The URL can be used to link to this page

Home My WebLink AboutMinutes - June 27, 2023 SSFiscal Year 2021/22 General Fund Balance in Excess of Reserve Requirement Presented by Andrew Keys, Deputy City Manager •Longstanding City Council adopted budget and fiscal policies require a General Fund reserve equal to 16% of repeatable revenue in a given year. •The reserve is split into two equal parts for Catastrophic and Economic reserves. •One time revenues and associated expenditures (ie FEMA reimbursements, settlements, or large single sales tax receipts, etc.), bond proceeds, limited duration revenue (rental from Department of Water Resources) are not considered in the calculation. •Reserves restricted for or allocated to specific projects/purposes are also not factored (ieMicroLoanprogram, DIVCA, Pension Stabilization Fund, etc.). •Council adopted a Pension Stabilization Policy (PSP) in 2017 requiring investment of funds in excess of 16% into City pension accounts at PARS or at PERS. •Until June 7, 2023, the policy required 100% of excess reserves be invested at PARS. •June 7, 2023 PSP adopted for FY 2023/24 made the following changes. •Maximum annual GF pension investment is 5% of GF revenues. •Investments are to be made at PARS until balance is equal to 5% of total CalPERS liability. •Additional amounts are to be invested in PERS as Additional Discretionary Payments (ADP). •Funds in excess of 21% are to be brought to Council for programming to various one time projects. •Budget and Fiscal Policies were adopted on June 7 with the PSP suspended temporarily. Background 2 •$7,160,260 is available for allocation. •Per the FY 22/23 Pension Stabilization Policy, 100% of this amount was to be invested in PARS. FY 2021/22 Available Resources 3 Revenue 72,541,500$ Fund Balance 18,766,900$ 16% Requirement 11,606,640$ Reserve Above Requirement 7,160,260$ •City Council considered and adopted a revised PSP on June 7 for Fiscal Year 2023/24. •Applying the revised Policy to Fiscal Year 2021/22 reserves gives $3.5 million available for allocation. Revised Pension Stabilization Policy 4 Revenue 72,541,500$ Fund Balance 18,766,900$ 16% Requirement 11,606,640$ Reserve Above Requirement 7,160,260$ Pension Investment Required by Policy 3,627,075$ Available for Allocation 3,533,185$ •The current PSP is suspended until Council takes action on FY 2021/22 reserves. •Council has the following options: OPTION 1:Invest the entire $7.1 million towards pensions as was required under the previous PSP. $0 to allocate to one time projects. OPTION 2: Apply the formulas from the FY 2023/24 PSP to invest in pensions with the excess available for Council consideration. $3.5 million to allocate to one time projects. OPTION 3: Apply a separate formula at Council discretion to allocate all $7.1 million. Up to $7.1 million to allocate to one time projects. •Staff recommends reinstating the PSP regardless of the option selected. •Option 1 prioritizes Council Strategic Imperative 3 Fiscal Health, specifically milestone 3.E to improve pension funding. •Should Council select Option 2 or 3, Council will be asked to allocate the additional one time funds to various projects. Allocation Options 5 •Department Heads submitted projects for consideration based on immediate needs in their department. •All align with City Council strategic imperatives and the overwhelming majority represent deferred maintenance/funding needs. •City staff met individually with Council to discuss this process, staff recommendations and seek input for additional projects to consider. •The following tables show staff’s recommendation for projects to fund and potential alternative projects for Council consideration. •It is important to note this is a non comprehensive list of City deferred maintenance, capital and project needs. Projects for Consideration 6 •Option 1 invests all $7.1 million into pensions and prioritize SI 3.E. •The first