Ojai council approves midyear budget adjustments, formalizes 100% reserve policy and extends auditor contract

The Ojai City Council voted unanimously to adopt a set of midyear financial actions that include modest budget adjustments, a formal general-fund reserve policy and a multi-year engagement with the city's existing audit firm.

Interim Finance Director Christy Billings and Finance Manager Norma Cervantes told the council the fiscal-year 2024'25 budget had been prepared conservatively and staff's review showed the city remains fiscally healthy but requested adjustments. The staff recommendation included a requested $525,000 increase in budgeted expenditures for additional legal and accounting services.

The council adopted a new general-fund balance policy that sets a formal reserve target equal to 100 percent of the prior year's general fund actual expenditures. Billings said the recommendation formalizes a practice the city has followed informally; the policy text preserves council flexibility to amend the threshold in the future.

Auditor rotation and engagement: Billings explained state auditing rules require periodic rotation of engagement partners and noted the recommended policy would rotate engagement partners every five years and audit firms every ten years, while still allowing the city manager to defer rotation in exceptional circumstances. The council authorized the city manager to enter into a professional services agreement with Rogers, Anderson, Malady & Scott (RAMS) to complete the 2024'25 audit through the 2026'27 audits; RAMS is the firm presently completing the 2023'24 audit.

Numbers and context: Staff reported the June 30, 2024 general fund balance was $21,746,377 (about 167% of then-actual expenditures). If all recommended midyear adjustments are expended, staff said the projected June 30, 2025 balance would be about $20,637,377 (about 116% of budgeted expenditures under the conservative budget assumptions used).

Council discussion and next steps: Council members pressed for clarity on the legal-services increase (councilors were told the matter covers short-term rental enforcement, labor and employment matters, outside counsel for hearings and indemnity claims) and for a clearer breakdown of scheduled items before the final-year accounting and audit are complete. Staff said a detailed budget book and line-item reports will be available as the FY2025 budget process continues.

Vote and motion: The council voted 5-0 to adopt the midyear adjustments, approve the general-fund balance policy, adopt the auditor-rotation policy and authorize the city manager to execute the audit services agreement.

Ending: Staff said they will provide updated line-item detail during the regular budget cycle; the council directed staff to return with any recommended refinements and to present reserve-layering options for future consideration.