Title
Year End Appropriation Resolution amending the 2025 Adopted Operating Budget by taking the following actions: transferring $2.1 million from the General Fund contingent reserve and $4.4 million from other General Fund underspending to meet projected shortfalls in agency budgets; appropriating $1.0 million for a shelter endowment, funded through transfers of agency underspending and contingent reserve; making other transfers of appropriations within and across agency budgets; and making revenue adjustments to non-General Fund agencies based on third quarter projections; amending the 2025 Adopted Capital Budget by taking the following actions: appropriating funding from non-borrowing sources to various capital projects; transferring budget authority across major projects; and transferring general obligation borrowing proceeds across capital projects to comply with federal arbitrage rules; and authorizing the Mayor and Clerk to execute an agreement for a shelter endowment
Fiscal Note
The proposed resolution amends the 2025 adopted operating budget in order to make technical adjustments within various agency budgets. The amounts proposed in the year-end appropriation are based on actual expenditures through September of 2025. Major changes in the resolution include: 1) transferring $1.2 million from direct appropriations to multiple agencies for compensated absence escrow costs, 2) transferring $6.5 million in the General Fund budget, including funding in the contingent reserve, underspending in centrally budgeted compensated absence escrow benefits, and underspending in various agencies, to cover projected deficits in multiple agencies, 3) transferring $1.0 million from agency underspending and the contingent reserve to fund a grant to an external partner to establish a shelter endowment, 4) authorizing intra-departmental transfers within multiple agencies, 5) amending the budget for multiple non-General Fund agencies, and 6) amending the 2025 adopted capital budget to make technical adjustments of funding across projects and comply with arbitrage requirements under federal tax law.
Expenditure Restraint Incentive Program (ERIP)
Under the State of Wisconsin Expenditure Restraint Incentive Program (ERIP), the City must limit the growth in its General Fund budget over the prior year, excluding debt service, to rate of inflation plus 60% of the net new construction factor in order to qualify for a state aid payment of approximately $7 million to $9 million. The mid-year budget resolution (Legistar File 89041) appropriated $2.3 million in General Fund unassigned balance for carryforward encumbrances and to increase funding for various agencies to make technical adjustments and address projected deficits. The mid-year appropriation increased the 2025 budget to the maximum allowable level to continue qualifying for an ERIP payment and increased the base amount for establishing the maximum allowable 2026 budget.
This year-end budget resolution proposes additional adjustments to agency budgets to address projected deficits and other prior obligations. As the 2025 budget is already at the maximum expenditure level to qualify for ERIP, the resolution cannot make any additional appropriations from fund balance to cover additional expenditures. Instead, the resolution proposes transferring the contingent reserve and reallocating underspending from various agencies to fund projected deficits and obligations. These transfers are detailed in the following sections.
Compensated Absence Escrow
The resolution seeks approval to authorize $1,193,900 in transfers from Direct Appropriations to agency budgets to cover projected deficits related to the cost of compensated absence escrow. The 2025 Adopted Operating Budget includes $4,300,000 for compensated absence escrow payments made from the General Fund. Through the 3rd Quarter, $2,725,147 has been paid out by General Fund agencies. This resolution recommends transferring funds to agencies where the compensated absence escrow amount is contributing to a deficit in the agency’s personnel budget.
Transfers from Direct Appropriations and Agency Underspending to Cover Agency Deficits
The Finance Department completes a year-end budget projection for all City agencies. This exercise identifies projected surpluses and deficits at the agency level. This resolution proposes transferring $6.5 million to agencies with projected deficits so they can complete the year without interruptions to core operations. The funding sources for these transfers include the remaining budget for compensated absence escrow ($3.1 million), the centrally budgeted contingent reserve ($2.1 million), and agency underspending in Information Technology ($1.2 million) and the Assessor’s Office ($100,000). Agencies that are facing a deficit that will receive transfers include Civil Rights ($176,500), Clerk ($13,100), Direct Appropriations Revenue Sharing Payments ($164,000), Employee Assistance Program ($37,900), and Metro Transit ($5.75 million). The resolution will also increase inter-departmental billings and charges for Fleet Services to account for a deficit within the internal service agency.
