AR 020706 2005-06 Mid-Year Financial Report

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The 2005-06 budget has already been adjusted by various City Council actions since July 1, 2005. Revenues were adjusted upward at the beginning of the fiscal year to reflect economic circumstances at that time and to budget for new grants received since the adoption of the budget. In addition, a few appropriation adjustments have been approved by the City Council for items such as grants and operating changes that were not anticipated prior to July 1, 2005. Fiscal Policy Change: As a foundation of good financial management, every organization needs some basic financial policies. On February 29, 2000, the City Council approved a concise document relative to the City of Colton's fiscal policies. In this document, the City Council set the General Fund reserve requirement at 8% of the General Fund budget. For the fiscal year beginning July 1, 2005, the approved General Fund budget was $29,866,457 which resulted in a reserve requirement of $2,389,317. The General Fund began this fiscal year with an undesignated reserve balance of $3,109,825. However of this amount $564,185 has been reserved to offset the shortfall in the Childcare Fund resulting from the Colton Cares program that was closed out on June 30, 2005. This would result in a beginning undesignated fund balance of $2,545,640 which is 8.5% of the General Fund budget. The City Manager is recommending that the General Fund reserve requirement be increased from the current 8% to 15% over the next four years. The current fiscal year is estimate to add an additional $683,734 to the reserves which will bring the reserve total to $3,229,374 or 10.6% of the adjusted General Fund budget. If the City Council approves the increase of the reserves to 15% with a 2% incremental increase each year, the General Fund reserve for the current year should be set at $3,045,275 (10% of adjusted budget of $30,452,757). The remaining $184,098 (difference between available reserve of $3,229,374 and the 10% reserve requirement of $3,045,275) is being recommended to be set-aside as a Capital Improvement Projects Reserve. Additionally the $425,000 that was set aside in the current year for the debt service on the sports park capital project loan is available to either be added to reserves or to be used for a "one-time" expenditure. The use of these funds will be discussed during the February 16th City Council workshop relating Capital Improvement Projects. Reorganization/Personnel Changes: The Community Services Department has been operating as a Division of the Police Department since July 1, 2004. The City Manager is recommending that the Community Services Department be reorganized as a stand-alone department effective with this mid- year budget approval. As part and parcel of this change the City Manager is recommending a 5% salary adjustment to the Community Services Directors salary costing an additional $2,600 for the current fiscal year. The Community Services Department budget will absorb this expense within their approved budget and no increases are being requested for this increase. • The Police Department's facilities have been maintained by a P/T Custodian during this fiscal year. The department has indicated that a P/T Custodian is unable to keep up with all the required tasks. In order to fully maintain its facilities there is a need to change this position to a F/T Building Maintenance Worker I position. This change will increase the department's salary and benefits expense by an additional $18,000 for the current fiscal year. • The Human Resources Department is requesting the titling of their Administrative Analyst II (in the Executive unit) to a Human Resources Analyst. This request is due to the fact that the Analyst in the Human Resources Department performs high level, more specialized and