Redondo Beach City Council
February 15, 2022

BLUE FOLDER ITEM
Blue folder items are additional back up material to administrative reports and/or public comments received after the printing and distribution of the agenda packet for receive and file.

CITY COUNCIL MEETING
February 15, 2022
N.1. DISCUSSION AND POSSIBLE ACTION REGARDING THE FY 2021-22 MIDYEAR

BUDGET REPORT
RECEIVE AND FILE THE FY 2021-22 MIDYEAR BUDGET REPORT AND THE PRESENTION OF THE FY 2021-22 CAPITAL IMPROVEMENT BUDGET AND FIVEYEAR CAPITAL IMPROVEMENT PROGRAM ADOPT BY 4/5 VOTE AND BY TITLE ONLY RESOLUTION NO. CC-2102-017, A

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, MODIFYING THE BUDGET FOR FISCAL YEAR 2021-22 en CONTACT: JENNIFER PAUL, FINANCE DIRECTOR
Attached are the following documents:
1) Updated Attachment 1 (Vehicle Replacement Fund had one calculation update of $7,000, and the form is updated with cleaner formatting) 2) Budget & Finance Commission Recommendation Letter regarding Midyear Decision Packages
3) Letter from Misc Bargaining Units Re Midyear Budget FY 21-22 4) Midyear Budget Response Reports
Attachment 1 Page 1 of 5
FY 2021-2022 Midyear Fund Balances
General Fund1 State Gas Tax
Storm Drain
Improvement
St
Landscaping/
Lighting
Local
Transport
Article 3 Measure M
Prop A Local
Trans Tax
Prop C Local
Trans Tax
Beginning Fund Balance (includes carryovers) 5,144,303 1,694,887 406,100 - 37,152 2,545,319 2,267,630 5,917,133Adopted Revenues 94,655,364 3,058,268 28,000 1,553,500 49,074 983,872 1,919,909 1,242,203Carry-over Revenues - - - - - - - -Other Council-Approved Revenues - - - - - 85,000 - -Transfers In 2,874,946 - - 1,018,856 - - - - Total Revenue 97,530,310 3,058,268 28,000 2,572,356 49,074 1,068,872 1,919,909 1,242,203 Adopted Appropriations 86,929,791 2,511,531 - 2,572,356 95,000 1,300,000 - 1,682,151Prior Year Encumbrances 981,809 95,035 36,190 186,338 - 644,160 - 1,914,199Carryover Appropriations 1,051,868 962,350 251,802 - - 1,412,418 75,000 3,499,110Other Council-Approved Appropriations (Exhibit A) - - - - - 85,000 - - Transfers Out 13,777,302 38,278 - - - - 2,867,624 -
Total Uses 102,740,769 3,607,194 287,992 2,758,694 95,000 3,441,578 2,942,624 7,095,460 Estimated Ending Fund Balance (66,156) 1,145,961 146,108 (186,338) (8,774) 172,613 1,244,915 63,876Adjustments to Revenue (Exhibit B - General Fund only) 2,883,707 (143,688) - - - - - -Adjustments to Appropriations (Exhibit C) (570,330) 54,190 829 25,455 2,574 6,407 2,393 11,415Adjustments to Revenue/Transfers In (Decision Pkgs) 3,400,540 - - - - - - -Adjustments to Appropriations/Transfers Out (Decision Pkgs) (7,049,432) - - - - - - -Revised Estimated Ending Fund Balance 13,837,853 948,083 145,279 (211,793) (11,348) 166,207 1,242,522 52,461 12 Beginning Balance of Intergovernmental Grants is usually negative so it is updated to zero.345 The Successor Agency is identified in the ACFR as the Redevelopment Obligation Retirement Fund.6 The Housing Successor Agency is identified in the ACFR as the Low-Mod Income Housing Fund.7 The Community Financing Authority is identified in the ACFR as the Public Financing Authority.

Because any fund balance (positive or negative) is eliminated with an adjustment to the transfer from the Proposition A Fund, the Transit Fund’s beginning fund balance was shown as zero.The General Fund beginning fund balance excludes the 8.33% minimum contingency reserve set by the City Council.The Self-Insurance Program Fund beginning fund balance reflects a positive cash balance of $14,201,733 reduced by liabilities for future workers' compensation and liability claims of $23,468,542.

Attachment 1 Page 2 of 5
FY 2021-2022 Midyear Fund Balances
Beginning Fund Balance (includes carryovers)Adopted RevenuesCarry-over RevenuesOther Council-Approved RevenuesTransfers In Total Revenue
Adopted AppropriationsPrior Year EncumbrancesCarryover AppropriationsOther Council-Approved Appropriations (Exhibit A)Transfers Out Total Uses
Estimated Ending Fund BalanceAdjustments to Revenue (Exhibit B - General Fund only)Adjustments to Appropriations (Exhibit C)Adjustments to Revenue/Transfers In (Decision Pkgs)Adjustments to Appropriations/Transfers Out (Decision Pkgs)Revised Estimated Ending Fund Balance Measure R Transit3 Measure W
Air Quality
Improvement
Intergovernmental
Grants2
Comm
Develop
Block Grant
Housing
Authority
Parks/Rec
Facilities
- 1,620,386 (142,701) 273,540 (167,575) 1,582,809 56,843 3,208,892 856,652 648,000 90,000 11,810,729 290,479 6,627,168 31,500 - - - - 10,106,211 - - -
- 175,000 - - 596,992 - - -
2,867,624 - - - - - - -
6,076,516 1,031,652 648,000 90,000 22,513,932 290,479 6,627,168 31,500 6,045,079 1,015,000 690,637 72,722 11,806,500 290,479 6,652,874 50,000 582,192 339,315 - 85,182 8,782,641 44,179 - -
690,000 956,831 471,527 59,650 10,106,211 118,920 - 50,000 - 175,000 - - 596,992 - - -
31,437 - 4,663 1,464 4,229 - 17,094 -
7,348,708 2,486,146 1,166,827 219,018 31,296,573 453,578 6,669,968 100,000 (1,272,192) 165,892 (661,528) 144,522 (8,782,641) (330,674) 1,540,009 (11,657) - - 72,000 - - - - 3,500
(17,745) 12,388 (7,339) 5,048 118,845 38,903 11,872 286 - - - - - - - -
- - - - - - - -
(1,254,447) 153,504 (582,189) 139,474 (8,901,486) (369,577) 1,528,137 (8,443) Attachment 1 Page 3 of 5
FY 2021-2022 Midyear Fund Balances
Beginning Fund Balance (includes carryovers)Adopted RevenuesCarry-over RevenuesOther Council-Approved RevenuesTransfers In Total Revenue
Adopted AppropriationsPrior Year EncumbrancesCarryover AppropriationsOther Council-Approved Appropriations (Exhibit A)Transfers Out Total Uses
Estimated Ending Fund BalanceAdjustments to Revenue (Exhibit B - General Fund only)Adjustments to Appropriations (Exhibit C)Adjustments to Revenue/Transfers In (Decision Pkgs)Adjustments to Appropriations/Transfers Out (Decision Pkgs)Revised Estimated Ending Fund Balance Narcotic
Forfeiture/Seizure
Subdivision
Park Trust
Disaster
Recovery
CalPERS
Reserve
Capital
Projects
Major Facilities
Reconstruction
Open Space
Acquisition
Harbor
Tidelands
1,943,240 379,084 172,846 5,105,721 6,047,998 660,714 1,303,695 12,370,892 600,000 20,000 51,000 - 492,678 - - 6,119,389
- - - - - - - -
- - - - - - - -
- - - - 6,865,770 - - -
600,000 20,000 51,000 - 7,358,448 - - 6,119,389
660,000 52,957 17,060 - 6,301,488 640,000 186,500 10,101,108 6,674 116,060 - - 1,395,419 - - 1,310,102
1,621,713 103,563 - - 3,546,670 625,491 18,047 4,929,487 - - - - - - - 415,200
- - - - 9,663 - - 364,179
2,288,387 272,581 17,060 - 11,253,240 1,265,491 204,547 17,120,076 254,853 126,503 206,786 5,105,721 2,153,206 (604,777) 1,099,148 1,370,206 175,000 32,000 - - (318) - - (122,992)
4,640 20,139 44,424 - 84,905 - 972 (402,249)
- - - - - - - -
- - - - - - - 195,000
425,213 138,364 162,363 5,105,721 2,067,983 (604,777) 1,098,176 1,454,463 Attachment 1 Page 4 of 5
FY 2021-2022 Midyear Fund Balances
Beginning Fund Balance (includes carryovers)Adopted RevenuesCarry-over RevenuesOther Council-Approved RevenuesTransfers In Total Revenue
Adopted AppropriationsPrior Year EncumbrancesCarryover AppropriationsOther Council-Approved Appropriations (Exhibit A)Transfers Out Total Uses
Estimated Ending Fund BalanceAdjustments to Revenue (Exhibit B - General Fund only)Adjustments to Appropriations (Exhibit C)Adjustments to Revenue/Transfers In (Decision Pkgs)Adjustments to Appropriations/Transfers Out (Decision Pkgs)Revised Estimated Ending Fund Balance Harbor
Uplands Solid Waste Wastewater
SelfInsurance
Program4
Vehicle
Replacement
Building
Occupancy
Information
Technology
Emergency
Communications
1,426,983 1,951,342 15,477,501 (9,008,664) 7,679,984 438,513 (390,574) 917,132 5,385,061 6,312,696 5,880,014 8,278,012 3,081,619 3,507,846 3,997,649 4,207,747 44,030 - - - - - - -
- - - - - - - -
4,000 - - - - - - -
5,433,091 6,312,696 5,880,014 8,278,012 3,081,619 3,507,846 3,997,649 4,207,747 5,728,974 4,843,448 3,700,162 7,367,025 3,588,339 3,012,467 3,820,631 3,066,919 69,696 176,874 892,263 - 1,040,517 69,889 250,952 90,980 44,030 335,503 8,925,862 - 267,396 - 650,000 -
- - 2,419,161 - - - - -
52,895 1,774,834 78,989 3,547 29,821 61,720 62,627 99,506 5,895,595 7,130,659 16,016,437 7,370,572 4,926,073 3,144,076 4,784,210 3,257,405 964,479 1,133,379 5,341,078 (8,101,224) 5,835,530 802,283 (1,177,135) 1,867,474 (22,396) (281,396) - - 37,500 - - -
(236,064) 114,350 104,681 (24,225) (23,084) (32,016) (257,362) (164,595) - - - - - - - -
8,276 - - - 21,195 - - -
1,169,871 737,633 5,236,397 (8,076,999) 5,874,919 834,299 (919,773) 2,032,070 Attachment 1 Page 5 of 5
FY 2021-2022 Midyear Fund Balances
Beginning Fund Balance (includes carryovers)Adopted RevenuesCarry-over RevenuesOther Council-Approved RevenuesTransfers In Total Revenue
Adopted AppropriationsPrior Year EncumbrancesCarryover AppropriationsOther Council-Approved Appropriations (Exhibit A)Transfers Out Total Uses
Estimated Ending Fund BalanceAdjustments to Revenue (Exhibit B - General Fund only)Adjustments to Appropriations (Exhibit C)Adjustments to Revenue/Transfers In (Decision Pkgs)Adjustments to Appropriations/Transfers Out (Decision Pkgs)Revised Estimated Ending Fund Balance Major
Facilities
Repair
Successor
Agency5
Housing
Successor
Agency6
Community
(Public) Financing
Authority7 Total
4,137,151 - 4,693,537 76,542,921
1,325,915 107,076 269,520 273,975 176,963,807
- - - - 10,150,241
- - - - 856,992
- - - 7,516,966 21,148,162
1,325,915 107,076 269,520 7,790,941 209,119,202
271,770 155,000 429,000 6,976,796 182,633,764
- 9,551 47,153 - 19,167,368
- - - - 40,773,448
- - - - 3,691,353
1,054,145 - - 814,145 21,148,162
1,325,915 164,551 476,153 7,790,941 267,414,095
- (57,475) 3,930,518 4,693,537 18,248,027
- - - - 2,632,917
2,477 3,609 (16,545) 6,879 (1,073,871)
- - - - -
- - 130,000 - (6,694,961)
(2,477) (61,084) 3,817,062 4,686,658 32,050,317

