Item 15 - Early Direction for the Fiscal Year 2025-26 Budget

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Early Direction for the Fiscal Year 2025-26 Budget March 18, 2025 Page 6 Based on the latest information from CalPERS, we expect to need $169.1 million in excess of the current budget level over the next 10 years, as shown in the shaded area of the following graph. Pension Debt Payments 100,000, 000 80,000,000 60, 000, 000 40, 000, 000 20, 000, 000 — Pension Debt Payments Budget The City Council approved a policy titled "Unfunded Employee Pension Liability Cost Reduction Policy" in 2021. The Policy states: "It shall be the City's policy to consider adding money to the Section 115 Trust account during each annual budget process." As noted above, the City has an estimated Spendable General Fund balance of $16.08 million. Staff recommends a $1 million allocation for FY 2025-26. Staff seeks City Council concurrence regarding a Section 115 Trust deposit of $1 million for FY 2025-26. This deposit sets aside money that will earn interest and be available for future pension cost increases when CalPERS does not meet its investment assumption of 6.8%. Jail Improvements The Santa Ana Police Department's jail, built in 1989, was designed to accommodate local detainees and provide additional capacity for outside agencies. Over the years, this arrangement has generated revenue for the City through partnerships with federal and local entities, as well as the "pay -to -stay" program, which allows qualifying detainees to pay for their incarceration. However, due to deferred maintenance and the aging condition of the facility, these revenue -generating opportunities have declined. To modernize the jail, enhance safety, and restore its capacity for detainees and contract housing, facility upgrades are necessary. The facility currently has two holding areas dedicated to the "pay -to -stay" program, which can accommodate up to 20 incarcerated individuals. To support these improvements, staff proposes allocating $250,000 in the FY 2025-26 budget. This amount reflects projected revenue over a six-month period, based on an approximate 50% occupancy rate at a daily fee of $134 per detainee.