Finance and Management Services
https://www.santa-ana.org/finance
Item # 20
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
March 4, 2025
TOPIC: Fiscal Year 2024-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes
AGENDA TITLE:
Fiscal 2024-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes
RECOMMENDED ACTION
1. Receive and file the FY2024-25 Mid-Year Budget Update.
2. Approve the recommended Appropriation Adjustments. (Requires five affirmative votes)
3. Adopt RESOLUTION NO. 2025-XXX entitled A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF SANTA ANA TO EFFECT CERTAIN CHANGES TO THE CITY’S CLASSIFICATION AND COMPENSATION PLAN
4. Adopt RESOLUTION NO. 2025-XXX entitled A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF SANTA ANA TO AMEND THE CURRENT
FISCAL YEAR 2024-25 ANNUAL BUDGET TO ADJUST FULL-TIME
POSITIONS IN THE CITY MANAGER’S OFFICE, HUMAN RESOURCES,
THE FINANCE & MANAGEMENT SERVICES AGENCY, PARKS,
RECREATION & COMMUNITY SERVICES PLANNING & BUILDING
AGENCY, AND PUBLIC WORKS AGENCY, INCLUDING ADDITIONS,
DELETIONS, AND/OR REALLOCATIONS
GOVERNMENT CODE §84308 APPLIES: No
DISCUSSION
The FY2024-25 (FY24-25) Mid-Year Budget Update provides a snapshot of General Fund activity for the first six months of the fiscal year, updated revenue estimates based on the latest available information, recommended appropriation adjustments, proposed workforce changes, and a full-time Vacancy Rate report by department and bargaining unit as of December 31, 2024. This update also includes an updated summary of all funds with estimated fund balances on June 30, 2025.
FY24-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes March 4,2025
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The proposed adjustments in this report result in a net decrease of $223,598 in the estimated Spendable General Fund balance. The First Quarter Budget Report on November 19, 2024, indicated that preliminary economic data from the City’s sales tax consultant suggested sales tax revenue for FY24-25 would fall below original projections.
Updated data and revised estimates from the consultant now confirm this shortfall, requiring budget adjustments.
To offset this reduction in revenues and maintain a balanced budget, staff is recommending the adjustments outlined in this report, which include a combination of adjustments to other revenue sources performing better than expected and targeted expenditure reductions, while also incorporating mid-year requests (as shown in Exhibit 1).
The following table illustrates that the General Fund remains balanced after the recommended Mid-Year adjustments by breaking out recurring expenditures and revenues, excluding one-time items.
Updated Estimates Remove One-Time Recurring
Revenue 408,609,794 314,561 408,924,355
Spending (412,327,471) 3,416,388 (408,911,083)
Net Recurring Available 13,272
FY24-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes March 4,2025
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General Fund Revenues
A summary of General Fund revenues follows.
The City generated approximately $132 million or 32% in revenue as of December 31, 2024. Since the City receives most of its revenue up to 60 days after the corresponding period, we can expect to have received approximately four (4) months (or 33%) of revenue by December 31. One notable exception is Business License Tax, where the City receives a majority of revenue in the spring of each year. The amount received in the current fiscal year is slightly lower than revenue collected in the prior year. This decrease is primarily attributed to lower sales tax receipts.
The following section provides a discussion on revenue estimate adjustments based on the latest available information.
Sales Tax (Bradley Burns)
The original revenue estimate for Bradley Burns was $61.7 million. With two quarters now completed, staff has decreased the revenue estimate by $2.7 million, bringing the estimate to $59 million. Another quarter of data, along with updated estimates from the City’s sales tax consultant, support this revised estimate. Sales tax receipts are 2.3% below the same period in 2023 and down 3.9% compared to the second quarter of 2024.
The City’s largest sectors, autos and transportation, business and industry, and fuel/service stations continue to struggle. Ongoing high prices and interest rates are slowing sales growth.
