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Home My WebLink AboutCity of Huntington Beach FY 2014/2015 Mid-Year Budget UpdateFY 2014/15 Mid -Year Budget Update May 18, 2015 Summary ❑ FY 2013/14 Audit and Year -End Results ❑ FY 2014/15 Mid -Year Update 1 1 FY 2015/16 Preliminary Baseline Estimates L-i Budget Challenges & Opportunities FY 2013/14 Audit and Year -End Results FY 2013/14 Audit Results Auditing firm of Vavrinek, Trine, Day & Co., LLP audited the City's financial performance and reports VFY 2013/14 Comprehensive Annual Financial Report (CAFR) received an Unmodified (Clean) Audit Opinion u✓The City's CAFR is award winning — has received the Government Finance Officers Association's (GFOA) Excellence in Financial Reporting Award for 28 years n FY 2013/14 Performance (Audited) Government -Wide Highlights: All Funds In Million ASSETS Current Assets $ 203.8 Restricted Assets 66.5 Capital Assets 800.0 J, Total Assets 1,070.3 16-0 LIABILITIES Current Liabilities 19.8 Liabilities Payable from Restricted Assets 4.5�''y Long -Term Obligations 81.7 Total Liabilities 106.0 TOTAL NET POSITION $ 964.3 General Fund Highlights: ❑ Year -End Fund Balance of $61.1 million — reflects a $6.5 million increase due mostly to carry forward encumbrances and increased reserves to pay off/reduce unfunded liabilities �j .�. GASB 68 — Unfunded Pension Liabilities CITY OF HUNTINGTON BEACH STATEMENT OF MET POSITION ,FrTFMRFR 30, 2014 (ln Th-ntlannrla) b, ASSETS Cash and Irnestmetrs Receivables. Net Advmcoc to Success+a-Agoncy Inwritones Prepaids Othw- Assets Other Postemployment Benetts Asset Subtotal Itsuiwkd A -- Cash and Irnestmems Cash and hwstmems vA�� =izcal .Agent Receivables "Jet Total Restncted Assets Capital Assets: Non -Depreciable Depreciable, Net Total Capital Assets Total Assets LIABIUTIES Accounts Payable Accrued Payroll Deposits Subtotal Liabilities Payable from Restricted Assets A--Lr P ay,4.te Accrued Interest Payable Deposits Total Liabilities Payable from Restricted Assets Long -Terra Obligations: Lana -Terre Obligations Due 'Within One Vear L ong-Terrn Obligations Due in Afore than One Year Total Long -Tenn Obligations Total Liabilities NET POSITION Not Invsstnnon t in Capital Assets Restricted for Debt Service Capital Projects Public Works and Communty Services Projects Total Restricted Net Position urlresi acted Total Net Position *The full impact of GASB 68 implementation is still under review. Governowntal Activities I Business -Type Activities Total $ 80.534 $ 54.392 S 134.925 36,345 5,74e 42.091 5,290 - 5,290 - 1.294 1.294 4.9178 - 4.978 2,411 - 2.411 12.761 - 12.761 142,319 61,432 203,751 19,752 Z7,951 47,703 4.12E 4412E 14.WC 14.690 38,567 27,951 66,518 a6a,00e 25,803 384,471 840,061 230,153 1,070,234 6,202 4,41E 10,817 5,D9C 93 0.183 ',269 1,002 2.961 13,581 6,170 19,751 1.940 - @.No 19e 19e 2.411 2.411 4,50 - 4,549 15.792 354 18.146 03,792 1,742 05.534 79,514 2,096 81,660 97,714 8,266 105,930 RIA A7R 1411.7711 710.50-r 4,137 - 4.137 5,772 Z7,9E1 33,723 24.109 - Z4,IM 34,018 27.951 61.960 1219,924 03.100 _ 142-00 742.367 221,867 6 '1 FY 13/14 General Fund Expenditures Expenditures ■Actual Citywide Departmental Expenditures ■Retiree Medical Unfunded Liability (Misc) Pay Down ■Infrastructure Fund Transfer ■ Workers' Compensation Transfer Total Expenditures $192.4 $2.7 $2.0 $1.2 $198.3 FY 13/14 General Fund Revenue General Fund Recurring Revenue $201.7 General Fund One -Time Revenue Total General Fund Revenue Total Expenses Available Year -End Fund Balance: 3.1 $204.8 (198.3) $6.5 s s, FY 2013/14 General Fund Fund Balance Designation* ❑ $1.0 million for the Workers' Compensation Fund for a 10-Year Plan to eliminate the $10.5 million liability ❑ $1.0 million for the Economic Uncertainties Reserve to help maintain City's AAA credit rating $1.0 million into Ca1PERS "1 = 5" Plan for Safety ❑ $2.9 million for Citywide encumbrances ❑ $1.3 million for new PERS Rate Increase Fund ❑ ($698K) used to help pay down Retiree Medical *Recommendations made at the Strategic Planning Retreat on January 23, 2015, and adopted by the City Council on February 17, 2015. 