PREPARED BY: ARTURO CASTILLO DATE OF MEETING: 07/07/2025
SUBJECT:
TITLE
CONSIDER ADOPTING RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN PABLO AMENDING THE FISCAL RESILIENCY RESERVE POLICY (LAST REVISED ON MARCH 3, 2025) FOR FISCAL YEAR 2025-26 WITH A REVISION FOR FUND 140 ASSET & VEHICLE REPLACEMENT RESERVE ALLOCATION PROCESS, EFFECTIVE JULY 7, 2025
CEQA: This proposed action is not a project as defined by CEQA.
Label
CITY MANAGER RECOMMENDATION
Recommendation
Adopt Resolution
Body
Council Priority Workplan
Continue Best Management Practices, Fiscal Excellence, and Fiscal Transparency is an adopted City Council Priority contained in the adopted Fiscal Year 2025-2027 City Council Priority Workplan, effective April 7, 2025.
CEQA Compliance Statement
This proposed action is not a project as defined by CEQA.
BACKGROUND
On October 21, 2013, to protect the fiscal solvency of the City and to achieve greater fiscal resiliency, the City Council took the important step of establishing the Fiscal Resiliency Reserve Policy, Resolution 2013-159, and established several new reserves and funded each at the recommended levels.
First Amendment - Casino Revenue Sustainability Reserve (Fund 180)
On June 20, 2016, the Fiscal Resiliency Reserve Policy (FRRP) was first amended by the City Council, Resolution 2016-218, and formally established the Casino Revenue Sustainability Reserve (Fund: 180). The purpose of the reserve is to mitigate against the potential impact that a sudden shutdown or loss of casino revenue would have on the City’s ability to maintain current operations and service levels. All deposits and withdrawals from the fund are discretionary by the City Council, and not formulaic as other FRRP reserves noted below:
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CITY OF SAN PABLO FISCAL RESILIENCY RESERVE POLICY (FRRP) Adopted 10/21/2013 via Resolution 2013-159; Amended 06/20/2016 via Resolution 2016-218 |
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Catastrophic Reserve (Fund: 150) |
50% of total Adopted GF Operating Funds |
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Budget Stabilization Reserve (Fund: 170) |
5% of total Adopted GF Operating Funds |
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City Manager Contingency Account (Fund: 190)* |
1% of total Adopted GF Operating Funds |
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General Fund Designated Reserves (Fund: 100)** |
Allocated on an annual basis |
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Future Capital Projects Reserve* |
Allocated on an annual basis |
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Casino Revenue Sustainability Reserve* (Fund: 180) |
Allocated on an annual basis; Up to max. 50% of Unused Audited Fund Balance on discretionary basis. |
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Notes: * One-time funds for allocation by the City Council for specific operational programs and projects. **One-time funds for allocation by the City Manager for specific operational programs and projects. |
Proposed Second Amendment - New Internal Service Funds for FISCAL YEAR 2024-25 Only
A second amendment was proposed by the City Manager to amend the Fiscal Resiliency Reserve Policy (FRRP) due to the City’s new financial condition as reported with the presentation of the City’s 10-year Long-Range Financial Forecast on December 13, 2023. Additionally, the City Council adopted a total of eight (8) new Strategic Budget Initiatives to assist the City Manager with elimination of forecasted deficits (-$8.7M) for the FY 2025 - 2027 period per Resolution 2023-167.
The City Council approved Resolution 2024-156, on April 15, 2024. The action created new Internal Service Funds (ISFs) (Funds: 130, 140 and 190) for specific related expenses which would have the impact of further demonstrating the City’s continued commitment to prudent financial management and protecting the City’s financial future. The action assigned one-time allocation from the City’s Unassigned Reserves Fund Balance based on percentage of GF Operating Funds for the FY 2024-25 period only, effective July 1, 2024. Future one-time appropriation from these three (3) new Internal Service Funds (excluding the City Manager’s Contingency Fund No.190) shall be utilized to cover expenses within the City’s operating budget for planned repair and replacement of capital assets. Funds may also be used for unplanned expenses if all other methods of funding have been exhausted. Use of the funds shall follow the City’s established spending authority limits as approved in the City’s Purchasing Policy.
