Service Funds account for the financing, on a cost-reimbursement basis, of commodities or services provided by one program for the benefit of other programs within the city. This allows the internal users of services to be charged for those services based on their use. The concept is the same as for Enterprise Funds, except the customers are internal. Scottsdale has four separate Internal Service Funds to account for the activity of this fund type. The individual funds are Fleet Management, PC Replacement, Risk Management and Healthcare Self Insurance. In the adopted budget, Internal Service Offsets are included to eliminate the “double” budget, since the charges for these services are already included in the Divisions’ budgets. Internal Service Funds Sources by Fund (in millions) Fleet Management PC Replacement Risk Management Healthcare Self Insurance Total Sources 20.8 1.0 11.3 30.9 64.0 Internal Service Funds Uses (in millions) Personnel Services Contractual Services Commodities Capital Outlays Contingency/ Reserves Internal Service Offsets Adopted Budget Transfers Out CIP Total Uses 5.0 40.3 8.0 7.5 35.9 (52.7) 43.6 1.6 45.2 Graph excludes the Internal Service Offset of ($52.7) million Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 190 - Table of Contents Budget by Fund Fleet Management Fund Overview BUDGET BY FUND | Fleet Management Fund Overview Fund Purpose This fund is used to account for the expenditures associated with purchasing and maintaining the city’s vehicles. Replacement and operation of vehicles are charged to the city departments as internal operating costs based on the quantity and type of vehicle used. The department charges become revenue to the Fleet Management Fund. Fleet Management Fund Sources (in millions) Maintenance & Operations Equipment Replacement Fuel Miscellaneous Reimbursements Total Revenue Tranfers In Total Sources 8.6 8.0 3.3 0.4 0.4 20.8 20.8 Fleet Management Fund Uses (in millions) Personnel Services Contractual Services Commodities Capital Outlays Contingency/ Reserves Internal Service Offset Adopted Budget Transfers Out CIP Total Uses 3.9 1.7 6.9 7.5 6.7 (20.0) 6.7 1.6 8.3 *Graph excludes the Internal Service Offset of ($20.0) million Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 191 - Table of Contents BUDGET BY FUND | Fleet Management Fund Summary Actual 2015/16 Beginning Fund Balance Designated For Future Acquisition Operating Contingency Undesignated, Unreserved Fund Balance Total Beginning Fund Balance Adopted 2016/17 Approved 2016/17 Forecast 2016/17 Adopted 2017/18 5,588,493 750,000 3,615,844 9,954,337 5,594,200 750,000 2,486,267 8,830,467 5,768,884 750,000 2,523,623 9,042,507 5,768,884 750,000 2,523,623 9,042,507 5,642,706 750,000 2,213,211 8,605,917 7,657,323 7,532,676 2,880,858 449,763 369,168 18,889,789 7,001,520 7,527,456 3,963,612 389,800 18,882,388 7,001,520 7,527,456 3,963,612 389,800 18,882,388 7,001,520 7,527,456 3,102,526 389,800 18,021,302 8,648,620 7,975,422 3,330,896 420,653 416,000 20,791,591 Total Sources 18,889,789 18,882,388 18,882,388 18,021,302 20,791,591 Expenditures Fleet Management Administration Fleet Management Operations Fleet Management Parts Supply Fuel Motorpool Vehicle Acquisitions Citywide Pay Program/Citywide Pay Program Tail Estimated Personnel Savings from Vacant Positions Leave Accrual Payments Subtotal 420,419 7,083,202 489,217 3,004,293 49,328 7,352,285 18,398,744 475,170 6,979,893 509,802 4,006,288 45,336 7,653,634 80,551 (199,500) 33,200 19,584,374 484,680 6,888,726 522,483 4,006,288 45,336 7,653,634 7,060 (55,003) 31,170 19,584,374 484,680 6,888,726 522,483 2,791,766 45,336 7,653,634 (55,003) 31,170 18,362,792 465,108 8,021,633 517,453 3,415,917 45,552 7,652,782 84,856 (225,000) 50,000 20,028,301 18,398,744 19,584,374 19,584,374 18,362,792 20,028,301 1,354,600 29,900 18,375 1,402,875 80,700 14,400 95,100 80,700 14,400 95,100 80,700 14,400 95,100 1,563,744 7,800 1,571,544 19,801,619 19,679,474 19,679,474 18,457,892 21,599,845 Sources Over/(Under) Uses (911,830) (797,086) (797,086) (436,590) (808,254) Ending Fund Balance Designated For Future Acquisition Operating Contingency Undesignated, Unreserved Fund Balance Total Ending Fund Balance 5,768,884 750,000 2,523,623 9,042,507 5,594,656 750,000 1,688,725 8,033,381 5,642,706 750,000 1,852,715 8,245,421 5,642,706 750,000 2,213,211 8,605,917 5,965,346 750,000 1,082,317 7,797,663 Revenues Maintenance & Operations Vehicle Acquisitions Fuel Miscellaneous Reimbursements from Outside Sources Subtotal TOTAL OPERATING BUDGET Transfers Out CIP CIP Technology Other Subtotal Total Uses City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 192 - Table of Contents BUDGET BY FUND | Fleet Management Fund Five Year Financial Forecast Adopted 2017/18 Beginning Fund Balance Designated For Future Acquisition Operating Contingency Undesignated, Unreserved Fund Balance Total Beginning Fund Balance Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 5,642,706 750,000 2,213,211 8,605,917 5,965,346 750,000 1,082,317 7,797,663 6,233,046 750,000 227,417 7,210,463 6,427,046 750,000 927,417 8,104,463 6,540,146 750,000 1,940,217 9,230,363 8,648,620 7,975,422 3,330,896 420,653 416,000 20,791,591 8,994,500 8,286,500 3,379,900 433,300 416,000 21,510,200 9,354,300 8,609,600 3,430,800 446,300 416,000 22,257,000 9,728,500 8,945,400 3,483,300 459,700 416,000 23,032,900 10,117,700 9,294,300 3,536,900 473,400 416,000 23,838,300 Total Sources 20,791,591 21,510,200 22,257,000 23,032,900 23,838,300 Expenditures Fleet Management Administration Fleet Management Operations Fleet Management Parts Supply Fuel Motorpool Vehicle Acquisitions Citywide Pay Program/Citywide Pay Program Tail Estimated Personnel Savings from Vacant Positions Leave Accrual Payments Subtotal 465,108 8,021,633 517,453 3,415,917 45,552 7,652,782 84,856 (225,000) 50,000 20,028,301 468,000 8,117,500 521,500 3,460,700 46,300 8,018,800 160,500 (231,800) 51,600 20,613,100 472,700 8,220,900 525,900 3,512,500 47,000 8,415,600 234,400 (238,700) 53,000 21,243,300 477,400 8,326,600 530,800 3,566,000 47,700 8,832,300 305,500 (245,900) 54,600 21,895,000 482,200 8,437,500 535,500 3,621,400 48,400 9,269,900 376,200 (253,200) 56,200 22,574,100 20,028,301 20,613,100 21,243,300 21,895,000 22,574,100 1,563,744 7,800 1,571,544 1,458,700 25,600 1,484,300 105,000 14,700 119,700 12,000 12,000 20,600 20,600 21,599,845 22,097,400 21,363,000 21,907,000 22,594,700 Sources Over/(Under) Uses (808,254) (587,200) 894,000 1,125,900 1,243,600 Ending Fund Balance Designated For Future Acquisition Operating Contingency Undesignated, Unreserved Fund Balance Total Ending Fund Balance 5,965,346 750,000 1,082,317 7,797,663 6,233,046 750,000 227,417 7,210,463 6,427,046 750,000 927,417 8,104,463 6,540,146 750,000 1,940,217 9,230,363 6,564,546 750,000 3,159,417 10,473,963 Revenues Maintenance & Operations Vehicle Acquisitions Fuel Miscellaneous Reimbursements from Outside Sources Subtotal TOTAL OPERATING BUDGET Transfers Out CIP CIP Technology Other Subtotal Total Uses City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 193 - Table of Contents BUDGET BY FUND BUDGET BY FUND | Fleet Management Fund Sources FLEET MANAGEMENT FUND SOURCES Fleet Management Sources Fleet Management Fund sources for FY 2017/18 equal $20.8 million which is an increase of $2.8 million from the FY 2016/17 yearend forecast mainly due to the increase in rates associated with the Fleet Department taking over the trolley monthly maintenance and repair responsibilities from a previously outsourced contract and the reevaluations of some budgets to be more realistic and accountable. It includes Maintenance & Operations, Equipment Replacement, Fuel, Miscellaneous and Reimbursements from Outside Sources. Maintenance & Operations Maintenance & Operations revenue originates from charges to other city programs based on the usage of city vehicles. For FY 2017/18, 42 percent of the Fleet Management Fund’s operating revenues are derived from rates related to vehicle maintenance and operation. The FY 2017/18 hourly rate is billed at $89.00 per hour and parts are marked up 22 percent. The maintenance and operations rates revenue for FY 2017/18 totals $8.6 million, which is an increase of $1.6 million from the FY 2016/17 yearend revenue forecast due to the increase in rates associated with Fleet taking over the trolley monthly maintenance and repair responsibilities from a previously outsourced contract and increased revenue related to more Fire and Police vehicles needing repairs than expected. Equipment Replacement Equipment Replacement represents the “rental” rate charged to other city funds and programs sufficient for the acquisition and replacement of city vehicles. For FY 2017/18, 38 percent of the Fleet Management Fund’s operating revenues come from rates related to vehicle acquisition. The vehicle acquisition rates for FY 2017/18 total $8.0 million, increasing about $0.5 million from the FY 2016/17 year-end forecast. The increase is to ensure a more realistic and sustainable funding source for future acquisition and replacement. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 194 - Table of Contents BUDGET BY FUND | Fleet Management Fund Sources Fuel Fuel represents the charges to other city programs based on the fuel consumption of city vehicles. Rates are determined based on historical as well as forecasted future consumption. Included in this methodology are local and national fuel cost trends. The FY 2017/18 adopted budget is $3.3 million, which is a $0.2 million increase from the FY 2016/17 year-end forecast. Miscellaneous Miscellaneous Revenue is generated from the liquidation of surplus property. The FY 2017/18 budget is $0.4 million, which is relatively flat with the FY 2016/17 year-end forecast. Reimbursement from Outside Sources Reimbursement from Outside Sources revenue is generated from any insurance recoveries received and reimbursements for fuel taxes and vehicle parts. Historically, these reimbursements did not always occur every year and were in turn not budgeted for. This revenue item was budgeted for the first time in FY 2017/18 and will going forward to account for the potential that reimbursements might occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 195 - Table of Contents BUDGET BY FUND BUDGET BY FUND | Fleet Management Fund Uses FLEET MANAGEMENT FUND USES Fleet Management Fund Expenditures The direct operating expenditures of the Fleet Management Fund are reflected in the following expenditure areas. Additionally, there is the Citywide Pay Program/Citywide Pay Program Tail, the Estimated Personnel Savings from Vacant Positions, Leave Accrual Payments and Transfers Out to other funds. Fleet Management Administration Includes all costs related to supporting the management and administrative personnel that are dedicated to directing and overseeing the fleet operation of the city. The FY 2017/18 adopted budget of $0.5 million remains relatively close to the FY 2016/17 year-end forecast. Fleet Management Operations Includes costs related to supporting technical personnel that perform the maintenance and repair functions of the city’s fleet operation, the funding for replacement parts and the use of outside vendors when necessary. The FY 2017/18 adopted budget of $8.0 million is a $1.1 million increase over the FY 2016/17 year-end forecast. This is primarily due to Fleet taking over the trolley monthly maintenance and repair responsibilities from a previously outsourced contract. It is partially offset by lower than expected fuel costs. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 196 - Table of Contents BUDGET BY FUND | Fleet Management Fund Uses Fleet Management Parts Supply Includes all costs related to supporting the specialized personnel that are dedicated to maintaining the parts segment of the city’s fleet operation, as well as the costs of all required supplies and tools. The FY 2017/18 adopted budget of $0.5 million is relatively close to the FY 2016/17 year-end forecast. Fuel Includes all costs related to the purchase of fuel, as well as costs for equipment, maintenance and services necessary to maintain fuel provision in the city’s fleet operation. The FY 2017/18 adopted budget of $3.4 million is $0.6 million higher than the FY 2016/17 year-end forecast. The year-end forecast for FY 2016/17 is $1.2 million less than budgeted due to lower fuel prices than anticipated. In order to cover the possibility of more expensive fuel prices in the upcoming fiscal year, the FY 2017/18 budget is higher than the year-end forecast. However, it is substantially less than the FY 2016/17 adopted budget. Motorpool This expenditure area includes all costs related to the care of the city’s motorpool vehicles including fuel and maintenance. The FY 2017/18 adopted budget of $45,552 is relatively flat when compared to the FY 2016/17 year-end forecast. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 197 - Table of Contents BUDGET BY FUND | Fleet Management Fund Uses Vehicle Acquisitions This expenditure area includes all costs related to the purchase or replacement of vehicles within the city's fleet. The FY 2017/18 adopted budget of $7.7 million is unchanged from the FY 2016/17 year-end forecast. Citywide Pay Program A citywide pay for performance program, through which employees may receive increases within their established salary ranges based on performance. The FY 2017/18 adopted budget total is $0.1 million. Additionally, the FY 2016/17 forecast and the FY 2013/14-2015/16 actuals are at $0 due to the actuals being allocated into the department. At the time the budget is adopted it is unknown which employees will receive a performance increase and for how much. Therefore, the citywide pay program is budgeted at a macro level and then paid based on actual increases within the department. The actual amount spent each year was at or below the adopted budget. Estimated Personnel Savings from Vacant Positions Personnel Savings is the amount of savings achieved from vacant positions. The FY 2017/18 estimate for vacancy savings is ($0.2) million. Additionally, the FY 2016/17 forecasted number of ($0.1) million, while accurate, has increased as the year has progressed and is forecasted to end the year at approximately ($0.2) million. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 198 - Table of Contents BUDGET BY FUND | Fleet Management Fund Uses Leave Accrual Payments These payments include accumulated medical and/or vacation leave paid out at the time of retirement or separation from the city. FY 2017/18 leave accrual payments of $50,000 include $25,000 budgeted for medical leave accrual payouts and $25,000 budgeted for vacation leave accrual payouts. The budget is higher than the FY 2016/17 year-end forecast because more retirements are expected to occur in FY 2017/18 when compared to FY 2016/17. Transfers Out Transfers Out is the authorized movement of cash or other resources to other funds and/or capital projects. Transfer amounts vary greatly each year. Transfers Out for FY 2017/18 are much higher than the FY 2016/17 year-end forecast and include $1.6 million to the CIP fund for a fuel site upgrade and $7,800 for CIP technology improvements. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 199 - Table of Contents BUDGET BY FUND | Fleet Management Fund Ending Fund Balance Fleet Management Fund Balance Fund balance/reserves protect the city’s financial condition and provide for unexpected economic challenges. Growth of fund balance occurs when revenues exceed expenditures. The city’s budget planning and adopted financial policies call for the establishment of reserves as part of the resource allocation/limit setting process. This process allows the city to “set aside savings” before allocated or spent as budgeted expenditures. The specific make-up of the city’s Fleet Management Fund balance and reserves are noted in the following: Designated for Future Acquisition The Designated for Future Acquisition reserve varies primarily due to the vehicle replacement schedule. The portion of internal charges to programs for replacement vehicles represents the "rental" rate for those vehicles. This charge becomes revenue to the Fleet Management Fund and applies to many vehicles with differing useful lives. Therefore, this revenue does not vary significantly by year, but the year in which vehicles are purchased may vary significantly if, for example, several large, expensive vehicles are scheduled for replacement in a single year. The fund balance at the end of each year includes the accumulated balance to be used for future year vehicle purchases. The anticipated FY 2017/18 ending Designated for Future Acquisition fund balance is $6.0 million, which is a $0.4 million increase from the FY 2016/17 forecast. Operating Contingency Operating Contingency includes $0.8 million of budget authorization in the event that unforeseen expenses occur during the fiscal year. Contingency funds are utilized only after all budget sources have been examined for available funds, and requires City Council approval. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 200 - Table of Contents BUDGET BY FUND | Fleet Management Fund Ending Fund Balance Undesignated, Unreserved Fund Balance The FY 2017/18 ending fund balance includes an Undesignated, Unreserved Fund Balance of $1.1 million, which represents an accumulation of one-time revenues and it is most appropriately used for one-time expenditures. Under prudent fiscal management practices, this amount should not be used to fund new or expanded programs with ongoing operating expenses. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 201 - Table of Contents FY 2017/18 Adopted Budget City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 202 - Table of Contents Budget by Fund PC Replacement Fund Overview BUDGET BY FUND | PC Replacement Fund Overview Fund Purpose This fund is used to account for the expenditures associated with purchasing the city’s computers, monitors and printers. Replacement of computers, monitors and printers (hardware) is charged to the city divisions as internal operating costs to each program based on the quantity and type of hardware used. The division charges become revenue to the PC Replacement Fund. PC Replacement Fund Sources (in millions) PC Replacement Fees Total Revenue Transfers In Total Sources 1.0 1.0 1.0 PC Replacement Fund Uses (in millions) Computer Hardware Acquisition Contingency/Reserves Internal Service Offset Adopted Budget Transfers Out Total Uses 0.7 0.5 (1.0) 0.2 0.2 Graph excludes the Internal Service Offset of ($1.0) million Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 203 - Table of Contents BUDGET BY FUND FUND PC REPLACEMENT Actual 2015/16 Beginning Fund Balance Operating Contingency Undesignated, Unreserved Fund Balance Total Beginning Fund Balance Adopted 2016/17 | PC Replacement Fund Summary Approved 2016/17 Forecast 2016/17 Adopted 2017/18 500,000 909,938 1,409,938 500,000 1,103,832 1,603,832 500,000 1,217,604 1,717,604 500,000 1,217,604 1,717,604 500,000 922,810 1,422,810 1,012,127 1,012,127 986,606 986,606 986,606 986,606 986,606 986,606 1,021,072 1,021,072 1,012,127 986,606 986,606 986,606 1,021,072 704,461 704,461 1,281,400 1,281,400 1,281,400 1,281,400 1,281,400 1,281,400 709,200 709,200 704,461 1,281,400 1,281,400 1,281,400 709,200 Total Uses 704,461 1,281,400 1,281,400 1,281,400 709,200 Sources Over/(Under) Uses 307,666 (294,794) (294,794) (294,794) 311,872 500,000 1,217,604 1,717,604 500,000 809,038 1,309,038 500,000 922,810 1,422,810 500,000 922,810 1,422,810 500,000 1,234,682 1,734,682 Revenues PC Replacement Fees Subtotal Total Sources Expenditures Computer Hardware Acquisition Subtotal TOTAL OPERATING BUDGET Ending Fund Balance Operating Contingency Undesignated, Unreserved Fund Balance Total Ending Fund Balance City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 204 - Table of Contents BUDGET BY FUND | PC Replacement Fund Five Year Financial Forecast PC REPLACEMENT FUND Adopted 2017/18 Beginning Fund Balance Operating Contingency Undesignated, Unreserved Fund Balance Total Beginning Fund Balance Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 500,000 922,810 1,422,810 500,000 1,234,682 1,734,682 500,000 1,235,982 1,735,982 500,000 1,067,782 1,567,782 500,000 1,301,582 1,801,582 1,021,072 1,021,072 1,035,600 1,035,600 1,053,200 1,053,200 1,069,100 1,069,100 1,084,700 1,084,700 1,021,072 1,035,600 1,053,200 1,069,100 1,084,700 709,200 709,200 1,034,300 1,034,300 1,221,400 1,221,400 835,300 835,300 1,238,500 1,238,500 709,200 1,034,300 1,221,400 835,300 1,238,500 Total Uses 709,200 1,034,300 1,221,400 835,300 1,238,500 Sources Over/(Under) Uses 311,872 1,300 (168,200) 233,800 (153,800) 500,000 1,234,682 1,734,682 500,000 1,235,982 1,735,982 500,000 1,067,782 1,567,782 500,000 1,301,582 1,801,582 500,000 1,147,782 1,647,782 Revenues PC Replacement Fees Subtotal Total Sources Expenditures Computer Hardware Acquisition Subtotal TOTAL OPERATING BUDGET Ending Fund Balance Operating Contingency Undesignated, Unreserved Fund Balance Total Ending Fund Balance City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 205 - Table of Contents BUDGET BY FUND BUDGET BY FUND | PC Replacement Fund Sources PC REPLACEMENT FUND Sources and uses PC Replacement Fund Sources The PC Replacement Fund includes revenue from rates charged to the city divisions as internal operating costs to each program based on the quantity and type of hardware used. The only source of revenue to this fund is the PC Replacement Fees, detailed below. PC Replacement Fees PC Replacement Fees represents the rates charged to other city funds and programs sufficient for the acquisition and replacement of city computer hardware. The revenue for FY 2017/18 is $1.0 million, which remains approximately flat from the FY 2016/17 year-end forecast. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 206 - Table of Contents BUDGET BY FUND | PC Replacement Fund Uses PC Replacement Fund Expenditures The direct operating expenditures of the PC Replacement Fund are budgeted in the capital outlay category. Computer Hardware Acquisition Computer Hardware Acquisition includes the purchase of desktop computers, laptops, ruggedized laptops, monitors, and printers. The computer hardware inventory for the entire city is aggregated as one asset and is thus classified as a capital asset on the city’s balance sheet. The adopted FY 2017/18 Computer Hardware Acquisition budget is $0.7 million, which is $0.6 million lower than the FY 2016/17 year-end forecast primarily due to changes to the scheduling of the replacement of ruggedized laptops. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 207 - Table of Contents BUDGET BY FUND BUDGET BY FUNDPC | PC Replacement Fund Ending Fund Balance REPLACEMENT FUND Balance PC Replacement Fund Balance The PC Replacement Fund balance varies primarily due to the hardware replacement schedule. The fund balance at the end of each year includes the accumulated balance to be used for future year hardware purchases. The PC Replacement Fund reserves include two reserve types: Operating Contingency and Undesignated, Unreserved Fund Balance. Operating Contingency Operating Contingency includes $0.5 million of budget authorization to offset unforeseen expenses that occur during the fiscal year. Contingency funds are utilized only after all budget sources have been examined for available funds, and requires City Council approval. Undesignated, Unreserved Fund Balance Undesignated, Unreserved Fund Balance accounts for any funds remaining after the designation of all other reserves/uses. The FY 2017/18 ending unreserved fund balance is $1.2 million. This balance represents an accumulation of one-time revenues and is most appropriately used for one-time expenditures. Under prudent fiscal management practices, this amount should not be used to fund new or expanded programs with ongoing operating expenses. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 208 - Table of Contents Budget by Fund Risk Management Fund BUDGET BY FUND | Risk Management Fund Overview Fund Purpose The Risk Management Fund is used to account for the city’s self-insurance, safety and risk management functions. Revenue to this fund is derived from internal charges to programs and is captured as internal rates. Payments for unemployment, workers’ compensation, and property and liability claims are made from this fund. Risk Management Fund Sources (in millions) Self-Insurance (Property and Workers Comp) Property Tax Reimbursements Miscellaneous Unemployment Claims Total Revenue Transfers In Total Sources 9.7 1.0 0.3 0.1 0.1 11.3 11.3 Risk Management Fund Uses (in millions) Personnel Services Contractual Services Commodities Capital Outlays Contingency / Reserves Internal Service Offset Adopted Budget Transfers Out Total Uses 0.9 8.1 0.1 20.8 (9.8) 20.0 0.0 20.0 Graph excludes the Internal Service Offset of ($9.8) million Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 209 - Table of Contents BUDGET BY FUND | Risk Management Fund Summary Actual 2015/16 Beginning Fund Balance Operating Contingency Operating Reserve Total Beginning Fund Balance Adopted 2016/17 Approved 2016/17 Forecast 2016/17 Adopted 2017/18 1,500,000 12,569,635 14,069,635 2,500,000 14,155,778 16,655,778 2,500,000 13,567,493 16,067,493 2,500,000 13,567,493 16,067,493 2,500,000 16,047,371 18,547,371 9,600,002 1,312,809 603,488 118,813 105,522 11,740,633 9,500,000 982,000 325,000 100,000 100,000 11,007,000 9,500,000 982,000 325,000 100,000 100,000 11,007,000 9,500,000 982,000 325,000 100,000 100,000 11,007,000 9,700,000 1,046,624 325,000 100,000 100,000 11,271,624 11,740,633 11,007,000 11,007,000 11,007,000 11,271,624 2,321,739 1,765,125 412,601 977,428 145,551 19,983 4,093,998 9,736,426 2,727,280 2,150,191 331,038 875,428 50,500 75,000 2,779,116 21,020 9,009,573 2,727,280 2,150,191 331,038 1,056,497 50,500 75,000 2,623,116 9,013,622 2,277,280 2,150,191 331,038 1,056,497 50,500 35,000 2,623,116 8,523,622 2,527,280 2,205,360 342,442 1,071,988 50,500 35,000 2,803,116 21,327 9,057,013 9,736,426 9,009,573 9,013,622 8,523,622 9,057,013 1,750 4,600 6,350 3,500 3,500 3,500 3,500 3,500 3,500 2,300 2,300 Total Uses 9,742,776 9,013,073 9,017,122 8,527,122 9,059,313 Sources Over/(Under) Uses 1,997,858 1,993,927 1,989,878 2,479,878 2,212,311 Ending Fund Balance Operating Contingency Operating Reserve Total Ending Fund Balance 2,500,000 13,567,493 16,067,493 2,500,000 16,149,705 18,649,705 2,500,000 15,557,371 18,057,371 2,500,000 16,047,371 18,547,371 2,500,000 18,259,682 20,759,682 Revenues Self-Insurance (Property and Workers Comp) Property Tax Reimbursements from Outside Sources Miscellaneous Unemployment Claims Subtotal Total Sources Expenditures Insurance & Bond Premiums Liability Physical Damage Risk Management Safety Grants Program Unemployment Workers' Compensation Citywide Pay Program Subtotal TOTAL OPERATING BUDGET Transfers Out Operating Transfer Out Transfers Out - CIP Technlgy Citywide Subtotal City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 210 - Table of Contents BUDGET BY FUND | Risk Management Fund Five Year Financial Forecast Adopted 2017/18 Beginning Fund Balance Operating Contingency Operating Reserve Total Beginning Fund Balance Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 2,500,000 16,047,371 18,547,371 2,500,000 18,259,682 20,759,682 2,500,000 19,440,082 21,940,082 2,500,000 20,383,282 22,883,282 2,500,000 21,079,882 23,579,882 9,700,000 1,046,624 325,000 100,000 100,000 11,271,624 9,700,200 250,000 325,000 100,000 100,000 10,475,200 9,700,200 250,000 325,000 100,000 100,000 10,475,200 9,700,200 250,000 325,000 100,000 100,000 10,475,200 9,700,200 250,000 325,000 100,000 100,000 10,475,200 11,271,624 10,475,200 10,475,200 10,475,200 10,475,200 2,527,280 2,205,360 342,442 1,071,988 50,500 35,000 2,803,116 21,327 9,057,013 2,648,200 2,238,100 