Mid-Year
Budget Review
City of San Leandro
City Council Meeting
March 14, 2022
Agenda
01. Purpose of MidYear Review02. Economic
Outlook
03. Mid-Year
Highlights
04. Proposed Budget
Adjustments
05. Questions and
Answers
2 Purpose of Mid-Year Review
• An analysis of revenue and expenditure trends
• Identification of budget adjustments to achieve
a more accurate budget and to increase
transparency
• An opportunity to adjust resource allocation to
reflect Council and community priority
3 U.S. Economic Outlook
• The pandemic continues to impact the economy
and influence consumer behaviors
• Inflation rate accelerated to 7.5% in January
• Supply chain pressures persist
• The economic outlook is positive, but beware of
the unknowns
4 5
General Fund - Highlights
Revenues Expenditures
• Expenditures are expected to be lower
than budgeted due to:
o Vacancy savings
o Reduction in Recreation and Human
Services program expenditures
o Reclassification of expenditures to the
American Rescue Plan Act (ARPA) Fund
• Proposed funding strategies/contributions:
o Pay down pension liability and achieve
savings
o Support capital projects and parking
program
• Sales Tax and Property Transfer Tax
are trending higher than anticipated
• Utility Users Tax and Cannabis Tax are
projected to be higher than
anticipated
• Recreation revenues are lower than
budgeted as a result of less
programming
6 Other Funds - Highlights
Revenues Expenditures
• Budget adjustments to various funds to
reflect projected program activities
(Environmental Services, Shoreline, etc.)
• Transfers between street related
funds/CIP projects to support the overall
program
• Reclassification of ARPA expenditures
from the General Fund
• Update estimates for various programs
based on projected revenue trends
(Enterprise Funds, Gas Tax Fund, Parking
Fund, etc.)
• Contributions from the General Fund to
the CIP, Gas Tax, and Parking Funds
• Appropriate ARPA revenue
• Amended Budget vs Adjusted Budget
7 General Fund – Proposed Adjustments
• $4.5M increase in revenue
• $2.6M decrease in expenditure
Amended
Budget
Proposed
Adjustment
Adjusted
Budget
Revenues $123.1M $4.5M $127.6M
Expenditures $133.7M $(2.6M)* $131.1M
Revenue (Expenditure) $(10.6M) $7.1M $(3.5M)
Use of ARPA Funds/OneTime Expenditures $6.7M
Use of Reserves/One-Time
Expenditures $3.9M $3.5M
Net Revenue (Expenditure) - -
* Include the $6.7M expenditures that will be reclassified to the newly established ARPA Fund.
Analysis of General Fund Balance
• Projected General Fund reserves on
June 30, 2022 (dollars in thousands)
• Proposed budget adjustments are
reflected in the overall fund balance
• A portion of the Undesignated fund
balance is used to fund one-time
expenditures in fiscal year 2022-23
8 Category
Projected
Reserves at
6/30/22
Nonspendable 7,627
Committed 50
Assigned 10,573
Unassigned Fund Balances:
Compensated Absences 1,000
Major Emergencies 5,000
Economic Uncertainty 26,220
Undesignated * 29,713
Total 61,933
Total - All 80,183
* Balance available for special appropriations and one-time projects General Fund – Major Adjustments
9 Justification Proposed
Adjustment
Revenues
• Increase Sales Tax based on updated projection $2.6M
• Increase Property Transfer Tax due to a robust housing market $2.0M • Reduce Charges for Services related to recreation programs -$0.6M Expenditures
• Reduce staffing costs - additional savings from unfilled positions -$3.9M • Contribution to CalPERS to pay down pension liability - $4.3M in estimated interest savings over time
$3.0M
• Contribution to PARS Trust account to fund pension obligation – to accumulate funds and generate investment income
$0.6M
• Contribution to Capital Project Fund - for further distribution to projects $3.2M • Contribution to support street maintenance program $1.7M • Reduce transfers out to Capital Project Fund – replace by ARPA funding -$5.7M Other Funds – Major Adjustments
10 Fund Justification Proposed
Adjustment
Revenues
Gas Tax • Contribution from the General Fund for street maintenance program
$1.7M *
Capital Project Fund • Contribution from the General Fund – funds to be distributed to CIP projects
$3.2M *
Expenditures
ARPA Fund • Expenditures reclassified from the General Fund and the Capital Project Fund
$6.7M
Note:
• $1.7M + $3.2M = $4.9M
• $4.9M was transferred from the Capital Project Fund to the General Fund in fiscal year 2020-21 in anticipation of the COVID-19 impact on the budget. Funds will be restored to support capital projects.
Review by Finance Committee
• The Committee unanimously approved the proposed budget amendments • Committee recommendations/comments
o Advised staff to continue to enhance and communicate budget information and financial results to the community
o Confirmed the need to communicate more about metrics and how they tie to expenses in the future *
o Advised staff to provide updates to the Council and community regarding Budget Task Force recommendation implementation status ** o Had discussion about future consideration of some portion of Property Transfer Tax be earmarked for affordable housing programs * Steps have been put in place for the development of strategic performance measures that will be easy for the community to understand
** An update has been planned for July 2022
11 Looking Forward
12 April-June 2022
- Mid-Cycle Budget Review
June-July 2022
- ARPA Project and Budget
Task Force
Recommendation
Implementation Update
August-October 2022
- Planning for FY 23-25
Biennial Budget
- Development and
Launching of the Public
Budget Process
Recommendation
• Staff recommends that the City Council accept the Mid-Year Financial Report and approve the Proposed Budget Amendments for fiscal year 2021-22
13 Thank You
14