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6.A. - Page 54 of 114 <br />Financial Overview — Pacifica <br />While Pacifica has been able to maintain balanced general fund budgets over the years, it <br />notes that "the slow [revenues] growth rate in Pacifica is not keeping pace with inflationary <br />cost increases... "42' The City highlights two sources of rising cost pressures that are <br />driving long-term general fund budget deficit projections; rising salary and benefits costs in <br />order to compete with other cities for quality employees and rising pension and health care <br />COStS.424 <br />If the City does not make substantial expenditure reductions or develop additional <br />revenues, its long-term general fund financial forecast projects that its general fund <br />expenses will exceed revenues by a total of approximately $18 million over the nine years <br />from FY 2019-20 through FY 2027-28. Annual deficits are projected to rise from $1.1 <br />million in FY 2019-20 to $3.55 million in FY 2027-28.425 <br />Pacifica states that, while it is committed to keeping future general fund budgets balanced, <br />"[t]he increasing [budget] gap projected beyond FY 2019-20 is anticipated to be extremely <br />challenging to balance."426 <br />Additional Payments to Ca1PERS - Pacifica <br />Pacifica does not currently have any plans to make additional payments to Ca1PERS <br />beyond its Annual Required Contribution. 427 <br />Pension Reserve Fund - Pacifica <br />Staff has recommended that the City Council consider establishing a Section 115 Trust and <br />begin funding the trust with one-time revenue sources. 428 The City expects to include a <br />transfer of $0.2 million into a Section 115 Trust in the FY 2019-20 budget. It has not put in <br />place a plan for the amounts of any future transfers to the trust in subsequent years but <br />expects that it would consider further contributions if general fund surpluses were <br />available.429 <br />Employee Contribution to City's Normal Cost — Pacifica <br />Pacifica has cost-sharing agreements in place with its employees pursuant to which employees <br />pay a portion of the City's pension contribution costs equal a percentage of their compensation <br />ranging from 2.5 percent up to 5 percent.430 <br />421 Pacifica, Council Agenda Summary Report for April 25, 2019 meeting re: FY 2019-20 Narrative Budget Report, <br />pp. 2-3. <br />424 mid., pp. 2-3 & 5. <br />azs Pacifica, Council Agenda Summary Report for February 25, 2019 meeting re: Long Term Financial Plan Update <br />2018-2028, Attachment 1 (Long Term Financial Plan 2018-28). <br />426 Pacifica, Council Agenda Summary Report for April 25, 2019 meeting re: FY 2019-20 Narrative Budget Report, p. 5. <br />421 Email from Pacifica, dated June 10, 2019. <br />428 Pacifica, Council Agenda Summary Report for April 25, 2019 meeting re: FY 2019-20 Narrative Budget Report, p. 9. <br />429 Grand Jury interview. <br />43o mid. Email from Pacifica, dated May 22, 2019. <br />2018-2019 San Mateo County Civil Grand Jury 47 <br />