PROPOSED ONE -TIME AMENDMENT TO
ADOPTED FISCAL RESILIENCY POLICY
FRAMEWORK
(FOR FY 2024 -2025 ONLY)
BUDGET, FISCAL & LEGISLATIVE STANDING COMMITTEE
FEBRUARY 26, 2024
NEW CITY FINANCIAL CONDITION : FORECASTED DEFICITS
NEW STRATEGIC BUDGET INITIATIVES: APPROVED ON 12/13/23 (CC RESO. #2023-067) FOR CITY MANAGER USE FOR BUDGET BALANCING AND ELIMINATION OF FORECASTED DEFICIT OF ($-8.7M) FOR FY 2025 - 2027 1). Implement a zero-based budget planning model for FY 2025-27 budget planning to optimize city service delivery and generate annual gf operating cost savings for all City Departmental expenses. 2). Eliminate or substantially reduce all GF operating subsidies. 3). Identify new GF annual revenue sources.
4). No (0) FTE increased authorized during FY 2025-27 period (i.e. Zero-growth; status-quo). 5). Extend FTE hiring freeze on all FTE vacancies during FY 2025-2027 period. 6). Re-tool & revise adopted fiscal resiliency policy requirements to reverse forecasted structural deficits as one-time balancing measures (for FY 2025-2027 period only).
7). Explore use of one-time funds from GFDR fund balance to reverse forecasted structural deficits as one-time budget balancing measures (for FY 2025-2027 period only).
8). Explore additional fiscal measures using forecast model to reverse forecasted structural deficits as recommended by the City Manager.
(SUBJECT TO CHANGE AS RECOMMENDED BY THE CITY MANAGER)
CURRENT ADOPTED FISCAL RESILIENCY POLICY FRAMEWORK
(REVISED 06/20/2016)
PURPOSE: The purpose of this policy is to establish target minimum levels of unreserved fund balance to be maintained in the General Operating Funds for exposure to natural disasters or severe unforeseen emergencies (Catastrophic Reserve), economic uncertainties (Budget Stabilization Reserve), financial liabilities (General Fund Designated Reserves), and unplanned, unforeseen program investment opportunities (Contingency Reserve). • CATASTROPHIC RESERVE (FUND 150): (50% OF OPERATING BUDGET) • BUDGET STABILIZATION RESERVE (FUND 170): (5% OF OPERATING BUDGET) • CITY MGR. OPERATING CONTINGENCY (FUND 100-1310) (1% OF OPERATING BUDGET) TOTAL: (56% OF OPERATING BUDGET)
CASINO REVENUE SHORTFALL RESERVE (FUND 180): At the completion of each annual audit, and following certification of the Comprehensive Annual Financial Report(CAFR) by the City’sindependent auditor for that particular fiscal year, a percentage of the net change in year-end audited fund balance—up to a maximum 50.0 percent—may be deposited into the Casino Revenue Sustainability Reserve (Fund 180). The purpose of the reserve is to mitigate against the potential impact that a sudden shutdown or loss of casino revenue would have on the City’sability to maintain current operations and service levels. All deposits and withdrawals from the fund are discretionary, but require approval by the Budget, Fiscal & Legislative Standing Committee and a majority approval by resolution of the City Council.
FY 2023- 2024 GF BUDGET AND FISCAL RESERVE DESGINATIONS (CURRENT ALLOCATIONS PER POLICY)
FY 2023-2024 GF OPERATING BUDGET: $52,504,430
• CATASTROPHIC RESERVE (FUND 150): $26,252,215
• BUDGET STABILIZATION RESERVE (FUND 170): $ 2,605,222 • CITY MGR. OPERATING CONT. (FUND100-1310) $ 525,044 TOTAL: $29,382,481 (56% OF OPERATING BUDGET)
CASINO REVENUE SHORTFALL RESERVE (FUND 180): $0
ARE PROPOSED POLICY REVISIONS NECESSARY ?
