CITY OF MOORPARK
CHRIS R. ENEGREN
Mayor
RENEE DELGADO
Councilmember
DANIEL GROFF
Councilmember
TOM MEANS
Councilmember
DR. ANTONIO CASTRO
Councilmember
CITY MANAGER’S OFFICE | 799 Moorpark Avenue, Moorpark, California 93021 Main City Phone Number (805) 517-6200 | Fax (805) 532-2528 | [email protected]
NOTICE AND CALL OF A
REGULAR MEETING OF THE
ADMINISTRATION, FINANCE & PUBLIC SAFETY STANDING COMMITTEE (Mayor Enegren and Mayor Pro Tem Means)
Wednesday, January 3, 2024, at 5:45 p.m.
TO THE MEMBERS OF THE ADMINISTRATION, FINANCE AND PUBLIC SAFETY STANDING COMMITTEE OF THE CITY OF MOORPARK:
NOTICE IS HEREBY GIVEN that a Regular Meeting of the Administration, Finance and Public Safety Standing Committee is hereby called to be held on Wednesday, January 3, 2024, commencing at 5:45 p.m. Said meeting will be held in the Large Conference Room of the Moorpark Community Center, located at 799 Moorpark Avenue, Moorpark, California.
Said Regular Meeting shall be for the purpose of considering the following items:
1. CALL TO ORDER:
2. ROLL CALL:
3. PUBLIC COMMENT:
4. DISCUSSION ITEMS:
A. Consider the City of Moorpark’s Long-term Financial Plan. Staff Recommendation: Review the City of Moorpark’s Long-term Financial Plan and consider recommendation for approval to the City Council. (Staff: Troy Brown, City Manager)
5. ADJOURNMENT:
Posted: December 28, 2023
All writings and documents provided to the members of the Administration, Finance and Public Safety Standing Committee of the City of Moorpark regarding all agenda items are available for public inspection at the City Hall public counter located at 799 Moorpark Avenue during regular business hours. The agendas and agenda reports for City Council Standing Committee meetings are available on the City's website at www.moorparkca.gov.
In compliance with the Americans with Disabilities Act, if you need special assistance to review an agenda or participate in this meeting, including auxiliary aids or services, please contact the City Clerk’s Division at (805) 517-6223. Upon request, the agenda can be made available in appropriate alternative formats to persons with a disability. Any request for disability-related modification or accommodation should be made at least 48 hours prior to the scheduled meeting to assist the City staff in assuring reasonable arrangements can be made to provide accessibility to the meeting (28 CFR 35.102-35.104; ADA Title II).
ADMINISTRATION, FINANCE AND PUBLIC SAFETY COMMITTEE
AGENDA REPORT
TO: Administration, Finance and Public Safety Committee (AFPS) (Mayor Enegren and Mayor Pro Tem Means)
FROM: Troy Brown, City Manager
DATE: 01/03/2024 Regular Meeting
SUBJECT: Consider the City of Moorpark’s Long-term Financial Plan
BACKGROUND
As the City celebrates 40 years of incorporation, a number of long-term planning efforts have been completed or are underway to chart the future course of the City. In addition to development of many long-term plans around services, facilities, and infrastructure improvements to ensure sustainability of City services, we have faced a number of extraordinary circumstances in recent years. These circumstances have resulted in increased costs for service delivery, volatility in revenues, and in particular, sales taxes as the shift from brick-and-mortar to online sales continues to expand. The City is experiencing higher peaks and valleys of vital revenue sources while simultaneously seeing a higher demand of City services to meet the ongoing needs of residents.
At the direction of the City Council in 2023, staff has developed a Long-term Financial Plan (LTFP) to provide more focus and attention on the overall long-term fiscal sustainability of the City. The goal of the LTFP is to serve as a proactive tool to ensure long-term efficient and effective management of City services, finances, operations, and capital improvement projects. In addition, the LTFP will serve as a budget model for the General Fund in its forecasting of revenues and expenditures over a ten-year period.
The findings and conclusions of the LTFP will provide an opportunity for the City to reflect and shift its view of the future as different conditions arise. Although the LTFP is not an accounting tool, it is valuable for policy makers by providing a look into the financial future of the City and the myriad of demands placed on it. The LTFP can qualify and quantify decisions and guide the decision-making process by placing a focus on maintaining the current quality of services, enhancing services and/or programs, forecasting economic recessions, and identifying projected long term financial imbalances early. The LTFP takes a forward-look of the City’s General Fund operating revenues and expenditures. Its purpose is to identify financial trends, shortfalls, opportunities, and issues so the City can proactively address them. It does so by projecting the future fiscal results of continuing the City’s current service levels and policies. The LTFP lays the foundation for the budget, Item: 4.A.