February 15, 2022 Item #N.1.

Honorable Mayor and City Council,
This letter is submitted on behalf of the three miscellaneous employee bargaining units, Teamsters, City Employees Association (CEA), and the Professional and Supervisory Association (PSA). We are expressing support of Decision Packages #6, #19, and #20, and want to address current challenges with stagnant wages caused by the City Council’s policy to leave salaries flat for the miscellaneous groups. Minimal base salary increases have resulted in wages which have not kept up with inflation, and are not competitive in the broader labor market.

Since the end of the great recession in 2013, miscellaneous positions have received only nominal salary increases totaling less than 8% in almost 10 years. Repeated efforts to secure salary increases close to the 5-6% yearly CPI were met with firm opposition from the City Council. This opposition has now resulted in reduced wages and significant difficulties attracting and retaining quality candidates for positions across all departments.

The miscellaneous bargaining units believe that a Class and Compensation Review as reflected in Decision Package #6 is needed to demonstrate the City’s base salary standing among other agencies. The review would provide a quantifiable basis for City Council to make informed decisions on salary adjustments. We are certain the review will show Redondo Beach is no longer competitive with other public agencies, and a significant upwards salary readjustment is required.

However, the process and any subsequent implementation measures, could take over a year, and would not address the immediate need to attract quality candidates for current vacancies.

Decision Packages #19 and #20 seek to rectify the immediate need in the Public Works Department (Teamsters). Additionally, we also need to call attention to issues within CEA and PSA:
• Public Safety Dispatch, which employs both CEA and PSA members, has operated at only 50% staffing levels for over a year due to issues with recruitment and retention directly related to compensation as compared to other agencies.
• In December 2021, City Council approved a reclassification of an administrative level CEA position in the Transit Division because the salary range of the existing job class would have been too low to attract quality candidates.
• In 2021, the Engineering Division had to underfill an Associate Engineer recruitment with an Assistant Engineer due to lack of qualified candidates (PSA). • In 2021, the Deputy Public Works Director PSA position was reclassed out of the bargaining group in order to increase the salary to retain a valuable employee that was offered the same position at a higher pay for another city. • This month, a recent PSA member will be leaving city employment for a private sector position in the same field.

These issues are a direct reflection of stagnated salaries which are no longer competitive with other agencies and the private sector.

Concrete evidence of this issue can be found in the December 2021 City Council action, at the request of the City Manager, which increased the base salary range for the Assistant to the City Manager position by 27%, even before recruitment efforts were started. The salary survey for that position showed Redondo Beach was in the bottom tier of comparable agencies in terms of base salary. That one action is indicative of what likely needs to occur across the organization, to reflect salaries that would be in-line with CPI since 2013.

As Council may recall, the Police Department experienced similar challenges a few years back.

The City was unable to attract quality police candidates due to a low base salary range. The Council acknowledged the problem and took action by increasing police officer compensation almost 12% in one year. Base salary increases for all other employees were denied for two subsequent years, which helped fund the police salary readjustment. Just as Council saw the need within the Police Department at the time, we ask that this Council acknowledge the current problem across the remainder of the organization and prioritize an immediate action of a unilateral base salary readjustment for all miscellaneous positions.

In closing, Teamsters, CEA, and PSA express our support of Decision Packages #6, #19, and #20 and ask City Council to vote in favor of each. Additionally, to address the immediate need, we ask that City Council allocate funding from the $13.8M end fund balance towards a unilateral base salary increase of at least 5% for all miscellaneous positions to attract qualified, quality candidates for current vacancies.

Respectfully,
Lina Portolese Peter Tucker Jerry Galbez
PSA President CEA President Teamsters Chief Steward
Annual Debt Service Costs for Bond 4
Enhancing Safety at the Waterfront 1
Grant Application and Management Consultant 2
Internal Service Fund Allocation 3
FY 2021-22

MIDYEAR BUDGET RESPONSE REPORTS

QUICK REFERENCE GUIDE

Table of Contents Page 1

CITY OF REDONDO BEACH

BUDGET RESPONSE REPORTS
FY 2021-22 MIDYEAR BUDGET
The following is a list of questions raised regarding the FY 2021-22 Midyear Budget.

The corresponding answer to each of these questions (the “Budget Response Report”) follows in the sequence reflected.

Question No.
 What are the options available for enhancing safety at the waterfront through operational modifications and/or capital improvements? 1  Are there consultants that can assist the City with grant application and management? What is the anticipated cost of these services? 2 
What are the City’s internal service fund and overhead allocations, and what policies and procedures govern them? What is the opinion of the outside audit firm regarding the internal service funds? 3 Attachment A: Administrative Policy/Procedures 3A
Attachment B: Internal Service Funds Financial Statements 3B Attachment C: High-Level Internal Service Fund Analysis by Internal Service Fund 3C

What are the current estimated annual debt service costs for a $40 million bond and what are the costs and proceeds for each $10 million borrowed?
4 BRR #1

CITY OF REDONDO BEACH
Midyear Budget Response Report #1
February 15, 2022
Question:

What are the options available for enhancing safety at the waterfront through operational modifications and/or capital improvements?
Response:

The enhancement of public safety can occur in specific geographic areas when additions are made to public safety staffing, when technological tools are installed and utilized and when upgrades are made to public-facing facilities. Public safety can be improved through the staffing of police officers and civilian police department employees in the Pier Harbor area, where there has been a steep increase in calls for service. Additionally, technology is a force multiplier and has made drastic enhancements in the law enforcement space. Lastly, an improved façade and interior design of the existing police substation could also act as a deterrent and provide engagement opportunities when properly staffed.

