TO: LINDA REICH, CITY MANAGER
FROM: KIM SAO, DIRECTOR OF FINANCE
SUBJECT
title
Fiscal Year 2025-26 Midyear Budget Review.
end
RECOMMENDATION
recommendation
Adopt Resolution No. 2026-023, authorizing the FY 2025-26 Midyear Budget adjustments as detailed in Exhibits A and B, including approval of contract amendments outlined in Exhibit C.
body
FISCAL IMPACT
Based on the Midyear Citywide analysis, staff recommends additional adjustments to address updates in Revenues, Expenditures, and Transfers In/Out.
• Revenue Estimates (Exhibit A):
Increase the revenues estimates totaling $2,323,073 in the following funds:
o $1,445,636 - General Fund
o $877,437 - All other funds
• Expenditure Appropriation (Exhibit B):
Increase the expenditures budget in the following funds:
o $768,537 - General Fund 100
o $60,000 - City Affordable Housing Fund 310
o $350,000 - Transportation Fund 320
o $70,000 - Community Services Fund 330
o ($185,978) - Landscape & Lighting Fund 360
o $293,919 - Assessment District Fund 361
o $316,368 - Water Fund 520
o $129,493 - Risk Management Fund 630
o $3,670,000 - Employee Services Fund 640
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above further the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Financial Stability
• Responsible Long-Range Planning
|
Revenue: Various |
Expenditure: Various |
|
Transfer In: Various |
Transfer Out: Various |
BACKGROUND
The City Council adopted the FY2025-26 Operating and Capital Improvement Budget on June 17, 2025. In accordance with the City's budget policy, the adopted budget can be amended during the fiscal year to address unforeseen circumstances or changes in service costs.
Each year, staff present to the citizens of Chino and the City Council a financial review of the current fiscal year. The midyear review evaluates progress relative to the original budget projections and recommends adjustments to ensure financial alignment through June 30, 2026. This year’s midyear financial review covers the activities through March 24, 2026.
ISSUES/ANALYSIS
Summary of the General Fund Operation for FY 2025-26
In June 2025, the City Council adopted a budget that included total revenues and transfers-in of $132,878,417. Expenditures, transfers-out, and capital project appropriations totaled $128,354,932, resulting in a projected year‑end surplus of $4,523,485.
Since July 1, 2025, the City Council has approved additional appropriations totaling $2,952,197, along with a modest revenue increase of $47,323. These additional adjustments throughout the fiscal year reduced the originally projected budget surplus by $2,904,965. The major drivers of these changes include $2 million for Cost-of-Living (COLA) increases, $500,000 for park projects, and $400,000 for facility improvements.
At the midyear point, revised revenues and transfers-in total $134,371,285, while revised expenditures, transfers-out, and capital project appropriations total $132,533,607, resulting in an updated projected budget surplus of $1,837,678 as of June 30, 2026.
Midyear Adjustments
The midyear review involved a thorough analysis by each department and Finance staff. Staff identified additional operational changes since the adoption of the FY 2025-26 Adopted Budget, with recommended adjustments for each fund, attached as Exhibits A through C and Resolution No. 2026-023.
The sections that follow describe the midyear adjustments and the key factors contributing to the revised budget.
Midyear Adjustments to Estimated Revenue (Exhibit A)
Adopting a conservative approach to revenue forecasting remains a critical component of sound financial management. This methodology helps prevent the overestimation of revenues that could otherwise result in overcommitting resources. By utilizing prudent assumptions and planning for potential economic variability, the City is better positioned to maintain fiscal stability, prioritize essential services, and respond to unforeseen financial challenges. This approach supports responsible resource allocation and reduces the likelihood of budgetary shortfalls during periods of economic uncertainty.
As part of this conservative approach, the midyear review process helps ensure the recommended revenue adjustments reflect the most current and supportable financial information available.
