title
CC:SA:HA:PA - PUBLIC HEARING: (1) Receipt of Presentation on the Status of Job Vacancies per Assembly Bill (AB) 2561; (2) Adoption of a City Council Resolution Approving and Adopting the Annual Appropriations Limit for Fiscal Year 2025-2026; (3) Adoption of Respective Resolutions Adopting the Fiscal Year 2025-2026 Budget for the City of Culver City, the Successor Agency to the Culver City Redevelopment Agency, the Culver City Housing Authority, and the Culver City Parking Authority; (4) Adoption of a Resolution Approving Salary Schedules for Miscellaneous Employees, Police Safety Employees and Fire Safety Employees Effective July 1, 2025; (5) Adoption of Resolution Approving Use of the City’s Contingency Reserve Funds; and (6) Adoption of Resolution Amending City Council Policy 5002, Financial Policies, to Establish a Committed Reserve for Jubilo Village in the Amount of $12 million.
body
Meeting Date: June 9, 2025
Contact Person/Dept: Lisa Soghor/Finance Department
Phone Number: (310) 253-5865
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Attachments Yes [X] No []
Public Notification: (E-Mail) Meetings and Agendas - City Council (06/05/2025)
Department Approval: Lisa Soghor, Chief Financial Officer (06/03/2025)
______________________________________________________________________
RECOMMENDATION
Staff recommends (1) the City Council receive a presentation of the status of job vacancies per AB 2561; (2) the City Council adopt a resolution approving and adopting the Annual Appropriations Limit for Fiscal Year 2025-2026; (3) the City Council and the Boards of the Successor Agency to the Culver City Redevelopment Agency (Successor Agency), Culver City Housing Authority (Housing Authority), and the Culver City Parking Authority (Parking Authority) (collectively, “Boards”) adopt respective resolutions approving the Fiscal Year 2025-2026 Budgets for the City of Culver City, Successor Agency, Housing Authority, and Parking Authority; (4) the City Council adopt a resolution approving Salary Schedules for Miscellaneous Employees, Police Safety Employees and Fire Safety Employees effective July 1, 2025; (5) adopt a resolution approving use of the City’s Contingency Reserve funds; and (6) adopt a resolution amending City Council Policy 5002, Financial Policies, to establish a committed reserve for Jubilo Village in the amount of $12 million.
PROCEDURE
1) Mayor/Chair seeks motion to receive and file the Affidavit of Publication;
2) Mayor/Chair seeks a Motion to open the Joint Public Hearing;
3) Mayor/Chair requests a staff report, including the presentation of the status of job vacancies per AB 2561;
4) Mayor/Chair calls for, and the City Council/Boards receive, public testimony;
5) Mayor/Chair seeks a Motion to close the Joint Public Hearing;
6) City Council adopts resolution approving the Annual Appropriations Limit for Fiscal Year 2025-2026;
7) City Council and Boards adopt respective resolutions approving the Fiscal Year 2025-2026 Budgets for the City of Culver City, Successor Agency, Housing Authority, and Parking Authority;
8) City Council adopts a resolution approving salary schedules for Miscellaneous Employees, Police Safety Employees, and Fire Safety Employees effective July 1, 2025;
9) City Council adopts a resolution authorizing a decrease to the Contingency Reserve below established target for Fiscal Year 2025-2026; and
10) City Council adopts a resolution amending City Council Policy 5002, Financial Policies, to establish a committed reserve for Jubilo Village in the amount of $12 million.
BACKGROUND/DISCUSSION
Status of Job Vacancies per AB 2561
The Human Resources Director will make a presentation to City Council in accordance with AB 2561, which became effective January 1, 2025. The bill requires public agencies to present a report at least once per fiscal year prior to adopting the agency’s annual or multiyear budget detailing the current status of job vacancies, recruitment efforts, and any internal policies or procedures affecting hiring. The law also ensures that recognized employee organizations are given the opportunity to present their input during the same public hearing. Additionally, if any bargaining unit has a vacancy rate of 20% or higher, and upon request, the agency must provide detailed vacancy data, applicant numbers, average time-to-hire, and discuss potential improvements to compensation and working conditions. This requirement is designed to improve transparency, accountability, and collaboration in addressing staffing challenges across public agencies. Currently, none of the Culver City bargaining units meets or exceeds the 20% threshold.
