Resolution No. 2024-002RESOLUTION NO. 2024-02
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON
AUTHORIZING AND APPROVING MID-YEAR BUDGET
APPROPRIATIONS AND AMENDING THE ANNUAL OPERATING AND
CAPITAL BUDGET FOR FISCAL YEAR 2023-24
SECTION 1. Recitals.
A. On June 6, 2023, the City Council of the City of Vernon adopted Resolution No.
2023-09, approving the annual operating and capital budget for Fiscal Year 2023-24.
B. Changes in anticipated expenditures of the City require a revision of the
appropriations for Fiscal Year 2023-24 and amendment of the budget by the affirmative
vote of a majority of the members of the City Council, pursuant to Charter Chapter 8.5.
C. There are sufficient funds in anticipated revenues and City-wide fund balance to
cover the proposed budget adjustments.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF VERNON AS FOLLOWS:
SECTION 2. The City Council of the City of Vernon finds and determines that the
above recitals are true and correct.
SECTION 3. Pursuant to Chapter 8.5 of the Charter of the City of Vernon, a
majority of the members of the City Council hereby approves the mid-year budget
appropriations in the table below.
Fund Department/
Division GL Account Description Adjustment
Amount
General Human
Resources 011-010-120-514090 Worker's Comp Claims - Miscellaneous
Employees $ 80,000
General Finance 011-010-130-529215 Cost Allocation Study 37,895
General Finance 011-010-130-529215 Bloomberg Subscription (Budget Transfer Out) (30,000)
General Finance 011-010-130-529225 Bloomberg Subscription (Budget Transfer In) 30,000
General Finance 011-010-130-529225 Municipal Advisory Services Agreement 50,000
General Health 011-020-200-527000 Equipment for Emergency Response Vehicle 20,000
General Police 011-030-300-514090 Worker's Comp Claim Payments - Police
Safety 220,000
General Facilities
Maintenance 011-040-415-660000 City Hall Digital Billboard(s) 300,000
General Street
Maintenance 011-040-430-529215 Graffiti Abatement 300,000
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Resolution No. 2024-02
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Fund Department/
Division GL Account Description Adjustment
Amount
General Street
Maintenance 011-040-430-660000 55th Street Soil Remediation and Paving
Project 1,500,000
General Fund Balance 011-000-000-301000 General Fund Unassigned Fund Balance (3,000,000)
General Fund Balance 011-000-000-301005 Economic Uncertainties Reserve 1,000,000
General Fund Balance 011-000-000-301015 Post-Retirement Reserve 500,000
General Fund Balance 011-000-000-301025 Fleet Replacement Reserve 500,000
General Fund Balance 011-000-000-301030 Paving Reserve 1,000,000
General Fund Subtotal $ 2,507,895
Electric System
Dispatch 055-050-555-660000
Re-appropriate Funds for Uninterruptible
Power Supply Ordered in FY 2022-23, Arrived
in FY 2023-24
56,500
Electric Engineering 055-050-585-660000
SCE Contract Total $11,735,000 for
Engineering and Procurement Related to
Interconnection Facilities
1,200,000
Electric
Malburg
Generation
Station
055-050-586-520231 Establish Initial MGS Safety Budget (Budget
Transfer In) 51,500
Electric
Malburg
Generation
Station
055-050-586-520232 MGS Environmental (Budget Transfer Out) (51,500)
Electric
Malburg
Generation
Station
055-050-586-660000 MGS Capital Outlay (Budget Transfer Out) (63,840)
Electric
Malburg
Generation
Station
055-050-586-660005 EAM Essentials (Hexagon) Software (Budget
Transfer In) 63,840
Electric Resource
Management 055-050-590-520150 Energy - Other Hedged Savings (Budget
Transfer Out) (3,000,000)
Electric Resource
Management 055-050-590-520154
Higher Renewable Energy Credit Purchases
Due to Lower Production on All VPU's
Renewable Projects (Budget Transfer In)
3,300,000
Electric Resource
Management 055-050-590-520160 Natural Gas Expense (Budget Transfer Out) (3,300,000)
Electric Resource
Management 055-050-590-520180 Capacity - Other Costs (Budget Transfer In) 3,000,000
Electric Customer
Service 055-450-575-450017 Fuel Cost Adjustment Credit 750,000
Electric Fund Subtotal $ 2,006,500
Gas Gas 056-060-600-529215 Updated Natural Gas Financial Forecast, Cost
of Service, and Rate Study 39,500
Gas Fund Subtotal $ 39,500
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Fund Department/
Division GL Account Description Adjustment
Amount
Water Water 058-070-700-529000 Well 17 Repairs and Maintenance (Budget
Transfer In) 500,000
Water Water 058-070-700-660000 Well 19 Capital Outlay (Budget Transfer Out) (500,000)
Water Fund Subtotal $ -
Fiber
Optic Fiber Optic 059-080-800-529000 Additional Repairs & Maintenance for Fiber
Operations 160,000
Fiber
Optic Fiber Optic 059-080-800-660000
Upgrade to the Existing Fiber Optic Network
System and Perform Network Migration
Services
700,000
Fiber Optic Fund Subtotal $ 860,000
31 Grand Total $ 5,413,895
SECTION 4. The Annual Operating and Capital Budget for Fiscal Year 2023-24,
adopted by Resolution No. 2023-09, is hereby amended to include the mid-year budget
appropriations.
