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Home My WebLink About2021-09-28; City Council; ; General Fund Surplus Policy: Approval of Fiscal Year 2020-21 Budget Carryforward Requests and Appropriation of Funds to FY 2021-22Meeting Date: Sept. 28, 2021 To: Mayor and City Council From: Scott Chadwick, City Manager Staff Contact: Ryan Green, Finance Director ryan.green@carlsbadca.gov, 760-602-2414 Subject: General Fund Surplus Policy: Approval of Fiscal Year 2020-21 Budget Carryforward Requests and Appropriation of Funds to FY 2021-22 District: All Recommended Action 1)Adopt a resolution: •Authorizing the appropriation of $6.4 million across all city funds and approving the disbursement of this $6.4 million as an additional discretionary contribution to CalPERS to achieve an 80% funded ratio; •Approving the fiscal year 2020-21 budget carryforward request list of individual items over $100,000, which totals $1,589,243 across multiple city funds, and appropriating the funds to the FY 2021-22 budget; 2)Consider additional uses of the General Fund surplus from FY 2020-21, including: •Adopting a resolution to increase the City Council’s contingency funding for FY 2021-22 •Adopting a resolution to commit additional General Fund surplus to fund a Section 115 irrevocable trust and direct city staff to return with options for account administration and investment management •Adopting a resolution to approve an additional transfer to the General Capital Construction Fund, Infrastructure Replacement Fund and/or Technology Investment Program to fund future projects that could include: o Police and Fire Headquarters o Monroe Street Pool o Additional Fire station o Growth management plan o Unspecified future items •Adopting a resolution to approve an additional transfer to the workers’ compensation fund, which is currently estimated to be funded at a 50% confidence level according to the most recent actuarial study, •Taking no additional action and allowing the surplus to increase the General Fund reserve balance. Sept. 28, 2021 Item #12 Page 1 of 23 Executive Summary City Council Policy No. 87 - General Fund Surplus Policy established a policy for the appropriation of surplus funds resulting from actual revenues exceeding actual expenditures, plus any unspent and unencumbered expenditure budget for a given fiscal year. The request for the appropriation of unspent and unencumbered expenditure budget is referred to as a budget carryforward of funds. In accordance with Policy No. 87, staff are presenting the list of budget carryforward requests and appropriation of funds to FY 2021-22 for the City Council’s consideration and approval. Those requests are detailed below. Staff are also reporting that the city is in conformance with the General Fund Reserve City Council Policy, and out of conformance with the City Council policy on pension funding (Policy No. 86). Staff therefore recommend the City Council apply unused budget from the prior fiscal year to reduce the city’s unfunded pension obligation, as explained below. This item is before the City Council because council policies require reporting the status of the reserve levels relative to the policy to the council, and because the council’s approval is required for individual carryforwards greater than $100,000. Discussion The FY 2020-21 surplus, or unspent and unencumbered expenditure budget, for the General Fund on June 30, 2021, was $25.8 million. This balance has been decreased to $15.5 million after considering previous City Council actions carrying forward balances into FY 2021-22— additional details are provided below. The unspent balance is the result of several factors, including, but not limited to, salary savings from partial year position vacancies, prudent spending from departments, especially in light of the current COVID-19 pandemic, and items or activities that were budgeted in FY 2020-21, but for various reasons were not purchased or encumbered by fiscal year’s end. Items approved by prior City Council action Various items have already been approved by the City Council to be carried forward that were budgeted in FY 2020-21, but for various reasons were not purchased or encumbered by fiscal year end. A list of unspent grant funding, developer deposits, and other items approved by prior City Council action is included as Exhibit 3 of this staff report. These items include: • Grant balances, developer deposits and innovation funds unspent on June 30, 2021, were approved for carryforward in the FY 2021-22 operating budget resolution (2021- 132) adopted by the City Council on June 8, 2021 o Grant funding approved but not yet completely expended by fiscal year end for various programs and services included:  $144,767 to carry forward in unspent grant funding in the General Fund  $630,164 in total unspent grant funding in all other funds o Unspent developer deposits received for developer funded studies that were not completed by fiscal year end totaling $107,620 in the General Fund o Unspent innovation funds of $9,628,375 set aside for various planned technology innovation projects were unspent at fiscal year end  The City Council also approved the transfer of these carryforward