REPORT TO COUNCIL
SUBJECT
Title
Receive and File the FY 2024/25 Budgetary Year-End Financial Report, Annual Comprehensive Financial Report (ACFR), the Sunnyvale Financing Authority Financial Report, Agreed Upon Procedure Reports, and the Report to the City Council Issued by the Independent Auditors, and Approve Budget Modification No. 10
Report
REPORT IN BRIEF
This report provides the year-end financial condition of the City of Sunnyvale on a budgetary basis for the fiscal year ending on June 30, 2025. In addition, the City’s audited Annual Comprehensive Financial Report (ACFR), Agreed Upon Procedure Reports (AUP), and Sunnyvale Financing Authority Financial Report for FY 2024/25 are being presented for Council and the Authority Board’s information.
The City’s ACFR and Sunnyvale Financing Authority Financial Report were independently audited by the firm of Maze & Associates (Maze), which rendered an unmodified (or “clean”) opinion and found no material weaknesses in internal control during the financial audit of the City. Receiving an unmodified opinion is the optimal outcome of an independent audit.
In addition, Maze performed three agreed-upon procedures (AUP) related to the Fiscal Administration of Public Funds. No material findings were noted in these reports.
Overall, the General Fund ended FY 2024/25 with a net positive impact of $16.8 million to the General Fund. General Fund revenues finished the year with a favorable variance of $8.3 million. Major revenues, such as Property Tax, Sales Tax, and Transient Occupancy Tax (TOT), accounted for most of the favorable variance. General Fund expenditures ended the year under the budgeted amount at approximately $8.5 million, which represents 2.7% of the General Fund budget net of project carryovers.
A budgetary summary of the Sunnyvale Financing Authority is also included in this report as is a summary of approved Administrative Budget Modifications made in FY 2024/25.
Staff recommends approval of Budget Modification No. 10, which includes General Fund clean-up items, as well as the appropriation of $16.8 million in savings and one-time revenues towards funding pension obligations, citywide infrastructure support, and the Civic Center Phase 2 Planning project for future library improvements. The remaining $1.4 million in net surplus would fall to the Budget Stabilization Fund to be programmed in upcoming budget cycles.
BACKGROUND
Each year, staff provides a report to Council detailing the City's year-end financial condition on a budgetary basis. The results are compared with the most recent revenue projections updated with the development of the FY 2025/26 Budget. Staff also reviews General Fund operating expenditures and the status of projects to date to identify expenditure savings, if applicable, and to provide the best estimate of the fund's FY 2024/25 financial position.
Additionally, each year, staff coordinates and facilitates the completion of the annual audit with an independent auditor. For the annual audit process, staff prepares several audit schedules and responds to audit queries. The auditor examines the City’s financial transactions and reviews records. The independent auditor conducts the audit in accordance with the auditing standards generally accepted in the United States of America and the Governmental Auditing Standards issued by the Comptroller General of the United States. Each year, upon completion of the audit, staff prepares the City’s ACFR and the Sunnyvale Financing Authority Financial Report, which include the auditor’s opinion and audited financial statements. Staff also engaged with the independent auditor Maze to perform Agreed Upon Procedures (AUP) to evaluate the City’s custody and control of the public funds.
EXISTING POLICY
City Charter, Article XIII, Fiscal Administration, Section 1305 (Budget Appropriations): All appropriations shall lapse at the end of the fiscal year to the extent that they shall not have been expended or lawfully encumbered. However, approved appropriations for Capital Improvement Projects shall not lapse at the end of the fiscal year unless the Capital Improvement Project has been completed and closed out or the City Council takes affirmative action to modify the budget appropriation for the Capital Improvement Project.
Pursuant to Sunnyvale Charter Section 1305, at any meeting after the adoption of the budget, the City Council may amend or supplement the budget by motion adopted by affirmative votes of at least four members so as to authorize the transfer of unused balances appropriated for one purpose to another, or to appropriate available revenue not included in the budget.
