Finance Director Masami presents reserve policy solutions to South El Monte City Council

During the South El Monte City Council meeting on September 2, 2025, a significant focus was placed on the city’s General Fund Reserve Policy, as presented by Finance Director Masami Higa. The discussion highlighted the need for a review and potential amendment of the city’s reserve policy, which currently mandates a reserve of 25% of general fund expenditures—equivalent to approximately three months of operating costs. However, the city currently maintains a reserve of about 75%, or nine months of expenditures, which raises questions about the sustainability and flexibility of this approach.

Higa emphasized the importance of having a clear reserve policy that aligns with best practices observed in surrounding cities. Many larger cities have established frameworks that differentiate between emergency reserves and other types of reserves, which are intended for one-time expenses rather than recurring costs. This distinction is crucial for maintaining fiscal health and ensuring that reserves are not depleted for ongoing operational needs.

The Finance Director also presented a five-year financial forecast, indicating a projected surplus of $100,000 for the upcoming fiscal year. However, concerns were raised about future revenue projections, particularly in light of declining sales tax revenues. The council acknowledged the need for a proactive approach to managing reserves, especially as inflation continues to outpace government revenue growth.

In addition to the reserve policy discussion, the council addressed the management of funds raised through the Flags of Valor program, which supports local veterans. Two options were proposed for distributing the funds: partnering with a veteran-serving nonprofit or having the city directly manage the funds. Council members expressed a preference for the latter option, citing the importance of ensuring that assistance is prioritized for South El Monte veterans.

The meeting concluded without a formal vote on the reserve policy amendments, but the council agreed to revisit the topic as more financial data becomes available. The discussions underscored the city’s commitment to fiscal responsibility and support for its veteran community, setting the stage for future decisions that will impact the city’s financial health and community services.