Local Sales Tax (Measure X)
The original budget estimate for the Local Sales Tax (also known as Measure X) was $85.6 million. The tax is down 2% compared to the second quarter of 2024. The overall decrease is in the same sectors as Bradley Burns. Based on further guidance from the Revenue Source
Annual Estimate
Updated with 1st Qtr
Received As of
12/31/2024 % Received
Property Tax/ Property Tax In-Lieu of VLF 92,819,320 22,076,738 23.8% Sales Tax (Measure X) 85,632,610 27,503,669 32.1%
Sales Tax (Bradley Burns) 61,682,950 19,227,461 31.2%
Other General Fund Revenue 47,189,303 14,097,243 29.9%
Charges for Service 30,590,300 14,671,814 48.0%
Utility Users Tax 27,300,000 13,939,547 51.1%
Business License 16,200,000 3,651,971 22.5%
Cannabis Revenue 14,530,000 5,600,077 38.5%
Jail Revenue 14,153,500 3,551,629 25.1%
Franchise Fees 12,375,000 3,693,029 29.8%
Hotel Visitor's Tax 9,500,000 4,042,679 42.6%
Total General Fund Revenue³ 411,972,983 132,055,856 32.1% ³Includes all Appropriation Adjustments through December 31, 2024, with the exception of Carry Forwards.
FY24-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes March 4,2025
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City’s Sales Tax consultants, staff has decreased revenue estimate by $2.8 million, bringing the total to $82.9 million.
Utility Users Tax- Electric
Southern California Edison (SCE) implemented multiple rate increases in 2024, and because the Utility User Tax is calculated as a percentage of consumer bills, these higher rates are generating additional revenue for the City. Additionally, increased electricity consumption driven by higher demand for air conditioning during heatwaves and the adoption of electric vehicles have further contributed to rising tax receipts. To align the revenue estimate with actual receipts, staff has increased the revenue estimate by $1.5 million, bringing the total for FY24-25 to $18.3 million.
Business Tax
Business Tax revenues continue to exceed original estimates, driven by the diligent efforts of Treasury Services staff in Finance to ensure that all businesses operating within the City, including new businesses and those operating without a license, comply with licensing requirements. This revenue increase is expected to continue as businesses are properly onboarded and brought into compliance. As a result of these sustained efforts, staff has increased the revenue estimate by $1,250,000, bringing the total to $17,450,000.
Property Tax, Property Tax, in lieu of VLF (VLF)
The City received the January payment for property tax in lieu of Vehicle License Fees (VLF), which represents 50% of the annual allocation from the State. This payment enables staff to accurately forecast total revenue for the fiscal year. Following the receipt of the January payment, staff has revised the annual revenue estimate, increasing it by $456,660, bringing the total budget to $44,465,670.
Documentary Stamp Tax
Based on actual and projected receipts, staff increased the Documentary Stamp Tax (also known as the documentary transfer tax) revenue estimate by $400,000, bringing the total budget to $1,200,000. This tax is imposed on the transfer of real property and is typically paid when deeds, grants, or other property transfer documents are recorded. Revenue trends suggest that collections will be closer to $1,200,000, as the original budget of $800,000 was set too conservatively.
Refuse Franchise Fee
Under the current Franchise Fee Agreement, the City’s waste hauler is obligated to remit either a minimum annual payment of $8 million or 17.9% of gross receipts, whichever is greater. FY23-24 actual Waste Hauler franchise fee receipts were $9,555,441, representing an increase of $1.26 million or 15% compared to FY22-23. Although staff increased the Refuse Franchise Fee estimate by $1 million for FY24-25, bringing the total to $9 million, actual revenues continue to exceed expectations. To better align the budget with current trends, staff has increased the revenue estimate by $500,000, bringing the new total to $9.5 million.
FY24-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes March 4,2025
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Zoo and Recreational Program Revenue
In FY24-25, Parks, Recreation and Community Services (PRCSA) expects an overall increase in General Fund revenues from zoo and recreational programs, mainly due to higher park reservation activity. Given these trends, staff has revised the revenue estimate with a one-time adjustment of $354,650, bringing PRCSA’s total revenue budget to $3.6 million.
Cannabis
Staff originally estimated a total Cannabis tax revenue of $14.2 million. However, actual revenue is expected to be short, totaling only $10.1 million, due to several factors contributing to the decline in California's legal cannabis market. These include increased competition from the regional black market, which continues to offer lower prices, and an oversupply in the market which may be driven by more cities allowing the sale of cannabis. As a result, many legal operators have struggled to maintain profitability, with some closing their operations entirely, leading to lower-than-expected tax collections.