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aiding both the City Manager and Council in establishing priorities and allocating resources appropriately. This year’s forecast continues the economic recovery from the downturn that impacted local, state, national, and global economies. The LTFP serves as a roadmap to aid the City in its financial decisions over the next few years to ensure expenditures and revenues stay in balance while sustaining vital services and programs to meet the needs of the community.
Components of the LTFP are focused on emerging issues and has been documented for public review to encourage input and feedback from various stakeholders. This Plan includes a statement of current financial position and trend analysis forecast which includes projections looking ahead ten years through FY 2033/34. The LTFP is not able to predict with certainty the City’s fiscal future, rather it serves as a tool to highlight significant issues or patterns that must be addressed if the City’s goals are to be achieved.
The City of Moorpark’s LTFP is critical to Council’s financial planning process. It underpins our long-term financial sustainability while meeting the needs and expectations of the community and delivering Council’s Strategic Directions highlighted in its City Council Goals and Objectives.
The LTFP is pivotal in setting the high-level financial parameters that guide the development and refinement of Council’s budgeted plans, strategies and actions and generates information that assists decisions about the mix, timing, and affordability of future outlays on operating activities, renewal, and replacement of existing assets and funding of additional assets. It is also instrumental in ensuring the City of Moorpark delivers enhanced services now and in the future by providing optimal value-for-money community outcomes.
In developing the LTFP, a number of key assumptions are applied. For this LTFP, the audited financial actual numbers from the 2021/22 Annual Comprehensive Financial Report form the basis for year one of the Plan. Years two to 10 present nine inclusive years of financial projections underpinned by the base data. The model assumes that overall, service levels will remain materially unchanged throughout the planning period.
However, there is recognition of some exceptions to this, outlined below:
• Local, national, and global economies are facing uncertainty due to the prolonged economic recovery following the COVID-19 pandemic. Despite the sustained efforts and long recovery, Moorpark - in addition to all levels of government - have a role to play in stimulating the economy and assisting those in financial hardship. • The City has implemented an updated new fee structure for services it provides.
The new fees will better align the City to recover more of its costs for services offered to the development community.
• Varied or additional services will need to be added over time in response to changes in community needs and preferences. Specifically, in the area of public safety. The LTFP assumes that any variations in the demand for services will not impact the financial bottom line, unless otherwise stated. 2 Administration, Finance and Public Safety Committee
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• Increases in the amount of General Fund dollars for park maintenance will continue to rise resulting in a greater transfer to the Parks Maintenance Fund to cover these expenses.
• Employee salaries are projected to increase by consumer price index. The ability to pay employees remains of vital importance to the City; however, the everchanging desires of employee attraction and retention remain a core objective of the City to ensure consistent service delivery.
• Operating Surplus’ must be achieved to restore reserve fund balances following the allocation of funds for major capital improvement projects such as:
o Acquisition and renovation of 323 Science Drive to serve as a new City Hall. o Design and construction of a new approximate 18,000 sq. ft. library. o Maintenance and repair of existing roadway assets equaling $14.1M in 2020/21 and totaling $97.6M across the 10-year period.
STRATEGIC CONTEXT
The LTFP is a strategic component of Council’s financial management framework and supports the delivery of the City Council Strategic Goals and Objectives. The Strategic Framework illustrated below outlines our organizational planning framework and highlights the importance of community feedback into this process.
The LTFP is integral to Council’s suite of Strategic Management Plans providing the critical link between the:
• City Council Goals and Objectives;
• Biennial Citizen Survey;
• Pavement Management Program; and,
• Annual Budget.
Optimizing the integration between these strategic intentions ensures Council develops and implements a robust and transparent system of financial management aimed to uphold and maintain Council’s long term financial sustainability.
KEY INFLUENCES AND RISKS
This LTFP generates information which is used to guide decisions about Council operations into the future. However, as with any long-term plan, the accuracy of this LTFP is subject to many inherent influences. These variables and risks can be divided into three main groups:
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External Influences – items outside of Council’s control:
• Unforeseen economic changes or circumstances such as:
o Financial and volatile economic impacts;
o Interest rates fluctuations;
o Localized economic growth;
o Residential development and new business development; o Consumer Price Index (a rolling five-year average determined by using the information provided by the U.S. Department of Labor, for all urban area consumers within the Los Angeles/Long Beach/Anaheim metropolitan area during the prior year);
o Cost of natural resources such as fuel and water;
o A change in the level of legislative compliance; and, o Cost shifting (i.e. increased levies, new development impact fees to ensure development fully “pays its own way” etc.).
• Variable Climatic Conditions such as:
o Climate Change - storm or Force Majeure Events (i.e., Easy Fire of October 2019);
o Flooding;
o Brushfires; and,
o Drought and more.