City Charter, Article XIII, Fiscal Administration, Section 1318 (Independent Audit): Requires that an independent audit be conducted of the City’s financial transactions at the end of each fiscal year. A final audit and report shall be submitted by a Certified Public Accountant to the City Council.
City Council Resolution No. 878-18, Section 5: All appropriations shall lapse at the end of the fiscal year to the extent that they shall not have been expended or lawfully encumbered.
Council Policy 7.1.1, Fiscal - Long Range Goals and Financial Policies G.1.7: The City Council shall be provided with periodic summary financial reports, by fund, comparing actual revenues and expenditures to budgeted amounts.
Council Policy 7.1.1, Fiscal - Long Range Goals and Financial Policies E.4.3 In years where there are one-time savings in the General Fund operating budget, a portion of those savings shall be prioritized to pay for unfunded Pension and OPEB Liabilities except where replenishing the Budget Stabilization Fund to maintain fiscal sustainability is needed.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” with the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.
DISCUSSION
Fiscal Year 2024/25 Year-End Financial Update
Staff have reviewed the City’s year-end financial results. The following is an analysis of the changes between the final budgetary amounts and the actual year-end results.
General Fund
Revenues
Comparison with Prior Year
When the Educational Revenue Augmentation Fund (ERAF) revenue is excluded, the City collected $268.1 million in General Fund revenue in FY 2024/25, which exceeded the final budget by $8.3 million.
Property Tax revenue growth reflects increases in the assessed valuation of both the residential and commercial/industrial sectors across the City, as well as changes of ownership and new construction. Year-over-year growth in Secured Property Tax revenue, the largest component of total property taxes, was $4.1 million. The net change in Secured roll growth was 5.3% when compared to FY 2023/24.
Sales Tax exceeded its revised projection by $3.4 million relative to the Final FY 2024/25 Budget of $40.8 million. The City’s medical/biotech sector and automobile sales (more specifically, used automobiles) continue to be significant sources of growth. Additionally, some of the gains can be attributed to economic activity as employees continue to return to work in the City.
The Public Safety Sales Tax (Proposition 172) is included in the Sales Tax category. This sales tax is a half-cent public safety tax set by a pro rata factor based on the County’s ratio of sales tax collections to the statewide total, which came in at $2.2 million.
At $20.9 million, Transient Occupancy Tax (TOT) came in at $0.7 million above its revised estimate of $20.2 million. TOT continued to approach pre-pandemic levels; the average room rate increased (8.1%) from $136 to $147, and occupancy experienced a slight increase from FY 2023/24 to FY 2024/25 (1.5%) from 62% to 63.5%. Also, tax exemptions for long-term stays and other tax-exempt stays have leveled out from FY 2023/24 to FY 2024/25.
Utility Users Tax came in $0.3 million below the revised estimate of $11.6 million. PG&E lowered gas rates for a portion of the year, resulting in an unanticipated reduction. With revenue of $8.5 million, Franchise Fees netted $0.7 million more than the prior year ($7.8 million), largely due to PG&E fees.
Construction Tax was slightly above its budget ($0.1 million) due to moderated development activity in FY 2024/25. Also, other development-related fees (i.e., General Plan Maintenance Fees, etc.) came in $0.2 million below revised projections.
Grants and Contributions also came in under budget by $0.2 million; however, it is common for grant receipts to cross fiscal years.
In addition, Transfers In/In Lieu Fees were under their revised projection of $1.6 million. This is primarily due to changes in the accounting process for leave benefit transfers resulting from the implementation of the Oracle Human Capital Management module of the City’s Enterprise Resource Planning (ERP) system. The budgeted transfer in from the Employee Benefits Fund was impractical, as the fund no longer received revenue from other funds to cover leave costs due to the process change. This differential will not be repeated in future years, as the transfer is not included in the FY 2025/26 Adopted Budget or in future years in the 20-year Resource Allocation Plan.
