Draft Overall Program & Budget -

1. RECOMMEND that the Board AUTHORIZE Executive Director to submit the draft fiscal year 18/19 budget and Overall Work Program to federal and state funding agencies for initial review;
2. RECOMMEND that the Board PROVIDE direction and guidance to staff on the three-year budget for fiscal years 18/19 through 20/21, and the Overall Work Program for fiscal year 18/19; and
3. DIRECT the Executive Director to bring the final three-year budget and one-year Overall Work Program back to the Board on May 23, 2018 for approval.

Authorization to submit the draft budget for fiscal year 18/19 is necessary to meet review deadlines of federal and state funding agencies. The Agency continues to control expenditures to stay within its current year budget, and maintains a prudent cash reserve. The annual Transportation Agency for Monterey County Overall Work Program describes the activities that the Agency will undertake during the next fiscal year, and provides the basis for the 2018/19 budget.

The Agency budget separates expenditures into two types: operating and direct programs. Operating expenditures include salaries and benefits, materials and supplies, and equipment. The proposed fiscal year 2018-2019 operating expenditure budget is $3,075,444, a net increase over fiscal year 2017-2018 of $161,530.  Direct program expenditures include outside consultants, contracts, and specific project delivery tasks such as the Rail Extension to Salinas, and the bicycle and pedestrian program. The proposed fiscal year current direct program expenditure budget is $18,021,275 a net decrease over fiscal year 17/18 of $3,466,490. This decrease is primarily due to the timing of expenditures on the Rail Extension to Salinas project, and Measure X projects and programs being funded from the Measure X trust account.

The Transportation Agency for Monterey County gets majority of its funding from state sources. The funding is usually specific to the project or program for which it is granted and cannot be used to cover expenditures of a different project or program -- e.g the funding received for the call box program can only be used for motorist aid programs. The use of funding is approved by Caltrans in the annual Overall Work Program.

Three Year Budget:
Attachment 1 is the budget for the three-year period from July 1, 2018 to June 30, 2021. Staff proposed several assumptions for the operating budget, which were reviewed by the Executive Committee in November 2017.

Operating Revenues: The Agency receives regular state planning and related operating funds from three primary state sources: Rural Planning Assistance, Project, Programming and Management funds, and Local Transportation Funds. Since November 2016, 1% revenues for Measure X administration have also been budgeted. In addition, TAMC receives funding related to specific project and program administration from several sources, which are estimated conservatively: Service Authority for Freeways and Expressways program, state rail project grants, Measure X project/program funds and railroad leases. Staff will continue to budget staff time in new grants, such as the recently received State Planning Grants for the Pajaro to Prunedale and SR 218 Corridor studies. In FY 16/17 the Congestion Management Program assessment on cities and counties was changed to a Regional Transportation Planning Assessment; the contribution amounts will stay at the same dollar level as in prior years but monies will need to be paid from a local funding source. Staff time will be billed to all of these revenues, and expenditures will be tightly controlled.

The Transportation Agency continues to subsidize the activities of the Regional Impact Fee Agency. The budget is projecting the annual use of $10,000 in fee revenue to pay for operating expenses, although the ongoing annual cost to the Transportation Agency for this activity is much higher. Expenditures on regional fee activities are being tracked with the expectation that this cost will be repaid to the Transportation Agency as more fees are collected in the future.

Potential revenue risks to the agency continue to include a reduction in federal and state planning funds and minimal new development and therefore reduced administration funds for the Regional Development Impact Fee Agency. No state funding other than Planning, Programming and Monitoring has been cut recently, but staff will keep the Board advised. Should major revenue reductions occur, the agency would have to reevaluate its revenues, costs and mission to determine essential vs. discretionary activities. Billing staff time to specific projects, when possible, will continue to be a priority.

Operating Expenses: A 3% cost of living allowance is proposed for fiscal year 18/19. Merit increases and promotions will continue to be available subject to performance. A 5% increase to the salary range for the Deputy Executive Director and Director of Finance & Administration is also proposed. In order to restrain rising health care costs, while still providing and protecting quality care, the Agency revised its cafeteria health benefit allowance for its active employees in FY 2011/12. The changes eliminated several variables that existed, permitted the Agency to better forecast its obligation under the cafeteria plan, and reduced the liability for future premium increases. Employees have the flexibility to choose from several plans that are offered by CalPERS. No change to the allowance is proposed in FY 18/19.

