HomeMy WebLinkAboutItem No. 06 - Mid-Year Financial Review - Fiscal Year 2019-20
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Staff Report
City of San Bernardino
Request for Council Action
Date: February 19, 2020
To: Honorable Mayor and City Council Members
From: Teri Ledoux, City Manager
By: Paul Espinoza, Finance Director
Subject: Mid-Year Financial Review - Fiscal Year 2019/20
Recommendation
Adopt Resolution No. 2020-42 of the Mayor and City Council of the City of San
Bernardino, California, approving the City of San Bernardino’s Fiscal Year 2019/20
Budget Update and related budget amendment actions.
Background
The Mayor and City Council adopted the budget for fiscal year 2019/20 on June 19,
2019, and adopted Resolution 2018-308, establishing a General Fund Reserve Policy
on November 21, 2018. For the General Fund, the budget was balanced with a minor
surplus after over $11 million in budget cuts were made. The Mayor and City Council
typically receive a mid-year update report projecting how the current fiscal year is
anticipated to end in relation to the adopted budget. The mid-year report is also an
opportunity to make budgetary adjustments due to either the current year’s actual
financial needs or to adjust budgetary items not handled during the original budget
adoption process.
Discussion
The Mid-Year analysis of General Fund revenues and expenditures indicates that the
General Fund, before any proposed budget increases, will end the year with $1,842,019
more than originally anticipated. However, later in this report there are
recommendations discussed for budget increases that propose using $1,753,699 of this
amount, leaving $100,643, which will increase reserves from $29.17 million to $29.27
million.
General Fund - Revenues, Expenditures, and Reserve Policy
As noted above, the General Fund budget was adopted as balanced, with a minor
surplus of $56,000. At the Year-End Review on December 4, 2020, staff reported a
projected FY 2018/19 ending unassigned fund balance of $29 million. At this time,
despite additions to the current year budget, staff is projecting to end FY 2019/20 with
an estimated ending fund balance of $29.27 million.
During the year, the operating budget was amended by the Mayor and City Council
which has increased both budgeted revenues and expenditures. The increases to the
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expenditure budget were greater than those for revenue prima rily due to the Carryovers
from Fiscal Year 2018/19 that were approved on December 5, 2019, which increased
the General Fund expenditure budget by $2,367,474. However, carryovers were
approved as a use of fund balance, and not as a use of current year reve nues. To that
end, comparing only current year revenues and expenditures, the General Fund is
projected to end the year with a surplus of $100,643.
Revenues
General Fund revenues overall are currently projected to be $132 million, which is $5
million over the adopted budget amount. $3 million of this is the revenue anticipated for
the General Plan Update that the City accepted from the State of California on
November 6, 2019. Above and beyond this grant, the general fund is estimated to
receive $2.1 million over the amended budget. Two significant positive variances are
projected for General Fund revenues: Sales and Use Tax and Measure Z Sales Tax.
These positive variances are offset by other, smaller, negative revenue variances
anticipated in other categories, primarily fines and forfeitures related revenues in the
Police Department, and Utility Users Tax (UUT). Attachment 2 includes detailed
footnotes explaining these variances.
Sales Tax, the General Fund’s largest revenue source, is on target to exceed
budgeted projections of $36.6 million by $1.7 million. Revenues were projected
conservatively, however our sales tax consultants have revised their projections
to reflect a healthy growth rate through the end of the fiscal year despite the
recent closure of the Sears anchor store in the Inland Center Mall.
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Measure Z (the City’s .25% district tax) revenues are expected to be
approximately $358,000 higher than budgeted. Similar to the City’s regular sales
tax, growth is anticipated to continue through the end of the fiscal year. Total
Measure Z revenue is projected at $9.3 million.
Total UUT is estimated at $23.3 million, which is $400,000 less than budgeted
due to continued downward pressure on revenues related to energy efficiency
programs and the resulting lighter demand for electric and gas. The reduction in
landline phone service and the increase in satellite over cable television service
have also contributed to reduced revenues (the City does not collect UUT on
satellite service). Weather, which impacts demand of utility services, also
impacts the ability to accurately predict revenue levels.
Fines and Forfeitures are projected to come in $475,000 below budget estimates.
This reduction is based on anticipated declines in Parking Cit ations and Code
Administration Civil Penalties. Parking Citation revenues peaked in the prior
fiscal year due to increased collections, however in the current fiscal year these
collections are anticipated to come in at a lower amount. Code Civil Penalty
revenues are also projected to come in below budget based on the decrease in
code enforcement officers on staff.
Expenditures
General Fund operating expenditures are projected at $132.8 million without approval of
the budget increases included in this report. If the increases are approved expenditures
are projected to be $134.3 million. Attachment 3 provides detailed footnotes related to
variances within each department. Below are explanations for any department that is
projected to exceed their departmen tal budget, or any department that anticipates of
$500,000 in savings.
The Mayor's department budget is projected to exceed current year's amended
budget by $36,000 due to the use of part time staff exceeding budgeted
amounts, vacation payouts, mileage reimbursements, printing & promotional, and
meetings & conferences.
The City Clerk's Office is projecting to exceed budget by $57,462. This is in
salaries and benefits, tied directly to the court decision between the City and
Elected Clerk. Additional overages are anticipated in advertising, and special
election costs as explained further in the fiscal impact section of this report . This
report requests an additional $172,462 from reserves be added to the Clerk’s
budget to cover additional election and advertising costs.
The City Attorney’s Office is projected to end the year $87,614 over budget. This
is in salaries and benefits, tied directly to the court decision between the City and
Elected City Attorney, however the Attorney’s Office also anticip ates needing an
additional $1,400,000 due to unanticipated litigation costs as explained further in
the fiscal impact section of this report. This report seeks council authority to
increase the City Attorney Office’s budget by $1,487,614 to cover these
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expenses. This will require a withdrawal from reserves.
The General Government budget is projecting a net savings of $554,905.
Contributing factors are Unemployment Insurance is projected to go over
amended budget, and the payment to Kohls based on the Sal es Tax Sharing
Agreement is anticipated to exceed budgeted amounts. These overages are
offset by a savings projected in the Animal Control due to vacancies, which
receives a transfer of General Funds from this department.
