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Budget commission recommends returning $3.5M to reserves, approves $5.2M allocation of year-end balances
Summary
After reviewing the FY 2024-25 year-end report, the commission voted to allocate $5.2 million of available fund balance: $3.5M to replenish the CalPERS reserve, $400K for AES bankruptcy-related legal costs, and $1.3M toward an unfunded actuarial liability payment; staff will present recommended dollar breakdowns to council.
Finance staff presented preliminary fiscal year 2024-25 year-end numbers and proposed assignments for the 2025-26 budget, saying revenues finished roughly 3% above revised estimates and noting several one-time transfers and expenditures affecting the general fund.
Stephanie (finance staff) said the city used one-time funds in 2024-25, including a $3.2 million unfunded liability payment and transfers to capital, and recommended prioritizing replenishment where future obligations are known. She flagged pressure on future years from potential sales tax and TOT declines and a scheduled $4 million unfunded liability payment in 2026-27.
Commission discussion centered on how to allocate approximately $5.2 million of estimated available fund balance. Commissioners identified three priorities: restoring the CalPERS reserve the city drew down in 2024-25, funding an estimated $400,000 likely needed for costs tied to the AES bankruptcy process, and setting aside funds for the 2026-27 unfunded accrued liability (UAL) payment. One commissioner called replenishing the CalPERS reserve a high priority.
The commission voted on a motion to allocate $3,500,000 back to the CalPERS reserve, $400,000 to AES-related costs, and $1,300,000 to the 2026-27 UAL payment (total $5,200,000). The motion was seconded and carried by voice vote. Commissioners also directed staff to present details of the one-time requests and the breakdown of transfers out to the council at the next meeting and to bring back more detailed backup documents for the commission's review.
The year-end report was received and filed by the commission. Staff said the numbers are preliminary pending completion of the audited financial statements (ACFR) and that council will consider final assignments following the commission's input.
