2022-04-19 CC Agenda Packet - PRESENTATION - ITEM D19 - FY 2021-2022 Mid-Year Budget ReviewCITY OF
ELSEGUNDO
FY 2021-2022
MID -YEAR BUDGET REVIEW
April 19, 2022
I
General Fund
$77,651,553
$78,954,278
$1,302,725
1.7%
2
Water Fund
31,314,039
30,114,039
(1,200,000)
(3.8%)
3
Transportation Funds
10,242,136
35242,136
(7,0005000)
(68.3%)
4
Debt Service POBs
9,800,000
9,800,000
-
-
5
Wastewater Fund
695205356
5,8701356
(6505000)
(10.0%)
6
General Fund CIP
5,055,900
5,055,900
-
7
Equip. Replacement Fund
55000,000
1,000,000
(45000,000)
(80.0%)
8
Workers Comp. Fund
3,490,975
3,490,975
-
-
9
General Liability Fund
3,094,306
35194,306
1001000
3.2%
10
Dev. Services Trust
1,900,000
1,900,000
-
-
11
Public Safety Special Rev.
1,802,948
1,302,948
(5005000)
(27.7%)
12
Other Special Rev.
1,650,800
1,650,800
-
13
Rec & Econ Dev Trust Fnd
1,000,000
3005000
(700,000)
(70.0%)
14
Cultural Dev. Trust Fund
585,346
585,346
-
-
15
Debt Service Fund
545,000
545,000
-
-
16
Solid Waste Fund
270,000
270,000
-
17
Senior Housing Fund
105,313
105,313
-
-
18
Golf Fund
10,000
32,000
22,000
220%
19
Economic Uncertainty
0
0
-
-
2
C.
O FY 2021-2022 Budget had an anticipated $9 million budget deficit
• Actions to close budget gap:
One-time use of OPEB Trust fund: $2,400,000
One-time use of General Fund Balance (Reserves): $2,025,125
® 23.5 frozen vacant positions: $2,174,875
® Operations & Maintenance reductions: $1,500,000
0 Reduction to Equipment Replacement Fund Contribution: $900,000
3
1
2
3
4
5
6
7
9
10
11
12
13
14
15
Sales Tax
$1252505000
$1214655206
$2155206
1.8%
Business License Tax
115750,000
11 ,3 805000
(370,000)
-3.1%
Property Tax
1014325525
958425525
(590,000)
-5.7%
Transient Occupancy Tax
8,4201000
10947500
2,05500
24.4%
Chevron Tax Agreement
65600,000
7,3229517
7225517
10.9%
Utility Users Tax
612895500
657895500
50000
7.9%
Charges for Service
457555511
4,5525523
(202,988)
-4.3`:t}
Franchise Tax
390005000
350001,000
0
Other Revenues
212679770
157715502
(496,268)
-21.9%
Intergovernmental Rev.
251781909
251785909
0
-
License & Permits
1,8255000
2,05000
2251000
12.3%
Interest & Rentals
7269250
9765250
2505000
34.4%
Fines & Forfeitures
2949000
3919500
975500
33.2%
FEMA COVID-19 Reimb.
