FROM:
Finance
SUBJECT:
Title
Fiscal Year 2025-26 Third Quarter Budget Status Report
End
RECOMMENDATION:
Recommendation
Approve the recommended Fiscal Year 2025-26 Third Quarter Budget adjustments.
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 Third Quarter of Fiscal Year 2025-26, covering the period through March 31, 2026.
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 $848.1 million and total sources (revenues and transfers in) of $700.0 million. The Recommended Budget includes an increase in total sources of $14.6 million for a total of $714.6 million and an increase in total uses of $35.8 million for a total of $883.9 million.
2025-26 Budget
All City Fund
GENERAL FUND
The current Fiscal Year 2025-26 General Fund Operating Budget includes total uses of $214.6 million and total sources of $214.2 million. The Recommended Budget includes an increase in total sources of $150,000 for a total of $214.3 million and an increase in total uses of $150,000 for a total of $214.8 million.
2025-26 Budget
General Fund (Fund 101)
Notable Changes
• Revenue Adjustments - an increase in revenues of $150,000 from investment interest reflecting receipts to date.
• Offsetting Adjustments - no net change in uses. Decrease in expenditure appropriations of $1.1 million, and an increase to Transfers-Out of $1.1 million. Notable requests include:
o Decreasing operating appropriations of $1.0 million and increasing transfers out of $1.0 million to Fund #601 for The Path and Navigation Center improvements.
o Decreasing operating appropriations of $65,000 and increasing transfers out of $65,000 to Fund #601 for 8491 Sierra shops.
o Transferring $50,000 in available legal appropriations from Human Resources department to Police department.
• One-time Requests - Increase appropriations of $150,000 for one-time Building & Safety re-typing services for un-readable plans expenditures.
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 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 Third Quarter 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 $46.0 million and total sources of $40.2 million. The Recommended Budget includes no change in sources and an increase in total uses of $121,300 for a total of $46.1 million.
2025-26 Budget
Other General Funds
Notable Changes
• City Technology - Increase appropriations of $47,000 for WCAG ADA compliance software.
• KFON - Increase appropriations of $74,300 for FXN studio design, build, and installation.
• Lease Fire - Decrease contribution revenue from Fund #210 and increase transfer in from Fund #601 for the Fire Lease Agreement amendment.
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 $587.5 million and total sources of $445.7 million. The Recommended Budget includes an increase in total sources of $14.4 million for a total of $460.1 million and an increase in total uses of $35.6 million for a total of $623.0 million.
2025-26 Budget
Other City Funds
Notable Changes
• Special Revenue Funds - Net decrease in fund balance of $501,719 primarily due to:
o Federal Asset Seizure (Fund 223): Decrease in revenues of $1.0 million based on receipts to date
o Measure I 2010-204 Local (Fund 246): Increase appropriations of $410,577 primarily for Catawba Ave SRTS construction, Rectangular Rapid Flashing Beacons (RRFB) equipment, and for pedestrian crossing signal design.
These decreases are offset by the following:
o State COPS AB 3229 (Fund 322): Increase revenues and $272,000 based on receipts to date.
o Federal Seizure Treasury (Fund 221): Increase revenues of $100,000 based on receipts to date.
o CFD #1 Southridge Village (Fund 401): Decrease available appropriations of $432,759 for completed Recycled Water Retrofits-CFD #1 project.
In addition to these adjustments, an offsetting adjustment is requested in Measure I 20120-2040 Reimb (Fund 245) to increase revenues and appropriations of $12.3 million for Westgate Cherry Victoria (RAISE), Etiwanda/Slover construction, and Cypress Storm Drain design and construction.
• Debt Service Fund - Decrease in fund balance of $2.9 million due to a increased appropriations for Lease Revenue Bond 2025 debt service payment.
• Capital Project Funds - Decrease in fund balance of $17.7 million primarily due to:
o Capital Reinvestment (Fund 601)
• Increase appropriations of $400,000 for 8470 Nuevo bakery.
• Increase appropriations of $500,000 for Lewis Library STEAM.
• Increase appropriations of $800,000 for 8491 Sierra shops.
o Capital Improvement (Fund 602)
• Increase appropriations of $200,000 for 16717 Spring St. demolition.
• Decrease appropriations of $700,000 and transfer out of $700,000 to Fund #601 for Courtplace Gap funding.
• Decrease appropriations of $224,000 and transfer out of $224,000 to Fund #601 for 8491 Sierra shops.
o Storm Drain (Fund 622): Increase appropriations of $2.8 million for Cypress Storm Drain design and construction.
o Circulation Mitigation (Fund 630): Increase appropriations of $5.8 million for Westgate Cherry Victoria (RAISE), Etiwanda/Slover construction, and Cypress Storm Drain design and construction.
o CFD #112 The Gardens Phase One (Fund 677): Increase appropriations of $7.5 million for developer reimbursement.
• Enterprise Funds
o Stage Red (Fund 720): Increase revenues and appropriations of $667,719 for Stage Red ASM based on receipts to date.
ORGANIZATIONAL CHANGES
There are no organizational changes included in the 2025-26 Third Quarter Budget Status Report.
FISCAL IMPACT:
The fiscal impact associated with this item is summarized below and details are provided in the Third Quarter 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.