FROM:
Finance
SUBJECT:
Title
Fiscal Year 2025-26 Midyear Budget Status Report
End
RECOMMENDATION:
Recommendation
1. Approve the recommended Fiscal Year 2025-26 Midyear Budget and Fund Balance adjustments and organizational changes.
2. Adopt Resolution No. 2026-011, of the City Council of the City of Fontana, California, approving the updated salary table for the Teamsters Local 1932, City Hall Unit.
End
COUNCIL GOALS:
• Operate in a businesslike manner by ensuring that the public debate is based on accurate information.
• Operate in a businesslike manner by correcting problems immediately.
• 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.
• Invest in the City’s infrastructure (streets, sewers, parks, etc.) by utilizing Measure-I Funds wisely.
DISCUSSION:
The City’s budget is an important policy document, serving as the annual financial plan that identifies the spending priorities for the organization. Quarterly budget status reports are developed and presented to the City Council to provide the most current information on the financial activities of the City upon which to base decisions. Additionally, quarterly reports assist City departments in communicating their financial operations throughout the fiscal year including any program changes and significant impacts to their annual budgets, as well as gauging the City’s budget plan as compared to actual revenue and expenditures. This report includes requested departmental budget adjustments and preliminary year-to-date actuals through Midyear of Fiscal Year 2025-26, covering the period through December 31, 2025.
The current citywide Fiscal Year 2025-26 budget is comprised of a total of 200 funds including the General Fund, Other General Funds (10 funds), Special Revenue Funds (135 funds), Enterprise Funds (5 funds), Capital Project Funds (36 funds), a Debt Service Fund, an Internal Service Fund, and Other Agency Funds (11 funds). The current total citywide Fiscal Year 2025-26 budget (excluding other agency funds) includes total uses (expenditures and transfers out) for all City funds of $826.1 million and total sources (revenues and transfers in) of $680.5 million. The Recommended Budget includes an increase in total sources of $19.6 million for a total of $700.0 million and an increase in total uses of $22.0 million for a total of $848.1 million.
2025-26 Budget
All City Fund
GENERAL FUND
The current Fiscal Year 2025-26 General Fund Operating Budget includes total uses of $211.0 million and total sources of $210.4 million. The Recommended Budget includes an increase in total sources of $3.8 million for a total of $214.2 million and an increase in total uses of $3.6 million for a total of $214.6 million.
2025-26 Budget
General Fund (Fund 101)
Notable Changes
• Revenue Adjustments - a net increase in revenues of $3.8 million primarily property tax, transaction use tax, and interest from investments as a result of revenue projections based on receipts to date.
• Personnel Requests (one-time) - an increase in appropriations of $520,714 in various personnel accounts primarily due to the negotiated FY25/26 Police Management Association (PMA) one-time bonus ($431,163), moving CSD Superintendent position from Fund #386 to the General Fund #101($69,800; PC# 24052), a Dispatch signing bonus ($50,000), and decreasing part-time appropriations of $30,250 to fund a new Human Resources Technician position.
• Personnel Requests (recurring) - an increase in appropriations of $684,012 in various personnel accounts primarily due to the FY25/26 PMA contract update ($545,682) cafeteria plan/health cost increases ($269,630). There is also a decrease in part-time appropriations of $139,490 and the elimination of the IT System Technician position ($99,230; PC# 26031) to fund new position requests detailed below.
• Offsetting Adjustments - a decrease in appropriations of $100,000, increase in revenues of $892,682, and an increase to Transfers-Out of $992,682. Notable requests include:
o Transferring $465,000 in available legal appropriations from Human Resources, Administrative Services, Development Services, Public Works & Engineering, and Police departments to the City Clerk and Finance departments.
o Increase of TUT Revenues and Transfer-out to fund #604 of $862,600 to update revenue projections based on receipts to date for various TUT capital improvement projects.
o Utilizing $120,000 in salary savings from Economic Development Analyst position (PC# 30126) and transfer-out to fund #720 for Stage Red Soundbox group.
• One-time Requests - Increase appropriations of $1.3 million in various operating accounts to fund one-time expenditures. And an increase to Transfers-out of $50,000. Notable requests include:
o City Admin - Decreases in appropriations of $40,000 for video presentation costs due to adoption of full-time positions.
o Building & Safety - Increase in appropriations of $242,030 for ADA consultant and plan check services.
o Planning - Increase in appropriations of $350,000 for plan retyping services and Housing Element update.
o Public Works & Engineering - Increase in appropriations of $339,930 for equipment rentals, landscape contract increases, damaged property materials, welding equipment, additional plan check services, traffic study and plan check support, additional on-call support, and traffic signal cabinets.
o Police Department
• Increase appropriations of $163,000 for microfiche scanning.
• Increase appropriations of $77,040 for FY24/25 San Bernardino animal shelter.
• Increase appropriations of $63,000 for crossing guard contract increase.
• Increase appropriations of $60,000 for CCTV surveillance systems lease.
• Recurring Requests - Increase appropriations in various operating accounts of $176,000 to fund recurring expenditures for a graffiti abatement contract ($100,000), for the FY25/26 San Bernardino Animal Shelter operational costs ($50,000), and a paint contract increase ($26,000).
Fund Balance Analysis
The recommended 2025-26 ending fund balance of $62.6 million has not changed since the First Quarter Budget Status Report. Included in the fund balance of are total operating reserves of $39.8 million (which reflects 25% of recurring annual expenditures).
