Presentations (Updated 5-17-2023) — Cupertino City Council, May 17, 2023

CC 05-17-2023
#1
FY 2023-24 Proposed
Budget
Updated Presentation
May 17, 2023
Fiscal Year 2023-24
Proposed Budget
5/17/23 Updated
Presentation Slides
23, 29 and 72
2 Study Session Objectives
Present City Manager’s Proposed
Budget
Receive comments and questions
from Council and Public
Gather feedback and return with
updates for Final Budget Hearing on
June 6
th
3 FY 2023-24 Themes
The new
normal
Building on a
strong fiscal
foundation
Balancing
multiple
priorities
Redefining
the essential
Annual Budget Cycle
Base Budget
Updates
(December)
New Budget
Proposals
(March)
City Manager
Approves Budget
Proposals (April)
Proposed Budget
(May)
Final Budget
Adoption (June)
4 Mid-March 2023: CDTFA verbally
communicates its preliminary
determination to the City
• City Website
cupertino.org/budget
• Interactive Financial
Transparency Portal
cupertino.org/opengov
• Resident Tax Calculator and
Budget Forecast Tool
cupertino.org/interactive-
budget-tools
Accessing the Budget
5 Community Budget Survey and
Outreach
6 Throughout April and May, City staff hosted a variety of budget outreach events to educate the community on budget related topics at local farmer's markets, Cupertino festivals, and in front of the Cupertino Library.

Community Budget Outreach
7 • Opened April 20, 2023
• Closes May 31, 2023
• 727 responses as of May 16, 2023, 5:26 PM
• cupertino.org/BudgetSurvey
Community Budget Survey
8 1. You have 10 dots to allocate to the list of services that the City should reduce funding for. Indicate how many dots you would assign to each service based on your priorities. Reducing funding for a service may have consequences, such as
decreased quality or availability of that service.

2. You have 10 dots to allocate to the list of services that you would like the City to NOT reduce funding for. Please review the list and indicate how many dots you would assign to each service based on your priorities.

3. You have a maximum of 10 dots to decide what revenue- generating avenues you would want the City to pursue.

Community Budget Survey Questions
9 10
516
653
1895
2040
521
1273
Street Maintenance
Park Maintenance
Recreation Classes
Citywide Events
Law Enforcement
Hours of Operations

1. Which services would you reduce funding for?
11 1759
1303
417
500
2546
460
Street Maintenance
Park Maintenance
Recreation Classes
Citywide Events
Law Enforcement
Hours of Operations

2. Which services would you NOT reduce funding
for?
12 1542
2712
1964
Increased Taxes
Increased Fees
Sale of City-owned Properties

3. Which revenue-generating avenues would you
want the City to pursue?
Fiscal Year 2023-24 Proposed Budget Overview
General Fund Overview
General Fund Forecast
All Funds Summary
Proposed Budget Requests
Issues and Challenges
Next Steps
Agenda
13 Fiscal Year 2023-24
Proposed Budget Overview
15 Financial Overview by Fund1
Fund Revenues Expenditures
Change in Fund
Balance/
Net Position
General Fund 80,281,054 86,311,553 (6,030,499)
Special Revenue Funds 12,678,745 10,411,018 2,267,727
Debt Service Funds 2,677,600 2,677,600 -
Capital Projects Funds - 175,000 (175,000)
Enterprise Funds 6,744,789 9,454,105 (2,709,316)
Internal Service Funds 5,478,924 8,733,704 (3,254,780)
Total All Funds $107,861,112 $117,762,980 $(9,901,868)
1Excludes Capital Improvement Program
Fiscal Year 2023-24
General Fund Overview
17 Sales Tax
$31.9M
Sales Tax
$11.4M
Property Tax
$30.0M
Property Tax
$31.7M
Transient
Occupancy
$5.0M
Transient
Occupancy
$7.5M
Other Revenues
$27.7M
Other Revenues
$29.6M
Total
$94.7M
Total
$80.3M
FY 2022-23 Adopted FY 2023-24 Proposed
General Fund Revenues
Note: Numbers may not add to total due to rounding.

General Fund Revenues
Category FY 2022-23 Adopted FY 2023-24 Proposed $ Change % Change Sales Tax 31,944,089 11,428,930 (20,515,159) -64%
Property Tax 30,039,574 31,736,834 1,697,260 6%
Transient Occupancy 5,000,000 7,500,000 2,500,000 50%
Utility Tax 2,955,404 3,304,742 349,338 12%
Franchise Fees 3,230,101 3,443,574 213,473 7%
Other Taxes 1,787,691 1,641,486 (146,205) -8%
Licenses & Permits 3,541,012 4,265,081 724,069 20%
Use of Money & Property 1,277,013 2,328,336 1,051,323 82% Intergovernmental 1,434,491 807,624 (626,867) -44%
Charges for Services 11,528,436 11,894,611 366,175 3%
Fines & Forfeitures 427,000 405,000 (22,000) -5%
Miscellaneous 1,160,437 1,142,836 (17,601) -2%
Transfers in 61,140 15,000 (46,140) -76%
Other financing sources 275,000 367,000 92,000 34%
Total Revenues $94,661,388 $80,281,054 $(14,380,334) -15% 18 Compensation & Benefits
$35.7M
Compensation & Benefits
$35.9M
Materials
$7.2M Materials
$6.4M
Contract Services
$25.0M
Contract Services
$25.0M
Transfers
$12.0M Transfers
$6.5M
Capital Outlay &
Special Projects
$3.7M
Capital Outlay &
Special Projects
$1.2M
Other Expenditures
$11.5M
Other Expenditures
$11.4M
Total
$95.2M
Total
$86.3M
FY 2022-23 Adopted FY 2023-24 Proposed
General Fund Expenditures
Note: Numbers may not add to total due to rounding.

