HomeMy WebLinkAboutFinance Committee Agenda Packet - October 12, 2023CITY OF NEWPORT BEACH
FINANCE COMMITTEE AGENDA
Community Room - 100 Civic Center Drive, Newport Beach
Thursday, October 12, 2023 - 3:00 PM
Finance Committee Members:
Will O'Neill, Chair
Noah Blom, Mayor
Joe Stapleton, Council Member
Allen Cashion, Committee Member
William Collopy, Committee Member
Keith Curry, Committee Member
Nancy Scarbrough, Committee Member
Staff Members:
Grace K. Leung, City Manager
Jason Al-Imam, Finance Director/Treasurer
Michael Gomez, Deputy Finance Director
Brittany Cleberg, Administrative Assistant
NOTICE REGARDING PRESENTATIONS REQUIRING USE OF CITY EQUIPMENT
Any presentation requiring the use of the City of Newport Beach’s equipment must be submitted to the Finance
Director/Treasurer 24 hours prior to the scheduled Finance Committee meeting.
NOTICE REGARDING PUBLIC PARTICIPATION
Questions and comments may also be submitted in writing for the Finance Committee’s consideration by sending them
to Jason Al-Imam, Finance Director/Treasurer, at jalimam@newportbeachca.gov. To give the Finance Committee
adequate time to review your questions and comments, please submit your written comments by no later than 5 p.m.
the day prior to the Finance Committee meeting. All correspondence will be made part of the record.
NOTICE TO THE PUBLIC
The Finance Committee meeting is subject to the Ralph M. Brown Act. Among other things, the Brown Act requires that
their agenda be posted at least twenty-four (24) hours in advance of each special meeting and that the public be allowed
to comment on agenda items before the Committee and items not on the agenda but are within the subject matter
jurisdiction of the Finance Committee. The Chair may limit public comments to a reasonable amount of time, generally
three (3) minutes per person.
It is the intention of the City of Newport Beach to comply with the Americans with Disabilities Act (“ADA”) in all respects.
If, as an attendee or a participant at this meeting, you will need special assistance beyond what is normally provided, the
City of Newport Beach will attempt to accommodate you in every reasonable manner. If requested, this agenda will be
made available in appropriate alternative formats to persons with a disability, as required by Section 202 of the
Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12132), and the federal rules and regulations adopted in
implementation thereof. Please contact the City Clerk’s Office at least forty-eight (48) hours prior to the meeting to
inform us of your particular needs and to determine if accommodation is feasible at (949) 644-3127 or
jalimam@newportbeachca.gov.
I.CALL MEETING TO ORDER
II.ROLL CALL
III.PLEDGE OF ALLEGIANCE
IV.PUBLIC COMMENTS
Public comments are invited on agenda and non-agenda items generally considered to be
within the subject matter jurisdiction of the Finance Committee. Speakers must limit comments
to three (3) minutes. Before speaking, we invite, but do not require, you to state your name for
the record. The Finance Committee has the discretion to extend or shorten the speakers’ time
limit on agenda or non-agenda items, provided the time limit adjustment is applied equally to all
speakers. As a courtesy, please turn cell phones off or set them in the silent mode.1
October 12, 2023
Page 2
Finance Committee Meeting
V.CONSENT CALENDAR
MINUTES OF SEPTEMBER 14, 2023A.
Recommended Action:
Approve and file.
MINUTES OF SEPTEMBER 14, 2023
VI.CURRENT BUSINESS
OVERVIEW OF FIRE DEPARTMENT BUDGETA.
Summary:
Staff will provide the Committee with a presentation covering the budget for the Fire
Department.
Recommended Action:
Receive and file.
STAFF PRESENTATION
YEAR END BUDGET RESULTS AND SURPLUS ALLOCATIONB.
Summary:
Staff will provide a presentation regarding the year-end budget results for FY
2022-23 and recommendations for allocation of any year-end budget surplus.
Recommended Action:
Review and discuss this report and provide any recommendations for consideration
by the City Manager and City Council.
STAFF REPORT
STAFF PRESENTATION
BUDGET AMENDMENTS FOR QUARTER ENDING SEPTEMBER 30, 2023C.
Summary:
Staff will report on the budget amendments from the prior quarter.
Recommended Action:
Receive and file.
STAFF REPORT
ATTACHMENT A
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October 12, 2023
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Finance Committee Meeting
WORK PLAN REVIEWD.
Summary:
Staff and Finance Committee to review the proposed work plan and identify matters
that members would like placed on a future Agenda for discussion, action, or report.
Recommended Action:
Receive and file.
WORK PLAN
VII.ADJOURNMENT
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Finance Committee Regular Meeting Minutes September 14, 2023
Page 1 of 4
CITY OF NEWPORT BEACH FINANCE COMMITTEE SEPTEMBER 14, 2023 REGULAR MEETING MINUTES I. CALL MEETING TO ORDER The meeting was called to order at 3:03 p.m. II. ROLL CALL PRESENT: Will O’Neill, Chair
Allen Cashion, Committee Member William Collopy, Committee Member Keith Curry, Committee Member Nancy Scarbrough, Committee Member
ABSENT: Noah Blom, Mayor (excused)
Joe Stapleton, Council Member (excused) STAFF PRESENT: Grace K. Leung, City Manager; Jason Al-Imam, Finance Director/Treasurer; Michael Gomez, Deputy Finance Director; Shelby
Burguan, Budget Manager; Jessica Nguyen, Budget Analyst; Abigail Marin, Budget Analyst; Raymund Reyes, Administrative Manager/Fire
Department; Theresa Schweitzer, Public Works Finance/Administrative Manager; and Brittany Cleberg, Administrative Assistant
MEMBERS OF THE PUBLIC: Jim Mosher
Charles Klobe Larry Tucker
III. PUBLIC COMMENTS
Chair O’Neill opened public comments on the consent calendar and non-agenda items.
Larry Tucker commented on various aspects related to the City’s compliance with State housing mandates.
Jim Mosher commented on Item 4A suggestion a correction to the subject minutes regarding the
spelling of a name.
Chair O’Neill closed public comments.
IV. CONSENT CALENDAR A. MINUTES OF JULY 26, 2023 Recommended Action: Approve and file.
MOTION: Chair O’Neill moved to approve the minutes of July 26, 2023, seconded by Committee Member Curry. The motion carried as follows:
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Finance Committee Regular Meeting Minutes September 14, 2023
Page 2 of 4
AYES: Cashion, Collopy, Curry, Scarbrough, O’Neill NOES: None ABSENT: Blom (excused), Stapleton (excused), ABSTAIN: None V. CURRENT BUSINESS A. ANNUAL REVIEW OF INVESTMENT POLICY Recommended Action: Review and discuss this report and recommend that the City Council formally approve the proposed changes by adopting a resolution. These changes are in furtherance of the City’s investment objectives. Committee and staff discussion ensued on clarification of the California Asset Management Program cash reserve portfolio, LAIF, addition of an authorized investment option, potential of allocating additional funds, accessibility of funds and ability to move between funds as the market changes, additional control over liquid cash, availability of funds for project needs and disbursements, and review of the recommended changes in the redline version included with the agenda report, Chair O’Neill opened public comment. Jim Mosher commented on various aspects of the proposed changes to the investment policy including the definition of maturity and requesting clarification regarding settlement dates and prohibited investments. Chair O’Neill closed public comment. Committee and staff discussion ensued on legacy holdovers, due diligence process best practices, review of the Orange County investment pool holdings, clarification as to the inclusion of the Los Angeles County pool, conduct of additional review of the investment information in January 2024, clarification regarding the City Council’s investment policy review timeline, MOTION: Committee Member Collopy moved to approve the Finance Committee’s recommendation to the City Council for annual review of the investment policy, seconded by Committee Member Scarbrough. The motion carried as follows: AYES: Cashion, Collopy, Curry, Scarbrough, O’Neill NOES: None ABSENT: Blom (excused), Stapleton (excused), ABSTAIN: None B. ANNUAL REVIEW OF INVESTMENT PERFORMANCE Recommended Action: Receive and file. Genny Lynkiewicz, Senior Portfolio Manager, representing the City’s investment advisor Chandler Asset Management, gave a presentation and provided a summary of the investment performance. Committee, staff, and consultant discussion ensued including comments regarding public opinion surveys on the current economic conditions, management of the bond portfolio, clarification of investment terms, the strategy for holding securities to maturity, City mandates for safety and liquidity of investments, strategy for investment of extra funds, short-term and
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Finance Committee Regular Meeting Minutes September 14, 2023
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long-term strategies for the investment of funds pursuant to the adopted policy, and noting the City does not invest in cryptocurrencies per California Codes and City policies. Chair O’Neill opened public comment. Charles Klobe commented on investments listed on page 27 of the agenda report.
