(20)AR 022007 Mid-Year Budget 2006-07

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Fiscal Policy Update: During the fiscal year 2005-06 mid -year budget presentation the City Manager recommended and the Council approved a change to the fiscal policy first adopted on February 29, 2000. The change approved an incremental increase of the General Fund reserve from 8% to 15% in 2% increments each year starting with fiscal year 2006-07. Per the audited financial results the General Fund reserve account (Undesignated Fund Balance)at June 30, 2006 is $4,857,238 which is 13.6% of the current year General Fund budget of $35,629,607. During the previous year mid -year discussion (February 16, 2006) staff brought to the Council's attention a shortfall in the Childcare Fund from the Colton Cares Program that was discontinued on June 30, 2005 due to operating losses. At that time the audit had not been completed and the preliminary data indicated that the shortfall was $564,185. With the completion of the audit the financials indicates the revised amount of the shortfall is $604,739. Staff is recommending that the General Fund absorb this one- time shortfall and relieve the Childcare Fund of this negative Fund Balance condition. This will reduce the Undesignated Fund Balance in the General Fund to $4,252,499 or 12% of current year budget. This adjusted Undesignated Fund Balance amount of $4,252,499 (or 12%) is ahead of schedule to reach the 15% target set by Council during Fiscal Year 2010-2011. Departmental Appropriation Increases Requested. • City Manager — The City Manager's professional services Account (100-6020-6020-2350) requires a $25,000 upward adjustment to accommodate additional costs associated with legal services for Barry Ross on the Steward matter. This additional expenditure will be offset by the revenue once settlement/judgment has been reached. The current year revenue has not been adjusted due to not knowing the timing of this action. • O—epartment Total $25,0001 Finance — The Finance Department — Administration is requesting an upward adjustment of $25,000 in professional services account (100-6040-6041-2350) to cover the cost of temporary staffing to cover the vacancy left by the passing of a Sr. Accountant. A recruitment time to fill this vacancy will take approximately three months and professional assistance from an audit firm is required to keep abreast of the ongoing tasks. Ve-partment Total $25,000 Finance — Customer Service is requesting $16,000 in the equipment account (100-6040- 6042-3890) for software costs associated with the implementation of the Colton eCare program. This program will give the customers access to their utility accounts online via the internet as well as make payments on their accounts online. Additionally this division is requesting $25,000 to cover a shortage in salary and benefits account (100-6040-6042- 1010) due to the pay -out of banked hours of a long-term employee whose retirement was not anticipated. The increases to this division will be covered by the Enterprise Funds (Electric, Water & Wastewater Funds) and no there will be no General Fund impact. Finally this division is requesting $20,000 in the overtime account (100-6040-6041-1050) to cover the Friday coverage through the end of the year. The original adopted budget was insufficient due to higher than projected training time that was required for all staff on the utility billing system which was unanticipated. We-partment Total $20,000 2