Several operators have also paid arrearages during the fiscal year, contributing a total of $1.7 million in one-time revenues. While this will help reduce the overall revenue shortfall for this year, it is not an ongoing source of funding. As such, the cannabis budget will need to be adjusted for the next fiscal year to align with the expected baseline revenue.
With available data, our best estimate of revenues follows:
Therefore, we expect a revenue shortfall of $2.4 million ($14.2 million budgeted, less $10.1 million expected, and $1.7 million in arrearages). This shortfall includes $1.6 million subject to the two-thirds transfer to the Cannabis Public Benefit Fund, while medical- related tax revenue is exempt from this transfer. As a result, the net General Fund impact is a loss of $0.8 million, and the Cannabis Public Benefit Fund revenue loss is $1.6 million.
With this report, staff is proposing adjustments to the Cannabis Public Benefit Fund to rebalance the budget, which are outlined later in this report.
July through December 6 months actual 4,691,298
January through June 6 months expected 5,380,523
Total Revenues Expected (Baseline) 10,071,821
Money paid in arrear 1,691,669
FY24-25 Expected Revenue 11,763,490
FY24-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes March 4,2025
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General Fund Expenditures
A summary of General Fund expenditures follows.
With the fiscal year now halfway complete, current year expenditures are tracking very close to FY23-24 with a total of $195,471,672 or 47%. In comparison, the City had expended $196,707,044 with 47.1% this time last year. Non-Departmental expenditures are approaching 60% of the budget, due to higher than anticipated litigation expenses.
Staff may return at the Third Quarter Budget Update scheduled for May with a request to increase appropriations if the current pace of spending continues. PRCSA’s expenditure budget appears to be tracking higher, only because carry forward adjustments are not reflected in this analysis. Once carry forward adjustments are incorporated, PRCSA’s spending aligns more closely with other departments. Due to the revenue reductions described previously in this report, staff is utilizing a combination of one-time funds and a handful of expenditure reductions to remain balanced. The use of one-time funds will leave less on the table for the FY2025-26 (FY25-26) budget allocation process. The discussion below explains those recommended adjustments as proposed in Exhibit 1.
Alley Improvements
In FY21-22, during the First Quarter Budget Report, a $1.5 million recurring budget allocation was added for Alley Improvements to address several years of deferred maintenance. This funding was made possible by continued increases in sales tax revenue, specifically from Measure X. However, due to reductions in estimated sales tax revenues for this fiscal year, staff recommends reducing this allocation by $1.4 million to rebalance the budget. The most recently approved construction contract for alley Department
Annual Budget
Updated with 1st Qtr
Spending as of
12/31/2024 % Expended
City Attorney 4,500,350 1,941,644 43.1%
City Clerk 1,934,570 591,414 30.6%
City Council 1,043,970 382,971 36.7%
City Manager 3,963,160 1,708,733 43.1%
Community Development 4,327,760 1,727,810 39.9%
Finance & Mgmt Services 13,268,160 6,072,919 45.8%
Fire & Emergency Medical Svcs⁵ 57,837,370 32,681,193 56.5% General Non-Departmental 38,543,830 20,891,635 54.2%
Human Resources 4,393,370 1,641,209 37.4%
Inter-Fund Transfers 19,363,180 7,940,690 41.0%
Library 8,347,033 3,984,109 47.7%
Museum Funding 1,715,320 857,807 50.0%
Parks, Recreation & Comm Svcs 15,008,008 8,601,361 57.3% Planning & Building 18,731,210 8,904,562 47.5%
Police 162,545,030 77,456,401 47.7%
Public Works 59,275,530 20,087,215 33.9%Total General Fund Expenditures⁴ 414,797,851 195,471,672 47.1% ⁵Fire & Emergency Medical Services includes an one-month advance. ⁴Includes all Appropriation Adjustments through December 31, 2024, with the exception of Carry Forwards.
FY24-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes March 4,2025
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improvements, approved on November 19, 2024, was funded through the FY23-24 allocation, not the FY24-25 budget.
Orange County Fire Authority (OCFA) Savings
As the FY24-25 budget was being finalized, staff received the final rate increase from Orange County Fire Authority (OCFA). Each year, the budget is developed using OCFA’s projected 4.5% cost increase, which represents the maximum allowable increase under the agreement. Based on this estimate, total charges were projected at $51,507,080.
