1 Auburn City Council
Special Session
City Hall – City Council Chambers
1225 Lincoln Way, Auburn, CA 95603
June 17, 2024
Special Session 6:00 P.M.
The public is encouraged to participate or observe this meeting by:
1. Participate: Attend this meeting in person at the City of Auburn City Council Chambers located at 1225 Lincoln Way, Auburn, California.
2. Observe this meeting live: City of Auburn Website or City YouTube channel at:
https://www.youtube.com/channel/UCmZkDGdt8ce1ckCRgcX-15A/live
CALL TO ORDER
ROLL CALL
PLEDGE OF ALLEGIANCE
1. Public Comment
This is the time provided so that the public may speak to the Council on any item on this agenda. Please make your comments as brief as possible.
2. A Resolution of the City Council of the City of Auburn Declaring a Fiscal Emergency
By RESOLUTION, approve the City of Auburn to declare a fiscal emergency cancelling all salary increases.
ADJOURNMENT
Materials related to an item on this Agenda submitted to the Council after distribution of the agenda packet are available for public inspection in the City Clerk’s Office, 1225 Lincoln Way, Room 6, Auburn, CA 95603 during normal business hours.
1225 Lincoln Way, Auburn, CA 95603
AUBURN CITY COUNCIL
STAFF REPORT
TO: Honorable Mayor and Members of the City Council
FROM: Sean Rabè, City Manager
BUSINESS TYPE: Council Business
MEETING DATE: June 17, 2024
SUBJECT: A Resolution of the City Council of the City of Auburn Declaring a Fiscal Emergency
Action Requested
By RESOLUTION, approve the City of Auburn to declare a fiscal emergency cancelling all salary increases.
Background
The City of Auburn is projecting a budget deficit of $1.1 million for the upcoming fiscal year, 2024-
25. The City’s total general fund reserves for fiscal year 2024-25 are projected to drop by more than 31% compared to July 1, 2023 (FY 2023-24). At the City Council meeting held March 11, 2024 the Council heard a mid-year financial update of the current fiscal year, 2023-24. The update included discussion of the discovery of a budget deficit, requiring the use of general fund reserves of $2.0 million to balance the current fiscal year 2023-24 budget. On April 15, 2024, the City instituted a hiring freeze and asked Department Heads to reduce spending in an effort to curb the budget deficit.
On May 13, 2024 the City Council heard an update on the development of the fiscal year 2024- 25 proposed budget and discussed solutions to solve a preliminary $1.9 million budget-year deficit. The solutions included redirecting unspent American Rescue Plan Act funds that had been pledged to other projects and using the City’s general fund reserves to close the fiscal year 2024- 25 budget shortfall. During the June 10, 2024 City Council meeting, the City presented the fiscal year 2024-25 proposed budget reflecting a reduced budget deficit of $1.1 million, which included budget reductions associated with a hiring freeze, un-funding and freezing four full-time positions and efforts taken by Department Heads to reduce their requested budgets. The solutions for closing the fiscal year 2024-25 budget shortfall remained the same but with less general fund reserves being required to close the gap.
Although the actions taken to balance the fiscal year 2024-25 budget close the one-year gap, they do not address the ongoing deficit projections, which remain significant. Using the reserves to close the budget gap for fiscal year 2024-25 will result in an additional 3.7% drop in the City’s general fund reserves, after a previous drop of 27.7% presented at the fiscal year 2023-24 midyear financial update, for a combined drop in reserves of more than 31% since July 1, 2023. The City’s reserves will fall below the City Council’s reserve policy of 30% to 26% of total General Fund estimated annual expenses.
