HomeMy WebLinkAboutFinance Committee - April 12, 2018CITY OF NEWPORT BEACH
FINANCE COMMITTEE AGENDA - Final
100 Civic Center Drive - Crystal Cove Conference Room, Bay 2D
Thursday, April 12, 2018 - 3:00 PM
Finance Committee Members:
Diane Dixon, Chair / Council Member
Will O'Neill, Mayor Pro Tem
Kevin Muldoon, Council Member
William Collopy, Committee Member
Patti Gorczyca, Committee Member
Joe Stapleton, Committee Member
Larry Tucker, Committee Member
Staff Members:
Dave Kiff, City Manager
Carol Jacobs, Assistant City Manager
Dan Matusiewicz, Finance Director / Treasurer
Steve Montano, Deputy Director, Finance
Marlene Burns, Administrative Specialist to the Finance Director
The Finance Committee meeting is subject to the Ralph M. Brown Act. Among other things, the Brown Act requires that
the Finance Committee agenda be posted at least seventy-two (72) hours in advance of each regular 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.
The City of Newport Beach’s goal is 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, we will
attempt to accommodate you in every reasonable manner. Please contact Dan Matusiewicz, Finance Director, 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) 644-3123 or dmatusiewicz@newportbeachca.gov.
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
Department 24 hours prior to the scheduled meeting.
I.CALL MEETING TO ORDER
II.ROLL CALL
III.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.
IV.CONSENT CALENDAR
April 12, 2018
Page 2
Finance Committee Meeting
MINUTES OF MARCH 15, 2018A.
Recommended Action:
Approve and file.
DRAFT MINUTES 031518
V.CURRENT BUSINESS
FISCAL YEAR 2018-2019 BUDGET BRIEF OVERVIEWA.
Summary:
Staff will prepare brief presentation of key initiatives proposed in the City Manager’s
Fiscal Year 2018-2019 Proposed Budget.
Recommended Action:
Receive and File
INTERNAL CONTROLSB.
Summary:
Staff will prepare a brief presentation summarizing of internal and external review of
internal control efforts
Recommended Action:
Receive and file.
STAFF REPORT
RESERVE POLICY SUBCOMMITTEE UPDATEC.
Summary:
Staff and or Subcommittee members will provide the Finance Committee a brief
update on the status of the Risk-Based Reserve Study.
Recommended Action:
Receive and file.
STAFF REPORT
ATTACHMENT A
BUDGET AMENDMENTSD.
Summary:
Receive and file a staff report on the budget amendments for the prior quarter.
Recommended Action:
Receive and file.
STAFF REPORT
ATTACHMENT A
April 12, 2018
Page 3
Finance Committee Meeting
WORK PLAN REVIEWE.
Summary:
Staff will review with the Committee the agenda topics scheduled for the remainder
of the calendar year.
Recommended Action:
Receive and file.
VI.FINANCE COMMITTEE ANNOUNCEMENTS ON MATTERS WHICH MEMBERS
WOULD LIKE PLACED ON A FUTURE AGENDA FOR DISCUSSION, ACTION OR
REPORT (NON-DISCUSSION ITEM)
VII.ADJOURNMENT
Finance Committee Meeting Minutes
March 15, 2018
Page 1 of 10
CITY OF NEWPORT BEACH
FINANCE COMMITTEE MARCH 15, 2018 MEETING MINUTES
I.CALL MEETING TO ORDER
The meeting was called to order at 3:00 p.m. in the Crystal Cove Conference Room, Bay 2D, 100 Civic
Center Drive, Newport Beach, California 92660.
II.ROLL CALL
PRESENT:Council Member Diane Dixon (Chair), Mayor Pro Tem Will O'Neill, Committee Member William Collopy, Committee Member Patti Gorczyca,
Committee Member Joe Stapleton, and Committee Member Larry Tucker
ABSENT: Council Member Kevin Muldoon (excused)
STAFF PRESENT: City Manager Dave Kiff, Assistant City Manager Carol Jacobs, Finance Director/Treasurer Dan Matusiewicz, Deputy Director, Finance Steve
Montano, Budget Manager Susan Giangrande, Fire Chief Chip Duncan, Assistant Fire Chief Jeff Boyles, Assistant Fire Chief Rob Williams, Battalion
Chief Justin Carr, Battalion Chief Brian McDonough, Administrative Manager Angela Crespi, Senior Fiscal Clerk Julie Liang, Harbor Resources Manager
Chris Miller, Public Works Director Dave Webb, Deputy Public Works Director Mark Vukojevic, Public Works Finance Administrative Manager Jamie
Copeland, and Administrative Specialist to the Finance Director Marlene Burns
MEMBER OF THE
PUBLIC: Jim Mosher
III.PUBLIC COMMENTS
Chair Dixon opened public comments.
Jim Mosher referred to the City Council’s General Plan update implementation program. He noted anitem, which may be relevant to the Finance Committee, Section 24.1, adopting a strategic plan for
economic sustainability. He expressed it had not been reviewed on an annual basis, as specified, norhad the impact fees to properly cover infrastructure costs.
Staff was directed to report back as to the process for updating the City’s impact fees.
Chair Dixon closed public comments.
IV.CONSENT CALENDAR
A.MINUTES OF FEBRUARY 15, 2018
Recommended Action:Approve and file.
MOTION: Tucker moved, and O’Neill seconded, to approve the minutes. The motion carried (4 –
0, 1 abstention Gorczyca, Muldoon absent).
Finance Committee Meeting Minutes
March 15, 2018
Page 2 of 10
V. CURRENT BUSINESS
A. AUDIT CLOSING
Summary: The City’s external audit firm, White Nelson Diehl Evans LLP will meet with the Finance Committee
to discuss the audit findings for the fiscal year ending June 30, 2017. The committee will have an opportunity to discuss any potential areas of concern and the auditors can discuss any changes
in accounting standards or disclosures that were relevant for the audit year. Recommended Action:
Receive and file.
Mr. Callahan, White Nelson Diehl Evans, presented the audit findings for the Fiscal Year ending June 30, 2017. He mentioned the Committee should remain aware of “significant estimates,”
subject to fluctuations, which are relative to the fair value of investments, the estimated value of capital assets (infrastructure assets, in particular), depreciation of capital assets, and various items
related to pension contributions, liabilities, and expenses. Additionally, the claims payable information was provided. These represent the significant audit areas. There were no significant
changes in methodologies, the information was consistent from year-to-year, and there were no difficulties in performing the audit. There were no disagreements with management on reporting
issues or matters.
Mr. Callahan noted the firm does not audit the entire CAFR; City staff is responsible for a certain portion. The audit covers the financial statements and supplementary schedules. There are eight
topic areas that are discussed, and he agrees with the steps; however, his firm does not fully audit the CAFR.
Committee Member Gorczyca inquired whether the audit performed was typical or included
elements such as fraud auditing. Mr. Callahan stated this is a standard auditing process and he is obligated to report anything irregular; however, this is not a fraud audit. He is working with staff on
other projects related to internal control standards and procedures. The financial statement audit is not an audit of internal controls; however, internal controls are taken into consideration in
performing the overall audit.
Committee Member Gorczyca inquired whether the audit reviewed the OPEB status as related to upcoming GASB requirements. Mr. Callahan responded the Fiscal Year 2018 financial statements
will include a number for the OPEB lability and it will be reviewed with that year’s financial statements audit.
Mr. Callahan noted one significant deficiency, which had to do with the pension plan and the
calculation of the deferred outflow of resources related to the pension contribution line item. The reason for the adjustment, which was found by City staff, had to do with retroactive pay that
occurred. From a financial reporting standpoint, it was not appropriate to list the payment as it was, and it needed to be adjusted. Mr. Callahan worked with staff, and the numbers will match going forward with what is found on the employer contributions page of the CalPERS website, as related to Newport Beach.
Committee Member Tucker inquired whether the City has moved forward with review of internal
controls, as directed by the Finance Committee.
Finance Director Matusiewicz affirmed the audit firm would work with staff on internal controls during their interim fieldwork in the spring. The first wave of review will include electronic fund
transfers, ACH, and other forms of electronic payments. The following year will include accounts payables, procedures, and transactions.
Mr. Collopy expressed interest in having the Finance Committee review the scope of the internal controls review and have an opportunity to provide input, if necessary.