Larry Tucker commented on interest earned from cash investments versus securities with the same maturity and inquired regarding the data utilized for forecasting interest rates. Jim Mosher inquired regarding the current policy’s restriction on options for purchase of 10-year issues and the financial impacts to the City.
Chair O’Neill closed public comment. This item was received and filed. There was no further action taken.
C. INTERNAL AUDIT PROGRAM Recommended Action: Receive and file. City staff provided a presentation and summary update of the information provided in the publicly noticed agenda report.
Committee and staff discussion ensued regarding enforcement and uniformity of property
controls and reporting across Departments, the process for addressing non-compliance, work conducted with applicable consultants, addressing the potential for abuse and fraud related to
overtime, changes to Police Department systems,
Chair O’Neill opened public comment.
Jim Mosher inquired whether there would be an opportunity for the public to review City purchasing policies, suggesting that they be posted to the City’s website.
Chair O’Neill closed public comment.
This item was received and filed. There was no further action taken.
D. BUDGET AMENDMENTS FOR QUARTER ENDING JUNE 30, 2023 Recommended Action: Receive and file.
Chair O’Neill opened public comments. Seeing none, Chair O’Neill closed the public comments.
This item was received and filed. There was no further action taken.
E. WORK PLAN REVIEW Recommended Action: Receive and file. A summary of items scheduled for upcoming meetings was provided as listed in the publicly noticed agenda report.
Chair O’Neill opened public comments. Seeing none, Chair O’Neill closed the public
comments. This item was received and filed. There was no further action taken.
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Finance Committee Regular Meeting Minutes September 14, 2023
Page 4 of 4
IV. ADJOURNMENT The Finance Committee meeting adjourned at 4:20 p.m. Attest:
___________________________________ _____________________ Will O’Neill, Chair Date Finance Committee
7
ITEM NO. 6A1 OVERVIEW OF FIRE
DEPARTMENT BUDGET
STAFF PRESENTATION – ADDITIONAL MATERIALS RECEIVED
8
FIRE
DEPARTMENT
OPERATIONS
& BUDGET
OVERVIEW
Presented By: Chief Jeff Boyles & Administrative Manager Raymund Reyes
Newport Beach Fire Department October 12, 2023
ITEM NO. 6A1 OVERIEW OF FIRE
DEPARTMENT BUDGETADDITIONAL MATERIALS RECEIVEDOCTOBER 12, 2023
9
THE DEPARTMENT
Newport Beach Fire Department
•152 Full-Time & over 200 Seasonal Part-Time
Employees
•8 Fire Stations (38 personnel on duty)
•8 Engines
•2 Trucks
•4 Ambulances
•1 Type III Engine
•1 Cal OES Engine
•Metro Cities Fire Authority (MetroNet)
Dispatch Center - Contract
•City Hall
•Fire Prevention
•Administration
•Medical Billing Services - Contract
•2 Lifeguard Stations
•42 Towers
•3 Rescue Boats
•1 Personal Watercraft
10
STATISTICS
0
2000
4000
6000
8000
10000
12000
14000
16000
2000 2010 2017 2022
Calls for all Emergency Services
9,808
11,270
13,575
126% Increase
6,000
0
2,000
4,000
6,000
8,000
10,000
12,000
2000 2010 2017 2022
Calls for Medical Services
6,705
9,185 10,184
3,900
161% Increase
-
2,000
4,000
6,000
8,000
2006 2016 2022
4,285
5,338
6,380
Medical Transports
49% Increase
11
Newport Beach Fire Department
FISCAL YEAR 2023-24 APPROVED BUDGETENHANCEMENTS
•1 New Frontline Ambulance ($500,000 vehicle + $150,000 equipment)
•Address increasing call volume
•Developments in Santa Ana Heights/Airport area
•In-Service date January 2024 at Santa Ana Heights - Station No. 7
•9/12/2023 Council approved purchase of a new chassis with ambulance box remount
($390,375)
•6 New Firefighter Paramedics (for new Ambulance)
•Recruitments Ongoing
•Conversion of Part-Time Recreation Coordinator to Full-Time
•New JG Building
•Scholarship program
•Conversion of Part-Time Life Safety Specialist III to Full-Time (Complete)
•Wildlands / Very High Fire Hazard Severity Zones (AB 3074)
•Insurance, Compliance
12
Newport Beach Fire Department
FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
Full-Time 143.90 143.90 143.80 143.80 143.80 151.80
Part-Time(FTE)42.17 43.12 43.12 42.56 42.56 40.96
Total 186.07 187.02 186.92 186.36 186.36 192.76
143.90 143.90 143.80 143.80 143.80 151.80
42.17 43.12 43.12 42.56 42.56 40.96
0
50
100
150
200
250
FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
Full-Time Part-Time (FTE)
FIRE PERSONNEL
FIREFIGHTER TO FIREFIGHTER-PARAMEDIC
CONVERSIONS:
FY19: 18 Firefighters, 33 Firefighter-Paramedics
FY20: 15 Firefighters, 36 Firefighter-Paramedics
FY21: 11 Firefighters, 40 Firefighter-Paramedics
FY24: 11 Firefighters, 46 Firefighter-Paramedics
13
$51,518,360
80%
$11,863,757
18%
$1,023,879
2%
Personnel
M&O
Capital
FISCAL YEAR 2023-24 BUDGET
Newport Beach Fire Department
$64,405,996
Division Budget
Administration $1,811,928
Operations $39,898,497
Prevention $1,736,548
CERT $232,727
EMS $11,997,399
Junior Lifeguards $1,288,342
Lifeguard Ops $7,440,555
TOTAL FY2024:$64,405,996
•Accountability •Responsibility
•Transparency •Collaboration
14
Newport Beach Fire Department
EXPENDITURES BY CATEGORY
Expenditure Category 2019 Actual 2020 Actual 2021 Actual 2022 Actual 2023 Revised Budget 2023 Actual 2024 Original Budget
Salaries $ 18,852,690 $ 19,142,522 $ 19,969,718 $ 19,695,806 $ 21,158,671 $ 20,167,830 $ 22,678,241
Benefits/Lump Sum Pays 17,245,311 17,573,791 19,779,904 19,762,204 21,441,450 21,059,191 21,435,023
(Overtime) Other Pays 6,524,169 5,949,845 7,813,761 8,045,776 7,431,856 6,980,705 7,405,096
Contract Services 1,163,765 1,589,854 1,461,275 1,595,234 1,908,321 1,780,392 1,836,246
Grant Operating 556,288 407,304 540,161 388,330 659,899 659,899 -
Utilities 217,963 229,276 247,865 248,582 243,258 301,778 291,289
Supplies and Materials 635,665 599,110 706,828 754,182 768,420 758,524 708,098
Maintenance and Repair 762,795 680,848 558,251 794,176 773,676 770,404 795,702
Travel and Training 181,492 168,464 154,213 198,541 170,366 153,091 169,009
General Expenses 336,845 211,840 277,212 359,084 363,094 309,554 328,847
Internal Services Charge 5,240,100 6,104,528 7,032,147 7,453,150 7,794,615 7,794,615 7,734,565
Capital Expenditures 668,232 665,597 720,169 805,329 541,748 403,462 1,023,879
Total 52,385,315 53,322,979 59,261,506 60,100,394 63,255,373 61,139,445 64,405,996
15
Newport Beach Fire Department
CONTRACTS & SERVICES