$772,000 of savings is expected in the Police Department primarily from
vacancies. This is a reduction compared to savings in prior years as the Police
Department has made significant headway in filling vacant positions, however,
the budget includes salary amounts for fulltime police of ficers, and when an
officer is first hired as a Law Enforcement Trainee (LET), there is a savings
between an LET’s salary and the budget for a fulltime officer.
General Fund Reserves
Total combined reserves at June 30, 2020, are estimated to be $29.27 million. However,
it is important to note that these funds are restricted into categories approved by the
Mayor and Council when the City’s Reserve Policy was approved in November of 2018.
The chart below illustrates the various General Fund Reserve Policy targets:
The City’s Reserve Policy also identified four different categories of Special Reserves
for which any remaining funds could be allocated. The four categories established in the
proposed policy are:
Risk Management Reserve
City Facilities Reserve
Vehicle and Equipment Reserve
Infrastructure Reserve
Currently the City is below its target reserve for its economic contingency reserve and
there are not additional reserves available to fund these other recommended areas.
Other Funds (Non-CIP)
Most budgetary attention typically falls to the General Fund during fiscal reviews as it is
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the most significant portion of the budget. However, it is also important to review the
other funds that make up the complete picture of the City’s operations. Most funds are
on target with original projections with variances noted below the chart:
Animal Control Fund
Salary Savings in the Animal Control Program have resulted in a total estimated
operational savings of $390,000. These savings are directly p assed on to the General
Fund, reflected in the General Government Program. This is separate from the animal
shelter improvement fund allocation.
Workers’ Compensation Fund
Due to increases related to the Department of Industrial Relations Office, premium s
were $70,000 higher than budgeted, however savings in other line items within the fund
have reduced this overage to $66,000. This excess cost will be distributed to the
General Fund and other appropriate funds.
The Plan of Adjustment
The City filed a petition commencing its Chapter 9 bankruptcy case in August 2012. As
part of the City’s effort exit from bankruptcy, the City adopted a Plan of Adjustment
Resolution No. 2015-103 on May 18, 2015, to submit to the Court and serve as the
roadmap for the treatment of obligations and future solvency. The City’s Plan of
Adjustment filed on February 7, 2017, became effective as of June 15, 2017.
In order to remain solvent and have the ability to provide a better level of service to the
community, the City needs to continue streamlining its operations by modernizing
service delivery and seek opportunities to increase revenue. In order to address these
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needs staff has been working to prepare the following items for consideration:
A fee study is scheduled for completion and presentation to the City Council
during FY 2020/21 budget process.
As enforceable obligations decrease on the ROPS, the County’s property tax
revenue share increases. Any revenue received by the County that is above their
cost to provide service to the City is subject to negotiation. Discussions are
currently open with the County and the Fire District for the VLF Property Tax
sharing agreement to review whether any current property tax revenue is
available for recapture per the “reopene r” clause. Currently these are taking
place for years 2 and 3 of the agreement. The City is currently in year 4 of the
agreement.
A renewal and/or increase of the Measure Z sales tax is currently being
evaluated.
In addition, a comprehensive street and road repair assessment will be completed in FY
2019/20 that will provide an updated list documenting the current condition of all City
streets.
Looking to the Future - 10-Year Financial Model Update
The City’s financial outlook is looking slightly better in comparison to the outlook
presented last fiscal year. At the June 19, 2019 City Council meeting staff presented the
10-Year Financial Model for Council Consideration. At that time, the 10 -Year model
projected a General Fund budget deficit of $4.5 for FY 2020/21.
At this time, staff is updating the 10 -Year Financial Model based on current years
activity. The 10-Year Financial Model presented in this staff report shows a decrease to
the FY 2020/21 deficit by $1.3 million to $3.2 million. Furthermore, th e General Fund is
projected to end FY 2020/21 with a fund balance of $26 million compared to $21 million
projected in June 2019. Higher than anticipated revenues are the major factor
contributing to the improvement in the model. Sales Tax and Measure Z revenues are
projected to increase by $2.4 million over the FY 2019/20 adopted budget. Business
Registration revenues are also expected to increase by at least $400,000. With the
exception of the PERS Unfunded Liability and a few inflationary adjustments,
expenditures are being held flat. As was the case last June, this model assumes
Measure Z ending in April, 2022. It also assumes no cost of living adjustments beyond
FY 2019/20.
In the coming months, staff will be conducting budget workshops where Council wi ll
have the opportunity to address and remediate the projected FY 2020/21 deficit.
As we look to the future, it is important that we continue to update the 10 -Year Financial
Model based upon changes that occur in revenue and expense projections. The City
continues to face on-going financial challenges. Relatively overall flat revenues,
increased costs to maintain existing service levels, deferred maintenance on City
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facilities, Public Safety needs, and employee attraction and retention issues continue to
present challenges.
On February 11, 2019, the Mayor and City Council received an update from the
Public Works department regarding the City Facility Building-Condition
Assessment Report. In this report Council learned that the City has over $260
million in deferred maintenance on City facilities. Public Works estimates that
deferred street and road maintenance is upwards of $110 million based on a 15 -
year-old study.
Measure Z, which is projected to result in $9.3 million in revenue this fiscal year
expires in April 2022.
Pension costs are expected to increase by $3.2 million in FY 2020/21 and then
another $2.7 million in FY 2021/22. The 10 -Year Financial Model shows a $5.2
million increase from FY 2019/20 to FY 2020/21 due to the following
assumptions:
o The City will not prepay the Unfunded Actuarial Liability (UAL) at the
beginning of the year, but rather monthly, which would result in a savings.
o The portion of UAL charged to Internal Service Funds, which are
represented in each department’s budget as an allocation, are included in
the UAL line on the 10-Year Model in future budget years. As each year’s
budget is developed and approved, a portion of this payment will be
distributed to each department in the form of Internal Service Fund
Charges, but total impact to the General Fund will remain the same.
o The Miscellaneous (Non-Safety) portion of the UAL is split with the Water
Department paying 35% and the City paying 65%. This split is subject to
change in future years depending on levels of staffing in each respective
organization.
