Staff Report Budget Final 5-21-2019 Page 9PAGE 9 OF 11 SUBJECT: OPERATING AND CAPITAL BUDGETS DATE: MAY 16, 2019
S:\COUNCIL REPORTS\2019\05-21-19\Budget\Staff Report Budget Final 5-21-2019.docx 5/21/2019 11:40 AM SLL
DISCUSSION (continued):
and staff recommends high priority projects that are consistent with the Strategic Priorities and
Core Goals.
General Fund Reserve Policy
On Page A-31 of Attachment 1, staff is recommending changes to the General Fund Reserve
Policy to more accurately reflect allocation options for additional discretionary payments
(ADPs) of unfunded pension/OPEB obligations. The proposed modifications are:
The ADP is currently projected at $390,000 for FY 2018/19 (subject to annual updates
provided by CalPERS actuaries). Per Council direction instead of paying future ADPs will
either be allocated directly to CalPERS, the Town’s Pension IRS 115 Trust Fund, or the
OPEB will deposit ADPs into the IRS 115 Trust Fund.
COMMENTS AND QUESTIONS FROM COUNCIL MEMBERS:
Some of the questions raised by Council members are addressed in the body of this report.
Below are responses to additional Council inquiries.
Please explain the General Fund Reserve Status.
The total General Fund Reserves are forecasted at a balance of approximately $22.9 million as
of June 30, 2020. Additional information on the estimated FY 2018/19 and FY 2019/20 year-
end General Fund balances can be found in the Financial Summaries section of Attachment 1.
As indicated in the Operating Budget Transmittal Letter in page A-9, the General Fund reserves
are decreasing from the prior year due primarily to programmed payments to the Town’s
California Public Employees Retirement System (CalPERS) side-fund payoff in June 2014 of $4.5
million dollars, transfers to the CIP program in FY 2016/17 ($7.0 million), FY 2017/18 ($2.4
million), FY 2018/19 ($2.4 million), FY 2019/20 ($5.7 million), and the total of $4.4 million
scheduled payments to the IRS 115 Pension Trust Fund in FY 2017/18 and FY 2018/19.
Specifically, regarding the CIP activity, General Fund reserves decrease by the annual amount of
Council approved appropriated transfers-out to the Town’s General Fund Appropriated Reserve
(GFAR) Capital Projects fund. The GFAR Capital Projects fund is a separate fund that accounts
for the funds until project work is completed, and the funds are expended. This means that
General Fund reserve will decrease for the annual transfers for the capital program regardless
of when funds are eventually expended in the Town’s separate GFAR Capital Projects fund. The
level of actual project expenditures or carry over balances in the Town’s GFAR fund will not
affect the Town’s General Fund reserves. Because of the high level of capital activity and
related transfers in recent years from the General Fund Capital/Special Projects Reserve, the