ITEM 4. 6
CITY MANAGER' SREPORT
MAY 13, 2024 CITY COUNCIL REGULAR MEETING
ITEM: RATIFY SAN JOAQUIN COUNCIL OF GOVERNMENTS
ANNUAL FINANCIAL PLAN
RECOMMENDATION: Adopt Resolution Ratifying the San Joaquin Council of Governments ( SJCOG) Annual Financial Plan for
FY 2024-5
BACKGROUND:
Every year pursuant to Section 7(b) of the San Joaquin Council of Governments SJCOG) Joint Powers Agreement, in anticipation of the new fiscal budget year, SJCOG requests that each member city ratify SJCOG' s Annual Financial Plan ( AFP) for the upcoming fiscal year.
Attached and referenced herein as Attachment B, is the Approved SJCOG Fiscal Year FY) Budget for 2024-025. Similar requests from SJCOG have been submitted to participating cities and ratified annually since the Joint Powers Agreement went into effect December 7, 2000.
The SJCOG AFP for FY 2024-025, was adopted by their Board on March 28, 2024, by Board Resolution No. R- 24-4. The AFP provides a detail of expenditures by cost category and line item comparing the proposed FY 2024-025 budgets with the current FY 2023-024 adopted budget.
REASON FOR RECOMMENDATION:
The SJCOG Joint Powers Agreement requires that the Annual Financial Plan be delivered to its jurisdictional member agencies for ratification. Therefore, it is recommended that the City Council ratify the SJCOG' s Annual Financial Plan for FY 2024-025.
FISCAL IMPACT:
No fiscal impact to Lathrop. However, the SJCOG letter dated April 2, 2024, highlights the following significant changes for FY 24-5 when compared to FY 23-4:
SJCOG Annual Financial Plan Summary
Revenue Funds FY 2023-024 FY 2024-025
Federal Grants $ 9, 703, 559 $ 22, 768, 271
State Grants 1 $ 23,57, 962 $ 17, 269,42
Local Funding $ 7, 371, 221 $ 8, 186, 088
Interest & Other $ 99, 600 $ 80, 000
Total Revenues $ 40,32, 342 $ 48, 303, 601
CITY MANAGER' S REPORT
MAY 13, 2024 CITY COUNCIL REGULAR MEETING
RATIFY SJCOG ANNUAL FINANCIAL PLAN FOR FY 2024-5
SJCOG Annual Financial Plan Summary
Expenditure Funds
Salary & Benefits
Services & Supplies
Professional Services
Capital Outlay
Total Expenditures
FY 2023-024
6, 281, 809
1, 338, 500
32, 431, 533
380, 50
40,32, 342
FY 2024-025
6, 944, 063
1, 572,00
39, 406, 538
380, 50
48, 303, 601
Highlights:
o General Fund Operating Revenues increased by $ 7, 871, 258 Federal Funding increased by 134. 64%
State Funding Sources decreased by - 25. 75%
Local Revenues increased by 11. 05%
o Budgeted Expenditures are $ 48, 303, 601
Salaries and Benefits increased 10. 54%
Services and Supplies increased by 17. 48%
Training & Travel increased by 78. 40%
o Professional Services increased by 21. 51%
o No increase or decrease to Fixed Assets
ATTACHMENTS:
A. Resolution Ratifying the San Joaquin Council of Governments Annual Financial Plan for FY 2024-5
B. Letter from SJCOG Dated April 2, 2024, including SJCOG Resolution R- 24-4, and Board Report Adopting the FY 2024-5 Annual Financial Plan
CITY MANAGER' S REPORT
MAY 13, 2024 CITY COUNCIL REGULAR MEETING
RATIFY SJCOG ANNUAL FINANCIAL PLAN FOR FY 2024-5
APPROVALS:
esa Vargas
overnment Services Dlfector
City Clerk
Cari
Finance ! rector
1 Date
Date
Salvador Navarrete Date
City Attorney
Stephen J. Salvatore Date
City Manager
da13/; 20. 0
RESOLUTION NO. 24-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LATHROP RATIFYING
THE SAN JOAQUIN COUNCIL OF GOVERNMENTS' ANNUAL FINANCIAL PLAN FOR FISCAL YEAR 2024-025
WHEREAS, every year pursuant to Section 7(b) of the San Joaquin Council of Governments' ( SJCOG) Joint Powers Agreement, in anticipation of the new fiscal budget year, SJCOG provides a letter, resolution, and report requesting that each City ratify SJCOG' sAnnual Financial Plan for the upcoming fiscal year; and WHEREAS, the Annual Financial Plan provides a detail of expenditures by cost category and line item comparing the proposed 2024-5 budgets with the current fiscal year' s (FY 2023-4) adopted budget; and
WHEREAS, the SJCOG Board approved the Annual Financial Plan for FY 2024- 2025 on March 28, 2024, by Board Resolution No. R- 24-4; and WHEREAS, the SJCOG Joint Powers Agreement requires that the Financial Plan be delivered to its member agencies for ratification; NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Lathrop hereby ratify the FY 2024-025 Annual Financial Plan for the San Joaquin Council of Governments.
