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CC 03-06-2018 Exhibit Item No. 14 Mid-Year Powerpoint Presentation FY2017-18March 6, 2018FY 2017-18Mid-Year Financial Report Budget Cycle General Fund at 2017 Fiscal Year-EndExpenditures were $6.9 million below budget appropriations 1.$ 1.5 Million in Vacancy Salary savings2.$ 800,000 in Contingency savings3.$5.1 Million in Materials and Supplies, Special Projects, and Contract Services savings FY 2017-18 Amended Budget $205,349,050 FY 2017-18 Budget AdjustmentsFundFY 17‐18 Final AdoptedCarryovers EncumbrancesAdjustments Approved in 1st‐2nd QuartersFY 17‐18 Amended Budget as Dec 31, 2017General$75,051,233 $11,974,549 $4,529,247 $6,256,918 $97,811,947Special Revenue$24,872,591 $21,061,815 $4,362,855 $213,344 $50,510,605Debt Service$3,167,538 ‐ ‐ ‐ $3,167,538Capital Projects$23,509,762 $5,971,870 $839,842 $2,270,000 $32,591,474Enterprise$10,576,992 $1,438,826 $38,195 $12,054,013Internal Service $11,690,063 $686,475 $762,015‐$3,925,080 $9,213,473Total All Funds$148,868,179 $41,133,535 $10,532,154 $4,815,182 $205,349,050 5 Year History – General Fund Revenues Mid-Year Changes to General Fund RevenuesRevenue – $2,600,000Sales Tax $1,000,000 Property Tax $1,600,000 5 Year History – General Fund Expenditures General Fund - Fund BalanceYear End Projections ActualsAdopted BudgetFirst QuarterMid‐Year ProjectionsCLASSIFICATION 2016‐17 2016‐17 2017‐18 2017‐18 2017‐18Non Spendable 0.94 0.88 1.10 0.94 0.94 Restricted 0.69 1.02 0.76 0.69 1.01 Committed 11.60 19.00 ‐ * 10.43 19.00 Assigned 20.50 4.64 36.80 23.86 15.95 UnAssigned 11.28 28.05 6.75 19.85 13.21 TOTAL FUND BALANCE45.01 53.5945.4155.77 50.11 Mid-Year Requests by FundFund Amended Budget as of Dec 31, 2017Requested Mid‐Year Adjustments Year End ProjectionsGeneral$97,811,947 $12,068,805$109,880,752 Special Revenue$50,510,605 ‐$50,510,605 Debt Service$3,167,538‐$3,167,538 Capital Projects$32,591,474 ‐$32,591,474 Enterprise$12,054,013‐$12,054,013 Internal Service $9,213,473 $75,900 $9,289,373 Total All Funds$205,349,050 $12,144,705$217,493,755 Mid-Year Adjustments by DepartmentDepartment Expenditure Revenue Fund BalanceAdministration 14,300$ ‐$ (14,300)$ Administrative Services 489,905$ 1,475,900$ 985,995$ Innovation and Technology 43,400$ ‐$ (43,400)$ Law Enforcement 60,000$ 69,000$ 9,000$ Public Works 100,000$ ‐$ (100,000)$ Recreation and Community Services 37,100$ ‐$ (37,100)$ Non‐Departmental 11,400,000$ 12,600,000$ 1,200,000$ Total ALL FUNDS 12,144,705$ 14,144,900$ 2,000,195$ Mid-Year Adjustments by DepartmentAdministration - $14,300Matching Funds to Remove Barrier to Fish Passage $9,900Full-time Community Outreach Specialist (30%) $4,400 Mid-Year Adjustments by DepartmentAdministrative Services - $489,905Contract Adjustment – Muni Services $384,820Account Clerk I/II $29,185Short-term disability budget in the $75,900Internal Service Fund** This request includes off-setting revenue resulting in a net zero impact Mid-Year Adjustments by DepartmentInnovation and Technology - $43,400Disaster Modeling and Planning for Seismic Activity $43,400 Mid-Year Adjustments by DepartmentLaw Enforcement - $60,000Sheriff Pass thru Expenses* $60,000* This request is completely covered with off-setting revenue Mid-Year Adjustments by DepartmentRecreation and Community Services - $37,100Part-time