TO: Mayor and City Council
FROM: Philippe Eskandar, City Manager
BY: Hillary Guirola-Leon, Finance Director
Mark Siegfried, Accounting Manager/Controller
DATE: October 25, 2024
SUBJECT: APPROVAL OF FY 2023-2024 BUDGET CARRYOVERS AND FY 2024-2025 RE-BUDGETS AND FINAL FY 2023-2024
BUDGET ADJUSTMENTS
STRATEGIC PLAN CRITICAL SUCCESS FACTORS
Fiscally Responsible and Transparent City Government
BACKGROUND
In accordance with the Citywide Financial Policies adopted by the Council in May 2018, all budget appropriations lapse at fiscal year-end (Resolution R-18- 08, Section 6.) This is the typical practice among governments. However, there are often outstanding purchase orders and unfinished capital projects at year-end. Outstanding purchase orders require City Council action for them to be carried over and re-appropriated in the new fiscal year. In addition, capital improvement projects (CIP) typically take more than one year to complete and the timing of the expenditures can vary depending on the project.
During the FY 2024-2025 budget preparation, staff estimated the projected expenditures to be re-budgeted and carried over to FY 2024-2025 budget.
Now that FY 2023-2024 is complete and final expenditures are known, the previous projected carryover amounts can be updated.
Occasionally, there are also some unfinished projects associated with the operating budget that are not able to be completed by the end of a fiscal year, which do not have outstanding purchase orders or contracts associated with them. These too require re-authorization by the City Council to allow them to Steven W. Huang, DDS, Mayor
Gretchen Shepherd Romey, Vice Mayor
Tony Chou, Council Member
Calvin Lo, Council Member
Steve Talt, Council Member
be carried over into the new year. At this time, staff is also requesting a few expenditure year-end cleanup amendments to the City’s final FY 2023-2024 budget. These will be discussed below.
DISCUSSION
FY 2023-2024 Carryovers
Attachment 1 lists six outstanding purchase orders as of June 30, 2024, for which the goods and services have been ordered but not yet received.
Procuring these items was difficult, which resulted in a delay in receiving the goods and services.
In addition, City staff is requesting re-appropriations for the outfitting of Police Department vehicles in the amount of $50,000. This expenditure was budgeted in FY 2023-2024 and needs to be re-appropriated to fund the outfitting of the vehicles purchased.
The total FY 2023-2024 carryover request is $286,150.
FY 2024-2025 Re-Budgets for Capital Improvement Projects:
Attachment 2 is a listing of capital improvement projects included in FY 2023- 2024 and FY 2024-2025 budgets. For FY 2023-24, the schedule lists the project’s final budget amount, actual expenditures incurred in FY 2023-2024, and the final amounts required to be re-budgeted in FY 2024-2025. The rebudgets are due to the timing of the projects and are not increasing the total budgeted project costs.
The schedule also includes the FY 2024-2025 adopted budget which lists the new CIP’s, the adopted re-appropriations, and the re-budgets carried over to FY 2024-2025 due to timing of the projects.
The total FY 2024-2025 re-budget request is $1,060,637.
FY 2023-2024 Year-End Budget Cleanup
Staff is recommending six expenditure amendments to the City’s FY 2024- 2025 budget based on the final figures.
Budget Amendment 1- Proposition A Eligible Expenditures In May 2024, staff discussed with Metro various possible uses of Metro Prop A Funds within the City. After reviewing possible allowable expenditures, Metro allowed the use of Prop A Funds to help offset costs from the Police Department’s Walking School Bus Program as well as offsetting crossing guard services that help promote safety of residents and children. A $168 budget amendment is also requested related to the City’s Dial-A-Ride Program as use was higher than in years past.
Budget Amendment 2-SB 1383 Grant Expenditure
In FY 2022, the City received approximately $21K in funds related to Senate Bill 1383, which established statewide targets to reduce organic waste. In FY 2024-2025, the City spent $3,482 in eligible expenditures to purchase mulch for use within the City. This amount was not budgeted in FY 2024-2025 as the City was trying to determine the best use of these grant funds.
