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10. Lastly, the $2,000 one-time lump sum payment comes out to about <br /> $1,000,000. <br /> 11. The budgetary treatment of the lump sum payment is debatable. <br /> 12. First, had the City Manager been able to come to agreement much earlier <br /> with the POA, all the funds for the lump sum payment most likely would have <br /> applied to FY 22-23. Instead, the Council must now evaluate options down the <br /> road to identify areas to offset this and other deficits. <br /> 13. One area to fund the lump sum payment would be the debt <br /> stabilization fund, which takes the general fund projected balance from the current <br /> year off the top before funds are allocated for the next year's budget. The fund <br /> operates with no transparency and in FY 22-23, the contribution from the prior <br /> year more than doubled. Total contributions to date are about $22,000,000. <br /> 14. Another consideration is to record the lump sum payment expense in FY 22- <br /> 23 and using debt stabilization fund balance as an offset. <br /> 15. Second, The MOU covers 1/1/23 to 12/31/23: therefore, depending on what <br /> the intention of this lump sum payment (i.e. to cover retroactive pay from 1/1/23- <br /> 6/30/23) can help determine how feasible this can be. <br /> 16. The process is feasible under the rules for government accounting whereby <br /> the expenses are recognized when the liability is incurred, if measurable. The one- <br /> time payment is measurable and upon approval by Council can be considered <br /> incurred before 6/30/23. (Ref: Fund Accounting Theory and Practice. Lynn and <br /> Freeman, 2nd Ed, Page 35) <br /> 17. Unless there is some valid, well- documented reason to record the expense <br /> in FY 23-24, the lump sum payment belongs in FY 22-23 and avoids a deficit. <br /> I hope this helps. <br /> VICTOR D MENDEZ <br /> WARD 3 <br /> SANTA ANA, CA 92705 <br /> 2 <br />