Fiscal Resiliency Reserve Policy (FRRP):
RE-CONSIDERATION of Revised FY 2024-25
Amendment No. 3
Administrative Services – Finance
March 3, 2025
History: FRRP Amendments Approved by previous
City Council Action (2013 – Current)
• On October 21, 2013, in order 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 (FRRP) (via Resolution No. 2013-159), and established several new reserves and funded each at the recommended levels.
• On June 20, 2016, the Fiscal Resiliency Reserve Policy (FRRP) was first amended by the City Council (via Resolution No. 2016-218) which 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. • On April 15, 2024, the Fiscal Resiliency Reserve Policy (FRRP) received a second amendment approved by the City Council (via Resolution No. 2024-156). The action created new Internal Service Funds (ISFs) (Funds: 130, 140 and 190). 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.
FY 2023/24 ACFR: Unassigned GF Fund Balance (as of 01/31/25) Fund Types of Reserves Balance as of
02/18/2025
YTD Actuals
02/18/2025 Remaining CURRENT Methodology
Current Reserve Funds
130 Building, Facilities & Parks Maintenance Reserve $2,175,636 $544,600 $1,631,036 3% of Annual Total Operating Funds Budget ONE time allocation FY 25 140 Asset & Vehicle Replacement Reserve $2,061,966 $974,609 $1,087,357 2% of Annual Total Operating Funds Budget ONE time allocation FY 25 150 Catastrophic Reserve $27,183,937 $0 $27,183,937 50% of Annual Total Operating Funds Budget 170 Budget Stabilization Reserve $2,718,394 $0 $2,718,394 5 % of Annual Total Operating Funds Budget 180 Casino Revenue Sustainability Reserve $0 $0 $0 up to a maximum of 50% of Unassigned Audited Fund Balance 190 City Manager Contingency Reserve $543,679 $275,283 $268,396 1% of Annual Total Operating Funds Budget 100 General Fund Designated Reserve $6,671,279 $1,612,000 $5,059,279 discretionary - Unassigned Audited Fund Balance Total General Fund Assigned Fund Balance $41,354,891 $3,406,492 $37,948,399 Unassigned Fund Balances
100 General Fund $19,828,720 $0 $19,828,720 * Estimated GF Unassigned Fund Balance ($10,414,859 REDUCTION) Total General Fund Unassigned Fund Balance $19,828,720 $0 $19,828,720 UPDATE: FY 2023/24 Unassigned General Fund Balance
(CORRECTION MADE 01/31/25)
• 06/30/2024 - $30,682,574 (ACFR FY 2023/24)
• 01/31/2025 - $19,828,270 (Reduced Balance)
Internal Accounting Procedure Error:
▪ On 02/21/2023 GFDR Reso 2023-024 appropriated $10,414,859 from FY 2022/23 GFDR Fund Balance to CIP Project Code GFD- 422 Fund 320-0104-3999 for SPPD HQ Project.
▪ The $10,414,859 was not acted upon after Reso 2023-24 was approved for FY 2022/23 (remained in Unassigned Fund
Balance)
CORRECTIVE ACTION: Per GFDR Reso #2023-24, all
$10,414,859 GFDR funds have been transferred to SPPD HQ Project GFD-422 in fund 320-0104-3999.
FRRP Policy Amendment #3: (BFLSC 01/15/25; REVISED)
RECOMMENDATION #I: Establish (3) New Operating Reserve Funds using Unassigned Fund Balance
(1) Due to City’s ongoing financial condition as of 12/13/2023; and (2) Implement Best Management Fiscal Practices (Assign Operating Reserves) to mitigate any unforeseen financial crisis or depletion of one-time funds Sales Tax Revenue Sustainability Reserve (Fund: 103)
❖ up to a maximum of 10% of Unassigned Audited Fund Balance The purpose of the reserve is to mitigate against the potential impact that a sudden shutdown or unforeseendecline/loss of annual sales tax revenue (i.e., Measure K passed on 2012, Measure S passed in November2020, or any future sales tax measurepassed by local voters for fundinggeneralmunicipalservices) would have on the City’s ability to maintain current Cityoperations and service levels. General Liability Sustainability Reserve (Fund: 104)
❖ up to a maximum of 5% of Unassigned Audited Fund Balance The purpose of the reserve is to mitigate against the potential impact that a sudden shutdown and/or unforeseenincreases of the City’s ability to cover annual premium costs for sustaining current Citygeneral liability coverage.
Pension (CalPERS) Liability Sustainability Reserve (Fund: 105) ❖ up to a maximum of 5% of Unassigned Audited Fund Balance The purpose of the reserve is to mitigate against the potential impact that a sudden shutdown or unforeseen decline/loss of available general fund revenue would have on any unforeseen Pension Liabilities associated with contracted CalPERS Retirement Service Plans.