Total unfunded liability payments for the current fiscal year total $23.75 million
with the prepayment discount. The 10 -Year Financial Model shows a lower total
of $22.2 million because of the portion charged to other funds, lessening the
impact on the General Fund. This number is expected to increase to over $40
million by FY 2027/28 based on long term projections provided by CalPERS.
2020-2025 Key Strategic Targets and Goals
Receiving this FY 2019/20 Midyear Budget Report and approving the related budget
amendment action aligns with Key Target No. 1: Financial Stability by implementing,
maintaining and updating a fiscal accountability plan.
Fiscal Impact
It is anticipated that the General Fund will end the year with $100,643 more in reserves
than originally projected. Although there are budget increases totaling $1,753,699 there
are sufficient gains in revenues and expenditures savings in other areas to cover these
increases.
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City Attorney’s Office
City’s Total Legal Expenditures
Since the transition from an in-house City Attorney’s Office to a largely contracted-
out operation with Best Best & Krieger LLP (BB&K) working closely in conjunction
with the elected City Attorney, the total legal expenses of the City have reduced
significantly. The below chart summarizes the City’s total legal spend expenditures
over the past seven years:
Fiscal Year Total Legal Spend
Expenditure*
2019/20 Est.<$5,000,000
2018/19 $5,522,622.39
2017/18 $6,468,601.50
2016/17 $8,792,218.88
2015/16 $8,221,289.00
2014/15 $6,769,699.59
2013/14 $5,414,739.78
2012/13 $6,167,889.47
*Includes the cost of the City Attorney’s Office
budget and also any outside legal counsel
hired by other departments, with the exception
of workers’ compensation legal counsel.
This fiscal year, with the proposed mid-year adjustment, the City’s total legal spend
expenditure is estimated to be under $5 million. The City Attorney’s Office
budget would amount to just over $3.8 million of that amount. W hile legal expenses
outside the City Attorney’s Office budget are difficult to predict, based on a review of
various departments’ budgets, staff anticipates these expenses to amount to
approximately $1.1 million. Therefore, even with the proposed mid -year budget
adjustment, the City’s total legal expenditures for Fiscal Year 2019/20 are expected
to be significantly lower than any of the prior seven years.
General Municipal Legal Services
The City’s cost for general municipal legal services remains stabl e. This budget
covers the high quality day-to-day legal advice and assistance provided to all City
departments and legal counsel support for the Mayor and City Council, the Planning
Commission, and the Water Board. This fiscal year, the City has paid BB&K the
budgeted amount of $450,000 for such services. The City is anticipated to pay an
additional $450,000 for the remainder of the fiscal year, in line with the City’s budget.
Special Legal Services.
In addition to general municipal legal services , the City utilizes significant special
legal services. By way of example, these services cover a wide range of litigation
matters, the criminal prosecution of Municipal Code violations, expert assistance on
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complex economic development and housing matters, and labor and employment
advice. The majority of special legal services are covered by the City Attorney’s
Office budget. However, several other departments manage limited legal budgets.
From time to time, cities experience unanticipated legal costs due to lawsuits filed
against the City or lawsuits filed by the City. This fiscal year, the City has faced
significant legal hurdles that have resulted in additional legal expenses. For
example, this year, the City Attorney’s Office has dedicated a significant portion of its
special legal services budget on the following: (1) state and federal litigation
involving Pepe’s Towing; (2) code enforcement and city prosecution; (3) several
cannabis litigation cases; (4) litigation involving the former City Manager; and (5)
litigation involving the elected City Attorney and elected City Clerk. Beyond these
significant matters, it is worth noting that the City’s recovery from bankruptcy has
resulted in a number of stayed cases becoming active and have made the City a
more attractive target of plaintiff’s lawyers. After a careful review of the City’s liability
exposure, the City Attorney’s Office anticipates special counsel expenses for the
remainder of the year to increase.
To continue to provide quality special legal services and to defend the City in current
and future litigation, the City Attorney’s Office is seeking an additional $1,400,000.
Although the requested allocation may seem significant, it is important to keep the
overall reduction in the City’s legal spending in mind. In addition, it is important to
recognize that although the City Attorney’s Office has been largely contracted
out, the budget still includes internal service charges and unfunded PERS
liability.
City Clerk’s Office
The City Clerk’s Office is anticipating needing an additional $172,462 this fiscal year.
$57,462 of this increase is for the salary and benefit reinstatement to the City Clerk
following the court decision between the City and Elected City Clerk. The remaining
$115,000 is requested in order to pay San Bernardino County for the special election
held in May 2019, as well as advertising costs that were underestimated in the
adopted budget. These advertisements are required by CA Govt. Code § 36933
(2018) which stipulates that when ordinances are introduced to the Mayor and City
Council at first reading, a summary must be published in the local newspaper. If this
fails to happen, the City is required to publish the full text of the ordinance, resulting
in advertising costs being significantly higher than expected. Due to short staffing
this fiscal year, the Clerk’s Office had some unforeseen advertising expenses that
will require a budget increase.
Human Resources
The Human Resources department has had some unanticipated investigation/legal
expenses that are expected to exceed budget estimates by $50,000. Due to turnover
and vacancies in this department, there have been some salary and benefits
savings. Staff is requesting a transfer of $50,000 from salary and benefit accounts
(001-110-0001-50xx) to Outside Legal Services (001-110-0001-5503) to cover these
costs (budget transfer, no increase). The Mayor and City Council approved the
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contract for Outside Legal Services on August 7, 2019 for a total amount not to
exceed $300,000. Staff is requesting that the amount not to exceed for the Purchase
Order be increased to the amount of the contract.
Staff is recommending an additional appropriation of $81,300 to pay for the legal
expenses related to the court order for the elected City Attorney and elected City
Clerk’s compensation. (budget increase).
Staff is recommending that the recruitment function of the City be transferred from
the City Manager’s Department to the Human Resources Department (budget
transfer, no increase).