The 2025 adopted budget includes a General Fund subsidy to Metro Transit of $18.4 million. The mid-year appropriation resolution (Legistar File 89041)projected a deficit of $4 million and increased the subsidy by $1.4 million. The year end projection estimates Metro will be in a deficit of $5.9 million due to higher than budgeted personnel expenses ($2.5 million), primarily related to higher overtime costs and associated benefits; higher than budgeted purchased services expenses ($850,000), primarily related to costs for electricity, State excise taxes on electric vehicle charging, and paratransit costs; and lower than budgeted revenues ($2.4 million) based on partner revenues and trends for passenger fares. The total General Fund subsidy for Metro Transit in 2025 will be $25.6 million if this resolution is adopted. The 2026 budget for Metro Transit includes a General Fund subsidy of $25.0 million. It is expected that Metro Transit will be able to manage their 2026 budget without the same level of significant budget amendments as required in 2025.
Fleet Services Appropriation and Inter-Departmental Billings and Charges
Fleet Services is projecting to be overbudget in expenditures by $315,000 from salaries ($150,000) due position reclassifications, severance payments, and other factors, and supplies ($225,000) due to increased costs for equipment. This expenditure deficit is partially offset by underspending in purchased services. In addition, the agency overestimated its revenues for trade-in allowances ($110,000). This contributes to a net agency deficit of $425,000. The resolution proposed covering these costs by increasing inter-departmental billings.
This resolution increases Fleet’s budget by $425,000. Inter-departmental (ID) billings to General Fund agencies will increase by $315,000 and user agency budgets for ID charges will increase by a corresponding amount. In addition, this resolution increases Fleet Service ID billings to Parking by $110,000, with a corresponding increase in Parking’s budget for ID charges.
Transfers from PCED Agency Underspending for a Shelter Endowment
In 2021, the Common Council adopted a plan to utilize $2.0 million in federal American Rescue Plan Act (ARPA) funding (Legistar File 65935) to fund an endowment for permanent shelter operations (“shelter endowment”). This plan was adopted prior to the publication of the U.S. Treasury’s ARPA Final Rule, which indicated creating an endowment was not an eligible use of ARPA funds. In 2023, the City reallocated ARPA funds for the shelter endowment to other unsheltered homeless support initiatives. The 2023 budget also allocated $2.0 million of General Fund monies to fund a shelter endowment to replace ARPA funds. This funding was not utilized in 2023 and lapsed into the General Fund balance.
The City’s first purpose-built shelter is currently under construction and scheduled to open in 2026. An independent group, Shelter Friends of Dane County, Inc., was established in 2025 to support fundraising efforts for shelter operations. As noted in the ERIP section of the fiscal note, the City’s 2025 budget is at the maximum expenditure limit and there is not sufficient room to allocate the full $2.0 million commitment in 2025. However, there is underspending in multiple Planning, Community, and Economic Development (PCED) agencies that can be transferred to fund the shelter endowment. This resolution would transfer $930,000 in underspending in PCED agencies and $70,000 from the contingent reserve to appropriate $1.0 million for a shelter endowment, authorize disbursing funds as a grant to the Shelter Friends of Dane County, Inc., Madison Community Foundation, and/or their fiscal operators or agents, and authorize an agreement with the Shelter Friends of Dane County, Inc., Madison Community Foundation, and/or their fiscal operators or agents, for the use of the funds.
Intra-Agency Transfers (All Funds)
The resolution seeks approval to authorize $521,000 in transfers across major expenditure categories within agency budgets to address areas where expenditures exceed budgeted amounts in those categories. These transfers are net neutral within agency budgets.
Other Appropriations and Agency Revenue Adjustments
The resolution increases the budget authority in multiple non-General Fund budgets by $7.4 million in revenues and expenses for CDA Redevelopment, Community Development Division (CDD) CDBG Fund, Golf, Monona Terrace, and Water. The proposed increases are funded through agency revenues, grants, or other sources. All proposed transfers and adjustments are net neutral within each fund. Proposed increases include:
• CDA Redevelopment Fund: Appropriate $4.4 million in TID 46 proceeds that were approved as a grant to CDA through Legistar File 86170 but not reflected in the CDA’s budget.
