Fiscal Year 2013-2015 Special Budget Meeting

ATTACHMENT FY 2013-2015 BUDGET HIGHLIGHTS Page 11 Other Anticipated Costs in Excess of Reserve Balance There are number of anticipated costs, currently estimated at least more than $40.3 million, which would eliminate the surplus fund balance of $32.5 million. These costs are primarily related to the State Department of Finance and Controller’s Office’s ongoing review of actions related to Redevelopment dissolution, litigation, and police overtime for FY 2012-13. Below is some detail related to these anticipated expenditures:  Potential State reversal of third-party contracts and City Funding Agreement $ TBD  State/ROPS Review $TBD  Land sale reversals following State review of Redevelopment dissolution $31-35 million  Pending litigation settlement agreements (minimum) $4.3 million  Negotiated Settlement Agreement compliance costs $TBD  Police overtime for FY 2012-13 (net after accounting revenue growth) $1 million Total $40.3+ million Budget Concerns in Other Funds The City has also implemented a number of corrective action plans on non-GPF funds financial challenges. Some result from historical overspending and/or under collection. Others stem from more recent operational shortfalls. Currently, approximately $99 million remains in negative fund balances which have been paid down by about $40 million over the past three years. Negative fund balances are a result of overspending or under-recovery of costs. Historically the City has borrowed from available positive funds to cover shortfalls in negative funds. Most of the positive funds are restricted, and therefore the City must repay what it has borrowed. The FY 2013-15 Proposed Budget contains the Council’s policy repayment plan for the City to repay itself, and staff is monitoring this closely. Continued commitment to repayment, especially while interest rates are low, is needed to ensure the necessary financial progress. Table 10: Status of Negative Fund Balance Repayments Ending Ending Ending Estimated Fund Balance Fund Balance Fund Balance Fund Balance FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 1 Negative Funds with Repayment Plan (98,175,474) (94,379,909) (78,766,947) (69,755,454) 2 Reimbursable Negative Funds (22,448,746) (13,525,732) (18,692,300) (14,629,751) 3 Non-Reimbursable Negative Funds without Repayment Plan (17,542,656) (13,441,408) (14,031,629) (14,531,629) (138,166,876) $ (121,347,049) $ (111,490,876) $ (98,916,834) $ FY 2010-10 to FY 2012-13 repayment amount (39,250,042) $ Negative Fund Balance Summary for FY 2010 thru 2013 Total Negative Funds Negative Fund Category