BACKGROUND:
The City of Cathedral City utilizes a biennial budget process – two separate, one-year budgets during the same approval cycle. Doing so has proven to be a good, effective strategy for these reasons:
•Cost and time savings reducing staff preparation time
•Allows more time for program review and analysis of expenditures •More conducive to long-term strategic planning, forecasting and analysis/results of decisions
•De-politicize the budget process by adopting biennial budgets in non-election years
There are government agencies utilizing an annual budget process, creating more pressure on staff with almost simultaneous actions to:
•Close the previous year’s budget
•Administer the new year’s budget, and
•Plan the following year’s budget
DISCUSSION:
Fiscal Year (FY) 2022/2023 is year two of the City’s current biennial budget. With the volatility encountered during the COVID-19 pandemic, we have experienced a varying degree of instability and unknowns impacting our ability to complete work on a timely basis, including:
•Staff vacancies and shortages related to turnover/retention unsuccessful/delayed and multiple recruitments for the same positions
•Resulting in delays in work, e.g., Capital Improvement Plan (CIP) projects, Parks Improvement and Maintenance Plan projects
In the near term, Staff is forecasting a better/stronger financial position in the FY 2023/2024 and FY 2024/2025 biennial budget, due to various increased revenue streams, including:
EXTRAORDINARY REVENUE FOR FY 2021/2022
•Sales Tax and Transactions and Use Tax (TUT) revenue will far exceed projections due to significant changes in buying patterns. Sales Tax is $14M and TUT is $9.7M. Collectively, this is $6.2M above projection. •With more development and growth in our City, e.g., more rooftops and families, we believe there will be continued economic growth with:
more stable Property Tax revenue base with more than $400K than in the previous fiscal year,
more than a $500K+ above projection for Utility User’s Tax (UUT) revenue
almost $400K above projection for Franchise Fee revenue Transient Occupancy Tax (TOT) revenue was almost $1.7M above budget, comprised of:
▪Short-term Vacation Rental (STVR) almost $150K higher than projected (but $200K less than the previous fiscal year) ▪Hotel/Motel more than $1.5M higher than projected
•One-time revenues totaling $2.1M are being recognized
Where we expected extreme volatility, and had projected more than a $5M deficit, we anticipate an operational surplus for our General Fund of almost $4.7M plus one- time revenues of $2.1M for a total surplus of almost $6.8M for FY 2021/2022.
As a result, and what you will see outlined in the staffing recommendations below, Staff has determined strategic staffing additions and changes to make a further investment in providing better service to our constituents and business community.
STAFFING CHANGES
As presented by the Fire Chief during FY 2021/2022, City Council approved trading three Firefighter Paramedic/EMT positions for nine Ambulance Operator/EMT positions.
Since this was mid-year 2021/2022, a budget amendment was not required at that time; however, City Council directed staff to bring back to the final impact to the budget for FY 2022/2023, which is $172,478.
In addition, during the course of the year, predominantly related to COVID, the demand for qualified candidates became highly competitive subsequently requiring the City Manager to make some operational decisions to get positions filled in order to address ongoing service needs. In some instances, this would have included hiring staff into positions at a higher actual rate than what had been budgeted, converting part-time Office Assistant positions to full-time, and transferring and converting limited term positions to full-time, resulting in the need for a budget amendment in the amount of $369,752.
MASTER POSITION CONTROL
Over the last two years, the City has been operating in unprecedented times. The global pandemic, economic shutdowns, and the local increase in development continue to test the City’s resource allocation. In FY 2021/2022, Council adopted a biennial budget designed to be a conservative forecast for an uncertain future. However, the new normal post-2020 has revealed various resources need to be reinstated to improve the City’s service delivery and meet the growing needs of the community.
The City has seen various staffing changes since the Great Recession, with total operational headcount currently below 2010 figures. This has had a material impact on the way the City functions both internally and externally in terms of our ability to respond to current service needs and the ability to keep pace with future growth in demand for services. As the City strategically plans for the future, it is essential the City analyze its human capital resource needs to ensure we have the organizational capability and capacity to provide high quality predictable services to our community. To that end, staff has identified several strategic personnel additions necessary to align City resources, City priorities, and the growing demand for services.
