May 26, 2016 Budget Workshop

1. Fiscal Year 2016-17
City of Corona – Budget Workshop
May 26, 2016
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2. Mission and values of effective budgeting
Accountability
TransparencySustainability
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3. Goals and objectives of effective budgeting
Communication
“Feedback and direction”
Monitoring
“Reporting and evaluation”
Preparation
“Cost control, priorities and
planning”
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4. What are the goals of effective budgeting?
Preparation
PreparationCost Control and
Prioritization
• Zero-based budgets
• Detailed substantiation
• Recurring needs
• Prioritization / allocation
of limited resources
Financial Planning
• ‘Two Year Budgeting’ -
Prior Year, Current Year,
Next Year, Next Year + 1
• Long-range planning
Monitoring
Monitoring
Reporting
• Useful, timely, and
complete
• Creates dialogue, action,
and transparency
Evaluation
• Informed decision-
making by City Council
• Performance measures –
are budgetary
investments bearing
fruit?
Communication
Communication
• City Council Members
• Internal stakeholders
(departments)
• External stakeholders
(public)
• Open Data Corona
Feedback
• Policy and direction for
next year
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5. Zero-Based Budgeting
Goals of Zero-Based Budgeting
• Budget for ordinary and necessary business needs for the upcoming
year
- What is the ‘Base Budget’
- Elimination of arbitrary ECB targets which can lose relevance as
services expand and contract over time
• Substantiate, prioritize and build the budget each year from the
ground up
‘Zero-based’ versus ‘Expenditure Control (Target-based) Budgeting’
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6. Other Budget Procedural Changes
Promoting effective budgeting and fiscal sustainability
Comprehensive review of revenues
- 10 years of historical data
- Segregating recurring revenue from non-recurring revenue
Transition to multi-year planning
- Promotes fiscal sustainability and better decision-making
- Setting the foundation for a two-year vs. annual budget process
- Five year forecasting
Changes to budgetary reserves, controls and amendment policies
- Personnel (or savings) will no longer offset non-personnel costs
- Budgetary controls for capital projects and change orders
- Emergency Contingency Reserve Target  from 60 to 90 days of
operating expenses
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7. Economic Outlook
Fiscal Year 2016-17
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8. Economic Outlook for Fiscal Year 2016-17
Assumes similar economic conditions experienced in 2015-16.
National and statewide growth in personal incomes, jobs and GDP
- Lower rates of borrowing, lower cost of fuel, higher personal
incomes and take-home pay  affordability of living
Locally, gains in jobs / job quality in the Inland Empire and local real
estate developments create opportunities and positive outcomes
Source: Beacon Economics, April 2016
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9. Economic Outlook for Fiscal Year 2016-17
Jobs forecast data for the Inland Empire reflect positive trends. (April 2016)
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• Inland Empire unemployment
rate at 6.0% (April 2016)
• Lower than 6.8% rate reported
in April 2015
(UC Riverside, Center for Economic Forecasting &
Development, May 2016)

