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HomeMy WebLinkAboutFiscal Year 2020/21 Year End Budget Adjustments, Inter-Fund i@)VED 7-0 City of Huntington Beach File #: 21-803 MEETING DATE: 11/2/2021 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Oliver Chi, City Manager PREPARED BY: Dahle Bulosan, Chief Financial Officer Subiect: Fiscal Year 2020/21 Year End Budget Adjustments, Inter-Fund Transfers, and Assignment Statement of Issue: The Finance Department is currently undergoing the year-end closing process for Fiscal Year 2020/21, which began on July 1, 2020, and ended on June 30, 2021. Certain technical adjustments and fund transfers need to be made 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) 2020/21. City Council authorization is also requested to set aside funds to ensure proper Litigation Reserves. There are sufficient revenues, available cash, and/or fund balances to support these adjustments Financial Impact: 1 . Appropriation Increases (Various Funds): Appropriation increases of $6,150,900 are requested to reconcile the budget with actual expenditures incurred in various funds (Attachment 1). 2. Inter-Fund Transfers (Various Funds): Authorization is requested for inter-fund transfers totaling $7,074,692 from various funds to reconcile budgets and close out fund accounts (Attachment 1). 3. Litigation Reserves: Authorization is requested to set aside $3.650,000 in the General Fund to properly fund legal claims. Recommended Action: A) Approve the year-end inter-fund transfers for the Fiscal Year 2020/21 Revised Budget in the Funds and by the amounts contained in Attachment 1; and, B) Increase appropriations for the FY 2020/21 Revised Budget by $13,225,591 in the Funds and amounts contained in Attachment 1 and associated carryovers to reconcile the budget with actual expenses incurred. C) Approve the assignment of$3,650,000 in the General Fund for Litigation Reserves. City of Huntington Beach Page 1 of 3 Printed on 10/272021 COWe&W LK star" File #: 21-803 MEETING DATE: 11/2/2021 Alternative Action(s): Do not approve the recommendation and direct staff accordingly. Analysis: The FY 2020/21 Budget was adopted by the City Council on June 29, 2020, for the fiscal year beginning July 1, 2020. The Finance Department has compiled recommended budget adjustments to cover additional costs and/or provide appropriations necessary to expend funds that have been received for specific purposes. The requested adjustments will be funded by available revenue or fund balances within each distinct Fund. Inter-Fund Transfers and Budget Adjustments Technical year-end budget adjustments to the FY 2020/21 Revised Budget are requested to align appropriations in certain funds with actual expenditures incurred through June 30, 2021, as actual expenditures 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. 1. General Fund (_1.00): An appropriation increase of $134,847 is requested to fund reimbursement agreements with various developers for the preparation of Mitigated Negative Declarations. 2. Narcotics Forfeiture - Federal & Treas_u_ry_(21.2_& 242): An appropriation increase of $48,912 in Fund 212 and $1,506 in Fund 242 is requested to appropriate FY 2020/21 Federal Asset Forfeiture revenues received from the Department of Justice. 3. Police-Development Impact Fees (227): An appropriation increase of $25,000 is requested to fund the upfitting of the City's Crisis Negotiation Team (CNT) van. 4. Retirement Supplemental (703): An appropriation increase of $99,901 is requested to reimburse benefit payments per actuary report. 5. Section 11.5 Trust_(71.6): An appropriation increase of $48,461 is requested to cover fees related to the City's Section 115 Trust. 6. Energy Efficiency(807): An appropriation increase of $29,660 is requested to appropriate remaining funds for street light retrofit expenditures. 7. Senior Mobility Program (9_6-3): An appropriation increase of $43,214 is requested to appropriate additional Measure M revenues received for this program. 8. General Fund Transfers (100, 204, 314, and 324): An appropriation increase of $46,462 is requested to increase transfers out of the General Fund and into the Fourth of July Fund (204) in order to close out the Fourth of July Fund, Section 617 of the City Charter requires the City to City of Huntington Beach Page 2 of 3 Printed on 10/27/2021 oowe 2162-Leg,S:ar 7- File #: 21-803 MEETING DATE: 11/2/2021 spend 15% of General Fund revenue on infrastructure. In order to comply with the City's Charter requirement and ensure adequate funding for essential capital needs, appropriations of $4,400,000 and $1,319,400 are requested to increase transfers into the Infrastructure (314) and Equipment Replacement (324) Funds, respectively, and to increase expenditure appropriations in both funds and carry remaining appropriations into FY 2021/22. 