City Manager’s Office
As planned at the beginning of the fiscal year, staff is recommending that the
recruitment function of the City be transferred from the City Manager’s Department
to the Human Resources Department (budget transfer, no increase).
The City Manager’s Office has postponed planned project work to fund the security
services in the downtown City Hall complex this fiscal year.
Community & Economic Development (CED) Department
The Housing Division of the CED Department manages the Housing and Urban
Development (HUD) grants that the City receives. There are various amendments
requested for these grants:
o Staff is requesting that $106,000 of Emergency Solutions Grant (ESG) funds
be allocated to existing, approved partnering non-profit agencies in order to
prevent these funds from being repossessed by HUD. (grant budget increase,
non-general fund)
o Staff is requesting that $10,000 of HOME Administration budgets be
transferred from salary and benefit accounts (117-180-2305-50xx) to outside
legal services (117-180-2305-5503) (budget transfer, no increase).
o Staff is requesting that $170,500 be allocated from the Neighborhood
Stabilization Program (NSP1) fund balance in order to support administrative
functions (120-180-2350) such as salaries and benefits (5011-5029) and
professional contractual services (5502) (grant budget increase, non-general
fund).
Staff is recommending the transfer of Code Enforcement from the Police Department
to the CED Department (budget transfer, no increase).
Police Department
Staff is recommending the transfer of Code Enforcement from the Police Department
to the CED Department (budget transfer, no increase).
Staff is recommending the transfer of $36,375 of part-time salaries from the
Downtown & City Hall program to the Personnel & Training program to reflect where
part-time staff are currently working (budget transfer, no increase).
Staff is recommending the transfer of $16,000 from Small Tools & Equipment to
part-time salaries within the AB109 Grant program (123-210-0972) (budget transfer,
no increase).
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Library
The Library Department is anticipating receiving $12,323 from the California State
Library Association (CSLA) in order to purchase e-resources such as eBooks,
eMagazines, etc. Staff is recommending an increase to both revenues and
expenditures to the Library’s budget to capture this (increase to revenues &
expenditures, no impact to reserves).
The Library Department is anticipating receiving $11,000 of addition grant revenue
for the Makerspace program. Staff recommends amending the budget to accept the
revenue and appropriate the expenditures (grant budget increase, non-general
fund).
Conclusion
It is recommended that the Mayor and City Council adopt Resolution No. 2020 -42,
authorizing amendments to the FY 2019/20 Adopted Budget and related Purchase
Orders as noted within this report.
Attachments
Attachment 1 Resolution
Attachment 2 General Fund Revenue Analysis
Attachment 3 General Fund Expenditure Analysis
Attachment 4 10-Year Financial Model
Attachment 5 PowerPoint Presentation
Resolution No. 2020-42
RESOLUTION NO. 2020-42
RESOLUTION OF THE MAYOR AND CITY COUNCIL OF
THE CITY OF SAN BERNARDINO, CALIFORNIA,
APROVING AND ADOPTING THE CITY OF SAN
BERNARDINO’S FISCAL YEAR 2019/20 BUDGET
UPDATE AND RELATED BUDGET AMENDMENT
ACTION
WHEREAS, the FY 2019/20 Budget Update provides for service levels necessary to
provide a myriad of municipal services, including the ability to respond to protect the health,
safety and welfare of the community, quality of life services, administrative services and others
which are deemed appropriate by the Mayor and City Council, and concurrently provides a
workforce to accomplish them; and
WHEREAS, the City Council intends to use the FY 2019/20 Budget Update document
as a guide for determining the allocation of resources to meet these various City priorities.
BE IT RESOLVED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF
SAN BERNARDINO AS FOLLOWS:
SECTION 1. The above recitals are true and correct and are incorporated herein by this
reference.
SECTION 2. That the certain document entitled “Mid-Year Financial Review – Fiscal
Year 2019/20”, as attached hereto and incorporated is hereby approved and adopted as the FY
2019/20 Budget Update and Related Budget Amendment Action document of the City of San
Bernardino.
SECTION 3. That the budget amendment as documented in the “General Fund
Expenditure Analysis, Attachment 2 to the Staff Report is hereby approved and the Director of
Finance is authorized to amend the FY 2019/20 Budget to include this Amendment.
SECTION 4. That the City Council finds this Resolution is not subject to the California
Environmental Quality Act (CEQA) in that the activity is covered by the general rule that CEQA
applies only to projects which have the potential for causing a significant effect on the
environment. Where it can be seen with certainty, as in this case, that there is no possibility that
the activity in question may have a significant effect on the environment, the activity is not
subject to CEQA.
SECTION 5. Severability. If any provision of this Resolution or the application thereof
to any person or circumstance is held invalid, such invalidity shall not affect other provisions or
applications, and to this end the provisions of this Resolution are declared to be severable.
SECTION 6. Effective Date. This Resolution shall become effective immediately.
Resolution No. 2020-42
APPROVED and ADOPTED by the City Council and signed by the Mayor and attested
by the City Clerk this ___ day of __________, 2020.
John Valdivia, Mayor
City of San Bernardino
Attest:
__________________________________
Georgeann Hanna, MMC, City Clerk
Approved as to form:
__________________________________
Gary D. Saenz, City Attorney
Resolution No. 2020-42
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF SAN BERNARDINO) ss
CITY OF SAN BERNARDINO )
I, Georgeann Hanna, MMC, City Clerk, hereby certify that the attached is a true copy of
Resolution No. _____, adopted at a regular meeting held at the ___ day of _______, 20 20 by the
following vote:
Council Members: AYES NAYS ABSTAIN ABSENT
SANCHEZ _____ _____ _______ _______
IBARRA _____ _____ _______ _______
FIGUEROA _____ _____ _______ _______
SHORETT _____ _____ _______ _______
NICKEL _____ _____ _______ _______
RICHARD _____ _____ _______ _______
MULVIHILL _____ _____ _______ _______
WITNESS my hand and official seal of the City of San Bernardino this ___ day of
____________ 2020.
______________________________
Georgeann Hanna, MMC, City Clerk
GENERAL FUND REVENUE ANALYSIS FOR FISCAL YEAR 2019/20
Budget Budget Projected Variance from
Description of Revenue as Adopted as Amended 6/30/2020 Amended Budget
Fines and forfeitures 1,815,900 1,815,900 1,339,969 (475,931) (A)
Franchise Tax 10,220,000 10,220,000 10,130,000 (90,000) (B)
Impact fees - - - -
Intergovernmental 2,306,000 5,306,000 5,298,178 (7,822)
Investment income 432,000 432,000 450,058 18,058
Licenses & permits 10,453,000 10,453,000 10,987,079 534,079 (C)
Measure Z Sales Tax 9,021,000 9,021,000 9,378,979 357,979 (D)
Miscellaneous 2,446,800 2,446,800 2,436,902 (9,898)
Other Taxes 7,699,100 7,699,100 7,714,199 15,099
Property Taxes in Lieu of VLF 16,805,900 16,805,900 16,805,900 -
Sales and Use Tax 36,619,400 36,619,400 38,323,670 1,704,270 (E)
Charges for services 4,455,900 4,530,249 4,974,015 443,766 (F)
Use of Money and Property 908,000 908,000 959,517 51,517 (G)
Utility Users Tax 23,700,000 23,700,000 23,300,000 (400,000) (H)
Total Revenues 126,883,000$ 129,957,349$ 132,098,468$ 2,141,119$
NOTES:
H - UUT revenues have been trending lower over the last 5 years, we expect this trend to continue as more people discontinue using
landlines.
A - Revenues projected to decrease due to lower than expected activity in Code Admin Civil Penalty.
B - Franchise Fees are on trend to come in slightly lower than budgeted estimates.
C - Permits issued through the Community & Economic Development and Public Works Departments are projected at a higher level
than budgeted.
G - Revenues from rental income is coming in higher than projected.
D - Revenue projection updates from HdL Consultants show increases over current budget.
E - Revenue projection updates from HdL Consultants show increases over current budget.
F - Increase due to higher than expected Police Miscellaneous receipts, Plan Check Fees and Plan reviews, and Engineering Receipts.
GENERAL FUND EXPENDITURE ANALYSIS FOR FISCAL YEAR 2019/20
Variance from Requested
Department Budget Budget Projected Amended Midyear
as Adopted as Amended June 2019 Budget Adjustments
010 Mayor 811,200 811,200 847,356 (36,156) (A)
020 City Council 931,800 938,872 867,661 71,211 (B)
030 City Clerk 779,300 806,300 863,762 (57,462) (C) 172,462 (G)
050 City Attorney 2,319,800 2,319,800 2,407,414 (87,614) (D)1,487,614 (H)
090 General Government 10,478,800 10,481,144 9,926,239 554,905 (E)
100 City Manager 3,179,000 3,180,145 3,087,144 93,001 (B)(41,538) (I)
110 Human Resource 1,064,800 1,314,967 1,311,281 3,686 (B)122,838 (I,J)
120 Finance 3,673,400 3,681,730 3,601,826 79,904 (B)
150 Assessment Districts - 118,755 118,755 -
160 Capital Projects - 1,075,213 956,333 118,880 (F)
180 Community & Economic Development 3,948,600 7,159,462 7,063,917 95,545 (B)571,320 (K)
210 Police 80,164,900 81,009,844 80,237,521 772,323 (B)(571,320) (K)
380 Parks Recreation & Community 4,332,700 4,332,700 4,300,663 32,037 (B)
400 Public Works 15,189,900 15,454,112 15,370,648 83,464 (B)
470 Library 1,812,600 1,820,135 1,796,156 23,979 (B)12,323
Total Expenditures 128,686,800$ 134,504,379$ 132,756,676$ 1,747,703$ 1,753,699$
Budgeted Salary Savings (1,859,800) (1,859,800) - (1,859,800)(B)
Ending Estimated Position 126,827,000 132,644,579 132,756,676 (112,097) 131,997,825 *
* Does not include carryovers.
NOTES:
(A) - The Mayor's department budget is exceeding current year's amended budget due to the use of part time staff exceeding budgeted amounts, vacation payouts, mileage
reimbursements, printing & promotional, and meetings & conferences.
(B) - Salary Savings is budgeted as a credit in one line item, but actual salary savings are captured in each respective department.
(C) - The City Clerk's Office is projecting to exceed budget due to salaries and benefits tied directly to the court decision between the City and Elected Clerk.
(D) - The City Attorney's Office is projecting to exceed budget by $87,000 due to salaries and benefits tied directly to the court decision between the City and Elected Attorney.
(E) - The General Government budget is projecting a net savings of $554,905. Contributing factors are Unemployment Insurance is projected to go over amended budget, and
the payment to Kohls based on the Sales Tax Sharing Agreement is anticipated to exceed budgeted amounts. These overages are offset by a savings projected in the Animal
Control, which receives a transfer of General Funds from this department.
(J) - Staff is requesting an additional appropriation in the Human Resources Department to pay for the legal expenses related to the court order for the elected City Attorney and
elected City Clerk’s compensation ($81,300).
(K) - Staff is requesting the transfer of Code Enforcement from the Police Department to the Community & Economic Development Department (571,320).
(I) - Staff is requesting the transfer of the Recruitment function from the City Manager's Office to the Human Resources Department ($41,538).
(H) - This report is requesting an addition to the City Attorney's budget to the outside legal services account due to unanticipated litigation expenses, and for the salary and
benefit reinstatement of the elected City Attorney.
(F) - The Facilities Assessment Construction CIP Project is completed and expenditures came in under budget.
(G) - This report is requesting an addition to the City Clerk's budget due to unanticipated additional costs for ordinance posting charges and the prior special election, and for the
salary and benefit reinstatement of the elected City Clerk.
