Fiscal Year End 2023-24
General Fund Review
and
Budget Reduction Strategy
LONG TERM FINANCIAL POLICY
AUDIT SUBCOMMITTEE
OCTOBER 10, 2024
VERONICA CONNER,
BUDGET & FINANCIAL ANALYSIS MANAGER
ALAN ALTON, CHIEF FINANCIAL OFFICER
General
Fund
Review
2 2023-24 Overall Surplus (Deficit)
General Fund Revenues &
Expenditures
General Fund Reserves
Budget Reduction Planning
Questions
Description Amount
Recurring Revenues & Transfers In $203,800,819
Recurring Expenditures,
Transfers Out & Encumbrances ($206,938,691)
Total Operational Deficit ($3,137,872)
Preliminary Results June 30, 2024
3 Budget vs. Actuals FY 2023-24
4 Adopted Budget
Revenues & Transfers In $204.8M
Expenditures & Transfers
Out ($208.1M)
Deficit ($3.3M)
Actual Results
Revenues & Transfers In $203.8M
Expenditures, Transfers
Out & Encumbrances ($206.9M)
Deficit ($3.1M)
5 Operating Revenues
Adopted
Budget +
Changes
Actual
Revenue
Over
(Under)
Budget
Percent
Property taxes $36,325,000 $37,361,779 $1,036,778 102.9% Sales taxes 75,866,735 70,071,011 (5,795,724) 92.4%
Utility Users tax 11,641,100 13,885,049 2,213,949 119%
Other taxes 45,258,029 47,804,273 2,546,244 105.6%
License and permits 3,075,000 2,944,864 (130,136) 95.8% Charges for services 23,349,429 22,915,637 (433,792) 98.1% Other (Fines, Forfeitures &
Intergovernmental Revenue) 6,828,754 5,870,587 958,167 86.0% Transfers In 2,934,773 2,977,620 42,847 101.5%
Total $205,278,820 $203,800,819 ($979,506) 99.2%
General Fund Operating Revenues
6 Other Taxes
Other Taxes Budget YTD Actuals Percent of
Budget
VLF Swap 17,278,677$ 17,761,938$ 102.8%
Franchise Fees 11,123,600 12,515,014 112.5% Motor Vehicle License Fees 200,000 219,893 109.9% Cannabis Industry Tax 1,800,000 2,042,851 113.5% Business Tax 4,605,752 4,997,198 108.5% Real Property Transfer Tax 4,250,000 3,419,526 80.5% Occupancy Tax 6,000,000 6,847,853 114.1% Total Other Taxes 45,258,029$ 47,804,273$ 105.6% 7 Operating Revenues 2022-23 vs 2023-24
General Fund Operating
Revenues
FY 2022-23
Actuals
FY 2023-24
Actuals $ Change % Change
Property taxes 35,721,102$ 37,361,779$ 1,640,677$ 4.6% Sales taxes 73,294,984 70,071,011 (3,223,973) -4.4% Utility users tax 14,056,526 13,855,049 (201,477) -1.4% Other taxes 45,793,429 47,804,273 2,010,844 4.4% License and permits 3,017,502 2,944,864 (72,639) -2.4% Charges for services 23,298,731 22,915,637 (383,094) -1.6% Intergovernmental - Recurring 2,089,188 1,920,436 (168,752) -8.1% Fines and forfeitures 1,944,474 1,870,355 (74,119) -3.8% Miscellaneous 4,102,352 2,079,796 (2,022,556) -49.3% Transfers In 2,442,896 2,977,620 534,724 21.9% Total 205,761,184$ 203,800,819$ (1,960,365)$ -1.0%
8 Major General Fund Revenue Lookback
9 General Fund Operating Expenditures
Expenditures Adopted Budget
+ Changes
Actual
Expenditures Encumbrances Over (Under)
Budget
Salaries $90,894,900 $89,353,973 - ($1,540,927)
Benefits 62,647,465 61,070,699 - (1,576,766)
Services &
Supplies 45,692,749 45,633,484 1,979,225 1,919,960 Total $199,235,114 $196,058,157 $1,979,225 ($1,197,733) Expenditure Turnback = 0.601%
Excludes Transfers Out and Project Spending
10 Expenditures by Dept. 2022-23 vs 2023-24
General Fund Operating
Expenditures
FY 22-23
Actuals
FY 23-24 Actuals
+ Encumb.