10. Economic Outlook for Fiscal Year 2016-17
However, how long will economic growth continue?
Differing opinions among economists and local business leaders
(March 2016 – Corona Business Confidence Survey)
- The last recession was in 2007-2009
- But economic indicators reflect otherwise (for now)
- Are historic year-over-year gains realistic in the long-term?
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11. Economic Outlook for Fiscal Year 2016-17
However, how long will economic growth continue?
Recessions happen over time (rather than ‘overnight’)
-  Slowdown  Continued economic stagnation = ‘Recession’
City staff will continue to monitor significant indicators (such as sales tax
receipts, quarterly economic reports, TOT) in the short-term
- Fiscal sustainability, flexibility and long-term financial planning are our primary
defensive strategies
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12. General Fund
Fiscal Year 2016-17
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13. Major General Fund Revenue Sources
Property and Sales Taxes account for 61% of General Fund Revenue.
Actual
Adopted
Budget
Mid-Year
Forecast Proposed Growth %
2015 2016 2016 2017 (FY16 Forecast)
Revenue Categories
Property Tax 38,896,951$ 40,087,695$ 40,237,000$ 41,363,000$ 2.80%
Sales Tax 38,565,868 42,827,500 42,275,268 42,199,000 -0.18%
Economically sensitive and therefore, volatile
- Property taxes  +$2.5M in budgeted revenue (since 2015)
- Sales taxes  +$3.6M in budgeted revenue (since 2015)
These general fund revenue sources are tied to:
- Property taxes tied to changes in ownership and new construction
- Sales tax revenues tied to autos; building and construction; general
consumer goods; business and industry
+$6.1M compared to YTD
receipts in June 2015
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14. Property Tax Revenue
Revenue estimate assumes 2.8% growth compared to 2015-16 projected
year-end revenue.
Modest growth due to:
- Higher real estate values due to lower
cost of borrowing
- Lower cost of borrowing improves
affordability for existing homeowners and
spurs real estate development
- Lower rates of foreclosure
- Competitively priced compared to Los
Angeles and Orange counties
Combined with:
- However, supply exceeds demand
- Average days on market have reached
90 days (early 2016)
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15. Sales Tax Revenue
Revenue estimate is flat compared to projected year-end fiscal year
2015-16.
End of Triple Flip – Jan 2016
- Normalization of revenue collections
and new State accounting
procedures
- No additional one-time revenues
Growth in receipts = + 3.8%
- Low population growth and a lack of
flagship shopping centers create
ceilings for growth
- Growth in consumer goods slightly
higher than inflation
Low cost of borrowing creates
opportunities
- Largest sector increase in Building &
Construction  +6.8%
Fiscal Year 2016-17 Estimated Sales Tax Revenue by
Industry Group (% of Total)
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16. General Fund Revenue Recap
Overall, General Fund budgeted revenue is flat compared to the 2015-16 year-
end projection.
- Rents and leases includes analysis of current and recently renegotiated tenant agreements
- Includes revised cost-based and market-based fees established as part of recent Cost
Allocation Plan and User Fee Study
- Transient Occupancy Tax assumes average daily room rates of approximately $51/night
- Interest income considers average monthly cash balances, weighted average earnings rate of
1.39%
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17. General Fund Budget (*compared to 15/16 forecast)
Actual
Adopted
Budget
Mid-Year
Forecast Proposed Growth %
2015 2016 2016 2017 (FY16 Forecast)
Total, General Fund Revenue $134,261,466 $131,190,995 $135,588,853 $136,200,085 0.45%
5.58% -2.29% 3.35% 0.45%
Total Personnel Costs (87,916,024)$ (91,446,849)$ (93,581,000)$ (97,535,469)$ 4.23%
1.82% 4.02% 2.33% 4.23%
Total Non-Personnel Costs (28,437,388)$ (32,395,544)$ (32,400,227)$ (33,736,440)$ 4.12%
14.31% 13.92% 0.01% 4.12%
Total Operating Expenses (116,353,412)$ (123,842,393)$ (125,981,227)$ (131,271,909)$ 4.20%
2.09% 6.44% 1.73% 4.20%
Operating Revenue 17,908,054 7,348,602 9,607,626 4,928,176 -48.71%
Non-Operating Activities
Debt Service (CPFA) (4,518,303) (4,532,230) (4,532,230) (4,528,070) -0.09%
Capital Projects Funds (CPF) (8,170,122) (4,413,739) (7,241,000) (3,556,543) -50.88%
Total Non-Operating Activities (12,688,425) (8,945,969) (11,773,230) (8,084,613) -31.33%
Interfund Transfers In (Out) 1,897,722 1,331,962 2,011,218 3,168,869 57.56%
Change in Fund Balance 7,117,351$ (265,405)$ (154,386)$ 12,432$ -108.05%
Personnel costs will
increase +4.23%
Non-personnel costs
will increase +4.12%
Debt service will be
flat, but due to
favorable market
conditions, the City will
refinance debt in
which will result in
budgetary savings
Capital Projects will
receive $3.6M in new
funding from the
General Fund, to
supplement needs for
ongoing and new
projects
Projected budgetary 16/17
surplus of $12K to be
deposited in contingency
reserve 17