City of San Bernardino10-Year Financial Model FY 2018-19 to FY 2027-28 (Measure Z Ending)FY 2018-19 Audited ActualFY 2019-20 AdoptedFY 2019-20 Mid-Year ProjectionFY 2020-21 ForecastFY 2021-22 ForecastFY 2022-23 ForecastFY 2023-24 ForecastFY 2024-25 ForecastFY 2025-26 ForecastFY 2026-27 ForecastFY 2027-28 ForecastREVENUES:Other Taxes 8,219,311 7,699,100 7,714,199 7,813,330 7,892,125 7,966,889 8,042,639 8,119,388 8,208,108 8,303,501 8,405,804 Licenses & Permits 11,250,755 10,453,000 10,987,079 11,110,079 11,182,666 11,257,430 11,334,438 11,496,985 11,704,776 11,916,908 12,133,485 Fines & Forfeitures 2,295,461 1,815,900 1,339,969 1,339,969 1,339,969 1,339,969 1,339,969 1,339,969 1,339,969 1,339,969 1,339,969 Investment Income 844,223 432,000 450,058 450,058 450,058 450,058 450,058 450,058 450,058 450,058 450,058 Use of Money & Property 1,309,153 908,000 959,517 959,517 959,517 959,517 959,517 959,517 959,517 959,517 959,517 Intergovernmental 1,787,758 2,306,000 5,298,178 2,333,178 2,333,178 2,333,178 2,333,178 2,333,178 2,333,178 2,333,178 2,333,178 Charges for Services 6,128,926 4,455,900 4,974,015 5,074,015 5,136,302 5,201,034 5,267,596 5,336,041 5,406,421 5,478,794 5,553,216 Property Taxes in Lieu of VLF 16,054,643 16,805,900 16,805,900 16,973,959 17,143,699 17,315,136 17,488,287 17,663,170 17,839,801 18,018,200 18,198,382 Sales & Use Taxes 38,337,628 36,619,400 38,323,670 38,566,907 39,338,245 40,125,010 40,927,510 41,746,060 42,580,981 43,432,601 44,301,253 Utility Users Tax 22,924,522 23,700,000 23,300,000 23,300,000 23,300,000 23,300,000 23,300,000 23,300,000 23,300,000 23,300,000 23,300,000 Measure Z Sales Tax 9,717,123 9,021,000 9,378,979 9,472,769 7,294,032 - - - - - - Franchise Tax 10,678,437 10,220,000 10,130,000 10,130,000 10,180,650 10,231,553 10,282,711 10,334,125 10,385,795 10,437,724 10,489,913 Miscellaneous 3,061,111 2,446,800 2,436,902 2,436,902 2,440,805 2,444,825 2,448,965 2,453,230 2,417,303 2,421,827 2,426,487 Debt RefundingTotal Consolidated General Fund Revenues: 132,609,052$ 126,883,000$ 132,098,468$ 129,960,684$ 128,991,245$ 122,924,600$ 124,174,868$ 125,531,720$ 126,925,909$ 128,392,278$ 129,891,263$ Council Approved Use of Reserves (Carryovers)2,367,474$ Grand Total 132,609,052$ 126,883,000$ 134,465,942$ 129,960,684$ 128,991,245$ 122,924,600$ 124,174,868$ 125,531,720$ 126,925,909$ 128,392,278$ 129,891,263$ EXPENDITURES:Division Total Total Total Total Total Total Total Total Total Total Total001-010 - Mayor 592,988$ 716,700$ 752,760$ 727,270$ 733,136$ 737,484$ 742,745$ 748,112$ 750,477$ 759,170$ 764,867 001-020 - City Council 785,265 742,800 678,669 762,283 768,913 775,050 781,926 788,936 791,854 803,366 810,792 001-030 - City Clerk 862,820 703,700 903,177 714,528 722,733 731,208 739,854 748,676 750,495 766,859 776,228 001-050 - City Attorney 2,811,393 2,263,100 3,750,718 2,268,425 2,273,626 2,277,989 2,282,922 2,288,153 2,289,521 2,299,038 2,304,707 001-090 - General Government 8,216,247 7,119,000 8,426,239 7,266,964 7,234,371 7,463,339 6,471,461 6,483,978 6,485,700 6,681,644 6,694,927 PERS - Unfunded Liability Payment 18,880,450 22,229,700 22,229,561 27,432,150 30,765,000 33,740,000 35,495,000 37,380,000 38,405,000 39,465,000 40,490,000 Merit Increases600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 Transfer to BK Fund 3,918,719 1,500,000 1,500,000 900,000 100,000 50,000 001-100 - City Manager 2,612,717 2,895,600 2,762,235 2,828,797 2,855,689 2,883,141 2,911,167 2,939,777 2,946,681 3,005,986 3,312,495 001-110 - Human Resources 1,000,512 983,600 1,352,922 1,096,930 1,109,842 1,122,185 1,133,914 1,146,740 1,148,921 1,173,173 1,184,798 001-120 - Finance 4,838,189 3,219,800 3,148,256 3,252,320 3,281,430 3,311,134 3,341,446 3,372,378 3,381,006 3,436,156 3,469,029 001-150 - Assessment Districts118,755 001-160 - Capital Projects 3,892,286 956,333 001-180 - Community Development 3,698,510 3,589,600 7,276,246 4,744,388 4,785,321 4,837,255 4,890,266 4,941,107 5,207,917 4,785,499 4,836,897 001-210 - Police 63,598,258 61,535,100 61,036,445 61,051,132 61,678,759 62,016,237 62,498,833 62,991,791 63,212,764 64,012,437 64,540,692 001-380 - Parks Recreation and Community Services 3,711,485 3,985,900 3,953,889 4,028,825 4,073,240 4,118,610 4,164,956 4,212,302 4,218,010 4,310,085 4,360,568 001-400 - Public Works 19,083,537 13,718,800 13,899,611 13,891,548 14,072,327 14,256,980 14,445,593 14,629,388 14,655,401 15,008,952 15,204,900 001-470 - Library 1,675,137 1,623,600 1,619,483 1,640,946 1,654,041 1,667,407 1,681,050 1,694,976 1,698,399 1,723,703 1,738,515 Total General Fund: 140,178,515$ 126,827,000$ 134,365,299$ 133,206,505$ 136,708,428$ 140,588,019$ 142,181,133$ 144,966,314$ 146,542,146$ 148,831,068$ 151,089,414$ Net Consolidated General Fund Surplus / (Deficit):(7,569,463)56,000 100,643(3,245,820) (7,717,183) (17,663,419)(18,006,264) (19,434,594) (19,616,238) (20,438,790) (21,198,151)Projected Beginning Fund Balances 39,112,915 31,543,452 31,543,45229,276,621 26,030,800 18,313,618 650,199(17,356,066) (36,790,660)(56,406,897) (76,845,687)Projected Ending Fund Balances31,543,452 31,599,452 31,644,095 26,030,800 18,313,618 650,199(17,356,066) (36,790,660) (56,406,897) (76,845,687) (98,043,838)Programmed Use of ReservesCouncil Approved Use of Reserves (Carryovers)2,367,474Net Consolidated Fund Ending Fund Balance 31,543,452 31,599,452 29,276,621 26,030,800 18,313,618 650,199(17,356,066) (36,790,660) (56,406,897) (76,845,687) (98,043,838)
