1 DATE: May 21, 2024
TO: Justin Hess, City Manager
FROM: Jennifer Becker, Financial Services Director
By: All Departments
SUBJECT: Department Cost Savings
BACKGROUND
At the May 7, 2024, City Council Meeting, Mayo r Nick Schultz requested staff to bring back to Council information on what types of cost savings measures have been implemented by City departments. The request included direction for each department to discuss what interna l cost savings or efficiency measures they have utilized to he lp achieve budgetary savings in recent years.
DISCUSSION
City Council and City staff, in cooperation with our labor groups, have implemented several new financial policies and cost savings measures that have helped generate millions in recurring citywide savings over the past several years, including:
➢ Pre-paying the City’s annual Unfunded Actuarial Liability (UAL) payment to CalPERS each July, which generates a citywide savings of over $1 million annually ➢ Implementing a market wage policy for the City’s labor groups ➢ Requiring employees to contribute 50% of the total normal cost of their pension plans
➢ Adopting a pension funding policy requiring half of all General Fund balance o ver 6% of recurring expenses go towards pensions, including Additional Discretionary Payments (A DP) and Section 115 Trust, until the funded status of the City’s pension plans reaches 90%
➢ Completing a Citywide Fee Study and implementing the resulting recommendations in order to maximize cost recovery for a variety of services provided by City departments, while remaining in compliance with Proposition 26 ➢ Prioritizing infrastructure projects that generate revenue, reduce costs or create budget efficiencies, such as installing LED lighting to lower utility costs ,
2 implementing Information Technology (IT) automation projects to produce process efficiencies, and improving the City’s sidewalk and pavement condition to eliminate hazards and reduce costly liability payments
➢ Aggressively pursuing grant funding for a variety of Citywide projects and services across all departments
Below is a summary of what each City Department is doing internally to reduce costs, generate budgetary savings or increase revenue streams for the City.
Burbank Water & Power (BWP):
BWP’s mission is to safely deliver sustainable, competitively priced, and reliable electricity and water to Burbank’s residents and businesses. As a municipally owned, not -for-profit utility, BWP assesses and collects rates only to offset the operating, maintenance, and capital expenditures required to manage reliable utility operations. One of the ways BWP stays competitively priced is by continuously identifying and implementing addi tional revenue streams, cost saving measures and cost avoidances to help offset increases in expenses now and in the future. This strategy has been effective over the last two decades and has enabled BWP to maintain competitive rates and exceptional reliab ility while still meeting sustainability mandates.
The following are examples of some of the many opportunities BWP staff leverages to help mitigate rate impacts:
BWP has diversified its revenue streams. In addition to revenues from the sale of electricity and water, BWP receives revenues from ONEBurbank customers for fiber optic and broadband services; participates in energy wholesale trading markets; actively pursues grants and tax credits; generates interest income by investing; sells recycled water to Los Angeles; sells Low Carbon Fuel Standard Credits in the credit market; has implemented aid-in-construction fees, capacity charges, and plan check fees to shift the cost recovery of certain services directly to their recipients; and continuously revie ws business practices to implement best management practices that lead to business efficiencies.
BWP has implemented many cost saving and avoidance measures as well. BWP has implemented proactive asset management strategies to optimize the lifespan and performance of infrastructure, fleet and equipment, reducing the need for costly repairs and premature replacements; invests in advanced leak detection technologies to identify and address leaks in the system promptly, reducing water loss and associated costs; negotiates with suppliers to secure favorable terms, discounts, or bulk purchasing arrangements for equipment, materials, and services, helping to reduce procurement costs; educates customers about conservation practices, water and energy -saving tips, and available incentives or rebates for adopting sustainable behaviors, which can help reduce overa ll demand and operational costs; invests in training and development programs for employees to enhance their skills and knowledge, leading to improved performance and cost savings in the long term; developed risk management and hedging strategies to identi fy and mitigate potential risks, which could impact operations and finances; collaborates with other utilities and agencies to share resources, equipment, and expertise, reducing costs and improving operational efficiency through economies of 3 scale; and pr oactively monitors opportunities for early bond and loan redemption, reducing overall costs.
City Attorney:
The City Attorney’s Office has been committed to creating a paperless environment. New case management systems have been recently implemented in t he Litigation and Prosecution divisions to support this effort. Not only has there been considerable savings in staff time with new efficiencies, but there has also been a financial savings in office supply purchases such as paper, file folders, ink toner, etc.
City Clerk:
The City Clerk's Office introduced the Public Records Portal which allows electronic access to City records such as City Council resolutions, ordinances, and minutes. Over time, the Public Records Portal will host additional documents an d generate substantial cost savings through the modernization of processes, enhanced efficiency, and transparency. The City Clerk’s Office continues to research cost -saving measures such as comparison shopping when buying office supplies and elections mate rials and exploring the use of alternate vendors for legal advertising.