Public Safety Staffing
The Police Department is currently staffed with 92 of the budgeted 95 police officers. Six current sworn police officers have not yet completed the mandatory training requirements and therefore cannot be utilized as a solo performing police officers in the field, which means that 86 police officers are completely trained and available for service. The Pier Harbor area is currently budgeted with one Sergeant (currently injured on duty) and three police officers. Calls for service in the Pier Harbor area have steeply increased in the last 6 years from 5062 annual calls for service to 7023 presently. Not only have the calls for service increased, but the number of arrests and crime reports have also increased during this time period. Most notably, an active shooter incident occurred at the crowded Redondo Beach Pier on August 25, 2021.

The Police Department sworn police officer staffing hovered around 108 in the late 1990’s and early 2000’s ultimately decreasing due to attrition. During that same time period the Pier Harbor area was staffed with 6 police officers, a Community Service Officer (CSO) and a Police Sergeant. Police Officers worked to reduce the high crime rates and protect the large crowds who frequented the Pier Harbor area. As the Department’s sworn staffing levels decreased so did the Pier Harbor Unit staffing.

Increasing the total complement of police officers to 97 would allow for two additional police officers to be assigned to the Pier Harbor area. Additionally, the hiring of 2 additional Community Service Officers II positions and two additional Municipal Services BRR #1

Officers would allow for staffing of the Pier Substation, enforcement of municipal code violations, community engagement and create an overall presence that would act as a crime deterrent. These modifications would significantly enhance the level of public safety in the Pier Harbor area without decreasing safety in other portions of the City. Also a possibility is the addition of a supervisor or CSO III position that would be partially dedicated to the Pier in addition to other Police Department responsibilities.

The approximate annual fiscal impact for the fully loaded personnel costs is as follows:

Sworn Police Officer
New Recruit - Tier 3: $135,000 - $190,000
Community Service Officer II: $ 98,000
Community Service Officer III: $110,000
Municipal Services Officer: $ 87,000
Installation of Technological Tools
Many new technological advancements have occurred which could be utilized to increase public safety in the Pier Harbor area. There are currently two surveillance cameras in the waterfront that provide live monitoring: one near the substation pointing south and one facing the ocean near Fire Station #3. Adding two additional surveillance cameras with pan, tilt and zoom capabilities would vastly increase the situational awareness in the Pier and Harbor area. These cameras would be monitored in the dispatch center and could also be monitored in the Pier Substation, with minor infrastructure upgrades. The ongoing costs for the installation of additional security cameras would be minimal and would be added to existing maintenance and data storage agreements. The one-time costs for installation would ultimately depend on the location of the additional cameras, but are expected to be approximately $5,000 per unit.

The Fusus LLC video and data collaboration system was recently purchased by the Police Department. This is a portable security system which is intended to integrate existing community and police department video camera systems. The system could provide an increased level of situational awareness in the Pier and Harbor area however, its success will depend on the level of community participation and the amount of permission obtained from business and residents to gain access to private video feeds. There will be no additional technology costs to enhance the use of the Fusus software in the waterfront area.

In addition to surveillance cameras, Automated License Plate Readers (ALPR) are a proven public safety tool utilized throughout the City of Redondo Beach. A fixed ALPR near the Pier Parking Structure would alert police to wanted people, stolen vehicles and provide valuable investigative data. The cost is anticipated to be approximately $19,000 for the hardware and installation of a single ALPR.

BRR #1

Pier Police Substation Improvements
Lastly, the Pier Police Sub-Station is located at the foot of the Redondo Beach Pier. The building is old, uninviting and does not stand out from the surrounding buildings as a Police Department facility. Prior to the outbreak of the COVID-19 pandemic some discussions were underway regarding the efficiency and overall look of the Pier SubStation. Upgrades to the substation that were discussed included installing new storefront-type windows and doors along with updated window dressing and countertop areas. A quote was obtained to purchase and install two glass doors. The total amount for the purchase and installation was $13,315.25. PD will work with Public Works Department to get a quote for the complete Pier Substation “storefront” project but it is estimated to be approximately $35,000.

In summary, adding two Police Officers to the complement of sworn police personnel would significantly increase the capabilities of patrolling the Pier Harbor area. The area includes significant residential, business and coastline space. The new Police Officers could take immediate action against the rising crime such as the recent active shooter incident at the foot of the Pier as well as provide outreach and resources to the elevated homeless population. Community Services Officers and Municipal Services Officers provide another possibility for enhanced presence. They could staff and operate the Pier Sub-Station, provide public safety information, enforce municipal code violations and conduct community engagement with the merchants and visitors. Added technology to the Pier Harbor area would also enhance the police response and investigative follow-up while providing real time public safety information. The existence of an inviting and updated Police Sub-Station would provide a professional law enforcement presence and a clearly identifiable safe haven for merchants and visitors.

BRR #2

CITY OF REDONDO BEACH
Midyear Budget Response Report #2
February 15, 2022
Question:

Are there consultants that can assist the City with grant application and management? What is the anticipated cost of these services?
Response:

Forthcoming grants available through the Infrastructure Bill will present the City with multiple opportunities to obtain grant funding for numerous City goals and objectives including, but not limited to, middle-mile broadband expansion, EV charger installation, and sea level rise impact mitigation efforts. Utilizing the services of a grant writing firm would ensure these opportunities are tracked, and that City applications are competitive and appropriately tailored to each granting agency's requirements. Grant writing consultants have years of experience in developing grant applications, fostering relationships with granting agencies, and managing the tangential responsibilities and demands of applying for and administering grants. There are many cities that choose to use grant writing and management services. Cities in the area that have used grant writing consultants include Rancho Palos Verdes, Torrance, Corona, Norwalk, Carson and West Hollywood.

Grant Writing Consultant fees vary. One-time grant application fees range between $8,500 and $17,500 (depending on application difficulty). Many cities opt for a full-service contract, which typically includes a one-time grant funding needs assessment, grant monitoring and monthly updates to City staff, and grant application development. This type of contract can range between $35,000 to $85,000, with the cost largely determined by the number of grant applications prepared. Cities usually enter into contracts with a not-to-exceed amount in place. It should be noted that grant writing consultants cannot work on a commission basis per the American Grant Writers' Association's Standards of Professional Practice (Standard 23) which states “The Grant Consulting business may not accept compensation that is a retainer, bonus, commission-based, or contingencybased.” Given the number of imminent grant opportunities, staff intend to prepare a request for proposals (RFP) from grant writing firms to gain a better understanding of actual costs and to identify the firms that are best prepared to assist the City with grant application and management efforts. The RFP will be returned to the City Council for consideration of approval in the next few months.

BRR #3

CITY OF REDONDO BEACH
Midyear Budget Response Report #3
February 15, 2022
Question:

What are the City’s internal service fund and overhead allocations, and what policies and procedures govern them? What is the opinion of the outside audit firm regarding the internal service funds?
Response:

Internal service fund/overhead allocations are charges to user departments for services provided by other departments of the City. The City uses internal service fund allocations (including overhead) to determine the true cost of departmental operations. The development of internal service fund and overhead allocations is considered to be a best management practice within both the private and public sectors. All twenty of the largest cities in California develop a cost allocation plan.

The City has been using its current structure of internal service fund and overhead allocations since FY 2005-06 (based on recommendations from a firm retained to review the allocation process). However, the Vehicle Replacement Internal Service Fund has been in place since FY1983-84, and overhead has been charged to enterprise and other specific non-general funds for at least that long.

The City’s Statements of Financial Principles were initially adopted in November 1998 and included policies regarding interfund transfers (overhead) as follows:
• Section 8(a) – Transfers to the General Fund from other funds for overhead costs shall be reviewed annually and shall conform to OMB (Office of Management & Budget) A-87 guidelines1.
• Section 8(b) – All City funds, including eligible grant funds, shall share the administrative costs borne by the General Fund.

In 2009, the Mayor and City Council approved adding the following policies to the Statements of Financial Principles. The additional policies give further clarification to the methodologies used by Redondo Beach in calculating its allocations. • Section 8(c) – Internal service funds and central service departments shall retain the costs of using services provided by other City departments. 1 In OMB A-87 (Cost Principles for State, Local, and Indian Tribal Governments), the federal government establishes the rules underlying the development of cost allocation plans. Plans prepared following the OMB A-87 guidelines can be used for federal grant administrative cost recovery.

BRR #3

• Section 8(d) – Allocations among funds and departments shall be based on prior fiscal year-end actual expenses and distributed using fair and justifiable statistics.

In 2010, the City issued an Administrative Policy / Procedures (APP) regarding internal service fund and overhead allocations to address expenses included in the allocations, methodologies used to make these allocations, and a brief description of how these amounts were calculated. Attachment 1 is the most recently updated APP. This APP is currently being reviewed/updated by Moss Adams, the City’s internal auditor, for possible revisions in regards to best practices.

