Attachment No. 2
CITY OF POMONA
Timeline
• On February 6, 2023 the City Council Adopted the CONSOLIDATED
FISCAL POLICIES AND ADMINISTRATIVE PROCEDURES
• The FY 2023‐24 Adopted Budget included allotments for the 4 areas adhering to the policy in an amount of $3.2M
• Met with Labor Subcommittee once in January and once in March to discuss the “Unassigned Fund Balance Policy”
• Discussed Policy with Labor Subcommittee, while also addressing future possible uses of the City's Unassigned Fund Balance • Awaited results of Measure P and Measure X on the March 2024 Election
Fiscal Year 2022‐23
General Fund Unassigned Fund
Balance
On February 6, the City Council adopted Resolution No. 2023 ‐06 ADOPTING THE CITY’S UPDATED CONSOLIDATED FISCAL POLICIES AND
ADMINISTRATIVE PROCEDURES
Purpose: To address financial needs due to a downturn or recession in the local, state, or national economy; action by another government that eliminates or shifts revenues from the City; an unanticipated inability to fully pay the General Fund’s debt service obligations in any given year; other unexpected reductions or interruptions of revenue streams; or cash flow requirements of the General Fund.
The Fund Balance Policy amount was set to 22% with the goal of incrementally increasing to a maximum of 25% of the General Fund’s current fiscal year operating expenses. Determination of this reserve amount should be based in part on the General Fund’s revenue loss/recovery during prior economic downturns and recessions, an assessment of the volatility of General Fund’s various major revenue streams, and a quantification of the General Fund’s cash flow demands over the fiscal year as compared to the timing of revenue receipts.
Fiscal Year 2022‐23
General Fund Unassigned Fund
Balance
Fiscal Year 2022‐23
General Fund Unassigned Fund
Balance
• How do you utilize the City’s General Fund
Unassigned Fund Balance (Surplus)?
• You need to appropriate funds from reserves
• In most cases, this will display the budget in a
structural deficit in the current fiscal year
• The Annual Budget is a living Document that
is amended throughout the Fiscal Year via
City Council action
Fiscal Year 2022‐23
General Fund Unassigned Fund
Balance
GENERAL FUND
UNASSIGNED FUND BALANCE (SURPLUS) ‐ Audited
For Fiscal Year Ending June 30, 2023
Total Revenues 157,393,989 $
Total Expenditures 144,131,870
Increase in FB ‐ Audited 13,262,119$
POLICY PURPOSE Current Policy Proposed Policy
Unassigned Fund Balance (Surplus)
To be allocated towards:
• Catastrophic Events Reserve
• Pension 115 Trust Funding
• Capital Improvement Funding
• Equipment Replacement Funding
none
50% allocat e d to
long‐term
obligat ions
50% allocat e d to
long‐term capital
needs
The City Manager may recommend the unassigned fund balance be used for one ‐time expenses. When recommending use of the unassigned fund balance for one ‐time expenses, the City shall attempt to achieve the following balance:
50% allocated to one ‐time payments that reduce long ‐term obligations such as unfunded pension or OPEB liability, bonded indebtedness, or lease obligations; and 50% allocated to facility or infrastructure improvements, equipment purchases, or other long ‐term capital needs that improve the community’s safety, aesthetics, transportation, or quality of life.
Fiscal Year 2022‐23
General Fund Unassigned Fund
Balance
Fiscal Year 2022‐23
General Fund Unassigned Fund
Balance
$6.6M or approximately 50% towards Section 115 Trust
CalPERS Unfunded Accrued Liabilities (UAL) payments are expected to increase in the future years. Approximately 97% of Safety and 50% of Misc UAL are paid from the GF.
A one‐time increase of $6.6M towards the Section 115 Trust, in addition to the initial $1.5M and $500k annually thereafter, will alleviate future payments from the GF.