The foregoing resolution was passed and adopted this 13th day of May 2024, by the following vote of the City Council, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
Sonny Dhaliwal, Mayor
ATTEST: APPROVED AS TO FORM:
Teresa Vargas, City Clerk Salvador Navarrete, City Attorney Resolution No. 24-
DocuSign Envelope ID: 3433DEA0- 4B18-190- BE15- A8077748EE36 ATTACHMENT" B • David Bellinger
CHAIR
Diane Lazard
VICE -CHAIR
Diane Nguyen
EXECUTIVE DIRECTOR
Member Agencies
CITIES OF
ESCALON,
LATH ROP,
LODI,
MANTECA,
RIPON,
STOCKTON,
TRACY,
AND
THE COUNTY OF SAN
JOAQUIN
SAN JOAQUIN COUNCIL OF GOVERNMENTS
555 E. Weber Avenue • Stockton, California 95202 • P 209.35. 0600 • F209. 235. 0438 • www. sjcog. or April 2, 2024
Stephen Salvatore
City of Lathrop
390 Towne Centre Dr.
Lathrop, CA 95330
Dear Mr. Salvatore:
On March 28, 2024 the SJCOG Board adopted the Annual Financial Plan for FY 2024-5. Attached is the board staff report as well as a copy of the adopting resolution. Pursuant to SJCOG' sJoint Powers Agreement, following adoption of the budget by the SJCOG Board, it is to be delivered to member agencies for ratification by each governing body. Approval by a majority of the governing bodies representing 55% or more of the county' s population is considered ratification.
Therefore, SJCOG requests you place SJCOG' s Annual Financial Plan for FY 2024-5 on a forthcoming
agenda prior to June 30, 2024, for ratification.
The Annual Financial Plan implements the FY 2024-5 Overall Work Program ( OWP) that was also adopted by the SJCOG Board on March 28, 2024.
The attached excerpt of the Annual Financial Plan ( AFP) provides a summary of revenues and expenditures by cost category and line item comparing the approved FY 2024-5 budgets with the current year ( FY 2023-4) adopted budget, as most recently amended, along with FY 2022-3 actual expenditures. Revenues and expenditures total $ 48, 303, 601. 00. The approved AFP represents the general fund budget for SJCOG. The revenues and expenditures in the AFP are the same as the Overall Work Program ( OWP), however, presented in a traditional line -item format compared to the work element format of the OWP.
Readers should note several differences between SJCOG and its member agencies' budgets:
SJCOG revenue sources are quite different from our member agencies.
SJCOG employs staff on an at -will basis, vis- a- vis civil service and has its own employee handbook and policies.
SJCOG has its own Financial and Accounting Policy guiding our financial matters including procurement procedures.
SJCOG employees are exempted from Social Security except for Medicare.
As noted below, SJCOG offers a defined contribution retirement plan to its employees. SJCOG has no Ca1PERS or post employments benefit obligations except limited sick leave conversion as noted.
