HomeMy WebLinkAboutFinance Committee Agenda Packet - April 11, 2024CITY OF NEWPORT BEACH
FINANCE COMMITTEE AGENDA
Community Room - 100 Civic Center Drive, Newport Beach, CA 92660
Thursday, April 11, 2024 - 3:00 PM
Finance Committee Members:
Will O'Neill, Mayor / Chair
Joe Stapleton, Mayor Pro Tem
Noah Blom, 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
Shelby Burguan, Acting Deputy Finance Director
Brittany Cleberg, Assistant Management Analyst
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
April 11, 2024
Page 2
Finance Committee Meeting
V.CONSENT CALENDAR
MINUTES OF MARCH 14, 2024A.
Recommended Action:
Approve and file.
MINUTES
VI.CURRENT BUSINESS
PROPOSED FISCAL YEAR 2024-25 BUDGETA.
Summary:
Staff will discuss with the Finance Committee the proposed budget that is included within
the agenda packet for Fiscal Year 2024-25, which will be presented to the City Council in
May.
Recommended Action:
Review and discuss the proposed budget and provide any recommendations for
consideration by the City Manager and City Council.
ATTACHMENT A
STAFF PRESENTATION
BUDGET AMENDMENTS FOR QUARTER ENDING MARCH 31, 2024B.
Summary:
Staff will report on the budget amendments from the prior quarter.
Recommended Action:
Receive and file.
STAFF REPORT
ATTACHMENT A
WORK PLAN REVIEWC.
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 March 14, 2024
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CITY OF NEWPORT BEACH FINANCE COMMITTEE CENTRAL LIBRARY – FRIENDS ROOM, 1000 AVOCADO AVENUE, NEWPORT BEACH, CA MARCH 14, 2024 REGULAR MEETING MINUTES I. CALL MEETING TO ORDER The meeting was called to order at 3:02 p.m. by Mayor/Chair O’Neill. II. ROLL CALL PRESENT: Will O’Neill, Mayor/Chair
Joe Stapleton, Mayor Pro Tem Noah Blom, Councilmember (arrived at 3:14 p.m.) William Collopy, Committee Member Keith Curry, Committee Member
Nancy Scarbrough, Committee Member
ABSENT: Allen Cashion, Committee Member STAFF PRESENT: Grace K. Leung, City Manager Jason Al-Imam, Finance Director/Treasurer
Michael Gomez, Deputy Finance Director Brittany Cleberg, Assistant Management Analyst
Shelby Burguan, Budget Manager Abigail Marin, Budget Analyst
Jessica Nguyen, Budget Analyst Anthony Alannouf, Budget Analyst
Jennifer Anderson, Purchasing & Contracts Administrator Theresa Schweitzer, Public Works Finance/Administrative Manager
Raymund Reyes, Administrative Manager Paul Blank, Harbormaster
MEMBERS OF THE
PUBLIC: Jim Mosher Charles Klobe
III. PLEDGE OF ALLEGIANCE
The Pledge of Allegiance was led by Mayor/Chair O’Neill.
IV. PUBLIC COMMENTS
Chair O’Neill opened public comments on agenda and non-agenda items.
Seeing no others, Chair O’Neill closed public comments.
V. CONSENT CALENDAR A. MINUTES OF FEBRUARY 15, 2024 Recommended Action: Approve and file.
Chair O’Neill acknowledged the suggested edits submitted by Jim Mosher. MOTION: Committee Member Curry moved to approve the minutes of February 15, 2024, as
amended, seconded by Committee Member Collopy. The motion carried as follows:
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Finance Committee Regular Meeting Minutes March 14, 2024
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AYES: Collopy, Curry, Scarbrough, Stapleton, O’Neill NOES: None ABSENT: Blom, Cashion (excused) ABSTAIN: None VI. CURRENT BUSINESS A. OVERVIEW OF REVENUE PROJECTIONS Recommended Action: Receive and file. Budget Manager Shelby Burguan and Finance Director/Treasurer Jason Al-Imam provided a
presentation with a summary of the FY 2024-25 revenue projections as detailed in the associated agenda report and supplemental materials. The staff presentation included a review of projected increase of $7 million in General Fund
revenue, with the primary drivers of revenue growth including the $5.7 million projected increase in property tax, $2.3 million projected increase in sales tax, and $0.6 million projected
increase in transient occupancy tax. Details of the various factors impacting each revenue source and the associated projection methodologies were provided. Property tax, sales tax, and transient occupancy tax make up approximately 75% of the City’s General Fund revenues.
Additional details were provided concerning the other sources of General Fund revenues including service fees and charges/licenses and permits (10%), property income (6%), and
other taxes (3%). The remainder (3%) of General Fund revenues come from intergovernmental revenues (primarily Proposition 172), fines and penalties (primarily parking fines), and
investment income and other revenues. Information concerning Tidelands Funds, Water Utility, and Wastewater Utility revenues was provided.
Committee Member Collopy inquired if the estimated revenue for property tax was as
conservative as the sales tax revenue estimates. Finance Director/Treasurer Al-Imam indicated that while secured property tax amounts are more predictable, some conservatism is built into
the forecast for certain property tax revenue categories that are more volatile such as supplementals, delinquencies and property transfer tax revenues. City Manager Grace Leung
noted the bulk of the revenue for property tax is a secure tax, set by the County Assessor, which does not have the same volatility as sales tax.
Committee Member Curry pointed out that secured assessed values for properties citywide
never declined even during the Great Recession and asked why the presentation shows a decrease in property tax revenue in 2011 and 2012. Finance Director/Treasurer Al-Imam
responded that it is due to a decrease in supplemental property tax revenue, which was lower due to a decline in the number of homes sales during that period.
