• 2/15/2022
City of Huntington Beach
FY 2020/21 Year-End Audit Results &
FY 2021/22 Mid-Year Budget Update
Huntington Beach City Council
February 15, 2022
HUNTINGTON BEACH
Overview
• FY 2020/21 Audit and Year-End Results
• FY 2021/22 Mid-Year Budget Update & Adjustments
FY 2022/23 Budget Development Calendar
SUPPLEMENTAL
COMMUNICATION
Meeting Date: 2/15/2022
• 1
Agenda Item No.: 17(22-107)
• 2/15/2022
FY 2020/21 Audit & Year-End Results
HUNTINGTON BEACH
FY2020/21 Audit Results
Government Finance Officers Association
Certificate of
• Auditing firm of Davis Farr LLP audited the City's Achievement financial statements and internal controls
• FY2020/21 Annual Comprehensive Financial Report
(ACFR) received an Unmodified (Clean) Audit Presented to Opinion City of Huntington Beac
Californis
• The City's ACFR is award winning - received the
Government Finance Officers Association's (GOA For the Fiscal Year Ended Excellence in Financial Reporting Award for 35 years June 30, 2020 Chuitophe P. Movill
Executive Director CEO
• 2
• 2/15/2022
FY 2020/21 Performance (Audited)
Government-Wide Highlights:
Description In Thousands
ASSETS
Current and Other Assets $374,526
Capital Assets 879,725
Total Assets 1,254,251
Deferred Outflows - Pensions & OPEB 419,067
LIABILITIES
Current and Other Liabilities 46,350
Long-Term Obligations* 915,921
Total Liabilities 962,271
Deferred Inflows - Pension & OPEB 19,317
TOTAL NET POSITION $691,730
* Reflect GASB 68 recording of Net Pension Liability of $438.4 million and GASB 75 recording of Net OPEB Liability $3.2 Million
FY 2020/21 General Fund (Audited)
Description In Thousands
Total Revenues $238,652
Total Expenditures 215,846
Excess of Revenues Over Expenditures 22,806
Transfers In 548
Transfers Out (10,868)
Net Change in General Fund Balance $12,486
Restricted AES Revenues (4,900)
Section 115 Trust Transfer (1,000)
Other Restricted Changes in General Fund Balance* (1,351) General Fund (Fund 100) Surplus $5,235
* Includes restricted donations and Section 115 Trust investment returns • 3
• 2/15/2022
General Fund Balance
Fund Balance Category (in thousands) FY 18/19 Audited FY 19/20 Audited FY 20/21 Audited Strategic Planning Initiative Assignment $15,998 $16,536 $16,536 Litigation Reserves - 3,650
AES Restricted Funds - 4,900
Pension Rate Stabilization 741
8,750 10,003 12,878
Section 115 Trust
Other Nonspendable, Restricted, 53,549 55,904
54,265
Committed, and Assigned Fund Balances
Total Fund Balance $79,013 $80,088 $94,609
FY 2021/22 Mid-Year Budget Update
HUNTINGTON BEACH
• 4
• 2/15/2022
City Budget & Fiscal Position
We are projecting a FY 21-22 surplus with modest surpluses over the next four years as a result of key financial decisions made by City Council and the ongoing recovery from the COVID-19 economic downturn. > FY2020-21 concluded with a $5.2M surplus, after year-end transfers ($10.9M surplus prior to transfers) • City Council approved additional investments of $4.4M into capital infrastructure and $1.3M o ssential capital equipment needs from the vear-end surplus > FY2021-22 is projected to conclude with a $4.3M surplus (subject to change) • Historic Infrastructure Investments in FY2021-22
> General Fund transfer to the Infrastructure Fund increased by 130% to $11.5M.
CIP budget increased 57% to $39.3M AGTON
HU
Additional One-Time Funding CITY
> City received $29.6M through the American Rescue Plan Act. City Council approved an expenditure plan to invest funds in projects.