FRRP Policy Amendment #3: (BFLSC 01/15/25; REVISED)
RECOMMENDATION #II: Revise (2) Reserve Funds
(1) Re-define existing Reserve Funds to meet operational requirements; and (2) Assign a new Fund #110 to replace Fund #100 - GFDR Reserve General Fund Designated Reserve (Fund 110)
❖ up to a maximum of 10% of Unassigned Audited Fund Balance Futureone-timeexpensesrelatedtoanyunforeseenexpenses,includingbutnotlimitedto,thefollowing: augment capitalprojects; informationtechnologysystemsand infrastructureupgrades; largecapitalequipment; facilities, professionalcontractservicestosupportcurrentorenhancedCityoperations/servicedelivery ,andotherinfrastructure maintenanceandreplacementcosts;etc.
Casino Revenue Sustainability Reserve (Fund 180)
❖ discretionary - Unassigned Audited Fund Balance
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.
Current Operating Reserve Funds:
▪ Catastrophic Reserve (150)
50% of Annual Total Operating Funds Budget
▪ Budget Stabilization Reserve (Fund 170)
5% of Annual Total Operating Funds
▪ City Manager’s Contingency Reserve (Fund 190)
1% of Annual Total Operating Funds Budget
▪ Building, Facilities, & Parks Maintenance (Fund 130) ONL YFY 2024-25 3% of Annual Total Operating Funds Budget; fund balance may be augmented by City Manager annually
▪ Asset and Vehicle Replacement Reserve(Fund 140) ONL YFY 2024-25 2% of Annual Total Operating Funds Budget; fund balance may be augmented by City Manager annually
FY 2024/25 General Fund Balance Reserve Details
FundTypes of Reserves Balances as of
03/03/2025
YTD Actuals
3/03/2025 Remaining Methodology
Current Reserve Funds
130 Building, Facilities & Parks Maintenance
Reserve $2,175,636 $544,600 $1,631,036 3% of Annual Total Operating Funds Budget 140 Asset & Vehicle Replacement Reserve $2,061,966 $974,609 $1,087,357 2% of Annual Total Operating Funds Budget 150 Catastrophic Reserve $27,183,937 $0 $27,183,937 50% of Annual Total Operating Funds Budget 170 Budget Stabilization Reserve $2,718,394 $0 $2,718,394 5 % of Annual Total Operating Funds Budget 190 City Manager Contingency Reserve $543,679 $275,283 $268,396 1% of Annual Total Operating Funds Budget NEW Reserve Funds Proposed Methodology
103 Sales Tax Revenue Sustainability Reserve $2,026,771 $0 $2,026,771 up to a maximum of 10% of Unassigned Audited Fund Balance
104 General Liability Sustainability Reserve $1,013,386 $0 $1,013,386 up to a maximum of 5% of Unassigned Audited Fund Balance
105 Pension (CalPERS) Liability Sustainability
Reserve $1,013,386 $0 $1,013,386 up to a maximum of 5% of Unassigned Audited Fund Balance
REVISED Reserve Funds Proposed Methodology
110 General Fund Designated Reserve $8,698,050 $1,612,000 $7,086,050 up to a maximum of 10% of Unassigned Audited Fund Balance
180 Casino Revenue Sustainability Reserve $12,682,993 $0 $12,682,993 discretionary - Unassigned Audited Fund Balance FY 2025/26 Budget
150 Catastrophic Reserve FY 25/26 Budget $968,558 $0 $968,558 Added to FY 2025-26 Balance per FRRP formula 170 Budget Stabilization Reserve FY 25/26 Budget $96,855 $0 $96,855 Added to FY 2025-26 Balance per FRRP formula Total General Fund Reserve Fund Allocations $61,183,612 $3,406,492 $57,777,119 GFDR Fund Balance (FY 2024-25): New Methodology
Under new Fund #110 – GFDR Fund Remaining Balance = $7,086,050 (per adoption of FRRP Revised Policy Amendment #3 (BFLSC and City Council Approval) Included in this new Fund #110 GFDR Fund Balance:
▪ New discretionary, one-time funding available under new methodology: +$2,026,771 ▪ Programmable for one-time capital expenses and non-recurring, one-time operational expenses to include, but not limited to, the following:
CIP PROJECT NEEDS: OPERATIONAL NEEDS:
1). McNeil Park Project Shortfall: (-$2M)
(Other funds: US NPS Grant: State CA Funds;
Value Engineering)
1). Tripepi Smith & Associates (New Marketing &
Branding 2-year Contract): ($100,000 GFDR Fund
#110 allocation on March 3, 2025)
2). SPDR Re-Paving & Street Median Project: ($2M)
(Other funds: RMRA funds; ADA Funds)
2). Any new City program or service (one-time
allocation of GFDR Fund #110 Balance) following
City Council Priority-Setting Workshop on 03/24/25
3). FY 2025-26 GF Budget Augmentation: (TBD)
Staff Recommendation & Action:
For the Budget, Finance, and Legislative Standing Committee (BFLSC) to recommend that the City Council:
1. Review and approve the REVISED Fiscal Resiliency Reserve Policy (FRRP) Amendment No. 3; and
2. Establish three (3) new reserve funds: (Funds 103, 104, and 105); and maintain two (2) internal services funds (Fund 130 & 140) with a one-time appropriation from unassigned fund balance from FY 2024/25 reserves.
Thank you!
Questions & Comments?