Non-Departmental

Overview

In addition to expenditures that are directly related to departmental operations, there are also significant expenditures that are not directly attributable to the departments or have already been factored in the department expenditures as an internal service fund transfer. Two of the most notable of the expenditures not attributable to operating departments are the General Fund’s transfer to the General Capital Fund to operate the Capital Improvement Plan and the debt service on the recreation general obligation bonds. Before fiscal year 2014–15, these expenditures were shown in the finance operations, which inflated the department’s budget. It also made any sort of trend analysis difficult because transfers can fluctuate significantly year-over-year. Starting in fiscal year 2014–15, these expenditures were pulled out of the Administrative Service Department’s budget and reflected in a separate section referred to as non-departmental. In addition, for fiscal year 2021-22, a contingency budget has been incorporated into the non-departmental budget to plan for City Council priorities which require additional scoping. Following the City's budgeting and accounting principles, these budgeted expenditures may be moved within a fund by the City Manager to better allocate toward anticipated needs. As with fiscal year 2020-21, the budget is likely to undergo substantial changes throughout the course of the fiscal year as the City recovers from the effects of the pandemic.

Since the 2017–18 fiscal year, Internal Service Funds have been used for workers’ compensation, general liability, and retiree medical payments. Internal services are billed to user departments through an allocation formula and each department’s expenditures includes charges equal to charges paid by these internal services. Also since fiscal year 2017–18, non- departmental fringe benefits include expenditures such as the vacancy factor (a credit to expenditures) and the management incentive program. Both of these fringe benefit items cannot be accurately assessed at the department level during budget preparation and are best budgeted at the non-departmental level. Inclusion of the vacancy factor as a credit to fringe benefits has created confusion when comparing budget to actual expense on the department level. For fiscal year 2020-21 the vacancy factor was removed, but has been reintroduced for fiscal year 2021-22 with a rate equal to 7 percent of variable personnel expenditures. This rate is lower than pre-pandemic experience and includes the expectation that there will likely be greater movement following the pandemic's recovery. Similarly, the management incentive program was previously budgeted in the Administrative Services Department and the amount was moved to non-departmental for fiscal year 2017–18. For fiscal year 2020-21, the management incentive program was suspended in order to limit expenditures, but is included in fiscal year 2021-22.

As reflected below, fiscal year 2021–22 expenditures in the non-departmental category are budgeted at $7,144,767. Transfers to the General Capital Fund for Capital Improvement Plan use have the largest impact and are budgeted at $3,050,5000 with an additional $846,400 being transferred between other funds as well. $1,041,281 has been budgeted for debt service related to the Recreation (Measure T) General Obligation Bonds. Removed from the non-departmental expenditure budget is the additional payments to CalPERS to reduce unfunded pension liability. Following City Council direction, an estimate for the cost of using a lower discount rate in pension obligations has been created and may be incorporated into either departmental or non-departmental budgets following consideration.