Projected UAL Payments
Fiscal Yr 2023 ‐24 2024 ‐25 2025 ‐26 2026 ‐27 2027 ‐28 2028 ‐29 2029 ‐30 Safety ‐ 1,357,423 1,986,000 2,614,000 3,243,000 3,871,000 3,871,000 Miscellaneous ‐ 342,525 761,000 1,179,000 1,597,000 2,015,000 2,015,000 Total UAL ‐ 1,699,948 2,747,000 3,793,000 4,840,000 5,886,000 5,886,000 Projected GF Contributions towards Section 115
Fiscal Yr 2023 ‐24 2024 ‐25 2025 ‐26 2026 ‐27 2027 ‐28 2028 ‐29 2029 ‐30 Section 125 Contributions 1,500,000 500,000 500,000 500,000 500,000 500,000 500,000 Contributions ‐to‐date (status quo) 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 Contributions ‐to‐date (with $6.6M) 8,100,000 8,600,000 9,100,000 9,600,000 10,100,000 10,600,000 11,100,000 Fiscal Year 2022‐23
General Fund Unassigned Fund
Balance
$3.3M or approximately 25% towards Equipment Replacement Funding The Updated Fiscal Policy states that funding will be at $200k initially, increasing to $400k at the end of 10 years. Looking at the 3‐year trend in vehicle supplemental requests in the General Fund, the City averages $1.07M a year funding the requests. A one‐time additional contribution of $3.3M towards equipment replacement positions the city to respond to the needs of the departments. In addition, the one‐time funds will assist in setting the City in motion to comply with the state mandate that by 2025, 25% of vehicles purchases must be EV.
Fiscal Year Requests
2023‐24 1,817,528 3‐Yr Average
2022‐23 702,961 1,075,496
2021‐22 706,000
2020‐21 zero request due to covid
2019‐20 534,077
Veh Supplemental
Projected GF Contributions towards Equipment Replacement Fiscal Yr 2023 ‐24 2024 ‐25 2025 ‐26 2026 ‐27 2027 ‐28 2028 ‐29 2029 ‐30 Equip Replacement Contributions 200,000 200,000 250,000 250,000 300,000 300,000 350,000 Contributions‐to‐date (status quo) 200,000 400,000 650,000 900,000 1,200,000 1,500,000 1,850,000 Contributions‐to‐date (with $3.3M) 3,500,000 3,700,000 3,950,000 4,200,000 4,500,000 4,800,000 5,150,000 Fiscal Year 2022‐23
General Fund Unassigned Fund
Balance
Remaining balance of $3.362M towards CIP
One‐time contribution of $3.362M towards CIP can fund unanticipated major repairs in City facilities to keep operations running.
Fiscal Year 2022‐23
General Fund Unassigned Fund
Balance
Use of Unassigned
Fund Balance Use None Use 100% Use 50% Use 33%
Use of Unassigned
Fund Balance Use None Use 100% Use 50% Use 33%
FY 2023‐24 Amended
Budget $162,628,531 $162,628,531 $162,628,531 $162,628,531 FY 2023‐24 Amended
Budget $162,628,531 $162,628,531 $162,628,531 $162,628,531 Unassigned Fund
Balance w/ FY 2022‐
2023 surplus $62,959,951 $49,697,832 $56,328,892 $58,539,245 FB with 22‐23 surplus $62,959,951 $49,697,832 $56,328,892 $58,583,452 FY 2023‐24 Deficit $2,887,067 $2,887,067 $2,887,067 $2,887,067 Net $60,072,884 $46,810,765 $53,441,825 $55,696,385
Contingency % 39% 31% 35% 36% Contingency % 37% 29% 33% 34% Note: Policy Goal is to have a Fund Balance of 25% by FY 2025‐26; Current Policy is 23% for FY 2023‐24 Fiscal Year 2022‐23
General Fund Unassigned Fund
Balance
After showing the same presentation before you tonight, discussion with the Labor Subcommittee included factors to keep in mind when determining the use of reserves per this Policy as well as forthcoming budgets:
• Economic Challenges – Recessions, Gas Prices, Interest Rates, Property Values, etc.
• Awaiting the impact of the Pomona Kids First Initiative – November 2024 General Election Ballot Item
• Possible uses of the Unassigned Balance for Annual City Programs • The Subcommittee Recommended the following action
Fiscal Year 2022‐23
General Fund Unassigned Fund Balance
Staff Recommendation is to use 33% of the FY 2022 ‐23 General Fund Surplus ($4.4M of the $13.3M)
Contingency would remain at 34% if surplus of $4.4M is used
Fiscal Year 2022‐23
General Fund Unassigned Fund Balance
Staff Recommendation
City Council approval of the Consolidated Financial
Policy stated uses of the FY 2022 ‐23 General Fund
Surplus to use 33% of the FY 2022 ‐23 Surplus ($4.4M)
and place in the respective 3 statutes of the financial policy.
This action will increase the FY 2023 ‐24 General Fund
Budget by $4.4M by using reserves
• The Consolidated Financial Policies are relatively new and this is the first year we brought this important decision of the policy to City Council for approval
• Staff is seeking concurrence of staff recommendation based on feedback from the Labor Subcommittee; The decision is ultimately up to the City Council
• By Implementing the recommendation the Estimated
ending General Fund Balance will still exceed the 23%
minimum amount of policy for FY 2023 ‐24 by 11% (equals 34%)
Conclusion