SECTION 5. The City Clerk shall certify the passage and adoption of this
resolution and enter it into the book of original resolutions.
APPROVED AND ADOPTED February 20, 2024.
________________________
CRYSTAL LARIOS, Mayor
ATTEST:
LISA POPE, City Clerk
(seal)
APPROVED AS TO FORM:
ZAYNAH N. MOUSSA, City Attorney
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Resolution No. 2024-02
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I CERTIFY THAT RESOLUTION NO. 2024-02 was passed and adopted by the City
Council of the City of Vernon at the Regular Meeting on February 20, 2024, by the
following vote:
AYES: 5 Council Members: Lopez, Rivera, Ybarra, Merlo, Larios
NOES: 0
ABSENT: 0
ABSTAIN: 0
________________________________
LISA POPE, City Clerk
(seal)
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City Council Agenda Report
Meeting Date: February 20, 2024
From: Jessica Alcaraz, Financial Services Administrator
Department: Finance
Submitted by: Angela Melgar, Finance Manager
Subject
Fiscal Year 2023-24 Mid-Year Financial Update
Recommendation
Adopt Resolution No. 2024-02 authorizing and approving mid-year budget appropriations and
amending the Annual Operating and Capital Budget for Fiscal Year 2023-24.
Background
The Mid-Year Financial Update reflects continued efforts to provide timely and accurate financial
information to assist the City Council with decision making and achievement of the City's goals.
As of December 31, 2023, the mid-year point of the current fiscal year, one would expect to be
at the 50% mark for revenues and expenditures. However, certain factors may influence the
timing, rate, or recognition of such. At mid-year, actual overall expenses for General Fund and
Vernon Public Utilities (VPU)were at 44% and revenues were at 46% of budgeted amounts. Staff
evaluated the trajectory of actual versus budgeted results and are providing the
recommendations to appropriate additional funds for unforeseen circumstances that have arisen
since the normal course of budget setting during the prior fiscal year. Pursuant to City Charter
Chapter 8.5, Council may amend or supplement the budget by the affirmative vote of a majority
of the members of the Council.
General Fund
Viewing the General Fund as a whole, about 46% of the cumulative budgeted revenues were
received as opposed to about 41% of cumulative budgeted expenditures. Due to the timing of
disbursements, some revenue streams are not linear throughout the year. For example, property
and parcel taxes were below the midpoint budgeted total, as the largest disbursements are
received near the end of the fiscal year. Conversely, at the mid-year point, utility user tax received
over 54% of the budgeted amount for FY 2023-24 due to the seasonality of electric usage.
Investment income has greatly exceeded budgeted expectations 106% due to the higher yield
rates and new investments in place. At mid-year, intergovernmental revenues were 18% of
budget; however, most of these revenues reimburse corresponding approved Public Works
expenditures that are billed when incurred and approved so it is dependent on this timing. At the
end of December 2023, salaries and benefits were 42% of budgeted amount and maintenance
and operations expenses were at target level; however, the capital projects and equipment
category was only at 10% of the budgeted amount due to deferred projects, long lead times for
equipment purchases, and other postponed capital expenditures.
Enterprise Funds
As of December 31, 2023, Electric revenues were at 48%, Gas revenues were at 33%, and
revenues in the Water Fund were at 45% of budgeted amounts. Fiber Optic revenues were at
31% of budgeted revenue due to the year-end timing of interfund billing. As of mid-year, Gas and
Water Funds were at 30% and 39% of budgeted expenditures respectively, Electric Fund was at
about 46% of budgeted expenditures. Alternatively, Fiber Optic Fund expenditures have already
exceeded the budgeted amount. This is mainly due to increased capital outlay expenses while
undergoing major infrastructure upgrades that will give the utility a competitive advantage and
help retain and attract more customers.
Cash Position
At mid-year, approximately 62% of the City's cash funds are unrestricted, with Electric utility
reserves exceeding 180 days of operating expenses. As stated in the FY 2022-23 Annual
Comprehensive Financial Report, the General Fund unassigned fund balance is $26 million as
of the last audited period ending June 30, 2023.
Proposed Budget Adjustments
A year-end operating surplus occurs when there is an excess of revenues over expenditures in
a particular year, generally a result of higher than budgeted revenues, and/or lower than
budgeted expenditures. The City concluded FY 2022-23 with an operating surplus of
approximately $14.1 million. Per the Council approved budget, $10 million was allocated to
committed reserve fund balances as follows: Economic Uncertainties $5 million, Capital $2
million, Post-retirement $1.5 million, Technology Replacement $500,000 and Fleet Replacement
$500,000, leaving a remainder of operating surplus of approximately $4.1 million.
Department staff has analyzed their line-item budgets and identified amendments needed for
additional expenditures through the end of FY 2023-24 and a recommendation to allocate
additional funds to committed reserve fund balances from the General Fund Unassigned Fund
Balance. Due to the rising costs of materials, supply chain constraints, and expenditures not
known or expected at the adoption of the FY 2023-24 Budget, adjustments are being presented
to Council to appropriate and reallocate funds in the General and VPU Funds that are in line with
strategic goals and objectives of the City.
Fiscal Impact
Approval of this action would require an appropriation of $2,507,895 in the General Fund,
$2,006,500 in the Electric Fund, $39,500 in the Gas Fund and $860,000 in the Fiber Fund from
their respective Fund Balances as detailed in Resolution 2024-02.
Attachments
1. Resolution No. 2024-02