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Fiscal Year 2025/2026 Preliminary Budget
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Requested Action(s)
recommendation
Review and approve either option 1 of the preliminary FY 2025/2026 Budget with funding the Organic Materials Program Coordinator or option 2 without funding the Organic Materials Program Coordinator, as presented.
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Financial Impact:
As listed.
Background Information:
Attached are two options for the recommended preliminary budget for fiscal year 2025/2026.
Below is a description of major revenues and expenses for each option:
Income
The proposed FY 2025/2026 budget with funding for the Organic Materials Program Coordinator (OMPC), and without funding the position, utilizes the following revenue sources and would result in a contingency of $31,778.83 (3.44%) or $33,985.48 (4.07%), respectively:
- Interest (440300) income is relative to federal interest rates. The Agency follows the guidance provided by the Tehama County Auditor-Controller for the purposes of budgeting interest income. The recommended interest rate has not yet been released, so the preliminary budget is based upon a 2% interest rate. This will be amended at the time the Board approves the final budget.
- Gate Fees w/ OMPC (461001) have been budgeted based on a flat fee. Despite the fact that expenses are projected to increase over FY 2024/2025 due to changes listed in this narrative, staff is not recommending an increase in the monthly fee of $70,000 due to the increase in the tipping fee as a result of the new operations contract. FY 2024/2025 resulted in a revenue surplus due to the Recycling Program Analyst position vacant for four months and the very sad unexpected death of the Agency Manager. Staff is proposing to use a small portion of the surplus to mitigate further tipping fee increases at this time. The Agency has a healthy retained earnings balance. Most increases listed in the proposed budget are outside of the Agency’s control, with very few exceptions.
- Gate Fees w/o OMPC (461001) have been budgeted based on a flat fee. Not funding the OMPC position will decrease salary expenses projected over FY 2024/2025 by $79,686.55, as such staff is recommending a decrease in the monthly fee of $70,000 to $65,000.
- Hazardous Waste Fees (461005) includes PaintCare reimbursements for managing paint reuse and reimbursement for home-generated sharps disposal. A small amount of revenue is also attributed to household hazardous waste business fees.
- Miscellaneous Revenue (471120) generally includes grazing lease fees, and other small amounts of revenue.
- Interfund Revenue (461070) is reimbursed salary/wages for direct labor on grant-related work.
Expenses
Expenses would increase $17,833.66 over the previous fiscal year with funding the OMPC position, or decrease $74,372.99 over the previous fiscal year without funding it, as described below.
- Salary/Wages (510100), Overtime (510120), PERS (510200), OASDI (510210), Group Insurance (510300), and Unemployment Insurance (510310) take into consideration normal step increases at anniversary dates, the current employer PERS contribution rate. The Agency no longer funds a second Recycling Program Analyst I/II. This position will be removed when the Agency transitions to an internal staffing structure. If the option to remove funding for the OMPC is approved, it will also be removed when the Agency transitions to an internal staffing structure.
- Pay in Lieu/Misc Payouts (51015) - Of current Agency staff, one staff member elected to receive payment for accrued vacation or Personal Time Off. This would remain the same for both options.
- PERS Unfunded Liability and ADP Misc PERS Unfunded are the Agency’s portion of the PERS unfunded liability, currently at $48,469.14 for FY 2025/26, and an additional discretionary payment to pay down the unfunded PERS loan balance faster. There will be some fluctuation in the Agency’s annual payment as it is based upon the prior year’s actual PERS payroll. This would remain the same for both options.
- Workers Compensation (510400) rates are expected to increase; however, the actual rate was unknown at the time this agenda item was prepared. As such, staff assumed a 10% increase over FY 2024/2025. This would remain the same for both options.
- Property, Crime, Liability, and Pollution Insurance (531500) includes an anticipated 10% increase in property liability premium over FY 2024/2025. A more accurate figure will be available in June. This would remain the same for both options.
- Maintenance of Equipment (53170) includes typical maintenance of equipment. This would remain the same for both options.
- Maintenance Structures-Improvement of Grounds (53180) takes into consideration the cost of maintaining the fire suppression systems at the Agency’s two Household Hazardous Waste facilities. This would remain the same for both options.
- Membership and Dues (53200) includes membership to the Rural Counties’ Environmental Services Joint Powers Authority, Solid Waste Association of North America, California Association of Recycling Market Development Zones and California Product Stewardship Council. This would remain the same for both options.
- Misc Expense (53210) is budgeted at $16,000. This expense account is utilized for Board per diem compensation for meeting attendance. This would remain the same for both options.
- Office Expense includes typical office supplies and a monthly lease payment for a multifunction copier. This would remain the same for both options.
- Professional/Special Services (53230) is proposed to be budgeted for $73,246. Expenses to be funded through current year franchise fees include attorney fees, independent audit costs, use of personnel at the Tehama County Auditor-Controller’s office for various accounting services, and an administrative fee pursuant to the agreement between the Agency and the County. The administrative fee between the Agency and the County is expected to increase slightly in FY 2025/2026. The independent audit budget has been increased to reflect the anticipated increase in cost to hire a new independent auditor. Below is an itemized breakout of budgeted expenses:
FY 24/25 FY 25/26
Attorney Fees $15,000 $15,000
Accounting Services Agreement $10,000 $10,000
Administration Fees $23,013 $24,246
Audit $11,000 $15,000
Lawrence & Associates $1,000 $1,000
Miscellaneous $2,000 $2,000
Janitorial Services $6,000 $6,000
Total $68,013 $73,246
- Special Departmental Expense has been increased to finish transitioning the 4Rs Kids Exhibit from the bus to the trailer. This would remain the same for both options.
- Employee Travel/Training and Transportation (53290 and 53291) is expected to remain the same for FY 2024/25 and includes typical travel, training, and fuel costs. This would remain the same for both options.
- Utilities (53300) reflects anticipated costs for PG&E, Hue & Cry, and fire alarm maintenance, monitoring and testing. This would remain the same for both options.
- Hazardous Waste Disposal (558007) is proposed to be budgeted at $160,000. This was increased to reflect the new rates under the current agreement for services that expires December 31st, 2027.
- Litter Abatement/Illegal Dumping funds illegal dumping on roads outside of Baker and Plymire and also supports AB 109 illegal dumping clean-up costs in the community. Pursuant to the Agency’s policy, $12,000 is allocated to PATH and the remainder is available to fund waste disposal resulting from cleanups on public land. This would remain the same for both options.
Impact of the Proposed Changes on the Tipping Fee
Per Section 6.B.1 of the Landfill and MRF Operations Agreement, if the cost to operate the Agency is more or less than the fee paid to the Agency on an annual basis, the Agency reserves the right to raise or lower the fee as necessary, and will notify Waste Connections by April 15th of each year. As stated above, the Agency has an unrestricted retained earnings balance that would allow for the Agency to operate without any revenue for more than one fiscal year. As such, in an effort to lessen the effect of the new operations contract on the public, staff is proposing one option that would include a portion of FY 2024/2025’s revenue surplus as a FY 2025/2026 revenue source, or the option to eliminate funding for the Organic Materials Program Coordinator, rather than increase the tipping fee. As a reminder, the JPA Fee is only a small portion of the tipping fee. Other impacts to the tipping fee include annual CPI adjustments, the contractor’s cost to comply with changes in law, the new agreement incentivizing diversion by the contractor, the closure/post-closure trust fund fee, and the cell liner trust fund fee.