However, the final rate increase from OCFA was 4.06%, resulting in General Fund savings of $212,840 for the City and reducing the total to $51,294,240. Staff is recommending a budget decrease of $212,840 to reflect these savings.
Parks, Recreation, and Community Services Facility and Program Improvements The Parks, Recreation, and Community Services Agency (PRCSA) is requesting a one- time appropriation adjustment of $200,000 for the Santiago Gym flooring improvements and Children’s Zoo programming, which were included in the Cannabis Public Benefit Fund budget; however, with the reduction in Cannabis business tax revenue, staff recommends funding these projects with one-time General Fund money.
Quality of Life Team (QOLT) Homeless Services Cleaning Contract The expansion of homeless cleanup services, including additional cleaning teams available on evenings and weekends for both scheduled and on-call requests, has led to higher monthly expenses. To sustain current service levels through the end of the fiscal year, the Public Works Agency is requesting a one-time budget allocation of $63,500. As part of the FY25-26 budget process, staff will reassess the recommended QOLT budget.
Street Light Utility Costs
Streetlight electrical utility costs have exceeded the current budget due to rising energy rates and the installation of over 300 new streetlights. To cover these ongoing expenses and ensure timely payment of utility costs, the Public Works Agency is requesting a recurring budget allocation of $400,000 to address the shortfall.
Graffiti Abatement Program
On April 5, 2022, City Council approved amendments to the contract to increase the annual funding for Graffiti Removal services and enhance service levels for the public.
These additional services help maintain a rapid average response time of 48 hours and address graffiti in high-traffic areas, including railroad properties, arterials, bike trails, and other highly visible locations. To support the annual contract increase and sustain current service levels, the Public Works Agency is requesting a recurring allocation of $56,800.
Planning and Building Agency Software Subscription
The Planning and Building Agency is requesting ongoing funding of $16,500 for a software subscription covering 50 user licenses. This software supports electronic plan check reviews and will help accommodate increased development activity in the city. By FY24-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes March 4,2025
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streamlining the review process, it will expedite plan checks and minimize delays in project commencement.
Adjustments to Other Funds
Cannabis
As noted earlier, cannabis revenues are projected to fall short by $2.4 million. Of this amount, $1.6 million is subject to the two-thirds transfer to the Cannabis Public Benefit Fund. To address this shortfall, staff is proposing the following adjustments to rebalance the cannabis budget, as outlined in the table below.
These adjustments also ensure compliance with Ordinance NS-3008, which requires that no less than 50% of the Cannabis Fund be allocated to Youth Services. After implementing these adjustments, 52% of the funding will support Youth Services, while 48% will be allocated to Enforcement.
While the proposed adjustments are intended to help balance the current year’s cannabis budget, these budget challenges will need to be revisited and addressed in next year’s budget development process, which is currently underway. Furthermore, the Police Department's budget reduction will need to be covered within its existing General Fund allocation.
As stated earlier, PRCSA’s reductions for the Salgado Gym and the Children’s Zoo will be offset by one-time General Fund appropriations. The Children’s Eco Center General
Fund
Dept Program One-Time Recurring One-Time
PRCSA
Salgado Gym Protective
Flooring (100,000) 100,000
PRCSA Children's Zoo (100,000) 100,000
PRCSA
Children's Eco Center
Programming (66,000)
Library
Book Mobile/Youth
Program part-time
staffing (66,000)
FMSA
Collections Staffing &
Contracts (120,550)
Police Training & Overtime (112,640)
Police
Body Worn Camera
Progam (1,029,150)
Total (200,000) (1,394,340) 200,000
Cannabis
FY24-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes March 4,2025
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programming will be placed on hold until an alternative funding source is identified. The Library is utilizing part-time vacancy savings from earlier in the fiscal year to absorb this reduction; there will be no impact on service levels. FMSA and the Police Department are both shifting these expenses to the General Fund, where the reductions will be absorbed within existing resources.
PRCSA Fees and Donations
Staff is adjusting the PRCSA revenue budget to align with expected revenues for this fiscal year. This revenue adjustment will also address the projected negative spendable fund balance at the end of the fiscal year.
