CITY OF SIGNAL HILL
STAFF REPORT
2175 Cherry Avenue • Signal
Hill, California 90755-3799
1/24/2023
AGENDA ITEM
TO:
HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM:
JONATHAN OROZCO
ACCOUNTING MANAGER
SHARON DEL ROSARIO
ADMINISTRATIVE SERVICES OFFICER/FINANCE DIRECTOR
SUBJECT:
ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR FISCAL YEAR 2021-22 Summary:
The Annual Comprehensive Financial Report (ACFR) is an independently audited summary report of the financial transactions of the City for Fiscal Year (FY) 2021-22, providing relevant financial information to the City Council, citizens, current and future employees, grant entities, creditors, bond investors, rating agencies, and other interested parties. This audit is performed in compliance with City Charter requirements with the results presented to the City Council for review.
The audit was completed by the City's independent auditor, CliftonLarsonAllen LLP, Certified Public Accountants, which issued an unqualified opinion audit report, otherwise known as a “clean opinion,” finding nothing of material concern in the City’s internal controls, financial, and bookkeeping practices. The independent auditor’s unmodified report provides assurance that the ACFR, and the audited information within, present fairly the City’s financial position for the fiscal year ending June 30, 2022.
As part of this report, staff recommends appropriating the General Fund Operating Surplus of $8.6 million. Staff recognizes the need to maintain ongoing financial stability by applying conservative budgeting practices. To that end, staff recommends allocating most of the budget surplus to replenishing and augmenting reserve funds. In addition, staff recommends allocating funding to the City’s Capital Improvement Projects fund. The recommended allocations also include funding for improvements related to deferred maintenance of City Hall, a stipend allocation, as well as funding to evaluate ongoing operational staffing needs.
Recommendations:
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1. Receive and file the City’s ACFR for FY 2021-22.
2. Approve the proposed appropriations and reserve transfers from FY 2021-22 to FY 2022-23 operating budget and reserve balances utilizing the current FY 2021-22 General Fund operating surplus of $8.6 million and the Library Reserve fund.
3. Adopt a resolution, entitled:
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SIGNAL HILL, CALIFORNIA, AUTHORIZING APPROPRIATIONS FROM THE FISCAL YEAR 2021-22 GENERAL FUND
OPERATING SURPLUS AND CURRENT YEAR APPROPRIATION ADJUSTMENTS, AMENDING THE FISCAL YEAR 2022-23 BUDGET
4. Direct staff to distribute copies of the ACFR for FY 2021-22 as required, as well as to the Office of the City Clerk to be placed on file for the general public and posted on the City’s website.
Fiscal Impact:
FY 2021-22 closed with General Fund revenues exceeding expenditures, including net transfers, in the amount of $8,556,833. The proposed appropriations for the FY 2021-22 surplus include the following:
· Replenishment and augmentation of reserve funds (page 11, Table 5) - $4,837,711 · Carryover appropriations (page 12, Table 6) - $9,865
· New appropriations - operating (page 13, Table 7) - $405,625 · New appropriations - other (page 13, Table 8) - $3,303,632 Staff is proposing additional appropriations utilizing the Library Reserve as follows:
· New appropriations (page 14, Table 9) - $1,105,000
Strategic Plan Objectives:
Goal No. 1: Ensure long-term fiscal stability.
Obj. No. 1.1.3: Monitor and respond to proposed legislation affecting City revenues.
Obj. No. 1.1.8: Adequately fund reserves.
Goal No. 6: Promote a transparent and open government.
Background:
The City’s Charter requires that an annual audit be performed relating to the City's financial transactions, records, inventories, and reports. Accordingly, the City retains an independent external auditor. The auditor’s responsibility is to express opinions on the financial statements, and plan and perform an audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The results of these efforts are incorporated in the ACFR (Attachment A), which is a set of financial statements that present the City’s financial results at the end of the fiscal year.
The ACFR was prepared in accordance with Generally Accepted Accounting Principles as set forth in CITY OF SIGNAL HILL Page 2 of 14 Printed on 1/20/2023
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The ACFR was prepared in accordance with Generally Accepted Accounting Principles as set forth in the pronouncements of the Governmental Accounting Standards Board (GASB), an organization that regulates governmental accounting as the source of generally accepted accounting principles. In addition to standards of reporting, GASB issues statements, interpretations, bulletins, and other guidelines for financial reporting.