Finance Committee Meeting Minutes
March 15, 2018
Page 3 of 10
Chair Dixon referenced the May 10 Finance Committee agenda, which displayed an item related
to internal control procedures. Finance Director Matusiewicz responded City staff has initiated the review of electronic transfers and payments, as well as other major processes to identify areas of
potential risk.
Committee Member Tucker requested the Finance Committee have an opportunity to be informed as to the areas of potential risk identified by City staff. In addition, in light of the City’s new system,
it would be a good time for the Finance Committee to review procedures and be informed of how transfers and payments are conducted.
Finance Deputy Director Montano stated a future agenda will feature a first report on the agreed
upon procedures. The audit will test procedures and transactions and report the results.
Committee Member Collopy inquired whether the Finance Committee’s review of internal controls should be placed on the agenda more than once per year. The Committee receives a monthly
update on pension and internal controls are extremely important, especially in light of how often staff is meeting on this issue.
Finance Director Matusiewicz reported that staff is still in the process of assessing risk and
adjusting/documenting procedures in order to begin a “testing” process.
Committee Member Tucker noted that once a year would be a formal review and a summary can be provided as to what staff is looking at in terms of internal controls. The auditor is also being
asked to complete interim review of internal controls as additional work. This will be a continuous process.
Chair Dixon requested that this is a continuous improvement process and update the Finance
Committee, as necessary, at least once per year.
Committee Member Collopy inquired whether the City had an internal auditor position or internal audit function. Finance Director Matusiewicz Certified Internal Auditor on staff utilized to look at
external operations, such as external self-reported taxes, but spent most of last year looking at internal controls. Preference is to keep her out in the field in order to encourage taxpayer
compliance. The position reports to the Revenue Manager.
Committee Member Gorczyca stated a report to the City Manager or CFO would be her preferred practice.
Committee Member Collopy inquired whether Mr. Callahan had seen an internal auditor for cities
such as Newport Beach. Mr. Callahan stated very few have internal audit functions. In cases where there are problems, the item is typically referred to the City Manager.
Chair Dixon opened public comments. Jim Mosher expressed surprise the auditors have difficultly reconciling retroactive pay, and
expressed concerns, citing the California Constitution, which he alleges prohibits compensating employees for work that has already been performed. In regard to the audit, he is aware that there
may have been other issues within the City’s financial reports that did not rise to the level of
warranting inclusion in the auditor’s final report. He cited State Senator Moorlach suggested review of the CAFR and net position, as listed on Page 53 of the report.
Mr. Callahan stated unrestricted net position is the availability of resources the City has going forward with no strings attached. It is negative right now because the net pension liability is having an impact.
Committee Member Gorczyca stated she had similar concerns and did not understand the complication on how the City of Newport Beach scored so low on the ranking provided by Senator
Moorlach.
Finance Committee Meeting Minutes
March 15, 2018
Page 4 of 10
Seeing no other individuals who elected to make comments, the Chair closed public comments.
There was unanimous consensus to receive and file this report.
B. REVIEW OF THE FIRE DEPARTMENT BUDGET TO ACTUAL RESULTS Summary:
In preparation of the 2018-2019 Fiscal Year budget, staff will review budget assumptions against actual results for Fiscal Year 2016-2017.
Recommended Action: Receive and file.
Fire Chief Chip Duncan and Administrative Manager Angela Crespi presented the staff report. A
PowerPoint presentation was displayed. Salary and benefits make up approximately 82% of the Department’s budget, and uniquely, they have ten remote facilities. He mentioned maintenance
and capital outlay allocations of the budget. Fiscal Year 2016-2017 included use of approximately 97.5% of the budget and the Department prides itself on consistently coming in “under-budget”
overall.
Chief Duncan stated the Department currently has 114 suppression employees, and there were some vacancies in the lifeguard section. The Department was at 100% staffing up until a few
months ago, where a few employees did not pass the probationary period. Civilian non-sworn positions are considered under the administration portion of the budget.
Mayor Pro Tem O’Neill inquired whether the 114 suppression employees included the civilian
positions. Chief Duncan noted the civilian positions are separate from the suppression employees. He confirmed there were 114 sworn employees, and inquired as to how many lifeguards are in
the Department.
City Manager Dave Kiff reported that several of the lifeguards are sworn part-time employees.
Discussion ensued as to the number of sworn full-time and part-time and how they are classified
Chief Duncan explained the constant staffing policy that requires a minimum number of personnel per type of equipment. He noted the Department is fully staffed and operational 365 days a year,
24 hours per day. Vacancies must be filled to keep a piece of equipment in service. Training is a large part of their operations and mandated by law, such as OSHA. In-house training keeps costs
down, while keeping staff on duty. The current year’s fire season was prolific and impacted the budget.
Committee Member Stapleton inquired as to the reimbursement process for strike teams. Chief
Duncan responded that paperwork is submitted to the OES, and they are reimbursed including a 10 % administrative fee, which is returned to the General Fund. Chief Duncan provided comments on Marine operations and deferred to Chief Williams as to
staffing. Training is mostly done in-house while employees are on-duty.
Committee Member Collopy inquired as to the cause of the 25% overtime overrun and whether it
was blended. Administrative Manager Crespi responded the overtime costs are for the entire Department, primarily related to operations and constant staffing required. There were five vacancies during that particular year; however, there were savings due to the vacancies as well.
Administrative Manager Crespi also confirmed there are 15 civilian positions. Committee Member Gorczyca inquired as to Fire Marshal position, especially as related to code
enforcement activities. City Manager Kiff commented the position will be considered in the upcoming budget review and clarified it is the building staff that is responsible for code enforcement.
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March 15, 2018
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Committee Member Gorczyca preferred the autonomy of a separate Fire Marshal position.
Mayor Pro Tem O’Neill stated Chief Duncan is the City’s Fire Marshal, although some of the
functions have been moved over to the Community Development Department.
Committee Member Stapleton inquired as to the Fire Department hiring probation process. Chief Duncan reviewed the hiring process which includes qualifications for hiring (EMT, academy-
trained hires), driver’s license requirements, and the 18 month probationary testing program, which includes two batteries of tests (at eight months and 16 months). There are currently two
probationary classes, one at month 15 and the other at month seven, each of which had a probationary hire terminated from the program for performance. Chief Duncan stressed the point
of the probationary process is to ensure the hire will be successful and the organization will be safe. The terminations are usually due to an inability to perform operational duties, rather than
attitude.
Mr. Callahan noted the Department is back to two vacancies.
Mayor Pro Tem O’Neill stated the unfunded pension liability hits the Police and Fire Departments harder than other City Departments. Their budget, especially on the benefits side, is higher than
it would have been had the City Council not taken the action in 2014 to pay down the unfunded liability.
Chair Dixon mentioned the inflated Transparent California numbers, which she understands will
now be corrected to reflect accurate numbers.
Mayor Pro Tem O’Neill stated that the budget now has the Unfunded Actuarial Liability (UAL) broken down by Department.
Chief Duncan stated the paramilitary nature of the Department, which has a strict hierarchy,
especially in terms of operations and budget. He described the budget and oversight procedures in the Department, including preventative maintenance to provide savings. He elaborated on the
preventative maintenance strategies related to facilities and equipment. Extended warranties are purchased on higher value equipment. He also mentioned the maintenance of various equipment,
including breathing apparatus and ballistic protection carried on vehicles.
Committee Member Gorczyca inquired whether the Department has looked at stocking equipment in advance to take advantage of savings. Chief Duncan noted the Department does try to stock
equipment as needed.
Chair Dixon inquired whether the Department has systems in place to identify erratic or unusual transactions. Administrative Manager Crespi responded the Department utilizes the Tyler Munis
program and the two-step invoice approval process. Purchasing card transactions are reviewed by the original purchaser, and Ms. Crespi provides a secondary review. Budget Manager Giangrande also reviews batches and credit card transactions for anomalies. A monthly report is sent to Finance Director Matusiewicz that includes any anomalies. There are fraud detection
modules in the software. Administrative Manager Crepsi also offers education to the Department members on purchasing card policies.
Chief Duncan detailed the cost-sharing/savings realized through their call-center partnership with the Joint Powers Authority. The Department also generates revenue, particularly through the deployment of strike teams. The Department recovers between from 99 through 112% of
personnel costs. This also includes the backfill of strike team members to maintain operations in the City when the strike team is deployed.