Gas Tax Fund
The state collects the Gas Tax on a cents-per-gallon basis, allocating a portion to the City. When fuel prices increase, local street and road revenues remain unaffected by price change since all tax rates are based on a per-gallon basis, independent of price fluctuations. The most recent Gas Tax estimates from the League of California Cities Fiscal Policy Advisor indicate an increase of $928,180 for FY24-25, bringing the revised budgeted revenue to approximately $16.6 million. The Gas Tax Fund has an estimated spendable fund balance of $26.3 million as of June 30, 2025, far exceeding the City’s target reserve level of 20% of annual operating costs, which is $1.7 million. PWA staff will return with appropriation requests once specific projects have been identified to utilize this funding.
Santa Ana Regional Transportation Center (SARTC) Capital Projects During the FY24-25 Carry Over process, the estimated spendable fund balance in the Regional Transportation Center Fund was sufficient to cover $1.77 million but the actual balance was short by $64,340. As a result, carryover amounts were adjusted to match the available balance as of June 30, 2024. The City’s target reserve level for this fund is $362,322, which represents 20% of annual operating costs. For FY24-25, the estimated spendable fund balance at June 30, 2025 is $584,905, which exceeds the target reserve level of $362,322. Accordingly, staff recommends an appropriation adjustment of $64,340 to fully restore funding for the following SARTC Capital Projects: $20,000 for the outdoor fountain renovation, $24,342 for exterior painting, and $20,000 for fencing.
Civic Center Budget Increase
The City has a Joint Powers Authority (JPA) Agreement with the County of Orange to pay for shared expenses related to the Civic Center area. These expenses include maintenance, security, and capital project funding. Since the County adopted its budget in late June after City Council approved the FY24-25 budget, a request for an appropriation adjustment is needed to align the budget with the County under the JPA agreement. With this adjustment, the Civic Center budget will increase by $907,600 in both revenues and expenditures to support various projects, including Civic Center and Courthouse concrete repairs, upgrades to Calsense Irrigation Controllers, waterproofing of the Plaza of the Sun, and the rehabilitation of Civic Center Drive from Shelton to Flower.
FY24-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes March 4,2025
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Since these costs are reimbursed by the County, this adjustment ensures the City’s budget remains balanced, though reimbursements typically occur one month after billing.
Liability and Property Insurance Fund
In an effort to settle claims and litigate matters early while minimizing litigation expenses, Human Resources requests an appropriation adjustment of $1 million from spendable fund balance for anticipated settlements. The Liability & Property Insurance Fund has sufficient funds to support this request, with an estimated spendable fund balance of $12.1 million. The City’s target reserve level for this fund is $17.2 million, representing 80% of liability, as actuarially determined every two years. Staff plans to address this reserve deficit during the budget process by gradually increasing overhead charges to rebuild the balance to the target level.
Quality Service Training
The Quality Service Training Fund was established as an internal service fund to provide training and support services aimed at enhancing City services through the use of total quality improvement tools. A budget appropriation is requested for the Quality Service Training Fund to cover charges for the Organizational Development and Training room setup. These charges were expected in FY23-24, but a processing delay shifted payment to the current fiscal year. The fund will use its remaining spendable balance of $61,400 to cover the costs. With no further expenses anticipated, it will be formally closed after the final payment. Training services are now being funded through HR’s General Fund budget.
Workers Compensation Fund
Based on past loss history, the City is prioritizing the settlement of workers’ compensation claims to avoid prolonged open cases. This approach helps mitigate long-term costs and liability while ensuring efficient claim resolution. Human Resources requests an appropriation adjustment of $946,266 in spendable fund balance to support the settlement of workers’ compensation claims. The Workers Compensation Fund has sufficient funds to support this request, with an estimated spendable fund balance of $19.7 million. The City’s target reserve level for this fund is $30.5 million, representing 80% of liability, as actuarially determined every two years. The City’s target reserve level for this fund is $30.5 million, representing 80% of liability, as actuarially determined every two years. Similar to the Liability & Property Insurance Fund, staff plans to address this reserve deficit during the budget process by gradually increasing overhead charges to rebuild the balance to the target level.
Corporate Yard
Since Aldridge Electric is no longer a renter at the Corporate Yard, the City no longer receives revenue from this source. Staff recommends adjusting the Corporate Yard budget to align revenues with expenditures, resulting in a $27,528 reduction due to the loss of revenue from Aldridge Electric with an equal offsetting decrease to the Corporate Yard’s part-time salaries expenditure budget.
