Tustin council accepts midyear budget update; city reports better-than-expected results and a plan to accelerate pension payoff

The Tustin City Council unanimously approved a midyear budget update and related supplemental appropriations after a presentation from Director of Finance Jennifer King.

King summarized the city’s fiscal performance for the first six months of FY 2024–25, reporting the city’s unfunded accrued liability (UAL) for pensions at $78,000,000 and describing a five-year funding plan that includes discretionary contributions to a pension trust to accelerate payoff. "Based on the last valuation report, our UAL total balance is 78,000,000," King said, and staff projected the UAL payoff timeline to be around 2036–37 given current contributions and discount assumptions.

King told the council general fund results for FY 2023–24 closed about $5.4 million better than projected due to higher departmental revenues and lower expenditures; for FY 2024–25 staff projects a modest general fund deficit of roughly $1,000,000 under current assumptions. She also said sales tax projections were trimmed by about $590,000 in the agenda report and that the water enterprise is projected to have a $4.4 million operating surplus before capital and debt expenditures.

Council discussion focused on the assumptions behind sales tax projections, monitoring of revenue versus adopted projections, and continuing efforts to drive development revenue (legacy land sales and Red Hill/Old Town development) to support long-term solvency. The council approved the recommended revenue and appropriation adjustments, updates to the citywide salary schedule, and requested staff provide follow-up details on projection variances.

What happens next: Staff will implement the approved midyear adjustments and return follow-up details and any required ordinance/resolution language as part of regular budget processes.