Mid-Cycle Budget Update Fiscal Year
2024-25
City Council Workshop
May 21, 2024
Agenda
1.Executive Summary
2.Background
3.Proposed Budget Overview
4.Revenue Adjustments
5.Expenditure Adjustments
6.Departmental Funding Requests
7.Workforce Changes
8.Key Takeaways
9.Questions and Discussion
Executive Summary
• Budget Update Overview:
• The Mid-Cycle Budget Update provides an overview of significant adjustments in revenue and expenditures and aims to ensure that the city remains on a stable financial path while addressing current needs and priorities. • The City’s finances are stable with forecasted $29.34 million in residual fund balance in addition to $39 million in policy reserves.
• The amount of General Fund reserves needed between adoption of the FY 2024-25 Baseline Budget, $6.05 million, and the Adjusted Baseline Budget decreased by $3.7 million resulting in an adjusted use of reserves of $2.68 million. • Staff is requesting an additional use of net reserves of $3.3 million to maintain existing service levels and prioritize community needs in FY 2024-25, resulting in $5.98 million use of reserves.
• Since adoption of the budget in June 2023, economic headwinds have impacted some revenues categories.
• The proposed Midcycle Budget has a slight structural imbalance of $2.45 million, which is equivalent to current revenue loss due to economic headwinds.
Executive Summary (cont….)
• Proposed General Fund Midcycle Budget:
• The proposed General Fund midcycle budget is $144.57 million, an increase aimed at supporting essential city services.
• This budget covers key areas such as public safety, public works, and recreation.
• Proposed All Funds Budget:
• The total proposed midcycle budget, encompassing all funds, is $324.43 million.
• This includes special revenue funds, enterprise funds, and capital improvement funds.
• New Positions:
• Introduction of three new positions: an Investigator to strengthen public safety, an Administrative staff member to support increased workload, and an IT Executive Assistant to enhance IT department operations.
Background
• Biennial Budget Adoption:
• The FY 2023-25 Biennial Budget was adopted in June 2023, setting the financial plan for two fiscal years.
• Adjustments have been made throughout the current fiscal year (FY 2023-24) resulting in a FY 2024-25 Adjusted Baseline Budget, which is the starting point for the FY 2024-25 Midcycle Budget.
• This budget focused on maintaining service levels, addressing capital needs, and ensuring fiscal sustainability.
• Workshop Objectives:
• The primary objectives of this workshop are to review the overall budget factors, discuss proposed changes, and ensure alignment with the City’s strategic priorities. • This includes evaluating the financial health of the City and making necessary adjustments to maintain fiscal discipline.
The Starting Point:
General Fund Adjusted Baseline Budget
FY 2024-25 Revenues Ongoing One-time Total
FY 2024-25 General Fund Baseline Revenue Budget (approved June 2023) 131,409,875$ 2,867,623$ 134,277,498$ Revenue Adjustments 4,443,765$ 1,253,101$ 5,696,866$ FY2024-25 Adjusted Revenue Baseline, starting point for Midcycle Budget 135,853,640$ 4,120,724$ 139,974,364$ FY 2024-25 Expenditures
FY 2024-25 General Fund Baseline Expenditure Budget (approved June 2023) 134,779,146$ 5,551,650$ 140,330,796$ Expenditure Adjustments (FY 2023-24 Midyear Budget, personnel adjustments, technical corrections, cost allocation adjustments) 1,856,689$ 463,048$ 2,319,737$ FY2024-25 Adjusted Expenditure Baseline, starting point for Midcycle Budget 136,635,835$ 6,014,698$ 142,650,533$ • The Adjusted Baseline Budget incorporates:
• $2.32 million of expenditure changes from amendments adopted for the FY 2023-24 Midyear Budget, as well as necessary personnel adjustments, technical corrections, and cost allocation adjustment.
• $5.70 million of anticipated revenue adjustments that include increases for fees for services, taxes and one-time transfers into the General Fund from other funds.
Current Adopted Use of Residual Fund Balance
• The FY 2024-25 Adopted Budget included a planned use of $6.05 million of residual fund balance.
• The FY 2024-25 Adjusted Baseline Budget reduces reliance on residual fund balance to $2.68 million, reduction of $3.38 million
• The FY 2024-25 Proposed Midcycle is requesting an
additional use of net reserves of $3.3 million to maintain existing service levels and prioritize community needs in FY 2024-25, resulting in $5.98 million use of reserves, which is still $0.07 million less than the adopted budget.