City Council/City Manager/Public Information Office:
The City Manager’s Office oversees expenses for City Council, City Manager, and the Public Information Office. While these areas make up a relatively small portion of the City’s budgetary expenses, each section operates in a fiscally responsible manner and potential increases in expenses are carefully analyzed to ensure cost effectiveness. The City Manager’s Office also contin ually collaborates with Department Executives to maintain balanced budgets and responsible spending across all City Departments.
City Treasurer:
The Office of the City Treasurer continues to push the boundaries in seeking ways to save money:
➢ The Department purchased 3 “open box” Humanscale Freedom Task chairs from eBay for $349 each, a deep discount from the “brand new” price of $1,299 each. ➢ Staff continues to perform manual upload of market prices and manual fund accounting, saving $7,632 per year by not h aving to use specialty software such as Sungard and add-on Tracker modules.
➢ The Treasurer’s Office negotiated $12,000 in annual credits from Bank of America for three years with the contract signed.
Community Development:
Updates to the City’s plan check review process to comply with state mandated shot clock requirements for A ccessory Dwelling Units (ADUs) and post-entitlement projects have helped the City maintain a 90% or higher compliance rate on meeting the preliminary review deadlines for these types of housing projects. As a result, there is a 20% reduced cost to process ADU applications. New regulations have ensured neighborhood compatibility of new single -family residential projects while reduc ing the Planning Division’s plan check review time by more than 71% over the past two years. Further, the Instant Solar Permit process will provide an estimated direct savings of $97,500 per year 4 in consultant costs to the City while the use of consultants for capital project and planning management, and the t ransition to electronic, online systems for parking permit administration delivers salary savings and reduces the City’s unfunded pension liability.
Financial Services:
The Financial Services Department generates budgetary savings utilizing a variety of technology tools and professional services and seeks to maximize City revenues through a variety of audit programs. Recently the Department contracted with HdL to administer the City’s T ransient Occupancy Tax (TOT) program, streamlining the tax remittance process for the City’s hotels and increasing the frequency of TOT audits, which brings back additional revenue to the City and reduces the amount of staff time required to collect and process payments . The Accounting Division recently implemente d the Debtbook Software, which aided staff in the reviewing and tracking of citywide leases and software agreements required under GASBs 87 and 96 – while the software had a cost associated, it allowed the department to implement these new mandates without adding staff. The department has a number of other technology and automation efforts underway which will save time and labor both internally and throughout the City, including the implementation of the Self Service Time Entry Project which will eliminate paper timecards and reduce the time and effort required for entering payroll, and the implementation of the OpenGov Solicitation Development tool which will streamline and standardize the process for developing Requests for Proposals (RFP) and soliciting bids for goods and services.
Fire Department:
The Burbank Fire Department has implemented several cost-saving initiatives in an effort to optimize resources towards the delivery of high -quality services to the community in the areas of fire prevention and suppression, emergency medical services, emergency preparedness, and hazardous materials response. In addition to its entry-level firefighter recruitment, the Department has embarked on a continuous lateral firefighter recruitment in effort to attract qual ified, high-caliber candidates; streamline the onboarding process; and facilitate an abbreviated academy for experienced recruits that results in savings of upwards of $50,000 per individual compared to an entry -level recruit academy. The Department also aims to maintain minimum staffing levels with recruitment and retention initiatives, which consequently lessens forced overtime hours. Lastly, the Burbank Fire Department actively pursues alternative funding sources to support equipment and training needs a nd has received approximately $1 million in grant funding over the last ten years to sustain its hazardous materials response program. The Department will continue to seek grant funding opportunities to supplement its current resources and evaluate opportunities for future cost-savings.
Information Technology:
The City of Burbank Information Technology Department (IT) has undertaken many measures, and led or partnered in many initiatives that result in direct (hard) cost savings, and indirect (soft) cost savings across the City. For example, the project to upgra de and migrate to cloud our on -premises Oracle Hyperion budgeting solution to Oracle EPM in the cloud will save the City $781,000 over 5-years by significantly reducing maintenance and administration costs while improving our budgeting processes and capabi lities. 5 Competitive purchasing processes, contract negotiations and service delivery model changes are yielding over $700 thousand dollars in hard IT cost savings annually.
New technology solutions and improved processes are saving the City multiple thousands of hours in labor effort (soft cost savings) across the City. For example, the City’s new Public Records Documents Portal has saved up to 4,519 hours of staff effort via 18,076 searches done online alleviating that effort from the City Clerk’s Office. Our Online Permits and Payments have saved over 245,000 hours of permit technician processing effort since implementation. Axon Investigate, which automates conversion of video formats for detective investigations, saves up to 7,800 hours of detective staf f hours annually. Our Burbank 311 has saved 2,172 person hours from service request call handling to date. Our Burbank 311 72-hour Abandoned Vehicle Reporting has yielded a 46% uptick in requests, with a 175% improvement in handling times.
