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Westminster council adopts fund‑balance policy, directs contributions to pension/OPEB trusts and adopts FY2025–26 budget
Summary
Council approved a revised fund balance policy that creates new dedicated reserves for budget uncertainty and infrastructure and authorized transfers to pension and OPEB Section 115 trusts when audited surpluses occur; the full FY2025–26 budget was also adopted.
The Westminster City Council adopted a revised fund‑balance policy and approved the fiscal year 2025–26 budget on June 25, directing staff to use a portion of audited surpluses for pension and post‑employment benefit trusts.
Under the new policy the council set the emergency reserve target at 17% of general fund expenditures, established a 10% “budget uncertainty” reserve and a 5% “infrastructure contingency” reserve. The council also included a mechanism to transfer a portion of audited general‑fund surpluses to Section 115 trusts used to prepay pension and OPEB liabilities.
Staff said the change is intended to formalize priorities for the city’s fund balance and to create a predictable approach for using one‑time surpluses. The finance presentation included a worked example using fiscal year 2023–24 numbers: a hypothetical surplus of $7.1 million would be allocated to the emergency contingency, the budget uncertainty and an infrastructure contingency before leaving an unassigned balance for future years. The policy as presented would also recommend directing up to 20% of an audited surplus to the city’s pension (PARS) Section 115 trust and 10% of surplus to the OPEB Section 115 trust, if the council chooses to do so at the time of the audited closing.
Staff said Westminster’s outstanding unfunded pension liability is about $146 million (as of June 30, 2024) and annual pension payments are projected to rise from about $14 million to $18 million in coming years. The city currently holds about $6.2 million in pension trust assets and the same amount in the OPEB trust. Finance staff noted transfers to Section 115 trusts would occur only after council approval and only following an audited surplus year.
In a companion action, the council adopted the FY2025–26 budget and enacted a set of personnel and salary schedule updates, including new positions discussed in study sessions earlier in the spring; staff said the general fund remained balanced with the adopted changes. Council also approved updated internal service fund reserve guidance, maintaining a $500,000 minimum and adding an inflation factor for future years.
Councilmember comments emphasized the long‑term fiscal risks of pension and OPEB liabilities and supported a measured, multi‑year approach to building trust reserves. The council adopted the fund balance policy and budget by formal resolutions; the budget adoption included the council direction to bring future transfers to the Section 115 trusts as a council action in the post‑audit period.
