The Livermore Area Recreation and Park District (LARPD) Board of Directors held an emergency meeting last week to review revised budget projections indicating the district’s cash balance will likely remain positive for the remainder of the calendar year, despite a number of fiscal challenges presented by the impact of COVID-19 pandemic.
Those challenges will cause the LARPD to report a $900,000 operating loss – as opposed to roughly $600,000 in reserves as were originally expected – for fiscal year 2019-2020, which ends June 30. However, as it stands now, the board forecasts a reserve of about $500,000 for the 2020-2021 fiscal year.
“This will be a high-level view of budget projections for the remainder of the calendar year, and where we project the district to be in a worst-case scenario, given that those assumptions are met,” said Mat Fuzie, LARPD general manager, immediately before the start of the budget review. “I’m specifically stating we think this is a worst-case scenario. However, everything can get worse.”
During the April 28 meeting, the board heard that the district’s cash balance will hit a low of $1.4 million in November 2020.
“I’m nervous about it, because it’s three pay periods worth of money, and we’ve never, in my time here, been that close to zero,” said Jeff Schneider, LARPD administrative services manager.
By the end of the calendar year, the cash balance returns to $6.5 million as a result of the second of two annual parcel tax distributions to the district.
The district’s approved midyear budget for fiscal year 2019-2020 was $23.4 million, while the revised figure is now $20.1 million. There have been changes to both the revenue and expense sides of the budget. On the revenue side, the change is significant. All income from district programs has been cut to zero through the summer. About half of the district’s income is derived from programs it operates. The other half comes from a parcel tax applied within the district’s 243.5-square-mile boundary.
Facility rentals have been hard hit by the stay-at-home order. All reservations through the end of May have been canceled while the district and renters await further direction from the county on social-gathering guidelines after the expiration of the current order at the end of May. The district is accepting reservations for 2021 and has responded to current restrictions by working to make videos available online that will allow potential renters to view the properties virtually.
“The budget model that we’re presenting to you right now shows that there is little to no rental activity up until September,” said Alexandra Ikeda, LARPD recreation department manager. “I think we had about 64 rentals that we had to cancel. It is a significant number, and it is going to continue to be that way. As you know, the summer months are popular for rentals.”
So far, all full-time employees of the district have retained their jobs; Fuzie said the plan does not call for cuts to full-time staff. Of the district’s 43 part-time employees, 32 have been furloughed through Aug. 17. Cuts to the hours of casual employees resulted in a savings of $552,000 through the end of 2020. Other expense savings have been realized in park maintenance, water usage and supplies.
“I’m likening our cuts now to the way we should be doing business on a regular basis where we should be lean and mean, and we would have reserves that the board would be able to allocate based on priorities,” Fuzie said. “We’re at that level of cuts right now. We could go further, but it would most likely be to the detriment of our facilities and units.”
As with any budget, there are risks and opportunities in the assumptions made to forecast future activity. The LARPD’s plan for the $20.3 million budget for fiscal year 2020-2021 assumes no increase in property values; a 6% increase was previously included. An increase in property values would result in additional income for the district. Schneider expressed some concern that the lifting of the stay-at-home order may not result in a return to normal usage levels of district amenities.
“People’s behavior is going to have to have been affected by this,” he said. “It will actually really present a challenge for us in offering what we would consider the traditional recreation program. This is a challenge we’re now working to address.”
With so many unanswered questions about what the near-term future will look like, Fuzie reiterated the need for a conservative approach to budgeting.
“I’m feeling a little more optimistic than this plan represents,” he said. “But I do think it’s important for us to think about the worst-case scenario right now.”