9 General Fund Balance FY 2013/ 14 Audited (In Thousands) Economic Uncertainties $ 24,011 $ 24,011 $ 25,011 $ 25,011 Litigation Reserve 900 900 900 900 Budget Stabilization 3,100 - - - PARS Obligation 4,701 - - - Equipment Replacement 6,913 8,295 8,295 8,295 Redevelopment Dissolution - 1,323 1,323 1,323 Retiree Medical Unfunded Liability 698 698 - - General Plan Maintenance 323 720 720 720 Capital Improvement Reserve (CIR) 5,970 7,136 7,136 7,136 Senior Center Debt Service Reserve - 2,000 2,000 - CalPERS "One Equals Five Plan" - 500 1,500 500 Ca1PERS Rate Increase - - 1,287 1,287 Cityview Replacement - - 695 - Other Fund Balance/Encumbrance* 7,819 8,924 12,187 9,643 Total Fund Balance $ 54,435 $ 54,507 $ 61,054 $ 54,815 *Other Fund Balance includes Pre paid insurance, Encumbrances, Non -Spendable and Other Restricted items. 10 FY 2014/15 Mid -Year Update FY 2014/15 General Fund Budget FY 2014/15 Adopted Budget $209.9 Carry-over Appropriations and Encumbrances 7.1 General Plan Contract 0.8 Mid -Year Budget Adjustments (May 18, 2015) 0.2 FY 2014/15 Revised Budget $218.0 12 FY 2014/15 General Fund Projection —low FY 2014/15 Revised Budget $218.0 Estimated General Fund Expenses 212.0 Mid -Year Budget Adjustments 0.2 Total Expenses 212.2 Estimated General Fund Revenue 209.0 Use of Set -Asides (Senior Center, "1=5" & LeBard, Cityiew, General Plan) 4.8 Total Revenue & Set -Asides 213.8 *Estimated FY 2014/15 General Fund Contingency $ 1.6 *This amount is only an estimate and is subject to change. 13 Proposed Mid -Year Budget Adjustments BUDGET ADJUSTMENT o Fire Department - $145,000 for additional Marine Safety and Lifeguard staffing due to the unexpected warm winter months o Office of Business Development - $50,000 for sales tax sharing agreement for Pinnacle Petroleum o City Treasurer - $6,100 for one-time expenses and $14,600 for temporary salaries BUDGET NEUTRAL o Non -Departmental - $41,400 to reconfigure City Hall office area ® Police Department - $48,000 for 5 part-time Police Community Liaison positions to address civil code violations from Labor Day to Memorial Day *Other Fund Adjustments also requested for BID Downtown, Library Department Impact Fee, and Historic Wintersburg Preservation. 14 FY 2015/16 Preliminary Estimates 0 FY 2015/16 General Fund Estimates (DRAFT Preliminary Baseline) ✓Balanced General Fund Budget for FY 2015/16 ✓No anticipated departmental cuts GfRevenue increases are projected OFixed costs projected to increase 16 FY 2015/16 General Fund Estimates (DRAFT Preliminary Baseline) CI✓Fixed Costs: ❑Negotiated contract costs factored in ❑PERS rate increases of $2.4 million ❑$SOOK for additional equipment replacement ❑$396K increase in Citywide utility costs ❑ $ l 00K increase for Animal Control Services ❑Fund 2 additional Police Officers ❑Labor cost adjustment of 2% 17 FY 2015/16 Preliminary General Fund Baseline Overview FY 2014/15 Adopted Budget PLUS: ➢ CaIPERS Rate Increases ➢Merits, Skill Pays, Longevity, etc. Increases ➢Animal Control Services Contract ➢Citywide Utilities Cost Increase ➢2 Police Officer positions ➢Equipment Replacement ➢Labor Cost Adjustment FY 2015/16 Preliminary Estimate (Expense) Structural Increase to Baseline from FY 2014/15 $ 206.1 2.4 0.5 0.1 0.4 0.5 0.5 3.0 $ 213.5 +$7.4 18 FY 2015/16 Revenue (Preliminary Estimates) General Fund Revenue Estimate - $216.0 million, increase of $7.0 million, or 3.3 % ❑ Property Tax, which includes secured and other property taxes, is estimated at $47.4 million, an increase of 5.7% ❑ Sales Tax is estimated at $30.8 million, an increase of 14.1 % (mostly due to large one-time accrual of $2.0 million) ❑ Transient Occupancy Tax is estimated at $10.3 million, with an increase of 8.4% projected ❑ Parking revenue remains robust at $11.3 million, with an _ e- increase of 3.9% � Le ❑ Gas Tax transfer is eliminated resulting in $ 900K loss *Year over year increases as compared to FY 2014/15 Revised Projections. 