PRIMARY REASONS TO IMPLEMENT RECOMMENDED ONE-TIME POLICY REVISION:
Short Answer: YES!!!
1). Creates new cost efficiencies for Annual GF Operating Budget. 2). Re-assigns capital outlays from GF Operating Budget . 3). Re-assigns annual vehicle replacement expenses from GF Operating Budget. 4). Removes CM Operating Contingency Reserve as recurring GF Operating Expense. 5). Assists with future Annual GF Budget Planning as a Budget Balancing Measure.
ONE -TIME PROPOSED AMENDMENT TO POLICY FRAMEWORK
(PROPOSED FOR FY 2024- 2025 ONLY )
CATASTROPHIC RESERVE (FUND 150) (50% OF OPERATING BUDGET) BUDGET STABILIZATION RESERVE (FUND (5% OF OPERATING BUDGET) NEW SPECIAL RESERVE FUNDS (FUND: TBD): Allocated as a percentage of the adopted Operating Budget (ONE-TIME)
a). Building & Facilities Maintenance Reserve Fund – New! (3% OF OPERATING BUDGET) b). Asset and Vehicle Replacement Reserve Fund – New! (2% OF OPERATING BUDGET) c). City Manager Operating Reserve Fund – New! (1% OF OPERATING BUDGET) __________________________________________________________________________________________ TOTAL: (61% OF OPERATING BUDGET)
• ALL FUTURE YEAR-END AUDITED FUND BALANCE WILL BE ALLOCATED BY CITY MANAGER TO NEW SPECIAL
RESERVE FUNDS (A-C)
• CASINO REVENUE SHORTFALL RESERVE (FUND 180): NO CHANGES; DISCRETIONARY
ONE -TIME PROPOSED AMENDMENT TO POLICY FRAMEWORK
(PROPOSED FOR FY 2024- 2025 ONLY ) – EXAMPLE:
FY 2024-2025 GF OPERATING BUDGET: $53,000,000 (EXAMPLE) • CATASTROPHIC RESERVE (FUND 150) $26,500,000 (50%)
• BUDGET STABILIZATION RESERVE (FUND $ 2,650,000 (5%) NEW SPECIAL RESERVE FUNDS (FUND: TBD): Allocated from Undesignated Fund Balance (ONE-TIME) a). Building & Facilities Maintenance Reserve Fund – New! $ 1,590,000 (3%) b). Asset and Vehicle Replacement Reserve Fund – New! $ 1,060,000 (2%) c). City Manager Operating Reserve Fund – New! $ 530,000 (1%) • ALL FUTURE YEAR-END AUDITED FUND BALANCE WILL BE ALLOCATED BY CITY MANAGER TO NEW SPECIAL
RESERVE FUNDS (A-C)
• CASINO REVENUE SHORTFALL RESERVE (FUND 180): NO CHANGES; DISCRETIONARY
BFLSC STANDING COMMITTEE RECOMMENDATION
BFLSC STANDING COMMITTEE RECOMMENDATION:
1). Receive Presentation
2). Recommend a policy amendment to the current FISCAL RESILIENCY RESERVE POLICY FRAMEWORK (for FY 2024-2025 period only) to establish three (3) new Special Revenue Funds:
a). Building & Facilities Maintenance Reserve Fund – New! (3% OF OPERATING BUDGET) b). Asset and Vehicle Replacement Reserve Fund – New! (2% OF OPERATING BUDGET) c). City Manager Operating Reserve Fund** – New! (1% OF OPERATING BUDGET) (**Note: Removed as an annual, recurring GF Budget Annual Operating Expense) 3). Future allocations to Special Revenue Funds #A - C would be from Year-end Audited Fund Balance following completion of ACFR for preceding fiscal year period to be allocated by City Manager recommendation, with BFLSC review and City Council approval by Resolution.
QUESTIONS?