REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Travis Hopkins, Acting City Manager
VIA: David Cain, Interim Chief Financial Officer
PREPARED BY: Serena Bubenheim, Assistant Chief Financial Officer
Subject:
title
Fiscal Year 2024/25 Mid-Year Budget Adjustments
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Statement of Issue:
The Finance Department has prepared a mid-year budget review for the fiscal year that began on July 1, 2024. In interfacing with operating departments, budgetary requests have been assessed across all City departments, and certain adjustments are being recommended based on available resources in the General Fund, through grants and/or restricted funds.
Financial Impact:
Fiscal Year 2024/25 Mid-Year Adjustments
1. General Fund (100) budget adjustments are requested as follows:
a. Fire Department - funding for Fire Strike team reimbursement costs ($1,200,000) offset with strike team reimbursement revenues for a net zero impact.
b. Fire Department - funding for emergency medical supplies and EMS billing costs ($291,000) offset with emergency medical services revenue for a net zero impact.
c. Fire Department - funding for additional costs associated with the City’s participation in the Voluntary Rate Range Intergovernmental Transfer Program ($145,685) offset with reimbursement revenue for a net zero impact.
2. The Community & Library Services Department is requesting to close out the Park Acquisition & Development Fund 209 and transfer the remaining fund balance of $6,488 to the Park Development Impact Fee - Residential Fund 228.
3. The Community & Library Services Department is requesting to transfer capital improvement project funds budgeted in the Development Impact Fee - Residential Fund 228, for a net zero impact.
4. The Public Works Department is requesting Infrastructure Fund 314 funding for the Sports Complex driveway and parking lot ($30,000).
5. The Public Works Department is requesting funding in the Water Fund 506 for a portion of the Warner Avenue emergency sinkhole repair ($367,240).
6. The Public Works Department is requesting funding in the Sewer Fund 511 for a portion of the Warner Avenue emergency sinkhole repair ($367,240) and funding to complete the Edinger Sewer Lift Station project ($90,000).
7. The Police Department is requesting an appropriation of $120,000 from the Supplemental Law Enforcement Fund 984 for the purchase and installation of a searchlight for one helicopter.
8. The Public Works Department is requesting an appropriation from the SB 1383 Local Assistance Fund 1276 to reimburse unspent grant funds to CalRecycle from the OWR1 grant cycle ($54,762).
9. The Public Works Department is requesting an appropriation of $31,500 from the Lot BB Buffer Maintenance Fund 1287 for maintenance costs for Lot BB of Tract Map No. 15549.
There are sufficient revenues, cash, and/or fund balances to support the above referenced adjustments.
Recommended Action:
recommendation
Approve mid-year budget adjustments to the FY 2024/25 Revised Budget in the funds and by the amounts contained in Attachment 1.
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Alternative Action(s):
Do not approve the recommended action(s) and direct staff accordingly. Denial of Mid-Year budget adjustment requests would result in insufficient funding for critical areas and potential loss of grant funding.
Analysis:
The FY 2024/25 Budget was adopted by City Council on June 4, 2024, for the fiscal year beginning July 1, 2024. The Finance Department has compiled recommended budget adjustments to cover additional costs and/or provide appropriations necessary to expend funds that have been received for specific purposes. There are sufficient offsetting revenues, cash, and/or fund balance to support the requested adjustments.
General Fund
The Fire Department participates in the California Fire and Rescue Emergency Mutual Aid System, and the department has responded to multiple mutual aid requests to assist in major fires, including the Palisades and Eaton Fires. The State of California will fully reimburse Huntington Beach for all allowable Strike Team expenditures and will reimburse an additional 12.9% administrative rate applied to these allowable expenditures.
The Fire Department has incurred $1,200,000 in Strike Team expenditures for FY 2024/25 so far. Given that Strike Team costs are unknown until costs are incurred, the annual budget does not include funding for mutual aid responses. Therefore, the Fire Department is requesting a budget appropriation of $1,200,000, which will be fully reimbursed by the State.
To meet the operational demands of increased vendor prices and increased medical calls, the Fire Department is requesting a budget appropriation of $291,000 for emergency medical supplies and billing costs. Additional emergency medical service revenues are anticipated to offset the requested appropriation.
