West Covina staff present FY 2025–26 proposed budget showing $144.2M revenues, $156.1M expenditures; pension and health‑department costs flagged

City of West Covina staff presented the proposed fiscal 2025–26 budget at a budget workshop, reporting $144.2 million in projected revenues and $156.1 million in projected expenditures and warning that rising pension and workers’ compensation liabilities are increasing costs.

The Finance Director summarized the process and schedule, saying the proposed budget “was already presented to Council June 3” and that adoption was scheduled for June 17; staff said the long‑range financial forecast will be updated before the adopted budget is submitted for Government Finance Officers Association (GFOA) consideration. The proposed package preserves current service levels and does not add new full‑time positions in the general fund, staff said.

Why it matters: staff and council members said the city faces lingering structural pressure because expenditures are rising faster than revenues, and because large, multi‑year liabilities tied to pensions and liability claims are increasing the city’s cost base. At the same time, staff said the city has not identified ongoing general‑fund revenue to pay for a proposed city health department and that any future costs would be presented to council with proposed funding sources.

Key figures and drivers

- Staff reported total citywide revenues of $144.2 million and expenditures of $156.1 million for the proposed 2025–26 budget. Staff characterized the higher citywide expenditures as reflecting activity across many funds, not only the general fund.

- Staff said the general fund is the city’s largest fund; figures discussed in the workshop put the general fund near $82 million (staff used several figures during the discussion while explaining transfers and fund balances across city funds).

- The finance presentation identified significant increases in pension and liability costs. Staff pointed to CalPERS and actuarial results showing unfunded accrued liabilities that rose in prior years (staff cited prior liabilities of about $12.7 million, then $20.5 million, and said the latest actuarial figure was about $24.5 million) and said those amounts are driving higher employer costs.

- Workers’ compensation and general liability costs were also highlighted. Staff presented projected losses and an actuarial forecast that shows those costs increasing over the next five years; one slide cited a projected loss of about $7.26 million for fiscal year 2029 as an example of longer‑range pressures.

Risk management and completed actions

Staff summarized a prior risk management evaluation performed by the California Joint Powers Insurance Authority (CalJPIA). The review identified 63 action items; staff said more than 50 of those items have been completed and that the city reviews the status monthly with the CalJPIA risk manager.

Capital projects, the Sportsplex and special funds

Staff said roughly $120 million in capital projects are underway citywide, with about $12 million proposed for 2025–26. According to staff, most capital projects are funded from special revenue or capital project funds tied to their specific purposes (for example, water or streets), rather than from the general fund; streets received the largest share of the proposed capital spending, aligning with survey responses that named streets and sidewalks as a top priority.

The Sportsplex is included in the capital and operating plan; staff said the city is evaluating options for the Sportsplex to become self‑sustaining and to help grow the local sales‑tax base.

Community input and survey results

Staff said a budget survey was open from December through May and that the workshop results reflected resident input. Staff reported the survey received 28 responses and summarized priorities reported by respondents: infrastructure, police and fire were named top priorities, and respondents flagged streets, sidewalks, traffic signals, economic development and affordable housing as areas for improvement. (Staff’s discussion included a few inconsistent numeric references to survey respondents during the presentation; staff described the results qualitatively as noted above.)

Health department discussion and funding uncertainty

Several participants asked about potential costs and the funding approach for a proposed city public health function. Staff said federal COVID funds that had been used for pandemic work have sunset and cannot be repurposed; staff said there is currently no ongoing general‑fund appropriation for a city health department in the proposed budget.

The Finance Director said the council will hear an update from the health director at the next city council meeting, and that the update will cover the city’s interactions with state and county agencies and outline potential timing and anticipated funding sources “if it proceeds.” Staff repeatedly said the proposed budget does not currently include costs that have not yet been realized and that “those monies won’t be accounted for and included in the budget until they're realized,” as part of standard budget practice.

On the operational model and timeline, staff said a full separation from Los Angeles County public health would be incremental and could start with discrete functions (for example, inspections or environmental‑health functions) rather than an immediate, full transfer of all county duties.

Personnel and vacancies

Staff said the proposed budget does not add new general‑fund FTEs, but that council will see a personnel item to reprogram an economic development coordinator position to create an assistant city manager; that item is scheduled to be brought forward to council for consideration. Staff also noted an upcoming required state report (AB 2561) that lists vacancies; staff said several vacancies will be reported to council.

Next steps and council direction

Staff said it will present any workshop input to the city council at its next scheduled meetings and incorporate changes as directed. The proposed budget was described as the version to be considered for adoption on the council’s schedule; staff also said it will update the long‑range financial forecast for a future presentation and for the city’s GFOA budget award submission.

Ending

Staff closed the workshop by reiterating that the budget reflects prior‑year actuals adjusted for projected base salary increases and that the city will continue to review funding sources, capital priorities and risk‑management work before finalizing the adopted budget.