Fiscal Year 2017/2018 Budget

City of Rialto

California

Annual
Budget
2017-2018

Proposed Budget

For the
Fiscal Year
July 1, 2017 – June 30, 2018

City Council

Deborah Robertson - Mayor
Ed Scott. - Mayor Pro Tem
Joe Baca Jr. - Council Member
Rafael Trujillo - Council Member
Andy Carrizales - Council Member

City Treasurer

Edward J. Carrillo

City Clerk

Barbara A. McGee

Executive Staff

Michael E. Story - City Administrator
Fred Galante - City Attorney

Robb Steel - Assistant City Administrator/Director of Development Services
Randy De Anda - Police Chief
Sean Grayson - Fire Chief

Perry Brents - Director of Community Services
Robert Eisenbeisz - Director of Public Works/City Engineer

Barbara McGee - Director of Management Services

Citizens

City Treasurer May
City C
Investments
Cash Receipting/Receivables City Adm
Animal Licensing, Cemetery (Records)
Admin
City Attorney

Development Services Dept. / Public Works Police Department Fire Hu
Assistant City Administrator Department 820-2550 Department M

820-8017 421-7229 820-2501 Em

Building Services Engineering Operations: Suppression
Planning Services Maintenance: Patrol, Dispatch, Prevention
Code Enforcement Animal Control,
Business Licensing Facilities Crime Prevention Disaster
Economic Development Fleet Preparation
Parks Support: Paramedic
Housing Streets Investigations, Ambulance
Downtown Revitalization Records, Property,
Traffic Safety Budget, Crime
RDA Project Area Water &
Analysis
Wastewater
Waste Community
Outreach
Management

Cemetery

(Maintenance)

Capital Projects

The City of Rialto

Organizational Chart

s of Rialto

yor and City Clerk
Council
Record Keeping, Public Information, City
ministrator Elections, Municipal Code/Ordinances,

nistration Agendas and Minutes, Commissions

uman Resources/Risk Administrative Services Dept. Community Management CC
Management Dept. Services Dept. Services Dept.
820-2544 Record Keep
820-2540 820-2519 820-2519 City Election
Budgeting Code/Ordin
Classification/ Financial Reporting Child Development Rialto Minutes, Co
Compensation Neighborhood & Network
Recruitment/ Payroll Senior Citizen
Accounts Payable Services Passport
Selection Utility Users Tax Services
mployee Development Classes, Excursions,
CDBG Special Events, Notary Services
Labor Relations ITS Sports
Racquet/Fitness Healthy Rialto
Benefits/Rideshare Purchasing Ctr. Pool,
Risk Management Playhouse Claims

Community Center Bid Openings
Cultural Arts (Construction)
Adult/Youth
Sports

Annual Budget FY 2017-18

Directory of Officials

DEBORAH ROBERTSON

MAYOR

ED SCOTT JOE BACA JR. RAFAEL TRUJILLO ANDY CARRIZALES
MAYOR PRO TEM COUNCIL MEMBER COUNCIL MEMBER COUNCIL MEMBER

BARBARA A. MCGEE EDWARD J. CARRILLO
CITY CLERK CITY TREASURER

The City of Rialto, California Annual Budget FY 2017-18

Annual Budget FY 2017-18

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The City of Rialto, California Annual Budget FY 2017-18

Table of Contents

Guiding Principles and Community Values 1
Budget Message 3
Department Awards and Recognitions 32
Grant Funding 34
Special Events 37

Budget Summary Information 40
Available Resources 41
General Fund Overview 43
Citywide Overview 49
Personnel 55

Department & Fund Information 67
City Council/City Administrator 68
City Legal Services 72
City Treasurer 75
City Clerk 78
Development Services Department 82
Public Works Department 89
Police Department 100
Fire Department 112
Human Resources Division 117
Finance Division 121
Information Technology and Purchasing Division 125
Community Services Department 129
Management Services Department 135
Special Revenue Funds 140
Capital Projects Funds 177
Enterprise Funds 181
Internal Service Funds 184
Debt Service Funds 188

Revenue & Expenditure Detail 194
Revenue Detail 200
Expenditure Detail 219

Capital Improvement Plan Update 264
Capital Improvement Plan Summary 265
Capital Improvement Plan Detail 266

Supplemental Information 278
Proposition 4 – Government Sending Limits 279
Fully Burdened Rate Study 283
Budgetary & Debt Management Practices 289
Description of Fund Types and Funds 293
Glossary of Terms 297

The City of Rialto, California Annual Budget FY 2017 - 18

Annual Budget FY 2017-18

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The City of Rialto, California Annual Budget FY 2017-18

Guiding Principles & Community Values

1. Rialto is a Family First Community
 Our neighborhoods will be a safe place to call home.
 Essential community services and amenities must meet the needs and desires of our families.
 We will require high-quality housing for our families and establish well-maintained, safe,
attractive neighborhoods.
 We will create a sense of community that bonds residents and families together, resulting in a
stronger, better Rialto.

2. Rialto Shall Attract High-Quality New Development and Improve its Physical Environment
 First impressions matter. The quality and standards of our streetscapes and public spaces will
reflect the high quality of development we require.
 Infrastructure keeps pace with our growth. Every act of construction will result in the
improvement and enhancement of both the public and private realms.
 We pay attention to the details. We have high standards and will maintain our properties and
enforce our codes at all times.

The City of Rialto, California 1 Annual Budget FY 2017-18

Guiding Principles & Community Values

3. Rialto’s Economic Environment is Healthy and Diverse
 Businesses, City government, and economic development organizations will continue to work
together to strengthen the local economy and support businesses.
 We will aggressively attract and retain businesses that provide goods and services we desire,
create jobs, and build a sustainable tax base.
 Our City government will lead by example, and will operate in an open, transparent, and
responsive manner that meets the needs of the citizens and is a good place to do business.
 We take advantage of our status as the transportation hub of the Inland Empire.
 Rialto is committed to environmental sustainability, which means meeting the needs of the
present without compromising the ability of future generations to meet their own needs.

4. Rialto is an Active Community
 Our community will support the creation and maintenance of attractive parks, recreational
facilities, and gathering places that meet the needs of our residents.
 We will create transportation alternatives that allow us to walk, bike, and use public
transportation to travel within our community and reach regional destinations.
 We will continue to participate in community-based events that enrich our lives.

The City of Rialto, California 2 Annual Budget FY 2017-18

Budget Message
Fiscal Year 2017/2018

JULY 11, 2017

HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

I am pleased to submit the City’s Fiscal Year 2017/18 Budget for your consideration. City staff
developed the Budget to reflect the City Council’s Guiding Principles and Core Values, with an emphasis
on open and transparent communication with the citizens of Rialto. The combined budget for all City
activities totals $169 million, including a General Fund Operating Budget of $76.0 million and a Capital
Improvement Program Budget of $8.1 million (new capital project funding, excluding approximately
$100 million carryover funding). While the General Fund Operating Budget is cash balanced dependent
upon approval of the measures recommended herein, I cannot declare the budget structurally
balanced because it does not absorb all current operating costs and defers capital outlay and other
liabilities into the future.

This Budget Message tells a tale of the “Good, the Bad, and the Ugly”.

First, the “Good”: The City is reaping the rewards of its aggressive economic recovery from the Great
Recession. The homes and business that stood empty in 2010 are now mostly occupied, with new
homes and businesses under construction and proposed. Home and business values rebounded from
the bottom in 2008 and have since largely recovered the lost value. New industrial development
initially sparked the recovery, and the City added 3,800 new jobs and $500 million in new assessed
valuation. Because of this development, Rialto has ranked in the top 3 for assessed valuation growth
in San Bernardino County each of the last three years. Last year, the commercial sector kicked in with
the completion of the Rialto Marketplace (Wal-Mart Supercenter and shops) and the long awaited
commencement of the Renaissance Marketplace (Cinemark, Burlington), and several other smaller
commercial projects along Foothill Boulevard. The housing market, dormant for almost 11 years,
finally evidenced signs of life with more than 200 new units under construction and many more in the
planning pipeline. All this economic activity produced new tax and service revenues to support general
fund operations. Finally, the City sold 237 acres of Airport land producing over $31 million in non-
operational revenues allocated for capital projects and commenced the most aggressive capital
improvement program in the City’s history, improving streets, fire stations, and parks.

Unfortunately, not all is good news -- now, the “Bad”: operational expenses continue to increase at
an unsustainable pace. Labor costs comprise 70% of the City’s operating revenues, and despite only
minor modifications to the workforce, personnel costs have increased by some 27% since FY 12. The
cost of benefits is the culprit, principally retirement (PERS), employee medical care, and other fringe
benefits. The expanding cost of labor makes it difficult for the City to add workers to enhance service
delivery to the community, as the City must allocate new revenues to service existing obligations to
current and retired employees.

The burden of fulfilling the City’s obligations to the retirement system (PERS) and for Other Post-

The City of Rialto, California 3 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

Employment Benefits (OPEB) is the “Ugly”. When the enhanced retirement program for all employees
took effect in 2010, the City in effect borrowed a substantial sum of money from PERS to satisfy its
promises to future retirees. At the same time, a severe recession gutted the systems investment
portfolio. The effect of these two significant events, along with changes in other modeling
assumptions, resulted in an immediate debt to PERS of $100 million as of the valuation date of June
30, 2009 (also termed the unfunded accrued liability). The City’s annual payments to PERS steadily
increased by about $500,000 each year to repay this debt at an imputed interest rate of 7.5%, until
recently. In December 2016, PERS reduced its interest rate to 7.0% over a 20-year period (with a 5-
year ramp up at the beginning) and reset the payments the City must make to move toward adequate
funding. This simple 50 basis point decrease will increase the City’s unfunded liability by an estimated
$30 million, and cause the General Fund annual payments to increase each year by approximately $1.5
million through FY 2025. This one expenditure will absorb much of expected revenue growth
compromising the City’s ability to provide services to the community.

Budget Principles

The City continues to seek new ways to deliver high quality public services at an affordable cost. The
City establishes its annual budget in accordance with a few key principles:

 Conservatively Forecasted. Revenues and expenses are forecasted in a conservative manner
to minimize negative surprises at year-end and increase reserve balances.

 Structurally Balanced. Recurring operating revenues should equal or exceed recurring
operating expenses. Recurring revenues are those that are reasonably reliable from year to
year and are normally produced from traditional governmental operations. A structurally
balanced operating budget should allocate revenues in proper proportions to personnel,
services, debt service, and capital outlay.

 One Time Monies. The City shall use one time money for capital projects or other one-time
expenditures and will not use it to balance the operating budget except in unusual
circumstances. The City shall not use one-time resources (e.g., revenue spikes, budget savings,
sale of property, or similar nonrecurring revenue) for ongoing operating expenses. The City
may use one-time resources to rebuild reserves, retire debt early, capital expenditures, and
other nonrecurring expenditures.

 Reserves. The City Council adopted a policy requiring a reserve equal to 50% of the operating
budget. This reserve provides working capital and a hedge against an emergency.

Over the last few years, the City has not produced a structurally balanced budget. While budgeted

The City of Rialto, California 4 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

operating revenues and expenditures equated, the City deferred normal obligations to achieve a “cash
balanced” budget. For instance, the City did not allocate funds for capital outlay from operating
revenues, and in many years, the City deferred payment for its OPEB obligations. The City satisfied the
capital outlay deficiency by allocating one-time revenues, but this obscures the ongoing problem that
labor costs consume a disproportionate share of operating revenues thereby crowding out other
spending categories that must someday receive an allocation of general fund operating revenues.

General Fund Revenues

General Fund revenues are categorized into operating revenues and non-operating revenues.
Generally, operating revenues reflect taxes and other revenues that are reasonably predictable from
year to year, and result from traditional governmental operations. Non-operational revenues reflect
one-time revenues or revenues produced from non-traditional governmental activities (such as land
sales).