Committee Member Stapleton inquired whether the UAL payment, or a portion of it, can be included in the calculation for reimbursement for strike team members.
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March 15, 2018
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Finance Director Matusiewicz raised this issue with the members of the Governmental Accounting
Standards Board. Ultimately, it can be recovered and at least today.
City Manager Kiff stated that the State could also elect not to use Newport Beach employees if their costs are too high, and the employees would miss out on the training opportunity.
Discussion ensued related to whether other agencies have included the UAL payment in their
calculations for strike team reimbursement, and whether this has excluded other agencies from participating in those types of deployments due to their higher costs. Committee Member
Gorczyca mentioned there must be some authority that articulates what costs are permissible for inclusion in the reimbursement calculation. Finance Director Matusiewicz spoke to a member of
the GASB board member, to inquire why it is not classified like debt service. Currently all unfunded liability payments are considered a cost of the current operating period.
Committee Member Collopy stated that if this is the case, then it should be billable.
Finance Director Matusiewicz stated that other agencies may not be as aggressive as Newport
Beach in paying off the unfunded liability. Chair Dixon suggested running the numbers so as not to knock the employees out of the opportunity to train, but to at least gain some reimbursement
for the City’s cost of the UAL.
There was consensus by the Finance Committee and agreement by City Manager Kiff to perform a cost-analysis for the reimbursements.
Chief Duncan detailed the Department’s relationship with Santa Ana College, and reimbursement
for average daily attendance. False alarm reimbursements are also a source of revenues. He noted the Department also receives revenue from the “GEMT” and “IGT” programs and paramedic
services transports. The Department is preparing for a fee study analysis. The Department also has a write-down program, directed by Council, to reduce costs for those in need.
Committee Member Gorczyca inquired regarding noticing more paramedics on scene lately. Chief
Duncan stated there is an increase in medical calls, and she may be noticing paramedics moving out of their district to cover for another agency. The County does mandate how response is
coordinated.
Chief Duncan noted there is a large revenue source from the Junior Lifeguard program, which exceed the costs of running the program.
Chief Duncan noted various upcoming projects and issues affecting the Department, including the
development in the City of high-rise buildings. Additional staff will likely be necessary to deal with the complicated building systems and operational impacts. He mentioned installing the appropriate
equipment, locating of ingress/egress points, and other development issues that will impact Department operations. Committee Member Collopy inquired whether Station No. 7 has capabilities that will be sufficient
to respond to any needs for a high-rise facility. Chief Duncan described the history of the building and the high number of medical calls. The best augmentation for that facility will be the addition of
a paramedic unit.
Committee Member Gorczyca inquired whether former Redevelopment Agency (RDA) funds can be used to recover costs for the facility. City Manager Kiff noted there is not much in the way of
surplus funds; most of the funds are utilized toward the County debt service on RDA debt. Chief Duncan noted the Department’s sensitivity toward vegetation and brush management. City
Manager Kiff noted the City pays $300-$400 thousand per year for maintenance in certain zones. Chief Duncan mentioned the opportunity to work with Harbor Operations and a study that will be
undertaken. They are also reviewing call volumes and alternate destination programs. He
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March 15, 2018
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mentioned the Health Information Exchange Act, which will place an individual’s medical
information in an electronic, transferable form. The Department conducted a study on the program and is looking to make it a permanent part of operations.
Chair Dixon inquired regarding the impacts on local emergency rooms, especially as it relates to
the homeless and the opioids crises. Fire Assistant Chief Jeff Boyles reported that the City has a higher rate of assistance in cardiac arrest care.
Chief Duncan reported on the status of the various Fire station construction projects.
There was unanimous consensus to receive and file this report.
C. FACILITIES FINANCIAL PLAN
Summary: Review Facilities Financial Plan for financial solvency based on known Council Priorities.
Recommended Action: Recommend forwarding to City Council for review and approval.
Finance Director Matusiewicz presented the staff report, noting it was based on staff’s best guess
of “known” City Council priorities. The proposed projects are funded through General Fund contributions and Development Agreement Fees. The debt service does start dropping in 2021,
when the Library component of bonded debt will be complete. Staff expects contributions will exceed $8.5 million by 2029 and will start growing at the rate of revenue growth. At that time,
approximately 3% will be dedicated to the Facilities Financial Plan (FFP).
Chair Dixon stated the public should understand that development is currently at a low in Newport Beach. Finance Director Matusiewicz stated that only projects with signed Development
Agreements are included in the current projections.
Finance Director Matusiewicz noted the only year the City will likely not meet its target for reserve balance would be 2037, due to the proposed construction for the Police Station. Although it is
unlikely to be realized, he suggested a solution to finance a portion of the cost to spread debt service over several years.
Discussion ensued regarding various projects, which do not yet have signed Development
Agreements.
Committee Member Gorczyca inquired whether staff should include a debt service layer on top of the pension debt. Finance Director Matusiewicz stated this report is specifically for facilities, and
that suggestion would be best included in the Long Range Financial Forecast.
Committee Member Tucker stated this is debt voluntarily incurred. The UAL will not necessarily always go up. If there is positive growth in the stock market, the UAL may go down. Committee Member Matusiewicz stated the purpose of the Long Range Financial Forecast, is to
aggregate all planned city expenditures and savings plan to determine whether the plans are feasible given long-term revenue projections.
Chair Dixon inquired as to the timeline and the Finance Committee’s responsibility to advise the City Council on this matter.
Finance Director Matusiewicz stated the Finance Committee should be looking at solvency and asking questions as to how items fit into the larger scheme of the budget. The City Council should make policy decisions as to which projects and programs should be ultimately implemented
including the timing of building construction. He therefore suggested the Council review the list of contemplated projects first before the Finance Committee makes a judgement on the financial feasibility of the replacement plan.
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March 15, 2018
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Public Works Director Dave Webb stated that if the Finance Committee identifies facility needs in
the future, it should be included so staff can start planning for the financing.
Committee Member Collopy stated the Finance Committee should look at and opine on affordability.
Public Works Director Webb stated staff looks at the status of facilities and adjusts the plan
accordingly.
Chair Dixon noted that the City Council has not yet directed staff as to which projects should be implemented. Public Works Director Webb appreciates the general direction so staff can know
which facilities to look at. The process starts in January with the Finance Committee and the community, and then moves to the City Council budget discussion in March. Staff has traditionally
made a recommendation from Finance, which includes review by the Finance Committee.
Discussion ensued regarding the process for reviewing, planning for, and funding facility improvements and construction costs. Committee Member Tucker stated the Finance Committee
is looking at general information and assisting the City Council in making the final decisions.
Public Works Director Webb stated these are only planning numbers and they are adjusted as costs go up or down, including costs for construction by square foot. He mentioned projects such
as Corona Del Mar, which has a relocation cost, and Lido, which does not. These are not exact numbers. Various projects were discussed; however, it was noted that the numbers presented are
for long-term planning, and not as precise as the City Council budget which is adopted each year.
Chair Dixon inquired whether the Finance Committee should change their review schedule. Finance Director Matusiewicz suggested that the Finance Committee would approve the financial
plan for the year and have it forwarded to the City Council as part of the budget process.
Committee Member Gorczyca suggested color-coding to denote whether the City is meeting targets and tracking for the financial plan for certain projects.
Chair Dixon opened public comments.
Mr. Jim Mosher expressed confusion over the numbering of the pages in the report. He mentioned
the 5-year capital plan, which is tabbed in the Capital Improvement document, noting it is only a concept of how money should be spent. He inquired whether the two lists are coordinated. He
expressed confusion as to the purpose of the plan, as it was not a commitment to proceed with particular projects. He is still unclear as to the actual 5-year plan.
Finance Deputy Director Montano noted the cost-per-year aggregate, which is included in the
document. Mr. Mosher inquired about the Development Fee issue and what the City should be charging for the impacts. He reviewed the Government Code, which articulated the method for entering into
Development Agreements. The concept, post-Proposition 13, was an advance on property taxes, which were expected. It states the developer will be reimburse the City over time.
Chair Dixon closed public comments. Finance Director Matusiewicz noted Development Impact funds have to be spent on particular
purposes, such as transportation or parks, depending on their source. Committee Member Gorczyca stated that she has seen, on occasion, situations where developers
must move forward on a particular project and they will be reimbursed by subsequent developers over time. Staff noted those are reimbursement agreements.