COUNTY CAL
General Fund Budget FY 2021/22
Projected $4.3M Surplus
Community
Development
Utility User Tax 4% Other
Other
8% 11% Community & 9%
Library Svcs-
6%
Police
Charges for Current 34%
Services Property Tax
38%
Non-Departmental
17%
Use of Money &
Property Fire
Sales Tax 21%
7%
20%
Hotel Tax
Public Works
6%
9%
General Fund Revenues - $245.3M General Fund Expenditures - $241.0M • Property Tax $92.9M or 38% • Police $77.6M or 34%
• Sales Tax $49.5M o 20% • Fire $47.8M or 21%
• Hotel Tax $14.4M or 6% • Public Works $20M or 9%
• Use of Money and Property $16.3M or 7%
• Charges for Current Services $24.8M or 10%
10 • 5
• 2/15/2022
Financial Outlook
General Fund (Fund 100) Projected Projected Projected Projected Projected (in thousands) FY21/22 Y22/23 FY23/24 FY24/25 FY25/26
Revenue (Recurring) $245,376 $251,820 $256,588 $261,444 $266,414 Personnel Costs 164,226 169,908 169,598 172,281 174,966 Operating Costs 43,046 48,860 50,842 52,370 53,953
Non-Operating Costs* 33,768 31,364 33,643 34,368 34,940 Total Expenditures 241,040 250,132 254,083 259,019 263,849 Surplus $4,336 $1,688 $2,505 $2,425 $2,565
* Includes Debt Service, Capital Expenditures, and Transfers Ongoing Challenges
• Ongoing Impacts of COVID-19
• Inflationary Costs
• Increased CaPERS Costs
• Capital and Infrastructure Needs
• Increased Workers' Compensation Costs
• Increased General Liability Costs
- $11.8M in estimated General Liability Claims as of 12/31/2021 - $11.3M in reserves/available funds as of 12/31/2021
- $2.OM total legal claims expense in FY20/21
- $1.4M total legal claims expense in FY21/22 as of 12/31/2021 12 • 6
• 2/15/2022
FY 2021/22 Mid-Year Budget Adjustments
HUNTINGTON BEACH
Mid-Year Budget Adjustment Requests
• Mid-Year budget adjustments are requested in 6 separate funds
1. General Fund (100)
2. Park Development Impact 228)
3. Emergency Operations Center (238)
4. In-Lieu Parking Improvements (308)
5. Refuse Collection Service (504)
6. Energy Efficiency (807)
14 • 7
• 2/15/2022
General Fund Adjustments
• General Fund Adjustments requested in the following
departments:
- Administrative Services Department
- City Manager Department
- Community Development Department
- Finance Department
- Fire Department
- Police Department
- Public Works Department
- Non-Departmental
15 General Fund Adjustments
Administrative Services Department
• $120K - increased pre-employment medical exams, labor and employee relations consulting services, and a performance evaluation system City Manager Department
• $120K - executive recruitments, City Charter review, and Project Zero/Healing Center
Community Development Department
• $150K increased plan check services; $140K inspection services; and $500K sales tax sharing offset with plan check and inspection permit revenues and sales tax revenues for a net zero impact.
