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Budget Stabilization Plan <br />September 19, 2011 <br />Page 2 <br />In June, the City adopted the FY 2011-12 budget that included a structural deficit of $13.6 million <br />between expected revenues and planned expenditures. This budget gap will be filled through a <br />combination of: 1) projected savings from anticipated retirements, 2) departmental reductions and <br />reduced purchases, and 3) the use of internal service funds that were above required levels in <br />the City's liability and workers compensation funds. However, most of these strategies do not <br />address the inherent structural deficit. The chart below shows that while reductions were made <br />over the past several years, and have been planned for in FY 2011-12, they are not all structural <br />in nature nor are they deep enough. <br />The following ten-year financial perspective illustrates the problem that the City has been <br />experiencing over the past five years and the gap between revenues and expenditures in the <br />current and coming years. The chart below was developed by Management Partners and was <br />based on known information at the time the 2011-12 Budget was adopted. Since the adoption of <br />the budget, new risks have emerged such as the elimination of vehicle license fees and the <br />decline of utility user tax revenues. <br />Ten-Year Financial Perspective <br />(Based on FY2011-12 Adopted Budget Showing a $13.61VI Deficit) <br />Million <br />$240.0 <br />$230.0 <br />$220.0 <br />$210.0 <br />$200.0 <br />$190.0 <br />$180.0 <br />$170.0 <br />$232.0 <br />$223.0 $223.0 $223.0 <br />$218.1 <br />1 .s <br />$220. $210.0 <br />$218.2 <br />$21z.s <br />$209.4 $201. $210.8 <br />203.5 <br />$199.2 $199.8 <br />Actual Actual Actual Actual Estimated Adopted FY 12/13 FY 13/14 FY 14/15 FY 15/16 <br />FY 06/07 FY 07/08 FY 08/09 FY 09/10 FY 10/11 FY 11/12 <br />-A-Total General Fund Revenues & Transfers - In (Total General Fund Expenditures and Transfers - Out <br />To bridge the structural deficit, the City's unrestricted fund balance was used to maintain <br />services. Currently it is estimated that there is only $5 million in unrestricted funds remaining. The <br />recommended reserve level by the Governmental Finance Officers Association is two months of <br />operating expenses which for Santa Ana would be approximately $35 million. The following chart <br />illustrates the use of the City's unrestricted funds over the past five years. <br />60A-2