ERAF is local property tax revenue that is shifted to public school systems in each county to ensure a baseline level of funding. When the county auditors determine that the fund has enough money to meet the minimum state funding requirements for its public schools and community colleges, the remaining funds are returned to local governments. ERAF was originally budgeted at 70% of the County’s projection given variability in the final remittance and the uncertainty around a state revenue source. The City received $12.7 million in ERAF this fiscal year.
Expenditures
General Fund expenditures for the fiscal year ending June 30, 2025, are shown in Table 2.
The details of FY 2024/25 expenditures as compared to the budget are contained in Attachment 1 of this report, by fund.
General Fund department operating expenditures finished the fiscal year at $0.8 million under budget; however, several departments exceeded their General Fund budget. The Department of Public Safety (DPS) exceeded its operating budget by $3.3 million, primarily due to overtime costs. DPS is analyzing the drivers of its overtime usage and how to mitigate them while maintaining service levels. The Office of the City Attorney exceeded its budget by approximately $89,000, primarily due to a change in the benefit-costing methodology following the implementation of the ERP payroll module, which shifted from an additive rate estimate to actual costs. In the Public Works Department, the Parks program ran over budget by $0.5 million, mainly due to utility costs and higher water and electricity usage.
In addition to funding operations, the General Fund also provides funding for numerous capital, infrastructure, and special projects. Due to the long-term nature of these projects, unspent budget amounts are committed to the next fiscal year for those projects that are still in progress. Approximately $33.6 million of the $42.2 million in remaining budget at year-end is being carried forward to FY 2025/26 to cover project and equipment expenditures.
The General Fund project carryover is largely associated with Public Safety Recruitment ($8.4 million), remaining work and maintenance on Civic Center Modernization project ($2.6 million), replacement of the emergency generator at the Department of Public Safety ($2.2 million), as well as $2.4 million for transportation and other sustainability-related grant matching. One item of note is the return to fund of $4 million from Pavement Rehabilitation. Annually, Pavement Rehabilitation receives sufficient funding from other funding sources (i.e., Gas Tax, Road Maintenance and Rehabilitation Account (SB1) Fund) and did not need the budgeted level of General Fund support to complete the scheduled maintenance and repairs in recent years. With this return to General Fund Reserves, Pavement Rehabilitation and Sidewalk, Gutter, and Curb Replacement have a total remaining carryover amount of $10.7 million across all other funding sources.
The annual transfers to the Employee Benefits Fund cover the cost of the City’s unfunded accrued liability for pension costs and retiree medical costs. Prior to FY 2021/22, these costs were captured as part of salaries and benefits in department operating budgets. Given that the costs are primarily associated with former employees, they are now accounted for as a fund-to-fund transfer, though they remain an ongoing operating cost for the City. The planned transfers for FY 2024/25 were $41.6 million and occurred as planned.
Overall, expenditures in the General Fund ended $8.5 million under budget.
Final Fund Results
The final position of the General Fund is a positive variance of $16.8 million. It is important to note that the Final Budget figures include all approved Council adjustments through June 30, 2025. Due to the timing of the FY 2025/26 Adopted Budget, these figures may differ slightly from the estimates for FY 2024/25 used during budget development.
Table 3 summarizes FY 2023/24 General Fund revenue/expenditure results:
After FY 2024/25, $16.8 million is available for reappropriation. Staff recommends appropriating $8 million to the Pension Trust, $5 million to the Civic Center Phase 2 Planning project for future library improvements, $2 million to the Infrastructure Fund for infrastructure repair and modernization, and $1.4 million to the General Fund Budget Stabilization Fund Reserve to be considered with the FY 2026/27 budget process.
These recommended allocations are based on a number of fiscal considerations, however primarily designed to improve the long-term fiscal position of the City’s General Fund. Placing $8 million into the Pension Trust will help improve the projected low point in the Budget Stabilization Fund, further stabilizing current service levels and hedging against uncertainty. The second and third recommendations provide funding for a future library project and provide funding for other critical infrastructure like fire stations and the corporation yard. These recommendations leverage the one-time savings to support long-term fiscal stability and investments in critical infrastructure.
