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2021-05-04 CC Agenda Packet SPC - PRESENTATION - Budget Study SessionCIT] OF ELSEGUNDO FY 2021-2022 BUDGET STUDY SESSION May 4, 2021 Agenda 1. Study Session Overview 2. Background Items 3. Proposed FY 2021-2022 Budget 4. Next Steps ELSEGUND6 City of El Segundo 1 350 Main St. El Segundo, CA 90245 2 Background Items • City Strategic Plan Follow-up • FY 2020-21 Budget Status Update • Pension Obligation Bonds Update E SEGUNDO City of El Segundo 1 350 Main St. El Segundo. CA 90245 3 Strategic Plan Follow-up •City Council Revisions: •Vision Statement •Values •Culture E SEGUNDO City of El Segundo 1 350 Main St El Segundo, CA 90245 4 Strategic Plan Follow-up •City Council Revisions (continued): •Top Priority #4 — Recreation Facilities •Top Priority #7 — Zoning & Housing EL$EGUNUO City of El Segundo 1 350 Main St. El Segundo, CA 90245 5 Strategic Plan Follow-up •City Council Revisions (continued): •Broad Goal #5 •Fiscal Sustainability •Business Incubator •Smoky Hollow Parking ELSEGUNDO City of El Segundo 1 350 Main St. El Segundo, CA 90245 6 1 Business License Tax $10,489,360 $11,475,000 $985,640 9.4% 2 Property Tax 9,145,025 9,686,000 540,975 5.9% 3 Sales Tax 8,373,683 8,044,500 (329,183) -3.9% 4 Transient Occupancy Tax 7,524,570 4,600,000 (2,924,570) -38.9% 5 Chevron Tax Agreement 6,000,000 6,678,446 678,446 11.3% 6 Utility Users Tax 4,494,047 4,897,500 403,453 9.0% 7 Charges for Service 3,415,836 3,081,075 (334,761) -9.8% 8 Franchise Tax 2,250,000 2,810,000 560,000 24.9% 9 Intergovernmental Revenues 1,942,770 2,035,380 92,610 4.8% 10 Other Revenues 2,416,964 2,045,314 (371,650) -15.4% 11 License & Permits 1,153,769 1,259,000 105,231 9.1% 12 Transfers -in 948,708 2,511,943 1,563,235 164.8% 13 Interest & Rentals 603,000 695,000 92,000 15.3% 14 Fines & Forfeitures 294,000 216,750 (77,250) -26.3% 15 FEMA COVID-19 Reimb. 0 688,107 688,107 N/A Total $59,051,732 .0 :% 1 Police $ 17,879,525 $ 17,879,525 $0 0% 2 Fire 13,068,393 13,068,393 0 0% 3 Public Works 7,253,488 7,253,488 0 0% 4 Community Services 4,661,460 4,661,460 0 0% 5 Non -Departmental 3,780,218 4,530,218 750,000 20% 6 Developmental Service 2,609,024 2,609,024 0 0% 7 Information Technology 2,440,068 2,440,068 0 0% 8 Finance 2,038,556 2,038,556 0 0% 9 City Manager 1,909,586 2,109,586 200,000 10% 10 Transfers Out (CIP) 11250,000 1,250,000 0 0% 11 Human Resources 917,405 917,405 0 0% 12 City Attorney 561,950 561,950 0 0% 13 City Clerk 421,157 421,157 0 0% 14 City Council 260,903 260,903 0 0% 15 COVID-19 Response 0 688,107 688,107 N/A 8 Description Adopted Year-end Estimate Change % Change Beginning Unassigned Fund Balance (October 1, 2020) $18,185,844 $18,229,563 $43,179 0.2% Est. FY 2020-21 Revenues (9 months) 59,051,732 60,724,015 1,672,283 2.8% Est. FY 2020-21 Expenditures (9 months) One-time expenditures: CIP: $1,249,000 (59,051,732) (60,689,840) 1,638,107 2.8% Est. Ending Fund Balance (June 30, 2021) 18,185,844 18,263,738 77,894 0.4% 20% Reserve Requirement (12-month) 15,747,129 16,000,462 253,333 1.6% Est. Ending Unassigned Fund Balance $2,438,715 $2,263,276 ($175,439) -7.2% Pension Obligation Bonds Update • Complete fourth Draft of POS — May 3 • Credit rating review — May 10 • Receive credit rating — May 14 (estimated) • City Council approval of POS & Bond Purchase Agreement— May 18 • Pricing of POBS — May 25 • Financing close — by June 4 ELSECUYDO City of El Segundo 1 350 Main St El Segundo, CA 90245 10 Pension Obligation Bonds Update (continued' • POB is anticipated to be a 19-year bond issuance • Provides the City budgetary relief • Total of $86.6 million or $62.9 million in Present Value {PV} • An average of $4.56 million per year ($3.3 million {PV}) • First year savings is estimated at $1.16 million • Year 18 savings is estimated at $6.58 million • Year 19 savings is estimated at $244,590 E ,SEGUNDO City of El Segundo 1 350 Main St El Segundo, CA 90245 11 Fiscal Year Change • Shifted from October 1 — September 30 to July 1 — June 30 • FY 2020-21 Budget was 9 months: Oct. 1, 2020 — June 30, 2021 • FY 2021-2022 Budget will be 12 months: July 1, 2021 to June 30, 2022 ELSEGUNDO City of El Segundo 1 350 Main St El Segundo, CA 90245 12 No. Fund Name General Fund Adopted FY 2020-21 • • $59,051,732 % of Total Budget 65.1% Proposed FY 2021-2022 $74,802,700 % of Total Budget 58.6% 1 2 Water Fund 18,285,000 20.1% 35,735,911 28.0% 3 Wastewater Fund 3,110,000 3.4% 5,533,582 4.3% 4 Worker's Comp Fund 2,910,924 3.2% 3,125,374 2.5% 5 General Liability Fund 1,395,900 1.5% 3,030,000 2.4% 6 Transportation Funds 1,228,835 1.4% 1,626,900 1.3% 7 Other Special Rev. Funds 11,248,250 1.4% 1,420,413 1.1% 8 Equip. Rep. Fund 994,379 1.1% 918,690 0.7% 9 Debt Service Fund 1371000 0.2% 360,000 0.3% 10 Federal & State Grants 219,000 0.2% 354,037 0.3% 11 CIP Fund 1,250,000 1.4% 225,500 0.2% 12 Public Safety Sp. Rev. Fnd 121,000 0.1% 177,500 0.1% 13 Golf Fund 802,000 0.9% 20,000 0.2% 14 Senior Housing Fund 10,000 0.0% 20,000 13 months)No. Fund Name Adopted FY 2020-21 % of Total Budget Proposed FY 2021-22 1 General Fund $59,051,732 51.2% $77,525,632 % of Total Budget 54.2% 2 Water Fund 22.1083,273 19.2% 30,001,592 21.0% 3 Transportation Funds 7,557,791 6.6% 7,983,695 5.3% 4 Equip. Rep. Fund 7,871,674 6.8% 7,791,006 5.4% 5 Wastewater Fund 4,660,165 4.0% 5,868,883 3.9% 6 Worker's Comp Fund 2,564,421 2.2% 3,529,532 23% 7 Trust Funds 2,786,850 2.4% 3,090,000 0 2. 8 General Liability Fund 1,269,399 1.1% 3,040,685 2.0% 9 Other Special Rev. Funds 1,8111256 1.6% 1,265,645 0.8% 10 Public Safety Sp. Rev. Fnds 1,366,000 1.2% 1,225,000 0.8% 11 Debt Service Fund 545,000 0.5% 545,000 0.4% 12 Federal and State Grants 478,000 0.4% 470,000 0.3% 13 Solid Waste Fund 230,000 0.2% 270,000 0.2% 14 CIP Fund 1,250,000 1.1% 225,000 0.0% 15 Senior Housing Fund 75,500 0.1% 105,313 0.1% 16 Golf Fund 727,000 0.6% 10,000 0.0% 17 Total Economic Uncertain 923,7081 $115,251p769 0.8% 100.0% - $14294. •. 1 0.0% III 14 No. • '' % of • 1 Sales Tax $12,250,000 16.4% 2 Business License Tax 11,750,000 15.7% 3 Property Tax 9,882,525 13.2% 4 Transient Occupancy Tax (TOT) 8,420,000 11.3% 5 Chevron Tax Resolution Agreement 6,600,000 8.8% 6 Utility Users Tax (UUT) 6,289,500 8.4% 7 Charges for Service 4,754,006 6.4% 8 Transfers -in 4,013,235 5.4% 9 Franchise Tax 3,000,000 4.0% 10 Intergovernmental Revenues 2.4178,909 2.9% 11 Other Revenues 2,817,770 3.8% 12 License & Permits 1,825,000 2.4% 13 Interest & Rentals 726,250 1.0% 14 Fines & Forfeitures 294,000 0.4% FY 2021-22 Revenue Assumptions ➢Top Six Revenue