1225 Lincoln Way, Auburn, CA 95603
Phone: 530-823-4211 EXT. 192
The City has entered into Memoranda of Understanding (“MOUs”) with the Auburn Employees Association (“AEA”), Auburn Police Officers Association (“APOA”), City Hall Employees Association (“CHEA”), Auburn Firefighters IAFF Local 4110 (“IAFF”), and Auburn Public Safety Association Non-Sworn (“APSA”) and all current MOUs between the City and its employee bargaining units include a provision that states “During the term of this agreement, in the event the City declares a fiscal emergency and the City’s total general fund reserves decrease 25 percent or more below existing levels as of July 1, 2023, any remaining subsequent salary increase shall be cancelled.”
On May 16, 2024, the City requested that its employee bargaining units scheduled for a salary increase in July 2024 voluntarily agree to forego such increases, and that employee bargaining units with contracts expiring in June 2024 voluntarily agree to extend out their contracts by six months with no salary increases, which the City expects would reduce the structural deficit by 17%. City staff offered to meet with the bargaining groups and also notified them of the possibility of a fiscal emergency.
Additionally, the APOA MOU Section 7.0(B)(3); APSA MOU Article VII, Section 7.9(A); AEA MOU Article VII, Sections 7.9(A)(3) and 7.9(G); and CHEA MOU Article VII, Section 7.9(A) state the City Council will direct the City Manager to reject sick leave “buybacks” for the fiscal year if the City declares a fiscal emergency; and to meet with APOA, APSA, AEA, and CHEA prior to such action, although the meeting shall not be construed as a “meet and confer” obligation. However, the City Council resolution does not direct the City Manager to reject sick leave “buybacks” pursuant to the MOU language.
During the June 10, 2024 Council meeting, the City Council directed staff to prepare a Resolution declaring a fiscal emergency for the purposes of the MOUs to assist in reducing the fiscal year 2024-25 budget shortfall and ongoing structural deficit. City staff have notified the respective bargaining units and have offered to meet to discuss this Resolution.
Alternatives to Recommended Action
1. Do not adopt a resolution and direct the City Manager accordingly.
CEQA Requirements
This action does not impact CEQA requirements.
Fiscal Impact
The estimated fiscal impact “salary savings” of cancelling all salary increases for the fiscal year 2024-25 budget is $235,114.
Attachments
A. Resolution
RESOLUTION NO. ___
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF AUBURN DECLARING A FISCAL EMERGENCY
CANCELLING ALL SALARY INCREASES
WHEREAS, the City is projecting a budget deficit of $1.1 million for the upcoming fiscal year, 2024-2025, with a one-time solution to cover this deficit by using $881,000 in American Rescue Plan Act funds that had been pledged to community development projects and a historical City scanning project and $195,312 in general fund reserves; and WHEREAS, the City’s total general fund reserves for fiscal year 2024-2025 are projected to drop by more than 31% compared to July 1, 2023, notwithstanding the onetime solution for fiscal year 2024-2025; and WHEREAS, the City has instituted a hiring freeze that went into effect on April 15, 2024 and asked Department Heads to reduce spending in an effort to curb the budget deficit; and
WHEREAS, on March 11, May 13 and June 10, 2024, the City Council held duly noticed regular meeting to discuss the budget deficit and possible solutions to the deficit; and
WHEREAS, during its May 13, 2024 meeting, City Council directed staff to close the fiscal year 2024-2025 budget shortfall by using the City’s general reserve funds, as well as to redirect unspent American Rescue Plan Act funds that were pledged to community development projects and a historic City scanning project; and WHEREAS, during its June 10, 2024 meeting, City Council was apprised of the City’s efforts to reduce the fiscal year 2024-2025 shortfall through its hiring freeze savings and budget deferrals for certain services and supplies, which still requires the use of the City’s general reserve funds, as well as unspent American Rescue Plan Act funds; and WHEREAS, these actions may close the gap for fiscal year 2024-2025, but they do not address the ongoing deficit projections, which remain significant. Indeed, using the reserves to close the budget gap for fiscal year 2024-2025 will result in an additional 3.7% drop in the City’s reserves, after a previous drop of 27.7% presented at the FY 2023-2024 Mid-Year Financial Update, for a combined drop in reserves of more than 31% since July 1, 2023. The City’s reserves will fall below Council’s reserve policy of 30% to 26% of total General Fund estimated annual expenses; and
