HomeMy WebLinkAboutITEM 12 - 24-24 MID-YEAR BUDGET UPDATEFiscal Year
2024-2025
Mid -Year
Budget Update
February 18, 2025
Agenda
Annual Budget Process and Budget Related Terminology
June 2024: Budget Adoption Recap
3 February 2025: General Fund Mid Year Updates and Proposed Amendments
Pension Costs: Unfunded Accrued Liability (UAL)
Land Sale Proceeds Fund and Backbone Fee Fund
Water Fund
Other Major Supplemental Appropriations
4. Recommendations
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I* iM.MC:
Budget Calendar January February March April May June July August September October November December
Annual Budget Cycle
Budget Kickoff Meeting
Department Budget/CIP Preparation
Revenue & Expense Projections
Personnel Budget Development
Finance Meeting w/Depts & City Manager
Preliminary Budget Preparation
Public Input &Engagement
City Council Consideration
City Council Adoption
On -going Budget Review
Quarterly Review
Mid -Year Review
Mid -Year Review Presented to Council
Remembering what connects us.
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Budget -Related Terminology
Adopted Budget — budget approved by the City Council annually in June.
Amended Budget — adopted budget + any subsequent budget adjustments approved by the City Council. It supersedes the
adopted budget. Some budget lines have no approved adjustments.
Projected Balance — estimate of the annual revenue/expenditures. It can differ from the amended budget.
Used during mid -year budget review in February (i.e. staff estimates revenues and expenditures for FY 24-25 and reports
back to the Council). The Council may choose to approve certain projected balances and make them the amended budget.
Used during adoption of next year's budget in June. Staff estimates the starting fund balance (i.e. projected fund balance at
7/1/2024 + adopted FY 24-25 revenue/expenditure = projected fund balance at 6/30/2025). The projection was necessary as
the FY 23-24 actual balances were not available until we finished the financial audit in November 2024.
Actual Balance — final audited numbers. We used actual balances from 23-24 to true up the beginning fund balance at 7/1/2024
during mid -year review.
June 2024m. 2024-2025 Adopted Budget
• Budget workshop GENERAL FUND
5/21/2024 OPTION A OPTION B
Amounts in Thousands Proposed Proposed
24-25 24-25
• Budget adopted Beginning Fund Balance $ 25,121 $ 25,121
6/ 18/2 0 2 4 Operating Revenue 97,558 97,558
Operating/Capital Expenditures (98,429) (98,429
• Council approved Budget Option:
Land Sale Proceeds to GF: Emerg. Generator 3,000
Option B Net Operating Changes 2,130 (870
General Fund Surplus/(Deficit) I 2,130 I I (870
Land Sale Proceeds Subtotal
GF Reserves as % of GF operating expenditures 28% 25%
LAND SALE
PROCEEDS
OPTION A
OPTION B
Proposed
Proposed
24-25
24-25
$ 84,366
$ 84,366
1,000
1,000
(74.768)
(74,768)
(3,000)
(76,768)
(73.768)
(76,768)
(73,768)
Pension Costsm. Unfunded LiabiLities
Total Unfunded Accrued Liability Different Types Payment T es and Funding Sources:
Y J
DUAL is 578M,
Annual required UAL $6.3M FY 24/25
- Two kinds of pension cost:
1. Normal cost —for current Employees.
2. Unfunded Accrued Liability (UAL) — how much
we have now vs. how much we need to have
to pay retirees.
UAL amortized over 20 years at 6.8%
discount rate.
City pays a portion of UAL (principal &
interest) every year
from General Fund
City's 5-year funding plan (2022-2026):
Annual $2M to a PARS pension trust
from Land Sale Proceeds Fund
Annual $1.8M discretionary UAL payment
from Land Sale Proceeds Fund
Projected to pay off UAL ,by 2036
Pension Costs: History and Projections
10-Year Pension Payment Actua12015 to 2024 and 13-Year Estimates 2025 to 2037
$4
$2
$0
14115 15116 16117 17118 18119 19120 20121 21122 22123 23124 24125 25126 Est 26127 Est 27128 Est 28129 Est 29130 Est 30131 Est 31132 Est 32133 Est 33134 Est 34135 Est 35136 Est 36137 Est
Budget
■ NarmalCastGF ■ Required UAL GF ■ Addl UAL Land Sale ■ PARSTrust Land Sale
Changes Since June Budget Adoption?.
