Wednesday, March 16, 2022
5:00 PM
CITY OF HAYWARD
Hayward City Hall
777 B Street
Hayward, CA 94541
www.Hayward-CA.gov
Zoom Platform
Council Budget and Finance Committee
Agenda
March 16, 2022Council Budget and Finance
Committee
Agenda
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CALL TO ORDER
ROLL CALL
March 16, 2022Council Budget and Finance
Committee
Agenda
PUBLIC COMMENTS:
(The Public Comment section provides an opportunity to
address the City Council Committee on items not listed on the agenda as well as items on the agenda. The Committee
welcomes your comments and requests that speakers present their remarks in a respectful manner, within established time limits, and focus on issues which directly affect the City or are within the jurisdiction of the City. As the Committee is prohibited by State law from discussing items not listed on the agenda, any comments on items not on the agenda will be taken under consideration without Committee discussion and may be referred to staff.)
APPROVAL OF MINUTES
Review and Approve the February 16, 2022 Council Budget and Finance Committee Meeting Minutes
MIN 22-0371.
Attachments: Attachment I Minutes
REPORTS/ACTION ITEMS
CalPERS Pension Unfunded Accrued Liability (UAL) Update and Introduction to Restructuring Concepts
ACT 22-0312.
Attachments: Attachment I Staff Report
Attachment II POB Presentation
Fiscal Year 2023 Mayor & City Council Departmental Budget Discussion
ACT 22-0283.
Attachments: Attachment I Staff Report
Attachment II FY 2023 Proposed Mayor & City Council
Discretionary Budget
Attachment III Mayor and City Council Budget Narrative
Fiscal Year 2023 Budget Process UpdateRPT 22-0284.
Attachments: Attachment I Staff Report
March 16, 2022Council Budget and Finance
Committee
Agenda
Review and Approve the FY 2022 Agenda Planning CalendarACT 22-0295.
Attachments: Attachment I Planning Agenda
FUTURE AGENDA ITEMS
COMMITTEE MEMBER/STAFF ANNOUNCEMENTS
ADJOURNMENT
Next Meeting - 5:00 p.m. Wednesday, April 20, 2022
The City of Hayward's Open Data Portal was designed to allow the public to explore, visualize, and download publicly accessible data. The Open Data Portal allows a clear view of the City's financial performance. Access to the portal may be found at https://haywardca.opengov.com/
CITY OF HAYWARD
Hayward City Hall
777 B Street
Hayward, CA 94541
www.Hayward-CA.gov
File #: MIN 22-037
DATE: March 16, 2022
TO: Council Budget and Finance Committee
FROM: Director of Finance
SUBJECT
Review and Approve the February 16, 2022 Council Budget and Finance Committee Meeting Minutes
RECOMMENDATION
That the Council Budget and Finance Committee reviews and approves the February 16, 2022 Committee meeting minutes.
SUMMARY
The Council Budget Committee (CBFC) held a meeting on February 16, 2022, and the draft minutes are attached for the Committee’s review and approval.
ATTACHMENTS
Attachment I 2/16/22 CBFC Meeting Minutes
CITY OF HAYWARD Printed on 3/11/2022Page 1 of 1
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ATTACHMENT I
COUNCIL BUDGET & FINANCE COMMITTEE MEETING
Meeting Minutes of February 16, 2022
Call to Order: 5:03 p.m.
Members Present: Mayor Barbara Halliday, Councilmember Sara Lamnin, Councilmember Aisha Wahab
Members Absent: None
Staff: Kelly McAdoo, Regina Youngblood, Dustin Claussen, Nicole Gonzales, Nicholas Mullins, Rick Rivera, Crissy Mello, Nick Tabari
Guests: None
Public Comments: None
1. Approval of Meeting Minutes from January 19, 2022
Action: A Motion was made by Councilmember Lamnin to approve the minutes of the January 19, 2022, Council and Budget Finance Committee meeting. Motion was seconded by Mayor Halliday and passed with unanimous approval.
2. FY 2022 Mid-Year Budget Review and General Fund Long Range Financial Model Update
Deputy Director Gonzales provided the Committee with the FY 2022 Mid-Year Budget Review and General Fund Long Range Financial Model Update presentation.
Deputy Director Gonzales provided an overview of proposed FY 2022 Mid-Year changes to revenue projections and expenditures for all City funds. The proposed FY 2022 Mid-Year changes in the General Fund will result in a reduction in the projected use of General Fund Reserves over what was projected at the time of Adoption. Bringing the projected use of General Fund Reserves from $6.1 million to $4.4 million.
Deputy Director Gonzales provided an update on the City’s General Fund Long Range Financial Model (Model), which included the appropriation of ARPA funding in FY 2022 and FY 2023.
Action: The Committee received the report and provided feedback.
ATTACHMENT I
3. Review and Approve of the FY 2022 Agenda Planning Calendar Director Claussen will present the Committee with an analysis of the viability of pension obligations bonds at the March 16, 2022, meeting. City Manager McAdoo proposed holding review of the Hayward Community Foundation operations until after organizational changes at the Foundation are settled, which is expected in Spring of 2022.
Action: The Committee provided feedback on future agenda items.
Committee Members/Staff Announcements:
Adjournment: The meeting was adjourned at 5:42 p.m.
CITY OF HAYWARD
Hayward City Hall
777 B Street
Hayward, CA 94541
www.Hayward-CA.gov
File #: ACT 22-031
DATE: March 16, 2022
TO: Council Budget and Finance Committee
FROM: Director of Finance
SUBJECT
CalPERS Pension Unfunded Accrued Liability (UAL) Update and Introduction to Restructuring Concepts
RECOMMENDATION
That the Committee:
(1) Receives a presentation from the City’s financial advisor, NHA Advisors, related to CalPERS pension costs, cost management strategies, and the concept of restructuring the UAL debt at a lower interest rate.
(2) Provides feedback to staff and NHA as to whether this presentation should be provided to the full Council.
(3) Provides preliminary feedback to staff and NHA as to whether a validation process should be initiated in order to preserve future options to restructure the Unfunded Accrued Liability (UAL) at a lower interest rate than CalPERS is charging the City on the UAL debt.
SUMMARY
The City has been diligent about monitoring changes at CalPERS over the last several years, providing regular updates to this Committee and Council, as well as factoring these changes into the City’s budget and projections. With interest rates at historically low levels, many agencies (>85) in California have recently restructured a portion of their UAL at significantly lower interest rates (vs. the 6.8% that CalPERS is charging the City on this debt) to achieve financial savings, enhanced budgetary predictability, and future fiscal sustainability.