9. Revolving Loan and CDBG Funds (215 and 239): An appropriation increase of $806,488 is requested to increase transfers out of the Revolving Loan Fund (215) into the Community Development Block Grant (CDBG) Fund (239) to reconcile funding with the Integrated Disbursement and Information Systems (IDIS) for the CDBG Program and show use of program income. 10. Senior Center Dev_eloPment Fund (319 and 314): An appropriation increase of $16,664 is requested to increase transfers from the Senior Center Development Fund (319) into the Infrastructure Fund (314) to use the remaining Senior Center funds on eligible Police Headquarters Modernization project costs that were charged to the Infrastructure Fund. 11. HOME Funds (854 and 240): An appropriation increase of $464,879 is requested to increase transfers from the HOME 06 Fund (854) into the HOME Fund (240) to show use of HOME program income. 12. Debt Service_Mell_o_Roos_Fund (406_and_1_00): An appropriation increase of $20,799 is requested to increase transfers from the Debt Service Mello Roos Fund (406) into the General Fund (100) for a year-end fund balance clean-up entry. The City's Financial Policy requires adequate reserves to fund unforeseen litigation losses exceeding the amount budgeted in a year. Due to recent unfavorable legal judgements against the City related to the Kennedy Commission and SB35, staff is recommending that we also set aside S3.65 million in the General Fund for Litigation Reserves, to supplement the $350,000 that we previously assigned to the two cases. City Council approval is requested to assign $3.65 million in the General Fund for Litigation Reserves to adequately fund the general liability claims. Environmental Status: Not applicable. Strategic Plan Goal: Non Applicable - Administrative Item Attachment(s): 1. Fiscal Year 2020/21 Year-End Budget Adjustment by Fund City of Huntington Beach Page 3 of 3 Printed on 10/27/2021 oowe2,163 Lectstar"" ATTACHMENT 1 Fiscal Year 2020/21 Year-End Budget Adjustment by Fund APPROPRIATION INCREASE: Dept Fund Fund Name Amount Community Development 100 General Fund 134,847 Police 212 Narcotics Forfeiture-Federal 48,912 Police 227 Police Development Impact Fees 25,000 Police 242 Narcotics Forfeiture-Treasury 1,506 Finance 703 Retirement Supplemental 99,901 Finance 716 Section 115 Trust 48,461 Public Works 807 Energy Efficiency 29,660 Community&Library Services 963 Senior Mobility Program 43,214 Non-Departmental 314 Infrastructure 4,400,000 ' Nan-Departmental 324 Equipment Replacement 1,319,400 - Subtotal 6,150,900 APPROPRIATION AND TRANSFER INCREASE: Dept From Name Amount To Fund Name Non-Departmental 100 General Fund 46,462 204 Fourth of July Non-Departmental 100 General Fund 4,400,000 314 Infrastructure Non-Departmental 100 General Fund 1,319,400 324 Equipment Replacement Community Development 215 Revolving Loan Fund 806,488 239 CDBG Non-Departmental 319 Senior Center Development 16,664 314 Infrastructure Community Development 854 HOME 06 464,879 240 HOME Non-Departmental 406 Debt Svc Mello Roos 20,799 100 General Fund Subtotal 7,074,692 TOTAL 13,225,591 ' Unspent appropriations will be carried over into Fy 2021/22 2164 City of Huntington Beach Financial Update & FY 2020/21 Year End Budget Adjustments Huntington Beach City Council November 2, 2021 Overview • City Financial Update • FY 2020/21 Year End Budget Adjustments • What's on the Budget Horizon? SUPPLEMENTAL COMMUNICATION Mee*v Dale:_ 4a 1203 I \ Agenda dtm No.:_ o2q 8t�31 City Financial Update i. MN\NGIOM �A('N Huntington Beach Is In A Terrific Financial Position! • As difficult as it is to believe given where we were a year ago. the City is now in an exceedingly strong fiscal position as we are transitioning into a post-COVIDI9 world • The City Council made difficult decisions during the past year to pave the way for sizable projected surpluses in FY2020/21 & FY 2021/22 as the economy continues to recover from COVID • We are currently projecting a $10.7M surplus in FY 2020/21 primarily due to increased sales tax and hotel tax • Our FY 2021/22 budget is structurally balanced and with improvements in the local economy we are conservatively projecting a $7.2M surplus for the current fiscal year • The General Fund transfer into the Infrastructure Fund for the FY 2021/22 adopted budget-which has historically been set at -55 million in prior years- includes a 130% increase to $11.5 million • The adopted CIP budget which typically runs at