MEETING DATE:
FEBRUARY 10, 2026
SUBJECT:
Title
RESOLUTION NO. 2026-9541 - APPROVING THE MID-YEAR ADJUSTMENTS TO AMEND THE FISCAL YEAR 2025-26 BUDGET AND UPDATING THE CITY’S CLASSIFICATION AND COMPENSATION SCHEDULE
Body
Recommendation
Recommendation
ADOPT resolution approving the recommended Mid-Year adjustments to amend the Fiscal Year 2025-26 Budget and updated classification and compensation schedule.
Body
Board or Commission Action
Not Applicable
Relevant Council Strategic Theme
Good Governance
Relevant Department Goal
Not Applicable
Executive Summary
The purpose of the Fiscal Year 2025-26 Mid-Year Budget Amendment is to adjust the adopted budget for unanticipated revenue and expense items that may occur within the current fiscal year. At this time, staff has identified expenditure and revenue adjustments that are needed prior to the end of Fiscal Year 2025-26. Therefore, staff is submitting a mid-year budget amendment for City Council review and approval. Staff is also recommending changes to the City’s Classification and Compensation schedule to better address departmental staffing needs. The proposed changes to this schedule do not have a budgetary impact.
Discussion
After the June 10, 2025 City Council adoption of the budget, each department has the operational flexibility to reallocate appropriations within specified budgeted line-items, but cannot exceed the overall appropriation level as approved by the City Council without approval. The Fiscal Year (FY) 2025-26 budget was adopted with a modest surplus and at this time, Staff has identified additional expenditure and revenue adjustments that are needed prior to the end of FY 2025-26 to ensure departments have sufficient appropriation approved by the City Council, per City fiscal policy. The anticipated adjusted budget will have a net positive impact and maintain a general fund surplus.
Staff worked to carefully identify potential areas where expenditures could be reduced by either changing how staff performed their business or by reorganizing budgeted activities while maintaining necessary services and activities. Therefore, the unanticipated General Fund expenditure requests increase the overall expenditure budget by $2,015,617, or approximately 2.1% of the approved FY 2025-26 General Fund budget (not including carryovers and amendments) primarily due to overtime in Fire safety. The unanticipated General Fund revenue requests increase revenue projections by $2,307,975, or about 2.3% of the approved FY 2025-26 General Fund Revenue Budget. A majority of the revenue adjustments are service-based revenue increases related to development-related fees. The City also saw a slightly higher return on real estate partnership income in FY 2025-26.
In addition to the proposed budget amendments to the General Fund, expense and revenue adjustments are also being proposed to Special Revenue Funds (Fund 2XX), Creekside Enterprise Fund (Fund 601), Infrastructure Funds (Fund 602, Fund 603, and Fund 604), Real Property Management Enterprise Fund (Fund 605), and the City’s Measure Q Fund (Fund 606). The net budgetary impact of the proposed adjustments for Special Revenue Funds (Fund 2XX) is a net increase of $10,094, due mostly to reimbursement agreement interest expense in Community Facilities District 2011-01. Other special revenue funds were adjusted to align with updated state projections on revenue for Gas Tax (Fund 200) and RMRA (fund 219) and revenue anticipated in the Senior Nutrition Grant Fund (Fund 206).
To fulfil revenue-generating capital obligations at City-owned leased properties, the expense increase for Creekside Enterprise Fund (Fund 601) is $40,000, and for the Real Property Management Fund (Fund 605) the expenditure increase is $1,457,041. The net expense increase for Infrastructure Funds (Fund 602, Fund 603, and Fund 604) is $1,176,365. This increase is primarily due to anticipated purchases of two dump trucks and one additional street sweeper. All infrastructure expenditure requests will be offset by anticipated transfer revenue from the Measure Q Fund (Fund 606) and anticipated grant revenue.
The net expense increase for the Measure Q Fund (606) is $1,476,000, primarily to increase transfers to Infrastructure funds 602-604 for its expenses noted above. This increase will be offset by additional anticipated Transactions and Use Tax Revenue, resulting in a balanced fund budget.
Proposed changes to the Capital Improvement Program Budget result in a $0 net fiscal impact. Savings from the Fire Station 1 HVAC Repair (Project # FC020) will be used to offset an increase in the Senior Center HVAC project (Project # FC019).
Finally, the proposed revisions to the City’s Classification and Compensation Schedule are attached as Exhibit C. Per the City’s Personnel Rules and Regulations, the City Council must approve all changes to the Classification and Compensation Schedule. Staff is proposing to add the following two new job classifications: Business License Technician and IT Help Desk Technician, and to remove the Customer Experience Manager classification. While staff may move forward with filling added positions during the fiscal year, any associated costs will be covered through existing salary savings, resulting in no net increase to the City’s FY 2025-26 Operations and Capital Improvement Program budget as a result of these changes. The updated classification and compensation schedule is attached in Exhibit C.
In summary, the proposed budget modifications to the approved General Fund budgeted expenditures will increase the expense budget by $2,015,617 and increase the revenue budget by $2,307,975, resulting in an anticipated FY 2025-26 General Fund net budgetary surplus of $726,380. The proposed budget modifications will result in a net budget increase of $548,635 for Other City Funds and a balanced budget for Measure Q fund 606. Finally, the Capital Improvement Program Budget updates result in no change to the overall program budget. A detailed list of all of the requested budget adjustments, classified by fund, is attached in Exhibit A. The updated classification and compensation schedule results in no fiscal impact and is attached in Exhibit C.
Environmental Review
There is no environmental impact due to this recommendation.
Fiscal Impact
Approval of the FY 2025-26 requested Operations and Capital Improvement Program budget amendments will result in a projected budgetary surplus of $726,380 to the General Fund, a net budgetary increase of $1,507,135 to non-General Fund funds, and a balanced budget for Measure Q fund 606. There is no impact to the Capital Improvement Program Budget. The Classification and Compensation Schedule Updates result in no fiscal impact to the City’s FY 2025-26 Operating Budget.
Attachment(s)
Attachment 1 - Resolution 2026-XXXX
Attachment 2 - Exhibit A: Fiscal Year 2025-26 Mid-Year Budget Amendments
Attachment 3 - Exhibit B: Updated CIP Budget Sheets
Attachment 4 - Exhibit C: Updated Classification and Compensation Schedule
Prepared by: Janet Brotherton, Budget and Analysis Manager
Submitted by: Janet Brotherton, Budget and Analysis Manager
Reviewed by: Donna Apar, Finance Director
Approved by: Michelle Bender, City Manager