Annual Appropriation Limit:
In 1979, California voters approved Proposition 4 and created Article XIII B of the State Constitution, a state law that requires the state and local governments to adopt an annual appropriation limit. This limit, also referred to as the “Gann Limit,” establishes a limit on the proceeds of taxes that may be appropriated for spending in a given fiscal year. The limit initially allowed the City’s spending of tax proceeds to increase only by population growth and cost-of-living factors from the base year of 1978-1979.
In June 1990, Proposition 111 was passed which changed the base year to Fiscal Year 1986-1987 and altered the way the limit is calculated. It enabled cities to increase the limit annually in two ways. First, by a percentage equal to the increase from the preceding year in county or city population (whichever is greater); and second by an amount equal to the change in per capita personal income in California or the change in the assessment roll the preceding year due to the addition of local nonresidential new construction (whichever is greater). The calculations also allow for exclusions of certain costs subject to the appropriation limit including but not limited to debt service, qualified capital outlay and the costs of complying with a federal mandate. Based on these guidelines, the City establishes the appropriation limit each fiscal year by resolution.
Fiscal Year 2025-2026 Budget
The City Manager’s/Executive Director’s Proposed Budgets for Fiscal Year 2025-2026 were presented to the City Council and Boards on Monday, May 12, 2025. Since that time, City Council held Regular Meetings on May 19 and 20, 2025, to review the associated budget requests and allow for public input. These meetings were in addition to the opportunities provided to the City’s various Commissions, Committees, and Boards to provide input on the City Manager’s Proposed Budget.
The City Council also called two meetings in March 2025 to review the work plans of each of the City’s Departments and provide an opportunity for additional public input. As a result of this series of meetings, staff has prepared any changes directed by the City Council and incorporated such changes into the budget resolutions presented to the City Council and Boards for approval this evening.
Salary Schedules Effective July 1, 2025
All agencies that are members of CalPERS are required to ensure that pay schedules are publicly adopted and available as prescribed by the California Code of Regulations, Title 2, §570.5 and §571 (b). “Publicly available” is defined as posted at the employer’s office or immediately accessible and available for public review. Placing the adopted pay schedules on the City’s website meets this requirement. The attached resolution containing the salary schedules for Miscellaneous and Safety employees (Attachment 7) reflects all required changes to the salary schedules proposed for Fiscal Year 2025-2026.
The Miscellaneous groups, Culver City Employees’ Association (CCEA), Culver City Management Group (CCMG), and the Executive Group will receive a 4% cost-of-living adjustment (COLA) effective June 30, 2025 per their respective MOUs adopted by City Council in June 2023. The new salary schedule also includes the new Miscellaneous classifications recommended by the City Manager during the Fiscal Year 2025-2026 budget process.
The Salary Initiative Ordinance (SIO), initially approved by the Culver City electorate in 1953, and subsequently amended by the electorate in 1982, requires that the City Council adjust salaries for its sworn police and fire employees by an average increase of base salaries provided by the City and/or County of Los Angeles. Per the terms of the SIO, Culver City Safety groups receive 50% of what Los Angeles County and City of Los Angeles safety groups receive.
The Los Angeles City Council approved an agreement for a successor Memorandum of Understanding (MOU) for the Association of United Firefighters of Los Angeles City (UFLAC), effective June 30, 2024. The UFLAC will receive a 3% salary increase effective June 29, 2025; therefore, the Culver City Firefighters (FIRE) and Fire Management (FMGT) groups will receive a 1.50% mandated SIO increase effective June 30, 2025.
The Los Angeles City Council approved an agreement for a successor MOU for the Association of the Los Angeles City Police Officers, Lieutenant, and Below Representation Unit, effective July 2, 2023. The Los Angeles City MOU for the Police Officer Association will receive a 3% increase effective June 29, 2025; therefore, the Culver City Police Officer’s Association (POLC) and Police Management (PMGT) groups will receive a 1.50% mandated SIO increase effective June 30, 2025.