General Fund Expenditures
Category FY 2022-23 Adopted FY 2023-24 Proposed $ Change % Change Employee Compensation 24,295,660 24,756,604 460,944 2%
Employee Benefits 11,440,636 11,124,035 (316,601) -3%
Total Personnel Costs 35,736,296 35,880,639 144,343 0%
Materials 7,219,073 6,387,746 (831,327) -12%
Contract Services 25,026,032 24,975,024 (51,008) 0%
Cost Allocation 10,385,961 10,257,656 (128,305) -1%
Capital Outlays &
Special Projects 3,657,378 1,211,157 (2,446,221) -67%
Contingencies 451,739 216,731 (235,008) -52%
Transfers Out 11,996,300 6,457,600 (5,538,700) -46%
Other Financing Uses 695,000 925,000 230,000 33%
Total Expenditures $95,167,779 $86,311,553 $(8,856,226) -9% 20 Category
FY 2023-24
Original
Budget1
FY 2023-24
Forecast
(April 13, 2023)
FY 2023-24
Proposed Budget
(May 5, 2023)
Sales Tax 42.1 11.4 11.4
Other Revenues 69.0 69.0 68.9
Total Revenues 111.1 80.4 80.3
Compensation & Benefits 42.1 35.8 35.9
Materials 8.2 4.9 6.3
Contract Services 27.7 25.7 25.0
Cost Allocation 10.4 10.4 10.3
Transfers 12.2 8.1 6.5
Other Expenditures 3.6 1.6 2.3
Total Expenditures 104.2 86.5 86.3
Net Revenues - Expenditures 6.8 (6.1) (6.0)
Proposed Budget Update
($ In Millions)
211This was the City’s budget before the CDTFA informed the City about potential revenue loss. Expenses were determined using the previous year's base budget, with adjustments by the Consumer Price Index (CPI) when applicable and additions of new requests.

Eliminating new
position requests
and 14 vacant
positions
$6.2M
Reduction in
Materials
$1.8M
Reduction in
Contracts
$2.7M
Reduction in
Transfers to
Other Funds
$5.8M
Reduction in Capital
Outlays, Special
Projects, Cost
Allocation, and
Contingencies
$1.4M
Use of Fund
Balance
$6.0M
Closing the $23.9 Million Deficit
FY 2023-24 Original Budget vs FY 2023-24 Proposed Budget 22 Fiscal Year 2023-24
General Fund Forecast
Forecast Revenue Assumptions1
Account Assumption Description
Sales Tax Conservative
(1.6% AAGR)
HdL’s forecast in FY 2023-24
73% ($30 million) sales tax loss
Conservative trend after
Property Tax Moderate
(3.1% AAGR)
HdL’s forecast in FY 2023-24
Moderate trend after
Transient
Occupancy
Tax
Moderate
(1.9% AAGR)
Recovery to $7.5M in FY 2023-24
Moderate trend after
1Forecasts assume recession (no growth) in FY 2024-25 and FY 2028-29 for all revenue categories
24 Forecast Expenditure Assumptions
Account Assumption Description
Compensation CalPERS
projections
No cost-of-living adjustments (COLAS), excluding
payroll growth forecasted by CalPERS
Benefits 1.2% AAGR Based on CalPERS projections
Materials 2.5% AAGR Average of State and County CPI
Contracts 6.3% AAGR Average of State and County CPI
Law enforcement contract = CPI + 2%
Special
Projects
1 Baseline +
CPI $0.5 million baseline
Contingencies 0.2% AAGR 1.25% of Materials and Contracts Transfers Baseline +
CPI $7.5 million baseline
1Will impact ability to fund work program and other one-time items 25 26 $6.3M
-$6.0M
-$11.5M
-$7.3M -$7.5M
-$6.1M
-$8.3M -$8.3M
-$5.6M -$5.0M -$5.2M
General Fund Annual Operating Surplus/(Deficit)
73% drop in sales tax revenue
Recessionary
assumption
Debt fully repaid
FY 2022-23 FY 2032-33 Change
General Fund
Unassigned 52.8 - (52.8)
Capital Projects Reserve 10.0 - (10.0)
Section 115 Pension Trust 17.2 13.3 (4.0)
Economic Uncertainty Reserve 24.0 24.0 -
Total $104.0 $37.3 $(66.8)
Capital Project Funds (420 & 429)
Unassigned $13.3 TBD TBD
Fund Balance Impacts -10 Years
($ In millions)
27Note: Numbers may not add to total due to rounding.
162.75 164.75 169.75
179.75 185.75
192.75 196.75 197.75 198.75 203.75
225
212 207 204 201 198 195 192 188 184 180
Historical and Forecasted Staffing
Adopted Budget and Forecast
28 Fiscal Year 2023-24
All Funds Summary
30 All Other Funds Financial Overview
Fund Revenues Expenditures
Change in Fund
Balance/
Net Position
Special Revenue Funds 12,678,745 10,411,018 2,267,727
Debt Service Funds 2,677,600 2,677,600 -
Capital Projects Funds - 175,000 (175,000)
Enterprise Funds 6,744,789 9,454,105 (2,709,316)
Internal Service Funds 5,478,924 8,733,704 (3,254,780)
Total All Other Funds $27,580,058 $31,451,427 $(3,871,369) All Other Funds Expenditures
31 Category FY 2022-23 Adopted FY 2023-24 Proposed $ Change % Change Employee Compensation 5,640,309 5,889,704 249,395 4%
Employee Benefits 3,833,322 3,906,958 73,636 2%
Materials 2,920,174 2,545,032 (375,142) -13%
Contract Services 8,020,243 7,954,378 (65,865) -1%
Cost Allocation 2,043,548 2,217,594 174,046 9%
Capital Outlays 4,406,600 880,224 (3,526,376) -80%
Special Projects 4,466,921 4,111,582 (355,339) -8%
Contingencies 242,632 104,335 (138,297) -57%
Debt Services 2,675,800 2,677,600 1,800 0%
Transfers Out 23,600 15,000 (8,600) -36%
Other Financing Uses 1,146,397 1,149,020 2,623 0%
Total $35,419,546 $31,451,427 $(3,968,119) -11%
Fiscal Year 2023-24
Proposed Budget Requests
Fund
One-Time
Special
Projects
Ongoing
Special
Projects
Total
Proposals
General Fund 1,211,157 - 1,211,157
Special Revenue Funds 227,868 3,175,981 3,403,849
Enterprise Funds 135,733 - 135,733
Internal Service Funds 572,000 - 572,000
Total All Funds $2,146,758 $3,175,981 $5,322,739
Budget Requests by Fund
33 34
Budget Requests by Department
Department
One-Time
Special
Projects
Ongoing
Special
Projects
Total
Proposals
Council & Commissions - - -
Administration 10,000 - 10,000
Innovation & Technology 691,475 - 691,475
Administrative Services - - -
Parks & Recreation 25,000 - 25,000
Community Development 100,000 - 100,000
Public Works 1,320,283 3,175,981 4,496,264
Non-Departmental - - -
Total All Departments $2,146,758 $3,175,981 $5,322,739
• The FY 2023-24 Proposed Budget decreased by $144,551 (-