funds in FY 2021-22 from the Innovation Fund to the Technology Investment Sept. 28, 2021 Item #12 Page 2 of 23 Capital Fund 375 to create the Strategic Digital Transformation Investment Program budget • The City Council approved to carry forward $291,333 of unspent COVID-19 Economic Revitalization funds via Resolution No. 2021-114 o Funding of $5 million was set aside from reserves and approved for investment in economic recovery and revitalization initiatives related to COVID-19, including a microloan program for businesses Council Policy No. 87 – General Fund Surplus Policy This policy established the process of using surplus funds after a fiscal year is closed. The policy dictates that the city will take the four actions, in order, listed below along with staff’s updates and recommendations. City Council reserve policy update Staff manage city funds in accordance with the council’s policies on pension funding and reserves. Action 1 - The city will use surplus funds to replenish any General Fund reserve deficiencies, up to 40%, as set forth in the City Council General Fund Reserve Policy No. 74. • The city’s General Fund reserve is projected to end the fiscal year at approximately $105.3 million, or 57% of the FY 2021-22 budget, excluding the Economic Uncertainty set aside funds of $9.6 million. Action 2 - The city will use surplus funds to replenish any pension liability deficiencies to achieve a pension funded ratio of no less than a minimum of 80%, with a target funded ratio range of 80% to 85%/ • The city’s combined miscellaneous and safety pension funded ratio at June 30, 2020 is 79.2% funded,1 leaving a deficit of $6.4 million to achieve an 80% funded ratio. A midyear payment applying $4.3 million to safety and $2.1 million to miscellaneous would result in a cumulative savings of approximately $710,000. The midyear expenditure would be split amongst the city’s many funds: $5.8 million in the General Fund and $600,000 across other funds. The annual savings is estimated to have a $650,000 impact in the General Fund and $60,000 across other funds. • To achieve an 85% funded ration, the city would need to contribute $37.5 million in addition to the $6.4 million mentioned above. Carryforward process In July 2021, city departments were asked to submit carryforward requests that are one-time in nature and not for ongoing services, programs or personnel to the Finance Department. The requests were reviewed by the City Manager. According to Council Policy No. 87, the City Manager may approve individual request items less than $100,000 to be carried forward into the following fiscal year. All items equal to or greater than $100,000 must be brought forward to the City Council for approval. 1 At June 30, 2021, based on the most recent CalPERS actuarial report, the city’s total pension assets are $584,045,500 and city’s total pension liability is $750,518,962. The city made an additional discretionary payment of $10 million in June of 2021 which has been manually added to calculate the current funded ratio. Sept. 28, 2021 Item #12 Page 3 of 23 Action 3 - The City Manager is authorized to approve the carry forward of any remaining surplus funds for a particular item equal to or less than $100,000 into the following fiscal year.2 • The City Manager approved $693,984 in General Fund carryforward requests and $1,122,363 in carryforward requests for other non-General Fund funds. All individual items are less than $100,000. A listing of all City Manager-approved requests is included as Exhibit 2 of this staff report. Action 4 - Items equal to or greater than $100,000 will be brought forward for City Council consideration to approve the use of any remaining surplus funds. • The requested items over $100,000 requiring City Council approval are listed and described in the following section. The General Fund carryforward requests total $788,660 and the non-General Fund requests total $800,583. A listing of these requests is included as Attachment A to Exhibit 1. Carryforward requests exceeding $100,000 Environmental analysis for the Housing Element implementation – $170,000 The City Council approved the environmental analysis for the Housing Element implementation on April 6, 2021 with Resolution No. 2021-073. As part of this resolution, the City Council allocated an additional $200,000 from the General Fund's City Council contingency for public engagement and environmental analysis needed for this citywide rezoning effort. The Community Development department requests to carryforward the remaining balance for this effort. Hotel voucher program for households experiencing homelessness in Carlsbad to bridge them to permanent housing – $260,000 This item was approved and appropriated as an addition to the FY 2020-21 budget as part of the City Council's goal to reduce the homeless population. These funds will support a new hotel voucher program for households experiencing homelessness in the city to bridge them to permanent housing. No funds were expended in FY 2020-21 because the program had not yet been implemented. These funds are still needed for the hotel voucher program for FY 2021-22. The funds would be carried forward to the new Housing & Homeless Services Department to support this program. Unspent public arts program funds – $258,660 As part of the FY 2016-17 budget process, the City Council approved an ongoing annual appropriation of $100,000 for new public art, including both permanent and temporary installations. The intent of this ongoing annual $100,000 appropriation was to effectuate public art projects for the benefit of the residents of Carlsbad. Projects regularly span more than one fiscal year, necessitating the carry forward of unspent funds from previous fiscal years to keep project funding in place. 