City of Corona
Staff Report
400 S. Vicentia Ave.
Corona, CA 92882
File #: 22-0344
REQUEST FOR CITY COUNCIL ACTION
CORONA HOUSING AUTHORITY ACTION
CORONA UTILITY AUTHORITY ACTION
DATE: 05/04/2022
TO: Honorable Mayor and City Council Members
FROM: Finance Department
SUBJECT:
Fiscal Year 2022 Quarter 3 Budgetary Adjustments.
EXECUTIVE SUMMARY:
The City Council will consider budgetary adjustments for Fiscal Year 2022 based on the Quarter 3 results and staff recommendations for funding level changes. On a quarterly basis, staff presents an update to the City Council on the current fiscal year revenue and expenditures. As part of the process, departments review the operating and capital improvement project funding levels and provide recommendations for budgetary adjustments.
RECOMMENDED ACTION:
That the:
a. City Council approve the following General Fund budgetary adjustments:
i. Appropriate $100,000 to a new capital improvement project (CIP) titled Unanticipated/Emergency Common Area Repairs for 725 S. Main Street and increase revenue estimates by $91,637 through the remainder of Fiscal Year 2022 for rent payments received from the tenant.
ii. Transfer $50,000 from the salaries/benefits budget to contractual services in the Community Services Department’s operating budget ($25,000 Parks, Trees, and Median Maintenance and $25,000 Facilities Maintenance).
iii. Appropriate $205,000 to the Community Services Department’s operating budget and increase revenue estimates by the same amount for additional activity in the contract class programs.
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iv. Appropriate $50,444.66 to the Fire Department’s Emergency Medical Services equipment budget, utilizing the American Medical Response fees. v. Transfer $45,000 from the salaries/benefits budget to capital outlay in the Police Department’s operating budget for the purchase of a Gang Task Force Sergeant vehicle.
vi. Appropriate $17,853 to the Community Services Department in the Historic Civic Center Fund 232 for lighting upgrades and stairwell repairs. The Historic Civic Center Fund falls under the General Fund for reporting purposes.
b. City Council approve a budgetary transfer of $2,355,108.81 from the Parks Improvements CIP 79020 to the Parks, Facilities and Amenities Inventory CIP 73840, in the Parks and Open Space Fund 217.
c. City Council accept and appropriate $8,785.20, and increase revenue estimates by the same amount, in the Library-Other Grants Fund 415 for grant funding received by the Community Services Department ($8,000 for the Zip Book Program Grant, $500 for the Día de los Niños/Día de los Libros Grant, and $285.20 for the Stay and Play Grant). d. City Council approve one-time appropriations totaling $276,697,172.71 (multiple funding sources) and increase revenue estimates by $225,994,225.05 (multiple funding sources) for the accounting of the pension obligation bonds issuance. e. Corona Housing Authority (CHA) and the Corona Utility Authority (CUA) review, ratify, and to the extent necessary, direct that the City Council take the above actions.
BACKGROUND & HISTORY:
On a quarterly basis, the Finance Department provides a budget update to the City Council. As part of this process, departments provide operating and CIP adjustments that need to be addressed in the fiscal year. The Finance Department prepares a consolidated request of all budgetary adjustments for the City Council’s consideration.
ANALYSIS:
Item a - General Fund budgetary adjustments
i. The Economic Development Department is recommending $100,000 for unanticipated/emergency common area repairs for 725 S. Main Street. As outlined in the property lease agreement, the tenant is responsible for any building repairs and the City is responsible for the common areas (parking lots, curb cuts, drive aisles, etc.). The City receives monthly rent from the tenant in the amount of $22,909.23. Revenue estimates in the General Fund will be increased by $91,637 for four months of FY 2022. The revenue will largely offset the appropriation in the current fiscal year. Additional monthly revenues received in FY 2023 will offset the balance of the appropriation and provide for additional unanticipated repairs.
