CITY COUNCIL STAFF REPORT
Meeting Date: February 24, 2025
TO: THE HONORABLE MAYOR AND CITY COUNCILMEMBERS
TITLE: Adopt Resolution No. __25 Approving an Additional Contribution to the Public Agencies Post-Employment Benefits Trust Program with Public Agency Retirement Services (PARS) Section 115 Trust
SYNOPSIS
The City Council is requested to review and adopt the proposed resolution approving an additional contribution into the City’s Public Agencies Post-Employment Benefits Trust Program with Public Agency Retirement Services (PARS), a Section 115 Trust based on the Pension Rate Stabilization Funding Policy, as recommended by the Budget Committee
DISCUSSION
Background
On May 2, 2022, the City Council approved a Section 115 Trust with PARS with an initial contribution of $1.0 million. The City Council also approved the PRSP Funding Policy, which includes potential contributions based on excess audited unassigned General Fund Balance. “The City will consider making additional contributions to the Trust based on the net position of the General Fund recommended by the City Manager and Finance Manager. The amount will be based on unassigned General Fund Balance when revenues exceed costs (not including Measure K funds) in the audited financial statements. The contribution amount will be based on the annual excess audited unassigned General Fund Balance (not including Measure K). The recommended contribution amount will be based on the higher of 10% or $50,000 of the excess unassigned General Fund Balance.” General Fund Balance
The Budget Committee received the Fiscal Year 2023/2024 (FY 23/24) audited financial statements.
For financial reporting purposes, the General Fund in the Annual Comprehensive Financial Report (ACFR) includes other general ledger funds such as the Measure K Fund. The Measure K Fund is included, since this is considered a general sales tax revenue, even though the City Council has prioritized specific projects and programs. Below is a detail of each of those components that is reflected in the General Fund ACFR:
The fiscal year ending result was a net increase of $1,895,242 for the “General Fund Only.” General Fund Balance Components (including Measure K)
The City’s fund balance includes several components from nonspendable, restricted, assigned, and unassigned. The policy was designed to only use the unassigned balances, since the City Council has full discretion on how those funds are allocated. The other components have certain requirements or strings attached to them, and the City Council may require additional steps or not have authority to allocate those funds as easily. For example, the $1.6 million in the restricted component is a combination of library bond proceeds for $165 thousand and the amount in the PARS Section 115 Trust for $1.4 million. Those amounts can only be spent for those legally dedicated purposes. The $13.5 million in the assigned fund balance is a combination of the City’s Contingency Reserve Policy of $9.0 million and the balance is mainly Measure K funds assigned for the debt service reserve of $2.5 million or future capital projects.
Unassigned Fund Balance
Based on the audited results, the unassigned General Fund Balance increased from $2.97 million to $4.24 million (see table below, amount is in the ACFR PP.20). Therefore, the minimum amount of the contribution should be $127,214 (10% of the increase in unassigned fund balance) per the policy approved by City Council. On December 2, 2024, the City Council approved an initial transfer of $300,000 after reviewing the preliminary FY23/24 financial results and considering the recommendation of the Budget Committee. This is similar to FY 22/23 when the City Council approved an additional contribution of $300,000, whereas based on the audit the minimum contribution required that year per adopted policy was only $157,009.
General Fund
Only Measure K
ACFR - General
Fund
Beginning Fund Balance - July 1, 2023 $13,786,025 $4,457,512 $18,243,537 Fiscal Year 2024 Activity:
Revenues including transfers in 31,388,245 5,707,448 37,095,693 Expenditures including transfer out (29,493,003) (6,482,917) (35,975,920) Change in Fund Balance 1,895,242 (775,468) 1,119,774
Ending Fund Balance - June 30, 2024 $15,681,267 $3,682,044 $19,363,311 General Fund Balance Components
(ACFR PP.20) Amount
Nonspendable $60,000
Restricted $1,605,098
Assigned $13,457,512
Unassigned $4,240,701
Total $19,363,311
The Budget Committee reviewed the annual audited information and made a recommendation to the City Council to contribute an additional $100,000 to the PARS Section 115 Trust for future pension costs.
FISCAL IMPACT
Adoption of the proposed resolution will result in a transfer of $100,000 into the PARS Section 115 Trust based on the audited financial information in accordance with the PRSP Funding Policy.
PUBLIC CONTACT
Public Contact was made through posting of the City Council agenda on the City’s official notice bulletin board, at the Pleasant Hill Senior Center, and at the Pleasant Hill Police Department. The agenda and staff report are posted on the City’s web page.
RECOMMENDED CITY COUNCIL ACTION
Adopt the proposed resolution approving an additional contribution into the City’s Public Agencies Post-Employment Benefits Trust Program with Public Agency Retirement Services (PARS) a Section 115 Trust, as recommended by the Budget Committee.
ALTERNATIVES TO RECOMMENDED ACTION
Do not adopt the proposed resolution and provide directions to staff.
General Fund
Only FY23/24
Audit Results
General Fund
Only FY22/23
Audit Results
Unassigned Fund Balance - June 30, 2024 (1) $4,240,701 $2,968,559 Unassigned Fund Balance - June 30, 2023 (2) $2,968,559 $1,398,465 Increase (1) - (2)= (3) $1,272,142 $1,570,094
PRSP Policy - 10% of Unassigned Fund Balance
or $50,000
(3)*10% = (4) $127,214 $157,009
City Council approved $300,000 transfers (5) $300,000 $300,000 PRSP Transfer to PARS 115 Trust above
minimum contribution
(5) - (4) $172,786 $142,991
ATTACHMENT(S)
a. Proposed Resolution – approving additional contribution into the City’s Public Agencies PostEmployment Benefits Trust Program with Public Agency Retirement Services a Section 115 Trust b. Resolution No. 30-22 - includes the City of Pleasant Hill Pension Rate Stabilization Program Funding Policy Proposed Resolution
Prepared by: Erick Cheung – Chief Finance Officer
Approved by: Ethan Bindernagel, City Manager