DATE: 09/18/2024
TO: Honorable Mayor and City Council Members
FROM: Finance Department
2024-47
REQUEST FOR CITY COUNCIL ACTION
SUBJECT:
FISCAL YEAR 2024 YEAR-END BUDGETARY ADJUSTMENTS
EXECUTIVE SUMMARY:
This staff report asks the City Council to approve budgetary adjustments for Fiscal Year 2024, based on year-end 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. The recommended budgetary adjustments happened after the Quarter 4 update to the City Council on August 7, 2024.
RECOMMENDED ACTION:
That the City Council:
a. Authorize an appropriation in the amount of $1,121 from the General Fund 110 to the City Hall Whole Building Energy Efficiency Operating & Maintenance Project No. 73790 due to additional staff time spent on the project. b. Authorize an appropriation in the amount of $22,889 from the Residential Refuse/Recycling Fund 260 to the Waste Disposal and Recycling operating budget for an increase in costs in the franchise agreement.
c. Authorize an appropriation in the amount of $4,692 from the CFD 2016-3 Zone 18 Corona Interchange Commerce Center Fund 264 to the Public Works Department’s operating budget for special district administration costs. d. Authorize a total appropriation in the amount of $65,564 ($62,838 from the LMD 84-1 Lighting Fund 446 and $2,726 from the Eagle Glen HOA Streetlight Fund 473) to the Public Works Department’s operating budget due to additional electric utility costs in those areas.
e. Authorize a total appropriation in the amount of $722 across multiple CFD maintenance districts (see breakdown in the Analysis section) to the Community Services Department’s operating budget due to an increase in administration costs.
f. Authorize an appropriation in the amount of $83,467 from the Fleet Operations Fund 682 to the Public Works Department’s operating budget due to an increase in costs relating to fuel, parts/labor on city vehicles, prevention & maintenance materials, and interest expense.
g. Authorize an appropriation in the amount of $1,635,655 from the Workers Compensation Fund 683 to the Legal and Risk Management Department’s operating budget to adjust for increased medical and related costs for claims and an accounting entry related to the updated value of projected claims.
BACKGROUND & HISTORY:
On a quarterly basis, the Finance Department provides a budget update to the City Council. As part of the quarterly process, departments provide operating and CIP adjustments that need to be addressed in the fiscal year (FY). The Finance Department prepares a consolidated request for the City Council’s consideration.
ANALYSIS:
Recommended Action a: Authorize an appropriation in the amount of $1,121 from the General Fund 110 to the City Hall Whole Building Energy Efficiency Operating & Maintenance Project No. 73790 due to additional staff time spent on the project.
Staff completed additional reporting for compliance with Title 24 to obtain a rebate from SCE after the project installation had been completed.
Recommended Action b: Authorize an appropriation in the amount of $22,889 within the Residential Refuse/Recycling Fund 260 to the Waste Disposal and Recycling operating budget for an increase in costs in the franchise agreement.
Staff is requesting City Council approval for an appropriation of $22,888.92 to the Waste Disposal and Recycling Operating Budget for Fiscal Year 2024. The original budget for Refuse Disposal costs was formulated based on historical expenditures, with an anticipated 3% rate increase pending the franchise agreement amendment at that time.
However, the final rates, which took effect on January 1, 2024, were an accumulated
7.91% increase, leading to a budget shortfall.
Recommended Action c: Authorize an appropriation in the amount of $4,692 from the CFD 2016-3 Zone 18 Corona Interchange Commerce Center Fund 264 to the Public Works Department’s operating budget for special district administration costs.
Special district administration budget was omitted in error during the budget process.
Public Works requests an appropriation in the CFD 2016-3 Zone 18 Corona Interchange Commerce Center Fund 264 to account for the special district administration costs.
Future fiscal years will be recommended during the annual budget process.
Recommended Action d: Authorize a total appropriation in the amount of $65,564 ($62,838 from the LMD 84-1 Lighting Fund 446 and $2,726 from the Eagle Glen HOA Streetlight Fund 473) to the Public Works Department’s operating budget due to additional electric utility costs in those areas.