There was unanimous consensus to forward the Facilities Financial Plan to the City Council.
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D. HARBOR & BEACHES MASTER PLAN Summary:
Review current Harbor & Beaches Master Plan for financial solvency based on known Council Priorities.
Recommended Action: Recommend forwarding to City Council for review and approval.
Finance Director Matusiewicz noted this is a recommendation from the Harbor Commission
related to proposed projects. Mr. Webb commented on various discussions that occurred related to projects that are not necessarily approved, but were placed for future consideration as to not
fall off the radar.
Chair Dixon inquired as to the funding for the various programs. City Manager Kiff responded that there are various resolutions related to increases in marine operations fees. Chair Dixon’s point
was that there is no corresponding policy that is driving the Harbor and Beaches Master Plan like the one that drives the funding for the Facilities Financial Plan. She inquired whether there should
be a minimum funding threshold policy.
Committee Member Tucker inquired whether the financial plans should be integrated or remain segregated, except for circumstances where funding/fees are legally tied to specific uses, such
as, Tidelands revenue. He suggested that all project and programs should compete equally for General Fund dollars.
Committee Member Gorczyca stated she has seen facilities financial plans that include various
subsets to cover the diversity of projects.
Committee Member Tucker stated there is limited control over revenues, except for Transient Occupancy Tax and Business License, to a certain degree. The Finance Committee’s
responsibility is to review items where there is a higher amount of financial risk.
Finance Director Matusiewicz stated that the plans should be kept separate as the stakeholders and lifecycles are different. A custom system would have to be created to facilitate the integration.
Discussion ensued regarding Council Policy F-28, planning for future costs, and whether to
integrate the various financial and master plans. Ultimately, it was determined that the City Council must provide the final approval for any financing and projects. Discussion ensued regarding the
3% policy to fund projects.
Mayor Pro Tem O’Neill noted the policy was written pre-COP’s.
There were no individuals who elected to provide public comments. There was unanimous consensus to receive and file this item.
E. PENSION DISCUSSION Summary:
Agenda item reserved for any discussion regarding the status of the City's pension liability. Recommended Action:
Receive and file.
Mayor Pro Tem O’Neill commented regarding Senator Moorlach’s position on pension liability and increases in Orange County Sheriff’s contracts for service.
Committee Member Tucker commented on amounts that are shown on various balance sheets for City’s who have pension liabilities.
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March 15, 2018
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Committee Member Gorczyca stated there are service level differences for Sheriff’s contract
amount cities based upon population size.
F. WORK PLAN REVIEW Summary:
Staff will review with the Committee the agenda topics scheduled for the remainder of the calendar year.
Recommended Action: Receive and file.
Chair Dixon announced the various items, which will be discussed on upcoming agendas.
VI. FINANCE COMMITTEE ANNOUNCEMENTS ON MATTERS WHICH MEMBERS WOULD LIKE
PLACED ON A FUTURE AGENDA FOR DISCUSSION, ACTION OR REPORT (NON-DISCUSSION ITEM)
Committee Member Gorczyca inquired whether a report can be provided related to CalPERS liquidity,
how we are going on the BABs reimbursements, and a potential initiative relating to property tax loopholes.
Discussion ensued regarding consensus for the Finance Committee to move forward with any of the
above referenced projects. Mayor Pro Tem O’Neill suggested these items be discussed at the level of the appropriate subcommittee.
VII. ADJOURNMENT
The Finance Committee adjourned at 5:19 p.m. to the next regular meeting of the Finance Committee.
Filed with these minutes are copies of all materials distributed at the meeting.
The agenda for the Regular Meeting was posted on March 12, 2018, at 1:51 p.m., in the binder and
on the City Hall Electronic Board located in the entrance of the Council Chambers at 100 Civic Center Drive.
4/12/2018
1
FY 2018-19 PROPOSED BUDGET
City of Newport Beach Finance Committee
April 12, 2018 www.newportbeachca.gov/budget
1
OVERVIEW
•Budget is balanced.
•Revenues still growing, but at a lower rate.
•Expenditures remain relatively flat except for
program enhancements.
•Adhered to Council guidance regarding the
use of FY 16-17 budget surplus.
•Continued aggressive payment schedule
toward unfunded pension liability = $34.5
million ($8.8M discretionary).
•Staffing Up 1.0 full-time and 7.07 part-time
staff.
•Continued focus on enhancing the
community’s quality of life and safety.
•Continued funding of infrastructure master
plans including the Harbor & Beaches Master
Plan ($4M) and Facilities Financial Plan
($8.5M)
2
Item No. 5A1
Fiscal Year 2018-2019 Budget Brief Overview
Staff Presentation
April 12, 2018
4/12/2018
2
SUMMARY(ALL FUNDS)
3
SUMMARY OF THE FY 18‐19 PROPOSED BUDGET ‐ ALL FUNDS (MILLIONS)
2017‐18 2018‐19
REVISED PROPOSED
EXPENDITURES EXPENDITURES $ VAR % VAR
OPERATING BUDGET 288,222,996 290,865,907 2,642,911 0.9%
CIP PROJECTS* 83,183,132 73,416,376 (9,766,756) ‐11.7%
TOTAL BUDGET 371,406,128$ 364,282,283$ (7,123,845)$ ‐1.9%
*Includes reappropriation of Capital Improvement Projects (CIP) that were
appropriated but not completed in prior fiscal years. There are $45.9 million of
proposed new CIP appropriations in 2018‐19.
GENERAL FUND SOURCES AND USES
2017‐18 2018‐19
Revised Proposed
Budget Budget $ VAR % VAR
SOURCES
UNRESTRICTED FUND BALANCE
FY 15‐16 Surplus 10,570,638 ‐ (10,570,638) ‐100%
FY 16‐17 Surplus 12,485,990 12,485,990 ‐ 0%
REVENUES 209,182,950 215,599,044 6,416,094 3.1%
Less: Restricted Revenues (718,122) (147,000) 571,122 ‐79.5%
Transfers‐In 8,310,304 8,262,571 (47,733) ‐0.6%
TOTAL SOURCES 239,831,760$ 236,200,605$ (3,631,155)$ ‐1.5%
USES
Operating Expenditures 205,282,851 208,372,600 3,089,749 1.5%
Transfers Out 21,734,878 24,759,000 3,024,122 13.9%
Contingency Reserve Increase(Decrease) 328,041 2,241,854 1,913,813 583.4%
