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TO: |
Board of Trustees |
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THROUGH: |
Jay Fox, Executive Director |
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FROM: |
Viola Miller, Chief Financial Officer |
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Mary DeLoretto, Chief Service Development Officer |
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PRESENTER(S): |
Viola Miller, Chief Financial Officer |
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Brad Armstrong, Director Budget and Financial Strategy |
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Daniel Hofer, Director Capital Assets and Project Controls |
TITLE:
title
R2023-06-02 - Resolution Adopting the Authority’s Amended 2023 Budget
end
AGENDA ITEM TYPE:
Resolution
RECOMMENDATION:
Approve Resolution R2023-06-02 to adopt Amendment 1 to the 2023 Operating Budget and Amendment 2 to the 2023 Capital Budget.
BACKGROUND:
Board of Trustee Policy Number 2.1 - Financial Management, allows the Board of Trustees, after consultation with the Local Advisory Council, to amend the budget at any time after its adoption. The Authority needs to amend the 2023 Operating and Capital Budgets to account for:
• The impacts of the new collective bargaining agreement with the ATU Local 382
• Adjustments to compensation for certain administrative positions to align with labor market studies
• Minor movement of Operating budget authority between Chief Offices (no cost impact)
• Amendment 2 to the 2023 Capital Budget.
The proposed amendments were presented at the May 10, 2023 Board meeting and to the Local Advisory Council for their consultation on May 31, 2023. The Local Advisory Council had no objections to the proposed amendments.
DISCUSSION:
This resolution provides for the adoption of amendments to 2023 Operating and Capital Budgets as described below:
2023 Operating Budget Amendment #1
Bargaining Agreement
UTA and ATU Local 382 negotiated and agreed upon a new Bargaining agreement which was ratified recently by represented members of the bargaining unit and the UTA Board. The term of the new contract is for three years ending in December of 2025. Ratification of this contract resulted in higher compensation costs than are currently reflected in the 2023 Operating Budget.
The terms of the newly ratified bargaining agreement will result in increased compensation expenses for UTA in 2023. UTA is proposing to increase the budgeted costs by $7.74 million to reflect these changes. Included in these costs would be additional wage, fringe benefits, leave expenses, and a one-time signing bonus for members.
Labor Market Adjustments
The UTA People Office engaged in labor market studies to assess whether compensation for various administrative positions within UTA are set at a competitive level to retain and attract the right people to work at UTA. The People Office identified several positions that should have their compensation levels increased to competitive levels. Implementation of these recommendations will result in increased costs which are not currently reflected in the 2023 Operating Budget. These adjustments are designed to help UTA be more competitive in both retaining and attracting talented individuals to administrative positions within the
organization. If approved, the proposed adjustments will require an additional $1.01 million increase in the Amended 2023 Budget.
For informational purposes, there have been several moves of full-time employee (FTE) positions between various UTA departments since the approval of the 2023 Operating Budget. As a result of these moves, costs have changed in various budget mode categories shown in Exhibit A-2 of the resolution. However, these moves result in no net change in overall costs in the budget.
2023 Capital Budget Amendment #2
For the 2023 Capital Budget Amendment #2, UTA staff are proposing the addition of two new projects to the 2023 Capital Plan, and to advance the adopted 2024 planned expenditures of an existing project to the 2023 budget year to facilitate delivery of that project. This proposal would add budget authority in 2023 for the three projects described below. The proposed amendment will require an additional $6,663,000 in 2023 Budget authority. This includes:
• MSP205- Tiger Program of Projects
Proposed 2023 Budget $13,269,000 - net increase $2,809,000
$2,809,000 in planned 2024 funding accelerated from 2024 to 2023 to complete this project per grant agreements.
• MSP240- Operator Restrooms throughout System
Proposed 2023 Budget $1,854,000 - net 2023 project increase $1,000,000
$1,000,000 has been received in grant funding for this project, and the remaining $854,00 in required budget authority will be realized by reducing the 2023 budget for project SGR409- System Restrooms Modification.
• ICI230- Workforce/Enterprise Asset Management System
Proposed 2023 Budget $4,300,000, net 2023 project increase $2,854,000
This is a new project being added by amendment to the Capital Plan and will have a net increase of $2,854,000 to 2023 budget authority. This increase will be offset by reducing the 2023 budget for project MSP269- Warm Springs Sewer Line Relocation, with the balance being realized by reductions in 2024 projects.
ALTERNATIVES:
Capital Budget Amendment #2
MSP240- Operator Restrooms throughout System & ICI230- Workforce/Enterprise Asset Management System projects could wait to be added to the 2024-2028 Capital Plan, but UTA would lose 6 months in procurement and construction time which would cause delays to these projects. UTA would also be at risk of losing the grant funds if they are not executed this year.
MSP205- Tiger Program of Projects could run a risk of having insufficient budget authority this year to complete the project in accordance with the terms of their grant agreement.
FISCAL IMPACT:
Operating Budget Amendment #1
The request to amend the 2023 Operating Budget will increase 2023 budget authority by $8.75 million. This will include the additional budgeted expense of $7.74 million associated with the ratified agreement with the ATU, and an additional $1.01 million in budgeted expense associated with administrative market rate compensation adjustments.
Capital Budget Amendment #2
The request to amend the 2023 Capital Budget will add $6.663 million to the 2023 Capital Budget to fund these three projects. As detailed in Exhibit A-1, this will be achieved by reducing budget authority for two projects, accelerating planned expenditures for the TIGER Program of Projects from 2024, and recognizing new grant funding for the Operator restroom project.
This capital budget amendment will not have a negative impact on UTA’s fund balance over the 5-Year Capital Plan.
ATTACHMENTS:
• Resolution R2023-06-02, including the following exhibits:
• Exhibit A: 2023 Operating Budget Amendment 1 (by Mode)
• Exhibit A-1: 2023 Capital Budget Amendment 2
• Exhibit A-2: 2023 Operating Budget Amendment 1 (Financial by Office)
• Exhibit A-2: 2023 Operating Budget Amendment 1 (FTE)