•Notable Contracts & Services:
•Medical Director Services (3yr contract, NTE $112k)
•Nurse Educator & Quality Assurance/Improvement (Various)
•Medical Billing Services (5yr contract, NTE $950k)
•Agency Fees:
•Joint Powers Agreement with Metro Cities Fire Authority (Dispatch Center)
•County of Orange 800MHz countywide radios
•AQMD, Orange County Health (Emissions and Hazmat)
$0.00 M
$0.20 M
$0.40 M
$0.60 M
$0.80 M
$1.00 M
$1.20 M
$1.40 M
$1.60 M
$1.80 M
$2.00 M
2019 Actual 2020 Actual 2021 Actual 2022 Actual 2023 Actual 2024 Budget
SERVICES PROFESSIONAL SERVCES OTHER PRINT VENDOR
SERVICES CONTRACT SERVICES CITY PRINT CONTRACT
EQUIPMENT RENTAL SERVICES PHYSICALS
OTHER AGENCY FEES SERVICES FUEL MODIFICATION
SERVICES ELECTRONIC REPORTING AMBULANCE BILLING
SERVICES JANITORIAL
CONTRACT SERVICES
2019
Actual
2020
Actual
2021
Actual
2022
Actual
2023
Actual 2024 Budget
811008 - SERVICES PROFESSIONAL 88,187 113,347 25,351 135,700 147,587 151,205 811015 - SERVCES OTHER PRINT
VENDOR - - - - - -
811017 - SERVICES CONTRACT 48,955 79,594 81,797 83,851 133,613 235,000
811027 - SERVICES CITY PRINT CONTRACT 8,180 5,343 2,943 5,811 5,661 6,229
811004 - EQUIPMENT RENTAL 41,320 49,161 48,717 53,795 60,930 27,250
811016 - SERVICES PHYSICALS 73,900 68,444 56,987 79,356 59,591 103,183
841060 - OTHER AGENCY FEES 729,573 861,924 818,066 792,165 907,160 887,569
811009 - SERVICES FUEL MODIFICATION - 227,174 227,174 227,174 217,199 225,810
811028 - SERVICES ELECTRONIC
REPORTING - - - - - -
891038 - AMBULANCE BILLING 156,008 164,378 162,560 188,257 218,227 155,000
811012 - SERVICES JANITORIAL 17,642 20,488 37,681 29,124 30,424 45,000
1,163,765 1,589,854 1,461,275 1,595,234 1,780,392 1,836,246
16
Newport Beach Fire Department
DEPARTMENT OVERTIME
$4,370,358 $4,616,843
$3,749,356
$5,526,928
$7,405,096 $7,405,096
$6,524,169
$5,949,845
$7,813,761 $8,045,776
$6,980,705
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
2019 2020 2021 2022 2023 2024
ORIGINAL BUDGET:ACTUAL:
Overtime Overages
•Majority of OT costs are due to:
•Minimum Staffing Levels and Vacancies
•Mutual-Aid Response
•Offset by salary savings/vacancies
Fiscal Year:2020 2021 2022 2023
OT Strike Team Salaries
(713010)N/A $1,055,130.66 $540,746.96 $129,571.97
Cal OES Revenues (431245)$245,909.27 $1,597,516.91 $1,114,257.80 $165,426.20
17
REVENUES
Newport Beach Fire Department
Account Type 2019 Actual 2020 Actual 2021 Actual 2022 Actual 2023 Actual 2024 Budgeted
43 - INTERGOVTAL REVENUES $ 1,627,406 $ 1,005,400 $ 2,464,214 $ 1,646,792 $ 1,964,154 $ 100,000
51 - MISC REVENUES 16,594 16,647 (56,317)3,293 17,811 5,780
52 - SERVICE FEES & CHARGES 4,900,805 5,384,415 5,098,196 5,874,233 6,912,401 5,745,050
53 - FINES & PENALTIES 53,559 107,658 84,594 137,997 91,577 30,000
Grand Total 6,598,364 6,514,121 7,590,687 7,662,314 8,985,942 5,880,830
Account/Description 2019 2020 2021 2022 2023 2024
Paramedic Service Fees (521245)Revenue Estimate 3,835,747 3,840,257 2,654,018 3,594,669 3,594,669 4,174,669
Actual 3,669,940 4,109,373 3,864,804 4,174,401 5,142,292
Junior Lifeguard Program (521145)Revenue Estimate 1,020,000 1,020,000 788,581 837,823 1,040,040 1,155,600
Actual 972,843 992,653 953,924 1,187,148 1,261,826 1,225,727
Fire Medic Program (521240)Revenue Estimate 318,750 283,875 223,061 234,234 234,234 260,000
Actual 252,022 275,569 274,541 274,210 274,192
Mutual Aid (Cal-OES) (431245)Revenue Estimate - - - - - -
Actual 833,119 245,909 1,597,517 1,114,258 165,426
Intergovernmental Transfer Example: all
payments in blue received in FY2023 2019*2020*2021*2022*2023*
GEMT (Ground Emergency Medical
Transports)Fiscal Year Reporting 166,375 196,949 226,945 216,364
Replaced by PP-
GEMT-IGT program
18
Newport Beach Fire Department
QUESTIONS?
19
CITY OF NEWPORT BEACH
FINANCE COMMITTEE
STAFF REPORT
Agenda Item No. 6B
October 12, 2023
TO: HONORABLE CHAIRMAN AND MEMBERS OF THE COMMITTEE
FROM: Finance Department
Jason Al-Imam, Finance Director / Treasurer
949-644-3126, jalimam@newportbeachca.gov
SUBJECT: YEAR-END BUDGET RESULTS AND SURPLUS ALLOCATION
SUMMARY:
The Finance Department prepares quarterly financial reports to review the status of
revenues and expenditures for the City’s General Fund and to monitor budgetary trends
in other City funds. This report contains information on revenues, expenditures, and
estimated fund balance for the fourth quarter of Fiscal Year 2022-23. In May 2023, an
unrestricted General Fund operating surplus of $7.8 million was projected for Fiscal Year
2022-23 based on revenues and expenditures through the third quarter. Based on
information available at the end of the fourth quarter, an unrestricted General Fund
operating surplus of $11.6 million is projected for Fiscal Year 2022-23, which is $3.8
million higher than previously projected. It is recommended that the unrestricted operating
surplus be allocated pursuant to City Council Policy F-5 with fifty percent (50%) allocated
towards the City’s long-term liabilities associated with other post-employment benefits
(OPEB) and with fifty percent (50%) towards infrastructure or neighborhood capital
improvements.
RECOMMENDED ACTION:
Review and discuss this report and provide any recommendations for consideration by
the City Manager and City Council.
DISCUSSION:
Economic Overview
The City’s assessed property values continue to increase providing a strong revenue
base for the City. Recent trends in inflation and the inverted Treasury yield curves have
caused concern in the broader economy and financial markets, and sales tax growth has
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Year-End Budget Results and Surplus Allocation
October 12, 2023
Page 2
slowed as is discussed later in this report. Transient Occupancy continues to outperform
budget and the opening of the Pendry hotel in September of 2023 should continue to
bolster the City’s TOT revenues. The City is well-positioned to withstand the impacts of a
potential recession and is expected to maintain long-term fiscal sustainability.
General Fund Revenues
Overall General Fund revenue growth has outpaced projections that were incorporated
into the adopted Fiscal Year 2022-23 budget, as well as projections provided at the end
of the third quarter. The following table summarizes the changes to projected General
Fund revenues versus the amounts previously projected for the third quarter. Details
follow highlighting the reasons for the material variances.
