For City Council Meeting June 25, 2024
TO: Honorable Mayor and City Council
APPROVAL: G. Michael Milhiser, Interim City Manager
FROM: Mark Alvarado, Interim Director of Finance
Title
Request City Council to:
1) Conduct a Public Hearing on the City’s Fiscal Year 2024-25 Proposed Annual Budget.
2) Approve and Adopt the following Resolutions:
a. Resolution No. 8251, RHA Resolution No. 08-24, RUA Resolution No. 08-36 and Rialto Redevelopment Successor Agency Resolution No. 01-24 for the City’s Fiscal Year 2024-25 Annual Budget;
b. Resolution No. 8252 Adopting the Fiscal Year 2024-25 Appropriations Limit (Gann Limit);
c. Resolution No. 8253 Adopting the Fiscal Year 2024-25 Citywide Classification and Compensation Plan
(ACTION)
Body
BACKGROUND
In accordance with Section 2.04.140 of the Rialto Municipal Code, the City Manager must present the fiscal budget to the City Council for approval annually. Under the direction of the Finance Director, the Finance Department conducted the analysis and made the projections required to complete the budget document after receiving input from all of the City departments. The process began in March and required the cooperation of staff organization wide.
On June 11, 2024, the City Council conducted a Budget Workshop to discuss the Budget Plan for Fiscal Year 2024-25. Every Department Head presented detailed information on their department’s budget for FY2024-25 and answered the City Council’s questions. At this meeting, the Council requested additional information as follow-up relating to certain areas in the General Fund budget. The responses to these requests are included as part of the proposed budget document included with this staff report.
Based on the direction received from the City Council, a proposed FY 2024-25 Budget document is presented for the City Council’s adoption.
ANALYSIS/DISCUSSION
Staff is presenting the proposed FY2024-25 Budget. The City’s budget is balanced with a General Fund that has a surplus in the amount of approximately $3 million.
GENERAL FUND
The General Fund FY2023-24 estimated year-end fund balance is projected to be $117 million. The portion that is reserved for economic uncertainty is projected to be $29 million. The table below shows the overall increase, over the last three years, of the reserve balances.
General Fund Revenues
Total proposed FY2024-25 General Fund budgeted revenue totals $151,308,094. This amount is approximately a 4% decrease in comparison to the estimated year-end total for FY2023-24. This is due to one-time sales tax payment of $7 million received in 2023-24. The City’s top three General Fund revenue sources are Sales Tax, Property Tax, and Utility Users Tax. The City is using conservative growth assumptions for the major revenue sources listed above. A 2% growth rate is projected for all categories.
The City’s Tax Revenue Appropriations from the proceeds of taxes for FY2024-25 is $341,297,809. Proposition XIII B allows local governments to increase the appropriations limit each year based on one of two growth factors. The two growth factors are one, the inflation and population growth percentage, or two, the city’s residential building growth factor. The city is using the latter. The Appropriation Limit calculation is shown below.
General Fund Revenues By Category Graph
General Fund Expenditures
The FY2024-25 Proposed General Fund Expenditure Budget is projected to be $148.3 million. This amount is approximately 4% more than the FY203-24 year-end projection. This is due to increased personnel costs and higher contracted services costs.
There are new staff positions that are being proposed to be added to the FY2024-25 General Fund Budget. They are shown in the table on the next page. The personnel changes being requested are focused on enhancing the level of customer service to the residents and businesses of Rialto. Following the table of personnel requests are short narratives explaining the position justification and detailing the customer service enhancements of each department’s requests.
The total cost of the personnel requests is approximately $915,000. This cost is currently not incorporated into the proposed General Fund expenditures. If the City Council approved all of the personnel requests, the 2024-25 General Fund budget would still be balanced. The anticipated surplus (revenues greater than expenditures), would now be approximately $2 million, instead of the current anticipated surplus of $3 million.
Narratives Explaining Department’s Personnel Requests
City Clerk/Management Services
In an effort to maintain our level of productivity and customer service with the public and internally, it’s essential to reclassify our two Office Specialists positions to Senior Office Specialists. Being one of the smaller departments, we feel the impacts when an employee is away from the office for an extended period of time, such as a vacation. It has been beneficial to have the ability to cross-train employees to take on the additional task or duty. This allows them to be more well-rounded and responsive to the general public or another department.
