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Agenda Item 15.

City Council Meeting

Meeting Date:	11/17/2020
FROM:	Bill Gallardo

Subject:

2020-21 General Fund Budget Update

RECOMMENDATION

Receive and file presentation.

BACKGROUND/DISCUSSION

On June 16, 2020, the City Council adopted the Fiscal Year 2020-21 Operating Budget and included initial assumptions related to the current Coronavirus (COVID-19) pandemic. This included revenue loss assumptions in sales tax, transient occupancy tax and Community Services revenues. Staff attempted to be objective for both revenues and expenditures, but again, these assumptions were based on very finite information since the full impact of the pandemic was not known at that time. In the short-term, the use of the City's General Fund Excess Reserves in the amount of $1,560,050 were programmed to maintain service levels to the community as well as assess the longer-term impact of the City's revenue base.

At tonight's budget update, staff will highlight the City's General Fund budget and provide an overview of both revenue and expenditure adjustments since budget adoption, as well as provide an economic outlook on Brea's changing financial landscape. Identifying expenditure reductions was a collective effort from the entire organization, as departments worked together to identify expenditure reductions to offset the additional revenue loss experienced as a result of the current pandemic.

In summary, since budget adoption, departments identified a total of $2,067,957 expenditure reductions to offset the additional revenue loss of $1,968,204. This represents a net General Fund decrease in expenditures of $99,753. These adjustments are included in the first round of quarterly budget adjustments and are highlighted in the attached budget update presentation. Mitigation measures identified include the following:

Staffing/Personnel Expenditures

Furloughed part time regular employees that have direct cost to cancelled programs and closed facilities
Programmed vacancy savings due to attrition and recruitment process
Delayed recruitment of some vacant positions to realize temporary savings
Repurposed full time Community Services employees impacted by COVID-19 pandemic to cover COVID related duties (reimbursable by the CARES Act)
Secured CARES Act funding to offset COVID related expenses

Other Operating Expenditures

Reduced travel, training and meeting expenses as a result of travel restrictions
Reduced postage and program supplies as a result of cancelled programs and events
Suspend Brealine Newsletter as a result of cancelled programs and events
Reduced ActiveNet transaction fees and banking charges as a result of cancelled programs and events
Removed equipment and software purchases to realize temporary budget savings
Removed consultant labor negotiation costs
Programmed savings from School Crossing Guard contract

Though the organization has taken great strides to maintain service levels while adhering to State and County public health orders, the pandemic will continue to have longer-term impact to our budget than originally assumed. Our situation, like the rest of the nation, is evolving and planning for the future will require strategic thinking and new ways of doing business.

Looking ahead, staff will continue to review vacancies strategically, closely monitor revenues and evaluate reductions throughout the organization and commit to providing City Council quarterly budget updates. Staff will also make every effort to review and plan for future capital and operating needs and have it match our new economic reality.

FISCAL IMPACT/SUMMARY

No fiscal impact as this report is a receive and file. The fiscal impact, as described in this report, is reflected on the first quarter budget adjustments for FY 2020-21.

RESPECTFULLY SUBMITTED:

William Gallardo, City Manager
Prepared by: Alicia Brenner, Senior Fiscal Analyst
Reviewed by: Faith Madrazo, Revenue and Budget Manager
Concurrence: Cindy Russell, Administrative Services Director

Attachments
Budget Update Presentation