Internal Influences – items that Council can control:
• Agreed service level review outcomes;
• Infrastructure asset management;
• Depreciation (valuations can be considered an external influence); • Fee/tax increases and other financial influences;
• Performance management;
• Efficiencies in service delivery and administrative support; and, • Salaries and wages.
Outside Influences – items the Council cannot control but can shape and guide. In addition to the influences previously mentioned, outside influences also exist and are realized by Moorpark residents and businesses. These drivers are manifested and realized through a variety of inputs such as:
• Community needs and expectations;
• Input from the biennial community survey;
• City Council Goals and Objectives; and,
• Other outside key strategies generated from other governmental agencies (state mandates, federal regulations, etc.).
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In order to minimize the inherent risks of long-term financial planning, the Council should review and update the LTFP at least annually to ensure that the most recent economic data and forecasts are being used as the basis for developing Council’s LTFP.
BASIS OF PREPARATION
The LTFP is key to establishing funding requirements of Council’s Asset Management Plans and other strategic community planning and implementation, ensuring we continue to operate in a financially sustainable manner. The LTFP enables Council to effectively and equitably manage service levels, asset funding and revenue raising decisions, balanced with achieving its financial strategy and key performance indicators.
In developing the LTFP, key financial principles are established that underpin the Council’s forecast of financial performance and position over a 10-year time frame. The LTFP incorporates a number of statutory and discretionary reports and assumptions. Due to the variable nature of the assumptions focusing on changes in the economy, an annual review of the LTFP provides the Council with the opportunity to review the financial principles to easily adapt to these external influences, changes in proposed service levels, or projects. This effort involves annual review and input from Council and the Administration, Finance and Public Safety Committee.
The financial projections contained within the LTFP, provide an indication of Council’s direction and financial capacity into the future, and is intended to be viewed as a guide to future actions or opportunities. This in turn encourages Council to analyze the future effects and impacts of current decisions made by Council.
FINANCE STRATEGY
The City of Moorpark continues to employ a strategic approach to financial planning that is influenced by the current and predicted economic environment, our financial position, and the impacts on the organization both internally and externally. Employing this strategic approach is designed to ensure:
• Support of the achievement of the City Council’s Goals and Objectives. • Our long-term financial sustainability.
• Intergenerational equity.
• Needs and expectations of the Moorpark community are met. • Delivery of appropriate, targeted, effective and efficient services. • Responsible rate increases.
This leads to Council achieving:
• Continued funding to ensure infrastructure is replaced and maintained when required (includes roads, trails, owned properties, and open spaces). • Commitment to major projects which span more than one year. 5 Administration, Finance and Public Safety Committee
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• Continually funding the full life-cycle costs of any new or enhanced services or construction of new assets through savings, rate increases, or grant funding. • Implementation of strategies to ensure new development “pays its way” related to infrastructure and community amenities such as parks, pools, street/sidewalk maintenance, etc.
• Maintaining existing services at current service levels.
Key Economic Assumptions
It is important that Council’s LTFP reflects the most recent economic data and forecasts available. A review is conducted each year to ensure that the underlying parameters and assumptions are reasonable given the current economic conditions and expectations.
The key economic indicators and drivers used in this Plan are summarized in the Table 1 below:
Table 1 – LTFP Key Assumptions
Property Tax
Growth
Sales Tax
Growth
Changes to General
Fund Transfer-Parks
Change to Salaries
& Benefits
Investment
Growth for
Infrastructure
2.0% 2.0% TBD 2.5% 0%
Population Growth – The City’s population has grown slowly over the past ten years and decreased slightly to 35,514 persons according to the latest population figures from the California Department of Finance. Comparing this growth over the prior ten-year period of 2005 to 2015 where the City experienced 4% growth in 2005 from a population of 34,500 to 36,009 in 2015 as depicted on the chart below. This emphasizes that the City is approaching build-out.
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Property Tax Growth – 2.0% annual increase
In the FY 2023/24 Budget, property tax is projected to total $5.23M or 23% of total General Fund revenues. Property tax growth has been strong over the past several fiscal years and revenues in this category are now consistently above pre-recession levels. On average, the City can expect to receive only $0.083 from every property tax dollar collected for real property in the City. Property tax revenues are mainly distributed to a number of other governmental agencies for a variety of services to support residents needs such as: schools, county services, and fire protection to name a few. Property taxes are fairly predictable since Proposition 13 (1978) limits increases to property tax to 2% per year. Improvements to land or change of ownership provide for a reassessment of land valuation which can result in increases higher than 2%. On average, property taxes can be expected to increase by 2% per year as historically performed.
