FY24-25 Third Quarter Budget Status Report 5-22-25.pdf — Fontana City Council, May 27, 2025

Third Quarter Budget Status Report
Fiscal Year 2024/2025
*
Compared to same period prior fiscal year
Quick Look Indicators Third Quarter* See Page
Revenues 7
Expenditures 8
Fund Balance 9

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Third Quarter Budget Status Report – 2024/2025 City of Fontana May 27, 2025
Table of Contents
Report Objectives .................................................................................................................................................................. 3 Summary of Key Points ....................................................................................................................................................... 4 Significant Economic Trends .............................................................................................................................................. 5 Summary of Proposed General Fund Adjustments .................................................................................................... 6 General Fund Revenues ...................................................................................................................................................... 7 General Fund Expenditures ................................................................................................................................................ 8 Fund Balance Review ........................................................................................................................................................... 9 Organizational Changes .................................................................................................................................................... 10 Write off of Doubtful Accounts ....................................................................................................................................... 11 Liability Claims ..................................................................................................................................................................... 12 American Rescue Plan Act Expenditure Plan ............................................................................................................. 13 Treasury Report ................................................................................................................................................................... 14 Conclusion ............................................................................................................................................................................ 24 S
chedules:

General Fund – Fund Balance Reconciliation.......................................................................................... 25 Fund Balance – Other Funds ....................................................................................................................... 26 Recommended Adjustments – General Fund ........................................................................................ 32 Recommended Adjustments – Other Funds .......................................................................................... 33

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Third Quarter Budget Status Report – 2024/2025 City of Fontana May 27, 2025
Report Objectives
The purpose of the Third Quarter Budget Status Report is to:
• Provide the City Council with an overview of all funds; • Comment on significant economic trends;
• Recommend write off of doubtful accounts; and
• Recommend budget changes to address known budget deficiencies which will materially impact fund balance;

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Third Quarter Budget Status Report – 2024/2025 City of Fontana May 27, 2025
Summary of Key Points
General Fund:
• Net decrease in General Fund inflows of $770,312:
o Increase to Transaction Use Tax of $78,297
o Increase to Interest & Rentals of $956,825
o Decrease to Miscellaneous Revenues of $417,000
o Increase to Reimbursables of $152,190
• Net decrease in General Fund outflows of $262,415:
o Offsetting Adjustments of $119,150
o New one-time requests of ($381,565)

Other Funds:
• Additional funding for the following projects:
o $1,609,000 Date Elementary School SRTS (ATP) (Grants Fund #301) o $500,000 Homelessness Prevent Res & Care Ctr (Grants Fund #301) o $306,959 Regional Navigation Center (Capital Reinvestment Fund #601) o $108,000 Septic to Sewer Conversion (Capital Reinvestment Fund #601)

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Third Quarter Budget Status Report – 2024/2025 City of Fontana May 27, 2025
Significant Economic Trends
Nationally:
• The GDP decreased at an annual rate of 0.3 percent primarily reflecting an increase in imports, a deceleration in consumer spending, and decrease in government spending. Decreases in government spending were partly offset by increases in investment and exports. The increase in consumer spending was mostly reflected in services led by spending on health care, housing, and utilities. • The US unemployment rate has increased and remains unchanged at 4.2 percent. Employment trended up in health care, transportation and warehousing, financial activities, and social assistance while Federal government employment declined. According to the Bureau of Labor Statistics, health care added 51,000 jobs in April through hospitals and ambulatory health services.

The State of California:
• California is now the fourth largest economy in the world, behind the US, China, and Germany – officially overtaking Japan. Over the long term, California’s economy has had an average nominal GDP growth of 7.5 percent from 2021 to 2024. The increasing state population and record-high tourism spending makes California the nation’s top state for business starts, access to venture capital funding, manufacturing, high-tech, and agriculture. California’s unemployment rate dropped to 5.4 percent in January 2025, ultimately gaining 3,112,600 jobs since April 2020. The leading industries contributing to jobs gained are Private Education and Health Services.

City of Fontana
• Third Quarter 24/25 sales were 5% lower than the same quarter one year ago. This is primarily due to the State being behind on sales tax processing. • The Local Agency Investment Fund (LAIF) is currently paying 4.31% (daily rate) on City investments as of March 31, 2025, up from 4.23% for the same time last year. The 2-year treasury benchmark rate as of March 31, 2025, is 3.89% down from 4.59% last year.