Fiscal Year 2022-23 Projected General Fund Revenues*
* Based on preliminary year-end close data available as of September 15, 2023.
Property Tax - Property taxes are the City’s single largest General Fund revenue and
represent approximately 50% of all General Fund revenues. As these revenues are
primarily dependent on the assessed valuation established in January of 2022, there is
typically very little variance seen from the original budget as the year progresses. The
strong growth in this category is a result of the CPI factor returning to the maximum 2.0%
allowed, as well as continued strong property sales activity and price appreciation. The
City’s total assessed valuation for Fiscal Year 2022-23 is now projected to grow from
$66.2 billion to $71.2 billion. Unaudited actuals in this category exceed prior quarter
estimates by $1.5 million, largely from supplemental property taxes, which average $2.4
million annually, but came in at $4.8 million for Fiscal Year 2022-23, which is offset by
Property Tax Transfers, which came in $1.1 million lower than budgeted.
A B C = B-A D = C/A
Revenues by Category
Revised
Budget
Previously
Projected for
Q3
Unaudited
Actuals
Variance from
Revised
Budget
Variance
from Q3
Projection % Variance
Property Taxes 134,803,081 136,867,331 138,358,730 3,555,648 1,491,399 1%
Sales Tax 46,526,493 48,401,417 46,552,459 25,966 (1,848,958) -4%
Transient Occupancy Tax 27,788,728 30,292,123 30,201,648 2,412,920 (90,474) 0%
Other Taxes 8,774,567 8,774,567 10,079,710 1,305,143 1,305,143 15%
Service Fees & Charges 23,228,086 23,228,086 25,187,124 1,959,038 1,959,038 8%
Parking Revenue 6,417,259 6,976,357 7,420,314 1,003,056 443,957 6%
Licenses and Permits 5,870,375 5,870,375 5,676,619 (193,757) (193,757) -3%
Property Income 6,093,309 6,828,626 7,530,393 1,437,084 701,767 10%
Fines & Penalties 3,870,567 3,870,567 3,838,752 (31,815) (31,815) -1%
Intergovernmental 3,108,014 3,100,151 4,379,680 1,271,666 1,279,529 41%
Investment Earnings 1,300,000 1,300,000 1,690,399 390,399 390,399 30%
Misc Revenues 2,964,324 2,941,824 3,469,293 504,969 527,469 18%
Operating Transfers In 17,348,716 17,348,716 18,428,263 1,079,547 1,079,547 6%
Total Revenues 288,093,519 295,800,140 302,813,385 14,719,866 7,013,245 2%
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Year-End Budget Results and Surplus Allocation
October 12, 2023
Page 3
Sales Tax - The second largest funding source for the General Fund is sales tax revenue,
making up more than 15% of General Fund revenues. The City’s sales tax base is largely
generated from four industry categories – autos and transportation, general consumer
goods, restaurants/hotels, and State & County Pools. The third quarter budget update
reflected a sales tax projection of $48.4 million for Fiscal Year 2022-23, which assumed
4.8% growth in sales tax over the previous fiscal year. The projection was made in light
of year-to-date cash receipts through December 2022, which were 6.8% higher than the
comparable period in the previous fiscal year (July 2021 – December 2021). However,
actual sales tax revenue amounted to $46.6 million for Fiscal Year 2022-23, which is 0.8%
higher than the previous fiscal year, nevertheless $1.8 million lower than the amount
previously projected. The lower-than-expected revenues are largely due to a $1.1 million
decrease in sales from autos and transportation compared to amounts previously
projected, which is largely due to a decrease in new car sales and boat sales during the
last six months of the fiscal year (January 2023 – June 2023). In addition, sales from
business & industry, restaurants & hotels, and general consumer goods were lower than
previously projected.
Transient Occupancy Tax –The third largest funding source for the General Fund is
transient occupancy tax (TOT) revenue, which makes up approximately 10% of General
Fund revenues. The third quarter budget update reflected a TOT projection of $30.3
million for Fiscal Year 2022-23, which assumed 13.6% growth in TOT revenue over the
previous fiscal year. The fourth quarter budget update shows that actual TOT revenues
came in $90,000 less than the updated third quarter forecast of $30.3 million, or $2.4
million over the revised budget.
The Fashion Island Hotel remained closed through the end of the Fiscal Year but
reopened on September 27th following a sale and renovation as the Pendry Newport
Beach. Since the timing of the Pendry’s opening was uncertain, revenue from the Pendry
was not included in the projection for Fiscal Year 2022-23. This reopening, combined with
the expected return of more business travelers, are anticipated to have additional positive
impact on the City’s TOT revenues in the years ahead.
All Other Revenue – This category includes all other revenue sources other than the top
three (property tax, sales tax, and TOT). All Other Revenue is made up of the following:
Other Taxes – Business license taxes, marine charter taxes, and franchise fees.
This category outperformed budget as well as prior quarter projections due
primarily to business license tax, utility franchise fees, as well as solid waste
franchise fees, all of which combined exceeded prior year actuals by over $1.0
million.
Service Fees and Charges – plan check fees, recreation classes, emergency
medical services fees, and numerous other cost-of-service fees. This category
ended Fiscal Year 2022-23 $2.0 million higher than budgeted, largely due to
paramedic service fees, Recreation’s fee-based classes, and Junior Lifeguard
22
Year-End Budget Results and Surplus Allocation
October 12, 2023
Page 4
fees.
Parking Revenue – all General Fund related metered parking fees that are
assessed throughout the various parking zones of the City. Parking revenue
outperformed third quarter projections by $444,000.
Licenses and Permits – fees charged to process building related permits, street
closure permits, dog licenses, and police tow franchise fees. This category came
in under budget by $194,000 largely due to building permits and electrical permits.
Property Income – City owned and managed income producing properties, long-
term ground leases to concessions, restaurants, hotels and other businesses and
organizations, and rental of City facilities to the public. As is discussed in more
detail later in this report, revenue from the Dove Street property is higher than
budgeted. Budgeted revenues for the Dove Street property were based on
projected revenues, net of property-related expenditures. However, the revenues
and expenditures for the property are required to be accounted for on a gross basis
– with revenues and expenditures accounted for separately in their respective
classifications. Therefore, the year-end budget results reflect an increase in both
revenues and expenditures over the previous quarter estimates.
Fines and Penalties – parking citation fines collected by the City, administrative
citation fines, fines remitted to the City from the County for vehicle code violations,
and false alarm penalties.
Intergovernmental Revenues – federal, state, and local grant revenues, which
includes, but is not limited to, the City’s portion of the ½ cent sales tax revenue
paid to the County for public safety, state mandate reimbursements,
reimbursement for strike teams sent to assist with fires, and revenue sharing with
the County of Orange under the Waste Disposal Agreement (WDA). This category
is exceeding previous projections due to rebates from the State of California for
the Ground Emergency Medical Transports (GEMT) program. These rebates are
from multiple prior years of cost reports submitted that the City received rebates
for all at once.
Investment Earnings – revenue generated from the investment of City funds.
Miscellaneous Revenues – restricted revenue, damage to City property, bad debt,
donations and contributions, non-operating revenues such as proceeds from the
sale of materials and equipment, and other miscellaneous revenues.
Operating Transfers In – Operating Transfers In reflect regular ongoing transfers
into the General Fund from other funds. For Fiscal Year 2022-23, this includes the
transfer from the Tidelands Fund for the expenses related to the Cost Allocation
Plan. The City received an updated cost allocation calculation based on Fiscal
23
Year-End Budget Results and Surplus Allocation
October 12, 2023
Page 5
Year 2022-23 actuals in the Tidelands fund that is $1.1 million higher than what
was budgeted. This increases the amount that the General Fund transfers to the
Tidelands fund to subsidize its operations. This is explained in more detail in the
Tidelands Fund section of the report.