Several residential and commercial development projects in the City have either been recently entitled or re-entitled which will add to the City’s property tax base. Some of these projects include:
• High Street Depot – 79 residential units with approximately 14,000 square feet of commercial space (construction underway);
• Hitch Ranch – 755 residential units (construction anticipated in 2025); • Beltramo Ranch – 47 detached residential units (construction timeline unknown); • North Ranch – 139 detached residential units (construction timeline unknown); • Green Island Villas – 69 multi-family units (construction timeline unknown); • Pacific Communities – 284 detached small-lot residential units (construction timeline unknown); and
• Everett Street Terraces – 60 residential condominium units (construction timeline unknown).
$ 0
$ 500,000
$ 1,000,000
$ 1,500,000
$ 2,000,000
$ 2,500,000
$ 3,000,000
$ 3,500,000
$ 4,000,000
$ 4,500,000
1999-002000-012001-022002-032003-042004-052005-062006-072007-082008-092009-102010-112011-122012-132013-142014-152015-162016-172017-182018-192019-202020-212021-222022-232023-24 Property Taxes
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Although each of these projects will add to the City’s property tax base, it is important to recognize that revenues derived from residential development in the form of property taxes are insufficient to meet the ongoing cost to service new development with the City receiving only 2% of assessed values. This was further confirmed in 2023 when graduate students of the Public Policy and Administration program at California Lutheran University completed an analysis of the “Housing Production Fiscal Impacts on the City of Moorpark” to examine the financial impacts of residential development on existing services to determine the extent of the financial impacts on City resources.
The quantitative and qualitative analysis undertaken by the students revealed five recommendations to address the impacts of development on the City. The recommendations were:
1. Create an initiative to be placed on the ballot to increase fees for the residents of Moorpark;
2. Implement specific programs and facilities to meet the needs of children and seniors;
3. Diversify the economy within the City of Moorpark;
4. Implement mixed-use development projects;
5. Implement community facility districts within established housing developments. *Copies of the full California Lutheran University analysis are available upon request.
The City receives a small portion of property tax revenues derived from secured properties in the City. As shown on the below graph, the Moorpark General Fund only receives approximately $0.08 of every dollar with remaining amounts allocated to various governmental agencies for service provision within their respective service areas.
Moorpark Unified School District receives the largest portion of property tax allocations receiving approximately $0.33 of every dollar, a 300% greater share than the City. The illustration below shows a breakdown of the distribution of Property Tax dollars derived from secured properties in the City.
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Source: HdL Coren & Cone
Sales Taxes – 2.0% annual increase
In the FY 2023/24 Budget, sales taxes are projected to total $5.30M or 23% of total General Fund revenues. Property tax growth has been strong over the past several fiscal years and revenues in this category are now consistently above pre-recession levels.
The City’s sales tax rate is 7.25%, like that of other cities in the County with the exception of Oxnard, Ventura, Port Hueneme, and Santa Paula who have higher sales tax rates.
More importantly, the City’s sales tax portfolio relies heavily on business-to-business and general consumer goods.
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Revenues from sales taxes is one of the most volatile revenue resources for the City and follows economic indicators. During time of national economic prosperity, sales taxes tend to be higher due to additional disposable income being available in households.
Currently, only goods and consumables generate sales taxes in California, while services are not taxed.
The retail industry is a strong contributor to sales tax revenues for the City. Globally, this industry is experiencing transformation as the proliferation of online sales penetrating the consumer market are occurring at a rate higher than originally contemplated by experts.
Online sales transactions do not result in a point-of-sale transaction resulting in sales taxes flowing to countywide pools rather than direct allocations to the City. The City received a portion of sales taxes from the countywide pool based on a percentage commensurate to total sales generated by neighboring cities in the County, rather than direct allocations where the City receives its full one percent (1%) of every dollar. Growth in online shopping is also causing a strain on traditional brick-and-mortar stores resulting in less foot traffic and larger profit margins to cover rents and leases. This results in retailers such as Toys R Us, Sears, and others shuttering sites or retooling their business model to keep pace with online giants like Amazon who are gaining market share at high rates.
According to HdL – the City’s sales tax consultant – over the period from 2012-2017 sales from brick-and-mortar businesses experienced an increase of 10%, while growth from online businesses have increased 88% over the same period. $0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 CITY OF MOORPARK - 10 YEARS SALES
TAX HISTORY
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Due to antiquated statewide sales tax policies, local municipalities often receive no sales taxes from online sales because there is no direct point-of-sale in the community. Yet cities still depend on revenues from point-of-sale to repair streets, roads and infrastructure used by delivery companies that transport goods over local roads to deliver to residents.
It is important to note that revenues derived from sales and property taxes together make up approximately 46% of all General Fund revenue sources for the City.
Property Tax In-Lieu (Motor Vehicle License Fee) (2% annual increase) – Property Tax In-Lieu of Motor Vehicle License Fee growth is linked to assessed valuation; therefore, the annual increase mirrors the increase in Property Tax revenue.