ATTACHMENTS
Attachment I Staff Report
CITY OF HAYWARD Printed on 3/11/2022Page 1 of 1
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DATE: March 16, 2022
TO: Council Budget and Finance Committee
FROM: Director of Finance
SUBJECT: CalPERS Pension Unfunded Accrued Liability (UAL) Update and Introduction to Restructuring Concepts
RECOMMENDATION
That the Committee:
(1) Receives a presentation from the City’s financial advisor, NHA Advisors, related to CalPERS pension costs, cost management strategies, and the concept of restructuring the UAL debt at a lower interest rate.
(2) Provides feedback to staff and NHA as to whether this presentation should be provided to the full Council.
(3) Provides preliminary feedback to staff and NHA as to whether a validation process should be initiated in order to preserve future options to restructure the Unfunded Accrued Liability (UAL) at a lower interest rate than CalPERS is charging the City on the UAL debt.
SUMMARY
The City has been diligent about monitoring changes at CalPERS over the last several years, providing regular updates to this Committee and Council, as well as factoring these changes into the City’s budget and projections. With interest rates at historically low levels, many agencies (>85) in California have recently restructured a portion of their UAL at signifi cantly lower interest rates (vs. the 6.8% that CalPERS is charging the City on this debt) to achieve financial savings, enhanced budgetary predictability, and future fiscal sustainability.
BACKGROUND
In spite of making CalPERS required contributions over the last 8 years, the City’s unfunded accrued liability (“UAL”) for its CalPERS Miscellaneous and Safety Plans has grown 75%, from approximately $282 million to $493 million. This UAL represents the shortfall/gap between what is needed to pay retiree benefits versus how much in current assets the City actually has in its accounts with CalPERS. The UAL has rapidly increased primarily due to CalPERS investment underperformance and changes to its actuarial assumptions, primarily the
discount rate. The di scount rate is what CalPERS expects to earn annually, as well as the interest rate that it charges its member agencies on this UAL debt. That discount rate was over 8% in the early 2000s and has been reduced several times over the last 15 years. In November 2021, CalPERS reduced the discount rate from 7.0% to 6.8%. Lowering of the discount rate results in increases to the City’s contributions to its CalPERS retirement plans.
As shown in the chart below, the City’s annual UAL payments have increased from a bout $17 million in FY 2017, to over $34 million in FY 2022. Based on the most recent report, they are projected to grow to $50 million by FY 2030.
Historical and Projected UAL Payments
Projected based on CalPERS 21.3% Returns & New 6.8% Discount Rate
While not yet reflected in the recent actuarial report, the City’s overall UAL is expected to decrease to about $414 million (from $493 million) once the new reports are released late this year as the strong 21.3% investment gains from FY 2021 and the new 6.8% discount rate get incorporated. Based on this projected UAL reduction, it is anticipated that the increase in annual UAL payments will be less rapid (projected new peak of $38 to $4 1 million over the next decade). However, the reduction in the discount rate to 6.8% will also increase the City’s Normal Cost , which is separate from the UAL, and relate s to the annual pension costs for current employees. These costs are expected to rise from the c urrent annual level of $15 million, to $17 million by FY 2023/24, offsetting a portion of the expected reduction in UAL payments resulting from the 21.3% investment gain.
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Current UAL Payments Projected UAL Payments (6.8% Discount Rate)
Additionally, it is possible that CalPERS will underperform its target of 6.8% ea rnings for FY 2022 based on the recent stock and bond market declines, meaning that the City’s UAL could potentially jump back up to previous levels (or higher). Rising pension costs are a widespread issue facing all municipalities nationally and developin g a multi-pronged cost management strategy is highly recommended by staff and NHA.
DISCUSSION
Several cost management strategies will be discussed in the presentation. However, the focus will be on the concept of restructuring the UAL given the complexity associated with this strategy and longer timeline to fully explore in a more comprehensive way if the Committee and Council desires to. A UAL Restructuring would entail converting higher interest rate debt with CalPERS (6.8%) to lower interest r ate debt (current market rates between 3.50% and
4.00%). While a significant amount of additional due diligence and analysis (including a thorough risk assessment) needs to be completed, the primary benefits of this option include:
● Fiscal Sustainability Tool: Ability to “re-shape” the City’s overall pension repayment in a way that creates enhanced long-term fiscal sustainability, budgetary predictability, and enhanced resiliency to future economic shocks.
● Financial/Budgetary Savings: By reducing the Ci ty’s pension payment s to lower levels, a significant amount of cash flow savings is projected for the City’s General Fund and other utility funds that could be used to address other City priorities (e.g., continue critical services to the community, sustain reserves, and funding capital and infrastructure needs).
● Interest Rate Savings “Arbitrage”: City can borrow at rates much lower (currently ≈
3.50% to 4.00% depending on term and credit) than the current CalPERS rate (6.80%).
Similar to refinancing a higher interest rate mortgage or credit card, a UAL Restructuring would allow the City to convert higher interest rate debt to lower interest rate debt and create a significant amount of projected savings on its debt payments. ● Increase Funding Ratio: Current funding levels (investments to liabilities) for the City’s CalPERS retirement plans are only about 60% to 64%; issuing a Public Obligation Bond ( POB) could increase the ratio to healthier levels ( 85% to 100%), helpi ng to ensure the long-term viability of the retirement program. ● Modify Maturity: Shorten or lengthen repayment period as deemed most fiscally appropriate.
● Leverage Savings through Improved Policies: City Council and staff can memorialize the intended uses of potential savings through new adopted policies if desired.
Recent UAL Restructurings: With interest rates dropping to historically low levels in the last couple years, combined with strong investor interest, pension bond issuance has significantly increased (since 2020) with over 8 5 CalPERS members (mostly cities) having restructured their UAL for a total estimated UAL refinanced of about $8 billion . Examples include San Ramon, Corte Madera, Poway, La Habra, Oroville, Fort Bragg, National City, Paramount, Bellflower, Lakeport, Montclair, Corona, Santa Ana, Orland, Commerce, San Anselmo, Sanger, San Fernando, Buena Park, Redondo Beach, Covina, Whittier, El Segundo, Auburn, Willows, Corte Madera, M anhattan Beach, Orange, Ukiah, Chula Vista, Downey, El Cajon, Coachella, Gardena, Arcadia, Placentia, Torrance, Azusa, Larkspur, Marysville, Grass Valley, Riverside, Pomona, West Covina, Ontario, Carson, Pasadena, Glendora, Hawthorne, La Verne, Maywood, El Monte, San Fernando, Montebello, Huntington Beach, Monrovia, and Inglewood.
Interest rates for these recent financings ranged from 2.54% to 4.25%, with rates dictated by market conditions at the time of pricing, credit rating of the issuer, and length of term of the bonds.
Reinvestment Risk: Actual savings from the restructuring will be dependent on two factors:
(1) actual interest rates at the time of pricing and (2) future CalPERS returns, which is unknown at the time of bond issuance. Generally speaking, the City will be better off if CalPERS earnings rate exceeds the pension bond interest rate (3.50% - 4.00%) over the term of the financing. While past performance doesn’t guarantee future results, CalPERS average historical returns are 6.9% (last 20 years) and 8.4% (last 30 years).
