Item 21 - Early Direction for the Fiscal Year 2026-27 Budget

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Early Direction for the Fiscal Year 2026-27 Budget April 7, 2026 Page 12 5 6 9 0 Agency will be expected to increase lease revenue and improve cost recovery, thereby reducing reliance on General Fund support. Animal Care Shelter The City of Santa Ana contracts with OC Animal Care, a division of the County of Orange, for animal shelter and related services. The City’s Animal Control Officers, under the authority of the Police Department, respond to calls for service, conduct investigations, and enforce animal-related regulations within City limits. Animals collected by City staff and those brought in by residents are transported to the County-operated shelter. The County’s cost allocation methodology is based on the level of animal shelter services provided to the City during the most recently completed fiscal year, including the number of animals received and the care provided. The total cost of services is reduced by fees collected at the shelter, such as animal licensing fees and owner-paid fees to reclaim their pets, resulting in the City’s annual net cost obligation. The County will use data from the most recent fiscal year to estimate the City’s projected cost for the upcoming year. The City’s annual animal shelter cost consists of two components: (1) operating costs associated with providing shelter and veterinary services, and (2) the City’s allocated share of costs associated with the construction of the County’s new animal shelter facility. A summary of these costs is provided in the table below. Fiscal Year Shelter Operating Costs New Shelter (Debt Service)Total Cost FY 21-22 $1,963,357 $782,467 $2,745,824 FY 22-23 $2,816,711 $776,649 $3,593,360 FY 23-24 $3,221,078 $770,852 $3,991,930 FY 24-25 $3,577,734 $764,999 $4,342,733 FY 25-26 (Estimated)$4,226,507 $755,549 $4,982,056 Since FY 2021-22, shelter operating costs have risen 216% from $1.96 million to an estimated $4.23 million in FY 2025-26. In comparison, General Fund revenue has increased by 7.5% over the same four years. During this period, the City has also contributed its allocated share of the costs to construct the County’s new shelter facility, with FY 2025-26 marking the final year of those payments. Although these construction- related costs will end in FY 2026-27 and are already reflected in the Ten-Year Outlook, shelter operating costs have continued to increase significantly. Given the continued growth in operating costs, staff believes it is appropriate to evaluate the long-term sustainability of the current cost structure. Cities across California are experiencing similar cost pressures related to animal shelter services and have implemented a variety of approaches to manage these expenses, including regional partnerships for shared shelter operations, contracting with nonprofit animal welfare