Committee Member Scarbrough inquired about the timing of when the Porsche dealership is
expected to reopen. Finance Director/Treasurer Al-Imam confirmed the dealership is expected to reopen in February 2025.
Committee Member Collopy requested clarification as to whether transient occupancy tax revenues were reflected on a gross basis or net of amounts remitted to Visit Newport Beach. Budget Manager Burguan clarified that the numbers reflected in the presentation were net of
amounts remitted to Visit Newport Beach. It was requested that transient occupancy tax revenues be reported on a gross basis and delineated from amounts remitted to Visit Newport
Beach. Committee Member Scarbrough asked whether the city is seeing a slowdown in transient occupancy tax revenue. Finance Director/Treasurer Al-Imam indicated that growth from short-
term lodging has flattened as the city has reduced the number of active permits and that growth
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Finance Committee Regular Meeting Minutes March 14, 2024
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from hotels were also flattening compared to the exponential growth experienced in 2022 and 2023. Committee Member Collopy asked about the upcoming renegotiation of the Visit Newport Beach contract (which expires at the end of 2024). Chair O’Neill confirmed that the City Council formed an ad hoc committee to advise the City Council in the renegotiation of the Visit Newport
Beach contract. The staff presentation concluded with an announcement that the presentation of the proposed FY 2024-25 expenditure projections is scheduled for the next Finance Committee meeting. Chair O’Neill opened the meeting for public comment.
Jim Mosher commented on the slide in the presentation related to residential sales trends and
asked whether the line chart represented single family residential sales. Finance
Director/Treasurer Al-Imam indicated that the line chart represented the average price and
median price of single-family homes sold during that period.
Chair O’Neill closed public comments as no other members of the public requested to speak.
There was no further action taken on this item.
B. FISCAL YEAR 2023-2024 FEE STUDY UPDATE
Recommended Action: Review and discuss this report and provide any recommendations for consideration by the City Manager and City Council. Budget Analyst Abigail Marin provided a presentation of the FY 2023-24 Fee Study update as detailed in the associated agenda report and supplemental materials. The staff presentation included a review of the types of fees and charges associated with the City, degree of general versus private benefit, the governing authorities for cost-recovery based user fees, the basis for establishing cost of service and cost recovery analysis, and the rotating cycle of departments studied by the City. This year’s study included a review of the fees and charges for Finance, Harbor, Public Works, and Utilities and “one-off” fees. The various fee changes were presented. Overall, the proposed fee updates will result in approximately $581,000 of additional revenues, which are intended to offset the cost of providing services. Committee Member Scarbrough inquired, and discussion ensued concerning clarification as to whether the mooring fees should be included. Chair O’Neill responded that mooring fees were not included within the scope of the user fee study and that any adjustments to mooring fees will be addressed once the final fees are determined by City Council and the municipal code is updated to reflect those fees. Committee Member Curry requested clarification concerning the fees related to IT/Audio Visual support related to a room rental. City Manager Grace Leung clarified that this fee is intended to be charged in instances in which an additional level of IT support is required, for example, if IT personnel are requested to remain onsite to provide IT or audio-visual support associated with a facility rental. Chair O’Neill opened the meeting for public comment. Jim Mosher requested clarification of the logic concerning cost recovery determinations for appeals, stating they should be uniform throughout the document, and clarification concerning
notifications to the public regarding changes to credit card convenience fees. He stated the municipal code and City General Plan require review of the fair share fee every five years and inquired as to the cost of administration of the Marine Program.
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Finance Committee Regular Meeting Minutes March 14, 2024
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It was determined that any cross-referencing errors would be corrected in the proposed document. Chair O’Neill closed public comments as no other members of the public requested to speak.
At a later juncture of the meeting, discussion on this item was reopened for the purpose of offering a motion to recommend the item be forwarded to the City Council for consideration. MOTION: Councilmember Blom moved to recommend all fee schedule changes, as recommended by staff in the associated agenda report, to the City Council for approval, seconded by Committee Member Curry. The motion carried as follows: AYES: Blom, Collopy, Curry, Scarbrough, Stapleton, O’Neill NOES: None ABSENT: Cashion (excused) ABSTAIN: None C. INVESTMENT POLICY UPDATE Recommended Action: Review and discuss the report and recommend that the City Council formally approve the proposed changes to Council Policy F-1 by adopting a resolution.
There was no staff report requested for this item. Chair O’Neill opened the meeting for public comment. Seeing none, Chair O’Neill closed public comments. At a later juncture of the meeting, discussion on this item was reopened for the purpose of
offering a motion to recommend the item be forwarded to the City Council for consideration. MOTION: Committee Member Curry moved to recommend Investment Policy amendments, as recommended by staff in the associated agenda report, to the City Council for approval, seconded by Committee Member Collopy. The motion carried as follows: AYES: Blom, Collopy, Curry, Scarbrough, Stapleton, O’Neill NOES: None ABSENT: Cashion (excused) ABSTAIN: None
D. WORK PLAN REVIEW Recommended Action: Receive and file. A summary of items scheduled for upcoming Finance Committee meetings was provided as listed in the publicly noticed agenda report, including upcoming joint meetings with the City
Council for budget review. Chair O’Neill opened the meeting for public comment. Seeing none, Chair O’Neill closed public comments.
This item was received and filed. There was no further action taken.