Assessing and mitigating reinvestment risk w ould be a key objective as the City and its financing team evaluate and refine restructuring options for the Committee and City Council’s consideration if this evaluation process were to continue . A preliminary stress-testing (risk assessment) has already been conducted and will be shared during the workshop presentation. More robust stress testing could be conducted during a more comprehensive evaluation process this Spring/Summer and could quantify several downside scenarios. This includes modeling out impacts if there were to be another 2008 -like recession, or other CalPERS underperformance scenarios where they consistently underperform their target returns. Based on this risk assessment, or changing market conditions (i.e., rising interest rates), it may be recommended that the City not pursue a restructuring at that time.
A UAL restructuring is most often executed using a Pension Obligation Bond (POB) structure.
Pension obligation bonds (POBs) are a partic ular kind of taxable bond where the proceeds are dedicated entirely to the government's pension obligations. The goal is that the return on the proceeds that they have invested in the pension system will be higher than the interest cost on the related debt over the long run. The issuance of a POB is viable only after a judicial validation process is completed (in Alameda County Superior Court). The validation process typically takes three to four months to complete. This process does not lock the City int o issuing a POB, but it does provide the City with the option to do so at anytime in the future (subject to future City Council approvals). Given the recent upward pressure on interest rates, and the ability to continue a robust financial evaluation process and investigation of all cost management strategies concurrently with this validation process, initiating a validation process soon is something that the City may want to consider in order to make a POB a viable option in the future.
ECONOMIC IMPACT
Based on preliminary analysis, a restructuring of the UAL could produce significant savings for the City. As outlined in the graphic below ( dark blue line), payments could be smoothed out at a lower level. Based on this preliminary option, projected cash flow savings are shown in the table at the bottom of the page, which total over $100 million (over $10M annually for next decade).
Metrics 22-Year POB
UAL Funded ($) $413,980,000
% UAL Funded (Current Asset Valuations) 84%
Funded Ratio (Current Asset Valuations) 94%
% UAL Funded (Projected After FY 2021 Returns & 6.8% Discount Rate) 100% Funded Ratio (Projected After FY 2021 Returns & 6.8% Discount Rate) 100% Maturity 22 Years
Average Life 12.8 Years
All-In Interest Rate 3.65%
PV Savings (%) 23.45%
PV Savings ($) $97,063,737
Cumulative Savings $112,261,872
Savings (2023-2032) $111,669,628
Potential Average Annual Savings (2023-2032) $11,166,963
As will be noted in the presentation, there are a myriad of structuring options for a potential POB. All sizes could be explored (as small as 25% of the City’s UAL, up to 100%), as well as varying terms (lengths of repayment) and repayment shapes (i.e. level vs. escalating) that are tailored to the City’s budgetary goals and constraints. This “base case” option above is included in order to provide the potential benefits of the UAL restructuring, while not overcomplicating the initial discussion with too many options.
Preliminary UAL Restructuring Option for City of Hayward 22-Year Term with Level Payments
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Projected UAL Payments (6.80% Discount Rate)
22-Year POB
Note: Preliminary estimates shown for illustration and assume current market rates – actual rates to be determined at pricing; assumes CalPERS earns 6.8% investment earnings.
Note: Preliminary estimates shown for illustration and assume current market rates – actual rates to be determined at pricing; assumes CalPERS earns 6.8% investment earnings.
NEXT STEPS
With guidance from the Committee, staff intends to present this same presentation to the full City Council on April 19th. If City Council wishes to initiate a validation process, it is estimated that this could happen on May 3 rd, which would start the vali dation process timeline. While that process runs its course (estimated to be 3-4 months), City staff would recommend a robust evaluation process for developing a multi -pronged cost management strategy to address these rising pension costs. Options would be evaluated in more detail this Spring and Summer, with the pros, cons , and risks illuminated in greater detail. Once the validation process is completed, the City would have the opportunity to issue a POB if it desired t o; however, market conditions may be significantly different at that time and a UAL restructuring may not be recommended.
Potential Timeline:
Prepared by: Mike Meyer, Vice President, NHA Advisors
Recommended by: Dustin Claussen, Director of Finance
Approved by:
Kelly McAdoo, City Manager
Spring 2022
March 16: Educational Workshop on to
Finance Committee
April 5: Education Workshop to Full City
Council
Q&A with City Council and Stakeholders
Engage Bond Counsel
May 3: City Council approval of basic legal
documents and parameters of transaction
(i.e. not to exceed interest rate) and
Initiate validation process
•Does not lock City into issuing bonds; starts legal
process required to preserve future flexibility
Late Spring/Early Summer 2022
More Educational Workshops, if needed
Continued Q&A with City Council and
Stakeholders
Legal documents and Preliminary Official
Statement (“POS”) drafted
Stress testing analysis & restructuring
options refined
Credit rating process
Summer/Fall 2022
Validation proceedings completed
Reassess market and potential interest
rates and recommend/not recommend
POB
City Council approval of POS and preferred
option, IF ANY
Sell and close bonds and pay off portion of
UAL with CalPERS
CITY OF HAYWARD
CALPERS UPDATE AND INFORMATION RELATED TO UAL COST
MANAGEMENT STRATEGIES AND RESTRUCTURING CONCEPT
MARCH 16, 2022
2 Executive Summary
City’s CalPERS projected Unfunded Accrued Liability (UAL) is currently $493 million
UAL debt has increased 75% over the past 8 years from $282M UAL payments have more than doubled: $17 million (2017) to $34.5 million (2022) CalPERS currently charges 6.8% interest rate on this debt CalPERS FY 2020-21 returns of 21.3% and key assumption changes will change the “shape” of City’s UAL repayment schedule
UAL balance may drop to $414 million
However, potential underperformance in FY 2022 may drive UAL back higher Restructuring the UAL at a lower interest rate will be explored in this presentation, including potential benefits, risks, and potential next steps if the City wishes to evaluate further