With persistent economic uncertainty and continual cost pressures, the City will continue to approach budget development by balancing resource availability and service delivery evaluation, strategic use of reserves, identifying additional revenue, and a disciplined approach to allocating resources over the short and long term.
Other Funds
In addition to the General Fund, other funds that warrant further discussion are highlighted below:
Park Dedication, Gas Tax, Capital Projects, and Infrastructure Funds
The Park Dedication, Gas Tax, Capital Projects, and Infrastructure Funds are used to fund capital, infrastructure, and special projects, as well as the maintenance of capital assets throughout the City. These projects are usually long-term in nature and take several years to complete. Therefore, every year many of these projects have unspent appropriations that will be used in the following fiscal year. Project costs are expensed directly from each associated funding source for its part of the project.
Ongoing projects in the Capital Projects Fund had unspent funds of approximately $50.5 million, of which most is being carried forward to FY 2025/26. The major ongoing projects utilizing this carryover funding include the Lakewood Branch Library Facility ($17.2 million), the Bernardo Avenue Caltrain Undercrossing ($7 million), the Stevens Creek Trail Extension W. Remington Avenue to W. Fremont Avenue ($4.3 million), and various transportation projects. Notably, many of the grant revenues budgeted for this year were not received, as these funds are available on a reimbursement basis and will be available to the City only after expenditures have been incurred. The projected grant revenues will therefore also be received in the following year.
In the Infrastructure Fund, there are $60 million in unspent project funds being carried over, primarily associated with Fire Station 2 - New Construction ($40.1 million), Civic Center Phase 2 Planning-Main Library ($15 million), Renovate Median Landscaping to Low Maintenance ($2.9 million), and Civic Center Modernization ($1 million).
Ongoing projects funded by Park Dedication Fee revenues account for about $51 million that will be carried forward to be spent in future years. Revenues in the Park Dedication Fund totaled $4.8 million, which is $4.5 million below the planned $9.3 million, primarily due to delays in development projects yielding revenue.
It is expected that this revenue will be realized in current and future fiscal years. Revenue collected in the Park Dedication Fund in FY 2024/25 is recorded as a fund balance in the two reserve accounts: Capital Projects Reserve and Land Acquisition Set-Aside Reserve. The City’s practice is to set aside 20% of the Park Dedication Fee revenue in a reserve designated explicitly for land acquisition and the construction of new parks, open space, trails, and other recreational facilities.
Development Enterprise Fund
The Development Enterprise Fund accounts for the revenues and expenditures associated with development activity throughout the City. The operating programs that support development activity span across multiple departments, with the largest programs in the Community Development and Public Works Departments. Development activity continued to moderate in FY 2024/25.
Revenue ended the year at $22.7 million ($1 million over the FY 2024/25 revised budget), and actual expenses were $22.6 million, which is $2.1 million under the original budget. The net fiscal impact is less growth in the Development Enterprise Reserve by approximately $2.4 million (after accounting for project carryover of $0.7 million) when compared with the FY 2024/25 revised budget. However, reserves remain robust and maintain a continued positive fund position.
Water Supply and Distribution Fund
The Water Supply and Distribution Fund accounts for the operations and capital expenditures for the City's water system. This fund receives the majority of its revenue from user fees collected from the City's water customers, with the remainder coming from development-related connection fees. Total water revenues were $66.3 million, which is $700,000 below the revised projection, primarily due to lower-than-projected connection fee revenue. Overall expenditures in the water fund were over budget by approximately $1.5 million, driven by higher water purchases due to increased usage. While overall fund revenues were lower than projected, revenue from water sales was higher than projected, and were sufficient to cover the increased cost of the water purchases.
