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2011-05-26 Work Session Kodiak Island Borough Assembly Work Session Thursday, May 26, 2011, 6 p.m., Borough Conference Room Work Sessions are informal meetings of the Assembly where Assembly members review the upcoming regular meeting agenda packet and seek or receive information from staff. Although additional items not listed on the work session agenda are discussed when introduced by the Mayor, Assembly, or staff, no formal action is taken at work sessions and items that require formal Assembly action are placed on regular Assembly meeting agenda. Citizen's comments at work sessions are NOT considered part of the official record. Citizen's comments intended for the "official record" should be made at a regular Assembly meeting. CITIZENS' COMMENTS (Limited to Three Minutes per Speaker) ITEMS FOR DISCUSSION 1. Continuation of KIB FY2012 Budget Discussion PACKET REVIEW PUBLIC HEARING Ordinance No. FY2011 -01A Amending Ordinance No. 2011 -01 Fiscal Year 2011 Budget By Amending Budgets to Account for Various Revenues that Are Over and Under Budget, Provide for Additional Expenditures, Budget New Projects, Accept Grants, and Move Funds Between Projects. Ordinance No. FY2012 -01 Levying Taxes on All Taxable Real and Personal Property Within the Kodiak Island Borough for the Expenses and Liabilities of the Kodiak Island Borough for the Fiscal year Commencing on the First Day of July 2011 and Ending on the Thirtieth Day of June 2012 (Fiscal Year 2012 Budget.) UNFINISHED BUSINESS Ordinance No. FY2011 -16 Amending Kodiak Island Borough Code of Ordinances Title 3 Revenue and Finance Chapter 3.45 Severance Tax Section 3.45.020 Resources Subject to Tax and Section 3.45.010 Definitions. NEW BUSINESS CONTRACTS Contract No. FY2011 -33 Approval of Concept Design Phase for the Kodiak Long Term Care Center Design Project. Contract No. FY2010 -10 Second Extension of the Recycling Contract with Threshold Services Inc. RESOLUTIONS Resolution No. FY2012 -02 Reestablishing the Fees of the Kodiak Island Borough. ORDINANCES FOR INTRODUCTION — None. OTHER ITEMS *Declaring a Seat on the Planning and Zoning Commission Vacant. Approval of the Solid Waste Advisory Board By Laws. Mayoral Appointment to the Solid Waste Advisory Board. MANAGER'S COMMENTS CLERK'S COMMENTS MAYOR'S COMMENTS ASSEMBLY MEMBERS COMMENTS , ' P ° ° =°> :Pi Kodiak Island Borough MEMORANDUM TO: Honorable Mayor and Assembly Members of the Kodiak Island Borough THROUGH: Rick Gifford, Borough Manager FROM: Karleton Short, Finance Director SUBJECT: FY2012 Budget DATE: May 26, 2011 This memo is in response to questions about the FY2012 budget asked by Assembly member Louise Stutes. I have not had time to answer all of the questions but I will keep working on it. I have underlined Louise's questions. Hi Rick I have a few questions that I would like Karl to address prior to the budget meetings so that I might not take up time with these at the meeting I will ask them in advance. 1. What is the total school budget before local funding at 8.5, and also their request and what does that equate to per student? The School District submitted their budget for FY2012 at $45,584,836. They asked for a local appropriation of $11,185,233. This leaves a budget of $34,399,603 with no Borough contribution. (This is not possible since there is a minimum amount the Borough must contribute.) The School District is projecting to have 2,556 students next year, an increase of 11 students. This equates to $13,458 per student. 2. What is the total school budget including local funding and what does that equate to per student at both the 8.5 and the requested amount? The School District submitted their budget for FY2012 at $45,584,836. They asked for a local appropriation of $11,185,233. The School District is projecting to have 2,556 students next year, an increase of 11 students. This equates to $17,834 per student. If the Borough were to fund the School District with a contribution of $8,500,000 the School District budget would be $42,899,603. This would equate to $16,784 per student. 3. How many mils is the 8.5 million figure to be provided currently locally and what would that mil rate be when you include the debt service? $8,500,000 equates to 8.07 mills. We are budgeting $3,549,806 for School District debt with the State reimbursing the Borough $2,265,000 leaving $1,284,806 to be paid for by the Borough. This equates to 1.22 mills. The total cost in mills would be 8.29 mills. 4. How many mils is the requested amount by the school board, (11.2 mil), and what would that mil rate be when you include the debt service? $11,185,233 equates to 10.62 mills. We arc budgeting $3,549,806 for School District debt with the State reimbursing the Borough $2,265,000 leaving $1,284,806 to be paid for by the Borough. This equates to 1.22 mills. The total cost in mills would be 11.84 mills. 5. Why is it when the school board prepares their budget they do not take into consideration the debt service? By State law it is not part of the calculation of minimum and maximum calculation. The "foundation formula" does not include debt service. 6. Could you please make a graph which shows the increase in salaries w/o benefits but including inflation rate based on Anchorage CPI from 2002 -2011 and what the dollar amount should be with just the inflation rate increase and what the actual numbers are. I haven't had time to do this yet 7. Could you please make a graph which shows the increase in salaries with benefits and the inflation rate using the Anchorage CPI and what the dollar amount actually is versus what is should be with just the inflation rate. I haven't had time to do this either. 7. I would like to know what the TOTAL debt is on the hospital? The Borough still has bonded debt of $2,288,610. $2,105,000 is principal and $183,610 is interest. The final payment will be on February 15, 2014. The Hospital Enterprise Fund owes the Facilities Fund $1,141,912. Total Hospital debt is $3,430,522. 8. Has there been any funds put away insofar as the depreciation of the hospital is concerned and or is there any account which would allow rebuilding or reconstruction or refurbishing once the hospital is depreciated out as they have with the dump? At this time there are no funds available to rebuild, reconstruct, or refurbish the Hospital. 2 9. What is the total debt service that the borough is paying on the hospital bond? This schedule shows the remaining debt service payments for the Hospital bond. Principal interest Total 8/15/2011 $ - $ 45,258 $ 45,258 2/15/2012 670,000 45,258 715,258 8/15/2012 - 30,853 30,853 2/15/2013 705,000 30,853 735,853 8/15/2013 - 15,695 15,695 2/15/2014 730,000 15,695 745,695 $ 2,105,000 $ 183,610 $ 2,288,610 10. Is this bond being paid by a debt service fund for the hospital? And if not how is it being paid? This bond is paid out of a debt service fund (fund 300, department 305). 11. Do the hospital revenues include any contributions from the borough other than the lease payments. The Borough only receives revenues from the lease with Providence. The Borough also receives "other income" This includes $108,000 each year from the Fern Fuller Fund and some interest earnings. The Borough has also received $4,003,597 in FY2010 and FY2009 as part of the Community Health Center construction. 12. How many years has the hospital been paying the same lease payment and have they been adjusted for inflation? When will this change? Providence Health Systems has been leasing the Hospital from the Borough for $720,000 per year since 1997. The Borough received a $2,000,000 contribution in 1997 at the start of the lease. For the first 10 years of the lease the Borough received a portion of the net income that Providence Health Systems earned. This lease is in effect until April 20, 2017. 13. I would like to know the exact dollar amount which the borough has spent on the LTC facility and how the borough will be getting those funds back, which I assume we will if this is not going to cost the borough "a dime ". 1 haven't had the time to do these calculations. 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