CITY OF MENIFEE
SUBJECT: Fiscal Year 2025/26 Mid-Year Budget Adjustments and Review, Including a Capital Improvement Program Status
Update
MEETING DATE: February 4, 2026
TO: Mayor and City Council
PREPARED BY: Margarita Cornejo, Deputy Finance Director REVIEWED BY: Travis Hickey, Chief Financial Officer
APPROVED BY: Armando G. Villa, City Manager
-------------------------------------------------------------------------------------------------------------------------------
RECOMMENDED ACTION
1. Accept the Fiscal Year 2025/26 Mid-Year Budget review and approve the additional budget revenue and appropriations as presented; and
2. Adopt a budget amendment resolution for Fiscal Year 2025/26 Mid-Year Budget adjustments; and
3. Adopt a resolution updating the City’s Authorized Position Listing & Salary Schedule approving staffing modifications; and
4. Adopt a resolution amending Resolution No. 19-838, updating the language to clarify existing practices and currently available benefits for city executive employees; and
5. Adopt a resolution amending Resolution No. 25-1584, amending the confidential personnel resolution to better reflect current departmental structures; and
6. Authorize the Finance Department to process as needed transfers of direct personnel expenditures actuals and corresponding budget associated with Capital Improvement Project Program efforts from the Operating Budget to the Capital Budget; and
7. Receive an update on the Fiscal Year 2025/26 Capital Improvement Program.
DISCUSSION
In June 2025, the City adopted the current biennial budget, incorporating Fiscal Year (FY) 2025/26 and FY 2026/27, as continued efforts to take a longer-range perspective on financial planning decisions as well as streamline and consolidate budget processes. As presented during the budget adoption process, the biennial budget incorporates both Mid-Year and Mid-Cycle reviews.
The Mid-Year review focuses on the progress and recommended adjustments at the halfway point of each respective year. The Mid-Cycle review addresses recommended adjustments in preparation for the beginning of second year of the two-year budget cycle.
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The FY 2025/26 Mid-Year budget review is presented to the City Council as an opportunity for the City Manager and the Finance Department to:
1. Provide an overall update of the City’s budget year underway.
2. Present any additional necessary budget adjustments identified during the Mid-Year review process for City Council’s consideration and approval.
3. Update the City Council on the Capital Improvement Program (CIP).
Executive Summary of 2025/26 Mid-Year Review
The current Biennial Budget for FY 2025/2026 and 2026/2027 as adopted reflected a balanced financial plan aligned with strategic priorities and long-term fiscal sustainability. The budget incorporates revenue and expenditure projections reflective of generally slower economic growth, for the regional and local economy, while maintaining existing service levels, supporting the existing workforce, and addressing high priority operational needs.
Key highlights on proposed FY2025/26 Mid-Year revenue, Operating Budget and Capital Budget adjustments are briefly summarized below and are further detailed within the report. The recommended revenue, expenditure, and assigned reserves presented for Quality of Life funds included were also presented at the Quality of Life Committee meeting on January 22, 2026. The Committee reviewed the presented use of available funds and made a motion to recommend the use of funds as presented.
Revenue Adjustments (FY2025/26 Adjusted Budget: $179,357,657/ Proposed Adjustments: $1,498,777) The City’s principal revenues are generally projected to meet adopted budget numbers, with no significant changes recommended at this time. Most of the proposed revenue adjustment increase is attributed to favorable interest earnings, and a small adjustment to VLF revenues based on updated projections.
The City Executive Office (CEO)’s request includes an increase in revenues of $1,295,000 for General Fund, $50,000 for Quality of Life, and $153,777 related to the Internal Service Funds (ISF) and Special Revenue & Other Funds for a total increase of $1,498,777.
Operating Budget (FY2025/26 Adjusted Budget: $137,926,347 / Proposed Adjustments: $1,138,941) Overall performance through the first half of the fiscal year is generally meeting budgeted expectations, but there are some operational matters presented for Council’s consideration to address and/or support current operations underway. In summary, recommendations include but are not limited to: re-alignment of several existing personnel to address agency wide restructure and/or current assignments, funding support to address mandatory wage adjustment and compaction for part-time staff, several one-time capital outlays/studies to support economic development efforts, and/or City priorities like the Valley-Wide LAFCO detachment process.
General Fund Operating Budget expenditure appropriations total $914,493 and Quality of Life recommendations total $28,360. All other funds Operating Budget expenditure appropriations total $196,008. A complete listing/detail summary of these requests is included within the Operating Expenditure Analysis & Adjustments section of the report.
Capital Budget (FY2025/26 Adjusted Budget: $96,663,589/Proposed Adjustments: $3,080,995) The City’s Capital Budget (CIP) continues to concentrate on moving the City’s infrastructure needs to fruition. In the first half of FY 2025/26, the City officially began construction of the Paloma City of Menifee Staff Report
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Wash Pedestrian Bridge, Bradley Bridge Project, and has issued several bids for projects.