2 These items will be one-time expenditures and not for on-going services, programs or personnel. Sept. 28, 2021 Item #12 Page 4 of 23 The requested amount of $258,660 to be carried forward is calculated as follows: FY 2020-21 adopted budget $100,000 FY 2019-20 carryforwards $280,000 Total FY 2020-21 budget $380,000 FY 2020-21 expenditures $121,340 FY 2020-21 carryforward requested $258,660 Funding for one vehicle and outfitting for two vehicles for the Police Department’s Homeless Outreach Team – $100,000 In April 2021, the City Council approved a resolution to expand the Homeless Outreach Team by adding two additional officers and one additional sergeant. The City Council also approved the addition of two new fully-outfitted marked police vehicles. Due to the pandemic, the vehicles’ manufacturing company experienced many shortages, and the department was unable to place the order for both vehicles in FY 2020-21. One additional vehicle is still needed for the officers, at a cost of $50,000, and both vehicles will need to be outfitted once they are delivered, also $50,000. Non-General Fund requests for City Council Approval The department requests listed below total $800,583. Elevator repairs and maintenance for Tyler Court Senior Apartments – $100,583 Tyler Court Senior Apartments is a city-owned 75-unit complex that provides for 100% affordable housing to senior households with incomes at 30% and 50% of the San Diego County Area median incomes. The city has an agreement with a third party to manage the day-to-day operations of the apartment complex. The requested carryforward funds are for elevator repairs and maintenance that were not completed at Tyler Court Senior Apartments by the end of FY 2020-21. Purchase of new golf carts for The Crossings at Carlsbad Municipal Golf Course - $700,000 The city contracts with a management company to manage operations at The Crossings. These funds are requested to replace the entire fleet of 88 golf carts for $700,000, at a cost of approximately $8,000 per cart. The city expects to sell or trade in the existing fleet of 88 carts for approximately $2,000 per cart, or a total of $176,000. The Crossings performed better than budgeted in FY 2020-21, with actual revenues far exceeding budgeted revenues. Carryforward requests of less than $100,000 The City Manager approved $693,984 in General Fund carryforward requests and $1,122,363 in carryforward requests for other non-General Fund funds. All of those items are for less than $100,000. A listing of all City Manager-approved requests is included as Exhibit 2 of this staff report. Options Options for carryforward requests Staff have identified the following options in response to the carryforward requests brought forward for City Council approval: Option 1: Staff’s recommended actions Sept. 28, 2021 Item #12 Page 5 of 23 a. Authorizing the appropriation of $6.4 million across all city funds and approving the disbursement of this $6.4 million additional discretionary payment to CalPERS to achieve an 80% funded ratio using the most recent actuarial report available b. Approve all or a combination of individual carryforward requests equal to or greater than $100,000 presented above and listed in Attachment A to Exhibit 1 of this staff report. Staff will appropriate the City Council-approved carryforward requests to FY 2021-22 Pros • Adheres with the City Council’s Pension Funding Policy • Provides the city with long-term savings in interest payments to CalPERS • Provides the needed resources to execute city programs as detailed in Attachment A to Exhibit 1. Con • The funds used would not be available for other programs the City Council might wish to fund. Option 2: Take no action on the carryforward requests brought forward for City Council approval. Pro • Funds would be returned to the reserve account and be available to support future needs. Con • Departments will be unable to fully implement planned programs and expenditures Options for surplus funds If the recommended action is chosen, there remains a projected $7.6 million in surplus funds available. Many options to deploy these unused funds from FY 2020-21 are presented for the City Councils consideration: Option A: Increase the City Council’s contingency funding for FY 2021-22 The City Council contingency was set at $500,000 during the FY 2021-22 budget process based on historical usage. If the City Council desires, the balance could be increased to a level commensurate with previous practice Pro • The City Council would have additional flexibility and funding during FY 2021- 22 should funding be required Con • Funds would not be available for other purposes Option B: Commit additional General Fund surplus to fund a Section 115 trust,3 an account dedicated to prefunding employer contributions to defined benefit pension systems, and direct city staff to return with options for account administration and investment management. 