Rochester Hills Legistar System

submitted to City Council on August 4, 2004.

* This year's budget plan proposes over $111 million in revenues and expenses.

* Capital Improvements total $31 million of the proposed plan, including over $20

million in the Water & Sewer Department.

* Proposed W&S projects include the construction of a new DPS Facility (FA-04);

installation of water and sewer lines in Section(SS-10 & WS-11); and along

Harding Road (SS-17 * WS-21).

* The Major Road Fund's proposed capital projects total over $4.2 million

including construction work along Crooks Road from South Blvd to M-59 (MR-01

B&C); Tienken Road and Bridge Rehabilitation (MR-06A); and Powderhorn Ridge

Reconstruction (MR-44).

* Proposed Drain projects total $4.4 million and include work on the Rewold Drain

(SW-05A&B); Stoney Creek Drain (SW-04); and O'Malley Drain (SW-06).

* The Capital Improvement Fund also proposes nearly $850,000 of capital

improvements, many of which focus on a variety Park improvements included in

the Capital Improvement Plan (CIP).

* No Capital Improvements were proposed for the Local Roads, since a dedicated

funding source has not yet been identified.

* Service Charges are the largest proposed single source of revenue for the City at

over $29 million ($22 million in W&S alone).

* City Taxes is the second largest source at nearly $28 million.

* It is proposed for the City to issue $19 million in bonds in 2004 to fund capital

improvements:

* $3.8 million in Major Roads

* $3.6 million in Drains

* $11.5 million in the Water and Sewer Fund

* With the exception of the Water and Sewer Fund, very little is being drawn out of

fund balance retained earnings to balance the 2005 proposed budget.

* The General Fund has estimated proposed expenses over revenues of $177,850

and Debt Service Funds plan to draw down fund balances by $250,810.

* Water and Sewer is proposed to draw $10.3 million additional dollars from

retained earnings.

Julie Jenuwine, Interim Finance Director, reported that the City of Rochester Hills

has been awarded the Distinguished Budget Presentation Award for the current

fiscal year.

She noted the Government Finance Officers Association's (GFOA) review indicated

that the City's budget document failed to satisfy the criteria:

Financial Plan Criterion #2

Financial Plan Criterion #3

However, this deficiency will not disqualify the budget document from receiving

the award this year.

The award is valid for (1) one year.

For continued participation within the program, the following must be met:

Next annual budget document must be submitted to GFOA within (90)

ninety days of the budget's final adoption.

Ms. Jenuwine presented and discussed July 2004 Year-to-Date Variance Report for

all major operating funds' budgets handout Noting the following.

MAJOR OPERATING FUNDS SUMMARY

* General Fund - Legal, Planning and Parks expenditures are the only General

Fund departments "off pace" of budget. Total General Fund expenditures are at

sixty-eight (68) percent, due to the quarterly transfers that are performed in the first

month of each quarter. Revenues are "on pace" in most categories to exceed budget

. The City has received forty-three (43%) percent of its budgeted State Shared

Revenues. A budget amendment will be performed in the 4th quarter, when final

revenue estimates are easier to project.

* Major Road Fund - Has only expended thirty-two (32%) percent due to the low

expenditures for capital improvements. Winter Maintenance department has

expended seventy-nine (79%) percent due to its seasonal nature. Revenues are

behind budget due to the Tri-party revenues budgeted which will likely be amended

in the 4th quarter.

* Local Road Fund - Has expended fifty-eight (58%) percent due to the transfers-

out bringing up that percentage, as the transfers for the entire quarter are performed

in July. Revenues are behind due to slower interest earnings and license revenues.

* Fire Fund - Has expended sixty-five (65%) percent due to Administration, Paid-

on- call, and Dispatch departments "on pace" to go slightly over, but part of this is

due to the transfers for the entire quarter are made in July. A bottom-line budget

amendment may be necessary in the 4th quarter. Revenues are ahead of budget due

to EMS charges.

* Police Fund - Has expended fifty-three (53%) percent of its budget. Revenues

are on track due to the early receipt of tax revenue and the 3rd quarter transfer-in

performed in July.

* Bike Path - Has expended seventy-three (73%) percent mostly due to increased

employee activity related to maintenance of the pathway, and should increase at a

slower pace for the balance of the year, unless there are early snowfalls in

December.

* Drain Improvement Fund - Has expended five (5%) percent of expenditures year-

to-date. Revenues appear to be poor based on the bond revenue that is not likely to

occur.

* Water and Sewer Fund - Has expended twenty-four (24%) percent of

expenditures budgeted. This is very low due to delayed capital expenses and the lag

in the billing from Detroit for the water and sewer. Revenues are at seventy-nine (

79%) percent remaining to be collected, this is due to the sale of fixed assets not

occurring, the lag for water and sewer commodity revenues, and fund balance-to-

balance not being journaled until the end of the year.

* Facilities - Has expended fifty-eight (58%) percent of its budget. This can be

misleading, as the entire quarter of depreciation is booked in July. Revenues are at

twenty-seven (27%) percent remaining.

* MIS - Has expended forty-seven (47%) percent of its budget. Revenues are at

forty-eight (48%) percent remaining, as fund balance-to-balance account entry is

not performed until the end of the year.

* Fleet - Has expended fifty-three (53%) percent. Revenues are at fifty-three (53

%) percent remaining, as fund balance-to-balance entry is not performed until the

end of the year.

* Ms. Jenuwine will meet with each Director during the month of September, after

the close of August financial period, to review their applicable variance reports in

detail.

* Variance report does not reflect the proposed 3rd quarter budget amendments.