Union claims that the City of Palo Alto has $22 million in unrestricted reserves are "just plain wrong" the City's chief financial officer said today.
“Palo Alto, like most cities across our country today, is seriously being affected by the economy,” said Lalo Perez, Director of Administrative Services. “There is no $22 million reserve. I wish there were. But it is important that employees and the community understand our City’s critical financial status,” Perez added.
Perez explained that the $22 million figure comes from the published Comprehensive Annual Financial Report (CAFR) as of June 30, 2008. The $22 million represents the totals of the Vehicle, Technology and General Benefits Internal Service Funds that are listed at http://www.cityofpaloalto.org/civica/filebank/blobdload.asp?BlobID=17034 , on the “Unrestricted Net Assets” line on page 123 of the CAFR. The majority ($17.1 million) of the funds were already contractually obligated, appropriated or budgeted. The actual balance in these funds as of that date was $4.9 million.
This $4.9 million needs to be available to handle cost fluctuations that run over estimates or emergencies in those funds. Additionally, the $4.9 million belongs to all funds, not just the General Fund. Prudent financial management practices dictate that one-time funding not be used to solve on-going, recurring financial needs. Perez pointed out that these reserve funds were used for such things as workers’ compensation claims, specialty vehicles for utility work, technology infrastructure and software systems.
“The situation we face now is not a short-term budgetary problem, but a systemic one. To help make progress in the ongoing contract negotiations with SEIU, the City wants to set the facts straight,” added Perez. “We can’t spend money we don’t have – otherwise we’ll end up in the same situation as the State of California. No one wants to see that happen.”
