City of Morgan Hill Fiscal Years 2020- 2022 Recommended Operating and CIP Budgets

In FY 2020-21, the City’s contribution for sworn police officers is 50.420 percent of pay, lower than CalPERS required employer’s contribution due to the 6.121 percent shared by our employees. The projected City’s contribution for sworn police officers for FY 2021-22 is 52.964 percent. These amounts are in addition to the employees’ 9 percent of pay contribution to their retirement. For all other employees, the employer’s required contribution is 25.354 percent of pay (20.869 percent City-paid and 4.485 percent employee-paid). These amounts are in addition to the employees’ 8 percent of pay contribution to their retirement for FY 2020-21. For FY 2021-22, the forecasted rate is 26.940 percent of pay (21.662 percent City-paid and 5.278 percent employee- paid). The chart below illustrates the CalPERS employer contribution rate projections through FY 2025- 26:

70%

60%

6%

6%

6%

6%

6%

6%

50%

6%

6%

40%

30%

56%

55%

55%

55%

53%

7%

7%

6%

6%

50%

5%

4%

4%

43%

3%

20%

39%

1%

2%

2%

2%

2%

1%

1%

1%

23%

23%

23%

22%

22%

21%

20%

10%

19%

14%

13%

13%

13%

13%

13%

12%

12%

0%

FY18‐19 *                   FY19‐20*                  FY20‐21*                    FY21‐22                     FY22‐23       

FY23‐24                     FY24‐25                    FY25‐26

% Misc

% Misc Employee Share of Employer Rate % Safety Employee Share of Employer Rate % Safety PEPRA Employee Share of Employer Rate

% Safety

% SafetyPEPRA

*Actual

Summary The Recommended FY 2020-21 and FY 2021-22 budget reflects the realities of the impact of the COVID-19 pandemic as the City is expecting significant revenue loss. This is the first time, in a long time, that there will be no “decision packages” or service enhancements recommended in the budget. In addition to the recently implemented hiring freeze, the recommended budget includes deferment of certain building maintenance projects, reduced contractual services, and draw down of the General Liability Fund to supplement the expected increase in unemployment insurance claims. All these steps will not be enough as the bleak outlook requires further reduction. Staff will continue to monitor and analyze the impact to City finances from the COVID-19 pandemic and will bring to the Council additional proposals and adjustments to the budget to ensure the City’s fiscal sustainability.

26 RECOMMENDED BUDGET MESSAGE