Local Economy and Financial Landscape
While the California economy continues recovering from the pandemic with a faster return to normalcy in most business sectors, the current global and local economies continue to face many of the same challenges in the prior year and remain prevalent through today. Inflation continues to top historical norms; rising interest rates continue to put pressure on the housing market, car sales, and other certain parts of the economy; the risk of new COVID-19 variants; and the war in Ukraine continue to have a global economic effect. A mix of economic forecasts believes that the longer inflation persists and the higher the Federal Reserve (the Fed) increases interest rates in response, the greater the risk to the overall economy.
Inflation has become one of the most challenging obstacles global economies have attempted to overcome. The Fed has taken an aggressive stance in combating inflation by raising interest rates from 0.25% in March 2022 to 4% in November 2022. The inflation rate met a 40-year high of 9.1% in 2022 but is predicted to taper over the next year, as indicated by softening housing prices, labor markets, consumer demand, and decelerated money supply. Furthermore, these actions have also impacted the housing market, which experienced a continued high growth rate (10%) through early 2022 until the Fall, when the rate tapered to 3%. Many economists are mixed about the relationship between higher mortgage rates and whether home prices will slow through 2023 and continue to watch this closely. While unemployment remains low, showing signs of resiliency, inflation may ultimately impact GDP growth and consumer spending habits towards basic necessities such as food, accommodations, health care, and transportation, creating more uncertainty for the overall economy.
While California’s economy remains robust, its outlook is weaker than it was three months ago as a result of the economic uncertainty both locally and globally. As these uncertainties remain, several factors, including the Fed’s approach to interest rates, could ultimately drive the economy into a slowdown and increase unemployment. Overall, much of the economic data appears to suggest a recession could potentially occur; however, it is far from certain, and the exact timing and severity are unknown. As always, staff will continue working to monitor regional and local economic conditions and advise the City Council of any needed budgetary adjustments.
During the COVID-19 pandemic, it was evident that local governments, particularly general fund revenue portfolio (i.e., property tax, sales tax, transient occupancy tax, franchise fees, etc.) and the elasticity of these sources, determined a city’s fiscal exposure during the economic shifts that occurred over the past two years. As a “low property” tax city, the City’s most significant revenue source for General Fund operating revenues is sales tax. Signal Hill’s revenue mix has proven to be resilient, with overall sales tax revenue remaining strong, with total point of sale revenues nearly the same as the previous year. The County Pool allocations experienced a slight pullback as online spending for general consumer goods began to flatten with consumers returning to in-store shopping and is expected to have more normalized gains of 4 to 5% moving forward. The City’s new transaction and use tax Measure SHR generated 27.7% of the Bradley Burns amount, led by a solid performance from general consumer goods. However, according to City’s industry expert, HdL, CITY OF SIGNAL HILL Page 3 of 14 Printed on 1/20/2023 powered by Legistar™
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performance from general consumer goods. However, according to City’s industry expert, HdL, overall sales trends are forecasted to experience decelerated growth rates.
The City’s major sales tax industry groups include Business and Industry, Autos and Transportation, General Consumer Goods, and Building and Construction. Two of the City’s larger business groups that experienced year-over-year gains include Building and Construction (3%) and General Consumer Goods (6%). The Autos and Transportation sector experienced a year-over-year decrease of 4%, with new car dealers and rental car vendors experiencing modest gains; however, sales of used autos and leasing activity have begun to cool. The Fuel and Service Stations and Restaurants and Hotel sectors experienced strong growth with gains of 46% and 19%, respectively, a reversal of the prior years’ declining trend. County Pool Allocations are down 13% as compared to the prior year due to the shift to in-store purchases, with lower gains forecasted for FY 2022-23. The most significant impact to FY 2021-22 sales tax revenue included the first full year of Signal Hill Measure SHR transaction and sales tax revenue with total district tax $1.5 million higher than budgeted. Overall, higher priced goods through periods of consistent demand have led to economic inflation, and the Federal Reserve Board’s recent actions to curb inflation are anticipated to put downward pressure on sales of autos, building materials, and financed general consumer goods, resulting in slower growth by year-end and into 2023.
