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General Fund Reserves
<br />The changes to General Fund Reserves are shown in Table 9 for the proposed two-year
<br />budget.
<br />Table 9: General Fund Projected Reserves
<br />$30,863,884
<br />($52,152)
<br />$30,811,732
<br />$471,871 $31,283,603
<br />$289,150
<br />($289,150)
<br />-
<br />- -
<br />$379,428
<br />$379,428
<br />$379,428
<br />$500,000
<br />$500,000
<br />$500,000
<br />$19,974,282
<br />($1,000,000)
<br />$18,974,282
<br />($2,000,000) $16,974,282
<br />$52,006,744
<br />($1,341,302)
<br />$50,665,442
<br />($1,528,129) $49,137,313
<br />The projected FY 2025/26 unrestricted ending fund balance of $30.8 million is
<br />approximately 19.9 percent of operating expenses in FY 2025/26. When all of the transfers to
<br />other funds for various subsidies and contributions to the capital program are accounted
<br />for, the projected FY 2025/26 unrestricted ending fund balance goes down to 18.8 percent.
<br />For the FY 2026/27, $31.3 million represents approximately 19.4 percent of operating
<br />expenditures and 18.3 percent when including all the transfers.
<br />As part of the balancing strategy, some one-time funding resources are utilized. First, the
<br />remaining COVID Response & Recovery reserve balance of $289,150 is planned to be used in
<br />FY 2025/26. Second, based on the Council's direction from the March 4, 2025 meeting and
<br />subsequent budget workshops, a total of $3.0 million from the Section 115 Pension Trust will
<br />be utilized over the next two fiscal years. Third, $2.1 million will be withdrawn from the
<br />Retiree Medical/Other Post -Employment Benefits (OPEB) Trust ($0.7 million in FY 2025/26
<br />and $1.4 million in FY 2026/27) to offset estimated contribution needs for each fiscal year.
<br />Approximately $1.9 million of $2.1 million is for the General Fund.
<br />Enterprise Funds
<br />Water Fund
<br />Revenues from water sales are expected to increase by 5.0 percent in FY 2025/26 and by an
<br />additional 5.2 percent in FY 2026/27. These increases reflect baseline adjustments for both
<br />fiscal years at this point. The City is conducting a water rate study with a rate increase
<br />anticipated in January 2026. This phase of rate increase will help the Water Fund to address
<br />the infrastructure funding gap and some of the critical projects identified in the Water
<br />System Management Plan approved by the City Council in December 2024. The anticipated
<br />rate increase will also help the Water Fund to restore and maintain the 35.0 percent reserve
<br />target. At the end of FY 2025/26, the reserve is projected at 34.9 percent. It should be noted
<br />that this reserve percentage is achieved by only transferring $0.1 million to the Water
<br />Capital Fund in FY 2025/26, which is not enough to maintain and improve the existing
<br />infrastructure. Without additional rate increases, this estimated reserve level is projected to
<br />drop.
<br />The rate study is scheduled to be completed in the fall. As such, numbers included in the FY
<br />2025/26 and FY 2026/27 budget, summarized in Table 10 below, reflect estimates based on
<br />preliminary analysis. Once the rate study is completed, any recommended budget
<br />amendments, as necessary, and proposed rate adjustments will be presented to the City
<br />Council for consideration.
<br />The City currently purchases 100.0 percent of its water from Zone 7. The water purchase
<br />costs are projected to increase by 3.8 percent in FY 2025/26 and 5.5 percent in FY 2026/27.
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