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2014-15 Budget Briefing

2014-15 Budget Briefing. 2015-2019 General Fund Forecast Fiscal Reform Plan Status Mayor’s Message Direction. 2015-2019 General Fund Forecast Changes in Operating Margin ($ in Millions). 2014-2015 2015-2016 2016-2017 2017-2018 2018-19 February 2012

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2014-15 Budget Briefing

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  1. 2014-15 Budget Briefing • 2015-2019 General Fund Forecast • Fiscal Reform Plan Status • Mayor’s Message Direction

  2. 2015-2019 General Fund Forecast Changes in Operating Margin ($ in Millions) 2014-2015 2015-2016 2016-2017 2017-2018 2018-19 February 2012 Incremental ($1.3) $19.0 $10.7 N/A N/A Surplus/(Shortfall) February 2013 Incremental ($13.7) $2.0 ($4.7) ($6.0) N/A Surplus/(Shortfall) February 2014 Incremental ($1.5) * ($4.2) $0.4 ($6.5) ($1.7) Surplus/(Shortfall) *Does NOT include impacts of Library Parcel Tax sunset, Pension Reform litigation, potential Sales Tax increase, Police retiree healthcare ARC, Police Staffing Restoration Strategy

  3. G.F. Forecast Shortfall • 2014-15 shortfall of $1.5M = 2/10 of 1% of total $900.8M G.F. Expenditures • Future years range from -0.3% to 0.02% • Without Salary Increase Reserves, forecast would show surpluses in all years

  4. How bad is it? • Shortfalls in all years are minimal (-0.3% to 0.02%) • 2014-15 Revenue assumptions:Up $27.8M • Sales tax up $10M • Property tax up $7.7M • Loss of federal grants ($5.5M); County Paramedic Fees ($2.2M) • 2014-15 Expenditure projections: Up $29.2M • Retirement contributions up $14.6M reflecting demographic changes and $20M partial savings from pension reform • Includes $10.9M Employee Compensation Reserve • SJPOA salary/benefit increases of $7M • MPP of $3M, Competitiveness Reserve of $1.2M

  5. Pension Reform Highlights Changes in Retirement Cost Projections ($M all funds) 2013-14 2014-15 2015-16 2016-17 2017-18 February 2011 $360.2 $388.9 $400.7 February 2013 $275.8 $295.1 $301.6 February 2014 $272.1 $308.6 $317.3 $324.6 $339.0 Difference from ($3.7 M) $13.5 M $15.7 M N/A N/A 2013 Projection

  6. $ 431 $ 400 $ 320 $ 301 ------------------------------------- $ 186 M ----- 2010-11

  7. Major Factors in the Change in Projections • Continued savings of $20m from elimination of the SRBR (13th or bonus check) and retiree healthcare plan design changes • Increased costs of $36.5m (all funds) from demographic changes and full funding of RHC ARC (Federated only) beginning December 2014 • These projections do not take into account other elements of Measure B not yet implemented: • additional contributions or an optional lower-cost plan for current employees • lower-cost plan for all new employees

  8. Fiscal Reform Plan Status Source: New City Manager’s Presentation “San Jose’s Journey to Fiscal Sustainability”

  9. Source: Revenue Strategies Presentation 2/10/14

  10. Source: Revenue Strategies Presentation 2/10/14

  11. Mayor’s Budget Direction • Budget “stabilized” - Avoids cutting services and layoffs for the third year in a row • Restores some pay to help retain experienced employees and maintain competitive compensation • “Threats” to fiscal stability still faced from litigation over pension reform and continuing growth of retirement costs • Public Safety service levels should be addressed with a number of operational changes including civilianization, use of reserve officers and staffing level of fire apparatus • Prepares for possibility of a Sales Tax increase by including a list of spending priorities consistent with the community survey

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