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CITY OF SAN PABLO FISCAL RESILIENCY RESERVE POLICY FRAMEWORK PROPOSED AMENDMENT FOR FY 2024-2025 ONLY Effective: July 1, 2024 |
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CATASTROPHIC RESERVE (FUND 150) BUDGET STABILIZATION RESERVE (FUND 170) |
50% of GF Operating Funds 5% of GF Operating Funds |
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NEW INTERNAL RESERVE FUNDS: Allocated as a percentage of the adopted GF Operating Budget (via ONE-TIME ALLOCATION for FY 2024-25) a). Building & Facilities Maintenance Reserve (Fund 130) b). Asset & Vehicle Replacement Reserve (Fund 140) c). City Manager Operating Reserve (Fund 190) Total: NOTE: ALL FUTURE YEAR-END AUDITED FUND BALANCE WILL BE ALLOCATED BY CITY MANAGER TO NEW INTERNAL SERVICE FUNDS (i.e., Fund 130, 140 & 190) AS NOTED ABOVE. (*Note: Removed as an annual, recurring GF Budget Annual Operating Expense) |
3% of GF Operating Funds 2% of GF Operating Funds 1% of GF Operating Funds __________________________________ = 61% of Adopted GF Operating Funds |
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CASINO REVENUE SHORTFALL RESERVE (FUND 180): |
NO CHANGES; DISCRETIONARY ACTION |
The City Council approved Resolution 2025-032, on March 2025. The action created three (3) NEW Reserve Funds (103, 104, 105) and maintaining two (2) ISF Funds (130 & 140) as follows for FY 2024/25:
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CITY OF SAN PABLO FISCAL RESILIENCY RESERVE POLICY FRAMEWORK (PROPOSED AMENDMENT No. 3 FOR FY 2024-2025) Effective: March 3, 2025 |
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CURRENT RESERVE FUNDS: a) Catastrophic Reserve (Fund: 150) b) Budget Stabilization Reserve (Fund 170). c) City Manager’s Contingency Reserve (Fund 190) d) Building, Facilities, & Parks Maintenance (Fund 130) e) Asset and Vehicle Replacement Reserve (Fund 140) NEW RESERVE FUNDS: f) Sales Tax Revenue Sustainability Reserve (Fund: 103) g) General Liability Sustainability Reserve (Fund: 104) h) Pension (CalPERS) Liability Sustainability Reserve (Fund: 105) REVISED RESERVE FUNDS: i) General Fund Designated Reserve (Fund 110) j) Casino Revenue Sustainability Reserve (Fund 180) |
-50% of Annual Total Operating Funds Budget -5 % of Annual Total Operating Funds Budget -1 % of Annual Total Operating Funds Budget -3% of Annual Total Operating Funds Budget -2% of Annual Total Operating Funds Budget -up to a maximum of 10% of Unassigned Audited Fund Balance -up to a maximum of 5% of Unassigned Audited Fund Balance -up to a maximum of 5% of Unassigned Audited Fund Balance -up to a maximum of 10% of Unassigned Audited Fund Balance -discretionary - Unassigned Audited Fund Balance NOTE: ALL YEAR-END AUDITED FUND BALANCE WILL BE ALLOCATED BY CITY MANAGER TO FRRP FUNDS NOTED ABOVE. |
All current and future allocations of the reserve funds would be from Year-end Audited Fund Balance following completion of ACFR for the preceding fiscal year periods to be allocated by City Manager recommendation, with Budget, Fiscal & Legislative Standing Committee review and City Council approval by Resolution.
Proposed Amendment No. 4 - Fund 140 Appropriations
Approval of the revised Fiscal Resilience Reserve Policy (FRRP) Amendment No. 4 will require Fund 140 Assets & Vehicle Replacement Reserve allocation requests to be approved by the Public Safety Standing Committee to recommend City Council to review and approve. All other FRRP reserve funds will continue to require Budget, Finance, and Legislative Standing Committee (BFLSC) recommendations for City Council to approve funding allocation requests. These proposed revisions to the FRRP will be formally established effective July 7, 2025, and ongoing thereafter for future fiscal years. Annual review of proposed vehicle acquisitions from City Departments (i.e. Police and Public Works) have been routinely reviewed by PSSC, with recommendation to the City Council for approval by adopted Resolution. City staff desires to formalize this ongoing policy practice and reflect this in the adopted FRRP at this time.
Budget, Fiscal & Legislative Standing Committee (BFLSC)
On June 23, 2025, BFLSC (Pabon-Alvarado; Ponce) reviewed the Fiscal Resiliency Reserve Policy (FRRP) Amendment 4 to be formally considered and approved by the City Council on July 7, 2025.
FISCAL IMPACT
This action does not involve the expenditure of funds. Hence, there is no associated fiscal impact for FY 2025-26.
ATTACHMENTS
Att. A - Resolution
Exh. A -Fiscal Resiliency Reserve Policy Amendment No. 4