16 • 8
• 2/15/2022
General Fund Adjustments
Finance Department
• $100K - parking citation processing offset with parking citation revenues for a net zero impact
Fire Department
• $1.7M Fire Strike team reimbursement costs offset with strike team reimbursement revenues for a net zero impact; $381K Emergency Transport deployment offset with emergency medical services revenue for a net zero impact; and $47K physical exams for suppression staff
Police Department
• $300K temporary retired annuitant employees to maintain essential public safety services such as pilot police officers retained to ensure proper staffing levels in the Air Support Division and to train new pilots 1 General Fund Adjustments
Public Works Department
• $235K - increased janitorial and maintenance contracts due to prevailing wage requirements and general labor increases; fuel increases; shifting duties from part-time staff to contract services; and additional scope of work to meet community standards
Non-Departmental
• $1M COVID related expenditures disallowed for FEMA reimbursement • $300K Be Well OC (Mind OC) Mobile Crisis Response Program contract costs ineligible for federal funding
18 • 9
• 2/15/2022
General Fund Adjustment Summary
Department Appropriation Revenue Offset Net Increase
Administrative Services $120,000 - $120,000
City Manager 120,000 120,000
Community Development 790,000 790,000
Finance 100,000 100,000
Fire 2,128,584 2,081,284 47,300
Police 300,000 300,000
Public Works 235,000 235,000
Non-Departmental 1,300,000 1,300,000
General Fund Total $5,093,584 $2,971,284 $2,122,300
19 Current Year General Fund Surplus with Mid-Year Adjustments General Fund (Fund 100)
(in thousands)
Revenue (Recurring) $245,376
Personnel Costs 164,226
Operating Costs 43,046
Non-Operating Costs 33,768
Total Expenditures 241,040
Surplus 4,336
General Fund Requests - Net Increase (2,122)
Surplus after General Fund Requests $2,214
20 • 10
• 2/15/2022
Other Fund Adjustments
• Other Fund Adjustments requested in the following
funds:
1. Park Development Impact (228)
2. Emergency Operations Center (238)
3. In-Lieu Parking Improvements (308)
4. Refuse Collection Service (504)
5. Energy Efficiency (807)
21 Other Fund Adjustments
Park Development Impact (Fund 228) - Public Works
• $150K contract administrator services to manage the large volume of park related projects currently underway
Emergency Operations Center (Fund 238) - Non-Departmental • This fund accounts for citywide COVID related expenditures reimbursable by FEMA. An additional appropriation of $2M is requested to continue charging eligible COVID related expenditures which will be submitted to FEMA for reimbursement for a net zero impact.
In-Lieu Parking Improvements (Fund 308) - Community Development • $30K Parking Structure Audit and Operational Assessment of the 5th and PCH parking structure
22 • 11
• 2/15/2022
Other Fund Adjustments
Refuse Collection Service (Fund 504) - Public Works
• $195K to fund pass-thru costs associated with the Refuse Collection and Disposal Services contract. Based on current revenue collection amounts, these adjustments will have a net zero impact.
Energy Efficiency (Fund 807) - Public Works
• $238K Civic Center storage system and software, which provides battery storage and energy management for the solar panel system; and the City's cost share in SCE Charge Ready 2 (CR2) grant program to install 25 dual port charging stations for a total of 50 charging ports
Other Funds Adjustment Summary
Fund Department Appropriation Revenue Offset Net Increase 228 Park Development Impact 150,000 150,000
238 Emergency Operations Center 2,000,000 2,000,000 -
308 In-Lieu Parking Improvements 30,000 - 30,000
504 Refuse Collection Service 195,000 195,000 -
807 Energy Efficiency 238,000 - 238,000
Other Funds Total 2,613,000 2,195,000 418,000
Sufficient revenues, cash, and/or fund balances are available to support the requested other funds adjustments
24 • 12
• 2/15/2022
Professional Service Contract Amendments
Community Development
• Increase National Development Council agreement by $125,100 for community development related consulting services. No additional budget is requested.
Be Well Program
• Increase Mind OC agreement by $1.5M and extend the contract by 14-months (to 6/30/2023) for the Be Well Mobile Crisis Response Program. $300K budget requested.
25 FY 2021/22 Budget Development Calendar
HUNTINGTON BEACH
• 13
• 2/15/2022
Budget Development Calendar
Proposed Date Item
February - May 2022 FY 2022/23 Internal Budget Development Process May 17, 2022 FY 2022/23 Proposed Budget Study Session with City Council June 7, 2022 FY 2022/23 Budget Adoption: City Council Public Hearing June 21, 2022 FY 2022/23 Budget Adoption: Alternate Date July 1, 2022 Fiscal Year 2022/23 Begins
27 Recommended Actions
1. Receive and File FY 2020/21 Annual Comprehensive
Financial Report (ACFR) and other auditor issued reports
2. Approve mid-year budget adjustments to the FY 2021/22 Revised Budget
3. Approve professional service contract amendments
28 • 14
• 2/15/2022
Questions?
15