The following assumptions are incorporated in the budget:
1. Work will not begin, and expenses will not be incurred unless anticipated revenue sources are secured.
2. The AFP anticipates SJCOG to be fully staffed. The budget includes a 7. 00 % pool that can be drawn upon for merit -based increases and potential promotions. The full impact of that pool is incorporated into the salary -driven benefits ( retirement, Medicare, disability).
3. SJCOG has no significant liability exposure for post -employment benefits. a. The employee retirement program is a defined contribution program managed by the International City Managers Association Retirement Program ( Mission Square Retirement).
b. SJCOG employee vacation accruals are capped at two times the individual' sannual leave.
c. Upon separation with 50 years of age or 20 years of SJCOG employment, an employee can convert accrued sick leave hours to be deposited into a Retirement Health Savings Account to pay for health -related expenses. The conversion is based upon the employee' ssalary at retirement.
DocuSign Envelope ID: 3433DEA0- 4B18-190- BE15- A8077748EE36 SJCOG staff would be pleased to appear before your policymakers to answer any questions they might have regarding this matter. We request ratification prior to June 30, 2024. Please let me know when this will be on your agenda. If you have any questions regarding this matter, don' thesitate to contact me at ( 209) 235- 0584.
Thank you for your assistance.
Sincerely,
EDocuSigned
by:
l , viol
77C9E4A491524D2...
STEVE DIAL
Deputy Executive Director/ Chief Financial Officer
Attachments:
R- 24-4
FY 2024-5 Annual Financial Plan Staff Report
FY 2024-5 Annual Financial Plan Board Summary
DocuSign Envelope ID: 3433DEA0- 4B18-190- BE15- A8077748EE36 San Joaquin Council of Governments
ANNUAL FINANCIAL PLAN
Fiscal Year 2024/5
Final March 28, 2024
CHAIR
Mayor David Bellinger, City of Escalon
VICE -CHAIR
Councilmember Diane Lazard, City of Lathrop
BOARD OF DIRECTORS
Mayor Lisa Craig
Mayor Gary Singh
Mayor Kevin J. Lincoln II
Vice Mayor Kimberly Warmsley
Councilmember Michael Blower
Supervisor Miguel Villapudua
Supervisor Steven Ding
Supervisor Robert Rickman
Mayor Nancy Young
Mayor Leo Zuber
EX OFFICIO DIRECTORS
Grace Magsayo, Director
Gary Giovanetti, Director
William R. Trezza, Commissioner
City of Lodi
City of Manteca
City of Stockton
City of Stockton
City of Stockton
County of San Joaquin
County of San Joaquin
County of San Joaquin
City of Tracy
City of Ripon
Caltrans District 10
San Joaquin Regional Transit District
Port of Stockton
SUBMITTED BY:
Diane Nguyen
Executive Director
Steve Dial
Deputy Executive Director/
Chief Financial Officer
DocuSign Envelope ID: 3433DEA0- 4618-190- BE15- A8077748EE36 San Joaquin Council of Governments
ANNUAL FINANCIAL PLAN
Fiscal Year 2024/025
Adopted Final March 28, 2024
REVENUES
FY2022- 23 FY 2023-4 FY 2024-5
Actual Amendment * 3 Adopted Final Change Change
Federal Grants 4, 351,52 9, 703, 559 22, 768, 271 13, 064, 712. 00 134. 64% State Grants 5, 290, 133 23,57, 962 17, 269,42 5, 988, 720. 40) 25. 75% Local 6, 459, 552 7, 371, 221 8, 186, 088 814,67. 00 11. 05% Interest 65, 347 20, 000 20, 000 0.0%
Other 113, 454 79, 600 60, 000 19, 600. 0) 24. 62%
I
SJCOG OPERATING 16, 279, 838 40,32, 342. 40 48, 303, 601. 0 7, 871, 258. 60 19. 47%
EXPENDITURES
Salaries & Benefits 4, 910, 403 6, 281, 809. 00 6, 944, 063.0 662, 254. 00 10. 54% Services & Supplies 1, 336, 555 1, 338, 500. 0 1, 572,00 234, 000. 17. 48% Office Expense 375, 730 338, 000. 367, 000 29, 000. 8. 58% Communications 58, 394 60, 000. 60, 000 0.0%
Memberships 42, 395 45, 000. 45, 000 0.0%
Maintenance - Equipment 4, 859 10, 000. 10, 000 0.0%
