FROM:
Management Services
SUBJECT:
Title
Fiscal Year 2022-23 First Quarter Budget Status Report
End
RECOMMENDATION:
Recommendation
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COUNCIL GOALS:
• To operate in a businesslike manner by ensuring that the public debate is based on accurate information.
• To practice sound fiscal management by producing timely and accurate financial information.
• To practice sound fiscal management by living within our means while investing in the future.
• To practice sound fiscal management by fully funding liabilities and reserves.
• To practice sound fiscal management by developing long-term funding and debt management plans.
• To invest in the city’s infrastructure (streets, sewers, parks, etc.) by maintaining and improving the city’s existing infrastructure.
• To 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. 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 the first quarter of 2022-23, covering the period through September 30, 2022.
The current citywide fiscal year 2022-23 budget is comprised of a total of 186 funds including the General Fund, Other General Funds (9 funds), Special Revenue Funds (126 funds), Enterprise Funds (4 funds), Capital Project Funds (33 funds), a Debt Service Fund, an Internal Service Fund, and Other Agency Funds (11 funds). The current total citywide fiscal year 2022-23 budget (excluding other agency funds) includes total uses (expenditures and transfers out) for all City funds of $264.7 million and total sources (revenues and transfers in) of $282.6 million. The Recommended Budget includes an increase in total sources of $10.5 million for a total of $293.1 million and an increase in total uses of $32.3 million for a total of $297.0 million.
2022-23 Budget
All City Funds
GENERAL FUND
The current Fiscal Year 2022-23 General Fund Operating Budget includes total uses of $142.5 million and total sources of $149.7 million. The Recommended Budget includes an increase in total sources of $69,399 for a total of $149.8 million and an increase in total uses of $5.9 million for a total of $148.4 million.
2022-23 Budget
General Fund (Fund 101)
Notable Changes
• Personnel Expenses - an increase in personnel expense of $2.0 million due to recurring proposed organizational changes detailed below ($1.2 million) and one-time expenses primarily associated with labor negotiations ($918,341) which will be funded through American Rescue Plan Act (ARPA) funding.
• Recurring Operational Expenses - an increase in citywide operational expenses of $798,925 primarily due:
o Planning - increase in legal fees ($100,000) for the Planning Commission.
o Police - increase in professional services ($539,160) primarily for maintenance services and insurance for the new helicopter as well as a crossing guard agreement with Fontana Unified School District.
o Finance - increase in other professional services ($62,900) for an increase in trustee fees and arbitrage calculations.
o Community Services - increase in departmental expense ($40,000) for annual employee engagement activities.
• One-time Requests - an increase in various operating accounts of $319,438 to fund one-time expenditures. Notable requests include:
o Marketing and Communications - increase in professional services ($40,000) for recruitment videos.
o Economic Development - increase in various accounts ($101,000) for economic data and various programs.
o Development Services - increase in departmental expense ($85,000) for department reconfiguration and relocation.
o Engineering - increase in professional services ($100,000) for surveying and plan review.
o Police - increase in professional services ($65,930) for the helicopter service agreement.
o Building & Safety - decrease in professional services ($200,000) to reduce the consulting budget as a result of requested organizational changes.
• Carryovers - an increase in various operating accounts of $2.6 million to fund one-time expenditures that were originally budgeted in the previous fiscal year. Notable requests include:
o Human Resources - increase in professional services ($500,000) for an anticipated classification and compensation study.
o Finance - increase in professional services ($267,166) for various purchase orders and for finance support services.
o Development Services - increase in professional services ($150,000) department reconfiguration and relocation.
o Engineering - increase in capita acquisitions ($278,832) for various purchase orders.
o Public Works - increase in professional services ($214,912) for various purchase orders.
o Police - increase in various operating accounts ($473,428) for various purchase orders.
Fund Balance Analysis
The recommended fund balance of $56.9 million reflects an increase of $9.1 million as a result of prior year operations.
The current fund balance of $47.9 million includes total operating reserves of $27.6 million. Total operating reserves includes Contingencies of $18.2 million (which reflects 15% of recurring annual expenditures) and an Economic Uncertainty Reserve of $9.5 million (which reflects 10% of adopted revenues). It is recommended to increase total operating reserves to equal 25% of the City’s General Fund recurring Operating Budget or $32.4 million and the recommended fund balance includes an increase in Contingencies of $4.8 million to achieve this.
Additionally, the recommended fund balance also includes an increase in unappropriated fund balance of $4.3 million for a total of $10.9 million, and staff will return to Council at mid-year with a proposed plan to address such items as the City’s retirement unfunded accrued liability and the general liability/ risk program.
2022-23 Budget
General Fund Balance
OTHER GENERAL FUNDS
Other General Funds includes a total of 9 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.
The current 2022-23 Other General Funds Operating Budget includes total uses of $24.5 million and total sources of $23.0 million. The Recommended Budget includes an increase in total sources of $168,705 for a total of $23.2 million and an increase in total uses of $696,601 for a total of $25.2 million.
2022-23 Budget
Other General Funds
Notable Changes
• City Technology - increase in appropriations of $207,845 primarily due to carry over purchase orders for purchases not completed in the previous fiscal year.
• Facility Maintenance - increase in appropriations of $95,611 primarily due to increases various operating expenses for carry over purchase orders for purchases not completed in the previous fiscal year and the purchase of a badge card reader for the Public Works Yard.
• Office of Emergency Services - increase in appropriations and revenues of $151,415 to reappropriate prior year grant funding.
