TO: ADAM PIRRIE, CITY MANAGER
FROM: JEREMY STARKEY, FINANCE DIRECTOR
DATE: OCTOBER 28, 2025
Reviewed by:
City Manager: AP
SUBJECT:
Title
2024-25 GENERAL FUND FINANCIAL UPDATE (UNAUDITED)
Body
SUMMARY
Staff provides a financial update for the General Fund after the end of each fiscal year. The information in this report represents unaudited information for the General Fund. The audited financial statements for all funds, including the General Fund for 2024-25, will be published at the end of this calendar year as part of the City’s Annual Comprehensive Financial Report (ACFR). In prior years, information provided in this report has generally not deviated materially from the final annual audited financial statements.
At the close of 2024-25, a projected General Fund surplus of $3,879,060 was realized from General Fund operations for the fiscal year. The following report details the staff recommendation for the allocation of the 2024-25 General Fund surplus.
RECOMMENDATION
Recommended Action
Staff recommends the City Council:
A. Allocate $500,000 of the 2024-25 General Fund surplus to the City’s Operating and Environmental Emergency Reserve, bringing the reserve balance to $11,613,060 or thirty percent of estimated 2026-27 General Fund operating expenditures and transfers out;
B. Allocate and appropriate $1,000,000 of the 2024-25 General Fund surplus for an additional discretionary payment to CalPERS to pay down the unfunded liability on the City’s employee pension plans;
C. Allocate and appropriate $500,000 of the 2024-25 General Fund surplus for a contribution to fund the City’s Section 115 Pension Trust; and
D. Allocate $1,879,060 or any remaining 2024-25 General Fund surplus after completion of the annual audit to the City’s Equipment and Facility Revolving Reserve.
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ALTERNATIVE TO RECOMMENDATION
In addition to the recommendation, there are the following alternatives:
• Request additional information
FINANCIAL REVIEW
General Fund revenues and transfers in for 2024-25 amounted to $41,938,778 compared with a full-year budget of $36,448,599.
Expenditures and transfers out in the General Fund were budgeted at $39,812,814. Actual current year expenditures and transfers out amounted to $38,059,718.
Based on revenues of $41,938,778 and current year expenditures of $38,059,718, an excess of revenues over expenditures (surplus) exists at the close of 2024-25. The amount of this surplus is estimated at $3,879,060 and came about as a result of higher than estimated annual revenues in the General Fund.
In previous years, General Fund surpluses have allowed the City to allocate funds to various set asides such as adding to the City reserves and making additional payments to CalPERS and the Section 115 Pension Trust Fund.
The staff cost to conduct research and prepare this report is estimated at $1,580 and is included in the operating budget of the Financial Services Department.
ANALYSIS
General Fund Revenues
General Fund revenues and transfers in for 2024-25 totaled $41,938,778 against an adjusted full year budget of $36,448,599. Actual revenues represent an excess of revenues relative to the adjusted budget of $5,490,179. Explanations of the major sources of additional revenue are described below:
1. Property Tax: Revenues for 2024-25 were approximately $818,971 higher than the full-year budget of $13,024,590. Growth in Property Tax is based on increases in the assessed value of taxable real property in Claremont, driven by the cost-of-living increase of up to two percent pursuant to Proposition 13, as well as the reassessment of property when it is sold. The growth in assessed value exceeded the four percent increase budgeted from the prior year, resulting in additional revenues for 2024-25.
2. Sales Tax: Revenues for 2024-25 were budgeted at $8,570,000. Actual Sales Tax receipts for 2024-25 were $10,264,445, an excess of approximately $1,694,445 over the adopted budget. The increase in sales tax was a result of increases in auto sales, along with higher allocation of Sales Tax resulting from online sales via the County.
3. Utility User Tax (UUT): At $6,026,915 revenues for 2024-25 were approximately $886,915 higher than the budgeted figure of $5,140,000. The excess of revenues was the result of higher electricity and water costs and the resulting tax on these services.
4. Franchise Tax: Revenues for 2024-25 were approximately $68,240 higher than the budgeted amount of $704,241, primarily due to higher utility rates for electricity service.
5. Transient Occupancy Tax (TOT): Revenues of $1,761,374 were approximately $161,374 higher than the budget of $1,600,000 during the fiscal year.
6. Licenses and Permits: Revenues exceeded the budgeted amount of $1,574,500 by approximately $310,833 in 2024-25 due to increases in fees from building and grading permits. Construction activities, related to residential, commercial and Colleges development remained strong during 2024-25, contributing to the excess of permit revenues.
