March 3, 2026
Finance Department
DATE: March 3, 2026
TO: Mayor Martinez and Members of the City Council
FROM:
Shasa Curl, City Manager
Nickie Mastay, Deputy City Manager, Internal Services
LaShonda White, Deputy City Manager, Community Services Emily Combs, Director of Finance
Mubeen Qader, Deputy Director of Finance
Jerry Gurule, Accounting Manager
SUBJECT:
Fiscal Year (FY) 2024-25 Audited Unspent Funds
FINANCIAL IMPACT: Appropriate General Fund FY 2024-25 audited unspent funds of $8,213,680.
PREVIOUS COUNCIL
ACTION:
June 24, 2024
November 19, 2024
April 22, 2025
May 6, 2025
December 16, 2025
STATEMENT OF THE
ISSUE:
City staff are presenting the Fiscal Year (FY) 2024-25
Audited Unspent Funds and recommending appropriations
totaling $8,213,680
RECOMMENDED
ACTION:
DISCUSS and ADOPT resolutions to APPROPRIATE Fiscal
Year 2024-25 audited unspent funds in the amount of
$8,213,680 – Finance Department (Emily Combs 510-620-
6790/Mubeen Qader 510-412-2077/Jerry Gurule 510-620-
6591).
DISCUSSION:
Background
The Fiscal Year (FY) 2024-25 budget was adopted on June 24, 2024, and subsequently revised during the Mid-Year Budget Review on May 6, 2025. Serving as the City of AGENDA
REPORT
March 3, 2026
Richmond’s financial blueprint, the budget established projected revenues and planned expenditures for the fiscal year while aligning with City Council Goals and Priorities.
Overview of Fiscal Year (FY) 2024–25 Financial Reporting
On March 3, 2026, City staff presented the Annual Comprehensive Financial Report (ACFR) for the Fiscal Year ending June 30, 2025 (City-of-Richmond-ACFRFY2025).
The ACFR provides audited financial statements, the independent auditor’s report, and supplemental schedules, offering a comprehensive assessment of the City’s financial position and operational results. This report identifies the amount of audited unspent funds that informs reserve allocations and other fiscal planning decisions.
The General Fund closed FY 2024–25 with revenues slightly exceeding the revised budget at approximately $277.7 million, supported by stable property tax collections and modest gains in sales tax and business license revenues. Expenditures totaled $278.5 million, exceeding revenues by $822,275, primarily due to increased public safety costs and one-time allocations for community programs and capital maintenance.
Another contributing factor to the availability of unspent funds is the City’s success in securing competitive grants. These grants have offset costs that would otherwise have been borne by the General Fund, reducing pressure on local revenues and allowing the City to maintain a higher reserve balance. However, the ability to secure such grants in future years is uncertain and often dependent on external factors such as state and federal funding priorities, economic conditions, and competitive demand. While City staff will continue to pursue grant opportunities aggressively, the City should not rely on these funds as a guaranteed source of revenue when making long-term financial plans.
Available Balance and Reserve Policy Requirements
The City’s General Fund Reserve Policy requires the City to maintain a minimum year- end contingency reserve balance of 21 percent ($54.6 million) of next year’s budgeted General Fund expenditures, including transfers out. As of June 30, 2025, the City’s General Fund Reserve, which is a component of the Unassigned Fund Balance, totals $62.8 million, representing 24.2 percent of next year’s budgeted expenditures.
The difference between the policy target of $54.6 million and the actual reserve balance of $62.8 million results in $8.2 million in audited unspent funds is available for appropriation. Under the City’s adopted funding policies, any year-end operating surplus (actual revenues minus actual expenditures and transfers) in excess of the minimum reserve requirement is subject to allocations of 10 percent to the Pension Section 115 Trust and 10 percent to the Other Post Employment Benefit (OPEB) Section 115 Trust.
Therefore, $821,368 will be allocated to the Pension Trust and $821,368 will be allocated to the OPEB Trust. This proactive measure strengthens long-term funding for retirement obligations and helps mitigate future cost pressures. Taking into account the Section 115 and OPEB Trust contribution, the remaining available balance available is $6.57 million.
March 3, 2026
Personnel Cost Trends and Staffing Strategy
Since 2021, the City has strategically filled positions to address critical service gaps, increasing the number of filled roles from approximately 590 Full-Time Equivalents (FTEs) in 2021 to 665 FTEs today, an overall increase of 12.7 percent. While these additions have improved service delivery, personnel costs have risen significantly. For example, the CalPERS Kaiser family health plan premium increased 44 percent from approximately $2,115 per month in 2021 to $3,039 in 2026, a difference of $924 per month. Recently approved labor successor Memorandums of Understanding, along with pending agreements, will further increase personnel costs. While this approach aligns with the City Council’s Goals and Objectives for efficient and sustainable governance and supports organizational efficiency, it also means that future budgets will experience higher baseline operating costs. As a result, the amount of audited unspent funds available for appropriation in future years may be significantly reduced. The City continues to proceed with incremental hiring to meet essential service needs while maintaining fiscal responsibility and adhering to the State Auditor’s recommendations for long-term financial stability.