0
1255535
1259535
N/A
Transfers -In
4
1011,733
(2,001,502)
General Fund Appropriations
Adopted Budget
Year-end Estimate
1
Police $ 19,436,175
$ 191,4365175
$0
0%
2
Fire
13,782,667
13,782,667
0
0%
Transfers Out (POBs,
3
transfer to Economic
1055381908
1019585908
4201000
4.0%
Uncertainty Fund, CIP, &
Solid Waste)
4
Public Works
8059404
9,027,404
332,000
3.8%
5
Non -Departmental
559041993
6,204,993
300,000
5.1 %
6
Community Services
59878,231
5,648,231
(230,000)
-3.9%
7
Developmental Service
313098,785
3,0989785
0
0%
8
Information Technology
330239930
350231930
0
0%
9
City Manager
2,453,282
2,453,282
0
0%
10
Finance
213412,820
254125820
0
0%
11
Human Resources
9775063
191935063
216,000
22.1 %
12
City Attorney
5619950
5619950
0
0%
13
City Clerk
5309749
5301749
0
0%
14
City Council
356,596
356,596
0
0%
15
COVID-19 Resj2onse
0
j 2645725
264,725
1 N/A
Description
July 1, 2021
Revised Year-end Estimate
(estimated)
(based on FY 2020-21 ACFR)
Beginning Unassigned Fund Balance on July
$1892299563
$2758989675
152021
FY 2021-22 Revenues
7458025700
75,3321700
FY 2021-22 Expenditures
(775651,553)
(78,9545278)
One-time expenditures:
Estimated Ending Unassigned Fund Balance
1593805710
24,2775097
(June 30, 2022)
20% Reserve Requirement
155365,569
1597905856
Unassigned Reserves
$159141
$894869241
Other Reserve Balances for FY 2021 =2022
• Economic Uncertainty Fund: $1.91VI (95% funded)
➢City Council policy is to retain a $21VI balance
is Worker's Comp Fund: $7.7M (~60% funded)
is General Liability Fund: $.7M (~20% funded)
ELSEGUNDO
City of El Segundo 1 350 Main St. El Segundo, CA 90245 7
Trust Balances
• OPEB Trust: -$33 million (59% funded)
• Pension Trust: $5.1 M
• PARS Retirement Enhancement Plan = $1.4
million (60% funded)
ELSECUNDO
City of El Segundo 1 350 Main St. El Segundo, CA 90245 8
General Fund Financial Forecast
General Fund Ten -Year Projection
$120,000,000 - - — $30,000,000
$100,000,000 -- $25,000,000
$80,000,000 $20,000,000
$60,000,000 $15,000,000
$40,000,000 -- -- - $10,000,000
.I
$20,000,000 — - $5,000,000
i
$o - $0
FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031
Revenues Appropriations - -Fund Balance
Pension Obligation Bonds (POBs)
• City Council authorized the issuance of POBs in May 2021
• Received AA+ Bond Rating from Standard & Poor's (S&P)
• issued POBs in the amount of $144 million to pay off 95% of UAL
• POBs were 4.5x over subscribed
• POBs interest rate = 2.568%
• Saving the City -$82 million over nineteen years
• Level debt service of -$9.8 million per year for nineteen years
• City Council Strategic Priority of addressing rising pension costs
has been adhered to
10
Special Revenue Funds
• The Adopted FY 2021-2022 Budget for all Special Revenue
Funds is $13.8 million, including $5.9 million for capital
improvements such as street repairs, sidewalk repairs,
Park Place Transportation Project, etc.
• These funds are restricted for specific purposes governed
by specific laws and regulations. For example, the Gas Tax
Fund can be spent only on street -related expenditures.
Prop A and Prop C Funds can only be spent on
transportation projects. Federal, State, or County grants
can only be spent for the specific grant purpose that it is
awarded for.
ELSEGUNDO
City of El Segundo 1 350 Main St. El Segundo, CA 90245 11
General Fund Capital Improvement Program (CIP) Fund
• The adopted FY 2021-2022 General Fund CIP Fund Budget totals
$5,055,900 and only provides funding for General Fund projects.
• Of this amount, $4,830,400 represents "carryover" unspent funds from
prior fiscal years and the remaining $225,500 represents funding for new
projects.
• There are a total of 14 General Fund CIP projects that are either active
during the fiscal year or will continue to accumulate funding for future
activation (such as The Plunge Rehabilitation Project).
• Capital improvement projects that are paid for via other funds are
located within each of the respected fund budgets.
ELSEGUNDO
City of El Segundo 1 350 Main St. El Segundo, CA 90245 12
Debt Service Fund
• Records the City's facility lease activity for Douglas Street
Gap Closure.
