2025-030 - APPROVING COMMITMENTS OF FUND BALANCE UNDER GASB 54 FOR THE TOWN OF LOS GATOSRESOLUTION 2025-030
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 $2,878,659 as of June 30, 2025 in the restricted
Pension Reserve; 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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Resolution 2025-30 June 3, 2025
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 2024-25; 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 2024-25; 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 $1,000,000 as of June 30, 2025
in the assigned OPEB/Pension Reserve, 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, 2025 in the
assigned Sustainability Reserve; and
WHEREAS, there exists an assigned Market Fluctuation Reserve that represents fund
balance amounts for unrealized investment gains that have been recorded as investment income
in the financial statements in accordance with the requirements of GASB 31, actual reserve
balance will be established at the close of FY 2025-26; 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
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Resolution 2025-30 June 3, 2025
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 until the
end of FY 2024-25; and
WHEREAS, the Town Council has determined the use of 100% of the Measure G
estimated proceeds from FY 2025-26 will go towards operating expenditures; and
WHEREAS, the Town Council will determine the use of Measure G beyond FY
2026-27 after the completion of the external review of the Five -Year Forecast and a
comprehensive Fiscal Impact Analysis, and
WHEREAS, the committed residual balance of $590,581 that was set aside for
operating purposes in FY 2020-21 was programmed to be used for operating expenses in FY 2024-
25 if needed; and
WHEREAS, the portion of the committed residual balance of $590,581 not used
for operating expenses in FY 2024-25, will be placed in the Unassigned Fund Balance, 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 the ERAF RISK Reserve will be moved to the
Unassigned Fund Balance during FY 2024-25, and
WHEREAS, there exists an excess balance of $4,000,000 as of June 30, 2025 in the
Unassigned Fund Balance, moving available funds from the available Capital/Special Projects
Reserve, and
WHEREAS, the FY 2025-26 budget anticipates using $905,060 of the General Fund
Unassigned Fund Balance to balance the budget; and
WHEREAS, there exists an excess balance of $3,094,940 as of June 30, 2026 in the
Unassigned Fund Balance, final balances will be determined at the close of the FY 2025-26 fiscal
year, and
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Resolution 2025-30 June 3, 2025
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, 2025 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 Unassigned
Fund Balance as of June 30, 2025 and as of June 30, 2026 as restricted, assigned, unassigned or
formally committed as follows:
Actual
FY 2024-25
FY 2024-25
Estimated
FY 2025-26
FY 2025-26
Estimated
General Fund
Budget, GF
Budget, GF
General Fund
Budget
Budget
General Fund
Reserves
Reserve Policy,
Reserve
Reserves
Resolution
Resolution
Reserves
June 30, 2024
and this
Policy, and
June 30, 2025
Approved
Approved
June 30, 2026
Resolution
this
Increase
(Decrease)
Approved
Resolution
Increase
Approved
(Decrease)
Restricted Fund Balances
Pension
$ 2,188,659
$ 690,000
$ -
$ 2,878,659
$ 390,000
$ -
$ 3,268,659
Porperty Held for Resale
344,338
-
(344,338)
-
-
-
Nonspendable
Rehab Loan Reserve (Nonspendable)
159,000
-
-
159,000
$ -
$ -
$ 159,000
Committed Fund Balances
Budget Stabilization
6,736,781
$ 1,133,858
-
7,870,639
-
-
7,870,639
Catastrophic
6,736,781
$ 1,133,858
-
7,870,639
-
-
7,870,639
Pension/OPEB
300,000
1,000,000
(300,000)
1,000,000
-
-
1,000,000
Measure G District Sale Tax - Operating
S90,581
(590,581)
-
-
-
-
Assigned Fund Balances
Capital/Special Projects
8,651,056
-
(7,144,607)
1,506,449
-
-
1,506,449
Compensated Absences
1,555,478
-
-
1,555,478
-
1,555,478
Open Space
410,000
-
-
410,000
-
-
410,000
Sustainability
140,553
-
-
140,553
-
-
140,553
Market Fluctuations
1,712,246
-
-
1,712,246
-
-
1,712,246
Carryover Encumbrances
85,861
-
-
85,861
-
-
85,861
Council Priorities - Economic Recovery
20,684
-
(20,684)
-
-
-
ERAP Risk Reserve
1,430,054
-
(1,430,OS4)
-
-
-
_
Unassigned Fund Balance
-
4,000,000
-
4,000,000
-
(905,060)
3,094,940
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Resolution 2025-30 June 3, 2025
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of
Los Gatos held on the 3rd day of June 2025 by the following vote:
COUNCIL MEMBERS
AYES: Maria Ristow, Rob Rennie, Rob Moore, Mary Badame, Mayor Matthew Hudes
NAYS: None
ABSENT: None
ABSTAIN: None
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
P
TOWN CLE OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
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Resolution 2025-30 June 3, 2025