• Available residual funds can change from year-to-year depending upon local economic conditions
• The dramatic increase in FYs 2020-2022 is largely due to:
• Historical staffing vacancies in Public Safety, and
• Significant increases in revenues derived from property transfer taxes. • Estimated FY 2024-25 starting residual balance of $29.34 million is net of:
• $6.05 million use of fund balance adopted in June 2023 • $15 million assigned for construction of the Aquatic Center • $39 million in reserves required by City Council policy Proposed Midcycle Budget Overview
• General Fund Budget:
• The proposed General Fund budget is $144.57 million, reflecting the city's commitment to maintaining essential services and investing in priority areas. • Key expenditures include personnel costs, operational expenses, and strategic investments in public safety and community services.
• All Funds Budget:
• The total proposed budget for all funds is $324.43 million, which includes the General Fund and other funds like capital improvement and special revenue funds. • This comprehensive budget supports a wide range of city functions and projects, ensuring balanced growth and development.
• Strategic Alignment:
• The budget aligns with the City’s Strategic Plan, emphasizing fiscally responsible governance, equity, and inclusivity.
• This involves prioritizing resources for key initiatives, ensuring equitable service delivery, and fostering an inclusive community environment.
General Fund Revenue Adjustments
• General Fund Revenue Increase: An increase of $5.70 million in General Fund revenues.
• Property Tax: 4.72% increased revenue due to higher property valuations, but slower than anticipated.
• Sales Tax: Sales tax revenue remains flat and transaction and use tax revenue is forecasted to decline reflecting decrease economic activity. • Real Property Transfer Tax: Forecasted to be -$2 million less than the adopted budget.
• Fees and Services:
• Adjustments in fees for City services to better reflect the cost of providing these services, assuming Council approval of proposed fee schedule this evening. • These adjustments ensure that the City can continue to offer high-quality services without compromising financial stability.
• One-time Transfers: Inclusion of one-time transfers from other funds or reserves. • Other Adjustments: Minor adjustments in other revenue categories to reflect updated projections.
Economic Headwinds
• Since adoption of the budget in June 2023, economic headwinds have impacted some revenues categories. • The categories below account for 82% of General Fund Revenues. • The minimal forecasted growth in some these categories is insufficient to offset expenditure growth • Overall revenue growth in major ongoing revenue categories was much slower (or flat!) than originally forecasted. -15.38%
-2.14%
Proposed FY 2024-25 Midcycle Budget
• The City’s finances are stable with forecasted $29.34 million in residual fund balance in addition to $39 million in policy reserves.
• The amount of General Fund reserves needed between adoption of the FY 2024-25 Baseline Budget, $6.05 million, and the Adjusted Baseline Budget decreased by $3.7 million resulting in an adjusted use of reserves of $2.68 million. • Staff is requesting an additional use of net reserves of $3.3 million to maintain existing service levels and prioritize community needs in FY 2024-25, resulting in $5.98 million use of reserves.
• The proposed Midcycle Budget has a slight structural imbalance of $2.45 million, which is equivalent to current revenue loss due to economic headwinds.
Workforce Changes- Additions and Repurposing Existing
Positions
• City Attorney (1 FTE addition, split funded)
• New position & classification- Investigator
• FY 2024-25 $14,000 General Fund, $94,954 all Funds
• Recreation & Parks (1 FTE addition, General Fund)
• Upgrade one Rec Services Manager to an Assistant Recreation and Parks Director.
• Downgrade one Recreation Specialist to TWO Recreation Assistants • FY 2024-25 aggregate cost including reduction in overtime budget: - $53,644
• Information Technology (1FTE addition, ISF funded)
• Add one Executive Assistant
• FY 2024-25 $156,441 Fund 606
Workforce Changes- Repurposing Existing Positions
• City Manager (no additional FTE)
• Upgrade one Executive Assistant to one Principal Executive Assistant • Downgrade one Executive Assistant to one Office Assistant, including reclassifying partial funding from Fund 606 to General Fund • Aggregate FY 2024-25 impact $29,445 General Fund
• Police Department (no additional FTE)
• Upgrade one Lieutenant to one Captain
• Upgrade three Sergeants to Lieutenants
• FY 2024-25 impact $178,945 General Fund, HOWEVER should offset a need for future increases in overtime
• Public Works (no additional FTE)
• Upgrade one Administrative Services Coordinator to ADA Coordinator (new classification)
• Upgrade one Senior Clerk to One Administrative Technician III • Aggregate FY 2024-25 impact $25,279 General Fund, $25,391 all Funds City Council Adopted Strategic Priorities
Operation and Maintenance
Requests will be presented in
alignment with City Council
adopted Strategic Priorities
Department Funding Requests
• Overview: Each department submitted funding requests to address specific needs and priorities.