Proposed FY 2025/26 Mid-Year adjustment requests of $3.08 million, including $580,000 funded by Quality of Life, provide additional funding towards needed additional funding based on overall increased project costs. Funding requests are focused on projects at or near construction, and/or pavement management program support. Details of the current CIP and requests are included within the CIP Review & Update of this report.
TABLE 1: FY 2025/26 CITYWIDE (OPERATING & CAPITAL IMPROVEMENT (CIP)
EXPENDITURE BUDGET SUMMARY
Category
FY2025/26
Adopted
Budget ($)
FY2025/26
Adjusted
Budget ($)
FY2025/26 Mid-
Year
Appropriation
Recommendations
Total
Proposed
FY2025/26
Adjusted
Budget
% of
Citywide
Budget
$104,949,150 $105,892,003 Operating Budget:
(General Fund & Quality of Life)
$99,372,143 $942,853
44.36%
32,852,196 33,048,314Operating Budget:
(ISFs, Special Revenue & Other)
29,811,633 196,088
13.85%
Total Operating Budget: $129,183,776 $137,801,347 $1,138,941 $138,940,317 58.21% 13,189,811 96,663,589 3,080,995 99,744,584 41.79%CIP Program (1) (Capital Project Fund)
Total CIP Budget: $13,189,811 $96,663,589 $3,080,995 $99,744,584 41.79% TOTAL $142,373,587 $234,464,936 $4,219,936 $238,684,901 100.00% (1) Beginning FY2024/25 all CIP (Capital Projects) budget/expenses are consolidated/unified within the Capital Projects Fund (Fund 4320).
Budget reflected in Tables 3 & 4 are just the new appropriations/transfers of the current year. All other CIP budget is held within Fund 4320.
In summary, for the Citywide Operating & CIP Budget (represented by the Operating and Capital budgets combined) the CEO’s Mid-Year recommendations include a recommended increase in total revenue appropriations of $1,498,777 across all funds and an increase in total expenditure appropriations of $4,219,936. The Citywide Operating and CIP Budget, as adopted, does not include Bonded Community Facilities Districts (CFDs) for Infrastructure or the corresponding Fiduciary funds, as these funds are managed and used exclusively for the purpose of the CFD bond issuance, administration, reimbursements, and debt service payments. Mid-Year budget adjustments for these funds are discussed in a separate section of the staff report.
Adopted Citywide Budget vs. Adjusted Citywide Budget (Summary of Adjustments) as of February 1, 2026
The adopted Citywide Operating & CIP Budget for Fiscal Year 2025/26 totaled $142,373,587 in revenue and $142,373,587 in expenditures for all funds, excluding Bonded CFDs (Capital & Fiduciary Funds), and supported 336.5 (304 full-time and 32.5 part-time) positions. The City’s General Fund total adopted budget, inclusive of Quality of Life Measure, totaled projected revenues of $99,372,143 and total projected operating expenditures of $99,372,143, resulting in a balanced operating budget.
The Adopted Budget is adjusted throughout the biennial period by including appropriations that are carried forward from the prior fiscal year for projects that were planned for and authorized by the City Council, however, not fully completed. In addition, throughout the year and at Mid-Cycle the City Council approves adjustments to the Adopted Budget in separate City Council action City of Menifee Staff Report
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agenda items. As of February 1, 2026, revenue adjustments total $34,801,289 and expenditure adjustments total $92,091,349 summarized in the following table.
TABLE 2: FY 2025/26 CITYWIDE BUDGET ADJUSTMENTS THRU FEBRUARY 1, 2026 Description Revenue Expenditures
FY 2024/25 Carryover Appropriations $31,901,814 $44,751,724 FY 2024/25 Carryovers Purchase Orders N/A $43,948,396
FY 2025/26 Additional Budget Resolutions $2,899,475 $3,391,229 Total: $34,801,289 $92,091,349
General Fund & Quality of Life Funds (Mid-Year Budget Adjustment Recommendations) The following tables (Table 3 and Table 4) depict the recommended revenue and expenditure adjustments by category within the General Fund and Quality of Life.
TABLE 3: FY 2025/26 MID-YEAR BUDGET ADJUSTMENT RECOMMENDATIONS (GENERAL FUND) General Operating & Capital Budget Year-to-Date (YTD) & Fund Balance Fund Type
Adopted
Budget
FY 2025/26
Adjusted
Budget
FY 2025/26
FY2025/26
Mid-Year
Adjustments
Recommended
Adjusted
Budget with
FY 2025/26
Mid-Year
Adjustments
YTD Actuals
FY 2025/26
as of
1/23/2026
Percentage
(%) YTD to
Current
Adjusted
Budget
Revenue:
Sales Tax(1) $13,613,160 $13,613,160 $0 $13,613,160 $4,251,559 31.23% Property Tax 24,295,893 24,295,893 0 24,295,893 9,438,410 38.85% Development Fees 12,845,000 12,845,000 395,000 13,240,000 5,723,934 44.56% Vehicle License Fee 12,474,953 12,474,953 300,000 12,774,953 0 0.00% Franchise Fees 5,875,000 5,875,000 0 5,875,000 799,101 13.60% Other 9,281,110 11,520,679 600,000 12,020,679 3,780,174 32.81% Total Revenue $78,385,116 $80,624,685 $1,295,000 $81,819,685 $23,993,179 29.76%
Expenditures:
Personnel(2) $38,674,653 $38,548,653 $109,838 $38,658,491 $18,184,879 47.17% Operating Expenses 28,660,869 32,994,912 357,000 33,451,912 8,791,117 26.63% Capital Outlays/1x
Studies
215,000 1,545,876 447,655 1,893,541 513,647 33.23%
Transfers &
Allocations
10,470,851 10,470,851 0 10,470,851 0 0.00%
Capital Projects (CIP) 0 0 0 0 0 0.00%
Debt 0 0 0 0 0 0.00% Total
Expenditures $78,021,373 $83,560,292 $914,493 $84,474,795 $27,489,642 32.90% (1) Reflects revenues collected through October 2025, as actual revenues are collected in arrears. (2) Reflects payroll costs through end of December 2025.