VII. ADJOURNMENT The Finance Committee meeting adjourned at 3:58 p.m.
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Finance Committee Regular Meeting Minutes March 14, 2024
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Attest: ___________________________________ _____________________ Will O’Neill, Mayor/Chair Date Finance Committee
7
ITEM NO. 6A PROPOSED FISCAL YEAR 2024-25
BUDGET
ATTACHMENT A
LINK TO PROPOSED BUDGET: https://ecms.newportbeachca.gov/WEB/DocView.aspx?id=2951141&dbid=0&repo=CNB
8
ITEM NO. 6A1 PROPOSED FISCAL YEAR 2024-25
BUDGET
ATTACHMENT A
STAFF PRESENTATION
9
FY 2024-25 PROPOSED BUDGET
Finance Committee Meeting –April 11, 2024
10
PRINCIPLES GUIDING DEVELOPMENT OF THE BUDGET
2
•Budget Priorities:
•Providing high quality municipal services that residents expect
•Providing a safe and secure neighborhood
•Keeping Newport Beach looking great
•Maintaining a prosperous, fiscally sustainable, and economically viable city
•Additional Focus
•Continued emphasis on elimination of the City’s long-term liabilities
•Ensuring proper funding of long-term infrastructure maintenance and replacement
•Addressing key City Council priorities identified at the February 3, 2024, City Council Planning Session
11
BUDGET DEVELOPMENT TIMELINE
3
Source and Use Projections
Personnel Budget Development
Departmental CIP Preparation
Departmental Budget Preparation
City Manager Review
Finance Committee Review
City Council Review
Budget Adoption
Budget Implementation
Oct Nov Dec Jan Feb Mar Apr May Jun Jul
Aug Sep
12
OPPORTUNITIES FOR PUBLIC ENGAGEMENT & CITY COUNCIL REVIEW OF THE BUDGET
4
Date Meeting Type Meeting Purpose
Saturday, February 2, 2024 Special City Council Meeting City Council Planning Session
Thursday, February 15, 2024 Finance Committee Meeting Long-Range Financial Forecast (LRFF) update
Tuesday, March 12, 2024 City Council Study Session Early Look at CIP Budget
Thursday, March 14, 2024 Finance Committee Meeting Overview of FY 2024-25 Revenue Projections
Thursday, April 11, 2024 Finance Committee Meeting Proposed FY 2024-25 Expenditure Budget
Review
Thursday, May 9, 2024 Finance Committee Meeting Follow-up Discussion of Proposed Budget and
Performance Metrics
Tuesday, May 28, 2024 Joint City Council/Finance
Committee Study Session FY 2024-25 Operating Budget Review
Thursday, May 30, 2024 Finance Committee Meeting Finalize Recommendations to City Council
Tuesday, June 11, 2024 City Council Public Hearing Adoption of FY 2024-25 Budget
13
FY 2023-24BUDGET STATUS
14
RECAP OF SECOND QUARTER BUDGET UPDATE -GENERAL FUND REVENUES
6
Adopted Revenue Budget $ 304 million
First Quarter Projection $ 307.6 million
Second Quarter Projection $ 308.8 million
•Projected Revenues are $4.8 million (1.6%) higher than the adopted budget
•Primary variances from adopted budget:
•Property Tax + $2.2 million
•Sales Tax - $4.8 million
•Operating Transfers In + $2.2 million
•Other + $5.2 million
$-
$50
$100
$150
$200
$250
$300
Adopted First Quarter Second Quarter
Mi
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Property Tax Sales Tax TOT Operating Transfers In Other
15
RECAP OF SECOND QUARTER BUDGET UPDATE –GENERAL FUND EXPENDITURES
7
Adopted Budget $ 293.9 million
Revised Budget $ 309.5 million
Second Quarter Projection $ 304.8 million
•Material appropriations to the budget include:
•$5 million appropriation of funds transferred to the Facilities Financial Plan Fund and General Fund Capital Improvement Program Fund for future capital needs.
•$5 million appropriation to increase the amount paid to CalPERS towards the unfunded pension liability (from $40 million to $45 million).
•Budget savings of $4.7 million projected, largely from vacancy savings.
16
RECAP OF SECOND QUARTER BUDGET UPDATE
8
•$7.7 million surplus projected for FY 2023-24 based on the Second Quarter Budget Update
•Additional positive revenue adjustments and expenditure savings will likely be identified as the year progresses, as is usually the case
•Year-end surplus typically used to fund required increase to Contingency Reserve (estimated to be $3.1 million), as well as in accordance with Council Policy F-5
17
FISCAL YEAR 2024-25ALL FUNDS BUDGET OVERVIEW
18
SUMMARY OF ALL FUNDS -EXPENDITURES
10
FY 21
Adopted
FY 22
Adopted
FY 23
Adopted
FY 24
Adopted
FY 25
Proposed % Variance
Operating Budget 290,407,369 291,523,400 330,919,923 351,870,115 367,936,823 4.6%
Transfers Out 27,979,154 39,075,536 53,035,836 58,859,125 72,312,196 22.9%
CIP New Appropriations 31,377,224 35,506,078 71,030,292 29,375,044 56,464,000 92.2%
Total Budget 349,763,747 366,105,014 454,986,051 440,104,284 496,713,019 12.9%
•4.6% growth in operating budget, primarily due to:•COLA and step increases considerations•Proposed Program Enhancement Requests
•22.9% growth in transfers out, primarily due to increased transfers out in FFP, HBMP, Parks Master Plan, GF CIP, transfers from Water Enterprise to Water Capital fund for CIP projects, and a transfer from FFP to the Parks & Community Center Fund.