GF closed 23-24 in a better position ($5.4 million better)
Projected fund balance $251M vs. Actual fund balance $30.5M
Approved MOUs: TMEA (9/2024) and unrepresented groups (10/2024)
Estimated annual costs: TMEA $756,000; unrepresented groups $322,000
Did not request additional appropriations at MOU approval; will request
appropriations at mid -year review.
Why did 2023-2024 Close $5.4M Better?.
Projected
Acutal
FY 23-24
FY 23-24
at Mav 24
at Dec 24 Variance
Operating Revenues:
Property Tax
$ 25,793
$ 26,205
$ 411
Sales Tax
35,000
35,403
403
Franchise Fees
1,940
1,864
(75)
Transient Occupancy Tax
2,300
2,392
92
Other Tax Revenue
1,461
1,479
18
Departmental Revenue
3,899
5,068
1,168
Use of Money & Property
4,240
5,409
1,169
Fines & Forfeitures
850
961
111
Transfers and Reimbursements
9,124
9,502
378
One -Time CIP Related
-
-
0
One -Time ARPA Funding
4,297
4,297
0
Other Revenue
2,490
2,416
74
Total Operatinq Revenues
91,394
94,998
3,603
Operating Expenditures
City Council
City Clerk
City Attorney
City Manager
Economic Development
Finance
Human Resources
Community Development
Public Works
Police Services
Fire Services
Parks and Recreation
Non -Departmental
Total Operating Expenditure
Projected
Acutal
FY 23-24
FY 23-24
at Mav 24
at Dec 24
65
62
820
824
1,069
792
836
800
1,983
2,021
1,888
1,891
1,262
1,301
5,313
5,103
16,160
16,075
35,415
34,725
10,624
10,703
5,555
5,650
16,449
15,695
97,440
95,642
Variance
3
(4)
277
37
(38)
(3)
(39)
210
85
690
(79)
(95)
754
1,798
General Fund
Revenues
$99M*
Operating Revenue:
Adopted
million
Projected
million
budget $97.5
revenue $99
Increase of $1.57 million
24-25 GENERAL FUND PROJECTED REVENUES*
One -Time ARPA Fund Other Revenue
One -Time CIP Related 2%
4%
Transfers and Reim
13%
Fines/Forfeitures
1%
Investments
/Rents
4%
Dept Revenue
5% -
Other Tax
Revenue
1%
TOT
Franchise Fees Sales Tax
2% 36%
* Excludes Navy North Hangar revenue
Property Tax
27%
General Fund
Expenditures
$loom*
Oaeratina Expenditures:
• Adopted budget $98.4M
• Amended budget $98.7M
• Projected expenditures
$loom
24-25 GENERAL FUND PROJECTED EXPENDITURES*
Tram
29
Parks/Recreation
6%
Fire Services
11%
Non -Departmental
qo/
Police Services_
• Increase of $1.51VI 39%
*Excludes Navy North Hangar revenue
Govn Support**
9%
Community
Development
6%
Public Works
18%
** Governmental Support includes City Council, City Manager and Real Property, City Clerk, City Attorney, Finance, and HR
General Fund - Amended Budget
Beginning Fund Balance
Add: Operating Revenue
Less: Operating Expenditures
Operating Net Change
Add: One -Time ARPA Fund
Add: One -Time Project Fund Returned to GF
Total Net Change
Actual
FY 23-24
$ 31,166
Adopted
FY 24-25
$ 25,121
Amended
FY 24-25
$ 30,522
Projected
FY 24-25
$ 30,522
90,701
90,573
90,573
92,143
95,642
(98,429)
(98,676)
100,185
(4,941)
(7,856)
(8,104)
(8,043)
4,297
3,216
3,216
3,216
-
3,770
3,770
3,770
(644)
GF Reserves as % of GF operating expenditures 32%
* Fund Balance excludes Navy North Hangar Fire incident responses
(870) (1,118) (1,057)
25% 30% 29%
Projection Scenarios (+/- 1% and 2%)
General Fund Net Change Scenarios:
2% revenue decrease less 2% expenditure
Pessimistic increase [(A)1 less (B)3] (4,904)
Projected [(A)2 less (B)2]
(1,057)
2% revenue increase less 2% expenditure
Optimistic decrease [(A)3 less (B)1] 2,789
Legacy Land Sale Proceeds Fund
Received $17M developer
profit participation revenue
Increase in professional
services and staffing to
speed up Legacy
development
CIP Increase mostly for
two projects:
Linear Park $1M
N-D South phase 2 $1.8M
Net Position 7/1/2024
Less: Capital Projects
Less: Staffing and Professional Services
Less: Contributions to Pension and OPEB
Less: Transfers
Net Operating Change
Add: Development Proceeds
Add: Interest Earnings
Change in Net Position
0
$ 84,366 $
Proiected
90,547 $
(61,356)
(64,665)
(2,231)
(3,360)
(4,320)
(4,320)
(6,861)
(7,450)
(74,768)
(79,796)
1,000
(73,768)
17,135
2,500
(60,161)
Variance
6,181
(3,309)
(1,129)
(590)
(5,028)
17,135
1,500
13,608
Legacy Backbone Fee Fund
Received $5M developer
impact fee.
