The City maintains fiscal responsibility by avoiding operating debt and reserves strategically. When the City has used long-term debt, it has been limited to specific infrastructure or improvement projects with dedicated funding sources. Long-term debt is used sparingly and responsibly for major projects that provide lasting community benefits. By budgeting within its means, the City's General Fund is less vulnerable to economic downturns or unexpected expenses. A debt-free General Fund gives the City the ability to respond to emergencies, invest in priorities, or maintain services without having to cut programs or raise taxes suddenly. Avoiding operating debt also helps keep the City financially healthy year after year, protecting both current residents and future generations.
Additionally, the City participates in the California Public Employees' Retirement System (CalPERS). The employee benefits are determined by date of hire, years of service, salary and age at retirement. Both the City and employees contribute toward the pension fund.
The City of Palm Desert also provides retiree health benefits to employees that retire directly from the City. The value of this benefit is determined by negotiated labor contracts. The City established an irrevocable trust set up with the California Employer's Retiree Benefit Trust (CERBT) program administered by CalPERS, to help fund future health benefits.
The following table illustrates the City long-term obligation balances for FY2024-25 as compared with FY2023-24.
| ACFR Source | FY 2024-25 | % of Total | FY 2023-24 | % of Total | |
|---|---|---|---|---|---|
| Limited Obligation Bonds | 1.0 | 2% | 1.1 | 2% | |
| Claims and Judgments | 0.8 | 1% | 3.7 | 7% | |
| Compensated Absences | 2.6 | 5% | 2.7 | 5% | |
| Lease and Subscriptions Payable | 2.4 | 5% | 2.5 | 4% |
| Subtotal Long-Term Obligations | Note 6 | 6.9 | 13% | 10.2 | 18% |
|---|---|---|---|---|---|
| Net Pension Liability | Note 12 | 42.2 | 82% | 44.0 | 79% |
| Net OPEB Obligations | Note 13 | 2.6 | 5% | 1.9 | 3% |
| Total | 51.7 | 100% | 56.1 | 100% |