18. General Fund – Personnel Cost Breakdown
Includes the impact of
current MOU’s only. No
forward assumptions
were made.
Increase in PERS rates,
*except for Fire due to payoff
of side fund liability. Savings
of $552K due to July 1
prepayment.
OPEB annual
required contribution
(ARC) increased by
+$1.9M
Health care =
+8% January 1
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19. General Fund – Non-Personnel Costs
The General Fund non-personnel budget is increasing by a modest 4.1%
compared to the 15/16 mid-year forecast.
Bureau of Labor Statistics - Los Angeles CPI was 1.7% (March 2016)
- E.g. service level agreements, cost of program supplies and
intangibles such as software and subscriptions
- Prevailing wages (Department of Industrial Relations) for tree
cutting services - + 31%
Identification of budgetary needs and / or savings
- Opportunities identified due to new ‘zero-based’ approach
- Savings offsets cost of new needs – e.g. Elections, audits, finance
system upgrades, maintenance agreements
- Re-allocation of costs to reflect true cost of providing service
Most increases in funding are accompanied by a related increase in
revenue
- E.g. Pass through costs such as plan checks
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20. Citywide Positions – Proposed 2016-17 Updates
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21. General Fund - Service Changes + Capital Outlays
Relate to new funding for service level changes and/or small capital outlays in
the 2016/17 Proposed Budget.
Fund Department Description
FY2016-17
Proposed
Comm Dev Reclassify 1.0 FTE Planning Tech. to 1.0 FTE Assistant Planner $4,500
Comm Dev Supplemental Funding for Code Enforcement Support 10,000
Fire Emergency Medical Dispatch (EMD) Accreditation 9,400
Fire Records Management System (RMS) Mobile Project 120,000
Legal/Risk Mgmt New 1.0 FTE Paralegal I (Risk Management) 93,000
Maint Svcs Solar Powered Trash Cans (Grant Funded) 45,000
Police New 1.0 FTE Crime Analyst 114,000
Police New 1.0 FTE Public Safety Dispatcher I/II 95,000
Police Emergency Medical Dispatch (EMD) Accreditation 39,500
General Fund Total $530,400
*Emergency medical dispatch accreditation is one-time
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*
*

22. Department of Water &
Power
Fiscal Year 2016-17
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23. DWP Funds – Operating Revenue and Expenditures
Water Reclaimed Water
$-
$20
$40
$60
$80
FY 2015-16
Adopted
FY 2016-17
Proposed
$58.9 $59.9
$55.8
$47.8
Revenues Expenditures
$-
$2
$4
$6
$8
$10
FY 2015-16
Adopted
FY 2016-17
Proposed
$3.0
$8.4
$4.5 $4.1
Revenues Expenditures
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Assumes a 6% rate increase in October
2016, or $2.0M in additional revenue
Assumes 12% rate increases in fall 2016 and
January 2017, or $650K in additional revenue
as well as $4.4M in grants and reimb. from
county flood control (RCFCD)

24. DWP Funds – Breakdown of Operating Costs
Water Reclaimed Water
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Operating expenses include $11.9M in raw
and treated water purchases as well as
$8.9M in ‘fixed’ costs for rent and
electricity
Largely, a status quo budget which has
declined by $0.3M due to department-
identified budgetary savings

25. DWP Funds – Operating Revenue and Expenditures
Water Reclamation Electric
$-
$10
$20
$30
$40
FY 2015-16
Adopted
FY 2016-17
Proposed
$33.4
$32.8
$26.6
$24.2
Revenues Expenditures
$-
$5
$10
$15
$20
FY 2015-16
Adopted
FY 2016-17
Proposed
$17.1
$17.7
$16.5
$17.4
Revenues Expenditures
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Change in revenue is due to decline in
capacity fees offset by increases in
miscellaneous revenue
Largely a status quo budget is proposed