3 Historical and Projected UAL Payments
Projected based on CalPERS 21.3% Returns & New 6.8% Discount Rate The City’s UAL is projected to
decrease from $493M to $414M due
to the following:
FY 2020-21 returns of 21.3%
Discount rate reduction to 6.8%
Annual payments (dark blue line)
projected between $38M and $39M
for next 6 years
Payments could rise back up again if
CalPERS underperforms in FY 2022
(given recent stock market declines)
$477M UAL if CalPERS earns 0%
$524M UAL if CalPERS earns -5%
Normal Cost payments (not pictured
here) will jump from $15M per year
to $17M per year in FY 2024 due to
discount rate reduction
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Current UAL Payments Projected UAL Payments (6.8% Discount Rate) 4 Cost-Containment Strategies – Not Mutually Exclusive* (1) Prepay UAL early in Fiscal Year (≈ 3.3% discount)
(2) Negotiate Cost Sharing With Employees
• Require employees to pay their share; New employees already governed by lower cost/benefit PEPRA plans • Negotiated cost sharing of the City’s share
(3) Fresh Start Amortization offered by CalPERS
• Pros: Smooths payment, shortens repayment period; reduces overall interest paid from shorter amortization period • Cons: New structure “locked-in” + increased annual payments in near term; still amortized at discount rate (4) Use Cash Reserves to Pay Extra (two options)
• Section 115 Trust - Separate trust solely dedicated to pension/OPEB • Offered by PARS, CalPERS, Keenan and others
• Lump Sum Pay Down of UAL – Reduce UAL through “Additional Discretionary Payments” (ADPs) • Choose optimal amortization bases to pay off
(5) Restructure All or Portion of Remaining UAL
• Restructure portion of UAL at lower bond interest rate (i.e. 3.50-4.00% vs. CalPERS rate of 7.0%) and “smooth out” payments for enhanced budget predictability, near and mid-term potential savings, and preservation of cash for other critical projects • * Options 1,2 & 4 are currently used by the City
5 Restructuring UAL using Debt
What is it? Borrow money to pay off all or a portion of UAL with CalPERS (i.e. very large ADP)
Pension Obligation Bond (POB) is typically utilized
Unsecured debt (no collateral required)
“Court Validation” process required to confirm UAL is a “debt” that can be refinanced Typically takes 3-4 months
Alternative is using a lease revenue bond structure
Pros:
POB rates significantly lower than CalPERS rate (currently 6.8%) Current market: 3.50% to 4.00% (dependent upon term and credit rating) Restructuring the annual payments into a smoother, predictable schedule is core objective Cons:
Re-investment risk and market timing risk of bond proceeds sent to CalPERS 6 Market Update – Recent UAL Restructurings
85+ agencies ($7.5B+) have
issued UAL Restructuring
bonds since 2020
≈75% as POBs; remainder as
LRBs
2020 → Most deals between
3.50% and 4.25%
2021 → Most deals between
2.50% and 3.50%
2022 → Uptick in rates due to
inflationary concerns
1/12 La Habra (AA+): 3.04% rate
1/19 Lakeside Fire (AA-): 3.35%
Current: Est. POB rates between
3.50% and 4.00%
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Ukiah: Upfront Relief + 1% Escalating + Linear Decline to 2050 UAL Payments 2020 LRB
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Riverside: Targeted Early Savings + “Chop the Peak” + No Dissavings UAL Payments 2020 POB
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El Monte: 30-Year Restructuring Accommodating Pension Tax Override UAL Payments 2020 POB
Recent Restructurings: Unique Approach for Each Issuer
No “One Size Fits All”
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Corte Madera: 24-Year Level
UAL Payments 2021 POB
8 1.00%
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Mar-92 Mar-97 Mar-02 Mar-07 Mar-12 Mar-17 Mar-22
Interest Rates (30Y UST)
Recent Volatility Due to Fed Statements and Russia/Ukraine Conflict
1.50%
1.70%
1.90%
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2.70%
30-Year Treasury Rates (March 2021 - Present)
9 4.03%
3.69% 3.72%
3.44%
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Montebello
Riverside (City)
West Covina
Torrance
Gardena
El Cajon
Monterey Park
Chula Vista
Orange
Hungtington Beach
Manhattan Beach
Corte Madera
CMPA
El Segundo
Auburn
Redondo Beach
Covina
San Fernando
Sanger
Stanislaus CFPD
Lakeport
Montclair
National City
Poway
La Habra
Lakeside FPD
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2021
Mar.
2021
Apr.
2021
Apr.
2021
May
2021
May
2021
May
2021
July
2021
July
2021
Aug.
2021
Aug.
2021
Sep.
2021
Oct.
2021
Oct.
2021
Nov.
2021
Dec.
2021
Jan.
2022
Jan.
2022
$150M $430M $200M $350M $101M $147M $106M $350M $286M $364M $91M $19M $27M $144M $17M $226M $63M $32M $19M $12M $8M $62M $84M $44M $72M $28M A+
(AA
Ins.)
AA A+ AA AA- AA AA AA
(AA
Ins.)
AA
(AA
Ins.)
AA+ AAA AAA AAA AA+ AA+ AA AA AA (A+
Ins.)
A+ AA- AA AA- AA- AAA AA+ AA-
POB POB Lease Lease POB POB POB POB POB POB POB POB POB POB POB LRB POB POB POB POB POB POB POB POB POB POB Spread to 30-Yr. Treasuries
All-in TIC
POB Rates: Recent Upticks in Rates and Spreads
Note: Spreads and interest rates should be considered
best estimates. Rates reflect estimated TIC or all-in TIC.
Significant Credit Spread Tightening
due to Demand > Supply Recent upticks in
TSY rates & spreads
Est. Current Market
10 Preliminary UAL Restructuring Option for City of Hayward 22-Year Term with Level Payments
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
Millions
Projected UAL Payments (6.80% Discount Rate)
22-Year POB
Note: Preliminary estimates shown for illustration and assume current market rates – actual rates to be determined at pricing; assumes CalPERS earns 6.8% investment earnings.
11 Preliminary UAL Restructuring Option: Savings Analysis Estimated Present
Value (“PV”) savings of
$97.1M
23.5% of refunded UAL
Savings over next 10
years estimated at
$112M
$11.2M annually on
average
Note: Preliminary estimates shown for illustration and assume current market rates – actual rates to be determined at pricing; assumes CalPERS earns 6.8% investment earnings.
Metrics 22-Year POB
UAL Funded ($) $413,980,000
% UAL Funded (Current Asset Valuations) 84%
Funded Ratio (Current Asset Valuations) 94%
% UAL Funded (Projected After FY 2021 Returns & 6.8% Discount Rate) 100% Funded Ratio (Projected After FY 2021 Returns & 6.8% Discount Rate) 100% Maturity 22 Years
Average Life 12.8 Years
All-In Interest Rate 3.65%
PV Savings (%) 23.45%
PV Savings ($) $97,063,737
Cumulative Savings $112,261,872
Savings (2023-2032) $111,669,628
Average Annual Savings (2023-2032) $11,166,963
12 Refining the Options (Next Steps if Strategy Pursues Further) Using UAL Restructuring as a Tool to Meet Multiple Objectives Sizes: 50% of UAL? 75%? 100%?
Term: 20 Year? 25 Year? 30 Year?