FY24-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes March 4,2025
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Inclusionary Housing Fund
In FY24-25, the City received $133,640 in revenue from Density Bonus Fees and the City’s share of California Municipal Finance Authority. The Density Bonus Fees were generated through the Third and Broadway project’s Miscellaneous Service Charges, which is 1/8 of 1% of the gross valuation of construction charges. The City's share of California Municipal Finance Authority fees is paid by developers on behalf of the tenants.
Staff recommends the appropriation of these funds to support the administration of the City's Inclusionary Housing Ordinance. Additionally, the Inclusionary Housing Fund provided $1,267,705 for the first-year implementation of the Rent Stabilization Program.
Therefore, an appropriation adjustment is requested for a transfer to reimburse the Inclusionary Housing Fund for those first-year expenses.
Water and Sewer Fund
The Water and Sewer Fund needs to purchase various equipment, including a backhoe, utility truck, heavy truck, CCTV truck, and other operational equipment. Staff recommends appropriating $990,000 for the Water Fund and $450,000 for the Sewer Fund.
Restricted Fund Adjustments
The City receives updated information after the beginning of the fiscal year for various restricted funding sources, usually to update federal monies available for various programs. Staff recommends a series of adjustments to resize restricted-money appropriations to available balances and authorizations. Examples include federal allocations to Community Development programs.
Proposed Workforce Changes
As part of the Mid-Year Budget Update, City departments propose workforce changes, including new positions and/or changes to existing positions to reflect organizational changes and priorities. Although there will be an FY2025-26 (FY25-26) fiscal impact due to these changes, there is no net fiscal impact in FY24-25. Existing department budgets will absorb the cost of these workforce changes. The FY25-26 General Fund fiscal impact follows:
FY24-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes March 4,2025
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In summary, staff requests the addition and reallocation of 13 full-time positions offset by a decrease of 14.5 part-time positions, increased revenue, and reduced reliance on outside contract services.
The Human Resources Department is requesting approval to make changes to the City’s Classification and Compensation Plan in collaboration with various department. The request includes the following:
•Creation of three new classifications
•Merging of five classifications
•Updating of titles or compensation for 11 existing classifications.
The new classifications will bring zoo veterinary services in-house within PRCSA and create managerial oversight classifications within the Water Services Division of the Public Works Agency.
Department
Position
Add/Reallocation Qty
Estimated FY25-26
Fiscal Impact
City Manager
Reallocate Administrative
Receptionist to Executive
Assistant 1 41,050
Finance
Reallocate AP Technician
to a Senior Accounting
Assistant 1 6,570
Finance
Customer Service
Representatives 2 52,905
Human Resources Management Analyst 1 -
Parks, Recreation &
Community
Services
Reallocate a Recreation
Specialist to a Recreation
Program Coordinator 1 -
Parks, Recreation &
Community
Services
Reallocate a Zoo Curator
of Health to a full-time Zoo
Veterinarian 1 -
Planning & Building
Welcome Desk
Receptionist 1 86,880
Planning & Building
Permit Services
Technician 1 -
Police
Reallocate Systems
Administrator to Senior
Systems Administrator 2 -
Public Works Assistant Engineer 1 -
Public Works Senior Office Assistant 1 -
Grand Total 13 187,405
FY24-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes March 4,2025
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The compensation changes will create internal equity between similar engineering classifications in the City between the Public Works Agency and the Planning and Building Agency.
Five classifications are being merged into two classifications to create fewer and more effective classifications to meet the needs of the Accounting Division of the Finance and Management Services Agency (FMSA). The classification title changes seek to standardize, ensure uniformity, and modernize classification titles as used internally and in outside agencies. These changes will help ensure the City’s classification and compensation plan provides equitable compensation, utilizes appropriately titled classifications, and remains competitive with both, internal classifications and those of comparable external agencies, ultimately enhancing the City’s recruitment and retention efforts. Classification and compensation proposed changes are detailed in Exhibit 2.
