City Council Meeting October 17, 2016 Item 10 Mid-year General Fund Budget Reductions and Discussion of Potential Future Budget Actions City Council Meeting October 17, 2016 Item 10

Outline for this evening Discuss current position of the General Fund Based on updated Five Year Forecast Consider proposed General Fund reductions Totaling $2.1 million Elimination of 7.0 Full-Time Equivalents Shift in expenditures to non-general funds Outline framework for potential future budget actions Phased approach

5-Year Forecast - June 2016

5-Year Forecast – October 2016

Fiscal Year 2016 – One Time Revenue Property Tax (Boomerang Funds from FOC Payment) $ 2,300,000 Administrative Fee Lawsuit Settlement 1,100,000 Triple Flip Unwinding 2,000,000 Insurance Claim – General Fund Reimbursement 403,000 Investment Settlement 100,000 Deposit Write-Off 372,000 Grant revenue receipt s/b accrued to FY15 1,102,000 $ 7,377,000

Unfunded Pension Liability

Fund Balance $47m Reserve Target

General Fund Forecast

Recommended FY 2017 Mid-Year Budget Reductions Department Description FTEs Amount City Manager's Office Eliminate Project Manager 1.00 $ 161,546   Eliminate Public Information Coordinator $ 111,332 Finance Eliminate Management Analyst II $ 103,405 Public Works Reallocate a portion of Engineering cost to CIP $ 117,980 Reduced water cost from conservation $ 300,000 Service and supply reductions $ 60,000 Eliminate Maintenance Assistant in Parks Division $ 65,015 Reduce overtime budget $ 133,097 Planning Reallocate personnel costs to Building Services Fund $ 465,377 Eliminate Management Analyst IV (50% General Fund/50% Building Fund) $ 71,354 Transportation Reallocate costs to various parking funds $ 300,999 Eliminate Transportation Administrator (50% General Fund/50% various Parking Funds) $ 109,976 Human Services & Recreation $ 112,976 TOTAL 7.00 $ 2,113,057

General Fund Expenditures

5-Year Forecast – with Proposed Reductions

Addressing Financial Challenges Revenues Modification to TOT sharing arrangement with PCOC Annual cap on total contribution Complete a comprehensive cost of service study Ensure City is recovering full cost recovery Complete a cost allocation plan Allocation of costs between funds Explore other opportunities to increase revenue recovery Possibility consider some sort of revenue measure

Addressing Financial Challenges Further expenditure reductions Will not be easy But are necessary to ensure a balanced budget Will likely result in service reductions As a result of prior recession-related reductions Will be recommended after program analysis First round getting underway presently Will take time and should be done methodically Adjusting as necessary along the way

Addressing Financial Challenges Create opportunities for public engagement Host a series of public meetings to discuss the budget Special budget issue of In Focus Return to City Council with additional information and specific recommendations as appropriate

CalPERS Investment Returns

CalPERS Investment Returns History of CalPERS Geometric Mean Rates of Return and Volatilities   1 Year 5 Year 10 Year 20 Year 30 Year Geometric Return 2.4% 10.7% 6.1% 7.7% 9.1% Volatility - 9.4% 14.0% 11.8% 10.5%

Library Funding City Population Facilities FTE FY16 Appropriations in Millions of $ Thousand Oaks 129,349 2 69.00 $8.3 Pasadena 141,510 10 104.95 $14.1 Torrance 148,427 6 74.00 $7.7 Ontario 168,777 50.00 $4.9 Rancho Cucamonga 174,064 51.00 $5.0 Glendale 199,182 7 69.78 $11.0 Anaheim 351,433 92.79 $10.5

5-Year Forecast – August 2016