San Fernando adopts conservative FY 2025–26 budget, approves $500,000 for retiree health trust
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Summary
The San Fernando City Council adopted a fiscally conservative FY2025–26 budget on June 30 and approved a $500,000 appropriation to the city’s Section 115 trust to pre-fund retiree health benefits. Council also approved a slate of smaller personnel and program enhancements while deferring two positions for further review.
The San Fernando City Council on June 30 adopted a $28.6 million fiscal year 2025–26 budget and passed a companion resolution appropriating $500,000 from general fund reserves to the city’s Section 115 trust for retiree health (OPEB) obligations.
City staff presented the budget as conservative in light of uncertain revenue projections over the next 12 to 18 months, and the council approved a mix of one-time and ongoing enhancements while limiting revenue assumptions. The adopted package keeps baseline revenues essentially flat and prioritizes operational stability, staff said.
Erica Melton, director of administrative services, told the council the proposed budget anticipates flat primary revenues and budgets expenditures of about $28.6 million. Melton said the city manager’s recommended enhancements total $266,670, split between ongoing personnel and technology items and $57,860 in one-time items. The proposal also included a recommendation to appropriate $500,000 from reserves to the Section 115 trust to begin addressing an unfunded retiree health liability staff estimated at roughly $40 million.
The council discussed a long-running concern about the unfunded retiree health obligation. Council member Joe Fajardo repeatedly pressed for clarity on the long-term cost and whether the city should set aside more than $500,000 annually; staff said $500,000 was the council’s prior commitment and that bringing the amount to $1 million annually would be a stronger long-term strategy but may not be feasible under current revenue assumptions. Staff said the $500,000 appropriation would be placed in the Section 115 trust and restricted for retiree medical benefits.
During an itemized review the council approved several manager-recommended enhancements (including software and modest personnel reclassifications), and approved a number of council-proposed items such as event funding and public-safety overtime. Council members also agreed to defer final decisions on two staffing items — a public-safety sergeant upgrade and one full-time parks position — for midyear review before any hiring is authorized.
Final action on the budget included two formal resolutions: one adopting the FY 2025–26 budget subject to any subsequent council amendments, and a second appropriating $500,000 from general fund reserves to the city’s Section 115 trust for retiree health benefits. Both resolutions were adopted by roll call vote.
The council’s budget vote included multiple smaller line-item votes on the manager and council enhancements during the meeting; staff will publish the final adopted budget document with line-item details and the council’s midyear review schedule. The council also directed staff to provide quarterly budget updates going forward so members can assess revenues and make adjustments if needed.
The budget resolutions take effect immediately as provided in the council action. The council scheduled midyear budget review and directed staff to bring additional retiree-health planning material, including updated projections and the city’s investment adviser, to a future meeting for a deeper discussion.