26. DWP Funds – Breakdown of Operating Costs
Water Reclamation Electric
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Largely, a status quo budget which has
declined by $2.4M due department-
identified budgetary savings. Continued
funding for sewer main cleaning and
video, odor control, cleaning, and sewer
main maintenance
The operating budget has increased by
$0.9M which is mainly attributable to
anticipated cost of wholesale energy
purchases

27. DWP Water & Water Reclamation Rates
The City plans to present revised rate schedules for public inspection and
possible adoption by the City Council during fiscal year 2016-17.
Identify, calculate and allocate cost of service (Proposition 218)
- Fairly and equitably establish volumetric and fixed rate charges
New challenges create uncertainty in rate-setting
- Governor’s declared drought emergency – is the end near?
- Impact of water conservation on development of a prudent per-
unit charge and 3 year rate schedule
- Spring + summer consumption data in analysis
- Impacts on cost of purchased water from other agencies
- Potential revenue impact from Local Resource Program (LRP)
Surveys indicate that escalation factors are 2-5% for personnel
costs, utilities, chemicals, supplies and construction
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28. Capital Improvement Plan
Fiscal Year 2016-17
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29. Major Categories of Citywide CIP
The Proposed Budget includes $50.8 million in new funding for needed capital
investments and infrastructure needs.
The City has
categorized a myriad
of discrete projects
into 6 major
categories to
facilitate public
understanding of city
capital investments.
Subprograms roll up
to each category.
According to the
Engineering News
Record (ENR), the
construction cost
index was 3.4% as of
May 2016.
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30. New Funding by CIP Category
The Proposed Budget includes $50.8 million in new funding for needed capital
investments and infrastructure needs.
The Proposed Budget includes $50.8 million in new funding to support critical
capital investments and infrastructure needs.
*in millions
Breakdown of New CIP Funding
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31. Major Highlights of General Fund CIP
The Proposed Budget includes $50.8 million in new funding for needed capital
investments and infrastructure needs.
New CIP funding from the General Fund is $3.6 million, which includes
$1.98M in one-time transfers for development-related projects from the
Dwelling Development Tax Fund.
Police / Fire Computer Aided Dispatch (CAD) and
Records Management System (RMS) - $1.8 million
Upgrades and integration of records and data for
public safety. Last update was in 1989. Facilitate crime
analysis, community policing, information sharing,
mobile data, field reporting, mapping, automatic vehicle
location, records and jail management.
General Plan & Climate Action Plan Update - $929K
Comprehensive technical update which guides policy
and decision-making with respect to growth and land
development.
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32. Major Highlights of General Fund CIP
The Proposed Budget includes $50.8 million in new funding for needed capital
investments and infrastructure needs.
Fire Station Alerting System - $223K
Implementation of a new modern fire station alerting
system allowing crew notification at time of dispatch to
increase efficiency and meet response time objectives.
Required to meet standards of the National Fire
Protection Association.
Citywide ADA Improvements - $615K
Projects as identified to ensure compliance with the
American with Disabilities Act (ADA). Includes
replacement of front door at Animal Shelter with
automatic doors, installation of ADA-accessible
sidewalk ramps throughout the City, and an ADA-
accessible walkway at Jamison Park.
New CIP funding from the General Fund is $3.6 million, which includes
$1.98M in one-time transfers for development-related projects from the
Dwelling Development Tax Fund.
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33. Program Subprogram
FY 16/17 Funding
(New $)
Water and Reclaimed Water
Transmission and Distribution $11,699,580
Quality, Supply and Storage 1,880,526
General Safety, Maintenance and Other Improv. 3,547,000
Pump Stations 1,250,342
Supervisory Control and Data Acquisition (SCADA) 331,500
Subtotal 18,708,948
Water Reclamation (Sewer)
Treatment 1,016,463
Pump Stations and Lift Stations 5,039,270
Sewer Main Rehabilitation 1,078,178
Pipeline Rehabilitation 3,152,950
General Safety, Maintenance and Other Improv. 920,217
Subtotal 11,207,078
Grand Total, FY2016-17 Proposed CIP $29,916,026
Major Highlights of Utility-Related CIP
The Proposed Budget includes $50.8 million in new funding for needed capital
investments and infrastructure needs.
New funding for Water, Reclaimed Water, and Sewer CIP programs
totals $30M broken down by the following subprograms:
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The Proposed CIP plan now assigns discrete and varied utility projects to Subprograms in
order to combine similar projects into several broad categories. No new money has been
allotted for Electric CIP.

