Finance Committee - Regular Meeting

Will staff and president please introduce themselves?

Pursuant to the City Council Rules of Procedure and Order of Business Resolution, the members of all boards and commissions and the public are reminded that they must preserve order and decorum throughout the meeting. In that regard, members of the boards and commissions and the public are advised that any delay or disruption in the proceedings or a refusal to obey the orders of the board or commission or the presiding officer constitutes a violation of these rules. The city of Riverside is committed to fostering a workplace that provides dignity, respect, and civility to our employees, customers, and the public they serve.

Hey, it sounded a little bit different than the last one.

It did sound a little different. Peter Kakos, budget manager. There's Pete.

So we don't have to do it again.

Okay. Thank you so much.

I'm sorry. Okay. Yeah.

I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all.

Commissioner Ira. Commissioner Bellow?

Present.

Commissioner Roten?

Present.

Commissioner Hutchins? Commissioner Ward?

Present.

Commissioner Benavidez?

Present.

Commissioner Chernyakov? Commissioner Lagner?

Present.

Vice Chair Vandenberg? Chair Williams? We have quorum. Chair, can you turn on your mic?

We will now open the phone lines for public comment.

Public comment is now open for this item. Call 951-826-8688 and follow the prompts to access the meeting. To request to speak, press star 9. When called to speak, press star 6 to unmute. You can also join via Zoom. The meeting ID can be found on the agenda.

Sister sec. Wrong group. Secretary, do we have any callers?

No callers.

Can I have a motion and a second to approve the consent calendar?

Second.

You may now begin voting. Motion passes.

On to item four. Sean Murphy, Deputy City Attorney, would you please present to us?