General Fund Expenditures
The Fiscal Year 2022-23 General Fund revised expenditure budget totals $288.6 million,
including operating transfers. Spending trends in Fiscal Year 2022-23 are generally
consistent with prior years and therefore budget savings are within reasonable
expectation. Total expenditure savings of $12.9 million are projected at this time due to
savings from vacancies and other operating categories, offset by expenditure overages
that are explained in this report.
The table below summarizes the revised expenditure budget for Fiscal Year 2022-23, as
well as projected expenditure savings by budget category. Details follow highlighting the
reasons for the material variances.
Fiscal Year 2022-23 Projected General Fund Expenditures *
* Based on preliminary year-end close data available as of September 15, 2023.
Significant expenditure budget variances are as follows:
The revised salary and benefits budget totals $169.5 million, an increase of $6.0
million over the adopted budget, primarily due to the appropriation of $5.0 million
from the Fiscal Year 2022-23 structural budget surplus as an additional
discretionary payment to CalPERS to further reduce the City’s unfunded pension
liability. Savings from vacant positions has resulted in a salary and benefit savings
A B C = A-B D = C/A
Expenditures by
Category
Revised
Budget
Previously
Projected for
Q3
Unaudited
Actuals
Savings
(Overage)
Variance
from Q3
Projection
%
Variance
Salary & Benefits 169,503,245$ 164,298,495$ 159,939,252$ 9,563,993$ 4,359,243$ 5.6%
Contract Services 30,042,768 29,581,872 26,810,745 3,232,023 2,771,126 10.8%
Grant Operating 1,218,355 1,083,878 1,095,379 122,976 (11,501) 10.1%
Utilities 3,837,745 4,004,358 4,166,763 (329,018) (162,405) -8.6%
Supplies & Materials 4,882,245 4,247,705 4,732,995 149,250 (485,291) 3.1%
Maintenance & Repair 14,464,897 14,369,029 14,001,415 463,481 367,614 3.2%
Travel & Training 825,588 726,267 746,291 79,298 (20,023) 9.6%
General Expenses 2,297,863 2,275,465 2,498,378 (200,515) (222,913) -8.7%
Internal Svc Charge 28,190,206 28,190,206 28,190,206 (0) (0) 0.0%
Risk Management 255,915 255,915 183,772 72,143 72,143 28.2%
Capital Expenditures 1,955,539 1,605,539 1,070,008 885,531 535,532 45.3%
Operating Transfers Out 31,097,817 30,687,817 32,246,069 (1,148,252) (1,558,252) -3.7%
Total Expenditures 288,572,183 281,326,545 275,681,273 $12,890,910 $5,645,272 4.5%
24
Year-End Budget Results and Surplus Allocation
October 12, 2023
Page 6
of $9.6 million dollars, or an additional $4.4 million more than what was projected
in the third quarter update. Savings are spread across multiple departments, with
particular savings in the larger departments such as Police, Public Works, and Fire.
The revised budget for contract services totals $30 million, an increase of $3.2
million over the adopted budget, largely due to carryovers from the prior year.
Savings in this category total $3.2 million, which is $2.8 million more than what
was projected in the third quarter update. Most of the savings in this category are
not available to spend as the funding for encumbered contracts carry into the next
Fiscal Year. The fund balance table in the next section of the report shows the
reservation of fund balance for these encumbrances.
The utilities budget was increased in Fiscal Year 2022-23 by $830,000 over the
Fiscal Year 2021-22 adopted budget, however, additional overages became
apparent and were reported in previous quarter reports. The primary reason for
this overage is in the budget for electricity. Budget savings in other expenditure
categories fully offset the $329,000 overage, and staff has made adjustments in
the Fiscal Year 2023-24 budget to address this issue.
Savings in various other operational categories such as supplies & materials,
maintenance & repair, and travel and training are typical and don’t necessitate any
adjustments.
An overage in the General Expenses category is associated with operating
expenses at the Dove Street property. The budget amendment that Council
approved when the property was purchased accounted for only the net activity of
revenues and expenses. Staff is now aware that the revenues and expenses must
be accounted for at their gross amount in our general ledger, resulting in additional
revenues and expenses that net out in the General Fund. The expenses in Fiscal
Year 2022-23 are for the months of May and June and are offset by significant
budget savings elsewhere so no adjustment is recommended at this time. For
Fiscal Year 2023-24 a budget amendment will be recommended in order to
account for a full year of these additional expenses and revenues.
Savings in the Risk Management category are in the Human Resources
department and are attributable to budgets for outside counsel and recruitment
and retention.
Savings in the Capital Expenditures category are primarily in the Police
Department. There is a $350,000 allocation to replace the Police Department’s
camera system that is being carried forward into Fiscal Year 2023-24 and is
deducted from the available fund balance on the Sources, Uses, and Budget
Surplus table. The majority of the remaining savings are in the Fire Department for
a program enhancement for EMS supplies that has also been carried forward into
the Fiscal Year 2023-24 budget.
25
Year-End Budget Results and Surplus Allocation
October 12, 2023
Page 7
Operating Transfers Out include the annual transfers that the General Fund makes
to various funds including the General Fund CIP Fund, the Tidelands Fund, the
Tidelands CIP fund, The Facilities Financing Plan (FFP) Fund, and the Facilities
Maintenance Plan Fund. As was described in the Transfers In section, and is
expanded on in the Tidelands Fund section later in this report, the Tidelands Fund
Cost Allocation Plan came in higher than was previously budgeted, which resulted
in an additional $1.1 million in revenue to the General Fund. As the Tidelands fund
does not generate sufficient revenue to support operations, the General Fund
subsidizes the Tidelands fund. The additional amounts for the Cost Allocation Plan
result in the need for the subsidy to be increased by $1.1 million which will be
recommended as a budget amendment when the Fiscal Year 2022-23 Year End
Budget Report goes to City Council. Additionally, on May 23, 2023, Council
approved a budget amendment appropriating $410,000 in the Tidelands Fund to
allow for a mooring field realignment, which necessitated an additional $410,000
transfer from the General Fund.
Non-Operating Transfers
Included in the non-operating transfers in is the advance repayment from the
Tidelands Capital Fund, which was utilized for dredging within the City’s Tidelands.
Included in the non-operating transfers out is the transfer of the prior year surplus to
the Police Facility Fund for the purchase of a property on Dove Street, utilization of
the Fiscal Year 2022-23 structural surplus which transferred funds to the Capital
Improvement Fund, and the Facilities Financing Planning Fund, as well as one time
program enhancements included in the adopted budget.
The purchase of the property on Dove Street for the future site of the Police
Department Headquarters was initially projected to total $30,775,000, however after
further negotiations and the closing of escrow, the actual amount for the purchase is
approximately $2.2 million less. These savings are reflected in the narrative of the
General Fund Sources, Uses, and Projected Surplus portion of the report.
General Fund Sources, Uses, and Projected Surplus
The City continues to be in excellent financial health. Conservative budgeting and sound
financial policies have resulted in a trend of General Fund operating surpluses and strong
reserve levels for several years. The City is well positioned to continue delivering a high
level of service to the community while targeting surplus resources to key priorities each
year.
26
Year-End Budget Results and Surplus Allocation
October 12, 2023
Page 8
The table below illustrates the prior year sources and uses of funds, current year activity
and the projected year-end results.
