Each year-end the Yorba Linda City Council has the pleasant task of deciding what to do with the extra revenue that was collected from taxes and fees during the previous fiscal year – the amount of cash income that exceeded the year's expenditures.
The additional revenue generated by the end of the fiscal year on June 30 was $7.6 million – well above the $326,578 projected when the budget was adopted – according to the closing-the-books report presented to councilmembers earlier this month.
Council's first priority is to keep city reserves at 50% of a year's general fund expenses, a longtime policy adopted by a past council and continued through the years by succeeding councils.
The reserve balance at the beginning of the current fiscal year on July 1 was $29.6 million, or about 70.1% of anticipated expenditures by June 30, 2023, according to an eight-page report from the city's finance director, Dianna Honeywell.
And after the spend-down of some of the funds approved by the council this month, the city's reserve balance will stand at about 56.4% of the current year's expected expenses, she said.
A large portion of the extra cash collected from tax- and fee-payers during the past year will go toward paying down the city's unfunded liability for employee pensions and placing extra cash into a trust account to reduce the unfunded liability for retired employees medical costs.
The city's aim for the past six fiscal years has been to amortize the pension liability over a 20-year period instead the standard 30 years. This year's extra payment is $366,962, in addition to the regular payment of $1.9 million to the state's Public Employees Retirement System.
Payment to the trust account for retiree medical expenses will be $511,600. That brings the extra payments to a bit more than $2 million since 2016. The extra pension fund payments now total some $2.2 million.
Also, $5 million is set aside for future projects, including right-of-way and construction related to a Yorba Linda Boulevard and Savi Ranch project, street pavement, Yorba Linda Boulevard widening in Imperial Highway area and $500,000 for library maintenance and improvements.
The past year surplus was attributed to $5.6 million fewer expenses than anticipated and better-than-expected sales tax, property transfer tax, recreation and building fees income.
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Council members this month also reviewed a 49-page report on the city's investment portfolio under the direction of PFM Asset Management, a national firm specializing in work with public agencies and non-profit institutions.
The company manages about $46.8 million for the city, with major allocations in U.S. Treasury (44.1%) and corporate (22.4%) assets.
For the fiscal year ending June 30, the portfolio market value dropped about $2.8 million, while earning $585,878 in interest. Since inception in 2017, total dollar return has been $2.55 million.