ITEM TITLE:
#25-55 - Amending the 2025 City Budget by Transferring $5,083,353 of Debt Service Fund Balance to the Projects Planning Reserve
SUBMITTED BY: Jordan Nelson, Finance Director
FISCAL NOTES:
Expenditure Required: $5,083,353
Unencumbered Balance: $5,083,353
Funding Source: Debt Service Fund Balance
RECOMMENDATION:
Approve
SUMMARY STATEMENT:
This resolution sweeps fund balance from Debt Service Fund to the CIP Planning Reserve for further appropriation in the 2026 Budget as directed by City Council during the 2026 Budget Work Sessions.
A debt service fund’s balance should ideally be zero, as they exist only to account for resources used to service debt.
Fund Balance Policy will address this issue in the future and will compel the reduction of transfers to Debt Service Fund by the amount held in Debt Service Fund Balance during the adoption of the City’s Annual Operating Budget
Appendix; how we got here:
-In State Fiscal Year (SFY) 2022, the State of Alaska fully funded the School Bond Debt Reimbursement program for SFY22 and years prior. For the City of Valdez that meant the following reimbursement schedule:
• SFY2017 $352,091
• SFY2020 $845,273
• SFY2021 $1,638,866
• SFY2022 $1,040,328
-The City FY22 Budget reflected $590,994 for Debt Service during SFY2022
• Therefore, the total received above budget in FY22 was $3,285,564 bringing Debt Service Fund balance to $4,099,578 according to 2022 Audited Financial Statements.
-Subsequently, State of Alaska also funded prior year Harbor Debt Reimbursement pursuant to House Bill 528 effective SFY25. City of Valdez receipts totaled $607,375 over FY24 and FY25 throughout the course of State Fiscal Year (SFY) 25.
-Revenue received above budget and interest income over subsequent years has increased fund balance to $5,083,353.