CITY COUNCIL WORKSHOP AGENDA PACKET

CITY OF PLEASANTON, CALIFORNIA 4 | eidebailly.com W TO S EXECUTIVE SUMMARY This report has been prepared at the request of the City of Pleasanton to provide an independent assessment of the quality and content of the City’s financial forecast and related financial management practices. The work was predicated on the American Institute of Certified Public Accountants’ Statement on Standards for Consulting Services framework and adapted to include the experience and perspectives of the engagement team. That experience includes serving as municipal Finance Directors and Budget Managers for multiple California cities, including in complex, full-service cities, experience as consultants to cities and other local governments in multiple states assessing financial condition and financial management practices, and experience teaching graduate courses and industry trainings in public financial management. Our assessment of the City’s financial forecast and related financial management practices included categorizing our observations into strengths, weaknesses, opportunities, and threats, commonly referred to as a SWOT analysis, in an effort to highlight the most notable of our observations. These key observations are highlighted in the graphic below and reflect both favorable and unfavorable internal and external influences on the City’s long- term financial planning process. In the course of our assessment, we identified a number of additional observations and recommendations, but those listed here are in our view the most notable. Our full list of observations and recommendations are discussed in the subsequent sections of this report. 1 The City is actively in the process of assessing facility and equipment replacement costs, interfund subsidies, cost allocations, and other key issues that will further inform the forecast and improve its accuracy. 2 Communication of information regarding the financial forecast, the City’s financial condition, and related financial management practices will be key in ensuring success as the City resolves the structural deficit. In our assessment, the City’s financial challenges are not attributable to any single recent or historical decision. They are the cumulative result of a variety of factors including the City’s revenue mix, sales tax base, collective bargaining pressures for competitive salaries and benefits, long-term pension challenges at CalPERS, and other cost pressures that frequently outpace revenue growth such as utility rates, contractor wages, and materials pricing. These challenges are common to many California cities and similar conversations have been had or are underway in cities throughout the state. What is less common, is agencies taking the time and effort to catalog financial challenges and unfunded needs comprehensively and discussing these issues openly in the context of thoughtful long-term financial planning. Conclusion. In summary, based on the information examined and our related observations we conclude that the City’s financial forecast employs an appropriate and standard methodology common in California local governments. The first step in forecasting is to develop a forecast model and the City has taken that important • Completion of the City’s efforts to fill information gaps in long-term financial planning data, which will enhance the accuracy of the forecast. 1 • OPPORTUNITIES STRENGTHS • Short-term (2-3 year) projections are based on sound data and assumptions. • External subject matter experts assist in preparing key revenue projections. WEAKNESSES THREATS Longer-term projections would benefit from enhanced detail and analysis. • The City’s communication of financial information can be improved. • Stakeholder confusion regarding the purpose of long-term financial planning. 2 • Stakeholder confusion regarding financial condition and reserve fund use. 2 • Page 13 of 33