Title
Adopt a Resolution to Approve 2023-2024 Budget Amendment for 2022-2023 Year-End, One-Time Appropriation of Unspent Funds for the General Fund, Special Revenue Funds, Capital Improvement Projects Fund, and Fiduciary Fund
Staffreport
COUNCIL PRIORITY
• Public Safety
• Housing and Homelessness
• Infrastructure
• Fiscal Sustainability and Transparency
SUMMARY
Subject to final audit, the City ended Fiscal Year 2022-2023 with at least $9,258,000 in unspent funds, made up of revenues received in amounts that were higher and expenditures that were lower than what were budgeted.
RECOMMENDATIONS
Staff recommends the City Council approve the 2022-2023 year-end, one-time appropriation of unspent (revenue exceeding expenditures) funds in the amount of $9,258,000.
BACKGROUND
The City Council approves annual budgets based on the best revenue and expenditure information available several months prior to the adoption of budget appropriation. The City Council initially approved the Fiscal Year 2022-2023 budget on June 28, 2021 as part of the City’s biennial budgeting process that covers two fiscal years. As a result, budget adjustments are periodically necessary for circumstances that arise and require additional budget appropriations. The City Council has approved various budget amendments since 2021, including a mid-cycle adjustment to the biennial budget that was approved on June 21, 2022.
ANALYSIS
Subject to finalizing the annual audit, the City estimates a 2022-2023 General Fund unspent balance of $9,258,000. These funds result from stronger-than-projected revenues and controlled expenditures across multiple departments. While sales tax declined in 2022-2023 by $3,077,000, other revenues, including business licenses, permits, investments, and property taxes increased, exceeding estimates by $6,950,000. Expenditures were $4,947,000 less than projections. Staff recommends a 2023-2024 budget amendment appropriating a total of $9,258,000 of one-time funds. The projects proposed for funding have either been identified as high-priority programs, will restore or protect assets from failure, or strengthen the City’s fiscal sustainability.
Human Services Priorities
Staff proposes appropriating $696,143 for priorities in Human Services. Of this amount $400,000 is proposed for an Expanded Safety Ambassador Program, and $296,143 is proposed for Recreational Vehicle (RV) Outreach and Housing Navigation, which will supplement $153,857 proposed from American Rescue Plan Act (ARPA) Funding.
Modeled after the successful Safety Ambassador program downtown, the Expanded Safety Ambassador Program would pilot service delivery in another business corridor of the City. It would create a visible presence by providing assistance to visitors, tenants, businesses and the general population; build relationships with vulnerable population groups and connect them with available social services; assist businesses in addressing occurrences on the property that disrupt business; and develop and introduce additional areas of opportunity to enhance conditions in the area.
RV Outreach and Navigation is the first step to implementing a safe parking program. Staff have identified two possible locations in the City to accommodate a safe parking program. One of these locations would be at a local church and the other location is a CalTrans-owned parcel that the City of San Leandro leases. Staff will continue exploring implementing a congregate safe parking program. In the interim, staff will work with nonprofit partners to identify 10 RVs to target outreach and housing navigation services to with a goal of permanently housing those residing in their RVs.
Public Safety Priorities
Staff proposes appropriating $345,000 for public safety priorities throughout the City. This investment would include authorizing and appropriating $70,000 for a new part-time, provisional crime prevention assistant and $275,000 for a Community Safety Grant program.
The proposed new crime prevention assistant position would augment the services of the Police Department’s Crime Prevention Unit. Specifically, the position would perform site surveys of residential and business properties and make safety improvement recommendations on lighting, fencing, and security. The intent would be to double the existing number of annual site surveys conducted from 60 to 120 annually.
As discussed with City Council at a prior work session, Community Safety Grants are proposed to assist the community with crime prevention measures and deterrents. Administered by the Police Department, the program would allow residents and businesses to apply for funding to help offset the cost of safety and security equipment. The pilot program would provide funding for neighborhood safety cameras and small camera systems, security lighting assistance, security monitoring systems, and security fencing assistance for homes and businesses. Also discussed at a prior work session was the concept of private security guards, which staff will continue to explore for feasibility and possible funding.
