FROM: Robert Thompson, General Manager
Originator: Lorenzo Tyner, Assistant General Manager
SUBJECT:
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FY 2025-26 BUDGET AMENDMENT
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GENERAL MANAGER'S RECOMMENDATION
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RECOMMENDATION:
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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. As a result of an accelerated rate of expenditure in the Capital Improvement Program (CIP) and repairs and maintenance activities, staff requested an increase to the FY 2025-26 budget. In April 2026, the Board of Directors approved this requested budget increase of $68 million for a total budget of $649 million, which included a Capital Budget of $318 million.
However, subsequent to that approval and the end of the fiscal year, staff determined that the increase is insufficient. This insufficiency is the result of two primary causes:
1. The expenditure estimate for the remaining months was inaccurate.
CIP spending continued at an even faster rate than estimated. This accelerated spending resulted in an additional $10 million in expenditure that was not anticipated to occur until the 2026-27 fiscal year.
2. A clerical error resulted in an underestimation of capital expenditures.
When developing the budget increase request for April 2026, February actuals were not available. Staff developed a preliminary spending estimate with the intent to update estimate when the February actuals were available. However, staff inadvertently omitted February actuals from the calculation and request given to the Board in April 2026. Adjusting the estimate to include the February actuals increases the 2025-26 total expenditures by an additional $17 million.
The combination of the above mentioned items increases total 2025-26 expenditures by $27 million.
In August, after Finance have sufficiently reconciled the OC San expenditures and revenues, staff will request a final FY 2025-26 budget incre...
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