Human Resources/Risk Management
The role of Human Resources and Risk Management have rapidly expanded in recent years due to response of regulatory requirements, health and safety efforts, more complex benefit programs and subsequent training and development efforts.
Creating a Human Resources/Risk Manager will assist the HR/RM department respond to these expanded functions while continuing to assist the departments. An HR/RM Manager is needed to assist the HR/RM Director in the more complex/confidential duties. Those assignments currently are being handled by the HR/RM Director. The HR/RM manager will also assist the director in the strategic oversight of the recruitments, the open workers’ compensation claims, general liability claims, and investigations/grievances. Many times the departments have questions on these items and the HR/RM analysts and Sr. Analyst rely on the HR/RM director to provide guidance and next steps.
The HR/RM Analyst will assist the Police Department and Fire Department in their recruitment efforts. Since these two departments have a higher volume of recruitments, an analyst will be necessary to quickly review each aspect of the recruitment against the current laws as well as our current rules and policies in place.
Community Development
Community Development is requesting staff position adjustments that are exclusively focused on improving customer service. The total budget increase is offset by Community Development’s ability to reduce its fiscal year budget by approximately $400,000. This is primarily accomplished through the significant reduction of consulting services/resources. The three requests include:
1. Replace three vacant part-time aide and intern positions with one full-time Office Specialist. This budget request results in a net decrease in the amount of $1,556. The customer service approach to have three part-time positions provide full time customer services resulted in having unstable staffing resources. These part-time positions are difficult to train and retain, which has caused a deficiency in staff resource continuity and a revolving door affect. Additionally, the part-time positions have proven challenging to recruit candidates with and appropriate level of customer service experience. Community Development is proposing this position adjustment to further stabilize the customer service team with a full-time Office Specialist position.
2. Reclass Planning Aide to Planning Technician. There is no additional cost involved in changing the title of the position to be reflective of the Planning industry at large and apply more technician application to the role versus administrative support.
The 2024 February thru June customer survey results are below:
Maintenance and Facilities
The budget for Fiscal Year 2024/2025 submitted by the Maintenance and Facilities Department includes a request to restructure the Engineering Services and Maintenance and Facilities Departments to create a Public Works Department. While eliminating the current Engineering Services Director position, this proposed restructuring would add one City Engineer and one Public Works Supervisor position and reclass the Maintenance and Facilities Director position, leading to a more streamlined and efficient operation. Engineering land development activities would remain with the Community Development Department, and park maintenance activities would remain with the Parks and Recreation Department.
The current organizational structure was created in 2021 by bifurcating Public Works into three separate organizational structures: the Engineering Services Division of the Community Development Department, the Park Maintenance Division of the Parks and Recreation Department, and the creation Maintenance and Facilities Department (M&F). The Engineering Services Division was later separated from Community Development in 2022 to form the Engineering Services Department, which provides land development, traffic engineering, grants management, and capital improvement functions. Engineering Services has been without a director since March 2023, and the oversight duties were given to the M&F Director. The oversight of land development was later reassigned to the Community Development Director in August of 2023. Capital improvement, grant management, and traffic engineering operations remained with the M&F Director.
The Maintenance and Facilities Department was established with the mission to plan, design, construct, and maintain safe, effective, and efficient transportation systems, fleet services, environmental compliance solutions, and government facilities in the City of Rialto. Two of the Department's primary goals are to continuously improve services to the public and provide customer service through communication and timely responses. The proposed restructuring is a strategic step toward achieving these goals.
Public Works Supervisor
When initially established, the M&F Department was created with organizational inefficiencies by not including first-line supervisors. The Department consists of 42 full-time employees and four part-time employees. Of this total employee count, only three have supervisor authority: the Director, the Deputy Director, and the Principal Budget Analyst. This organizational design places the Deputy Director as the first-line supervisor for 37 staff members, dealing with day-to-day operations, job assignments, quality control oversight, customer interactions, training, employee evaluations, and personal matters. The oversight between resident concerns, staff actions, and available supervision far exceed industry norms, creating inefficiencies in allocating resources where they can better create value, and organizational effectiveness is suffering. This is a clear imbalance of the division of labor, resulting in a higher transaction cost for the city. Further, it delays City services, such as in response times to customer concerns and safety matters. Adding one Public Works Supervisor help would address these challenges and significantly improve the Department's performance.