11.1%) from the FY 2022-23 Adopted Budget.1
• No budget requests
Council & Commissions
35 1Includes all expenditures including compensation, benefits, materials, contract services, cost allocation, special projects, and contingencies. Details for this department are available in the FY 2023-24 Proposed Budget on pages 177-218.

Organization Requested
Funding
Recommended
Funding1
Cupertino Symphonic Band 4,000 3,015
No Time to Waste 5,000 3,769
West Valley Community Services 10,000 7,539
STEMBoost Corporation 4,000 3,015
AINAK 2,500 1,885
Omniware Networks 4,000 3,015
Asian American Parents Association 3,000 2,262
Total $32,500 $24,500
Community Funding
36 125% reduction to all organizations
Service FY 2023-24
Original
Budget
FY 2023-24
Reduced
Budget
Reduction Service Level Impact
Materials 286,824 161,259 125,565 Reduced meeting expenses such as food and coffee,
conference and meetings, and
tech reimbursements. Council
members now use City devices.

Total $286,824 $161,259 $125,565
Council & Commissions – Reductions
37 Internal Impacts Community Impacts
• Reduce
• coffee service and food
• professional development
opportunities from conference
attendance and trainings
• tech reimbursements. Council
now uses City devices
• Mayor’s fund to $10k per year
from $15K
• Reduce
• Community Funding by $8,000 from $32,500 to
$24,500. In addition, staff will be recommending
eliminating funding beginning next fiscal year.
• funding for artist awards
• Remove
• cyber security education funding
• parting gift for Poet Laureate
• Art in Unexpected Places
• School Waste Audit
• Grant Programs for Students in sustainability
commission
• contingency planning for an outdoor Public Safety
Forum event
• Commission dinners and conferences
Council & Commissions – Detailed Impacts
38 Administration
(City Manager's, City Clerk's, City Attorney's Office)
39 • The FY 2023-24 Proposed Budget decreased by $1,894,863 (-19.6%) from the FY 2022-23 Adopted Budget.1
• Requests for two City Work Program projects
1Includes all expenditures including compensation, benefits, materials, contract services, cost allocation, special projects, and contingencies. Details for this department are available in the FY 2023-24 Proposed Budget on pages 219-266.

Service FY 2023-24
Original
Budget
FY 2023-24
Reduced
Budget
Reduction Service Level Impact
Materials 535,812 400,223 135,589 Reduction in conferences/ trainings, office supplies,
meeting expenses, supplies for
City events, some emergency/
business/and sustainability
programs
Contracts 1,362,790 941,380 421,410 Reduction in funds available for new/unexpected litigation and
other legal issues, translation
services, and water
conservation rebate agreement
Total $1,898,602 $1,341,603 $556,999
Administration – Reductions
40 Internal Impacts Community Impacts
• Reduce
• professional development
opportunities from
conference attendance
and training
• office supplies and meeting
expenses
• funds available for
new/unexpected litigation
and other legal issues
• Reduce
• CREST award and State of
the City budgets
• funds for annual volunteer
recognition for Block
Leaders and Citizen Corps
• CM Contingency to $50k
from $75k
• funds for water conservation
rebate agreement
Administration – Detailed Impacts
41 • Eliminate 2 FTEs
• Assistant City Manager (Vacant)
• Communications Analyst (Vacant)
Administration – Staffing
42 Administration – Special Projects
Fund Project One-Time/
Ongoing Revenue Amount
General Fund CWP Public Safety in both
residential/commercial areas One-Time 10,000
Total $10,000
43 • The FY 2023-24 Proposed Budget increased by $998,089 (5.9%) from the FY 2022-23 Adopted Budget.1
• This budget was not reduced. Interoperability contract was removed due to program ending.
• The budget increase is due to the City’s contract with Santa Clara County Sheriff’s department.
• The current contract term ends on June 30, 2024.

Law Enforcement
44 1Includes all expenditures including compensation, benefits, materials, contract services, cost allocation, special projects, and contingencies. Details for this department are available in the FY 2023-24 Proposed Budget on pages 267-278. • The FY 2023-24 Proposed Budget decreased by $428,630
(-5.4%) from the FY 2022-23 Adopted Budget.1
• Transfer of 1.5 FTEs from City Manager’s Office
• Requests for infrastructure and applications
enhancements
Innovation & Technology
45 1Includes all expenditures including compensation, benefits, materials, contract services, cost allocation, special projects, and contingencies. Details for this department are available in the FY 2023-24 Proposed Budget on pages 279-306.

