CITY OF POMONA
COUNCIL REPORT
April 15, 2024
To: Honorable Mayor and Members of the City Council
From: Anita D. Gutierrez, City Manager
Submitted By: Andrew Mowbray, Finance Director/City Treasurer SUBJECT: RECOMMEND AND APPROVAL OF THE FISCAL POLICY STATED USES OF THE FIscal YEAR (FY) 2022-23 UNASSIGNED FUND BALANCE RECOMMENDATION:
It is recommended that the City Council adopt the following resolution:
RESOLUTION NO. 2024-60 – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA, APPROVING THE FISCAL POLICY STATED USES OF THE FICAL YEAR 2022-23 UNASSIGNED FUND BALANCE AND AMENDING FISCAL YEAR 2023-24 GENERAL FUND OPERATING BUDGET BY APPROPRIATING A TOTAL AMOUNT OF $4,376,500 TOWARDS SECTION 115 TRUST CONTRIBUTION, EQUIPMENT REPLACEMENT RESERVE AND CIP FUNDING EXECUTIVE SUMMARY:
Approval of Resolution 2024-60 approves and authorizes $4.4M of the $13.3M Fiscal Year (FY) 2023-24 General Fund Unassigned Fund Balance be used towards the 3 areas of Section 115 Trust, CIP funding and Reserves for Equipment Replacement as identified in the City’s Consolidated Fiscal Policies and Administrative Procedures.
FISCAL IMPACT:
The adoption of Resolution 2024-60 (Attachment No.1) approves the use of FY 2022-23 Unassigned Fund Balance totaling $4.4M, and approves a FY 2023-24 Budget appropriation towards the following uses:
Use of Unassigned FB
Account Number
Amount
Section 115 Trust
101-0101-59930-00000
$2,188,250
Equipment Replacement
101-0101-89921-00000
$1,094,125
CIP Funding
101-0101-89987-00000
$1,094,125
Total
$4,376,500
PREVIOUS RELATED ACTION:
On February 6, 2023, the Pomona City Council adopted via Resolution 2023-06, City of Pomona’s Updated Consolidated Fiscal Policies and Administrative procedures.
On June 5, 2023, the City Council adopted the FY 2023-24 Operating Budget, which includes appropriations to implement City of Pomona’s Fiscal Policies for establishing Section 115 Trust, setting aside funds for CIP funding and creating Reserves for Equipment Replacement and Catastrophic Events.
On November 6, 2023 the FY 2023-24 1st Quarter General Fund Budget Review was presented to the City Council and General Fund appropriations were approved via City Council action.
On March 18, 2024 the FY 2023-24 Mid-Year Budget Review was presented to the City Council and General Fund appropriations were approved via City Council action.
SB1439/GOVERNMENT CODE §84308 APPLICABILITY:
☐ When this box is checked, it indicates the agenda item is subject to the Levine Act SB1439 requirements. Councilmembers are reminded to check their campaign contributions and determine whether they have received a campaign contribution of $250 or more that would require disclosure and/or recusal from discussing or acting on this agenda item. Campaign contributions of $250 or more made 1) by any person or entity who is identified in the agenda report as the applicant or proposer; or 2) on behalf of the applicant or participant, including a parent, subsidiary or otherwise related business entity; or 3) by any person who has a financial interest in the agenda item requires a councilmember to comply with SB1439.
DISCUSSION:
On June 20, 2011, the City Council adopted Resolution 2011-63A approving the City’s Fund Balance Policy. The objectives of the Policy were to comply with the Governmental Accounting Standards Board (GASB) Statement Number 54 – Fund Balance Reporting and Governmental Fund Type Definitions, establish formal reserve policies, build adequate reserves, and guide the City toward meeting its short and long-term obligations. On February 6, 2023, this Policy was replaced and repealed when staff brought forward the City’s Consolidated Financial Polices and Administrative Procedures via analysis by City staff and the City’s financial advisor Urban Futures Inc. (UFI). The revised policy states that at the end of each fiscal year, the City shall have a Committed Fund Balance equal to 22% of operating expenditures and transfers out in the General Fund. The 22% is to be considered the minimum level. The level will increase each year by 1% until the level is 25%. In addition to setting a minimum level of Fund Balance, the City Manager may recommend the use of Unassigned Fund Balance be used for one-time expenses. When recommending the one-time use of Unassigned Fund Balance, the City shall attempt the following: 50% allocated to reduce long-term obligations such as unfunded pension or OPEB liability, bonded indebtedness or lease obligations, and 50% allocated to facility or infrastructure improvements, equipment purchases or other long-term capital needs that improve the community’s safety, aesthetics, transportation, or quality of life.
Based on audited FY 2022-23 figures, the General Fund ended with an Unassigned Fund Balance of $13.3M, bringing the total General Fund fund balance to an amount of $63M (as of June 30, 2023). The Labor Subcommittee first met on January 16, 2024 to discuss the establishment of the 115 trust and the forthcoming use of FY 2022-23 General Fund reserves per the Consolidated Fiscal Policy. Staff was asked to come back to the committee after the March election as it related to Measure P and Measure X’s possible impacts on the Transaction and Use Tax. On March 26, 2024 the Labor Subcommittee met again. After discussion, the committee recommended that staff bring forward an action to the City Council, to use a portion equivalent to 33% of the $13.3M available of the FY 2022-23 Unassigned Fund Balance in the amount of $4.4M towards the 3 areas discussed herein. As a result, after approval of the proposed General Fund appropriation, the FY 2023-24 Fund Balance is estimated to be at $55.7M by June 30, 2024, which is 34% of operating expenditures and transfers out in the General Fund. This would mean the amount is 11% above the minimum required level of 23%. It is also important to note another ballot measure titled the “Pomona Kids First” Initiative will be placed on the November 2024 ballot that could have significant impacts to the General Fund each fiscal year if approved by the voters. If approved, General Fund reserves may need to be utilized.
It should be noted that using available reserves in the General Fund and all City operating funds is common when available funds are needed and sufficient reserves can still be maintained. The Annual budget is a living document, and the City Council routinely approves amendments to the General Fund budget via City Council action at meetings throughout the fiscal year. The action to use General Fund reserves according to this new Policy is the first time brought forward to the City Council. The City Council can approve the use of reserves via the Adopted Budget approval process that routinely takes place in June each year, as well as for programs, projects, and positions throughout the fiscal year that the City Council feels are necessary to add.
Prepared by:
Andrew Mowbray
Finance Director/City Treasurer
ATTACHMENT(S):
Attachment No. 1 – Resolution No. 2024-60
Attachment No. 2 – Unassigned Fund Balance Presentation Attachment No. 3 – Updated Fiscal Policies (Link to Consolidated Fiscal Policies) Fiscal Year 2022-23 General Fund Unassigned Fund Balance