TOTAL USES 227,345,770$ 235,373,454$ 8,027,684$ 3.5%
UNRESTRICTED RESOURCES 12,485,990$ 827,151$ (11,658,839)$ ‐93.4%4
4/12/2018
3
5
Long‐Term
Infrastruture Obligations TOTAL
Harbor & Beaches Master Plan 4,000,000 4,000,000
Neighborhood Enhancement Projects 1,000,000 1,000,000
Pensions 3,000,000 3,000,000
General Liability 3,000,000 3,000,000
Contingency Reserve 750,000 750,000 1,500,000
5,750,000 6,750,000 12,500,000
46% 54%
PROPOSED USE OF 2016-17 SURPLUS
GENERAL FUND REVENUE
FY 17‐18 FY 18‐19
REVISED PROPOSED $ VAR % VAR
Property Taxes 100,146,449 104,366,653 4,220,204 4.2%
Sales Taxes 34,498,007 34,678,282 180,275 0.5%
Transient Occupancy Tax 21,137,676 22,838,484 1,700,808 8.0%
Other Taxes 11,311,956 11,830,000 518,044 4.6%
Licenses and Permits 4,489,288 5,021,451 532,163 11.9%
Intergovernmental 2,450,939 1,756,055 (694,884) ‐28.4%
Charges for Services 20,106,992 20,139,328 32,336 0.2%
Fines & Penalties 3,870,900 3,881,907 11,007 0.3%
Use of Money & Property 10,200,107 10,512,948 312,841 3.1%
Other Revenues 970,636 573,936 (396,700) ‐40.9%
Total General Fund 209,182,950$ 215,599,044$ 6,416,094$ 3.1%
6
4/12/2018
4
GENERAL FUND
EXPENDITURES
FY 17‐18 FY 18‐19 $ VAR % VAR
General Government
City Council 1,288,542 834,796 (453,746) ‐35.2%
City Clerk 1,068,620 1,131,339 62,719 5.9%
City Manager 3,135,122 2,977,021 (158,101) ‐5.0%
Human Resources 3,174,619 3,142,479 (32,140) ‐1.0%
City Attorney 2,527,083 2,593,143 66,060 2.6%
Finance 6,828,782 6,896,937 68,155 1.0%
Total General Government 18,022,768$ 17,575,715$ (447,053)$ ‐2.5%
Public Safety
Police Department 61,256,186 62,542,629 1,286,443 2.1%
Fire Department 49,217,946 50,437,290 1,219,344 2.5%
Total Public Safety 110,474,132$ 112,979,919$ 2,505,787$ 2.3%
Community Development
Community Development 12,887,309 12,834,325 (52,984) ‐0.4%
Public Works‐Water Quality 746,014 780,775 34,761 4.7%
Total Community Development 13,633,323$ 13,615,100$ (18,223)$ ‐0.1%
Public Works
Municipal Operations ‐ General Services 28,709,464 29,090,537 381,073 1.3%
Public Works 8,428,520 8,734,882 306,362 3.6%
Municipal Operations ‐ Utilities 1,189,489 1,337,921 148,432 12.5%
Total Public Works 38,327,473$ 39,163,340$ 835,867$ 2.2%
Community Services
Recreation & Sr. Services 13,620,274 13,624,223 3,949 0.0%
Libraries & Arts 9,509,936 9,021,784 (488,152) ‐5.1%
Finance ‐ Parking Meters 2,607,995 2,260,623 (347,372) ‐13.3%
Total Community Services 25,738,205$ 24,906,630$ (831,575)$ ‐3.2%
General Fund Non Dept Exp (913,050) 131,896 1,044,946 ‐114.4%
General Fund Operating Expenditures 205,282,851$ 208,372,600$ 3,089,749$ 1.5%
7
8
2017‐18 2018‐19
Revised Proposed
Budget Budget $ VAR % VAR
General Fund CIP 5,334,878 5,525,000 190,122 3.6%
Facilities Financing Plan (FFP) 8,500,000 8,500,000 ‐ 0.0%
Facility Maintenance Plan (FMP) 1,000,000 1,000,000 ‐ 0.0%
Harbor & Beaches Capital Plan 6,000,000 4,000,000 (2,000,000) ‐33.3%
800 MHz Radio Fund 500,000 534,000 34,000 6.8%
Neighborhood Enhancement Projects 400,000 1,000,000 600,000 n/a
General Liability ‐ 4,200,000 4,200,000 n/a
Total 21,734,878$ 24,759,000$ 3,024,122 13.9%
GENERAL FUND TRANSFERS
4/12/2018
5
RECURRING INTERNAL SERVICE CHARGES
FY 17‐18 FY 18‐19
Revised Proposed $ VAR % VAR
General Liability 4,068,234 6,239,000 2,170,766 53.4%
Worker's Compensation 2,753,921 3,753,921 1,000,000 36.3%
Compensated Absences 2,509,547 2,533,649 24,102 1.0%
IT Operations & Equipment 5,756,155 5,964,619 208,464 3.6%
Vehicle Maint & Replacement 4,816,271 4,958,798 142,527 3.0%
Other Equipment Replacement 800,893 800,893 ‐ 0.0%
Retiree Insurance or OPEB 4,042,838 3,834,916 (207,922) ‐5.1%
Total 24,747,859$ 28,085,796$ 3,337,937 13.5%
9
PENSION FUNDING
(ALL FUNDS)
FY 14‐15 FY 15‐16 FY 16‐17* FY 17‐18 FY 18‐19 $ VAR % VAR
Normal Pension Cost 14,627,830 14,899,906 15,424,068 16,186,507 16,762,312 575,805 3.6%
Min. Unfunded Liability Pmt. 12,783,847 14,024,369 21,265,608 24,958,890 25,698,506 739,616 3.0%
Additional Discretionary Pmt.‐ 7,500,000 ‐ 8,914,595 8,801,493 (113,102) ‐1.3%
Less: Amt Paid by Employees (7,429,842) (8,401,598) (9,447,341) (10,083,183) (10,310,870) (227,687) 2.3%
Net Pension Cost 19,981,835$ 28,022,677$ 27,242,335$ 39,976,809$ 40,951,441$ 974,632$ 2.4%
* Fresh Start ‐ Shorter Repayment Schedule 18 Yrs ( 16 Yrs Remaining)
10
4/12/2018
6
LEVEL DOLLAR PAYMENT STRATEGY
But we save more here
↓We pay more here ↓
Level dollar payment becomes a smaller % of
the budget over time
•Paying more $$ now, while we
can, allows us to avoid cumulative
interest costs inherent in legacy
amortization schedules
•Avoids negative amortization
•Payment becomes a declining %
of budget
•Compelling $ Savings
11
STAFFING CHANGES
Fulltime FTE
FY 18 Adopted 725.00 140.79
FY 18 Revisions
CDD - Add .6 FTE Code Enforcement Trainee 0.60
CDD - Eliminate F/T Code Enforcement Trainee (1.00)
CDD - Add 2.25 FTE Building Inspector II 2.25
CDD - Add .5 FTE Student Aide 0.50
City Clerk - Add 1 F/T Records Specialist 1.00
City Clerk - Eliminate .75 FTE Records Specialist (0.75)
City Clerk - Eliminate .96 FTE Dept Assistant (0.96)
Finance/Fin Plan - Add 2 .5 FTE Fiscal Specialists 1.00
Finance/Rev - Eliminate .45 FTE Fiscal Specialist (0.45)
Finance/Rev - Eliminate .76 FTE Hearing Officer (0.76)
CDD/Fire - Add Fire Marshal 1.00
MOD - Eliminate Park Maintenance Supervisor (1.00)
MOD - Eliminate Facilities Maintenance Technician (1.00)
FY 19 Revisions
CDD - Add 1 PC Engineer 1.00
CDD - Add .5 FTE Intern 0.50
CDD - Add 1 .0 FTE Student Aide 1.00
CDD - Add .15 Code Officer Trainee FTE 0.15
Finance/Rev - Add .7 FTE Fiscal Specialist 0.70
Finance/Rev - Add .75 FTE Sr Fiscal Clerk 0.75
PD - Add 2.0 Police Officers 2.00
PD - Add .44 FTE Cold Case Investigator 0.44
PW - Add 1.0 FTE PT Associate Civil Engineer 1.00
Rec - Eliminate Recreation Supervisor (1.00)
Rec - Eliminate Marine Naturalist (0.85)
Rec - Eliminate Rec Coord - Asst PT (0.50)
Rec - Add PT Recreation Leader 0.82
Rec - Add PT Sr Recreation Leader 0.73
Rec - Add PT Recreation Supervisor 0.90
FY 19 Proposed 726.00 147.86
12
4/12/2018
7
BUDGET REDUCTIONS
Department Reduction
Community Development 67,219$
City Manager 18,300
City Council 12,200
Finance 44,251
Fire 15,335
Human Resources 3,500
Library 3,100
Municipal Operations 50,980
Police 66,450
Public Works 4,700
Recreation 80,895
366,930$
General Fund budget maintenance and
operations accounts and some
equipment accounts were reduced
based on a three-year trend analysis of
budget usage.