The Quality of Life recommended Mid-Year revenue increase is $50,000 for a total revised revenue budget of $21,608,647 and a recommended $608,360 increase in expenditure and appropriations and transfers for a revised expenditure budget of $23,184,179 from the FY 2025/26 Adjusted Budget (Current). Additionally, the FY2025/26 Mid-Year review includes recommendations to allocate Quality of Life Fund Balance towards public safety equipment, see Fund Balance Reserves and Assigned Fund Balances for additional detail.
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TABLE 4: FY 2025/26 MID-YEAR BUDGET ADJUSTMENT RECOMMENDATIONS (QUALITY OF LIFE) Quality of Life Operating & Capital Budget Year-to-Date (YTD) & Estimated Use of Fund Balance Fund Type
Adopted
Budget
FY 2025/26
Adjusted
Budget
FY 2025/26
FY2025/26
Mid-Year
Adjustments
Recommended
Adjusted
Budget with
FY 2025/26
Mid-Year
Adjustments
YTD
Actuals
FY 2025/26
as of
1/23/2026
Percentage
(%) YTD to
Current
Adjusted
Budget
Revenue:
Sales Tax(1) $21,008,647 $21,008,647 $0 $21,008,647 $7,499,824 35.70% Interest 550,000 550,000 50,000 600,000 405,374 73.70%
Total Revenue $21,558,647 $21,558,647 $50,000 $21,608,647 $7,905,197 36.67%
Expenditures:
Personnel(2) $7,881,456 $7,881,456 $0 $7,881,456 $3,508,658 44.52% Operating Expenses 13,469,314 13,473,898 28,360 13,502,258 5,814,445 43.15% Capital Outlays/1x Studies 0 33,504 0 33,504 0 0.00%
Transfers & Allocations 0 0 0 0 0 0.00%
Capital Projects (CIP)(3) 1,186,960 1,186,960 580,000 1,766,960 1,186,960 100.00% Debt 0 0 0 0 0 0.00%
Total
Expenditures
$22,537,730 $22,575,819 $608,360 $23,184,179 $10,510,063 46.55% (Deliberate Use of Fund
Balance)/Estimated
Surplus
($979,083) ($1,017,172) ($558,360) ($1,575,532)
(1) Reflects revenues collected through October 2025, as actual revenues are collected in arrears. (2) Reflects payroll costs through end of December 2025. (3) Beginning FY2024/25 all CIP (Capital Projects) budget/expenses are consolidated/unified within the Capital Projects Fund (Fund 4320). Budget reflected in Table 11 are just the new appropriations/transfer of the current year. All other CIP budget is held within Fund 4320.
Current Economic Outlook (National, State, Regional & Local) & Revenue Analysis Going into the current biennial budget cycle, the adopted FY 2025/2026 and FY 2026/2027 Budget reflected a more conservative fiscal outlook, with slower revenue growth against the backdrop of an overall uncertain national and local economy. At a more localized level, retaining its status as one of the fastest growing communities in the state, the City of Menifee is expected to continue to grow, but at a more leveled pace. Reflecting some of the broader elements of the national financial background including: higher interest rates influenced by the Federal Reserve’s efforts to rein inflation, impacts of immigration policy on certain labor markets such as construction, and the federal shutdown during the fall of 2025, several of the City’s principal revenues, from development to sales activity, have experienced a flattening in growth.
Nationally, throughout 2025 the economy has seen some positive areas (artificial intelligence infrastructure investment, which has already surpassed $405 billion, and rising income among high wealth households) that are driving the economy forward, while other factors such tariff induced inflation, geopolitical uncertainty, and weaker labor market are contributors to overall tepid growth projected through early 2026 before more robust growth. Similarly, within California the economy has performed stronger than originally projected in last year’s state budgetary review. The higher performance has been principally attributable to continued consumer City of Menifee Staff Report
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spending, slower-than-expected pass-through of higher tariff costs to consumers, and stronger- than-projected personal income growth. However, the position of the state economy is bifurcated with certain areas, AI, aerospace and high-productivity continue to expand, where other areas, including construction, non-durable goods, leisure and hospitality, and government funded services have continue to struggle. Unemployment was expected to increase to 4.5% by end of 2025, inflation projected to peak at 3.5% in early 2026, and then gradually decline. Overall GDP is expected to slow through early 2026 and begin rebounding in late 2026.
