Preliminary Budget Overview General Fund Revenues/Expenditures

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1 June 11, 2018

2 Preliminary Budget Overview General Fund Revenues/Expenditures Law Enforcement IT Agency Requests Capital Projects Retirement Costs Capital Projects Water Fund Wastewater Fund

3 Fiscal Year General Fund Water Fund Wastewater Fund Transit Fund Estimated Revenues $ 8,104,148 $ 5,143,704 $ 1,723,737 $ 1,063,097 Estimated Expenditures $ 9,407,195 $ 7,329,420 $ 3,568,664 $ 1,371,361 Increase (Decrease) to Net Position $ (1,303,047) $ (2,185,716) $ (1,844,927) $ (308,264) Use of Reserves $ 1,303,047 $ 2,185,716 $ 1,844,927 $ 308,264 Total $ - $ - $ - $ - The funds will be utilizing reserves to cover the costs of capital projects and other items.

4 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $- $(2,000,000) Actual Actual Estimated Estimated Revenues $8,083,731 $8,639,657 $7,949,179 $8,104,148 Expenses $7,149,249 $8,161,145 $8,878,235 $9,407,195 Increase/ (Decrease) $934,482 $478,512 $(929,056) $(1,303,047) Unassigned Fund Balance $5,345,636 $5,824,932 $4,895,876 $3,592,829

5 Source FY Budget % of Total Revenue FY Budget % of Total Revenue Transient Occupancy Taxes $4,050,000 50% $4,100,000 51% Sales Tax $1,190,000 15% $1,300,000 16% Property and Other Taxes $1,321,700 16% $1,367,450 17% Charges for Services $495,329 8% $495,529 7% Other $892,150 11% $841,169 10% Total $7,949, % $8,104, %

6 * Based on Budget Projections

7 Law Enforcement Services Salaries and Benefits IT Costs Capital Outlays Agency Requests Solvang Conference and Visitors Bureau

8 FY Law Enforcement Contract represents approximately 19% of General Fund expenses. Contract cost is going up by 1% for FY , and now includes the Community Resources Deputy. We anticipate the Contract to increase 5%/year for the next 2-3 years.

9 FY Salaries and Benefits represent approximately 32% of General Fund expenses Salaries Payroll Taxes Cafeteria Plan Retirement Retiree Health Includes OPEB Trust Ongoing premiums Workers Compensation

10 FY Premium Decrease of 18% Based on a rolling 5 year period Total cost is $191,239 and includes the retrospective adjustments for earlier claims. Strategies Employee Safety Training Return to Work Program Nurse Hotline Continued Collaboration with CJPIA Partnership with Buellton Medical Center

11 Computer Support Financial System, Laserfiche, GIS, Archiving, IT Support (no increase from prior year), Civic Rec Software/Website Website Hosting, Antivirus, New Work Order Software for Public Works Computer Equipment Desktop Replacements (7), Monitors, Misc Replacement Parts Video Equipment New video camera for Council Chambers - $6,500

12 Category Computer Support Software/ Website Computer Equipment FY 2014/15 Actual FY 2015/16 Actual FY 2016/17 Actual FY 2017/18 Budget FY 2018/19 Budget $63,979 $74,178 $55,478 $83,883 $82,754 $15,724 $11,321 $5,244 $8,286 $6,243 $7,057 $3,065 $4,744 $12,133 $12,683 Total $86,760 $88,564 $65,467 $104,302 $101,860

13 Project Cost Alisal Road Sidewalk Phase 2 $ 505,000 Water Meter Replacement Project (Transfer to Water Fund) $ 405,000 Second Street Drainage Improvements $ 271,000 HCA Road paving/parking lot $ 100,000 Storm Drain Master Plan $ 69,000 Vets Hall Restroom ADA-design $ 60,000 HCA Tennis Court Restrooms $ 50,000 Mission/Fifth Underground Utility District $ 50,000 Slurry Seal Parking Lots $ 48,000 Solvang Park Gazebo $ 30,000 Sunny Fields Playground Repairs $ 15,000 Centennial Plaza Display $ 13,500 City Hall Parking Lot Pergola Repair $ 10,000 Total $ 1.626,500

14 22 Agencies Applying for Funds Total Requests: $527,500 FY Budgeted Amount: $254,500 This represents approximately 3% of FY General Fund Revenue. The SCVB and Library are not included in these numbers. The Library was budgeted separately, for $182,646 based on information to date from the County. New amount is $173,333.