around -525M /year is set at 539 3M for FY 2021/22 an increase of greater than 57%. Current & Prior Year Surpluses Projected Rever s $ 236,983 $ 227.980 S 235.150 Expenditures less UAL 193.100 209.037 209,037 CaIPERS UAL 28,302 4.891 4.891 POB Payment - 14.052 14.052 Total Expenditures 221,402 227,980 227.980 Restricted AES Reserves 4.900 Surplus 10,681 - 7,170 202012,promoted numbers are sub/ec1 to change as the annual audit is cunenrly in process FY 2020/21 Year End Budget Adjustments Year End Budget Adjustment Requests Year End budget adjustments are requested in 14 separate funds 1. General Fund(100) 2. Narcotics Forfeiture Federal Fund (212) 3. Police Development Impact Fees Fund(227) 4. Narcotics Forfeiture Treasury Fund(242) 5. Retirement Supplement Fund(703) 6. Section 115 Trust Fund (716) 7. Energy Efficiency Fund (807) 8. Senior Mobility Program Fund(963) 9. Infrastructure Fund(314) 10. Equipment Replacement Fund (324) 11. Revolving Loan Fund(215) 12. Senior Center Development Fund (319) 13. HOME Fund (854) 14. Debt Service Mello Roos Fund(406) General Fund Adjustments • General Fund Adjustments requested include the following: — Community Development Department appropriations -41' of July Fund close out — Infrastructure Fund transfer — Equipment Fund transfer — Litigation Reserves General Fund Community Development Appropriation • The Community Development Department is requesting a net-neutral appropriations adjustment $135K for preparation of a Mitigated Negative Declaration for the Seacliff Senior Living & Memory Care Facility and Gisler Residential Development General Fund Transfer Fourth of July Fund • $46K is requested to close out the Fourth of July Fund General Fund Transfer Infrastructure Fund • $4.4M in appropriations is requested to be transferred to the Infrastructure Fund to comply with Section 617 of the City Charter that requires the City to spend 15% of General Fund revenue on infrastructure General Fund Transfer Equipment Replacement Fund • $1.32M in appropriations is requested to be transferred to the Equipment Fund to ensure adequate funding for essential capital equipment needs General Fund Litigation Reserve Funding Set-Aside $3.65M in Litigation Reserves to properly fund legal claims, given unforeseen litigation losses exceeding budgeted amounts due to unfavorable legal judgements against the City related to the Kennedy Commission and SB35 Current Year General Fund Surplus with Year End Adjustments (in thousands) Revenues 6 236.983 Expenditures less UAL 193.100 50%of the General Fund surplus CalPERS UAL 28.302 or estimated $656K would be POB Payment set-aside in a Restricted Pension Total Expenditures 221,402 Rate Stabilization Reserve per Restricted AES Reserves _ 4,900 the City's UAL Pension Funding Surplus /0,681 Policy Recommended Actions Litigation Reserves (3.650) Infrastructure Transfer (4 400) Equpneni Transfer (1,319) Surplus vain Recommended Actions $ 1,312 F v 2020'2+AT)ecYeC numoeR aT Suoptr to Cnarpe as the annual audr is Currenriy rn process Other Fund Adjustments • Funding is available for all other budgetary requests, most of which are previously planned administrative adjustments • Police: $50K net-neutral adjustment for additional Federal Narcotics Forfeiture Program revenues from DO)&$25K Development Impact Fee to up-fit the Crisis Negotiation Team van Finance: $100K for Retirement Supplemental program adjustment per actuary report and $48K for Section 115 Trust Fund administrative fees Public Works: $30K Energy Efficiency street light retrofit expenditures Community Services: $43K Senior Mobility Program net neutral adjustment for additional Measure M revenues Community Development: $806K Revolving Loan Fund transfer to CDBG Fund to properly provide for code funding& $465K HOME Fund transfer to the proper grant year Other: $17K Senior Center Development Fund transfer of remaining funds for eligible Police Headquarters capital project and$21K for year end clean up of Debt Service Mello Roos Fund What's on the Budget Horizon? • The City is currently in a great and enviable financial position! • In February 2022, we will return to Council with a Mid-Year Update • The following details the Budget Development Calendar for FY2022/23: January—May 2022 FY 2022/23 Internal Budget Development Process May 17, 2022 FY 2022/23 Proposed Budget Study Session with City Council June 7,2022 FY 2022/23 Budget Adoption:City Council Public Hearing June 21, 2022 FY 2022/23 Budget Adoption: Alternate Date July 1, 2022 Fiscal Year 2022/23 Begins Recommended Action Approve year-end budget adjustments, transfer, and assignment to the FY 2020/21 Revised Budget. Questions?