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ii. Transfer $50,000 from the salaries/benefits budget to contractual services in the Community Services Department ($25,000 for Parks, Trees, and Median Maintenance and $25,000 Facilities Maintenance). There are salary savings due to vacancies and the additional workloads have been addressed by utilizing contractual service providers. Per the budget resolution, transfers from salaries/benefits to the operating budget require City Council review and approval.
iii. Appropriate $205,000 to the Community Services Department and increase revenue estimates by the same amount for additional activity in the contract class programs. The original estimate for contract instructor payments was $50,000 due to levels of enrollment through the pandemic. The enrollment levels have rebounded close to pre-pandemic levels which creates the recommendation for additional funding. Revenue is also increasing due to the higher enrollment, which offsets the additional contractor instructor payments. iv. Appropriate $50,444.66 to the Fire Department’s Emergency Medical Services (EMS) equipment budget, utilizing the American Medical Response (AMR) fees. The Riverside County Emergency Medical Services Agency (REMSA) assesses late response fees to AMR. These fees are distributed annually to the cities within the EMS system. In accordance with the memorandum of understanding (MOU) for Joint Monitoring of Ambulance Services, all monies collected by the City under the terms of the MOU shall be used only for EMS system enhancements. Expenditures by the City for EMS system enhancements are reported to REMSA annually.
v. Transfer $45,000 from the salaries/benefits budget to capital outlay, in the Police Department, for the purchase of a Gang Task Force Sergeant vehicle. There is currently salary savings due to vacancies, which provides the funding for the purchase. The request was originally prepared and is no longer included in the proposed FY 2023 budget. There are currently supply chain issues for some types of vehicle purchases. However, a vendor has one Police truck available now, prompting the need to initiate the purchase in the current fiscal year.
Waiting to fund the purchase in the next fiscal year will delay acquisition until summer 2023.
Per the budget resolution, transfers from salaries/benefits to the operating budget require City Council review and approval.
vi. Appropriate $17,853 to the Community Services Department, Historic Civic Center Fund 232, for lighting upgrades and stairwell repairs. Two projects at the Historic Civic Center (HCC) campus, totaling $17,853, will help improve security for tenants, staff, and the public: (1) A lighting project includes installing light poles outside of the HCC to increase illumination (total $16,477), and (2) Sheet metal was purchased and installed for stairwell repairs (total $1,376).
The Historic Civic Center Fund falls under the General Fund for reporting purposes.
Item b - Transfer $2,355,108.81 from the Parks Improvements CIP 79020 to the Parks, Facilities and Amenities Inventory CIP 73840 in the Parks and Open Space Fund 217 Staff is recommending consolidation of two existing capital projects into one project titled Parks, Facilities and Amenities Inventory. Combining these projects will help to simplify accounting activity for the park facility improvements. Per the adopted budget resolution for FY 2022, transfers greater City of Corona Page 3 of 7 Printed on 4/28/2022
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for the park facility improvements. Per the adopted budget resolution for FY 2022, transfers greater than 10% of the transferring project amount must be reviewed and approved by the City Council.
Item c - Appropriate $8,785.20, and increase revenue estimates by the same amount, in the LibraryOther Grants Fund 415 for grant funding received by the Community Services Department Three grant allocations have been provided to the Community Services Department, totaling $8,785.20.
· The Zip Books Program provides Library patrons with speedy access to materials they might not otherwise be able to get through the Library. Under the program, patrons request books that the Library does not own, and the Library orders the book from Amazon to be shipped directly to the patrons home. When the patron is finished with the book, it is returned to the Library. The Zip Books Program Grant was previously approved by the City Council on February 2, 2022 for $17,000. The supplemental allocation is $8,000, which will increase the total award to $25,000. The Zip Books program is currently supported with California Library Services Act funds from the State of California. The grant period is July 1, 2021 through June 30, 2022.
· Día de los Niños is a multicultural experience for young children and their families celebrated in libraries all over California and the United States. It focuses on inclusion and promotes culture, language, and books for our multicultural/multilingual families. This funding will provide additional resources to support the City’s Diversity in Action (DIA) event and activities for the Corona community. DIA Day is a celebration planned and implemented by the Corona Public Library’s Teen Advisory Council and their staff leads for the annual spring Día de los Niños/Día de los Libros (Day of the Child, Day of the Book) events. Eligible libraries will receive $500 toward multicultural programming materials and resources through this funding opportunity. The funding is provided through California State Library. · The Corona Public Library was selected as one of ten (10) new piloting organization for the Stay & Play Program, a pilot program of the California State Library’s Early Learning with Families Initiative. Stay & Play is a library service model specifically designed to serve and support the needs of informal childcare providers, often referred to as Family, Friend, and Neighbor or FFNs. Stay & Play is designed to be offered over time and includes weekly inperson gatherings as well as targeted online resources. Stay & Play is made possible with funding from the David and Lucile Packard Foundation. The project is supported in part by the U.S. Institute of Museum and Library Services under the provisions of the Library Services and Technology Act, administered in California by the State Librarian, and distributed by the Califa Group. The Stay & Play Grant was previously approved on June 16, 2021, for $3,750.