Property taxes account for the next largest revenue source for the General Fund. California median home prices experienced a modest annual growth (0.3%) as of October 2022, with Los Angeles experiencing an increase of 2.4%, according to the California Association of Realtors. The housing market home sales have recovered from their record low during the initial months of COVID-19.
Signal Hill’s home sales and prices continued to increase in 2022; however, with rising interest rates and inflation, there may be a decrease in the volume of home sales moving forward. The City’s overall net taxable property value changed by 8.3% and is highly affected by the oil and gas assets within the City. These property value changes are likely related to oil price fluctuations. As the property tax roll is set prior to the commencement of the fiscal year, property tax revenue was conservatively projected for FY 2022-23.
The City’s annual obligated costs, such as contract costs, insurance, pension obligations, and unfunded mandates, continue to rise over time and compete against other budget priorities. The largest obligated costs include pensions costs related to the CalPERS Unfunded Accrued Liability (UAL). The UAL mainly fluctuates as a result of investment returns and changes in the discount rate.
CalPERS recently announced a loss of 7% for FY 2021-22, which is balanced by FY 2020-21’s net return of 21%. CalPERS’ FY 2020-21 above-expected return triggered a risk mitigation review, which lowered the discount rate from 7 to 6.8 percent, effectively erasing part of the gains from the 2021 returns. The recent gain and loss, change in the discount rate, and assumption changes have led to variable funding status’, which directly impact the City’s pension costs and overall budget strategies.
The City will continue to monitor the UAL closely.
Based upon industry forecasts, historical and current data, and in accordance with the City’s tradition of fiscal prudence, the City applied conservative budgeting principles during the budget development process for FY 2022-23. The City’s FY 2022-23 Operating Budget focuses on the delivery of quality core municipal services while proactively addressing safety and deferred maintenance and operational needs with a skilled and talented workforce. In developing the budget for the major general fund revenues, the City relied on an analysis of historical performance and trends, as well as industry, economist, and news reports.
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The City’s expenditures were developed as a conservative spending plan addressing City Council and community priorities. The City’s continued operations at full capacity include the expansion of current community programs, increased public engagement through committees and other city events, and plans for future development. The budget also reflects the utilization of government relief program funding, special revenues, and grant programs in the City’s capital plan and operational expenditures.
While the budget reflects tempered optimism, the current global and local economies continue to face new and ongoing challenges that may lead to reevaluating spending strategies. The City’s future economic health will be dependent on maintaining healthy reserves through fiscally conservative budgets and policies, planning for economic development opportunities, and maintaining its strong financial position through prudent, long-range policy decisions and sound fiscal management. The City will continue to monitor key economic indicators, sources of revenue, and spending levels as part of its sound, conservative fiscal approach.
Analysis:
ACFR Components
The ACFR includes three main sections: 1) Introductory; 2) Financial; and 3) Statistical.
Introductory Section (pages i thru xii)
This section includes the guide to the report and one of two key narratives, the Transmittal Letter, which provides a broad financial outlook of the City and legal requirements for financial reporting.
Financial Section (pages 1 thru 133)
This section includes the second key narrative, the Management’s Discussion and Analysis (MD&A) section. The MD&A is audited information and is similar to financial reports in the private sector. The MD&A section of the ACFR provides a narrative overview of the City’s previous year’s activity and financial performance. This information should be read in conjunction with the basic financial statements and the extended footnotes to get an accurate overall representation of the City’s financial health. The Notes to the Basic Financial Statements provide narrative information about the City’s significant accounting policies and detailed disclosures on key financial matters. In addition, the MD&A includes a discussion of factors affecting the current year’s budget.
Also included in this section is the Independent Auditor’s Report, the Basic Financial Statements, the Fund Financials, Notes to the Basic Financial Statements, and other required supplementary information (RSI). The Government-Wide Financial Statements report information on all activities of the City, with the exception of where the City acts as a trustee for another agency, such as the Successor Agency; in addition, transfers of funds between City entities and reserves have been removed from these statements, and the statements only reflect events that resulted from activities between the City and non-City associations. Governmental activities, which normally are supported by taxes and grant revenues, are reported separately from business-type activities, such as the Water Department, which instead rely on user fees and charges that come from receiving a service.