Sources (compared to pre-COVID) ➢Sales Tax — 2% ➢Business License Tax (BLT) — 7% ➢Property Tax +8% ➢Transient Occupancy Tax — 45% ➢Chevron Tax Resolution Agreement +1 % ➢Utility Users Tax (UUT) — unchanged 0% ELSEGUNDO City of El Segundo 1 350 Main St El Segundo, CA 90245 16 FY 2021-22 Revenue Assumptions (continued ➢Transient Occupancy Tax (TOT) ➢55%-65% occupancy rates ➢Lower room rates ➢ -$7 million ELSEGUNDO City of El Segundo 1 350 Main St. El Segundo, CA 90245 17 1 Police — - - - $233,7100 2 Fire 179543544 3 Public Works 912529971 4 Community Services 6,2965442 5 Non -department 59728,44 6 ❑evelopment Services 35520599 7 Information Technology Services 39224527 8 Finance 217205588 9 City Manager 296589442 10 Human Resources 15112,07 12 City Clerk 585,197 11 City Attorney 561995 13 ity Council 385,11 Operating14 Total Budget 7793009132 15 ransfers out to CIP 2251150 M Description Adopted Estimated Beginning Unassigned Fund Balance on July 1, 2021 $18,229,563 Estimated FY 2021-22 Revenues 74,801,195 Proposed FY 2021-22 Appropriations (77,525,632) Estimated Ending Fund Balance (June 30, 2022) 15,505,126 20% Reserve Requirement (based on proposed appropriations) 15,505,126 Estimated Ending Unassigned Fund Balance $0 19 FY 2021-22 Budget Gap • $9,000,000 gap • Primary causes: • TOT revenues down by $7,000,000 • Rising pension costs • Labor contracts ELSEGUNUO City of El Segundo 1 350 Main St. El Segundo, CA 90245 20 Proposed FY 2021-22 Budget Gap Closure Strategy • One-time use of OPEB Trust fund: $2,400,000 • Currently 58% funded • No new contributions to the trust required per actuary report • Actuary assumption of $1.85M investment earning for FY 2020-21 • $5.1M actual investment earnings through March 31, 2021 • One-time use of General Fund Balance: $2,200,000 • After fully funding the 20% policy reserve • Freeze 18 vacant positions: $2,000,000 • Reduction to Operations & Maintenance items: $1,500,000 • Reduce Equipment Replacement fund contribution: $900.000 Total: $9,000,000 F. L,',EGI NUO City of El Segundo 1 350 Main St El Segundo, CA 90245 21 FY 2021-22 Budget Appropriation Assumptions Personnel Costs ➢Salaries &Benefits adjustments based on multi -year MOUs ➢Police and Fire MOUs expire September 30, 2021 ➢Pension Obligation Bonds issued in June 2021 ➢Minimum hourly wage effective each January 1: •2021 = $14 •2022 = $15 E SEGUV©O City of El Segundo 1 350 Main St El Segundo, CA 90245 22 FY 2021-22 Budget Appropriation Assumptions (continued' ➢Frozen Positions FY 2020-21 = 22 FY 2021-22 = 18 12.5 vacant positions frozen full fiscal year 10 vacant positions frozen part of the year Equivalent to 19 positions frozen for FY 2021-22 ➢FY 2021-22 Overtime $1307000 ELSEGUNDO City of El Segundo 1 350 Main St El Segundo, CA 90245 23 FY 2020-2021 Frozen Vacant Positions • FY 2020-21 • Police — 5 = 22 positions • Public Works — 4 • Fire — 3 • Information Technology— 3 • Development Services — 2 • Community Services — 1 •City Manager - 1 • Human Resources — 1 • Finance — 1 ELSEGUNUO City of El Segundo 1 350 Main St El Segundo, CA 90245 24 Police Fire Public Works Community Services Development Services Finance I .T. Human Resources Other Departments Total 21 17 20 9 5 12 278 3 2 n 35 (12.6%) FY 2021-22 Budget Appropriation