Service FY 2023-24
Original
Budget
FY 2023-24
Reduced
Budget
Reduction Service Level Impact
Materials 2,794,442 1,812,505 981,937 Extended Tech Refresh Cycle, Less Software Licenses, Reduce
WAN Link Redundancy, Less
City Parks with Wi-Fi, Less
Training & Conferences
Contracts 791,240 620,119 171,121 Reduced Outside Support – application configuration
and/or modification changes,
Less Pilots of Future Tech, Less
Outside Scanning
Total $3,585,682 $2,432,624 $1,153,058
Innovation & Technology – Reductions
46 Internal Impacts Community Impacts
• Reduced professional
development opportunities
from conference attendance
• Extended tech refresh cycles
for laptops, iPads, iPhones,
and other IT equipment
• Reduced WAN Link
Redundancy
• Reduced outside support of
applications
• Less pilots of future tech
• Less City parks with Wi-Fi
Innovation & Technology – Detailed
Impacts
47 • Eliminate 1 FTE
• Manager
Innovation and Technology – Staffing
48 Innovation & Technology – Special Projects
Fund Project One-Time/
Ongoing Revenue Amount
General Fund ERP (Phase III) Ongoing FY 2023-24: 310,000 FY 2023-24: 450,000 Ongoing: 300,000
General Fund ProjectDox Ongoing FY 2023-24: 129,475
Ongoing: 117,100
I&T Fund VR Decarb One-Time 111,500 112,000
Total $421,500 $691,475
49*Refer to pages 36-37 of the FY 2022-23 Proposed Budget for the full list of special projects • The FY 2023-24 Proposed Budget increased by $2,998
(0.0%) from the FY 2022-23 Adopted Budget.1
• No budget requests
Administrative Services
50 1Includes all expenditures including compensation, benefits, materials, contract services, cost allocation, special projects, and contingencies. Details for this department are available in the FY 2023-24 Proposed Budget on pages 307-344.

Service FY 2023-24
Original
Budget
FY 2023-24
Reduced
Budget
Reduction Service Level Impact
Materials 186,223 108,808 77,415 Reduced conference
attendance, office and general
supplies, recruitment
advertisements, printing,
citywide coffee and tea and
reduced citywide employee
events.

Contracts 4,152,414 4,020,746 131,668 Reduced citywide trainings, reduced executive recruitments
and reduced consultant costs.

Total $4,338,637 $4,129,554 $209,083
Administrative Services – Reductions
51 Internal Impacts Community Impacts
• Reduced
• professional development opportunities
from conference attendance
• Citywide trainings
• advertising for recruitment
• costs for lunch for outside interview panels
• executive recruitments from two annually
to one
• internal audit budget to $80,000 from
$100,000 in line with budget reduction
targets
• citywide employee events (years of service
and holiday party) from two events to one
• Reduced printing of Budget, Budget at a Glance
and Annual Comprehensive Financial Report
(ACFR)
Administrative Services – Detailed Impacts
52 • Eliminate 1 FTE
• Administrative Assistant (Vacant)
Administrative Services – Staffing
53 Parks & Recreation
54 • The FY 2023-24 Proposed Budget decreased by
$1,155,198 (-8.6%) from the FY 2022-23 Adopted Budget.1 • Requests for two City Work Program projects
1Includes all expenditures including compensation, benefits, materials, contract services, cost allocation, special projects, and contingencies. Details for this department are available in the FY 2023-24 Proposed Budget on pages 345-396.

Service FY 2023-24
Original
Budget
FY 2023-24
Reduced
Budget
Reduction Service Level Impact
Part-Time
Staffing –
Department
Wide
1,606,998 1,381,602 225,396 Reduced PT Staff budgets to minimum levels necessary to operate currently
open Recreational facilities and
ongoing programs.

Materials 779,829 457,723 322,106 Reduced conferences and training, reduced materials and supplies and
marketing efforts, simplified programs
and events.

Contracts 4,532,489 3,953,917 578,572 Reduced free events. Reduced budget for new classes and programs.

Removed budget to cover festival
fees.

Total $6,919,316 $5,793,242 $1,126,074
Parks & Recreation – Reductions
55 Internal Impacts Community Impacts
• Reduced professional
development
opportunities from
conference and
training attendance
• Reduced materials and
supplies across the
department by 30%
• Cutting the pages in the recreation brochure, incorporating the 50+ Scene into the recreation brochure, and reducing social media ad funding
• Reduced
• expansion of current or new offerings for contracted programs, camps, and classes
• funding for events (Tree Lighting, Big Bunny 5K, Fourth of July, Summer Events)
• Removed
• extra office hours at appropriate buildings and close teen center • budget to cover fees for festivals.
• Council may consider further reductions to fee waivers. • free events (Volunteer Fair, Bobateeno, Movies in the Park, Harvest Day, Corridor Stroll, Commissioner’s Dinner)
• funding for Shakespeare in the Park, but work with San Francisco Shakespeare to continue offering through fundraising
Parks & Recreation – Detailed Impacts
56 • Eliminate 2 FTEs
• Recreation Manager (Vacant)
• Community Outreach Specialist (Vacant)
• Delay Filling of vacancies where possible
• Reduced PT staff budgets to minimum levels
necessary to operate current facilities and
programs.

Parks & Recreation – Staffing
57 Parks & Recreation – Special Projects
Fund Project One-Time/
Ongoing Revenue Amount
General Fund CWP Senior Services and Youth
Engagement One-Time 20,000
General Fund CWP Dogs off leash area (DOLA) One-Time 5,000 Total $25,000
58 59
Festival Costs1
1 Data not available at the time of the proposed budget printing * Staff recommends cutting the budget for Sheriff costs and having the festival organizers pay those fees ** Staff recommends cutting the budget for the rental of chairs and having the festival organizers pay those fees

Community Development
60 • The FY 2023-24 Proposed Budget increased by $173,371 (1.3%) from the FY 2022-23 Adopted Budget.1
• Requests for two City Work Program projects:
• Update Tree List
• Support for the Unhoused
1Includes all expenditures including compensation, benefits, materials, contract services, cost allocation, special projects, and contingencies. Details for this department are available in the FY 2023-24 Proposed Budget on pages 397-444.

Service FY 2023-24
Original
Budget
FY 2023-24
Reduced
Budget
Reduction Service Level Impact
Materials 1,186,321 1,121,866 64,455 Consolidation and reduction of conference attendance and
professional development
opportunities, and reduction of
materials and supplies.

Contracts 665,080 565,580 89,500 Termination of on-call contracts and negotiation of new
contracts will reduce service
level and response time.