Budget Amendment 3-Worker’s Compensation
A budget amendment is needed in workers’ compensation expenditures due to costs incurred as a result of worker’s compensation claims during FY 2023- 2024, which was historically higher than in years past. The budgeted amounts are based on prior 3-years‘ average.
Budget Amendment 4- Insurance Premiums
A budget adjustment is required as the cost for the City’s Pollution Liability Insurance was $380 higher than estimated.
Account Num ber Description
Revised (F inal)
Budget
Actual
E xpenditures
Budget
Am endm ent
207-30-4004-0000 Walking School Bus Salaries - 1,963 1,963 207-30-4006-0000 Medicare-Walking School Bus - 27 27
207-11-4208-1330 Bus Transportation-Dial A Ride 10,300 10,468 168 207-30-4150-0000 Other Contract Services - 50,000 50,000 10,300 62,458 52,158
Account Num ber Description
Revised (F inal)
Budget
Actual
E xpenditures
Budget
Am endm ent
221-50-4376-0000 Supplies - 3,482 3,482
Account Num ber Description
Revised (F inal)
Budget
Actual
E xpenditures
Budget
Am endm ent
595-30-4015-0001 Workers' Comp Current Employee-Police 51,739 344,255 292,516 595-30-4015-0002 Workers' Comp Past Employees-Police 74,981 82,519 7,538 595-34-4015-0001 Workers' Comp Current Employee-Fire 176,647 314,930 138,283 595-34-4015-0002 Workers' Comp Past Employees-Fire 34,553 7,715 (26,838) Fund 595 (Various) Workers Compensation Fund 337,920 749,419 411,499 Budget Amendment 5- Measure W Expenditures
In FY 2024-2025, the City incurred $3,500 of audit compliance costs related to Measure W Funds. The City is required to have a review of expenditures every 3 years per the agreement with the County. All costs from these reviews can be paid using Measure W Funds.
Budget Amendment 6- Workers’ Compensation
A budget adjustment is necessary to cover additional payroll expenditures incurred as a result of staff shortages due to workers compensation injuries in the Fire Department.
The total FY 2023-2024 budget year-end clean up amendments are $853,616.
FISCAL IMPACT & PROCUREMENT REVIEW
The FY 2023-2024 carryover requests total $286,150 and the updates to FY 2024-2025 capital improvement project re-budgets is a total of $1,060,637.
The expenditures in these requests were budgeted in FY 2023-2024, but were not expended as originally planned.
Since these carryovers were budgeted and not spent in FY 2023-2024, the funds are reflected in the ending fund balance on June 30, 2024, which in turn provides the resources to fund these carryover and re-budget requests.
Furthermore, the above proposed budget year-end cleanup amendments increases the budgeted expenditures by $853,616.
Account Num ber Description
Revised (F inal)
Budget
Actual
E xpenditures
Budget
Am endm ent
596-10-4356-3412 Insurance Premiums-CJPIA 766,174 766,554 380 Account Num ber Description
Revised (F inal)
Budget
Actual
E xpenditures
Budget
Am endm ent
246-00-4150-0000 Other Contract Services - 3,500 3,500
Account Num ber Description
Revised (F inal)
Budget
Actual
E xpenditures
Budget
Am endm ent
103-34-4015-0000 Worker's Comp. - 382,597 $ 382,597
LEGAL REVIEW
The City Attorney's office has reviewed and approved as to form.
RECOMMENDATION
Staff recommends the Council approve the requested FY 2023-2024 carryovers, updates to the FY 2024-2025 re-budgets, and the budget amendments to the funds and accounts as noted in the attachments. If the City Council concurs with staff’s recommendation, an appropriate motion would be:
“I move to approve the requested FY 2023-2024 carryovers, updates to the FY 2024-2025 re-budgets, and the budget amendments to the funds and accounts as noted in the attachments of the Staff Report.”
ATTACHMENTS
1. Carryovers FY 2023-2024
2. Capital Projects and FY 2024-2025 Re-budgets
3. Budget Amendments FY 2023-2024