Minor CIP Increase for
Linear Park $209,000
Warner Ped. Bridge
$767000
Adopted
Projected
Variance
Net Position 7/1/2024
$ 10,170
$ 11,429
$ 1,259
Less: Capital Projects
(10,181)
(10,467)
(286)
Less: Legacy Related Expenditures
(107)
(134)
(27)
Net Operating Change
(10,288)
(10,601)
(313)
Add: Development Impact Fees
-
5,046
5,046
Add: Interest Earnings
200
300
100
Change in Net Position
(10,088)
(5,256)
4,833
Water Fund Review
$30
Water u n $28
$26 Debt
Review $24
$22 Capital
$20
Net position projected at $24.6M $18
Operating surplus $4.4M before capital and $16
debt expenses 14 Operating
Meeting minimum reserve requirement of $12 Operating$10
$11 million $g
Meeting net revenue coverage requirement $6
of 120% $4
$2
$0
Revenue Expenses
Other Fund Major Supplemental Revenue
and Appropriations
Workers Comp Fund — Request $250,000 appropriations for claims, offset by a reduction of $86,000 in administration fee and
insurance premium budget.
Liability Fund — Reduce property insurance premium appropriation by $420,000 as actuals came in lower than expected.
Backbone Fee Fund — Increase revenue budget by $5M for impact fees received from the Advantech development.
Land Sale Proceeds Fund — Increase revenue budget by $17M for development profit participation revenue received; also
increase transfer out appropriation by $589,000 for additional real property development activities incurred at the General
Fund and reimbursed by the Land Sale Proceeds Fund.
Water Fund — Increase operating appropriation by $330,000, including $255,000 for higher electricity costs due to current dry
conditions and using wells more than expected. The remaining $75,000 is to increase connection fee budget with EOCWD.
Voluntary Workforce Housing Fund — Increase appropriations by carrying over 23/24 Council -approved budget of $2.1M for
Families Forward's affordable housing grant and related administrative costs. The grant will be disbursed when Families
Forward entitles the project and receives the building permits.
Capital Project Major Supplemental
Appropriations
Remaining 23/24 budget from on -going CIPs will be carryover to 24/25 as adjustments. Total carryover
adjustment is $5.1M.
Mid -Year Appropriation New Requests:
Legacy Linear Park - $1M from Land Sale Proceeds Fund.
Tustin Sports Park Turf Renovation — Reduce an unfunded request $2.5M from adopted budget and request
$650,000 from Park Development Fund.
Beneta Well — Switch $425,000 budget from Water Capital Fund to 2024 Water Bond Fund.
➢ 23-24 Annual Roadway Maintenance — Request a total of $728,000 from Measure M2 and Gas Tax Fund.
N-D South Phase 2 — Request $200,000 from Land Sale Proceeds Fund.
Columbus Tustin Gym HVAC — Request $120,000 from CIP Fund. In 25-26, staff will come back to request $2M
for construction to complete the project.
Recommendations for Mid -Year Budget:
Approve/Adopt recommendations included in the Agenda Report:
General Fund revenue and budget appropriations.
Revenue budget increases for Backbone Fee Fund and Land Sale Proceeds Fund.
Supplemental appropriations for other funds and CIPs.
Water Funds supplemental appropriations for operation and CIPs.
Resolution 25-11 to update the Citywide salary schedule and approve staffing changes to
the position control.
Supplemental revenue and appropriations for the Navy North Hangar Fire incident
responses.
/OOOOO—=MWO=
N UJII
Remembering what connects us.
Thank You'.
III LOP