First off, thank you guys for being patient. I was unavailable at the last session. This is going back to our June session where there are some questions. Commissioner Langer, I just want to thank you for your patience on this because I know you had specific questions on that. Bringing up our slide presentation, just to kind of bring up the slides that had some questions, there were new rules in 2026, specifically SB 707 established new participation and the reasonable accommodation which made reference to disability that we wanted to address. And I think the best way to address is just kind of go to the statutes themselves. So one is a just cause exception, which is going to be under 54953.8.3. We're going to look at that in the code. And the other is the exception for conferencing, which is maybe a broader set, which is 54953. So let's go to the just cause first, even though it's a little bit out of order. And you should each have the statutes with you. So... Let's turn to page... And I can probably do this... Can I use the... Let's talk before we get to the text. 54953, which is the meetings to the open public, it does create an exception for disability that is kind of like a standing exception. So unlike 54953.8.3, which is a just cause exception for a limited basis for teleconferencing, 54953 provides an unlimited for purposes of disability. Now, when we look at what a disability is, we're going to want to go to the first statute that I've given you, which is 42 USCA 12102, which is the definition of a disability. And if you can look at the one that's been provided, the term disability means, with respect to an individual, a physical or mental impairment that substantially limits one or more major life activities of such an individual, a record of such an impairment, or being regarded as having such an impairment. I think it's something that's going to affect major life activities, major bodily functions, And then there's a really more detailed definition of an impairment, which is subsection three, which is an individual meets the requirements of being regarded as having an impairment if the individual establishes that he or she has been subjected to an action prohibited under this chapter because of an actual or perceived physical or mental impairment, whether or not that impairment limits or is perceived to limit a major length activity. I think the most important part of these definitions of disability is that they're going to revolve around an individual focus. And so that isn't really something that can be done from a presentation. But if you are having an issue that qualifies for this, I do recommend maybe reaching out to HR and doing some of that detailed analysis. Now, under this statute, that would be an exemption to the quorum. Okay, so let's make a real distinction here. When we're trying to meet as the BEC, we need to make sure there's a quorum. Now, the just cause exception that we'll go to later does not affect the quorum. We still need quorum as a BEC in order to meet. This exception kind of stands above that, right? So this wouldn't affect that quorum. So I hope that answered your question, Commissioner Langer. The second one, I think, is the one that I also will reply to that one for another person. This would apply to you specifically as a board member. But the just cause exception, which is in 54953.83, I'll give you guys a section to get to that. Okay, this is not an exception to Quorum. This is a just cause exception, right? And this allows someone to teleconference. I'll note that in section three of this, because we're a legislative body that meets once per month or less, this would be limited to two times per year. This would be the exception that would be applicable for taking care of someone else. I'll refer to subsection C, which is the just cause, and that could be childcare or caregiving for a child, parent, grandparent, grandchild, sibling, spouse, or domestic partner that requires them participate remotely. It could also be for a contagious illness that prevents a member from attending. needs related to a physical or mental condition that are not subjected to that section I talked about before. So the 54953, that section which is a general disability under the Disabilities Act, that will be covered by that section. However, physical or mental condition that's not subject to that could still be applicable for just cause travel while on a business or official legislative body or an immunocompromised child parent grandparent grandchild sibling spouse or domestic partner of the member that requires their member to participate remotely physical or family emergencies would also apply military service obligations um And this section is valid until 2030. So I hope that that answers the questions that people had about how those two provisions work. But if you have any questions on that, I'm more than happy to kind of walk through the code with you. I do recommend reaching out to HR if you have specific questions. And again, if it comes down to a statutory reading, I'm happy to try and help. Let's move on to... perhaps what I thought was one of the more challenging parts of our discussion in June, which is the understanding of the digital misconduct prohibited. And I think this slide created confusion, and perhaps my presentation created some confusion as well. So I went back, and I wanted to make sure you had the actual language from our code. And the highlighted section, I think, is the most important. So the type of digital misconduct that is prohibited by the code of ethics is... online activity or messages that create or appear to create biased partisanship or predisposition on city matters that fall within the subject matter jurisdiction of the public official and are quasi-judicial proceedings that are strictly prohibited. However, Any violation of prohibited conduct under this code shall be limited to online activity while representing the public official's appointed or elected position using official Citi accounts. This should not apply to you because you do not have official Citi accounts. So I hope that clarifies that perspective. I think other questions that really came up was, what can you say in your personal capacity? Well, you can speak freely in your personal capacity. To maybe get ahead of another issue, which is who speaks on behalf of the BEC? Well, the BEC speaks on behalf of the BEC. So to speak on behalf of the BEC, the process would be to seek authorization from yourselves, like who is to speak that way. But as far as best practices for speaking in your personal capacity, it's a good practice to qualify that you're not speaking on behalf of the organization that you represent. I think that's just a factor test, but it's something to just consider in that regard. I hope that answers the questions that you have. And the best practice, I think, is a common sense practice. But really, I would recommend that if you want to speak on behalf of the BEC, seek authority from the BEC to speak on behalf of the BEC. Without going into greater detail, I think that answered the questions that we talked about. Thank you.

We will now open the phone lines for public comment.

Public comment is now open for this item. Call 951-826-8688 and follow the prompts to access the meeting. To request to speak, press star 9. When called to speak, press star 6 to unmute. You can also join via Zoom. The meeting ID can be found on the agenda.

No callers.

Next up, we have Peter Kakos, Budget Manager. Thank you, Peter.

Good evening, Honorable Commissioners. My name is Peter Kakos. I am the Budget and Revenue Manager.

Can I get these slides up?

There we go.