As the City moves through the second half of the current fiscal year, overall recommendations for adjustments are fiscally conservative. While development activity, including residential activity, has been notably slower in the first half of the year, there are various industrial projects nearing permitting in the upcoming months. Based on internal review and discussion with development departments during the Mid-Year process, the City forecasts more development activity during the balance of the year.
Economic conditions will continue to be closely monitored and factored in during the Mid-Cycle budget review scheduled to be presented for adoption in June 2026. The following table provides an overall summary of some of the principal revenue analysis incorporated as part of the Mid- Year review process.
Proposed Mid-Year Revenue Adjustments: $1,498,777
($1,345,000 General Fund/Quality of Life)
The City’s top six budgeted revenue sources for the General Fund, inclusive of Quality of Life (Measure DD) are listed in the table below. Together, these six revenues sources represent
90.1% of the budgeted General Fund revenues, including Quality of Life, as adopted in June 2025.
TABLE 5: TOP 6 PRINCIPAL CITY REVENUES PROPOSED MID-YEAR ADJUSTMENTS Revenue Description Proposed
FY2025/26
Mid-Year
Adjustments
Mid-Year Review/Analysis
1. Sales Tax $0 The City has received revenue for the July to October 2025 period through the Mid-Year review. Based on the current year-to-date (TYD) actuals and performance of Sales Tax, excluding 1x time sales tax proceeds, in FY2024/25 this revenue is generally trending in line within the adopted budget. Other external factors impacting sales activities for the remainder of the fiscal year include impact of continued tariffs on inflation, prices, and consumer response to these. No Mid-Year adjustments.
2. Quality of Life (Measure DD) 0 The City has received revenue for the July to October 2025 period through the Mid-Year review. Based on the current YTD actuals and performance of Sales Tax, excluding 1x time sales tax proceeds, in FY2024/25, this revenue is generally trending in line within the adopted budget. Other external factors impacting sales activities for the remainder of the fiscal year include impact of continued tariffs on inflation, prices, and consumer response to these. No Mid-Year adjustments.
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Revenue Description Proposed
FY2025/26
Mid-Year
Adjustments
Mid-Year Review/Analysis
3. Property Tax 0 HdL projections received in August 2025 indicate property tax revenue is expected to meet adopted budget numbers. Compared to FY 2024/25, the taxable assessed value has increased by 11.69%, and YTD actuals are trending with adopted budget which incorporated anticipated growth in this revenue category. Recommendation for balance of the year includes No Mid-Year adjustments.
4. Building/Planning/Engineering/
Fire Fees (Development Fees)
395,000 The first half of FY2025/26 has been marked by a notable leveling/slowing in development activity, particularly in the planning and building/safety areas. However, there are several industrial projects anticipated to begin building activity in the 2 nd half of the fiscal year. Recommended Adjustments for balance of the year include a total of $395,000, represented by $150,000 adjustment associated with recoverable planning (landscape architecture) services, and $100,000 associated with recoverable construction inspection services. These two revenue adjustments are offset/matched with equal expenditure appropriation requests. There is also a 1x adjustment of $145,000 recommended for Fire Inspection Services, based on current YTD actuals. This increase is associated with fire inspections of a larger project in the first half of FY2025/26.
5. Vehicle License Fee (VLF) 300,000 Revised HdL projections reflect VLF revenue expected to exceed original adopted FY2025/26 budget based on updated Assessed Valuation numbers. Recommendation for balance of the year includes Recommended Adjustment of $300k.
6. Franchise Fees 0 Solid Waste Franchise Fees received for the 1st quarter of FY 2025/26 are trending higher than originally forecast. Other franchise revenues (gas and electricity) are collected later in the year. Cable TV franchise revenues are trending slightly lower than the projected monthly average.
Recommendation for balance of the year includes No Mid-Year adjustments.
TOTAL $695,000
Based on the revenue analysis discussed in the preceding section relative to the City’s top six revenue sources, recommendations are limited to the $695,000 described. The remaining General Fund and Quality of Life Mid-Year adjustments includes a revenue adjustment increase of $550,000 in interest revenue due to higher than projected interest earnings. There is also a one-time transfer of $100,000 moving from the CIP Budget to the Operating Budget.
TABLE 6: FY 2025/26 MID-YEAR GENERAL FUND & QUALITY OF LIFE REVENUE
PROPOSED REVENUE AND OTHER ADJUSTMENTS
# Fund Description FY 2025/26
Mid-Year Revenue
Adjustments ($)
Justification
1 General Fund Interest
Income
$500,000 Higher interest revenue receipts based on YTD
actual.
2 Quality of Life Interest
Income
50,000 Higher interest revenue receipts based on YTD
actuals.
