Finance Committee Meeting - September 15, 2026

The City of Palo Alto Finance Committee met on September 15, 2026, to discuss two main agenda items related to financial management and procurement planning. The first item focused on the Baker Tilly reserves advisory report, which included staff and Utilities Advisory Commission (UAC) recommendations for revising utility reserve management practices. Key procurement-related discussions involved setting target reserve levels for the Capital Improvement Program (CIP) reserve and the rate stabilization reserve across electric, gas, and water utilities. The committee considered a 5-year timeline to reach CIP reserve targets for gas and water utilities and a 10-year timeline for the electric utility, with associated rate impacts. Staff recommended a 10% target of operating expenses for the rate stabilization reserve to buffer against revenue volatility and unexpected expenses, with options to combine or separate this reserve from the operations reserve. The committee voted unanimously to recommend the staff and UAC aligned recommendations for CIP reserves and to return to UAC for further discussion on the rate stabilization reserve. The second item was the formal acceptance of the California Public Employees' Retirement System (CalPERS) annual valuation reports as of June 30, 2025. The committee reviewed the funded status, unfunded actuarial liability, and projected employer contributions, noting a $1.7 million savings due to strong investment returns. The committee unanimously accepted the valuation reports, which will be forwarded to the City Council. Future meetings will continue to address reserve policies and financing for grid modernization.