Revenue adjustments across all funds result in a net increase of $2,323,073. The General Fund accounts for approximately $1.5 million of this increase, driven primarily by modest growth in property tax revenues ($750,000), plan check fees ($400,000), and Measure V sales tax ($350,000). These increases reflect ongoing development activity, the implementation of the updated user fees, and continued growth in Measure V revenue. While user fee revenues experienced some fluctuation, they resulted in an overall net increase. Offsetting a portion of these gains is a decrease in revenues associated with Community Services, specifically, participation fees and facility rentals.
Below is a summary of changes to the revenue estimates by fund. For a detailed description of the revenue adjustments within each fund, refer to Exhibit A.
|
Fund |
Description |
Revenue Inc/(Dec) |
|
100 |
General Fund |
$1,445,636 |
|
330 |
Community Services Fund |
(73,520) |
|
340 |
Park Fund |
950,957 |
|
|
Total Revenue Adjustments |
$2,323,073 |
Midyear Adjustments to Expenditures (Exhibit B)
Total midyear expenditure adjustments across all funds amount to $5,472,339, as detailed in Exhibit B of this report. Of this total, $768,537 pertains to the General Fund as explained below.
• $200,000 - Increase in Building Plan Check Services, due to development activities
• $150,000 - Increase in Engineering Plan Check Services, due to development activities
• $100,000 - Increase in attorney fees needed for labor negotiations and code enforcement
• $69,024 - Contract increase for Animal Resource Center services
• $60,000 - Increase for services to complete the General Plan Update
• $54,513 - Increase in salary for the council approved Captain position
• $50,000 - Increase to the Economic Development for supplies and contract services
• $33,000 - Increase for contracted code enforcement services
• $24,000 - Increase in part-time salaries to cover full-time staff temporarily out of office
• $8,000 - Increase contract services for the Empire Stryker’s Partnership
Contract Amendments (Exhibit C)
In addition to the midyear appropriation requests, several contract amendments are needed to cover increased costs for ongoing services. Contract amendments total $1,390,392, and to the extent that any of these amendments require additional appropriations, those amounts are included in the appropriation requests outlined in Exhibit B.
Staff requests that the City Council authorize the contract amendments listed in Exhibit B as part of the midyear budget action.
Update on Measure V Investments for FY 2025-26
In Fiscal Year 2025-26, the City of Chino is estimated to receive approximately $24.5 million in Measure V revenue. Of this amount, the City Council programmed $20 million in expenditures, including $11 million dedicated to preserving essential services-such as maintaining core programs, staffing, and public safety retention-and $9,048,921 allocated to capital projects including streets, parks, and facility improvements.
The table below summarizes the projects supported by the availability of Measure V revenues. The amounts shown represent allocations for the FY 2025-26 budget year only. They do not reflect the full cost of each project, and many projects are funded through multiple sources in addition to Measure V.
General Fund Balance
The table below provides a final overview of the FY 2025-26 General Fund Budget. The budget begins with an audited fund balance of $40,205,196 as of July 1, 2025. After accounting for the revised midyear budget surplus of $1,837,678, the estimated fund balance at June 30, 2026 is $42,042,874.
CONCLUSION
The Midyear Budget Review process is an essential part of managing the City’s evolving financial landscape. It represents a proactive effort to adapt to changing circumstances, using the best information available at the time of preparation. Recognizing that factors such as economic conditions, legislation, and local trends can rapidly alter planning assumptions, this review highlights the importance of flexibility and vigilance in fiscal management.
Overall, the City remains fiscally sound with citywide revenue performance generally on target and expenditures within expected ranges. At this time, there are no indications of a structural imbalance or any trends that require immediate corrective action.
Approving the proposed midyear adjustments will provide staff with the budget authority to make needed adjustments and achieve a more accurate budget that aligns with current realities and provide a basis for developing the upcoming FY 2026-27 Budget.
Attachments: 1. Resolution No. 2026-023
2. Exhibits A, B, C