Rents & Leases - Equipment 70, 424 131, 000. 131, 000 0.0% Transportation, Travel & Training ( In & Out of State) 212,95 125, 000. 223, 000 98, 000. 78. 40% Publications & Legal Notices 3, 929 7, 500. 0 7, 500 0.0% Insurance 204, 781 205, 000. 258, 000 53, 000. 25. 85%
Building Operations & Maintenance 270, 868 217, 000. 271, 000 54, 000. 24. 88% SJCOG Building Debt Service Principal and Interest 92, 880 200, 00. 200, 00 0.0% Professional Services 9, 171, 078 32, 431, 533. 40 39, 406, 538. 00 6, 975, 004. 60 21. 51% Capital Outlay 2, 010, 716 380, 50. 0 380, 50 0.0%
Unallocated/ Resrve
SJCOG OPERATING EXPENDITURES 17. 428, 751 40,32, 342. 40 48, 303, 601. 0 7, 871, 258. 60 19. 47% DocuSign Envelope ID: 3433DEA0- 4B18-190- BE15- A8077748EE36 March 2024
SJCOG Board
STAFF REPORT
SUBJECT: FY 2024-025 Proposed Annual
Financial Plan ( AFP)
RECOMMENDED ACTION: That the Board Adopt Resolution 24-4 Approving the FY 2024-025 Annual
Financial Plan
The attached proposed Annual Financial Plan (AFP) provides a detail of revenues and expenditures by cost category and line item. The proposal compares the FY 2024-025 budget with the most recently adopted FY 2023-024 AFP. In addition, it compares the proposal to the FY 2022-023 actual expenditures. The total revenues and expenditures amount to $ 48, 303, 601. 00. The proposed AFP represents the general fund budget for SJCOG. The revenues and expenditures in the AFP are the same as the Overall Work Program (OWP), however, presented in a traditional line -item format compared to the work element format of the OWP.
Below is a summary of revenues and expenditures in the AFP. For details on each of those categories please refer to the attachment.
Readers should note several differences between SJCOG and its member agencies' budgets:
SJCOG revenue sources are quite different from our member agencies:
SJCOG employs staff on an at -will basis, vis- a- vis civil service and has its own employee handbook and policies.
SJCOG has its own Financial and Accounting Policy guiding our financial matters including procurement procedures.
SJCOG employees are exempted from Social Security except for Medicare.
As noted below, SJCOG offers a defined contribution retirement plan to its employees. SJCOG has no CaIPERS or other post employments benefit obligations except limited sick leave conversion as noted.
Upon adoption by the board, pursuant to the SJCOG Joint Powers Agreement, the AFP will be sent to the member agencies for ratification. Ratification is achieved when a majority of the
member agencies representing 55% of the county population, approve the AFP.
The following assumptions are incorporated in the budget:
1. Work will not begin, and expenses will not be incurred unless anticipated revenue sources are secured.
DocuSign Envelope ID: 3433DEA0- 4B18-190- BE15- A8077748EE36
2. The position of Deputy Director of Finance & Administration is being added to the classification table under group B. This position is being created to backfill the Deputy Executive Director/ Chief Financial Officer position once it becomes vacant.
3. The position of Manager of Administration has been vacant for two years and SJCOG does not intend to fill it in the future; therefore, this position is being removed from the classification chart. To meet the evolving needs of SJCOG, the position of Assistant Office Administrator to support the administrative functions of the office is being created. This position will have different responsibilities and a lower pay grade compared to the Manager of Administration. This position is being added with the concurrent elimination of an Administrative Technician position that was left vacant in the last quarter of FY 2024.