The supplemental allocation is $285.20 which will increase the total award to $4,035.20.
Item d - One-time appropriations totaling $276,697,172.71 (multiple funding sources) and increase revenue estimates by $225,994,225.05 (multiple funding sources) for the accounting of the pension obligation bonds issuance
In October 2021, the City issued pension obligation bonds (POBs). The entries to record the issuance, allocating to all the appropriate funds, have been recorded in the accounting system. Staff worked with the City’s independent auditing firm to ensure the transactions were recorded properly.
In compliance with Governmental Accounting Standards, the City uses two different bases of City of Corona Page 4 of 7 Printed on 4/28/2022
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In compliance with Governmental Accounting Standards, the City uses two different bases of accounting for the City’s various funds. The governmental funds shown below use a modified accrual basis with a focus on current financial resources. Revenues are recognized when they are available and measurable, and expenditures are recognized as they are incurred. This means that in the current fiscal year, revenues are recognized for receiving the bond proceeds and expenditures are recognized for paying the unfunded pension liability with the bond issuance. Appropriations and revenue increases are requested for City Council approval.
The proprietary funds shown below use the full accrual accounting method with a focus on economic resources. Revenues are recognized when earned regardless of when they are received, and expenses are recorded at the time the liability is incurred, regardless of when they are paid. In the current fiscal year, those funds will recognize the expenditures and a long-term payable. As the debt service is recorded over the years, the payable will be reduced, eventually to a zero balance. With the proprietary funds, appropriations are requested for City Council approval. The offsetting entries are in long-term payable, which is a balance sheet item. The appropriations are long term in nature and, therefore, are excluded from the working capital calculations of the proprietary funds. Working capital calculations consider current assets and current liabilities.
FINANCIAL IMPACT:
Approval of the recommended actions will have fiscal impacts as noted below in the following tables.
Items b and e do not have a financial impact. For item d, regarding the POB issuance, only the governmental funds are noted in the following tables. The proprietary funds listed in the Analysis City of Corona Page 5 of 7 Printed on 4/28/2022
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governmental funds are noted in the following tables. The proprietary funds listed in the Analysis section are not included as they are long term in nature and do not impact the Working Capital calculations. Reference the Analysis section for additional information on the accounting for the governmental and proprietary funds.
GENERAL FUND
Adopted Budget - FY 2022 Estimated Revenue Over Expenditures $ 14,593,660 Less Measure X Reserves (13,144,418)
Previously Approved/Revised Budget Adjustments (Net)* 3,782,375 Current Estimated Revenue Over Expenditures - Note 1 5,231,617 Action a.i - 725 S. Main Emergency Common Area Repairs (100,000) Action a.i - 725 S. Main Rental Income Revenue Increase 91,637 Action a.iii - Comm. Svcs. - Contract Class Instructor Payment Appropriation (205,000) Action a.iii - Comm. Svcs. - Contract Class Revenue Increase 205,000 Action a.iv - Fire - AMR Fees Appropriation (50,445)
Action a.vi - Comm. Svcs. - Historic Civic Center Appropriation (17,853) Action d - POB Issuance - Appropriation (221,989,149)
Action d - POB Issuance - Revenue 221,996,682
Revised Estimated Revenue Over Expenditures - Note 1 $ 5,162,489 Budget Balancing Measures Reserve - Actual 06/30/2021 43,614,486 Section 115 Trust (30,000,000)
Less Measure X Reserve (from updated revenue estimates) (6,103,333) Estimated FY 2022 Change in Budget Balancing Measures Reserve 5,162,489 Estimated Budget Balancing Measures Reserve - 06/30/22 $ 12,673,642 *Approved through Council Action or other operational process.
Note 1 - Includes updated FY 2022 revenue estimates since the Spring Financial Workshop.
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ENVIRONMENTAL ANALYSIS:
This action is exempt pursuant to Section 15061(b)(3) of the Guidelines for the California Environmental Quality Act (CEQA), which states that a project is exempt from CEQA if the activity is covered by the general rule that CEQA applies only to projects that have potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the action is not subject to CEQA. This action is to approve budgetary adjustments for Fiscal Year 2022, and there is no possibility that approval of the recommended actions will have a significant effect on the environment. Therefore, no environmental analysis is required.
PREPARED BY: KIM SITTON, FINANCE DIRECTOR
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