Gilroy receives preliminary FY25 year‑end report; council approves Section 115 trust contributions and budget amendments

Finance Director Herjia Tsang presented the preliminary fiscal year 2025 year‑end financial report on Oct. 20 and the council approved staff recommendations to deposit year‑end savings into Section 115 trusts for pension and OPEB and to adopt a set of budget amendments for FY26.

Key figures and takeaways

- General fund revenues for FY25 were about $69.5 million against a budget of $69.9 million (99% of budget). - General fund expenditures (including encumbrances) were about $75.1 million versus a $76.4 million budget (98% spent); the net at‑year savings was approximately $1.3 million. - Per council policy, staff proposed placing 25% of general fund year‑end budgetary savings into the pension Section 115 trust and 25% into the OPEB trust. Council approved the trust contributions consistent with existing policy. - Finance reported several important variances: sales taxes came in lower than the adopted budget (staff had revised projections to 20.5% of total), while some user fees and interest earnings exceeded budget; transient occupancy (hotel) tax fell about $500,000 short of the projection. - CalPERS preliminary returns for FY25 were about 11.6%, which staff said would likely reduce the city’s unfunded actuarial liability (UAL) roughly to $101 million from prior estimates.

Budget amendments and follow‑ups

Council voted 7–0 — motion by Councilmember Klein, second by Councilmember Fugazi — to receive the report, approve Section 115 contributions per policy, and adopt recommended budget amendments. Amendments included reappropriation of certain police grants that have performance periods overlapping FY26, appropriations for a CERT emergency management community program, and park/landscape work (tree management and playground improvements) identified in FY26. Staff noted some capital projects and grant expenditures budgeted for FY25 did not occur because projects are still in design or because other agencies are leading the work (for example, a Santa Clara County transit agency leading a roadway project rather than the city).

What council asked for and next steps

Council members asked for quarterly follow‑ups on sales tax and TOT trends and requested staff to bring additional detail on capital projects’ timing. Finance said staff would return with the Q1 FY26 report and the next quarterly update to incorporate any recommended adjustments. Tsang also noted the city’s Section 115 trust balance stood at about $5.2 million and that returns on the trust have been strong, helping the city’s long‑term pension strategy.

Quote

“The fiscal year ’25 general fund top‑line came in about $1.3 million under budget; staff recommends putting the 25% allocations into the Section 115 trusts consistent with council policy and reappropriating grants whose performance periods overlap into FY26,” Finance Director Herjia Tsang said.

Ending

Council adopted the budget amendments and directed staff to continue quarterly reporting and to return with any necessary adjustments to multi‑year assumptions as FY26 progresses.