Capital and Facilities Projects
Staff proposes appropriating $793,000 for various capital and facilities projects that have been identified as high priority needs. These one-time funds will be moved to complete the projects summarized below.
• Roof Replacements: $366,000 is proposed to complete replacement of roofs at Fire Station 9, Fire Station 12, and the San Leandro History Museum. These roofs are being replaced as part of regular asset maintenance with funding from the Facilities Maintenance Fund, which does not have a sufficient balance to complete the work. The proposed allocation will allow for completion of all three roof projects.
• Bonaire Park Well: $300,000 is proposed to restore a well servicing Bonaire Park. Repair of the well will provide water to fulfill the irrigation demand of the park landscaping and reduce existing water costs.
• Parking Garage Security Cameras: $50,000 is proposed to install security cameras in the downtown parking garage. These cameras will be a crime prevention measure to improve security for garage patrons.
• Public Works Security Gate: $77,000 is proposed to replace security gates at the Public Works building. The existing gate is experiencing mechanical failure that requires frequent repair. Additionally, there is no pedestrian egress option, as the gate will only open from the weight of exiting vehicles.
Risk Management General Liability Fund
Staff proposes appropriating $469,738 to fund the City’s general liabilities cash assessment. The City participates in the California Joint Powers Risk Management Authority (CJPRMA), a joint powers agency administering a risk retention pool to provide excess general liability coverage for its members. Since Fiscal Year 2018-2019, CJPRMA has experienced a steady decline in its net position driven by an increase in claims coupled with higher verdicts and settlements. This decline in net position necessitates an assessment to all members who participated in CJPRMA’s liability program during deficit years. CJPRMA’s calculation of this liabilities assessment for the City is $543,142. The City’s General Fund share of this amount is $469,738.
Pension Trust Fund
Staff proposes appropriating and transferring $4,629,000 to the Pension Trust Fund. In September 2015, the City Council adopted the Prioritizing Unfunded Liability Liquidation (PULL) Plan, which affirmed a 5-year goal of setting aside an additional $5,000,000 toward reducing unfunded liabilities. The PULL Plan calls for the City to direct up to 50 percent of all annual General Fund carryover funds toward unfunded liabilities. In addition, the plan directs 50 percent of all General Fund land sales toward PULL. In 2021, the City Council authorized establishing the Section 115 Pension Trust Fund with PARS (managed by HighMark Capital Management). The City’s objective is setting aside funds and accumulating investment earnings to buy down the City’s unfunded pension liability. The City’s prior contributions to the Trust total $20,695,500.
The Net Pension Liability reported as of June 30, 2023, amounts to $240,900,000. Transferring $4,629,000 to the Pension Trust further reduces outstanding Net Pension Liability by 1.3%.
Deficit Reduction
Staff proposes preserving $2,325,119 to reimburse the fund balance for projected ongoing structural deficits that will require use of reserves. Annual budget deficits as part of ensuring the City is providing adequate services are part of a planned reduction in available fund balance. The fund balance is projected to have a negative $3.5 million balance by Fiscal Year 2027-2028. The proposed reimbursement would replenish the General Fund balance to reduce this projection to negative $1.2 million, a 46 percent reduction, which will help address a structural imbalance while staff continues to seek efficiencies, expenditure reductions, and revenue growth as part of fiscal sustainability efforts to support city services and operations.
Committee Review and Actions
On February 28, 2024, this item was presented to the City Council Finance Committee where the Committee provided partial approval of Staff’s recommendation.
Financial Impacts
This Council action will require an appropriation of $9,258,000 for these projects from Fiscal Year 2022-2023 unspent funds that currently reside in the General Fund’s undesignated fund balance.
ATTACHMENTS
Attachment A: Resolution Approving 2023-2024 Budget Amendment
Attachment B: Budget Amendment Detail
PREPARED BY
T. Michael Yuen, Finance Director