Note: Prior year amounts have been restated to align with current accounting for Tideland expenditures
19
ALL FUNDS OPERATING EXPENDITURES TREND
11
$290.3 $298.5 $308.8 $321.0 $324.8
$351.9 $367.9
$89.4
$65.5
$100.4 $87.9
$134.5
$58.9 $72.3
$-
$50
$100
$150
$200
$250
$300
$350
$400
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Actual
2022-23
Actual
2023-24
Adopted
2024-25
Proposed
Operating Expenditures
Transfers Out
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OPERATING EXPENDITURES BY FUND
12
General Fund,
70.7%
Tidelands,
5.6%
Water, 8.7%
Wastewater,
1.2%Other, 13.8%
21
MAJOR FUND OPERATING EXPENDITURES
13
•General Fund growth of 5.9% outlined in detail on subsequent slides
•Tidelands Fund growth of 5.4% primarily due to:
•Updated Cost Allocation Plan•Program Enhancement Requests
•Water Fund increases largely due to transfer to capital fund for CIP
FY 21
Adopted
FY 22
Adopted
FY 23
Adopted
FY 24
Adopted
FY 25
Proposed % Variance
General Fund 225,858,038 246,163,632 276,111,174 293,917,485 311,251,957 5.9%
Tidelands Fund 20,084,234 20,727,144 20,978,717 23,312,029 24,579,410 5.4%
Water Enterprise Fund 27,969,925 27,933,241 32,069,765 33,623,346 38,347,276 14%
Wastewater Enterprise Fund 4,284,105 3,956,840 4,884,651 5,097,917 5,289,276 3.8%
Other Funds 57,319,375 49,408,984 49,911,451 54,778,463 60,780,872 11%
335,515,677 348,189,842 383,955,759 410,729,240 440,249,019 7.2%
Note: Amounts Include Operating Expenditures and Transfers
22
GENERAL FUND BUDGET OVERVIEW
23
GENERAL FUND REVENUE SOURCES
15
Property Taxes
47%
Sales Tax15%
Transient Occupancy
Tax
10%
Other Taxes
3%
Charges for Services
10%
Property Income6%
Transfers
6%
All Other Sources
3%
24
FY 2024-25 GENERAL FUND REVENUES
16
2023-24 Projected $ 308.8 million
2024-25 Proposed $ 315.3 million
•Projected revenues for FY 2024-25 are $6.5 million (2.1%) higher than amounts currently projected for FY 2023-24
•Primary drivers of revenue growth due to:
•Property Tax + $5.7 million (4.0%)
•Sales Tax + $1.6 million (3.6%)
•Transient Occupancy Tax + $0.6 million (2.0%)
•Service Fees & Charges + $0.6 million (2.5%)
$-
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
FY 2022-23
Actuals
FY 2023-24
Projected
FY 2024-25
ProposedBudget
Mi
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Property Tax Sales Tax TOT Transfers Others
25
GENERAL FUND EXPENDITURES FOR FY 2024-25
17
2023-24 Adopted Budget $ 293.9 million
2024-25 Proposed Budget $ 311.3 million
•The Proposed Budget for FY 2024-25 reflects:
•5.9% increase over FY 2023-24 Adopted Budget
•$40 million allocated to paying down the City’s unfunded pension liability
•$1.8 million in program enhancements
-
50
100
150
200
250
300
350
FY 23-24 AdoptedBudget FY 24-25 ProposedBudget
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Salaries & Benefits Non-Personnel Transfers
26
SIGNIFICANT REASONS FOR BUDGET GROWTH OF 5.9%
18
Amount % Change
Increases in Internal Service Charges 1,781,524 0.6%
GF Program Enhancements (Gross, $730k offsetting revenues)1,830,907 0.6%
CPI increases to M&O Budgets 1,125,197 0.4%
Other Routine Personnel (COLA, PERS rate changes)7,710,503 2.6%
Dove Street Property Expenses 1,650,000 0.6%
Remove One-time FY24 Enhancements
Police Recruitment Assistance (880,000)-0.3%
New Ambulance (650,000)-0.2%
Increase in base Transfers (Tidelands, 2.5% index in HBMP)966,340 0.3%
New increases to transfers
GF CIP 500,000 0.2%
FFP 1,000,000 0.3%
HBMP 1,000,000 0.3%
Parks 1,300,000 0.4%
Total Increase 17,334,471 5.9%
27
GENERAL FUND EXPENDITURES BY DEPARTMENT
19
2020-21 Adopted 2021-22 Adopted 2022-23 Adopted 2023-24 Adopted 2024-25Proposed % Variance
City Council 848,125 841,003 909,554 924,218 931,993 0.8%
City Clerk 1,206,539 1,080,305 1,265,760 1,191,331 1,427,452 19.8%
City Attorney 2,708,230 2,725,458 2,350,264 2,526,824 2,661,605 5.3%
City Manager 3,543,321 4,571,940 5,992,008 6,760,029 7,268,998 7.5%
Human Resources 3,423,267 3,448,725 3,440,696 3,770,070 3,937,952 4.5%
Finance 9,573,969 9,667,618 9,982,311 10,275,379 10,476,613 2.0%
Police 67,002,345 67,401,926 71,622,531 73,415,698 78,156,707 6.5%
Fire 54,790,911 55,861,885 60,255,549 64,405,996 65,865,961 2.3%
Community Development 12,525,476 12,772,405 13,798,699 14,937,632 17,233,367 15.4%
Library 9,559,849 9,655,108 9,432,008 10,259,001 10,818,892 5.5%
Recreation and Senior Services 13,325,836 13,360,496 13,627,977 15,394,067 16,151,132 4.9%
Public Works 37,274,177 41,305,237 44,397,921 46,594,485 48,680,984 4.5%
Utilities 5,033,549 5,144,631 5,649,416 5,982,258 6,156,003 2.9%
Miscellaneous Non-Operating 1,043,444 126,896 3,795,710 2,991,226 2,228,689 -25.5%
Vacancy Factor (2,000,000)(2,000,000)(2,000,000)0.0%
SubTotal 219,859,038 225,963,632 244,520,405 259,428,214 271,996,346 4.8%
Transfers Out 6,000,000 20,200,000 31,597,269 34,489,271 39,255,611 13.8%
Total 225,859,038 246,163,632 276,117,674 293,917,485 311,251,957 5.9%
28
GENERAL FUND TRANSFERS OUT
20
•General Fund CIP transfer increased by $500,000
•Increases to FFP and HBMP
•Increase to Tidelands subsidy transfer as needed to support Tidelands Fund.