dollars would be invested in PARS to reach the 5% of total liability target set by the PSP adopted on June 7. •Additional dollars would be invested as ADP at CalPERS to buy down the total liability. •Council would need to direct staff on how to treat non General Funds. •Per the PSP, non General Funds with the exception of Library and Parks, are required to fund PARS/ADP investments in relation to their share of total pension costs. •These funds have sufficient fund balance to support additional investment. Staff Recommendations –Option 1 7 •Option 2.A leaves Council with $3.5 million to allocate freely. •This option honors the current PSP and prioritizes SI 3.E on pension funding utilizing over 50% of the funds towards pensions which are the largest liability the City has. Staff Recommendations –Option 2.A 8 Total Available 7,160,260$ Pension Funding Per FY 23/24 PSP 3,627,075$ Available for Allocation 3,533,185$ •Staff recommends the following projects with the remaining $3.5 million to address Strategic Initiatives 1, 2, 3, 5 and 6. Staff Recommendations –Option 2.A 9 Project Funded Amount Council Imperative/ Milestone Extraordinary Litigation Costs 250,000$ 3.All Hutchins Street Square Roof Phase II 2,500,000$ 5.C/6.C Lodi Lake North Restroom Roof and Fire Damage Repair 283,000$ 5.C/6.B Lodi Lake Fire Mitigation - Tree Maintenance 250,000$ 5.C/5.B Economic Development Strategic Plan 100,000$ 2.A Skate Park Repair and 1 Year Bathrooms 95,000$ 5.C/6.C Downtown Specific Plan * or Unallocated transfer to Parks Capital 55,185$ 1.All or 6 Total Allocation 3,533,185$ * Total project cost is estimated at $750,000 Alternative Option 2.B 10 •Council can elect Option 2 to follow the formulas in the newly adopted PSP and select alternative projects for the remaining $3.5 million. •A list of potential projects begins on slide 14 of this presentation after discussion of Option 3 alternatives. •Option 3.A leaves Council with $7.1 million to allocate freely. •If Council selects this option Staff recommends prioritizing some funds to address SI 3.E on pension funding. •As of May 31, 2023, the City was approximately $2.1 million short of the PARS ceiling of 5% of combined Safety and Miscellaneous liability adopted in the policy. The General Fund’s share is just shy of $1.6 million. •Following this recommendation, Council would have approximately $5.6 million to allocate freely. Staff Recommendations –Option 3.A 11 Total Available 7,160,260$ Pension Funding to reach 5% of PERS Liability* 1,587,008$ Available for Allocation*5,573,252$ * Amount will change based on June 30, 2023, PARS statement. •Staff recommends the following projects with the remaining $5.6 million to address Strategic Initiatives 1, 2, 3, 5, 6 and 7. Staff Recommendations –Option 3.A 12 Project Funded Amount Council Imperative/ Milestone Extraordinary Litigation Costs 250,000$ 3.All Hutchins Street Square Roof Phase II 2,500,000$ 5.C/6.C Lodi Lake North RestroomFire Damage Repair 283,000$ 5.C/6.B Lodi Lake Fire Mitigation - Tree Maintenance 250,000$ 5.C/5.B Economic Development Strategic Plan 100,000$ 2.A Skate Park Repair and 1 Year Bathrooms 95,000$ 5.C/6.C Downtown Specific Plan 750,000$ 1 PRCS Master Plan 150,000$ 6 White Slough Training Facility 1,195,252$ 7.B/2.D Total Allocation 5,573,252$ Alternative Option 3.B 13 •Council can elect Option 3 to fund the PARS balance to 5% of the total PERS liability as outlined as one target in the newly adopted PSP and select alternative projects for the remaining approximately $5.7 million. •A list of potential projects begins on slide 14 of this presentation after discussion of Option 3 alternatives. Alternate Projects for Consideration – 1. Downtown 14 Request Amount Requested Historical Buildings Survey and Inventory 1.B 50,000$ Downtown Business Alliance request for Downtown Aesthetic and Maintenance Funding 1.F 125,000$ Decorative String Lighting on Downtown