General Fund Revenues

120,000,000 12%

100,000,000 10%
All General Fund Revenue
Operating Revenues Growth %80,000,0008%

60,000,000 6%

40,000,000 4%

20,000,000 2%

- FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 0%
Actual Actual Actual Actual Actual Budget Budget
Non-Operating Revenues 7,588,270 9,816,621 4,064,556 5,548,519 473,637 35,921,977 12,428,000
Operating Revenues 56,858,529 59,134,502 62,384,295 69,174,511 70,667,345 72,895,532 77,545,830
Operating Revenue Growth % 1.6% 4.0% 5.5% 10.9% 2.2% 3.2% 6.4%

Operating revenues and non-operating revenues continue to grow due to the economic expansion and
scope of development activity in Rialto. Total General Fund revenues peaked in FY 17 at $111 million,
largely due to extraordinary land sale activity from the Airport. Total projected revenues for FY 18 are
$89.9 million, with $77.5 million from operational sources and $12.4 million from non-operational
sources. Total revenues will exceed expenditures, and the surplus will accrue to the General Fund
Reserve (where much of it has been reserved for specific purposes).

Operating Revenues

Since FY 12, projected operating revenues increased by $20,687,301 (36.4%) or 5.3% per year
compounded (very strong performance). Estimated revenue growth from FY 17 to FY 18 is a stronger

The City of Rialto, California 5 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

$4,650,298 or 6.4% over the prior fiscal year. The operational revenue growth derives from the
following:

Recurring General Fund Operating Revenues (FY 12 to FY 18)

Revenue Actual Actual Actual Actual Actual Budget Budget Change FY 12- FY18
FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 % $%
Sales Taxes
Utility Taxes 10,292,757 9,822,562 11,007,226 11,471,814 11,336,288 11,324,330 14,894,000 19% 4,601,243 44.7%
In Lieu Property Tax (VLF) 11,082,948 11,253,196 12,191,859 12,634,013 12,670,893 13,663,000 14,195,500 18% 3,112,552 28.1%
Property Taxes 10,043,391 10,637,000 11,300,000 15% 3,277,399 40.9%
Service Charges 8,022,601 8,244,059 8,561,057 9,340,333 10,098,000 13% 4,254,662 72.8%
Other Taxes 5,843,338 8,259,013 6,353,190 7,796,261 8,437,354 9,673,000 2,818,147 67.0%
Licenses/Permits 4,204,053 3,908,000 4,919,741 5,916,723 6,653,806 7,473,100 7,022,200 9%
Revenue/Other Agencies 4,243,155 4,401,734 4,471,004 4,866,214 4,963,799 4,856,850 4,790,700 6% 547,545 12.9%
RUA Lease Payments 2,297,527 2,737,375 3,486,675 3,849,479 3,899,686 3,837,650 4,271,250 6% 1,973,723 85.9%
Operating Transfers In 2,233,066 2,254,717 3,287,005 5,361,607 3,974,456 4,212,353 3,448,420 4% 1,215,354 54.4%
Use of Money 2,609,000 2,597,000 2,824,032 3,798,656 3,167,530 3,140,530 3,140,530 4%
Misc Revenue 4,299,145 2,583,568 2,614,302 2,150,868 3,198,560 2,027,159 2,384,130 3% 531,530 20.4%
Fines/Penalties/Other 1% (1,915,015) -44.5%
574,539 546,567 613,388 564,721 790,561 860,000 894,800 1%
Operating Revenues 765,174 1,952,925 1,407,303 807,127 985,126 715,460 555,700 1% 320,261 55.7%
Yr/Yr $ Change 391,227 616,694 545,896 475,100 550,600 (209,474) -27.4%
% Yr/Yr Change 573,785 647,514
159,373 40.7%

56,858,529 59,134,502 62,384,295 69,174,511 70,667,345 72,895,532 77,545,830 100% 20,687,301 36.4%

911,483 2,275,973 3,249,793 6,790,217 1,492,834 2,228,186 4,650,298

1.6% 4.0% 5.5% 10.9% 2.2% 3.2% 6.4%

 Sales and Use Taxes (19%). Sales and Use Taxes reflect State Board of Equalization allocations
to the City of its 1% share of taxable point of sale transactions within the City, along with
allocations from the County and State pools (based upon the City’s proportion of countywide
or statewide sales). In addition, the City receives allocations from out of state shipments and
on construction materials for new residential and non-residential development not otherwise
allocated by situs.

Sales taxes will become the City’s largest revenue source for the first time in years, due to the
completion of several retail projects (Rialto Marketplace) and the capture of sales taxes from
the Medline Industries facility. HdL Sales Tax forecasts the City will receive $14,894,000 in FY
18, a growth of $3,569,670 from FY 17 and $4,601,243 since FY 12. Medline Industries reported
quarterly sales taxes to the City for the first time in June 2017 and the Budget projects full year
returns of $3,000,000. The City agreed to rebate 50% of this amount to Medline as an incentive
to relocate its point of sale to Rialto, so the net benefit to the General Fund will be $1,500,000.
As the Renaissance Marketplace completes toward the end of FY 18, sales taxes should receive
another boost of approximately $750,000 per year in FY 19. The principal future risk to this
revenue stream is the trend toward online sales (rather than brick and mortar), which will
depress sales tax yields from existing shopping centers and cause the sales taxes from obsolete
shopping centers to decline.

 Utility User Tax (18%). The City adopted the Utility User Tax in 2003 as an 8% levy upon all
utility consumption. This revenue projects to increase by $532,500 in FY 18 to a total of
$14,195,500. The City’s levy expires on June 30, 2018 and the City must reinstate (or replace)

The City of Rialto, California 6 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

this revenue source during the FY18 budget year. This revenue has grown reliably by
approximately $500,000 each year because of economic expansion, and may receive
continuing boosts in the years ahead from new development (Niagara and Building 5/6). The
principal risk (other than repeal) is the trend toward co-generation and legislative exemption
of certain utilities from the payment of local taxes.

 In Lieu Property Tax (15%). The State created the In Lieu Property Tax in 2004 as an allocation
of additional property tax revenue to replace vehicle license fee (VLF) revenue lost when the
state reduced the vehicle license tax. This property tax in lieu of VLF grows with the change in
the citywide gross assessed valuation of taxable property from the prior year. The State
allocates property tax in lieu of VLF revenue in addition to other property tax apportionments.
This revenue projects to increase by $663,000 to a total of $11,300,000 in FY 18 according to a
projection from HdL Coren & Cone, factoring in expected growth in assessed valuations from
new construction of $150 million.

 Property tax (13%). Property taxes represent the City’s share of the property taxes levied upon
all secured and unsecured property within the City. The City receives approximately 14% of the
1% levy on assessed value. This revenue projects to increase by $425,000 during FY18 to a total
of $10,098,000. The rapid pace of development should add significant new assessed valuation
($150 million) to the property tax rolls and produce an attendant increase in property tax
revenue.

 Service Charges (9%). Service charges include animal control, police department fees,
ambulance service fees/subscriptions, weed and lot cleaning, development related fees
(building and engineering plan checks), and other current services. This revenue projects to
decrease by $450,900 from last year. The budget slightly scales back the scope of development
related revenues from the extraordinary FY 17 performance. Costs associated with this
revenue were likewise decreased.

 Other Taxes (6%). Other taxes include franchise fees, transfer taxes, CFD fees, TOT, and
Proposition 172 sales taxes. The budget forecasts relatively stable revenues in this category at
$4,790,000.

 Licenses and Permits (6%). Licenses and Permits include business licenses and building
permits. These revenues forecast to increase by $433,600 to a total of $4,271,250, an increase
of 11%. The largest single source of revenue in this category is business license, with a
forecasted increase of $400,000 due to expanding economic activity and improved collection
efforts. Building permit related revenues forecast to remain steady as the pace of construction
continues into FY18.

The Rialto electorate approved Measure U in 2014, setting a tax on fuel storage facilities equal
to $1.00 per cubic foot of liquid fuel storage. The fuel companies immediately filed suit to

The City of Rialto, California 7 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

prevent implementation of the tax, although the companies paid the tax in protest. The City
recently prevailed on most issues at the Superior Court but the case is now on appeal. The City
does not know if or when it will be authorized to retain and expend the Measure U revenues.
The current budget assumes the tax monies will not be available to support services.

 Revenue from Other Agencies (5%). Revenues from Other Agencies include grants and other
subventions from other governmental agencies. The budget forecasts a decline by $763,933
due to declines in the receipt of grants and forecasted reductions in landfill excavation charges.

 RUA Payments (4%). RUA Payments include transfers from the Rialto Utility Authority to the
City General Fund in accordance with the authorities established under the Joint Powers
Agreement. These revenues will remain stable at $3,140,530 reflecting the annual lease
payments ($2,000,000) and annual contract service payments ($1,140,530).

 Operating Transfers In (3%). Operating Transfers In include transfer from a wide variety of
special funds for services, overhead, and other expenses. These transfers forecast to increase
by $356,971 to a total of $2,384,130. The largest source of this transfer in is Gas Tax ($1.6
million) which offsets costs of street maintenance in the Public Works Department.

 Use of Money (1%). Use of Money captures earnings on the General Fund’s investment
portfolio. Revenues have increased in recent years due to a growing investment portfolio and
increasing short-term interest rates.

 Miscellaneous (1%). Miscellaneous includes false alarm fees, general service fees, and
impound charges among other things with a reduction of $159,760 due to lower administrative
fees in the Development Services Department.

 Fines/Forfeitures/Penalties (1%). Fines/Forfeitures/Penalties include parking and court fines,
with a modest increase of $34,800 forecasted for FY18.

Non-Operating Revenues

In recent years, the City derived significant income from its entrepreneurial activities. The City
completed 8 land transactions at the Airport generating $31 million ($28 million, net of contingent
liabilities) for the general fund. The City has also facilitated several private development projects by
acquiring land on a conduit basis, collecting revenue from the developer that is then passed through
to the selling landowner (for a net zero budget consequence).

The City of Rialto, California 8 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

General Fund Non-Operating Revenues (FY 12- FY 18)

Revenue Actual Actual Actual Actual Actual Budget Budget
FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18

Transfers In 7,586,950 1,669,240 3,424,114 625,664 0 0 300,000
Airport Land Sales/Transfers 1,320 3,980,849 51,440 4,922,855 441,437 19,971,834 6,800,000
Development Agreements 0 2,910,000 0 10,300,041 3,800,000
Other 0 1,256,532 0 0 1,528,000
589,002 0 32,200 5,650,102

Non Operating Revenues 7,588,270 9,816,621 4,064,556 5,548,519 473,637 35,921,977 12,428,000
Yr/Yr $ Change
% Yr/Yr Change 2,228,351 (5,752,064) 1,483,963 (5,074,882) 35,448,340 (23,493,977)

29.4% -58.6% 36.5% -91.5% 7484.3% -65.4%

For FY 18, the City anticipates the sale of a 58 acre Airport parcel producing $6.8 million in general fund
proceeds, with a net current revenue of $5.3 million after contingent liability set aside of $1.5 million.
The City also budgeted closing on the Easton/Ayala Retail Site ($3,800,000), which will offset the
$3,000,000 acquisition costs. Other non-operating revenues include one-time payments related to the
Landfill Development Agreement totaling $1,528,000.

The non-operating revenues have been extraordinary in recent years, and have allowed the City
Council to allocate funding for capital projects that otherwise had no other funding source.

General Fund Expenditures

General Fund Expenditures by Object

The Budget assigns operating expenditures to five major categories: Salaries and Benefits,
Service/Supplies, Capital Outlay, Debt Service, and Other. Since FY 12, General Fund Operating
Expenditures increased by $18,050,446 or 31% as illustrated in the table below. The largest dollar
growth occurred with Salaries and Benefits ($11 million), while the largest percentage growth occurred
in the Service/Supply category (84%). Operating revenue growth of $20.7 million over this period
exceeded operating expenditure growth of $18 million (in large part because of the expenditure
savings proposed for FY 18).