Franchise Fees (2% annual increase) – The City receives several revenues from Franchise Fees. The Refuse Franchise Fee with Waste Management (WM) is set at 6%, Charter Communication Franchise rate is 5%, DirecTV Franchise rate is 5%, Edison Franchise rate is 2%, Southern California Gas pays a 2% Franchise rate, Crimson Gas began at a base rate of $2,220 which has increased by CPI since inception, and AT&T pays a 5% Franchise rate. Although the rates of these services can increase from year to year based on many external factors, there have not been large swings in these revenues and the historical trend shows a modest 1% increase.
In addition, the City has seen a steady decline in the Franchise Fee revenue from traditional cable providers as there is an increasing trend towards satellite and internet providers. Finally, the City negotiated a Most Favored Nation clause in the Franchise Agreement with WM. As a result of recent contract negotiations with neighboring cities, the residents can expect a reduction in residential rates by 1% and no increase in 11 Administration, Finance and Public Safety Committee
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commercial rates through 2025. Based on the above-mentioned factors, Franchise Fees are projected to increase at a modest rate of 1% mirroring population growth.
Transient Occupancy Tax (TOT) (2.5% annual increase) – The current TOT rate within City limits is 10% and can only be changed with majority voter approval. Similar to Sales Tax, TOT is tied to economic activity and consumer confidence. Although increases have been higher over the past three fiscal years, no new hotels are currently anticipated during the next ten years.
Gasoline Tax (0.5% annual increase) – This is a very volatile funding source subject to several global economic indices. Minimal increases are projected for gas taxes primarily due to declining Gas Tax revenues resulting from development of more fuel-efficient cars, including hybrid and electrical cars, offset by the rise in gasoline prices and growth in population.
General Fund transfer for Parks/LMD Maintenance – In July 1999, the City established the Parks and Recreation Maintenance and Improvement District (Improvement District) for the maintenance and improvement of City parks. It was initiated by the Council to provide funding in place of Parks Maintenance Assessment District No. AD 85-1 (AD 85- 1), which was disbanded in July 1998 as a result of Proposition 218. The Improvement District is based on a “special” assessment. This means that the City assesses property owners for that portion of park maintenance and improvement activities that generate a “special” benefit. All activities that generate a “general” benefit must be funded from nonassessment revenue, typically the General Fund and Park Improvement Funds.
The budget for installation, maintenance, and servicing costs of the City’s parks for FY 2023/24 is $6,368,345 which is $691,061 higher than the initial budget used in FY 2022/23. In FY 2023/24, the assessment will generate approximately $978,307 in revenue, an increase of $41,182 over the amount generated in FY 2022/23. At its current rate, assessment revenue will cover approximately 15% of the total budget for operations and improvements or only 24% of the 75% cap for the “special” benefit the City is eligible to assess. The General Fund is estimated to subsidize $1,569,169 in current year FY 2022/23 and is budgeted to spend $1,592,086 in FY 2023/24. Even though these costs have increased over the years and is expected to continue to increase, actual funding levels in this area – resulting from the actual transfer versus budgeted transfer – has decreased.
A concerted effort has been underway since 2018 to contain costs in this area. Cost cutting measures have been implemented that have played a significant role in reducing costs here. In April of 2020 the City Council approved the redistribution of the City’s LMDs among three areas of contract responsibility for landscape maintenance services. This redistribution allows the underfunded LMDs to be serviced under one contractual service area, while the fully funded LMD areas are distributed across two separate, similarly-sized contractual service areas. This updated distribution also allowed staff to explore service level reductions in the underfunded LMD contractual service area to reduce landscape 12 Administration, Finance and Public Safety Committee
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maintenance costs and lower the burden on the General Fund, while maintaining the existing levels of landscape maintenance service in the fully funded LMDs. At the same time, staff also investigated possible service level reductions to the parks landscape maintenance services that would similarly lower costs. Some of the activities taken to control costs here have included:
• Investment in capital improvements in the City’s parks to remove turf areas to address environmental circumstance and reduce water usage; • Changes to parks and underfunded landscape maintenance services; • Mowing: No change to sports fields. Mowing at passive parks changed from weekly to every other week. Mowing of turf areas in the underfunded LMDs would also change from weekly to every other week. Edging changed from weekly to every other week at all parks;
• Shrub Pruning: Changed from “as necessary” to monthly; • Fertilization: Removed from contractual services and will be completed by in-house staff. Activity will focus on sports fields to keep passive parks and LMD areas from growing too quickly between mowings;
• Custodial Services: Removed from park services contract. Services transferred to City janitorial services contractor;
• Weeding: Changed from weekly to monthly and modified to include mechanical weed control in combination with the use of herbicides approved by the Ventura County Agricultural Commissioner;
• Debris and Litter Removal: Changed from daily to weekly. Service for refuse bins remains unchanged;
• Sport Court and Picnic Area Cleaning: Changed from daily to weekly; • Ballfield Dugout/Bleacher Cleaning: Changed from daily to weekly; • Playground Site Inspection and Raking: Changed from daily to twice weekly; • Parking Lot/Hardscape Cleaning: Cleaning of hardscape surfaces, sidewalks, parking lots, access roads, decomposed granite trails and walkways changed from weekly to every other week;
• Drinking Fountain Maintenance: Changed from daily to weekly; • Swale, Catch Basin and Drain Cleaning: Changed from weekly to “as needed”; and
• Irrigation Repairs: Inspections changed from weekly to monthly. Materials will be provided by the City on City’s account with a local vendor.
