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San Clemente Adopts $194.7M First‑year Budget, Council Directs Pension and Sand‑Replenishment Planning
Summary
Council adopted a two‑year budget June 2 that sets an all‑funds total of about $194.66 million for fiscal year 2026‑27 with an improved general fund position and a modest first‑year surplus; council directed staff to consider placing year‑end balances into a Section 115 trust to address pension liabilities and to plan for Army Corps sand replenishment.
The San Clemente City Council adopted its biennial budget June 2, approving an all‑funds total of about $194.66 million for fiscal year 2026‑27 and $188.4 million for 2027‑28.
A city staff summary presented at the meeting said revenues are healthy, property tax growth is expected to add roughly $2 million per year, and the general fund shows a projected surplus of $471,620 in the first year and $496,330 in the second year. Staff highlighted specific areas of concern: storm‑drain fund revenue, street sweeping funding, limited funding for major initiatives such as sand replenishment overseen by the Army Corps, and pension/unfunded liability obligations.
Council members discussed options for using year‑end unassigned fund balances. Several members favored directing a portion of the year‑end balance into a Section 115 trust to earn higher returns and to offset unfunded pension liabilities. "I think it's prudent to have that money earning better interest," one council member said when proposing the approach; the motion to return year‑end fund balance recommendations to council and to prioritize placement into a Section 115 trust was carried as part of budget adoption.
Staff summarized long‑term liabilities and retirement obligations in response to council questions, noting multiple retirement plans (including CalPERS and earlier legacy plans) contribute to roughly $5 million in upcoming unfunded liabilities plus normal annual contributions. Council directed staff to return with options after year‑end audit and to continue funding capital improvement program priorities.
The council approved the budget package by voice vote and also adopted a motion directing staff to bring back a formal recommendation on allocating year‑end balances, including potential deposits into a Section 115 trust and possible sand replenishment contributions.
Next steps: staff to return with audit‑confirmed year‑end unassigned fund balance figures and recommended allocations; CIP projects proceed as funded in the approved plan.
