REPORT TO COUNCIL
SUBJECT
Title
Action on a Proposed Reallocation of the General Fund Reserve for Future Uses, Elimination of Senior Center Membership Fees for Residents, Issuance of Credits for Senior Memberships Paid Between July 1, 2026 and October 20, 2026, and Approval of Related Budget Amendments Including an Allocation of Funds for Senior Center Facility Repairs
Report
BACKGROUND
As reported in the Monthly Financial Reports during FY 2025/26, General Fund revenues tracked above budgeted levels and expenditures ended the year below budget. A portion of this higher revenue and expenditure savings ($19.6 million) was assumed and programmed in the FY 2026/27 Adopted Budget. These funds allowed for additional investments, including a transfer to the new Infrastructure Replacement Capital Fund and funding for the Pension Trust contribution, as well as the carryover of unspent funds from FY 2025/26 to FY 2026/27 to complete projects. Additionally, as part of the April Monthly Financial Report, approved by the City Council on June 23, 2026, an additional $20.0 million was set aside to establish a new Reserve for Future Uses in the General Fund.
At the June 23, 2026 City Council meeting, staff brought forward Report to Council 26-663 (Attachment 1) to discuss possible allocations of the additional funds set aside in the Reserve for Future Uses, including the following:
* Transfer to the Infrastructure Replacement Capital Fund: Increase the transfer by $7.0 million (from $10.4 million to $17.4 million). This would bring the Infrastructure Replacement Capital Fund reserve to 5% of General Fund expenditures in FY 2026/27.
* Increase the Capital Projects Reserve: Increase the Capital Projects Reserve (CPR) by $5.4 million (from $12.5 million to $17.9 million). These funds would be available to address capital project needs throughout the City.
* Transfer to the Convention Center Capital Fund: Establish a transfer of $7.6 million to the Convention Center Capital Fund to fund priority projects in FY 2026/27. Capital needs of $13.8 million have been identified for the Convention Center over the next five years. Given the significant capital needs for this facility, funding from the General Fund was recommended. Staff would also continue to work with OVG360 (Oak View Group), the Convention Center operator, to determine if there is any additional funding available from annual net income to support capital projects.
The report also included additional information regarding Senior Center membership fees and operations at the Senior Center. The feedback from the City Council and public on these items are addressed as part of this report.
At the June 23rd meeting, the City Councilmembers expressed various concerns regarding the proposed allocation to the Convention Center Capital Fund. These included whether there was a funding plan in place to address the Center’s aging infrastructure without using the General Fund and questions around the financial status of the Convention Center operations. Additionally, determining how much General Fund funding should be provided to the Center for these capital needs was discussed, with feedback to balance the core infrastructure and safety needs with some cosmetic renovations to help generate and attract more business at the Convention Center.
DISCUSSION
Given the feedback at the June 23rd meeting, staff has revised its recommendation of the use of the $20.0 million. Staff is not recommending the allocation of funding to the Convention Center Capital Fund at this time. Potential action on the use of General Fund reserves for the Convention Center capital needs will be brought forward separately, after completion of the Convention Center financial reports.
At the meeting, there was also discussion regarding potential funding for immediate needs at the Senior Center (described below).
Staff recommends the transfer to the Infrastructure Replacement Capital Fund ($7.0 million), a transfer of $455,000 to the Parks and Recreation Capital Fund, with the remaining balance to be set aside in Capital Projects Reserve ($12.55 million). A portion of the funds set aside in the CPR could be allocated to the Convention Center based on the completed analysis for the Center that will be brought forward to Council at a later date. The revised recommendation is summarized below.
Allocation of the $20 Million Reserve for Future Uses
(Revised Recommendation)
|
Item |
June 23, 2026 Recommendation |
October 20, 2026 Recommendation |
Difference |
|
Infrastructure Replacement Capital Fund |
$7.00 M |
$7.00 M |
$0 |
|
Capital Projects Reserve |
$5.40 M |
$12.55 M |
$7.15 M |
|
Transfer to Convention Center Capital Fund |
$7.60 M |
$0* |
($7.60 M) |
|
Transfer to the Parks and Recreation Capital Fund |
$0 |
$0.45 M |
$0.45 M |
|
Total |
$20.00 M |
$20.00 M |
$0 |
* An allocation from the Capital Projects Reserve may be recommended at a future date.
