HomeMy WebLinkAboutApprove Fiscal Year 2018/2019 Year-End Budget Adjustment and Appno%D (o-D-l
City of Huntington Beach
File #: 19-818 MEETING DATE: 8/19/2019
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Dave Kiff, Interim City Manager
PREPARED BY: Chuck Adams, Interim Chief Financial Officer
Subject:
Approve Fiscal Year 2018/19 Year-End Budget Adjustment and Inter-Fund Transfers
Statement of Issue:
The Finance Department is currently undergoing the year-end closing process for Fiscal Year
2018/19. Certain technical adjustments and fund transfers are needed to reconcile the budget with
actual expenditures incurred, and to comply with auditing, actuarial, accounting or legal
requirements. City Council authorization is requested to perform these reconciliations in order to
properly close Fiscal Year (FY) 2018/19. There are sufficient revenues, available cash, and/or fund
balances to support these adjustments.
Financial Impact:
This action:
1. Approves the appropriation and transfer of$1.0 million from the General Fund year-end
balances to the City's long-term pension obligations reducing the City's Net Pension Liability.
The $1.0 million will be reflected in the City's PARS Section 115 Trust with an approximate
balance of$7.0 million at June 30, 2019.
2. Approves the inter-fund transfers of $1.0 million from the General Fund year-end balances to
provide additional funding of$850,000 to the Technology Fund (323); and $150,000 to the
Retiree Supplemental Fund (703) to match total fund payments in FY 2018/19.
3. Approves increasing appropriations of $1.08 million to the Retirement Supplemental Fund
(703) from the General Fund year-end balances to equal total fund payments paid in FY
2018/19.
Recommended Action:
A) Approve the appropriation and transfer of $1.0 million into the Section 115 Trust from the
General Fund year-end balances. (See Attachment 1); and,
B) Approve appropriation and transfer of $850,000 from the General Fund year-end balances to
the Fiscal Year 2018/19 Revised Budget in the Technology Fund (323) and $150,000 in the Retiree
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File #: 19-818 MEETING DATE: 8/19/2019
Supplemental Fund (703). (See Attachment 1); and,
C) Increase appropriations by $1.08 million in the Retiree Supplemental Fund (703). (See
Attachment 1).
Alternative Action(s):
Do not approve the recommended action and direct staff accordingly.
Analysis:
At this time, the Finance Department is awaiting final revenue accruals for FY 2018/19, and for our
external auditor to complete their annual audit. Staff is comfortable with the transfer of $2.0 million
from the General Fund year-end balance, since this amount was received as a one-time adjustment
due to a change in the State's monthly allocation of sales tax.
These year-end budget adjustments to the FY 2018/19 Revised Budget will align appropriations in
certain funds with actual expenditures incurred through June 30, 2019, as actual expenses cannot
exceed the appropriation amounts contained in the Revised Budget. Adjustments are also required
to ensure compliance with GAAP, GASB, and other regulatory, contractual or legal requirements.
Please note any appropriation increases are fully offset by commensurate amounts of revenues,
available cash, or fund balances in each Fund.
Our recommendation to transfer $2.0 million of General Fund year-end balances is as follows:
$1.0 million to the City's Section 115 Trust. The City created a tax-exempt, Internal Revenue Code
Section 115 Trust as authorized by the City Council on December 21, 2015, to help address the City's
unfunded pension liabilities. To further this goal, on May 2, 2016, the City Council authorized the
Public Agency Retirement Services Company (PARS) to administer the Trust's assets and ensure the
tax-exempt status for the Trust. City Council authorization is requested to appropriate, transfer and
deposit $1.0 million in one-time FY 2018/19 year-end savings into the Section 115 Trust to help
mitigate unfunded pension liabilities. Because of this action, the Section 115 Trust balance will be
approximately $7.0 million as of June 30, 2019.
Before this action, the City's Retiree Supplemental Benefit had a net unfunded liability of $3.6 million.
The proposed deposit of $1.0 million will reduce the Retiree Supplemental unfunded pension liability
to $2.6 million, resulting in a funded status of 96.1%.
The actions that the City Council has taken, such as establishing the Section 115 Trust and pre-
paying the CalPERS actuarial liability at the beginning of each fiscal year, among other actions, has
put the City on a better footing to manage its long-term retirement obligations. This action is
consistent with the Financial Policies adopted by the City Council and with the City Council's
Strategic Planning Goal to Strengthen Economic and Financial Sustainability.
$850,000 to the City's Technology Fund (Fund 323). City Council authorization is requested to
appropriate and transfer $850,000 to the Technology Fund to help address the costs associated with
upgrading the City's aged technology systems (i.e., the Enterprise Wide Asset Management System).
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File #: 19-818 MEETING DATE: 8/19/2019
$150,000 to the Retiree Supplemental Fund (Fund 703). City Council authorization is requested to
transfer $150,000 from the available year-end balances of the General Fund to the Retiree
Supplemental Fund to fund the required Retiree Supplemental Pension payments for FY 2018/19.
Lastly, an increase in appropriation of $1,080,000 is requested in the Retiree Supplemental Fund to
equal all trust payments paid in FY 2018/19. This is a result of an increased number of retirements in
FY 2018/19. The Retiree Supplemental Fund has sufficient fund balance to support the requested
appropriation increase.
Environmental Status:
Not applicable.
Strategic Plan Goal:
Strengthen long-term financial and economic sustainability
Attachment(s):
1. Fiscal Year 2018-19 Appropriation Adjustment and Inter-Fund Transfers
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ATTACHMENT 1
FY 2018/19 Appropriation Adjustment
Appropriation
Fund No Fund Name Department Adjustment
703 Retiree Supplemental Finance 1,080,000
Total 1,080,000
FY 2018/19 Inter-Fund Transfers
Department From Name Amount To Fund Name
Non Departmental 100 General Fund 1,000,000 716 Section 115 Trust
Non Departmental 100 General Fund 850,000 323 Technology Fund
Non Departmental 100 General Fund 150,000 703 Retiree Supplemental
Total 2,000,000
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