Solid Waste Management and SMaRT Station® Funds
The Solid Waste Management Fund accounts for the operation of the City's solid waste collection and disposal system. Revenues are received from user fees and from the sale of recyclable materials. This fund's expenses primarily consist of charges for the Sunnyvale Materials Recovery and Transfer (SMaRT) Station operations, disposal fees at Kirby Canyon Landfill, and contractor payments to Bay Counties Waste Services (Specialty Solid Waste and Recycling) for the collection of garbage, food waste, yard trimmings, and recyclable materials. Revenues in this fund are driven primarily by the volume of material collected and, to a lesser extent, by curbside recyclables and recyclables diverted from the general waste stream. Fund expenses are partially driven by garbage volumes but are largely fixed costs for the collection system and SMaRT Station equipment and infrastructure.
Overall, the Solid Waste Management Fund revenues finished FY 2024/25 at $64.8 million, approximately $0.5 million above projection, while expenditures were approximately $0.6 million under budget. Accounting for ongoing project requirements, the reserve balance for this fund finished the year $1.1 million higher than expected when compared to the Final Budget.
The SMaRT Station fund accounts for revenues and expenses related to the operation of the SMaRT Station by the partner cities - Sunnyvale and Mountain View. Each city makes quarterly contributions to the fund on a budgetary basis. At the end of the year, the fund is reconciled, and each city either owes more or receives a refund based on its individual use of the facility. The SMaRT Station Operating Fund net position for the year ended as expected.
Wastewater Management Fund
The Wastewater Management Fund accounts for operations of the City's wastewater collection and treatment facilities. User fees account for the bulk of the revenues, with the remainder coming from connection fees and fees from the small area outside the City served by the wastewater system. Total revenues (including loan proceeds in FY 2024/25) were $157.9 million, which was $6.9 million lower than anticipated. This variance is attributable to lower-than-anticipated project expenditures, resulting in lower draws from the Cleanwater Program loans, which are treated as revenue.
The fund remains in good fiscal condition; however, its reserves ended $4 million lower than planned when accounting for ongoing project costs. While there were positive revenues and short-term operating and project savings, this fund has significant ongoing capital projects, including the Sunnyvale Cleanwater Program and other Wastewater infrastructure needs, which will continue to put pressure on the fund, resulting in a lower reserve balance.
Golf and Tennis Operations Fund
The Golf and Tennis Operations Fund accounts for revenues and expenditures related to the two City-operated golf courses and the tennis center. Activity in the fund remains strong, with golf, tennis, and pickleball usage continuing to drive revenue. Golf and Tennis revenues ended at approximately $5.8 million, approximately $186,000 above the revised projection. Expenditures totaled $6.4 million, which is approximately $135,000 higher than budgeted, primarily due to higher-than-anticipated needs for casual staffing, credit card fees, and utilities.
The fund’s ending position of $4.9 million will serve as a needed reserve balance. One of the significant actions taken by Council with the FY 2025/26 Budget was to stabilize the golf fund over the long term by increasing golf fees by 10% which will help keep the fund in a positive balance in the near term. The fund will continue to draw down reserves until a General Fund transfer is needed, anticipated to start in FY 2029/30.
General Services Fund
The General Services Fund accounts for the expenditures associated with the internal services provided by the City to user departments such as fleet management, building maintenance, technology/communication services, project administration, and the print shop. These activities are funded by charging rental rates to the operating programs that use the services. Overall, after considering project carryovers and project funds returned to the fund balance for reprogramming across the 20-year Financial Plan, the General Services Fund finished better than planned, primarily due to operating savings.
Employee Payroll & Benefits Fund and Liability and Property Insurance Fund
These two internal service funds provide a mechanism to cover expenditures for pension costs, insurance plans, workers’ compensation, leave time, and liability and property insurance, while applying the principles of full-cost accounting. It should be noted that year-over-year variances in collections, either over-collections or under-collections, are expected, and annual rate adjustments take this into account.
Revenues to the Employee Benefits Fund to cover the cost of employee benefits are collected from operating departments through a benefit rate charged to actual salary costs based on hours worked. The Employee Benefits Fund ended FY 2024/25 with reserves of $53.3 million, consistent with the adopted budget.