The City participates in the Voluntary Rate Range Intergovernmental Transfer Program (VRRP IGT), which is administered through the Department of Health Care Services and CalOptima Health and allows the City to receive additional Medi-Cal reimbursement revenue through a federal match. The City’s up front payment was anticipated to be $2,751,293 with a reimbursement of $6,620,273, for a net revenue of $3,868,980. The City’s actual up front payment was $2,896,978 with a final reimbursement of $6,885,526, for a net revenue of $3,988,548. The department is requesting an appropriation of $145,685 to cover the additional up front cost, which has been fully offset by the additional net revenue received.
In summary, the requested General Fund appropriations total $1,636,685 and are offset by anticipated revenues of $1,636,685, for a net zero impact.
Other Funds
Park Acquisition & Development and Park Development Impact Fee - Residential Funds (209 & 228)
The Community & Library Services Department is requesting to close out the Park Acquisition & Development Fund 209 and transfer the remaining $6,488 balance to the Park Development Impact Fee - Residential Fund 228. Fund 209 was originally used for all park development fees collected prior to the adoption of new fees in 2012. All fees are now deposited into Fund 228, so Fund 209 is no longer needed.
Park Development Impact Fee - Residential Fund (228)
The FY 2024-25 Adopted Capital Improvement Program (CIP) Budget includes approved funds in the amount of $600,000 for playground improvements at Pleasant View Park. Since the time of budget adoption, staff has learned that the Ocean View School District is considering the potential sale of Pleasant View School. Due to the unknown disposition of this possibility, staff would like to reassign the approved budget for Pleasant View Park Playground Improvements to Robinwood Park Playground Improvements which is also in need of replacement. There is no change to the overall budget with this request.
Infrastructure Fund (314)
The Public Works Department is requesting a $30,000 fund balance appropriation from the Infrastructure Fund 314 to conduct an underground investigation of the Sports Complex driveway. Over the past year, the sinking driveway has gotten much worse due to rainwater seeping through the asphalt and causing erosion. Based on the results of the investigation, the cost for stabilization and repairs will be included in the FY 2025/26 CIP Budget.
Water and Sewer Funds (506 and 511)
In June 2024, a sinkhole, caused by years of heavy rainfall infiltrating the sewer trench and creating a void beneath the street, collapsed and damaged the City sewer pipeline between Magnolia and Ross on Warner Avenue. Emergency repair work for the sewer pipeline and street began in September 2024 and was completed within six weeks, incurring costs of just under $750,000. The Public Works Department is requesting fund balance appropriations of $367,240 in the Water Fund and $367,240 in the Sewer Fund to cover the cost of the emergency repair work.
Sewer Fund (511)
The Public Works Department is requesting a fund balance appropriation of $90,000 from the Sewer Fund 511 to cover remaining costs related to the Edinger Avenue Sewer Project. Once the project started, it was found that a materials testing company and construction management consultant were needed to ensure timely completion of the project. The project has been completed, and additional funding is needed to cover the remaining costs and close out the project.
Supplemental Law Enforcement Services Fund (984)
The Police Department is requesting a fund balance appropriation from the Supplemental Law Enforcement Services Fund in the amount of $120,000 for the purchase and installation of a new searchlight for one helicopter. The current searchlight is over ten years old and is failing on a consistent basis. Searchlights are essential for officer safety when performing public safety functions during nighttime hours.
SB 1383 Local Assistance OWR1 Fund (1276)
In May 2022, the City was awarded $278,482 through the SB 1383 Local Assistance Grant administered by CalRecycle. This was a one-time, non-competitive grant program to assist local jurisdictions with the implementation of their SB 1383 programs. The CalRecycle OWR1 grant expenditure period has concluded and the grant is finalized. The City received the grant funds up front and must reimburse CalRecycle for unspent grant funds in the amount of $54,762.
Lot BB Buffer Maintenance Fund (1287)
In 2003, the City entered into a Buffer Area Maintenance Reimbursement Agreement for Lot BB of Tract Map No. 15549. The Homeowner’s Association (HOA) reimburses the City annually for the City’s costs to maintain the lot. A fund balance appropriation of $31,500 is requested in the Lot BB Buffer Maintenance Fund 1287 to pay for maintenance costs for FY 2024-25. This expenditure was erroneously omitted from the FY 2024-25 Adopted Budget.
In summary, the requested non-General Fund appropriations total $1,060,742. There are sufficient offsetting revenues, cash, and/or fund balance in each fund to support the requested adjustments.
Environmental Status:
Not applicable
Strategic Plan Goal:
Non Applicable - Administrative Item
Attachment(s):
1. Fiscal Year 2024/25 Recommended Mid-Year Adjustments
2. FY 2024/25 Mid-Year Budget Adjustments Presentation