Budget commission flags $4.3M CalPERS bill as biggest pressure on Redondo Beachbudget; urges council to limit reserve draw

The Redondo Beach Budget and Finance Commission reviewed the City Managerproposed fiscal 2025-26 budget and five-year capital improvement program at a June 12 meeting and voted to recommend the City Council limit transfers from the citypension reserve to cover an expected $4.3 million CalPERS unfunded accrued liability payment.

City Manager Mike presented the proposal and told the commission the city faces a major pressure point in 2025-26: “we have a $4,300,000 unfunded accrued liability payment that's hitting the 25-26 budget,” he said. The manager said staff proposes drawing about $3.5 million from an $8 million pension set-aside to smooth the current year while seeking structural fixes in subsequent budgets.

The commissionrecommended that council minimize the use of the pension reserve and requested additional information on homelessness spending and capital project performance before further reserve draws. The motion passed on a roll call vote with six commissioners voting yes and one commissioner absent.

Why this matters

Commissioners and staff said the CalPERS payment is the largest single cost pressure in the proposed budget and that drawing heavily from reserves will leave less flexibility if revenues weaken. The city manager described the proposal as a smoothing strategy that buys time while the city seeks ways to close the structural gap in future years.

Key numbers and program choices

- CalPERS unfunded accrued liability (UAL) payment for 2025-26: $4,300,000 (as stated by the City Manager). - Proposed transfer from pension reserve to cover part of UAL: $3,500,000 from an approximately $8,000,000 pension set-aside. - City managerpresentation projects transient occupancy tax (TOT) at $9.1 million for 2025-26 (staff called that a conservative estimate; full potential was discussed at $11 million to $11.5 million if new hotels reach full operation). - Proposed capital improvement program (CIP) total in the presentation: roughly $94,000,000, including about $23,000,000 in new competitive grants the city reported securing.

Commission questions and concerns

Commissioners pressed staff for clearer presentation of the budget book and for department-level highlights that would make major year-over-year changes easier for commissioners and the public to parse. Commissioners asked specifically for:

- A department-sorted summary of the 53 decision packages that drive year-over-year changes; staff said those decision packages are already available and can be exported in spreadsheet form for sorting. - A clearer CIP dashboard or table that shows each project's original appropriation, phase (feasibility, design, construction), engineer estimate at bid, contract award and final cost or current estimate. Staff told the commission such a view is feasible but requires staff time to prepare and that the city would experiment with a category-level pilot (for example, street projects) rather than a multi-year retroactive review of all projects. - More detail on revenue assumptions (TOT, sales tax, transfers in) and where internal-service fund and user fees are counted in the operating budget.

Specific program items discussed

Crossing guards: Commissioners focused on a decision package that would expand crossing-guard coverage. Staff said the existing core budget historically funded 12 locations; community demand and council direction have raised staffing to 27 locations. The decision package would add 15 locations and cost about $367,000 (one-time in staff presentation) and additional options would add another roughly $64,000. Staff said contracting for crossing guards to ensure coverage has become more expensive and the city is exploring volunteer and cadet solutions to reduce long-term cost.

Public safety training and drone program: Commissioners asked about a proposed $17 million federal grant application to build a regional firearms range in partnership with the LA Air Force Base. Staff said the city will apply for federal funds that could be 100% funded if the federal waiver is granted; otherwise a 70/30 split is possible and the council would decide whether to fund any local share. The police departmentdrone program also drew questions: current contract costs were reported around $165,000 with a possible increase to $240,000 if a vendor secures extended FAA certification; staff said some recurring personnel costs might be offset by operational savings.

Positions and reorganization: Staff said the proposed budget adds a small number of reorganized or repurposed positions (not large net headcount increases). Examples: a captain-level harbor master replacing a civilian emergency preparedness coordinator (net headcount neutral), upgrading a part-time police social media coordinator to a full-time citywide social media coordinator (offset by deleting another vacant position), an MSO supervisor expected to be revenue-offset, and a senior analyst funded in part by grant monies.

Commission action and next steps

The commission voted to forward a recommendation to City Council to limit the amount drawn from the pension reserve to cover the CalPERS UAL and to request additional information on homelessness costs and CIP performance. The commission also asked staff to work on improved budget presentation materials (department highlights, sortable decision-package spreadsheets and a pilot CIP dashboard) to improve transparency for the public and commissioners.

City Manager Mike said the council will hold its final public hearing and consider budget adoption the following Tuesday. Staff told commissioners they will prepare supplemental materials and try to deliver the requested summaries, and they noted that the adopted budget document (if approved) will be published in an adopted, hard-copy form after council action.

Quotes

Chair Allen, Budget and Finance Commission, said at the start of the presentation: "This is the most important budget presentation of the entire year, and it has 10 slides." City Manager Mike told the commission: "we have a $4,300,000 unfunded accrued liability payment that's hitting the 25-26 budget." At public comment, Jim Wheeler urged the commission to inform the public about the city's financial pressures, saying, "The big pension liability is still there. The city is dipping into limited reserves to cover the deficit."

Ending

Staff said they would return requested follow-up material and asked commissioners to flag specific questions so staff could prioritize slides and spreadsheets. The councilfinal hearing was scheduled for the week after the commission meeting.