3 The Internal Revenue Service has determined that trusts established for the exclusive purpose of funding public agencies’ employee benefit obligations are entitled to certain tax benefits, particularly exemption from income tax. Sept. 28, 2021 Item #12 Page 6 of 23 Pros • The balance can act as a reserve fund to offset potential volatility in CalPERS annual contribution or rate requirements and act as a set-aside and available for use in reducing the city’s pension obligations • Assets in the trust can be placed into a broader range of investments than is permitted for other general governmental funds (trust investments are still governed by restrictive fiduciary rules) • A trust diversifies the city’s investments in pension assets Cons • Funds would only be available for future pension costs or to reimburse the city for any required annual CalPERS employer contributions. Funds would not be available for other purposes The trusts are irrevocable, meaning that the resources deposited into the trust become the property of the trust and cannot be withdrawn for purposes other than to pay pension costs. However, as long as the city’s Section 115 trust does not exceed one year’s required annual city CalPERS contribution – approximately $22 million in FY 2021-22 – the city can liquidate the entire balance within one year Option C: Approve an additional transfer to the General Capital Construction Fund, Infrastructure Replacement Fund and/or Technology Investment Program to fund future projects. The city has many unfunded capital projects, including some that cannot be foreseen. If the City Council desires, it could provide funding for: • Police and Fire Headquarters • Monroe Street Pool • Additional fire station • Growth management plan • Unspecified future items Pros • Funds would be available for major capital purchases in the future • The city’s reserve balance would be reduced • Unused balances can be transferred back to the General Fund for other purposes Cons • Funds, once appropriated to a capital project, would not be available for other purposes Option D: Approve an additional transfer to the workers’ compensation fund The city is self-insured for workers’ compensation. The city’s Workers’ Compensation Fund is assessed annually by an external actuary firm that estimates the city’s outstanding losses based on current claims, case reserves and incurred but not reported claims. The most recent report, when compared to the current fund balances, indicate the city has additional potential exposure that could be mitigated. Sept. 28, 2021 Item #12 Page 7 of 23 Confidence level4 Estimated outstanding losses Balance of Workers’ Compensation Fund Current funding shortfall 50% $ 22,009,758 $ 13,420,822 $ 8,488,936 70% 26,411,710 13,420,822 12,890,888 80% 31,033,759 13,420,822 17,512,937 90% 38,737,174 13,420,822 25,216,352 Losses and balances are as of June 30, 2021 Pros • The city’s Workers’ Compensation Fund would have additional funds to mitigate potential future exposure • The city’s reserve balance would be reduced to a level closer to the 40% target Cons • Funds, once appropriated, would not be available for other purposes Option E: Take no additional action and allow the surplus to increase the General Fund reserve balance Pros • Funds would be available for other uses in the future Cons • The city’s reserve balance would be above its targeted level Fiscal Analysis The unspent and unencumbered budget balance on June 30, 2021, for the General Fund and the amounts of the department carryforwards are as follows: Surplus funds (unaudited) 25,804,465 Previous City Council-approved carryforwards (10,172,095) Available surplus funds 15,632,370 General Fund reserve replenishment required - Pension liability deficiency (6,369,670) City Manager-approved carry forward requests (693,984) Carry forward requests for City Council approval (788,660) Available surplus funds after Policy 87 requirements 7,780,056 4 The city’s outstanding losses have a 50% chance of emerging higher or lower than $22,009,758. The actuary’s expected outcome is $22,009,758. Similarly, the city’s outstanding losses have a 10% chance of emerging higher than $38,737,174 and a 90% chance of emerging lower than $38,737,174. The actuary’s expected outcome is $22,009,758. Sept. 28, 2021 Item #12 Page 8 of 23 The impact of each associated action on the city’s General Fund reserve balance are shown below: Reserve Balance Reserve %* Beginning projected unassigned General Fund balance 105,280,576 57.0% Pension liability deficiency (6,369,670) -3.5% Subtotal projected unassigned General Fund balance 98,910,906 53.6% City Manager approved carry forward requests (693,984) -0.4% Carry forward requests for City Council approval (788,660) -0.4% Projected unassigned General Fund balance after CFs 97,428,262 52.8% Reserve balance requirement (40% of budget) 73,827,796 40.0% Excess