• Funded with Traffic Mitigation Fees
• $532,000 in principal and interest will be paid in FY
2021-2022
• Final payment: August 2035
EL,SEGDNDO
City of El Segundo 1 350 Main St. El Segundo, CA 90245 13
Enterprise Fund
Water Fund
• The Adopted FY 2021-2022 Water Fund Budget is $31.3
million, including $3.1 million in new capital and $.26 million
in carryover from previous fiscal years for capital
improvement projects related to water main replacement,
water infrastructure replacement, and Citywide meter
replacements.
•The revised year-end expense is $30.1 million due to $1.2
million in capital projects that will be deferred to FY 2022-
2023.
ELSEGUYDO
City of El Segundo 1 350 Main St. El Segundo, CA 90245 14
Enterprise Fund
Water Fund
• On March 2, 20211 City Council adopted a five-year water rate
plan with the following annual rate adjustments: 0% rate
increase on April 2, 2021, 3% on January 1, 2022, 3% on
January 1, 2023, 3% one January 1, 2024, and 3% on January
1, 2025.
• These adjustments are expected to cover the rising cost of
purchasing potable and recycled water from West Basin
Municipal Water District and inflationary expenses associated
with the City's distribution system (maintenance and operating
costs).
ELSEGUNDO
City of El Segundo 1 350 Main St. El Segundo, CA 90245 15
Enterprise Fund
Wastewater Fund
• The Adopted FY 2021-2022 Wastewater Fund Budget is
$6.5 million, including $1.4 million for capital improvement
projects which include pump station, lifts, and sewer main
repairs.
•The revised year-end expense is $5.9 million due to
$650,000 in capital projects that will be deferred to FY
2022-2023.
'ESF UNDO
City of El Segundo 1 350 Main St. El Segundo, CA 90245 16
Enterprise Fund
Wastewater Fund
• As a result, on March 2, 20211 City Council adopted a five-
year wastewater rate plan with the following annual rate
adjustments: 9% rate on April 2, 2021, 9% on January 1,
20221 9.5% on January 1, 2023) 9.5% on January 1, 2024,
and 9.5% on January 1, 2025.
• These adjustments are expected to cover the rising cost of
El Segundo's contractual costs associated with Hyperion's
treatment plant (including much needed deferred
maintenance and capital improvement projects) along with
the inflationary expenses associated with the City's
collection system (maintenance and operating costs).
ELSEGUNDO
City of El Segundo 1 350 Main St. El Segundo, CA 90245 17
Golf Fund
• The existing Golf Fund continues to carry a significant
negative net position due to the outstanding loan
balance of approximately $5.6 million that is due to the
Equipment Replacement Fund.
With Topgolf opening operations in April 2022, the Golf
Fund should finally be able to begin systematically
paying down its loan to the Equipment Replacement
Fund. This will reverse the past several years of
recurring Golf Fund operating losses and General Fund
subsides.
4/20/2022
City of El Segundo 1 350 Main St. El Segundo, CA 90245
18
ELSEGUNDO
Golf Fund - Topgolf
➢Topgolf project is projected to generate over $1,900,000 in new recurring
General Fund and Golf Fund revenues/investment
➢Annual $1,300,000 driving range ground lease payment
➢Annual $200,000 Community Benefit Contribution
➢Annual $200,000 Golf Course and Driving Range Capital Contribution
➢Recurring 3% beverage fee payment at driving range & golf course
(minimum guarantee of $200,000)
➢Annual $20,000 golf course ground lease payment
➢Total = $1,900,000+ per year
ELSEGUNDO
19
Topgolf Revenue Allocation Policy
Ground Lease Revenue
➢ 60%-70% of the revenue generated from the driving range ground lease
(estimated to start at $1,300,000 per year) will be dedicated to funding the
City's pension related liabilities. This would result in a starting annual
pension contribution of $780,000 to $910,000.
➢ 30%-40% of the revenue generated from the driving range ground lease
(estimated to start at $1,300,000 per year) will be dedicated to repaying
the Equipment Replacement Fund. This would result in a starting annual
loan repayment of $390,000 to $520,000 until the loan is paid off.