From FY 17 to FY 18, total budgeted expenditures increase by $2,238,880 (3%) to a total operating
budget of $75,951,060. The operational expenditure growth derives from the following:

 Salaries & Benefits. This category encompasses all forms of employee compensation. Since FY
12, total compensation to City General Fund supported employees increased by approximately
$11.3 million, or 26.8%. The largest components of that growth included overtime
compensation, retirement (PERS) costs, and fringe benefits. Budgeted employment increased
slightly over the period (by 17 employees), but the increased costs were still largely attributable

The City of Rialto, California 9 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

Summary of Recurring General Fund Expenditures by Object

Actuals Actuals Actuals Actuals Actuals Revised Proposed Change FY12 to FY18 Change FY17 to FY18
FY 12 FY 13 FY 14 FY 15 FY16 Budget Budget $% $%
FY 17 FY 18

Salaries & Benefits 42,003,423 40,746,504 42,332,956 45,964,008 49,679,344 51,790,789 53,268,767 11,265,344 26.8% 1,477,978 2.9%
Salaries 21,393,819 20,969,460 20,954,378 21,956,693 23,315,489 25,649,991 24,740,593 3,346,774 15.6% (909,398) -3.5%
Overtime 1,523,795 43.4% 330,578 7.0%
PERS UAL & NC 3,510,299 3,211,672 3,397,605 4,251,263 4,693,474 4,703,516 5,034,094 3,007,680 36.3% 599,265 5.6%
Other Benefits 8,290,669 7,473,173 7,614,003 8,701,370 9,673,663 10,699,084 11,298,349 2,328,730 26.4% 12.3%
OPEB 8,808,636 9,092,199 8,756,995 8,029,572 10,302,688 9,915,288 11,137,366 1,058,365 1,222,078 28.6%
n/a 235,455
0 0 1,609,975 3,025,110 1,694,030 822,910 1,058,365

Other 15,897,191 12,583,045 15,354,889 16,220,148 19,330,046 21,921,391 22,682,293 6,785,102 42.7% 760,902 3.5%
Services & Supplies 9,980,392 84.3% 554,829 2.6%
Capital Outlay 11,843,540 11,219,077 12,617,098 14,279,802 17,240,862 21,269,103 21,823,932 (1,076,760) -100.0% (444,696) -100.0%
Debt Service 27.2% 211,886 4237.7%
Other 1,076,760 793,546 2,370,213 1,032,583 863,802 444,696 0 46,347 -77.1% 438,883 216.6%
(2,164,877)
170,539 142,754 128,191 128,216 3,119 5,000 216,886

2,806,352 427,668 239,387 779,547 1,222,263 202,592 641,475

Total Expenditures 57,900,614 53,329,549 57,687,845 62,184,156 69,009,390 73,712,180 75,951,060 18,050,446 31.2% 2,238,880 3.0%
Yr/Yr $ Change
Yr/Yr % Change (328,402) (4,571,065) 4,358,296 4,496,310 6,825,234 4,702,790 2,238,880

0.6% -7.9% 8.2% 7.8% 11.0% 7.6% 3.0%

to growth in wages and fringe benefits. The labor contracts negotiated during the period
partially restored the concessions employees made during the Recession. The City’s employees
generally absorbed the employee’s share of PERS costs, ranging from 8% of salary for
miscellaneous employees to 12% of salary for public safety employees.

The FY 18 Budget projects Salaries and Benefits to increase by $1,477,978 from FY 17 allocated
as follows:

o Salaries decrease by ($909,398) because the Budget freezes 11 currently vacant
positions as described in more detail below. The actual savings from the frozen
positions ($1,392,957) are offset by increases due to step increases and other annual
adjustment factors.

o Overtime increases from $4,703,516 to $5,034,094, an increase of $330,578 (7.0%)
because of the impacts of the Flores vs. San Gabriel Decision that mandates the
inclusion of the cash value of the cafeteria benefits in the computation of overtime
rates. The majority of overtime costs are budgeted for the Fire Department ($3,244,322
or 64%) and the Police Department ($1,483,774 or 29%). Addressing the unanticipated
impact of the Flores Decision on the City’s overtime costs will be a major topic of labor
negotiations with each of the affected bargaining units.

o PERS costs will increase from $10,699,084 to $11,298,349, an increase of $599,265
(5.6%). This is a continuing series of annual increases programmed through FY 2025.
The PERS costs include the normal costs associated with current employment, as well
as payment of the Unfunded Accrued Liability (UAL). The City’s normal cost
components and the UAL payment forecast to grow by $1.5 million per year over each
of the next 8 budget years (for a total increase of $12 million annually), assuming no
other actuarial adjustments. This represents a huge financial challenge for the City
discussed in more detail below.

The City of Rialto, California 10 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

o Other Benefits include the cost of medical care (cafeteria benefits), deferred
compensation, leave cash outs, and workers compensation premiums. Costs increased
from $9,915,285 to $11,137,366, an increase of $1,222,078 (12.3%). These costs
increased with anticipation of senior staff retirements, a more aggressive approach to
settling worker’s compensation claims, and a full year of increased payouts for cafeteria
benefits and deferred compensation for multiple bargaining units.

o Other Post-Employment Benefit (OPEB) is the cost associated with the City’s payment
for post-retirement medical expenses. Similar to PERS, the City’s payment obligation
consists of a normal cost component and an unfunded accrued liability component. The
City’s full annual payment for OPEB is $2,451,322 (GF only) – the FY 18 Budget
contributes approximately 43% of this required annual payment by paying the normal
cost ($1,058,365) and deferring payment toward the unfunded accrued liability
($1,392,957). This will increase the City’s downstream payment obligation when the
unfunded accrued liability is re-amortized. While this action contradicts recent City
policy to make the full Annual Required Contribution, it conserves reserve balances to
address a more inflexible creditor in PERS.

 Services and Supplies. The Services and Supplies category includes legal services, contract
services, supplies, and travel/training/memberships. Since FY 12, Service and Supply
expenditures grew by $10.0 million or 84.3%, the largest single growth component. This
occurred primarily due to the expansion of contract services related to development projects.
The City collects monies from developers for plan check and inspection services, and then
passes funding through to contract consultants engaged by the City to perform those services.
Stripping that portion out of the expenditures results in a more normalized growth rate for
Services and Supplies.

For FY 18, Services and Supplies will increase from $21,269,104 to $21,823,932 an increase of
$554,829 (2.6%) over FY 17. The payment ($1.5 million) to Medline Industries pursuant to the
Sales Tax Sharing Agreement causes this increase. The Budget otherwise decreased Service
and Supply expenditures by ($945,171). During the Budget process, the City Administrator
tasked the Departments with reducing discretionary Service and Supply expenditures. The City
Administrator further exercised his authority to reduce certain Service and Supply expenditures
as follows:

o Cut the number of credit cards and the available purchasing authority from $167,000 to
$90,000 and the number of cards in circulation decreased from 30 to 15.

o Reduce the number of cable TV connections from 55 to 26, saving the City $6,000 per
year in cable subscription fees.

The City of Rialto, California 11 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

o Review the number of City cell phones, and only employees with essential requirement
will continue to have access.

o Reduce the travel and training budgets.

 Capital Outlay. General Fund supported capital outlay includes investment or reinvestment in
new public facilities, and the purchase of new or replacement rolling stock (cars, trucks, and
engines). It varies widely from year to year depending upon circumstances, but generally
averaged $1 million per year since FY 12. The City periodically supplements the annual
allocations with one-time reserve allocations.

The FY 18 Operating Budget does not allocate funding for general fund supported capital
outlay. Normal capital outlay should equal 5%-10% of the operating budget ($3.8 million to
$7.6 million) so this appears to represent a deferred obligation; however, the City Council has
allocated a significant portion of the reserves to fund capital outlay in recent years supplanting
the demand upon the operating budget. This cannot continue indefinitely, but is defensible for
the near future as asset sales create uncommon opportunities for capital expenditures.

 Debt Service. The City currently does not have any significant General Fund secured debt
service payments. However, the City Council recently approved two general fund secured debt
obligations that will impact future budgets:

o Energy Efficiency Improvement Loan. On May 9, 2017, the City Council approved a
debt financing with Holman Capital to finance the retrofitting of various public facilities
for energy efficiency under a contract with Alliance Building Services. The total
authorized debt was $6,854,653 and the projected annual debt service payment is
approximately $550,000 per year for 15-20 years beginning with a partial payment of
$211,000 in FY 18. The program proposes that energy savings will exceed the annual
debt service payments and provide cash flow benefits to the General Fund.

o Streetlight Acquisition. On May 9, 2017, the City Council approved a debt financing to
acquire the SCE owned streetlights and convert all City owned streetlights to LED
Lighting Fixtures. The anticipated debt of $3,612,709 produces annual loan payments
of approximately $315,000 per year. The City repays the debt from savings achieved
due to the acquisition and conversion project. The first annual debt service payment
will commence in FY 19.

 Other. The Other category includes operating subsidies to LMD’s, cemetery, and transfers out
to other funds. The transfers out increased from $202,592 to $641,509 an increase of $438,917
because prior year fund balances used to subsidize the transfers were exhausted.

On June 27, 2017 the City Council directed staff to seek additional savings to minimize the reserve

The City of Rialto, California 12 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

requirement. The Departments submitted savings proposals totaling $1,382,895 including cuts to
services, supplies, overtime, training, part-time compensation, and other expenses. These savings
have been factored into the FY 18 Budget.

General Fund Expenditures by Department

The table below allocates General Fund expenditures by Department to show recent trends (FY 12 to
FY 18) for each City enterprise.

Summary of Recurring General Fund Expenditures by Department

Actuals Actuals Actuals Actuals Actuals Revised Proposed Change FY12 to FY18 Change FY17 to FY18
FY 12 FY 13 FY 14 FY 15 FY 16 Budget Budget
FY 17 FY 18 $% $%

Budgeted FTE 293 268 285 284 302 308 310

Department 57,900,614 53,329,549 57,687,845 62,184,156 69,009,390 73,712,180 75,951,060 18,050,446 31.2% 2,238,880 3.0%
Administrative Services 1,344,183 1,417,184 1,396,263 1,463,069 1,819,720 1,918,170 1,793,729 449,546 33.4% (124,441) -6.5%
City Administrator 397,719 502,484 594,024 627,737 718,813 686,267 731,581 333,862 83.9% 6.6%
City Clerk 679,024 906,295 504,389 446,209 452,562 593,398 657,134 (21,890) -3.2% 45,314 10.7%
City Council 279,459 322,656 315,506 377,021 457,954 381,601 424,202 144,743 51.8% 63,736 11.2%
City Treasurer 453,740 412,965 340,911 370,578 412,652 443,094 460,561 6,821 42,601 3.9%
Community Services Subsidy 1,736,409 1,358,300 1,217,860 1,487,575 2,526,981 2,633,061 2,674,944 938,535 1.5% 17,467 1.6%
Development Services 2,039,930 2,153,243 2,304,368 2,690,595 3,253,898 4,212,884 3,990,029 54.1% 41,883 -5.3%
Fire 1,950,099 95.6% (222,855) 5.3%
Human Resources 14,432,719 13,528,821 14,734,439 14,821,607 17,357,465 18,288,441 19,262,101 4,829,382 33.5% 973,660 2.2%
Management Services 409,819 474,232 508,808 602,437 673,602 856,836 875,688 113.7% 18,852 1.2%
Non-Departmental 371,459 286,144 572,986 770,798 608,099 739,347 747,980 465,869 101.4% 48.3%
Police 376,521 8,633 1.2%
Public Works 5,851,587 2,659,462 4,387,906 6,818,291 5,708,159 4,156,877 6,162,964 311,377 5.3% 2,006,087 -10.6%
23,834,545 23,999,315 23,580,400 24,944,043 26,327,541 29,608,037 29,950,945 6,116,400 25.7%
2,149,181 35.4% 342,908
6,070,021 5,308,448 7,229,985 6,764,196 8,691,944 9,194,167 8,219,202 (974,965)

Yr/Yr $ Change (328,402) (4,571,065) 4,358,296 4,496,310 6,825,234 4,702,790 2,238,880
Yr/Yr % Change
-0.6% -7.9% 8.2% 7.8% 11.0% 6.8% 3.0%

The noteworthy trends for each Department for the budget year are summarized below. The Budget
does not authorize any new positions, although it does reassign funding for 2 existing positions to the
General Fund from grant funds.

 The Administrative Services budget will decrease by $124,441 or 6.5%, with most of the
decrease in Salaries and Benefits due to the position freezes.

