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8.A. - Page 4 of 42 • Limited the use of reserve funds in response to emergencies so as to maintain the 15 percent General Fund reserve level established in policy • Began reimagining what services are provided, how they are provided, and to whom they are provided, in order to adapt to a rapidly evolving environment with a focus on fiscal sustainability and social equity • Launched a Climate Action Plan that includes risk management and long-term forecasting to ensure financial as well as environmental benefits • Leveraged the ten-year forecast not only for financial planning but also to analyze trends over time and reinforce a longer view in times of crisis, to support thoughtful problem solving and strategic action All of the sections outlined below reflect efforts underway to maintain the fiscal health of the City, while at the same time supporting numerous initiatives to advance the City Council's Strategic Plan and top priorities. 1. FY 2019-20 YEAR-END BUDGET UPDATE AND ADJUSTMENTS TO FY 2020-21 BUDGET On October 26, 2020, the City Council held a Public Hearing and adopted the Revised Budget for FY 2020-21. The Revised Budget continued the City's longstanding practices to support the City's financial health, while striving to address critical community needs in light of the COVID-19 pandemic, to advance multi-year City Council priorities, and to focus on equity and sustainability. The Revised Budget used ongoing core operating revenues for ongoing core operating expenditures and was structurally balanced for City operations after making reductions in each department. It tapped into $3.6 million in one-time funds or reserves to fund critical community needs and City Council priorities. The City's independent audit firm, Maze & Associates, has completed review of the City's FY 2019-20 year- end financials, and the General Fund has an actual year-end operating balance of $18.7 million. Out of this operating balance, only $12.1 million is available. The available operating balance of $12.1 million is slightly higher than the projected actual and operating balance of $11.0 million that was forecast in October 2020. The $18.7 total operating balance is higher than the anticipated $11.0 million due to revenues and transfers in exceeding projections by $4.4 million (mostly due to a one-time accounting entry of $3.3 million) and unspent funds of $3.3 million for anticipated limited term funding of City Council priorities. Below is a reconciliation of the total operating balance of $18.7 million to the actual available balance of $12.1 million. Total available operating balance Less: $ 18,700,000 One-time accounting entry to adjust investments to fair value (3,300,000) Unspent limited term funding of City Council priorities from FY 2019-20 (3,300,000) Tota! $ 12,100,000 During FY 2019-20, $3.8 million of the $7.1 million in limited term funding to support City Council priorities were expended. Due to delays related to COVID-19, and after accounting for slightly lower than projected COVID-19 costs, the current balance of unspent limited term funding is $3.3 million. Recommended budget amendments for the unspent limited term funding are detailed in Section 5 of this report. Page 4 of 28 City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org 535