• Alignment with Strategic Priorities: Ensuring that departmental requests align with the City’s strategic goals and long-term planning. • Workforce Changes focus on repurposing existing positions, when ever possible, to provide enhanced service delivery and long-term cost savings Additional Investments in:
Enhance Community Safety & Services Ongoing One-Time Total Rec & Park Increase Part-Time Pay - Aquatics & Swim Center 453,250$ -$ 453,250$ Rec & Park Increase Part-Time Pay - Other Recreation Programs 47,380$ -$ 47,380$ Rec & Park Increase Utilities - Electricity, Water, Phone Service 91,800$ -$ 91,800$ Rec & Park Increase Utilities - Payment to AUSD for Electricity - Encinal Boat Ramp -$ 17,100$ 17,100$ Rec & Park Increase Recreation Supplies - Recreation Programs 28,200$ -$ 28,200$ Rec & Park Increase Professional Services - Payment to AUSD for Encinal Access -$ 75,274$ 75,274$ Rec & Park Increase Professional Services - Recreation Programs & Administrative 33,000$ -$ 33,000$ Rec & Park Increase Other Services - Based on FY23/24 actuals projections 33,750$ -$ 33,750$ Rec & Park Increase Ground Maintenance Supplies 15,000$ -$ 15,000$ Base Reuse & Econ Dev Add Professional Services - Special Event Grants -$ 200,000$ 200,000$ Fire Increase Professional Services - Analyst Application 15,000$ 10,000$ 25,000$ Fire Increase Dispatch Services - Alameda County 43,820$ -$ 43,820$ Fire Increase Part-Time Pay - Fire Inspections (Increase Revenue Offset) 22,000$ -$ 22,000$ Fire Upgrades to Fire Inspection Software 150,000$ 150,000$ General Fund Total Enhance Community Safety & Services 783,200$ 452,374$ 1,235,574$ Build Resilience to Climate Change & Water Level Rise
PBT Increase Professional Development - Sustainability Update 4,100$ -$ 4,100$ PBT Increase Professional Services - C ASA Intern 6,000$ -$ 6,000$ General Fund Total Build Resilience to Climate Change & Water Level Rise 10,100$ -$ 10,100$ Invest in Alameda’s Transportation, Infrastructure, & Economy Police Increase Police Administration Building Improvements -$ 165,000$ 165,000$ General Fund Total Invest in Alameda’s Transportation, Infrastructure, & -$ 165,000$ 165,000$ House All Alamedans & End Homelessness
C ity Manager Increase Services - Homelessness Prevention and Outreach -$ 185,000$ 185,000$ C ity Manager Increase Services - Extend Days for Winter Warming Shelter -$ 50,000$ 50,000$ General Fund Total House All Alamedans & End Homelessness -$ 235,000$ 235,000$ Additional Investments in:
Practice Fiscally Responsible, Equitable & Inclusive Governance Public Works Increase C ost Allo - Fleet Maintenance C ollision Repair for Uninsured -$ 74,437$ 74,437$ Public Works Reduce Cost Allocation - Rec & Park Facility Maintenance (55,000)$ -$ (55,000)$ Rec & Park Increase Part-Time Pay & Janitorial Supplies - Facility Maintenance 122,200$ -$ 122,200$ Rec & Park Increase Professional Development - Training 10,000$ 13,500$ 23,500$ Fire Increase Professional Services - Mental Health and Wellness Program -$ 25,000$ 25,000$ Fire Increase Overtime - Training -$ 240,000$ 240,000$ City Attorney Transfer to Golf Fund for litigation expenses -$ 200,000$ 200,000$ City Attorney Increase C ost Allo - Wrks' C omp and Gnrl Lia due to additional expenses 185,700$ -$ 185,700$ City Attorney Increase Part-Time Pay -$ 47,563$ 47,563$ General Fund Practice Fiscally Responsible, Equitable & Inclusive Governance 262,900$ 600,500$ 863,400$ Additional Investments in:
Aggregate Strategic Priority Investments in
Other Funds
• Many strategic investments in Other Funds are offset by additional revenues or transfers in.
