CITY COUNCIL MEETING AGENDA PACKET

Page 9 of 17 to be kept in the General Fund to increase its Unrestricted General Fund Reserve to $31.2 million, which is equivalent to 20.1 percent of the FY 2025/26 Adopted General Fund expenditure budget; 20.0 percent is the recommended target level per the City’s Reserve Policy, adopted by Council on June 6, 2023. Overall, the total General Fund reserves, including program and restricted reserves, will be approximately $53.7 million. Table 6. General Fund – Fund Balance Enterprise Funds The City currently has six Enterprise Funds: • Water/Recycled Water Operations and Maintenance (O&M) Fund • Sewer O&M Fund • Callippe Preserve Golf Course Fund • Storm Drain O&M Fund • Paratransit Fund • Cemetery Fund The Operating Budget only includes the Operations and Maintenance (O&M) and debt service expenses of these enterprises. Capital improvements and replacements for the Water, Sewer, and Storm Drain funds are accounted for in the Capital Improvement Program (CIP). The financial results of the CIP are presented to the City Council in a separate report. Each Enterprise Fund should generate adequate revenues to fully cover both operating and supplemental costs to maintain and update its facilities and infrastructure. However, both Storm Drain and Cemetery operations do not generate adequate revenues and receive subsidies from the General Fund as a result. Water and Sewer Operating Funds Water/Recycled Water O&M Fund. As shown in Table 7 below, the Water Operating Fund ended FY 2024/25 with an operating fund balance of $11.5 million, which equals 29.4 percent of the Water and Recycled Water O&M Fund’s FY 2025/26 expenditure budget. The operating reserve policy adopted by the City Council on June 6, 2023, requires reserves equal to 30.0 - 40.0 percent of operating expenses with a target of 35.0 percent. The current 29.4 percent Page 355 of 399