Also attached are City-wide variance analyses comparing allocations in the FY 2021-22 midyear budget to the FY 2021-22 adopted budget. Attachment 2-A is an analysis of each internal service fund/overhead allocation, and Attachment 2-B is an analysis of the impact from these allocations to each fund’s proposed expenditures and revenues.

Explanations for increases/decreases are included. In total, internal service fund and overhead allocations have increased three percent (3%) primarily due to increased allocations for emergency communications operations as a result of a new methodology whereby pension and other post-employment benefit (OPEB) liabilities are averaged together with increased maintenance/implementation costs for computer aided dispatch (CAD) software.

Beginning with the audit of the FY 2011-12 financials, a report on the internal service funds was issued with the other audit reports. Attachment B is a copy of the FY 2020-21 report prepared by Lance, Soll & Lunghard. The report includes a clean opinion from the audit firm.

Attachment C is a high-level analysis by internal service fund. A more detailed analysis will be presented as part of the annual budget review process after the firm that performed the internal service fund calculations, Maximus, completes their report.

Attachments:

Attachment A – APP
Attachment B – Internal Service Funds Financial Statements Attachment C – High-Level Internal Service Fund Analysis by Internal Service Fund Attachment A
BRR# 3A

Attachment A
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Attachment A
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Attachment A
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Attachment A
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Attachment A
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Attachment A
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Attachment A
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Attachment A
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Attachment A
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Attachment A
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Attachment A
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CITY OF REDONDO BEACH, CALIFORNIA

INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021

FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS’ REPORT
Attachment B
BRR# 3B

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Attachment B
BRR# 3B

CITY OF REDONDO BEACH

INTERNAL SERVICE FUNDS

FINANCIAL STATEMENTS
AND INDEPENDENT AUDITORS’ REPORT
FOR THE YEAR ENDED JUNE 30, 2021

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Number
Independent Auditors’ Report ................................................................................................................................ 1 Management’s Discussion and Analysis .............................................................................................................. 4 Statement of Net Position ....................................................................................................................................... 7 Statement of Revenues, Expenses, and Changes in Net Position .............................................................. 9 Statement of Cash Flows .......................................................................................................................................... 11 Notes to Financial Statements ............................................................................................................................. 13 Attachment B
BRR# 3B

Lance, Soll & Lunghard, LLP 203N.BreaBlvd.,Suite 203 Brea,CA92821 Phone: 714.672.0022 INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
City of Redondo Beach, California
Report on the Financial Statements
Opinions
We have audited the accompanying financial statements of the Internal Service Funds of the City of Redondo Beach, California, (the City) as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the Internal Service Funds of the City of Redondo Beach, California, as of June 30, 2021, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter
As discussed in Note 1, the financial statements present only the internal service funds activities of the City, and do not purport to, and do not, present fairly the financial position of the City as of June 30, 2021, the changes in its financial position, or when applicable, its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the date of the financial statements.

Attachment B
BRR# 3B

To the Honorable Mayor and Members of the City Council
City of Redondo Beach, California
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with the GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if, there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
 Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Other Reporting Responsibilities
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Attachment B
BRR# 3B

To the Honorable Mayor and Members of the City Council
City of Redondo Beach, California
Other Information
Management is responsible for the other information included in the annual report. The other information comprises the introductory section and statistical section but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the financial statements does not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 17, 2021 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Brea, California
December 17, 2021
Attachment B
BRR# 3B

MANAGEMENT’S DISCUSSION AND ANALYSIS
As management of the City of Redondo Beach (the “City”), we offer readers of the Internal Service Funds’ financial statements this narrative overview and analysis of the financial activities of the Internal Service Funds for the fiscal year ended June 30, 2021. We encourage readers to consider the information presented here in conjunction with additional information contained within the financial statements.

OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as the introduction to the Internal Service Funds’ basic financial statements. The Internal Service Funds’ financial statements are comprised of two parts; (1) the Basic Financial Statements, and (2) the Notes to the Basic Financial Statements.

Basic Financial Statements: The Basic Financial Statements are designed to provide readers with a broad overview of the Internal Service Funds’ finances, in a manner similar to a private-sector business.

The Statement of Net Positions presents information on all the Internal Service Funds’ assets and deferred outflows of resources, and liabilities and deferred inflows of resources, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Internal Service Funds is improving or deteriorating.

The Statement of Revenues, Expenses and Change in Net Position provides a more detailed disclosure as to the nature of the Internal Service Funds’ revenues and expenses during the fiscal year. This statement provides information on the financial activity that resulted in the change of net position.

The Statement of Cash Flows provides information regarding the cash flow activities of the Internal Service Funds during the fiscal year. As Internal Service Funds, transactions are recorded using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when the related liability is incurred, regardless of the timing of the related cash flows. This statement provides information on the sources and uses of cash during the fiscal year, which may differ from activities as reported on the Statement of Revenue, Expenses and Change in Net Position.

The above statements are provided in accordance with the Governmental Accounting Standards Board Statement No. 34.
.

Attachment B
BRR# 3B

Financial Analysis: The Internal Service Funds’ net position as reported on the Statement of Net Position as of June 30, 2021 is $8.9 million. Total assets and deferred outflows of resources of $46.1 million includes $34.6 million in cash and investments and approximately $0.02 million in other current assets (accounts receivable and prepaid costs) combined with capital assets of $10.0 million, and deferred outflows related to pensions and other post-employment benefits (OPEB) of $1.5 million. Total liabilities and deferred inflows of resources of $37.2 million consist primarily of claims and judgments in the amount of $23.4 million, compensated absences of $0.4 million, net pension liability of $10.0 million, net OPEB liability of $1.0 million, accounts payable of $2.0 million, leases payable of $0.1 million, and deferred inflows related to pensions and other post-employment benefits o(OPEB) of $0.3 million.. Following is a summary schedule showing the components that make up the Internal Service Funds’ net position at June 30, 2021 and 2020.

Statement of Net Position
Internal Service Funds
2021 2020
Current and Other Assets $34,614,488 $31,432,088
Capital Assets, Net Depreciation 9,916,271 9,999,325
Total Assets 44,530,759 41,431,413

Deferred Outflows of Resources 1,537,975 1,443,506

Long-Term Liabilities Outstanding 32,581,240 33,498,449 Other Liabilities 4,302,399 2,443,724
Total Liabilities 36,883,639 35,942,173

Deferred Inflows of Resources 294,643 390,636

Net Position
Net Investment in Capital Assets 9,819,619 9,812,738
Unrestricted (929,167) (3,270,628)
Total Net Position $8,890,452 $6,542,110
The Internal Service Funds’ primary source of program revenues is charges to user City departments to recover costs of providing services to the departments. For the year ended June 30, 2021, total program revenues for the Internal Service Funds were $22.8 million. Expenses for the Internal Service Funds totaled $20.7 million resulting in a change in net position of $2.1 million. The Internal Service Funds’ largest expenses are for workers’ compensation claims and personnel, which totaled $2.0 million and $6.6 million, respectively. Following is a summary schedule showing the components that make up the Internal Service Funds’ changes in net position for the years ended June 30, 2021 and 2020.

Attachment B
BRR# 3B

Changes in Net Position
Internal Service Funds
2021 2020
Operating Revenues $22,534,858 $23,087,731
Operating Expenses 20,710,600 20,337,423
Operating Income (Loss) 1,824,258 2,750,308
Nonoperating Revenues (Expenses) 321,707 (224,239)
Transfers 202,377 -
Changes in Net Position 2,348,342 2,526,069
Net Position, Beginning of Year 6,542,110 4,016,041
Net Position, End of Year $ 8,890,452 $ 6,542,110
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
The City Council has adopted a balanced fiscal year 2020-2021 operating budget for the Internal Service Funds with total funding of $23.8 million and total expenditures of $1.2 million.

The June 30, 2021 net position is estimated to be $7.9 million.

REQUEST FOR INFORMATION
This financial report is designed to provide a general overview of the Internal Service Funds’ finances. Questions concerning any of the information in this report, or requests for additional financial information should be directed to the City’s Financial Services Department at 415 Diamond Street, Redondo Beach, California 90277, phone 310-318-0683 or email [email protected].