reserve 23,600,466 12.8% *Calculated as a percentage of the FY 2021-22 adopted budget of $184,569,489. Next Steps All City Council approved carryforward requests will be appropriated to FY 2021-22. The annual fiscal year audit is currently underway for FY 2020-21. City staff will return to the City Council to present the results of the financial audit and the status of the city’s General Fund reserve after the final audit opinion has been issued. Environmental Evaluation In accordance with California Public Resources Code Section 21065, this action does not constitute a “project” within the meaning of the California Environmental Quality Act in that it has no potential to cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. Therefore, it does not require environmental review. Public Notification Public notice of this item was posted in keeping with the Ralph M. Brown Act and it was available for public viewing and review at least 72 hours before the scheduled meeting date. Exhibits 1. City Council resolution – CalPERS additional discretionary contribution and carryforward approval 2. Listing of City Manager-approved FY 2021-22 General Fund and non-General Fund carryforward budget requests 3. Listing of unspent grant and developer deposit balances for carryforward into FY 2021-22 4. City Council resolution – City Council contingency 5. City Council resolution – Section 115 trust 6. City Council resolution – Additional transfer to long-term capital fund(s) 7. City Council resolution – Transfer to Workers’ Compensation Fund Sept. 28, 2021 Item #12 Page 9 of 23 RESOLUTION NO. 2021-225 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING FISCAL YEAR 2020-21 BUDGET CARRYFORWARD REQUESTS AND APPROPRIATION OF FUNDS TO FISCAL YEAR 2021-22 AND APPROVING THE APPROPRIATION OF GENERAL FUND RESERVES IN FISCAL YEAR 2021-22 TO PAY DOWN $6.4 MILLION OF THE CITY'S EXISTING PENSION LIABILITY TO THE CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM EXHIBIT 1 WHEREAS, the City Council of the City of Carlsbad, California established City Council Policy No. 87 -General Fund Surplus Policy for th_e appropriation of surplus funds resulting from General Fund actual revenues exceeding total actual expenditures, plus any unspent and unencumbered expenditures budgeted for a given fiscal year; and WHEREAS, at the close offiscal year 2020-21, the city's unaudited General Fund reserve balance is 57% and has exceeded its General Fund Reserve Policy target of 40%; and WHEREAS, at the close of fiscal year 2020-21, the city's unaudited pension funded ratio is 79.2%, a $6.4 million shortfall from the Pension Funding Policy target range of 80-85%; and WHEREAS, at the close of fiscal year 2020-21, the remaining unaudited unspent and unencumbered expenditures budget for the General Fund is $25.8 million of which $10.2 million has been carried forward as a result of a previous City Council resolution, resulting in an available surplus of $15.6 million; and WHEREAS, in accordance with City Council Policy No. 87, the City Manager has approved individual items of less than $100,000 that total $693,984 in General Fund carryforward requests and $1,122,363 in carryforward requests for other non-General Fund funds; and WHEREAS, City Council Policy No. 87 requires City Council approval for the carryforward of any unspent and unencumbered budget for a particular item equal to or greater than $100,000; and WHEREAS, department carryforward requests submitted for City Council approval that total $788,660 in General Fund carryforward requests and $800,583 in carryforward requests for other non- General Fund funds are listed in Attachment A to this resolution. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. Sept. 28, 2021 Item #12 Page 10 of 23 General Fund RequestsDEPARTMENTFUNDDESCRIPTIONREQUESTTYPEREQUESTED AMOUNTCommunity Development001Housing Element Professional Services170,000$ Housing & Homeless Services001Motel/Hotel Voucher Program Pilot Program260,000 Library & Cultural Arts001Public Art FundsOther258,660 Police001Homeless Outreach Team vehiclesCapital Outlay100,000 Total General Fund Requests788,660$ Non‐General Fund RequestsDEPARTMENTFUNDDESCRIPTIONREQUESTTYPEREQUESTED AMOUNTTyler Court Senior Apartments806Elevator repairs and maintenanceProfessional Services100,583$ Golf Course572Toward purchase of new golf cartsCapital Outlay700,000 Total Non‐General Fund Requests800,583$ CITY OF CARLSBAD FY 2020‐21 TO FY 2021‐22(ITEMS EQUAL TO OR GREATER THAN $100,000)CARRYFORWARD BUDGET REQUESTSFOR CITY COUNCIL CONSIDERATIONAttachment A Sept. 28, 2021Item #12 Page 12 of 23 General Fund ItemsDEPARTMENTFUNDDESCRIPTIONREQUESTTYPEREQUESTED AMOUNTCity Manager's Office001Leadership Team TrainingProfessional Services7,500$ Community Development001Mills ActProfessional Services40,000 Facilities & Fleet001Fall Safety SystemEquipment & Supplies25,000 Fire001Reserve Aerial Ladder TruckOther78,900 Fire001Fire Station ComputersEquipment & Supplies10,000 Fire001iPad ReplacementEquipment & Supplies9,000 Fire001Wellness Pilot ProgramPilot Program12,000 Fire001Utility Terrain VehicleCapital Outlay30,000 Fire001Firefighting Foam MandateEquipment & Supplies12,000 Fire001SCBA Storage