Actual electric utility costs were higher than anticipated. Public Works requests an appropriation in the LMD 84-1 Lighting Fund 446 and the Eagle Glen HOA Streetlight Fund 473 to adjust the budget for the additional electric utility costs. Future fiscal years will be adjusted based on the FY 2024 actuals.
Recommended Action e: Authorize a total appropriation of $722 across various CFD and LMD maintenance districts to the Community Services Department’s operating budget due to an increase in administration costs.
Actual costs related to CFD administration were higher than anticipated. Staff is requesting a total appropriation in the amount of $722 across the funds listed below:
Fund Amount
CFD 2016-3 Zone 3 Dollar Self Fund (258) 57.00
CFD 2016-3 Zone 19 Cresta/Promenade Fund
(265) 600.00
CFD 2016-3 Zone 15 Northpoint Fund (287) 65.00
Total 722.00
Recommended Action f: Authorize an appropriation in the amount of $83,467 from the Fleet Operations Fund 682 to the Public Works Department’s operating budget due to an increase in costs relating to fuel, parts/labor on city vehicles, prevention & maintenance materials, and interest expense.
Actuals costs relating to unleaded fuel, diesel fuel, CNG fuel, parts/labor on city vehicles, and preventative & maintenance materials were higher than anticipated. Additionally, budget for interest expense was erroneously omitted during the budget process. Staff is requesting a total appropriation of $83,467 from the Fleet Operating Fund 682 to the Public Works Department’s operating budget.
Recommended Action g: Authorize an appropriation in the amount of $1,635,655 from the Workers Compensation Fund 683 to the Legal and Risk Management Department’s operating budget to adjust for increased medical and related costs for claims and an accounting entry related to the updated value of projected claims.
During the fiscal year, the City has experienced a significant increase in medical costs related to workers’ compensation claims. We have experienced an unprecedented number of surgery requests for our injured employees, have been required to seek more than a typical number of additional medical opinions, and continue to incur high costs for an increased number of PTSD claims and other specialized treatments. In addition, we have seen an increase in cumulative trauma (CT) claims, which require considerable costs for medical and legal evaluations.
At the end of each fiscal year, the City receives an actuarial report about the value of pending claims. An accounting entry is made to both the Workers’ Compensation Fund 683 and the Liability Fund 687 to adjust for the pending claims. Based on the additional costs incurred and the year-end accounting entry, the account has a negative balance.
The pending claims accounting entry is a bookkeeping item only as actual claim expenditures are incurred in the year in which they are paid. Future fiscal years will be evaluated and recommended through the budget process.
FINANCIAL IMPACT:
Approval of the recommended actions will have financial impacts as noted below. There is sufficient fund balance in each of the respective funds for approval of the recommended actions.
Fund Appropriations
Estimated
Revenue
Increase Net Impact
General Fund (110) $ 1,121.00
$
-
$
1,121.00
CFD 2016-3 Zone 3 Dollar Self Fund (258) 57.00
-
57.00 Residential Refuse/Recycling Fund (260) 22,889.00
-
22,889.00
CFD 2016-3 Zone 18 Corona Interchange Commerce Center Fund (264) 4,692.00
-
4,692.00
CFD 2016-3 Zone 19 Cresta/Promenade Fund (265) 600.00
-
600.00
CFD 2016-3 Zone 15 Northpoint Fund (287) 65.00
-
65.00 LMD 84-1 Lighting Fund (446) 62,838.00
62,838.00
Eagle Glen HOA Streetlight Fund (473) 2,726.00
2,726.00
Fleet Operations Fund (682) 83,467.00
-
83,467.00
Workers Compensation Fund (683) 1,635,655.00
-
1,635,655.00
Total $ 1,814,110.00
$
-
$
1,814,110.00
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 common sense exemption that CEQA applies only to projects that have the 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 activity is not subject to CEQA. This action is to approve budgetary adjustments for Fiscal Year 2024, 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: LUIS NAVARRO, BUDGET SUPERVISOR
REVIEWED BY: KIM SITTON, FINANCE DIRECTOR