13
PROGRAM ENHANCEMENTS
•Rideshare program enhancement – $4k
•Storage fees with Corodata – $4k
City Clerk
14
4/12/2018
8
PROGRAM ENHANCEMENTS
•Add P/T Building Inspectors – $188k
•Add a Plan Check Engineer – $121k
•New Civilian Fire Marshal (split with Fire
Department) – $33k
•Add an additional P/T Student Aide – $10.5k
•Add additional P/T interns – $10k
•Increase Code Enforcement Officer/Trainee
P/T hours– $7k
•Flexible staffing for the Planning Assistant/
Technician positions – $3.5k
Community Development Department
15
PROGRAM ENHANCEMENTS
•Increase Finance’s Professional Services
Budget– $82.5k
•Add P/T Fiscal Specialist – $43.5k
•Revenue offset of $190k
•Add P/T Senior Fiscal Clerk – $40k
•Revenue offset of $165k
Finance Department
16
4/12/2018
9
PROGRAM ENHANCEMENTS
•Civilian Fire Marshal (split with Community
Development) – $133k
•Marine Operations Night Standby pay– $36k
Fire Department
17
PROGRAM ENHANCEMENTS
•General Liability increase – $90k
•Increase for negotiations and recruitment –
$67k
•Benefits increase – $2.5k
Human Resources Department
18
4/12/2018
10
PROGRAM ENHANCEMENTS
•Shakespeare in the Park performance –
$15.5k
•Eliminate funding for Pacific Symphony -
<$50k>
Library
19
PROGRAM ENHANCEMENTS
•Additional cost for imported water - $1.5M
•Revenue offset of $1.325M
•Streetlight pole replacement - $100k
•Maintenance and repair of seawalls - $79k
•Asbestos Consultant – $75k
•Consultant Safety Office/Water Conservation Coordinator - $40k
•Contract labor for equipment maintenance
and repair - $50k
•Contract to provide environmental engineering services for the landfill gas
control program req. by State - $50k
•Miscellaneous costs for equipment renovation, recycling, restroom portering, overtime, etc. - $78.5k
Municipal Operations Department
20
4/12/2018
11
PROGRAM ENHANCEMENTS
•Add two new Police Officers – $280k
•Revenue offset of $75k
•Motorcycles and uplift costs for two new
Police Officers – $72k
•Add P/T Cold Case Investigators – $51k
•Ongoing Increased Maintenance Costs –
$30k
•Miscellaneous costs for Animal Control
Veterinary care costs, public relations
funding, Narcan, and new vehicle for Human
Trafficking Task Force Detective – $94k
Police Department
21
PROGRAM ENHANCEMENTS
•Contract Engineers – $106k
•P/T Assistant or Associate Civil Engineer -
$94k
•Water Quality Contracts with County of
Orange – $19k
Public Works Department
22
4/12/2018
12
PROGRAM ENHANCEMENTS
•Add P/T Rec Leader/Senior to Afterschool
Program – $44k
•Add Rec Leader/Senior to Pint Size Campers
Program - $7k
•Revenue offset of $10.5k
Recreation & Senior Services Department
23
AUTHORIZED POSITIONS BY
ORG
F/T FTE Total
F/T FTE F/T FTE F/T FTE Variance Variance Variance
GENERAL CITY GOVERNMENT
City Council 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
City Clerk 4.00 1.96 4.00 2.71 5.00 1.00 1.00 -1.71 -0.71
City Manager 6.50 0.74 6.50 1.00 6.00 1.00 ‐0.50 0.00 -0.50
Human Resources 11.00 0.00 11.00 0.50 11.00 0.50 0.00 0.00 0.00
City Attorney 6.00 1.00 7.00 1.00 7.00 1.00 0.00 0.00 0.00
Finance 31.50 4.02 32.50 3.02 32.00 4.26 ‐0.50 1.24 0.74
Total 59.00 7.72 61.00 8.23 61.00 7.76 0.00 -0.47 -0.47
PUBLIC SAFETY
Police - Safety 146.00 0.00 146.00 0.00 148.00 0.44 2.00 0.44 2.44
Police - Miscellaneous 82.00 12.47 83.00 13.43 83.00 13.43 0.00 0.00 0.00Fire - Safety 130.00 2.25 130.00 2.25 130.00 2.25 0.00 0.00 0.00Fire - Miscellaneous 13.10 39.17 13.10 39.17 13.90 39.17 0.80 0.00 0.80 Total 371.10 53.89 372.10 54.85 374.90 55.29 2.80 0.44 3.24
COMMUNITY DEVELOPMENT
Public Works - Water Quality 3.00 0.00 3.00 0.00 3.00 0.00 0.00 0.00 0.00
Community Devt - Admin 7.00 3.00 7.00 3.00 7.20 4.50 0.20 1.50 1.70
Community Devt - Planning 13.00 0.60 13.00 0.60 13.00 0.85 0.00 0.25 0.25
Community Devt - Building 24.40 0.50 25.40 0.50 25.90 3.00 0.50 2.50 3.00
Community Devt - Code Enforcement 4.50 0.00 4.50 0.00 4.00 0.75 ‐0.50 0.75 0.25
Total 51.90 4.10 52.90 4.10 53.10 9.10 0.20 5.00 5.20
PUBLIC WORKSPublic Works 29.00 4.35 31.00 3.85 31.00 4.85 0.00 1.00 1.00
Municipal Operations - Utilities Electrical 0.00 0.00 1.00 0.00 1.00 0.00 0.00 0.00 0.00
Municipal Operations - General Services 62.50 0.00 58.50 0.23 57.00 0.23 ‐1.50 0.00 -1.50
Total 91.50 4.35 90.50 4.08 89.00 5.08 -1.50 1.00 -0.50
Adopted2017-2018 Proposed2018-19
THREE‐YEAR COMPARISON OF FULL‐TIME AND FTE POSITIONS
Adopted 2016-17
24
4/12/2018
13
AUTHORIZED POSITIONS BY
ORG (CONT.)
F/T FTE Total
F/T FTE F/T FTE F/T FTE Variance Variance Variance
COMMUNITY SERVICES
Library 37.00 22.83 36.00 22.83 36.00 22.83 0.00 0.00 0.00
Recreation 27.00 29.69 26.00 29.69 25.00 30.79 -1.00 1.10 0.10
Senior Services 13.00 6.67 13.00 6.67 13.00 6.67 0.00 0.00 0.00
Recreation & Sr Srvcs Admin 3.50 0.50 3.50 0.50 4.00 0.50 0.50 0.00 0.50
Total 80.50 59.69 78.50 59.69 78.00 60.79 -0.50 1.10 0.60
GENERAL FUND 654.00 129.75 655.00 130.95 656.00 138.02 1.00 7.07 8.07
TIDELANDS FUND
City Manager - Harbor Resources 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Public Works - Harbor Resources 3.00 0.00 3.00 7.50 3.00 7.50 0.00 0.00 0.00
Finance - Parking Lots 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Recreation - Tidepools 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.003.00 0.00 3.00 7.50 3.00 7.50 0.00 0.00 0.00
WATER ENTERPRISE FUND 31.50 1.00 33.00 1.23 32.50 1.23 -0.50 0.00 -0.50
SEWER ENTERPRISE FUND 13.00 0.00 11.50 0.23 11.50 0.23 0.00 0.00 0.00
EQUIPMENT FUND 7.50 0.00 7.50 0.23 7.50 0.23 0.00 0.00 0.00
FiiN FUND 0.00 0.17 0.00 0.17 0.00 0.17 0.00 0.00 0.00INFORMATION TECHNOLOGY FUND 15.00 0.50 15.00 0.50 15.50 0.50 0.50 0.00 0.50
TOTALS 724.00 131.42 725.00 140.79 726.00 147.86 1.00 7.07 8.07
Adopted2017-2018 Proposed2018-19
THREE‐YEAR COMPARISON OF FULL‐TIME AND FTE POSITIONS
Adopted 2016-17
25
BARGAINING UNIT CONTRACT END DATES
Bargaining Unit Contract End Date
Newport Beach Police Association June 30, 2017
Newport Beach Lifeguard Management Association December 31, 2017
Newport Beach Fire Management Association June 30, 2018
Newport Beach Police Management Association June 30, 2018
Newport Beach City Employees Association December 31, 2018
Newport Beach Employees League December 31, 2018
Newport Beach Firefighters Association December 31, 2018
Newport Beach Professional & Technical Association December 31, 2018
Part Time Employees Association of Newport Beach December 31, 2018
Association of Newport Beach Ocean Lifeguards June 30, 2021
26
4/12/2018
14
BUDGET CHECKLIST
27
BUDGET CHECKLIST (CONT.)