City Manager Department - (.5) FTE and (1) LT
•Staff is recommending the addition of a part-time (P/T) Human Resources Assistant to assist the Human Resources (HR) team with a recruitment lead- time in advance of the new fiscal year. Currently, recruitments are taking 60-90 days to finalize, with some candidates turning over prior to the completion of their probation. In the last eight months, there have been 20 resignations, two (2) retirements with at least two (2) additional retirements by the end of the calendar year, and 31 recruitments – five (5) of which were reposted recruitments. •In addition, to facilitate and coordinate numerous resources to meet the Event demand, there is a need for a Limited Term (LT) Events Coordinator to support the Communications & Events Manager.
Administrative Services Department - (2) FTEs
•At the January 2022 City Council Goal Setting Session, in an effort to decrease soft costs associated with manual processes and improve services throughout the organization, staff identified digital transformation as a major Citywide goal.
The Tyler Enterprise Resource Planning (ERP) system was the City’s first step in this direction and staff has learned valuable lessons throughout the implementation of this citywide system over the past four years. One of the major hurdles has been staff capacity. Due to lack of appropriate staffing throughout Operations, and a reduction in force due to COVID in 2020, the implementation has been slow moving. Over the last three years, staff from Finance have been pulled off their regular duties to manage the ERP implementation full-time. Thus, staff is recommending adding back a Financial Analyst in an effort to keep up with this position’s regular duties, as well as allow the Finance department to devote resources to proactively address purchasing and risk management/insurance activities and responsibilities.
•Additionally, there is need for a dedicated Software/Systems Applications Engineer. As all departments continue to review various department specific technology needs to streamline sometimes onerous processes, this position would research and test Business application software products for all departments; provide software application development and support; manage enterprise systems, databases, and web-based applications; make modifications to SQL database data; provide hardware and software technical support related to Enterprise Business Applications; provide end-user hardware/software training; customize ERP applications based on workflows; and, evaluate the current state of all business applications.
Over the last several years, Cathedral City has seen a vast increase in private development activity. The expansion of economic development opportunities in housing, commercial, and retail projects have significantly increased the baseline of the City’s private development workload. In addition to their regular duties, this has inundated department staff who must support, respond, and efficiently process private development applications. Since staffing levels in Planning and Building Services, as well as Engineering, have not fully recovered from previous budget driven staff reductions, backlogs of private development applications have become the norm versus the exception.
As it relates to private development, the goal and purpose of the Engineering & Public Works and Planning and Building Services departments is to facilitate the investment of private capital in high quality development benefiting the City and its residents. This important goal can only be achieved by having professional staff dedicated to support, respond, and process private development applications. The City currently has approximately 27 projects in the development/planning queue with smaller projects taking approximately 6-8 months and larger projects 8-12 months. Notable projects recently approved by the Planning Commission include Cathedral Cove Center, Denny’s, Dave’s Hot Chicken, Henry Arroyo Auto Repair Facility and Quick Quack Carwash. Developer interest in our City remains strong with increasing interest in multi- family residential, self-storage and cannabis projects.
Accordingly, staff is recommending the following:
Engineering & Public Works Department - (4) FTEs
•Staff recommends adding a Development Project Engineer in the Engineering and Public Works department. This will be a dedicated position for development plan review and streamlining preparation of conditions of approval. •The Engineering & Public Works Department is currently utilizing two Assistant Engineers to manage a $50 million Capital Improvement Project (CIP) and Parks Improvement Program. Due to time sensitive administrative tasks that must be performed on a regular basis, limited engineering resources are diverted to perform numerous non-engineering and administrative/reporting tasks for the Community Development Block Grant (CDBG), National Pollutant Discharge Elimination System (NPDES), Senate Bill (SB) 1, Riverside County Transportation Commission (RCTC), federal, state and county grants, etc. Based on the organizational assessment completed this year and a resource allocation review, it was determined our engineers dedicated to CIP Delivery are currently spending the majority of their time (65%) on non-CIP work activities.