 The City Administrator budget increased by $45,314 (6.6%). The City Administrator increased
the Service and Supply budget by $42,987 to fund two sessions of the Institute of Progress and
recruitment for a new City Administrator.

 The City Clerk budget increased by $63,736 or 10.7% with most of the increase in Service and
Supplies ($75,809) offset by small decreases in other expense categories. The City Clerk
anticipates at least one election for the Utility Tax.

 The City Council budget increased by $42,601 (11.2%) with the increase in Service and Supplies
by $43,668. The City Council budget increased due to a change in General Liability Allocation.

The City of Rialto, California 13 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

 The City Treasurer budget increased by $17,467 or 3.9% with most of the increase in Service
and Supplies.

 The Community Services budget increased by $41,883 or 1.6% with most of the increase in
Salaries and Benefits. The increase in the subsidy amount provided by the General Fund relates
to an increase in personnel costs and a conservative approach to revenue budgeting because
of increased competition to the Fitness Center. There is an overall decrease of 4% in budgeted
revenues.

 The Development Services budget decreased by $222,855 or 5.3%, principally because the staff
expects a decline in the volume of building permit and plan check services, the services and
supply budget decreased, and the savings due to the position freezes.

 The Fire Department budget increased by $973,660 or 5.3% with the largest increase in Salaries
and Benefits (OT and Fringe Benefits).

 The Human Resource Department budget will increase by $18,852 or 2.2% with most of the
increase in Salaries and Benefits for existing employees.

 The Management Services budget increased by $8,633 or 1.2% with most of the increase in
Salaries and Benefits. The modest increase relates to anticipated step increases.

 The Non-Departmental budget increased by $2,006,087 or 48.3% to reflect the cost of
anticipated separations from City service, legal costs, and new sales tax agreements.

 The Police Department budget increased by $342,908 or 1.2% with most of the increase in
Salaries and Benefits.

 The Public Works budget decreased by $974,965 or 10.6%, primarily due to large decreases in
Service and Supplies and salary savings due to the position freezes.

The City of Rialto, California 14 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

Potential New Revenues and Service Efficiencies

The City hosted forums for the employees (on May 11th), bargaining units (on May 18th), and the
community (on May 31st) to solicit ideas for increasing revenues, cutting costs, implementing
efficiencies, and maintaining services. Some of the potential ideas interspersed with some of my own
include:

Revenues

 User Fees. Charging for the use of public facilities, including lighting, park facilities, and other
venues.

 Franchise Agreements. As example, the Kinder Morgan Franchise Agreement expires in 2018,
entitling the City to seek additional franchise revenue.

 Service Fees. Increase towing and impound fees.

 Community Facility Districts. Expand the use of Community Facilities Districts for residential
projects to ensure new development pays it fair share toward municipal services.

 Entrepreneurial Activities. Sell advertising space at or on City facilities, create donation pools
for City events, and sell or lease City properties.

 Grant writing and Lobbyist Services. Engage specialists to secure more funding for City
operations and capital projects.

 Trucking Taxes. Levy a fee on new warehouses to compensate the City for damage to City
streets.

Expenditures

 Cut Waste. Purchase generic brand printer cartridges, eliminate ink-jet printers, use paperless
technologies, and other suggestions intended to save money with more judicious use of
resources.

 Reduce or Consolidate Commissions and Committees. Better utilize scarce staff resources by
combining duties of various Commissions and Committees, thereby reducing staff time spent
preparing for meetings, without compromising opportunities for citizens to participate in
government.

 Interns, Apprentices, and Volunteers. Use lower cost interns, apprentices, or volunteers to

The City of Rialto, California 15 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

support City services.

 Strategic Reductions in Force and Reorganizations. A sizable contingent of the City’s
workforce nears retirement age, creating opportunities to reorganize functions to focus on core
services and possibly reduce the size of the workforce.

 Restoration of a Five-Day Work Week. To increase service to the community and reduce
overtime costs, return the City to a standard work schedule, either a 5/40 or a 9/80 program.

 Privatizing City Functions. Consider privatizing functions such as the pool or recreation center.

 Withdraw from PERS and Switch to a Defined Contribution Program. Reduce long-term
obligations to employees by withdrawing from the defined benefit program and creating a
defined contribution program.

 Use Reserves to Pay Down PERS Obligations. Take a substantial portion of the reserves to buy
down the obligation to PERS thereby reducing the Annual Required Contribution in future
years.

 Retire High Cost Debt using Idle City Funds. Use the City’s idle investment pool to retire high
cost debt like the equity element of the Concession financing. Basically, take low earning cash
to retire high cost debt and use the debt service savings to repay the pool with interest and
capture the remaining savings.

 Standardize City Benefits. Create a uniform package of benefits (cafeteria allowances,
incentive pay, paid time off, etc.) for all City employees to save money, improve transparency,
and incentivize service to the community.

 Labor Concessions. Seek equitable salary and benefit concessions to help free up resources to
pay the increasing burden to PERS and OPEB.

The City received many more ideas during the various forums that are worthy of consideration. In the
short time preceding the budget, staff could not vet all of the ideas to determine implementability for
this Budget adoption. Unlike prior year budgets, the FY 18 Budget will be continuously refined to
squeeze out all of the potential savings. I will task the contract Interim Finance Officer with the
responsibility for evaluating each of the ideas submitted and reporting on the potential savings.

The City of Rialto, California 16 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

Organizational Changes

The various City departments submitted personnel requests as part of the annual budget process. As
City Administrator, I denied all of these requests. In fact, because of the impending long-term threats
as outlined in this budget message, I recommend all currently vacant positions remain frozen for the
FY 18 budget year. The positions and the budgeted savings include:

Vacant Positions at July 11, 2017

Department Position Range Total

Fire Fire Division Chief 6900 $ 283,830
$ 213,351
Police Police Lieutenant 6100 pd $ 195,508
$ 175,501
Administrative Services Director 7500 $ 95,777
$ 80,279
Development Services Economic Development Manager 5900 $ 78,110
$ 69,843
Administrative Services Accountant 3700 $ 69,235
$ 67,516
Public Works Engineering Technician 3200 $ 54,312

Public Works Construction Inspector 3500 ========
$ 1,383,262
Administrative Services Administrative Assistant 2600

Police Lead Emergency Dispatcher 2900 pd

Police Law Enforcement Technician 2600 pd

Police Lead Police Records Assistant 2000 pds

Totals

The City of Rialto, California 17 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

Each Department Director if queried would state these positions are essential to the delivery of public
services. Unfortunately, the prognosis going forward requires severe corrective measures to ensure
the City can fulfill its service responsibilities to the community and provide the promised compensation
to the City’s employees.

Finally, I recommend all positions that become vacant during FY 18 due to resignations or retirements
remain vacant unless the City Administrator and the City Council find that the position must be filled
due to urgent circumstances (i.e. threat to public safety or compromise essential services). The City
expects several employees to retire in the next year, presenting opportunities for additional salary
savings at least until the Long Range Financial Plan process completes and the City better understands
its financial destiny.

The table below illustrates the City General Fund supported workforce. From FY 12 to FY 18, total
General Fund budgeted employment increased from 293 employees to 310 employees. The Budget
adds no new employees for FY 18 but reassigns two positions in the Police Department from grant-
funded positions to the General Fund.

Budgeted Employment (FY 12 to FY 18)
General Fund Workforce

Authorized Positions Proposed Changes
FY 13 FY 14 FY 15 FY 16
Department FY 12 FY 17 FY 18 FY12-FY18 FY17-FY18

General Fund Workforce 292.80 267.96 285.16 283.53 301.97 307.57 309.64 16.84 2.07
Administrative Services 14.33 11.83 12.33 13.33 13.17 12.50 12.50 (1.83) 0.00
City Administrator 1.50 2.00 2.00 3.00 3.00 3.00 3.00 1.50 0.00
City Clerk 6.00 6.00 3.00 3.00 3.00 3.00 3.00 (3.00) 0.00
City Council 5.50 5.00 5.00 5.00 5.00 5.00 5.00 (0.50) 0.00
City Treasurer 4.00 4.00 4.00 4.00 4.00 4.00 4.00 0.00 0.00
Development Services 7.50 8.25 15.88 16.25 18.45 19.05 19.05 11.55 0.00
Fire 69.00 64.00 64.00 61.00 78.00 81.00 81.00 12.00 0.00
Human Resources 3.33 3.33 3.33 4.33 3.73 4.40 4.40 1.07 0.00
Management Services 0.00 0.00 4.00 4.00 4.00 5.00 5.00 5.00 0.00
Police (12.16) 1.84
Public Works 156.50 140.50 141.50 141.50 141.50 142.50 144.34 3.21 0.23
25.14 23.05 30.12 28.12 28.12 28.12 28.35

The total City workforce, including positions funded by grants or as part of enterprise activities,
remained constant at 344 budgeted positions. Since FY 12, the City Workforce overall shrunk by 13
employees, with reductions in grant and enterprise supported employment of almost 30 employees
offset by an increase of 17 employees to the General Fund. The employment shifts due to the
Concession Agreement, the dissolution of redevelopment, elimination of enterprise funds like
Development Services, and reductions in other grant-supported employment caused this transition.

The City of Rialto, California 18 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

Budgeted Employment (FY 12 to FY 18)
Total City Workforce

Authorized Positions Proposed Changes
FY 13 FY 14 FY 15 FY 16
Department FY 12 FY 17 FY 18 FY12-FY18 FY17-FY18

Total City Workforce 357.00 329.00 321.00 324.00 338.00 344.00 344.00 (13.00) 0.00
Administrative Services 20.33 12.83 12.33 13.33 17.67 17.00 17.00 (3.33) 0.00
City Administrator 1.50 2.00 2.00 3.00 3.00 3.00 3.00 1.50 0.00
City Clerk 6.00 6.00 3.00 3.00 3.00 3.00 3.00 (3.00) 0.00
City Council 5.50 5.00 5.00 5.00 5.00 5.00 5.00 (0.50) 0.00
City Treasurer 4.00 4.00 4.00 4.00 4.00 4.00 4.00 0.00 0.00
Community Services 10.34 9.34 9.34 9.34 10.00 10.00 10.00 (0.34) 0.00
Development Services 23.25 21.10 19.50 19.50 20.50 21.00 21.00 (2.25) 0.00
Fire 69.00 76.00 76.00 70.00 78.00 81.00 81.00 12.00 0.00
Human Resources 3.33 3.33 3.33 4.33 3.73 4.40 4.40 1.07 0.00
Management Services 0.00 0.00 4.00 4.00 4.00 5.00 5.00 5.00 0.00
Other 0.00 0.00 0.00 0.00 0.60 0.60 0.60 0.60 0.00
Police 0.00
Public Works 156.50 140.50 142.50 145.50 145.50 146.00 146.00 (10.50) 0.00
57.25 48.90 40.00 43.00 43.00 44.00 44.00 (13.25)

Operating Budget Deficit/Recommended Measures

A Structurally Balanced Budget occurs when Operating Revenues equal or exceed Operating
Expenditures. Operating Expenditures for this analysis should include all costs of standardized service,
and all normal allocations to services/supplies, capital outlay, debt service, and other components.
Often, budgets may be cash balanced (revenues equal expenditures) but structurally imbalanced
(because otherwise appropriate expenses are deferred). The City of Rialto has many times submitted
a budget reflecting this dichotomy, and the FY 2017/18 budget is no exception. Circumstances may
make this approach acceptable in certain years, but the City cannot sustain this practice indefinitely
and eventually must achieve a better allocation of its limited resources between the competing budget
elements.

The table below summarizes the proposed Operating Revenues and Expenditures for FY 18. Adjusted
Operating Expenditures of $82,327,279 exceed Operating Revenues of $77,545,830 producing a
Structural Budget Deficit of $4,781,449. This is the theoretical amount the City should squeeze out of
the budgeted expenditures to achieve structural balance. Because labor remains such a large part of
the total budget, labor probably needs to shoulder the largest cost reduction so the City may properly
fund the other budget elements. Labor cost reductions require time to execute, with management
obligations to meet and confer with the various labor representatives.

