ITEM NO. _7b_Supp________ DATE OF MEETING: October 25, 2011 2012 Operating Budget Update Commission Briefing October 25, 2011 Budget Overview • Key Drivers: - Baseline payroll increases and contractual increases - New Rental Car Facility / Busing Services - Terminal Realignment - Deferred Maintenance - Initiatives Tied to Strategic Goals & Century Agenda - Audit Committee/Internal Audit Initiatives - Other initiatives including Enterprise Risk Management, Medical Plan Review/Design, Business Process Improvement 2 Budget Changes Summary As of 10/4/11 As of 10/11/11 $ Change 238,149 149,828 934 388,911 235,619 150,111 1,234 386,964 -2,530 283 300 -1,947 Seaport Real Estate CDD Corporate Other Operating Revenues 98,151 32,828 0 151 131,131 98,151 32,828 0 151 131,131 0 0 0 0 0 Total 520,042 518,095 -1,947 Operating Expenses Aviation Seaport Real Estate CDD Corp Total 162,909 20,408 37,166 15,528 76,655 312,666 160,851 20,408 36,416 15,516 76,535 309,725 -2,058 0 -750 -12 -120 -2,941 Net Operating Income 207,376 208,370 994 ($ in '000s) Operating Revenues Aeronautical Non-Aeronautical Other (adjusted) Aviation Notes Cost recovery Higher Rental Car and Concessions revenues Fed Operating Grant Rev for Fire Dept No changes No changes No changes No changes See next slide for details No changes See next slide for details Direct Charge Refinement Remove a proposed Police position and cut $10K 3 Budget Major Changes Since 10/4 Division (in $ 000's) Aviation 1) Remove RCF Traffic Support Specialists 2) Delay hiring of RCF Bus Drivers 3) Removal AV Maintenance positions 4) Delay Hiring Some Positions 5) Natural Gas Rate Change 6) Remove Window Cleaning 7) Remove Remote Cruise Facility 8) Add Joint Marketing Fee 9) Other Reductions Total Real Estate 1) Pier 69 Carpet Replacement 2) Maximo Mobility Intergration 3) Pier 69 Concrete Beams Rehab Subtotal Change Notes (436) (526) (735) (243) (127) (90) (84) 300 (120) (2,058) Remove 7.6 new FTEs Start on 3/1/12 Remove 9.0 new FTEs 7 new positions (400) (100) (250) (750) CDD 1) Direct Charge Refinement Subtotal (12) (12) Corporate 1) Leadership Conference 2) Deleted a Proposed Police Position Subtotal (10) (110) (120) TOTAL For new international air services Include the removal of 4 pathfinders and 1.25 interns Deferred $400K to 2013 ($800K in 2013) Deferred $100K to 2013 Deferred $250K to 2013 Reduce new request from $51K to $41K Redeploy officers from other duties to RCF (2,941) 4 Operating Budget Summary ($ in '000s) Operating Revenues Aeronautical Non-Aeronautical Other (adjusted) Aviation 2010 2011 2011 2012 $ % Actual Budget Forecast Budget Change Change 198,329 217,200 214,181 235,619 18,419 135,052 144,601 144,541 150,111 5,510 880 877 877 1,234 357 334,262 362,678 359,599 386,964 24,286 Seaport Real Estate CDD Corporate Other Operating Revenues 97,279 98,153 95,961 98,151 30,391 30,942 31,030 32,828 36 610 1,025 1,202 151 128,316 130,119 128,192 131,131 Total 462,578 492,798 487,792 518,095 25,297 Notes 8.5% Cost recovery 3.8% Including $9.1M RAC operating revenue. 40.6% $7.8M Fuel Hydrant rev is reclassified as non-op. 6.7% -1 1,886 0.0% $2.1M reduction in pass-through grant. 6.1% n/a -874 -85.2% $990K for AAPA Conference in 2011 budget. 