The reporting includes the auditing standards of GASB Statement No. 68 (GASB 68), which requires CITY OF SIGNAL HILL Page 5 of 14 Printed on 1/20/2023 powered by Legistar™
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The reporting includes the auditing standards of GASB Statement No. 68 (GASB 68), which requires that a governmental entity recognize its net pension liability (UAL) in the statement of net position (balance sheet). Under GASB Statement No. 75 (GASB 75), the City’s net Other Post-Employment Benefits Liability (OPEB) is recorded and extended discussions and disclosures are provided as part of the supplementary information in the footnotes. Under the reporting standards of GASB 68 and 75, City-wide financial statements present the net pension and OPEB liabilities.
The report also includes the recently implemented GASB 87, the new requirement for governments to improve accounting and financial reporting for leases. The report now includes an increase of approximately $13 million to right-to-use lease assets and lease liability from the two ground leases with Robinett (lessor of master ground lease involving several auto dealership parcels). The report also includes an increase of approximately $24 million to leases receivable and lease-related deferred inflows of resources from the four ground leases to auto dealerships.
Statistical Section (pages 135 thru 158)
This section consists of information pertaining to the City, including financial trends, revenue and debt capacity, demographics and economic information, and other operating information.
General Fund Analysis
The General Fund is the City’s primary operating fund, comprised of local tax revenues and fees for services to fund core municipal services such as public works, police, planning, and recreation. The General Fund ended FY 2021-22 with revenues exceeding expenditures (including transfers) by $8,556,833.
The independent auditor reported that the FY 2021-22 General Fund Operating and Non-Operating Revenues were $32.5 million, which is $5.2 million above the FY 2021-22 final budget of $27.3 million and $4.4 million over the prior year’s FY 2020-21 actuals of $28.1 million. The increase over the FY 2020-21 Operating Budget was due to an overall increase in most revenue line items with the largest increase in sales tax revenues of $4.5 million. This increase reflects the full-year collection of Measure SHR, the City’s add-on sales tax. The Operating Revenues also reflects the market value adjustment to the City’s investment portfolio due to market fluctuations.
The General Fund’s Operating and Non-Operating Expenditures were $24.9 million, which is $4.0 million below the FY 2021-22 the Current Operating Budget of $28.9 million and $2.8 million above the prior year FY 2020-21 actuals of $22.1 million. All departments ended the year with expenditures below budget, primarily due to vacant positions across multiple departments, delayed projects, and lower use of planned contract services.
Net transfers were $0.9 million, which is $0.07 million lower than the FY 2021-22 Current Operating Budget. The net transfers are mainly due to the use of Park Development Impact Fee funds, $537,896, for an acquisition of land to expand Signal Hill Park, along with other transfers from special revenue funds to cover operating expenditures, such as $261,376 from Measure W and $130,000 from Gas Tax Fund. Also included in net transfers is the annual transfer out to the Housing Authority for approximately $240,000.
The General Fund Operating Results are summarized in Table 1. Revenues and transfers in less operating expenditures and transfers out resulted in a year-end surplus of $8,556,833. The Beginning CITY OF SIGNAL HILL Page 6 of 14 Printed on 1/20/2023 powered by Legistar™
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operating expenditures and transfers out resulted in a year-end surplus of $8,556,833. The Beginning Fund Balance in the FY 2021-22 Operating Budget was $48.03 million. After reflecting revenues, expenditures, and net transfers, the actual Ending Fund Balance is $56.6 million.