• CDBG Fund (Fund 1205): Reauthorize $424,100 in federal EHH funds and $1.8 million in CINH funds that were approved in the 2024 budget and were not carried forward in the 2025 budget
• Golf: Increase agency revenues and expenses by $175,000 based on higher than budgeted activity
• Monona Terrace: Increase agency revenues and expenses by $365,000 based on higher than budgeted activity
• Water: Increase agency revenues and expenses by $220,000 based on higher than budgeted activity
Capital Budget: Various Projects
The proposed resolution amends the adopted 2025 capital budget by appropriating non-general obligation funding sources and related expenditures to various projects, and authorizing transfers of budget authority across projects. The proposed changes reflect current 2025 scope and schedule adjustments.
• Engineering - Major Streets: Transfer $472,734 assessment budget from Reconstruction Streets to Pavement management based on actuals.
• Library: Appropriate $550,000 from Library Fund balance to the Imagination Center at Reindahl Park capital project for additional collections start-up costs.
• Parks: Transfer $266,700 in proceeds from a land sale from Park Land Acquisition to Park Land Improvements
• Water: Appropriate $1,040,000 in expense depreciation and $260,000 in reserves to increase the budget for the water mains program.
Capital Budget: Arbitrage
In advance of the City’s annual general obligation debt sale each fall, agencies are asked to review all capital projects to ascertain the amount of borrowing proceeds needed. Through this exercise, agencies identified projects that will not spend down their full authorized budget within time frames required for arbitrage compliance under federal tax law. As a result, technical adjustments are requested to transfer funding across multiple projects. The transfers do not impact the total authorized budget for any capital project or program.
Body
WHEREAS, the 2025 Adopted Operating Budget includes $4,300,000 within Direct Appropriation for compensated absence escrow payments associated with payments made by the City for health insurance benefits upon the retirement of employees; and,
WHEREAS, General Fund agencies have paid out $2,725,147 in Compensated Absence Escrow payments through the third quarter of 2025; and,
WHEREAS, some agencies are able to absorb the cost of compensated absence escrow within their budget while others require a transfer from Direct Appropriations to cover these costs; and,
WHEREAS, the Finance Department completes a year-end budget projection, in collaboration with agency staff, to identify potential surpluses or deficits within each agency budget; and,
WHEREAS, the 2025 year-end projection identified $6.5 million in agency deficits that would need to be addressed to ensure agencies have sufficient funding to maintain operations through the end of the year; and,
WHEREAS, there is sufficient budget available in various accounts, including the contingent reserve, Direct Appropriations compensated absence escrow account, and underspending in other agencies to cover the projected deficits through inter-departmental transfers; and,
WHEREAS, Fleet Services is projecting a deficit of $425,000 in salaries ($150,000), supplies ($225,000), and agency revenues ($110,000), and a surplus in purchased services ($60,000); and,
WHEREAS, Fleet requires an additional $425,000 in budget authority for these expenses and to cover its revenue shortfall, which can be offset by increasing the budget authority for inter-departmental billings to agencies; and,
WHEREAS, other agencies require increased budget authority for corresponding inter-departmental charges within agency budgets, which are described in other sections of this resolution related to transfers within the General Fund and Parking fund; and
WHEREAS, in 2021, the Common Council adopted a plan to utilize federal American Rescue Plan Act (ARPA) funding (Legistar File 65935) to address community needs, which included a plan to use $2.0 million to capitalize an endowment for permanent shelter operations (“shelter endowment”). This plan was adopted prior to the publication of the U.S. Treasury’s ARPA Final Rule, which indicated creating an endowment was not an eligible use of ARPA funds; and,
WHEREAS, the 2023 adopted budget reallocated the $2.0 million in ARPA funds designated for the shelter endowment to the Unsheltered Homeless Support program to fund operations at the City’s temporary shelters; and,
WHEREAS, the 2023 adopted budget also included a one-time General Fund allocation of $2.0 million for a shelter endowment to replace ARPA funds. The General Fund allocation was not expended within the fiscal year and lapsed into the General Fund balance as assigned fund balance; and,
WHEREAS, the 2025 Adopted Operating Budget, as amended by the Common Council in the mid-year appropriation resolution (Legistar File 89041), is at its maximum expenditure limit under the State Expenditure Restraint Incentive Program (ERIP); and,
