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HomeMy WebLinkAboutApproved Minutes - May 11, 2023Finance Committee Meeting Minutes May 11, 2023 Page 1 of 5 CITY OF NEWPORT BEACH FINANCE COMMITTEE MAY 11, 2023 MEETING MINUTES I. CALL MEETING TO ORDER The meeting was called to order at 3:04 p.m. II. ROLL CALL PRESENT: Will O’Neill, Chair Noah Blom, Mayor Joe Stapleton, Council Member Allen Cashion, Committee Member William Collopy, Committee Member Nancy Scarbrough, Committee Member ABSENT: Keith Curry, Committee Member (excused) STAFF PRESENT: Grace K. Leung, City Manager; Jason Al-Imam, Finance Director/Treasurer; Michael Gomez, Deputy Finance Director; Shelby Burguan, Budget Manager; Sander Huang, Purchasing and Contracts Administrator; Jessica Nguyen, Budget Analyst; Eric Wilson, Budget Analyst; Mark Vukojevic, Utilities Director; Theresa Schweitzer, Public Works Finance/Administrative Manager; and Brittany Cleberg, Administrative Assistant MEMBERS OF THE PUBLIC: Jim Mosher Bill Kroener Charles Klobe OTHER ENTITIES: III. PUBLIC COMMENTS Jim Mosher requested clarification regarding the lack of an agenda item to approve meeting minutes. Staff responded they would work with the transcription vendor regarding production timelines. IV. CURRENT BUSINESS A. REVIEW OF FINANCE COMMITTEE AUTHORIZING RESOLUTION Recommended Action: Review and discuss the Finance Committee’s responsibilities set forth in the City Council’s authorizing resolution 2018-71 compared to actual responsibilities the Committee takes to fulfill its charge and provide any recommendations for consideration by the City Manager and City Council. Chair O’Neill thanked City staff for the thoroughness of the written report and opened the floor to the Finance Committee members for comment. In response to Committee Member Scarbrough’s inquiry if the Finance Committee has ever exercised its discretion to provide written recommendations to the City Council, Chair O’Neill confirmed it has been done in the past. Finance Committee Meeting Minutes May 11, 2023 Page 2 of 5 Chair O’Neill opened public comment. Jim Mosher expressed support for the Finance Committee to review their authorizing resolution on a regular basis, as it was last reviewed five years ago. He requested the Finance Committee consider reviewing the description of their purpose as listed on the City’s website and clarify several items including, but not limited to their role as related to the Fiscal Sustainability Plan, requirements to review multi-year grant applications which require City financial support, results-based budgeting recommendations, and management of the ongoing process for measuring and setting goals (along with setting initiatives to meet goals). Chair O’Neill closed public comment. Committee Member Collopy stated he does believe the new City Manager and her team have committed to performance-based budgeting and developing metrics by which the Departments can justify budget requests, rather than rely upon metrics such as inflation, to guide budgeting decisions. Chair O’Neill suggested the Finance Committee place review and consideration of their role as related to the Fiscal Sustainability Plan on an upcoming meeting agenda, along with a potential rewrite of the Finance Committee’s purpose statement as listed on the City’s website. This item was received and filed. There was no further action taken. B. THIRD QUARTER BUDGET UPDATE Recommended Action: Receive and file. Budget Manager Shelby Burguan provided a staff report and presentation which summarized the information provided in the publicly noticed agenda packet. Committee Member Scarbrough inquired whether other cities are challenging the “accounting pools” related to online retailing. Finance Director Al-Imam responded it is within the State’s scope of authority to challenge any misallocation of funds from the pool. In response to an inquiry regarding the recent settlement received by the City, City Manager Leung confirmed the settlement funds received are not restricted and can be considered as general fund money. Discussion ensued regarding potentially utilizing the settlement, as it was related to water quality issues, to allocate the funds toward water quality projects in the City, such as the water wheel. City Manager Leung stated the settlement funds have no restrictions, can be utilized for any purpose, and are considered surplus funds. Committee Member Collopy inquired if the City was going to follow Council policy regarding surplus funds by applying half of the surplus amount toward Unfunded Accrued Liability (UAL) and the other half toward neighborhood improvement projects. City Manager Leung responded that absent any other Council direction, City staff would follow the established policy, however there may be separate discussion regarding the settlement funds. Committee Member Collopy inquired whether the Council would entertain a change to the policy by making it a practice to split any surplus funds between long term obligations and neighborhood improvement projects. Chair O’Neill stated he is in support of keeping the current policy in place as it forces the City Council to strategically address needs at the time, to ensure they are applying surplus funds in the most effective manner. This item was received and filed. There was no further action taken. Finance Committee Meeting Minutes May 11, 2023 Page 3 of 5 C. FOLLOW-UP DISCUSSION OF PROPOSED FISCAL YEAR 2023-24 BUDGET Recommended Action: Receive and file. Budget Manager Shelby Burguan provided a staff report and presentation which summarized the information provided in the publicly noticed agenda packet. Committee Member Collopy requested clarification regarding the difference between an Assistant City Manager and a Deputy City Manager. City staff confirmed an Assistant City Manager is a higher classification. Budget Manager Burguan opened the floor to the Finance Committee for input and questions regarding the proposed Fiscal Year 2023-24 budget document. In response to an inquiry from Committee Member Collopy, Budget Manager Burguan