Total $1,841,401 $1,687,446 $153,955
Community Development – Reductions
61 Internal Impacts Community Impacts
• Reduced
• professional development
opportunities from
conference and training
attendance
• printing and office materials
• Removed commission meals and
beverages for public meeting
days
• Permit review and public inquiry
response time will experience
delays due to reduced staff levels
and contractors
Community Development – Detailed
Impacts
62 • Eliminate 3 FTEs
• Office Assistant (Vacant)
• Senior Housing Planner (Vacant)
• Consolidation of roles will result in elimination
of a manager vacancy
• Total 13 current vacancies
• Evaluate priorities and timing of recruitments for
remaining vacancies
• Reduce on-call contracts and materials
Community Development – Staffing
63 Community Development – Special
Projects
Fund Project One-Time/
Ongoing Revenue Amount
General Fund CWP Tree List One-Time 50,000
General Fund CWP Support for the Unhoused One-Time 50,000 Total $100,000
64 • The FY 2023-24 Proposed budget decreased by
$1,366,792 (-3.4%) from the FY 2022-23 Adopted Budget.1 • Requests for City Work Program projects and special
projects
Public Works
65 1Includes all expenditures including compensation, benefits, materials, contract services, cost allocation, special projects, and contingencies. Details for this department are available in the FY 2023-24 Proposed Budget on pages 445-604.

Public Works – Reductions
66 Service FY 2023-24
Original Budget
FY 2023-24
Reduced Budget
Reduction Service Level Impact
Materials 5,439,339 4,852,483 586,857 Reduced or eliminated office and general supplies; meetings, conference and
trainings; memberships; equipment not
covered under the MOU; small tools and
equipment; and printing and advertising.

Contracts 5,460,208 4,859,824 600,384 Reduced services and response to work requests; Decreased frequency
of maintenance at City facilities, parks,
streets & trees.

Special Projects 5,290,259 4,496,264 793,995 Delayed or deferred sidewalk repairs and pavement maintenance.

Capital Outlays 1,100,280 880,224 220,056 Delayed or deferred pavement maintenance, which will lower the City’s
Pavement Condition Index (PCI) rating.

Total $17,290,086 $15,088,795 $2,201,292
Internal Impacts Community Impacts
• Reduced
• professional development
opportunities from
conference attendance
• frequency of janitorial
cleaning services for most
City facilities
• Reduced frequency of janitorial
cleaning services for most City
facilities
• Cessation of goose control services
at Memorial Park
• Reduced funds for concrete and
pavement maintenance with an
expectation of a reduction in the
City’s Pavement Condition Index
(PCI)
Public Works – Detailed Impacts
67 • Eliminate 3 currently vacant Maintenance Worker
FTEs
• Eliminate 2 currently vacant Project Manager FTEs
• Delay Filling of FTE vacancies
• 6 Current Vacancies are not being filled
Public Works – Staffing
68 Public Works – Special Projects
Fund Project One-Time/
Ongoing Revenue Amount
Transportation Fund Annual Asphalt Project Ongoing 1,943,668 Transportation Fund Annual Sidewalk Curb & Gutter Ongoing 1,232,313 Vehicle/Equipment Vehicle & Equip Replacement One-Time 460,000 Various Other Projects* One-Time 303,550
General Fund Fluted Street Light Pole Replacement One-Time 230,000 Env Mgmt Cln Crk
Envirosight ROVVER X Remote Control
Camera System One-Time 131,000
Resource Recovery HHW and Paint Care One-Time 115,733
General Fund CWP Tree List One-Time 60,000
General Fund CWP Vision Zero One-Time 20,000
Total $4,496,264
*High level overview. Refer to page 44 of the FY 2023-24 Proposed Budget for the full list of special projects 69 • The FY 2023-24 Proposed Budget decreased by
$5,521,900 (-37.6%) from the FY 2022-23 Adopted
Budget.1
• No budget requests
Non-Departmental
70 1Includes all expenditures including compensation, benefits, materials, contract services, cost allocation, special projects, and contingencies. Details are available in the FY 2023-24 Proposed Budget on pages 605-622.

General
Fund
Position
Reclassification - 25,360
Reclassification of the Emergency
Services Manager as Assistant to the City
Manager
Total $84,218 $25,360
Changes Since Proposed Budget Printing
72 City Work Program
73 FY 2023-24 City Work Program
74 Strategic Goal Project Description Department
Funded in
FY 2022-23
FY 2023-24
Recommended
Funding
Quality of Life CWP - Public Safety in
both
residential/commercial
areas
1) Deploy city-owned license plate readers and implement policies to allow neighborhood-owned ones. 2) Strengthen Block Leader/Neighborhood Watch programs to ensure the leaders are active and expand the coverage of active neighborhoods. 3) Explore best practices to deter crime in commercial areas and Administration 60,000 10,000
Publ Eng and
Transparency
CWP - Senior Services
and Youth Engagement
1) Assess Survey results and develop a plan to increase awareness of programs and services for seniors based on gaps identified by the survey. 2) Connect seniors with youth and their families
Parks and Recreation - 20,000
Quality of Life CWP - Dogs Off Leash
Area
1) Transition successful trial DOLA programs to permanent programs with a staff level permitting process housed in Parks and Rec 2) Amenities for DOLA programs in City parks, e.g., water facilities for dogs, fencing, benches, etc.

Parks and Recreation 200,000 5,000
Sustainability & Fiscal
Strategy
CWP - Tree List Project phases: 1) Review and revise development tree list (per Ch. 14.18:

Protected Trees) with an emphasis on appropriate trees and native species. 2) Review, revise, and communicate street tree list with an emphasis on appropriate trees and native species. 3) Develop an Urban Forest program scope and cost for future consideration.

Community
Development/ Public
Works
- 110,000
Housing CWP - Support for the
Unhoused
Collaborate and fund jointly with West Valley efforts to address regional needs and find workable support for the Unhoused.