The County of Los Angeles is currently in negotiations with its safety units. Any SIO increases related to the County’s pending MOUs will be brought to the Council later.
Sufficient funding for all salary increases reflected in the salary schedules has been included in the Proposed Budget for Fiscal Year 2025-2026.
City Council Policy Statement 5002 (Financial Policies)
Policy Statement 5002 includes a Financial Reserves Policy section which lays out the maintenance of some portion of funds available to be reserved for future use. The Governmental Accounting Standards Board (GASB) defines five specific classification of fund balance: Non-spendable, Restricted, Committed, Assigned and Unassigned. Committed fund balances are those with a City Council imposed commitment. Policy Statement 5002 currently includes a Contingency Reserve, a Facilities Planning Reserve, a Recreational Facilities Reserve, and a Public Safety Equipment Reserve as part of the Committed fund balances.
On March 10, 2025, City Council directed staff include $16 million in the Proposed Budget for Fiscal Year 2025-2026 for a loan to Community Corps of Santa Monica (CCSM) for the Jubilo Village affordable housing project. Council directed that $4 million be disbursed to CCSM in Fiscal Year 2025-2026. The remaining $12 million will be disbursed later in Fiscal Year 2026-2027. To set the funds aside, a new Committed reserve for Jubilo Village must be established.
An update to Council Policy Statement 5002 is necessary to establish such a reserve. A resolution amending the policy is Attachment 9 and includes the updated Policy as Exhibit A to the Resolution, which includes the following change:
• A new Subsection C.5 was added to Section VIII Financial Reserves Policy establishing the Jubilo Village Reserve
Contingency Reserve
There is no Unassigned General Fund Balance to fund the $12 million for the new Jubilo Village Reserve. The funds must be taken from the Contingency Reserve.
Section VIII.C.1 of the Financial Reserves Policy states “The Contingency Reserve shall have a target balance of thirty percent (30%) of General Fund “Operating Budget” as originally adopted. Operating Budget for this purpose shall include current expenditure appropriations and shall exclude Capital Improvement Projects and Transfers Out. Appropriation and/or access to these funds are reserved for emergency situations only.”
The Financial Reserves Policy provides that reserve funds, including the Contingency Reserve, will not be spent for any function other than the specific purpose of the Reserve account from which they are drawn without specific direction in the annual budget or by a separate City Council action. The Financial Reserves Policy also states that a portion of a fund balance that includes amounts that can only be used for specific purposes remain binding unless removed in the same manner they were established.
A resolution authorizing a decrease of the Contingency Reserve to the amount of 21.6% of General Fund Operating Budget for Fiscal Year 2025-2026 is included as Attachment 8. Per the policy, the City Manager will present a plan to City Council no later than six months following the adoption of this Resolution to replenish the reserves within 5 years.
Westside Cities Council of Governments
Every three years the responsibility for treasurer duties for the Westside Cities Council of Governments (WSCCOG) rotates amongst the participating cities. Fiscal Year 2024-2025 is the third year the City of Culver City has been responsible for performing treasurer duties in the current rotation. The WSCCOG funds are separate from the City’s funds, however, to pay invoices and receive revenues, the WSCCOG fund has been reflected in the City’s financial system. In the prior year budget, the City Council approved the City’s treasurer function. On July 1, 2025, the City of Santa Monica will assume the treasurer function for the WSCCOG. Culver City will transfer WSCCOG funds to Santa Monica in the transition.
FISCAL ANALYSIS
As noted previously, the City calculates the appropriations limit each year as part of the budget process. Based on the City Manager’s/Executive Director’s Proposed Budget for Fiscal Year 2025-2026, the Finance Department has calculated the City’s Fiscal Year 2025-2026 Appropriation Limit to be $153,944,972. The City’s Fiscal Year 2025-2026 appropriations from the Proposed Budget that are applicable to Appropriations Limit are $127,171,134, which is $26,773,838 under the limit.
The Proposed Budget presented to City Council in May 2025 included $369,972,947 in appropriations (not including transfers between funds) and $315,313,492 in revenues. The May 2025 Proposed Budget for Fiscal Year 2025-2026 is available on the City’s website at: <https://www.culvercity.org/City-Hall/City-Departments/General-Info-Finance/Annual-Budget>. Adjustments to these amounts have been summarized in the tables below by Fund. More detail on these adjustments can be found in Attachment 6 of the staff report.
