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Page 9 of 14 <br />two operations. The preliminary results indicate significant funding gaps, consistent with the <br />infrastructure funding gap mentioned earlier, and resources must be identified to fund critical <br />improvement projects. In late 2024/early 2025 staff will present the plans to the City Council <br />and begin to develop plans to fund the necessary water and sewer system needs. <br /> <br />Reserves and Fund Balances <br />The Government Finance Officers Association recommends maintaining at least 16.7% of <br />unrestricted reserves in the General Fund; the City’s General Fund reserve target is 20%. The <br />unrestricted reserve balance, including unassigned, assigned, and committed fund balance, is <br />projected to be $30.7 million at the end of the current fiscal year, or 20% of the General Fund <br />operating budget. <br /> <br />The City’s reserve target for the Water Fund and the Sewer Fund is 35%, with a reserve range <br />of 30%-40%. The Water Fund reserve balance is projected at 32% of the operating budget at <br />the end of the current fiscal year, lower than the reserve target despite new rates being <br />applied. The Sewer fund reserve balance is projected at 40% of the operating budget, which is <br />within the reserve range. <br /> <br />General Fund Reserve <br />As stated above, the General Fund unrestricted reserve is projected to be about 20% of the <br />operating budget for the current fiscal year. At the end of fiscal year 2022/23 (fiscal year <br />2023/24 data is not yet available), the City’s unrestricted reserve reported in the Annual <br />Comprehensive Financial Report (ACFR), including committed, assigned, and unassigned <br />fund balance, totaled $38.6 million; this includes the $6.6 million "Rainy Day Reserve" <br />intended for capital projects. By comparison, the City of Dublin reported $245.4 million in <br />unrestricted reserve in its ACFR, and the City of Livermore reported $78.2 million. Compared <br />to these neighboring cities, Pleasanton’s unrestricted reserve is alarmingly low, clearly <br />indicating that other cities are better prepared to address emergencies and other unforeseen <br />expenses. <br /> <br />Unfunded Retiree Medical and Pension Liabilities <br />The City has been proactive in paying down its unfunded retiree medical and pension <br />liabilities. The City has also implemented strategies to control employee compensation costs, <br />including requiring the maximum contribution to retirement benefits from all employees, <br />reducing retiree health benefits, and trimming retirement benefits and extending the retirement <br />age (including for public safety employees). Currently, more than 40% of the City’s workforce <br />will receive lower benefits in retirement. While saving measures have been implemented, the <br />City’s unfunded liabilities remain significant at over $200 million, impacted by factors such as <br />CalPERS investment loss. <br /> <br />The tables below summarize the retiree medical/OPEB and pension liabilities, assets in trust <br />accounts or with CalPERS, net liabilities, and the funded status for fiscal year 2022/23. The <br />net OPEB and pension liabilities totaled over $200 million. The total net liability is expected to <br />increase for the fiscal year 2023/24 due to lower-than-expected CalPERS investment returns <br />in fiscal year 2022/23. The final number will be available once the audit has been completed <br />later this year. <br /> <br />Page 41 of 114