Report Prepared by: Venus Rodriguez, Finance Officer
Title
SUBJECT: Mid-Year Budget Review for Fiscal Year 2024-2025, General Fund Supplemental Appropriations in the Amount of $405,158 and Budget Amendments in Various Funds
REPORT IN BRIEF
Presents the Fiscal Year 2024-2025 Mid-Year Financial Report, seeks approval of General Fund Supplemental Appropriations in the amount of $405,158 and Budget Amendments in Various Funds.
RECOMMENDATION
City Council - Adopt a motion:
A. Approving the deletion of one Development Associate position and adding one Economic Development Administrator; and,
B. Approving the deletion of one Park Worker I/II position and adding one Recreation Field and Facility Worker; and,
C. Approving Resolution 2025-11, A Resolution of the City Council of the City of Merced, California, Amending the Classification Plan by Updating the Personnel Allocation in the Economic Development Department by Deleting one Economic Development Associate Position and Adding one Economic Development Administrator position; the Parks and Community Services Department by Deleting one Park Worker I position and adding one Recreation Field and Facility Worker Position; and,
D. Approving Resolution 2025-12, A Resolution of the City Council of the City of Merced, California, Adopting the Salary Range for the Economic Development Administrator Position within the Economic Development Department and Recreation Field and Facility Worker Position within the Parks and Community Services Department; and,
E. Approving a Supplemental Appropriation from the unreserved, unencumbered fund balance in Fund 2003- Measure Y Fire Department in the amount of $52,000; and,
F. Approving an increase in General Fund Communications Division revenue account 10003530-431002 Cost Recovery in the amount of $35,158 and appropriating the same to 10003530-511002 Telephone for maintenance of 911 phone system; and,
G. Approving a Supplemental Appropriation from the unreserved, unencumbered General Fund balance in the amount of $30,000, transferring to Fund 3002-Bell Station and appropriating the same for utility expenditures; and,
H. Approving a Supplemental Appropriation from the unreserved, unencumbered fund balance of Fund 2004-Measure Y Parks and Recreation in the amount of $16,620, transferring to Fund 1018-Parks and Community Services and appropriating the same for aquatics and minimum wage increase; and,
I. Approving a Supplemental Appropriation from the unreserved, unencumbered General Fund balance in the amount of 340,000 and transferring to Fund 7002-Worker’s Compensation and appropriating the same; and,
J. Approving a Supplemental Appropriation from the unreserved, unencumbered fund balance of Fund 2001-Measure C in the amount of 339,275 and transferring to Fund 7002-Worker’s Compensation and appropriating the same; and,
K. Approving a Supplemental Appropriation from the unreserved, unencumbered fund balance of Fund 4503-CFD-Police in the amount of 100,000 and transferring to Fund 7002-Worker’s Compensation and appropriating the same; and,
L. Approving a Supplemental Appropriation from the unreserved, unencumbered fund balance of Fund 2002-Measure Y-Police in the amount of 50,000 and transferring to Fund 7002-Worker’s Compensation and appropriating the same; and,
M. Approving a transfer in the amount of 39,730 from Fund 6002 Refuse Operations to Fund 7002-Worker’s Compensation and appropriating the same; and,
N. Approving a transfer in the amount of 18,995 from Fund 6000 Wastewater Operations to Fund 7002-Worker’s Compensation and appropriating the same; and,
O. Authorizing the Finance Officer to make any necessary budget adjustments.
Body
ALTERNATIVES
1. Approve, as recommended; or
2. Approve, subject to other than recommended (identify specific findings and/or conditions amended to be addressed in the motion; or
3. Deny; or
4. Continue to a future meeting (date and time to be specified in the motion).
AUTHORITY
Charter of the City of Merced, Section 1105.
DISCUSSION
Mid-Year Update
The purpose of the Mid-Year update is to provide the City Council with a reconciliation on how the City ended Fiscal Year 2023-24, a General Fund update for the current Fiscal Year 2024-25, and to request changes to the budget due to needs that have been identified since the budget was adopted on June 17, 2024.
