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Page 8 of 9 million, respectively, and are associated with loans made to other funds and funds set aside in a pension trust. Funds in the pension trust can only be used to pay for pension contributions. The City’s various committed reserves are projected at $1.9 million (Strategic Plan Implementation, Alternate Response Unit, Mobile Library Vehicle, etc.). The Rainy Day Reserve (a General Fund sub-fund) is projected at $4.6 million. Note that these reserves are earmarked for programs and capital projects and funds will be spent down over the coming few years. When accounting for these reserves, the City’s total unrestricted reserve is $36.1 million, or 24.0 percent of the FY 2023/24 General Fund operating expenditures. Overall, the City’s reserve is at a sufficient level and meets the GFOA recommendation. However, if the City needs to draw into reserve to help balance the budget in future years, the reserve would be depleted over time, result in audit findings, and would leave the City in a financially vulnerable position. Timeline for Implementation of Cost Reduction Strategies While staff is working with the community to assess revenue measure feasibility, the City is taking steps to reduce costs and plan toward developing a budget stabilization plan that takes into consideration both cost containment and revenue enhancement strategies. Cost reductions will have an impact on services and programs, especially if reductions include staff positions. If the revenue measure is not feasible, staff will make recommendations and solicit the City Council's direction on cost and service reductions. Fiscal Year 2024/25 Budget • City staff are now identifying non-personnel cost reductions to be incorporated into the FY 2024/25 mid-term budget update. Non-personnel costs include expenditures such as contract services, equipment, and operating supplies and materials. The mid-term update will be presented to the City Council in May and June 2024. • Exploration of freezing some positions, if necessary. Fiscal Years 2025/26 and 2026/27 Budget • If the spring poll shows the revenue measure is not feasible or if the measure is not approved by voters on November 5, 2024, staff will develop strategies to explore further non-personnel and personnel budget reductions as well as evaluation of service impacts (July 2024-March 2025). • Consideration of freezing certain vacant positions. • Evaluation of the utilization of pension trust funds to reduce budget deficit; the overall funded status for the City’s pension plans will be lower as funds are drawn down. • Proposed cost reductions and service cuts will be presented to by early April 2025. • Proposed cost reductions and service cuts will be incorporated into the FY 2025/26 and FY 2026/27 budget after receiving direction from the City Council. The biennial budget is anticipated to be adopted by the Council in June 2025. Staff will continue to explore additional funding opportunities such as grant funds to support priority community projects and initiatives to lower budget impact on the General Fund. Page 219 of 228