Attachment B
BRR# 3B

CITY OF REDONDO BEACH

COMBINING STATEMENT OF NET POSITION

INTERNAL SERVICE FUNDS
JUNE 30, 2021
Assets:

Current:

Cash and investments $ 9,157,547 $ 2,943,570 $ 2,158,203 $ 15,527,476 Receivables:

Accounts 14,619 - - -
Prepaid costs - - 7,686 -
Total Current Assets 9,172,166 2,943,570 2,165,889 15,527,476 Noncurrent:

Capital assets - net of accumulated depreciation 6,711,662 158,586 926,958 45,361 Total Noncurrent Assets 6,711,662 158,586 926,958 45,361 Total Assets 15,883,828 3,102,156 3,092,847 15,572,837
Deferred Outflows of Resources:

Deferred pension related items 164,096 339,662 337,897 23,820 Deferred OPEB related items 52,851 26,426 53,909 3,876
Total Deferred Outflows of Resources 190,522 392,513 391,806 27,696 Liabilities:

Current:

Accounts payable 462,013 368,509 244,485 916,856
Accrued compensated absences 7,288 17,775 38,972 1,323
Accrued claims and judgments - - - 2,068,532
Bonds, notes, and capital leases - - 89,935 -
Total Current Liabilities 469,301 386,284 373,392 2,986,711 Noncurrent:

Accrued compensated absences 21,864 53,323 116,917 3,970 Accrued claims and judgments - - - 21,400,010
Net pension liability 1,222,359 2,530,152 2,517,008 177,439 Net OPEB Liability 122,128 244,255 249,140 17,912
Bonds, notes, and capital leases - - 6,717 -
Total Noncurrent Liabilities 1,366,351 2,827,730 2,889,782 21,599,331 Total Liabilities 1,835,652 3,214,014 3,263,174 24,586,042 Deferred Inflows of Resources:

Deferred pension related items 13,016 26,942 26,802 1,888 Deferred OPEB related items 49,117 24,558 50,099 3,602
Total Deferred Inflows of Resources 37,574 76,059 76,901 5,490 Net Position:

Net investment in capital assets 6,711,662 158,586 830,306 45,361 Unrestricted 7,489,462 46,010 (685,728) (9,036,360)
Total Net Position $ 14,201,124 $ 204,596 $ 144,578 $ (8,990,999) Vehicle
Replacement
Building
Occupancy
Information
Technology
Self-Insurance
Program
Attachment B
BRR# 3B

CITY OF REDONDO BEACH

COMBINING STATEMENT OF NET POSITION

INTERNAL SERVICE FUNDS
JUNE 30, 2021
Assets:

Current:

Cash and investments
Receivables:

Accounts
Prepaid costs
Total Current Assets
Noncurrent:

Capital assets - net of accumulated depreciation
Total Noncurrent Assets
Total Assets
Deferred Outflows of Resources:

Deferred pension related items
Deferred OPEB related items
Total Deferred Outflows of Resources
Liabilities:

Current:

Accounts payable
Accrued compensated absences
Accrued claims and judgments
Bonds, notes, and capital leases
Total Current Liabilities
Noncurrent:

Accrued compensated absences
Accrued claims and judgments
Net pension liability
Net OPEB Liability
Bonds, notes, and capital leases
Total Noncurrent Liabilities
Total Liabilities
Deferred Inflows of Resources:

Deferred pension related items
Deferred OPEB related items
Total Deferred Inflows of Resources
Net Position:

Net investment in capital assets
Unrestricted
Total Net Position
Totals
$ 3,929,632 $ 875,755 $ 34,592,183
- - 14,619
- - 7,686
3,929,632 875,755 34,614,488
1,624,852 448,852 9,916,271
1,624,852 9,916,271 448,852
5,554,484 1,324,607 44,530,759
- 464,265 1,329,740
- 71,173 208,235
- 535,438 1,537,975
- 49,212 2,041,075
- 37,499 102,857
- - 2,068,532
- - 89,935
- 86,711 4,302,399
- 112,495 308,569
- - 21,400,010
3,456,621 - 9,903,579
- 328,930 962,365
- - 6,717
3,898,046 - 32,581,240
3,984,757 - 36,883,639
- 32,476 101,124
- 66,143 193,519
- 98,619 294,643
1,624,852 9,819,619 448,852
381,694 ( 875,755 929,167)
$ 2,006,546 $ 1,324,607 $ 8,890,452
Emergency
Communications
Major Facilities
Repair
Attachment B
BRR# 3B

CITY OF REDONDO BEACH

COMBINING STATEMENT OF REVENUES, EXPENSES

AND CHANGES IN NET POSITION

INTERNAL SERVICE FUNDS
YEAR ENDED JUNE 30, 2021
Operating Revenues:

Sales and service charges $ 2,964,119 $ 3,507,842 $ 3,484,682 $ 8,185,687 Miscellaneous 72,721 - 1,879 -
Total Operating Revenues 3,036,840 3,507,842 3,486,561 8,185,687 Operating Expenses:

Administration and general 970,037 1,078,004 520,735 5,854,953 Personnel services 772,697 1,332,468 1,568,848 63,237
Contractual services 34,319 219,759 1,385,848 164,718
Internal service charges 468,819 289,904 457,977 295,644 Depreciation expense 1,253,962 11,751 62,905 -
Total Operating Expenses 3,320,919 3,110,801 3,996,313 6,378,552 Operating Income (Loss) (284,079) 397,041 (509,752) 1,807,135 Nonoperating Revenues (Expenses):

Intergovernmental 275,000 - - -
Gain (loss) on disposal of capital assets 46,707 - - -
Total Nonoperating
Revenues (Expenses) 321,707 - - -
Income (Loss) Before Transfers 37,628 397,041 (509,752) 1,807,135 Transfers in 179,941 12,900 - 840
Transfers out - - (304) -
Changes in Net Position 217,569 409,941 (510,056) 1,807,975 Net Position:

Beginning of Year 13,983,555 (205,345) 654,634 (10,798,974) End of Fiscal Year $ 14,201,124 $ 204,596 $ 144,578 $ (8,990,999) Vehicle
Replacement
Building
Occupancy
Information
Technology
Self-Insurance
Program
Attachment B
BRR# 3B

CITY OF REDONDO BEACH

COMBINING STATEMENT OF REVENUES, EXPENSES

AND CHANGES IN NET POSITION

INTERNAL SERVICE FUNDS
YEAR ENDED JUNE 30, 2021
Operating Revenues:

Sales and service charges
Miscellaneous
Total Operating Revenues
Operating Expenses:

Administration and general
Personnel services
Contractual services
Internal service charges
Depreciation expense
Total Operating Expenses
Operating Income (Loss)
Nonoperating Revenues (Expenses):

Intergovernmental
Gain (loss) on disposal of capital assets
Total Nonoperating
Revenues (Expenses)
Income (Loss) Before Transfers
Transfers in
Transfers out
Changes in Net Position
Net Position:

Beginning of Year
End of Fiscal Year
Totals
$ 4,207,747 $ 108,422 $ 22,458,499
- 1,759 76,359
4,209,506 108,422 22,534,858
- 48,031 8,471,760
2,830,322 625 6,568,197
- 146,954 1,951,598
- 646,734 2,159,078
1,891 229,458 1,559,967
3,901,499 2,516 20,710,600
308,007 1,824,258 105,906
- - 275,000
- - 46,707
- - 321,707
308,007 2,145,965 105,906
- 9,000 202,681
- - ( 304)
317,007 2,348,342 105,906
1, 1,689,539 6,542,110 218,701
$ 2,006,546 $ 1,324,607 $ 8,890,452
Emergency
Communications
Major Facilities
Repair
Attachment B
BRR# 3B

CITY OF REDONDO BEACH

COMBINING STATEMENT OF CASH FLOWS

INTERNAL SERVICE FUNDS
YEAR ENDED JUNE 30, 2021
Cash Flows from Operating Activities:

Cash received from customers and users $ 3,063,741 $ 3,507,842 $ 3,486,561 $ 8,187,301 Cash paid to suppliers for goods and services (1,532,781) (935,345) (2, 168,258) (6,509,854) Cash paid to employees for services (1,303,813) (631,685) (1, 257,773) (352,544) Net Cash Provided (Used) by Operating Activities 1,496,711 671,248 60,530 1,324,903 Cash Flows from Non-Capital
Financing Activities:

Cash transfers out - - ( 304) -
Cash transfers in 12,900 179,941 - 840
Cash received from other governments - 275,000 - -
Net Cash Provided (Used) by
Non-Capital Financing Activities 454,941 12,900 ( 304) 840 Cash Flows from Capital
and Related Financing Activities:

Acquisition and construction of capital assets (1,072,334) - (151,431) - Principal paid on capital debt - - ( 89,935) -
Proceeds from sale of capital assets - 48,828 - -
Net Cash Provided (Used) by
Capital and Related Financing Activities (1,023,506) - ( 241,366) - Net Increase (Decrease) in Cash
and Cash Equivalents 928,146 684,148 ( 181,140) 1,325,743 Cash and Cash Equivalents at Beginning of Year 8,229,401 2,259,422 2,339,343 14,201,733 Cash and Cash Equivalents at End of Year $ 9,157,547 $ 2,943,570 $ 2,158,203 $ 15,527,476 Reconciliation of Operating Income to Net Cash
Provided (Used) by Operating Activities:

Operating income (loss) $ (284,079) $ 397,041 $ (509,752) $ 1,807,135 Adjustments to reconcile operating income (loss)
net cash provided (used) by operating activities:

Depreciation 1,253,962 11,751 62,905 -
(Increase) decrease in accounts receivable - 26,901 - - (Increase) decrease in due from other governments - - - 1,614 (Increase) decrease in deferred outflow pension related items 1,527 (18,982) ( 39,032) 19,369 (Increase) decrease in deferred outflow OPEB related items 6,233 1,902 4,770 7,050 (Increase) decrease in prepaid expense - - 12,906 584,373 Increase (decrease) in accounts payable 233,411 353,708 176,450 296,146 Increase (decrease) in claims and judgments - - - (1,212,590) Increase (decrease) in net pension liability 43,460 164,728 338,791 (137,332) Increase (decrease) in net OPEB liability 390 5,207 6,946 (27,186) Increase (decrease) in deferred inflow pension related items (19,762) (6,847) ( 14,108) (4,022) Increase (decrease) in deferred inflow OPEB related items (6,102) (1,917) (4,742) (6,610) Increase (decrease) in compensated absences 3,299 2,128 25,396 (3,044) Total Adjustments 1,780,790 274,207 570,282 (482,232)
Net Cash Provided (Used) by
Operating Activities $ 1,496,711 $ 671,248 $ 60,530 $ 1,324,903 Self-Insurance
Program
Vehicle
Replacement
Building
Occupancy
Information
Technology
Attachment B
BRR# 3B

CITY OF REDONDO BEACH

COMBINING STATEMENT OF CASH FLOWS

INTERNAL SERVICE FUNDS
YEAR ENDED JUNE 30, 2021
Cash Flows from Operating Activities:

Cash received from customers and users
Cash paid to suppliers for goods and services
Cash paid to employees for services
Net Cash Provided (Used) by Operating Activities
Cash Flows from Non-Capital
Financing Activities:

Cash transfers out
Cash transfers in
Cash received from other governments
Net Cash Provided (Used) by
Non-Capital Financing Activities
Cash Flows from Capital
and Related Financing Activities:

Acquisition and construction of capital assets
Principal paid on capital debt
Proceeds from sale of capital assets
Net Cash Provided (Used) by
Capital and Related Financing Activities
Net Increase (Decrease) in Cash
and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year
Reconciliation of Operating Income to Net Cash
Provided (Used) by Operating Activities:

Operating income (loss)
Adjustments to reconcile operating income (loss)
net cash provided (used) by operating activities:

Depreciation
(Increase) decrease in accounts receivable
(Increase) decrease in due from other governments
(Increase) decrease in deferred outflow pension related items (Increase) decrease in deferred outflow OPEB related items (Increase) decrease in prepaid expense
Increase (decrease) in accounts payable
Increase (decrease) in claims and judgments
Increase (decrease) in net pension liability
Increase (decrease) in net OPEB liability
Increase (decrease) in deferred inflow pension related items Increase (decrease) in deferred inflow OPEB related items Increase (decrease) in compensated absences
Total Adjustments
Net Cash Provided (Used) by
Operating Activities
Totals
$ 4,209,506 $ 108,422 $ 22,563,373
( (843,536) 728) (11,990,502)
( (2,175,473) 625) (5,721,913)
1,190,497 107,069 4,850,958
- - (304)
- 9,000 202,681
- - 275,000
- 9,000 477,377
( (29,977) 225,292) (1,479,034)
- - (89,935)
- - 48,828
( (29,977) 225,292) (1,520,141)
1,169,520 (118,223) 3,808,194
2,760,112 30,783,989 993,978
$ 3,929,632 $ 34,592,183 875,755 $
$ 308,007 $ 1, 105,906 $ 824,258
1,891 229,458 1,559,967
- - 26,901
- - 1,614
- (91,116) (128,234)
- 13,810 33,765
- - 597,279
( 20,017 728) 1,079,004
- - (1,212,590)
- 736,998 1,146,645
- (21,834) (36,477)
- (18,601) (63,340)
- (13,282) (32,653)
27,040 - 54,819
882,490 1,163 3,026,700
$ 1,190,497 $ 4, 107,069 $ 850,958
Emergency
Communications
Major Facilities
Repair
Attachment B
BRR# 3B

CITY OF REDONDO BEACH

INTERNAL SERVICE FUNDS

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 1: Summary of Significant Accounting Policies
The accounting policies of the City of Redondo Beach Internal Service Funds (City) conform to the generally accepted accounting principles applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB). A summary of the Internal Service Fund’s more significant accounting policies follows:

The accompanying financial statements are not intended to present the financial position or results of operations of the City, taken as a whole.
a. Financial Reporting Entity
These funds are used to account for interdepartmental operations where it is the stated intent that costs of providing services to the departments of the City on a continuing basis be financed or recovered primarily by charges to the user departments. b. Basis of Accounting and Measurement Focus
Internal Service Funds financial statements include a Statement of Net Position, a Statement of Revenues, Expenses and Changes in Net Position, and a Statement of Cash Flows for each Internal Service Fund.

Internal Service Funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets, deferred outflows of resources, liabilities, and deferred inflows of resources, (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Net Position presents increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. In these funds, receivables have been recorded as revenue and provisions have been made for uncollectible amounts.

Operating revenues in the Internal Service Funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as nonoperating expenses. c. Cash, Cash Equivalents and Investments
The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investments balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund.

For more information on the City’s cash and investments as of June 30, 2021, please see the City of Redondo Beach’s audited financial statements.

For purposes of the statement of cash flows of the proprietary fund types, cash and cash equivalents include all investments, as the City operates an internal cash management pool which maintains the general characteristics of a demand deposit account.

Attachment B
BRR# 3B

CITY OF REDONDO BEACH

INTERNAL SERVICE FUNDS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED JUNE 30, 2021
Note 1: Summary of Significant Accounting Policies (Continued) d. Prepaid Items
Certain interdepartmental payments reflect costs applicable to future accounting periods and are recorded as prepaid items.
e. Capital Assets
Capital assets, which include land, buildings, improvements, equipment, furniture, and infrastructure assets (e.g., roads, sidewalks, and similar items), are reported in the applicable internal service funds. Capital assets are recorded at historical cost or estimated historical cost if actual cost is not available. Donated assets are valued at their estimated fair value on the date donated.

City policy has set the capitalization threshold for reporting capital assets at the following:

General Capital Assets $ 5,000
Infrastructure Capital Assets 25,000
Buildings, Parking Structures and Parking Lots 100,000
Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows:

Assets Years
Buildings and Improvements 5-45
Equipment 5-20
Vehicles 4-20
Infrastructure 5-60
Interest accrued during capital assets construction, if any, is capitalized for funds as part of the asset cost.
f. Compensated Absences Payable
Vacation pay is payable to employees at the time a vacation is taken or upon termination of employment. Employees may accrue from two to three times their annual accrual rate.

Upon termination an employee will be paid for any unused accrued vacation pay. Sick leave is payable when an employee is unable to work because of illness. Unused sick leave is forfeited upon termination.
g. Claims and Judgments Payable
The short-term and long-term claims are reported as liabilities in the Self-Insurance Program Internal Service Fund. The liability the amount of settlement reached, but unpaid, related to claims and judgments entered.

Attachment B
BRR# 3B

CITY OF REDONDO BEACH

INTERNAL SERVICE FUNDS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED JUNE 30, 2021
Note 1: Summary of Significant Accounting Policies (Continued) h. Net Position
In the Internal Service Funds, net position is classified in the following categories:

Net Investment in Capital Assets - This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt attributed to the acquisition, construction, or improvement of the assets.

Restricted Net Position - This amount is restricted by external creditors, grantors, contributors, laws or regulations of other governments.

Unrestricted Net Position - This amount is all net position that does not meet the definition of "net investment in capital assets" or "restricted net position." i. Use of Estimates
The preparation of the basic financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In addition, estimates affect the reports amount of expenses. Actual results could differ from these estimates and assumptions. j. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City only has two items that qualify for reporting in this category. Firstly, the City also has deferred outflows related to pensions, which arises only under a full accrual basis of accounting. Accordingly, this item (pension related items), is reported only in the government-wide statement of net position. This includes pension contributions subsequent to the measurement date of the net pension liability and other amounts, which are amortized by an actuarial determined period. Secondly, the City has deferred outflows related to Other Post-Employment Benefits (OPEB), which include contributions subsequent to the measurement date of the Total OPEB liability and other amounts.

In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has two types of items, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Firstly, the City also has deferred inflows of resources related to pensions, which arises only under a full accrual basis of accounting. Accordingly, this item (pension related items), is reported only in the government-wide statement of net position. These amounts are amortized by an actuarial determined period. Secondly, the City also has deferred inflows of resources related to OPEB, which arise only under a full accrual basis of accounting.