Beginning Fund Balance July 1, 2024
The table below reflects the Fiscal Year 23-24 adopted budget assumptions compared to actual fund balance on June 30, 2024.
|
Fund |
FY 2024-25 Actual Beginning Balance |
FY 2024-25 Beginning Budget Balance |
Savings or (Deficit) |
|
General Fund |
$16,279,866 |
$11,526,743 |
$4,753,123 |
|
Development Services |
$3,292,585 |
$2,931,592 |
$360,993 |
|
Parks & Community Services |
$1,818 |
($310,329) |
($312,147) |
|
Airport |
$461,906 |
$722,132 |
($260,226) |
|
Measure C |
$8,732,026 |
$9,989,209 |
($1,257,183) |
|
Measure Y |
$893,648 |
$428,776 |
$464,872 |
|
Housing Administration |
$99,192 |
$874,253 |
($775,061) |
Fiscal Year 2024-25
The City Council adopted the Fiscal Year 2024-25 budget for all funds on June 17, 2024. Subsequent to the budget adoption, there have been several actions approved by the City Council that affected the budget.
General Fund Expenditures
The City Council has approved revenue increases of $187,408 with equal offsetting expenditures. In addition, there has been $2,725,933 in Supplemental Appropriations and $187,692 in revenue increases for the following:
Opioid Settlement $201,659
Housing Consultant-RSG 6,355
Hincapie Bicycle Race 48,000
Labor Negotiations-LCW 150,000
Reappropriate Art Funding 103,000
Labor Negotiated Increases 2,216,919
Subtotal Appropriations 2,725,933
Hincapie Contributions 30,000
Fire Stop Gap Agreement with County 157,692
Net Appropriations $2,538,241
MID-YEAR RECOMMENDATIONS
Economic Development Department (Recommendation A, C, and D)
Prior to Redevelopment being dissolved, economic development functions were supported by Redevelopment Agency staff which generally had 5 to 7 employees. The staff provided assistance, support, and depth to the Office of Economic Development. When Redevelopment was dissolved, the Office of Economic Development was typically run by a two-person department. Generally, the two positions included an Economic Development Associate and higher-ranking manager. Currently, the city has one full-time position an Economic Development Associate supported by the Deputy City Manager. There remains one vacant Economic Development Associate. The best suited staffing combination to move the program to the next level is to have an Economic Development Associate and a seasoned Economic Development Administrator. As the City continues to grow and expand, the economy is becoming more sophisticated, there is a greater demand for goods and services. As the economy transitions, the transitioning of the entry-level Economic Development Associate for an experienced Economic Development manager is the combination necessary to navigate Merced’s economic future.
The Economic Development Administrator will oversee and support the Core Divisions of the Economic Development Department which include the Office of Economic Development, Merced Yosemite Regional Airport, Airport Industrial Park, Parking Authority, leasing and real estate asset management. The Economic Development Department has recently absorbed the following functions, Merced Redevelopment Successor Agency, Property Based Improvement District, Tourism Business Improvement District, oversight of environmental remediation projects in Central Merced and the Airport Industrial Park and expanding outreach methods. The Economic Development Administrator will supervise Office of Economic Development and Airport staff and report to the Office of the City Manager.
The Economic Development Associate has a current annual cost of $123,000 and the Economic Development Administrator annual cost is estimated to be $205,610. This is a difference of $82,610 annually. Due to salary savings from the vacant Associate no additional funding is needed this fiscal year. If approved the new position will be included in the Fiscal Year 2025-26 budget process.
Fire Department (Recommendation E)
The Fire Department is requesting additional appropriation of $52,000 from Fund 2003 Measure Y-Fire to replace four thermal imaging cameras, 15 self-contained breathing apparatus (SCBA) bottles, and eight gas monitors which are crucial for maintaining the safety and operational readiness of the department. The existing thermal imaging cameras have failed and are unrepairable due to age, rendering them unreliable for critical operations, and replacement is necessary to ensure effective response in low-visibility conditions, at a cost of $22,000. The 15 SCBA bottles, totaling $18,000, could not be covered under the FEMA SCBA grant. The department is currently short, and the additional purchase would ensure our personnel have adequate air supply equipment. Additionally, the eight gas monitors, valued at $12,000, are outdated and experiencing frequent failures which pose a risk to safety during hazardous gas detection. These replacements will directly enhance response capabilities, ensuring the safety and efficiency of operations.