clarified information on page 21 of the budget document noting one of the differences was related to the American Rescue Plan Act funding received. She also noted that the non-operating source includes the revenue from bond proceeds. City staff will provide additional detail and clarification on these items. Committee Member Collopy requested clarification regarding the purpose of the Uninsured Claims Fund. City staff confirmed this is a fund allocation for this purpose and City Manager Leung stated staff would take a look at the history of uninsured claims to ensure the annual fund is justified. In response to an inquiry from Committee Member Collopy regarding vehicle replacement funds, City staff confirmed that the funds are managed centrally. City staff noted that Police have their own equipment funds and vehicles, which they manage separately. The rest of the City has a centralized fleet which is overseen by the Public Works Department and have their own fleet management system. City staff confirmed that for the donation contributions, $12 million is for the Library Lecture Hall and Junior Lifeguard Program and the non-operating source is all assessment districts. Chair O’Neill inquired as to where equipment replacement funds are held pending disbursement for purchase of equipment, such as fire trucks. City Manager Leung confirmed the funds remain in the Internal Service Fund, but the expensing would come out of the Department’s budget. Detail was provided as to the process for procurement as related to replacement vehicles. Additional detail was provided as to the differences between Police and Public Works fleet management, regarding the specifications required for Police vehicle modifications. Committee Member Collopy requested clarification for the increase in refuse costs and how the City is projecting reduction in 2024. City Manager Leung responded increased costs are primarily related to state mandates regarding recycling, requiring restructuring and renegotiation of the current contract. It is likely the projected decreases in costs are related to carryovers included in the revised budget. Discussion ensued regarding paydown of the City’s unfunded pension liability. There was general consensus to have the Finance Committee review the unfunded pension obligation on an annual basis. Additional clarification was provided regarding various acronyms utilized in the revenue section of the budget document. Committee Member Scarbrough requested clarification as to why renewals for charging modules were projected to decrease. City staff confirmed they would provide additional information on that item. Finance Committee Meeting Minutes May 11, 2023 Page 4 of 5 Committee Member Scarbrough requested clarification on page 32 related to agreements with Caltrans. City staff confirmed that when the City takes over a portion of a roadway and the payment is placed in a fund, the budget reflects the interest generated. City staff confirmed there was no additional funding for the item on page 166. Committee Member Scarbrough requested clarification on page 239 for the General Plan update, the proposal came back at a larger amount and whether it needed to be adjusted. City staff confirmed there is a remaining allocation for the General Plan update, and it will be carried forward to next fiscal year. Committee Member Scarbrough requested clarification regarding in-lieu fees for affordable housing (page 140). City staff confirmed the in-lieu fees go into a separate fund and there is no proposal to spend that money in the upcoming fiscal year budget. The revenue side is in a separate fund. Committee Member Cashion thanked staff for their efforts as related to the budget. He requested clarification on budget transfers included in the revised budget document. City staff confirmed the transfers include the purchase of the Police station (approximately $30 million) and capital projects, which are placed into special capital improvement project funds to complete the specified projects. Committee Member Cashion requested, and staff confirmed, that previous years’ CIP budgets can be provided to Committee Members. Discussion ensued regarding the nature of carryover funds as related to capital projects and the capital projects budget allocation process. City staff also provided clarification regarding the adopted budget comparisons from year to year. City staff committed to providing general fund revenue and expenditure information back to 2016, including a subline that goes between the transfers. Chair O’Neill opened public comment. Jim Mosher commented that part of the City’s philosophy is not to anticipate donations as part of the annual budget and that they are reconciled later as part of a special correction. He inquired where he could find information on the reserve fund for Culture and Arts. He requested clarification regarding the organizational structure, functions, and staff assigned to the City Manager’s Department, which to him appears unusually high. City staff responded the information related to the reserve fund for Culture and Arts can be found in the ACFR document. Chair O’Neill closed public comment. In response to an inquiry from Committee Member Scarbrough, City staff confirmed there is no position specifically dedicated to grant writing citywide, however each Department’s staff pursues grant opportunities as appropriate. City Manager Leung is currently evaluating the feasibility of hiring a grant writing firm and discussion ensued on the topic. Additional clarification was provided as to the need for Department-level subject matter expertise in grant writing and that the City does pursue opportunities that are available. City Manager Leung acknowledged the City can provide additional information regarding the grant opportunities the City does pursue and is awarded. This item was received and filed. There was no further action taken. D. UTILITY RATE PRIMER Recommended Action: Receive and file. Utilities Director Mark Vukojevic gave a presentation highlighting the system’s cost structure and rate history.