28
Budget
Increase (Decrease) Approved
800 MHz
Increase to system backbone cost per County memorandum 36,837$
Municipal Operations
Sidewalk steam cleaning (McFadden Square, Oceanfront, Lido Bridge) & plexiglass cleaning on Coast Hwy 25,000$
Increased cost for restroom portering due to new contract and additional service days. 47,360$
Quarterly steam cleaning of sidewalks on Balboa Island 13,800$
122,997$
473,579$
TOTAL CHANGES TO THE PROPOSED OPERATING BUDGET BY FUND
General Fund 473,579$
Tidelands Operations Fund -$
Total Changes to the Proposed Operating Budget 473,579$
CHANGES TO THE PROPOSED BUDGET AS PRINTED - MAINTENANCE & OPERATIONS
TOTAL CHANGES TO THE PROPOSED OPERATING BUDGET - M&O
TOTAL CHANGES TO THE PROPOSED OPERATING BUDGET - PERSONNEL AND M&O
4/12/2018
15
UPCOMING DATES -
TENTATIVE
Date Action
May 8 or May
22, 2018
Proposed FY 19 CIP and /or the
Operating Budget will be presented to
a joint FC/City Council meeting on
one or both days (TBD)
May 10, 2018 Review of Proposed Budget (FC)
May 31, 2018 Review of Proposed Budget (FC)
June 12, 2018 Public hearing and budget /Gann
appropriation limit adoption
July 1, 2018 Fiscal year 2018-19 begins
29
www.newportbeachca.gov/openbudget
Citizen Transparency Portal
•Easy public access via any internet browser dynamic data for FY
19 and historical searches
•Transaction details for granular inquiries
•Data export options via Excel, PDF or image files
30
CITY OF NEWPORT BEACH
FINANCE COMMITTEE STAFF REPORT
Agenda Item No. 5B
April 12, 2018
TO: HONORABLE CHAIR AND MEMBERS OF THE COMMITTEE
FROM: Finance Department Dan Matusiewicz, Finance Director
(949)644-3123 or danm@newportbeachca.gov
SUBJECT: FINANCE DEPARTMENT INTERNAL CONTROL REVIEW ROADMAP
DISCUSSION
The City of Newport Beach Finance Department is committed to protecting the City’s assets against the risk of loss or misuse. As a practical matter, Finance staff cannot evaluate all of its internal controls at the
same time. Consequently, staff has divided its review of internal controls into workable units for designing and evaluating controls as indicated below.
Staff will apprise the Finance Committee with the Finance Departments efforts to date on assessing potential risks and developing sufficient controls to compensate for such risks.
Prepared by: Submitted by:
/s/ Steve Montano /s/ Dan Matusiewicz
Steve Montano Dan Matusiewicz
Deputy Finance Director Finance Director
FINANCE DEPARTMENT
INTERNAL CONTROL REVIEW
ROADMAP
City of Newport Beach
Finance Committee
April 12, 2018
Item No. 5B1
Internal Controls
Staff Presentation
April 12, 2018
INTERNAL CONTROL CYCLES UNDER REVIEW
DONE
IN PROGRESS
WIRE TRANSFER PROCEDURES TO TEST
The auditor will trace wire transfers payment process to test that
controls are set and verify if procedures are adequate to prevent
fraud. Examples of some agreed upon test procedures:
•Are wires properly authorized?
•Can any one individual request, initiate, and approve and
release wires?
•Are wire transfer recorded in the wire log correctly?
•Can the wires and supporting documentation be traced to the
proper documents?
•Who can set up entitlements or make changes to them?
•Who is authorized to set up templates?
•Who gets the bank statements and performs bank
reconciliations?
New Fraud, Waste or Abuse
Administrative Policy
Purpose and Scope:
•To make clear the City’s no tolerance policy for Fraud,
Waste, or Abuse (FWA)
•To provide communication and guidance for the
detection, reporting and prevention of FWA
•To define acts that constitute FWA, describe the steps
to be taken when FWA is suspected, provide the
procedure for how FWA is investigated, and establish
the process for handling substantiated findings of FWA
•The FWA policy applies only to City employees
CITY OF NEWPORT BEACH
FINANCE COMMITTEE STAFF REPORT
Agenda Item No. 5C
April 12, 2018
TO: HONORABLE CHAIR AND MEMBERS OF THE COMMITTEE
FROM: Finance Department Dan Matusiewicz, Finance Director
(949)644-3123 or danm@newportbeachca.gov
SUBJECT: STATUS UPDATE OF GFOA RISK BASED ANALYSIS OF GENERAL FUND RESERVE REQUIREMENTS
DISCUSSION
The Government Financial Officers Association (GFOA) was selected to assist staff with analyzing risks
through an analytical framework intended to determine reserve levels appropriate for the City of Newport Beach. GFOA, working closely with staff, is performing a thorough examination of the City’s primary and
secondary risk factors that generally influence the amount of reserves the City should hold. GFOA is developing recommendations, risk management methods, and ideas to support the General Fund Reserve
strategy over the long-term.
GFOA prepared a project status update (Attachment A) for the Committee’s review.
Prepared by: Submitted by:
/s/ Steve Montano /s/ Dan Matusiewicz
Steve Montano Dan Matusiewicz
Deputy Finance Director Finance Director
Attachment:
A.Project Status Update
ATTACHMENT A
PROJECT STATUS UPDATE
Project Status Update
for GFOA Risk Based Analysis of General Fund Reserve Requirements
April 6, 2018
Status
Task 1 – Review of Preliminary Analysis
Provide preliminary data done
Kick off call done
Extreme risk call done
GFOA methodology call done
Task 2 – Complete Analysis of Risk
GFOA to provide City with draft of secondary risk factors analysis
done, except
pension – scope expanded
GFOA to provide City with draft of primary risk factors analysis done
GFOA to present preliminary analysis in-person (optional) waived
City to provide GFOA with feedback on secondary risk factor analysis in progress
City to provide GFOA with feedback on primary risk factor analysis in progress
Task 3 – Develop Recommendations
GFOA to provide City with draft financial policies and other recommendations TBD
City to provide GFOA with feedback on draft financial policies and other recommendations TBD
Task 4 – Draft Report
GFOA to provide City with full draft report April 2018
GFOA to present draft report to City in-person (optional) April 2018
City to provide GFOA with feedback on draft report April/May 2018
Task 5 – Final Report
GFOA to provide final report to City May/June 2018
CITY OF NEWPORT BEACH
FINANCE COMMITTEESTAFF REPORT
Agenda Item No. 5D
April 12, 2018
TO:HONORABLE CHAIR AND MEMBERS OF THE COMMITTEE
FROM:Finance DepartmentDan Matusiewicz, Finance Director
(949) 644-3123 or danm@newportbeachca.gov
SUBJECT:BUDGET AMENDMENTS
EXECUTIVE SUMMARY
The purpose of this memorandum is to report on the budget amendments for the third quarter of Fiscal
Year 2017-2018. All budget amendments are in compliance with City Council Policy F-3, Budget Adoptionand Administration.
DISCUSSION
The Finance Committee requested that staff provide a quarterly report of budget amendments includingtheir effect on fund balance. City Council Policy F-3, Budget Adoption and Administration, identifies how
appropriations can be transferred, amended or reduced. Please find the list of budget amendments for thequarter ending March 31, 2018, as Attachment A.
Prepared by:Submitted by:
/s/ James Tai /s/ Dan Matusiewicz
James Tai Dan Matusiewicz
Budget Analyst Finance Director
Attachment:
A.Budget Amendments Fiscal Year 2017-2018 Quarter Ending March 31, 2018
ATTACHMENT A
BUDGET AMENDMENTS FISCAL YEAR 2017-2018 QUARTER ENDING MARCH 31, 2018
Date Amount
Amendment
Type Fund
Net Effect on Fund
Balance
Increase/(Decrease)Department Explanation
01/12/18 25,000.00 City Manager General Fund -
Human
Resources
To transfer appropriations from City Council Special
Department Expense to Human Resources Advisory Counsel to
be used for Human Resources negotiation budget.
01/18/18 324,000.00 City Council
Water Capital &
General Fund CIP -
Municipal
Operations
To transfer appropriations to provide funding for the contract
with Nobest, Inc. for the Annual Concrete Replacement
Program.
Tidelands 200,000.00
Oceanfront (363,000.00)
General Fund CIP
Public Works Admin -
Facilities Financial
Planning (897,000.00)
Fire Station CIP -
02/28/18 142,486.15 City Manager FiiN 142,846.15 Recreation
To transfer expenditure appropriates in the FY18 FiiN Budget to unappropriated fund balance. These funds will be budgeted in
FY19 for future use.
02/28/18 63,202.19 City Manager General Fund - Community Development
To transfer expenditure appropriations from Professional
Services to Part Time Salaries to be used for 2.25 FTE Building
Inspectors. This is a four month allotment to be used for the remainder of FY18.
03/06/18 21,871.00 City Manager General Fund - City Manager
To transfer expenditure appropriations from the City Council
operating budget to the Elections operating budget to pay for
County invoice for signature verification.