trees 1.F 150,000$ Downtown Specific Plan 1.All 2.All and 4.B 750,000$ Total 1,075,000$ City Council Strategic Imperative/Milestone Alternate Projects for Consideration – 2. Economic Development 15 Request Amount Requested Business Acceleration Grants 2.B 2.G 100,000$ Economic Development Strategic Plan 2.A 100,000$ Total 200,000$ City Council Strategic Imperative/Milestone Alternate Projects for Consideration – 3. Fiscal Health 16 Request Amount Requested Extraordinary Litigation Costs 3.C 250,000$ Cost overages on new truck outfitting 3.D 7.F 315,000$ PERS Combined Safety and MISC UAL as of 6.30.21 Actuarial Reports*3.E 3.C 158,579,250$ Total 159,144,250$ City Council Strategic Imperative/Milestone * As of May 31, 2023, the General Fund share to achieve 5% of total PERS liability invested at PARS is $1,587,008. Per the FY 2023/24 PSP, the General Fund investment to pension funding would be $3,627,075. Alternate Projects for Consideration – 4. Housing 17 Request Amount Requested Housing Element Update 4.All 1.A 1,500,000$ Stockton Street & Main Street Properties – (Master Planning & Phased Improvements)4.C 5.B 1,000,000$ Total 2,500,000$ City Council Strategic Imperative/Milestone Alternate Projects for Consideration – 5.C Infrastructure –Deferred Maintenance 18 Request Amount Requested Central Ave and Hilborn St Alley Drainage Concern 5.C 300,000$ Alley Resurfacing - South of Pine between Garfield and Central 5.C 300,000$ Alley Resurfacing - South of Tokay between Garfield and Cherokee 5.C 300,000$ HSS Parking Lot(s) Overlay Improvements and Tripping Hazards 5.C 6.C 1,100,000$ Hutchins Street Square Roof Phase II 5.C 6.C 2,500,000$ Hutchins Street Square Charlene Powers Lange Performing Arts Theatre Fire Curtain Infrastructure 5.C 6.C 30,000$ Hutchins Street Square Interior Improvements 5.C 6.C 320,000$ Hutchins Street Square Auto Shop Windows and outside improvements 5.C 6.C 30,000$ Hutchins Street Square Booster Pump 5.C 6.C 28,000$ Lodi Lake Fire Mitigation - Tree Maintenance 5.C 250,000$ Lodi Lake North Restroom Roof and Fire Damage Repair 5.C 6.B 283,000$ Softball Complex Parking Lot Reconstruction 5.C 6.C 1,000,000$ Blakely Swim Complex Building Roof 5.C 6.C 100,000$ Grape Bowl Field House Area Paving Improvements 5.C 6.C 1,000,000$ Skatepark Repair and 1 Year Bathrooms 5.C 6.C 95,000$ Replace aged carpet in police station 5.C 100,000$ Total Deferred Maintenance 7,736,000$ City Council Strategic Imperative/Milestone Alternate Projects for Consideration – 5. Infrastructure 19 Request Amount Requested Security Camera at Tokay St/Central Av and Tokay St/Stockton St 5.A 50,000$ Upstairs Rehabilitation 315 W. Elm St. for Office Space 5.D 5.B 1,500,000$ Space Planning Master Plan for office and COED accommodations 5.D 5.B 250,000$ Total 1,800,000$ Total all Infrastructure 9,536,000$ City Council Strategic Imperative/Milestone Alternate Projects for Consideration – 6. Parks 20 Request Amount Requested PRCS Master Plan 6 150,000$ Hutchins Street Square Security Cameras 6.C 64,000$ Hutchins Street Square External Digital Marquee Sign 6.C 50,000$ Salas Park – Sports Lighting Phase II 6.C 1,000,000$ Skatepark - Planning 6.C 175,000$ New Skatepark - existing location 6.C 5.C 2,380,000$ New Skatepark - new location 6.C 5.C 4,885,000$ Total 8,704,000$ City Council Strategic Imperative/Milestone Alternate Projects for Consideration – 7. Safety 21 Request Amount Requested Explosive Ordinance Disposal Robot 7.A 3.D 250,000$ White Slough Training Facility 7.B 2.D 8,600,000$ Lucas Device 7.C 50,000$ Standards of Cover 7.F 7.D 30,000$ Radar Trailers 7.H 3.D 18,000$ Total 8,948,000$ City Council Strategic Imperative/Milestone Alternate Projects for Consideration – 8. Public Well Being 22 Request Amount Requested Local Non Profit Grant Program 8 200,000$ WOW Museum Hazardous Waste Disposal 8.B 1.F 66,050$ Total 266,050$ City Council Strategic Imperative/Milestone Questions? 23