In FY 2024/25, the Liability and Property Insurance Fund came in $0.3 million under its budget. As there can be significant year-over-year variances in claims, the City budgets are based on the long-term historical average and anticipated upcoming claim settlement expenses. Additionally, the long-term financial plan ensures sufficient reserves are drawn down and replenished annually.
Annual Comprehensive Financial Report
City Charter Section 1318 requires that “[a]t the end of each fiscal year, a final audit and report shall be submitted by a Certified Public Accountant to the City Council.” The City’s Annual Comprehensive Financial Report (ACFR) is prepared annually to meet this requirement and is submitted to Council as Attachment 8 to this report.
The ACFR, which is prepared in the format prescribed by the Governmental Accounting Standards Board (GASB), contains the Independent Auditor’s Report, Management’s Discussion and Analysis, Basic Financial Statements with Notes and Required Supplementary Information, Supplementary Information, and the Statistical Section.
The City’s independent audit was performed by the firm of Maze & Associates (Maze), which rendered an unmodified opinion on the City’s ACFR. Receiving an unmodified opinion is the optimal outcome of an independent audit.
Pursuant to GASB Statement No. 68, the City’s net pension liability represents unfunded pension obligations and is presented as a liability on the statement of net position. The Net Pension Liability line totaled $444.3 million as of June 30, 2025, which decreased by $24.1 million from the prior fiscal year. The decrease was mainly due to CalPERS’ investment returns coming in significantly higher than its assumed discount rate (11.6% vs 6.8%).
Through the City’s long-term financial planning process, Sunnyvale began addressing the liability many years ago, with contributions to CalPERS above the required level and funding a pension uncertainty reserve to continue addressing the liability into the future. In addition, a Section 115 Pension Trust (Trust) was established in May 2018 that is managed by investment professionals and owned by the City. The Trust received contributions of $6 million during FY 2024/25, including an annual payment of $2 million and an additional $4 million from prior-year General fund budget savings. This staff report recommends an additional $8 million contribution from FY 2024/25 year-end surplus.
The current 20-year plan includes a $2 million annual contribution to the Trust through FY 2025/26 to accumulate funds to fund future pension liabilities. Pension costs are expected to peak in FY 2030/31, and staff anticipates drawing down the Pension Trust funds to help cover these liabilities at that time. Each year, staff revisits pension costs with Council during the annual budget process to make adjustments based on CalPERS's most recent financial performance. This process will continue with the FY 2025/26 Recommended Budget.
The GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, into effect in FY 2017/18. Consequently, the City began reporting its net Other Post-Employment Benefits (OPEB) liability on the Statement of Net Position. With the requirement to disclose the OPEB liability, the City began funding the OPEB Trust Fund in 2011. As of June 30, 2025, the reported net OPEB liability was $29.1 million, a decrease of $8.7 million from the prior year. The OPEB liability reporting standard is parallel to the pension liability reporting standard (GASB Statement No. 68) and does not require changes to the City’s plan to fund its OPEB liability. Nonetheless, the City continues to budget the full annual required contribution in the short term and over the long-term plan until the OPEB liability is fully funded, which is anticipated to occur in FY 2027/28. At that point, the City will be able to begin drawing on the Trust to fund current/future obligations
Auditor’s Report to the City Council
As part of the City’s annual external audit, Maze reviews and comments on the City’s internal control over financial reporting for the audit of the financial statements. The comments are intended to advise management of the existence of any material weaknesses in the City’s internal controls. In addition, the report aids City staff in improving its operational records and communicates other advisory information, such as future accounting and reporting requirements, that may affect the City.
No material weaknesses were noted by Maze in the City’s internal controls. A material weakness is a significant deficiency, or combination of deficiencies, in internal controls such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis. The report is provided as Attachment 7.
Agreed Upon Procedure Reports
City staff engaged Maze to perform Agreed-Upon Procedures reviews to evaluate internal controls related to the fiscal administration of public funds. The reviews were conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Thirteen cash collection sites and three programs were selected for review in FY 2024/25. Accordingly, Maze issued three reports (Attachments 4, 5, and 6). Three programs - (1) Accounts Payable Policies and Procedures, (2) ACH and Wire Transfers Policies and Procedures, and (3) Department of Public Safety Change Funds Policies and Procedures - were selected for review. Maze conducted the reviews in accordance with the agreed-upon procedures for these three programs, and no exceptions were noted.
