1 Financial Forecast Update
February 3, 2025
Attachment 1
2 Presentation – Table of Contents
• Based on FY 2025 Adopted Budget
• Annual Youth Commitment of $2 million
• Full Funding of Fiscal Policies
Updated Baseline
Forecast
• Adds UAL Management StrategyScenario Forecast #1
• Implementation of Measure YScenario Forecast #2
3 UPDATED 10-YEAR BASELINE FORECAST
4 Baseline Forecast – Updated for FY 2025
1. CalPERS UAL. New payment schedule now includes the amortized FY 2022 losses suffered by the CalPERS investment fund (-6.2% returns). New UAL payment for General Fund is approximately $2.3 million over forecast.
2. Salaries & Wages. Current MOU increases of 4% in FY 2026 and 5% in FY 2027 are included.
3. Sales Tax Revenues. Annual growth uses "Conservative Trendline" (2.1% AAGR). This is more consistent with HdL's short-run projection and Moody's long-term projection.
4. General Fund Fiscal Policies. Full funding of City’s adopted fiscal policies for the General Fund are included.
5. Youth Commitment Funding. FY 2025 budget amount of $2 million is included and continues thereafter at same level.
KEY ASSUMPTIONS
5 $75,000,000
$95,000,000
$115,000,000
$135,000,000
$155,000,000
$175,000,000
$195,000,000
$215,000,000
$235,000,000
Total Revenues & Expenses
10-Year Prior and Baseline Forecast
Surplus/Deficit Baseline Revenues 1-Time Revenues
Baseline Expenses 1-Time Expenses
Measure PG (local sales tax)
Slow Revenue
Recovery (2.2%
real growth) from
Great Recession
Covid-19 Pandemic & Recovery
Baseline Forecast – Updated for FY 2025
Annual operating deficit created by
new $2.3 million annual UAL payment
6 $(10,000,000)
$(5,000,000)
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
Annual Operating Surplus/(Deficit)
10-Year Prior and Baseline Forecast
Slow Revenue Recovery (2.2% real
growth) from Great Recession
Measure PG
(local sales tax)
Covid-19 Pandemic
& Recovery
Annual operating deficit
created by new $2.3 million
annual UAL payment
Baseline Forecast – Updated for FY 2025
7 $-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
Year End Fund Balance & Allocation
10-Year Prior and Baseline Forecast
Non-Spendable Restricted Economic Reserve
Catastrophic Reserve Undesignated
Baseline Forecast – Updated for FY 2025
Measure PG
(local sales tax)
Covid-19 Pandemic
& Recovery
Slow Revenue
Recovery (2.2%
real growth) from
Great Recession
Declining fund balance
created by new $2.3 million
annual UAL payment
8 Baseline Forecast – Updated for FY 2025
General Fund
Fiscal Outlook by the Numbers
Baseline Forecast
Updated for FY 2025
Scenario Forecast #1
Baseline Forecast + UAL Management
Scenario Forecast #2
Measure Y Implementation
Forecast
Year
Annual Operating
(Deficit)/Surplus Fund Balance Annual Operating
(Deficit)/Surplus Fund Balance Annual Operating
(Deficit)/Surplus Fund Balance
FY 2025 $ (2,193,349) $ 58,091,179
FY 2026 (1,018,372) 57,072,807
FY 2027 (2,711,865) 54,360,942
FY 2028 (3,260,814) 51,100,128
FY 2029 (3,676,072) 47,424,057
FY 2030 (3,455,112) 43,968,944
FY 2031 (3,091,773) 40,877,171
FY 2032 (2,987,478) 37,889,693
FY 2033 (2,857,964) 35,031,730
FY 2034 (2,778,523) 32,253,206
FY 2035 (2,220,923) 30,032,283
9 10-YEAR SCENARIO FORECAST #1
Baseline Forecast + UAL Management
10 All assumptions in Baseline Forecast remain constant, except the following:
1. CalPERS UAL. Pension Reserve is utilized to make two additional payments of $1.9 million to CalPERS at end of FY 2025 and FY 2026, resulting in increasing annual savings reaching $2.4 million in FY 2031 and continuing thereafter.
Scenario #1 – Baseline Forecast + UAL Management
CHANGES TO ASSUMPTIONS
11 (10,000,000)
(5,000,000)
-
5,000,000
10,000,000
15,000,000
20,000,000
Annual Operating Surplus/(Deficit)
10-Year Prior with Scenarios vs. Baseline Forecast
Scenarios Forecast Baseline Forecast
Slow Revenue Recovery (2.2% real
growth) from Great Recession
Measure PG
(local sales tax)
Covid-19 Pandemic
& Recovery
Annual operating deficit
eventually mitigated with
UAL management strategy
Scenario #1 – Baseline Forecast + UAL Management
12 $-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
Year End Fund Balance & Allocation
10-Year Prior with Scenarios vs. Baseline Forecast
Non-Spendable Restricted Economic Reserve
Catastrophic Reserve Undesignated Baseline Forecast
Measure PG
(local sales tax)
Covid-19 Pandemic
& Recovery
Slow Revenue
Recovery (2.2%
real growth) from
Great Recession
Scenario #1 – Baseline Forecast + UAL Management
Declining fund balance
eventually mitigated with
UAL management strategy
13 Scenario #1 – Baseline Forecast + UAL Management
General Fund
Fiscal Outlook by the Numbers
Baseline Forecast
Updated for FY 2025
Scenario Forecast #1
Baseline Forecast + UAL Management
Scenario Forecast #2
Measure Y Implementation
Forecast
Year
Annual Operating
(Deficit)/Surplus Fund Balance Annual Operating
(Deficit)/Surplus Fund Balance Annual Operating
(Deficit)/Surplus Fund Balance
FY 2025 $ (2,193,349) $ 58,091,179 $ (2,193,349) $ 58,091,179 FY 2026 (1,018,372) 57,072,807 (723,918) 57,367,261
FY 2027 (2,711,865) 54,360,942 (1,750,577) 55,616,685
FY 2028 (3,260,814) 51,100,128 (1,949,737) 53,666,948
FY 2029 (3,676,072) 47,424,057 (2,002,070) 51,664,878
FY 2030 (3,455,112) 43,968,944 (1,413,651) 50,251,227
FY 2031 (3,091,773) 40,877,171 (664,953) 49,586,274
FY 2032 (2,987,478) 37,889,693 (537,064) 49,049,210
FY 2033 (2,857,964) 35,031,730 (376,091) 48,673,119
FY 2034 (2,778,523) 32,253,206 (273,058) 48,400,061
FY 2035 (2,220,923) 30,032,283 316,001 48,716,062
14 10-YEAR SCENARIO FORECAST #2
Measure Y Implementation
15 All assumptions in Baseline Forecast remain constant, except the following:
1. CalPERS UAL. Pension Reserve is utilized to make two additional payments of $1.9 million to CalPERS at end of FY 2025 and FY 2026, resulting in increasing annual savings reaching $2.4 million in FY 2031 and continuing thereafter.
2. Measure Y . Annual transfer out from General Fund to new special Children & Youth Fund in accordance with Measure Y .
3. Youth Funding Commitment. Annual amount removed to avoid duplication.
Scenario #2 – Measure Y Implementation
CHANGES TO ASSUMPTIONS
16 (25,000,000)
(20,000,000)
(15,000,000)
(10,000,000)
(5,000,000)
-
5,000,000
10,000,000
15,000,000
20,000,000
Annual Operating Surplus/(Deficit)
10-Year Prior with Scenarios vs. Baseline Forecast
Scenarios Forecast Baseline Forecast
Slow Revenue Recovery (2.2% real
growth) from Great Recession
Measure PG
(local sales tax)
Covid-19 Pandemic
& Recovery
Annual operating deficit
rapidly widens into $18
million annual gap due to
Measure Y transfers
Scenario #2 – Measure Y Implementation
17 $-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
Year End Fund Balance & Allocation
10-Year Prior with Scenarios vs. Baseline Forecast
Non-Spendable Restricted Economic Reserve
Catastrophic Reserve Undesignated Baseline Forecast
Measure PG
(local sales tax)
Covid-19 Pandemic
& Recovery
Slow Revenue
Recovery (2.2%
real growth) from
Great Recession
Declining fund balance turns
into “fiscal cliff” due to
Measure Y transfers
Scenario #2 – Measure Y Implementation
18 Scenario #2 – Measure Y Implementation
General Fund
Fiscal Outlook by the Numbers
Baseline Forecast
Updated for FY 2025
Scenario Forecast #1
Baseline Forecast + UAL Management
Scenario Forecast #2
Measure Y Implementation
Forecast
Year
Annual Operating
(Deficit)/Surplus Fund Balance Annual Operating
(Deficit)/Surplus Fund Balance Annual Operating
(Deficit)/Surplus Fund Balance
FY 2025 $ (2,193,349) $ 58,091,179 $ (2,193,349) $ 58,091,179 $ (1,759,000) $ 58,525,528 FY 2026 (1,018,372) 57,072,807 (723,918) 57,367,261 (6,687,821) 51,837,706 FY 2027 (2,711,865) 54,360,942 (1,750,577) 55,616,685 (9,608,702) 42,229,005 FY 2028 (3,260,814) 51,100,128 (1,949,737) 53,666,948 (11,808,718) 30,420,287 FY 2029 (3,676,072) 47,424,057 (2,002,070) 51,664,878 (13,982,867) 16,437,420 FY 2030 (3,455,112) 43,968,944 (1,413,651) 50,251,227 (15,654,857) 782,563 FY 2031 (3,091,773) 40,877,171 (664,953) 49,586,274 (17,283,156) (16,500,593) FY 2032 (2,987,478) 37,889,693 (537,064) 49,049,210 (17,703,117) (34,203,710) FY 2033 (2,857,964) 35,031,730 (376,091) 48,673,119 (18,104,520) (52,308,230) FY 2034 (2,778,523) 32,253,206 (273,058) 48,400,061 (18,566,280) (70,874,510) FY 2035 (2,220,923) 30,032,283 316,001 48,716,062 (18,559,950) (89,434,459) 19 QUESTIONS?