There are no Fund Balance Reserves adjustments included in the Midyear Budget Report.
2025-26 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, Office of Emergency Services, KFON, Self-Insurance, Retiree Medical Benefits, and General Fund Operating Projects.
The current 2025-26 Other General Funds Operating Budget includes total uses of $39.5 million and total sources of $44.5 million. The Recommended Budget includes a decrease in total sources of $648,942 for a total of $40.2 million and an increase in total uses of $1.5 million for a total of $46.0 million.
2025-26 Budget
Other General Funds
Notable Changes
• City Technology - Increase appropriations of $120,000 for security camera installation.
• Facility Maintenance - Increase appropriations of $500,000 for Jesse Turner gym floor replacement.
• Lease Fire - Net Transfer-outs of $645,000 to Funds #580, #601 for 2024 LRB Debt Service and Fire Lease revenue reconciliation.
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.
The current 2025-26 Other City Funds Operating Budget includes total uses of $570.6 million and total sources of $430.6 million. The Recommended Budget includes an increase in total sources of $15.1 million for a total of $445.7 million and an increase in total uses of $16.8 million for a total of $587.5 million.
2025-26 Budget
Other City Funds
Notable Changes
• Special Revenue Funds - Decrease in fund balance of $2.3 million primarily due to:
o Federal Asset Seizure (Fund 223)
• Increase appropriations of $1.1 million for license plate reader upgrade.
• Increase appropriations of $290,000 for 3 Narcotics vehicles and outfitting.
o Air Quality Mgmt Dist (Fund 241)
• Increase appropriations of $431,831 for TDA grant O’Day Short Elementary SRTS and Citywide transit stops City contributions.
o Measure I 2010-204 Local (Fund 246)
• Increase appropriations of $736,806 for TDS grant Fontana Middle School SRTS and Ted J Porter Elementary City Contributions, CalTrans signage consultant, and TMS signal upgrade.
o TDA/Article 3 (Fund 303)
• Increase revenues and appropriations of $1.1 million for various TDA grant projects.
• Debt Service Fund - Increase in fund balance of $2.9 million due to a Transfer-in from Fund #115 for the 2025 LRB Debt Service and Fire Lease Revenue Reconciliation.
• Capital Project Funds - Decrease in fund balance of $5.8 million primarily due to:
o Capital Reinvestment (Fund 601)
• Increase appropriations of $3.2 million for the Navigation Center additional construction costs.
• Increase appropriations of $1.0 million for the Honor Roll Memorial additional construction costs.
• Increase appropriations of $800,000 for 8740 Nuevo New Ministries design.
• Increase appropriations of $500,000 for 8572 Sierra Oldtimers construction.
• Decrease appropriations of $2.8 million for a partial defunding of the Courtplace project
• Increase revenues of $5.6 million for a contribution from Fund #210 for the 2025 LRB Debt Service and Fire Lease Revenue Reconciliation.
• Decrease in net Transfers-in of $2.3 million from Fund #115 for the 2025 LRB Debt Service and Fire Lease Revenue Reconciliation.
o Capital Improvement (Fund 602)
• Increase appropriations of $240,000 for Fontana Fair Grounds design, and SBCTA PE Trail land acquisition.
o Capital Project - TUT (Fund 604)
• Increase in transfers-in and appropriations of $862,600 from the General Fund #101 for the East Courtyard fountain repair, Southridge ballfield shade structures, and Sycamore Hills rubber playground surfacing replacement.
• Enterprise Funds - Increase in fund balance of $3.5 million primarily due to:
o Sewer Replacement (Fund 703)
• Decrease appropriations of $3.9 million for the FY24/25 project carryover update.
o Stage Red (Fund 720)
• Increase appropriations of $820,000 for SB County Downtown Economic Development grant ($150,000; offset by revenue), ASM operating funds ($500,000; offset by loan from the General Fund), and for the Soundbox group ($120,000; offset by Economic Development Analyst salary savings and transfer-in from the General Fund).
ORGANIZATIONAL CHANGES
Included in the 2025-26 Midyear Budget Status Report are organizational changes that are summarized at the departmental level below. The net impact of all requests is an increase of $10,590 ($8,190 General Fund increase and $2,400 Other Funds increase) for the remainder of the fiscal year with a total estimated annual cost of $308,650 which is being fully funded or offset by the decrease of other budget items including part-time budget, other professional services, and departmental expenses.
• City Administration - General Fund increase of $27,850
o Add one (1) Business Development Coordinator
o Title change (1) Senior Production Coordinator to Multimedia Production Supervisor (PC #10020)
o Decrease of part-time budget of $139,490
• Human Resources - General Fund increase of $30,250
o Add one (1) Human Resources Technician
o Decrease of part-time budget of $30,250
• Innovation & Tech - General Fund decrease of $52,520
o Eliminate one (1) IT System Technician (PC #26031)
o Add one (1) Senior Business System Analyst
• Finance - General Fund increase of $2,610; Other Funds increase of $2,400
o Reclass one (1) Account Clerk I to Accounting Technician (PC #28006)
FISCAL IMPACT:
The fiscal impact associated with this item is summarized below and details are provided in the Midyear Budget Status Report.
The General Fund projected ending fund balance remains $62.6 million due to the net impact of the recommended budget adjustments.
MOTION:
Approve staff recommendation.