20240612-006 Updated Budget Amendment RCA — original pdf

Backup

Posting Language Approve an ordinance amending the Fiscal Year 2023-2024 Aviation Department Operating Budget Airport Operating Fund (Ordinance No. 20230818-008) to recognize additional revenue in the amount of $10,082,451 and increase appropriations in the amount of $10,082,451 to accommodate adjustments implemented because of the Aviation staffing market study, and reflect expenses resulting from the improved vacancy rate, wage and vacancy adjustments associated with contractual agreements, and increased commodity purchase needs. Lead Department Aviation Fiscal Note Funding in the amount of $10,082,451 is available in the Fiscal Year 2023-2024 Aviation Department Operating Budget Airport Operating Fund. Additional Aviation Department revenue in the amount of $10,082,451 is also recognized. A fiscal note is attached. Prior Council Action: N/A For More Information: Ghizlane Badawi, Aviation, Chief Executive Officer, 512-530-8846 Rajeev Thomas, Aviation, Chief Financial Officer, 512-530-2463 Council Committee, Boards and Commission Action: Airport Advisory Commission – June 12, 2024 Additional Backup Information: This budget amendment is to accommodate adjustments resulting from a greatly improved vacancy rate that outperformed expectations, wage and vacancy adjustments associated with contractual agreements, increased commodity purchases, and to reflect expenses associated with the implementation of the Aviation staffing market study. This amendment will increase appropriation to the Department of Aviation and will be funded from operating revenues within the Airport Operating Fund without impact to the General Fund. The Department of Aviation in collaboration with the City of Austin Human Resources Department, is in the final stage of the Aviation staffing market study. The market study compared the salary ranges for positions at the Department of Aviation with comparable airports in other markets. Changes to salary ranges resulting from conclusions of the market study will be implemented within FY2023-2024 and will have a financial impact on the operating expenses of the Department of Aviation. In the wake of the COVID-19 pandemic, the Department of Aviation’s vacancy rate surged to as high as 40% as a result of increased number of FTEs necessitated by greatly increased passenger traffic and by challenges recruiting and retaining staff. The Department has worked to address the hiring and retention issues and has far outpaced the forecasted improvement in vacancy rate included in the FY2023-2024 Budget. As of May 2024, the Department has a vacancy rate of 20% and forecasts this will continue to improve through the end of the fiscal year. This has driven a significant variance compared to the approved FY2023-2024 Budget due to the additional personnel cost from improved staffing levels. The Department has also experienced a significant increase in staffing costs across various contracted services and City of Austin services, including the parking operations contract and the services provided by the Austin Police Department (APD) and Austin Fire Department (AFD) at the airport. The improved staffing at AUS and within contracted services has resulted in a return to the high level of service our passengers expect at the airport. This has driven an increase in the volume of commodities purchased for facility services as restrooms and airport facilities are cleaned at a more frequent interval. Additionally, the increase in passenger traffic that the airport has experienced post pandemic has also driven increased need for repair and maintenance of aging buildings and equipment (i.e. baggage handling system, passenger boarding bridges, Central Utility Plant equipment, airfield lighting and equipment, elevators/escalators). Finally, the Department continues to experience supply chain issues and inflationary pressures for some commodities, which has further driven up commodity expenses. The transfer to the Airport Operating Reserve will increase as a result of the increase in operating expenses. The operating reserve must maintain 2 months of airport operating expenses in compliance with bond covenants. Based on analysis of operating revenue realized year-to-date, Aviation is projecting additional revenue beyond what was budgeted in FY2023-2024. This amendment recognizes this additional revenue and appropriates the amount needed to fund the additional costs for the remainder of FY2023-2024. Strategic Outcome(s): Mobility Safety District(s): 2