Santa Paula: Structural Imbalance Difficult Budget Approved

by Sheryl Hamlin

The June 24, 2020 Santa Paula City Council meeting concluded the FY20/21 budget process. Read about the June 17, 2020 “austerity budget” here. Note graph of five year forecast.

Since that meeting there has been resolution on the labor negotiations which made a small change in the labor expenses. The changes include: 54 unpaid furlough hours, vacation buyback and sick leave incentive temporarily suspended and tuition reimbursement temporarily reduced. There were no layoffs. One position that was budgeted for 12 months was reduced to ten months. The new five year forecast is shown below with the FY 20/21 balanced with caveats and subsequent years negative. Note the RDA bump in 2025/2026 is not included. A structural imbalance exists because the yellow line always exceeds the revenue line, thus requiring a structural change to an underlying operational condition to rectify.

Forecast Assumptions

Assumptions
Personnel ‐ Salaries
Payroll growth of 2.75 percent and an inflation rate of 2.50 percent
Historical Data ‐ 15 year period 2002/03‐2016/17 2.75%
Personnel ‐ Benefits
Payroll growth of 2.75 percent and an inflation rate of 2.50 percent
Historical Data ‐ 15 year period 2002/03‐2016/17 9.08%
Lump Sum Payment Discount not applied
Current GF portion of UAL (unfunded pension liabilies) attributable to GFs remain the same (69.61% of total)
Other Operating
Historical Data ‐ 15 year period 2002/03‐2016/17 6.63%

Note, there are no position additions or deletions in this five year period.

Revenue down 12%

The FY 20/21 revenue includes $550,000 from the sale of a property which has not yet closed.

Source: Staff Report

Huge Liabilities Due

The Finance Director presented a list of liabilities. Top on the list was a bill for the mutual aid from the Thomas Fire. The city is looking for federal or state help with this bill. The other fund negatives are issues because the budget calls for “transfers” against these funds, which are already negative. The bond drawdown involves the gas tax.

Source: Staff Report

Visualizing General Fund Expenses and Revenues

The following pie chart was created from data in the staff report. Pie charts instantly show relative size with respect to other expenses. Note the SPPD receives the largest share of the General Fund. Several speakers and speaker groups submitted comments during the budget about reducing or defunding the police in exchange for social services or housing.

General Fund Revenue

The following pie chart shows General Fund Revenue without detail. Council Member Crosswhite felt the property related should be broken down by secured property tax, VLF swap and other. Not mentioned, but other helpful information would be differentiation between regular sales tax and Measure T sales tax. There were no definitions about contents of “transfers” or “intergovernment” for example.

The staff report included a new report showing “sources and uses” of funds but this was not reconciled in the report to the charts.

New Software for Pension Cost Modeling

Two members of Govinvest zoomed into the meeting to explain their software. For a $7,000 license fee, the city could model the expenses due CalPERS for current and retired employees, including the firefighters who were transferred to county fire.

To download the material, click here. Unfotunately there is a playback issue at the current time.

To read about the author, click sherylhamlin dot com

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