Attachment B
BRR# 3B

CITY OF REDONDO BEACH

INTERNAL SERVICE FUNDS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED JUNE 30, 2021
Note 1: Summary of Significant Accounting Policies (Continued) k. Pension Plans
For purposes of measuring the net pension liability, deferred outflows and inflows of resources related to pensions, and pension expense, information about the fiduciary net position and additions to/ deductions from the fiduciary net position have been determined on the same basis as they are reported by the CalPERS Financial Office. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. CalPERS audited financial statements are publicly available reports that can be obtained at CalPERS’ website, at www.calpers.ca.gov.

GASB 68 requires that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used.

Valuation Date (VD) June 30, 2019
Measurement Date (MD) June 30, 2020
Measurement Period (MP) July 1, 2019 to June 30, 2020
l. Other Post-Employment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan (OPEB Plan), the assets of which are held by California Employers’ Retiree Benefit Trust (CERBT), and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined by an independent actuary. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date (VD) June 30, 2019
Measurement Date (MD) June 30, 2020
Measurement Period (MP) July 1, 2019 to June 30, 2020
m. Recognition of Deferred Outflows and Deferred Inflows of Resources Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time. Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense.

The recognition period differs depending on the source of the gain or loss:

Net difference between projected and actual
earnings on pension plan investments
5 years
All other amounts Expected average remaining service lifetime (EARL) (8.1 years at July 1, 2019)
Attachment B
BRR# 3B

CITY OF REDONDO BEACH

INTERNAL SERVICE FUNDS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED JUNE 30, 2021
Note 2: Cash and Investments
As of June 30, 2021, cash and investments are as follows:

Vehicle Building Information Self-Insurance Emergency Major Facilities Replacement Occupancy Technology Program Communications Repair Total Cash and
Investments 9,157,547 $ 2,943,570 $ 2,158,203 $ 15,527,476 $ 3,929,632 $ 875,755 $ 34,592,183 $ The Internal Service Funds do not own specifically identifiable securities, and their cash is pooled with the other funds of the City.

The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investments balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund. a. Investments
Under the provisions of the City’s investment policy, and in accordance with the California Government Code, the following investments are authorized:
 United States Treasury Bills, Notes and Bonds
 Obligations issued by the Federal Government
 Bankers' Acceptances with a maturity of 180 days or less  Time Certificates of Deposits
 Negotiable Certificates of Deposit
 Commercial Paper with a maturity of 270 days or less
 Local Agency Investment Fund (LAIF) limited to $75,000,000 by LAIF  Medium-Term Notes (5 year maximum) of Domestic Corporations or Depository Institutions
 Mutual Funds
 Guaranteed Investment Contracts not to exceed $5 million annually  Certificate of Deposit Placement Services
 Collateralized Bank Deposits
 Supranationals
The City’s investment policy applies to all financial assets, investment activities and debt issues of the City (including funds which are invested by trustees appointed under debt trust indentures, with direction from the City Treasurer).

The City is a participant in LAIF, which is an external investment pool regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City’s investment with LAIF at June 30, 2021 includes a portion of the pool funds invested in structured notes and asset-backed securities (1.10 %). The City values its investments in LAIF at a fair market value provided by LAIF. At June 30, 2021, the factor used was 1.00008297.

Attachment B
BRR# 3B

CITY OF REDONDO BEACH

INTERNAL SERVICE FUNDS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED JUNE 30, 2021
Note 2: Cash and Investments (Continued)
b. Deposits and Investment Risks
Credit Risk
The City's investment policy limits investments in medium-term notes (MTN's) to those rated "A" or higher by Standard and Poor's (S&P) or “A2” or higher by Moody's. As of June 30, 2021, all MTN's were rated "A2" or higher by Moody's. As of June 30, 2021, the City's Federal Agency investments were rated "AA+" by Moody's and “Aaa” by S&P.

All securities were investment grade and were in accordance with State and City law.

Investments in U.S. government securities are not considered to have credit risk; therefore, their credit quality is not disclosed. As of June 30, 2021, the City's investments in external investment pools are unrated.

Custodial Credit Risk
The custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party.

The California Government Code requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City’s name.

The fair value of pledged securities must equal at least 110% of the City’s cash deposits.

California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation. The City, however, has not waived the collateralization requirements.

Concentration of Credit Risk
The City’s investment policy imposes restrictions on the maximum percentage it can invest in a single type of investment. Investments in Federal Agencies have the implied guarantee of the United States government. While all the City’s investments are in compliance with the City’s investment policy as of June 30, 2021, if a City has invested more than 5% of its total investments in any one issuer, they are exposed to concentration of credit risk.

Investments guaranteed by the U.S. government and investments in mutual funds and external investment pools are excluded from this requirement.

Attachment B
BRR# 3B

CITY OF REDONDO BEACH

INTERNAL SERVICE FUNDS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED JUNE 30, 2021
Note 2: Cash and Investments (Continued)
The City has invested more than 5% of the total investment value with the following issuers:

Up to one year
% of Total
Investments
Federal Home Loan Bank 6,277,260 $ 7%
Federal Farm Credit Bank 16,222,860 18%
Fannie Mae 5,177,490 6%
$ 27,677,610 31%
Interest Rate Risk
The City’s investment policy limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The City’s investment policy states that at least 50% of the City’s portfolio shall mature in three years or less; and at least 25% in one year or less. The only exception to these maturity limits shall be the investment of the gross proceeds of tax exempt bonds. The City has elected to use the segmented time distribution method of disclosure for its interest rate risk.

Note 3: Receivables
The following is a summary of receivables net of allowances for uncollectible amounts at June 30, 2021:

Vehicle
Replacement Total
Accounts Receivable 14,619 $ 14,619 $
Note 4: Interfund Transactions
Transfers
The internal service funds made the following transfers as of June 30, 2021.

General Vehicle Building Self-Insurance Emergency
Transfers Out Fund Replacement Occupancy Program Communications Total General Fund - $ 6,240 $ 12,900 $ 840 $ 9,000 $ 28,980 $ Enterprise Funds:

Wastewater - 173,701 - - 173,701 -
Internal Service Funds:

Information Technology 304 - - - - 304
Total $ 304 $ 179,941 $ 12,900 $ 840 $ 9,000 $ 202,985
Transfers In
Internal Service Funds
Attachment B
BRR# 3B

CITY OF REDONDO BEACH

INTERNAL SERVICE FUNDS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED JUNE 30, 2021
Note 5: Capital Assets
At June 30, 2021, the City's capital assets consisted of the following:

Balance at Balance at
June 30, 2020 Additions Deletions Transfers June 30, 2021 Non-depreciable assets:

Construction in progress
Vehicle Replacement $ 450,000 $ - $ - $ 450,000 - $
Major Facilities Repair 225,451 22,140 - (184,984) 62,607 Self Insurance 45,361 - - - 45,361
Total non-depreciable assets 720,812 22,140 - (184,984) 557,968 Depreciable assets:

Buildings and improvements
Building Occupancy 124,678 - - 124,678 -
Vehicle Replacement 967,857 - - 967,857 -
Information Technology 15,272 - - - 15,272
Emergency Communications 90,391 - - - 90,391
Major Facilities Repair 203,152 - - 184,984 388,136
Furniture and equipment
Building Occupancy 121,809 - - 121,809 -
Vehicle Replacement 251,807 - - 251,807 -
Information Technology 1,562,820 151,431 - 1,714,251 -
Emergency Communications 2,913,795 29,977 - 2,943,772 - Automotive equipment
Vehicle Replacement 13,872,932 1,072,334 (508,113) 14,437,153 - Leased equipment
Information Technology 1,541,019 - - 1,541,019 -
Infrastructure -
Vehicle Replacement 109,199 - - 109,199 -
Total depreciable assets 21,571,579 1,456,894 (508,113) 184,984 22,705,344 Less accumulated depreciation for:

Buildings and improvements
Building Occupancy 50,375 4,411 - - 54,786
Vehicle Replacement 43,046 37,116 - - 80,162
Information Technology 4,582 339 - - 4,921
Emergency Communications 51,428 4,677 - - 56,105
Major Facilities Repair - 1,891 - - 1,891
Furniture and equipment
Building Occupancy 25,775 7,340 - - 33,115
Vehicle Replacement 123,077 11,922 - 134,999 -
Information Technology 1,327,880 62,566 - 1,390,446 -
Emergency Communications 1,128,425 224,781 - 1,353,206 - Automotive equipment
Vehicle Replacement 8,581,843 1,202,194 (505,992) 9,278,045 - Leased equipment
Information Technology 948,217 - - 948,217 -
Infrastructure
Vehicle Replacement 8,418 2,730 - - 11,148
Total accumulated depreciation 12,293,066 1,559,967 (505,992) 13,347,041 - Total depreciable assets, net 9,278,513 (103,073) (2,121) 184,984 9,358,303 Governmental activities capital assets, net 9,999,325 $ $ (80,933) $ (2,121) $ 9,916,271 - $

