OCEANSIDE – The city’s budget is expected to maintain a surplus balance over the next five years despite rising prices.
According to the city’s annual five-year financial forecast, which was presented to Oceanside City Council earlier this month, the upcoming 2022-23 fiscal year will end with a $3.42 million surplus. Fiscal years start in July of the first year and end in June the following year.
Five-year forecasts are used to project a municipality’s cost of maintaining current service levels as well as adding any operational changes that could affect the city’s future financial status. Revenues are estimated by property and sales tax projections, past trends and best estimates of future development; while expenditures are determined by using the prior year as a base budget, consumer price index, or CPI, increases, salary increases, changes in operations and retirement cost increases.
After next year, the FY 2023-24 will end with a smaller surplus of about $1.86 million, followed by an even smaller $1.28 million in FY 2024-25. That number will then jump to $3.09 million in FY 2025-26, then once again fall back to $1.84 million in FY 2026-27.
For FY 2022-23, the city expects to see a 9.5% increase in revenue but also a 5% CPI increase in expenditures. Every consecutive year after that will see about a 2% CPI increase, and the city expects to see a $10.5 million increase in retirement costs over the next five years.
“While that is a significant projected increase, notice the percentage of increase is expected to decrease over the next five years as our workforce smoothens into PEPRA employees,” said Jill Moya, the city’s interim financial services director.
PEPRA employees are public employees who were hired following the California Public Employees’ Pension Reform Act, which took effect in January 2013. The law changed how CalPERS’ retirement and health benefits are applied by placing a compensation limit on its members.
Moya said the city will also see a decrease in its unfunded pension liability fund.
“We’ve been making additional, one-time payments,” Moya said. “Fifty percent of our general surplus goes to paying down our long-term debts.”
The city has paid $34.7 million toward its unfunded pension liability over the last five years.
“We expect these additional payments with additional PEPRA employees to decrease unfunded liability,” Moya said.
Currently, staff is working to create the 2022-2023 budget based on the five-year forecast projections. Moya said the $3.42 million surplus will allow for some one-time items to be purchased, however, the city needs to keep in mind that the following year will only have a $1.86 million surplus.
Next year’s budget will be up for discussion and final approval at a council workshop on April 3.