AGENDA TITLE:
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Proposed Updates to the Budget and Fiscal Policies (CM)
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MEETING DATE:
January 27, 2026
PREPARED BY:
James Lindsay, Interim City Manager
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RECOMMENDED ACTION:
Review proposed policy updates and provide direction to staff on any changes.
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SUMMARY:
Staff is recommending updates to the Budget and Fiscal Policies as part of the City Council's mid-year budget review scheduled for February 4, 2026 (Attachment A). Most of the updates remove reference to the Deputy City Manager position which has not been an active job classification for several years and replace it with the new Administrative Services Director position.
Additional, staff is recommending adjusting the liability funded ratio in the Pension Stabilization Policy from 80% to 70% and providing a framework for distributions from Internal Revenue Code Section 115 Trust account (Pension Trust). The current fund balance in the Pension Trust, with an average annual return of 6.8%, will provide the City sufficient funds to draw down and reduce the impact of rising CalPERS pension costs on the City's operating budget through 2045.
BACKGROUND:
The City Council established the Pension Stabilization Policy in 2017 to dedicate annual budget savings to earn higher potential investment returns using a Section 115 Trust account administered through Public Agency Retirement Solutions (PARS) to help fund rising CalPERS pension costs.
Funds can be withdrawn from the Pension Trust and be used to:
* Cover required City contributions to any CalPERS rate plan.
* Pay for normal costs, unfunded accrued liabilities (UAL), or other pension-related expenses.
* Offset spikes in required payments to stabilize budgets.
The City has not made any withdrawals to fund rising pension costs as the Pension Stabilization Policy directs annual budget savings be deposited to the Pension Trust until assets in both the Safety and Miscellaneous CalPERS Plans, plus the market value ...
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