2024-032 - Resolution Approving Commitments of Fund Balance Under GASB 54RESOLUTION 2024-032
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
APPROVING COMMITMENTS OF FUND BALANCE UNDER GASB 54
WHEREAS, the Governmental Accounting Standards Board (GASB) has issued its
Statement No. 54, Fund Balance and Governmental Fund Type Definitions with the intent of
improving financial reporting by providing fund balance categories that will be more easily
understood and to improve the comparability of governmental fund financial statements; and
WHEREAS, GASB 54 provides that the Town Council of the Town of Los Gatos classify
governmental fund balances as restricted, assigned, or committed fund balances; and
WHEREAS GASB 54 provides that restricted reserves are funds that are restricted for
externally imposed constraints such as legal contracts or state law, assigned amounts are
constrained by the Town's intent to use them for specific purposes, and committed amounts are
dedicated for specific purposes under constraints and formal action taken by the Town Council
and these committed amounts cannot be used for any other purposes unless the Town Council
of the Town of Los Gatos removes or changes the specific use through the same formal action to
establish the commitment; and
WHEREAS, there exists a Restricted General Fund Pension Reserve in the form of an
IRS 115 Pension Trust; and
WHEREAS, there exists a balance of $2,090,163 as of June 30, 2024 in the restricted
Pension Reserve; and
WHEREAS, upon Council direction up the entire balance of the restricted General
Fund Pension Reserve will be appropriated for additional discretionary payment to CaIPERS; and
WHEREAS, the Town Council of the Town of Los Gatos has established a General
Fund Reserve Policy providing for minimum fund balance dollar target amounts for Budget
Stabilization and Catastrophic Reserve fund balances and outlines policies and procedures for
use and restoration of these balances; and
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WHEREAS, there exists an assigned General Fund Compensated Absences Reserve
allocated to fund 50% of all vested hours of sick leave, compensation, and vacation time with the
actual reserve amount to be determined at the close of FY 2023/24; and
WHEREAS, there exists an assigned Capital/Special Projects Reserve to fund key
infrastructure and capital/special projects as identified in the Town's five-year Capital
Improvement Plan, and/or other Council priorities; and
WHEREAS, there exists an assigned authorized Carry Forward Reserve for materials
and services on approved purchase order and contracts which were issued but not finalized or
fulfilled as of the end of the fiscal year but for which funds will be carried forward to the following
fiscal year. Actual reserve balance will be established at the close of FY 2023/24; and
WHEREAS, in June 2016, the Town Council established the committed Pension/OPEB
Reserve to provide funding toward pension and Other Post -Employment Benefits (OPEB)
unfunded obligations by placing discretionary amounts to the reserve with formal Council action
and transferring available year-end surpluses based on the General Fund Reserve Policy; and
WHEREAS, there is an anticipated excess balance of $300,000 as of June 30, 2024 in
the assigned OPEB/Pension Reserve, that will confirmed at the close of FY 2023/24 and
WHEREAS, on November 6, 2018, the Town Council provided direction to establish
an unassigned Surplus Property Revenue General Fund Reserve that any monies received from
the sale of the property located on Winchester Boulevard and any monies received from the sale
of future surplus property be placed in this reserve, and the provisions for the reserve specifically
indicate that Council may, at its discretion, distribute those funds as it deems appropriate; and
WHEREAS, The Town Council established the assigned Sustainability Reserve in FY
2008/09 by closing the Solid Waste Management fund and placing the initial residual balance
dedicated for conservation, recycling, and sustainability; and
WHEREAS, there exists an excess balance of $140,553 as of June 30, 2024 in the
assigned Sustainability Reserve; and
WHEREAS, there exists an assigned Market Fluctuation Reserve that represent fund
balance amounts for unrealized investment gains that have been recorded as investment income
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in the financial statements in accordance with the requirements of GASB 31, actual reserve
balance will be established at the close of FY 2023/24; and
WHEREAS, there exists an assigned Measure G 2018 District Sales Tax Reserve to