Community
Development
- 50,000
Transportation CWP - Planned
Transportation Project
(Vision Zero)
Develop a Vision Zero Policy and Action Plan and hire a consultant. The Plan will guide policies and programs with the goal of eliminating fatalities on Cupertino roadways. Special emphasis will be placed on routes to, and streets surrounding, Cupertino schools.

Public Works 80,000 20,000
75 Strategic Goal Project Description Department
Funded in
FY 2022-23
FY 2023-24
Recommended
Funding
Sustainability & Fiscal
Strategy
CWP - Analyze Potential
Revenue Resources
Analyze potential revenue resources such as transient occupancy tax, sales tax, property tax, utility users tax, the City -owned municipal water system, and potential lease/rental income to address possible future financing challenges.

Administrative Services 50,000 -
Sustainability & Fiscal
Strategy
CWP - Fiscal Procedures
and Policies Handbook
Develop the handbook to ensure standardization of accounting, budget, investment, procurement policies, procedures, rules and regulations.

Administrative Services 45,000 -
Sustainability & Fiscal
Strategy
CWP - Budget Audit Audit the Budget and Budget Policies. Administrative Services 15,000 - Publ Eng and
Transparency
CWP - Whole City Policy
Review
Repeat the 2013 process of compiling and reviewing all City Policies including 1) Administrative and 2) Council policies and provide recommendations/updates, e.g. Green Purchasing, Property Acquisition
Administrative
Services/City Attorney’s
Office/City Manager’s
Office
10,000 -
Publ Eng and
Transparency
CWP - Council
Governance Reform
Package

1. Revised Ethics Policy consistent with City response to the Civil Grand Jury Report authorized on 2/21/2023 2. Investigate and report back on incidents of violations of the Municipal Code and Ethics Policy relative to the Council -staff relationship cited in the Civil Grand Jury Report
City Attorney's
Office/City Manager's
Office
25,000 -
Publ Eng and
Transparency
CWP - Commission
Governance Reform
Package

1. Revised Commissioner’s Handbook to align it with Council Procedures Manual

2. Investigate & report back on incidents of violations of the Muni Code re: the Commission -Staff relationship 3. Realignment of Commissioner terms of office 4.

Establishment/revision of commissioner qualifications
City Attorney's
Office/City Manager's
Office
- -
Sustainability & Fiscal
Strategy
CWP - Study Session on
City-Owned Properties
Inventory and assess existing facilities and prepare a long -range planning report for three City-owned properties (including, but not limited to Blesch, Byrne, and Stocklemeir)
City Manager’s Office 90,000 -
Housing CWP - Preserve existing
and develop new
BMR/ELI Housing
Explore opportunities to preserve existing expiring BMR housing. Develop ELI (Extremely Low Income) and BMR housing units for Developmentally Disabled individuals (IDD) on City-owned property as well as the County-owned sites.

Community
Development
250,000 -
Housing CWP - Housing Element
Update
Update Housing Element and complete rezoning, General Plan Amendments and EIR by December 2023.

Community
Development
1,714,625 -
TOTAL $2,539,625 $215,000
FY 2024-25 City Work Program
76 Strategic Goal Project Description Department
Funding
Requests for FY
2024-25
Publ Eng and
Transparency
CWP - The Rise: construction
stakeholder engagement
Improve engagement with stakeholders to ensure progress with construction and reduce barriers. City Manager’s Office 100,000
Sustainability & Fiscal
Strategy
CWP - Real Estate Purchasing
Policy
Create Real Estate Purchasing Policy City Manager’s
Office 75,000
Quality of Life CWP - Revise & Update Heart
of the City Special Area
Prioritize following completion of Housing Element: 1. Address effect of AB 2011 and build on Housing Element goals to facilitate housing production in transit -oriented locations 2. Tailor permissible uses to revitalize local public -facing commercial uses (retail/restaurant/entertainment/professional office, etc.) Community
Development 1,050,000
Housing CWP - Homelessness Jobs
Project and Transitional
Housing
Continue the Homeless Jobs program for two individuals for the third year. Revisit for review and consider Transitional Housing
Community
Development 225,000
Quality of Life CWP - Privacy Screening and
Balconies Code
Prioritize following completion of Housing Element: Muni Code (Ch.19.28: R -1 Zones) Privacy Screening and Balconies. Update privacy planting list to be climate appropriate/native Community
Development 200,000
Sustainability & Fiscal
Strategy
CWP - Recycled Water
Feasibility Study
Develop Recycled Water Feasibility Study. Include Blackberry Farm focus and extension of recycled water from SCVWD.

Public Works
200,000
Quality of Life CWP - Pond Repurposing at
Blackberry Farm
Repurposing ponds at Blackberry Farm, focus on groundwater recharge. Public Works 50,000
Transportation CWP - New Bicycle-Pedestrian
Plan
1) Update the current Bicycle and Pedestrian Plans and combine them to create a comprehensive Active Transportation Plan. 2) Consider Complete Streets concepts to enhance the interface between Active Transportation improvements and public and private transportation systems.

Public Works
200,000
Quality of Life CWP - 280 stretch as scenic
highway
Establish/maintain I-280 as scenic highway Public Works 25,000
TOTAL $2,125,000
Capital Improvement Program (CIP)
77 1. Stevens Creek Blvd./Calabazas Creek Storm Drain Repair (infrastructure)

2. Stevens Creek Bridge Repair (infrastructure)
New Projects:
$2,027,000*
$420,000
$172,000
$592,000

1. Street Light Installation – Annual Infill (infrastructure)

2. Annual Playground Replacement (parks)

3. ADA Improvements (facilities)

4. Citywide Building Condition Assessment Implementation (facilities) Additional Funding for existing projects:
$35,000
$300,000
$100,000
$1,000,000
$1,435,000
CIP – Proposed FY23–24 Projects
*This Funding will come from the existing CIP Capital Reserve Fund (Fund 429) rather than the General Fund (Fund 100). 78
Issues and Challenges
• CDTFA Sales Tax Audit
• Capital Project Funding
• Labor Negotiations
• Law Enforcement Costs
• Reduced Staffing
Issues and Challenges
80 Position Department FTE
Assistant City Manager Administration -1.00
Communications Analyst (Limited-Term) Administration -1.00 Administrative Assistant Administrative Services -1.00
Office Assistant Community Development -1.00
Senior Housing Planner Community Development -1.00
Permit Center Manager Community Development -1.00
Recreation Manager Parks and Recreation -1.00
Community Outreach Specialist Parks and Recreation -1.00 Maintenance Worker I Public Works -1.00
Maintenance Worker I Public Works -1.00
Maintenance Worker Lead Public Works -1.00
Project Manager Public Works -1.00
Project Manager (Limited-Term) Public Works -1.00
Assistant Director of Public Works Public Works -1.00
Total -14.00
Staffing Reductions
81Note: 1 FTE in the IT department is expected to be eliminated later this year due to an upcoming vacancy.