34. General Fund
5 Year Forecast
Fiscal Year 2016-17
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35. General Fund Five Year Forecast
Long-Range Financial Planning using Sensitivity Analysis
- Scenario-based and sensitivity analysis
- Adjusting a few variables allows us to gauge the City’s financial
flexibility and risk
What is the impact to the General Fund if we alter our most
significant variables (and hold other items constant)?
- Sales Tax is the top General Fund revenue source in Fiscal Year
2015-16.
- Personnel is the top General Fund expense in Fiscal Year 2015-16.
- How sensitive is the General Fund to the above items?
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36. General Fund Five Year Forecast
Assumptions are required to provide clear context.
Assumes pre-recessionary environment (affects sales tax)
- Governor’s May Budget proposal assumes a flattening in sales
tax revenue beginning in 2018, and a slow decline thereafter
Assumes salaries and most personnel-related costs remain
constant except for: OPEB, health care, and PERS
Assumes funding for most important CIP projects
Assumes no debt refinancings
No use of one-time budget balancing measures for operating
needs
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37. General Fund Five Year Forecast
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Mid-Year
Forecast
Proposed
Budget Forecast Forecast Forecast Forecast
Description 2016 2017 2018 2019 2020 2021
Total Revenues 135,588,853$ 136,200,085$ 137,881,770$ 139,181,000$ 138,839,000$ 139,368,000$
Expenditure Categories
Personnel Costs (93,581,000) (97,535,469) (99,529,000) (101,621,000) (103,760,000) (105,160,000)
Operating Costs + Capital Outlays (32,400,227) (34,260,321) (34,977,000) (35,672,000) (36,381,000) (37,103,000)
Debt Service (CPFA) (4,532,230) (4,539,000) (4,528,600) (4,530,600) (4,522,300) (4,518,000)
Capital Projects Funds (CPF) (7,241,000) (3,556,543) (3,000,000) (3,000,000) (2,000,000) (2,000,000)
Interfund Transfers In (Out) 2,011,218 3,703,680 1,539,600 1,437,000 1,384,000 1,382,000
Total Expenditures (135,743,239) (136,187,653) (140,495,000) (143,386,600) (145,279,300) (147,399,000)
Change in Fund Balance ($154,386) $12,432 ($2,613,230) ($4,205,600) ($6,440,300) ($8,031,000)

38. SWOT analysis – a risk-based approach
Strengths + Weaknesses
PreparationStrengths
• Established fund balance reserves for
unknowns and ‘rainy days’
• Increase to Emergency Contingency
Reserve (60 to 90 days)
• Conscientious budget procedures
• Transparency and monitoring
Weaknesses
• Economic volatiliy of revenues
• Ceiling for future growth in revenue
• Performance measurement and
evaluation of investments
Opportunities + Threats
Opportunities
• Real estate and commercial development
• Favorable affordability gap between
Inland Empire and Orange County
• Economy and jobs growth still positive
• Refinancing of debt
Threats
• PERS rates and retirement costs
• Dependence on fee for service
• Timing of next recession is unknown
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39. Fiscal Year 2016-17 Budget Deliverables
Accomplishments with respect to goals and objectives are:
Open Data Corona
- A highly interactive tool to engage the public and their
understanding of City funds
- Open Budget and Checkbook modules with enhancements coming
soon
Zero-Based Budgeting
- Phase out of target-based budget procedures in favor of a
comprehensive approach which builds/identifies annual base budget
needs
Brand New Budget Book
- Accompanies and complements Open Data Corona
- Transparency requires readability
- Better define what we do as a City, who does what, and what it takes
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