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Third Quarter Budget Status Report – 2024/2025 City of Fontana May 27, 2025
Summary of Proposed General Fund Adjustments
The Third Quarter Budget Report recommends the following General Fund budget adjustments:

Revenues Expenditures
Increase to Transactional Use Tax 78,297
Increase to Interest & Rentals 956,825
Decrease to Miscellaneous Revenue (417,000)
Increase to Reimbursables 152,190
770,312
Public Works & Engineering Decrease for WGMP NV5 Review (30,000) Police Battery backup service aggreement 149,150
119,150$
Finance 40,685
Development Services (500,000)
Public Works & Engineering 57,750
Police 20,000
(381,565)$
770,312$ (262,415)$
Transfers: To Fund #125 for WGMP NV5 review 30,000
From Fund #401 for Police services 59,809
Reserves: Inventories adjustment 105,711
PERS Rate Stability adjustment 956,825
830,121$ 830,121$
Fund Balance
Impact
Adjust revenue estimates to reflect third quarter collections:

Offsetting Adjustments:

New requests (one-time):

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Third Quarter Budget Status Report – 2024/2025 City of Fontana May 27, 2025
General Fund Revenues
Revenues continue to be monitored on a monthly basis. Staff recommends a net decrease in revenues of $770,312 as part of the Third Quarter Budget Status Report. See page 32 for details of the revenue adjustments.

NOTE: Property Tax in-lieu of VLF collections are lagging due to the State’s distribution which provides for lump-sum payments in January and May. Interest revenue is received starting in October and is followed by a year-end accrual for a full twelve months of interest. A large number of Business Licenses are renewable in December. A large share of Franchise revenues is received annually in the month of April. When adjusted for these anomalies, the percent of recommended budget received is 64.14%.

Revenue Source Adopted Budget
Current Budget
Before
Adjustments
Received as of
3/31/2025
Percent of Current
Budget Received

Recommended
Third Quarter
Adjustments
Recommended
Budget After
Adjustments
Percent of
Recommended
Budget Received
Sales Tax 58,638,140$ 57,928,710$ 31,538,671$ 54.44% -$ 57,928,710$ 54.44% Transaction Use Tax - - - 0.00% 78,297 78,297 0.00% Property Tax 41,290,060 43,563,830 22,963,230 52.71% - 43,563,830 52.71% Interest and Rentals 3,636,180 3,713,070 808,948 21.79% 956,825 4,669,895 17.32% Franchises 10,237,950 11,782,010 4,873,708 41.37% - 11,782,010 41.37% Business Related 10,066,170 10,914,289 8,843,478 81.03% - 10,914,289 81.03% Development Related 10,381,130 11,947,650 6,853,090 57.36% - 11,947,650 57.36% Recreation 4,176,200 4,176,200 2,934,161 70.26% - 4,176,200 70.26% Motor Vehicle in-Lieu 200,000 250,000 337,767 135.11% - 250,000 135.11% Miscellaneous Revenues 2,411,030 2,970,730 1,574,561 53.00% (417,000) 2,553,730 61.66% Reimbursables 2,129,440 2,851,350 1,503,858 52.74% 152,190 3,003,540 50.07% From Other Agencies 5,916,550 6,809,690 4,852,768 71.26% - 6,809,690 71.26% Total General Fund 149,082,850$ 156,907,529$ 87,084,241$ 55.50% 770,312$ 157,677,841$ 55.23%

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Third Quarter Budget Status Report – 2024/2025 City of Fontana May 27, 2025
General Fund Expenditures
General Fund expenditures for Third Quarter are on track and within budget. Staff recommends a net decrease in appropriations of $262,415. See page 32 for details of the expenditure adjustments.

NOTE: The above amounts do not include projects.

Department Adopted Budget
Current Budget
Before
Adjustments
Spent as of
03/31/2025
Percent of Current
Budget Spent

Recommended
Third Quarter
Adjustments
Recommended
Budget After
Adjustments
Percent of
Recommended
Budget Spent
City Administration 4,745,090$ 4,436,464$ 2,686,162$ 60.55% - 4,436,464$ 60.55% Human Resources 1,405,380 1,995,565 1,015,421 50.88% - 1,995,565 50.88% Administrative Services 623,230 735,753 457,312 62.16% - 735,753 62.16% City Clerk 883,420 1,521,746 644,736 42.37% - 1,521,746 42.37% Community Services 15,517,660 15,351,267 9,643,874 62.82% - 15,351,267 62.82% Innovation & Technology 4,848,200 5,403,863 3,672,701 67.96% - 5,403,863 67.96% Finance 4,587,160 5,236,737 3,284,851 62.73% 40,685 5,277,422 62.24% Development Services 1,578,290 4,079,869 1,626,336 39.86% (500,000) 3,579,869 45.43% Building and Safety 3,400,150 4,228,270 2,628,769 62.17% - 4,228,270 62.17% Planning 3,372,090 3,692,998 2,388,650 64.68% - 3,692,998 64.68% Public Works & Engineering 12,388,550 16,899,172 10,821,565 64.04% 27,750 16,926,922 63.93% Police 78,327,180 80,592,911 55,790,726 69.23% 169,150 80,762,061 69.08% Total General Fund $ 131,676,400 $ 144,174,615 $ 94,661,104 65.66% $ (262,415) $ 143,912,200 65.78%

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Third Quarter Budget Status Report – 2024/2025 City of Fontana May 27, 2025
Fund Balance Review
The City Council has established an Undesignated General Fund Balance goal of 25% of adopted recurring annual appropriations. The Third Quarter Report recommendations maintain this balance. The City’s Undesignated General Fund Balance represents the available resources to provide funding for future contingencies such as earthquakes, economic fluctuations, major infrastructure repairs and investment in capital for improved productivity and efficiencies.