Assumptions Operations & Maintenance (O&M) Budgets ➢ Carried over reduced O&M from prior year - 10% � );;Includes The Plunge not opening until October 1, 2021 ➢Equipment replacement charges ➢ FY 2021-22 - 50% ➢ FY 2022-23 — 100% ➢$2.4 million withdrawal from OPEB Trust (reimburse the City for retiree health) ELSEGVNDO City of El Segundo 1 350 Main St El Segundo, CA 90245 26 $100,000,000 $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 Revised General Fund Multi -Year Forecast General Fund Projections for Revenues, Expenditures, & Fund Balance 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Revenues Appropriations —Fund Balance ­ 20% Reserve $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 2025-26 28 FY 2021-2022 Cultural Development Fund Arts & Culture Commission budget recommendations • Cultural Arts Coordinator (75% of position) — $100,000 • Festival of Holidays — $60,000 • Outdoor Dining Enhancements — $55,000 • TEDx El Segundo — $50,000 • Poet Laureate Program — $8,000 Total = $273,000 ELSECVNDO City of El Segundo 1 350 Main St El Segundo, CA 90245 29 Information Technology FY 2021-2022 Initiatives 1. IT Strategic Plan Update 2. Implementation of Development Services Permitting System 3. PD Mobile Data Computer (M DC) Replacement 4. Upgrade of the City Library Systems 5. Network Infrastructure Upgrade 6. Design of City-wide security cameras in conjunction with Public Works 7. Start Enterprise Resource Planning (ERP - Financial systems) Evaluation 8. City wide / Smoky Hollow broadband Solutions / Evaluation 9. Finalize the Graphical Information System (GIS) Roadmap 10. Business License System to Cloud solution ELSEGUNDO City of El Segundo 1 350 Main St El Segundo, CA 90245 30 Other Items • Hawthorne Jail Contract Small number of positions reclassified and salary range adjustments Et.SEGIINDO City of El Segundo 1 350 Main St El Segundo, CA 90245 31 PROPOSED 5-YEAR CAPITAL IMPROVEMENT PROGRAM • Goal 4: Develop Quality Infrastructure and Technology • Objective: El Segundo's physical infrastructure supports an appealing, safe, and effective community. 33 • Police Firing Range improvement • Indiana Water Main replacement • Acacia Park improvement • Pavement Rehabilitation Projects • Softball Bleachers Replacement 34 ■ Library Park Project • New Residential Sidewalks Y El Segundo Blvd. Improvements • Hockey Rink Rehabilitation • Park Place Transportation Extension Design Contract • Recreation Park Checkout Building Restrooms 0 The Plunge Design 35 POLICE FIRING RANGE- BEFORE 37 ACACIA PARK PLAYGROUND - BEFORE ACACIA PARK PLAYGROUND - AFTER u •, �:-_ ..: ram.. Am ���•V r 6,:�, : � -1 Pfi•r �'� _ ..: � r � j - k �: r :d' ACACIA PARK PLAYGROUND - AFTER 1Or 4 ` { •r fir. . �� 21 A - ! f ti ACACIA PARK PLAYGROUND - AFTER s PAVEMENT REHAB. IMPERIAL AVE.- BEFORE PAVEMENT REHAB. IMPERIAL AVE.- AFTER PAVEMENT REHAB. PINE AVE.- BEFORE Asks 7ZW��r \ fw.a,� PAVEMENT REHAB. PINE AVE.- AFTER �, � .................... ,.....: ... 'SIP PAVEMENT REHAB. PINE AVE.