This presentation will cover the fiscal year 25-26 third quarter financial update and proposed adjustments. Starting off at a high level before we dive into the details, overall the city continues to maintain a strong financial position with record level reserves. And even though we are in a strong financial position, now there continues to be ongoing fiscal uncertainties that cloud the city's financial outlook. Most recently, there is uncertainty on potential impacts from the geopolitical activity in the Middle East and evolving federal policies. There are also continued concerns that ongoing expenditures will continue to outpace revenue growth, which we are actively monitoring. Therefore, staff continue to recommend restraint on unallocated spending and will continue to monitor economic conditions and expenditure and revenue growth and provide additional updates in future reports. This slide provides an overview of our general fund and Measure Z reserve balances, which demonstrates that we are still in a strong financial position. We have approximately 76.4 million in policy reserves, which complies with the city's 20% reserve policy. In addition to the policy reserves, there are approximately 152.1 million in other reserves that are set aside for specific purposes, most of which to support ongoing pension obligations. This nets to a total of 228 million in various general fund reserves. On the Measure Z side, we estimate approximately 28.86 million in year-end fund balance, which includes the $5 million policy reserve. This balance however is anticipated to be drawn down over the next few years. This slide provides a high-level overview of general fund and Measure Z budget and recommendations for third quarter adjustments. For the general fund, we are recommending adjustments to increase $701,000 in revenue and expenditures that is related to a year-end true-up of the FHIR Mutual Aid Program. When accounting for the proposed adjustments thus far, you will see in the last column that we would still end the fiscal year in a balanced budget. For Measure Z, we are not recommending any adjustments at this time. This slide shows the one proposed third quarter general fund adjustment. In the other revenue category, the adjustment is solely related to the fire mutual aid revenue as I spoke about on the previous slide. As of the third quarter, actual revenues for the general fund are at 60.6% of the budget, which is generally aligned with the trend from last year. Most of the general fund revenue comes in the latter half of the fiscal year. Actual expenditures as a percentage of budget are 71.4%, which are generally trending in line with the same period of the prior fiscal year. However, it's important to note that some expenditures cannot be directly compared quarter over quarter between fiscal years. After second quarter adjustments to overtime budgets, personnel expenditures are running in line with budgeted expectations and no major adjustments are recommended with this report. Moving on to Measure Z. The adopted 2526 budget for Measure Z totaled $107.3 million, which included a budgeted net drawdown of $23.2 million and projected ending balance of $12.7 million. As of the third quarter, Measure Z is projected to end the fiscal year with $23.8 million in fund balance, resulting from a net drawdown of $64.63 million, which includes encumbrances and carryovers from prior years and supplemental appropriations approved through the third quarter. In terms of revenues, staff currently do not recommend a change in revenue projections for Measure Z in this quarterly report. While revenues are still softer as compared to previous years, revenues seem to be performing in line with our updated budget adjustments from our last quarterly reports. In terms of expenditures, Measure Z funds include many projects and one-time expenditures causing quarterly actuals to appear trending under budget. However, similar to the general fund, spending is generally progressing as planned and within appropriation limits. Moving on to the electric fund. As of the end of the third quarter, electric revenues stand at 76.4% of budgeted projections and are generally expected to meet budgeted amounts with the exception of transmission revenues, which are projected to perform below budget by 7.6%. Electric expenditures are 69.1% of total budget at the end of the third quarter. The electric fund had a vacancy rate of 13.5%, and personnel savings are anticipated from normal attrition due to retirements, resignations, and as well as the timing of filling positions. Within the non-personnel budget, overall costs are in line with the adopted budget. Moving on to the Water Fund. At the end of the third quarter, total revenues for the Water Fund are at 98.1% of budgeted projections. Projected retail sales are now expected to be 0.9% higher than budgeted. There is a bump in the revenue category due to settlement proceeds that the Water Fund has received of approximately $21 million, thus showing the higher revenue projections. If we strip that out, revenue projections are slightly ahead of budgeted expectations. Water fund expenditures stand at 63.8% of the budget. Water fund has a 10.9% vacancy rate, and personnel savings are anticipated from normal attrition due to retirements, resignations, as well as the timing of filling positions. Non-personnel expenditures are trending lower than last year's level as a percentage of budgets. Moving on to the Refuse Fund. At the end of the third quarter, total revenues for the Refuse Fund are at 78.8% of budgeted projections and are generally in line with the percent of revenue received by the third quarter of the previous fiscal year. Revenues are generally on track to meet expectations and align with budgeted projections. Expenditures are 62.6% of total budget as of the end of the third quarter. The refuse fund has a 14.9% vacancy rate, and personnel savings were partially offset by new vehicle expenditures from prior year carryovers that took place in the first half of the fiscal year. Sewer Fund At the end of the third quarter, total revenues for the sewer fund are at 63.7%, which is 2.3% lower than revenues received as of the third quarter of last fiscal year. Third quarter analysis indicates that the sewer fund will underperform in revenue due to a continued decline in the new sewer connection fee category, which is linked to reduced construction activity and lower than anticipated development within the city. Expenditures stand at 70.1% of total budget as of the end of the third quarter. During this period, the sewer fund had a vacancy rate of 11.6%. However, savings from vacancies are anticipated to be offset by increased overtime to meet operational needs. And lastly, the parking fund. Overall revenues for the parking fund stand at 82.4% and are expected to meet projected revenue. Revenues are increasing due to the nightly flat rate and monthly parking rate increases but are being offset by the decrease in volume. Revenues for street stripping are expected to operate at a deficit of 18% when compared to total budget. Expenditures are at 57.7% of total budget at the end of the third quarter. During this period, the public parking fund had a vacancy rate of 8.7%. These shortages, coupled with extended hours of operation, have necessitated the need for overtime, but overall expenditures remain within budget. And with that, our recommendation is that the Budget Engagement Commission receive the fiscal year 25-26 third quarter financial update. Thank you, and I am available for any questions.

