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Agenda Report
October 27, 2025
TO: Honorable Mayor and City Council
THROUGH: Finance/Audit Committee
FROM: Finance Department
SUBJECT: APPROVE FISCAL YEAR 2025 GENERAL FUND EMERGENCY CONTINGENCY COMMITMENT OF $51,292,500 AND UP TO
$17,097,500 IN THE GENERAL FUND OPERATING RESERVE
COMMITMENT
RECOMMENDATION:
It is recommended that the City Council:
1. Find that that the proposed action is not subject to the California Environmental Quality Act (CEQA) pursuant to Section 21065 of CEQA and State CEQA Guidelines Sections 15060 (c)(2), 15060 (c)(3), and 15378, and, as such, no environmental document pursuant to CEQA is required; and
2. Adopt a resolution approving the City of Pasadena General Fund Emergency Contingency commitment of $51,292,500 and General Fund Operating Reserve commitment of up to $17,097,500 (with the final amount to be determined upon conclusion of Fiscal Year (FY) 2025 financial statement preparation based solely on General Fund sub-fund 101 (Fund 101)).
BACKGROUND:
As recommended by the Government Finance Officers Association best practices and to meet City Council's strategic planning objective of fiscal responsibility and stability, the City has established fund reserve goals. Maintaining adequate and prudent levels of fund reserves mitigates current and future risks by protecting against reducing service levels or raising taxes or fees, because of temporary revenue shortfalls, unexpected one-time expenditures, or natural disaster costs. Appropriate reserve levels are monitored by rating agencies and protect the City's bond ratings.
I
MEETING OF10/27/2025AGENDA ITEM NO.4
General Fund Emergency Contingency and Operating Reserve Commitment FY 2025 October 27, 2025
In FY 2017 the overall commitment of 20% was split between the General Fund Emergency Contingency (15%) and a General Fund Operating Reserve (5%).
The City's Fund Balance Policy incorporates the requirements of Government Accounting Standards Board (GASB) Statement No. 54, the Fund Balance Reporting and the Government Fund Type Definitions. This standard classifies fund balance into five categories: non-spendable, restricted, committed, assigned, and unassigned. It also requires formal action by the City Council to commit a fund balance annually, prior to fiscal yearend and before the financial statements are audited.
This action formally commits the full 15% FY 2025 General Fund Emergency Contingency Committed fund balance for $51,292,500 and the 5% General Fund Operating Reserve of up to $17,097,500 with a recognition that the actual amount of the Operating Reserve may be less, to account for previously approved unreimbursed activities. No General Fund Emergency Reserves were used in response to the Eaton Fire.
The table below provides a comparison of the General Fund balances and includes the Section 115 Trusts for both pension and other post-employment benefits.
General Fund - Fund Balance Summary
FY 2024 FY 2025
15% Emergency Reserve
5% Operating Reserve
Sub-Total
Section 115 Trust - Pension
Section 115 Trust-OPEB
Total
48,552,000
16,184,000
64,736,000
13,206,233
2,501,656
51,292,500
17,097,500
68,390,000
14,273,745
2,704,003
Change
2,740,500
913,500
3,654,000
1,067,512
202,347
$80,443,889 $85,367,748 $4,923,859
As part of the budget adoption for FY 2025, the City Council determined that the General Fund Emergency Contingency Commitment and Operating Reserve Commitment Calculations should be based on the current year appropriations solely from the General Fund 101 excluding sub funds 102-108, which are specialized funds of the General Fund.
In order to qualify as a committed fund balance, a stabilization commitment of fund balance must clarify the circumstances under which the funds may be utilized. These circumstances cannot occur routinely. Hence, the terms "extreme operational budget deficits" and "to mitigate the effects of major economic uncertainties resulting from events uncontrollable by the City" are used in the resolution to enact the Operating Reserve.
General Fund Emergency Contingency and Operating Reserve Commitment FY 2025 October 27, 2025
COUNCIL POLICY CONSIDERATION:
The City Council's strategic planning goal of maintaining fiscal responsibility and stability will be advanced by the commitment of General Fund Balance for Emergency Contingency and commitment of General Fund Balance for Operating Reserve.
ENVIRONMENTAL ANALYSIS:
The proposed action is not a project subject to the California Environmental Quality Act (CEQA) in accordance with Section 21065 of CEQA and State CEQA Guidelines Sections 15060(c)(2), 15060(c)(3), and 15378. The approval of the commitment of general fund emergency contingency and general fund operating reserves is a government fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
Therefore, the proposed action is not a "project" subject to CEQA, as defined in Section 21065 of CEQA and Section 15378 of the State CEQA Guidelines. Since, the action is not a project subject to CEQA, no environmental document is required.
General Fund Emergency Contingency and Operating Reserve Commitment FY 2025 October 27, 2025
FISCAL IMPACT:
For many years the General Fund has had surplus unassigned fund balance beyond the reserve commitments. With the strategic use of fund balance to fund capital improvement projects the last few years, the surplus funds have been expended or committed. There is no net income projected for FY 2025; therefore, there is no surplus beyond the reserve commitments in the General Fund that have already been appropriated for FY 2026. There is no fiscal impact as a result of this action; however, the individual components that make up the total fund balance are changed.
Respectfully submitted,
t
VICK^l (VIC) ERGANIAN
Actincf Director of Finance
Prepared by:
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^r-fTiTrie Trash lan
Controller
Approved by:
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L MARQUEZ
City Manager