FROM: Robert Thompson, General Manager
Originator: Wally Ritchie, Director of Finance
SUBJECT:
title
FY 2025-26 BUDGET AMENDMENT
end
GENERAL MANAGER'S RECOMMENDATION
recommendation
RECOMMENDATION: Recommend to the Board of Directors to:
Approve a budget increase of $68,000,000 for FY 2025-26, for a total budget as follows:
FY 2025-26
Net Operating $260,365,399
Self-Insurance $ 6,745,565
Net Capital Improvement Program $317,959,620
Debt/COP Service $ 60,431,104
Intra-District Joint Equity Purchase/Sale (1) $ 3,500,000
Total $649,001,688
(1) Cash to/from Revenue Area 14 (RA14) in exchange for capital assets to/from Consolidated Revenue Area 15 (RA15)
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BACKGROUND
In June 2025, the Board of Directors approved the Operating, Capital, Debt Service, and Self-Insurance Budgets for FY 2025-26. An accelerated execution rate for the Capital Improvement Program (CIP) and planned repairs and maintenance activities have driven the need to request a FY 2025-26 budget increase.
RELEVANT STANDARDS
• Ensure the public’s money is wisely spent
• Produce appropriate financial reporting - annual financial report & audit letter and Ops & CIP budgets every two years, with annual update
PROBLEM
The budget authority for FY2025-26 is not adequate to cover the estimated expenses for the fiscal year.
PROPOSED SOLUTION
Approve the proposed budget increase for FY 2025-26.
TIMING CONCERNS
The budget increase needs to be approved before expenditures can exceed the previously approved amount.
RAMIFICATIONS OF NOT TAKING ACTION
OC San will not have a budget approved at sufficient levels to accommodate the expenses incurred in FY 2025-26.
PRIOR COMMITTEE/BOARD ACTIONS
June 2025 - Approved the proposed Operating, Capital, Debt Service, and Self-Insurance Budgets for FY 2025-26 as follows:
|
|
FY 2025-26 |
|
Net Operating |
$ 246,365,399 |
|
Self-Insurance |
$ 6,745,565 |
|
Net Capital Improvement Program |
$ 254,276,633 |
|
Debt/COP Service |
$ 60,431,104 |
|
Intra-District Joint Equity Purchase/Sale (1) |
$ 3,500,000 |
|
Other Requirements |
$ 10,000,000 |
|
Total |
$ 581,318,701 |
(1) Cash to/from Revenue Area 14 (RA14) in exchange for capital assets to/from Consolidated Revenue Area 15 (RA15)
ADDITIONAL INFORMATION
The table below shows the approved budget and estimated actuals for FY 2025-26 (in millions).
|
|
Approved Budget |
Estimated Actuals |
Variance |
Performance Percentage |
|
Capital |
$254 |
$318 |
$64 |
125% |
|
Operating |
$246 |
$260 |
$14 |
106% |
|
Debt Service |
$60 |
$60 |
$ 0 |
100% |
|
Other |
$21 |
$11 |
$(-10) |
52% |
|
Total |
$581 |
$649 |
$68 |
|
Due to receiving higher than budgeted revenues for FY 2025-26 a portion of the increase of the expenditure budget is offset, detailed in the table below (in millions).
|
|
Adopted Budget |
Estimated Actuals |
Variance |
|
Revenues |
$588 |
$617 |
$29 |
|
Expenditures |
$581 |
$649 |
$68 |
|
Net Revenues |
$7 |
$(32) |
$(39) |
The requested increase does not impact the long term cashflow due to the capital increase request in FY 2025-26 being predominantly driven by accelerated project spending, not project budget increases. These spending increases are offset by a reduction in spending for the relevant projects in future years.
CEQA
N/A
FINANCIAL CONSIDERATIONS
Increase in budget will not affect long term cash flow.
ATTACHMENT
The following attachment(s) may be viewed on-line at the OC San website (www.ocsan.gov) with the complete agenda package:
• Presentation