Thank you, Peter. We will now open the phone lines for public comment.

Public comment is now open for this item. Call 951-826-8688 and follow the prompts to access the meeting. To request to speak, press star 9. When called to speak, press star 6 to unmute. You can also join via Zoom. The meeting ID can be found on the agenda.

Secretary, do we have any callers?

No callers.

Thank you. Commissioner Ward.

Thank you, Chair Williams, and thank you for that presentation there. So I just wanted to ask some, I guess, some technical questions about some general questions and then some specific questions for the general fund, I guess. To the more general questions, I guess, my first question is, how are these appropriations determined in these quarterly updates if the budget was already approved? Like, are these just the decisions that are being made for how to spend the money. It's already been approved, but this is just your operational decisions that are going into how some of these appropriations are made.

Yeah, so we make periodic adjustments based on the needs. So one example that I talked about was the fire mutual aid. So those things happen throughout the fiscal year. We don't know what those numbers are going to come in at, so we take an estimate as we approach the end of the fiscal year, and we make those adjustments. Typically, there are adjustments based on, you know, the needs or whatever situations arise to kind of make the budget align with what, you know, whether it's spending increases or decreases or revenue increases and the like.

Got it. And I guess would that be considered more like of a variable cost, like fixed costs would be, you know, some of these employee costs for salaries and then some of these appropriation matters? Are they... just variable costs that you estimate at the beginning of the budget cycle and then as You get more specific as you can see the need then that's when you would go to City Council to Get that approved.

Yeah, exactly So, I mean we plan on you know prior to the fiscal year beginning and then as the fiscal year unfolds That's where we kind of see how things are playing out and that's where we would make our adjustments based on the reality at that time Okay.

Yeah, that makes sense Thank you for that. Another general question is, you were just talking about the enterprise funds there, and you were going through some of the vacancies that are due to various factors, including the retirements, I guess. Within those enterprise funds, do the vacancies that you've identified, do they need to be filled, or are they negatively impacting operations in Those funds like with if it's the refuse fund or the water fund like are those vacancies that are existing right now negatively impacting where you're actively looking for replacement of some of those people who have left those positions.

Yeah, I mean, typically they're trying to fill those positions because they have an operational need for those. So there's always a search for it, and depending on the economic conditions and competition from the private sector, specifically, say, in refuse, you know, sometimes that turnover has a tendency to be a little bit higher than we would like, but unfortunately that's just, you know, the nature of the game, and then, you know, they continue to try to fill those positions to fill those operational needs as best they can.