3 General Fund
(CIP Budget to Operating
Budget)
Budget
Transfer In
100,000 Cancelling of CIP 24-13 Public Arts in the Park and moving budget from CIP (Capital Projects
Fund) to General Fund (Capital to Operating
Budget)
TOTAL: $650,000
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Proposed revenue adjustments for other funds include the following:
TABLE 7: FY 2025/26 MID-YEAR INTERNAL SERVICE & OTHER FUNDS REVENUE
PROPOSED REVENUE AND OTHER ADJUSTMENTS
No. Fund Description FY 2025/26
Mid-Year
Revenue
Adjustments ($)
Justification
1 Internal Services
Funds (ISFs)
Interest Income $140,000 Higher interest revenue receipts based on YTD actual.
2 Gas Tax & Other
Special Revenue
Funds
Interest Income 125,000 Higher interest revenue receipts based on YTD actuals.
3 CFDs (Maintenance) (111,220)
4 CSAs
Updated Special
Tax Assessments (3)
Reducing adopted revenues based on
updated special assessment levy amounts.
TOTAL: $153,777
Operating Expenditure Analysis & Adjustments: $1,138,941 ($942,853 General Fund/Quality of Life)
General Fund expenditure appropriation requests total $914,493 representing various personnel adjustments, operating costs, and capital/one-time studies. Quality of Life includes an operating appropriation request of $28,360 related to some additional technology upgrades to the integration with the current dispatch services data.
Overall, budgetary expenditures within the General Fund, including Quality of Life, are in line with their original budget projections. Mid-Year appropriation requests are focused on immediate needs necessary to complete the balance of the year, and/or address current operational challenges.
Personnel Mid-Year Requests
Personnel expenditures year-to-date actuals through the first half of fiscal year were at 45.50% of the Adjusted Budget across all funds and 46.72% for General Fund and Quality of Life.
The FY 2025/26 Adopted Budget includes a total of 336.5 full-time equivalent (FTE) personnel, represented by 304 full-time and 32.5 part-time FTEs. As part of the Mid-Year process, departments reviewed organizational structure and operations to identify critical staffing needs. Staff is requesting approval of the following: promotion of four FTE positions to align with overall agency restructuring, reclassification of one position to align with current operations/function, and an increase to the part-time budget to account for the state-wide increase of minimum wage and to update hourly wage rates for part-time classification to address pay compaction. The proposed Mid-Year recommendations do not result in total FTE increases, as all proposals impact promotion and/or reclassification of existing positions.
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TABLE 8: FY 2025/26 MID-YEAR PERSONNEL REQUESTS (ALL FUNDS) # Department/
Division
Position Title New
FTE
FY
2025/26
Salary &
Benefits
(1)
Funding
Source
Justification
1 City Executive
Office (CEO)
Assistant City Manager
(Promotion from Deputy City
Manager)
0 $6,562 General
Fund
Justification: Operational
Need – Based on overall
agency restructuring. Full year
cost FY 2026/27: $12,410.
2 City Executive
Office -
Communications
Communications and
Government Affairs
Director
(Promotion from Public Information
& Legislative Affairs Officer)
0 11,845 General
Fund
Operational Need – Based on
overall agency restructuring.
Full year cost FY 2026/27:
$34,518.
3 City Executive
Office - Economic
Development
Economic Development
Director
(Promotion from Economic
Development Manager)
0 11,366 General
Fund
Operational Need – Based on
overall agency restructuring.
Full year cost FY 2026/27:
$43,316.
4 Finance/
Strategic
Programs and
Initiatives
Director of Strategic
Programs and Initiatives
(Promotion from Deputy Finance
Director)
0 11,336 General
Fund
Operational Need – Based on
overall agency restructuring. Full
year cost FY 2026/27: $29,127.
5 Public Works/
Engineering –
Inspection
Senior Public Works
Inspector
(Reclassification from
PW Inspector II)
0 3,022 General
Fund
Justification: Operational Need
– Based on
operational/functional
assignment and needs. Full
year cost FY 2026/27: $10,284.
6 Community
Services Part-time staff
0 65,707 General
Fund
Justification: The minimum
wage increases as of 1/1/26
will increase PT wages and
funds will also be needed to
address pay compactions.
TOTAL 0 $109,838
(1) Prorated to be effective 2/4/2026, 5 months.
Other Personnel Adjustments
Part of the FY2025/26 Mid-Year recommendations include updating language in the Compensation and Benefits Resolution for City Executive Employees. These revisions are administrative in nature, primarily to clarify existing practices and currently available benefits. The changes do not result in any increase in compensation or an expansion of benefits for Executive Employees.
Additionally, the City is amending the Confidential Resolution to better reflect the current departmental structure. This amendment removes the Management Analyst in the Economic Development Department and replaces it with the Senior Management Analyst in the City Executive Office. Furthermore, The Principal Accountant in Accounting is being added to the Confidential Resolution. This position will be supporting in costing City labor negotiation contracts and supporting the budget development process.
Lastly, the Authorized Position Listing has been updated to reflect the following flex classifications:
Accounting Technician I/II
Office Specialist I/II
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Park/Landscape Maintenance Worker I/II
Street Maintenance Worker I/II
No additional budgetary appropriations are needed to accommodate this adjustment, and any fiscal impact will be absorbed by existing budget.