Fiscal Year 2022-23 Projected General Sources, Uses, and Budget Surplus
As reflected in the table above, a $20 million operating surplus for the General Fund is
projected for Fiscal Year 2022-23, which is net of non-operating activity that includes one-
time transfers out of the General Fund to the FFP and General Fund CIP, as well as the
addition to the Contingency Reserve (pursuant to City Council Policy F-2). City Council
has approved two budget amendments in Fiscal Year 2023-24 that allocate a portion of
the Fiscal Year 2022-23 year-end surplus. BA 24-009 designated $2.0 million to the
permanent supportive housing project with the City of Costa Mesa and BA 24-012
designated $1.65 million to the Arroyo Park Synthetic Turf Field Installation Project
(23P11). Additionally, the General Fund is scheduled to reimburse the General Fund CIP
Fund and the Facilities Financing Plan (FFP) Fund for their contributions to the Dove
Street Property Purchase. The original amounts transferred by these funds totaled just
under $7.0 million, however, savings from the purchase have reduced that amount by
$2.2 million. These uses of the General Fund surplus reduce the available unrestricted
surplus to $11.6 million, as shown on the table below. Per Council Policy F-5, year-end
surplus funds are allocated 50% to long-term obligations such as pensions, debt, and
other long-term needs and 50% to infrastructure or neighborhood capital improvements.
Staff recommends allocating the remaining $11.6 million surplus in a matter consistent
with Council Policy, and as further described within this report.
A B C=B-A D=C/A
FY 2022-23 Projected FY 2022-23 Variance % Variance
Adopted for Q3 Unaudited Actuals
BEGINNING UNRESTRICTED FUND BALANCE 24,093,441$ 24,093,441$ 24,881,469$ 788,028$ 3.3%
OPERATING RESOURCES:
Operating Revenues 265,030,502 278,451,424 284,385,122 5,933,698 2.2%
Prior Year Resources Carried Forward - 4,429,573 4,429,573 - ---
Transfers In from Other Funds 17,300,724 17,348,716 18,428,263 1,079,547 6.2%
Repayment of Advances 1,250,000 1,250,000 1,250,000 - 0.0%
TOTAL OPERATING RESOURCES 283,581,226 301,479,713 308,492,958 7,013,245 2.5%
OPERATING USES:
Operating Expenditures 244,520,405 250,638,728 243,435,204 (7,203,524) -2.9%
Transfers Out 30,687,817 30,687,817 32,246,069 1,558,252 5.1%
Resources Carried Forward to Next Fiscal Year - - 5,465,426 5,465,426 ---
Addition to 25% Contingency Reserve - - 3,739,907 3,739,907 ---
TOTAL OPERATING USES 275,208,222 281,326,545 284,886,607 3,560,062 1.3%
NET OPERATING SURPLUS 8,373,004$ 20,153,168$ 23,606,351$ 3,453,183$ 41.2%
NON-OPERATING RESOURCES & USES
Non-Operating Transfers Out (909,452) (28,457,903) (28,457,903) - 0.0%
NON-OPERATING RESOURCES & USES (909,452)$ (28,457,903)$ (28,457,903)$ -$ 0.0%
ENDING UNRESTRICTED FUND BALANCE 31,556,994$ 15,788,707$ 20,029,918$ 4,241,211$ 13.4%
Category
27
Year-End Budget Results and Surplus Allocation
October 12, 2023
Page 9
Allocation of Surplus Towards Long-Term Obligations
Consistent with Council Policy F-5, it is recommended that 50% of year-end surplus funds
be allocated to long-term obligations such as pensions, debt, and other long-term needs.
The City’s most recent actuarial valuation from CalPERS reflects a $348 million net
pension liability as of June 30, 2022, which reflects a funded status of 70.9%. In Fiscal
Year 2022-23, the City paid $45 million towards the City’s net pension liability, which is
approximately $15 million more than the amount required to be paid. The Budget for
Fiscal Year 2023-24 continues to reflect the City’s commitment to paying $45 million per
year towards the City’s net pension liability, which is anticipated to result in eliminating
the City’s pension liability in 2032. The continuation of the $45 million pension paydown
plan is based on a dollar-cost averaging approach where consistent contributions over
the long-term are intended to minimize the risk from market fluctuations. If the City
allocated $5.8 million of the surplus for Fiscal Year 2022-23 towards the City’s pension
liability, it would increase the City’s pension funded status from 70.9% to 71.4%.
However, considering the City’s comprehensive pension paydown strategy, it is
recommended that 50% of the surplus be allocated towards the City’s other post-
employment benefits (OPEB).
The City’s most recent actuarial valuation reflects a $7.5 million net OPEB liability as of
June 30, 2023, which reflects a funded status of 82.4% (excluding amounts related to the
implied rate subsidy). If the City allocated $5.8 million of the surplus for Fiscal Year 2022-
23 towards the City’s OPEB liability, it would increase the City’s OPEB funded status from
82.4% to 96.0%. The City’s Budget for Fiscal Year 2023-24 includes a contribution of
approximately $1.5 million to paying down the OPEB liability. If the City allocated 50% of
the surplus to OPEB, and continues to make a contribution of $1.5 million per year
towards the OPEB liability, the City expects to eliminate the OPEB liability within the next
year or two, which would provide for $1.5 million in annual budgetary savings. Therefore,
it is recommended that the City allocate 50% of the surplus towards the City’s OPEB
liability.
Other Major Funds
The Tidelands Fund Cost Allocations have exceeded the amount included in the revised
budget by $1.1 million. This 6% increase over what was included in the adopted budget
is due to a variety of changes in the cost allocation plan calculation methodology. In
Fiscal Year 2022-23 Operating Surplus 20,029,918
Arroyo Park Synthetic Turf Field Installation Project (23P11)(1,650,000)
Permanent Supportive Housing project with the City of Costa Mesa (2,000,000)
Reimburse General Fund CIP for Dove Street (1,450,000)
Reimburse FFP for Dove Street (3,324,919)
Unrestricted Surplus 11,604,999
50% to long term obligations such as pension liability or debt 5,802,499
50% to infrastructure or neighborhood capital improvements 5,802,499
28
Year-End Budget Results and Surplus Allocation
October 12, 2023
Page 10
August of Fiscal Year 2022-23, the City awarded a Professional Contract to ClearSource
Financial Consulting for the Citywide User Fee Study and Cost Allocation Plan Services.
The cost allocation plan budget for Fiscal Year 2022-23 had been developed by the City’s
prior consultant, and this reconciliation of year-end actuals which resulted in an increase
of $1.1 million, or 6% was calculated by the City’s current consultant. An analysis of the
changes from the prior calculation to the new calculation determined that the reasons for
the increase are due to updates to the cost bases used (Fiscal Year 2022-23 actuals
compared to prior year actuals used to calculate the Fiscal Year 2022-23 budget), as well
as methodology changes in both the calculation of Citywide overhead allocated to the
Tidelands Fund, as well as the allocation of direct services to the Tidelands Fund. The
recent updates to the Cost Allocation Plan show that more Citywide services, which are
fully budgeted in the General Fund are allocable to the Tidelands Fund. Because these
costs are already fully budgeted in the General Fund, and the General Fund already
subsidizes the Tidelands Fund, the additional cost allocations result in increased revenue
to the General Fund, which is then offset by an additional subsidy from the General Fund.
It is important to account for the expenses and revenues in this way, despite the fact that
they net out in both the General Fund and Tidelands Fund, because the City is required
to keep complete and accurate financial records of the activity in the Tidelands area and
report on them to the California State Lands Commission in the annual Tidelands
Financial Report.
Staff have evaluated the fiscal condition of the City’s other major operating funds (Water,
and Wastewater). An analysis of the budget performance for these funds indicates that
no budget adjustments are necessary and variances between budgeted and actual
amounts are within reason.
Preliminary Unaudited Amounts
The City’s financial records are undergoing a customary audit review. Therefore, the
Tidelands Operating Fund Activity
FY 2022-23
Projected
Available Beginning Fund Balance 4,547,799
Revenues 13,640,610
Expenses (24,343,445)
Surplus (Deficit)(6,155,036)
CIP Rebudgets (3,071,845)
Reserve Set Asides (2,319,188)
Surplus (Deficit)(11,546,069)
Budgeted Subsidy from General Fund 10,397,817
Additonal General Fund Subsidy (1,148,252)
29
Year-End Budget Results and Surplus Allocation
October 12, 2023
Page 11
financial information presented in this report is preliminary in nature and subject to
adjustments as the year-end close process continues through December. Any such
adjustments are not anticipated to have a material impact on the financial information
presented in this report. If any material adjustments related to Fiscal Year 2022-23 are
subsequently recorded, any such adjustments will be reported to the Finance Committee.