Longer maturities have slightly higher interest rate BUT generate more cash flow savings in next 15-20 years AND enhance City’s resiliency (capacity to absorb future UAL shocks/increases) Repayment Shape:
Level vs. Escalating
Utilize City’s financial forecast to clarify budgetary challenges/constraints and other needs (reserves, CIP , etc.) and tailor UAL repayment options “Stress-Test” options to quantify risks for stakeholders and ensure that there is sufficient resiliency in structure to absorb future UAL shocks (see next slide re: Risks) 13 UAL Restructuring Pros & Cons Summarized
Primary Benefits
• Fiscal Sustainability T ool: “Re-shape”
to “smoother” payments
• Near-Term Budgetary Savings
• Interest Rate Savings “Arbitrage”:
Borrow at lower rates (currently ≈
3.75%) vs. CalPERS (currently 7%)
• Increase Funding Ratio
• Flexibility to Modify Maturity
Primary Risks
• Reinvestment Risk: Savings
dependent on future CalPERS returns
(unknown at issuance) through term
of bond - Primary concern of GFOA
• Rule of Thumb: Present value savings
occur if PERS earns greater returns
than pension bond interest rate
• Market-Timing Risk: Near-term
losses exacerbate the reinvestment
risk given large lump sum deposit
into the market
These risks should be
quantified through a
stress testing process
to better understand
the impacts of potential
poor investment
performance by
CalPERS
What if CalPERS only
earns 5%?
What if there is another
2008-like recession?
14 -$26.96
-$12.30
$7.33
$33.19
$66.79
$109.96
$164.95
$234.44
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
($50.0)
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0%
Actual PV Savings (% of Par)
Actual PV Savings ($)
Millions
Actual CalPERS Returns
Actual PV Savings ($) Actual PV Savings (% of Par)
Risk Assessment/Stress Testing: Preliminary (Non-Actuarial) Impact to Savings if CalPERS Underperforms
Annual Underperformance
Bar chart shows PV savings
generated from POB assuming
various CalPERS returns (2% up to
9%
Market Timing Risk
Table below shows PV savings if
CalPERS loses significant amount
in 1st year after POB
6.9% - CalPERS 20-
Year Average Return
8.4% - CalPERS 30-
Year Average Return
Market Crash Scenarios
Actual CalPERS
Returns
Actual PV
Savings ($)
Actual PV Savings
(% of Par)
-10.0% $36,227,176 8.7%
-15.0% $17,110,022 4.1%
-20.0% ($2,007,132) -0.5%
-25.0% ($21,124,286) -5.1%
15 Government Finance Officers Association (GFOA) Critique of POBS • Yes. Instead of CalPERS’s expected earnings rate of (currently 7.0%), lower actual returns could occur.
The chances of long-term returns being below current < 3.75% borrowing costs do exist. A “stress testing” process is often helpful to better quantify this risk. Each agency has different risk tolerances.
Invested pension bond proceeds might earn less than the borrowing costs
• No. Only fixed rate POBS (no swaps or derivatives) are being issued in current marketplace.“Pension bonds are complex instruments that carry considerable risk…and may include swaps or derivatives…” • No. POBs replace CalPERS (all or portion) UAL on the Agency’s Balance Sheet, thereby converting one liability for another. A lease bond (instead of an unsecured POB) does reduce asset/debt capacity. “Issuing taxable debt to fund the pension liability increases the jurisdiction’s bonded debt burden and potentially uses up debt capacity…”
• No. All POBS are being issued with an optional redemption (5 or 10 year call) in current marketplace.
Pension bonds are “typically issued without call options” making it more difficult to refund bonds if interest rates fall or a different debt service structure is desired in the future. • No. Almost all POBS amortize principal immediately. Shortening, lengthening, or maintaining the same term of payments is at the discretion of each agency. “Pension bonds are frequently structured in a manner that defers the principal payments…”
• No. If POB is prudently structured from a thoughtful and comprehensive policy to increase payment affordability, financial flexibility and long-term resiliency. A Pension Funding Policy is noted as a credit positive by S&P .
“Rating agencies may not view the proposed issuance of
Pension bonds as credit positive…”
16 Integrated into a comprehensive reserve policy
Provides direction and prioritization to use surplus
funds for “filling up” City reserves and other
important accounts
Detailed projections that account for positive
POB cash flow benefits under different CalPERS
performance assumptions is a good planning tool
Also, a “credit positive” by rating agencies
Beyond economic contingency reserves,
surpluses may also be targeted towards funding
Section 115 Trusts for additional future
smoothing, if needed, of pension or OPEB costs
Finally, funding an early redemption account of
POBs, as well as other priority capital project
funds may be considered
General Fund Operating
Reserves (15% General
Fund Expenses)
Pension Reserve Fund
(Up to 15% General
Fund Expenses)
Economic Contingency
& Catastrophic Event
Reserves
75% 25%Surplus
Surplus
Surplus Funds
CIP Fund Reserve POB Bond Call
ReserveSurplus
50% 50%
Recommendation: Adopt a Pension Funding Policy
Hypothetical Example Shown in Graphic
Note: Policy Graphic is provided for illustrative purposes only. Each agency should consider its unique needs and constraints for its own Pension Funding Policy. 17 Hypothetical Timetable if Strategy Pursued Further
Spring 2022
March 16: Educational Workshop on to
Finance Committee
April 5: Education Workshop to Full City
Council
Q&A with City Council and Stakeholders
Engage Bond Counsel
May 3: City Council approval of basic legal
documents and parameters of transaction
(i.e. not to exceed interest rate) and
Initiate validation process
• Does not lock City into issuing bonds;
starts legal process required to preserve
future flexibility
Late Spring/Early Summer 2022
More Educational Workshops, if needed
Continued Q&A with City Council and
Stakeholders
Legal documents and Preliminary Official
Statement (“POS”) drafted
Stress testing analysis & restructuring
options refined
Credit rating process
Summer/Fall 2022
Validation proceedings completed
Reassess market and potential interest
rates and recommend/not recommend
POB
City Council approval of POS and preferred
option, IF ANY
Sell and close bonds and pay off portion of
UAL with CalPERS
Validation preserves option for the City to issue a POB in 2022 or anytime in the future
City Council must approve POS and other documents
before any bonds can legally be issued
18 Conclusion