19 General Fund Supplemental Requests ❑ A total of $10.5 million in Personnel and Operating funding requests received 13 Highlights ❑ Police $2.8 Million; 8 FTEs (5 Sworn, 3 Miscellaneous) ❑ Fire $1.9 Million; 5 FTEs (4 Sworn, 1 Miscellaneous) ❑ All Others $5.8 Million; 14.2 FTEs (Miscellaneous) ❑ Equipment Replacement Requests $10.5 million ❑ Capital Improvement Requests $26.0 million 20 Budget Challenges & Opportunities Governor's May Revise FY 2015/16 State Budget ❑ Total State Budget All Funds totals $162.5 billion. ❑ The General Fund portion is $115.03 billion. ❑ General Fund revenues $6.7 billion higher than expected ❑ Proposition 2 Rainy Day Fund will receive additional $633 million deposit, bringing it to $3.5 billion ❑ Extra revenue will also help the State expedite its debt payments by $633 million ❑ $168 million more in mandate reimbursements to cities (1 x) ❑ Numerous redevelopment dissolution amendments are included which will negatively impact cities '. Highlights -Personnel Costs x(in thousands) POA 201.00 9/30/2015 2,582 HBFA 121.00 9/30/2015 1,057 MSMA 12.00 3/31 /2016 151 PMA 12.00 3/31 /2016 569 FMA 6.00 9/30/2015 124 NA 2.00 N/A 63 Safety 354.00 4,672 MEA 401.75 9/30/2015 1,746 MEO 111.50 11 / 1 /2015 974 POA 38.00 9/30/15 126 NA 12.00 N/A 133 Miscellaneous 563.25 2,979 TOTAL 917.25 $7,651 *Excludes 30 defunded positions and 30 Ambulance Operators. ^Contract costs are trending higher than budgeted amounts due to conservative projections. "All Funds 23 -8 Year CalPERS owl. Employer Contribution Increases 1� M--- 11— 1 11 1, $60.0 $50.0 $40.0 $30.0 $20.0 $10.0 /L_ AX'I1_--- _\ Qoa, $20.2 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 $45.8 $48.1 $49.3 *Projections do not include new negotiated contract impacts. Mise ■ Safety 0 24 Accomplishments PARS Pre -Payment $ 5 9, 606 7.75% Discount Rate Change to 7.50% — No Phase In Retiree Supplemental "16 to 10" Plan Retiree Medical "25 to 10" Plan Early Payoff of Miscellaneous Retiree Medical PERS "1 = 5" Plan (Safety) Subtotal Total * Actual performance will be based on market conditions and actuarial gains and losses during the amortization period. 190279000 794009000 9,200,000 TBD $1796869606 53,680,116 $7193669722 25 Proposed Date FY 2015/16 Proposed Item Budget Calendar March 18, 2015 Budget Kick -Off April 15, 2015 FY 2015/16 Budget Forms and Narratives Due May 18, 2015 FY 2014/15 Mid -Year Budget Study Session April 28 to May 26, 2015 FY 2015/16 Department Budget Meetings with City Manager July 6, 2015 FY 2015/16 Proposed Budget Study Session August 17, 2015 FY 2015/16 Budget Adoption: City Council Public Hearing September 8, 2015 FY 2015/16 Budget Adoption: (Alternate) October 1, 2015 Fiscal Year 2015/16 Begins 26 Awards and Accolades Government Finance Officers' Association of US & Canada ✓Distinguished Budget Presentation Award ✓Certificate of Achievement for Excellence in Financial Reporting ✓Award for Outstanding Achievement — Popular Annual Financial Reporting California Society of Municipal Finance Officers ✓Innovation Award — Plans to Reduce Unfunded Liabilities Association of California Cities — Orange County ✓Golden Hub of Innovation Award Fitch Rating Agency ✓AAA General Obligation credit rating September 2014 27