FUND BALANCE POLICY General Fund Reserves
The General Fund Reserve Policy established on October 16, 2012 provides that the City will maintain a reserve of at least 15% to 20% of annual General Fund operating expenditures. General Fund Reserves may fall to less than 15% if the City Council declares a financial emergency. Pension Reserves In 2018, the City established a trust with Public Agency Retirement Services (PARS) to hold assets that are legally restricted for pension expenses of the City. The City has contributed $15.6 million into a Pension Trust held by Public Agency Retirement Services (PARS). The Pension Trust provides for rate stabilization since Pension Trust assets can be used to offset unanticipated increases in CalPERS pension costs. Pension Trust assets are managed in a customized investment strategy that balances risk and return and provides for diversification. Emergency Reserves On October 16, 2012, the City Council established an Emergency Reserve Fund in the amount of $1 million for use in a City Council declared emergency such as earthquake, flood, and fire. Other Post-Employment Benefits (OPEB) Trust In 2018, the City established a trust with PARS to hold assets that are legally restricted for other post-employment benefit (OPEB) expenses of the City. Over the past five years, the City has made $4.5 million in contributions into the OPEB Trust. The OPEB Trust assets are managed in a customized investment strategy that balances risk and return and provides for diversification. REVENUE MANAGEMENT POLICIES Fees and Cost Recovery User fees and charges shall be established at a level related to the direct and indirect cost of providing the service, wherever possible. On July 20, 2021, the City Council directed the City’s Finance Director to annually review and, as appropriate, recommend to the City Council approval of an increase of the user fees and charges in accordance with the Consumer Price Index (CPI) reported in the month of February/March for the corresponding year for the Los Angeles-Long Beach-Anaheim area for all Urban Consumers. On July 20, 2021, the City Council also directed the City Manager to submit an updated user fee study and report to the City Council at least every five (5) years. A full Comprehensive Fee Study was completed and adopted by the City Council in January 2026. PENSION FUNDING POLICY The Pension Funding Policy is based on a comprehensive long-term fiscal strategy designed to mitigate against risk exposure through diversification and utilizing a dollar-cost averaging approach in order to provide for fiscal sustainability. The City’s net pension liability was $53 million as of June 30, 2025, or 86.0% funded, which is based on the most recent CalPERS actuarial valuation report issued in July 2026. The funding status does not consider impact of the recent preliminary 2025-26 CalPERS investment earnings of 14.8%. The City has also deposited funds into a separate Pension Trust, which is held by Public Agency Retirement Services (PARS). The PARS Pension Trust has a balance of approximately $21.5 million, which reduces the City’s net pension liability.
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