City Engineer
The City Engineer position is instrumental to all cities and, specifically to Rialto, is required to provide various duties outlined in the Rialto Municipal Code. The City Engineer position was a stand-alone position before the duties were incorporated into the Engineering Services Director requirements in 2022. As mentioned, the Director position has been vacant since March 2023. City Engineer duties have been maintained through contract services on a two-day per week basis. This vacancy has led to inefficiencies in project oversight in both capital improvement projects and land development, leading to the likelihood of mistakes (e.g., inaccurate sequencing of project tasks or failure to complete specific requirements) and project delays. Including the City Engineer position would provide greater attention to the City’s Engineering tasks and opportunities to perform a greater level of duties in-house, reducing the City’s reliance on contractual services while increasing response times to residents and developers.
Public Works Director
The proposal to reform the Public Works Department also includes reclassifying the current M&F Director title to Public Works Director. This is necessary to align the proposed duties from a multidivisional structure to a singular structure. In addition, this would provide organizational clarity and reduce the public and staff’s current confusion of responsibilities.
Parks, Recreation and Community Services
The department is requesting the reclass of two positions 1) Recreation Supervisor to a Recreation Manager and eliminate two part-time Day Care Site Supervisor positions to create 1 fulltime position.
Over the past two and half years the department has taken on both divisions and large programs:
• CDBG
• Rialto Cares
• Parks Maintenance
• Cemetery Administration
• Rialto E-Bikes Program
Once the PE Trail expansion project is completed the parks division will assume maintenance responsibility for the added acreage along with the completion of the Rialto Habitat project.
The Day Care Site Supervisor being reclassed to a full-time position will allow us to have on a staff who has the necessary child development background to help the department reestablish their day care licensure, continue to expand our tiny tot programs ensuring that the program grows with the up-to-date curriculum, trainings, assisting to secure any necessary permits or license required. They will also be able to expand the summer camp program via the growth of a volunteer program to teach our local teens job and leadership skills that will help them be successful in the future, all the while completing volunteer hours for their school program requirements.
The reclass of the Recreation Supervisor will allow us to recruit a top recreation professional into a position that oversees many divisions within the department. Reclassifying the position to a manager will allow us to secure a more well-rounded staff to help lead and support the team while our community continues to benefit from the team’s creativity and hard work.
This help continue to catapult our city to be one of the most desired cities to live and play in the Inland Empire.
Detailed outline below:
1. Improved Customer Service Engagement:
• Emphasize and enhance outreach programs, including Senior Services, resource information/services, and other community engagement initiatives, to ensure high quality service delivery.
• Collaborate with the Department Director and City leadership to develop and implement strategic plans for park and recreation services, aligning with the City’s goals and community needs, such as urban development, infrastructure improvement, and public space design.
• Create new collaborative initiatives with community service groups, clubs, organizations, and agencies to expand service outreach and resource information to the Rialto Community.
• Address difficult complaints and requests for information, ensuring prompt and satisfactory resolution to enhance customer service and reduce potential city liability.
2. Timely and Effective Responsiveness:
• Ensure prompt and effective response to complaints and requests, enhancing public satisfaction and reducing potential city liability. Some of these tasks vary in time frame completion, however the direct oversite will help establish solid standards for the division helping to easily identify which areas need to be improved on and how.
• Structured maintenance schedule and asset inventory will allow for quicker identification and resolution of maintenance issues. This will lead to shorter response times for maintenance requests, ensuring that park facilities remain safe and functional 7 days a week for public use.
3) Operational Continuity:
• Increase and solidify leadership stability and succession planning to ensure seamless operations in the Director's absence. •
• Plan, organize, coordinate, and direct the maintenance of parks, parkways, playground areas, and park facilities, ensuring these spaces are well-maintained and safe for public use before they become an issue for the public. •
• Review reports and operating/activity records of various facilities, evaluate program effectiveness, and prepare recommendations for improvement to maintain high standards and continuously enhance services.
• Focus on establishing non-resident fees for the cemetery so that our residents can benefit from the purchase of their local cemetery plot. Currently a majority of our burials are for non-residents who are looking to pay low fees.
4. Accountability, Employee Development, and Succession Planning:
• Enhance staff accountability, morale, performance, and retention through effective supervision and development.
• Create a comprehensive Maintenance Management Plan (MMP) to standardize the current service level so that we can work towards enhancing and improving the maintenance levels. The MMP will cover the 253 acers of parkland and other facility landscape areas, 30 picnic shelters, 14 baseball fields, 14 playgrounds, five parks with fitness stations, two dog parks, various shade structures, three skate parks, two horseshoe pits, four tennis courts, 17 restroom facilities, eight snack bars, and 1 pool. The MMP will help to hold our contractors accountable for meeting the desired service level per the contract approved by council.
