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Council pauses automatic surplus-fund distribution for one year, directs funds to general fund
Summary
The council voted unanimously to pause the existing policy that directs year-end general fund surplus into retirement and infrastructure accounts. For one year the surplus distribution will be halted and funds will remain in the general fund while the council considers priorities; the contingency fund allocation remains in place.
The Simi Valley City Council voted on Monday to pause its current policy for distributing year-end general fund surpluses for one year and to retain surplus dollars in the general fund. The policy, adopted in April 2022, previously directed surplus distributions as follows: 40% to a retirement-payment account (to reduce the city's CalPERS liability), 40% to an infrastructure investment fund and 20% to a contingency fund.
Administrative Services Director Carolyn Johnson told the council the existing approach has produced measurable results: roughly $12.3 million paid toward the city's CalPERS unfunded liability and more than $9 million directed to street maintenance over the last three years. With the 2023–24 surplus not yet assigned, the council had an opportunity to revisit allocations.
After discussion, Councilmember Rhodes moved to pause the current automatic allocation for one year, move the retirement and infrastructure shares into the general fund for potential reallocation, and keep the contingency fund in place. The motion passed unanimously.
Councilmembers said pausing the distribution will allow time to review near-term budget and capital needs. "We have to make decisions that make the city work, but we also know that the workers we need to run the city," Councilmember Ayala said, noting the city's competing priorities.
Council direction and next steps - Pause automatic distribution of surplus funds for one fiscal year. - Move the 40% retirement and 40% infrastructure allocations back into the general fund for possible reallocation to pressing needs. - Maintain the contingency fund allocation (20%). - Staff to return with recommendations and options for how any unassigned surplus could be allocated in the coming budget cycle.
Background The surplus-distribution policy had been used in past years to reduce pension liabilities and to accelerate street and infrastructure repairs. Councilmembers said the pause is temporary and requested staff return within the budget calendar year with options for prioritized spending.