4. The budget includes a new longevity incentive program to attract and maintain an experienced and knowledgeable workforce. In addition, long term staff can reach their maximum salary and only receive cost of living adjustments annually. The incentive is structured to recognize and reward the length of staffs' tenure. The longevity pay targets will be 10, 15 and 20 years ( of continuous service), with an increase in base salary of 1%, 2% and 3% respectively. Currently, this benefit will apply to eight ( 8) noncontract employees and the estimated financial impact for FY 2024-025 is $ 29, 158. 00. This longevity pay does not apply to the contract position of the Executive Director.
5. The budget includes a pool equaling 7% of current salaries that can be drawn upon for merit -based increases and potential promotions. The full impact of that pool is incorporated into the salary -driven benefits ( retirement, Medicare, disability).
6. SJCOG has no significant liability exposure for post -employment benefits. a. The employee retirement program is a defined contribution program managed by Mission Square Retirement, formerly the International City Managers Association Retirement Program.
b. SJCOG employee vacation accruals are capped at two times the individual' sannual leave.
c. Upon separation, an employee can convert accrued sick leave hours to be deposited into a Retirement Health Savings Account to pay for health - related expenses, with the qualification of being 50 years of age or 20 years of SJCOG employment. The conversion is based upon the employee' ssalary at retirement and alleviates SJCOG of any further liability.
REVENUES
Compared to the current year amended AFP, SJCOG general fund operating revenues are proposed to increase from $ 40,32, 342. 40to $48, 303, 601. 00, an increase of 7, 871, 258. 60
DocuSign Envelope ID: 3433DEA0- 4B18-190- BE15- A8077748EE36 a,
9)
re
FY24/ 25 Revenue Budget Total Budget $ 48, 303, 601
22, 768, 271
25, 000,0
20, 000,00
15, 000,00
10, 000,00
5, 000,00
1 2
17, 269,42
8, 186. 088
111 480Effir
80. 000
3 4
Funding Category
Federal Grants State Grants • Local Interest& Other
Federal funding for general
fund activities is $ 22, 768, 271
or 134. 64% higher than FY
2023-4 primarily due to a
15, 000,00 Charging and
Fueling Infrastructure grant.
State funding sources are $ 17, 269,42. 00 or 25. 75% lower primarily due to:
1, 224, 892 drawdown on Regional Early Action Planning ( REAP) 1. 0 493, 526 drawdown on REAP 2. 0
Consumption of $2, 368, 883. 78 from the state grant for Sustainable Transportation Equity Project (STEP).
950, 00 drawdown on Regional Climate Collaborative grant. 787, 51 drawdown on Clean Mobility Options grant.
1, 338, 147. 75drawdown on prior year' s Freeway Service Patrol funding. 1, 084,44 is available for FY 24-5 future years of Freeway Service Patrol funding.
264, 199. 75 drawdown has occurred on three years of Senate Bill 1 ( SB1) Sustainable Transportation Planning Grants offset by a FY 24-5 allocation of 355, 000.
290, 544. 12 drawdown on prior year' s
State Transportation Improvement
Program ( STIP) for planning offset by FY 24-5 allocation of $290, 00.
Local revenues are higher by $ 814,67 or 11. 05% due to increased sales tax receipts on Local Transportation Fund by $ 96, 018, Measure K by $ 605, 849, Sacramento Association of Governments of $200, 00, offset by an $ 87, 000 decrease in donations.
EXPENDITURES
DocuSign Envelope ID: 3433DEA0- 4B18-190- BE15- A8077748EE36 FY24/ 25 Expenditures
15000000
10000000
5000000
0 6, 991, 881
1, 572,00
AlIMP
Total Budget $ 4830033 601
39,58, 720
380, 50
s
Salarla& Servkesand Professional Capital
Benefit Supplies Servleas Outlay
Expenditure Class
Salaries& Benefits aServlces and Supplies a Professional Services Capital Outlay Salaries and Benefits are
anticipated to increase by
662, 254 or 10. 54% from
6, 281, 809to $ 6, 944, 063
compared to the FY 23-4
amended budget. The
budget includes the removal
of the Manager of
Administration position and
the addition of the position
of Assistant Office
Administrator ( to replace a
recently vacant
Administrative Technician
position so there are no changes to overall staffing numbers). The new position is at a lower pay grade than that of the Manager. It also includes $ 29, 158. 00 for longevity pay and $ 343, 863. 00 or 7.0% of total salaries pool for merit -based raises. The salary -driven benefits adjust accordingly.