staff costs for Neighborhood Events Planning $37,100 Mid-Year Adjustments by DepartmentPublic Works - $100,000Carmen Road Pedestrian/Bike Bridge Study $100,000 Mid-Year Adjustments by DepartmentNon-Departmental $11,400,000Transfer out fund balance to the Retiree Health Fund $1,400,000Transfer out excess fund balance to Capital Reserve $10,000,000 Mid-Year Staffing●Current Full-time Benefited Positions – 193.75●Account Clerk I/II and the Conversion of Limited Term Special Programs Coordinator to a Community Outreach SpecialistTotal Costs FY 2017‐18FY 2018‐19Account Clerk I/II $29,185 $100,491Community Outreach Specialist $4,400 $110,428TOTAL$33,585 $210,919 Update - Changes in CalPERS●May 2017 ●Briefed Council on discount rate changes●Set aside $4.8 million as a CalPERS reserve●October 2017 – Staff attended CalPERS Board Meeting●November 2017 – Acquired GovInvest Software●February 2018 – Met with CalPERS actuary CalPERS Assumption Changes●Recent changes to CalPERS actuarial assumptions:●CalPERS discount rate changing from 7.5% to 7.0% over three years●Amortization period for new pension liabilities decreasing from 30 years to 20 years ●Potential for significant increases to City’s annual required contributions Pension StatusJune 30, 2015 June 30, 2016Actuarial Accrued Liability$ 111.2 M $ 118.5 MActuarial Value of Assets$ 77.9 M $ 77.9 MUnfunded Accrued Liability (UAL)$ 33.3 M $ 40.6 MFunded Ratio70.1% 65.8%Source: CalPERS Actuarial Valuation Report as of June 30, 2016 Projected Future CalPERS ContributionsFY 2017-18 FY 2024-25 Increase ($) Increase (%)Projected Payroll$ 15.2 M $ 19.8 M $ 4.6 M 29.9%Normal Cost$ 1.6 M $ 2.3 M $ 0.9 M 44.7%UAL Payment$ 2.4 M $ 4.9 M $ 2.5 M 106.1%Total Cost $ 4.0 M $ 7.2 M $ 3.2 M 81.7%Note: Illustrative only and based on the projected payroll shownSource: CalPERS Actuarial Valuation Report as of June 30, 2016 Funding Options●To reduce the risk of contribution increases in the future, the City has several options:●Pre-paying the UAL●Establishing and funding a Section 115 Trust●Expedite amortizing the UAL over 20 years instead of 30 years Pre-paying the UAL●Advantages:●Decreases the City’s UAL●Disadvantages:●These funds are subject to the same market volatility risk as the CalPERS investment pool●Minimal impact on the City’s annual required contributions due to amortization Establishing a Section 115 Trust●Advantages:●Local control over assets●Pension rate stabilization●Potential for higher investment returns●Diversification from CalPERS investment pool●Disadvantages:●Assets are restricted to retirement plan purposes Changing the amortization from 30 years to 20 years●Advantages:●Increase future average funding ratios●Provide faster recovery of funded status following market downturns●Decrease cumulative interest contributions●Disadvantages:●Potential for higher contributions in certain years Next Steps - CalPERS●Late March/Early April – Fiscal Strategic Committee●May – Present Funding Strategy to Council Next Steps●FY 2017-18●3rd Quarter Report to Council May 15, 2018 ●FY 2018-19●Proposed Budget available May 1, 2018 ●Proposed Budget Study Session May 15, 2018●Final Budget Hearing & Adoption June 6, 2018 Recommendations1.Accept the City Manager’s Mid-Year Financial Report2.Adopt Resolution 18-020 approving Mid-Year Budget adjustments Questions?