The impacts of the COVID-19 pandemic and resultant shelter-in-place order in effect in Alameda County are taking a growing toll on Livermore Area Recreation and Park District (LARPD) finances.
When the LARPD board met for a budget review in late April, they were faced with a projected operating loss of $900,000 for the 2019-2020 fiscal year, which ends June 30. During the June 9 board meeting, revised budget numbers showed that the projected loss for the year had increased to more than $1.2 million.
The outlook for the 2020-2021 fiscal year has similarly soured. The district was initially expecting a $500,000 contribution to reserves at the end of the next budget year. The preliminary 2020-2021 budget now forecasts the district to be $353,000 in the red. A precipitous drop in revenue is fueling the district’s budgeting challenges.
“We are a very people-oriented business,” said LARPD General Manager Mat Fuzie. “When we people are not available, we don’t have programs. We’re doing a lot online. We’re doing a lot of creative things. Believe it or not, our open space use is up, so our revenues are up there.”
For the current budget year, district revenue is off $3.6 million from the midyear forecast of $23.3 million. The forecast for next year is down an additional $4.2 million. Fuzie said the revenue hit comes from canceled rentals of district facilities for weddings, as well as sports and aquatic facilities that have been idled by the pandemic, and canceled senior trips. The district’s programs for school-age children have been particularly hard hit.
“We have an early student services program where we do child care and before- and after-school care, and we’re getting killed there,” Fuzie said. “We normally have 1,500 students in that program at about $435 a pop. So that’s a huge revenue drop.”
Efforts are underway to reduce expenses to help offset the impact of the lost revenue. LARPD furloughed 32 of its 42 part-time employees with benefits. Hours for casual workers – part-time employees without benefits – have been all but eliminated. The district also cut capital improvement projects and maintenance dramatically.
“We are reducing some of the spend we have to maintain the parks, but without jeopardizing the health of the parks,” LARPD Administrative Services Manager Jeffrey Schneider said. “Maybe we don’t water quite as often, but we sure aren’t going to let the lawns die so that then we have to go through a process to re-establish them once program activities kick in. We’re doing it carefully. We’re trying to manage our spending in the areas that, heretofore, hadn’t been as carefully managed before Mat (Fuzie) got here.”
According to Schneider, one part of the budget that isn’t a concern, at least for the immediate future, is property tax revenue.
“We expect a big December, because tax inflows are going to be based on the roles that existed in January 2020,” he said. “Property tax numbers are going to be significant. We’ll probably see a 5 to 6% increase over December last year. But beyond that, you get a little anxious.”
The district’s cash balance hits a low point of $2 million in November before the December tax revenue distribution replenishes district accounts. Cash flow remains positive through the end of the next fiscal year, but Fuzie said that accomplishment took some effort.
“One projection early on showed us dipping below (zero),” he explained. “We quickly went all the way through and rethought our (spending). For example, we identified everywhere we could get water savings because we spend $1.2 million on water when we’re not trying to conserve. We went through and scrubbed our entire budget to try to get back in the positive. We did everything we could to stay in a positive cash flow.”
As with any budget, the LARPD budget is based on assumptions. There are risks and opportunities that could move the actual results in a positive or negative direction. But Fuzie and Schneider emphasized that planning is based on worst-case scenarios and that assumptions built into the budget are very conservative.
“We have been able to keep LARPD parks and open spaces available to the community as essential places to exercise, spend time outdoors and experience nature during this difficult time,” said Stacey Kenison, LARPD marketing and public information officer. “Our staff has been very creative, pivoting to virtual programs, special events and activities to help families stay active and engaged while at home. As the health order allows, we look forward to having families back in our facilities and seeing the smiles that we have missed over the past few months.”