Police Department (Recommendation F)
Over the past several years the State of California has directly paid to AT&T for any maintenance costs for our 911 phone system. We were recently informed by the State that they will no longer br paying directly for the maintenance. The city will be required to pay the maintenance costs then request a reimbursement. The maintenance costs are expected to be $35,158 for the remainder of the fiscal year. The police department is requesting an appropriation of the referenced amount as well as the equal increase to revenue. There should be no net impact to the city. In future fiscal years this item will be included in the budget process.
Bell Station (Recommendation G)
The City is continuing to make efforts to release the Bell Station either back to the US Department of Interior or to another public agency. The City had been working with one public agency over several months but ultimately, they declined to take over the building. In the meantime, rents received from the tenants are not keeping up with costs and the City had only budgeted expenses for six months of this fiscal year with the thought that the building would transition by then. The City is currently working with another public agency who seems very interested in taking over the building. Since the transition is taking longer than anticipated, Staff is requesting $30,000 from the General Fund to pay for utility costs through the end of the year.
Parks and Community Services Department (Recommendation B,C, D, and H)
Parks and Community Services is made up of several core, full-time staff who utilize over 60 part-time employees to provide year-round services to the community. To cover the cost increases of minimum wage and the associated raises for all part time staff, the department is requesting $16,620 from Measure Y 20% Parks and Recreation allocation. In addition, Parks and Community Services is requesting to delete one full time Park Worker I position and add one full time Recreation Field & Facility Worker to the department. This shift in classification will require no adjustment to compensation but will align roles and responsibilities with field and facility preparation required in support of recreational sports.
Workers Compensation (Recommendation I-N)
The Workers Compensation budget is created annually based on historical expenses. For Fiscal Year 2024-25, the adopted expenditure budget was $4.1. The fund ended up expending more than estimated in FY 2023-24 and in order to balance the expenditure budget had to be reduced by $217,000. In addition, several unanticipated settlement claims of over $1 million have been negotiated this year and have been paid out or are pending to be paid. Staff has completed a fund analysis and determined that based on estimated weekly invoices and settlements to be paid for the remainder of the fiscal year the fund will need an additional $888,000. Staff is recommending the additional funding per the allocation below based on the settlement claims.
1000-General Fund $340,000
2001-Measure C (old) 339,275
4503-CFD Police 100,000
2002-Measure Y 50,000
6002-Refuse Operations 39,730
6000-Wastewater Operations 18,995
Total $888,000
Property Based Improvement District (Recommendation O)
PBID was formed and began assessing property in Fiscal Year 2023-24. During this time an administration agreement was being negotiated between the City of Merced and the PBID board which took longer than anticipated. Although the City received funding from the County Assessor’s office, we were unable to forward it to PBID until an agreement was in place. The agreement is now in place, and we have forwarded FY23-24 assessments to PBID with the exception of any delinquencies. When the current fiscal year 2024-25 budget was created, we did not expect that we would need appropriation to forward funding to PBID for two years’ worth of assessments. We are requesting to allow the Finance Officer to make any necessary adjustments to the budget for additional interest revenue received and appropriation to be able to pass through all the available funding to the PBID board as required by the agreements in place.
Vehicle Purchase Resolution
As part of the Fiscal Year 2023-24 Mid-Year Budget, City Council approved Resolution 2024-26 declaring the infeasibility of using public bidding to purchase certain vehicles and authorizing limited direct purchases. The resolution expired on December 31, 2024, and had some controls built in that included each vehicle purchase cannot exceed $100,000 and staff can only use this method for purchases not to exceed $900,000. The resolution also required that a report be provided to the City Council as soon as practical. A total of 14 vehicles totaling $634,850.34 were purchased under this resolution. Each vehicle ranged between $30,216.44-$59,487.24. The list of vehicles and amounts is attached for reference.
Recommendations E-O will require five affirmative votes.
ATTACHMENTS
1. Resolution 2025-11 Amending Classification Plan
2. Resolution 2025-12 Amending Salary Range
3. Vehicle list of purchases under Resolution 2024-26