Surprise cash counts were conducted on thirteen sites. No material exceptions were noted for the cash counts.
Sunnyvale Financing Authority Report
The Joint Exercise of Powers Agreement creating the Sunnyvale Financing Authority by and between the City of Sunnyvale and the former Redevelopment Agency of the City of Sunnyvale requires that “the Controller of the Authority shall either make, or contract with a certified public accountant or public accountant to make, an annual audit of the accounts and records of the Authority…a report thereof shall be filed as a public record with each of the Member Agencies.” The Sunnyvale Financing Authority Report is prepared annually to meet this requirement and is submitted to the Council as Attachment 3 to this report.
The Sunnyvale Financing Authority Report, which is prepared in the format prescribed by the Governmental Accounting Standards Board (GASB), contains the Independent Auditor’s Report, Management’s Discussion and Analysis, Basic Financial Statements, and the Notes to Basic Financial Statements.
Administrative Budget Modifications
Administrative budget modifications are specific budget changes that do not require public approval or appropriation by the City Council. The City Manager may appropriate grants up to $100,000 that are also free of local match requirements and do not obligate the City to ongoing expenses not already planned in the City’s Resource Allocation Plan. Attachment 2 summarizes the Administrative Budget Modifications approved by the City Manager in FY 2024/25, totaling $256,676 in unanticipated grant revenue.
FISCAL IMPACT
Receipt of the ACFR, Sunnyvale Financing Authority Report, AUP reports and the Report to Council issued by the Independent Auditors has no fiscal impact.
The report of each fund’s results is discussed in detail in the body of this report. Each 20-Year Financial Plan will be rebalanced based on actual FY 2024/25 performance as part of FY 2026/27 budget development.
Budget Modification No. 10 has been prepared to provide General Fund clean-up items related to Public Safety mutual aid and reallocation of General Fund savings and one-time revenues.
General Fund Clean-Up Items
Public Safety Mutual Aid Response
In FY 2019/20, DPS created two special projects: 835150 - DPS Reimbursable Mutual Aid to capture the cost of mutual aid response and 835160 - DPS Police Services Contract Overtime to capture police contract overtime. The projects mitigate the impact of mutual aid deployment and contract overtime costs on the DPS operating budget. They also provide a mechanism for effectively tracking and verifying reimbursement, particularly when the cost is incurred in one fiscal year and the reimbursement is received in another.
Because actual costs are unknown and funding for the project is reimbursement, there is no budget appropriation. DPS completes an annual reconciliation of project costs versus revenue in support of a budget modification that will appropriate expected revenue and expenditures annually to the project to “true up” the budget versus actual revenue and expenses. The amount requested is $445,558 for Project 835150. For FY 2024/25, Project 835160 does not require any appropriation.
Redevelopment Agency Counsel Fees
In FY 2015/16, a project was created to account for all continuing legal costs associated with Successor Agency litigation concerning redevelopment dissolution issues. The budget was overspent in FY 2024/25 and in the prior year, which requires a clean-up amount of $3,894. This project will be continually monitored and will be re-evaluated in next year’s project budget cycle.
Cities Association of Santa Clara County Fiscal Agent Services
The City has entered into a two-year agreement with the Cities Association of Santa Clara County (CASCC) to perform fiscal agent support services. The estimated cost for FY 2025/26 is $10,000, which will be recovered from CASCC through an agreed-upon fee. The funding will be appropriated in a New Project - Cities Association of Santa Clara County Fiscal Services for cost monitoring and accounting purposes.
Reallocation of General Fund Year-End Surplus
Pension Trust
Staff recommends appropriating a total of $8 million towards funding the City’s Section 115 Pension Trust. The transfer to the Pension Trust would allow the City to retain control of those funds and accrue interest earnings in the trust through investments made under the City’s policies.