Next Steps
83 Next Steps
May 16, 2023
3rd Quarter
Financial
Report
May 17, 2023
Proposed
Budget Study
Session
May 18, 2023
Community
Budget
Townhall
June 6,2023
Final Budget
Hearing and
Adoption
Nov 2023
1st Quarter
Financial
Report
Questions?
CC 05-17-2023
#1
FY 2023-24 Proposed
Budget
Presentation
May 17, 2023
Fiscal Year 2023-24
Proposed Budget
2 Study Session Objectives
Present City Manager’s Proposed
Budget
Receive comments and questions
from Council and Public
Gather feedback and return with
updates for Final Budget Hearing on
June 6
th
3 FY 2023-24 Themes
The new
normal
Building on a
strong fiscal
foundation
Balancing
multiple
priorities
Redefining
the essential
Annual Budget Cycle
Base Budget
Updates
(December)
New Budget
Proposals
(March)
City Manager
Approves Budget
Proposals (April)
Proposed Budget
(May)
Final Budget
Adoption (June)
4 Mid-March 2023: CDTFA verbally
communicates its preliminary
determination to the City
• City Website
cupertino.org/budget
• Interactive Financial
Transparency Portal
cupertino.org/opengov
• Resident Tax Calculator and
Budget Forecast Tool
cupertino.org/interactive-
budget-tools
Accessing the Budget
5 Community Budget Survey and
Outreach
6 Throughout April and May, City staff hosted a variety of budget outreach events to educate the community on budget related topics at local farmer's markets, Cupertino festivals, and in front of the Cupertino Library.

3. You have a maximum of 10 dots to decide what revenue- generating avenues you would want the City to pursue.

Community Budget Survey Questions
9 10
516
653
1895
2040
521
1273
Street Maintenance
Park Maintenance
Recreation Classes
Citywide Events
Law Enforcement
Hours of Operations

1. Which services would you reduce funding for?
11 1759
1303
417
500
2546
460
Street Maintenance
Park Maintenance
Recreation Classes
Citywide Events
Law Enforcement
Hours of Operations

2. Which services would you NOT reduce funding
for?
12 1542
2712
1964
Increased Taxes
Increased Fees
Sale of City-owned Properties

Eliminating new
position requests
and 14 vacant
positions
$6.2M
Reduction in
Materials
$1.8M
Reduction in
Contracts
$2.7M
Reduction in
Transfers to
Other Funds
$5.8M
Reduction in Capital
Outlays, Special
Projects, Cost
Allocation, and
Contingencies
$1.4M
Use of Fund
Balance
$6.0M
Closing the $23.9 Million Deficit
FY 2023-24 Original Budget vs FY 2023-24 Proposed Budget 22 Fiscal Year 2022-23
General Fund Forecast
Forecast Revenue Assumptions1
Account Assumption Description
Sales Tax Conservative
(1.6% AAGR)
HdL’s forecast in FY 2023-24
73% ($30 million) sales tax loss
Conservative trend after
Property Tax Moderate
(3.1% AAGR)
HdL’s forecast in FY 2023-24
Moderate trend after
Transient
Occupancy
Tax
Moderate
(1.9% AAGR)
Recovery to $7.5M in FY 2023-24
Moderate trend after
1Forecasts assume recession (no growth) in FY 2024-25 and FY 2028-29 for all revenue categories
24 Forecast Expenditure Assumptions
Account Assumption Description
Compensation CalPERS
projections
No cost-of-living adjustments (COLAS), excluding
payroll growth forecasted by CalPERS
Benefits 1.2% AAGR Based on CalPERS projections
Materials 2.5% AAGR Average of State and County CPI
Contracts 6.3% AAGR Average of State and County CPI
Law enforcement contract = CPI + 2%
Special
Projects
1 Baseline +
CPI $0.5 million baseline
Contingencies 0.2% AAGR 1.25% of Materials and Contracts Transfers Baseline +
CPI $7.5 million baseline
1Will impact ability to fund work program and other one-time items 25 26 $6.3M
-$6.0M
-$11.5M
-$7.3M -$7.5M
-$6.1M
-$8.3M -$8.3M
-$5.6M -$5.0M -$5.2M
General Fund Annual Operating Surplus/(Deficit)
73% drop in sales tax revenue
Recessionary
assumption
Debt fully repaid
FY 2022-23 FY 2032-33 Change
General Fund
Unassigned 52.8 - (52.8)
Capital Projects Reserve 10.0 - (10.0)
Section 115 Pension Trust 17.2 13.3 (4.0)
Economic Uncertainty Reserve 24.0 24.0 -
Total $104.0 $37.3 $(66.8)
Capital Project Funds (420 & 429)
Unassigned $13.3 TBD TBD
Fund Balance Impacts -10 Years
($ In millions)
27Note: Numbers may not add to total due to rounding.
162.75 164.75 169.75
179.75 185.75
192.75 196.75 197.75 198.75 203.75
225
212 207 204 201 198 195 192 188 184 180
Historical and Forecasted Staffing
Adopted Budget and Forecast
28 Fiscal Year 2022-23
All Funds Summary
30 All Other Funds Financial Overview
Fund Revenues Expenditures
Change in Fund
Balance/
Net Position
Special Revenue Funds 12,678,745 10,411,018 2,267,727
Debt Service Funds 2,677,600 2,677,600 -
Capital Projects Funds - 175,000 (175,000)
Enterprise Funds 6,744,789 9,454,105 (2,709,316)
Internal Service Funds 5,478,924 8,733,704 (3,254,780)
Total All Other Funds $27,580,058 $31,451,427 $(3,871,369) All Other Funds Expenditures
31 Category FY 2022-23 Adopted FY 2023-24 Proposed $ Change % Change Employee Compensation 5,640,309 5,889,704 249,395 4%
Employee Benefits 3,833,322 3,906,958 73,636 2%
Materials 2,920,174 2,545,032 (375,142) -13%
Contract Services 8,020,243 7,954,378 (65,865) -1%
Cost Allocation 2,043,548 2,217,594 174,046 9%
Capital Outlays 4,406,600 880,224 (3,526,376) -80%
Special Projects 4,466,921 4,111,582 (355,339) -8%
Contingencies 242,632 104,335 (138,297) -57%
Debt Services 2,675,800 2,677,600 1,800 0%
Transfers Out 23,600 15,000 (8,600) -36%
Other Financing Uses 1,146,397 1,149,020 2,623 0%
Total $35,419,546 $31,451,427 $(3,968,119) -11%
Fiscal Year 2023-24
Proposed Budget Requests
Fund
One-Time
Special
Projects
Ongoing
Special
Projects
Total
Proposals
General Fund 1,211,157 - 1,211,157
Special Revenue Funds 227,868 3,175,981 3,403,849
Enterprise Funds 135,733 - 135,733
Internal Service Funds 572,000 - 572,000
Total All Funds $2,146,758 $3,175,981 $5,322,739
Budget Requests by Fund
33 34
Budget Requests by Department
Department
One-Time
Special
Projects
Ongoing
Special
Projects
Total
Proposals
Council & Commissions - - -
Administration 10,000 - 10,000
Innovation & Technology 691,475 - 691,475
Administrative Services - - -
Parks & Recreation 25,000 - 25,000
Community Development 100,000 - 100,000
Public Works 1,320,283 3,175,981 4,496,264
Non-Departmental - - -
Total All Departments $2,146,758 $3,175,981 $5,322,739
• The FY 2023-24 Proposed Budget decreased by $144,551 (-