Economic Development and WARN Letters
In addition to internal cost pressures, the City monitors Worker Adjustment and Retraining Notification (WARN) letters issued in Contra Costa County. These notices, which businesses must provide when anticipating mass layoffs or closures, help the City prepare workforce support and assess potential impacts on local revenues. During FY 2024-25, the City received two WARN notices, which resulted in minimal fiscal impact; however, WARN filings have surged in other parts of California, particularly in Los Angeles, San Francisco, and Orange counties. Closer to home, Solano County has experienced significant WARN activity, including over 600 layoffs tied to the Budweiser plant closure in Fairfield, Mare Island Dry Docks reductions, CVS store closures, and the Valero refinery shutdown in Benicia. Harbinger Production Inc. also filed a WARN notice for approximately 290 potential layoffs beginning in April. Local officials estimate total job losses in Solano could reach 1,000–2,000 when ripple effects are considered.
These regional trends heighten concern about potential revenue reductions and increased demand for services in future years. Continued monitoring and targeted responses are essential to safeguard Richmond’s fiscal stability and preserve available unspent funds for community priorities.
Calculation of Available Unspent Fund
After accounting for the City’s reserve policy requirements and audited year-end balances, the amounts available for appropriation, as reported in the ACFR, are shown in Table 1 below.
March 3, 2026
Table 1: FY 2024-25 Audited Amounts
Item Audited Amount
FY 2024-25 Ending Unassigned Fund Balance (Reserve) (24%) 62,824,919 FY 2025-26 Policy Target Beginning Fund Balance (Reserve) (21%) 54,611,239 Total Available Unspent Funds 8,213,680
Recommendations for Unspent Funds
Prior year unspent funds are considered one-time resources. In alignment with best practices recommended by the Government Finance Officers Association (GFOA), one- time funds should be appropriated for one-time expenditures, such as non-recurring projects or programs. To guide the City Council’s discussion, City staff recommend committing or appropriating funds to the following projects in the amount of $6.57 million:
Capital Improvement Project Funding Shortfalls
The City continues to face significant unfunded capital needs across multiple infrastructure categories. However, based on City staff’s assessment of project readiness, urgency, potential cost escalation, alignment with City Council Goals and Objectives, and community input, two projects are recommended for funding from the FY 2024-25 unspent funds. These projects can be advanced within the current fiscal year and represent the most critical opportunities to address immediate capital requirements.
Table 2: Capital Improvement Projects Funding Shortfalls for Unspent Funds Project Total
Shortfall
Unspent
Funds
Complete Streets Improvements (Pavement Management, Streetscape Improvements, etc.) $6,500,000 $$6,320,944
Point Molate Annual Monitoring $250,000 $$250,000
Total $6,570,944
Complete Streets Improvements (Pavement Management, Streetscape Improvements, etc.)
Complete Streets Improvements are designed and operated to enable safe, comfortable, and convenient access for all users—pedestrians, bicyclists, motorists, and transit riders of all ages and abilities. This approach transforms road design from solely car-centric to multimodal, focusing on safety, equity, and community connectivity.
Streets Improvements could include but is not limited to pavement management and streetscape improvements.
The City of Richmond’s Pavement Management Program maintains approximately 580 lane miles of roadway with an annual budget of about $4 million, though an estimated $100 million would be required to fully address citywide paving needs, resulting in an unfunded backlog of roughly $96 million. The program uses a data-driven approach to assess roadway conditions and prioritize repairs, relying on the Pavement Condition
March 3, 2026
Index (PCI) and preventive maintenance strategies to extend pavement life while directing limited resources toward the most critical rehabilitation needs.
The Streetscape Improvements Program implements corridor-wide urban design enhancements to improve safety, accessibility, and the overall public realm in Richmond’s commercial and residential areas. The program includes improvements such as widened sidewalks, upgraded crosswalks, enhanced lighting, landscaping, and street trees, with current efforts focused on advancing the next phase of Macdonald Avenue corridor enhancements. Several planned streetscape projects remain on the City’s unfunded project list, reflecting a broader need for additional resources to fully implement these improvements across priority corridors.
Point Molate Annual Monitoring
The Point Molate Annual Monitoring activity provides ongoing environmental oversight and reporting for the former Naval Fuel Depot site. Through monthly and annual status updates, coordinated via the City-sponsored Restoration Advisory Board and shared with regulatory agencies, the program tracks remediation work, land-use planning, groundwater and soil cleanup, and related community engagement.
Summary of Recommendations
A summary of the potential FY 2024-25 unspent funds are as follows:
Table 3: Summary of Unspent Appropriations/Commitments
Item Action Amount
Complete Streets Improvements Appropriate $6,320,944
Point Molate Annual Monitoring Appropriate $250,000
OPEB Section 115 Trust Appropriate $821,368
Pension Section 115 Trust Commitment $821,368
Total $8,213,680
Next Steps
City staff recommend that the City Council appropriate the remaining unspent funds in the amount of $8,213,680 towards Complete Streets Improvements, Point Molate Annual Monitoring, and contributions to the Pension and OPEB Trusts.
DOCUMENTS ATTACHED:
Attachment 1 – Fiscal Year 2024-25 Unspent funds Resolution