The Third Quarter Budget Report recommends the following:
• $956,825 Increase to PERS Rate Stability Reserve

Fund Balance Reserves After Adjustments
25% Contingency Reserve $35,888,470
Animal Shelter JPA Reserve $582,570
Operating Contingencies Reserve $3,000,000
PERS Rate Stability Reserve $11,651,142
Total $51,122,182

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Third Quarter Budget Status Report – 2024/2025 City of Fontana May 27, 2025
Organizational Changes
Quarterly Budget Reports are routinely used to recommend organizational and/or personnel changes within a fiscal year. Upon approval, the total recurring costs for these organizational changes will be added to the department’s target numbers. The changes have been reviewed by Human Resources and comply with City personnel rules.

There are no organizational changes recommended as part of the Third Quarter Budget Status Report.

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Third Quarter Budget Status Report – 2024/2025 City of Fontana May 27, 2025
Write off of Doubtful Accounts
A review of the City’s Doubtful Accounts (bad debts) is routinely a part of the City’s Third Quarter Budget Review. The review and subsequent write off is necessary to accurately reflect the true value of City assets. The budget is not impacted by the reduction as budget revenue estimates are based on receipts rather than billings.

The following write offs consist of items that are: (1) too small to collect, and therefore not cost effective or (2) unable to locate. In many cases, these items will be referred to a collection agency for further action.

These items represent an information item for the City Council. Specific City Council action related to the write offs is not required.

The write offs are categorized by fund number, account, and dollar amount.

Account Title Account # Amount
Illegal Firework 101-1306 75,384$
Returned Checks 101-1307 7,055
Miscellaneous 101-1306 54,535
Total Write Offs 136,973$

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Third Quarter Budget Status Report – 2024/2025 City of Fontana May 27, 2025
Liability Claims
The City Council has authorized the Director of Human Resources and the City Manager to settle liability claims within specified dollar amounts as follows:

City Manager with the concurrence of the City Attorney $25,000 Director of Human Resources/Risk Management with concurrence of the City Attorney $10,000

The City Council has directed staff to report claim settlements as part of each quarterly budget report. There were no claims settled during the Third Quarter of Fiscal Year 2024/2025.

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Third Quarter Budget Status Report – 2024/2025 City of Fontana May 27, 2025
American Rescue Plan Act (ARPA) Expenditure Plan

Approved Projects by Federal Use Category Amount Expended Available Public Health & Economic Response 22,633,152 21,765,583 867,569 Fontana Forward Grant Program 190,786 190,786 - Homelessness Prevention Resources and Care Center 6,442,229 5,984,202 458,027 Leveraged Project: Support Government Employment 9,842,763 9,842,763 (0) Metrolink Station Security Cameras 66,411 66,411 - Park Improvements 3,241,828 2,832,285 409,542 Vaccine Bonus 526,986 526,986 - Ventilation Upgrade for City Facilities 2,322,150 2,322,150 - Revenue Loss 10,000,000 9,936,963 63,037 Parking Structure 10,000,000 9,936,963 63,037 Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200)
51,433 51,433 -
Administrative Costs 51,433 51,433 - Water, Sewer, and Broadband Infrastructure 16,531,692 7,577,342 8,954, 350 Cypress Storm Drain Project 7,340,000 608,455 6,731, 545 Data Security & Threat Detection 157,927 157,927 - Endpoint Detection & Response Solution 154,806 154,806 - Fiber to City facilities 1,773,968 66,778 1,707, 190 Network Detection & Response Solution - - - Leveraged Project: Accela 3,406,636 3,406,636 - Leveraged Project: Fontana 311 2,398,355 1,953,695 444,660 Septic to Sewer 500,000 429,133 70,867 Sewer and Storm Drain Infrastructure Masterplan 375,130 375,130 - Update Master Infrastructure Plans 424,870 424,781 89 Premium Pay 1,040,837 1,040,837 -
Part-Time Employee Retention 152,936 152,936 - Public Safety Premium Pay 887,901 887,901 - Total 50,257,114 40,372,157 9,884, 957

CITY OF FONTANA

AMERICAN RESCUE PLAN ACT (ARPA) EXPENDITURE PLAN
ESTIMATED AS OF March 31, 2025

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Third Quarter Budget Status Report – 2024/2025 City of Fontana May 27, 2025
Treasury Report

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