• Self Insurance - increase in appropriations of $211,890 primarily due to organizational changes discussed below.
OTHER CITY FUNDS
Other City Funds includes a total of 164 funds which Special Revenue Funds,
Debt Service Funds, Capital Project Funds, Enterprise Funds, and Internal Service Funds.
The current 2022-23 Other City Funds Operating Budget includes total uses of $97.7 million and total sources of $110.0 million. The Recommended Budget includes an increase in total sources of $10.2 million for a total of $120.2 million and an increase in total uses of $25.7 million for a total of $123.5 million.
2022-23 Budget
Other City Funds
Notable Changes
• Special Revenue Funds - decrease in fund balance of $16.4 million primarily due to:
o Measure I Local (Fund 246) - increase in appropriations of $3.6 million primarily due to the increase in construction costs for various projects ($1.7 million), to fund carry over purchase orders for purchases not completed in the previous fiscal year ($100,673), the Arrow Blvd Traffic Signal project ($1.0 million), Randall Ave. Improvement project ($880,000), and the Heritage RRFBs ($200,000).
o ARPA (fund 302) - increase in appropriations of $4.2 million primarily due to the carry forward of prior year projects.
o CDBG (Fund 362) - increase in appropriations of $1.4 million primarily due to the receipt of annual ESG CV-3 Funds.
o After School Program (Fund 385) - increase in appropriations of $2.2 million primarily due to the carry over of the prior year ASES Grant.
o ASES ELOP Grant (Fund 386) - increase in appropriations of $4.3 million to account for the carry over of the prior year ASES Program Services Agreement.
• Capital Project Funds - decrease in fund balance of $6.0 million primarily due to:
o Capital Improvements (Fund 602) - increase in appropriations of $3.6 million primarily due to Council approved land acquisitions.
o Storm Drain (Fund 622) - increase in appropriations of $526,814 primarily due to an increase in debt service costs.
o Sewer Expansion (Fund 623) - increase in appropriations of $680,000 to fund sewer main projects.
o Police Capital Facilities (Fund 636) - increase in appropriations of $150,000 to fund fence project that came in higher than budgeted and for future project planning.
• Debt Service Fund - zero net change to fund balance as a result of an increase in both appropriations and revenue of $896,060 to fund the debt service of the 2021A Lease Revenue Bonds issued in October 2021 to refinance the 2010 lease revenue bonds as well as provide funding for the construction of Fire Station No. 81, and the fire training facility. Debt service is funded by the Fontana Fire Protection District.
• Enterprise Funds (Sewer) - decrease in fund balance of $145,574 due to an increase in appropriations of $145,574 mainly due to carry over purchase orders for purchases not completed in the previous fiscal year.
• Internal Service Fund (Fleet Operations) - decrease in fund balance of $2.5 million due to increase in appropriations of $2.6 million primarily due to carry over purchase orders for purchases not completed in the previous fiscal year.
CAPITAL PROJECTS
Included in the 2022-23 First Quarter Budget Status Report is the reappropriation of prior year project budgets for projects not completed by June 30, 2022. These capital projects are budgeted in 37 different funds and amount to $181.2 million of prior year budgets plus encumbrances and contracts of $22.2 million. The funds and the associated amounts are detailed in the report.
ORGANIZATIONAL CHANGES
Included in the 2022-23 First Quarter Budget Status Report are organizational changes that are summarized at the departmental level below. The net impact of all requests is a decrease of $199,970 ($481,420 General Fund decrease and $281,450 Other Funds increase).
• Building & Safety - General Fund increase of $6,540
o Reclassify one (1) Building Official to Director of Building & Safety
• City Administration - General Fund increase of $105,510
o Add one (1) Senior Administrative Secretary
• Development Services - General Fund increase of $168,790; Other Fund increase of $72,810
o Add one (1) Homeless Solutions Manager
o Add one (1) Secretary
• Engineering - General Fund increase of $5,170; Other Fund increase $3,720
o Salary Adjustment for two (2) Senior Civil Engineers
o Salary Adjustment for one 91) Senior Traffic Engineer
• Finance - General Fund increase of $153,230; Other Fund decrease $12,730
o Eliminate one (1) Accounting Technician
o Add one (1) Deputy Finance Director
o Reclassify one (1) Purchasing Supervisor to Purchasing Manager
o Reclassify one (1) Account Clerk II to Buyer I
o Reclassify one (1) Administrative Technician to Buyer I
o Reclassify one (1) Accountant II to Revenue Manager
• Human Resources - Other Fund increase of $203,390
o Add one (1) Risk Manager
• Planning - General Fund increase of $5,880
o Reclassify one (1) Administrative Secretary to Senior Administrative Aide
• Police - General Fund decrease of $926,540
o Eliminate three (3) Officer/Advanced (previously grant funded)
o Eliminate one (1) Corporal/Advanced (previously grant funded)
• Public Works - Other Funds increase of $14,260
o Reclassify one (1) Secretary to Administrative Technician
o Reclassify one (1) Administrative Analyst I to Sr Administrative Analyst
o Reclassify two (2) Maintenance Service Worker II to Senior Maintenance Service Worker
FISCAL IMPACT:
The fiscal impact associated with this item is summarized below and details are provided in the First Quarter Budget Status Report.
The General Fund projected ending fund balance reflects a net increase of $9.1 million to a total of $56.9 million as a result of prior year operations and the net impact of the recommended budget adjustments.
MOTION:
Approve staff recommendation.
Title
End
Recommendation
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