track receipt and use of the 1/8 cent district tax funds collected by the Town; and
WHEREAS, the Town Council has determined the use of Measure G accumulated
and future proceeds to be 50% for operating expenditures and 50% for capital purposes; and
WHEREAS, the committed residual balance of $590,581 that was set aside for
operating purposes in FY 2020/21 is programmed to be used for operating expenses in FY
2024/25; and
WHEREAS, with the adoption of the Fiscal Year 2023/24 Budget, an assigned
Council Priorities — Economic Recovery Reserve has been established to track General Fund
revenues freed up from recognizing all American Rescue Plan Act (ARPA) "replacement" revenues
to the General Fund for essential government services, for economic recovery and business
support, enhanced senior services, capital program augmentations, and other one-time uses; and
WHEREAS, the assigned Council Priorities — Economic Recovery Reserve has an
estimated balance of $11,333 at June 30, 2024, with the actual reserve balance being determined
at the close of FY 2023/24; and
WHEREAS, with the adoption of the Fiscal Year 2023/24 Budget, an assigned
Education Realignment Augmentation Fund (ERAF) Risk Reserve has been established, reserving
the 30% of the anticipated ERAF proceeds from FY 2022/23 until a lawsuit between the State and
the School Districts concludes; and
WHEREAS, an excess balance of $1,430,054 exists as of June 30, 2024 in the
assigned ERAF Risk Reserve, with the actual amount will be determined at the close of FY
2023/24; and
WHEREAS, with the adoption of the Fiscal Year 2024/25 Budget, $1,000,000 will
be transferred from the ERAF Risk Reserve to the Pension/OPEB Reserve; and
WHEREAS, the $1,110,000 transfer from the Capital/Special Project Reserve to the
General Fund Appropriated Reserve provides funding to the five-year capital plan; and
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WHEREAS, the Town Council established the assigned Open Space reserve in the
FY 1998/99 to be used for the preservation of open space, connection of open space trails, the
definition of the southern boundary of the Town with passive open space, and protection of
unique natural features; and
WHEREAS, there exists an excess balance of $410,000 as of June 30, 2024 in the
assigned Open Space Reserve; and
NOW, THEREFORE, THE TOWN COUNCIL OF THE TOWN OF LOS GATOS DOES
HEREBY RESOLVE that the following estimated Pension, Budget Stabilization, Catastrophic,
Pension/OPEB, Capital/Special Projects, Compensated Absences; Measure G District Sales Tax,
Surplus Property Revenue, Market Fluctuations, Sustainability, Open Space, and ARPA Reserves
as of June 30, 2024 and as of June 30, 2025 as restricted, assigned, unassigned or formally
committed as follows:
Actual FY 2023/24 FY 2023/24 Estimated FY 2024/25 FY 2024/25 Estimated
General Fund Budget, GF Budget, GF General Fund Budget Budget General Fund
Reserves Reserve Policy, Reserve Reserves Resolution Resolution Reserves
June 30, 2023 and this Policy, and June 30, 2024 Approved Approved June 30, 2025
Resolution this Increase (Decrease)
Approved Resolution
Increase Approved
(Decrease)
Restricted Fund Balances
Pension $ 1,400,163 $ 690,000 $ - $ 2,090,163 $ 390,000 $ - $ 2,480,163
Porperty Held for Resale 44,338 - 44,338 44,338
Committed Fund Balances Budget Stabilization 6,129,774 $ 607,007 - 6,736,781 - - 6,736,781
Catastrophic 6,129,775 607,006 6,736,781 6,736,781
Pension/OPEB 300,000 300,000 (300,000) 300,000 1,300,000 (300,000) 1,300,000
Measure G District Sale Tax - Operating 590,581 - 590,581 (568,051) 22,530
Assigned Fund Balances
Capital/Special Projects 10,359,577 1,107,950 (3,259,013) 8,208,514 (1,143,000) 7,065,514
Compens ated Abs ences 1,580,623 1,580,623 1,580,623
Open Space 410,000 - 410,000 - 410,000
Sustainability 140,553 - - 140,553 - 140,553
Market Fluctuations - - - -
Carryover Encumbrances 37,698 37,698 37,698
Council Priorities - Economic Recovery 1,556,614 (1,545,281) 11,333 - (11,333)
ERAF Risk Reserve 689,608 740,446 1,430,054 785,100 (1,000,000) 1,215,154
Rehab Loan Reserve (Nonspendable) 159,000 - 159,000 159,000
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Resolution 2024-032 June 4, 2024
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of
Los Gatos held on the 4th day of June, 2024, by the following vote:
COUNCIL MEMBERS:
AYES: Maria Ristow, Rob Rennie, Rob Moore, Matthew Nudes, Mayor Mary Badame
NAYS: None
ABSENT: None
ABSTAIN: None
SIGNED:
feleiohht
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
DATE:
TOWN CLERK OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
DATE: jaiteaLl
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