Conclusion
Staff recommends that the Finance Committee review and discuss this report and provide
any recommendations for City Manager and City Council consideration prior to the
October 24th City Council meeting, at which time this report will be presented.
Prepared and Submitted by:
/s/ Shelby Burguan
____________________________
Shelby Burguan
Budget Manager
30
ITEM NO. 6B1 YEAR END BUDGET
RESULTS AND SURPLUS
ALLOCATION
STAFF PRESENTATION – ADDITIONAL MATERIALS RECEIVED
31
2022-23
Fourth Quarter Financial
Report
Finance
Committee
October 12, 2023
Item No. 6B1 Year End Budget Results and Surplus
Allocation
Additional Materials ReceivedOctober 12, 2023
32
City of Newport Beach – Finance Department 2
Actual General Fund Revenues
Q3 Projection $ 295.8 million
Actual Revenues $ 302.8 million
•Actual General Fund Revenues were $7.0
million higher than the Q3 projection
largely due to higher property tax revenue,
interfund transfers, and other revenue,
which was partially offset by lower-than-
projected sales tax revenue.
$296m $303m
$137m $138m
$49m $47m
$30m $30m
$17m $18m
$63m $69m
33
City of Newport Beach – Finance Department 3
Property Tax
•Represents approximately 50% of
General Fund revenues
•Strong growth a result of CPI
factor returning to 2.0% maximum
& adding $1.2 billion to assessed
valuation
•$1.5 million higher than projected,
primarily due to supplemental
property taxes, which was
partially offset by lower property
tax transfer revenue
$110.7
$115.6
$123.2
$128.5
$138.4
$80.0
$90.0
$100.0
$110.0
$120.0
$130.0
$140.0
FY 2018-19Actual FY 2019-20Actual FY 2020-21Actual FY 2021-22Actual FY 2022-23Actual
Mi
l
l
i
o
n
s
34
City of Newport Beach – Finance Department 4
Sales Tax
•Actual revenues $1.8 million lower than Q3
projection
•Q3 Projection based on year-to-date cash
receipts through December 2022 (up 6.8%
to comparable prior year period)
•Unaudited actuals on par with original
adopted budget
•Slow down in growth in Autos &
Transportation, Retail, and County Pools
•Autos & Transportation account for
$1.1 million of the decrease
$38.5
$36.2
$38.9
$46.1 $46.5
$30.0
$32.0
$34.0
$36.0
$38.0
$40.0
$42.0
$44.0
$46.0
$48.0
$50.0
FY 2018-19
Actual
FY 2019-20
Actual
FY 2020-21
Actual
FY 2021-2022
Actual
FY2022-2023
Actual
Mi
l
l
i
o
n
s
35
City of Newport Beach – Finance Department 5
Sales Tax RevenueMajor Industry Groups
$0
$2
$4
$6
$8
$10
$12
$14
$16
Autos &Transportation Restaurants &Hotels GeneralConsumer Goods State & CountyPools
Mi
l
l
i
o
n
s
Actual
July - Dec.Projected Year-End
Actual
Autos & Transportation 2.8%2.1%(5.5%)
Restaurants & Hotels 7.9%9.1%6.2%
General Consumer Goods 10.2%7.4%5.3%
State & County Pools 1.6%1.3%(0.9%)
21-22 22-23 21-22 22-23 21-22 22-23 21-22 22-23
FY 2021-22 vs FY 2022-23 Projected vs Actual
8%3%
0%-1%
14%
0%-6%-5%
-10%
-5%
0%
5%
10%
15%
09/30/22 12/31/22 03/31/23 06/30/23
Statewide Newport Beach
Quarterly Sales Tax Trends
36
City of Newport Beach – Finance Department 6
Transient Occupancy Tax
•TOT revenues came in $90 thousand
(0.3%) lower than projected
•Growth rates of 9.8% and 23.5% from
FY 21-22 for hotel and residential,
respectively
•Pendry reopened September 25th, will
impact FY 2023-24 actual revenues
$24.6
$20.8
$16.8
$26.6
$30.2
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
FY 2018-19Actual FY 2019-20Actual FY 2020-21Actual FY 2021-22Actual FY 2022-23Actual
Mi
l
l
i
o
n
s
TOT
$14.7 $20.0 $22.0 $21.9
$4.4 $6.7 $5.8 $8.3
$2
$9
$16
$23
FY 21-22Original FY 21-22Actual FY 22- 23Original FY 22-23Actual
Mi
l
l
i
o
n
s
Hotel vs Residential TOT
Hotel Residential 37
City of Newport Beach – Finance Department 7
Other General Fund Revenues
•Other revenues exceeded the revised budget by $6.8 million or 8.4%, and
exceeded Q3 projections by $7 million or 8.79%
•Business license tax, utility franchise fees, and solid waste franchise fees
combined exceeded prior year actuals by over $1 million
•Fees and charges revenues were $2 million above budget due to increased
recreation fee-based classes, Junior Lifeguard Program, and paramedic
service fees
•Parking revenue outperformed budget by $1 million and Q3 projections by
$444,000
•Property income exceeded budget by $1.4 million due to revenues from Dove
Street Property as well as Lido House
•Transfers in exceeded budget by $1.1 million due to cost allocation plan
38
City of Newport Beach – Finance Department 8
Actual General Fund Expenditures
Adopted Budget $ 275.2 million
Final Budget $ 288.6 million
Actual Expenditures $ 275.7 million
•$12.9 million of actual expenditure budget savings
•$9.5 million of this amount was salary savings, or $4.3 million more that Q3 projection
•Net overages in general expenses and utilities, as well as increased amount needed
for Tidelands subsidy due to additional amount of cost allocation plan (nets to zero)
•$5.5 million in encumbrances were carried into FY 23-24
39
City of Newport Beach – Finance Department 9
General Fund Reserves and Recommended Use of Surplus
•Higher than originally budgeted revenues and lower than budgeted costs have resulted in a strong year-
end budget surplus of $20.0 million in unaudited unrestricted General Fund resources
•Approved budget amendments for projects identified portion of FY23-24 surplus for use, reducing available
balance to $11.6 million
•Staff are recommending allocation of the available $11.6 million, in a matter consistent with Council Policy
F-5, as follows:
•50% of surplus ($5.8 million) towards the City’s OPEB liability
•50% of surplus ($5.8 million) towards infrastructure or neighborhood capital improvements
Fiscal Year 2022-23 Operating Surplus 20,029,918
Arroyo Park Synthetic Turf Field Installation Project (23P11)(1,650,000)
Permanent Supportive Housing project with the City of Costa Mesa (2,000,000)
Reimburse General Fund CIP for Dove Street (1,450,000)
Reimburse FFP for Dove Street (3,324,919)
Unrestricted Surplus 11,604,999
50% to long term obligations such as pension liability or debt 5,802,499
50% to infrastructure or neighborhood capital improvements 5,802,499
40
City of Newport Beach – Finance Department 10
Allocation of Surplus Towards Long-Term Obligations
70.9%71.4%82.4%96.0%
PENSION FUNDED STATUS
+ $5.8 Million
OPEB FUNDED STATUS
+ $5.8 Million
41
City of Newport Beach – Finance Department 11
Recommended Action
Staff recommends that the Finance Committee:
•Review and discuss this report
•Provide any recommendations for consideration by the City Manager and City
Council
42
City of Newport Beach – Finance Department 12
Questions?