•Additional $1.3 million transfer added to support parks infrastructure projects.
2020-21
Adopted
2021-22
Adopted
2022-23
Adopted
2023-24
Adopted
2024-25
Proposed % Variance
General Fund CIP 5,000,000 5,700,000 5,530,000 6,000,000 6,500,000 8.3%
Facilities Financing Plan (FFP)8,500,000 8,600,000 444,141 1,285,152 189.4%
Harbor & Beaches Master Plan 4,500,000 4,600,000 4,715,000 5,832,875 23.7%
Facilities Maintenance Plan
(FMP)1,000,000 1,500,000 2,500,000 2,500,000 2,500,000 0.0%
Tidelands Operating Fund 9,987,817 11,152,510 12,256,805 9.9%
Parks Specific CIP Projects 1,000,000 2,300,000 130.0%
Fire Equipment Fund 379,452 0.0%
Debt Service Fund 8,677,620 8,580,779 -1.1%
Total 6,000,000 20,200,000 31,597,269 34,489,271 39,255,611 13.8%
29
GENERAL FUND INTERNAL SERVICE FUND CHARGES
21
•Insurance charges are increasing due to increasing premiums, particularly Workers Compensation which increased by 30%.
•Compensated Absences is based on 3.5% of fulltime salaries, increases are due to COLAs, Merit Increases, and new positions added.
FY 21
Adopted
FY 22
Adopted
FY 23
Adopted
FY 24
Adopted
FY 25
Proposed % Variance
Information Technology 6,639,228 6,595,085 6,888,238 7,358,798 7,477,883 1.6%
Vehicle Replacement 2,714,673 3,327,141 3,922,740 3,730,547 3,844,299 3.0%
Equipment Replacement 2,672,067 2,779,552 2,822,871 3,159,080 3,144,267 -0.5%
Insurance 9,440,982 7,866,768 10,777,438 11,199,865 12,804,430 14.3%
OPEB 4,510,345 4,510,345 3,778,920 3,964,953 3,974,618 0.2%
Compensated Absences 2,440,698 2,481,372 2,562,839 2,716,447 2,957,695 8.9%
Total $ 28,417,993 $ 27,560,262 $ 30,753,045 $ 32,129,690 $ 34,203,192 6.5%
30
PROGRAM ENHANCEMENTS & STAFFING CHANGES
31
SUMMARY OF RECOMMENDED ENHANCEMENTS
23
Fund Name Department Description Budget Increase
General Fund Fire Building Maintenance Budget Increases 40,000
General Fund Police FLOCK ALPR System 283,500
General Fund Police Fusus Intelligence Ecosystem Subscription 100,000
General Fund Police July 4th Outside Agency Staffing 40,000
General Fund Police Mounted Enforcement Unit 20,000
General Fund Police Uniform Expense 15,000
General Fund Public Works Increase Contract Services for Streets and Beaches 50,000
General Fund Public Works Maintenance for New City Facilities 40,000
General Fund Recreation & Senior Services Increase in Recreation Programming 232,500
General Fund Recreation & Senior Services Increase in Maintenance & Repair 6,500
General Fund Various Personnel Changes 1,003,406
Asset Forfeiture Fund Police CIC Software & Equipment 50,000
Asset Forfeiture Fund Police Use of Force Immersive Training Simulator 196,000
Environmental Liability Fund Community Development Personnel Changes 30,356
Tide & Submerged Lands Fund Harbor Increase Capital accrual for replacement patrol vessel 100,000
Tide & Submerged Lands Fund Harbor Increase Budget for Crane Maintenance 30,000
Tide & Submerged Lands Fund Harbor Personnel Changes 2,170
Water Fund Utilities Personnel Changes 19,048
Grand Total 2,258,480
32
KEY GENERAL FUND PROGRAM ENHANCEMENTS
24
Police Department
•New Crime Information Center (CIC)
•Addition of 3 Police Civilian Investigators -$359,000
•Automated License Plate Reader System $283,500
•Fusus Intelligence Ecosystem -$100,000
•CIC Software & Equipment -$50,000 (Asset Forfeiture Funds)
•Use of Force Immersive Training Simulator -$196,000 (Asset Forfeiture Funds)
•Addition to Outside Agency Staffing for the Fourth of July -$40,000
•Mounted Enforcement Unit -$20,000
•Increase to budget for uniform expenses -$15,000
33
NON-PERSONNEL PROGRAM ENHANCEMENTS
25
•Other non-personnel enhancements include:
•$40,000 in Fire for building maintenance
•$40,000 in Public Works for maintenance for new city facilities
•$50,000 in Public Works for increase in contract services for Streets and Beaches
•$232,500 in Recreation & Senior Services for increased programming for youth
programs as well as instructor payments at various community centers
•$100,000 increase to Harbor’s capital budget to cover amount needed for replacement
patrol vessel
•$30,000 increase in Harbor for crane maintenance
34
PROPOSED ADDITIONAL STAFFING & OTHER PERSONNEL ENHANCEMENTS
26
Fund Department Item Description
Full-Time
FTE
Change
Part-Time
FTE
Change
General Fund City Attorney Increase Part-Time Paralegal FTE 0.25
Community Development Add FT Code Enforcement Officer II 1.00 -
Community Development Convert PT Code Enforcement Officer I to FT 1.00 (1.00)