The adjustments include items recommended by the City Council at the Regular Meetings on May 19 and May 20. The adjustments also include corrections made during Finance staff’s final review of the budget document. General Fund (101) adjustments include but are not limited to the addition of $250,000 for budget outreach consultant services, $100,000 for additional environmental analysis for the Hayden Tract Specific Plan and $58,508 to correct for critical ongoing software systems. These General Fund additions are partially offset by a reduction of $192,756 to remove two new vehicles purchases that were mistakenly included in the Proposed Budget for the Police Department. The net adjustment is $215,752 for the General Fund expenditures.
The Transportation Fund (203) includes a reduction of $815,130 to correctly reflect the Department’s liability reserve charges. The reclassification of a 1.0 FTE Senior Management Analyst to Transit Administration Manager is called out but had already been included in the budget salary projections. There is no cost associated with this reclassification. The Sewer Fund (204) includes a reduction of $87,350 to align the anticipated debt service payment with the debt service schedule. The Municipal Fiber Fund (205) includes a reduction of $561,567 to reflect the anticipated operating and maintenance expenditures. The Air Quality Management District (AQMD) Fund (410) includes a reduction of $125,000 to align with anticipated spending. The Parking Authority Fund (475) includes an increase of $346,000 for communications, utilities and contract services.
Similarly, adjustments have been made to the City’s proposed revenue. Adjustments include but are not limited to a reduction of $27,756 in the Equipment Replacement Fund (307) due to the removal of two proposed vehicle purchases from the budget, a reduction of $815,130 to the Self Insurance Fund (309) to correct for Transportation Fund liability charges, and an increase of $55,900 for the Gas Tax Fund (418) to reflect updated revenue estimates from the State. Staff is also proposing to move local tax revenue from the Finance Department (Division 14) to Non-Departmental (Division 16) to consolidate all revenue in one location for revenue tracking purposes in the financial system. This move has no fiscal impact. The City’s projected General Fund revenue will remain unchanged.
The tables below show the total expenditure and revenue adjustments proposed by Fund.
The final Proposed Fiscal Year 2025-2026 Budget provides $377,463,963 of appropriations authority in all funds (including Internal Service Funds and transfers between funds). It anticipates $314,526,506 in revenue, with the balance to be made up from reserves. For the General Fund, expenditures exceed revenues by $21.9 million and require the use of the City’s reserve balance to make up the deficit including the $14.9 million structural budget shortfall.
Jubilo Village Funding
The Proposed Budget for Fiscal Year 2025-2026 includes the $4 million loan from the Housing Authority Fund approved in Fiscal Year 2022-2023 and the $16 million loan directed by City Council on March 10 for a total of $20 million. The first installment of the $16 million loan, in the amount of $4 million, is anticipated to be disbursed in Fiscal Year 2025-2026. The Proposed Budget allocates the first $4 million installment as follows: $2 million from the Housing Authority Fund (Fund 476), $1,557,080 from the Affordable Housing Linkage Fee fund (Fund 439), and $442,920 from the General Fund (Fund 101). $12 million will be moved from the General Fund Contingency Reserve to a Committed General Fund Reserve anticipated to be distributed Fiscal Year 2026-2027.
Only the $1,557,080 from the Affordable Housing Linkage Fee fund is restricted to be used for affordable housing. The $12,442,920 from the General Fund has no restrictions. The $6 million from the Housing Authority Fund depletes that fund. Now programs historically paid by the Housing Authority Fund including the City’s Rental Assistance Program (RAP), Mortgage Assistance Program (MAP), Upward Bound House services and other homeless outreach, will have to be funded by the General Fund.
General Fund Balance
To address the projected $21.9 million deficit including the $14.9 million structural budget shortfall, the City will have to use its reserves. Staff recommends drawing down $1.4 million from the Restricted Section 115 Pension Trust to partially offset the increased cost of the City’s Unfunded Accrued Liability payment to CalPERS. The one-time adjustments require the use of $1.9 million in fund balance, and the transfers to capital projects require the use of $5.1 million in Committed Fund Balance including $3.9 million from the Facilities Planning Reserve, $1.1 million from the Recreation Facilities Reserve, and $117,000 from the Public Safety Equipment Reserve. Combined, these represent a decrease of approximately $21.9 million to the General Fund balance.