And would you be able to provide some detail on what some of these operational needs are for the funds that you mentioned that have some of these vacancies? I don't know exactly how many of the enterprise funds have those vacancies, but I think at least two, like the water fund, the refuse fund. What do some of those positions entail?

I couldn't tell you off the top of my head, but there are various positions throughout the funds. I mean, typically it's a pretty normal course of business where they're going to have vacancies for various reasons, and then they just continue to try to fill those positions as best they can.

Yeah, I mean, that's what I'm imagining, but I guess what the question is getting at is if there's 10 vacancies in a fund, right, Do we need to fill all those 10 vacancies or can we maybe do half and consolidate some of the work so that we can have some extra cost savings and reappropriate some of those savings into the general fund reserves?

Well, on an enterprise fund side, that would not be possible because that is not part of the general fund. So any savings that would be realized for, say, vacancies in this discussion would remain within that fund. So even if you were to realize any savings or any savings that we do realize from vacancies would remain in that fund. So it's not like that would be transferred over or anything like that.

Is that a standard municipal practice, or are there any?

Yeah, that's an accounting practice where they have to, the enterprise funds remain within the enterprise fund.

Okay, got it. Yeah, that makes sense. Thank you for that. And is that just a hard limit, too? Like, it cannot leave that fund whatsoever? It's a hard stop? Yes, typically, yes. Okay. I guess to a more specific question, the general fund, I noticed within our agenda packet that there was an expedited plan check services that was a supplemental appropriation the third quarter here for $200,000 for I guess I'm just going to summarize I guess streamlined development processes is that are those services planning on continuing in perpetuity or is this maybe like a one-time appropriation for a specific project I guess

Are these prior adjustments you're speaking of, or are they third quarter adjustments?

Yeah, so I can start real quick. That's referring to an adjustment that was made last year. I want to say that happened like in June or July of 25. That was a quarter one supplemental. What we do in this report is we list all the supplementals that were approved throughout the entire year. So that's one that was approved fairly early on last fiscal year. And that is intended, to my understanding, to be ongoing because it's in essence providing an expedited service where we just get reimbursed back by the developers. So it's always just reimbursement based. So when it was first implemented, I think this last year was the first time. It was intended to continue in the future year, so I want to say this was actually now built into the budget moving forward, but it was the first time that was conducted last fiscal year.

Okay, so this is like an initiative from economic development?

Yeah, and that's why it was a supplemental that happened after the adoption of the previous budget, so it was the last fiscal year.

Okay, I think that makes sense. Okay, so they're planning on continuing that. And just to be clear on what that is, the developer pays $200,000 to CDD to streamline, I guess, some of their project work. Is that right?

No, the way it worked is we added this as a placeholder number because it would be reimbursement based off of the work of that specific developer. So in certain cases where they needed some expedited work, in some cases like, I think it was mostly public works actually, not CDD, where they needed some consultant to do work on an expedited basis, we would be contracting that consultant. And then we would get reimbursed by a developer to do that specific service. So the $200,000 is, I guess, like a limit of that budget. But it might be that there's one developer that has some expedited service that costs $15,000. And they were reimbursed with $15,000. But this was like the budgetary cap that we placed. on that program. And then ultimately if we need to increase it later, then we could increase it later, but it's not the cost of like one developer. It's a, when a developer comes in for some service, it's an option for them to, to be able to request an expedited service. And then they would just reimburse the city for the cost of it.

Okay. But the takeaway is that this is a new initiative from. Yeah. It started, it started last year. Okay. Got it. Yeah. Okay. That's, that's good to know. Um, I think that we definitely need that. Um, I guess just a clarification, maybe finance clarification here. On the phrase actual savings will depend on the salary and benefit costs of a vacant position. So it was talked about in the packet that there would be a 6.2 vacancy savings rate that was equivalent to $15.9 million in the general fund. But I think you also say that other vacancy rate adjustments, or I think there was one for maybe 9%. You can't quantify how much that would be.