FY 23-24 Budget
+ Changes
Over (Under)
Budget % Change
City Council 1,225,775$ 1,061,989$ 1,049,269$ 12,721$ 1.0% City Manager 2,452,202 2,590,186 3,124,868 (534,682) -21.8% City Attorney 3,730,420 4,222,454 4,038,256 184,198 4.9% Human Resources 3,586,475 4,369,188 4,299,109 70,079 2.0% Finance 6,921,905 7,175,689 7,285,855 (110,166) -1.6% Comms & Intergovt Relations 1,394,299 1,562,802 1,901,868 (339,066) -24.3% Planning & Econ Development 17,889,766 16,427,178 17,506,759 (1,079,580) -6.0% Housing & Community Services 108,420 50,063 51,000 (937) -0.9% Recreation and Parks 11,554,123 16,520,098 17,487,171 (967,073) -8.4% Fire 49,351,180 53,853,253 53,623,072 230,181 0.5% Police 68,400,709 71,689,980 72,373,027 (683,047) -1.0% Public Works 29,180,325 25,549,658 26,651,234 (1,101,576) -3.8% Water 796,013 824,575 806,350 18,225 2.3% Non Departmental (7,494,126) (7,859,733) (10,962,723) 3,102,990 -41.4% Total 189,097,485$ 198,037,381$ 199,235,114$ (1,197,733)$ -0.6% Impacts on Unassigned
General Fund Reserves
11 ➢ Operational Surplus (Deficit)
➢ Council Action to appropriate reserves mid-year
• Occur outside of the annual budget process
• $2M for BVGC Irrigation, $800K for Police Radio upgrade, Graffiti Abatement & Vacant Lot Programs, etc.
➢ Interest Earnings/ Gains & Losses on Investments
➢ Release of Appropriations and Encumbrances
Structural Deficit
Structural Deficits
▪ Result from ongoing programs and services expenses exceeding ongoing revenue
▪ Cannot be addressed through reserves and one-time funding Ongoing Expense Increases
▪ Increased staffing
▪ New service levels to the community
▪ Diverted revenue
▪ Require action at budget development to address, increases in certain areas will result in decreases to others
12 Reserves Summary
13 Council Policy - Mandated Reserves
▪ 15% to 17% of annual expenditures
▪ Used to address unforeseen events like disasters or sudden dramatic economic downturns
▪ If below 15%, upcoming budget is to address shortfall Unassigned Reserves
▪ Amount above 17% Council reserves policy
▪ Used by the City to fund one-time expenditures
▪ Infrastructure, facilities, capital projects
▪ One time programming
Fiscal Stability Reserves
▪ Used to address adopted deficits
Description Amount
FSR Balance 6/30/2022 $27,300,000
Budgeted Deficit FY 2023-24 (3,300,000)
FSR Balance 6/30/2023 ($24,000,000)
Budgeted Deficit FY 2024-25 (13,300,000)
FSR Balance 6/30/2024 $10,700,000
Fiscal Stability Reserves (FSR) June 30, 2024
14 Description June 30, 2023 June 30, 2024
General Fund Reserve Balance $84,809,468 $68,893,573
Fiscal Stability Reserves (24,000,000) (10,700,000)
Total Unassigned Reserves June 30, 2024 $60,809,468 $58,193,573 17% Mandated Reserve Policy (32,598,117) (35,872,804)
Amount Over Mandated Reserve Policy $28,211,351 $22,320,770 Preliminary General Fund Reserves
June 30, 2024
15 Budget Reduction Planning
16 Budget Reduction Strategy
Phase 1
▪ Department Reductions in FY 2024-25
▪ Vacant Positions
▪ Ongoing Services and Supplies
▪ One-time project funding reductions
Phase 2
▪ Further reductions as part of FY 2025-26 & FY 2026-27 budgets ▪ Position reductions (attrition/layoffs)
▪ Program reductions
▪ Organizational restructuring
17 Strategy – Administrative Cuts
➢Administrative Cuts: Target administrative functions and overhead within city departments, with the goal of reducing costs associated with management, planning, and support services; minimizing the impacts to service delivery as much as possible ◦ Pros: Immediate costs savings can be applied across the board ✓ Slows the growth of payroll expenditures
✓ Long-term savings, improved productivity
◦ Cons: Increased workload and potential delays in service delivery ✓-Temporarily disruptive
18 Strategy – Operational Cuts
➢ Operational Cuts: involve changes in day-to-day service delivery, focus on improving efficiency and reducing overhead costs
◦ Pros: Lowers ongoing expenses, potential reduced maintenance, enhanced value from contracts, savings on fuel, maintenance and replacement costs ◦ Cons: Requires reorganization, possible impact on workforce productivity, needs strong management oversight
✓ Reduces availability for emergency services
19 Strategy – Programmatic Cuts
➢Programmatic Cuts: Aimed at reducing or eliminating specific programs.
