ITEM 15 ATTACHMENT 1 - Laserfiche WebLink

to strengthen the long-term sustainability of the fund to pay promised benefits and reduce the long-term risk of contribution increases associated with the volatility of the markets. Reducing the discount rate results in increased annual pension contributions. Based on CaIPERS's latest projection, the City's contributions are expected to peak in FY 2030/31 and then decrease continuously until the Unfunded Actuarial Liability (UAL) is fully paid off. Citywide pension costs are projected at $29.2 million for FY 2025/26 and $31.2 million for FY 2026/27. Pension contributions are expected to stabilize as a higher percentage of current members will be under the reduced pension benefits based on the Public Employees' Pension Reform Act of 2013 (PEPRA). To date, the City has allocated a total of $38.0 million toward a Section 115 Pension Trust Fund administered by PARS (PARS Trust Fund), which is comprised of both short- and long- term investments. The City Council also adopted policies that placed limits on the City's ability to draw on the PARS Trust Fund, to ensure funds remain available to make pension contributions during financially difficult times without having to reduce City services. In addition, to the extent to which the City does not draw on the PARS Trust Fund, the fund can grow through compounded investment earnings. However, due to the City's current fiscal challenges with the structural deficit in the General Fund, the City Council approved the use of $2.0 million annually from the PARS Trust Fund for the next two years for a total of $4.0 million to balance the budget. Major Expenses - Non -Personnel Non -personnel expenses include utilities, contractual services, insurance, repairs and replacement of the City's equipment, facilities, streets, and parks, and materials and supplies. Each major non -personnel expense category is discussed separately below. Utilities (Electricity, Phones, Garbage, Sewer and Water) The FY 2025/26 and FY 2026/27 budget includes minor adjustments compared to the FY 2024/25 Modified Budget based on current usage trends and expected rate increases. Contractual Services The City uses contractual services to support City operations including building and grounds maintenance, engineering and architectural design, temporary employment agency staff to backfill vacancies until positions can be filled, consultant support for planning studies, instructors for recreation classes, and outside legal counsel. The City's budget for key contractual services categories, including contract services, professional services, and other professional services, decreased by $2.5 million or 25.9 percent in FY 2025/26 compared to the FY 2024/25 Modified Budget. This major decrease is the result of service reductions that have been incorporated to balance the proposed budget, as well as some reallocation of software -based subscription services to the data processing equipment and software category under Materials and Supplies, as discussed below. For full details on the list of service reductions and their impacts, refer to the Budget Summary section of the book. Repairs and Replacement General Fund allocations to City Repair and Replacement funds for the next two years are approximately $3.5 million in FY 2025/26 and $3.7 million in FY 2026/27. Materials and Supplies Materials and supplies include office supplies, small equipment, uniform costs, and data processing equipment and software. The FY 2025/26 and FY 2026/27 Materials and Supplies budgets are approximately $0.7 million higher than the FY 2024/25 Modified Budget due to higher software and related subscription costs and budget reallocations from contractual