Example of Creation of Operations and Maintenance Standards:
1. Accountability and Compliance: Establishing clear standards will hold our Parks Maintenance staff and contractor accountable, ensuring compliance and verifying we receive the services we pay for and require.
2. Maintenance Plan: In this Maintenance Management Plan (MMP) we can create a comprehensive asset inventory, lifecycle management and maintenance scheduling. By doing so we will be able to implement a detailed inventory of all park assets. A complete asset inventory will enable precise tracking, maintenance scheduling, and budgeting for future park upgrades. We need to establish lifecycle management protocols for each asset category to predict and plan for maintenance, repairs, and replacements. Proactive lifecycle management will extend the useful life of assets, optimize budget allocation, and prevent costly emergency repairs. Then, develop and implement a structured maintenance schedule based on asset condition and usage patterns. Regular, scheduled maintenance will keep park facilities in optimal condition, enhance user satisfaction, and reduce long-term costs.
The MMP will help our team enhance the longevity and quality of our park amenities, the safety of our patrons, all while ensuring fiscal responsibility.
On average, cities can save between 20-30% on maintenance costs by implementing a comprehensive Maintenance Management Plan. This equates to substantial annual savings that can be reinvested into park improvements and community services.
• Select, train, supervise, and evaluate parks maintenance staff to ensure high-quality customer service and efficient productivity. Enhanced leadership will improve staff morale, performance, and retention, contributing to a more effective and motivated team.
Police Department
Lead Police Records Assistant
This position will analyze and process state Racial and Identify Act (RIPA) information required by the State of California. The RIPA program requires law enforcement agencies to provide all traffic stop and pedestrian data to State DOJ. The lead records assistant will also assist in expanding the functioning supervision capabilities in the records bureau to expand hours of operation to 7-days a week. This position personnel costs will be fully reimbursed by the State of California.
Crime Analysist Assistant
As the department expands operations in anticipation of the new police facility, plans call for the development and implementation of a Real Time Crime Center (RTCC). The crime analysis position assists in expanding policing strategies that assist patrol, traffic and investigations bureaus in analyzing crime trends and disseminating crime series data for apprehension and crime prevention, including processing other city requests for crime/traffic data for grants. The Crime Analysis Assistant’s role will also be expanded to monitor camera surveillance systems that are currently being initiated and expanded city-wide at intersections and various thoroughfares, including future camera systems at city facilities. It is anticipated that the added Crime Analysis Assistant positions will also be responsible for monitoring real-time crime camera data in the RTCC. Adding these positions in each of the fiscal years leading up to the go-live date in FY 2026 will assist with budget development, training and staffing.
Additional Impacts to General Fund Expenses
• LMD & SLD General Fund Subsidy - The Street Lighting and Landscape Maintenance Fund and the Landscape and Lighting District No. 2 Fund levy assessments to cover all expenses in the Funds. The General Fund will subsidize the funds if assessments are insufficient to cover all expenditures. The FY2024-25 forecasted subsidy is $0 which is a decrease of $1,389,820 from FY2023-24.
• CalPERS Employer Contribution Rates changes - The California Employees Retirement System requires employer and employee contributions for each fiscal year. The changes in employer rates are shown below.
|
|
FY2023-24 |
FY2023-24 |
|
Safety Plan |
26.44% |
25.29% |
|
Miscellaneous Plan |
12.62% |
12.87% |
Even though the safety rate is decreasing by approximately 1%, the overall cost of the Safety Plan will be increasing because of the increased personnel costs. The Unfunded Accrued Liability (UAL) payment will be $13.5 million. These costs are incorporated into the budget.
The proposed FY2024-25 General Fund Expenditures are listed in the table below.
General Fund Expenditures By Department
ALL OTHER FUNDS
In addition to the General Fund, the City of Rialto has budgeted appropriations for 38 other funds, including 25 Special Revenue funds, the Successor Agency Private Purpose Trust Fund, the Rialto Housing Authority, five Enterprise funds, two Internal Service Funds, one Capital Projects Fund, and three Community Facility District funds. The FY2024-25 proposed revenues for all other funds is $104,199,480. The FY2024-25 budgeted appropriations for all other funds is $112,676,276.