The following are proposed workforce changes for full-time positions as detailed in Exhibit
3. City Manager’s Office
•The City Manager’s Office is requesting to reallocate an Administrative Receptionist to an Executive Assistant. An Executive Assistant provides more sophisticated activities to support and balance City Councilmembers’ requests, as well as administrative support to the Deputy City Manager and Assistant City Managers.
Human Resources (HR)
•Currently, the Human Resources department has a Management Analyst underfilling the Senior Organizational Development and Training (OD&T) Analyst position. HR is requesting a new Management Analyst position to retain the current Management Analyst and allow the Senior OD&T Analyst position to be filled accordingly. The Management Analyst is essential for managing the department’s budgets, contracts, and Public Records Requests, while the Senior OD&T Analyst is critical for expanding training, coaching, and recognition programs that support employee growth and the City’s commitment to innovation and professional development. A portion of HR’s General Fund part-time salaries budget will be used to fully fund the additional Management Analyst position, resulting in a net zero fiscal impact for this request.
Finance and Management Services Agency (FMSA)
•The purpose of the reallocation from an Accounts Payable (AP) Technician to a Senior Accounting Assistant is to differentiate an experienced AP Technician from an entry-level. This position, like other Senior Accounting Assistants in FMSA, performs duties that require the application of specialized knowledge and skills gained only through experience with the City.
FY24-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes March 4,2025
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•Treasury & Customer Services is requesting to add two additional Customer Service Representatives (CSR). One CSR will support revenue collection activities, new business license software implementation, field inspections, and audits. Due to the revenue offsets of this position, it will have no fiscal impact to the General Fund. The other CSR will be assigned to Treasury and will perform cashiering, banking, and deposit activities. The fiscal impact will be partially offset by the reduction of the division’s part-time salaries budget.
Parks, Recreation, and Community Services Agency (PRCSA) •The Athletics Section has successfully expanded youth and adult sports programs and managed an increase in athletic facility reservation and permit activity. To meet growing demands, PRCSA proposes reallocating the Recreation Specialist position to a Recreation Program Coordinator, which will provide additional oversight and leadership for the Athletic Facility Reservation and Permit program.
PRCSA is fully offsetting the cost of this reallocation by reducing the part-time budget within the same Accounting Unit.
•To enhance effectiveness, provide expanded veterinary hours, and comply with new USDA regulations and the Association of Zoos and Aquariums (AZA) standards, PRCSA is proposing to reallocate a Zoo Curator of Health to a full-time Zoo Veterinarian and add two part-time Zoo Registered Veterinary Technician positions. Having a full-time Zoo Veterinarian with the support of two part-time Zoo Registered Veterinary Technicians will ensure timely and responsive communication regarding emergent animal health issues, enabling faster and more efficient action. PRCSA is also fully offsetting the cost of this reallocation by reducing the budget for contracted veterinary services.
Planning and Building Agency (PBA)
•PBA is requesting to add a Receptionist due to an expansion of City services.
Public counters at City Hall are experiencing an increase in walk-in customers who require assistance from the Information Desk receptionists. Beginning in August 2024, the receptionists’ duties increased. They now screen customers for PBX services. To ensure stability and create a positive first impression for the public, the need for an additional Information Desk staff member is essential. •A Permit Services Technician is requested due to an increased demand for services. PBA is currently accepting electronic plans for plan checks while continuing to work with legacy customers who submit paper plans. Due to the labor-intensive nature of electronic and internet portal-based system, the daily queue of projects to process ranges from 100 to 200 projects, with permit process turnaround times of eight to ten business days. The addition of this position will ultimately enable PBA to reduce this turnaround time to two business days. PBA is foregoing its part-time budget and utilizing a portion of the contracted services budget to afford this position.
FY24-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes March 4,2025
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Police Department (PD)
•PD is proposing to reallocate two Systems Administrator positions to a Senior Systems Administrator to better align with functions and duties performed by the current incumbents beyond the job classification. These two reallocations will also help with talent retention and career ladder opportunities.
Public Works Agency (PWA)
In response to ongoing and future development, including major projects such as Related Bristol and The Village, PWA is requesting additional staff for the Engineering Resources Division to respond to the development needs of the community. •PWA proposes adding an Assistant Engineer to perform plan check services due to the increased development in the city. The addition of an Assistant Engineer will result in a reduction of contract personnel and on-call plan check services. Budget from contractual savings in the Public Works Admin and Planning Fund will be reallocated to fund this position, resulting in a net zero fiscal impact. •PWA is also requesting an additional Senior Office Assistant for the Engineering Resource Division to issue residential parking permits. The addition of one full-time Senior Office Assistant will replace the need for three part-time clerical aides.
