FROM:
Finance
SUBJECT:
Title
Fiscal Year 2024-25 Supplemental Budget Report
End
RECOMMENDATION:
Recommendation
1. Approve the recommended 2024-25 Supplemental Budget adjustments and authorize adjustments for final fund balance.
2. Adopt Resolution No. 2024- 043, of the City Council of the City of Fontana establishing a General Fund Appropriations limit of $370,164,949 pursuant to Article XIII (B) of the California Constitution for 2024-25.
3. Authorize the carryforward of the available budget at fiscal yearend to the following fiscal year for all capital improvement projects and obligations funded with grants and other one-time funding.
4. Adopt Resolution No. 2024- 044, of the City Council of the City of Fontana adopting the updated salary table for the Fontana Police Officers’ Association for the 2024-25.
End
COUNCIL GOALS:
• Operate in a businesslike manner by ensuring that the public debate is based on accurate information.
• Practice sound fiscal management by producing timely and accurate financial information.
• Practice sound fiscal management by living within our means while investing in the future.
• Practice sound fiscal management by fully funding liabilities and reserves.
• Practice sound fiscal management by developing long-term funding and debt management plans.
• Invest in the City’s infrastructure (streets, sewers, parks, etc.) by maintaining and improving the city's existing infrastructure.
• Invest in the City’s infrastructure (streets, sewers, parks, etc.) by providing for the development of new infrastructure.
DISCUSSION:
The City’s budget is an important policy document, serving as the annual financial plan that identifies the spending priorities for the organization. The budget is used to balance available resources with community needs, as determined by the City Council. The City's fiscal priorities include keeping the City safe, clean, and well maintained, in addition to protecting the quality of life and property values. The budget also serves as a tool for communicating the City's financial strategies and for ensuring accountability.
On June 13, 2023, the City Council adopted the two-year operating budget for 2023-24 and 2024-25. As adopted, the 2024-25 Operating Budget includes total uses (expenditures and transfers out) for all City funds of $391.0 million and total sources (revenues and transfers in) of $425.9 million. The Recommended Budget includes an increase in total sources of $37.9 million for a total of $463.8 million and an increase in total uses of $49.9 million for a total of $440.9 million.
2024-25 Budget
All City Funds
GENERAL FUND
As adopted, the 2024-25 General Fund Operating Budget includes total uses of $160.0 million and total sources of $161.5 million. The Recommended Budget includes an increase in total sources of $7.6 million for a total of $169.1 million and an increase in total uses of $11.0 million for a total of $171.0 million.
2024-25 Budget
General Fund (Fund 101)
Notable Changes
• Revenues have been increased by $7.2 million primarily due to increased property tax projections ($2.3 million), franchise fees ($1.5 million), and development-related fees and charges ($1.6 million).
• Expenditures have been increased by $6.8 million primarily due to personnel expenses related to increases in utilities, costs associated with labor negotiations, classification actions including the addition of 5.5 new positions, risk liability, and legal fees increases.
• Transfers Out have been increased by $4.2 million primarily due to increased costs for various software maintenance and licenses ($.9 million), pavement rehabilitation ($1.9 million), operational support for the Village of Heritage ($.7 million), and an additional payment for CalPERS unfunded accrued liability or UAL ($.8 million).
Fund Balance Analysis
The estimated ending fund balance for 2024-25 is $62.6 million and includes various designations. The proposed 25% Contingency Reserve for the 2024-25 Recommended Budget is $35.9 million, an increase of $2.3 million from the adopted reserve. Additionally, reserves for the Animal Shelter JPA of $582,570, Operating Contingencies of $3.0 million, and Future Commitments of $500,000 have been adopted as a part of the 2024-25 Operating Budget.
2024-25 Budget
General Fund Balance
OTHER GENERAL FUNDS
Other General Funds includes a total of 10 funds which are funded by the General Fund for services that support the City’s general operations. The most notable funds include City Technology, Facility Maintenance, Self-Insurance, Retiree Medical Benefits, and General fund Operating Projects.
As adopted, the 2024-25 Other General Funds Operating Budget includes total uses of $28.0 million and total sources of $32.8 million. The Recommended Budget includes an increase in total sources of $4.9 million for a total of $37.7 million and an increase in total uses of $4.4 million for a total of $32.4 million.
2024-25 Budget
Other General Funds
Notable Changes
• City Technology - increase in appropriations of $1.3 million and an increase in transfers in of $1.7 million primarily due to increased software maintenance and operating expenses
• Facility Maintenance - increase in appropriations of $1.7 million and an increase in transfers in of $1.9 million primarily due to increases in utilities and various operating expenses
OTHER CITY FUNDS
Other City Funds includes a total of 178 funds which Special Revenue Funds,
Debt Service Funds, Capital Project Funds, Enterprise Funds, and Internal Service Funds.
As adopted, the 2024-25 Other City Funds Operating Budget includes total uses of $132.2 million and total sources of $162.8 million. The Recommended Budget includes an increase in total sources of $14.0 million for a total of $176.9 million and an increase in total uses of $33.5 million for a total of $165.7 million.
2024-25 Budget
Other City Funds
Notable Changes
• Special Revenue Funds:
o Muni Svcs Fiscal Impact - increase in transfer out of $342,040 to General Fund
o Measure I 201-2040 Local - increase in appropriations of $2.7 million for infrastructure stock and improvements and projects
o Gas Tax - increase in appropriations of $718,050 for utilities and risk liability increases
o Grants - increase in appropriations of $34.8 million to fund the Foothill: Hemlock to Almeria Arterial project ($19.8 million) and the Westgate at Cherry & Victoria Ave Arterial project ($15.0 million)
o ASES ELO-P Grant - decrease in appropriations of $14.9 million due to contract adjustments
o Various CFD/LMD Funds - increase in appropriations of $4.8 million in 96 different funds due to increases in operating expenses
• Internal Service Fund (Fleet Operations) - increase in appropriations of $3.7 million primarily due to fleet replacement and the purchase of new vehicles
ORGANIZATIONAL CHANGES
Included in the 2024-25 Supplemental Budget report are organizational changes that are summarized at the departmental level below. The net impact of all requests is $714,750 ($640,070 General Fund and $74,680 Other Funds).
• Development Services Admin - General Fund increase of $129,540 and Other Funds increase of $14,950
o Add one (1) Management Analyst I
o Reclassification of one (1) Senior Accountant to Senior Administrative Analyst
• Building & Safety - General Fund increase of $237,230
o Add one (1) Building Inspector II
o Add one (1) Senior Code Enforcement Inspector
• Public Works & Engineering - General Fund increase of $59,730 and Other Funds increase of $59,730
o Add one (1) Traffic Signal Maintenance Technician II
• Police - General Fund increase of $213,570
o Add two (2) Dispatcher II
FISCAL IMPACT:
The fiscal impact associated with the approval of this item is summarized below and details are provided in the 2024-25 Supplemental Budget:
The 2024-25 Supplemental Budget General Fund projected ending fund balance reflects a net decrease of $2.0 million, a $3.5 million decrease as compared to the 2024-25 adopted budget for a total estimated ending funding balance of $60.1 million.
MOTION:
Approve staff recommendation.