The City’s CalPERS Pension Liability (UAL) is its largest General Fund debt A UAL Restructuring may be a strategic and thoughtful approach to enhancing budget predictability, future resiliency and creating additional cash flow for other City priorities If City desires to evaluate a UAL restructuring further, it is recommended that a comprehensive evaluation process be continued to ensure that decision makers and stakeholders understand the pros and cons, including risks, in order to make an informed decision that is in the best interests of the City Workshops and Q&A can continue for as long during the process as is needed for a full evaluation by the City Council and community stakeholders
Initiating the court validation process and doing the workshops in parallel would be most efficient use of time and resources and give City best chance of locking in lower interest rates if UAL restructuring was ultimately desired
A Pension Funding Policy should be adopted by City Council regardless of whether the UAL is restructured or not
APPENDICES: CASE STUDIES
20 Enhanced Financial Resiliency: Results of “What-If” stress-testing / risk assessment demonstrates that
Town can now better absorb increased payment
shocks from CalPERS underperformance
Comprehensive & Inclusive 18-month Evaluation
Process: Considered wide array of options,
GFOA/stakeholder objections, opportunities and risks
Pension Funding Policy: Commits Town towards
financial path to address pension challenge
Includes dedicating POB savings towards reserves, Section 115, CalPERS ADPs and early POB pay off
Credit Rating Upgrade to “AAA”!Town upgraded from
AA+ to AAA based on improved financial performance,
new financial policies and multipronged pension
funding strategy
Savings! $12,400,000 estimated savings over next 15
years
Over $6,500,000 present value (35% of Refunded UAL) savings overall*
* Projected savings assumes CalPERS earns 7.0% investment earnings; navy blue line represents combined POB debt service and unrefunded UAL. UAL figures sourced from 6/30/2019 CalPERS Actuarial Valuation reports. $-
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
$1.8
$2.0
$2.2
$2.4
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
Millions
Corte Madera UAL
2021 POB + Unrefunded UAL Payments
Metrics
2021 POB
Savings*
UAL Funded (%) 88%
Est. Funded Ratio 96%
Avg. Life 15.0 Years
True Interest Cost (TIC) 2.97%
Cumulative Savings $6,490,751
Present Value Savings ($) $6,586,376
PV Savings (% of UAL) 34.98%
Cumulative Savings (2022-2036) $12,399,032
Avg Annual Savings (2022-2036) $826,602
$18,955,000
Town of Corte Madera
2021 Pension Obligation Bonds (POBs) – “AAA” Rated
Sold: April 29, 2021 @ True Interest Cost: 2.97%
CASE STUDY
21 Case Study: $432M Riverside 2020 POBs
Education, Options, Risk Assessment & Holistic Strategy Summer/Fall 2018:
Comprehensive CalPERS
Pension Education for
CFO and City’s CalPERS
Challenge Committee;
Overview of All Cost
Management Strategies
Summer 2019: POB
Education with CFO; NHA
Selected thru RFP
Process for POB
Education; Produces 8
Page Pension Summary
Report for Staff and CC
Fall 2019: Staff
Workshops (Brown Bag
Lunches) on POB
Pros/Cons with Staff and
CalPERS Challenge
Committee
January 2020: Public POB
Workshop for City’s
Finance Committee and
Residents
February 2020: Public
POB Workshop for Full
City Council and
Residents; NHA Manages
Underwriter RFP Process
March – May 2020:
Robust POB Evaluation
Process (25+ Options)
Including Risk Stress
Testing and Pension
Funding Policy Updates
May – June 2020: Final
City Council Approval
and Pricing/Closing
Multi-
Pronged
Solution for
City of
Riverside
92% Funding
Ratio for Both
Plans
Only Partial
Funding of UAL
(67%) to
Balance
Risk/Reward
$7M Savings to
General Fund
for FY 2021 and
FY 2022 ($7.6M
Achieved)
Maximize
Projected
Overall Savings
($178.5
Million)
Smooth
Payments for
Budget
Predictability
(“Shave Off
Payment
Peak”)
Maximize
Resiliency to
Future Adverse
CalPERS
Returns
Meet 3.99%
All-In Interest
Rate Cap
(3.69%
Achieved)
Incorporate
Flexibility to
Call Bonds in
Future (10-Year
Call Included)
Index Eligible
Bond ($300M)
to Drive
Demand ($5B
of Investor
Interest)
Ensure Savings
in Every Year
(No Years of
Dis-savings)
Managing Complexity & Translating Results to
Achieve Carefully Tested Solution
Dynamic and
real-time
modeling of
complex
quant
Tag team
approach to
stress
testing;
Bartel, NHA,
and UW
25+ options
analyzed
22 $350,025,000
City of Chula Vista
2021 Pension Obligation Bonds (POBs) – “AA” Rated
Sold: February 11, 2021 @ All-In Cost: 2.54%
Savings! $15 million average
annual savings over next 15
years; Over $150 million net
present value (44% of Refunded
UAL)*
Enhanced Financial Resiliency:
City can now better absorb
increased payment shocks from
CalPERS underperformance
Inclusive 15-month Evaluation
Process: Considered wide array
of options, objections,
opportunities and risks
Pension Funding Policy:
Commits City towards detailed
roadmap to address this
challenge; Includes dedicating
POB savings towards reserves,
Section 115 and early POB
payoff
$-
$5
$10
$15
$20
$25
$30
$35
$40
$45
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
Millions
Prior General Fund Payments vs. New Payments After UAL Restructuring UAL Payments
General Fund Lease Bond Debt Service
1% Escalating General Fund Debt (24-Year)
* Projected savings assumes CalPERS earns 7.0% investment earnings; green line represents combined other General Fund debt service + POB debt service Metrics Statistics*
All-In Interest Cost 2.54%
Final Maturity 2045
Est. Present Value Savings $158.6 Million
Est. Cumulative Savings $177.5 Million
Avg. Annual Savings thru 2036 $14.9 Million
CASE STUDY
https://www.chulavistaca.gov/departments/finance/pension-obligation-bonds 23 General Fund Operating
Reserves (15% General
Fund Expenses)
Pension Reserve Fund
(Up to 15% General
Fund Expenses)
Economic Contingency
& Catastrophic Event
Reserves
75% 25%Surplus
Surplus
Surplus Funds
CIP Fund Reserve POB Bond Call
ReserveSurplus
50% 50%
Examples of Two Pension Funding/Reserve Policies
Corte Madera and Chula Vista
General Fund Operating
Reserve
(20% General Fund
Expenses)
Maintain $2.5 million
Emergency Sales Tax
Override Fund (Separate
from Operating Reserve)
OPEB Trust,
Park Madera Center Fund,
Additional allocation to
Operating Reserve
50% 50%
Surplus Funds
OPEB Stabilization
Trust
Annual Savings from
issuing POBs
Pension
Stabilization Trust
CalPERS/Unfunded
Liability
Town of Corte Madera City of Chula Vista
CITY OF HAYWARD
Hayward City Hall
777 B Street
Hayward, CA 94541
www.Hayward-CA.gov
File #: ACT 22-028
DATE: March 16, 2022
TO: Council Budget and Finance Committee
FROM: Director of Finance
SUBJECT
Fiscal Year 2023 Mayor & City Council Departmental Budget Discussion
RECOMMENDATION
That the Committee reviews and provides comment on the proposed FY 2023 Mayor & City Council budget and narrative.