WHEREAS, there is underspending across multiple Planning, Community, and Economic Development (PCED) agency budgets that can be reallocated to make an appropriation to establish expenditure authority for the shelter endowment; and,
WHEREAS, the General Fund-supported portions of Planning, Community, and Economic Development (PCED) agency budgets are projected to underspend their authorized budgets in various major categories by $930,000 by the end of 2025 due to position vacancies and other underspending in non-personnel categories, and there is $70,000 available in the contingent reserve for a total of $1.0 million; and,
WHEREAS, the $1.0 million can be used to fund a grant to Shelter Friends of Dane County, Inc., Madison Community Foundation, and/or their fiscal operators or agents, to capitalize a shelter endowment to support the ongoing operations of the Bartillon Permanent Shelter, scheduled to open in 2026; and,
WHEREAS, if the resolution is adopted and the City allocates $1.0 million for a shelter endowment in 2025, there would be a remaining commitment to fund an additional $1.0 million in future budgets to fulfill the original appropriation of $2.0 million; and,
WHEREAS, various City agencies require intra-agency transfers within their budget to cover projected deficits in major expenditure categories and account for other technical changes based on 3rd quarter projections; and
WHEREAS, various non-General Fund agencies require increasing their total budgets by a total of $7.4 million by appropriating funding from agency revenues, grants, and federal sources; and,
WHEREAS, Legistar File 86170 amended the Economic Development Division budget and authorized granting TID 46 funds to CDA for the project at 5546 Element Way, but did not amend the CDA budget to reflect the increase in funds; and,
WHEREAS, the Community Development Grant Fund (Fund 1205) requires an increase of $424,100 in EHH funds awarded through the Wisconsin Department of Administration that were unintentionally excluded from the Community Development Division’s 2025 Adopted Operating Budget to accommodate the funding’s 2024-2025 performance period; and,
WHEREAS, the CDBG Fund (Fund 1205) requires an additional reauthorization of $1.8 million for use in the Capital Improvements for Non-Profit Housing (CINH) Program originally authorized via Legistar Files 85520 and 86219 in late 2024; and,
WHEREAS, the Golf enterprise is anticipating higher than budgeted revenues from greens fees and facility rentals, and projects higher associated expenses for personnel, supplies, and purchased services; and,
WHEREAS, Monona Terrace is anticipating higher than budgeted revenues from facility charges, and projects higher associated expenses for personnel and supplies; and,
WHEREAS, Water Utility is anticipating higher than budgeted revenues from miscellaneous revenues, and projects higher than budgeted expenses for benefits, primarily due to compensated absence escrow costs; and
WHEREAS, various agencies require capital budget amendments to appropriate additional funds or to transfer budget authority across major; and,
WHEREAS, Engineering - Major Streets had a resurfacing project for Segoe/ Sheboygan (Munis Project # 14215), which had a large assessable amount that exceeded the existing budget within the major project (Pavement Management) by $472,734. Engineering - Major Streets has sufficient assessment budget within the Reconstruction Streets program. A transfer of budget authority across projects would allow the agency to allocate the expenses and revenues associated with the Segoe/ Sheboygan project without increasing their overall expenditure authority; and,
WHEREAS, the Library’s original budget for collections at the Imagination Center at Reindahl Park (ICRP) was developed several years ago, and Library projects that actual costs will be higher than budgeted by $550,000. There is sufficient Library Fund balance to increase the budget for ICRP collections without increasing City borrowing; and,
WHEREAS, Legistar File 83182 authorized a purchase and sale agreement for City-owned vacant land, and $266,700 in proceeds were deposited into the Parks Division’s Park Land Acquisition capital program. The Parks Division is requesting to transfer funds to the Park Land Improvements program to utilize funds for improvements at Starkweather Park rather that land acquisitions; and,
WHEREAS, Water Utility utilizes expense depreciation and reserves as a funding source for capital projects and is requesting an additional appropriation of $1.3 million to fund water mains projects in 2025; and,
WHEREAS, several capital projects have not fully spent down their authorized borrowing proceeds within two years and transfers of funding across programs are needed for compliance with arbitrage rules under federal tax law.
