Fremont City Council Meeting: 02/10/26 07:00 PM
3300 Capitol Avenue Div/Dept: Finance Department
Fremont, CA 94538 Category: Plans, Policies and Studies
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5629) DOC ID: 5629
Updated: 2/6/2026 9:51 AM by Dina Lewis Page 1
FY 2025/26 BUDGET REBALANCING - Approve Amendments to the FY 2025/26 Adopted Operating Budget Reflecting Negotiated Labor Agreements with Offsetting Expenditure Reductions in the General Fund
Contact Persons:
Name: David Persselin
Title: Finance Director
Div/Dept: Finance Department
Phone: 510-494-4631
E-Mail: [email protected]
Executive Summary: Subsequent to adoption of the FY 2025/26 Operating Budget, the City entered into labor agreements with all nine of its labor unions. Staff is recommending that the City Council amend the adopted budget to fund the compensation and benefit changes specified in the labor agreements and make offsetting ongoing reductions in the General Fund, including eliminating the budget for some currently vacant positions.
BACKGROUND: The FY 2025/26 operating budget (the “Budget”) was adopted by the City Council on June 10, 2025. The General Fund Budget was balanced, with expenditures limited to fit within the projected ongoing resources through the reallocation of infrastructure maintenance funds, without the use of reserves.
As the City’s labor agreements ended on June 30, 2025, and were the subject of continuing negotiations, no compensation or benefits increases were included in the Budget.
Subsequently, the City has entered into labor agreements for FY 2025/26 with all of its bargaining groups. Since these labor agreements commit the City to ongoing total compensation increases, it is now necessary for the City Council to amend the Budget to include these costs.
DISCUSSION/ANALYSIS: Across all City funds, appropriations for personnel expenditures will need to increase by $3.8 million to accommodate the new labor agreements, with about $3.1 million of that impacting the General Fund.
General Fund
To rebalance the General Fund, the City Manager assigned each department a reduction target roughly equivalent to its share of the increased labor costs, with consideration for maintaining service delivery for City Council priorities. The departments with the largest recommended reductions are Police, Fire, and Maintenance Operations since they constitute the majority of General Fund budgeted expenditures.
Departmental budget reduction plans were designed to minimize service impacts to the community, particularly with respect to public safety. However, the recommended staffing reductions and decreases in overtime, training, part-time staff, and cost center support will likely result in longer response times for routine services and limit community engagement.
Cuts in professional and contract service budgets will reduce staff’s ability to make use of outside resources to deliver lower priority projects. Smaller budgets for meetings and Council Staff Report (ID # 5629) Meeting of February 10, 2026 Updated: 2/6/2026 9:51 AM by Dina Lewis Page 2
conferences will constrain staff training opportunities. Should additional sources of local funding be identified, it would be possible to restore some or all of these services.
The table below provides a summary by category of the recommended General Fund amendments to offset the labor agreement increases.
Category
Increased
Costs
Decreased
Costs
Labor Agreement Increases $ 3,129,688
Budget Rebalancing Amendments
Personnel ($ 1,922,458)
Services/Training/Travel (673,499)
Supplies/Equipment (452,067)
Cost Center Support (81,664)
Net Change $ 3,129,688 ($3,129,688)
The majority of the recommended personnel reductions involve eliminating or reclassifying positions. Most of the positions recommended for elimination are vacant. However, there are a few that are filled, and the Human Resources Department is actively engaged in the meet and confer process over the impacts of reclassifying or moving these employees to similar vacant positions that better align with ongoing service demands. No employee layoffs are anticipated.
No personnel reductions to sworn police or fire positions are proposed. However, the Police Department does propose to eliminate six full-time administrative positions, two detention officers, and one detention supervisor. Note that in 2021 the Fremont Police Department Detention Facility transitioned from a Type 1 Jail to a Temporary Holding Facility (a Type 1 Jail is used for booking and ongoing custody, including serving jail sentences, while a Temporary Holding Facility is limited to short-term holding prior to release or transfer to a county jail, such as Santa Rita Jail). This transition has significantly reduced the workload and eliminated the need for many of the duties assigned to the detention officer and detention supervisor classifications.
Other Funds
The labor agreements also require appropriation increases in the Development Services, Recreation, and Senior Center cost centers, as well as the Human Services special revenue fund and the Risk Management and Information Technology internal service funds.
However, the budgets for those funds are fee- or contract-based, the budgetary impact is relatively small, and most of them hold contingency reserves, so offsetting expenditure or revenue actions can be implemented without amending their current-year budgets.
FISCAL IMPACT: The recommended amendments to fund the increases in compensation and benefits in accordance with the new labor agreements will add expenditure appropriations in all funds of $3.8 million ($3.1 million in the General Fund). To rebalance the General Fund, $3.1 million of offsetting ongoing reductions are recommended.
Council Staff Report (ID # 5629) Meeting of February 10, 2026 Updated: 2/6/2026 9:51 AM by Dina Lewis Page 3
ENVIRONMENTAL REVIEW: This agenda item is not subject to the requirements of the California Environmental Quality Act (CEQA) per CEQA Guidelines Section 15378 as it is not defined as a “project.”
RECOMMENDATION: Direct staff to amend the FY 2025/26 Operating Budget to:
1. Implement compensation and benefit changes specified in the FY 2025/26 labor agreements.
2. Implement appropriation reductions necessary to offset the labor agreement increases in the General Fund.