ITEM TITLE:
#16-46 Amending the 2016 City Budget by Transferring Unencumbered Funds Totaling $30,000 from Law/Professional Services to Leave Liability Reserve.
SUBMITTED BY: Brian Carlson, Finance Director
FISCAL NOTES:
Expenditure Required: $30,000
Unencumbered Balance: $528,000
Funding Source: 001-5600-43200
RECOMMENDATION:
Approve Resolution No. 16-46
SUMMARY STATEMENT:
The City maintains a Reserve Account (Leave Liability Reserve) to fund the payment of unused, accrued personal leave time. The account is funded annually with the adopted budget with an amount equal to the prior three-years’ average of disbursements. Insofar as any year’s disbursements differ from the three-year average, the account balance will rise or fall. If the variance is great enough, the account will occasionally be over-spent.
Disbursements are made for one of three reasons:
1. Severance - must be paid within three days
2. Cash-out - pursuant to personnel regulations and subject to available funds
3. Mandatory - pursuant to personnel regulations when accrued time exceeds allowed limits. This is done in January each year, and is administered by Human Resources.
Owing to the volume of turnover in 2016, the Leave Liability Reserve will be overspent by the end of 2016 unless additional funds are transferred. Staff proposes funding the transfer with unencumbered funds from the Legal department, which will likely be under-budget by over $300,000 once all 2016 billing is accounted for.
Finance staff will consider ways to improve monitoring and forecasting of this account balance so as to ensure funding levels are adequate. Despite best efforts, unforeseen severance may periodically cause this account to be overspent.