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Home My WebLink AboutITEM 11Fiscal Year 2025-2026mm Mid -Year Budget February 17, 2026 Overview Good News Fiscal Sustainability Strategy: 10-Year Plan (FY 25/26 — FY 36/37) Pension Unfunded Actuarial Liability (UAL) Paydown Strategies General Fund and Land Sale Proceeds Budget Options Capital Improvement Program (CIP) Review Good News 1 FY 25/26 operating budget is balanced = Over 100 acres of undeveloped City owned property have been authorized for competitive disposition —expected to generate significant one time and on- going revenues 3 Sale of City owned property in Legacy generated $42M and will add more than 1300 new apartments 4 UAL payoff projected for in 2032 5 Major CIP projects are underway: Old Town and Mainstreet Civic Center Generator Fiscal SustainabiLity Strategy 10-year Plan (FY 25126 — FY 36137) OBJECTIVES: Increase On -Going General Fund Revenues: Advance development of City -owned property to generate additional recurring sales tax and property tax revenues Decrease On -Going General Fund expenses: Achievement of UAL paydown policy goal and reduce expenses Utilize Projected One -Time Revenues to Fund: a) General Fund Reserves (minimum 15% fund balance level) b) Paydown of Unfunded Pension Liabilities c) Operations and Programs (if necessary to maintain existing service levels) Dnera 0 Lel u $25.0 $20.0 $15.0 $10.0 $5.0 $0.0 ($5.0) rl Operating Surplus/(Deficit) Projection 2026-2039 ($10.0) 25-26 26-27 27-28 28-29 29-30 30-31 31-32 32-33 33-34 34-35 35-36 !June 25 Projection ($3.5) ($6.5) ($1.9) $1.2 $2.0 $4.0 $18.4 $6.0 $12.5 $1.7 $3.6 -Jan 26 Projection $0.7 ($5.1) ($6.5) $13.0 $1.2 $0.8 $14.9 $9.9 $10.9 $4.2 $6.6 -June 25 Projection -Jan 26 Projection 36-37 37-38 38-39 $18.8 $9.0 $9.7 $22.7 $13.7 $15.3 Projected New Revenue Proceeds may be a potential replenishment to the General Fund's reserves New developments generate additional recurring revenues for the General Fund to support on- going City programs City Owned Land Authorized to be Sold Confluent Senior Care 6 acres Estimated Year Revenue Would be Received FY 26-27 Mariners Church 3.3 acres FY26-27 150 E. 1st Street 0.4 acres FY26-27 Pacific Center East 11 acres FY 26-27 N-D South 23 acres FY 28-29 Flight Phase II 21 acres FY 28-29 Cornerstone II 52 acres FY 28-29 UAL Study and CounciLmember Ad -Hoc True Comp performed an analysis of UAL funding options Ad -Hoc Committee appointed by the Mayor: Mayor Pro Tern Schnell Council Member Nielsen In addition to a funding plan, Ad -Hoc also recommends: An annual review of UAL as part of the budgeting process 1. Adjusting as needed to reflect market conditions and City priorities Contribution Projection - Baseline "Recommended" $18 $16 $14 $12 0 $10 $S $6 $4 $2 $0 14115 15116 11-Year Pension Payment Actual 2015 to 2025 and 10-Year Estimates 2026 to 2035 16117 17118 18119 19120 20121 21122 22(23 23124 24125 25126 26127 27128 Est 28129 Est 29130 Est 30131 Est 31132 Est 32133 Est 33134 Est 34135 Est Budget Budget ■ Normal Cost ■ Required UAL ■ PrepaymentioPERS ■ Prepayment to Trust Normal Cost Contributions UAL Amortization Contributions Additional Contributions to CalPERS Contributions to 115 Trust Total Contributions CaIPERS CONTRIBUTION SAVINGS Projected 115 Trust Balance 6/30/35 TOTAL SAVINGS Market Risk Ur1-Lr-11JUUUH %woUMPdIFISC gars 2025126 through 203413i., 1. Slow and Steady to 2. Slow & Steady 4. $10 Million in FY 5. Baseline 4 years Baseline CaIPERS with 115 Trust 3. All at Once in FY26 26&28 split with 115 and All at Once in Trust FY30 $51,951,913 $51,951,913 $51,951,913 $51,951,913 $51,951,913 $51,951,913 $57,909,255 $40,275,564 $41,988,124 $10,639,145 $41,191,719 $43,009,696 $2,000,000 $18,000,000 $10,000,000 $42,600,000 $10,000,000 $14,200,000 $2,000,000 $2,000,000 $10,000,000 $0 $10,000,000 $2,000,000 $113,861,168 $112,227,476 $113,940,037 $105,191,058 $113,143,632 $111,161,608 $1,633,692 ($78,868) $8,670,110 $717,536 $2,699,560 $1,400,000 $3,300,000 $6,000,000 $100,000 $7,100,000 $0 $3,533,692 $4,521,132 $7,370,110 $6,417,536 $1,299,560 Low Medium Medium High Medium Low Recommendations For FY 26/27, staff and the Ad -Hoc support the "baseline" funding plan with no additional prepayments Make required and normal cost contributions to eliminate UAL by FY 31/32 Review during annual and mid year budget process to adjust as needed Keeps the most cash on hand for City discretionary use Offers the most resiliency if market fluctuations occur CALPERS' investment return impacts UAL total May 2025 projection was to eliminate UAL payments by FY 35/36 (prior to Latest CALPERS' valuation report and investment return) 14 MANNNSIM I-Ypar Pro-lectic Recommended Budget Options GENERAL FUND LAND SALE PROCEEDS ADOPTED OPTION 1 OPTION 2 ADOPTED OPTION 1 OPTION 2 Beginning Fund Balance $ 29.4 • i • i Operating Revenue 95.3 99.1 99.1 2.0 3.6 3.8 Operating Expenditures 98.9 98.4 98.4 7.5 8.9 8.9 (3.5) 0.6 0.6 (5.5) (5.3) Net Operating Change (5.1) Non -Recurring Items: ARPA Funding 0.7 0.7 0.7 Land Sale Proceeds 42.1 42.1 42.1 Capital Improvement Projects (CIP) (22.3) (23.8) (23.8) Required Pension UAL (7.2) (6.8) (6.8) Optional Pension and OPEB Prepayment (4.3) (4.3) (4.3) PD Mobile Digital Computers (MDC (0.2) (0.2) (0.2) PD Body-Worn/In-Car Cameras (0.9) (1.0) (1.0) PD Locker Room Remodel (1.0) (1.0) (1.0) PD Vehicle/Crime Center (0.3) (0.3) Temporary Emergency Shelter (1.5) (1.5) (1.5) Furniture and Fixtures (0.1) (0.1) (0.1) Maintain 20% Reserve Level 5.3 5.3 (5.3) (5.3) GF Reserve % to Operatinq 20% 29% 24% n: Hpvpnup Dptor; Adopted Updated June 2025 February Increase/ FY 25-26 FY 25-26 (Decrease) Property Tax $28.3 $28.5 $0.2 Sales Tax 35.8 37.0 1.2 Franchise Fees 1.9 1.8 (0.1) Transient Occupancy Tax 2.3 2.3 - Other Tax Revenue 1.7 1.6 (0.1) Departmental Revenue 5.7 8.1 2.4 Use of Money & Property 4.3 4.3 (0.0) Fines & Forfeitures 0.9 1.1 0.2 Transfers and Reimbursements 12.9 12.9 - Other Revenue 1.6 1.5 (0.1) Subtotal 95.3 99.1 3.7 Non -Recurring Revenues: from Land Sale Proceeds for 20% Reserves 5.3 - (5.3) One -Time ARPA Funding 0.7 0.7 0.0 Subtotal 6.0 0.7 (5.3) • City Council City Clerk City Attorney City Manager City Manager/Real Property Finance Human Resources Community Development Public Works Police Services Fire Services Parks and Recreation Non -Departmental Transfers Total Operating Expenditure Non -Recurring Expenditures: Transfer for Capital Projects Transfer for vehicle/equipment Transfer for shelter Required Pension UAL Furniture/Fixtures Non -Recurring Subtotal Adopted June 2025 FY 25-26 $0.1 1.1 0.9 0.6 2.7 2.1 1.6 6.0 18.5 41.4 11.5 6.1 3.3 3.1 Ah Updated January 2026 FY 25-26 $0.1 1.2 0.9 0.5 2.5 2.1 1.8 5.4 18.7 41.1 11.5 6.1 3.4 3.1 98.9 98.4 1.0 1.0 0.9 1.3 1.5 1.5 7.2 6.8 0.1 0.1 10.7 10.7 0r_ (Increase) / Decrease $0.0 (0.1) 0.0 0.2 (0.2) 0.6 (0.2) 0.3 (0.0) (0.2) M (0.4) 0.4 0.1 Recommendation Proceed with Budget Option 2 removes the $5.3 million budget transfer because the General Fund is now projected to have sufficient reserve to meet the 20% target without this transfer. FY25-26 CIP Summary Storm Drain , .S0.5. 1% Adopted CIP - $58M and 35 projects Amended CIP - $67M and 42 projects 2025-2026 Amended CIP ($M) .. 1- , ,;1.6, 2% New Mid -Year CIP Requests FY25-26 Major Building Maintenance: CT Gym Patio Cover Request to add $250,000 City Hall Tenant Improvements New request $255,000 Police Department Real -Time Crime Center New Request $200,000 Major Park Maintenance: Tustin Sports Park Walking Trail New request $65,000 South Hangar: Site Security, Infrastructure and Lighting New request $500,000 Grant Funding Recognized Recommendations Approve Carryover and Supplemental Appropriations and Revenues as described within the agenda report /OOOOO—=MWO= N UJII Remembering what connects us. Thank You! 4 w ie