Well, when we're developing the budget, we put in that as a placeholder saying that on average, this is what we would expect by the year end. So anything beyond that in terms of specifics, because obviously it's dependent on which positions are vacant, how long their positions are, and the other costs associated with the fully burdened rate on those positions, what the savings would be. So that's essentially a placeholder, and then anything above and beyond that would be essentially a surplus. Got it. Okay.

And lastly, another question, this is the final one, on overtime costs. So it looks like overtime costs are putting pressure on public safety, putting pressure on the general fund. Can you elaborate on what the cause is? I mean, I thought that we had a fully funded police force. I know some of it will come from fire too, but what would the reason be for a fully funded police force to have... you know, a ton of overtime costs or is it just highly concentrated in, in fire?

No, it's mostly on the police side, and that has a tendency to vary based on their needs, whether there's protests or other things outside of their normal courses of duty that they wouldn't have planned for, and then they would have to call in officers to be able to be on the scene or whatnot based on their operational needs. So they plan as best they can, and then if there needs to be an adjustment because they say there were multiple incidents or additional patrols required throughout the year, that's when they would come back and kind of request an additional funding for that. I see. I guess the short answer is it varies.

Yeah. I mean, it definitely does, but I'm concerned each new officer that you add or each new fire personnel that you add, they could go into overtime costs, and those are just additional costs that... the city's going to have to deal with that burden of cost. So it mentioned in the packet just being cautious of that fact, given some of our revenue challenges or softening. And so I'm just wondering, if you were to go to the police department and try to say, hey, your overtime costs are growing a lot. It's putting pressure on the general fund. What would you say in a conversation to police leadership? for maybe how to adjust that or to work with you given some of the revenue challenges because your job is to balance the budget. This works against that. And I'm fully supportive of public safety, of course, and we need that. But just trying to understand where everyone's coming from and given other programs that we have like our PANS teams, our PSET teams, and other teams that support public safety. So how would you approach that conversation?

I mean, we have ongoing discussions within the finance department, the police department, and city leadership to be able to kind of bring that to the forefront. It is an ongoing issue, and there are ongoing discussions amongst all the departments collaborating together to kind of try to see, you know, understand where it's coming from and be aware of it. Unfortunately, sometimes it gets to the point where they have to provide services, and we have to pay for those over time. And obviously fire is a little bit different because they're based on number of incidents. You cannot predict the fire. That's just the nature of that game. So it's more of trying to do the best you can, being aware of the situation that you're in, and trying to plan accordingly. And like I said, there are ongoing discussions. We are always in communication with PD to be able to understand what kind of operational needs they have and anything that would make that overtime number spike and do the best that they can, because they are aware of that as well.

Got it, okay. I'd just be curious on just how those conversations are going. Maybe we can follow up with some of our police officers. Yeah, I am concerned a little bit about overtime costs and, you know, some of the pressure that's putting on us. But thank you very much for your presentation and answering my questions.

Thank you, Peter. Any more commissioners? No? Okay. Thank you.

Thank you.

Next up is Sergio Aguilar, Deputy Finance Director.

No updates to report on today. Thank you.

Thank you for that report.

That was the best report I've ever heard.

Okay. I'm going to speak really fast. Coming up on the Master Calendar, we have the Beck Scope and Power to Agendize. The requested date was 6-11, but that will be possibly in September. The Measure Z Revenue, Ballot and Measure Items, Formal Policy. is still to be determined, and that's pending a scope discussion, and child care is also to be determined. Is there anything else anyone would like to put on the calendar? Three, two, just kidding.

I don't have anything either.

all right with that said our meeting is adjourned and the next meeting will be september 10th 2026 thank you city staff and commissioners see you next month