03/12/18 300,000.00 City Manager General Fund - City Manager
To transfer appropriations from the General Fund General Plan
Update Project to the City Council's airport issues operating
budget to provide consulting services related to John Wayne
Airport operations.
03/13/18 23,459.00 City Council General Fund - Library Services
To increase revenue estimates and expenditure appropriations
to record grant revenue from Newport Mesa ProLiteracy to be
used towards Literacy Services.
03/13/18 35,000.00 City Council Contribution - Municipal Operations
To increase revenue estimates and expenditure appropriations
to record grant revenue from the State of California Department
of Fish & Wildlife Office of Spill Prevention and Response for oil
spill response equipment.
03/13/18 440,396.23 City Council Asset Forfeiture (440,396.23)
Police
Department
To increase expenditure appropriations in the Asset Forfeiture
Fund to purchase office furniture/fixtures for use at the Police
Department Facility.
03/20/18 10,182.79 City Manager 800 MHz - Recreation
To transfer appropriations from Backbone to Mobile Radios to
cover Motorola 800 MHz order costs.
03/22/18 8,875.00 City Manager General Fund -
Library
Services
To appropriate donor restricted gifts to Library Collection, Balboa Branch Library, and Literacy Services for the purchase
children's books, films, and to support the Literacy Program.
General Fund CIPCity Council -
03/27/18 225,000.00 City Manager General Fund CIP -
Municipal
Operations
To transfer appropriations from Slope Erosion Control/Enhancements to Traffic Signage, Striping, Marking andCrosswalks for the Balboa Peninsula Pedestrian Crossing
improvement project - Phase 1.
Marina Park (1,337,018.00)
Facilities Financial Planning 1,337,018.00
03/27/18 120,000.00 City Council City Manager
To transfer appropriations from the General Fund General Plan
Update Project to the City Manager's Operating budget to
02/27/18 897,000.00 City Council Public Works
To increase expenditure appropriations from Facilitites Financial
Planning Fund for the CDM Fire Station No.5/Library
Replacement Project
02/27/18 141,000.00 City Council Public Works
To transfer expenditure appropriations from the General Plan
Update CIP to the operating budget to provide for a
professional services agreement for federal advocacy services
related to harbor dredging efforts and programs.
City of Newport Beach
Budget Amendments
Fiscal Year 2017-18
Quarter Ending March 31, 2018
02/27/18 363,000.00 City Council
Community
Development
To appropriate funding from the Oceanfront Encroachment
Reserve for the Newport Elementary School field Maintenance
project and to return the initial project appropriation for the
project from Tidelands Operating Fund.
03/31/18 1,337,018.00 City Manager Finance
To close out the Marina Park Fund by transferring its
unappropriated fund balance back to the Facilities Financial
Planning Fund.
I:\Users\FIN\Shared\Admin\Finance Committee\WORKPLAN\2018\2018 FC Workplan 1
Updated 04/12/2018
Scheduled Date Agenda Title Agenda Description
Tuesday, January 09, 2018 Council Study Session 9th - Economic Overview (Optional)Broad Local Economic Overview to be provided by Beacon Economics.
Thursday, January 11, 2018 Risk Based Reserve Analysis Overview Consultant will provide an update and overview of the Risk -based Reserve Analysis.
Consultant Overview of Property and Sales Tax Revenues Consulting specialists in Property and Sales Tax will provide an overview of revenue prospects.Long Range Financial Forecast (LRFF)City staff will provide an update on efforts to improve the City's Long Range
Financial Forecast and provide a comparative review of best practices to other cities.Review of Finance Committee Resolution The Committee will review its objectives as set forth in Council resolution 94-
110 as amended by 2017-58.Review of Finance Committee Workplan Staff will review with the Committee the agenda topics scheduled for the remainder of the fiscal year and highlight those work plan items that were
carried forward from the prior fiscal year. The Committee will also consider setting up a subcommittee to review finance related Council Policies.
Monday, January, 29, 2018 Council Goal Setting Session - (FYI Only)
Thursday, February 15, 2018 Create a Subcommittee to Review Council Finance Policies The Finance Committeewill consider the creation of a Finance Subcommitteetoreview Council Finance policies,discuss membership, scope of work andtimeline.
Risk-Based Reserve Subcommitte Update Discuss Finance Committee progress since the last meeting.
Debt Policy Review Subcommittee Update Subcommittee will discuss revisions of Debt Policy and discuss next steps.
Review of Police Department Budget to Actual Results In preparation of the 2018-2019 Budget,staff will review budget assumptionsagainst actual results for Fiscal Year 2016-2017 and pertinent updatesconcerning the Fiscal Year 2017-2018 to date. Year-End Closing Results Staff will present year-end closing results for Fiscal Year 2016-2017.
Pension Discussion
Agenda item reserved fordiscussionregarding the status of the City's pensionliability, payment strategies, CalPERS policy updates and or advocacy efforts.
Review of Finance Committee WorkPlan
Staff will review with the Committee the agenda topics scheduled for theremainder of thefiscal year and highlight those work plan items carriedforward
from the prior fiscal year. The Committee will also consider setting up asubcommittee to review finance related Council Policies.MARCH
Thursday, March 15, 2018 Audit Closing The City’s external audit firm, White Nelson Diehl Evans LLP will meet with the Finance Committee to discuss the audit findings for the fiscal year ending 6/30/2017. The committee will have an opportunity to discuss any potential areas of concern and the auditors can discuss any changes in accounting
standards or disclosures that were relevant for the audit year.Harbor & Beaches Master Plan Review Harbor & Beaches Master Plan for financial solvency based on known
Council PrioritiesReview of Fire Department Budget to Actual Results In preparation of the 2018-19 Budget, staff will review budget assumptions against actual results for fiscal year 2016-17.
Facilities Financial Plan Review Facilities Financial Plan for financial solvency based on known Council Priorities
Pension Discussion
Agenda item reserved fordiscussionregarding the status of the City's pensionliability, payment strategies, CalPERS policy updates and or advocacy efforts.
APRILThursday, April 5, 2018 Submit Budget Documents to Finance Committee - Information Only ** NOT A MEETING DATE **Information Only - Not a meeting date.
Thursday, April 12, 2018 Fiscal Year 2018-19 Budget Brief Overview Staff will prepare brief presentation of key initiatives proposed in the City Manager’s Fiscal Year 2018-2019 Proposed Budget.Internal Controls Staff will prepare a brief presentation summarizing of internal and external
review of internal control efforts.Reverve Policy Subcommittee Update Staff and or Subcommittee members will provide the Finance Committee a brief update on the status of the Risk-Based Reserve Study.
Budget Amendments Receive and file a staff report on the budget amendments for the prior quarter.
Workplan Review Staff will review with the Committee the agenda topics scheduled for the
remainder of the calendar year.
MAY
Thursday, May 10, 2018 Finance Committee Budget Review
Agreed Upon Audit Procedures for Internal Control The Finance Department is working with the City’s audit firm, White Nelson Diehl Evans LLP, to develop agreed upon procedures for the audit of the City’s
internal control processes and procedures. Staff will present these agreed upon procedures for the Finance Committee’s review. Harbor & Beaches Master Plan Review Harbor & Beaches Master Plan for financial solvency based on known
Council PrioritiesFY 2018-19 Budget Review (TBD)
Tuesday May 8 or May 22, 2018 (TBD)Council Budget Study Session (Potential Joint FC Study Session - TBD)The Proposed Fiscal Year 2018-19 CIP and/or the Operating budget will be covered on one or both days (TBD).
Thursday, May 31, 2018 Reserved For Policy Discussion(s)
FY 2018-19 Budget Review (TBD)
JUNETuesday, June 12, 2018 Council Budget Adoption For Information Purposes Only - Not a Finance Committee Meeting Date
Reserve Policy Presentation of Draft Report: GFOA Risk Based Analysis of General Fund Reserve Requirments
Thursday June 14, 2018 Reserved For Policy Discussion(s)Master Fee Schedule Staff will present the Master Fee Schedule to the Finance Committee and subsequently will present to the City Council at the July 24, 2018, meeting.
JANUARY
FEBRUARY
City of Newport Beach Finance Committee Work Plan 2017-18
Item No. 5E1
Work Plan Review
Additional Materials Received
April 12, 2018