Community Development Add Full Time Building Inspector II (Reduce Contract Services)1.00 -
CMO/IT Reclassify Management Analyst to Sr. Management Analyst - -
Fire Firefighter to Firefighter Paramedic Position Adjustments - -
Fire Title Changes for Life Safety Specialists - -
Police Add 3 Police Civilian Investigators 3.00 -
Public Works Add Engineering Technician 1.00 -
Public Works Reclassify Senior Civil Engineer to Principal Engineer - -
Recreation & Senior Serv.Reduce Preschool Program Staff Expenditures - (1.45)
Total General Fund 7.00 (2.20)
Tidelands Harbor Reclassify Department Assistant to Administrative Assistant - -
Total Tidelands Fund - -
Environmental Liability Fund Community Development Convert PT Code Enforcement Officer I to FT 1.00 (0.50)
Water Enterprise Fund Utilities Reclassify Maintenance Aides to Utilities Specialists - -
Total Other Funds 1.00 (0.50)
Total Personnel Program Enhancements 8.00 (2.70) 35
27
CHANGES IN TOTAL STAFFING 2009 –NOW
967 946 925
886 878
848 853 867 855 867 877 886 888 895 902 916
500
600
700
800
900
1000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
921
36
GENERAL FUND RESERVES AND SURPLUS
37
GENERAL FUND SOURCES AND USES
29
FY 2023-24 Projected FY 2024-25 Proposed
Beginning Unrestricted Fund Balance $ 15,254,999 $ -
Operating Revenues & Transfers In $ 308,836,480 $ 315,298,822
Operating Expenditures & Transfers Out $ (304,763,798)$ (311,251,957)
Repayment of Advances $ 1,250,000 $ 1,250,000
Prior Year Resources Carried Forward $ 5,465,426 $ -
Non-Operating Transfers Out $ (18,293,751)$ -
Preliminary Ending Unrestricted Fund Balance $ 7,749,356 $ 5,296,865
Increase in Contingency Reserve (estimated)$ (3,128,408)$ -
Additional CalPERS UAL Payment $ -$ (5,000,000)
Final Ending Unrestricted Fund Balance $ 4,620,948 $ 296,865
38
GENERAL FUND SURPLUS FOR FY 2024-25
30
•The baseline budget includes $40 million allocated towards paying down the city’s pension liability.
•It is recommended that an additional $5 million appropriation be made at the time of budget adoption to bring the total paid towards the city’s pension liability to $45 million, which is approximately $15 million more than what is required to be paid and is anticipated to result in eliminating the city’s pension liability in 2033.
•A structural surplus of $297,000 is projected for FY 2024-25, which takes into consideration the recommended budget amendment in the amount of $5 million to appropriate additional funds towards the city’s pension liability.
39
RECAP: KEY MESSAGES
31
•Proposed General Fund budget for FY 2024-25 is balanced
•Updated and comprehensive savings plans for long-term capital needs
•Maintained pension UAL payment of $45 million resulting in paydown of the liability in 2033
•Structural General Fund budget surplus of $297,000 is projected for FY 2024-25 subject to the Council’s direction as to possible additional resource allocations
40
32
QUESTIONS?
41
CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT
Agenda Item No. 6B
April 11, 2024
TO: HONORABLE CHAIR AND MEMBERS OF THE COMMITTEE
FROM: Finance Department
Jason Al-Imam, Finance Director/Treasurer 949-644-3123 or jalimam@newportbeachca.gov
SUBJECT: BUDGET AMENDMENTS FOR QUARTER ENDING MARCH 31, 2024
EXECUTIVE SUMMARY
The purpose of this memorandum is to report on the budget amendments for the third
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/ Anthony Alannouf /s/ Jason Al-Imam
Anthony Alannouf Jason Al-Imam Budget Analyst Finance Director/Treasurer
Attachment: A.Budget Amendments Fiscal Year 2023-24 Quarter Ending March 31,2024
42
ATTACHMENT A
BUDGET AMENDMENTS FISCAL YEAR 2023-24 QUARTER ENDING MARCH 31, 2024
43
BA #Date Amendment Type Fund Revenues Expenditures
Net Effect on Fund Balance
Increase/(Decrease)Department Explanation
18 02/21/2024 CM GENERAL FUND 2,234.70 2,234.70 - Police
Recognize revenue and appropriate additional expense to PD Traffic for additional crossing guard services provided to and paid by Newport-Mesa Unified School District (NMUSD) during
Summer School.
GENERAL FUND CAPITAL PROJECTS 14,930.00 (14,930.00) Public Works
NEIGHBORHOOD ENHANCEMENT 249,729.71 (249,729.71) Public Works
41 01/09/2024 CC CONTRIBUTIONS FUND 689,699.00 656,856.00 32,843.00 Public Works Accept and appropriate funds from OC Sanitation District for the West Coast Highway Joint Manhole & Valve Adjustments project.
