HomeMy WebLinkAbout12/10/2019 Item 2, PowerPoint Presentation on Review of City's Fiscal Health1
Council Compensation –
Review of City’s Fiscal Health
Budget in Brief –General Fund
23%
10%
23%
25%
19%
WHERE THE MONEY COMES FROM
Sales Tax
Measure G
Property Tax
Other Taxes
Fees for Service
$77 Million
Revenues
& Other Revenue
What the Money is Spent On
77%
8%
9%
6%
OPERATING BUDGET
Staffing
Contract Services
Other OpEx
Transfer
$63 Million
Operating
Expenditures
Capital Budget –General Fund
New Assets (incl. Development
Agreement Projects)
Asset Replacement
Annual Asset Maintenance
$9.2 Million Capital
Expenditures
Focus on maintaining existing assets
5 Year Forecast
Revenue
Projected
FY 20
Projected
FY 21
Projected
FY 22
Projected
FY 23
Projected
FY 24
Total Tax & Franchise Revenue 62,856$ 65,097$ 66,268$ 67,435$ 68,566$
Total Fees & Other Revenue $ 14,480 $ 13,787 $ 14,325 $ 14,621 $ 14,922
Total Revenue $ 77,337 $ 78,885 $ 80,593 $ 82,056 $ 83,488
Use of Funds
Total Operating Expenditure $ 63,184 $ 64,433 $ 65,508 $ 67,202 $ 68,685
Debt Service 2,742$ 2,577$ 3,000$ 3,000$ 3,000$
Capital Expenditures 9,288$ 7,693$ 8,538$ 8,699$ 8,880$
Transfers 336$ 709$ 625$ 540$ 454$
Total Expenditure $ 75,550 $ 75,412 $ 77,671 $ 79,441 $ 81,019
Beginning Fund Balance $ 17,797 $ 16,584 $ 17,057 $ 17,978 $ 18,594
Revenue Over/(Under) Expenses $ 1,787 $ 3,473 $ 2,922 $ 2,616 $ 2,470
Ending Fund Balance $ 19,584 $ 20,057 $ 19,978 $ 20,594 $ 21,064
Undesignated Fund Balance $ 2,854 $ 2,976 $ 3,372 $ 3,791 $ 4,429
Normalized Fund Balance 106$ 122$ 396$ 419$ 638$
$7.8 million$19 millionWhat is the Issue?
Similar to 3,000 other agencies in California,
the City faces a significant increase in
required pension contributions.
The City’s annual costs to CalPERS will
more than double in 10 years.
Without action, the City would face a
negative General Fund balance
beginning 2019-20.
To address these issues, the City needed
to reduce expenditures by $7.5 million in
the General Fund & $1.4 million in the
four Enterprise Funds over the next three
years.
The Fiscal Health Response Plan
(FHRP)
To tackle the issue the City developed a fiscal health
response plan. The purpose of the Plan is to establish a
framework to respond to the fiscal challenges ahead. It
was developed with a three-year approach in mind.
30 -40%
20 -30%
30 -40%
General Fund
Revenues
New Ways of Doing Business
Operating Reductions
Concessions
The FHRP pursues a balanced
approach to required reductions
The FHRP guided the preparation of the 2018 -19
Budget Supplement and the 2019 -21 Financial
Plan.
All Departments provided operating reductions
and new ways of doing business as have the
Enterprise Funds.
No reductions to CIP are proposed.
The deficit cannot be made up by rate increases
in the Enterprise funds.
9
All regular employees participate in the same retirement
system –CalPERS
Adopted policies address the concept of shared
responsibility
Phased approach for concessions with the objective to
reduce staffing cost by $1.9 million for all funds by fiscal year
2020-21
City will tailor labor agreements to meet mutual objectives
FHRP Concession Target: $1.9 million
Concessions
To date, all bargaining units but SLOCEA have negotiated three-year
terms.
2018-19 saw a 1% salary increase with a 1% take-away such as PARS
contributions for management. It ultimately looked at a 0% overall
increase.
2019-21 –bargaining units accepted a 2% salary increase with a 1.5%
cost-share for CalPERS benefits. SLOCEA has just entered negotiations
as the contract expired June 30, 2019.
Where are we at?
With the 2019-21 Financial Plan, the City considered:
The FHRP will be fully achieved.
The City will pay down its pension liability over the next 20 year.
The City has dedicated annual payments to CalPERS above the
required annual payment
The City will establish a 115 Pension Trust Fund to assist the pay-down
schedule currently envision. This is crucial as it is expected that
CalPERS will further reduce its assumed discount rate to 6.5%.
The City achieves a balanced budget with slim margins
The path ahead will require tremendous discipline to yield the
desired pay-off.