SUMMARY
On May 14, 2022, the City Manager will present for Council consideration the proposed operating budget for FY 2023. Staff plans to bring the budget adoption in early June. Staff is proposing the attached Mayor & City Council budget, which has no significant fiscal changes. In addition, staff is proposing the key activities and accomplishments from FY 2022 in the attached proposed budget narrative.
ATTACHMENTS
Attachment I Staff Report
Attachment II FY 2023 Mayor & City Council Discretionary Budget Attachment III Mayor and City Council Budget Narrative
CITY OF HAYWARD Printed on 3/11/2022Page 1 of 1
powered by Legistar™
DATE: March 16, 2022
TO: Council Budget and Finance Committee
FROM: City Manager
SUBJECT: Fiscal Year 2023 Mayor & City Council Departmental Budget Discussion
RECOMMENDATION
That the Committee reviews and provides comment on the proposed FY 2023 Mayor & City Council budget and narrative.
SUMMARY AND DISCUSSION
On May 14, 2022, the City Manager will present for Council consideration the proposed operating budget for FY 2023. Staff plans to bring the budget adoption in early June. Staff is proposing the attached Mayor & City Council budget, which has no significant fiscal changes. In addition, staff is proposing the key activities and accomplishments from FY 2022 in the attached proposed budget narrative.
FISCAL IMPACT
Should the full Council adopt the attached Mayor & City Council budget as proposed in Attachment II, the FY 2023 Mayor & City Council discretionary budget will be the same as in FY 2022.
NEXT STEPS
Staff will incorporate the Committee’s comments into the proposed budget document and present to the entire Council for consideration on May 14, 2022.
Prepared by: Mary Thomas, Management Analyst
Recommended by: Dustin Claussen, Director of Finance
Approved by:
_____________________________________
Kelly McAdoo, City Manager
FY 2020
Actual
FY 2021
Actual
FY 2022
Adopted
FY 2023
Proposed
REVENUES
None $ - $ - $ -
Total Revenues: $ - $ -
$ -
EXPENDITURES
Expenditures
Salary
Regular
$ 192,496 $ 189,171 $ 191,540 $ 195,334 Overtime $ - $ - $ -
Benefits
Fringe Benefits
$ 52,702 $ 49,543 $ 42,094 $ 41,319 Retiree Medical $ 10,800 $ 10,858 $ 10,780 $ 11,081 PERS $ 52,583 $ 26,885 $ 27,754 $ 23,233 Furlough / COLA Deferral $ - $ - $ -
Charges (to)/from other programs $ - $ - $ -
Net Staffing Expense $ 308,581
$ 276,457 $ 272,168 $ 270,967
Supplies & Services $ 31,380 $ 37,984 $ 52,867 $ 52,867 Internal Service Fees $ 79,462 $ 71,682 $ 70,303 $ 81,227 Net Operating Expenses $ 110,842 $ 109,666 $ 123,170 $ 134,094 Total Expenditures: $ 419,423 $ 386,123 $ 395,338 $ 405,061 General Fund Subsidy $ 419,423 $ 386,123 $ 395,338 $ 405,061
GENERAL FUND
Mayor And Council
ATTACHMENT II
ATTACHMENT III
MAYOR & CITY COUNCIL DEPARTMENT
MISSION STATEMENT
The mission of the Mayor and City Council is to represent the priorities and concerns of Hayward residents by providing relevant and timely policy direction to its appointed officers for the development of programs and services that address the needs of the residents, businesses, and visitors of Hayward, while exercising transparent and ethical governance of the community.
DEPARTMENT OVERVIEW
The Mayor and City Council provide overall policy leadership and guidance to appointed staff members who in turn implement this direction. The Mayor and Council appoint the City Manager, City Attorney, and City Clerk and adopt an overall City budget that provides the framework and resources within which the municipal corporation operates. Each year, the City Council adopts priorities that guide the work of City staff consistent with the above mission statement.
FY 2022 KEY ACTIVITIES AND ACCOMPLISHMENTS
1. Continued to provide crucial community and organization leadership and stability during the COVID-19 pandemic emergency, including the phased reopening of City facilities and sponsorship of the Together for Hayward Downtown Grant Re-opening Celebration.
2. Continued to oversee critical services to Hayward community members during the COVID-19 emergency in partnership with non-profit community providers, especially the community vaccination site at Fire Station 7.
3. Adopted a plan for use of Hayward’s $38 million allotment of American Rescue Plan Act (ARPA) funds, including year one programs to support homeless reduction, rental assistance, and economic recovery initiatives.
4. Worked collaboratively with the City’s bargaining units and staff leadership team to adopt Memorandums of Understanding with the International Federation of Professional and Technical Engineers - Local 21, Hayward Association of Management Employees, and Service Employees International Union, Local 1021.
5. Provided legislative and policy direction for the City Manager in support of the community’s priorities and Strategic Roadmap projects.
6. Initiated work and provided direction on pilot solutions to address community safety concerns, including the Hayward Evaluation and Response Teams (HEART) Program, Dispatch Center evaluation, and using unarmed Community Service Officers to respond to property crimes.
7. Adopted and began implementation of Let’s House Hayward, the Homelessness Reduction Strategic Plan.
8. Partnered with Abode Housing on the groundbreaking for the Depot Community Apartments for formerly homeless residents and very low-income households.
9. Adopted a resolution apologizing to Black, Indigenous, Californio, Mexicano, Latino, Latinx and other community members of color for racially disparate impacts and inequities resulting from past City policy and decision-making.
MAYOR & CITY COUNCIL DEPARTMENT
10. Adopted a resolution welcoming and calling for support of Afghan Refugees and coordinated with staff to help launch a resource center that has supported hundreds of refugee families.
11. Approved the raising of the Pan African Flag on City flagpoles for Black History Month, Juneteenth, and August 17th acknowledging the birthday of Marcus Garvey.
12. Adopted Renewable 100 as the Default Electricity Product from East Bay Community Energy.
13. Approved the 2020 Urban Water Management and 2020 Water Shortage Contingency Plans.
14. Adopted a resolution declaring the City’s support of the goal for California to reach 100 percent zero emission vehicle sales by 2030.
15. Joined Alameda County's ALL IN Eats Partnership to promote a circular food economy.
16. Provided direction on negotiations with Waste Management of Alameda County for a new Solid Waste and Recycling Franchise Agreement.
17. Received and discussed the results of the 2021 Biennial Resident Satisfaction Survey.
18. Reviewed and provided direction on fireworks mitigation options.
19. Coordinated with staff to celebrate the Heritage Plaza grand opening and the launch of Curbie the Book Mobile.
20. Worked with staff to the launch of the City Hall to You and Hayward People’s Budget community engagement programs.
21. Approved the plans to launch community engagement for the General Plan Amendments related to the Housing Element, Climate Action Plan, Environmental Justice, and Safety Element.