BE IT RESOLVED, that the Common Council amends the 2025 Operating Budget to authorize transferring $1,193,900 from Direct Appropriations to the following agencies to cover compensated absence escrow payments:
• Civil Rights: $53,900
• Finance: $65,000
• Human Resources: $55,000
• Fire: $750,000
• Police: $250,000
• Transportation: $20,000; and,
BE IT FURTHER RESOLVED, the following agencies are projecting a surplus or reflect centrally budgeted funds that are not fully allocated, and available funds will be transferred out to agencies projecting a deficit:
• Direct Appropriations: Transfer out the remaining budget for compensated absence escrow ($3,106,100), and the majority of funds in the contingent reserve ($2,050,907)
• Information Technology: Transfer out underspending in salaries ($430,000), benefits ($120,000), and purchased services ($650,000) related to higher than anticipated vacancy savings and the timing of multi-year software contracts (Total: $1,200,000)
• Assessor: Transfer out underspending in salaries related to higher than anticipated vacancy savings ($100,000); and,
BE IT FURTHER RESOLVED, the following agencies are projecting a deficit and will receive a transfer in to cover their projected budget shortfall:
• Civil Rights: Transfer $176,500 for salaries ($53,000) and benefits ($45,500) related to severance costs and higher than budgeted non-permanent wages (e.g. overtime, premium pay); transfer $78,000 to purchased services for additional expenses, primarily related to interpretation costs
• Clerk: Transfer $13,100 to salaries related to severance costs and higher than budgeted non-permanent wages (e.g. overtime, premium pay). The total Clerk’s office personnel budget is projected to be $119,000 over budget, but the costs will partially be offset with an intra-departmental transfers from non-personnel accounts.
• Direct Appropriations: Transfer $164,000 to pay for revenue sharing agreements with other municipalities. The 2025 budget did not sufficiently account for actual costs. Expenditures in this category are excluded from the ERIP calculation.
• Employee Assistance Program: Transfer $37,900 to salaries to cover the cost of a position reclassification that was not accounted for during budget development
• Fleet charges to General Fund agencies: Increase inter-departmental charges for Fleet Services in Streets ($160,000), Fire ($80,000), and Police ($75,000)
• Metro Transit: Increase the General Fund subsidy to Metro by $5,750,507 for salaries ($2,053,037) and benefits ($470,000), primarily related to higher than budgeted overtime costs; increase purchased services ($850,000), primarily related to higher than budgeted costs for electricity, State excise taxes on electric vehicle charging, and paratransit costs; and reduce projected revenues by $2,377,470 to align with current projections for partner revenues and passenger revenues; and,
BE IT FURTHER RESOLVED, that the Common Council amends the 2025 Operating Budget to authorize the following intra-agency transfers and revenue adjustments within Fleet:
• Reduce agency revenues for trade-in allowance by $110,000
• Increase budget authority for salaries by $150,000
• Increase budget authority for supplies by $225,000
• Reduce budget authority for purchased services by $60,000
• Increase budget authority for inter-departmental billings to other agencies by $425,000 to offset the increased expenses; and,
BE IT FURTHER RESOLVED, that additional adjustments to Fleet inter-departmental charges for Streets, Police, Fire, and Parking Division, are described within this resolution under the sections for transfers within the General Fund and other funds; and,
BE IT FURTHER RESOLVED, that the Finance Director is authorized to approve additional adjustments to Fleet inter-departmental charges so long as the adjustments are net neutral to General Fund agencies and are offset by agency revenues within enterprise agencies; and
BE IT FURTHER RESOLVED, the Common Council amends the 2025 adopted operating budget to reduce the expenditure authority within PCED agency budgets and contingent reserve in order to increase Direct Appropriations expenditures by a corresponding amount to fund a grant for the endowment supporting ongoing operations at the Bartillon Permanent Shelter:
• Building Inspection Division: Transfer out $50,000 from underspending in salaries ($32,000) and supplies ($18,000)
• Community Development Division: Transfer out $650,000 from underspending in salaries ($160,000), benefits ($80,000), and purchased services ($410,000)
• Economic Development Division: Transfer out $55,000 from underspending in salaries ($16,000), benefits ($35,000), and supplies ($4,000)