Contracts 4,152,414 4,020,746 131,668 Reduced citywide trainings, reduced executive recruitments
and reduced consultant costs.

Materials 779,829 457,723 322,106 Reduced conferences and training, reduced materials and supplies and
marketing efforts, simplified programs
and events.

Contracts 4,532,489 3,953,917 578,572 Reduced free events. Reduced budget for new classes and programs.

Removed budget to cover festival
fees.

Contracts 665,080 565,580 89,500 Termination of on-call contracts and negotiation of new
contracts will reduce service
level and response time.

Contracts 5,460,208 4,859,824 600,384 Reduced services and response to work requests; Decreased frequency
of maintenance at City facilities, parks,
streets & trees.

Special Projects 5,290,259 4,496,264 793,995 Delayed or deferred sidewalk repairs and pavement maintenance.

Capital Outlays 1,100,280 880,224 220,056 Delayed or deferred pavement maintenance, which will lower the City’s
Pavement Condition Index (PCI) rating.

Service FY 2023-24
Original
Budget
FY 2023-24
Reduced
Budget
Reduction Service Level Impact
Transfers
Out
12,236,355 6,472,600 5,763,755 Reduced subsidies of other funds (e.g., Special Revenue,
Capital Projects, Enterprise
Funds)
Total $12,236,355 $6,472,600 $5,763,755
Non-Departmental – Reductions
71 Fund Request Revenue Expenditure Description
General
Fund Festival Waivers 86,598 - Budget includes $31,875 in reduced expenditures for Festivals
General
Fund
Position
Reclassification - 25,360
Reclassification of the Emergency
Services Manager to Assistant to the City
Manager
Total $86,598 $25,360
Changes since Proposed Budget Printing
72 City Work Program
73 FY 2023-24 City Work Program
74 Strategic Goal Project Description Department
Funded in
FY 2022-23
FY 2023-24
Recommended
Funding
Quality of Life CWP - Public Safety in
both
residential/commercial
areas
1) Deploy city-owned license plate readers and implement policies to allow neighborhood-owned ones. 2) Strengthen Block Leader/Neighborhood Watch programs to ensure the leaders are active and expand the coverage of active neighborhoods. 3) Explore best practices to deter crime in commercial areas and Administration 60,000 10,000
Publ Eng and
Transparency
CWP - Senior Services
and Youth Engagement
1) Assess Survey results and develop a plan to increase awareness of programs and services for seniors based on gaps identified by the survey. 2) Connect seniors with youth and their families
Parks and Recreation - 20,000
Quality of Life CWP - Dogs Off Leash
Area
1) Transition successful trial DOLA programs to permanent programs with a staff level permitting process housed in Parks and Rec 2) Amenities for DOLA programs in City parks, e.g., water facilities for dogs, fencing, benches, etc.

Parks and Recreation 200,000 5,000
Sustainability & Fiscal
Strategy
CWP - Tree List Project phases: 1) Review and revise development tree list (per Ch. 14.18:

1. Revised Commissioner’s Handbook to align it with Council Procedures Manual

2. Investigate & report back on incidents of violations of the Muni Code re: the Commission -Staff relationship 3. Realignment of Commissioner terms of office 4.

Community
Development
250,000 -
Housing CWP - Housing Element
Update
Update Housing Element and complete rezoning, General Plan Amendments and EIR by December 2023.

2. Stevens Creek Bridge Repair (infrastructure)
New Projects:
$2,027,000*
$420,000
$172,000
$592,000

1. Street Light Installation – Annual Infill (infrastructure)

2. Annual Playground Replacement (parks)

3. ADA Improvements (facilities)

Cupertino City CouncilMay 17, 2023

Cupertino City Council
May 17, 2023