347,400 1,080,400 51,200 35,500 2,844,600 41,800 9,287,200 2,775,000 2,271,600 352,800 1,090,200 52,200 36,100 2,887,200 62,500 9,527,600 2,908,100 2,306,300 358,100 1,099,600 52,700 36,600 2,931,300 82,300 9,775,000 3,048,000 2,342,100 363,600 1,110,000 53,600 37,200 2,976,800 101,500 10,032,800 9,057,013 9,287,200 9,527,600 9,775,000 10,032,800 2,300 2,300 7,600 7,600 4,400 4,400 3,600 3,600 6,100 6,100 Total Uses 9,059,313 9,294,800 9,532,000 9,778,600 10,038,900 Sources Over/(Under) Uses 2,212,311 1,180,400 943,200 696,600 436,300 Ending Fund Balance Operating Contingency Operating Reserve Total Ending Fund Balance 2,500,000 18,259,682 20,759,682 2,500,000 19,440,082 21,940,082 2,500,000 20,383,282 22,883,282 2,500,000 21,079,882 23,579,882 2,500,000 21,516,182 24,016,182 Revenues Self-Insurance (Property and Workers Comp) Property Tax Reimbursements from Outside Sources Miscellaneous Unemployment Claims Subtotal Expenditures Insurance & Bond Premiums Liability Physical Damage Risk Management Safety Grants Program Unemployment Workers' Compensation Citywide Pay Program Subtotal TOTAL OPERATING BUDGET Transfers Out Operating Transfer Out Transfers Out - CIP Technlgy Citywide Subtotal City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 211 - Table of Contents BUDGET BY FUND BUDGETRISK BY FUND | Risk Management Fund Sources MANAGEMENT FUND SOURCES Risk Management Fund Sources Sources received in the Risk Management Fund consist of Self-Insurance (Property and Workers Comp), Property Tax, Reimbursements from Outside Sources, Miscellaneous, and Unemployment Claims. More specific information on these sources is detailed below. Self-Insurance (Property and Workers Comp) Self-Insurance (Property and Workers Comp) represent this fund’s operating resources, which are derived from internal charges for services to other city funds. The fund covers excess insurance premiums, administrative charges and claim payments for general and auto liability/physical damages, workers’ compensation, and property damage. The FY 2017/18 revenue budget for property, liability, and worker compensation rates is $9.7 million. The large increase in FY 2014/15 compared to FY 2013/14 was due to year two of the city's Loss Trust fund board's preference to maintain an 85 percent confidence level of the most recent actuarial assessment in the fund balance, which required a two year phase in of increased rates. Property Tax This revenue represents a reimbursement to the city’s Risk Management Fund for the liability tort settlements and judgments approved by City Council and paid during the most recently completed calendar year. The inclusion of the tort claim reimbursements in the city’s primary tax levy is allowed per a March 20, 1986 Arizona Attorney General opinion. The tort expenses are paid from the Risk Management Fund therefore the reimbursement becomes revenue to this fund. The budgeted tort claims for FY 2017/18 total $1.0 million. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 212 - Table of Contents BUDGET BY FUND | Risk Management Fund Sources Reimbursements from Outside Sources Reimbursements from Outside Sources represent revenue received from an insurance claim. The primary component of this revenue source is subrogation where the city seeks reimbursement from third party insurance companies for damage occurring on or to city property. Reimbursements from outside sources for FY 2017/18 are $0.3 million, which remains consistent with FY 2016/17 year-end forecast. Miscellaneous Miscellaneous revenue represents special event reimbursement related to services provided by off-duty police officers. When an off-duty police officer is contracted for services certain insurance requirements must be met. If the event producer does not meet the specified insurance thresholds, additional costs are billed to cover potential city liability. When Police receive these reimbursements they are then reimbursed to the city's Risk Management Fund. This revenue for FY 2017/18 is budgeted at $0.1 million which is consistent with FY 2016/17 year-end forecast. Unemployment Claims Unemployment Claims revenue represents reimbursement for administrative charges and claim payments. The budgeted revenue from unemployment claims for FY 2017/18 is $0.1 million, which remains consistent with FY 2016/17 year-end forecast. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 213 - Table of Contents BUDGET BY FUND BUDGET BY FUND | Risk Management Fund Uses RISK MANAGEMENT FUND USES Risk Management Fund Uses The direct operating expenditures of the Risk Management Fund are divided into the following major expenditure categories: Insurance & Bond Premiums, Liability, Physical Damage, Risk Management, Safety Grants Program, Unemployment, Workers' Compensation, and Citywide Pay Program. There are also cash transfers out to the CIP Fund. Insurance & Bond Premiums Insurance & Bond Premiums include various citywide insurance policies for umbrella type coverage offering protection against large or ongoing claims. The adopted budget for FY 2017/18 is $2.5 million, which is $0.2 million more than the FY 2016/17 year-end forecast of $2.3 million. This increase continues to be attributed to the increase in insurance and bond premiums. Liability Liability primarily includes claim payments and legal costs for all activity not related to physical damage or workers' compensation claims. The adopted budget for FY 2017/18 is $2.2 million, which is consistent with FY 2016/17 year-end forecast. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 214 - Table of Contents BUDGET BY FUND | Risk Management Fund Uses Physical Damage Physical Damage is a claim used to pay for physical damage to city property or city vehicles. The budgeted expenditures for FY 2017/18 is $0.3 million, which remains consistent with FY 2016/17 year-end forecast. Risk Management Risk Management operating budget is for day to day operations of the department. The operating budget for FY 2017/18 is $1.1 million, which remains consistent with FY 2016/17 year-end forecast. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 215 - Table of Contents BUDGET BY FUND | Risk Management Fund Uses Safety Grants Program Safety Grants Program is for city departments to request funds to pay for office furniture/equipment, office operating supplies, and protective clothing that would enhance safety or reduce a known loss in the workplace. In order to receive these funds a certain criteria must be met and no other funding source available. The budgeted expenditure for FY 2017/18 is $0.1 million, which is consistent with FY 2016/17 year-end forecast. Unemployment Unemployment represents claims which can be paid to terminated city employees who qualify. The budgeted expenditure for FY 2017/18 is $35,000, which remains consistent with FY 2016/17 year-end forecast. The budgeted amount was reduced in FY 2017/18 based on historical use. Workers' Compensation Workers' Compensation represents claims paid to current city employees in the event there is an injury, illness, or disease occurring in the course of city employment. The budgeted expenditure for FY 2017/18 is $2.8 million, which is an increase of $0.2 million from the FY 2016/17 year-end forecast. FY 2015/16 actual amount shows an increase in medical claims, which caused medical bill review services expense to increase. This resulted in $4.1 million in medical claim expenses, which was $1.5 million above the FY 2015/16 budgeted amount. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 216 - Table of Contents BUDGET BY FUND | Risk Management Fund Uses Citywide Pay Program A citywide pay for performance program, through which employees may receive increases within their established salary ranges based on performance totaled $21,327 for FY 2017/18. Additionally, the FY 2016/17 forecast and the FY 2013/14 - FY 2015/16 actuals are at $0 due to the actuals being allocated to the department. At the time the budget is adopted it is unknown which employees will receive a performance increase and for how much. Therefore, the citywide pay program is budgeted at a macro level and then paid based on actual increases within the department. Transfers Out Transfers Out is the authorized movement of cash to other funds and capital projects. Transfers out of $2,300 are planned to help cover the Risk Management's portion of citywide technology maintenance/replacement capital projects during FY 2017/18. Additionally, in FY 2015/16 there was a City Council approved one-time transfer to the non-disabled retiree healthcare fund to help absorb the accumulated deficit. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 217 - Table of Contents BUDGET BY FUND | Risk Management Fund Ending Fund Balance Risk Management Fund Reserve Fund balance/reserve protects the city's financial condition and provide for unexpected economic challenges. The specific make-up of the city's Risk Management Fund balance and reserves are noted in the following: Operating Contingency Operating Contingency includes $2.5 million of budget authorization in the event that unforeseen expenses occur during the fiscal year. Contingency funds are utilized only after all budget sources have been examined for available funds, and requires City Council approval. In FY 2014/15 City Council approved a one-time contingency transfer of $1.5 million to cover increased insurance premiums and settlement activity. Operating Reserve Risk Management's operating reserve is maintained to provide coverage for unforeseen expenses. The required operating reserve is set by the Loss Trust Fund Board and has been determined to be an 85 percent confidence level of the most recent actuarial assessment. Each year the projected balance are actuarially determined based on current actual losses and potential outstanding claims. The projected FY 2017/18 operating reserve is approximately $18.3 million, which is an increase of $2.3 million from the FY 2016/17 year-end forecast and meets the 85 percent confidence level. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 218 - Table of Contents Budget by Fund Self-Insurance Fund BUDGET BUDGET BY FUND BY FUND | Healthcare |Healthcare General Self-Insurance Fund EndingFund FundOverview Balance Fund Purpose The Healthcare Self-Insurance Fund is used to account for the city’s self-insured medical and dental benefits. Revenue to this fund is derived from premiums charged to both the city and employees. The premiums are collected for the city’s portion by charging the divisions and through payroll deductions for the employee’s portion. Revenue is also collected through premium charges to public safety disabled retirees (including per City Council direction, a subsidy form the General Fund to cover Public Safety disabled retirees costs that exceed the premium charges) as well as pharmacy rebates, COBRA, and stop loss insurance recoveries. This fund provides payment of actual healthcare expenses (medical, behavioral, prescription and dental claims) as well as claims administration and other benefit plan expenses. Healthcare Self-Insurance Fund Sources (in millions) Employer Contribution - Medical Employee Contributions - Medical Employer Contribution - Dental Employee Contributions - Dental Miscellaneous Disabled Retiree Contributions Total Revenue Transfers In Total Sources 21.2 7.4 0.8 0.7 0.3 0.3 30.7 0.2 30.9 Healthcare Self-Insurance Fund Uses (in millions) Personnel Services Contractual Services Commodities Capital Outlays Contingency/ Reserves Internal Service Offset Adopted Budget Transfers Out Total Uses 0.1 30.5 0.3 8.0 (22.0) 17.0 17.0 Graph excludes the Internal Service Offset of ($22.0) million Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 219 - Table of Contents HEALTHCARE SELF INSURANCE FUND BUDGET BY FUND | Healthcare Self-Insurance Fund Summary Actual 2015/16 Adopted 2016/17 Approved 2016/17 Forecast 2016/17 Adopted 2017/18 Beginning Fund Balance Healthcare Claims Reserve Operating Contingency 4,289,716 2,500,000 5,314,988 2,500,000 4,954,074 2,500,000 4,954,074 2,500,000 5,492,248 2,500,000 Total Beginning Fund Balance 6,789,716 7,814,988 7,454,074 7,454,074 7,992,248 Subtotal 20,143,166 6,038,228 755,467 723,973 462,765 179,295 28,302,894 20,494,125 7,286,542 806,569 777,424 810,000 263,820 30,438,480 20,494,125 7,286,542 806,569 777,424 810,000 263,820 30,438,480 20,494,125 7,243,142 774,569 743,424 315,500 263,820 29,834,580 21,195,321 7,402,203 774,600 743,500 305,500 279,984 30,701,108 Subtotal 1,198,166 1,198,166 400,000 400,000 400,000 400,000 214,633 214,633 230,000 230,000 29,501,060 30,838,480 30,838,480 30,049,213 30,931,108 25,690,045 1,390,176 552,965 712,790 253,067 168,207 69,451 28,836,701 27,435,155 1,526,993 682,250 502,336 210,000 376,498 95,249 2,829 30,831,310 27,435,155 1,526,993 682,250 502,336 210,000 378,715 95,249 30,830,698 26,195,155 1,297,674 682,250 502,336 360,000 386,375 87,249 29,511,039 27,649,064 1,412,876 687,250 506,215 360,000 215,775 87,242 2,487 30,920,909 28,836,701 30,831,310 30,830,698 29,511,039 30,920,909 28,836,701 30,831,310 30,830,698 29,511,039 30,920,909 Sources Over/(Under) Uses 664,358 7,170 7,782 538,174 10,199 Ending Fund Balance Healthcare Claims Reserve Operating Contingency 4,954,074 2,500,000 5,322,158 2,500,000 4,961,856 2,500,000 5,492,248 2,500,000 5,502,447 2,500,000 Total Ending Fund Balance 7,454,074 7,822,158 7,461,856 7,992,248 8,002,447 Revenues Employer Contribution - Medical Employee Contributions - Medical Employer Contribution - Dental Employee Contributions - Dental Miscellaneous (a) Disabled Retiree Contributions Transfers In Operating Transfer In Total Sources Expenditures Medical Claims Dental Claims Insurance & Bond Premiums Administrative Fees Live Life Well Program (b) City Administration Behavioral Health Insurance Claims Citywide Pay Program/Citywide Pay Program Tail Subtotal TOTAL OPERATING BUDGET Total Uses (a) FY 2016/17 adopted and approved budget included $0.6 million in pharmacy rebates that are actually received and recorded as a credit to medical claims expenditures. (b) FY 2017/18 budget includes Cigna's healthcare incentive, which had not been budgeted in prior years. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 220 - Table of Contents SELF INSURANCE FUND BUDGET BY FUND |HEALTHCARE Healthcare Self-Insurance Fund Five Year Financial Forecast Adopted 2017/18 Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 Beginning Fund Balance Healthcare Claims Reserve Operating Contingency 5,492,248 2,500,000 5,502,447 2,500,000 5,753,047 2,500,000 6,012,147 2,500,000 6,293,447 2,500,000 Total Beginning Fund Balance 7,992,248 8,002,447 8,253,047 8,512,147 8,793,447 Subtotal 21,195,321 7,402,203 774,600 743,500 305,500 279,984 30,701,108 22,471,600 7,830,900 797,800 765,800 305,500 295,800 32,467,400 23,595,100 8,255,600 821,800 788,700 305,500 312,700 34,079,400 24,787,700 8,703,600 846,400 812,500 305,500 330,500 35,786,200 26,040,700 9,235,300 871,800 836,900 305,500 349,300 37,639,500 Subtotal 230,000 230,000 240,000 240,000 250,000 250,000 260,000 260,000 270,000 270,000 Total Sources 30,931,108 32,707,400 34,329,400 36,046,200 37,909,500 Expenditures Medical Claims Dental Claims Insurance & Bond Premiums Administrative Fees Live Life Well Program City Administration Behavioral Health Insurance Claims Citywide Pay Program/Citywide Pay Program Tail Subtotal 27,649,064 1,412,876 687,250 506,215 360,000 215,775 87,242 2,487 30,920,909 29,058,700 1,455,300 742,300 521,600 359,800 219,800 94,200 5,100 32,456,800 30,539,200 1,498,900 801,700 537,300 359,600 224,200 101,700 7,700 34,070,300 32,093,500 1,543,900 865,700 553,700 359,500 228,200 109,900 10,500 35,764,900 33,949,700 1,590,200 935,000 570,300 359,300 232,800 118,700 13,300 37,769,300 30,920,909 32,456,800 34,070,300 35,764,900 37,769,300 30,920,909 32,456,800 34,070,300 35,764,900 37,769,300 Sources Over/(Under) Uses 10,199 250,600 259,100 281,300 140,200 Ending Fund Balance Healthcare Claims Reserve Operating Contingency 5,502,447 2,500,000 5,753,047 2,500,000 6,012,147 2,500,000 6,293,447 2,500,000 6,433,647 2,500,000 Total Ending Fund Balance 8,002,447 8,253,047 8,512,147 8,793,447 8,933,647 Revenues Employer Contribution - Medical Employee Contributions - Medical Employer Contribution - Dental Employee Contributions - Dental Miscellaneous Disabled Retiree Contributions Transfers In Operating Transfer In TOTAL OPERATING BUDGET Total Uses City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 221 - Table of Contents BUDGET BY FUND BUDGET BY FUND | Healthcare Self-Insurance Fund Sources healthcare self-insurance fund sources Healthcare Self-Insurance Fund Sources Healthcare Self-Insurance Fund sources for FY 2017/18 equal $30.9 million, which is an increase of $0.9 million from the FY 2016/17 forecast, mostly due to higher medical premiums. Sources include city and employees contributions for medical and dental premiums, miscellaneous revenues and Public Safety disable retirees contributions. Employer Contribution – Medical This revenue represents the city's contribution towards employee healthcare premiums. The city's premium cost sharing varies for the four healthcare plans offered. The city contributes 77 percent of the employee only premium for the costliest plan; and 90 percent of the lowest cost plan. The FY 2017/18 adopted budget of $21.2 million represents an increase of $0.7 million from the FY 2016/17 year-end forecast. Employee Contributions – Medical This revenue captures the employee portion of healthcare premiums collected through payroll deductions, and COBRA. Historically, the premium cost sharing has shifted a larger share of total cost to the employees. The FY 2017/18 adopted budget of $7.4 million, represents an increase of $0.2 million from the FY 2016/17 year-end forecast. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 222 - Table of Contents BUDGET BY FUND | Healthcare Self-Insurance Fund Sources Employer Contribution – Dental This revenue is comprised of the city's contribution to the dental premiums. The city contributes 100 percent of the employee only premium cost for the HMO dental plan and 87 percent of the employee only portion of the premium cost for the PPO dental plan. The FY 2017/18 adopted budget of $0.8 million remains flat from the FY 2016/17 year-end forecast. Employee Contributions – Dental This revenue captures the employee portion of dental premiums collected through payroll deductions, as well as COBRA elections. FY 2017/18 is estimated at $0.7 million, which remains relatively flat from the FY 2016/17 year-end forecast. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 223 - Table of Contents BUDGET BY FUND | Healthcare Self-Insurance Fund Sources Miscellaneous Miscellaneous revenues include state subsidy contributions for qualifying employees as well as reimbursements on medical claims over the city's stop loss limit. The FY 201718 adopted budget of $0.3 million is relatively flat compared to the FY 2016/17 year-end forecast. In prior years, the pharmacy rebates received under the agreement with Cigna were included as a part of this budget. However, pharmacy rebates are received and recorded as credits to medical claims expenditures. Disabled Retiree Contributions This revenue captures the disabled retiree healthcare premiums collected through direct collections. Beginning in FY 2014/15 retiree healthcare was no longer available through the city’s Healthcare Self-Insurance Fund. The city continues to provide healthcare benefits to public safety disabled retirees at the same rate as an active employee. Operating Transfers In Operating Transfers In includes the subsidy received from the General Fund per City Council direction to cover the annual costs that exceeded premium collections for Public Safety disabled retirees. Total Transfers In for FY 2017/18 is $0.3 million, which is slightly higher than the FY 2016/17 year-end forecast. In FY 2015/16 a transfer from various funds was approved by Council to absorb the accumulated deficit for costs associated with non-disabled retirees that were previously on the city’s healthcare plan. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 224 - Table of Contents BUDGET BY FUND BUDGET BY HEALTHCARE FUND | Healthcare Self-Insurance Fund Uses SELF-INSURANCE FUND uses Healthcare Self-Insurance Fund Uses The direct operating expenditures of the Healthcare Self-Insurance Fund include: medical and dental claims, insurance and bond premiums, administrative expenses and health related programs. Medical Claims Includes all medical claims expenses for members of the plans, including employees, Public Safety disabled retirees and their families. The FY 2017/18 adopted budget of $27.6 million represents an increase of $1.5 million from the FY 2016/17 year-end forecast due to the increasing costs of healthcare. Dental Claims Includes all dental claims. The adopted FY 2017/18 budget is $1.4 million, which is $0.1 million higher than the FY 2016/17 year-end forecast. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 225 - Table of Contents BUDGET BY FUND | Healthcare Self-Insurance Fund Uses Insurance & Bond Premiums Insurance & Bond Premiums includes the stop-loss insurance purchased to limit the city's exposure to large dollar claims. This type of coverage is used to ensure catastrophic claims do not upset the financial reserves of the self-funded plan. The adopted FY 2017/18 budget of $0.7 million is relatively flat with the FY 2016/17 year-end forecast. Administrative Fees Administrative Fees are the cost incurred for administering the healthcare and dental plans. The significant decrease from prior years is related to changing providers and to receiving more favorable terms. The FY 2017/18 adopted budget of $0.5 million is flat with the FY 2016/17 year-end forecast. Live Life Well Program Incentives to employees to encourage participation in various health and wellness events, challenges, activities and classes. The FY 2017/18 adopted budget of $0.4 million includes $0.2 million for a wellness incentive to employees enrolled in a medical plan that complete an annual wellness exam and health assessment. This incentive is reimbursed by the provider and had not been included in the FY 2016/17 adopted budget. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 226 - Table of Contents BUDGET BY FUND | Healthcare Self-Insurance Fund Uses City Administration The city's administrative expenses incurred to coordinate healthcare, behavioral, dental and wellness plans. The adopted FY 2017/18 budget is $0.2 million lower than the FY 2016/17 year-end forecast due to the elimination of the Affordable Care Act (ACA) fee. FY 2013/14 - FY 2014/15 the City Administration budget included reinsurance fees and stop loss insurance; however, the expenditures were recorded in Insurance & Bond Premiums. Behavioral Health Insurance Claims Includes all behavioral claims expenses. The FY 2017/18 adopted budget of $0.1 million remains flat compared to the FY 2016/17 year-end forecast. FY 2013/14 was a previous provider that charged more for behavioral health claims. A new provider was in effect beginning in FY 2014/15 where the cost of behavior health claims decreased significantly; however, the budget was not properly adjusted until FY 2016/17. Citywide Pay Program / Citywide Pay Program Tail A citywide pay for performance program, through which employees may receive increases within their established salary ranges based on performance totaled $2,487 for FY 2017/18. Additionally, the FY 2016/17 forecast and FY 2013/14 - FY 2015/16 actuals are at $0 due to the actuals being allocated to the department. At the time the budget is adopted it is unknown which employees will receive a performance increase and for how much. Therefore, the citywide pay program is budgeted at the macro level and then paid based on actual increases within the department. The actual amount spent each year was at or below the adopted budget. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 227 - Table of Contents BUDGET BY FUND | Healthcare Self-Insurance Fund Ending Fund Balance Healthcare Self-Insurance Fund Balance The Healthcare Self-Insurance Fund balance is maintained to provide for coverage of self-insured benefits. Healthcare Claims Reserve The projected FY 2017/18 Healthcare Claims Reserve is $5.5 million, which remains relatively flat from the FY 2016/17 yearend forecast. The reserve is for large claims beyond what was anticipated and for incurred but not reported claims. Operating Contingency Contingency funds are utilized only after all other budget sources have been examined for available funds and require City Council approval. The FY 2017/18 adopted budget is $2.5 million. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 228 - Table of Contents Budget by Fund Total Budget Overview BUDGET BY FUND | Grants & Special Districts Overview Adopted Budget $1,279.8Million (a) Operating Budgets $557.9M (a) (a) (b) Grants & Special Districts $15.2M Capital Improvement $522.6M Contingencies / Reserves $184.0M General Fund $265.6M Grant Funds $14.6M Community Facilities $17.5M General Fund $29.8M Special Revenue $46.5M Special Districts $0.6M Preservation $47.6M Special Revenue $7.1M Debt Service Funds $125.4M Drainage / Flood Control $8.8M Debt Service Funds $20.3M Enterprise Funds $112.4M Public Safety $18.6M Enterprise Funds $73.2M Internal Service $8.0M (a) $60.7M (b) Service Facilities $20.1M Internal Service $36.0M Transportation $163.5M Grant Funds $2.0M Water Management $246.6M Capital Projects $15.6M Adopted Budget and Operating Budgets include Internal Service Funds offsets (reductions) of $52.7M Internal Service Funds Budget prior to Internal Service Funds offsets of $52.7M Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 229 - Table of Contents Budget by Fund Grants Overview BUDGET BY FUND | Grants Overview Grant Funds The Grant Funds receive and expend the city’s federal, state, and local grants. The amount of grants received is generally based upon application to granting agencies by the city and through entitlement grants and are contingent upon availability of funding by the grantors. Grant revenues may be used only for the stated purpose in the approved grant agreement and are subject to grantor expenditure guidelines and audits. The city will only expend grant funds that have been appropriately awarded by the granting agency and accepted in accordance with the city’s grant policy. Grant Fund Uses (in millions) Personnel Services Contractual Services Commodities Contingency Adopted Budget Transfers Out Total Uses 1.0 11.1 0.1 4.5 16.6 0.0 16.6 Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 230 - Table of Contents BUDGET BY FUND | Grants Summary GRANT FUND SUMMARY Grant Description Adopted FY 2017/18 COMMUNITY DEVELOPMENT BLOCK GRANT HOME SECTION 8 BELLEVIEW RENTAL OPERATIONS CAN-DO-FUND FAMILY RESOURCE CENTER FORT MCDOWELL ARIZONA CRIMINAL JUSTICE COMMISSION NATIONAL CRIMINAL HISTORY EDWARD BYRNE MEMORIAL JUSTICE ASSISTANCE GRANT GILA RIVER PASCUA YAQUI SALT RIVER PIMA - MARICOPA INDIAN COMMUNITY STATE GRANT-IN-AID Subtotal: Grants 2,172,529 666,869 6,110,457 39,000 40,285 196,052 105,000 129,900 31,640 231,052 100,000 2,250,472 12,000 12,085,256 GRANTS ANTICIPATED GRANT CONTINGENCY Subtotal: Grants Anticipated/ Contingency Total Grants 2,526,101 2,023,299 4,549,400 16,634,656 City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 231 - Table of Contents BUDGET BY FUND | Grant Funds Sources BUDGET BY FUND GRANT FUNDS SOURCES Grant Fund Sources By Grant The city pursues grant funding to leverage city funds to address priority program and service needs. The major areas of grant revenue consist of Community Development Block Grant (CDBG), Housing Choice Voucher (Section 8), HOME Funds, and miscellaneous federal, state, and local grants. The revenues by grant are detailed in the following sections below: Community Development Block Grant (CDBG) and Housing Choice Voucher (Section 8) CDBG and Section 8 funds are awarded annually by the U.S. Department of Housing and Urban Development (HUD) through entitlement grants, based on formula allocations. These grant revenues may only be used for those projects specifically approved in the funding agreement meeting applicable federal regulations and are subject to agency expenditure guidelines and audits. Staff estimates the CDBG and Section 8 Housing Choice Voucher allocations and prior year’s carryover for FY 2017/18 to total $8.3 million. CDBG and Section 8 funds actual amounts will vary depending on when the funds were received during the fiscal year. HOME HOME funds are received through the Maricopa County Home Consortium. Staff estimates the HOME allocation and prior year’s carryover for FY 2017/18 to total $0.7 million. HOME funds actual amounts will vary depending on when the funds were received during the fiscal year. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 232 - Table of Contents BUDGET BY FUND | Grant Funds Sources Miscellaneous Federal, State and Local Grants Miscellaneous Federal, State and Local Grants include grants for law enforcement, fire services, community services, transportation, and preservation projects. The adopted budget for these grants is estimated to total $3.1 million for FY 2017/18, which is an increase of $1.2 million from FY 2016/17 year-end forecast. Actual amounts will vary depending on when the funds were received during the fiscal year. Grants Anticipated Grants Anticipated for FY 2017/18 totals $2.5 million. These are anticipated grants that may be received throughout the fiscal year to aid in the support of a specified function or general purposes. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 233 - Table of Contents BUDGET BY FUND | Water & WaterBUDGET Reclamation BY Funds FUNDEnding | Grant Fund Funds Balance Uses BUDGET BY FUND GRANT FUNDS SOURCES Grant Fund Uses By Grant The city determinedly seeks grant funding to leverage city funds to address priority program and service needs. The major areas grant expenditures consist of Community Development Block Grant (CDBG), Housing Choice Voucher (Section 8), HOME Funds, and miscellaneous federal, state, and local grants. The expenditures by grant are detailed in the following sections below: Community Development Block Grant (CDBG) and Housing Choice Voucher (Section 8) CDBG and Section 8 funds are used for social and housing services for the elderly, disabled and low-income families. The adopted budget for these grants is estimated to total $8.3 million for FY 2017/18, which is an increase of $0.4 million from FY 2016/17 year-end forecast. CDBG and Section 8 expenditure actual amounts will vary depending on the timing of disbursement during the fiscal year. HOME HOME funds are used to provide affordable housing, expand the capacity of non-profit housing providers, strengthen the ability of local governments to provide housing, and leverage private-sector participation in housing. The FY 2017/18 adopted budget is $0.7 million, reflecting a increase of $0.4 million from FY 2016/17 year-end forecast. HOME funds expenditure actual amounts will vary depending on the timing of disbursement during the fiscal year. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 234 - Table of Contents BUDGET BY FUND | Water & WaterBUDGET Reclamation BY Funds FUNDEnding | Grant Fund Funds Balance Uses Miscellaneous Federal, State & Local Grants Miscellaneous Federal, State & Local Grants are typically used for the purchase of equipment and services related to the law enforcement, fire services, community services, transportation and preservation projects. The FY 2017/18 adopted budget is $3.1 million, which is $2.6 million higher than FY 2016/17 approved budget. Actual amounts will vary depending on the timing of disbursement during the fiscal year. Grants Anticipated Grants Anticipated for FY 2017/18 totals $2.5 million. These are anticipated grants that may be received throughout the fiscal year to aid in the support of a specified function or general purposes. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 235 - Table of Contents BUDGET BY FUND | Grant Funds Ending Fund Balance Grant Fund Contingency Grant Fund Contingency for FY 2017/18 totals $2.0 million, in the event that unforeseen expenses occur during the fiscal year while conducting operations. Contingency funds are utilized upon City Council approval. Additionally, in FY 2014/15 the annual budget for contingency was reduced from $7.0 million to $3.0 million to align more with historical, expected usage. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 236 - Table of Contents Budget by Fund Special Districts Overview BUDGET BY FUND | Special Districts Fund Overview Special Districts Fund This fund is used to account for proceeds received by property owners in return for the city providing agreed-upon increased levels of municipal services beyond the standard level of core city services as allowed by statute. More specifically, the fund is used to account for the city’s streetlight districts. Special Districts Fund Uses (in millions) Contractual Services Adopted Budget Transfers Out Total Uses 0.6 0.6 0.6 Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 237 - Table of Contents BUDGET BY FUND | Special Districts Fund Summary Actual 2015/16 Beginning Fund Balance Streetlight Districts Total Beginning Fund Balance Adopted 2016/17 Approved 2016/17 Forecast 2016/17 Adopted 2017/18 23,697 23,697 13,827 13,827 12,190 12,190 12,190 12,190 25,469 25,469 577,702 577,702 609,739 609,739 609,739 609,739 601,736 601,736 598,296 598,296 577,702 609,739 609,739 601,736 598,296 589,209 589,209 623,566 623,566 621,929 621,929 588,457 588,457 623,765 623,765 589,209 623,566 621,929 588,457 623,765 Total Uses 589,209 623,566 621,929 588,457 623,765 Sources Over/(Under) Uses (11,507) (13,827) (12,190) 13,279 (25,469) Ending Fund Balance Streetlight Districts Total Ending Fund Balance 12,190 12,190 - - 25,469 25,469 - Revenues Streetlight Districts Subtotal Total Sources Expenditures Streetlight Districts Subtotal TOTAL OPERATING BUDGET City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 238 - Table of Contents BUDGET BY FUND | Special Districts Fund Five Year Financial Forecast Adopted 2017/18 Beginning Fund Balance Streetlight Districts Total Beginning Fund Balance Forecast 2018/19 Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 25,469 25,469 - - - - 598,296 598,296 648,700 648,700 674,700 674,700 701,700 701,700 729,700 729,700 598,296 648,700 674,700 701,700 729,700 623,765 623,765 648,700 648,700 674,700 674,700 701,700 701,700 729,700 729,700 623,765 648,700 674,700 701,700 729,700 Total Uses 623,765 648,700 674,700 701,700 729,700 Sources Over/(Under) Uses (25,469) - - - - Ending Fund Balance Streetlight Districts Total Ending Fund Balance - - - - - Revenues Streetlight Districts Subtotal Total Sources Expenditures Streetlight Districts Subtotal TOTAL OPERATING BUDGET City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 239 - Table of Contents BUDGET BY FUND BUDGET BY FUND | Special Districts Fund Sources SPECIAL DISTRICTS FUND SOURCES Special Districts Sources Special Districts Sources for FY 2017/18 equal $0.6 million, which is flat from FY 2017/18. Sources include Streetlight Districts Revenue which is derived from the levy assessed on property owners within the city's streetlight districts. Streetlight Districts Revenue Streetlight Districts Revenue represents the levy assessed on property owners within each of the city’s more than 355 streetlight districts. The levy is calculated based on the expected costs for the year less any reserve balance from the prior fiscal year. The adopted FY 2017/18 revenue budget is $0.6 million. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 240 - Table of Contents BUDGET BY FUND BUDGET BY FUND | Special Districts Fund Uses SPECIAL DISTRICTS FUND USES Special Districts Uses Special Districts Uses consists of Streetlight Districts Expenditures. The cost of operating each district varies based on the cost of electricity usage and number of streetlights. Streetlight Districts Expenditures Streetlight Districts adopted FY 2017/18 expenditure budget is $0.6 million and will be used for electric costs of streetlights installed within certain areas throughout the community. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 241 - Table of Contents BUDGET BY FUND | Special Districts Fund Ending Fund Balance Special Districts Fund Balance Fund balance protects the city’s financial condition and provides for unexpected economic challenges. Growth of fund balance occurs when sources exceed uses. The specific make-up of the city’s Special Districts Fund balance is as follows: Streetlight Districts Fund Balance The FY 2017/18 Streetlight Districts ending fund balance is projected to be $0.0 thousands. A reduction to fund balance was done in prior years to match current revenues with expenses and ultimately reduce the existing reserve to a $0.0 thousands balance. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 242 - Table of Contents Budget by Fund Total Budget Overview BUDGET BY FUND | CIP Funds Overview Adopted Budget $1,279.8Million (a) Operating Budgets $557.9M (a) (a) (b) Grants & Special Districts $15.2M Capital Improvement $522.6M Contingencies / Reserves $184.0M General Fund $265.6M Grant Funds $14.6M Community Facilities $17.5M General Fund $29.8M Special Revenue $46.5M Special Districts $0.6M Preservation $47.6M Special Revenue $7.1M Debt Service Funds $125.4M Drainage / Flood Control $8.8M Debt Service Funds $20.3M Enterprise Funds $112.4M Public Safety $18.6M Enterprise Funds $73.2M Internal Service $8.0M (a) $60.7M (b) Service Facilities $20.1M Internal Service $36.0M Transportation $163.5M Grant Funds $2.0M Water Management $246.6M Capital Projects $15.6M Adopted Budget and Operating Budgets include Internal Service Funds offsets (reductions) of $52.7M Internal Service Funds Budget prior to Internal Service Funds offsets of $52.7M Note: Amounts are rounded in millions; therefore, differences may occur. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 243 - Table of Contents BUDGET BY FUND | CIP Funds Summary (in thousands) Actual Adopted 2015/16 2016/17 Beginning Fund Balance (a) Revenues Bonds/Contracts General Obligation Bond 2015 Program General Obligation Preserve Municipal Properties Corporation-Water Municipal Properties Corporation-Airport Pay-As-You-Go Water & Water Reclamation Development Fees Grants Intergovernmental In-Lieu Fees Other Contributions Interest Earnings Miscellaneous Subtotal Transfers In General Fund Transportation Fund CIP Transportation Fund Tourism Development Fund Special Programs Fund CIP Special Programs Fund Aviation Fund Water & Water Reclamation Funds Solid Waste Fund Fleet Fund Grants CIP In Lieu Transportation Fund Stadium Improvement IGA Preservation Privilege Tax Fund Internal Service Funds Subtotal Forecast 2016/17 Adopted 2017/18 205,480.0 152,472.5 231,775.4 216,973.7 0.0 - 50,000.0 28,000.0 28,000.0 28,850.0 42,100.0 - 5,156.0 7,882.6 1,187.2 74.2 10,818.1 1,638.4 375.7 27,132.3 3,300.0 37,176.1 17,505.5 120.0 2,534.8 1,300.5 139,937.0 3,300.0 38,830.8 3,659.8 84.0 2,534.8 1,300.4 77,709.8 3,300.0 14,035.3 11,132.0 50.0 2,534.8 1,572.6 103,574.7 7,568.1 14,023.2 2.2 1,846.9 268.5 4.6 263.7 107,622.4 2,085.3 1,384.5 2.5 60.0 75.5 741.3 135,948.5 10,223.8 10,216.2 505.9 823.1 38,403.7 15.6 95.1 2.8 67.4 3,880.0 3.5 64,237.0 11,665.6 10,285.4 119.4 934.9 828.9 38,403.7 15.6 95.1 2.8 67.4 15,176.0 3.5 77,598.3 8,165.9 10,491.4 43.5 215.6 41,898.8 10.5 1,571.5 3.8 67.4 3,880.0 2.3 66,350.7 Total Sources 163,080.8 204,174.0 155,308.1 169,925.4 Total Fund Balance and New Sources 368,560.7 356,646.5 387,083.5 386,899.1 (a) Prior year unexpended sources and uses of funds are estimated and included in Beginning Fund Balance (Sources) and Program (Uses). Prior year unexpended uses are based on annual cashflow estimates. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 244 - Table of Contents BUDGET BY FUND | CIP Funds Summary (in thousands) Actual 2015/16 Use of Funds: Expenditures Program Community Facilities Preservation Drainage / Flood Control Public Safety Service Facilities Transportation Water Management Prior Year Unexpended (a) Subtotal Less: Estimated Capital Improvement Expenditures 2,466.1 1,031.1 1,606.6 2,045.6 3,874.0 27,002.7 41,647.5 79,673.5 Subtotal: Unexpended at Year End Subtotal Ending Fund Balance Capital Grant Contingency (b) Capital Aviation Contingency (b) Capital Aviation Grant Contingency (b) Capital Water Fund Contingency (b) Capital General Contingency (b) Reserved: Reserved Fund Balance Total Ending Fund Balance Forecast 2016/17 14,712.4 181,463.2 18,794.0 20,231.3 17,140.7 156,385.4 232,307.9 641,035.1 (251,046.9) 12,878.3 15,176.0 6,205.9 10,989.7 6,808.3 61,873.2 39,683.0 153,614.5 389,988.1 Transfers Out General Fund CIP General Fund CIP Transportation Fund Special Program Fund CIP Contributions Fund CIP Water & Water Reclamation Funds Debt Service Aviation Fund Solid Waste Fund Total Uses Adopted 2016/17 38.2 33.1 60.0 20.9 2.2 39,576.5 15,087.2 418.9 1,875.0 57,111.8 136,785.4 231,775.4 231,775.4 Adopted 2017/18 17,459.9 47,589.5 8,751.1 18,632.2 20,056.6 163,549.4 246,566.1 522,604.7 (178,339.6) 344,265.0 900.0 15,595.3 16,495.3 267,542.2 900.0 15,595.3 16,495.3 170,109.8 900.0 15,720.1 16,620.1 194,959.8 5,000.0 250.0 3,600.1 9,500.0 250.0 1,720.0 5,000.0 250.0 3,350.1 2,000.0 5,000.0 89,104.2 89,104.2 216,973.7 216,973.7 191,939.3 191,939.3 (a) Prior year unexpended sources and uses of funds are estimated and included in Beginning Fund Balance (Sources) and Program (Uses). Prior year unexpended uses are based on annual cashflow estimates. (b) Unfunded contingencies that allow for the expenditure of unanticipated revenue are not included in the beginning or ending fund balance. City Council approval is required before use of capital contingencies. (c) Provides budgetary appropriation set aside for capital projects that are to be identified by the CIP Subcommittee. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 245 - Table of Contents BUDGET BY FUND | CIP Funds Five-Year Financial Forecast (in thousands) Adopted 2017/18 (a) Beginning Fund Balance Revenues Bonds/Contracts General Obligation Bond 2015 Program General Obligation Preserve Municipal Properties Corporation-Water Municipal Properties Corporation-Airport Pay-As-You-Go Water & Water Reclamation Development Fees Grants Intergovernmental In-Lieu Fees Other Contributions Interest Earnings Miscellaneous Subtotal Transfers In General Fund Transportation Fund CIP Transportation Fund Tourism Development Fund Special Programs Fund CIP Special Programs Fund Aviation Fund Water & Water Reclamation Funds Solid Waste Fund Fleet Fund Grants CIP In Lieu Transportation Fund Stadium Improvement IGA Preservation Privilege Tax Fund Internal Service Funds Subtotal 216,973.7 28,850.0 42,100.0 - Forecast 2018/19 191,939.3 - Forecast 2019/20 101,604.4 Forecast 2020/21 74,148.4 - - Forecast 2021/22 73,597.6 - 3,300.0 14,035.3 11,132.0 50.0 2,534.8 1,572.6 103,574.7 3,300.0 567.0 19,725.6 50.0 2,534.8 2,028.6 28,206.0 3,300.0 867.0 7,097.1 50.0 2,534.8 2,399.0 16,247.9 3,300.0 15,828.4 50.0 2,534.8 2,782.1 24,495.3 3,300.0 15,828.3 50.0 2,534.8 3,350.5 25,063.6 8,165.9 10,491.4 43.5 215.6 41,898.8 10.5 1,571.5 3.8 67.4 3,880.0 2.3 66,350.7 11,627.2 10,872.9 295.0 455.0 36,364.1 34.5 1,484.3 12.5 67.4 1,380.0 7.6 62,600.5 12,711.8 13,751.9 20.0 16.4 38,392.2 19.9 119.7 7.2 67.4 380.0 4.4 65,490.9 13,299.5 11,463.6 20.0 11.8 38,711.1 16.3 12.0 5.8 67.4 380.0 3.6 63,991.1 13,775.7 11,838.6 20.0 433.6 37,967.5 27.8 20.6 10.0 67.4 6.1 64,167.3 Total Sources 169,925.4 90,806.4 81,738.8 88,486.4 89,230.9 Total Fund Balance and New Sources 386,899.1 282,745.7 183,343.1 162,634.8 162,828.5 (a) Prior year unexpended sources and uses of funds are estimated and included in Beginning Fund Balance (Sources) and Program (Uses). Prior year unexpended uses are based on annual cashflow estimates. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 246 - Table of Contents BUDGET BY FUND | CIP Funds Five-Year Financial Forecast (in thousands) Adopted Forecast 2017/18 2018/19 Use of Funds: Expenditures Program Community Facilities Preservation Drainage / Flood Control Public Safety Service Facilities Transportation Water Management Prior Year Unexpended (a) Subtotal Less: Estimated Capital Improvement Expenditures Subtotal: Unexpended at Year End Transfers Out General Fund CIP General Fund CIP Transportation Fund Special Program Fund CIP Contributions Fund CIP Water & Water Reclamation Funds Debt Service Aviation Fund Solid Waste Fund Subtotal Total Uses Ending Fund Balance Capital Grant Contingency (b) Capital Aviation Contingency (b) Capital Aviation Grant Contingency (b) Capital Water Fund Contingency (b) Capital General Contingency (b) Reserved: Reserved Fund Balance Total Ending Fund Balance Forecast 2019/20 Forecast 2020/21 Forecast 2021/22 17,459.9 47,589.5 8,751.1 18,632.2 20,056.6 163,549.4 246,566.1 522,604.7 (178,339.6) 7,837.7 1,380.0 1,875.9 4,154.8 18,000.0 50,623.0 344,265.0 428,136.4 (164,615.6) 5,239.8 380.0 2,854.0 1,527.6 3,162.8 29,451.9 25,650.5 263,520.8 331,787.4 (92,546.0) 5,239.8 380.0 6,345.0 6,671.2 5,282.9 9,648.7 23,077.5 239,241.4 295,886.5 (72,355.1) 9,529.1 29,879.8 2,443.9 8,630.2 18,800.1 30,590.6 223,531.4 323,405.1 (76,361.0) 344,265.0 263,520.8 239,241.4 223,531.4 247,044.1 900.0 15,720.1 16,620.1 194,959.8 900.0 15,625.8 16,525.8 181,141.4 900.0 15,748.7 16,648.7 109,194.7 900.0 15,782.2 16,682.2 89,037.2 900.0 15,835.0 16,735.0 93,095.9 5,000.0 250.0 3,350.1 2,000.0 5,000.0 5,000.0 4,500.0 5,000.0 4,500.0 5,000.0 4,500.0 5,000.0 4,500.0 191,939.3 191,939.3 101,604.4 101,604.4 74,148.4 74,148.4 73,597.6 73,597.6 69,732.6 69,732.6 (a) Prior year unexpended sources and uses of funds are estimated and included in Beginning Fund Balance (Sources) and Program (Uses). Prior year unexpended uses are based on annual cashflow estimates. (b) Unfunded contingencies that allow for the expenditure of unanticipated revenue are not included in the beginning or ending fund balance. City Council approval is required before use of capital contingencies. (c) Provides budgetary appropriation set aside for capital projects that are to be identified by the CIP Subcommittee. City of Scottsdale FY 2017/18 Adopted Budget - Volume One - 247 -