CARLSBAD — The good news is the city is projecting an $8.7 million surplus after approving the 2018-19 Fiscal Year operating budget on June 12.
The additional funds will increase the city’s reserve fund to about $97.8 million. However, there is the pressing issue of the city’s unfunded debt liability, which received an $11 million injection from the council.
Additionally, the council also voted to schedule a workshop regarding the debt liability, or CalPERS (California Public Employee Retirement Services), at a later date. The workshop is to establish a policy, or policies, regarding the pension liability.
Councilman Michael Schumacher said the policies would not require a specific amount, but allow council and staff the flexibility to determine the appropriate amount of a surplus.
The city has $185 million in unfunded liability obligations.
“There’s a balance between chipping away at the unfunded liability, but also maintaining the reserve … and that we should continue to have,” he said. “There are going to be times where that balance, every year, is going to shift. I do think it’s a good idea to have a policy in place as a guideline … not a hard and fast rule.”
The $11 million, though, shaves off $2.9 million in interest over five years, according to Chuck McBride, administrative services director. The city also paid $9 million to reduce the unfunded liability in FY 2017-18 and established a Pension Stabilization Fund with a $10 million deposit.
Also, in FY 2011-12 and FY 2012-13 the city prepaid, which McBride said, “allowed us to overpay a bit.”
Mayor Matt Hall said the liability fund is a complex issue and stressed the importance of having more data.
“I think there’s more numbers we need to see to grasp the magnitude,” he said. “We really need to see what the big picture is. This isn’t about this moment in time, this is about the next 30 years and how big those numbers get.”
CalPERS, McBride said, “finally” realizes it has a funding problem, as funding sits at about 70 percent statewide. In 2016-17, the CalPERS board voted to reduce the discount rate from 7.5 percent to 7 percent, McBride said.
However, when the discount rate decreases, it puts more pressures on a city’s contribution, he added.
“When we’re talking about PERS, we’re talking about decades,” McBride said of balancing the liability fund.
As for the city’s budgets, the combined total is $342 million with operating revenues at $287.7 million and expenditures totaling $275.9 million. The general fund expenditures come in at $155.6 million.
Some of the budget requests include $4.6 million to replace 46 Public Works vehicles plus a ladder truck for the fire department, $465,000 for three full-time police officers and $400,000 for park expansion projects, to name a few.
For the Capital Improvement Program, revenues are projected at $49.7 million with $66.2 million in appropriations.
Some of the CIP projects include $9.5 million for the new Fire Station No. 2, $5.1 for the Monroe Street pool and more than $2 million for parks including turf replacement at Stagecoach and the dog park at Poinsettia.
Also, the council approved adding a school resource officer at Sage Creek High School. Currently, only Carlsbad High School has a dedicated school resource officer.
The budget increase will be added to the Carlsbad Police Department. The cost is about $224,000, and the Carlsbad Unified School District will reimburse the city more than $64,000.