Item 38 - Fiscal Year 2021-2022 General Fund - First Quarter Budget Update

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Receive and file the FY 2021-2022 General Fund - First Quarter Budget Update December 21, 2021 Page 7 2 3 6 1 Wireless hotspots have been expanded to allow for filtered safe internet services for the City's youth community. Year-round aquatics program at Memorial Pool and seasonal aquatic programs for youth to promote water safety and stay physically active. The Youth Internship program, in partnership with the Santa Ana Youth (SAY) Employment Program, provides a paid work experience to introduce youth into the workforce and is a year around program. The City Council recently received a report of FY20-21 actual expenditures in the Cannabis Public Benefit Fund, as recommended by the Orange County Grand Jury. Parking Enterprise The Parking Enterprise fund was impacted by COVID-19, but as outdoor dining continues to be an option in the downtown area and events are planned during the year, we expect to see a slight improvement in parking revenue. However, staff may recommend a subsidy with the FY21-22 Mid-Year Budget Report to fund ongoing parking operations. Internal Service Funds Internal Service Funds are used to centralize the budget and accounting for services provided to other City departments. Examples include General Liability claims and coverage, Employee Benefits, Building Maintenance, and Fleet Maintenance. The City utilizes a consultant to review, validate, and develop internal charges to City departments. The FY21-22 budget included increased charges for some of these funds; but other charges have remained static while labor, supply and contract costs continue to increase. As such, some of the Internal Service Funds are still troubled and in need of increased contributions to sustain service levels. General Liability Fund The City’s Budget and Reserve Policy includes a target reserve equal to 80% of the actuarial-determined loss liability. The General Liability Fund is short of this target over the next two years by $6.4 million. Staff will work towards developing a long-term plan to achieve target reserve levels. Workers Compensation Liability Fund The Workers Compensation Liability Fund is also short of the target reserve level over the next two years by $12.9 million. Staff will work towards developing a long-term plan to achieve target reserve levels. Employee Benefits Fund The pass-through charges accounted for in the Employee Benefits Fund have remained level for many years, even though the City’s costs for employee benefits have steadily increased. The fund has been operating at a loss, depleting the previously accumulated fund balance. The actual fund balance at June 30, 2021 was negative $1,227,916. The FY21-22 budget would deplete the fund balance by another $2.2 million, as shown on page B-21 of the budget document. Recently, staff and the City’s consultant worked