7. Use of Money and Property: This revenue category includes interest earnings on the City’s investment portfolio and the revenue associated with the rental of City Facilities. In 2024-25, revenues exceeded the budget of $879,401 by approximately $1,162,179. This was due in large part to interest earnings, which increased significantly as a result of higher interest earnings rates with the City’s investments in the State Controller’s Local Agency Investment Fund (LAIF), Certificates of Deposit (CDs) and US Treasuries.
Other revenues that exceeded budget included Business License Taxes by $87,972, Fines and Forfeitures by $224,860 for collections of traffic and code enforcement citations, Miscellaneous Revenue by $93,046 resulting from mandated cost reimbursements and settlements, and Other Taxes by $51,927 from document transfer taxes.
General Fund Expenditures
General Fund expenditures and transfers out for 2024-25 were originally budgeted at $35,870,061 and were amended to $39,127,088 through additional appropriations totaling $3,257,027.
These budget amendments included $943,851 for the carryover of unexpended budgets from the prior year for projects that were not completed, $1,300,000 in appropriations using 2023-24 surplus funds, $291,195 in grant related expenses and $721,981 related to other appropriations authorized by City Council throughout the fiscal year.
Actual expenditures and transfers out amounted to $38,059,718 compared with the amended budget of $39,127,088.
General Fund Surplus
Based on revenues of $41,938,778 and expenditures of $38,059,718, an excess of revenues over expenditures (surplus) exists at the close of 2024-25. The amount of this surplus is estimated at $3,879,060.
Staff recommends the following actions related to the General Fund surplus of $3,879,060 for 2024-25:
1. Operating and Environmental Emergency Reserve: The City’s current Operating and Environmental Emergency Reserve balance stands at $11.11 million representing 29.2 percent of 2024-25 General Fund expenditures and transfers out. Staff recommends allocating $500,000 of the surplus to the Operating and Environmental Emergency Reserve. Doing so would increase this reserve balance to $11,613,060, equal to 30 percent of estimated 2026-27 General Fund expenditures and transfers out.
2. Pension Funding: The City Council allocated $2,000,000 million in additional funding towards its unfunded pension liabilities from the 2022-23 General Fund surplus and an additional $2,250,000 million of the General Fund surplus from 2023-24 to prefunding employee pensions. Staff recommends continuing this practice and proposes to direct $1,500,000 million of the General Fund surplus from 2024-25 to prefunding employee pensions. Staff recommends making a $1,000,000 payment directly to CalPERS to reduce the unfunded accrued liabilities (UAL) on the City’s safety and miscellaneous employee pension plans and a $500,000 contribution to the City’s Section 115 Trust. Funding in the Section 115 Trust allows local control over the investment of funds allocated for future pension payments; it offsets the Net Pension Liability reported in the City’s annual financial statements and allows higher investment returns than in the City’s investment portfolio.
3. Equipment and Facility Revolving Reserve: In 2012, the City Council established the Equipment and Facility Revolving Reserve to set aside funding for equipment and facility maintenance expenses above those included in the City’s operating budget. Eligible expenditure of these reserve funds include renovation projects, replacement and refurbishments of furniture and equipment, and facility enhancements. The current balance in this reserve is $851,382. Staff recommends allocating $1,879,060 or any remaining surplus after the completion of the 2024-25 audit to this reserve. The allocation of $1,879,060 would increase its balance to approximately $2,730,442. The reserve will be available to fund equipment replacements or facility improvements with City Council approval. Upcoming projects to be funded with this reserve will likely include seismic and safety improvements at the Claremont Police Department, park facility upgrades at Larkin Park and other parks identified in the recently-adopted Park Facilities Improvement Plan, as well as other improvements to other City-owned facilities.
RELATIONSHIP TO CITY PLANNING DOCUMENTS
Staff has evaluated the agenda item in relationship to the City’s strategic and visioning documents and finds that it applies to the following City Planning Documents: Council Priorities, Economic Sustainability Plan, General Plan, and the 2024-26 Budget.
CEQA REVIEW
This item is not subject to environmental review under the California Environmental Quality Act (CEQA).
PUBLIC NOTICE PROCESS
The agenda and staff report for this item have been posted on the City website and distributed to interested parties. If you desire a copy, please contact the City Clerk’s Office.
Submitted by:
Jeremy Starkey
Finance Director