The lack of engineering project management resources results in important capital projects being delivered based on availability of professional staff instead of on City Council funding priorities. The resulting project delays have real economic impacts to the City when 90% of our projects are street resurfacing projects and traffic safety projects, such as those funded through the Highway Safety Improvement Program (HSIP) grant program and the Active Transportation Program (ATP) bicycle/pedestrian improvement grant program.
Delaying street resurfacing projects leads to further street degradation resulting in increased costs to repair and maintain. Delaying grant funded projects could result in loss of funding which could also negatively impact the City’s ability to compete for future grant funds. HSIP and ATP grant funds are highly competitive and awarding agencies have strong preferences towards agencies with a good track record of spending money and delivering projects.
Additionally, the Engineering & Public Works Department does not maintain any administrative support staff for assistance in obtaining Requests for Information (RFI), Proposal (RFP), or Quote (RFQ) processing, pricing and tracking of CIP projects and several other clerical needs. To improve these services, staff is recommending three (3) positions be added to enhance CIP delivery and to support the various non-engineering and administrative tasks required by the Engineering and Public Works department to include an Analyst I/II, Engineering Technician II and Administrative Assistant.
Planning and Building Services Department - (1) FTE
•In an effort to improve the consistency and predictability of development services for project applicants, staff recently reinstituted a Development Services Strike Team comprised of the Department Directors. However, the work involved in managing these projects across the finish line will require additional resources to reduce the backlog and process private development applications in a reasonable and predictable timeframe. Staff recommends the addition of a Deputy Director in the Planning and Building Services Department, proposed to primarily manage the Planning Division and help lead the Development Services Strike Team, while also assisting the Director with managing the Department and heading up new initiatives and improve the City’s business friendliness.
A summary of the proposed recommended positions outlined above are identified below:
New Positions – (7.5) FTEs + (1) LT Six Month Salary and Benefit Total - $664,676 (7.5) FTEs + (1) LT Full Year cost for FY 2023/2024 - $1,329,352
CITY MANAGEMENT
Position Department
Human Resources Asst (P/T) City Management – HR
Events Coordinator (LT) City Management – Comm/Events
ADMINISTRATIVE SERVICES
Position Department
Analyst I/II Admin Services – Finance
Software/Systems App Engineer Admin Services – IT
ENGINEERING/PUBLIC WORKS
Position Department
Analyst I/II Engineering & Public Works
Development Project Engineer Engineering & Public Works Engineering Technician II Engineering & Public Works
Administrative Assistant I Engineering & Public Works
PLANNING AND BUILDING SERVICES
Position Department
Deputy Director Planning & Building Services
As an optional consideration for Councilmember Ross’ suggestion, a Grant Writer at the Analyst I/II level can be included at a salary and benefit cost of $126,527. If approved, this would be added to the General Fund fiscal impact below.
In addition, these four position reclassifications have either occurred or are planned to be evaluated to meet the functional staff duties:
Reclassified Positions – (4) FTEs Six Month Salary and Benefit Total - $89,916 (4) FTEs Full Year cost for FY 2023/2024 - $179,832
POSITIONS TO BE RECLASSIFIED TO MEET
FUNCTIONAL STAFF DUTIES
Position Department
Admin Assistant Planning & Building Services
Code Compliance II Planning & Building Services
Assistant Engineer Engineering & Public Works
Fleet Coordinator Engineering & Public Works
FISCAL IMPACT:
FY 2021/2022 Staffing Changes impacting FY 2022/2023 total $542,230 for the General Fund (No impact to Other Funds)
FY 2022/2023 Master Position Control additions and changes, comprised of:
•General Fund $656,184
•Other Funds $ 98,408
TOTAL $754,592
If approved, staff will pursue recruiting and reclassification efforts in the current year.
These positions will then be included in the upcoming FY 2023/2024 and FY 2024/2025 Biennial Budget.