Operating Expenses Mid-Year Requests
Expenditures year-to-date are trending within budget. Operations and maintenance expenditures year-to-date are 34.13% Citywide, and 31.43% of the adjusted budget for General Fund and Quality of Life. Larger expenses, such as Dispatch Services and Fire Services are expected to be received later in the fiscal year and are therefore not yet realized.
TABLE 9: FY 2025/26 MID-YEAR OPERATIONS & MAINTENANCE REQUESTS # Department Description
Increase/
(Decrease) Justification
GENERAL FUND
1 Menifee Police
Department
1x appropriations to support
various activities such as
training.
$32,000 Operational needs to support
professional staff development and
other costs.
2 Community
Development –
Planning Division
Professional As Needed
Planning Services (Landscape
Architecture)
150,000 Needed to support recoverable
services, offset by corresponding
revenue adjustment.
3 PW/Engineering –
Construction
Inspection
Professional As Needed
Construction Inspection
Services
100,000 Needed to support recoverable
services, offset by corresponding
revenue adjustment.
4 Community Services Central Park Turf
Replacement Phase I
60,000 Replacement of turf located between
bridge/civic center parking lot.
5 Community Services Independence Celebration
2026 (Enhanced Celebration)
15,000 Enhanced celebration approved at
1/21/2026 Council Meeting.
GENERAL FUND SUBTOTAL $357,000
QUALITY OF LIFE
6 Menifee Police
Department
CentralSquare API (CAD
data/RMS Data). Increase to
Dispatch Agreement to
accommodate.
$28,360 Will help address/improve
connectivity and access to CAD data
across other data platforms.
QUALITY OF LIFE SUBTOTAL $28,360
ISFs, GAS TAX & OTHER SPECIAL REVENUES FUNDS
7 IT Department Microsoft 365 License renewal
additional cost & Building
Division license expansion.
89,744 Required renewal cost increases and
recommended license expansion
(Upcodes).
8 Community Services LLMD 89-1, Zone 38 40,000 Green Shrub Fence Installation LLMD 98-1 Zone 38.
9 Community Services
& Finance
CFDs (Maintenance) Utility
Costs & admin. costs.
18,844 Increased projected utility costs and
district administration costs.
10 Finance Adjustment to cover streetlight
Debt Service admin. costs.
37,500 Needed to cover projected admin.
costs for streetlight debt service.
ISFs, GAS TAX & OTHER SPECIAL REVENUES FUNDS
SUBTOTAL
$186,088
TOTAL $571,448
Capital Outlay & One-Time Studies Mid-Year Requests
Capital Outlay year-to-date expenditure actuals are 30.62% of the Adjusted Budget Citywide and
32.52% for General Fund and Quality of Life. Larger capital outlays, such as vehicle purchases, can take several months to receive from an order being placed. The various Capital Outlays & City of Menifee Staff Report
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One-Time Studies requested as part of this Mid-Year review are summarized in the following table.
TABLE 10: FY 2025/26 MID-YEAR CAPITAL OUTLAYS/1X STUDIES REQUESTS # Department Description
Increase/
(Decrease) Justification
GENERAL FUND
1 City Executive Office-
Economic
Development
Professional Services for Fiscal
Revenues Use Audit, Mapping,
& Development Analysis.
$167,655 Economic Analysis (includes 3 total
phases) to help support long-term
economic development strategies.
2 Community Services Professional Services for
Landscape Standards update.
100,000 Needed to provide support for
comprehensive landscape standards
update.
3 Community Services Public Arts Standards &
Guidelines
100,000 Transfer of budget from CIP 24-13
Public Arts in the Park, to first establish
public arts standards/guidelines as first
step.
4 Community Services LAFCO Application Support
Services
50,000 Professional Services to support
application to annex Valley-wide LMD
maintenance districts,
5 Community Services Asset Inventory for Valley-wide
Parks
30,000 Inventory of Valley Wide Park assets to
determine condition of assets and
future costs.
GENERAL FUND SUBTOTAL $447,655
ISFs, GAS TAX & OTHER SPECIAL REVENUES FUNDS
6 City Executive Office:
Communications
Purchase of new AV network
switches.
$10,000 Upgrade our infrastructure from 1G to
10G connections.
ISFs, GAS TAX & OTHER SPECIAL REVENUES FUNDS
SUBTOTAL
$10,000
TOTAL $457,655
Other Operational Adjustments
Other operational adjustments were reviewed and analyzed and will be absorbed within the current year’s budget through savings. Of note, an increase of $70,000 in animal sheltering services is a result of the continued increase of animals originating from Menifee. This increase is also expected to continue into FY2026/27. Operational savings in other areas were identified to cover this expense along with $10,000 to establish a microchip and spay/neuter voucher pilot program as efforts to mitigate some of the challenges in leveling volume of sheltering/field services. Lastly, in addition to the $32,000 appropriation identified to support various police training and other areas, repurposing of grant funding for eligible uses will allow for the availability of an additional $68,000 for various one-time expenses, such as needed spacing reconfiguration.