Nevertheless, as in the past, management suggests several measures to achieve a “cash balanced”
budget for Fiscal Year 2017/18, while moving toward a long-term financial plan that will help achieve
“structural balance”. The measures include:

The City of Rialto, California 19 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

Structural Deficit Projection and Balancing Recommendations

FY 18 Notes

Operating Revenues $ 55,278,200 added property tax and VLF
Taxes $ 22,267,630 Excludes non-recurring revenues
Other ==========
A $ 77,545,830
Total Revenues

Operating Expenditures $ 57,999,386 includes all labor costs, including current vacant, Flores, & full OPEB
Personnel $ 21,823,932 move $1.2M to Non-Operating
Services/Supplies $ 3,600,000
Capital Outlay $ 216,886
Debt Service $ 641,475
Other ==========
B $ 84,281,679
Total Expenditures

Budget Surplus/(Deficit) $ (6,735,849) Budget Deficit before Adjustment for One Time Expenses

Adjustments to Operating Budget C $ 1,954,400 Potential impacts of the Flores Decision/Prior Yr Operating Cost
Add: One Time Expenses

Adjusted Operating Budget D $ 82,327,279 B-C Recurring annual expenses

Structural Budget Surplus/(Deficit) E $ (4,781,449) A-D Amount by which Recurring Expenses exceed Recurring Revenues

Recommended Cash Budget Balancing Measures

Freeze Vacant Positions F $ 1,383,262

Defer Capital Outlay G $ 3,600,000

Defer UAL of OPEB Payment H $ 1,392,957

Recurring Annual Cash Surplus/(Deficit) I $ 1,594,770 E+F+G+H Excess Reserve Requirement

Total Reserve Requirement for FY 18 J $ (359,630) I-C Sum of One Time Expenses and Residual Cash Surplus

1. Freezing all Vacant Positions for One Year. This produces savings of $1,392,957 if all frozen
positions remain vacant for the full budget year. This proposition is non-strategic in that it
simply freezes positions that happen to be vacant, and it does not necessarily assess the value
of the position to the organization.

2. Deferring All General Fund Capital Outlay. As noted earlier, this recommendation is justified
in that the City Council has allocated a substantial sum of General Fund Reserves toward capital
projects this budget year and for the near future. Eventually, when the one-time monies
dwindle the City Council will need to allocate funding each year from operational revenues to
fund replacement and new investment requirements.

3. Deferring the Unfunded Liability Component of the City’s OPEB Payment. The City has

The City of Rialto, California 20 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

seesawed on its OPEB obligations in recent years, making no payments in some years and then
playing catch up in others. For the FY 18 budget, I recommend the City pay the normal cost of
OPEB but defer the unfunded accrued liability. This results in short-term cash flow savings of
$1,392,372.

With these adjustments, the City’s budget is cash balanced for FY 2017/18 (small surplus of
$1,594,770), with one caveat. Management recommends the City use surplus reserves to make court
mandated restitution to the various employees that earned overtime compensation in accordance
with the Flores Decision. The estimated cost of resolution is approximately $2 million. This cost relates
to services performed in prior years, and should not be considered a labor cost for the upcoming fiscal
year. The reserves are an appropriate use for such unexpected events, although the City must
commence efforts to reverse the unintended and unbudgeted consequences of this decision. The
reserve requirement to balance the budget is $359,630.

General Fund Reserves

The City Council established the General Fund Reserve Fund to provide funding for emergencies,
special projects, and working capital. In 2002, the City Council adopted a policy to maintain General
Fund reserves at not less than 50% of the operating budget.

The table below forecasts the General Fund Reserve Balance as of June 30 for FY 17 and FY 18 based
upon anticipated revenues and expenditures. Based upon the budgeted revenues, expenditures, and
previously established reserve priorities, the City will end the FY 18 Budget with a net unencumbered
reserve of $1,334,402 – a slight increase over the FY 17 ending balance.

The City of Rialto, California 21 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

General Fund Reserve Balances June 30, 2017 June 30, 2018

Fiscal Year Ending $ 56,714,577 $ 70,519,152

Begin Balance at July 1 for FYE $ 72,895,532 $ 77,545,830
$ 38,472,323 $ 12,428,000
Budget Year Results $ (73,712,180) $ (75,951,060)
FY Operating Revenues $ (23,851,100) $ (6,154,400)
FY Non-Operating Revenues ============ ============
FY Operating Expenses $ 13,804,575 $ 7,868,370
FY Non-Operating Expenses
$ 70,519,152 $ 78,387,522
Budget Year Surplus/(Deficit)
$ (36,856,090) $ (37,975,530)
Reserve Balance before Reservations
$ 33,663,062 $ 40,411,992
Reserve Requirement at 50%
$ (1,300,000) $ (1,200,000)
Net Reserve after Policy Application $ (5,000,000) $ (5,000,000)
$ (3,840,762) $ (3,840,762)
Reservations against Reserve Balance at FYE $ (5,000,000) $ (5,000,000)
Advances to Other Funds $ (2,054,203) $ (3,554,203)
Operational Reserve $ (5,600,000) $ (5,600,000)
Streets & Parks $ (7,875,000) $ (7,875,000)
Fire Station 205 $ (1,707,625) $ (7,007,625)
Airport Contingent Liability ============ ============
Joe Sampson Park $ (32,377,590) $ (39,077,590)
Frisbie Park
Baca/Turch Park $ 1,285,472 $ 1,334,402

Reservations on Reserve Balance

Net Unencumbered Reserve at FYE

Capital Improvement Program

The FY 18 Budget commits substantial funding for capital improvement projects, utilizing the one-time
monies generated from asset sales, grant funding, development impact fee funding, and other sources.
The major projects scheduled for construction in FY 18 include the following:

The City of Rialto, California 22 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

Street Projects

 Street Resurfacing, Overlay & Pavement Rehabilitation. This $3 million project rehabilitates
Cactus Avenue from Rialto Avenue to Merrill Avenue, Cactus Avenue from Bloomington Avenue
to San Bernardino Avenue, Randall Avenue from Maple Avenue to Cactus Avenue, and San
Bernardino Avenue from Larch Avenue to Lilac Avenue. The Project uses funding from the
General, Measure I, Gas Tax, and Waste (Pavement Maintenance Fee) Funds.

 Street Resurfacing/Overlay of Easton, Bloomington, and Riverside. This $2.6 million project
rehabilitates Bloomington Avenue from Lilac Avenue to Merrill Avenue, Easton Avenue from
Lilac Avenue to Willow Avenue and Riverside Avenue from 1,630’ east of Sierra Avenue to
Linden Avenue. The Project uses funding from the General, Measure I, Gas Tax, and Waste
(Pavement Maintenance) Funds.

 Alder Avenue Widening Phase II. This $7.3 million project widens Alder Avenue from Baseline
Road to Renaissance Parkway from two lanes to four lanes improving traffic flow and enhancing
public safety. The Project uses funding from the General, Regional Transportation
Development Impact Fee, Drainage Development Impact Fee, and County Landfill Transfer Fee
Funds along with residual RDA Bond Proceeds.

 Randall Street Widening. This $2.2 million project widens Randall Avenue from Cactus Avenue
to Riverside Avenue. The Project uses funding from Measure I and Transportation
Development Impact Fee Funds.

Parks and Public Facilities

 Frisbie Park. The Frisbie Park expansion project adds approximately 10.7 acres of new facilities
to the existing park. New facilities may include tennis courts, restroom facilities, a skate park,
basketball courts, playgrounds, a new "T" ball, and a new softball field. The $7.9 million Project
uses funding from Park Development Impact Fees and General Fund Reserves (provided by
Airport land sales).

 Joe Sampson Park. The Joe Sampson Park project consists of the development of a 7.5-acre
local park, on a vacant parcel situated at the northeast corner of Cactus Avenue and Randall
Avenue. The $5.6 million Project uses funding from Park Development Impact Fees and General
Fund Reserves (provided by Airport land sales).

 Announcer’s Booth at Rialto City Park. Replace existing sports announcers’ booth to meet
current standards and codes. The $130,000 Project uses CDBG and General Fund Reserves.

The City of Rialto, California 23 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

 Bud Bender Park Field Lights and Monument Sign. Replace aging light poles for sports fields
and install new park monument sign. The $115,000 Project uses CDBG Funding.

 Fire Station 205. This $5 million Project constructs a new 10,000+ square foot station and
community facility to serve southern Rialto. The station will be located on Willow Avenue,
between San Bernardino Avenue and Valley Boulevard. The City engaged an
architect/engineering team in FY 17, with construction slated for FY 18 and completion in FY
19. The Project uses Fire Development Impact Fees and General Funds (Airport Land Sales
Proceeds).

RUA/RWS
 Wastewater Treatment Plant Improvements. The Wastewater Treatment Plant
Improvements expand the existing Plant No. 5 to meet the design capacity of 11.7 Million
Gallons per Day (MGD) and all Federal, State, and local regulations. The expansion will
construct new and upgraded facilities including the headworks, primary treatment, biological
treatment, effluent filtration, chlorination feed system, and solids handling. The $27 million
Project uses funding from the Concession Agreement Facility Improvement Plan and Rialto
Utility Authority Reserves.

 Sewer Manhole Rehabilitation Project. This project consists of repairing the critical sewer
manholes throughout the City. This year will be the fifth year repairing approximately 25
manholes per year. The repairs identified are in the problem areas of the sewer system. These
efforts ensure the quick and safe transport of sewer waste to the wastewater treatment
plant. The $150,000 per year Project uses funds from the Concession Agreement Facility
Improvement Plan.

 Sewer Line Replacement Program. The City and RWS are in the progress of videoing the City’s
sewer system and evaluating the condition of the sewer pipelines. The areas that have high
maintenance (hot spots) have been identified for replacement or relining. This Project replaces
2 miles of sewer pipelines in the center of the City’s sewer system. The $1.5 million Project
uses funding from the Concession Agreement Facility Improvement Plan.

 Supervisory Control and Data Acquisition (SCADA) Project. The SCADA Project will improve
the City’s ability to operate the water system remotely from an operations center. Currently
operators are required to visit each site to make operational decisions. The SCADA Project will
allow operators to see the water levels in the reservoirs, whether wells are in an on or off
position, if booster pumps are delivering water from one pressure zone to another, and other
system information. In addition, the City will have access to real time data for forecasting and
operational trends. The $1.9 million Project uses funding from the Concession Agreement
Facility Improvement Plan.

The City of Rialto, California 24 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

Energy Efficiency

 Street Light Acquisition and LED Upgrade Project. The City intends to acquire the inventory of
SCE owned streetlights and convert all streetlights to energy efficient Light Emitting Diode (LED)
fixtures. The City expects the $3.6 million project to save $126,000 per year in utility costs.

 Solar and Energy Conservation Project. This updates aged interior and exterior lighting, aging
HVAC equipment, and outdated building automation systems. The City expects the $9.3 million
project to save approximately $885,000 per year in utility costs.

Economic Development

 Renaissance Marketplace West. In FY 17, the City sold 58 acres of land to Lewis-Hillwood Rialto
and construction commenced on the Rialto Marketplace Project, a 450,000 square foot
community shopping center anchored by Cinemark Theaters, 24 Hour Fitness, Burlington, and
numerous other shops and restaurants. The first phase will open in January 2018 with the
balance of Phase I of the center opening by June 2018.

 Renaissance Marketplace East. In FY 17, the City entered into purchase agreements to acquire
an 8-acre site at the northeast corner of Ayala Drive and Renaissance Parkway, and
concurrently entered into an agreement to convey the site for development of a Cracker Barrel
and Sonic restaurant, and a hotel. After securing land use entitlements late in 2017, site
development should commence early in 2018 with opening of the restaurants early in 2019.
The City will expend $3 million from General Fund Reserves for acquisition, and earn $3.8
million in land sales proceeds upon sale of the last parcel. The $800,000 surplus will accrued
to the General Fund Reserves.

 Coffee Bean & Tea Leaf. The City entered into a purchase and sale agreement with
Fountainhead Shrugged LLC for the development of a Coffee Bean & Tea Leaf restaurant at the
southeast corner of Riverside Avenue and Easton Avenue. The City expects to convey the site
in July 2017 with opening of the restaurant scheduled for early 2018.