• PCED Office of the Director: Transfer out $104,000 from underspending in salaries ($34,000), benefits ($10,000), and purchased services ($60,000)
• Planning Division: Transfer out $71,000 from underspending in supplies ($9,000), purchased services ($12,000), and transfer out to grants based on actual costs for the MPO ($50,000)
• Contingent Reserve: Transfer out $70,000 from the contingent reserve
• Direct Appropriations: Transfer in $1,000,000 to the Other Grants account to fund the shelter endowment
BE IT FURTHER RESOLVED, the Common Council authorizes the Mayor and Clerk to execute an agreement for a shelter endowment and/or a Memorandum of Understanding and disburse $1,000,000 of funding allocated for this purpose as a grant to the Shelter Friends of Dane County, Inc., Madison Community Foundation, and/or their fiscal operators or agents, and to take such other actions as shall be necessary or desirable to accomplish the purposes of this Resolution in a form authorized by the City Attorney; and,
BE IT FURTHER RESOLVED, the City maintains its commitment to providing $2.0 million in funding for a shelter endowment, and will seek to allocate the remaining $1.0 million in future budgets as funds are available and there is sufficient expenditure room under ERIP; and,
BE IT FURTHER RESOLVED, the Common Council amends the 2025 adopted operating budget to authorize the following transfers to expenditure categories within agencies:
General Fund
• Assessor: Transfer $5,000 from purchased services to supplies
• Attorney: Transfer $10,000 from salaries to purchased services
• Clerk: Transfer $40,000 from supplies and $53,000 from purchased services to salaries ($56,000) and benefits ($37,000)
• Engineering: Transfer $40,000 from benefits to supplies
• Human Resources: Transfer $45,000 from purchased services to salaries ($28,000) and benefits ($17,000)
• Parks: Transfer $70,000 from salaries and $15,000 from benefits to supplies ($55,000) and purchased services ($30,000)
• Police: Transfer $40,000 from supplies to purchased services and reallocate $30,000 across various objects within the purchased services major
• Traffic Engineering: Transfer $28,000 from salaries to purchased services
Other Funds
• Planning (Grant Fund): Transfer $35,000 from salaries to purchased services for Metropolitan Planning Organization (MPO) related expenses
• Parking: Transfer $110,000 from salaries to inter-departmental charges for Fleet due to higher than budgeted Fleet costs
BE IT FURTHER RESOLVED, that the Common Council amends the 2025 Operating Budget to appropriate additional funding and commensurate expenditures for the following non-General Fund budgets:
• CDA Redevelopment: Increase revenues and purchased services by $4,365,000 to reflect a TID 46 grant authorized by Legistar File 86170.
• CDD CDBG Fund (Fund 1205): Increase CDD’s CDBG fund by $424,100 in EHH funds and reauthorize $1,833,226 for the Capital Improvements for Non-Profit Housing (CINH) Program originally authorized via legislative files 85520 and 86219.
• Golf: Increase charges for service revenues by $175,000 to offset higher than budgeted expenses for salaries ($75,000), benefits ($25,000), supplies ($25,000), and purchased services ($50,000) to reflect projections.
• Monona Terrace: Increase charges for service revenues by $365,000 to offset higher than budgeted expenses for salaries ($265,000), benefits ($50,000), and supplies ($50,000).
• Water: Increase miscellaneous revenues by $220,000 to offset higher than budgeted expenses for benefits, primarily related to compensated absence escrow costs.
BE IT FURTHER RESOLVED, that the Common Council amends the 2025 capital budget to transfer or appropriate revenues and commensurate expenses for the following agencies and capital projects:
• Engineering - Major Streets: Transfer $472,734 assessment budget from Reconstruction Streets to Pavement Management based on actual assessments for the Segoe/ Sheboygan project
• Library: Appropriate $550,000 from Library Fund balance to the Imagination Center at Reindahl Park project for additional collections start-up costs.
• Parks: Transfer $266,700 in proceeds from a land sale from Park Land Acquisition to Park Land Improvements
• Water: Appropriate $1,040,000 in expense depreciation and $260,000 in reserves to increase the budget for the water mains program.
BE IT FINALLY RESOLVED, that the Common Council amends the 2025 Adopted Capital Budget to transfer funds across multiple projects to comply with arbitrage rules under federal tax law, as detailed in the attachment to the resolution titled “Capital Project Transfers for File 90967.”