Cylinder MandateProfessional Services6,500 Fire001Office FurnitureEquipment & Supplies10,000 Fire001Fire Records Online Payment FormProfessional Services6,000 Fire001Digital Dashboard EquipmentEquipment & Supplies4,200 Housing & Homeless Services / Police001Temporary Pet Shelter ProgramPilot Program35,000 Housing & Homeless Services / Police001Misc. Programming Other24,000 Innovation & Economic Development001Faraday Offices ClickShare & InstallEquipment & Supplies4,415 Innovation & Economic Development001IEDC Conference RegistrationOther2,847 Innovation & Economic Development001Program Management Certificate TrainingOther2,261 Library & Cultural Arts001Digital Matrix Processor Equipment & Supplies6,512 Library & Cultural Arts001eBulletin Board Software UpgradeEquipment & Supplies8,169 Library & Cultural Arts001Replace 28 Desktop PCs with LaptopsCapital Outlay42,000 Library & Cultural Arts001Arts Ed ‐ STEAM ConsultantProfessional Services25,000 Library & Cultural Arts001Arts Maintenance ContractProfessional Services15,000 Parks & Recreation001Office Renovation & SecurityCapital Outlay99,000 Parks & Recreation001Market Lighting Equipment & Supplies15,000 Parks & Recreation001Property Boundary SurveysProfessional Services16,251 Parks & Recreation001Master Plan: Add Scope to Agreement & CF CommunicationsProfessional Services84,400 Police001Barriers for Village FaireProfessional Services18,749 Police001Radio Encryption InstallationProfessional Services19,050 Police001Nakoa Wellness ProgramPilot Program25,230 Total General Fund693,984$ CITY OF CARLSBAD FY 2020‐21 TO FY 2021‐22(ITEMS LESS THAN $100,000)APPROVED BY CITY MANAGERCARRYFORWARD BUDGET LISTINGExhibit 2 Sept. 28, 2021Item #12 Page 13 of 23 Non‐General Fund ItemsDEPARTMENTFUNDDESCRIPTIONREQUESTTYPEREQUESTED AMOUNTFleet Replacement621Vehicle Outfitting CompletionEquipment & Supplies 157,765$ Information Technology640Prosci Change Management CourseProfessional Services13,500 Information Technology640Motorola ConferenceProfessional Services7,000 Information Technology640NetMotion TrainingProfessional Services5,000 Information Technology640ESRI Developer SummitProfessional Services3,000 Information Technology640ServiceNow Knowledge 2022 ConferenceProfessional Services5,000 Information Technology640Central Square ConferenceProfessional Services6,000 Information Technology640NorthStar ConferenceProfessional Services2,100 Information Technology640Tyler Connect ConferenceProfessional Services5,500 Information Technology640LaserFiche ConferenceProfessional Services1,500 Information Technology640DocuSign ConferrenceProfessional Services2,000 Information Technology640Architecting on AWS TrainingProfessional Services2,100 Information Technology640Tableau Desktop I & II Advanced TrainingProfessional Services2,100 Information Technology640Azure Backup MigrationEquipment & Supplies50,000 Information Technology Replacement640EnerGov Maintenance ConsolidationProfessional Services64,400 IT Replacement641Annual IT Hardware ReplacementCapital Outlay617,855 Library & Cultural Arts‐Gifts145Digital Mixing console ‐ Schulman AuditoriumEquipment & Supplies1,800 Lighting District162Street Light Lamp PurchaseEquipment & Supplies63,000 Storm Drain Maintenance521Misc. Outside Services: Storm Drain Inspection and Cleaning Professional Services56,000 Golf Course572Incomplete FY 2020‐21 projectsEquipment & Supplies56,743 Total Non‐General Fund1,122,363$ *Totals are comprised of individual items less than $100,000.Exhibit 2 Sept. 28, 2021Item #12 Page 14 of 23 General Fund ItemsDEPARTMENTFUNDDESCRIPTIONREQUESTTYPEREQUESTED AMOUNTCommunity Development001Unspent Developer DepositsUnspent Developer Deposits107,620$ Community Development001State SB2 grant unspent balanceUnspent Grant Balance125,000 Innovation Fund001Innovation Fund unspent balanaceResolution No. 2021‐1329,628,375 Library & Cultural Arts001Adult literacy grant unspent balanceUnspent Grant Balance13,065 Library & Cultural Arts001State library grant unspent balanceUnspent Grant Balance6,701 Non‐departmental001COVID Economic Revitalization unspent balanaceResolution No. 2021‐114291,333 Total General Fund10,172,095$ Non‐General Fund ItemsDEPARTMENTFUNDDESCRIPTIONREQUESTTYPEREQUESTED AMOUNTCommunity Development171Agricultural Mitigation Fee Fund ‐ unspent community grant balance Unspent Grant Balance66,818$ Community Development391Community Development Block Grant affordable housingUnspent Grant Balance282,368 Community Development190Federal Section 8 Program Cares Act Funding unspent balanceUnspent Grant Balance172,838 Police Grant124Justice Assistance Grant unspent balanceUnspent Grant Balance3,411 Police Grant124Office of Traffic Safety grant unspent balanceUnspent Grant Balance76,382 PW ‐ Environmental Management520State Beverage container grants unspent balanceUnspent Grant Balance28,348 Total Non‐General Fund630,164$ CITY OF CARLSBAD FY 2020‐21 TO FY 2021‐22ITEMS APPROVED BY PREVIOUS CITY COUNCIL ACTIONCARRYFORWARD BUDGET LISTINGExhibit 3 Sept. 28, 2021Item #12 Page 15 of 23 RESOLUTION NO. . A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AUTHORIZING THE APPROPRIATION OF GENERAL FUND RESERVES IN FISCAL YEAR 2021-22 TO INCREASE THE CITY