DATE:June 27, 2024
TO:President and Members of the Board of Directors
FROM:John R. Gillison, City Manager
INITIATED BY: Mike McCliman, Fire Chief
Noah Daniels, Finance Director
Michelle Cowles, Management Analyst II
Rick Flinchum, Finance Manager
SUBJECT: Consideration of a Resolution Adopting the Amended Fire Protection District General Fund Article XIIIB Appropriations Limit for Fiscal Years 2012/13 through 2023/24. (RESOLUTION NO. FD 2024-014) (FIRE) RECOMMENDATION:
Staff recommends the Fire Board of the Rancho Cucamonga Fire Protection District approve the resolution adopting the amended Article XIIIB Appropriations Limit for Fiscal Years 2012/13 through 2023/24.
BACKGROUND:
In conjunction with the adoption of the annual budget, the State of California Constitution, Article XIIIB, requires that an appropriations limit, referred to as the GANN limit, be established annually by the Fire Board. The GANN limit is intended to keep inflation adjusted, per-person government spending under 1978-79 levels.
There are established guidelines for setting the appropriations limit, including the use of four distinct factors in developing the annual limit:
1. Consumer Price Index (CPI) change for the subject year (CPI Factor);
2. Assessed Valuation due to new non-residential construction per the San Bernardino County Assessor (Price Factor);
3. Change in the City’s population per the State of California Department of Finance (City Population Factor); and,
4. Change in the County’s population per the State of California Department of Finance (County Population Factor).
Historically, the District solely utilized the CPI Factor and the City Population Factor during each budget adoption; however, the guidelines indicate that the CPI Factor or Price Factor and City Population or County Population Factor can be utilized to determine the higher factor to increase the appropriations limit by each year. As such, the appropriations limit is below what otherwise could have been calculated.
ANALYSIS:
As stated, each year the Fire Board approves a resolution establishing the appropriations limit for the upcoming fiscal year. On June 22, 2023, the Fire Board established the appropriations limit
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for Fiscal Year 2023/24 at $51,526,207. At the time, the District’s Fiscal Year 2023/24 appropriations subject to this limit totaled $50,908,370, which anticipated that the District would be at 98% of its GANN Limit at the fiscal year’s end of June 30, 2024.
Staff has conducted an analysis of the appropriations limit adoptions since Fiscal Year 2010/11 to review the factors used to set the appropriations each year, historically the C.P.I. Factor and Population Factor. This analysis has shown that, while all factors utilized in setting the limit were correct, the two aforementioned factors were not those that would provide an optimized appropriations limit in each year. Therefore, the appropriations limit has historically been well below the threshold it otherwise would be if guidelines were followed as intended. To ensure the District’s appropriations limit is optimized for efficient management of resources, staff is recommending a restatement of appropriations limits beginning with Fiscal Year 2012/13 through the current fiscal year. Though not every fiscal year will need new factors utilized, because of the rolling nature of appropriations limits, it is necessary to restate each fiscal year subsequent to 2012/13.
In recent fiscal years, inflation has driven up appropriations faster than the factors previously used in this calculation. Therefore, it is necessary to ensure the appropriations limit is adequate for the District’s operations and that the limit is not exceeded. This action will ensure that the limit is sufficiently established within the guidelines set by Article XIIIB and optimized for the growth in appropriations. The table below summarizes these changes.
Fiscal
Year
Factors Previously Used Former Limit New Factors Used New Limit 2012/13 CPI Factor: 3.77%%
City Population: 1.07%
$29,920,117 Price Factor: 11.57%
City Population: 1.07%
$31,563,941
2013/14 CPI Factor: 5.12%
City Population: 1.13%
$31,808,076 Price Factor: 5.96%
City Population: 1.13%
$33,823,919
2014/15 CPI Factor: -0.23%
City Population: 1.1%
$32,084,806 Price Factor: 3.09%
City Population: 1.1%
$35,254,671
2015/16 CPI Factor: 3.82%
City Population: 1.1%
$33,679,421 CPI Factor: 3.82%
City Population: 1.1%
$37,006,828
2016/17 CPI Factor: 5.37%
City Population: 1.18%
$35,905,577 CPI Factor: 5.37%
City Population: 1.18%
$39,456,680
2017/18 CPI Factor: 3.69%
City Population: 0.94%
$37,575,253 CPI Factor: 3.69%
County Population: 1.16%
$41,390,057
2018/19 CPI Factor: 3.67%
City Population: 0.79%
$39,262,382 Price Factor: 7.14%
County Population: 0.95%
$44,767,486
2019/20 CPI Factor: 3.85%
City Population: 0.44%
$40,954,591 Price Factor: 5.02%
County Population: 0.90%
$47,440,105
2020/21 CPI Factor: 3.73%
City Population: 0.18%
$42,560,011 Price Factor: 7.48%
County Population: 0.51%
$51,249,545
2021/22 CPI Factor: 5.73%
City Population: 0.01%
$45,019,980 CPI Factor: 5.73%
County Population: 0.17%
$54,278,394
2022/23 Price Factor: 9.3%
County Population: 0.14%
$49,274,368 Price Factor: 9.3%
County Population: 0.14%
$59,413,130
2023/24 CPI Factor: 4.44%
County Population: 0.12%
$51,526,207 CPI Factor: 4.44%
County Population: 0.12%
$62,128,310
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FISCAL IMPACT:
There is no fiscal impact as a result of this action. The recommendation by staff ensures the District’s compliance with Article XIIIB of the State Constitution.
COUNCIL MISSION / VISION / GOAL(S) ADDRESSED:
The adoption of the amended Article XIIIB appropriations limit supports the Fire District’s core value of providing and nurturing a high quality of life for all by demonstrating the active management of financial resources to support the various services provided to Rancho Cucamonga residents, businesses, and stakeholders.
ATTACHMENTS:
Attachment 1 – Resolution No. FD 2024-014