Budget from part-time salary savings in the Traffic Engineering General Fund Budget will be used to fund this position, resulting in a net zero fiscal impact.
Contribution to Section 115 Trust for Pension Stabilization from Payroll and Retirement Funds
In line with the City Council-approved Unfunded Employee Pension Liability Cost Reduction Policy, staff recommends a one-time $1 million contribution from the Payroll and Retirement funds. This additional deposit is part of the overall Section 115 Trust strategy outlined in the Unfunded Employee Pension Liability Cost Reduction Policy adopted by City Council in 2021, which helps mitigate fluctuations in future contributions caused by differences in actual plan performance and changes to actuarial assumptions made by CalPERS.
This contribution also helps prepare for future revenue challenges, including the scheduled decrease in the Local Sales Tax (Measure X) rate from 1.5% to 1.0% on April 1, 2029, by proactively strengthening the Section 115 Trust. This forward-looking approach ensures stable pension cost management and enhances the City’s long-term financial sustainability.
Previously, in December 17, 2024, Council approved a $2 million deposit as part of the General Fund Results Staff Report. With this additional $1 million deposit and the original budgeted deposit, the total deposits approved during this year now amount to $14.95 million for both the General and Non-General Funds.
FY24-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes March 4,2025
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The Payroll and Retirement funds manage both inflows and outflows related to employee and employer contributions for benefits. Inflows primarily consist of employee payroll deductions and City-paid contributions, including amounts earmarked for CalPERS and other employee benefits such as health insurance and deferred compensation plans.
Outflows include payments to CalPERS for pension obligations, as well as disbursements to other benefit providers.
Over the past ten years, residual balances have accumulated within these funds due to one-time transactions, such as retroactive pay adjustments, benefit corrections, and payroll reconciliations. These variances have arisen from differences between calculations for these one-off transactions and the actual payments processed by the payroll system versus what the general ledger shows. As a result, fund balances have grown and are now available for strategic allocation.
Staff recommends transferring the $1 million to the General Fund before depositing it into the Section 115 Trust. This administrative process will clear residual balances from the Payroll and Retirement funds, enhancing the City's financial position and supporting the effective management of future pension-related costs.
Next Steps
•Early direction for the Fiscal Year 2025-26 budget is scheduled for March 18. •The Public Works Agency (PWA) has identified funding needs for the Centennial Park Improvements. These include enhanced lighting, a family recreation area with additional lighting, restroom upgrades, a dog park, a walking trail, and a connection to the Santa Ana River. While we have no funding requests at this time, PWA staff anticipates bringing the construction contract and an additional one-time General Fund appropriation request to City Council for consideration on March 18. •Staff will bring forward a separate staff report proposing the addition of a construction crew to handle work currently performed by external vendors. The increased costs will be offset by reductions in contract service expenses as the work is brought in-house.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
The General Fund’s fiscal impact is outlined at the beginning of this report. Exhibit 1 presents the line item changes to revenue estimates and recommended appropriation adjustments. Exhibit 5 shows the estimated spendable fund balance as of June 30, 2025 for all funds, based on Council-approved adjustments through February 4, 2025. It does not yet account for revenue impacts and recommendations discussed in this report.
FY24-25 Mid-Year Budget Update, Appropriation Requests, and Workforce Changes March 4,2025
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EXHIBIT(S)
1. Line Item Changes to Revenue Estimates and Recommended Adjustments
2. Resolution to Effect Certain Changes to the City’s Classification and Compensation Plan
3. Resolution to Amend the Current Fiscal Year 2024-2025 Annual Budget to Adjust Full-Time Positions in the City Manager’s Office, Human Resources, Finance & Management Services Agency, Planning and Building Agency, Police Department, and the Public Works Agency
4. Citywide Vacancy Report as of December 31, 2024
5. Updated FY2024-25 Fund Balance Summary for All Funds Submitted By: Alex Trinidad, Acting FMSA Executive Director Approved By: Alvaro Nuñez, City Manager