Senior Center
During the June 23rd City Council meeting, additional information was provided regarding the Senior Center membership fees, aquatic facility hours, and rehabilitation of the Senior Center facility. Both the City Councilmembers and members of the public provided feedback and shared concerns around these topics.
Given the Council and community comment, staff recommends eliminating the resident membership fees for both the basic and premium tiers, effective immediately upon City Council approval of this staff report.
If the elimination of the fees is approved, the Parks and Recreation Department would implement the change by updating its registration system and updating customer-facing materials, including the City website, membership forms, brochures, newsletters, and facility signage. Staff would also develop frequently asked questions regarding the effective date, renewal process, and refunds, if applicable. Implementation will require staff time and limited printing and reprinting costs, which will be absorbed within the Department's existing operating budget.
A policy determination will also be needed regarding existing paid memberships. Staff has identified three potential approaches:
1) Senior Center memberships remain valid through their current expiration date, with renewals processed at no cost thereafter. No refunds or credits are provided under this option.
2) Prorated or full refunds are provided for the Senior Center membership fees. This option would require significant administrative effort and is not recommended. If refunds are directed by the Council, staff would need to process a substantial number of transactions, including issuing City refund checks for patrons who paid by cash, check or whose credit card information is no longer valid.
3) A credit on the membership holders’ account is provided for memberships purchased from July 1, 2026 through the effective date of the fee change. This credit could be applied to other fitness or recreational programs and is recommended to be valid for use until June 30, 2027. By setting these effective dates, the change in Senior Center membership fees aligns with the current fiscal year without requiring any retroactive credits spanning multiple fiscal years. This option is included in the staff recommendation.
Staff will also monitor participation levels following implementation, as eliminating the membership fee may increase utilization of the Senior Center. This, in turn, may result in additional operating costs, including staffing, custodial services, supplies, and program support. These fiscal impacts would be evaluated and addressed through future budget development.
As discussed, there has been a nationwide lifeguard shortage and staff is working diligently to address concerns around this area. The Parks and Recreation Department will continue year-round lifeguard recruitment while increasing outreach efforts at local high schools, colleges, and citywide events. Staff will also explore recruiting qualified lifeguards working in neighboring agencies. Staff will coordinate closely with the Human Resources Department (HR) to help ensure applications are processed in a timely manner. By late summer, the Parks and Recreation Department anticipates having 22 lifeguards available to support current aquatics programs, consistent with staffing levels during the same period last year. Increasing Senior Center Natatorium swim hours on Tuesdays, Thursdays, and Fridays will require eight additional lifeguards.
The Parks and Recreation Department continues to work with HR to evaluate the City's lifeguard positions relative to the City’s minimum wage and the local market. Lifeguards are required to obtain specialized certification and complete approximately 27-30 hours of training and currently start at $18.70 per hour. The Department is working with HR on potential wage adjustments for as-needed employees, including an updated salary schedule proposal to be considered in advance of the City’s minimum wage increase in January 2027. However, these efforts remain under review. Additionally, as-needed employees are required to complete 2,080 hours in the classification before becoming eligible for a salary adjustment. This threshold can be difficult for aquatics staff to achieve due to their as-needed and seasonal schedules and may affect employee retention. Staff will continue working with HR to evaluate options for both starting wages and longer-term wage progression for as-needed employees, including lifeguards.
Following further evaluation with HR, if additional funding is needed to implement any proposed changes, staff will coordinate with Finance to bring forward the appropriate budget amendment request for City Council consideration and approval.
Staff is also working on the Senior Center Natatorium HVAC project, and an agreement for the HVAC rehabilitation which will be brought forward separately for City Council approval.
The Parks and Recreation Department has identified the Senior Center Multipurpose Room as a priority for facility improvements. The room is part of the original facility constructed in 1972 and is one of the most heavily used areas of the Senior Center, supporting the Daily Nutrition Program, Senior Dances, community gatherings, and other programs. Due to the age and condition of the room, staff recommends addressing the necessary improvements comprehensively.
The preliminary scope includes various repairs including the roof, interior doors, and flooring. Staff also plans to remove wall treatments and update the painting, acoustic paneling, light fixtures, ceiling finishes, and window treatments. Work also includes updates to the audio-visual equipment and other furnishings. In coordination with the Facilities Division of the Department of Public Works, staff has determined an estimated cost of $455,000 for the proposed scope of work. This estimate is based on the 2018 Kitchell Report, with an annual 5% escalator.