COUNCIL’S CONTINGENCY FUNDING IN THE AMOUNT OF $500,000 FOR FISCAL YEAR 2021-22 WHEREAS, City Council Policy No. 87 – General Fund Surplus Policy allows for General Fund reserve levels in excess of the 40% target requirement to be used for one-time opportunity cost purposes at the discretion of the City Council; and WHEREAS, at the close of fiscal year 2020-21, the city’s unaudited General Fund reserve balance is 57% and has exceeded its General Fund Reserve Policy (City Council Policy No. 74) target of 40%; and WHEREAS, at the close of fiscal year 2020-21, the city’s unaudited pension funded ratio of 79.2%, a $6.4 million shortfall from the Pension Funding Policy (City Council Policy No. 86) target range of 80-85%; and WHEREAS, at the close of fiscal year 2020-21, the remaining unaudited unspent and unencumbered expenditures budget for the General Fund is $25.8 million of which $10.2 million has been carried forward as a result of previous City Council resolution, resulting in an available surplus of $15.6 million; and WHEREAS, in accordance with Council Policy No. 87, the City Manager has approved individual items of less than $100,000 that total $693,984 in General Fund carryforward requests and $1,122,363 in carryforward requests for other non-General Fund funds; and WHEREAS, City Council Policy No. 87 requires City Council approval for the carryforward of any unspent and unencumbered budget for a particular item equal to or greater than $100,000; and WHEREAS, the City Council adopted Resolution No. 2021-132, in part adopting the final operating budget for fiscal year 2021-22 for the City of Carlsbad; and WHEREAS, the fiscal year 2021-22 operating budget for the City of Carlsbad authorized $500,000 for the City Council’s contingency funding; and WHEREAS, additional funding of $500,000 would provide the City Council with more flexibility and funding should it be required that is commensurate with previous practice. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: Sept. 28, 2021 Item #12 Page 16 of 23 1. That the above recitations are true and correct. 2. That the Deputy City Manager, Administrative Services, is authorized to appropriate $500,000 from the General Fund Reserves to the City Council’s contingency funding. PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the __ day of ________, 2021, by the following vote, to wit: AYES: NAYS: ABSENT: _____________________________________ MATT HALL, Mayor ______________________________________ FAVIOLA MEDINA, City Clerk Services Manager (SEAL) Sept. 28, 2021 Item #12 Page 17 of 23 RESOLUTION NO. . A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, COMMITTING GENERAL FUND RESERVES IN FISCAL YEAR 2021- 22 TO FUND A SECTION 115 TRUST AND DIRECTING CITY STAFF TO RETURN WITH OPTIONS FOR ACCOUNT ADMINISTRATION AND INVESTMENT MANAGEMENT WHEREAS, City Council Policy No. 87 – General Fund Surplus Policy allows for General Fund reserve levels in excess of the 40% target requirement to be used for one-time opportunity cost purposes at the discretion of the City Council; and WHEREAS, at the close of fiscal year 2020-21, city’s unaudited General Fund reserve balance is 57% and has exceeded its General Fund Reserve Policy (City Council Policy No. 74) target of 40%; and WHEREAS, at the close of fiscal year 2020-21, the city’s unaudited pension funded ratio of 79.2%, a $6.4 million shortfall from the Pension Funding Policy (City Council Policy No. 86) target range of 80-85%; and WHEREAS, at the close of fiscal year 2020-21, the remaining unaudited unspent and unencumbered expenditures budget for the General Fund is $25.8 million of which $10.2 million has been carried forward as a result of previous City Council resolution, resulting in an available surplus of $15.6 million; and WHEREAS, in accordance with Council Policy No. 87, the City Manager has approved individual items are less than $100,000 that total $693,984 in General Fund carryforward requests and $1,122,363 in carryforward requests for other non-General Fund funds; and WHEREAS, City Council Policy No. 87 requires City Council approval for the carryforward of any unspent and unencumbered budget for a particular item equal to or greater than $100,000; and WHEREAS, the City Council of the City of Carlsbad, California participates in the California Public Employees’ Retirement System (CalPERS); and WHEREAS, participating in a Section 115 trust fund to prefund the city’s contributions to CalPERS could act as a reserve fund to offset potential volatility in CalPERS’s annual contribution or rate requirements and act as a set-aside available for use in reducing the city’s pension obligations; and WHEREAS, assets in the Section 115 trust fund can be placed into a broader range of investments than is permitted for other general governmental funds; and WHEREAS, the Section 115 trust fund diversifies the city’s investments in pension assets. Sept. 28, 2021 Item #12 Page 18 of 23 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the City Council directs staff to return with options for account administration and investment management in order to commit additional General Fund reserves in fiscal year 2021-22 to fund a Section 115 