CONTRIBUTIONS FUND 5,243,968.00 5,243,968.00 - Public Works
PARKS & COMMUNITY CENTERS 5,243,968.00 5,243,968.00 - Public Works
FACILITIES FINANCING PLAN 5,243,968.00 10,487,936.00 (5,243,968.00) Public Works
GENERAL FUND CAPITAL PROJECTS - - - Public Works
WATER CAPITAL FUND - - - Public Works
WASTEWATER ENTERPRISE FUND - - - Public Works
44 01/09/2024 CC ENVIRONMENTAL LIABILITY FUND - 100,411.00 (100,411.00) Public Works To appropriate funds from the unappropriated Environmental Liability Fund Fees balance for the San Diego Creek Trash Interceptor.
45 01/23/2024 CC GENERAL FUND 1,159,970.00 210,882.69 949,087.31 Fire Payment to State of California for Participation in PP-GEMT-IGT for State Calendar Year 2024 and to recognize received amounts for the CY 2023 program and CY 2024 program.
46 01/02/2024 CM GENERAL FUND 350.00 350.00 - Library
To recognize revenues in the Private Donations and Library Foundation Revenue accounts from the donation of patrons, and to increase expenses in the Library Materials budget for Library Administration and Literacy Services. CONTRIBUTIONS FUND 27,600.00 27,600.00 - Public WorksSTATE GAS TAX FUND 1,079,359.00 (1,079,359.00) Public WorksMEASURE M FUND 390,765.00 (390,765.00) Public WorksSB1 GAS TAX RMRA FUND 79,905.00 (79,905.00) Public Works
PCH RELINQUISHMENT 76,616.00 (76,616.00) Public Works
48 01/22/2024 CM GENERAL FUND 29,484.00 29,484.00 - Recreation
To recognize revenues from the Aquatic Center Grant FY2022-23 allocation in Marina Park Sailing and increase expenditures associated with the grant in Marina Park Community Center - Equipment NOC.
49 02/13/2024 CC GENERAL FUND 120,000.00 64,000.00 56,000.00 Recreation
To increase revenue estimates and expenditure budget due to the update in charges to the City for the contract with Active Net software. The City will be charged a flat 3% CC processing fee and an annual $64,000 technology for the software subscription. It is estimated that this will lead to budget savings of approximately $56,000.
50 02/13/2024 CC EQUIPMENT FUND - 378,205.41 (378,205.41) Fire
To refurbish the 2015 Pierce Aerial Ladder Truck with Pump. The cost to remove the pump and refurbish the truck is expected to offset maintenance costs related to the weight of the pump for the remaining serice life of the truck and more importantly, provide for safe, reliable operation and use.
51 02/12/2024 CM CONTRIBUTIONS FUND 5,000.00 5,000.00 - Public Works Accept funds from the City of Costa Mesa contributions and appropriate the funds to the Slurry Seal Program, project 24R04.
52 02/27/2024 CC GENERAL FUND - 120,000.00 (120,000.00) Utilities
To amend the existing on-call agreement with Charles King
Company (C-9236-1) for temporary pumping services and increase the agreement to cover current and foreseeable temporary pumping for the continued situation on Galaxy Drive. The original agreement was approved for $50,000.00 amended twice by $200,000.00.
53 02/13/2024 CM GENERAL FUND - - - Library To transfer funds from Library Foundation Publications & Dues NOC to Office Furntiture/Fixtures
To appropriate funds from the current capital improvement
program savings for Contract No. 8925-2 project 23R11.CC4702/21/2024
To appropriate and fund the remainder of the Library Lecture Hall Project (19F11) by transferring funds from the Facilities Financing Plan Fund (FFP) to the Contributions Fund and the Parks & Community Centers Fund, and increasing the revenue in the FFP to capture the remainder of the reimbursement from the Newport Beach Public Library Foundation
43 02/21/2024
To move funds from Fund 012 project 23L01 to Fund 012 project 24L01. Per Council Policy F-3 (E.7.b.), project appropriation
transfers of this nature shall require the approval of the City Manager.
42 02/21/2024 CC
CM
City of Newport BeachFiscal Year 2023-24 Budget AmendmentsQuarter Ending March 31, 2024
40 02/21/2024 CC
To appropriate funding to the Newport Boulevard Landscape
Improvements Project (Industrial Way to Pacific Coast Highway) & West Coast Highway Landscaping Improvements (West City Limits to Highland St) fron fund balance of the General Fund CIP Fund as well as the Neighborhood Enhancement Fund.
44
BA #Date Amendment Type Fund Revenues Expenditures
Net Effect on Fund Balance
Increase/(Decrease)Department Explanation
City of Newport BeachFiscal Year 2023-24 Budget AmendmentsQuarter Ending March 31, 2024
54 03/12/2024 CC GENERAL FUND - 36,748.02 (36,748.02) Community Development To increase expenditures for costs related to the Unpermitted Commercial Use of Public Property Impounds fee.
55 02/21/2024 CM GENERAL FUND 10,000.00 10,000.00 - Library
To recognize revenues in the Cultural and Arts Private Donation
and Contributions account, transfer budget from the Cultural Arts Programming and Services Professional accounts, and increase expenditures in the Cultural and Arts Sculpture Garden Phase 9 account.
56 02/27/2024 CM GENERAL FUND - - - City Clerk
There was a major overhaul of Council Policies which effected Newport Beach Municipal Code. Policies are changed by Ordinance and the overhaul resulted in Code Publishing, the City's Code Publisher, to updated 879 pages of Municipal Code. This update resulted in a single invoice which is accounts for 95% of
the entire year's budget for this line item.
57 03/11/2024 CM GENERAL FUND - - - Library To transfer budget from the Library Foundation New PC Purchases to Software License Renewal
58 03/26/2024 CC CONTRIBUTIONS FUND 31,872.75 159,250.85 (127,378.10) Public Works
Accept and recognize additional revenue and appropriate expenses as it relates to the Assessment District No. 111 and
Underground Utilities District No. 22 Phases 2 & 3, Conctract No. 7833-1 (Project# 21A11).