Attachment B
BRR# 3B

CITY OF REDONDO BEACH

INTERNAL SERVICE FUNDS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED JUNE 30, 2021
Note 5: Capital Assets (Continued)
Depreciation expense was charged to internal service funds for the fiscal year ended June 30, 2021, as follows:

Internal Service Funds:

Vehicle Replacement 1,253,962 $
Building Occupancy 11,751
Information Technology 62,905
Emergency Communications 229,458
Major Facilities Repair 1,891
Total depreciation expense 1,559,967 $
Note 6: Compensated Absences Payable
The following is a summary of compensated absences payable transactions for the year ended June 30, 2021:

Balance Balance
July 1, 2020 Additions Deletions June 30, 2021
Internal service funds:

Compensated absences payable 356,607 $ 261,394$ 206,575$ $ 411,426 $ 102,857 Amounts Due
Within One Year
Note 7: Long-Term Debt
The following is a summary of long-term debt transactions for the year ended June 30, 2021:

Balance Balance
July 1, 2020 Additions Deletions June 30, 2021
Information Technology $ 186,587 $ 89,935$ - $ 96,652 $ 89,935 Amounts Due
Within One Year
Capital Leases
The City has entered into various lease purchase agreements for equipment. These leases have been classified as capital leases. The related assets have been capitalized in the internal service funds at the initial present value of the lease payments. The balance outstanding at June 30, 2021, was $96,532.

The total leased assets by major asset class consisted of the following:

Equipment
Information Technology 1,541,019 $
Equipment under capitalized lease, at cost 1,541,019
Accumulated depreciation
Information Technology (948,217)
Equipment under capitalized lease, net 592,802 $
Attachment B
BRR# 3B

CITY OF REDONDO BEACH

INTERNAL SERVICE FUNDS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED JUNE 30, 2021
Note 8: Risk Management
The City is exposed to risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters; and currently reports all of its risk management activities in its Self-Insurance Program Internal Service Fund.

The City has adopted a self-insurance workers' compensation program, which is administered by a third-party agent, AdminSure. The self-insurance coverage for each claim is limited to $750,000. Excess coverage of up to $50,000,000 for each claim is provided by the California State Association of Counties – Excess Insurance Authority (CSAC-EIA), an insurance pool, in which a consortium of counties and cities has agreed to share risks and losses. As of June 30, 2021, the estimated claims payable for workers' compensation was $16,858,982, which included claims incurred but not reported (IBNR). The current year's portion of the claims was $710,192.

For general liability claims, the City is also self-insured up to $500,000 for each occurrence.

The self-insurance program is administered by a third-party agent, AdminSure. Each claim in excess of the self-insured retention of up to $30,000,000 is covered by the CSAC-EIA.

As of June 30, 2021, the estimated claims payable for general liability was $6,609,560, which included IBNR. The current year's portion was $1,358,340. Governmental activities claims and judgments are generally liquidated by the General Fund.

Liability on
June 30, 2021
General Liability 6,609,560 $
Workers' Compensation 16,858,982
Total $ 23,468,542
Settled claims have not exceeded any of the City's coverage amounts in any of the last three fiscal years and there were no reductions in the City's coverage during the year.

The estimated claims payable for workers' compensation and general liability is based on estimates provided by the third-party administrator, the City Attorney, the Risk Management staff, and the City’s actuary.

Changes in the reported liability resulted from the following:

Balance Balance Due Within
June 30, 2020 Additions Deletions June 30, 2020 One Year $ 24,681,132 $ 4,488,781 $ (5,701,371) $ 23,468,542 $ 2,068,532 Attachment B
BRR# 3B

CITY OF REDONDO BEACH

INTERNAL SERVICE FUNDS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED JUNE 30, 2021
Note 9: Pension Plan
Plan Description
The Plans are agent, multiple-employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS). A full description of the pension plans regarding number of employees covered, benefit provisions, assumptions (for funding, but not account purposes), and membership information are listed in the June 30, 2018 Annual Actuarial Valuation Report (funding valuation). Details of the benefits provided can be obtained in Appendix B of the actuarial valuation report. The actuarial valuation report and CalPERS’ audited financial statements are publicly available reports that can be obtained at CalPERS’ website, at www.calpers.ca.gov.

Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries.

Benefits are based on years of credited service, equal to one year of full time employment.

Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

For detailed information on the pension plan refer to the City of Redondo Beach’s Comprehensive Annual Financial Report.

Note 10: Other Post-Employment Benefits
Plan Description and Eligibility. In addition to the pension benefits described above, the City provides certain health insurance benefits, in accordance with memorandums of understanding, to retired employees through the California Employers' Retiree Benefit Trust (CERBT) Fund, which is an agent multiple-employer plan administered by CalPERS. The City provides medical insurance for employees in accordance with agreements reached with various bargaining groups. The City shall pay the single retiree medical premium rate, for qualified retirees, for a medical insurance plan in which the retiree is enrolled from among those medical plans provided by the City. These contributions of the City for such medical premiums shall cease on the date the retiree becomes eligible to enroll in the Federal Medicare program and/or any Medicare supplemental plans.

For detailed information on the OPEB plan refer to the City of Redondo Beach’s Comprehensive Annual Financial Report.

Note 11: Commitments and Contingencies
a) Lawsuits - The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City's legal counsel that resolution of these matters will not have a material adverse effect on the financial condition of the City.
b) As of June 30, 2021, in the opinion of City management, there were no outstanding matters that would have a significant effect on the financial position of the funds of the City.

Attachment B
BRR# 3B

Internal Service Funds
FY 2021‐22 Budgeted
Amounts (Based on FY
2019‐20 Actuals)
FY 2021‐22 Midyear Budgeted
Amounts (Based on FY 2020‐21 Actuals)
Increase /(Decrease) $
Increase /(Decrease) % Variance Reasoning
700 LIABILITY CHARGES 4,272,072 4,007,172 (264,900) ‐6.2% Actual FY 2021‐2022 costs were lower than FY
2019‐20 Actuals due to decreased premiums
from joining a new risk pool
700 WORKERS COMP CHARGES 3,797,440 2,371,376 (1,426,064) ‐37.6% Actual FY 2021‐2022 claims costs were lower
than FY 2019‐20 actuals due to less claims being
filed than expected, and decreased premiums
from joining a new risk pool
701 VEHICLE MAINTENANCE 2,063,737 2,062,257 (1,480) ‐0.1% n/a 701 VEHICLE REPLACEMENT 900,382 1,115,604 215,222 23.9% Actual FY 2021‐2022 costs were higher than FY2019‐20 Actuals due to vehicle cost increases 702 BUILDING OCCUPANCY 3,507,846 3,110,802 (397,044) ‐11.3% Actual FY 2021‐2022 costs were lower than FY
2019‐20 Actuals; energy costs for City facilities
were below budget due to pandemic‐related
facility closures
703 INFORMATION TECHNOLOGY 3,997,649 4,250,667 253,018 6.3% Actual FY 2021‐2022 costs were higher than FY
2019‐20 Actuals
705 EMERGENCY COMM OPNS 3,720,063 3,656,203 (63,860) ‐1.7% Actual FY 2021‐2022 costs were lower than FY
2019‐20 Actuals
705 EMGCY COMM EQUIP REPL 487,684 492,427 4,743 1.0% n/a 707 MAJOR FACILITY REPAIR 107,076 107,077 1 0.0% n/a
CITY FACILITY SEWER FEE 43,014 40,645 (2,369) ‐5.5%
The Sewer User Fee formula for FY 21‐22 is
based on pandemic‐related, decreased water
usage from Jan 1, 2020‐ Dec 31, 2020
OVERHEAD 9,379,851 10,046,411 666,560 7.1%
Actual FY 2021‐2022 costs were higher than FY
2019‐20 Actuals
Totals 32,276,814 31,260,641 (1,016,173)
Attachment C
BRR# 3C

BRR #4

CITY OF REDONDO BEACH
Midyear Budget Response Report #4
February 15, 2022
Question:

What are the current estimated annual debt service costs for a $40 million bond and what are the costs and proceeds for each $10 million borrowed? Response:

The debt service costs for a $40M Bond are approximately $1.9M per year.

Assumptions:
• Current Rates = 2.00% Coupon (tax-exempt)
• 30-year term
• Level Debt Service
• 1.25% Gross Issuance Cost for all scenarios
More specifically $1.9M in annual Debt Service pays for the following:

Approx. Net Approx. Bond
Proceeds Size___
• Current Market (2.00% annually) $41,964,000 $42,495,000 • Current Market at +0.25% $40,567,000 $41,080,000
• Current Market at +1.00% $36,720,000 $37,185,000
Approx. Net Approx. Annual
Debt Service costs for a $10 Million Bond Issue: Proceeds Debt Service_ • Current Market (2.00% annually) $9,875,000 $447,000
• Current Market at +0.25% $9,875,000 $462,000
• Current Market at +1.00% $9,875,000 $510,000