trust. PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the __ day of ________, 2021, by the following vote, to wit: AYES: NAYS: ABSENT: _____________________________________ MATT HALL, Mayor ______________________________________ FAVIOLA MEDINA, City Clerk Services Manager (SEAL) Sept. 28, 2021 Item #12 Page 19 of 23 RESOLUTION NO. 2021-226 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING THE APPROPRIATION AND TRANSFER FROM GENERAL FUND RESERVES IN FISCAL YEAR 2021-22 TO THE GENERAL CAPITAL CONSTRUCTION FUND, INFRASTRUCTURE REPLACEMENT FUND, OR TECHNOLOGY INVESTMENT PROGRAM TO FUND FUTURE PROJECTS EXHIBIT 6 WHEREAS, City Council Policy No. 87 -General Fund Surplus Policy allows for General Fund reserve levels in excess of the 40% target requirement to be used for one-time opportunity cost purposes at the discretion of the City Council; and WHEREAS, at the close of fiscal year 2020-21, city's unaudited General Fund reserve balance is 57% and has exceeded its General Fund Reserve Policy (City Council Policy No. 74) target of 40%; and WHEREAS, at the close of fiscal year 2020-21, the city's unaudited pension funded ratio of 79.2%, a $6.4 million shortfall from the Pension Funding Policy (City Council Policy No. 86) target range of 80-85%; and WHEREAS, at the close of fiscal year 2020-21, the remaining unaudited unspent and unencumbered expenditures budget for the General Fund is $25.8 million of which $10.2 million has been carried forward as a result of previous City Council resolution, resulting in an available surplus of $15.6 million; and WHEREAS, in accordance with Council Policy No. 87, the City Manager has approved individual items are less than $100,000 that total $693,984 in General Fund carryforward requests and $1,122,363 in carryforward requests for other non-General Fund funds; and WHEREAS, City Council Policy No. 87 requires City Council approval for the carryforward of any unspent and unencumbered budget for a particular item equal to or greater than $100,000; and WHEREAS, the city has many unfunded capital projects that are known and some that are unknown; and WHEREAS, an additional appropriation and transfer to either the General Capital Construction Fund, Infrastructure Replacement Fund, or Technology lnve~tment Program could fund future projects. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. Sept. 28, 2021 Item #12 Page 20 of 23 RESOLUTION NO. . A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING THE APPROPRIATION AND TRANSFER FROM GENERAL FUND RESERVES IN FISCAL YEAR 2021-22 TO THE CITY’S WORKERS’ COMPENSATION FUND WHEREAS, City Council Policy No. 87 – General Fund Surplus Policy allows for General Fund reserve levels in excess of the 40% target requirement to be used for one-time opportunity cost purposes at the discretion of the City Council; and WHEREAS, at the close of fiscal year 2020-21, city’s unaudited General Fund reserve balance is 57% and has exceeded its General Fund Reserve Policy (City Council Policy No. 74) target of 40%; and WHEREAS, at the close of fiscal year 2020-21, the city’s unaudited pension funded ratio of 79.2%, a $6.4 million shortfall from the Pension Funding Policy (City Council Policy No. 86) target range of 80-85%; and WHEREAS, at the close of fiscal year 2020-21, the remaining unaudited unspent and unencumbered expenditures budget for the General Fund is $25.8 million of which $10.2 million has been carried forward as a result of previous City Council resolution, resulting in an available surplus of $15.6 million; and WHEREAS, in accordance with Council Policy No. 87, the City Manager has approved individual items are less than $100,000 that total $693,984 in General Fund carryforward requests and $1,122,363 in carryforward requests for other non-General Fund funds; and WHEREAS, City Council Policy No. 87 requires City Council approval for the carryforward of any unspent and unencumbered budget for a particular item equal to or greater than $100,000; and WHEREAS, the city is self-insured for workers’ compensation; and WHEREAS, an external actuary firm estimated the city’s outstanding losses based on current claims, case reserves and incurred but not reported claims, and determined that when compared to current fund balances, the city has additional potential exposure that could be mitigated; and WHEREAS, the balance of the city’s workers’ compensation fund at June 30, 2021 is $13,420,822, which is $8,488,936 less that the actuary firm’s expected loss outcome of $22,009,758. Sept. 28, 2021 Item #12 Page 22 of 23 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That a transfer to the city’s workers’ compensation fund as determined by the City Council as set forth in the minutes of the City Council meeting of Tuesday, Sept. 28, 2021, is approved to help mitigate potential future exposure based on the most recent report from the external actuary firm. PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the __ day of ________, 2021, by the following vote, to wit: AYES: NAYS: ABSENT: _____________________________________ MATT HALL, Mayor ______________________________________ FAVIOLA MEDINA, City Clerk Services Manager (SEAL) Sept. 28, 2021 Item #12 Page 23 of 23