CITY COUNCIL REGULAR MEETING AGENDA PACKET

Page 13 of 15 As described in Table 12 below, collectively, expenditures from the Repair and Replacement funds were $6.0 million less than budgeted in FY 2023/24. Any unspent funds remain in the Repair and Replacement funds to be expended on projects and equipment or vehicle replacements in the future. Actual net transfers ended up with a slight difference due to an interest payment from the Recycled Water Operating Fund to the Equipment Replacement Fund based on the interfund loan to pay off the outstanding balance of the 2017 water revenue bond. As approved by the City Council at its April 16, 2024 meeting, the Recycled Water Operating Fund will pay back the loan amount of $965,160 plus applicable interest rates, based on the investment return generated by the City’s investment pool. It is worth noting that many of the City’s Repair and Replacement funds do not have an adequate fund balance to cover necessary project costs and/or replace aging equipment or vehicles in a timely manner. For example, the Information Technology Repair and Replacement Fund, which funds replacement costs for the City’s technology equipment, such as computers, monitors, servers, network equipment, has an estimated ending fund balance of just over $1.1 million. The Facilities Repair and Renovation Fund, which is used as a primary funding source for non-major facility repairs and modifications, as well as unanticipated repairs at any of the City’s more than 100 facilities and structures, has just a $2.4 million fund balance. As part of the FY 2023-FY25 biennial budget development process, staff performed a preliminary analysis to estimate the level of contributions needed from the General Fund to the Repair and Replacement Funds and determined that the current annual contribution levels are not sufficient. A more comprehensive analysis is planned as part of the preparation of the Asset Management Plan that is now underway to better estimate an appropriate level of funding needed to support each Repair and Replacement Fund. Table 12. Repair & Replacement Funds - Amended Budget vs. Actual Workers’ Compensation Funds. There are two Workers’ Compensation funds: one for the City of Pleasanton workers’ compensation expenses and liabilities and the other for Livermore-Pleasanton Fire Department’s (LPFD) workers’ compensation expenses and liabilities. While there is, and has been, sufficient cash in both funds to cover actual workers’ compensation expenses, the incurred but not expensed claims and future liability cause both funds to have negative fund balances. That said, as described in Tables 13 and 14 below, the City’s claims paid is approximately $0.1 million lower, and future liability is higher than expected by $0.1 million. For LPFD, claims paid and future liability are higher by approximately $0.1 million and $1.2 million, respectively. The City’s Workers’ Compensation Fund had a negative fund balance of $3.7 million, and LPFD had a negative fund balance of $2.4 million, with $1.2 million (50 percent) belonging to Pleasanton. Page 242 of 658