➢ Once the Equipment Replacement Fund loan is paid off, this revenue will
be dedicated to City's Capital Improvement Program (public
infrastructure) needs.
O SecunDo
20
Topgolf Revenue Allocation Policy
Golf Course and Driving Range Capital Contribution
➢ The Annual minimum $200,000 Golf Course and Driving Range Capital
Contribution to Golf Fund will be made as required in the Ground Lease
and Agreement and Golf Course Management Agreement.
The annual 3% beverage fee payment from driving range and golf course
(with a minimum guarantee of $200,000 from the driving range) will go to
the General Fund to be used for general use purposes.
➢ The annual $20,000 golf course ground lease payment (with a 10%
adjustment every five years) will go to the General Fund for general use
purposes.
➢ The Annual $200,000 Community Benefit Contribution will be dedicated to
Recreation and Park capital improvement projects.
ELSEGCNDO
21
Internal Service Funds
Equipment Replacement Fund
• The City normally budgets 100% of available funds to
streamline the budgeting process for the purchase of
equipment and vehicles. However, in response to the
impacts of COVID-19 during the current budget cycle, the
purchase of replacement equipment and vehicles was
reduced. This will not be a recurring practice.
ELSEGUND0
City of El Segundo 1 350 Main St. El Segundo, CA 90245 22
Internal Service Funds
General Liability Insurance Fund
Projected to end the fiscal year above the adopted
budget and requesting an additional appropriation
of $100)000.
E ,SEGUYD0
City of El Segundo 1 350 Main St. El Segundo, CA 90245 23
Internal Service Funds
Workers' Compensation Insurance Fund
• On target to meet the adopted budget.
ELSEGUNDO
City of El Segundo 1 350 Main St. El Segundo, CA 90245 24
Potential FY 2022-2023 Budget Balancing Options
• Continue the strategic hiring freeze into FY 2021-22
• Deferred maintenance
• Position reductions
• Review of existing labor contracts/changes to future contracts
• Increased use of private contracts/privatization of services
• Regionalization of services
• Reduction to General Fund subsidies
• Use of Economic Uncertainty Reserves
• Use of General Fund Reserves
• Revenue enhancements
• Additional service reductions
• Other options
ei.SsauNno
City of El Segundo 1 350 Main St. El Segundo, CA 90245 25
Recommendation
1.Receive FY 2021-2022 Citywide Mid -Year Budget Update.
2.Amend FY 2021-2022 General Fund Revenues from $74,802,700
to $75,,207,,165 and Appropriations from $77,651,553 to
$78,.689,,553 (see exhibit A for details).
3.Amend FY 2021-2022 Golf Fund Appropriations from $10,000 to
$32,000 (see exhibit A for details).
4.Amend FY 2021-2022 General Liability Fund Appropriations from
$3,094,306 to $3,,194,306 (see exhibit A for details).
5.Amend FY 2021-2022 Solid Waste Fund Revenue from $0 to
$420,,000 (see exhibit A for details).
ELSEGUNDO
City of El Segundo 1 350 Main St. El Segundo, CA 90245 26
Next Ste �s
FY 2021-2022 Budget
• End of Fiscal Year (June 30, 2022)
• FY 2021-2022 Year-end Audit (June 2022 - November 2022)
• FY 2021-2022 ACFR Presentation to City Council (December 2022)
FY 2022-2023 Budget
• Strategic Planning Study Session (April 12, 2022)
• Proposed FY 2022-2023 Budget Study Session (May 3, 2022)
• There will be an opportunity to conduct a 2nd Budget Study Session if
necessary
• FY 2022-2023 Budget Public Hearing and Adoption (June 7, 2022)
• Beginning of FY 2022-2023 (July 1, 2022)
ELSECUNDO
City of El Segundo 1 350 Main St. El Segundo, CA 90245 27
Concluding Remarks