 Industrial Development. The City will continue its aggressive industrial development program
with 6 facilities under construction on or around the Airport and several others throughout the
City. Projects expected to finish in FY 18 will add an estimated $500 million in new assessed
valuation and create 5,600 jobs. Each job adds approximately $500 per year in general fund
revenue (net of service costs).

The proposed budget document does not include any carryover budget for multi-year capital projects
and grant programs. Revenues and expenditures typically do not match in funds that are capital

The City of Rialto, California 25 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

project related because revenues may be received prior to the beginning of the project and others may
be reimbursement-based or grant funded. The budget does not include these funds since the City
Council previously approved the expenditures, and the budgets carry forward the budgets from year
to year until project completion. The City Council will accept new grants at the time of award.

Utility Users Tax and Measure U

The current Utility Tax expires on June 30, 2018. The Utility Tax contributes $14.2 million or 18% of
General Fund operating revenues. The City cannot operate without devastating impacts upon core
City services without the Utility Tax (or a comparable replacement). This does not affect the FY 18
Budget, but will affect all subsequent budgets (except for the cost of a special election).

The City Administrator will request the City Council declare a fiscal emergency as required by law to
place a measure on the ballot during November 2017. This measure would ask the voters of Rialto to
extend the Utility Tax beyond June 30, 2018 at the current rate of 8%. The City Council shall establish
the term and other essential characteristics of the ballot measure.

The City expects the legal challenge to Measure U will delay the implementation of this voter-approved
tax beyond FY 18. If a court of law validates Measure U, the City agreed to reduce the Utility Tax by
2%, to a rate of 6% across all utility users (commercial and residential). This reduces the Utility Tax
revenue by 25% or $3.6 million. For Measure U to produce new operating revenues for the General
Fund, the City must secure a fuel storage tax at a rate generating more than this reduction.

Pension and OPEB Costs

The developing “Pension Tsunami” will be the most difficult challenge to the City’s financial stability
for the next few years. The source and scope of the challenges are summarized as follows.

In FY 2007, the City’s pension fund was “super-funded” – meaning the value of the assets exceeded
the value of the liabilities. The City in effect had more money in its retirement fund than what was
actuarially determined necessary to pay all claims. A series of events dramatically changed this positive
standing. First, the City Council approved labor agreements enhancing retirement benefits retroactive
to the first day of employment with the City of Rialto, substantially increasing liabilities. Second, the
economy crashed in FY 2008 substantially reducing asset values. Third, the California Public Employee
Retirement System Administrators updated a variety of assumptions regarding post-retirement
outcomes (i.e. duration of retirement). Finally and most recently, PERS lowered the expected long-
term rate of return on its investment portfolio from 7.5% to 7.0%. The combined effect of all these
changes moved the City from “super-funded” status to “super-unfunded” status. The City’s unfunded
liability on the valuation date of June 30, 2016 is expected to hit $130 million. The City’s ratio of assets
to liabilities will drop to just over 60%, which is well below acceptable standards for adequate funding.

The City of Rialto, California 26 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

$20,000,000 PERS Unfunded Liability 120.0%

$- FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 100.0%
FY 06
80.0%
$(20,000,000)

$(40,000,000)

$(60,000,000) 60.0%

$(80,000,000) From “super-funded” status to “super unfunded status” 40.0%
$(100,000,000) 20.0%
$(120,000,000) 0.0%
$(140,000,000)

The City Budget will soon feel the full consequence of these events. To restore proper funding levels,
PERS notified all participating public investors that contribution rates would be increasing over the
next 7 years. The normal cost component will increase by 1-3% for miscellaneous plans and 2-5% for
public safety plans. The payment for the unfunded accrued liability will increase by 30-40% over a 7-
year phase in program. The net result is the City’s General Fund annual payment obligation will
increase from $11.4 million in FY 18 to $22.4 million in FY 25, an increase of $10.8 million. Pension
payments will grow from approximately 10% of General Fund expenditures to 25% of General Fund
expenditures, crowding out expenditures for other essential services. This trend requires immediate
attention to ensure future budgets can accommodate the increased payment obligations.

The City of Rialto, California 27 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

General Fund PERS Payments

25 30%
Annual City Paid PERS (Millions)
PERS Cost as % of General Fund Revenue
20 25%

20%
15

15%
10

10%

5 5%

0 0%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Fiscal Year

GF Annual PERS Payments % of GF Revenue

The City also contributes toward the post-retirement health care costs of former employees. The City
contributes a fixed amount toward the cost of retiree medical coverage, depending upon family size
with contributions ranging from $279 to $726 per retired employee toward insurance plans costing
from approximately $500 to $1,700 per month. CGMA members receive full premium payment.

In 2009, the City created an OPEB trust account to pre-fund retiree medical care obligations. Public
Agency Retirement Services (PARS) invests contributions on behalf of the City. As with PERS, the City
makes annual payments to fund normal costs and the amortized amount of the unfunded liability (the
sum of these two payments is the Annual Required Contribution). The City should make the full
payment each year to ensure full funding of the obligation. The Annual Required Contribution for FY
18 consists of the normal cost component and the amortization payment towards the UAL. The FY 18
Budget proposes to fund the normal cost only, deferring the amortization payment.

The chart below shows the trends in unfunded liability for OPEB obligations along with the funded
ratio. The unfunded liability stands at $24.8 million as of April 1, 2016. The funded ratio is 32.5%,
which is below generally accepted standards; however, the ratio improved in recent years as the City
made catch up payments from surplus reserves.

The City of Rialto, California 28 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

OPEB Unfunded Liability 35.0%

$-

$(5,000,000)Unfunded Liability 30.0%
$(10,000,000) Funded Ratio25.0%
$(15,000,000) 20.0%
$(20,000,000) 15.0%
$(25,000,000) 10.0%
$(30,000,000) 5.0%
$(35,000,000)

$(40,000,000) 2010 2012 2014 2016 0.0%
$(26,354,217) $(36,820,069) $(20,214,929) $(24,846,599)
Unfunded Liability
Funded Ratio 7.6% 13.5% 25.7% 32.5%

By only funding the normal cost component, the City defers the amortization payment until a future
year. Ultimately, the amortization payment in future years will be larger creating a bigger budget
burden.

The City maintains greater flexibility to fund its OPEB obligations than it does for its PERS obligations.
PERS does not accept anything less than full payment of the Annual Required Contribution. Because
resources for paying the PERS obligation may be scarce in future years, deferring the OPEB to preserve
reserve capital is prudent at this time.

The combined liabilities to current and future retired workers are approximately $155 million. This
obligation stresses City budgets for many years to come.

The City of Rialto, California 29 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

Capital Replacement Funding

The City has invested historically significant sums over the last few years to address deferred capital
investment. The City General Fund contributed toward expanded street reconstruction and building
upgrade programs. The current budget sets aside considerable funding for parks and fire facilities.
Nevertheless, the FY 18 Operating Budget does not allocate general funds for capital outlay, for either
facilities or rolling stock. Given the substantial funding from one-time sources in FY 18, this is
appropriate; however, the City’s operating budget should have capacity to allocate a stable fund
amount for capital each year without relying on volatile one-time monies. This circumstance
contributes toward the structural imbalance.

Dilution of City Services

As the City adds new residents and workers, City services should expand. The complement of police
and firefighters and other City employees should expand to maintain service standards. Unfortunately,
given the financial stresses discussed herein the City cannot add employees at the level that would
maintain current or desired service levels. The City must provide services to the best of its ability using
the current (or reduced) workforce complement and use the revenues generated from the new growth
to pay for the forthcoming financial burdens. City employees will carry extraordinary workloads for
the near future.

Other Funds

Other Funds reported in this budget document include Special Revenue Funds, Enterprise Funds,
Internal Services Funds, Rialto Utility Authority, Rialto Housing Authority, Capital Projects Fund, and
Debt Service Funds.

Noteworthy items in the FY 18 Budget include:

 Rialto Utility Authority. There are minimal capital projects budgeted in RUA for the proposed
FY 2017/18 budget; however, a significant portion of the capital outlay budgeted in the prior
year’s budgets will be carried over and projects undertaken in FY 18.

 Other Fund Subsidies. The General Fund must provide operating subsidies to the following
accounts:

o The Recreation Fund requires $2.7 million representing 71% of the revenue in the fund.

The City of Rialto, California 30 Annual Budget FY 2017 - 18

Budget Message
Fiscal Year 2017/2018

o The Cemetery Fund requires $50,000 representing 41% of the revenue in the fund.

o The Landscape Maintenance District Fund 225 receives a subsidy of $272,000 and the
Street Lighting Assessment Fund 490 receives a subsidy of $264,000.

 Successor Agency to the Redevelopment Agency. The Budget does not include the budget for
the Redevelopment Successor Agency. Since the State ordered the dissolution of
Redevelopment Agencies in 2012, all financial activity related to the remaining held Agency
funds is subject to approval of the Oversight Board and the State Department of Finance.
Annually, the administrative budget and Recognized Obligation Payment Schedule (ROPS) must
be presented to and approved by the Oversight Board; subsequently, staff presents the
approved budget to Council, which is then adopted into the City budget as a separate process.

Long Range Financial Planning

As described in this Budget Message, the City confronts serious long-term financial challenges. The
burden of increasing PERS and OPEB obligations, along with normal cost escalations will make
balancing future budgets increasingly difficult. Immediate actions are necessary to ensure the City
fulfills its future financial obligations to the employees and residents of Rialto. Consequently, I
recommend the City undertake a comprehensive longer-term review of its finances to prepare for the
coming growth in expenditures. This process will commence immediately upon budget adoption and
completed during FY 18. I also recommend the City Council consider the establishment of a Citizen’s
Budget Advisory Committee to help vet the various ideas for enhancing revenues, cutting costs, all
while maintaining core services.

Summary and Acknowledgements

While we have submitted this Budget for your approval, the FY 18 Budget approval will not cease the
effort to find new revenue sources and cost efficiencies. City staff will review in detail all of the ideas
suggested by the community, and provide recommendations within the first 90 days of the new Budget
year. In addition, recommendations derived from the Long Range Financial Planning process will also
be incorporated into the Budget upon proper review and consideration by the City Council.

I wish to thank the City Council for its guidance and support throughout the development of this
proposed budget. In addition, I wish to thank the Management and Finance department staff, all of
the employees of the City and the citizens who have contributed to make this budget a reality.

The City of Rialto, California 31 Annual Budget FY 2017 - 18

Department Awards & Recognition

 HeartSafe Community Award - in recognition for the Rialto Fire Department’s
sudden cardiac arrest survival rate of 50% or more than 5 times the national
average.


 RFD “Life Saving” Award – Recognition of 60 Fire Employees earning the

Life Saving Award for reviving a patient who was in cardiac arrest to the
point where they regained spontaneous breathing and circulation. The 60
employees saved a total of 271 lives in 2016.

 Community Paramedicine Recognition – Recognition of the Rialto Fire
Department Community Paramedic program from the California Emergency
Medical Services Authority and the Inland Counties Emergency Medical
Agency.

 Published Article in the Western Journal of Emergency Medicine – Rialto Fire
Department and EMS Coordinator Joe Powel as authors of, “Is it Time for
Alternative Destination Transport”

 Published Article in the Western Journal of Emergency Medicine – Rialto Fire
Department and EMS Coordinator Joe Powel as authors of, “Efficacy and Safety
of Tranexamic Acid in Prehospital Traumatic Hemorrhagic Shock: Outcomes
of the CalPAT Study”

 Firefighter of the year – Fire Engineer Marcus Lynch

 Community Service Award – Recognition of Fire Chief Mat Fratus by the San
Bernardino County Fire Chiefs Association and the California Department of
Forestry and Fire Protection for 30 years of exemplary service to Fire and EMS.

 Academic Achievement – Fire Captain James Bender and Fire Prevention
Specialist Nikki Haslam-Wright completed Bachelors of Science degrees in
Management.

