CITY OF POMONA
COUNCIL REPORT
January 23, 2023
To: Honorable Mayor and Members of the City Council
From: James W. Makshanoff, City Manager
Submitted By: Andrew Mowbray, Finance Director/City Treasurer SUBJECT: FISCAL YEAR 2023-24 BUDGET KICKOFF
______________________________________________________________________________ RECOMMENDATION:
It is recommended that the City Council take the following actions:
Approve the attached Fiscal Year (FY) 2023-24 Budget Guiding Principles; and Review the FY 2023-24 Budget Preparation Calendar and Budget Process.
EXECUTIVE SUMMARY: The City’s Fiscal Sustainability Policy (Policy) adopted in 2011 requires the City Manager to submit guiding principles for the upcoming budget year. The FY 2023-24 Budget Guiding Principles are attached (Attachment 1) for Council approval. The FY 2023-24 Budget Calendar and Budget Process are also presented for Council approval. The policies are intended to establish guidelines for the City’s overall fiscal planning and management. These policies are intended to foster and support the continued financial strength and stability of the City as reflected in its financial goals.
FISCAL IMPACT: None with this action
PUBLIC NOTICING REQUIREMENTS: None Required
PREVIOUS RELATED ACTION: On May 2, 2011, the City Council adopted Resolution Number 2011-49 approving the Fiscal Sustainability Policy which contains the following language, “annually, the City Manager shall submit to the City Council for consideration, a list of Budget Guiding Principles to be used in the development of the coming year’s budget.” In addition, the City of Pomona Fund Balance Policy was adopted via Resolution 2011-63A on June 20, 2011.
DISCUSSION:
In accordance with the City Council adopted Fiscal Sustainability Policy (Attachment No. 2), the FY 2023-24 Budget Guiding Principles is hereby submitted for consideration. The FY 2023-24 Principles closely follow those of FY 2022-23, however some items were deleted and added.
Budget Calendar
Description
Fiscal Year 2023 -24
Budget Kickoff for Staff - Distribution of Budget Guide and Forms to Departments December 13, 2022
City Council Meeting – Approval of Fiscal Year 2022-23 Guiding Principles January 23, 2023
Citizens Oversight Committee (COC) February Meeting – Preview of Mid-Year Figures February 16, 2023
City Council Meeting – FY 2022-23 General Fund Mid-Year Budget Review March 20, 2023
Budget Study Sessions – Community Budget Meeting
FY 2023-24 Preview and seek input from Community
Input from Community on the Annual Budget
COC Input on Measure PG
Introduction of Participatory Budget Process
March 27. 2023
Evening Session
5:30pm
April 5, 2023
Afternoon Session
3:00pm
Citizens Oversight Committee (COC) April Meeting – Preview on FY 2023-24 Budget April 20, 2023
Distribution of Proposed Budget Documents
May 2, 2023
Budget Study Session – Review of the Proposed Budget
May 8, 2023
City Council Meeting – Public Hearing for Budget Adoption June 5, 2023
Staff recommends following the same process used in prior years with a budget study session held in May (the second Monday, May 8th) and one public hearing (or more if needed) held in June. Items that are once again include the two respective Citizens Oversight Committee (COC) meetings scheduled for February and April. The COC has 4 scheduled meetings annually, and at the two meetings identified give the committee an opportunity to get a preview of upcoming budget related items. To follow suit with something new that was implemented last year, staff is proposing two City Council study session meetings to be held on March 27, 2023, in the evening and a second meeting to be held on April 5, 2023, in the afternoon. The meeting start times vary to give the public ample opportunity to attend and participate in the budget process. At these two meetings a preview of the FY 2023-24 will be covered. Departments have been advised to limit requests for new programs or staffing if there is an identified ongoing funding source. Once revenues are more closely analyzed, staff will determine what the baseline budget will be. In addition, staff would like to encourage that the public provide input on the forthcoming budget. A member of the COC will provide input on the FY 2023-24 budget as it relates to the Measure PG Sales Tax Funds. This is being included in the process as it relates to the language stated in Ordinance 4253, Section. 50- 653. — COC Duties and responsibilities. It specifically states that the COC shall “Prepare written reports to the City Council that summarize the Committee' s findings and recommendations.” Staff along with the COC requested that this report be presented at one or both study sessions. This addition of the COC input last year was a great addition to the annual process.
FY 2023-24 Budget Guiding Principles
In accordance with the City Council adopted Fiscal Sustainability Policy, the FY 2023-24 Budget Guiding Principles is hereby submitted for consideration. The FY 2023-24 Principles closely follow those of FY 2022-23 with some new items added as well as a few modifications. Departments have been given these updated principles to use when developing their proposed budgets.
Fiscal Sustainability Policy
On May 2, 2011, the City Council adopted resolution number 2011-49 approving the City’s Fiscal Sustainability Policy (Attachment 2). This Policy established guidelines for the City's overall fiscal planning and management and is intended to foster and support continued financial strength and stability of the City. The Policy is quite comprehensive and covers areas of Budget, Economic Development, Risk Management, Accounting-Auditing-Financial Reporting, Cash Management and Investments, and Debt Management. The Policy also sets forth guidelines for expanding the annual budget within the Budget' section of the Policy.
Fund Balance Policy
On June 20, 2011, the City Council adopted resolution number 2011 - 63A approving the City's Fund Balance Policy (Attachment 3). The objectives of the Policy are to comply with the Governmental Accounting Standards Board (GASB) Statement Number 54 -- Fund Balance Reporting and Governmental Fund Type Definitions; establish formal reserve policies; build adequate reserves; and guide the City toward meeting its short and long - term obligations. The Policy states that at the end of each fiscal year, the City shall have a Committed Fund Balance equal to 17% of operating expenditures in the General Fund. The 17% is to be considered the minimum level and represents funding for two months of General Fund operations. Because the required fund balance amount (17% of expenditures) was significantly more than the City had in the General Fund, the Policy provided a tiered approach to achieving the 17% no later than 2019-20. The City has be able to maintain the 17% or above for the last several years. The City’s current Fund Balance for the year ending June 30, 2022 is $49.7M.
Conclusion
As stated in the Executive Summary, the purpose of this report is to give the City Council an overview of FY 2023-24 Budget process and approve the annual Guiding Principles for the upcoming budget year. On December 19, 2022, the City Council was given a presentation of the City’s General Fund 10-year forecast, which was received and filed, as well as direction was given to pursue a Pension 115 Trust. Also, part of the December 19, 2022 Council item was the proposed adoption of a new Consolidated Financial policies and procedures document designed and structured to develop principles that guide the financial administration of the City. The document includes current and new proposed policies and staff administrative procedures in the form of a centralized comprehensive financial document. The City’s current Fiscal Sustainability and Fund Balance policy would be replaced by this document. Part of the discussion was the idea to increase the fund balance from 17% to a higher amount. Based on City Council feedback at the December 19, 2022 meeting, staff was given direction to bring the document before the City’s Labor subcommittee. The Labor subcommittee reviewed the Consolidated Policies and Procedures document on January 11, 2023 and gave staff feedback which will be incorporated and brought forward to the Mayor and City Council at the February 6, 2023 Council meeting.
Prepared by:
___________________________
Andrew Mowbray
Finance Director/City Treasurer
ATTACHMENT(S):
Attachment No. 1 – Budget Guiding Principles for FY 2023-24 Attachment No. 2 – Fiscal Sustainability Policy
Attachment No. 3 – Fund Balance Policy
January 23, 2023
FY 2023-24 Budget Kickoff