As approved by voters in November 2024, the Public Facilities and Infrastructure Bond Measure (Measure I) will provide funding of $9.5 million for the Senior Center Expansion/ Rehabilitation project; however, this funding is planned in a future tranche.
While staff is recommending allocation of General Fund Capital Projects Reserve funding to support this Senior Center renovation project, there is a potential of reimbursement of bond eligible expenses to the CPR upon receipt and appropriation of a future Measure I General Obligation Bond tranche.
ENVIRONMENTAL REVIEW
The actions being considered do not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to section 15378(b)(4) of Title 14 of the California Code of Regulations in that they are fiscal activities that do not involve any commitment to any specific project which may result in a potential significant physical impact on the environment.
FISCAL IMPACT
With the proposed elimination of the resident Senior Center membership fees, the fiscal impact is estimated at $92,000, which would require an increase to the General Fund’s subsidy of the Senior Center and its respective programs. Given the City’s improving financial forecast, staff does not anticipate significant impact to services.
Of the $20.0 million that was approved to be set aside in the Reserve for Future Uses, staff recommends transferring $7.0 million to the Infrastructure Capital Replacement Fund and allocating $12.5 million to the General Fund’s Capital Projects Reserve. The remaining $455,000 is recommended to be transferred to the Parks and Recreation Capital Fund for the Senior Center Renovation project. The amendments are detailed in the table below.
Budget Amendment
FY 2026/27
|
|
Current |
Increase/ (Decrease) |
Revised |
|
General Fund |
|
|
|
|
Transfer To |
|
|
|
|
Infrastructure Capital Replacement Fund |
$10,420,000 |
$7,000,000 |
$17,420,000 |
|
Parks and Recreation Capital Fund |
$489,000 |
$455,000 |
$944,000 |
|
|
|
|
|
|
Ending Fund Balance |
|
|
|
|
Capital Projects Reserve |
$12,031,732 |
$12,545,000 |
$24,576,732 |
|
Reserve for Future Uses |
$20,000,000 |
($20,000,000) |
$0 |
|
|
|
|
|
|
Infrastructure Replacement Capital Fund |
|
Transfer From |
|
|
|
|
General Fund |
$10,420,000 |
$7,000,000 |
$17,420,000 |
|
|
|
|
|
|
Fund Balance |
|
|
|
|
Unrestricted |
$10,420,000 |
$7,000,000 |
$17,420,000 |
|
|
|
|
|
|
Parks and Recreation Capital Fund |
|
Transfer From |
|
|
|
|
General Fund |
$489,000 |
$455,000 |
$944,000 |
|
|
|
|
|
|
Expenditure |
|
|
|
|
Senior Center Facility Repair Project |
$0 |
$455,000 |
$455,000 |
COORDINATION
This report has been coordinated with the City Attorney’s Office and the Parks and Recreation Department.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Approve the elimination of the resident fees for the Senior Center, effective immediately;
2. Approve account credits for the residents that have paid Senior Center membership fees between July 1, 2026 through October 20, 2026, to be applied to other fitness or recreational programs through June 30, 2027; and
3. Approve the following FY 2026/27 budget amendments:
a. In the General Fund, increase the transfer to the Infrastructure Replacement Capital Fund in the amount of $7,000,000, increase the transfer to the Parks and Recreation Capital Fund in the amount of $455,000, increase the Capital Projects Reserve in the amount of $12,545,000, and decrease the Reserve for Future Uses in the amount of $20,000,000 (five affirmative Council votes required for the use of unused balances);
b. In the Infrastructure Replacement Capital Fund, recognize the transfer from the General Fund in the amount of $7,000,000 and increase the Reserve for Capital Improvements in the amount of $7,000,000 (five affirmative Council votes required to appropriate additional revenue); and
c. In the Parks and Recreation Capital Fund, recognize the transfer from the General Fund in the amount of $455,000 and establish the Senior Center Facility Repair project in the amount of $455,000 (five affirmative Council votes required to appropriate additional revenue).
Staff
Reviewed by: Damon Sparacino, Director of Parks and Recreation
Reviewed by: Kenn Lee, Acting Assistant City Manager / Chief Financial Officer
Approved by: Jovan D. Grogan, City Manager
ATTACHMENT
1. Report to Council 26-663