43
CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT
Agenda Item No. 6C October 12, 2023
TO: HONORABLE CHAIR AND MEMBERS OF THE COMMITTEE
FROM: Finance Department
Jason Al-Imam, Finance Director/Treasurer 949-644-3126 or jalimam@newportbeachca.gov
SUBJECT: BUDGET AMENDMENTS FOR QUARTER ENDING SEPTEMBER 30,
2023
EXECUTIVE SUMMARY
The purpose of this memorandum is to report on the budget amendments for the first quarter of Fiscal Year 2023-24. All budget amendments are in compliance with City Council Policy F-3, Budget Adoption and Administration.
DISCUSSION
City Council Policy F-3, Budget Adoption and Administration, identifies how appropriations can be transferred, increased or reduced. The Finance Committee reviews a quarterly report of City Council and City Manager budget amendments including
their effect on fund balance. Please find the list of budget amendments included as
Attachment A.
Prepared by: Submitted by:
/s/ Abigail Marin /s/ Jason Al-Imam
Abigail Marin Jason Al-Imam
Budget Analyst Finance Director/Treasurer
Attachment: A.Budget Amendments Fiscal Year 2023-24 Quarter Ending
September 30, 2023
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ATTACHMENT A
BUDGET AMENDMENTS FISCAL YEAR 2023-24 QUARTER ENDING SEPTEMBER 30, 2023
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BA #Date Amendment Type Fund Revenues Expenditures
Net Effect on Fund Balance
Increase/(Decrease) Department Explanation
GENERAL FUND 10,000,000.00 (10,000,000.00)
GENERAL FUND CAPITAL PROJECTS 2,500,000.00 2,500,000.00
FACILITIES FINANCING PLAN 2,500,000.00 2,500,000.00
002 07/01/2023 City Council GENERAL FUND - 309,298.18 (309,298.18) Fire For payments to State of California for participation in PP-GEMT-IGT
program.
003 07/01/2023 City Council GENERAL FUND 31,359.69 31,359.69 - Police Accept Officer Wellness and Mental Health Grant and appropriate first
year allocation. Year 1 of 3.
004 07/01/2023 City Manager GENERAL FUND - - Police Boardwalk Enforcement Program - Council approval to utilize contract
services allocation for NBPD overtime deployment.
005 07/01/2023 City Council GENERAL FUND - 70,000.00 (70,000.00) City Manager Professional Services Agreement with American Global Security, Inc.,
for Security Guard Services at Civic Center and other City Facilities
during hours of non-operation.
006 07/11/2023 City Council GENERAL FUND 200,000.00 200,000.00 - Library Accept donation from the Friends of Newport Beach Library and
appropriate amount to department's Maintenance and Operation
budget.
007 07/11/2023 City Council IT STRATEGIC FUND - 278,924.14 (278,924.14) City Manager - Information
Technology
Purchase of Dell Hardware for replacement of City's Data Center
Server Storage.
008 07/11/2023 City Council ENVIRONMENTAL LIABILITY FUND 1,173,075.00 (1,173,075.00)
ENVIRONMENTAL CONTRIBUTIONS 1,600,000.00 1,600,000.00 -
009 07/11/2023 City Council GENERAL FUND 1,000,000.00 3,000,000.00 (2,000,000.00) To appropriate funding to American Family Housing for the
Travelodge North Homekey Project.
010 07/25/2023 City Council GENERAL FUND 62,000.00 62,000.00 - Police Accept Department of Homeland Security Operation Stonegarden
Grant Funds - Grant supports enhanced cooperation and coordination
among Customs and Border Protection, United States Border Patrol,
and local law enforcement.
013 08/15/2023 City Manager COMM DEVL BLK GRANT FUND 688,388.00 680,228.00 8,160.00 Community Development To align the FY24 budget with the approved FY2023-24 Action Plan
for CDBG Projects.
014 08/15/2023 City Manager ASSESSMENT DIST #123 5,300.00 5,300.00 -
GENERAL FUND 5,300.00 (5,300.00)
016 08/15/2023 City Manager MISCELLANEOUS SPECIAL
REVENUES FUND
- 9,898.19 (9,898.19) Library City Art Commission - use of 2015 Donations for 2023 City Arts
Comission Marina Park Concert.
012 08/22/2023 City Council GENERAL FUND 1,665,952.00 (1,665,952.00) Public Works
NEIGHBORHOOD ENHANCEMENT 1,665,952.00 1,665,952.00 -
017 08/22/2023 City Council FiiN FUND - 76,758.65 (76,758.65) Recreation and Senior
Services
Independent Contract Agreement with Newport Bay Naturalists and
Friends, d.b.a Newport Bay Conservancy, for the Fostering interest in
Nature (FiiN) program.
GENERAL FUND 10,000.00 10,000.00 -
SPECIAL PURPOSE DEPOSIT FUND 10,000.00 (10,000.00)
GENERAL FUND 4,000.00 4,000.00 -
SPECIAL PURPOSE DEPOSIT FUND - 4,000.00 (4,000.00)
011 09/12/2023 City Council GENERAL FUND 39,980.00 39,980.00 - Library Accept donation from the Newport Beach Library Foundation to
enhance collections and furniture for the Newport Beach Public
Library.
019 09/12/2023 City Council PEG FEES FUNDS - 90,000.00 (90,000.00) Public Works Appropriate funds from the PEG Fee Fund for PEG Equipment.
023 09/27/2023 City Council GENERAL FUND CAPITAL PROJECTS 77,756.00 (77,756.00) Public Works Appropriate expenses from the General Fund Capital Projects fund for
the Concrete Replacement Program FY2023-24 (Project No.24R06).
025 09/29/2023 City Manager GENERAL FUND 4,088.99 4,088.99 - Fire To recognize revenue from donation and appropriate expenditure for
Fire Cadet Program
020 09/01/2023 City Manager
City of Newport Beach
Fiscal Year 2023-24 Budget Amendments
Quarter Ending September 30, 2023
VariousCity Council07/01/2023001 To transfer structural surplus revenue to increase expenditure
appropriations. Funds will be allocated to CalPERS UAL Additional
payment for FY 23-24, Facilities Financing Plan and future Capital
Improvement Projects.
Public Works
To appropriate expenditures from the unappropriated Environmental
Liability fund balance for the Newport Bay Trash Wheel project
(17x12).
Library To appropriate expenditures to cover required expendes for the
Literacy Program.
To appropriate a portion of the FY2022-23 year-end surplus to the
Arroyo Park Synthetic Turf Field Installation project (23P11).
Public Works
Fire Transfer from Dorothy Arens Ressel Trust and increase expenditure
in Fire Department for Honor Guard.
To increase expenditure appropriations from the Assessment District
#123 fund unappropriated fund balance for the hours and cost to
complete the scope of services.
022 09/01/2023 City Manager
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10/6/23
Scheduled Date Agenda Title Report Type Agenda Description
Thursday, November 9, 2023
OPEB Actuarial Valuation Report Update Presentation Staff will provide the Committee with an overview of the Fiscal Year 2022-23 actuarial valuation report prepared by the City's actuary.Fiscal Sustainability Plan Review
CalPERS Update Presentation Staff will provide the Committee with an overview of the data from the latest actuarial reports from CalPERS as well as their impact on prior projections of the paydown of the City's unfunded pension liability.
First Quarter Budget Update Presentation Staff will provide a presentation regarding the year-to-date and projected FY 2023-24 budget performance.Work Plan Review Receive and File Staff will report on the upcoming Finance Committee items.
Thursday, January 11, 2024
Rescheduled from October Long Range Financial Forecast (LRFF) Update Presentation Staff will brief the Committee regarding the results of the updated LRFF analysis.
Investment Policy LA vs OC County Pools
Internal Audit Program Work Plan Review Presentation Selection of audit topics for the FY 2023-24 audit program.
Budget Amendments for Quarter Ending December 31, 2023 Receive and File Staff will report on the budget amendments from the prior quarter.
Work Plan Review Receive and File Staff will report on the upcoming Finance Committee items.
January 2024
December 2023
Committee Recess
Newport Beach Finance Committee Work Plan
November 2023
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