What days today?

It's four o'clock.

That's the important part.

So it's four o'clock on Wednesday for calling order of the finance committee meeting selling city council.

The 26th and 27th proposed by annual budget.

Councilmember Vieiros Walton is not currently here.

I have Councilmember Aguilar.

Mayor Gonzalez.

And then Clark, would you please talk to your answer?

After each agenda item is presented, the mayor will ask for committee member comments and then take public comment.

You will have two minutes for your comment.

Account down timer will appear for the convenience of the speaker and attendees.

So with that, we will move to our discussion item.

Our single discussion item will involve a lot of discussion today, I am sure.

It's our proposed by annual budget, and we've got finance directory and global solid specifically.

Thank you, Mayor.

Good evening, mayor and committee members.

The item before this evening is to discuss the city's proposed fiscal years 26-27 biannual budget presentation.

Just to kind of go over a quick agenda of today's item.

Some budget strategies that helped us develop that budget, general fund forecast update, budget overview.

We'll do a view of general fund reductions and savings, review of capital funding needs, an overview of the city's pension and op trust, and then some uh discussion around KERT, ARPA funded projects that if continuation would be augmentation from the general fund for continuation.

Okay, and just for our record, because it is recorded.

I didn't want to say that while you were speaking, we could have our last council member come in.

So thank you for joining us.

Thank you.

Um so um as we we began developing the proposed fiscal year 26-27 by annual budget, several key driving factors were considered as they do impact uh the decision uh potential as we prepare for the upcoming two fiscal years.

So the first and foremost was a focus on um working towards fiscal stability.

So it's a major focus for the city for the council, um, and so that was our primary focus, um, and we wanted to identify things that were attributing to uh the city's ability to um work towards that fiscal sustainability goal.

Um, some of those factors are that we are looking to align our budget to actual needs and costs, so being very mindful about um what is going into the budget based on our actual needs and the costs that we're seeing in the market.

Um also driving factors in hacking this budget are increased employee costs, that includes the cost of uh personnel, as well as uh benefits including including rising costs as it relates to uh medical intentional and some of the other benefits that we offer to employees.

Um we did look at uh reducing discretionary budgets, but still um wanted to ensure that we're preserving service levels.

So some of the discretionary uh costs that we looked at were things that did not impact service levels, such as uh training and travel, office supplies, fixed assets, and etc.

Um, also contributing to our ability to uh forecast a fiscal stability scenario was the rising cost of pension and OPEC costs, um balancing the city's needs uh for both capital and internal service needs due to aging facilities and aging infrastructure.

And then last but not least, the economic uncertainties that we have seen over the last several months are also impacting our uh preparation for the explanation for two years.

So again, some of the budget strategies that we we looked at that we um implemented during this budget process was first looking at discretionary costs.

So again, looking at reductions in areas of services and supplies, but also ensuring that we are preserving those service levels.

We wanted to make sure that those doctors that we were making were having the least at all no impact on the service levels to the community.

Um additional um uh strategies included looking at the city's internal service fund and uh looking to prioritize our fleet uh replacement schedule and needs, uh also looking to defer uh technology enhancements throughout the uh organization throughout the city, um, but also aligning our budget with our actual needs.

Also looking to defer technology enhancements throughout the organization throughout the city, but also aligning our budget with our actual needs.

The other thing that we looked at was at fixed assets, which often are related to the replacement of office furniture, purchase of equipment as it relates to maintenance services.

We did temporarily suspend or reduce those budgets for the next two fiscal years.

And then last, we did look at personnel costs, establishing realistic onboarding of vacant positions, so including anticipation of attrition through retirements, making sure that we are trying to line up as closely as possible with known factors of our current vacancies, as well as anticipated vacancies and how long it takes for those positions to actually be filled with these.

So we're gonna jump into a little bit more detail about the city's uh general fund forecast, and before we do so, I wanted to make sure that we talked a little bit about some key things that help us understand and why it's important to focus on a 10-year forecast.

And so, first, what is a what is a fund balance?

So a fund balance represents the difference between the city's total assets and its current and future liabilities.

It essentially shows the net available resources in a particular fund at any given time.

Some of those categories that we see, and you'll see them in the model itself, are uh non-spendable, which are resources that cannot be spent, restricted resources that are external restrictions, those are often like tied to specific funds related to grants and grant obligations, uh, committed, which is set aside for a specific purpose by a formal government action.

Assigned is intended for specific purposes but not legally restricted.

So those are some of the things that you might see in that area are encumbrances.

So services and supplies that are currently encumbered are assigned and unassigned are available for any purpose at the discretion of the city council.

Um so what is a fund, uh what is a target fund balance?

So a targeted fund balance is a percentage referred to the desired level of reserve with government board organization aims to maintain this general fund.

The government finance officers association, which is GFOA, is a pioneer in best practices throughout the United States, but local organizations and state organizations often rely on some of the best practices and policies developed by GFOA, and what GFOA recommends that general purpose governments maintain an unrestricted fund balance in their general fund of allow of at least two months or approximately 20% of regular operating expenditure.

So again, looking at regular operating expenditures, which excludes any transfer that a city may have.

Um, in 2020, ability to remain operational during natural disasters.

The city of San Landro does have a fault that runs along its city, and so it is important to make sure that we have funding available in the event that we have a natural disaster.

It may impact or improve the city's credit rating, leading to lower borrowing costs, and then of course, enhanced financial stability and resilience.

What is the city's fund balance policy currently?

It's five million dollars for major emergencies and 20% of total expenditures for economic uncertainties.

Currently, the city's policy itself does meet or exceed industry best practices.