Services and Supplies are proposed to increase by $136, 000.
Computer software, supplies, postage, and licensing is increasing by $29, 000 to support both a return to the office, working remotely and heightened cybersecurity. Liability insurance is increasing by $ 53, 000 due to increased premiums. Building maintenance is increasing by $54, 000 due to increased utilities, security upgrades, and vandalism repairs.
Transportation, Travel, and Training increase by $98, 000.
With several new board members and new employees, more training expenses are expected. This budget has increased by $ 98, 000 up to $ 223, 000. This will help to support such activities as the annual One Voice® trip.
Professional Services — Increases $ 6, 975, 004. 60 from FY 23-4 $32, 431, 533. 40 to 39, 406, 538. 00.
There are consumptions of various grants and new funding sources, which directly correlate to professional services. For example, the prior years' SB- 1 Sustainable Communities grants used $ 222, 530. 0and we are budgeting the new SB- 1 allocation of 355, 000.. The 1- 205 Managed Lanes Widening project consumed $ 1, 800, 000. and we are budgeting $ 12, 452, 108. 00 for the Clean Fuels Infrastructure project.
The Sustainable Transportation Equity Project (STEP) has consumed $ 2, 168, 883. 00 and the CMO Voucher is program drew down by $ 510,66. 00. The San Joaquin Regional Climate Collaborative used $ 850, 00. while the Regional Early Action Plan REAP 1.0) expended $ 909, 82. 00.
Position Classification and Salary Schedule
Per board policy, the salary ranges at both the minimum and maximum levels and are adjusted by the CPI change.
DocuSign Envelope ID: 3433DEA0- 4618-190- BE15- A8077748EE36
FISCAL IMPACT
All revenues in the AFP are secured and available. The Annual Financial Plan is required to be adopted by the Board of Directors prior to April 1 each year and disseminated to the member agencies for ratification. The Annual Financial Plan is the traditional line -item budget identifying estimated revenues and expenditures for the fiscal year. The Annual Financial Plan is complementary to the Overall Work Program.
RECOMMENDATION
That the Board adopt Resolution 24-4 approving the FY 2024-5 Annual Financial Plan.
Prepared by: Steve Dial, Deputy Executive Director/ CFO, and Grace Orosco, Manager of Finance
DocuSign Envelope ID: 3433DEA0- 4B18-190- BE15- A8077748EE36
RESOLUTION
SAN JOAQUIN COUNCIL OF GOVERNMENTS
R- 24-4
RESOLUTION APPROVING THE ADOPTION OF THE 2024-025
ANNUAL FINANCIAL PLAN
FOR THE SAN JOAQUIN COUNCIL OF GOVERNMENTS
WHEREAS, the San Joaquin Council of Governments is required by the Joint Powers Agreement to adopt a budget ( Annual Financial Plan) annually, and WHEREAS, the adopted budget is to be sent to the member agencies for ratification.
NOW THEREFORE BE IT RESOLVED, that the San Joaquin Council of Governments adopts the FY 2024-025 Annual Financial Plan and directs the Executive Director to transmit it to the member agencies for ratification.
PASSED AND ADOPTED this 28th day of March 2024 by the following vote of the San Joaquin Council of Governments, to wit:
AYES:
NOES:
Mayor Bellinger, Escalon; Councilmember Blower, Stockton; Mayor Craig, Lodi; Supervisor Ding, SJ County; Mayor Lincoln, Stockton; Supervisor Rickman, SJ County; Mayor Singh, Manteca; Supervisor Villapudua, SJ County; Vice Mayor Warmsley, Stockton; Mayor Young, Tracy; Mayor Zuber, Ripon.
None.
ABSENT: Councilmember Lazard, Lathrop.
DAVID BELLINGE
Chair