Civic Center Phase 2 Planning - Main Library
When the Civic Center Modernization Master Plan was adopted in 2018, Phase 2 included a new Main Library, a playground, and site improvements. In recognition of the continued need to improve library facilities, $5 million is recommended for appropriation toward the project.
Continued City Infrastructure Support
The City’s infrastructure serves as a critical foundation for delivering essential services to the community. In line with established policy, the City prioritizes investing in the repair and replacement of existing assets to ensure reliability and sustainability. To support this commitment, staff recommends appropriating $2 million to advance ongoing renovation and repair efforts and address the increasing costs associated with maintaining and modernizing infrastructure.
The remaining balance of $1,377,313 would fall to the General Fund BSF Reserve to be considered with the development of the FY 2026/27 budget.
Budget Modification No. 10
FY 2025/26
|
|
Current |
Increase/ (Decrease) |
Revised |
|
|
|
|
|
|
General Fund |
|
|
|
|
Funding Uses |
|
|
|
|
Project 835150 - DPS Reimbursable Mutual Aid (Out of County) |
$0 |
$445,558 |
$445,558 |
|
|
|
|
|
|
Project 831320 - RDA Counsel Fees |
$187 |
$3,894 |
$4,081 |
|
|
|
|
|
|
New Project - Cities Association of Santa Clara County Fiscal Services |
$0 |
$10,000 |
$10,000 |
|
|
|
|
|
|
Project 834710 - Civic Center Phase 2 Planning - Main Library |
$15,000,000 |
$5,000,000 |
$20,000,000 |
|
|
|
|
|
|
Transfer to Fund 3201 - Infrastructure Fund |
$5,643,000 |
$2,000,000 |
$7,643,000 |
|
|
|
|
|
|
Additional CalPERS contribution |
$0 |
$8,000,000 |
$8,000,000 |
|
|
|
|
|
|
General Fund Budget Stabilization Reserve |
$108,608,498 |
$1,377,313 |
$109,985,811 |
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the City Hall reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
ALTERNATIVES
City Council:
1. Receive and File the FY 2024/25 Budgetary Year-End Financial Report, Annual Comprehensive Financial Report (ACFR), the Sunnyvale Financing Authority Financial Report, Agreed Upon Procedure Reports, and the Report to the City Council Issued by the Independent Auditors, and Approve Budget Modification No. 10.
2. Other action as directed by Council.
Sunnyvale Financing Authority:
3. Receive and File the FY 2024/25 Sunnyvale Financing Authority Financial Report.
4. Other action as directed by the Financing Authority.
STAFF RECOMMENDATION
Recommendation
Staff Recommends Alternative 1 for the City Council, and Alternative 3 for the Sunnyvale Financing Authority:
City Council
1. Receive and File the FY 2024/25 Budgetary Year-End Financial Report, Annual Comprehensive Financial Report (ACFR), the Sunnyvale Financing Authority Financial Report, Agreed Upon Procedure Reports, and the Report to the City Council Issued by the Independent Auditors, and Approve Budget Modification No. 10.
Sunnyvale Financing Authority
3. Receive and File the FY 2024/25 Sunnyvale Financing Authority Financial Report.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $500 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html <http://www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html>
An ”X” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
___ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
_X_ General policy and legislative actions
*“Competitively bid” means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: Kurtis Mock, Budget Manager
Reviewed by: Dennis Jaw, Assistant Director of Finance
Reviewed by: Matt Paulin, Director of Finance
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. Year-End Budgetary Report by Fund
2. Administrative Budget Modifications Summary
3. FY 2024/25 Sunnyvale Financing Authority Report
4. FY 2024/25 Sunnyvale Cash and Accounts Payable AUP
5. FY 2024/25 Sunnyvale Cash and ACH/Wire Transfers AUP
6. FY 2024/25 Sunnyvale Cash and DPS Investigation Change Funds AUP
7. FY 2024/25 Auditor’s Report to City Council
8. Annual Comprehensive Financial Report