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Home My WebLink AboutFY 2013-14 Mid-Year Budget Update5/19/2014 iCITY OF HUNTINGTON BEACH FY 2013/14 Mid -Year Budget Update 0 Summary ❑ FY 2012/ 13 Audit and Year -End Results ❑ FY 2013/14 Mid -Year Update ❑ FY 2014/ 15 Prel ❑ Budget Challeng E TAL TION �ft ate: 5/ `� �e Agenda Item No. - 1 5/19/2014 FY 2012/13 Audit and Year -End Results FY 2012/13 Audit Results N'Auditing firm of Vavrinek, Trine, Day & Co., LLP audited the City's financial performance and reports idFY 2012/13 Comprehensive Annual Financial Report (CAFR) received an Unmodified (Clean) Audit Opinion r!(The City's CAFR is award winning — has received the Government Finance Officers Association's (GFOA) Excellence in Financial Reporting Award for 27 years 2 5/19/2014 'e'' FY 2012/ 13 Performance (Audited) Government -Wide Highlights: All Funds In Million ASSETS Current Assets Restricted Assets Capital Assets $ 181.8 88.4 807.4 Total Assets 1,077.6 LIABILITIES Current Liabilities 18.2 Liabilities Payable from Restricted Assets 9.0 Long -Term Obligations 88.2 Total Liabilities 115.4 TOTAL NET POSITION $ 962.2 �R Vpiihi� IIryry ❑ Reflects an increase of $26.9 million in net position due primarily to water and sewer infrastructure improvements and debt payoffs (bonds and PARS). General Fund Highlights: ❑ Year -End Fund Balance of $54.5 million — No Change GASB 68 — Unfunded Pension Liabilities CNY OF HUNTWGTON BEACH f• STATEMENT OF NET POSITION "..,....' SEPTENEEN 3%ZM9 (In TlWtoand.) 68 N�Et� fhereeb:, ux �teswcassaaaancY iaernnr Maoaba oXmPm4 Voabmyvtmev 9anMb Psaet sugna cxn am M.nn�n wn ce_ei nwm CagxYga, alX Tm+ogrnarn a� smaaq A e M a�M Mtl.X pepmia � Poyaeaa imm MgIm6 ow,e Lmgimm ady'twa LMgTenn ouaNUX Os VewnOneYm �agTxm cm'y. owbWingan Man ory rw eu� ee�q-Tn�x _ T<HI UaWMtlae XET Pn&TUX Net M+wonutM l2PXq NaM FXWCW b. LYq Sugte Pu[ne NWmmmA tl a�ln n dtlm � q�X ua.acvtl� Tmt xet Potlmn antation is still under review. nrn+ kn.¢,Asw � vX• a s 8,48e a 5, Je 1,:eS 4ew t3 - sea 1.16e tae.tea ,r;aa rzeas m,aea a.at+ ene» 3sasoz n..ae ta,�a saes+ w mT at.m aaoe mote t»r Net Position stc ,m a,ea - a a.s� may decline by t tote 2ata as much as $360 million! �0.a35 e98 't aa4 e ab ttt3 aal» 1Wm x»a eti.fti 14aB8a %1i53 Y•, Be ume na,a� i ]CAB T�li6 5 6] 3 5/19/2014 Workers' Compensation Liabilities (In Thousands) Balance September 30, 2011 Additions Reductions Net Increase (Decrease) Balance September 30, 2012 Additions Reductions Net Increase (Decrease) Balance September 30, 2013 Workers' Compensation Total Liabilities $ 7,015 9,262 (5,393) 3,869 10,884 10,367 (5,068) 5,299 $16,183 7 General Fund Balance FY 2012/13 Audited (In Thousands) Z�- Audited Economic Uncertainties $ 23,185 Audited m - $ Litigation Reserve 900 900 900 Budget Stabilization* - 3,100 - PARS Obligation 4,649 4,701 - Equipment Replacement 6,913 6,913 8295 Redevelopment Dissolution - - 1,323 Retiree Medical Unfunded 698 698 General Plan Maintenance - 323 720 Capital Projects Reserve 4,270 5,970 ,,136 Senior Center Debt Service Reserve 2,000- CalPERS One Equals Five Plan - 500 Other Fund Balance** 14,639 7,819 8,924 Total Fund Balance $ 54,556 $ 54,435 $ 54,507'' The BudgetStabi/rzatlon set -aside was used to help fund the General Fund portion ofthe $11.0 million Non-HausingDDR payment to the State. '*Includes Pm -paid/ rance,Enc brances,Non-SpendableandotherRepsomctedItems. 8 4 5/19/2014 FY 2013/14 General Fund Budget (As of March 31, 2014) FY 2013/14 Adopted Budget $193.5 Carry-over Appropriations and Encumbrances 4.3 Mid -Year Budget Adjustments (March 3, 2014) 0.9 Approved MOU Contract Adjustments (March 17, 2014)* 0.7 Other City Council Approved Adjustments** 0.8 FY 2013/14 Revised Budget $200.2 "Does not include POA coup actand other units. +'General Plan Update contract and plan check services. J 5 5/19/2014 FY 2013/14 General Fund Projection (As of March 31, 2014) In Description - Million FY 2013/14 Revised Budget $200.2 Estimated General Fund Expenses 197.7 Third Quarter Budget Adjustments 1.7 Subtotal Expenses 199.4 Estimated General Fund Revenue 200.0 *Estimated FY 2013/14 General Fund Contingency $ 0.6 'This amount is only an estimate and is subject to change in the event of extenuating circumstances. 