1 Annual Financial Forecast Update
March 16, 2026
Attachment No.3
2 Presentation – Table of Contents
• Based on FY 2026 Adopted Budget
• Full Funding of Fiscal Policies
• Full Measure Y Implementation
Updated Baseline
Forecast
• New LA County Fire ContractScenario Forecast #1
• Adds Proposed Measure ZScenario Forecast #2
3 UPDATED 10-YEAR BASELINE FORECAST
4 Baseline Forecast – Updated for FY 2026
1. CalPERS UAL. New payment schedule now includes estimated FY 2025 preliminary returns for CalPERS investment fund (+11.6%).
2. Salaries & Wages. Current MOU increase of 5% in FY 2027 is included. Thereafter, wage growth assumed at 3% per annum.
3. Additional Vacancy Savings. Vacancy savings in FY 2026 is $2.4 million more than City’s typical vacancy savings ($2 million) due to City Council’s decision to hold all vacancies in FY 2026.
4. General Fund Fiscal Policies. Full funding of City’s adopted fiscal policies for the General Fund.
5. Measure Y Full Implementation. FY 2026 budget at 5% of unrestricted General Fund revenues to Children & Youth Fund.
Transfer thereafter increases by 1% per annum to 10% in FY 2031.
KEY ASSUMPTIONS
5 Baseline Forecast – Updated for FY 2026
6 Baseline Forecast – Updated for FY 2026
7 Baseline Forecast – Updated for FY 2026
8 Baseline Forecast – Updated for FY 2026
General Fund
Fiscal Outlook by the Numbers
Scenario Forecast #2
Scenario #1 + Proposed Measure Z
Scenario Forecast #1
Baseline Forecast + New Fire Contract
Baseline Forecast
Updated for FY 2026
Fund BalanceAnnual Operating
(Deficit)/SurplusFund BalanceAnnual Operating
(Deficit)/SurplusFund BalanceAnnual Operating
(Deficit)/Surplus
Forecast
Year
$ 53,560,752 $ (5,509,457)FY 2026
39,393,852 (14,166,900)FY 2027
23,438,798 (15,955,054)FY 2028
6,125,760 (17,313,038)FY 2029
(11,367,414)(17,493,174)FY 2030
(29,269,293)(17,901,879)FY 2031
(46,211,663)(16,942,370)FY 2032
(62,925,693)(16,714,030)FY 2033
(79,456,371)(16,530,678)FY 2034
(95,351,129)(15,894,757)FY 2035
(111,172,872)(15,821,743)FY 2036
9 10-YEAR SCENARIO FORECAST #1
Baseline Forecast + New Fire Contract
10 All assumptions in Baseline Forecast remain constant, except the following:
1. New Contract with County Fire Services. Adds the additional costs for LA County fire services based on recently completed negotiations and new three-year contract through FY 2029.
Annual increases in fire contract are as follows:
• FY 2027 = 8.19% increase
• FY 2028 = 11.48% increase
• FY 2029 = 7.63% increase
Forecasted thereafter at 3.83% average annual increase.
CHANGES TO ASSUMPTIONS
Scenario #1 – Baseline Forecast + UAL Management
11 Scenario #1 – Baseline Forecast + New Fire Contract
12 Scenario #1 – Baseline Forecast + New Fire Contract
13 Scenario #1 – Baseline Forecast + New Fire Contract
General Fund
Fiscal Outlook by the Numbers
Scenario Forecast #2
Scenario #1 + Proposed Measure Z
Scenario Forecast #1
Baseline Forecast + New Fire Contract
Baseline Forecast
Updated for FY 2026
Fund BalanceAnnual Operating
(Deficit)/SurplusFund BalanceAnnual Operating
(Deficit)/SurplusFund BalanceAnnual Operating
(Deficit)/Surplus
Forecast
Year
$ 53,560,752 $ (5,509,457)$ 53,560,752 $ (5,509,457)FY 2026 37,925,628 (15,635,124)39,393,852 (14,166,900)FY 2027
17,436,873 (20,488,755)23,438,798 (15,955,054)FY 2028
(6,231,462)(23,668,334)6,125,760 (17,313,038)FY 2029
(30,332,291)(24,100,830)(11,367,414)(17,493,174)FY 2030 (55,097,362)(24,765,071)(29,269,293)(17,901,879)FY 2031 (79,166,584)(24,069,222)(46,211,663)(16,942,370)FY 2032 (103,279,253)(24,112,669)(62,925,693)(16,714,030)FY 2033 (127,489,064)(24,209,810)(79,456,371)(16,530,678)FY 2034 (151,352,303)(23,863,239)(95,351,129)(15,894,757)FY 2035 (175,440,589)(24,088,286)(111,172,872)(15,821,743)FY 2036 14 10-YEAR SCENARIO FORECAST #2
Scenario #1 + Proposed Measure Z
15 All assumptions in Scenario Forecast #1 remain constant, except the following:
1. Proposed Measure Z. Proposed Measure Z would amend
Measure Y to provide that 10% of the City’s annual state sales tax (Bradley Burns) revenue be transferred annually to the Children & Youth Fund. The amount transferred is projected to be $2.4 million in FY 2027 and increasing annually
thereafter for a total of $28.3 million over ten years.
CHANGES TO ASSUMPTIONS
Scenario #2 – Scenario #1 + Proposed Measure Z
16 Scenario #2 – Scenario #1 + Proposed Measure Z
17 Scenario #2 – Scenario #1 + Proposed Measure Z
18 Scenario #2 – Scenario #1 + Proposed Measure Z
General Fund
Fiscal Outlook by the Numbers
Scenario Forecast #2
Scenario #1 + Proposed Measure Z
Scenario Forecast #1
Baseline Forecast + New Fire Contract
Baseline Forecast
Updated for FY 2026
Fund BalanceAnnual Operating
(Deficit)/SurplusFund BalanceAnnual Operating
(Deficit)/SurplusFund BalanceAnnual Operating
(Deficit)/Surplus
Forecast
Year
$ 53,560,752 $ (5,509,457)$ 53,560,752 $ (5,509,457)$ 53,560,752 $ (5,509,457)FY 2026 45,692,633 (7,868,119)37,925,628 (15,635,124)39,393,852 (14,166,900)FY 2027 35,035,485 (10,657,148)17,436,873 (20,488,755)23,438,798 (15,955,054)FY 2028 23,406,660 (11,628,825)(6,231,462)(23,668,334)6,125,760 (17,313,038)FY 2029 13,711,703 (9,694,957)(30,332,291)(24,100,830)(11,367,414)(17,493,174)FY 2030 5,897,652 (7,814,051)(55,097,362)(24,765,071)(29,269,293)(17,901,879)FY 2031 (554,584)(6,452,236)(79,166,584)(24,069,222)(46,211,663)(16,942,370)FY 2032 (6,375,851)(5,821,267)(103,279,253)(24,112,669)(62,925,693)(16,714,030)FY 2033 (11,604,214)(5,228,363)(127,489,064)(24,209,810)(79,456,371)(16,530,678)FY 2034 (15,774,965)(4,170,750)(151,352,303)(23,863,239)(95,351,129)(15,894,757)FY 2035 (19,432,583)(3,657,619)(175,440,589)(24,088,286)(111,172,872)(15,821,743)FY 2036 19 QUESTIONS?