Major Assumptions & Explanations:1. Assumes no renewal for Measure Z.2. The Model assumes no Cost of Living Salary adjustments beyond FY 2019/20.3. The Model assumes merit increases at an annual cost of $600,000.4. The Model assumes Salary Savings of $1,859,800 on an annual basis.5 Compared to the Plan presented to Council in June of 2019, the projected budget deficit for FY 2020/21 has improved from a deficit of $4.5 million to $3.2 million.6. The General Fund is projected to end FY 2020/21 with a fund balance of $26 million compared to $21 million projected in June 2019.7. Sales Tax and Measure Z revenues are seeing sizeable growth compared to the FY 19/20 plan present to council.8. Business Registration is also seeing slight increase.9. PERS Unfunded Accrued Liability (UAL) increasing by $5.2 million in FY 20/21 and by $18.3 million by FY 27/28. * Note: The Miscellaneous (Non-Safety) portion of the UAL is split with the Water Department paying 35% and the City paying 65%. This split is subject to change in future years depending on staffing levels in each respective organization. In addition, this model assumes no discount which comes with prepaying the UAL. Finally, the model assumes the General Fund paying all of the city's portion.
Mid-Year Budget Update
FY 2019/20
1
Fund Balance
3,670,900
10,327,100
15,260,400
32,517,700
30,218,400
38,995,700
31,543,452
29,276,621
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
FY 2012-13
Actual
FY 2013-14
Actual
FY 2014-15
Actual
FY 2015-16
Actual
FY 2016-17
Actual
FY 2017-18
Actual
FY 2018-19
Actual
FY 2019-20
Projected
General Fund Ending Spendable Fund Balance
2
General Fund Revenue to Expenditures
126,883,000 129,957,349 132,098,468
126,827,000
132,644,579 131,997,825
56,000 (2,687,230) 100,643
(20,000,000)
-
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
Adopted Amended Projected
General Fund Revenues to Expenditures FY 2019-20
Revenues Expenditures Gain (Loss)
*Does not include carryovers 3
General Fund Ending Position
FY 2019/20 Projected
FY 2019/20 Projected Change in General Fund
Balance/Reserves
Adopted
Budget
Amended
Budget
Projected
Budget
Beginning Fund Balance 7/1/2019 (Audited)31,543,452 31,543,452 31,543,452
(Deductions)/Additions to Reserves:
Net Operating Gain (Loss)56,000 (319,756) 100,643
Use of Reserves for Carryovers (2,367,474) (2,367,474)
Projected 2019/20 Ending Fund Balance 31,599,452 28,856,222 29,276,621
4
Total General Fund Revenues FY 2019/20
Adopted Budget Amended Budget Projected June 2020 Variance from Amended
Budget
Revenues 126,883,000 129,957,349 132,098,468 2,141,119
-
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
5
General Fund Revenues by Major Category
Property Taxes in
Lieu of VLF Sales and Use Tax Utility Users Tax Licenses & permits Measure Z Sales Tax
Adopted Budget 16,805,900 36,619,400 23,700,000 10,453,000 9,021,000
Amended Budget 16,805,900 36,619,400 23,700,000 10,453,000 9,021,000
Projected June 2020 16,805,900 38,323,670 23,300,000 10,987,079 9,378,979
Variance -1,704,270 (400,000)534,079 357,979
(5,000,000)
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
6
General Fund Revenues by Major Category
(continued)
Franchise Tax Other Taxes Charges for services Fines and forfeitures
Adopted Budget 10,220,000 7,699,100 4,455,900 1,815,900
Amended Budget 10,220,000 7,699,100 4,530,249 1,815,900
Projected June 2020 10,130,000 7,714,199 4,974,015 1,339,969
Variance (90,000)15,099 443,766 (475,931)
(2,000,000)
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
7
8
GENERAL FUND EXPENDITURE ANALYSIS FOR FISCAL YEAR 2019/20
Variance from Requested
Department Budget Budget Projected Amended Midyear
as Adopted as Amended June 2019 Budget Adjustments
010 Mayor 811,200 811,200 847,356 (36,156)
020 City Council 931,800 938,872 867,661 71,211
030 City Clerk 779,300 806,300 863,762 (57,462) 172,462
050 City Attorney 2,319,800 2,319,800 2,407,414 (87,614) 1,487,614
090 General Government 10,478,800 10,481,144 9,926,239 554,905
100 City Manager 3,179,000 3,180,145 3,087,144 93,001 (41,538)
110 Human Resource 1,064,800 1,314,967 1,311,281 3,686 122,838
120 Finance 3,673,400 3,681,730 3,601,826 79,904
150 Assessment Districts - 118,755 118,755 -
160 Capital Projects - 1,075,213 956,333 118,880
180 Community & Economic Development 3,948,600 7,159,462 7,063,917 95,545 571,320
210 Police 80,164,900 81,009,844 80,237,521 772,323 (571,320)
380 Parks Recreation & Community 4,332,700 4,332,700 4,300,663 32,037
400 Public Works 15,189,900 15,454,112 15,370,648 83,464
470 Library 1,812,600 1,820,135 1,796,156 23,979 12,323
Total Expenditures 128,686,800$ 134,504,379$ 132,756,676$ 1,747,703$ 1,753,699$
Budgeted Salary Savings (1,859,800) (1,859,800) - (1,859,800)
Ending Estimated Position 126,827,000 132,644,579 132,756,676 (112,097) 131,997,825 *
* Does not include carryovers.