GENERAL FUND - 750,000.00 (750,000.00) Community Development
GENERAL FUND CAPITAL PROJECTS 750,000.00 750,000.00 - Community Development
GENERAL FUND 5,226,642.00 - - Finance
FACILITIES FINANCING PLAN 5,226,642.00 286,361.00 4,940,281.00 Finance
JR GUARDS CAPITAL PROJCTS 286,361.00 - - Finance
AMERICAN RESCUE PLAN ACT 2021 - - - Finance
61 03/12/2024 CM MISCELLANEOUS GRANT FUND 9,911.00 9,911.00 - Police To increase estimated revenues and expenditures relating to the approved grant funding from the 2023 Edward Byrne Memorial Fund Justice Assistance Grant (JAG).
62 03/12/2024 CM TIDE & SUBMERGED LANDS FUND 6,000.00 6,000.00 - Harbor
To increase estimated revenues and expenditures relating to a
grant from the Newport Harbor Foundation for the Support Installation of Lighting on Various Private Aids to Navigation (PATONs) in Newport Harbor.
63 03/13/2024 CM GENERAL FUND 4,516.00 4,516.00 - Library To recognize revenues in the Library Admin SLS Grant Fund OC Library account and increase expenditures in the Library Materials
account.
64 03/22/2024 CM EQUIPMENT FUND - 10,000.00 (10,000.00) Fire To cover costs for an undriveable unit due to a broken differential and to have it brought back to the facility via Pierce Flatbed.
65 03/22/2024 CM GENERAL FUND 6,000.00 6,000.00 - Library To recognize revenues in the Library Foundation account and
increase expenditures in the Literacy Services Library Materials and Library Foundation Programming accounts.
60 03/26/2024
To transfer American Rescue Plan Act of 2021 (ARPA) funds from Junior Lifeguards Building Project (19F13) and City Yard
Fueling Station Project (20F14) for the reimbursement to the city for public safety services incurred on fire operations. Transfers unappropriated General Fund balance to the FFP fund for future CIP projects.
59 03/26/2024
To transfer anticipated savings from the General Fund unappropriated balance to the General Plan CIP Account for the General Plan Update multi-year project. CC
CC
45
4/4/24
Scheduled Date Agenda Title Report Type Agenda Description
Thursday, May 9, 2024
Third Quarter Budget Update Presentation Staff will provide a presentation regarding the year-to-date and projected Fiscal Year 2023-24 budget performance.
Performance Metrics & Follow-Up Discussion of Proposed FY 2024-25 Budget Discussion
Staff will provide the Committee with departmental performance metrics, which
will be included with the proposed budget. This will be an opportunity to discuss
the performance metrics and to continue April’s discussion of the FY 2024-25 budget.
Work Plan Review Receive and File Staff will report on the upcoming Finance Committee items.
Tuesday, May 28, 2024 Joint City Council and Finance Committee Study Session Presentation Staff will present the FY 2024-25 proposed budget to the City Council and Finance Committee.
Thursday, May 30, 2024 Financial Statement Auditor's Communication with the Finance Committee acting as the City's Audit Committee Presentation
The City's external auditors, Davis Farr LLP, will provide an overview presentation regarding the audit process and request feedback from the Committee regarding any information that may assist them in their audit of the City's financial statements.
Committee Recommendation to Council for the FY 2024-25 Budget Discussion
Discussion of the Study Session earlier in the week and formulation of any
recommendations to be presented to the City Council at the budget public
hearing in June.
Work Plan Review Receive and File Staff will report on the upcoming Finance Committee items.
Thursday, September 12, 2024
Annual Review of Investment Performance Presentation The City's investment advisor, Chandler Asset Management, will report on the performance of the City's investment portfolio for the fiscal year ending June 30, 2024.
Annual Review of Investment Policy Presentation Staff will provide a presentation regarding any proposed changes to the City's Investment Policy prior to the Investment Policy being approved by the City Council.
Internal Audit Program Update Presentation Presentation of internal audit reports, findings, and recommendations from the
FY 2023-24 audit program.
Budget Amendments for Quarter Ending June 30, 2024 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.
Thursday, October 10, 2024
Overview of Public Works Department Budget Presentation Staff will provide the Committee with a presentation covering the budget for the Public Works Department.
September 2024
October 2024
August 2024
Committee Recess
Newport Beach Finance Committee Work Plan
June 2024
Committee Recess
Committee Recess
July 2024
May 2024
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4/4/24
Scheduled Date Agenda Title Report Type Agenda Description
Newport Beach Finance Committee Work Plan
Budget Amendments for Quarter Ending September 30, 2024 Receive and File Staff will report on the budget amendments from the prior quarter.
Year-End Budget Results and Surplus Allocation Presentation Staff will provide a presentation regarding the year-end budget results for FY
2023-24 and recommendations for allocation of any year-end budget surplus.
Work Plan Review Receive and File Staff will report on the upcoming Finance Committee items.
Thursday, November 14, 2024
First Quarter Budget Update Presentation Staff will provide a presentation regarding the year-to-date and projected FY 2024-25 budget performance.
OPEB Actuarial Valuation Report Update Presentation Staff will provide the Committee with an overview of the Fiscal Year 2023-24 actuarial valuation report prepared by the City's actuary.
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.
Work Plan Review Receive and File Staff will report on the upcoming Finance Committee items.
November 2024
December 2024
Committee Recess
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