Often based on strategic evaluations of program effectiveness, cost-efficiency, and alignment with city priorities
◦ Pros: Direct and significant cost savings, immediate cash flow relief from deferred expenditures and economies of scale
◦ Cons: Reduction of critical services, stifles growth, potential economic slowdown
20 5-Year Staffing History
21 DEPARTMENT FY 2008-09 FY 2012-13 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25 City Attorney 15.80 12.90 15.90 15.90 15.90 15.90 15.90 City Manager 12.00 12.00 8.00 9.00 11.00 11.00 11.00 Communications &
Intergovernmental Relations * - - 7.00 7.00 7.00 9.00 9.00 Finance 75.35 63.85 92.85 89.60 62.60 62.60 62.60 Fire 143.75 137.75 151.00 148.00 157.00 157.00 169.00 Housing &
Community Services 74.00 63.50 24.00 24.00 27.00 27.00 27.00 Human Resources 20.40 17.70 21.00 21.00 22.00 23.00 23.00 Information Technology 28.00 24.00 29.00 30.00 31.00 33.00 33.00 Planning &
Economic Development 49.20 27.80 69.00 68.00 74.00 74.00 78.50 Police 274.75 246.75 260.00 256.00 259.00 264.00 264.00 Recreation &
Parks 132.60 82.65 42.00 42.00 44.00 74.00 76.15 Transportation &
Public Works 298.05 268.00 287.00 288.00 292.00 261.00 261.00 Water 253.00 241.00 247.50 248.50 276.00 278.00 278.00 Total FTE Positions 1,376.90 1,197.90 1,254.25 1,247.00 1,278.50 1,289.50 1,308.15 22 5-Year Staffing History
Department Reductions (FY 24-25)
➢ Departments were directed to review operations and identify 5% and 8% reductions
➢Ongoing Budget Reductions: $6.2M
◦ Vacant FTEs: $2.7M
◦ Operating Costs: $3.5M
➢FY 2024-25 Mid-Year Reductions: $3.2M
◦ Vacant FTEs: $1.7M
◦ Operating $1.6M
◦ Remaining $1M of FTE Vacancy reductions and $1.9M of Operational costs to be reduced with FY 25-26 annual budget
23 Budget Reduction Summary
➢One-Time Funds:
◦ PGE Funded projects: $9.4M – detail on next slide
◦ Pension 115 Trust: $12M
➢Hiring Freeze:
◦ $3.8M in General Fund vacancies
➢Programmatic Cuts:
◦ $1.3M Safe Parking
◦ Applying for alternative grants and evaluating internal resources available
➢ Department Identified Cuts: $6.2M
24 25
PG&E Funds AvailableDepartment Description Amount
City Council Translation Services (Written and Oral) 402,091 Comm. Engagement Community Equity Capacity Building 34,846 Comm. Engagement Youth Promotores/Youth Council 50,000
Comm. Engagement DEI Spaces 57,860
Comm. Engagement Community Empowerment Plan 127,766
Fire Wildland Resiliency Planning "Response" 261,791
Fire Vegetation Management 2,000,000
HCS Down Payment Assistance 1,452,106
HR City Staff Equity Capacity Training 115,000
HR (DEI) Equity Data Dashboard 50,000
HR (DEI) SEED Equity Plan Prioritized Recommendations 300,000 PED Climate Action Plan Implementation 150,000
TPW Fire Station 5 Rebuild 500,000
TPW PGE Fire Damaged Pavement - Non-Reimbursable 542
TPW Fire Damaged Tree Removal Phase 2 82,407
TPW FEMA Fire Damage Fountaingrove 3,800,000
Total $9,384,409
One-Time Funds: PG&E Projects
Next Steps
▪ Budget Reduction Study Session (October 22)
▪ Mid-Year budget adjustment (January)
▪ Budget Reduction Study Session (April)
▪ Budget Study Session (May 6-7)
▪ Budget Adoption (June 17)
26 Questions?
27