Glendale City Council approves $20 million transfer from utility surplus to general reserve fund
The Glendale City Council voted 4-1 Tuesday to again transfer a portion of Glendale Water & Power funds to the city’s General Reserve Fund directly from a surplus.
The decision continues a modified accounting practice mandated in 2016 by a Los Angeles Superior Court judge who ruled a previous fund transfer practiced by the city breached its own charter.
Councilman Vrej Agajanian cast the dissenting vote.
The city will transfer an estimated $20 million from the Electric Works Surplus Fund — or about 10% of the Electric Works Budgeted Operating Revenue — to the General Reserve Fund. The money will eventually make its way to the General Budget Fund, according to city documents.
Previously, the city made its annual transfers from the Electric Revenue Fund directly to the city’s General Fund between 2010 and 2014, but in a ruling last year, Judge James Chalafant found that the money should have instead been moved from Glendale Water & Power’s surplus fund to the city’s General Reserve Fund, after the conclusion of a 2014 lawsuit filed by the Glendale Coalition for Better Government.
Shortly after, in June, council members voted to approve the 2015-16 annual transfer under the procedure Chalfant ruled should be followed.
The Glendale City Charter requires up to 25% of the utility’s operating revenue fund be transferred to the General Reserve Fund as long as the utility is in a fiscally strong position.
Since at least fiscal year 2012-13, the city has adopted a resolution that sets a lower percentage — roughly no more than 12.7% — and the percentage has declined over time.
Still, the transfer amount has remained at around $20.5 million because of revenue growth, according to City Manager Scott Ochoa.
Before the resolution vote Tuesday, Frank Gallo, a board member with the coalition, asked Ochoa how much money is being set aside to account for utility depreciation before the transfer into the the General Fund.
“[The coalition is] very concerned with that because we have seen that, in the past, money has been transferred without money put aside for depreciation,” Gallo said.
According to the city charter, before transferring money to the General Reserve Fund, the city must set aside a separate fund that “shall be sufficient to meet the normal depreciation of such electric works” and “each of such funds shall be used only for the repair, replacement, betterment and extensions of the plants and equipment of the waterworks or electric works.”
The city ceased the transfer of monies from its Waterworks Revenue Fund in 2011.
Ochoa pointed to capital investment funds for the utility and said the the city has a “robust” replacement program for its infrastructure.
“One of the items that gets mischaracterized is that the city doesn’t put money into infrastructure. Quite the contrary, particularly when you look at the two bonds that were sold over the last several years … You’ve had a very significant investment in the depreciation of the utility,” Ochoa said.
Twitter: @JeffLanda