 Healthy Firefighters USA Outstanding Fitness Award – Cody Young, Chad
Vogtman, Tommy Stephenson, Jeremiah Mendoza, Jacob Huber, Greg Tucker,
Craig Hauenstein, Scott Davisson, Joseph Gerardi, and Joseph Boehm.

 The Rialto Fire Department Explorers took first place in the Annual Los Angeles
County Explorer competition for the second year in a row. They also took first
place in the Inland Empire Explorer completion.

 Cal ID Awards – Parking Enforcement Officer Melissa Costantino, Officer
David Padilla

The City of Rialto, California 32 Annual Budget FY 2017 -18

Department Awards & Recognition

 Explorer Competition NO INFO because the event is not until Saturday June
10th

 Life Saving Award: Sergeant Chris Hice and Officer Steven Wright
 Rialto Network and Rialto Police Department Partnership – 11th year of

collaborating to host the Every 15 Minutes Program (Eisenhower High
School was the hosting)
 3rd Annual Earp Challenge Military Academy Award – Pride Platoon Class 13
 2016 Officer of the Year – Officer Erica Duque
 2016 Non-Sworn Employee of the Year – Senior Office Specialist Deidre
Cook
 2016 Dispatcher of the Year – Kourtney O’Brien

 Chuck Mc Gowan Volunteer of the Year awarded to Police Volunteer Richard
Montano

 In an effort to support and raise awareness in the fight against cancer, the
Police Department participated in the No Shave November campaign and
raised $5000 for the cause.

 Mothers Against Drunk Driving (MADD) State Award -Officer Gaspar

 Rialto Network Awards
o 1st Place: Community Pulse for Best Talk Show Under $400k

o 1st Place: Every 15 Minutes: Bloomington Christian H.S. for Best use
of Sound/Sound Design

o 1st Place: Every 15 Minutes: Bloomington Christian H.S. for Best
Every 15-Minutes.

o 1st Place: Pulso de la Comunidad for Best Use of Set Design

o 2nd Place: National Night Out Annual Chili Cook Off! PSA for Best
Use of Animation or Motion Graphics

o 3rd Place: Bud Bender | Playing on a Dreamfield for Documentary -
Profile Under $400K

o 3rd Place: Class of 2016: Be Safe! - City of Rialto/MADD for Public
Service Announcement Under $400K

o 3rd Place: Your Rialto for News – Monthly

The City of Rialto, California 33 Annual Budget FY 2017 -18

Grant Funding

 $214,200 - California Department of Rialto Metrolink Parking Lot
Transportation (Caltrans) Highway Expansion Project.
Safety Improvement Program (HSIP)
Cycle 6 to upgrade and improve an  $800,000 - Local Transportation
existing traffic signal at Baseline Funds through SANBAG for the Rialto
Road/Acacia Avenue - funds to be Metrolink Parking Lot Expansion
used for construction. Project.

 $66,397 - Federal Highway  $1,450,000 – from Cycle 1 of the
Administration – National Highway
Performance Highway Bridge California Department of
Program through the California
Department of Transportation for Transportation (Caltrans) Active
Preliminary Engineering on the
Riverside Avenue Overhead at the Transportation Program (ATP) - for a
Union Pacific Railroad Project.
Safe Routes to School Program.

 $629,000 – from Cycle 2 of the

 $359,960 - SAFETEA-LU DEMO California Department of
Grant from the California Department
of Transportation for Preliminary Transportation (Caltrans) Active
Engineering on the Riverside Avenue
Overhead at the Union Pacific Transportation Program (ATP) - for
Railroad Project.
the Etiwanda Corridor Project.

Project will improve sidewalks and

 $446,200 - California Department of construct bike lanes to improve
Transportation Safe Routes to pedestrian and bicyclists’ safety.
School (SR2S) Cycle 10 Program
Grant for the Rialto Avenue/Cedar  $300,000 - Transportation
Avenue improvements including Development Act (TDA) through San
sidewalks and pedestrian crossings. Bernardino Associated Governments
for the Etiwanda Corridor Project.
 $900,000 - California Department of
 $196,200 – from the Highway Safety
Highway Safety-State-Local Improvement Program to install 4.5
miles of Class II bike lanes along
Partnership Program Grant for Merrill Avenue from western to
eastern city limits.
widening Ayala Drive from SR210 to
 $900,000 – from the Caltrans HSIP-
Baseline Road. Cycle 8 to upgrade traffic signal at
various locations to include left turn
 $3,345,600 - U.S. Department of phasing.
Transportation, Federal Transit
Administration (FTA) for the Metrolink
Parking Lot Expansion Project.

 $1,500,000 - Proposition 1B, Public

Transportation Modernization,  $1,057,320 – from the Caltrans HSIP-
Cycle 8 to install raised center
Improvement and Service median, ADA curb & ramp at Baseline
Road between Willow Avenue and
Enhancement Account (PTMISEA) Meridian Avenue.

Funds, through SANBAG for the

The City of Rialto, California 34 Annual Budget FY 2017-18

 $70,000 – Southern California Grant Funding
Association of Governments (SCAG)
and SBCTA are partners with Rialto Beverage Container Recycling
hosting the Right on Rialto Event that Payment Program to promote
will advance local active beverage container recycling.
transportation initiatives.
 $106,839 - from the U.S. Department
 $291,000 – from the Environmental of Housing and Urban Development
Protection Agency for water system (HUD) – for Sidewalk, Curb, Gutter
improvements. and ADA Improvements.

 $3,565,400 – from the California  $79,995 - National Recreation and
Energy Commission to BDP Parks Association – to cover the cost
Technologies, LLC to host a of providing playground equipment at
demonstration project for an Bud Bender park.
alternative treatment technology in
the Rialto Wastewater Treatment  $30,000 - National League of Cities -
Plan Facilities. 2016-2017 Cities Combating Hunger
through Afterschool and Summer
 $233,580 - from the California Meal Programs (CHAMPS) to
Department of Resources Recycling promote the development and
and Recovery (CalRecycle) - for implementation of Afterschool and
Rubberized Asphalt Concrete road Summer Meal Programs in the
resurfacing. community.

 $54,000 – from Caltrans Systemic  $19,321 - Homeland Security Grant
Safety Analysis Report Program Program (HSGP). Funding for joint
(SSARP) to develop an SSAR on active-shooter training for fire and
evaluating the City’s entire roadway police department.
network three years of collision data
to identify intersections and roadway  $23,800 - Emergency Management
corridors that have high Performance Grant. Funding to
concentration of collision to identify replace generator at Fire Station 201.
safety projects for future funding.
 $23,761 - Homeland Security Grant
 $28,290 - from the California Program. Funding for additional
Department of Resources Recycling radios and satellite telephones.
and Recovery (CalRecycle) - for the
Oil Payment Program to assist in  $159,580 - from California Citizens’
proper disposal of used motor oil and Option for Public Safety (COPS)
oil filters. Grant. This is a state grant to be
specify used for front-line municipal
 $26,592 - from the California police services. The Police
Department of Resources Recycling Department intends to use the funds
and Recovery (CalRecycle) - for the for technology, communications, and
safety equipment.

The City of Rialto, California 35 Annual Budget FY 2017-18

 165,294 - from California Citizens’ Grant Funding
Option for Public Safety (COPS)
Grant. This is a state grant to be Emergency Management Agency.
specify used for front-line municipal Grant to fund a Mobile Field Force
police services. The Police training exercise.
Department intends to use the funds
for technology, communications, and  $625,000 – COPS Hiring Program
safety equipment. from the U.S. Department of Justice
Office of Community Oriented
 $32,213 - Edward Byrne Memorial Policing Services. Grant pays a total
of $125,000 of an Officer’s three year
Justice Assistance Grant (JAG) from salary for five newly hired Officers
who are Veterans.
the U.S. Department of
 $250,000 – COPS Hiring Program
Justice/Bureau of Justice Assistance. from the U.S. Department of Justice
Office of Community Oriented
The Police Department will use JAG Policing Services. Grant pays a total
of $125,000 of an Officer’s three year
Funds to purchase computers for first salary for two newly hired Officers to
backfill positions due to newly
responder vehicles. assigned School Resource Officers.

 $38,572- Edward Byrne Memorial  $468,000 - California Gang
Reduction, Intervention, and
Justice Assistance Grant (JAG) from Prevention (CalGRIP) Program from
State of California Board of State and
the U.S. Department of Community Corrections. Grant funds
one Officer’s Salary and a community
Justice/Bureau of Justice Assistance. based intervention, prevention and
suppression efforts throughout the
The Police Department will use JAG City of Rialto.

Funds to purchase desktop  California Department of Public
Health - 100 children’s life vests for
computers and computer equipment. the City of Rialto Drowning
Prevention Program. 500 smoke
 $194,000 - from the California Office alarms to be placed in residences
of Traffic Safety for the Selective where children reside.
Traffic Enforcement Program. This
program funds a variety of law Total Grant Funding:
enforcement operations and traffic
safety programs on an overtime basis $18,700,960*
for first line officers and supervisors,
training for Traffic Officers, a Collision *The intent of the list above is to show the total amount of grant
Reconstruction System, and needed funding entering the 2017-2018 fiscal year including grants to be
Checkpoint supplies. awarded in fiscal year 2017-2018 and funding available from
grants awarded in previous years.
 $20,165 - Homeland Security Grant

Program from the U.S. Department of

Homeland Security/Federal

Emergency Management Agency.

Grant to fund an Active Shooter

training exercise.

 $30,681 – Homeland Security Grant

Program from the U.S. Department of

Homeland Security/Federal

The City of Rialto, California 36 Annual Budget FY 2017-18

Summary of Special Events

Event Month Host Departments Estimated
Involved City Staff
Costs for 2017/18
Farmers’ Market Weekly City Clerk/Healthy CC Based on 2016/17
Rialto Dept. Actual
PD 5K Run/Walk January Police Dept. PW, Rec, PD
State of Women March Mayor/City Clerk PW, CC Costs
Passport Day March City Clerk CC $ 6,500
Spring Eggstravaganza April Recreation PW, Rec, PD, FD
Drowning/Safety Fair April Kiwanis Rec, PD, FD $ 6,500
Earth Day April Public Works PW, PD $ 9,000
MDA Fill the Boot April MDA/Fire Fire $ 4,800
Cinco de Mayo/5K Run May Lions Club Rec, PD $ 5,500
Memorial Day May City Clerk PW, PD, CC $ 3,000
Summer Series May-August Recreation Rec, PW, PD, FD $ 7,500
Taste of Rialto June Chamber PW
Run Whatcha Brung June Rotary PW, Rec, PD, FD **
MADD 5k/3k Walk CC, Rec, PD, FD $ 2,468
4th of July July Recreation PW, Rec, PD $ 7,500
National Night Out August Police Dept. PW, Rec, PD, FD, $ 9,000
CC $ 3,000
Bike Ride & Rodeo August City Clerk/Healthy PW, Rec, PD, CC $ 25,000
Rialto $ 4,000
Family Festival September City Clerk PW, Rec, PD, CC $ 30,000
Fire Open House October Fire Dept. Rec, PD, FD
Run Around the Rocks October Mayor/CALCIMA FD $ 25,000
Halloween Hi-Jinks October Recreation PW, Rec, PD, FD
Hall of Fame November Recreation Rec $ 6,700
Las Colinas Toy Drive December Fire Fire
Tree Lighting Ceremony December Recreation PW, Rec, PD $ 22,000
Holiday Parade December Recreation PW, Rec, PD, FD $ 3,300
$ 1,500
$ 12,500
$ 3,800
$ 50
$ 3,000
$ 17,500

Estimated Total $ 219,118

*CC= City Clerk, PW=Public Works, Rec= Recreation Center, PD= Police Department, FD= Fire Department

**(Members of the Fire Department do this during their off-duty time or while on-duty, but when on-duty, remain

available to respond to any Fire Department service call. The cost to the City is nominal).

Farmers’ Market - Encourages healthy eating habits among City residents by offering, for sale,
fresh and healthy farmer-direct produce and other foods.

PD 5K Run/Walk - The City of Rialto has declared January 31st of each year will be "Rialto

Police Officer Remembrance Day" to honor those Rialto police officers who have made the

ultimate sacrifice in the line of duty. The 5K Run/Walk is a part of a larger effort toward building
a permanent memorial to honor Rialto’s fallen officers.