General Fund Expenditures FY 2019/20
Significant Points and Requested Amendments:
Police Department
Transfer of Code Enforcement to Community & Economic
Development.
Transfer of $36,375 of part-time salaries from the Downtown &
City Hall program to the Personnel & Training program.
Transfer of $16,000 from Small Tools & Equipment to part-time
salaries within the AB109 Grant program (Non General Fund).
9
General Fund Expenditures FY 2019/20
Significant Points and Requested Amendments (continued):
City Attorney
Projected overage of $87,000 due to reinstatement of salary,
benefits, and leave cash outs to the elected City Attorney.
Unanticipated outside litigation expenses are projected to
require an additional $1.4 million.
10
General Fund Expenditures FY 2019/20
Significant Points and Requested Amendments (continued):
City Clerk
Projected overage of $57,000 due to reinstatement of salary,
benefits, and leave cash outs to the elected City Clerk.
Unanticipated additional costs for ordinance posting and the
prior special election will require $115,000 be added to the
budget.
11
General Fund Expenditures FY 2019/20
Significant Points and Requested Amendments (continued):
Human Resources
Staff is requesting an additional appropriation to pay for the legal
expenses related to the court order for the elected City Attorney
and elected City Clerk’s compensation ($81,300).
Transfer of Recruitment from the City Manager’s Office.
Transfer of $50,000 from salary savings to Outside Legal Services
for investigations/employment law related issues.
12
General Fund Expenditures FY 2019/20
Significant Points and Requested Amendments (continued):
Community & Economic Development
Transfer of Code Enforcement from the Police Department
Various transfers within the Housing Division (Non General
Fund) :
$106,000 of Emergency Solutions Grant funds be allocated to
existing, approved partnering non-profit agencies.
$10,000 of HOME Administration budgets be transferred from
salary and benefit accounts to outside legal services.
$170,500 be allocated from NSP1 fund balance in order to
support administrative functions such as salaries, benefits and
professional contractual services.
13
General Fund Expenditures FY 2019/20
Significant Points and Requested Amendments (continued):
City Manager’s Office
Transfer of Recruitment to Human Resources.
Library
$12,323 from California State Library Association (CSLA) in
order to purchase e-resources. Increase to both revenues and
expenditures.
$11,000 for the Makerspace Grant. Accept the revenue and
appropriate the expenditures.
14
Bankruptcy Related Expenditures
Total Projected BK Costs FY 2019/20 are $1.5 million.
Compared to $4.2 million in FY 2018/19 and $6.2
million in FY 2017/18.
15
General Fund Reserves by Category
16
Analysis of Reserve Policy Targets
Target Reserves
per Policy
Actual
Reserves at
6/30/19
Use of /
Contribution to
Reserves
Projected
Available
Reserves 6/30/20
Operating Reserve:
Emergency Reserve - 15% of adopted budget 19,024,050 19,024,050 0 19,024,050
Economic Contingency Reserve -10% of adopted budget 12,682,700 10,151,928 100,643 10,252,571
Assigned for Carryovers 2,367,474 (2,367,474) 0
Unassigned:0 0 0 0
31,706,750 31,543,452 (2,266,831) 29,276,621
Other Funds (Non – CIP)
Variance from
Fund Name Budget,Budget Projected Amended
as Adopted as Amended June 2019 Budget
Gas Tax Fund (Operations Only)5,365,900 5,576,300 5,572,633 3,667
Measure I Fund (Operations Only)1,650,000 1,650,000 1,650,000 -
Animal Control Fund 2,563,200 2,922,000 2,531,209 390,791
General Liability Fund 2,625,700 2,789,915 2,738,748 51,167
Workers' Compensation Fund 5,843,800 5,843,800 5,910,319 (66,519)
Fleet Services Fund (Operations Only) 3,371,100 3,372,524 3,302,323 70,201
Information Technology Fund 4,493,400 4,554,399 4,468,601 85,798
Totals 25,913,100$ 26,708,938$ 26,173,833$ 535,105$
17
10-Year Financial Model
Revenues
Measure Z sunsets in April 2022, model assumes those revenues not
continuing
Sales Tax revenues came in stronger in FY 18/19 and projections have been
adjusted up
Plan assumes modest growth for Property Tax – in Lieu of VLF.
Utility Users Tax projected to remain flat at best.
Expenditures
Expenditure budget assumes no growth with PERS being the main exception.
PERS Unfunded Liability increasing by $5.2 million next Fiscal Year and by
$18.3 million in FY 2027/28.
No Cost Of Living adjustments beyond FY 2019/20.
FY 2018-19
Audited Actual
FY 2019-20
Adopted
FY 2019-20
Mid-Year
Projection
FY 2020-21
Forecast
FY 2021-22
Forecast
FY 2022-23
Forecast
FY 2023-24
Forecast
FY 2024-25
Forecast
FY 2025-26
Forecast
FY 2026-27
Forecast
FY 2027-28
Forecast
General Fund Revenues 132,609,052 126,883,000 134,465,942 129,960,684 128,991,245 122,924,600 124,174,868 125,531,720 126,925,909 128,392,278 129,891,263
General Fund Expenditures 140,178,515 126,827,000 134,365,299 133,206,505 136,708,428 140,588,019 142,181,133 144,966,314 146,542,146 148,831,068 151,089,414
General Fund Budget Surplus/ (Deficit)(7,569,463)56,000 100,643 (3,245,820)(7,717,183)(17,663,419)(18,006,264)(19,434,594)(19,616,238)(20,438,790)(21,198,151)
Ending Fund Balance 31,543,452 31,599,452 29,276,621 26,030,800 18,313,618 650,199 (17,356,066)(36,790,660)(56,406,897)(76,845,687)(98,043,838)
18
•FY 2020/21 Budget Development underway
•Budget workshops in May
•Questions/Discussion
FY 2019/20 Mid-Year Budget Review Conclusion
19