Cathedral City staff outline Financial Services budget, cite risk-management costs and housing lien receipts ahead of May 14 preliminary budget vote

Cathedral City staff presented a review of the Financial Services Department to the City Council on April 30, 2025, outlining proposed staffing and budget changes, risk-management costs tied to the city's membership in the Public Entity Risk Management Authority (PERMA), facilities master-plan work, progress on FEMA reimbursements and the status of the housing successor agency's liens and receivables.

The presentation, billed as the final deep dive in a series of departmental reviews that began Feb. 19, will inform the city's preliminary budget adoption scheduled for May 14, staff said. "This is the last in our series of deeper dives into the staffing and budget levels for each of our departments," a Finance staff member told the council. The review covered personnel counts, insurance forecasts, ongoing and one-time facilities projects, audit timing and the city's housing-related receivables.

City staff said the Financial Services Department would show a net reduction of roughly 1.5 full-time equivalent positions in the proposed budget: the department will move from 18.5 to 17.0 positions based on a 2024–25 trade of an assistant supervisor for two facilities maintenance worker I positions and other adjustments. Staff described the reduction as part of succession planning and a retirement-related cash-out affecting year-to-year budget figures.

Risk management and insurance comprised a major portion of the discussion. Staff described the city's membership in PERMA, a 32-member joint powers authority (JPA) for public-entity insurance and risk services, and said most liability coverage is carried through PERMA while some commercial lines (including cyber and crime coverage) were transitioned between programs. Staff noted insurer conversations after the Pasadena/Altadena wildfires raised concerns that personal-lines losses can affect commercial coverage pricing. The presentation used a conservative forecast (previously discussed as a 7% figure) and noted current planning around a double-digit increase in some lines if trends persist. Staff also said PERMA will appear before the council May 14 to present an award tied to collaborative risk-management work with public works.

Facilities work under the adopted Facilities Master Plan was described as a mix of completed items and multi-year projects. Staff listed recent accomplishments at the amphitheater, Bell Tower, City Hall, the Central Police and fire stations, the Public Works building, the library, Festival Lawn, Town Square, Century Park, Panorama Park, Ogletier Park and the soccer park. Facilities is now staffed seven days a week with four staff members to support event season and routine inspections, staff said. A large, multi-year recommendation in the master plan would be funded from the facilities fund rather than the general fund if fully implemented.

Finance operations and controls were highlighted as a continued focus. Staff said the city administers about 59 internal funds and completes roughly 97 separate financial reports and filings annually, including interim and year-end audit materials. The city continues to use the Tyler ERP financial system; payroll processing was brought in-house in 2022 and the enterprise asset manager (EAM) module is now used by multiple departments. Staff said central budget entry was used this cycle for the first time to gather department inputs and that process improvements and procurement centralization produced about $65,000 in identified savings across two years.

Grant and audit work was also discussed. Staff said grant management improvements have produced more than $500,000 in grant awards in the first year after implementing a grants management workflow. On audits, the city expects interim audit work to begin with its auditors in two weeks and listed four routine year-end audit activities, including state controller reporting and Measure A/TDA procedures with Riverside County.

On FEMA reimbursements tied to Tropical Storm Hilary, staff said four projects were in environmental review with two making recent progress. One large FEMA claim — debris removal — is estimated at about $2.8 million; staff said progress on several items could yield roughly $250,000 in recoveries already being processed, with additional approvals still required through Cal OES and FEMA.

The presentation included a detailed explanation of the housing successor agency (the city's successor to the former redevelopment agency dissolved in 2012). Staff said the successor agency holds roughly $15 million in historic receivables recorded as forgivable loans, about $4 million in active recorded liens across multiple programs, and an overall housing fund balance just under $3 million. Since dissolution, staff said the successor agency retains about 14 housing parcels of the original 81 and credits nearly 1,800 units as restricted affordable housing under various agreements. City staff said lien payoffs produce occasional cash inflows — typically about $50,000 to $75,000 per year on average — and that liens are released or enforced through the escrow/demand-letter process when properties sell.

Council members asked for clarification about liability exposure and whether the city had recent multimillion-dollar payouts; staff said while there have been significant settlements in the region, the city's participation in the JPA and its self-insured layers limit single-event exposure. Councilmember Carnivali said the FEMA recovery was "a win" for the city after staff described progress on reimbursements. Councilmember Lam and Councilmember Grama asked for clarification on JPA membership and mechanics of the housing liens and successor-agency accounting.

No formal votes or ordinances were taken during the special meeting. Staff told council any feedback from this review would be incorporated into the budget document and brought back for preliminary adoption on May 14. The council also noted a joint meeting with the Planning Commission on the zoning code update scheduled the following week.

A list of supporting documents referenced during the presentation includes the Financial Services departmental organization chart, the Facilities Master Plan project list and a schedule of housing successor-agency liens and receivables that staff said are available with the budget materials.