15 Actual Actual Actual Actual Recommendation Base $624,412 $675,000 $726,000 $760,000 $736,000 Matching $24,412 $25, $30,000 Total $648,824 $700,000 $726,000 $760,000 $766,000

16 * Proposed

17 Centennial Plaza Display - $13,500 Solvang Park: Gazebo ADA Upgrades - $30,000

18 While we are doing capital projects in several funds, we are not anticipating any grant funds that would be passed through our Capital Projects Fund.

19 FY Retirement 4 Components Classic Members Normal Cost: Employees contribute 8%; Net rate to City is 3.419%. Classic Members City Pays Employee 8% Share PEPRA Members Employer Pays approx. 50% of the Normal Cost; Employees Pay 6.5% UAL Unfunded Liability

20 Classic Members - Normal Cost Employer Normal Cost Rate % % % % % % % Employee Contributions 6% 8% 8% 8% 8% 8% 8% Net Normal Cost Rate 4.808% 2.848% 3.419% 4.000% 5.000% 5.000% 5.000% Payroll $ 2,220,669 $ 2,218,027 $ 2,136,361 $ 2,200,452 $ 2,266,465 $ 2,334,459 $ 2,404,493 Classic Members - Normal Cost $ 106,770 $ 63,169 $ 73,042 $ 88,018 $ 113,323 $ 116,723 $ 120,225 Classic Members - Employer Paid 8% Employee Share $ 177,654 $ 177,442 $ 170,909 $ 176,036 $ 181,317 $ 186,757 $ 192,359 Unfunded Accrued Liability $ 139,418 $ 168,981 $ 213,073 $ 264,000 $ 305,000 $ 356,000 $ 401,000 Classic Members - Total Employer Cost $ 423,841 $ 409,593 $ 457,024 $ 528,054 $ 599,641 $ 659,480 $ 713,584

21 The increase in our rate is partly due to the revised discount rate (rate of expected returns) set by CalPERS. Over the next three years, CalPERS is moving from a discount rate of 7.5% to 7%. CalPERS is shortening the amortization period from 30 years to 20 years.

22 As of June 30, 2017, our unfunded CalPERS liability was $3,370,661 as disclosed in our Notes to the Financial Statements. As of June 30, 2017, our unfunded Other Post Employment Benefits (OPEB) liability was $1,994,420 as disclosed in our Notes to the Financial Statements. Currently participating in a Trust to earn a better return and reduce our liability.

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24 The Water Fund is utilizing its available reserves in the amount of $2,185,716 to complete approximately $2.7M in projects and one-time purchases. We anticipate an additional $200,000 in water consumption revenue. Expenses are increasing due to: Projects planned for well development $922,000 Upland Well $70,000 River Well $820,000 Supplemental Table A Water

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28 The Wastewater Fund is utilizing its available reserves in the amount of $1,844,927 to complete approximately $1.4M in projects. Projects include $950K for environmental processing and engineering design work for a Treatment Plant upgrade project.

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31 Project Cost Purchased water (includes $820K for Table A Suspended Water) $ 1,047,080 WWTP Upgrades project $ 950,000 Upland well development (well 22) $ 922,000 Meter Replacement Project $ 430,000 Resevoir 2 Access Road Improvements $ 175,000 Dredge Pond at the WWTP $ 160,000 Fjord Odor Control Upgrade Project $ 140,000 New Generator (partial from Water Fund - partial from Vehicle Pool) $ 125,000 Sewer Line Rehab under Mission Dr $ 100,000 Trench failure repair $ 40,000 Valve Exercising Machine $ 30,000 Manhole lining $ 30,000 Sustainable Groundwater Management $ 25,000 River Well Development - Right of Way $ 20,000 SCADA Modifications $ 10,000 Total $ 4,204,080

32 Looking ahead Law Enforcement Contract CalPERS Employer Contribution Increases Options to reduce CalPERS Pension Liability Continued contributions to the OPEB Trust Water and Wastewater Rate/Reserves Evaluation