FY 2024-25
Mid Year Review &
General Fund
Financial Forecast
GROVERBEACH.ORG
Nick Szamet
Administrative Services Director
GF Summary – FY 2024-25
GROVERBEACH.ORG
• Projecting slightly less
revenues than budgeted.
• Overall, lower than
anticipated cost for labor and
supplies/services has
resulted in a larger surplus.
Budget Estimated
Revenue 18,674,000 18,592,000
Expenses 18,629,000 18,075,000
Surplus/(Deficit) 45,000 517,000
Beginning Reserves 5,295,000 5,295,000
Ending Reserves 5,340,000 5,812,000
Percent of operating 30% 33%
GF Revenue – Top 5
GROVERBEACH.ORG
41%
39%
7%
7% Budget Estimated Over/(Under) 6%
Percent of
Budget
1 Property Tax 5,949,000 6,152,000 203,000 103%
2 Sales Tax 6,170,000 5,812,000 (358,000) 94%
3 Transient Occupancy Tax 1,186,000 1,001,000 (185,000) 84% 4 Cannabis Tax 1,224,000 1,070,000 (154,000) 87%
5 Franchise Fees 947,000 848,000 (99,000) 90%
General Fund Expenditures
GROVERBEACH.ORG
Budget Projected Variance
Salaries and Benefits 9,581,000 9,174,000 (407,000)
Supplies and Services 7,846,000 7,612,000 (234,000)
Minor Capital 55,000 142,000 87,000
Debt Service 297,000 297,000 -
Transfers Out (CIP & ERF) 850,000 850,000 - -
2 4
6 8
10 12
Salaries
and
Benefits
Supplies
and
Services
Minor
Capital
Debt
Service
Transfers
Out (CIP &
ERF)
Millions
Budget Estimated
Water Fund - 601
GROVERBEACH.ORG
Revenues
• Have been returned to the 2021 Rate Study
• Another 4% Rate increase July 1, 2025
Expenditures
• Capital projects for Automated Meter Reading, 16th Street Booster and Water Main Zone Values have been removed or reduced to minimize impact to reserves. • Structural deficit is likely to widen in coming years without increase in rates Bottom Line
• Reserves are diminishing
• The “unexpected” could create a challenging situation • Repayment for Calvin Court. offsets larger shortfall. -
1 2
3 4
5 6
2023-24 2024-25
Millions
Revenue Expense
Wastewater Fund - 603
GROVERBEACH.ORG
Revenues
• Have been returned to the 2021 Rate Study
• Final 4% increase on July 1, 2025
Expenditures
• Minimized to conserve reserves
• Capital projects reduced to ensure minimum reserves
Bottom Line
• Like Water Fund, the current rate structure will not sustain the fund to maintain fiscal solvency.
-
0.50 1.00
1.50 2.00
2.50 3.00
2023-24 2024-25
Millions
Revenue Expense
Midyear appropriations requests
GROVERBEACH.ORG
• Midyear requests are driven by
higher than anticipated costs in
Public Works, Police, and NonDepartmental.
• Additional detail can be found in
Attachment #2.
General
Fund Wastewater Water Grand Total
Non-Departmental 57,500 57,500
Police 23,500 23,500
Public Works 164,041 68,500 111,000 343,541
Grand Total 245,041 68,500 111,000 424,541
GF Summary – FY 2024-25
GROVERBEACH.ORG
• Revenues are $82K less than
budgeted
• Expenses are projected to be
$554K lower
• Midyear requests are $245K
• Fully funding midyear
requests will end the year
with an estimated surplus of
$271K for FY2024-25
General Fund Summary
FY 2024-25 Budget FY 2024-25
Projection
Variance
Amount
(A) (B) (A-B)
Revenues/Transfers In 18,674,000 18,592,000 82,000
Expenditures/Transfers
Out 18,629,000 18,075,000 554,000
Surplus/(Deficit) 45,000 517,000 472,000
Beginning Reserves 8,803,000 8,803,000 0
FY2024 Carryover -3,366,000 -3,366,000 0
Wastewater Fund
Repayment -142,000 -142,000 0
Midyear Requests -245,041 -245,041
Ending Reserves 5,198,000 5,566,959 226,959
Five Year GF Forecast - Benefits
GROVERBEACH.ORG
• Building a
financially
resilient
government
Planning
• Creates and
transparency
encourages
involvement
Communication
• Informs goalsetting and
the budget
process
Context
• Improves
long-term
financial
sustainability
Outcome
Forecast Drivers
GROVERBEACH.ORG
Economic Trends
and Outlook
• National, State, and Local
conditions.
City Top 5 Revenues
• Taxes and Fees
CalPERS Investment
Yield
• Unfunded Accrued Liability
• Workforce
Debt
Service/Repayments
• Debt Service requirements
Capital Improvement
Program
• Investments in our
community
Inflation and Interest Rates
GROVERBEACH.ORG
• U.S inflation has increased
substantially in the last four
years moving to a high of 8%
in 2022 and moderating in
2023 to four percent.
• This is higher than the
Federal Reserve’s target of
2%.
• Interest rates have lowered
but they have not reduced
costs to borrow for mortgages.