Capital Improvement Program (CIP) Review & Update
At budget adoption in June 2025, the FY 2025/26 CIP included new funding totaling $13,189,811 for twenty-four (24) ongoing and/or new projects. As many of the CIP projects are complex multi- year projects spanning across fiscal years, each year remaining funding of previously approved CIP projects is carried forward into subsequent years until project completion. All expenditure appropriations, including carry-overs and respective funding source transfers are consolidated within Fund 4320 (Capital Project) beginning FY2024/25. The Adjusted CIP budget below reflects the combined adopted budget, carried over project budgets and any additional appropriation/changes activity. The FY2025/26 Adjusted CIP budget as of 2/1/2026 represents approximately 66 active and funded projects.
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CIP Program FY2025/26 Adjusted Budget Summary: $96,663,589 In summary, the following updates occurred from July 2025 through February 2026 (prior to the FY 2025/26 Mid-Year requests):
- Budget expenditure carryovers of $80,531,394 (encumbrances and previously appropriated budget) for previously approved CIP projects underway. Approximately $39.2 million, or 48.63% of this represented contract/encumbered activity underway. - There are nine items identified in the attached Budget Amendment Resolution (BAR) summary, approving expenditure appropriations totaling $2,942,384 towards various projects. $2.3 million of the new appropriations correspond to grant/TUMF reimbursable expenditures/additional funding secured (Attachment 1).
FY 2025/26 Mid-Year CIP Requests
New Appropriation requests of $3,080,995 and elimination of one project/transfer of funds totaling $100,000, as follows:
-$580,000 from Quality of Life funds to supplement existing funding for CIP 25-05: Evans Road/Craig Ave Traffic Signal.
-$850,995 from Measure A funds to supplement existing funding for CIP 24-01: Citywide Traffic Signal Safety Improvements.
-$1,050,000 from SB 1 and Measure A funds to supplement existing funding for CIP 25- 07: FY24/25 AC Resurfacing (Phase 2 - Lazy Creek).
-$600,000 from Gas Tax to fund FY25/26 Citywide Pavement Improvements, supporting overall Pavement Management efforts.
-($100,000) originally funded by General Fund transferred from the CIP Program to the Operating Budget formally removing CIP 24-13: Public Arts in the Park project and using the funds to establish Public Arts Standards & Guidelines as an initial step.
A summary of the adopted and adjusted CIP budget, including Mid-Year requests, can be found within Table 11 on the following page.
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TABLE 11: FY 2025/26 ADOPTED vs. FY 2025/26 ADJUSTED BUDGET (CIP) UPDATE (Including FY 2025/26 Mid-Year Requests, $580,000 Funded by Quality of Life) FY 2025/26
PROJECT CATEGORY # OF
PROJECTS
Adopted
Budget
FY2025/26
Adjusted
Budget
Mid-Year
Requests
FY2025/26
Adjusted
Budget (with
Mid-Year)
Transportation 14 $1,873,503 $56,223,073 $0 $56,223,073 Traffic Signal 4 1,000,000 3,605,284 1,430,995 5,036,279 Street Improvement 12 2,225,960 6,938,638 0 6,938,638
Pavement Management (PMP) 8 3,266,348 9,739,715 1,650,000 11,389,715 Drainage 3 1,274,000 1,974,833 0 1,974,833
Streetlight 0 0 0 0 0
Public Facility 10 2,900,000 8,757,999 0 8,757,999
Park, Recreation, and Trail(1) 11 650,000 8,695,826 (100,000) 8,595,826 Technology Infrastructure 2 0 552,153 0 552,153
Studies 3 0 176,068 0 176,068
Transfer to Operating Budget(1) (1) N/A N/A 100,000 100,000 TOTAL 66 $13,189,811 $96,663,589 $3,080,995 $99,744,584 (1) CIP 24-13 Public Arts in the Park project to be eliminated from CIP program, and $100k to be transferred back to Operating Budget (General Fund) for Public Arts Standards & Guidelines.
In total, the FY 2025/26 CIP Budget, inclusive of: (1) the current year adopted budget funding, (2) additional appropriations requests since July 1, 2025, (3) Fiscal Year 2025/26 Mid-Year requests discussed above, (4) and prior year budget and encumbrance carryovers for ongoing projects will be $99,744,584.
Direct Personnel Costs for CIP Project Delivery:
Throughout the first half of FY2025/26 CIP staff has been coding/tracking all hours of direct time for specific CIP projects. These personnel costs help reflect a more complete picture of the total costs for an infrastructure project. Therefore, as part of the recommended actions included in this Mid-Year review process, staff is requesting authorization for the Finance department to periodically and throughout the year transfer corresponding personnel costs and the respective budget from the Operating Budget to the Capital Budget. The Citywide Operating and Capital Budget in aggregate would not increase, but costs and budget would be moved from operating to capital. Estimated year-to-date personnel costs are $249,736.
Fund Balance Reserves and Assigned Fund Balances
From a financial standpoint the City ended the Fiscal Year 2024/25 in a stable and fiscally strong position. Collectively revenues and operational savings resulted in an estimated unrestricted net surplus of just under $13.9 million in General Fund and $3.1 million in Quality of Life. These amounts are net of restricted uses, and other use requirements such as the amount needed to adjust the reserve amounts to meet the 40% requirement for both FY2025/26 and FY2026/27.
