San Diego reports improved FY24 finances but reserves remain below policy target

City finance staff told the San Diego City Council on Oct. 28 that unaudited fiscal year 2024 results improved modestly from mid‑year expectations but left the general fund with a negative net projected activity and reserves below policy targets.

Chris Purcell, financial operations manager, said revenues were about $4.6 million above third-quarter projections while expenditures were roughly $18 million lower, yielding a combined variance of $22.6 million or roughly 0.5 percent. Purcell said the general fund is now projected to end the fiscal year with a negative net projected activity of $23.8 million, an improvement from an earlier projection of $46.4 million.

"Based on these unaudited actuals, it is now anticipated that the general fund will end the fiscal year with a negative 23,800,000 in net projected activity," Purcell said during the presentation.

City staff and the Independent Budget Analyst (IBA) reported that excess equity is now estimated at $105 million at year‑end. Of that amount, $84.4 million has already been programmed to support the FY25 budget, leaving about $20.6 million available for future requests.

IBA analyst Sergio Alcalde said year‑end expenditures were $27.1 million below the adopted budget, driven largely by a $44.9 million decrease in non‑personnel spending. However, overtime costs were a key pressure: fiscal year overtime exceeded budget by $24.3 million, with fire rescue and police comprising more than half of that overage.

"For fiscal year 2024, year‑end overtime expenditures were $24,300,000 over the adopted budget," Alcalde said, adding that fire rescue overtime was about $5.6 million over and police overtime about $7.9 million over budget.

Council members pressed staff on several points: how much of the apparent savings represented expenditures deferred into FY25 (finance staff estimated $5–8 million), whether excess equity should be used to plug shortfalls or held for uncertainties tied to the upcoming sales tax measure, and how the city would address persistently high public‑safety overtime through staffing and operational changes.

Finance staff warned that some post‑storm FEMA reimbursements can take years to materialize and noted that the city had incurred roughly $16.5 million in costs from the January storm event, partially covered by prior council approvals.

Councilmember Lee, who moved the FY26 priorities motion later in the meeting, thanked staff for the work and said the modest variance gave some room but urged caution given the structural challenges in the five‑year outlook. "There may be some deferred expenditures that will need midyear adjustments," Lee said.

The presentation was informational; no vote was required. Staff said updated projections will be included in December's five‑year financial outlook and in the FY25 first‑quarter report.