Item 25 - Public Hearing - Fiscal Year 2025-26 City Budget

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CITY COUNCIL ADOPTED POLICIES Annual Statement of Investment Policy (Adopted June 3, 2025)- Finance staff continually analyzes the City’s investment portfolio and act to safeguard assets and maintain liquidity, while earning a reasonable rate of return. Treasury staff conducts an annual review of the City’s Policy document to evaluate compliance. This analysis includes the review of applicable Federal and State regulations, industry standards, and best practices to determine if any enhancements or newly adopted rules and regulations are required to be incorporated within the document. As a result, periodic revisions to the investment policy are recommended to the City Council which adopts the policy annually. Unfunded Employee Pension Liability Cost Reduction Policy (Adopted February 2, 2021)- With a continuous rise in pension costs, the City explored alternatives to reducing pension liability. Establishing a City Policy was the first step in addressing pension liability which included two strategies: 1) Contribute more than required to reduce the accrual of interest; or 2) Refinance the liability, which is a legal debt of the City, at a lower interest rate. The outcome of this policy led to the City refinancing a portion of its unfunded liability costs in 2022, with estimated long-term savings of $138 million. Debt Management Policy (Adopted February 6, 2018)- The City’s Debt Management Policy is intended to comply with California Government Code Section 8855(i), which requires municipalities that issue debt to develop and apply debt management policies to ensure that debt is issued and managed prudently. The policy applies to all the Santa Ana Issuers, which include the City of Santa Ana, the Santa Ana Financing Authority, and the Successor Agency to the Santa Ana Redevelopment Agency. Budget & Reserve Policy (Adopted March 16, 2021)- The Budget and Reserve Policy provides direction on balancing the budget (e.g., General Fund), information to support long-range financial decisions, and reserve requirements. The General Fund is the City’s discretionary fund and provides for numerous activities such as Parks and Recreation Programs, Library Services, and Public Safety. The current minimum reserve is 18% of annual recurring revenue and is projected to be $74.5 million for FY25-26 in accordance with this policy. City Council may elect to fund recurring costs with non- recurring costs only after declaring an emergency and developing a plan to restore the funds to the target reserve level. Other target reserve levels are established for internal service funds and reevaluated annually. The policies in this section are based on longstanding City policies and practices, and recommendations developed by the National Advisory Council on State and Local Budgeting whose founding members include the International City and County Managers Association (ICMA), Government Finance Officers Association (GFOA), and California Society of Municipal Finance Officers (CSMFO). They are presented in the following order: City Council Adopted Policies Internal Policies Standard Operating Procedures