OPERATING RESULTS (millions)
2021-22
FINAL
BUDGET
2021-22
FINAL
RESULTS
DIFF
Beginning Fund Balance $ 48.03 $ 48.03 $ -
Revenues $ 27.25 $ 32.54 $ 5.29
Expenditures $ 28.93 $ 24.90 $ 4.03
Excess Revenues over Expenditures $ (1.68) $ 7.64 $ 9.32 Net Transfers In/(Out)-Other Financing Sources (Uses) $ 0.98 $ 0.91 $ (0.07) Net Change in Fund Balance $ (0.70) $ 8.55 $ 9.25
Ending Fund Balance at June 30, 2021 $ 47.33 $ 56.58 $ 9.25 Table 1. General Fund Operating Results
General Fund Reserves
The auditor reported that the General Fund Unassigned Reserve is $23.1 million, and the Economic Uncertainties Reserve is $4.5 million for a total of $27.6 million as of June 30, 2022. Based on the original FY 2021-22 General Fund budgeted expenditures, not including net transfers of $27.6 million, the General Fund Unassigned Reserve and Economic Uncertainties Reserve together represent a reserve level of 100%, meeting and exceeding the City’s target of maintaining 50% in reserves.
The grand total of the General Fund Committed Reserves and the Unassigned General Fund Balance was $53.5 million on June 30, 2022. The Committed Reserves are classified fund balances that can only be used for the specific purposes determined by the City Council through the adoption of a resolution prior to the end of the fiscal year, consistent with the prior fiscal year’s inclusion of the debt service reserve for the 2018 Library Lease Revenue Bond issuance from Non-Spendable.
Committed Reserves balances and changes are summarized in Table 2.
General Fund Balance Classifications FY 2020-21 FY 2021-22 Change Debt Service* $8.05 $8.24 0.19
Economic Uncertainties Reserve 4.45 4.45 $0.00
Library Reserve Fund 3.67 3.67 0.00
PERS Reserve 2.34 3.24 0.90
OPEB future costs 1.12 1.52 0.40
Building and Land Acquisition 1.88 2.13 0.25
Capital Improvements Reserves 0.06 2.05 1.99
Economic Development 0.65 1.21 0.56
Equipment & Furniture Reserve 0.52 0.52 0.00
Insurance Premium Increases 0.58 0.83 0.25
Police Radio Reserve 0.42 1.02 0.60
General Plan 0.28 0.34 0.06
100th Anniversary 0.06 0.09 0.03
Park Expansion 0.56 0.74 0.18
NPDES issues 0.001 0.001 0.000
General Fund Capital Outlay (incl Police-General Reserve) 0.31 0.30 -0.01 Table 2. Changes to Committed Reserves
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General Fund Balance Classifications FY 2020-21 FY 2021-22 Change Debt Service* $8.05 $8.24 0.19
Economic Uncertainties Reserve 4.45 4.45 $0.00
Library Reserve Fund 3.67 3.67 0.00
PERS Reserve 2.34 3.24 0.90
OPEB future costs 1.12 1.52 0.40
Building and Land Acquisition 1.88 2.13 0.25
Capital Improvements Reserves 0.06 2.05 1.99
Economic Development 0.65 1.21 0.56
Equipment & Furniture Reserve 0.52 0.52 0.00
Insurance Premium Increases 0.58 0.83 0.25
Police Radio Reserve 0.42 1.02 0.60
General Plan 0.28 0.34 0.06
100th Anniversary 0.06 0.09 0.03
Park Expansion 0.56 0.74 0.18
NPDES issues 0.001 0.001 0.000
General Fund Capital Outlay (incl Police-General Reserve) 0.31 0.30 -0.01 Total Committed $24.95 $30.35 5.40
Unassigned Fund balance** 20.36 23.10 2.74
Total Committed and Unassigned Fund Balance $45.31 $53.45 $8.14 Total Non-Spendable 2.72 3.13 0.41
Total Committed, Unassigned & Non-spendable $48.03 $56.58 $8.55 * - Successor Agency loan balance reclassified to Committed fund balance in FY 2020-2021 ** - reduced by capital outlay that is included in committed fund balance Table 2. Changes to Committed Reserves
GASB 68 and GASB 75
The City’s net pension liability is $19.5 million and the OPEB liability is $9.7 million. Net pension liability is the present value of projected benefit payments to current employees and retirees, less pension assets that are invested and maintained by CalPERS. Net pension liability associated with pensions for safety personnel is $11.6 million and for non-safety personnel is $7.9 million. The weighted average funding status of the City’s two pension plans is approximately 88.3% based on the most recent GASB 68 actuarial valuation, which is above the average funded status of approximately 82%. The City has established committed reserve funds to address future CalPERS rate increases and OPEB costs.
