Council approves transfer of excess general‑fund balance to capital projects after audit

The Folsom City Council voted March 25 to transfer the portion of the general fund’s unassigned fund balance that exceeds the council’s 20% reserve cap to the capital projects fund, and heard the city manager’s fiscal year 2024–25 second‑quarter financial update.

Stacy Timani, Chief Financial Officer, presented the audited year‑end figures for fiscal 2023–24 and a second‑quarter update covering October through December 2024. Timani said the final audited unassigned general‑fund balance for 2023–24 was $24.9 million, or 21.57% of expenditures, and that the city proposes transferring the amount above the 20% target — $1.9 million — to the capital projects fund under Resolution No. 11335. Timani described the drivers: final revenues of about $119 million (including roughly $3 million of ARPA revenue) and final expenditures of about $115.6 million.

Timani also walked the council through the current year projections: revenues projected at about $121 million, amended budgeted expenditures currently at roughly $124 million and projected year‑end expenditures of about $129 million — a projection that includes a planned $1.9 million one‑time transfer to capital. Timani said projected year‑end unassigned fund balance would be about $22.2 million (about 17.2% of expenditures) if the transfer is approved.

Council members discussed components of the amended budget and prior-year encumbrances that carry forward; Timani identified roughly $5.5 million of approved purchase orders carried forward into the current year, largely for capital and vehicle purchases. Council members also pressed for additional transparency on how the council moved from an adopted budget of $117 million to an amended budget of $124 million; staff explained much of the change reflected encumbrances, grants and program-specific amendments and promised follow-up detail in future budget cycles.

Council members raised the status of the city’s risk management internal service fund. Timani said the city temporarily underfunded the risk management contributions during COVID to reduce general fund pressure, which lowered the risk fund reserve from about $9 million in 2019–20 to a projected $3.9 million this year. City staff and the city manager recommended proceeding with the $1.9 million transfer now to begin capital projects and reassess replenishment of the risk fund during the August–September final budget process. After discussion, the council approved Resolution No. 11335 directing the finance director to make the transfer from the general fund to the capital projects fund by roll-call vote.