1,012 0.8% 5.1% Operating Expenses Aviation Seaport Real Estate CDD Corp Total 126,481 139,575 137,120 160,851 21,276 15.2% 19,517 23,242 19,200 20,408 -2,834 -12.2% $2.1M pass-thro grant and $500K for env. reserve exp. 30,739 33,741 33,741 36,416 2,675 7.9% 9,335 14,278 14,278 15,516 1,237 8.7% 67,391 75,008 73,969 76,535 1,527 2.0% See notes (1), (2) & (3). 253,464 285,844 278,308 309,725 23,881 8.4% Net Operating Income 209,114 206,954 209,484 208,370 1,416 0.7% 5 Comprehensive Budget Summary ($ in 000s) 2010 Actual 2011 Budget 2012 Budget Change $ Change % Revenues 1. Aeronautical Revenues 2. Operating Revenues 3. Tax Levy 4. PFCs 5. CFCs 6. Fuel Hydrant 7. Non-Capital Grants and Donations 8. Capital Contributions 9. Interest Income Total 198,329 264,250 73,125 59,744 23,243 7,912 12,473 30,518 13,096 682,690 217,200 275,598 73,500 60,379 22,237 7,839 8,493 32,106 13,654 711,006 235,619 282,476 73,500 63,448 21,333 7,839 1,779 31,448 5,748 723,190 18,419 6,878 3,069 (904) Expenses 1. O&M Expense 2. Depreciation 3. Revenue Bond Interest Expense 4. GO Bond Interest Expense 5. PFC Bond Interest Expense 6. Non-Op Environmental Expense 7. Public Expense 8. Other Non-Op Rev/Expense Total 253,464 160,775 133,239 17,463 10,187 22,730 25,085 7,276 630,220 285,844 160,491 148,206 13,780 10,191 6,200 17,205 2,521 644,438 Change In Net Assets 52,470 66,568 • • • Explanations Cost recovery Seaport , R.E. Non-Aero & Corp (6,714) (658) (7,906) 12,184 8.5% 2.5% 0.0% 5.1% -4.1% 0.0% -79.1% -2.0% -57.9% 1.7% 309,725 158,479 135,806 14,926 6,826 5,290 5,654 3,576 640,282 23,881 (2,012) (12,400) 1,146 (3,365) (910) (11,551) 1,055 (4,156) 8.4% -1.3% -8.4% 8.3% -33.0% -14.7% -67.1% 41.9% -0.6% Partially due to new RCF/BMF 82,907 16,340 24.5% Increase in enplanement Classify portion as ops revenue Reclassified from ops revenue EMW winding down FAA & DHS grants Lower interest rate 1% vs. 1.86 % Reduction in capitalized interest New issue and increase interest Savings from bond refunding Due to superfund sites Reduction of FAST I and II projects Total Revenues were $12.2M higher than 2011 budget and $40.5M higher than 2010. Total Expenses were $4.2M less than 2011 budget and $10.1M higher than 2010. Change in Net Assets were $16.3M above 2011 budget and $30.4M higher than 2010. 6 Corporate Cost Analysis ($ in 000's) 2010 Actual 2011 Budget 2011 Forecast 2012 Budget Corporate Cost 67,391 75,008 73,969 76,535 Total Revenue 462,651 492,798 487,719 518,095 Total Expense 253,464 285,844 278,547 309,725 Corporate Cost as % of Revenues 14.6% 15.2% 15.2% 14.8% Corporate Cost as % of Expense 26.6% 26.2% 26.6% 24.7% 7 Port-wide FTEs Summary Aviation 2011 Approved FTE's Seaport Real Estate Capital Dev Corporate Totals 761.9 60.4 164.8 262.5 447.6 1697.2 Mid Year Approval 10.1 0.4 1.0 2.0 3.7 17.2 Eliminated 0.0 -1.7 -1.0 0.0 -0.5 -3.2 Transfers 1.0 0.0 0.0 0.0 -1.0 0.0 Adjusted 2011 FTE's 773.0 59.1 164.8 264.5 449.8 1711.2 Eliminated 0.0 0.0 0.0 -9.8 0.0 -9.8 Transfer 0.0 0.0 0.0 0.0 0.0 0.0 New FTE's 86.0 0.8 1.0 1.0 2.4 91.2 Total 2012 Changes 86.0 0.8 1.0 -8.8 2.4 81.5 Proposed 2012 FTE's 859.0 59.9 165.8 255.8 452.2 1792.7 2012 Budget 8 Next Steps • First Reading and Public Hearing of the 2012 Budget on 11/8. • Second Reading and Final Passage of the 2012 Budget on 11/22. • Release the 2012 Final Budget and Draft Plan of Finance Document to the Public on 12/14. 9 ITEM NO. _7b_Supp________ DATE OF MEETING: October 25, 2011 2012 Operating Budget Update Commission Briefing October 25, 2011