Title
Recommendation to Accept the Report on the Long-Term Financial Forecast for the General Fund and Special Revenue Funds. (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
This report provides an overview of the initial analysis and issues identified in the 10-year financial forecast model prepared by Urban Futures, Inc. (UFI). The model allows staff to consider longer-term financial trends in the General Fund and 11 special revenue funds. The 10-year forecast identifies a projected operating deficit and initial issues for the City Council and staff to begin to address.
BACKGROUND
In 2019, staff identified the need for a longer-term forecast of the City of Alameda's (City) finances to better understand the risks associated with pension obligations, trends in operating deficits/surpluses, and the impact of these trends and potential recession scenarios on the City's reserves, and/or fund balance. In May 2020, City Council authorized an agreement with UFI to complete a financial forecasting model and assist staff with scenarios and strategies, following a competitive solicitation process.
UFI has prepared a 10-year financial forecast model that includes the General Fund and 11 special revenue funds identified. The special funds were targeted, after being identified as higher risk for requiring General Fund support due to due to factors such as: potentially volatile revenues, labor obligations, transfers in/out, and allocated costs. The 10-year model includes a baseline forecast with revenue and expense trends, projections for annual operating deficit/surplus, projected fund balance, and the capacity to create and analyze "what-if" scenarios (i.e., what happens to the City's forecast if certain decisions are made, and/or economic conditions change).
DISCUSSION
Projected early Operating Deficit which Balances over 10 Years
Across the General Fund and 11 special revenue funds, the City has an annual operating de...
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