0.0 1.0
2.0 3.0
4.0 5.0
6.0 7.0
8.0 2017 2018 2019 2020 2021 2022 2023 2024
Annualized Inflation LA/LB/Anaheim
U.S. Unemployment Rate
GROVERBEACH.ORG
• U.S. unemployment rate
has risen by four basis
points since last year at
4.1%.
• SLO County fares better
at a rate of 3.7%.
0 1
2 3
4 5
6 7
2014 2016 2018 2020 2022 2024
Unemployment Rate (January)
Series1
Housing Market
GROVERBEACH.ORG
• SLO County has seen
sizable increases in the
last three years for yearover-year gains.
• The average list price for
home countywide was
over $1.5 million in 2024.
• Grover Beach has seen
increases of 8% from
2023 to 2024 or $904K.
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Millions
Average List Price SLO County Homes
Latest Sales Tax Forecast
GROVERBEACH.ORG
3rd Quarter 2022 Review (September 2024)
• Sales tax revenue compared with previous year:
• Statewide – down 2.0%
• Central Coast – down 2.0%
• Countywide Pool – down 6.5%
• Business Activity
• Construction – up 7.8%
• Retail – down 7.9%
• Overall – down 5.2%
Sales tax projection
• With average of less than 2% increase in FY24-25
• Subsequent 2% annual growth from 2025-30
Five Year GF Forecast Summary
GROVERBEACH.ORG
FY2025-26 FY2026-27 FY2027-28 FY2028-29 FY2029-30
Budget Estimated Forecast Forecast Forecast Forecast Forecast Revenue 18,674,000 18,592,000 18,931,000 19,539,000 20,256,000 20,890,000 21,534,000 Expenses 18,629,000 18,075,000 18,655,000 19,255,000 19,877,000 20,522,000 21,190,000 Surplus/(Deficit) 45,000 271,959 276,000 284,000 379,000 368,000 344,000 Beginning Reserves 5,295,000 5,295,000 5,566,959 5,842,959 6,126,959 6,505,959 6,873,959 Ending Reserves 5,340,000 5,566,959 5,842,959 6,126,959 6,505,959 6,873,959 7,217,959 Reserves as percent of operating 30% 32% 33% 33% 34% 35% 36% FY2024-2025
All figures rounded to nearest thousandth.
General Fund
Projected Bottom Line
GROVERBEACH.ORG
• City’s General Fund is in a
positive position over the
next five years.
• Revenue keeping pace
with expenditures.
• Some costs can be
adjusted to ensure long- term stability. $16
$17
$18
$19
$20
$21
$22
FY2024-25 FY2025-26 FY2026-27 FY2027-28 FY2028-29 FY2029-30 Revenues/Sources & Expenditures/Uses
Capital Improvements
GROVERBEACH.ORG
• The 2024-2025 Budget eases
constrained revenues by reducing
capital investment to $600K and 10%
increases year-over-year thereafter to
trend with improving revenues.
• CIP development is ongoing as part of
the budget process and incorporates
expectations for funding.
Financial Summary
GROVERBEACH.ORG
• City expects a balanced budget over the next five years with modest surplus projected through 2030
• Moderate revenue growth from new developments with expenditures keeping pace and not much room for additional spending
• Healthy reserves for unforeseen events through high liquidity is recommended given uncertainties
Budget Policies
GROVERBEACH.ORG
• General Fund Reserve minimum increase to 25% based on a survey of current reserves held for cities of similar size. • Equipment Replacement Fund is funded on an annual basis with allocation amount determined by the amount of
depreciation for vehicle assets across the city in the current year and allocated across funds.
• Establish Facility Reserve Fund to be funded on an annual basis with initial funding dependent on available surplus funds.
Budget Policies
GROVERBEACH.ORG
• Budget transfer authority for department heads is amended to require City Manager approval when intradepartmental transfers cross categories of Supplies and Services and Salaries and Benefits.
• Capital Projects will require encumbrance in the year of allocation to establish life-of-project budget amounts to facilitate carryover from year to year.
• Grant applications require City Manager approval prior to submission of an application to the funding organization and subsequent approval of award by City Council.
Recommendation and Timeline
GROVERBEACH.ORG
• Receive the FY 2024-25 Mid-Year Budget Review including the updated General Fund Financial Forecast; approve mid-year budget augmentations; adopt the resolution to approve revised budget and financial policies.
• Timeline:
COUNCIL DATES
February 11 Mid-year review and forecast presentation to Council March 24 Draft CIP review by Council
May 12 FY 2025-27 Budget Update to Council.
June 9 Budget hearing
June 23 Budget adoption
Questions and
Comments
GROVERBEACH.ORG
CalPERS
GROVERBEACH.ORG
• A major near-term driver of costs is
pension obligation
• The Unfunded Accrued Liability
(UAL) suggests significant nearterm impacts
• The City will need to keep in the
forefront of its financial planning
• PERs Assumed rate of return
affects the bottom line
1.41 1.52
1.62 1.71
1.90 1.38
0.00 0.20
0.40 0.60
0.80 1.00
1.20 1.40
1.60 1.80
2.00 2024-25 2025-26 2026-27 2027-28 2028-29 2030-31
Millions
CALPERS COSTS
Normal Contribution UAL