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Quality of Life
With respect to the existing Quality of Life Fund Balance, as part of the FY2025/26 Mid-Year recommendations presented and recommended by Quality of Life Committee on January 22, 2026, the following were included:
-Fire Engine, $1,036,000. To be added to existing $764,000 assigned fund balance in General Fund for the purchase of a fire engine at the future Fire Station (Menifee Valley). -Public Safety Equipment, $90,563. Establish assigned fund balance to help support future public safety equipment purchases.
Based on these recommendations Quality of Life would have an estimated remaining unassigned fund balance of $1.4 million which will be reviewed/incorporated as part of the FY2026/27 Mid- Cycle for infrastructure and/or public safety needs.
General Fund
In accordance with the City Council approved Fund Balance Policy and, recognizing the one-time nature of the revenue and operational savings sources, the excess General Fund balance (beyond the established 40% Reserve Requirement, including the necessary increase for FY2026/27), has been distributed amongst the following Assigned Fund Balance categories as follows:
-Fleet Replacement, $435,308. Add to existing assigned fund balance to help cover upcoming purchases of citywide fleet/equipment.
-Self-Insured Retention/Insurance Premium Costs, $4.5 million. As the City’s services expand, the quantity/size of claims is anticipated to continue to grow. Insurance premiums have also experienced significant year-over-year increases and are forecast to continue to do so.
-Unfunded Pension Liability, $274,069. Realized budget savings from FY 2024/25 will be added to existing assigned fund balance and/or future Section 115 trust to offset significant increases in future years, as the City continues to prioritize maintaining no outstanding unfunded pension liability balance.
-Other Post Employment Benefits (OPEB), $3.8 million. Similar to Unfunded Pension Liability. Establish as assigned fund balance and/or future Section 115 trust to offset existing current and future liability.
-Fire Services Fund, $2.775 million. Establish assigned fund balance to help support future fire services costs/increases.
-Public Facilities, $2.038 million. Will be added to existing assigned fund balance.
Bonded CFDs: (Infrastructure) Funds and Fiduciary Funds Through its established CFD policy, the City works with developers on the formation and bond issuance of infrastructure CFDs used to finance eligible public improvements and/or fees. It is important to note that the related debt is not an obligation of the City, but of the CFD and respective properties. The following adjustments for the bonded CFDs are requested:
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TABLE 12: BONDED CFDS FY 2025/26 MID-YEAR APPROPRIATION REQUESTS Fund Category Type
Revenue
Adjustment ($)
Expenditure
Adjustment ($) Justification/Explanation
CFD Funds (Infrastructure) ($194,900) $0 Revised interest projections based on Year to Date (YTD) actuals
and fund balances.
CFD Funds (Fiduciary) (9,500) 2,499 Revised interest projections based on Year to Date (YTD) actuals
and fund balances. Expenditure
adjustment for admin. expenses.
TOTAL ($204,400) $2,499
STRATEGIC PLAN OBJECTIVE
Regular City Business
FISCAL IMPACT
Summary of Revenue & Expenditures Adjustments by Fund Type Table 13 below provides an overall summary of all revenue and expenditure Mid-Year adjustment requests by fund type and amount.
TABLE 13: FY 2025/26 MID-YEAR ADJUSTMENT RECOMMENDATIONS Fund Category
Proposed FY 2025/26
Revenue Adjustments
Proposed FY 2025/26
Expenditure Adjustments
General Fund $1,295,000 $914,493
Quality of Life Fund 50,000 28,360 Internal Service Funds (ISF) 140,000 89,744 Gas Tax & Other Special Revenue Funds 125,000 10,000 LLMD Funds 0 40,000 CFD Funds (Maintenance) (111,220) 18,844 CSA Funds (3) 0
DIF/Quimby/RBBD Funds 0 0 Debt Service 0 37,500
Capital Projects Fund 0 3,080,995
Total Revenue/Expenditures $1,498,777 $4,219,936
Fund Category FY 2025/26 Transfers In
Adjustments
FY 2025/26 Transfers Out
Adjustments
Quality of Life Fund $0 $580,000
Gas Tax & Other Special Revenue Funds 0 2,500,995 Capital Projects Fund 3,080,995 0
Total Transfers In/Transfers Out $3,080,995 $3,080,995
Fund Category FY 2025/26 Revenue
Adjustments
FY 2025/26 Expenditure
Adjustments
CFD Funds
(Infrastructure & Fiduciary Funds)
($204,400) $2,499
TOTAL ALL FUNDS $4,375,372 $7,303,430
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ATTACHMENTS
1. Listing of FY 2025/26 Budget Amendment Resolutions (BARs) & Carryover Items through February 1, 2026
2. Budget Amendment Resolution
3. Resolution - Authorized Position Listing & Salary Schedule
4. Exhibit A - Authorized Position Listing & Salary Schedule
5. Resolution - Executive Employees
6. Resolution - Confidential Personnel