Transferring of General Fund dollars to other funds to support other services is a subsidy of the other service. Chart 3 below shows the amount of actual dollars transferred to the Parks and LMD funds to support maintenance in those funds. This results in less funds available to provide other vital services.
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Personnel Costs – The City’s business is people serving people to provide municipal services and personnel costs are currently the largest General Fund expenditure minus police services. In FY 2022/23 personnel expenses totaled $5.9M or 26.8% of General Fund expenditures and transfers out for FY 2022/23. There are 76.48 full-time and designated part-time General Fund positions across all departments. This is an increase of 15.7 positions since 2015. Citywide staffing levels were constantly adjusted not only to create better workflows to serve the public, but to move important initiatives forward.
The City should remain vigilant before adding ongoing personnel costs in the future to ensure employee morale and productivity remain high, while combatting fatigue, employee retention, and burnout.
City of Moorpark
Position History
For the Fiscal Years 2014/15 to 2023/24
Department FY 2014/15
Actuals
FY 2023/24
Actuals
Variance Ten-Year
Change
1. City Manager’s Office 12.48 7.72 -4.76 -38.1%
2. *Finance/Administrative Services 6.00 10.30 4.3 71.6%
3. Community Development 8.00 11.00 3.0 37.5%
4. Parks, Recreation and
Community Services
25.73 35.73 10.0 38.8%
5. Public Works 13.86 11.73 -2.13 -15.3%
Total 66.07 76.48 10.41 15.7%
*Three positions were moved from the City Manager’s Office to the Finance Department to create an Administrative Services Department in 2017. $999,787
$1,165,975
$1,202,407
$1,360,393
$1,469,077
$1,335,666
$1,685,621
$1,495,638
$1,340,430
$1,154,621
$1,196,027
$1,060,566
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
GF Transfer
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Salaries and Wages
The 2023/24 forecast for salaries and wages is fully costed for 76.48 Full Time Equivalents and is in line with the approved Bargaining Agreements and wage increases for staff. The salaries and wages staff costs for year 2 (FY 2023/24) has been assumed including a 3% salary increase. The current Bargaining Agreement is due to expire on June 30, 2025, and the increase in salaries and wages for FY 2024/25 and any years thereafter will be subject to negotiated amounts in future bargaining agreements.
Traditionally the City has negotiated wage increases commensurate with CPI. Salaries and wages increase for future years been assumed at 2.0%. A point of consideration will be the appropriateness of this strategy in the overall desire to attract and retain employees, while at the same time ensuring the City maintains fiscal sustainability in providing adjustments above CPI.
Benefit costs (healthcare, vision, dental, retirement) also comprise total compensation.
Increases in benefits area are calculated on a proportional scale vis-à-vis salaries. This LTFP currently includes increases to benefits totaling 1.5% of total wage costs.
HISTORICAL COLA ADJUSTMENTS- MOORPARK
3 0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 Cost of Living Adjustment vs.
Consumer Price Index (LA Area) by Fiscal Year
COLA CPI - LA Mar
10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 COLA 0.00% 0.00% 0.00% 1.00% 1.00% 1.00% 1.00% 2.00% 2.00% 1.00% 0.00% 2.00% 2.00% 7.00 3.00 CPI - LA Mar 1.90% 3.00% 2.00% 1.30% 1.00% 0.50% 1.70% 2.70% 3.80% 2.70% 1.90% 2.20% 8.50% 3.70% TBD 15 Administration, Finance and Public Safety Committee
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Police Contract (4% annual increase) – The City contracts with Ventura County Sheriff’s Office (VCSO) for police services. VCSO has consistently suggested a 5% increase on a year-over-year basis to account for salary and overhead cost increases. Typical increases over the past 10 years have averaged increases of approximate 4.0%. In FY 2022/23 the costs for police services exceeded $8M for the first time in the City’s history.
Improvements/Infrastructure Investment
The City of Moorpark is responsible for the management, operation, and maintenance of a diverse asset portfolio that provides services and facilities for our community. Council has historically preferred to purchase capital expenditure items on cash basis, limiting the use of debt service.
