Although Glendale is likely to end the fiscal year with a $300,000 surplus after closing a $15.4-million budget gap, officials will have to start strategizing next year about unfunded post-employment benefits that could drag down the city’s finances in the future.
Not only have employees been promised certain benefits, but as pending federal healthcare reforms take hold, the city may face obstacles when it comes to curbing increasing costs.
As of June 2012, Glendale’s post-employment benefit projections were at $191 million, up from $103 million the prior fiscal year, according to the city’s annual financial report.
Over the past year, Glendale has trimmed roughly 120 positions through early retirements and layoffs, bringing the organization down to its lowest staffing levels since 2000, at 1,605 employees.
Of the roughly $166-million General Fund budget this year, about $130 million is being spent on salaries and benefits, a 7.6% drop compared with the prior year, according to a city report. The entire city budget, which includes enterprise funds that pay for specific projects, such as the sewer fund, is about $698 million.
In addition, the City Council approved multiple General Fund adjustments at the midyear budget meeting. The Fire Department’s budget was adjusted by $774,000 due to savings reaped from early retirements. Twenty-one employees retired, and their positions were not filled.
The Parks Recreation Fund was adjusted by about $97,000 to hire seasonal laborers to work on park maintenance, as well as pay for staffing at the Verdugo Skate Park. The site was at risk of closure until the city increased fees in October to cover staffing costs at the popular facility.
As city officials begin planning the budget for next year, they could see a balanced budget for the first time after years of multimillion-dollar budget gaps. That depends, however, on several factors.
If the city curbs payments to its liability and workers’ compensation funds like it did last year — and receives about $1.4 million from the state to reimburse a redevelopment loan — it could avoid a $4-million gap.
“The worst, I believe, is behind us,” Ochoa said.