The Agency contribution to CalPERS in FY 2018/19 is projected to be higher than last year due to CalPERS lowering the discount rate (assumed rate of return on investments) from 7.5% to 7.375%. The discount rate is projected to further decline over the next 2 years to 7.0% and will increase the Agency’s contributions. The Agency paid off its side-fund liability in December of 2013 and made a sizeable payment towards its unfunded liability in June 2016. These two factors help in keeping contributions lower than they would have otherwise been. However, due to Caltrans requirements, the Agency must book the expense of the unfunded liablility over a 5 year period ($110,168/year) in order to be reimbursed; the budget continues reflect these pension contributions. The Public Employees’ Pension Reform Act of 2013 continues to help curtail the agency’s costs in the future due to the establishment of a 2nd tier, 3-year averaging and required sharing of employee contributions with new members. In addition, all Agency employees pay a total contribution of 3.5% towards their CalPERS. These contributions help cover increases in CalPERS retirement costs and have brought the employee-paid share to the payment percentage recommended in the pension reform law.

Direct Program: Projects, programs and consultant work are funded out of the Direct Program budget. For example, the traffic counts program is funded from the Regional Surface Transportation Program in the Direct Program budget. Caltrans audit repayment, Public Outreach, Wayfinding signage and State legislative costs are funded from the unassigned reserve. No funds are budgeted for consultant Federal legislative costs. Regional Development Impact Fees have been designated by Board action to pay for project costs related to SR 156 improvements and the Highway 68 Monterey to Salinas Scenic Highway corridor.

As a result of good fiscal management, the agency has added to its reserve in past years. As designated in its GASB 54 fund balance policy, the agency will continue to maintain a minimum of a six-month operating budget balance in its undesignated reserve. As requested by the Executive Committee, any excess over the six-month level is designated as a “contingency” fund to cover short-term revenue shortfalls or unanticipated expenses. A portion of the undesignated contingency fund is forecast to be used in each of the three budget years for Operating and Direct Program activities.

Annual Work Program:

Attachment 2 is the annual Agency Overall Work Program, which describes the activities to be accomplished during the fiscal year beginning July 1, and ending June 30. After the draft Overall Work Plan is approved by the Transportation Agency Board of Directors at their February 28 meeting the draft plan will be submitted to Caltrans, who reviews the document and provides comments on the state funded activities in the plan. Agency staff then incorporates comments from Caltrans, as well as comments received from the Transportation Agency Board, into to a final proposed Overall Work Program to be presented to the Board of Directors in May for adoption in conjunction with the fiscal year 2018/19 budget.

Highlights of the Draft 2018/19 Overall Work Program, and how they implement the adopted TAMC Goals, are as follows:

Deliver Projects and Programs:

• Measure X administration and project/program delivery including:
  • Work with Caltrans on environmental review and preliminary engineering for the Monterey to Salinas Route 68 corridor.
  • Work with City of Marina on the Imjin Road section of the Marina to Salinas Multi-Modal Corridor.
  • Work with City of Pacific Grove and Caltrans on Holman Highway compete streets projects.
  • Work with MST and Caltrans to implement results from the Highway 1 busway study.
  • Initiate environmental review and preliminary engineering for the SR 156-Blackie Road Extension.
  • Initiate environmental review and preliminary engineering for the Fort Ord Regional Trail and Greenway project.
  • Update Project Study Report for the US 101 Safety Improvements – South County.
  • Initiate the Habitat Preservation/Advance Mitigation program.
  • Coordinate the Pavement Management program.
  • Implement the Safe Routes to School program and administer the Senior and Disabled Mobility program.

• Initiate construction of a portion of the improvements at the Salinas Intermodal Center and continue right-of-way and final design work for the Salinas Rail Extension Project.

• Continue to finalize these corridor studies in coordination with partner agencies:

• Pajaro to Prunedale - G12 corridor
• Canyon Del Rey (SR 218) corridor

• Assist Caltrans, Monterey-Salinas Transit and member agencies in securing funding and delivering transportation improvements.

Leverage Matching Funds:

• Collect data needed to apply for the next cycle of SB 1 matching funds and Federal Lands Access Program.
• Position projects to be "shovel-ready" for the next grant funding cycles.

Inform and Involve the Public:

• Educate the public on  the benefits of SB 1 matching funds to Monterey County.
• Publicize Measure X accomplishments and upcoming improvements.
• Continue to integrate a strong public input component in all project phases, from Corridor Study to Environmental Review/Design to construction. 

Plan for Future Innovation:

• Reach out to major employers and schools to help reduce and manage trips with the Traveler Information Program.
• Support local utilization of the Complete Street guidelines and implementing other components of the region’s Sustainable Communities Strategies.
• Fund bicycle racks and related hardware as part of the Bicycle Secure Program.
• Install signs for initial routes identified in the Regional Bicycle Wayfinding Plan.
• Initiate the Marina-Seaside Safe Route to School grant.

The next steps in the process are to present the draft budget and Overall Work Program to the Board of Directors in February and in May to bring the final budget and Overall Work Program to the Executive Committee for review and the Board of Directors for adoption.