Investments in infrastructure assets are normally captured through overhead allocation methodologies to cover expenses for replacement of building fixtures, information technology, and vehicle replacement. Underfunding of these activities leads to excessive single-year outlay to cover costs, rather than sinking these expenses overtime.
The largest capital asset owned by the City is its street and roadway network. In October 2023, the City Council adopted a Pavement Management and Pavement Rehabilitation program which valued these assets at $99.6M.
The report provided a budget-based model and pavement preservation scenario for the next five years based on pavement conditions determined from March 2022. The “Moorpark Budget” which was used as a funding model for the Pavement Management Public Safety Costs Trend
5/23/2022 7
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Program was based on a pavement preservation budget of $800,000 per year, which correlates with the funding received from the Local Streets and Roads Funding Program.
For FY 2022/23, the City received $785,353 from the Local Streets and Roads Funding Program.
The Budget Scenarios contained in the Plan detailed various funding scenarios:
• An investment of $800,000/year (“Moorpark Budget”): overall PCI drops from 68 to 67, backlog increase from 3% to 10%;
• An investment of $960,000/year: (“Steady state PCI”) of 68, backlog increase from 3% to 10%;
• An investment of $1,000,000/year: (“Recommended Budget”) PCI increases to 69, backlog increase from 3% to 10%;
• An investment of $1,560,000/year: (“Target PCI”) raise theoretical target PCI to 72, backlog increases from 3% to 9%; and
• An investment of $5,600,000/year: (“Fix All Budget”) maintains backlog condition at 3%, PCI increases to 81.
Like many cities across the country, funding for maintenance of the City’s roadway network is insufficient to meet the needs of the City. The primary source of funding for maintenance for streets and road is gas taxes. Due to limited funds available from the Local Streets and Roads program, should the Council desire to enhance its roadway/sidewalk network, additional General Fund dollars are needed to augment Local Streets and Road program dollars. As indicated in the Pavement Management Report and the above graph, the City would need to provide $38.4M per year over the next five years to fully improve all deficiencies on local streets and roads. No additional General Fund dollars are included in the LTFP for these improvements. 17 Administration, Finance and Public Safety Committee
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When all the assumptions are aggregated using actuals from FY 2021/22 as a base year and are extrapolated out 10 years, the model calculates anticipated revenues and expenditures based on historical levels of growth. The results of the straight-line projections of the LTFP are graphically depicted below. Presuming the assumptions manifest themselves over the next 10 years as projected in the LTFP, in FY 2025/26 the City’s expenditures will exceed resources resulting in an ongoing structural deficit for the City. As previously mentioned, the model presumes no service augmentations or investments in infrastructure or other capital assets of the City.
The LTFP serves as a powerful planning tool and can project the financial impacts using many assumptions. Ultimately the City Council has within its authority the ability to influence the LTFP through expenditure control and/or revenue enhancement opportunities. Assuming the aforementioned context previously described, expenditures will continue to increase due to a number of uncontrollable expenses related to personnel such as health care and retirement costs. The implementation of the Public Employee Pension Reform Act has played a significant role in containing ongoing retirement costs from rising at the levels seen previously in the state.
CONCLUDING COMMENTS
The City is currently in good fiscal health with a balanced budget in FY 2023/24. Strong City Council leadership and staff management combined with sound financial and reserve policies have enabled the City to weather economic downturns with minimal impact on public services. The City’s investments in maintenance for the community will present unique challenges that the City has not faced during the past 40 years. Slow population growth, slow economic growth, and a shifting focus from new development to rehabilitation of existing development all combine to lead to a slower growth in revenue over the next 10 fiscal years than the City has experienced in the past. Although the General Fund is projected to maintain a positive fund balance throughout the duration of $0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
2023 10-Year Financial Plan
GF Revenues
GF Expenses
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the Plan years, it is nonetheless projected to draw upon fund balance beginning in FY 2025/26 in order to meet operating and capital requirements of existing services and programs. However, no capacity exists for the General Fund to support new or additional services such as public safety augmentations and programs that have historically been supported with non-General Fund revenue such as streets and roads. The draw down upon fund balance also impacts the reserve available for capital projects. Although not projected in this Plan, further cuts or takeaways by the federal, state, or county government would significantly strain the City’s ability to provide outstanding services to residents.
FISCAL IMPACT
There is no direct impact associated with the approval of the proposed City of Moorpark Long-term Financial Plan.
STAFF RECOMMENDATION
Review the City of Moorpark’s Long-term Financial Plan and consider recommendation for approval to the City Council.