The estimated beginning General Fund balance for July 1, 2025 is now projected to be $135.5 million. This is approximately $5.0 million more than what was projected in the May 12th version of the proposed budget due to the receipt of higher than anticipated real property transfer tax revenue from the recent sale of a large commercial property. The estimated ending General Fund balance is $113.6 million which is approximately $4.8 million more than what was projected in the first version of the proposed budget once all the adjustments are taken into account. The chart below details the changes in the General Fund reserve accounts.
The City’s target goal for the Contingency Reserve for emergencies is 30% of the General Fund Operating Budget as established in City Council Policy Statement 5002 and Resolution #2014-R058. For Fiscal Year 2025-2026, this would be $57.7 million. Based on the General Fund Operating Budget in the Adopted Budget for Fiscal Year 2024-2025, the Contingency Reserve has a balance of $53.4 million. To maintain existing services and fund a portion of the proposed $4 million contribution to Jubilo Village in Fiscal Year 2025-2026 and $12 million contribution in Fiscal Year 2027-2028, the City will need to utilize any remaining unassigned General Fund balance, draw funds from the Contingency Reserve and will not be able to meet the minimum requirement for Fiscal Year 2025-2026. Staff is projecting a balance of $41.6 million in the Contingency Reserve at the end of Fiscal Year 2025-2026. The remaining funds will be only 21.6% of the General Fund Operating Budget of $192.5 million.
These amounts are estimates based on the projected ending fund balance for Fiscal Year 2024-2025. The beginning General Fund balance for Fiscal Year 2025-2026 will not be final until the fiscal year has been closed and approved by the City’s auditors in the fall.
Per Section VIII.C.1 of the Financial Policies, should the Contingency Reserve commitment be used, the City Manager shall present a plan to City Council to replenish the reserve within five years. Staff proposes returning to City Council with a plan within six months. The plan will depend on the outcome of the August 26, 2025 election for the 0.25% sales tax measure. Regardless of the outcome of the election, the City will need to consider further expenditure reductions to allow full funding of the Contingency Reserve.
ATTACHMENTS
1. Proposed Resolution for Annual Appropriation Limit and related Exhibits and Schedule I
2. City Council Budget Resolution and related Exhibits A - G
3. Successor Agency to the Culver City Redevelopment Agency Budget Resolution
4. Housing Authority Budget Resolution
5. Parking Authority Budget Resolution
6. Adjustments to the City’s Proposed Budget Fiscal Year 2025-2026
7. Salary Schedule Resolution and related Exhibit A
8. Resolution Authorizing a Decrease to the Contingency Reserve Below Established Target for Fiscal Year 2025-2026
9. Resolution Amending City Council Policy Statement 5002 (Financial Policies) to Establish Committed Reserve for Loan to Community Corp of Santa Monica Toward Construction of Affordable Housing Units in the Jubilo Village Project Located at 4464 Sepulveda Boulevard Culver City
MOTIONS
That the City Council:
1. Receive presentation on the status of job vacancies per AB 2561
2. Adopt a resolution approving and adopting the annual Appropriations Limit for Fiscal Year 2025-2026; and
That the City Council and Boards:
Adopt respective resolutions approving the Fiscal Year 2025-2026 Budget for the City of Culver City, Successor Agency, Housing Authority, and Parking Authority; and
That the City Council:
1. Adopt a resolution approving the Salary Schedule for Miscellaneous Employees, Police Safety Employees, and Fire Safety Employees effective June 30, 2025; and
2. Adopt a resolution authorizing a decrease to the Contingency Reserve below established target for Fiscal Year 2025-2026;
3. Adopt a resolution amending City Council Policy Statement 5002 (Financial Policies) to establish Committed Reserve for loan to Community Corp of Santa Monica toward construction of affordable housing units in the Jubilo Village Project located at 4464 Sepulveda Boulevard Culver City.