San Fernando proposes conservative FY 2025–26 budget; council questions OPEB and homelessness outreach funding

City staff presented a conservative recommended budget for fiscal year 2025–26 that holds revenue expectations steady, prioritizes one-time enhancements or those offset by other revenue, and proposes modest program changes while flagging potential reductions to some services after grant funds expire.

Director of Administrative Services Erica Melton told the council the FY25–26 proposed budget “prioritiz[es] financial stability during economic uncertainty,” and that staff had minimized new ongoing commitments where possible. The proposed general-fund revenue total was presented at about $28.8 million with $28.6 million in budgeted expenditures; the city manager’s recommended enhancements totaled roughly $266,670 and the presentation showed an estimated general-fund surplus of about $149,340 available for council direction.

Melton and City Manager Nick Kimball outlined several cross-cutting priorities that informed the budget: public-safety patrol effectiveness; citywide recruitment and retention; park and right-of-way beautification; homelessness services; and continued investment in technology and essential service continuity. Staff gave a department-by-department overview of service areas, prior-year enhancement status and recommended work plans.

Key budget details and council concerns noted in the meeting:

- Homeless outreach funding: Staff said the city had supported full-time outreach using one-time funding (ARPA and a mental-health outreach grant) and that those funding sources will be exhausted by October. The county Measure H “local return” was estimated at roughly $130,000 annually; staff said that amount would not sustain the current full-time outreach level (staff indicated current spend closer to $200,000), so without additional funding the service would be reduced to part-time after October 1.

- OPEB / retiree health: The city manager told council the general fund carries about $11 million in reserves and staff recommended the council consider transferring $500,000 to $1 million from unrestricted reserves into a restricted retiree-health trust to begin pre-funding other post-employment benefits (OPEB). Some councilmembers pushed for stronger OPEB pre-funding; others emphasized the need to balance reserves against near-term service priorities.

- Parks restrooms and facilities: Staff proposed renovating outdoor restrooms at the city’s busy parks (Rudy Ortega Recreation Park and Las Palmas Park) with preliminary cost estimates of roughly $40,000–$45,000 per facility. The Las Palmas Park larger revitalization project was also described as a multi-year capital undertaking that requires scope refinement to match available grant funding.

- Special events and staffing: Staff showed existing event funding covers more than 10 annual events; council discussed whether additional part-time staff would be needed to expand the city’s special-events calendar.

- One-time and ongoing enhancements: The proposed budget included a modest slate of requests across departments (examples: $25,000 for continuing a leadership/coaching program in Administrative Services; $60,000 ongoing to convert part-time recreation hours to 1 full-time recreation coordinator in Recreation & Community Services, partially offset by reduced part-time hours; $5,500 for specialized legal services in Community Development). Staff noted most recommended enhancements were onetime or revenue-offset where possible.

- Capital improvement program (CIP): Staff noted roughly $41 million in funded carryover projects and a proposed FY25–26 CIP allocation (about $1.2 million in the reviewed table, primarily streets resurfacing) to continue multiyear infrastructure projects. Public Works identified several ongoing programs—water/wastewater projects, signage, traffic synchronization, park revitalizations—and recommended several reclassifications to improve supervisory spans of control.

Process and timing: Staff said the proposed budget is a recommended draft; the council will have a second budget study session on June 2 and a tentative budget adoption hearing scheduled for June 16, 2025.

Ending: Councilmembers asked staff for additional detail on the homeless outreach costs and options, a visual explanation of OPEB funding and repayment schedules, and more specificity about contractors, vendor lists, and temporary-business-license records (requested during an earlier item). No budget adoption occurred at the meeting; the items were left for further council discussion before the tentative adoption date.