Finance Committee Meeting – August 3, 2026: Fleet Fund Policy and OPEB/Pension Investment Reports
Finance Committee Meeting – August 3, 2026
The Finance Committee of the San Leandro City Council met on August 3, 2026, from 4:00 PM to 4:55 PM to discuss two main items: the Fleet Fund Policy and Analysis (Item 2A) and the Calendar Year 2026 Q2 OPEB Trust and Pension Trust Investment Report (Item 2B). The committee reviewed staff presentations, asked detailed questions, and provided direction on next steps.
Discussion Items
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2A – Fleet Fund Policy and Analysis
- Staff presented an update on developing a sustainable fleet fund, including a transition from a pay-as-you-go model to a fleet replacement reserve with reserve targets of 20% for both the fleet maintenance fund and the fleet capital replacement fund. The five-year financial forecast (FY 2027–2032) projects a deficit of approximately $1.4 million by FY 2032 if all planned replacements are funded. The current fund combines operating and capital components, complicating historical underfunding measurement.
- Key challenges include: 4–5 year lead times for fire apparatus, deferred replacement for budgetary reasons, and the need to separate the single fund into two (operating and capital) with new accounting system implementation.
- Committee members asked about: maintenance staffing (fleet supervisor, two mechanics, two mechanic aids); vehicle replacement lifespans (sedans ~12 years, police vehicles ~7 years, trailers/equipment up to 20 years); potential leasing scenarios; city vehicle take-home policies; and electrification impacts. Staff confirmed no leasing analysis had been done and that the model assumes replacement of existing vehicles, not electrification.
- Councilmembers expressed support for systematic replacement schedules to avoid aging, unreliable vehicles, and requested historical data on underfunding and a scenario analysis for leasing select vehicles. The mayor emphasized the importance of reliable vehicles for employee morale.
- Committee Position: The committee provided general guidance to proceed with developing funding models and reserve targets, and to return in December with funding plans that incorporate additional analysis (leasing options, historical funding levels, and vehicle condition scoring).
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2B – CY 2026 Q2 OPEB Trust and Pension Trust Investment Report
- Assistant Finance Director Gonzalez presented the report for the quarter ending June 30, 2026. The OPEB trust increased by $1.1 million (4.72% for Q2) with a one-year return of 9.69% and a 5.0% long-term average since inception. The Pension trust increased by $2.6 million (7.24% for Q2) with a one-year return of 13.44% and a 5.49% long-term average.
- No public comments or discussion from committee members. The committee unanimously recommended forwarding the report to the City Council for acceptance.
Public Comments & Testimony
- No public comments were made on either agenda item or on non-agenda matters.
Key Outcomes
- Unanimous recommendation (by acclamation) to forward the CY 2026 Q2 OPEB and Pension Trust Investment Report to the City Council.
- Fleet Fund: Committee directed staff to (a) separate the fleet fund into operating and capital components, (b) develop funding models with reserve targets, (c) incorporate historical underfunding data and leasing scenario analysis, and (d) return in December 2026 with funding plans for the FY 2028-29 biennial budget.
- Upcoming items: Project Elevate update in September, year-end balances, and a CalPERS update before year-end.
Meeting Transcript
Recording in progress. Well, good afternoon. This Wednesday, July 22nd, 2026. It is four o'clock in order gathering for the finance committee meeting of the South and Road City Council. Madam Cork, would you please take role to establish quorum? Mayor present. Iceman Venos Walton. Councilmember AEI. Present. After each agenda item is presented, the mayor will ask for committee member comments and then take public comment. You'll have two minutes for your comment. The cabinet camera will appear for the convenience of the speaker and attendees. Okay. Good afternoon. Can we do that? Yeah, thank you. Okay. Good afternoon, Mayor and committee members. The item before you this afternoon is an update on the city's efforts around its fleet fund policy and continue an analysis for appropriate funding models. So we did want to provide a little bit of background on where the city's been with its fleet. It is something that is of high importance on the finance department and organization as a whole. A significant number of our fleet is related to public safety and public works with an emphasis on ensuring that we provide core services to our community. It's vital that we have the appropriate fleet to support those efforts. And so in August of 2024, the city did complete a study with Baker Tilly. It took an inventory of the city's fleet and looked at its current policy and made some recommendations at that time. And that work was done by A Mays and Incorporated, and we completed the initial work with both the study and recommended policy changes in April 2026. So over the last couple of months, we spent some time looking at the uh the funding forecast tool that was developed, policy recommendations, as well as ensuring that the inventory that we have on file is complete and accurate. And so that brings us to this meeting today to talk about some of the initial uh steps we would like to take to continue our efforts to build a sustainable fleet uh fund. So one is make sure that we are under the same uh understanding about what a fleet fund is and why it's important. A fleet fund is an internal service fund, an internal service fund is a fund to account for centralized services that is provided by city departments, and in this case we have a number of uh vehicles that support city uh city services, so public safety, police, fire, with public works. We also have non-public, so we do have public work inspector vehicles. We also have some recreation uh vehicles. We also have equipment, so it's not solely uh a fund that is for vehicles like trucks and cars, but also equipment that we operate as well within the public works department in particular. So why is it important to have a fleet fund? Um it promotes cost recovery by charging departments the actual cost of the vehicle, including any maintenance and fuel and replacement costs. It provides sustainable vehicle replacement funding by collecting replacement costs over the cost or two over the useful life of the vehicle or equipment. Um, and so then it in result uh will reduce the number of large one-time capital uh requests uh to support those roots expense. It promotes um consistent replacement schedules before maintenance costs become exorbitant. Um, and then also it minimizes the potential for disruption to the city in providing its core services to the community. So we've talked a little bit over the last year about fleet replacement challenges and funding needs. So there's there's a couple of components that um we look at. One is that the city has ongoing fleet replacement needs a significant portion of those to support the city's efforts in providing core services, so public safety, public works, and public health. The fleet includes city fleet, police fleet, fire fleet, and city equipment. So any type of city equipment that we have, bucket trucks, things like that, those are also part of what we look at when we're looking at our full inventory of our fleet and equipment. We have ongoing procurement challenges as it relates to maintaining those operational needs for our fleet. For example, the fleet fire fleet, there is estimated lead time of anywhere from four to five years. So from the moment that we purchase the vehicle to when we actually receive it and outfit it, and it is back on the road for service. So that is not necessarily incumbent on any practices that the city does. It just happens to be the amount of time it takes the vendor to fully build and outfit a fire vehicle apparatus and deliver to the customer. And then another component is our funding challenges.
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