22. Adopted amendments to the Commercial Cannabis Program and launched a screening process for new permit applicants.
23. Approved key development projects throughout Hayward, including the redevelopment of the former Berkeley Farms and former Burlington Coat Factory sites.
24. Provided direction on the draft site plan for the Skywest Property.
25. Continued to oversee the Route 238 Property Disposition project, including approval of 250 housing units, 70% of which will be affordable.
26. Accepted grant funding and approved plans for transportation improvements, such as on Huntwood Blvd, Patrick Ave, and for the Safe Routes to School Program.
27. Held a joint work session with the Hayward Unified School District.
28. Completed annual performance evaluations for Council-appointed officers.
29. Issued X proclamations and X commendations to honor community members and important work being done in the Hayward community (getting these numbers).
30. Adopted modifications and edits to the City Council Handbook.
SIGNIFICANT RESOURCE CHANGES PLANNED FOR FY 2023
None.
CITY OF HAYWARD
Hayward City Hall
777 B Street
Hayward, CA 94541
www.Hayward-CA.gov
File #: RPT 22-028
DATE: March 16, 2022
TO: Council Budget and Finance Committee
FROM: Director of Finance
SUBJECT
Fiscal Year 2023 Budget Process Update
RECOMMENDATION
That the Committee receives an update on the FY 2023 Budget Process.
SUMMARY
This report provides an update to the Committee on the FY 2023 Budget process. The City’s annual budget process begins in January each year. The budget process includes several significant steps that allow for the development and presentation of the proposed budget to the Council for consideration prior to adoption in June. Graphic 1 provides a visualization of the FY 2023 annual budget process.
ATTACHMENTS
Attachment I Staff Report
CITY OF HAYWARD Printed on 3/11/2022Page 1 of 1
powered by Legistar™
DATE: March 16, 2022
TO: Council Budget and Finance Committee
FROM: Director of Finance
SUBJECT: Fiscal Year 2023 Budget Process Update
RECOMMENDATION
That the Committee receives an update on the FY 2023 Budget Process.
SUMMARY
This report provides an update to the Committee on the FY 2023 Budget process. The City’s annual budget process begins in January. The budget process includes several significant steps that allows for the development and presentation of the proposed budget to the Council for consideration prior to adoption in June. Graphic 1 provides a visualization of the FY 2023 annual budget process.
BACKGROUND AND DISCUSSION
The annual budget process began in January 2022. Departments identify both operational budgetary needs, as well as emerging capital infrastructure needs as part of the City’s Capital Improvement Program (CIP). By February, departments submit budget requests for both operating and CIP needs for the upcoming fiscal year.
As part of the Operating Budget process, each department presents its operating budget requests to the City Manager during a series of meetings in early March. The City Manager reviews all department requests prior to making a recommendation to the Council for consideration. These recommendations are included in the proposed FY 2023 Operating Budget, which will be provided to the full Council and published on the City’s website by the end of April.
As part of the CIP Budget process, several CIP Screening Committee meetings are held throughout February and March, prior to the presentation of the draft CIP to the City Manager and Assistant City Manager in March. The recommended CIP Budget will be provided to the full Council and published on the City’s website in mid-April.
On May 14, 2022, a Council Budget Work Session will be held to review the proposed FY 2023 Operating Budget. A separate CIP Budget Work Session is scheduled for May 17, 2022.
Upon completion of all budget work sessions, the Proposed FY 2023 Operating and CIP Budgets are scheduled for a Public Hearing and Adoption on June 7, 2022. Should the Public Hearing result in necessary changes to the Proposed FY 2023 Operating and CIP Budgets, the item will be continued to June 14, 2022, for final adoption.
Graphic 1: FY 2023 Annual Budget Timeline
ECONOMIC IMPACT
There is no economic impact associated with this report as it is informational only.
STRATEGIC ROADMAP
This agenda item is a routine operational item and is not specifically relate to a project currently identified in the Strategic Roadmap.
FISCAL IMPACT
There is no fiscal impact associated with this report as it is informational only.
PUBLIC CONTACT
The agenda for this item was posted in compliance with the California Brown Act.
January
Budget
Kick-Off
February
Operating
Budget
Requests
Due
March
Budget Review
Meetings with
City Manager and
CIP Screening
Committee
April
Proposed
Operating
Budget
Presented
to City
Council and
published
on City
website
May 14
Saturday
Budget
Work
Session
May 17
CIP Budget
Work
Session
June 7 or 14
Public Hearing
& Adoption of
both Operating
and CIP Budgets
NEXT STEPS
The proposed FY 2023 Operating Budget will be presented to Council and published on the City’s website by the end of April. A Saturday budget work session will be held on May 14, 2022, followed by a Public Hearing and Adoption of the FY 2022 Operating and CIP Budgets on June 7 or 14, 2022.
Prepared by: Nicole Gonzales, Deputy Director of Finance
Recommended by: Dustin Claussen, Director of Finance
Approved by:
_________________________________
Kelly McAdoo, City Manager
CITY OF HAYWARD
Hayward City Hall
777 B Street
Hayward, CA 94541
www.Hayward-CA.gov
File #: ACT 22-029
DATE: March 16, 2022
TO: Council Budget and Finance Committee
FROM: Director of Finance
SUBJECT
Review and Approve the FY 2022 Agenda Planning Calendar
RECOMMENDATION
That the Council Budget and Finance Committee reviews and approves the 2022 Agenda Planning Calendar.
SUMMARY
The FY 2022 Agenda Planning Calendar suggests agenda topics for the year for the Committee’s consideration.
ATTACHMENTS
Attachment I FY 2022 Agenda Planning Calendar
CITY OF HAYWARD Printed on 3/11/2022Page 1 of 1
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ATTACHMENT I
COUNCIL BUDGET AND FINANCE COMMITTEE
FY 2022 Agenda Planning Calendar
March 16, 2022
Meeting Location: Remote Participation
Meeting Time: 5:00 p.m.
Meeting Dates: The Council Budget & Finance Committee generally meet monthly on the 3rd Wednesday of the month, except for August, due to City Council Break. Special meetings will be scheduled as determined necessary by the Committee or the City Manager.
DATE SUGGESTED TOPICS (subject to change)
March 16, 2022
Discussion on Mayor & City Council FY 2023 Budget
FY 2023 Budget Process Update
Pension Obligation Bond Analysis
April 20, 2022 FY 2023 Proposed Budget Discussion
Parcel Tax Discussion
May 18, 2022
Annual Review of City Issued Debt
Measure C Analysis/Review
Annual City Benefit Liabilities and Funding Plan Review June 15, 2022 FY 2023 Budget Process Debrief (Oral Presentation)
Non-scheduled future agenda topics:
- Public Banking Feasibility Study
- Fleet Utilization Study
- Hayward Community Foundation Update