- BEFORE ti A 47 BLEACHERS -BEFORE w BLEACHERS -AFTER k PD RECORD ROOM SHELVING -BEFORE V, PD RECORD ROOM SHELVING -AFTER DOWNTOWN FLOWER HANGING BASKETS -BEFORE & AFTER Ak BEFORE AFTER DOWNTOWN FLOWER HANGING BASKETS Proposed FY 2021-2022 CIP Projects • Total projects = $16,137,500 Projects nearly completed or projects in progress = $6,190,000 • New Projects = $9,947,500 EI.SEGUNDO City of El Segundo 1 350 Main St. El Segundo, CA 90245 54 1 Alondra Park (Regional project) $0 $200,000 $200,000 $200,000 $200,000 $200,00 2 Infiltration projects 0 200,000 200,000 200,0001. 200,000 200,000 California Street Storm Drain Improvement 150,000 3 0 0 0 0 c Total Stormwater Fund $150,000 $400,000 $400,000 $400,000 $400,000 $400,OOa Proposed 5-Year CIP (continued Prior Years City of El Segundo 1 350 Main St El Segundo. CA 90245 64 EL')EGL %DO CaIPERS Pension Update • FY 2019-2020 return = 4.7% (2.3% below 7.0% target) ➢ Resulted in additional unfunded liability of $6.4 million • FY 2020-2021 anticipated return = 15% (8.0% above 7.0% target ➢May result in an actuarial investment gain of $23.2 million EL.SEGUN©O City of El Segundo 1 350 Main St El Segundo, CA 90245 65 Reserve Balances Proposed for FY 2021-22: General Fund: -$15.5M (20% per policy) Economic Uncertainty: $2.01VI (per policy) ➢ Worker's Comp Fund: $7.31VI (-70% funded) General Liability Fund: $O.41VI (-33% funded) ELSEGVYDO City of El Segundo 1 350 Main St. El Segundo, CA 90245 66 Trust Balances •Pension Trust: $4.91VI (April 30, 2021) ➢No additional funding proposed for FY 2020-21 ➢FY 2021-22 contributions will follow UAL policy and will be evaluated during mid -year (January 2022) • OPEB Trust: $32.51VI (April 30, 2021) ➢-58% funded ➢Full funding anticipated by 2030 ➢No additional contributions required ➢Withdrawal $2.4 million to reimburse the City for retiree health EL$EGUNDO City of El Segundo 1 350 Main St El Segundo, CA 90245 67 FY 2021-2022 Budget Strategv •Use of OPEB Trust to balance FY 2021-22 Budget • Provides flexibility to observe actual revenues and expenditures in first six -months of FY 2021-22 • Actual withdrawal from Trust will be evaluated after FY 2021-22 mid -year review ELSEGUNDO City of El Segundo 1 350 Main St. El Segundo, CA 90245 68 Potential FY 2021-2022 Budget Balancing Options • Across-the-board cuts (if needed) • Enhance hiring freeze • Deferred maintenance • Position reductions • Review of existing labor contracts/changes to future contracts • Use of furloughs (including winter holidays furlough) • Use of early retirement incentives • Increased use of private contracts/privatization of services EI.SEGUNDO City of El Segundo 1 350 Main St El Segundo, CA 90245 69 Potential FY 2021-2022 Budget Balancing Options (continued) • Regionalization of services • Additional service reductions • Reduction to General Fund subsidies • Use of Economic Uncertainty Reserves • Use of General Fund Reserves • Revenue enhancements • Other options ELSEGUNUO City of El Segundo 1 350 Main St. El Segundo, CA 90245 70 Next Steps FY 2020-2021 Budget: ➢End of Fiscal Year (June 30, 2021) ➢FY 2020-2021 Year-end Audit (June 2021 —November 2021) ➢FY 2020-2021 CAFR Presentation to City Council (Dec. 7, 2021) FY 2021-2022 Budget: ➢City-wide Fee Resolution (June 1, 2021) ➢FY 2021-2022 Budget Public Hearing and Adoption (June 15, 2021) ➢Beginning of FY2021-2022 (July 1, 2021) ➢Begin preparation of Biennial FY 2022-2023 & FY 2023-2024 Budget — December 2021 ELSEGUN DO City of El Segundo 1 350 Main St El Segundo, CA 90245 71 Questions