WHEREAS, the City has entered into Memoranda of Understanding (“MOUs”) with the Auburn Employees Association (“AEA”), Auburn Police Officers Association (“APOA”), City Hall Employees Association (“CHEA”), Auburn Firefighters IAFF Local 4110 (“IAFF”), and Auburn Public Safety Association Non-Sworn (“APSA”); and WHEREAS, all current MOUs between the City and its employee bargaining units include a provision that states “During the term of this agreement, in the event the City declares a fiscal emergency and the City’s total general fund reserves decrease 25 percent or more below existing levels as of July 1, 2023, any remaining subsequent salary increase shall be cancelled”; and
WHEREAS, APOA MOU Section 7.0(B)(3); APSA MOU Article VII, Section 7.9(A); AEA MOU Article VII, Sections 7.9(A)(3) and 7.9(G); and CHEA MOU Article VII, Section
7.9(A) state the City Council will direct the City Manager to reject sick leave “buybacks” for the fiscal year if the City declares a fiscal emergency; and to meet with APOA, APSA, AEA, and CHEA prior to such action, although the meeting shall not be construed as a “meet and confer” obligation; and
WHEREAS, on May 16, 2024, the City requested that its employee bargaining units scheduled for a salary increase in July 2024 voluntarily agree to forego such increases, and that employee bargaining units with contracts expiring in June 2024 voluntarily agree to extend out their contracts by six months with no salary increases, which the City expects would reduce the structural deficit by 17%; and WHEREAS, on June 10, 2024, the City Council directed staff to prepare this resolution declaring a fiscal emergency for purposes of the MOUs described herein.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN,
CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. That the recitals above are true and correct and fully incorporated herein by reference.
Section 2. That the City Council hereby finds and declares a fiscal emergency now exists in the City of Auburn pursuant to the provision included in the City’s Memoranda of Understanding (“MOUs”) between the Auburn Employees Association (“AEA”), Auburn Police Officers Association (“APOA”), City Hall Employees Association (“CHEA”), Auburn Firefighters IAFF Local 4110 (“IAFF”), and Auburn Public Safety Association Non-Sworn (“APSA”), which states: “During the term of this agreement, in the event the City declares a fiscal emergency and the City’s total general fund reserves decrease 25 percent or more below existing levels as of July 1, 2023, any remaining subsequent salary increase shall be cancelled.”
Section 3. That the City Council hereby finds that the City’s fiscal emergency justifies the cancelling of all employee bargaining unit salary increases subsequent to July 1, 2023, pursuant to the City’s MOUs between the AEA, APOA, CHEA, IAFF, and APSA.
Section 4. That the City Council declines to direct the City Manager to reject sick leave “buybacks” for the fiscal year as stated in APOA MOU Section 7.0(B)(3); APSA MOU Article VII, Section 7.9(A); AEA MOU Article VII, Sections 7.9(A)(3) and 7.9(G); and CHEA MOU Article VII, Section 7.9(A).
Section 5. That the City Council directs staff to meet with any employee bargaining unit wishing to discuss this Resolution.
Section 6. That the City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions. This Resolution shall be effective immediately upon passage and adoption.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Auburn, California, at a special meeting held on the 17th day of June, 2024. ____________________________________
Rachel Radell-Harris, Mayor
_______________________________
Amy Lind, City Clerk
APPROVED AS TO FORM:
________________________________
Gary B. Bell, City Attorney
I, Amy Lind, City Clerk of the City of Auburn, California, hereby attest to and certify that the foregoing resolution, being Resolution No. ___, adopted by the Auburn City Council at its meeting held on the 17th day of June, 2024, by the following vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS: