2025-city-of-oakland-acfr_final-123025.pdf

The FY 2025–27 budget represents a shift toward more sustainable fiscal practices by balancing ongoing General Purpose Fund expenditures with ongoing revenues, rather than relying on one-time funding sources. The budget is also accompanied by a multi-year Roadmap to Fiscal Health that outlines strategies to restore financial stability, improve accountability, and position the City to meet future service obligations and financial challenges. Looking ahead, the City remains focused on long-term fiscal sustainability through continued expenditure discipline, diversification of the revenue base through future voter-approved measures, and targeted economic development efforts. The Five-Year Financial Forecast In May 2025, the City issued a Five-Year Financial Forecast for Fiscal Years 2025-26 through 2029-30. The purpose of the Five-Year Financial Forecast is to help the City of Oakland make informed financial and operational decisions by better anticipating long-term future revenues, expenditures, and financial risks. The forecast issued in May 2025 was a point in time projection and highlighted significant and growing fiscal challenges driven by structural imbalances between ongoing revenues and expenditures. Addressing these challenges will require continued fiscal discipline, structural reforms, and thoughtful long-term planning. Consolidated Fiscal Policy On December 9, 2014, the City Council passed Ordinance No. 13279 C.M.S. amending the City’s Financial Policy to add the Rainy Day Policy and consolidate all the City’s fiscal policies into a single Consolidated Fiscal Policy (CFP). This amendment allowed the City to establish a reserve fund (Vital Services Stabilization Reserve) to stabilize the provision of vital services, protect against service reductions, and prevent layoffs, furloughs, and similar measures in times of economic hardship. Additionally, this policy addressed procedures that allow for accelerating debt repayment and paying down unfunded long-term obligations by modifying the definition of excess Real Estate Transfer Tax. The CFP includes policies on budgeting practices, reserve funds, the budget process, fiscal planning, and public participation. On May 15, 2018, the City Council passed Ordinance No. 13487 C.M.S. amending provisions related to the use of excess Real Estate Transfer Tax (RETT), adding new requirements intended to reduce the potential for future increases in negative fund balances, and revising various budget procedures. These City policies include provisions for the use of reserves during emergencies. As of June 30, 2025, the Vital Services Stabilization Reserve had a balance of close to $0. These funds were previously utilized to preserve vital services and address the projected deficit for the FY 2023-25 Biennial Budget. The City expects to restore the Vital Services Stabilization Reserve from future one-time revenues. On June 24, 2021, the City Council passed Resolution No. 88717 C.M.S., establishing the General Purpose Fund Emergency Reserve as a separate subfund of the City's General Fund. The resolution also appropriated an amount equal to 7.5% of FY 2021-22 GPF appropriations to this new fund. Prior to the adoption of this resolution the City measured its emergency reserve as the unassigned fund balance in the GPF, its chief operating subfund within the General Fund. As of June 30, 2025, the City’s standalone General Purpose Fund Emergency Reserve has a balance of $63.8 million and unassigned fund balance in the GPF is $34.6 million, resulting in total General Fund reserves of $98.4 million, exceeding the minimum reserve required under the City's CFP. OPEB Funding Policy On February 26, 2019, the City Council adopted Resolution No. 87551 C.M.S. establishing the Other Post-Employment Benefits Funding Policy, which provides for ongoing prefunding contributions of 2.5% vi