Upland finance committee recommends repurposing some reserves to address road funding; keeps pension stabilization intact

The Upland Finance Committee agreed April 30 to forward a package of changes to the city council that would shift several reserve funding streams toward infrastructure needs while leaving the pension-stabilization reserve intact.

Finance Manager Stacy Sullivan and Assistant City Manager Steven Parker presented the existing reserve-policy structure and several options for reallocating year-end surpluses. The committee's majority view, summarized to council staff, was to keep the pension stabilization reserve at its current 40% target but to repurpose other sources to help address the city's pavement and infrastructure shortfall.

Committee recommendations being sent to council (as summarized by staff and confirmed by council members during the meeting) include: - Keep the pension-stabilization reserve at 40% of the stated target (no reduction). - Stop ongoing annual contributions to the OPEB (other post-employment benefits) trust (set annual contribution to 0%, while leaving the existing balance in place). - Remove the 0.25% operating-year transfer that had been set aside for building replacement/maintenance and instead use the available balance to cover near-term revenue shortfalls; the presentation estimated that removing the 0.25% would free about $157,000 for the upcoming fiscal year. - Eliminate ongoing general-fund surplus contributions to a general-plan update reserve (the general plan will still receive fee-based funding tied to building permits) and allow remaining fees to persist. - Increase the infrastructure-improvement reserve allocation so more surplus dollars flow to roadway and capital needs (staff presented an option to increase the infrastructure allocation up to 40%).

Committee members repeatedly emphasized the severity of the pavement-management findings. One council member described the pavement study's scale: "to get to a C grade of our streets, it was, what, $55,000,000 a year, which we current I I thought that It was, around 25 if I remember right," (committee member, paraphrased in discussion and reflecting competing figures discussed during the meeting). Staff referenced a separate estimate that approximately $25,000,000 per year would be required over multiple years to begin improving the system; council members noted the figures were large compared with the incremental dollars they were discussing for reserve reallocation.

Stacy Sullivan summarized the policy context: "The general plan is updated on a roughly 10 year basis" and the last plan update had an estimated cost in the low millions; the city had set a target of $2,000,000 for the general-plan reserve after prior discussion. Sullivan also presented the current balances for key funds and liabilities: - 115 trust (pension-related fund): approximately $10,216,000 in balance. - Unfunded Accrued Liability (UAL) for pensions: approximately $104,000,000 (staff described this as the city's largest long-term liability). - OPEB trust balance: approximately $2,600,000. - Building-maintenance fund balance: approximately $3,200,000. - Annual ongoing pension cost estimated at about $10,000,000 for the upcoming fiscal year (staff noted an approximate $200,000 projected increase next year that council has already set aside).

Council members expressed concern about cutting pension-protection measures given CalPERS's volatility; as one member stated, the current approach has helped "stop the bleed" on pension liabilities. For that reason the committee reached consensus to keep the pension stabilization level at 40% and not reduce it at this time.

Next steps: Staff will prepare the formal recommendation and ordinance changes to go before the full city council at a future meeting (staff indicated the recommendation would be presented to council for approval and take effect if adopted). The committee also asked that the reserve policy be reviewed at the beginning of each two-year budget cycle by the finance committee before it goes to council.

No formal roll-call vote on the policy changes was recorded during the committee meeting; committee members spoke to consensus and instructed staff to forward the package to council for consideration.