The following table summarizes the proposed expenditures for all city funds by category and by fund.
Special Revenue Funds
The City’s various Special Revenue Funds include grant program funds and other funds that by law are required to be segregated from other funds. The 2024-25 Special Revenue Fund category includes appropriations for 25 different funds in the aggregate amount of $24,017,961, which reflects a decrease of $96 million as compared to the 2023-24 Revised Budget. This net decrease is due to a decrease in several project expenditures budgeted in the prior year, including Measure I, Gas Tax, Drainage Development, Major Capital Grants, Waste Management, and Traffic Development.
Special Revenue funds account for the proceeds of specific revenue sources that are legally restricted or otherwise assigned for specific purposes.
Debt Service Funds
Debt Service Funds account for the payment of principal and interest on general long-term debt of the City. Some of the funds include the Public Building Authority and Communities Facilities District Funds. The proposed appropriations for the Debt Service Funds are $830,145.
Capital Projects Funds
Capital Projects Funds are used to account for the acquisition or construction of major capital facilities. Capital project appropriations are for the life of the project.
FY2024-25 Capital Expenditures
As a separate action, City Council will be presented with a 5-Year Capital Improvement Plan. The 5-Year CIP will be a planning document that is subject to revision as conditions and funding opportunities change. The 5-Year CIP represents a five-year assessment of the City’s infrastructure, facilities, and equipment needs that will be updated annually.
Staff will develop a comprehensive 5-Year CIP by evaluating proposed capital projects to determine the estimated cost, funding source, and prioritization within the next 5 years. For the 2024-25 fiscal year, $7,079,540 is appropriated for capital projects. Most of the activity is carry over projects from the previous year, along with the current year’s street resurfacing program, $1,000,000.
Enterprise Funds
Enterprise Funds account for City operations that are financed and operated in a manner similar to private business enterprises where the costs of providing goods or services to the general public are financed primarily through user charges. The Enterprise Funds include the Airport Fund, Cemetery Fund, the Cemetery Endowment Fund, and the Rialto Utility Authority Funds. The proposed appropriations for all Enterprise Funds are $58,371,303.
Internal Service Funds
Internal Service Funds account for goods and services provided by one City department to other City departments or agencies. The two internal service funds are the Worker’s Compensation Fund and the General Liability Fund. The proposed appropriations for the Internal Service Funds are $11,521,774.
Agency Funds - Successor Agency
Fiduciary Funds, comprised only of Agency Funds, are used to account for assets held by the City as an agent for other governmental units, private organizations or individuals. The Successor Agency to the Redevelopment Agency Fund is included in this category. The proposed appropriations for the Successor Agency fund is $10,817,098.
ENVIRONMENTAL IMPACT
The action is exempt form California Environmental Quality Act (CEQA) pursuant to Section 15378(b)(5) of the CEQA Guidelines because of the preparation of the Audited Annual Financial Reports are governmental administrative activity that will not result in indirect physical changes in the environment.
N/A
GENERAL PLAN CONSISTENCY
General Plan Guiding Principle 3 - Rialto’s Economic Environment is Healthy and Diverse - specifically our City Government will lead by example, and will operate in an open, transparent, and responsive manner that meets the needs of the citizens is a good place to do business
LEGAL REVIEW
The City Attorney has reviewed and supports this staff report
FINANCIAL IMPACT
The FY2024-25 citywide budget includes proposed revenues of $255,507,574 and proposed expenditures of $260,963,652. Sufficient reserves are available in specific funds to account for the excess expenditures. If projections change at any point during the fiscal year, staff will come back to the City Council with updates and recommendations to make adjustments accordingly. Staff will return to the City Council no later than the middle of the fiscal year with an update.
RECOMMENDATION
Staff recommends that the City Council:
1) Conduct a public hearing on the City’s FY2024-25 Proposed Budget.
2) Adopt a Resolution to approve and adopt the following:
a. Resolution No. 8251, RHA Resolution No. 08-24, RUA Resolution No. 08-36 and Rialto Redevelopment Successor Agency Resolution No. 01-24 for the City’s Fiscal Year 2024-25 Annual Budget;
b. Resolution No. 8252 Adopting the Fiscal Year 2024-25 Appropriations Limit (Gann Limit);
c. Resolution No. 8253 Adopting the Fiscal Year 2024-25 Citywide Classification and Compensation Plan