Finally, IBM estimates in their 2023 Cost of Data Breach Report that the average savings for organizations that use security AI and automation extensively in protecting their networks and data is $1.76 million. The City of Burbank has used security AI and automation exten sively for several years, effectively protecting us from major data breaches.
Library Services:
The Library Services Department has saved costs in several ways. Circulation of Library materials has been made more efficient through the use of automation tec hnology, automatic renewals, and self-service options. The Library has increased efficiency while improving service by cross -training staff in order to eliminate lost time due to lack of training or comfort levels in carrying out basic work at all locations.
Management Services:
Management Services (MS) ensures efficient use of City funds by settling many liability claims before they become litigated, when they are much more costly to address. MS also effectively manages workers’ compensation claims to ensure access to appropriate medical care for injured employees while containing City costs. Finally, MS continually works to reduce the costs associated with employee turnover by ensuring fair, equitable, and market-based compensation so that the City can re cruit and retain a well -qualified workforce to deliver excellent services to the Burbank community.
Parks and Recreation:
The Parks and Recreation Department is continually seeking opportunities to create efficiencies and save costs. In Fiscal Year 202 2-23, the Department was successful in reducing utility costs, securing grants and utilizing volunteers resulting in savings of $5.4 million.
The Department completed the installation of smart irrigation controller systems throughout city parks and facilities, which has saved the City from using 27,731,269 gallons of a water from January 2023 to December 2023. This amounts to a cost savings of approximately $123,450.
6 Since July 2023, t he Department was awarded nearly $2,990,655 in grant fund s for programs, equipment and capital improvement projects including: the Elderly Nutrition Program, McCambridge Pool Renovation Project, Santa Anita Playground Replacement Project, and procurement of a daptive sports equipment . Additionally, grant reimbursements in the amount of $690,063 were received for salary, operations, maintenance and programming from Proposition A and the Tobacco Grant.
Since July 2023, a total of 42,790 volunteer hours were worked in various city programs as part of the Burbank Volunteer Pr ogram (BVP) . This amounts to a cost savings of approximately $1,596,927.28* in staff time.
*Based on the 2023 Value of Volunteer Time for California- https://independentsector.org/ Police Department:
The Burbank Police Department (BPD) achieves cost savings measures by optimizing on technology through department -wide operations. Utilizing modern technology such as body-worn cameras, Automated License Plate Readers, and digital forensics tools enhances the efficiency and effectiveness of investigations. This not only improves outcomes in prosecutions but also leads to considerable savings in staff time across multiple departments, including the City Attorney’s Office. Moreover, the implementation of a contemporary report management system, along with data analytics software, and interagency collaboration tools streamlines processes, optimizes staff resources, and allocates staff more effectively, ultimately resulting in further cost savings. Furthermore, BPD actively pursues state and federal grants to support its mission. In Fiscal Year 2023- 24, BPD secured $788,248 in grant funding.
Public Works:
Public Works (PW) Waste Management staff is renegotiating our long-term contract with Burrtec Waste Industries (BWI) for processing recyclables at the Burbank Recycle Center (BRC) to have BWI take over the maintenance of the facility, reduce the cost of processing Burbank’s recyclables, and provide a host fee for any outside tonnage brought into the BRC.
The PW Facilities Maintenance team recently identified highly -used assets, such as elevators and gates, and increased the frequency of preventative maintenance that staff performs on them. The increased maintenance has resulted in a substantial reduction in asset downtime, employee overtime, and emergency repair costs.
In partnership with the Financ ial Services Department four years ago, PW started reviewing each and every contract to see if it cost savings and operational efficiencies can be provided by procuring services with a 3-year base plus 2-optional year contracts, as opposed to annual procurements or renewals. Full-service Civil Engineering and Citywide Landscaping services were the first two contracts brought to Council, with more to come in the next fiscal years.
PW/Wastewater seeks to purchase chemicals and maintenance parts for the Wastewater Treatment Plant in larger quantities with other plants that are operat ed by the City’s 7 operator, resulting in cost savings for the ratepayers. Additionally, staff released an RFP for Plant Operations after an approximate 25 years with the same operator, ensuring current cost and operational certainty for the next 10-15 years of contractual commitment.
CONCLUSION
With increasing demand for City services and limited resources to support the growing needs of the Burbank community, striving for budget efficiencies has become ingrained in the City’s culture. Across departments, staff continues to work towards maximizing the City’s resources by adopting sound financial policies , implementing business process improvements, and strategic ally investing one -time funds towards items that generate recurring savings.