11 r Proposed 3rd Quarter General Fund Budget Adjustments o Police Department - $784,615 for one-time overtime costs due to the expiration of the comp time provision in the POA MOU o Police Department - $415,385 for overtime costs related to the expedited filling of Police Officer vacancies and additional overtime in Downtown o Fire Department - $350,000 to correct budget for sunset of employee pickups (6.75% vs 2.25% on 9/30/13) o Fire Department - $55,000 for additional Marine Safety staffing due to the unexpected warm winter months n Fire Department - $110,000 for Marine Safety to fund staffing north of Goldenwest o Cost neutral Table of Organization changes 'OtherF dAdjusine tsaGnreguestedjor Downtown BID. Donations Fund andDebt Service. 12 11 5/19/2014 FY 2014/15 Preliminary Estimates FY 2014/15 General Fund Estimates 9-" (Preliminary Baseline) Balanced General Fund Budget for FY 2014/15 EINo anticipated departmental cuts 6Revenue increases are projected EfFixed costs projected to increase ✓Negotiated contract costs factored in C'+'1 Contract negotiations still underway II 5/19/2014 Jailififi FY 2014/15 Revenue (Preliminary Estimates) ❑ Total General Fund estimate is $204.3 million ❑ Property Tax, which includes secured and other property taxes, is estimated at $54.3 million, an increase of 4.1 % ❑ Sales Tax is estimated at $26.6 million, an increase of 4.0% ❑ Transient Occupancy Tax is estimated at $8.7 million, an increase of 5.0% ❑ License and Permits revenue remains robust at $8.9 million with an increase of 17.2% projected -01 "T. - VINKOW 15 FY 2014/15 Preliminary General Fund Baseline Overview Description ea, FY 2013/14 Expense Baseline $ 1)3.5 PLUS: ➢Percentage Wage for Percentage Pickup MOU Increases 3.2 ➢PERS, Merits, G/L Payouts, Longevity, Special and Other Pays 3.5 ➢Fixed Costs Increases (Utilities, Animal Control, Elections, ACA) 1..1 ➢Emerald Cove Bond Payments 0.4 ➢Tax Sharing Agreements (Sales Tax and TOT) 0.5 ➢LeBard Park Debt Service 0.4 ➢Equipment Replacement and Infrastructure Increases 1.5 FY 2014/15 Preliminary Estimate (Expense) $ 204.1 Structural Increase to Baseline from FY 2013/14 +$10.6 16 L•: 5/19/2014 Budget Challenges & Opportunities 5/19/2014 0. Unfunded Liabilities ❑ Total Ca1PERS costs will increase from $26.1 million in FY 13/14 to $49.3 million by FY 21/22 (eight years), an 89% increase ❑ Safety rate increases from 38.8% to 55.2% in eight years ❑ Miscellaneous rate increases from 21.4% to 34.7% in eight years ❑ FY 13/14 Ca1PERS costs total $26.1 million; by FY 21/22 Ca1PERS costs will be almost double this amount at $49.3 million ❑ These estimates DO NOT include the cost of recently negotiated or yet to be negotiated contracts ❑ Employee compensation currently totals almost three quarters of the General Fund Budget (72%) $60.0 $50.0 540.0 530.0 $20.0 $10.0 8 - Year CalPERS = Employer Contribution Increases (In lMions> 89% FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22 $26.1 $27.1 $29.5 $33.9 $37.7 $41.7 $45.9 $48.1 $49.3 *Projections not include new negotiated contract impacts. * Misc Safety 10 19 20 10 5/19/2014 Highlights of Governor's May Revise o Governor Brown: "Follow a policy of restraint going forward" n Priority of Paying Down Debts (i.e. Current Commitments): ■ $1.6 billion payment to help pay down the economic recovery bonds ■ $1.6 billion into the State's Rainy Day Fund ■ 30-year plan to pay down California's nearly $74 billion in unfunded liabilities for the California State Teacher's Retirement System ■ $100 million payment to local governments as reimbursement for deferred state mandates owed since 2004 ■ Propose a "Rainy Day Fund" constitutional amendment on the November 2014 statewide ballot 0 Budget Strategies o Maintain fiscal prudence in developing FY 2014/15 Budget o Ensure fixed costs are fully funded before entering into new commitments o Prepare for rating agency response to GASB 68 and impact to Net Position o Assign projected ongoing revenue increases to address projected Ca1PERS rate increases first and foremost o Create a PERS Rate Stabilization Fund to help mitigate impact of future CalPERS rate volatility o Create a plan for reducing Workers' Compensation Unfunded Liabilities 21 22 11 5/19/2014 16, Awards and Accolades CITY OF HUNTINGTON BEACH FISCAL YEAR 2013/2014 Disting Bu gisbed IM Award CITY OF HUNTINGTON BEACH I CITY OF HUNTINGTON BEACH FOR THE YEAR ENDED FOR'. THE YEAR ENDED' SEPTEMBER 30, 2012 SEPTEMBER 30, 2012errificate �GHIEY EN EifT 23 Next Steps ❑ May 19, 2014 Third Quarter Budget Adjustments ❑ July 21, 2014 — FY 2014/15 Proposed Budget to the City Council (Tentative) ❑ August 4, 2014 — FY 2014/15 Proposed CIP Budget to the City Council (Tentative) ❑ August 18, 2014 — Long Term Financial Plan to the City Council (Tentative) ❑ By September 30, 2014 — FY 2014/15 Budget Adoption ❑ October 1, 2014 — New Fiscal Year Begins 24 12 5/19/2014 CITY OF HUNTINGTON BEACH Questions? 13