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TO: |
Local Advisory Council |
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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): |
Brad Armstrong, Director Budget and Financial Strategy |
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Daniel Hofer, Director Capital Assets and Project Controls |
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TITLE:
title
Proposed 2023 Operating and Capital Budget Amendments
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AGENDA ITEM TYPE:
LAC - Consultation
RECOMMENDATION:
Recommend amendment to 2023 Operating Budget to reflect increased costs associated with the ratification of the Bargaining Unit (ATU) agreement. Also include in the amendment the approval of additional costs associated with adjusting administrative position compensation to reflect current labor market conditions. Recommend amendment to 2023 Capital Budget as presented.
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 is in need of amending the 2023 Operating and Capital Budgets to account for 1) a new collective bargaining agreement with the ATU Local 382 2) adjustments to compensation for certain administrative positions to align with labor market studies, and 3) amendment two to the 2023-2027 Capital Plan.
DISCUSSION:
2023 Operating Budget Amendment
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 will result 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 in the Amended 2023 budget by $7.74 million to reflect these changes. Included in these costs would be additional wage, fringe benefits and leave expenses.
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 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 on the Operating Budget Exhibit A. However, these moves resulted 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 2024 budget 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 increase $1,000,000
$1,000,000 in grant funding. 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 increase $2,854,000
$2,854,000 in additional 2023 Budget Authority is required - this increase in required 2023 budget authority will be offset by reductions in 2024 projects. The remaining $1,446,000 in required budget authority will be realized by reducing the 2023 budget for project MSP269- Warm Springs Sewer Line Relocation
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
Additional budgeted expense in 2023 of $7.74 million associated with the ratified agreement with the ATU. An additional $1.01 million in budgeted expense in 2023 associated with administrative market rate compensation adjustments. Total proposed increase to be reflected in the Amended 2023 Operating Budget of $8.75 million.
Capital Budget Amendment #2
The request to amend the 2023 Capital Budget will advance $6.663 million from future budget years and grant funds to the 2023 Capital Budget to fund the projects presented. These capital requests will not have a negative impact on UTA’s fund balance over the 5-Year Capital Plan.
ATTACHMENTS:
• 2023 Amended Operating Budget Exhibit A by Mode
• 2023 Amended Operating Budget Exhibit A-2 Financial by Office
• 2023 Amended Operating Budget Exhibit A-2 FTE
• Proposed 2023 Capital Budget Amendment 2 Exh A-1