Beginning in 2009, the City and its employees recognized the need to take proactive measures to address the rising costs of the pension and OPEB plans. All employees began contributing a portion of their compensation toward their pension plan costs, reducing the City’s employer-paid costs. In 2010, the City established new pension plans for employees hired after June 2010 (Tier II) that offered reduced retirement benefits in order to lower long-term pension liability. In 2013, the State passed the Public Employees’ Pension Reform Act (PEPRA) that affects employees hired on or after January 1, 2013. PEPRA capped the annual pension benefit that can be received, established a lower-cost pension formula for safety and non-safety employees with requirements to work longer in order to reach full retirement age, and capped the amount used to calculate a pension.
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Current contribution rates for Classic Tier I, Classic Tier II, and Public Employees’ Pension Reform Act (PEPRA) employees are as follows:
· Classic Safety employees contribute 12%;
· Classic Safety management contribute 9%;
· PEPRA Safety employees contribute 13.75%;
· Classic Tier I/Tier II miscellaneous and management employees contribute 7%; and · PEPRA miscellaneous and management employees contribute 6.75%.
Additionally, non-safety employees contribute 1% of their compensation, and safety employees contribute $625 annually to offset the cost of OPEB obligations.
Water Fund
The City’s business-type activities consisted solely of the Water Utilities Enterprise Fund (Water Fund). The Water Fund is used to account for financial activity related to the purchase, production, storage, and distribution of water used by the community, as well as the maintenance, repair, and replacement of related equipment and pipelines. The intent of the Water Fund is to meet all operational costs through regular revenue from rate payers while also putting monies aside for future infrastructure replacement and repairs.
Water Fund revenues consist of charges for services and investment income which totaled $6.2 million. Operating revenues continue to grow year-over-year due to annual rate increase, in accordance with the approved Prop 218 rate schedule (the third of five rate increases). Nonoperating revenues include unrealized loss related to fair market value adjustment of $76,572.
Operating expenses totaled $5.7 million, reflecting costs for repairs and maintenance. Interest expenses related to debt service totaled $81,540.
The Water Fund received net transfers of approximately $0.7 million, of which $597,327 relates to a transfer in from the Water Development Impact Fund to support the costs for Well 10 Construction, $90,084 from American Rescue Plan Act funds to support the 33rd Street Water Main improvements, and $19,915 from the Capital Improvement Project (CIP) Reserve for project administration.
GASB 68 requires that the year-over-year change to unfunded pension liability be reflected within the Statement of Revenues, Expenses, and Changes in Net Position. Consistent with the previous fiscal year, this did not increase actual current operational costs, but the net impact increased operating expenses. The net operating result was an increase of $507,019 for FY 2021-22. After non-operating results, transfers, and financial consolidation entries, the change in net position increased by $1,056,233. Despite the increase in net position, the Water Fund experienced a negative cash flow of $260,165 where the use of Cash and Cash Equivalents to fund day-to-day operations, capital projects, and debt repayment exceeded the receipts from customers, funds received from the Water Replenishment District (WRD) Loan, and net transfers.
The Water Fund’s operating results are summarized in Table 4.
OPERATING RESULTS AND NET POSITION
(in millions)
2021-22
FINAL
RESULTS
Table 4. Net Position Water Fund
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OPERATING RESULTS AND NET POSITION
(in millions)
2021-22
FINAL
RESULTS
Beginning Net Position at July 1, 2021 $ 20.542
Operating Income (Loss) $ 0.507
Total Non-Operating Revenues (Expenses) $ (0.158)
Transfers $ 0.707
Net Change in Position $ 1.056
Adjust for Financial Consolidation $ 0.035
Adjusted Change in Net Position $ 1.091
Ending Net Position at June 30, 2022 $ 21.633
Table 4. Net Position Water Fund
Reserve Appropriations and Reallocations of FY 2021-22 Surplus For FY 2021-22, the General Fund closed with revenues exceeding expenditures in the amount of $8,556,833 (including net transfers), as shown in Graph 1.