The City of Rialto, California 37 Annual Budget FY 2017-18

Summary of Special Events

State of Women Conference - Celebrates Women’s History Month with a conference that
recognizes women for their public service and leadership. Highlights work being done on behalf
of women, support of women and their commitment and work in the community.

Passport Day –On this day, U.S. citizens can forgo the required appointment and simply stop by
the Rialto City Clerk’s office to sign up or renew their passport. Convenient Saturday hours ensure
most parents don't have to miss work to apply for their child's U.S. passport.

Spring Eggstravaganza – Held in partnership with the Rialto Branch Library. The event includes
free spring crafts, an egg hunt, games and giveaways. This event has no religious significance, it
provides an opportunity for Rialto families to celebrate the coming of spring as a community.

Drowning Prevention/Safety Fair – Co-sponsored by the Kiwanis Club of East Rialto, takes
place at the Tom Sawyer Swimming pool, as public education and drowning prevention initiative.
The program educates the public on safety at home, reducing water related fatalities and near
drowning incidents. Includes car seat safety checks and vendors providing safety information.

Earth Day – The City of Rialto in hosting this annual event, provides public outreach to assist in
a community clean-up. The event provides an opportunity to increase public awareness of
environmental issues and the efforts being spear-headed by and on behalf of the City of Rialto.

Muscular Dystrophy Association Fill the Boot Drive – Members of the Fire Department collect
funds from drivers and pedestrians at designated areas in the City in firefighter boots. The funds
are donated to the Muscular Dystrophy Association. (Members of the Fire Department do this
during their off-duty time or while on-duty, but when on-duty, remain available to respond to any
Fire Department service call. The cost to the City is nominal).

Cinco de Mayo/5K Run - The Rialto Lions Breakfast Club, is scheduled to host a 5K fundraiser
supporting the club’s mission to provide assistance for the blind and those in need of vision care.
The community comes together allowing the club to spread the word for their cause.

Memorial Day – Held at the Rialto Park Cemetery, this event commemorates those who died in
active military service. Officially observed on the last Monday in May.

Summer Series – This event is designed to keep children entertained in a safe, affordable,
productive environment during the summer months while school is out. There are movies and
concert at the park, and a variety of activities, including pool activities from May through August.

Taste of Rialto – Is provided by the Chamber of Commerce to promote the business community
in the City of Rialto. This event is scheduled to be held inside the Downtown Park on the northeast
corner of Rialto Avenue and Riverside. The event provides an opportunity for the community to
explore what the city has to offer in regards to food and drink.

Run Whatcha Brung – Is co-sponsored by the Rialto Rotary. This event offers a cruise night on
Friday and show and shine cruise on Saturday. The event features a car show, music, and a cruise
along Route 66, as well as Downtown Rialto.

Mothers Against Drunk Driving 5K Run/Walk – This 5K Run/Walk is a part of a larger effort
toward building a permanent memorial to honor Rialto’s fallen officers. The monies raised from
the run help fund the memorial and future Remembrance Day events.

The City of Rialto, California 38 Annual Budget FY 2017-18

Summary of Special Events

4th of July – Is the City of Rialto’s celebration of America’s Independence Day. This event
provides an opportunity for families to participate in fun activities during the day and fireworks at
night. This event gives families a safe environment to enjoy fireworks.

National Night Out - Nationwide community-police awareness-raising event in the United States.
Neighborhood Watch groups come together one night a year with Police, Fire, School and City
officials, to celebrate the concerted effort in fighting crime. Promoting police-community
partnerships and neighborhood camaraderie to make our neighborhoods safer, better places to live.

Bike Ride and Rodeo - For children ages 3-12, this event offers a bike safety class, helmet checks,
games, raffles, refreshments, and a bike ride. Providing an opportunity for the community
participants to learn, practice, and demonstrate bicycle safety and handling skills in a fun,
noncompetitive atmosphere. The City takes this opportunity to exercise community-wide health
and fitness initiatives, and promotes the importance of alternative modes of transportation.

Family Festival – The Human Relations Commission recognizes and celebrates the diversity of
our community, promoting healthy lifestyles through food, fitness and fun. Rialto families and
residents interact with onsite resources available through national, state, local and City
representatives, businesses, and others that affect the lives of those living in and around Rialto.

Fire Department Open House – Provides information on how to prevent and survive a fire, and
offers an opportunity to showcase the Rialto fire station(s) and its personnel to the community.
Visitors learn positive fire safety actions, important safety messages, kids enjoy activities, bounce
houses, demonstrations, various vendors and a Pancake Breakfast to support Explorer Post 299.

Run Around the Rocks - A 5K & 10k Run/Walk, along the Cemex Lytle Creek aggregate quarry,
promoting the benefits of healthy living among our school age population. Students see and learn
about the active mining at the site of the quarry. Participants in the race get an up-close look at
big equipment used to mine the sand and gravel for roads, bridges, sidewalks and buildings.

Halloween Hi-Jinks – Rialto families, residents, and children participate in Halloween activities,
at a family oriented Festival providing a safe alternative to traditional “trick or treating,” filled
with food, games, activities, pictures, costumes, giveaways and lots of candy.

Sports Hall of Fame - A dynamic recognition ceremony honoring athletes who have brought
honor and fame to the City. Recognition ranges from individuals to championship teams.

Las Colinas Toy Drive –The Fire Department assists in the distribution of toys donated to children
in need in the north area of the City. The program benefits children in the community whose
parents cannot afford to provide them with toys. The program allows members of the community
to meet members of the Fire Department in a non-emergency, positive environment and understand
the services they provide to the City. (Members of the Fire Department do this while on-duty, but,
remain available to respond to any Fire Department service call. The cost to the City is nominal).

Tree Lighting Ceremony - The City’s unofficial kick off to the holiday season. This event
sometimes doubles as an opportunity to help the less fortunate, visitors to the event are encouraged
to bring a canned food item as a part of a larger canned food and toy drive to help the less fortunate.

The Holiday Parade – A traditional hometown parade highlighting life in the City of Rialto. The
parade celebrates the holiday season by featuring every age group imaginable, youth, adults, and
seniors. Providing a showcase of Rialto schools, bands and drill teams, elected officials, dance
teams, businesses, sports teams, service organizations and others. After the parade, participants
and spectators attend a Vendor Fair filled with musical performances, food vendors and exhibits.

The City of Rialto, California 39 Annual Budget FY 2017-18

Summary

 AVAILABLE RESOURCES SUMMARY BY FUND
 GENERAL FUND FINANCIAL OVERVIEW
 GENERAL FUND EXPENDITURE SUMMARY
 ALL FUNDS REVENUE SUMMARY
 ALL FUNDS EXPENDITURE SUMMARY

The City of Rialto, California 40 Annual Budget FY 2017-18

City of
Budget Yea
Available Resource

Adjusted FY16/17
6/30/2016
Fund 1 End Avail Bal Revised Revised
No.
Revenues Expenditu
General Fund
010 General Fund 30,292,401 94,458,634 97,599,
030 Working Capital Reserve 24,944,206 44,000 97,599,
55,236,607
Special Revenue Funds 94,502,634
200 Measure I
201 Measure I (2010-2040) 309,045 1,300 306,
202 Gas Tax 4,253,727 2,606,687 7,035,
204 Transportation Development Fund 2,097,918 3,518,
205 Fire Grants 4,180
207 Traffic Safety Prop. 1B (State Bonds) (330,000) 330,000 89,
209 Fire Ground Emergency Transportation 190,389 98,777
210 Park Development - 520,
211 PEG Funding 200 804,
212 Waste Management 788,981 1,740,197 288,
213 Local Law Enforcement Grant 751,943 438,400 4,653,
214 Citizens Opt. Public Safety 432,601 101,900
216 Asset Forfeiture Set Aside 3,325,956 37,
217 Fire Development 2,120,845 393,
218 Police Development 8,573 32,213
219 Asset Forfeiture 182,376 10,
220 Open Space Development 185,489 213,009 811,
221 Traffic Safety Grant 470,040 70 444,
222 Transportation Enhancement Grant 799,863 590,
223 Major Grant Projects 2,704,335 2,335,200 1,000,
224 Landscape & Lighting District No. 2 1,053,917 278,600 459,
225 Landscape Maintenance District 132,754 7,900 108,
490 Street Lighting Asst. District (135,677) 354,600 8,580,
226 AB 2766 SCAQMD 2,314,577 361,916 1,062,
230 Drainage Development 499,303 244,479 773,
233 Neighborhood Stabilization Program 308,452 4,509,
234 Community Dev. Block Grant 324,384 8,671,119 175,
239 Neighborhood Stabilization Program 3 283,345 973,347 16,562,
241 Neighborhood Stablization Prg-Prog Income 5,797,211 553,950
243 Brownfield Clean Up WDJL Site Grant 2,699,
244 Neighborhood Stablization Prg 3-Prog Income - 4,185,592 163,
245 PERS Property Tax (1,955,768) 154,767 540,
246 Dev. Svcs- Housing Program
247 Police Grants 352 4,635,300 651,
250 Traffic Development 172,180 581,490 1,582,
270 General Facilities Development 13,940,
275 Library Facility Development 17,296 4,636,793
282 Business Improvement District 286,125 664,442 34,

Total Special Revenue Funds - 1,471,588 72,349,
626,162 -
(279,462)
5,472,962 1,300
990,755 200

- 888,343
2,954 1,280,922
6,997,255
29,989,518
423,100
-
250

49,483,769

41

f Rialto
ar 2017-2018
e Summary by Fund

2017 Revised FY17/18 2018 Projected
d Budgeted 6/30/2017 6/30/2018
ures 2 Depreciation End Avail Bal Projected Projected Budgeted End Avail Bal

Revenues Expenditures 2 Depreciation

,013 - 27,152,021 89,973,830 82,105,460 - 35,020,391
- - 25,072,206
- 24,988,206 84,000 - - 60,092,597
,013
- 52,140,227 90,057,830 82,105,460

,997 - 3,348 4,200 - - 7,548
,996 - (165,582)
,741 - (175,582) 1,923,000 1,913,000 - (1,345,843)
--
- - (1,416,643) 2,376,630 2,305,830 - 199,590
,575 - 200
- -- - - 1,834,061
- - 977,766
,117 - 199,590 - - - 181,014
,977 - 843,122
,287 - 200 - - - 3,358
,300 - 5,044
,428 - 2,009,061 150,000 325,000 - 138,049
,141 - 2,297,720
,000 - 385,366 592,400 - - 934,449
,260 - 1,984,724
,314 - 246,214 105,200 170,400 - 692,817
,411 - 35,411
,000 - 793,501 2,474,890 2,425,269 -1
,259 - 2,405,460
,801 - 3,358 - - - 377,434
,237 - 89,040
,265 - 2,244 2,800 - - 532
,937 - 306,409
,973 - 175,559 2,490 40,000 - (2,560,246)
,133 - 581,490
,737 - 1,993,980 305,000 1,260 - (18,143)
- 501,028
- - 634,149 300,300 - - 1,105,849
,167 - 17,296
,766 - 2,121,824 37,900 175,000 - 291,325
,519 --
- 408,517 284,300 - - 908,926
- - (580,775)
- - 35,411 - - - 1,368,575
200 - 1,795,755
,657 - 1- - - 49,000
,234 - 2,954
,943 - 2,405,460 1,200,000 1,200,000
,000 - 15,265,358
- - 410,385 619,935 652,886
250
- 88,465 828,040 827,465
,624
- 3 1,117,008 1,116,479

- 262,979 120,700 77,270

- (6,130,226) 3,570,200 220

- 581,490 - -

- (18,143) 1,573,885 1,573,885

- 501,028 - -

- 1,103,249 2,600 -

- 17,296 - -

- 287,425 3,900 -

- - 200 200

- 862,848 112,000 65,922

- (580,775) - -

- (1,470,725) 5,523,600 2,684,300

- 1,379,855 415,900 -

- - 49,000 -

- 2,954 250 250

- 7,123,666 23,696,328 15,554,636

1