Manhattan Beach budget projects rising pension and insurance costs; council asks staff for cost‑containment and revenue options

Finance Director Libby Bradau presented the city’s proposed fiscal year 2027 operating budget and five‑year forecast, telling council the plan maintains current service levels but forecasts rising long‑term liabilities that will pressure reserves.

Bradau highlighted three structural pressures: growing CalPERS unfunded actuarial liability payments (UAL payments projected to rise to roughly $2.6–$2.8M next year and to higher levels in the near term), escalating insurance costs and litigation exposure that have left the city’s insurance internal service fund strained, and rising equipment/fleet replacement prices (an example: an ambulance replacement cost that rose from about $176K in 2017 to roughly $550K today). In response staff proposed a one‑time transfer of roughly $6.0M from the general fund to the insurance fund to stabilize claim payments, and temporarily paused transfers into a Section 115 pension trust that had been planned in earlier years. The proposed budget also assumes an annual $5M transfer to the CIP (funded by Measure MMB receipts), and includes three net new full‑time positions that staff said were offset where possible by part‑time reductions or other savings.

Bradau repeatedly cautioned that modest revenue growth combined with rising costs would erode reserves over the five‑year forecast without action. "This has been the most challenging budget year since the pandemic," Bradau said, framing the tight decisions staff had made and the requests for follow‑up analysis (May 5 presentation).

Council members and members of the public urged fiscal restraint, asked staff to detail possible spending reductions and revenue options, and requested transparent impact assessments of any proposed cuts. Council directed staff to return at the next budget study session with (a) a prioritized set of contract‑service and materials reductions and estimates of service impacts, (b) revenue options including parking citation/ meter rate adjustments and a review of TOT options, (c) a clearer list of CIP projects that could be deferred and the effect on the capital plan, and (d) a schedule for actuarial and insurance‑fund updates.

Ending: Council did not adopt the budget on May 5; staff will return with additional analyses and options for council consideration before final budget adoption in June.