Attachment: General Fund Summary
19 Actual Budget Revised BUDGET
2021-22 2022-23 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031-23 2033-34
REVENUES
Property Taxes ($ 9,759,621) ($ 9,290,168) ($ 9,375,168) ($ 9,635,000) ($ 9,828,000) ($ 10,025,000) ($ 10,225,000) ($ 10,429,000) ($ 10,637,000) ($ 10,849,000) ($ 11,066,000) ($ 11,287,000) ($ 11,512,000) Sales Taxes (5,219,884) (5,028,000) (5,228,000) (5,296,000) (5,402,000) (5,510,000) (5,620,000) (5,732,000) (5,847,000) (5,964,000) (6,083,000) (6,205,000) (6,329,000) Other Taxes (7,070,151) (6,530,364) (6,530,364) (4,781,044) (4,949,000) (5,124,000) (5,305,000) (5,493,000) (5,689,000) (5,892,000) (6,103,000) (6,323,000) (6,551,000) Licenses and Permits (251,803) (308,000) (308,000) (308,000) (318,000) (328,000) (338,000) (348,000) (358,000) (369,000) (380,000) (392,000) (404,000) Fines and Forfeitures (102,416) (178,000) (203,000) (178,000) (178,000) (178,000) (178,000) (178,000) (178,000) (178,000) (178,000) (178,000) (178,000) Use of Money and Property (236,127) (656,600) (656,600) (580,848) (587,000) (593,000) (599,000) (605,000) (611,000) (617,000) (623,000) (629,000) (635,000) Revenue from Other Agencies (101,556) (553,000) (553,000) (515,000) (516,000) (517,000) (518,000) (519,000) (520,000) (521,000) (522,000) (523,000) (524,000) Charges for Services (89,854) (202,000) (1,193,539) (1,380,839) (1,381,000) (1,381,000) (1,381,000) (1,381,000) (1,381,000) (1,381,000) (1,381,000) (1,381,000) (1,381,000) Miscellaneous Revenue - - - - - - - - - - - - -
Interfund Revenue - - - - - - - - - - - - -
Transfers In - - - - - - - - - - - - -
TOTAL REVENUE ($ 22,831,411) ($ 22,746,132) ($ 24,047,671) ($ 22,674,731) ($ 23,159,000) ($ 23,656,000) ($ 24,164,000) ($ 24,685,000) ($ 25,221,000) ($ 25,771,000) ($ 26,336,000) ($ 26,918,000) ($ 27,514,000)
EXPENDITURES
Salaries and Benefits $ 4,880,945 $ 5,629,555 $ 5,644,555 $ 5,996,519 $ 6,200,883 $ 6,412,356 $ 6,631,191 $ 6,857,637 $ 7,091,967 $ 7,334,452 $ 7,585,373 $ 7,845,028 $ 8,113,719 Maintenance and Operations 10,464,385 11,924,714 12,240,943 12,345,569 12,783,368 13,237,325 13,708,052 14,196,185 14,702,384 15,227,339 15,771,762 16,336,389 16,921,989 Capital 127,361 1,085,229 1,674,141 1,235,322 1,203,885 1,233,982 1,264,831 1,296,452 1,328,863 1,362,084 1,396,136 1,431,040 1,466,816 Charges-Other Depts. Or Funds - - - - - - - - - - - - - Transfers To Other Funds 7,113,563 2,888,894 2,888,894 2,784,604 2,784,604 2,784,604 2,784,604 2,784,604 2,784,604 2,784,604 2,784,604 2,784,604 2,784,604 TOTAL EXPENDITURES $ 22,586,254 $ 21,528,392 $ 22,448,533 $ 22,362,013 $ 22,972,740 $ 23,668,267 $ 24,388,678 $ 25,134,878 $ 25,907,818 $ 26,708,479 $ 27,537,875 $ 28,397,061 $ 29,287,128 SURPLUS or (DEFICIT) $ 245,157 $ 1,217,740 $ 1,599,138 $ 312,718 $ 186,260 ($ 12,267) ($ 224,678) ($ 449,878) ($ 686,818) ($ 937,479) ($ 1,201,875) ($ 1,479,061) ($ 1,773,128) BEGINNING FUNDS AVAILABLE $ 0 $ 245,157 $ 1,462,898 $ 1,724,452 $ 2,037,170 $ 2,223,430 $ 2,211,163 $ 1,986,485 $ 1,536,607 $ 849,789 ($ 87,690) ($ 1,289,565) ($ 2,768,626) ENDING FUNDS AVAILABLE $ 245,157 $ 1,462,898 $ 1,724,452 $ 2,037,170 $ 2,223,430 $ 2,211,163 $ 1,986,485 $ 1,536,607 $ 849,789 ($ 87,690) ($ 1,289,565) ($ 2,768,626) ($ 4,541,754) 10-YEAR FINANCIAL PROJECTION
GENERAL FUND SUMMARY
ATTACHMENT
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