• A detail listing of both revenues and expenditures can be found in the staff report and Exhibit 1 to the staff report.
• Highlights from other funds:
• Updating the 5-year Information Technology Master Plan • Additional funding for Day Center and Safe Parking Relocation Project • Additional funding for pavement rehabilitation
Additional Use of Residual Fund Balance?
• The City continues to maintain $39 million in Policy Reserves. • Additionally, in FY 2023-24 Friends of the Alameda Animal Shelter is requesting one-time funding of $185,554 to close a developing budget gap.
$29.34
Housing Day Center and Safe Parking Relocation $0.75
Transportation Street Safety CIP $0.25
Safety & Service McKinley & Washington Park Playground Repair $0.12 Governance Additional CalPERS Unfunded Liability Payment $3.00 Safety & Service Sweeney Railroad Depot Repair $0.19
Safety & Service New Turn-Out Gear for Fire Fighters $0.25 Transportation Sidewalk Repairs $2.00
Subtotal Use of Residual Fund Balance $6.56
Remaining Forecasted Residual Fund Balance $22.78
Considered Use of Residual Fund Balance
Starting Forecasted Residual Fund Balance (in millions) Key Takeaways
• General Fund Revenue and Expenditure Summary:
• Overview of the major revenue increases and expenditure adjustments. • Necessary increases to service charges to ensure high level services. • This includes detailed analysis of revenue sources and expenditure categories to highlight key changes. • Decreases or lack of growth in key revenues categories, including transfer taxes and sales/use taxes. • A slight structural imbalance of which is equivalent to current revenue loss due to economic headwinds.
• Proposed comparable use of Residual Fund balance to maintain and enhance existing services • Financial Resilience:
• The City’s finances are very stable with forecasted $29.34 million in residual fund balance in addition to $39 million in policy reserves.
• This ensures that the city can weather economic fluctuations and continue to provide essential services.
• Strategic Priorities:
• Ensuring that all budget changes support the City’s strategic goals and priorities, focusing on long-term benefits and community impact.
• This includes investments in capital needs, public safety, and community services to enhance quality of life for residents
.
Questions and Discussion
• Discussion Points:
• Clarifications or questions on specific budget adjustments • Implications of proposed changes on City services and operations • Direction on any additional adjustments and/or use of fund balance, as well as any other considerations for final budget adoption
Expenditure Adjustments at Adjusted Baseline
• Total Expenditure Changes:
• $2.32 million in expenditure adjustments to reflect updated needs and priorities. • These changes include increases in personnel costs, operational expenses, and strategic investments.
• Personnel Adjustments:
• Changes in staffing costs, including new hires, promotions, and salary adjustments, to attract and retain qualified personnel.
• This ensures that the City has the necessary human resources to deliver essential services effectively.
• Technical Corrections:
• Updates and corrections to previously adopted budget figures to ensure accuracy and transparency.
• This includes adjustments for accounting changes, updated cost estimates, and reallocation of funds.
• Cost Allocation Adjustments:
• Reallocation of costs across departments to better reflect actual service usage and improve budget efficiency.
• This involves distributing shared costs, such as administrative support and facilities maintenance, based on usage.
Workforce Changes
• New Positions:
• Investigator: To strengthen the city’s investigative capabilities and City Attorney’s Prosecution Unit’s efforts.
• Administrative Staff: To handle increased administrative workload and improve operational efficiency.
• IT Executive Assistant: To assist with technology and administrative tasks in the IT department, supporting digital transformation initiatives. • Position Downgrades/Deletions:
• Downgrade or elimination of two positions to reallocate resources more effectively and align with current needs.
• This includes evaluating roles that are no longer critical and reallocating funds to higher-priority areas.
• Position Conversions/Upgrades:
• Conversion and upgrade of six positions to improve efficiency and meet evolving service demands.
• This involves reclassifying positions to better reflect their responsibilities and provide opportunities for career advancement.