San Ramon City Council to consider tapping reserve funds despite budget woes

The San Ramon City Council is expected to consider options for closing the remaining $3.5 million deficit projected in the city’s budget for the next fiscal year, following the approval of several million dollars in budget cuts and other cost-cutting measures as officials grappled with a $14.1 million budget. deficit earlier in the budget planning process.

At a special meeting this week, following several previous town halls and council meetings on the city’s financial outlook and budget for the next fiscal year, the council is expected to vote on reducing the remaining deficit through reserves from the General Fund or money from the post-retirement benefits fund.

At the last regular meeting on May 28, board members favored reducing the remaining budget deficit by reducing General Fund reserves from 36 percent to 30 percent, but requested more information on that option as well as the possibility of using other post-employment benefits (OPEB). trust funds to pay retiree medical expenses currently paid with General Fund assets. They rejected a third option presented by staff, which would cancel $1.6 million in funding restored after $8.1 million in departmental cuts and instead implement $1.9 million additional in additional cuts.

If the council chooses to reduce general fund reserves, it wouldn’t be the first time, since the city’s first general fund reserve policy requires reserves to be maintained at 50 percent. This requirement was lowered to 40% following a subsequent analysis by city staff, which remains well above the 26% to 35% level recommended by the internal analysis. Following a consultants’ report that included information on other cities’ reserve levels – many of which were between 20% and 25% – council members accepted a recommendation to lower the required reserve levels of the San Ramon General Fund to 36% in 2021, the requirement currently in effect.

In order to tap into additional reserve funds, council should not necessarily change the current 36% level required by municipal policy. However, this move would require the city manager to develop an action plan detailing how funds would be restored to the 36% level, with the plan presented to council within 30 days of the decision to use funds above the threshold current reserve. If council instead chooses to permanently change the city’s current reserve policy, a resolution would need to be discussed and voted on at a future council meeting.

Instead of or in addition to tapping additional General Fund reserves, the council could turn to funding the city’s OPEB trust fund, which is intended to meet the costs of retiree medical benefits instead of financing those costs through the General Fund. If this option were used to close the total deficit of $3.5 million remaining following other measures, the OPEB fund – currently at a balance of $36.6 million against $41.2 million in liabilities, is 88% funded – at 80% funded status.

Although reducing the threshold for general fund reserves below 36% would require a decision on whether or not to change the policy or direct the city manager to prepare an action plan, no action would be required to go moving forward with a transfer from the OPEB fund. .

City staff is seeking input and decisions on options that will be presented at the next meeting, with guidance to be incorporated into a comprehensive proposed city budget for 2024 to 2025 that council can consider adopting on June 11.

The San Ramon City Council is scheduled to meet Tuesday, June 4 at 4 p.m. The agenda is available here.

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