Fort Walton Beach Council agenda — 06-17-08 special agenda — reading text

Fund' s cash flow deficits and deficit unrestricted net assets. The unrestricted net assets of the Golf Fund have been negative every fiscal year since FY 2003 and the total net assets of the Golf Fund have declined each year with the exception of FY 2006. The Golf Fund incurred a net profit in FY 2006 due to the disposal of capital assets ( primarily from the trade -in for new golf carts) and City Council' s forgiveness of the Golf Fund' s $ 100K debt to the General Fund and $ 173K debt to the Sanitation Fund. Total Net Assets Net Assets 800 1. 0 600 0. 5 N$ 400 FL00- 0. 0 200 0 0. 5 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 est. est. Capital, net of debt Restricted OUnrestricted Equity in Pooled Cash — As permissible by generally accepted accounting principals, the City commingles each fund' s resources for practical and investment purposes. Each fund' s proportionate share of the City' s investment and checking accounts is called equity in pooled cash ( EIPC). The Golf Fund currently has an EIPC of negative $ 262K. EIPC, which fluctuates monthly based on revenues and expenses, is another indicator of financial health. In essence, the Golf Fund is borrowing $ 262K from the General Fund since the Golf Fund' s proportionate share of resources is negative. This negative EIPC shows as a liability on the Golf Fund' s statement of net assets and therefore causes the unrestricted net assets of the fund to be negative. As of September 30, 2007, the Golf Fund owed the General Fund 449K. Year -to -date through May 31, 2008 the Golf Fund' s revenues exceed expenses, so the current EIPC balance is negative $ 262K. Paae 6 of 59 6of23 Golf Fund Meeting EXPENSES FY 2007 -08 Budgeted Expenses — $ 2, 540, 022 Capital Capital Outlay Improvements 0. 4% 1. 2% Operations & Debt Service Maintenance 19. 7% 27. 4% Transfers Out 2. 4% Benefits 11. 1% Wages 37. 7% Wages & Benefits —Personnel accounts for half of the Golf Fund' s expenses, attributable in large part to greenskeepers to maintain the golf courses and attendants to manage the golf carts and driving & putting ranges. Effective in FY 2004 -05, the Golf Supervisor and Assistant Golf Supervisor positions were eliminated and a Golf Operations Assistant position created to more accurately reflect the workload. For FY 2008 -09, staff is evaluating eliminating three full -time greenskeeper positions that will become vacant due to employee retirements and converting seven full -time greenskeeper positions to 30 hours /week part-time positions. Staff believes the quality of the golf course conditions will not be diminished and the salary 40 Funded Full -Time Equivalent Positions and benefits savings will assist in returning the Golf Fund to self -sufficiency. 38 Benefits include Social Security tax, Medicare tax, 3s worker' s compensation insurance, unemployment compensation insurance, medical insurance ( health, 34 dental, & life), and pension benefits. Affordable health insurance providing quality coverage is an important part 32 of the City' s benefits package. The City contributes 75% of the premium for both employee ( single) coverage and 30 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 dependent ( family) coverage and currently offers three est. levels of coverage. Effective October 1, 2008, the City' s contribution for dependent ( family) coverage will drop to Wages & Benefits 50 %. $ 1. 5 The City is required to maintain its General Employee 1' 2 pension plan in a fiscally sound manner. Investment $ earnings and employee /employer contributions comprise 0. 9 the plan' s income. General employees contribute 5% of o wages into the plan. The City' s actuary estimates $ 0. 6 investment earnings at 8% annually and estimates annual salary increases at 5. 4% annually. The City' s $ 0. 3 contribution is based on these estimates and must be 0. 0 adjusted in future years to make up for any deviation $ FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2 from these estimates. Factors such as lower than est. anticipated investment earnings and higher than estimated salary increases for employees have necessitated that the City contribution steadily increase over the past several years. However, according to the March 2008 actuarial evaluation, the City' s contribution to its General Employees pension plan is anticipated to remain about the same for the Paae 7 of 59 7of23 Golf Fund Meeting upcoming budget year. Operations & Maintenance — This category of expenses includes grounds maintenance, utilities and fuel, materials and supplies, and other charges. This expense category is largely impacted by increases in fixed costs necessary to maintain the same level of course conditions. Over the last five years, grounds maintenance expense Fixed Costs 500 has averaged about $ 470K annually. During the same $ time period, utilities expense increased 52% or $ 36K $ 400 and fuel expense increased 60% or $ 21K. High petroleum prices are most likely here to stay. $ 300 Speculation on the futures market, high demand in Asia, CU refinery disruptions, or hurricane activity in the gulf could 0 $200 easily push prices higher than their current record. 100 Capital Outlay — This includes the purchase computers, vehicles, equipment, and other assets with a $ value greater than $ 500 and a useful life of more than of 0 FY 2003 FY 2004 FY 2005 Li" FY 2006 FY 2007 FY 2008 est. three years. Capital outlay purchases are identified in a OGrounds utilities Fuel five -year replacement schedule, but replacements are limited to essential, ageing assets required to maintain current service levels due to funding constraints. The $ 10K allocated to capital outlay in FY 2007 -08 includes flooring replacement, a golf ball dispenser, a range golf ball picker, and a golf ball washer. Capital Improvements —The acquisition, construction, replacement, renovation, or repair of facilities and infrastructure with a value greater than $ 25, 000 and a useful life of ten years or more are identified in the City' s five -year Capital Improvements Program. For FY 2007 -08, $ 30K is budgeted for new cart path construction. Debt Service —The following annual debt service payments are made by the Golf Fund: Principal Interest Total Landscaping Equipment Lease —year 1 of 5 $ 45, 262 $ 14, 426 $ 59, 688 Golf Cart Lease —year 3 of 5 $ 84, 163 $ 17, 502 $ 101, 665 1999 Bond — Clubhouse Construction —year 9 of 30 $ 70, 000 $