Graph 1. General Fund FY 2021-22 Operating Results
-
5.0 10.0
15.0 20.0
25.0 30.0
35.0 REVENUES (including
transfers in)
EXPENDITURES (including
transfers out)
33.8 25.2
General Fund Operating Results (millions)
The annual surplus is available for a one-time allocation to projects, programs, or reserves as directed by the City Council. Staff proposes to allocate approximately 56.5 percent of the operating surplus to the City’s reserve funds; the summary of proposed allocations is listed below for the City Council’s consideration.
Reserve Fund Allocations $4,837,711
Carryover Appropriations $9,865
New Appropriations - Operating $405,625
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New Appropriations - Special $3,303,632
TOTAL $8,556,833
· Replenishment and augmentation of reserve funds (Table 5). o Economic Uncertainties Reserve ($722,711)
o Capital Improvement Reserve ($2,750,000)
§ $2,300,000 fund future CIP projects identified in the Long-Range CIP plan § $450,000 to fund additional CIP projects related to ADA/Ramp installation, Street Tree installation.
o Police Radio/System Reserve ($1,365,000)
§ $360,000 to fund year 2 annual maintenance for new Motorola Police radio system
§ $1,005,000 to fund replacement of the Police Department Body Worn Camera system, RMS/CAD system and upgrade the firing range targeting system. · Carryover appropriations for items budgeted in FY 2021-22 (Table 6) o City Council - Council Development
§ Requested carryover: $9,865
§ Carryover requested due to continued limited opportunities for in-person Council development in FY 2021-22
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· Operating New appropriations for FY 2021-22 (Table 7) o IT/Finance
§ Computer refresh: $67,500
§ Computer/laptop - facilitate remote work: $12,000
§ New phone system - current system no longer supported: $100,000 § Consultant for Advanced Scheduling Software Implementation - current Police Department software is no longer supported. Desire to implement an integrated Tyler Technologies product: $80,000.
o Community Services
§ New portable PA system for events: $6,500
§ New furniture for ARC program - desk and tables: $4,000 § New uniforms for Community Services & Recreation: $6,000 § New portable tower lights for events: $2,500
o Police Department
§ New chairs: $25,125
§ New docking laptops for administration: $12,000
o Community Development
§ Part-Time Contract Assistant Planner thru June 30, 2023: $90,000 To complete multiple projects to satisfy new mandated requirements.
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· Other - New appropriations for FY 2021-22 (Table 8)
o Water loan for Gundry Reservoir: $1,900,000
o City-wide Stipends: $722,332
o New Reserve - Workforce Innovation Reserve: $681,300
Reserve Allocations
Separate from the proposed appropriations corresponding to the operating budget surplus, staff proposes a limited number of reallocations from existing reserve funds to provide for one-time costs to address deferred maintenance at City Hall, update the Civic Center Master Plan, and provide needed supplies for the library. Subject to City Council approval of these requested changes, the CITY OF SIGNAL HILL Page 13 of 14 Printed on 1/20/2023
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needed supplies for the library. Subject to City Council approval of these requested changes, the remaining Library Reserve balance would be $2,504,321.
· Library Reserve Allocations
o CIP:
§ Land and Building Reserve - City Hall Remodel: $850,000 o PW:
§ Civic Center Master Plan: $200,000
o CS:
§ Supplies for expanded Library programs: $40,000
§ Modular Workstation for additional staff: $15,000
Next Steps
Overall, staff believes the recommended allocation levels are consistent with the City’s conservative financial principles; transfers to reserve funds represent the largest single share of allocations. The allocations also provide funding to the CIP which will ensure completion of capital projects that have been highlighted as a priorty for the City Council and the community. In addition, investing in efforts to support employee retention by addressing deferred maintenance at City Hall, providing one-time stipends to recognize staff efforts during the pandemic, and creating a new reserve fund to evaluate ongoing operational needs are recommended.
Staff will present the mid-year FY 2022-23 financial results at the February 28, 2023, City Council meeting. This action will be followed by the year 2 annual budget reporting for FY 2023-24 which will also include year-end projections for FY 2022-23.
Approved:
_________________________
Carlo Tomaino
Attachments
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