FROM:
Finance
SUBJECT:
Title
Fiscal Year 2025-26 Fourth Quarter Budget Status Report
End
RECOMMENDATION:
Recommendation
1. Approve the recommended Fiscal Year 2025-26 Fourth Quarter Budget adjustments.
2. Authorize the City Manager or Designee to make necessary year-end budgetary and accounting adjustments to facilitate the fiscal year-end closing process not to exceed 5% of a fund’s total operating budget.
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.
• 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 Fourth Quarter of Fiscal Year 2025-26, covering the period through June 30, 2026.
The current citywide Fiscal Year 2025-26 budget is comprised of a total of 202 funds including the General Fund, Other General Funds (10 funds), Special Revenue Funds (135 funds), Enterprise Funds (5 funds), Capital Project Funds (38 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 $883.9 million and total sources (revenues and transfers in) of $714.6 million. The Recommended Budget includes an increase in total sources of $7.8 million for a total of $722.4 million and an increase in total uses of $16.2 million for a total of $900.1 million.
2025-26 Budget
All City Fund
GENERAL FUND
The current Fiscal Year 2025-26 General Fund Operating Budget includes total uses of $214.8 million and total sources of $214.3 million. The Recommended Budget includes an increase in total sources of $4.7 million for a total of $219.0 million and an increase in total uses of $3.5 million for a total of $218.2 million.
2025-26 Budget
General Fund (Fund 101)
Notable Changes
• Revenue Adjustments - an increase in revenues of $4.7 million due to 2025-26 Transaction Use Tax forecast.
• Offsetting Adjustments - a decrease in appropriations and increase in transfers-out of $170,567 defunding consultant services and transferring to Fund #601 for The Path improvements.
• One-time Requests - Increase appropriations or uses in various operating accounts of $3.5 million to fund one-time expenditures. Notable requests include:
o Increase in appropriations of $50,000 for Beacon Economic contract.
o Increase in appropriations of $1.5 million to fund 2026-27 one-time departmental operating requests.
o Increase in transfers-out of $1.9 million to Fund #604 for forecasted TUT revenues.
Fund Balance Analysis
The recommended 2025-26 ending fund balance of $49.4 million reflects a net decrease of $13.1 million as a result of moving the PERS Rate Stability reserve of $14.4 million to the Pension - 115 Trust (Fund #109) which is offset by an increase of $1.2 million to Contingencies (which reflects 25% of recurring annual expenditures).
The recommended ending fund balance reserves and designations reflect an increase in Unappropriated reserves.
2025-26 Budget
General Fund Balance
OTHER GENERAL FUNDS
Other General Funds include 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.
The current 2025-26 Operating Budget for Other General Funds includes total uses of $46.1 million and total sources of $40.2 million. The Recommended Budget includes an increase in total sources of $24,654 for a total of $40.2 million and an increase in total uses of $24,654 for a total of $46.1 million.
2025-26 Budget
Other General Funds
Notable Changes
• City Technology - Reappropriate existing operating budget of $150,000 to cover increased cost and scope of facility lockdown buttons project. There is no net fund balance impact.
• Facility Maintenance - Increase revenues and appropriations by $24,654 for parking garage incident reimbursement.
OTHER CITY FUNDS
Other City Funds include a total of 181 funds which Special Revenue Funds, Debt Service Funds, Capital Project Funds, Enterprise Funds, and an Internal Service Fund.
The current 2025-26 Operating Budget for Other City Funds includes total uses of $623.0 million and total sources of $460.1 million. The Recommended Budget includes an increase in total sources of $3.1 million for a total of $463.2 million and an increase in total uses of $12.7 million for a total of $635.7 million.
2025-26 Budget
Other City Funds
Notable Changes
• Special Revenue Funds - increase in uses of $805,762, an increase in sources of $814,938, resulting in an increase in fund balance of $9,176 primarily due to:
o Grants - increase in revenues and appropriations of $814,938 primarily for the HHAP Grant ($500,000) and the Clean CA Grant ($300,000).
• Capital Project Funds - increase in uses of $10.1 million and sources of $2.5 million, resulting in a decrease in fund balance of $7.5 million primarily due to:
o Capital Reinvestment (Fund 601) - decrease in uses of $1.3 million due to numerous requests for various projects most notably:
• Defunding Miscellaneous Project to cover $1.5 million loan to Stage Red Fund #720.
• Increase appropriations and transfers-in of $170,567 from the General Fund #101 to cover The Path improvements.
o Capital Project - TUT (Fund #604) - Increase in transfers-in of $1.9 million from the General Fund (Fund #101) for forecasted TUT revenues.
o Capital CFD Funds - increase of uses of $11.4 million primarily to fund developer reimbursements from bond proceeds.
• Enterprise Funds - increase in uses of $1.8 million and increase in sources of $197,571 for Stage Red (Fund 720) primarily due to:
o Increase revenues of $197,572 for ASM April through June estimates for operations.
o Increase appropriations of $1.8 million to sustain and expand programming and operations through ASM for Stage Red. This increase is primarily funded by the operating loan approved by Council.
FISCAL IMPACT:
The fiscal impact associated with this item is summarized below and details are provided in Fourth Quarter Budget Status Report.
The General Fund projected ending fund balance reflects a decrease of $13.1 million for a total of $49.4 million due to the net impact of the recommended budget adjustments.
MOTION:
Approve staff recommendation.