Agenda Report
Fullerton City Council
MEETING DATE: MARCH 15, 2022
TO: CITY COUNCIL / SUCCESSOR AGENCY
FROM: JEFFREY W. COLLIER, ACTING CITY MANAGER
SUBJECT: PROPOSED ADDITIONAL 2.5% BUDGET REDUCTIONS
SUMMARY
Proposed additional 2.5% budget reductions submitted for City Council consideration.
RECOMMENDATION
Provide direction with respect to the proposed additional 2.5% budget reductions or
2. Ratify the proposed additional 2.5% budget reductions.
BUDGET POLICY PRIORITY STATEMENT
This item matches the following Budget Policy Priority Statement:
Fiscal and Organizational Stability.
FISCAL IMPACT
City Council ratification will result in defunding the identified positions and reducing the operating budgets for FY 2021-22. Ratification will also reduce the base General Fund budget as the City develops the FY 2022-23 budget for City Council consideration in the spring of 2022.
DISCUSSION
On December 7, 2021, City Council adopted Scenario 12 of the Fiscal Year 2021-22 Budget Adjustments and Initial ARPA Designation agenda report. Scenario 12 included $11.9 million of ARPA designation for revenue replacement to stabilize and support government finances (subsequently adjusted to $9.6 million on February 15, 2022) and an additional 2.5% General Fund budget reduction to achieve a 17% contingency reserve level.
Based upon City Council’s action, the City Manager proposes the attached reductions (Attachment 2) to achieve the additional 2.5% budget cuts in FY 2021-22 to carry forward into FY 2022-23 budget development.
The effect of the additional 2.5% budget reductions will reduce the General Fund base operation budget of $107.1 million ($110.9 million less $3.8 million vacancy savings) by an additional $2.8 million, to $104.3 million.
In FY 2020-21 and FY 2021-22, staff incorporated $3.8 million of unidentified vacancy savings into the respective fiscal year budgets. Per City Council direction, the City Manager’s Office initiated the process of identifying positions to defund. Staff presented these proposed position reductions on August 17, 2021 and October 5, 2021. The City further defined and established positions on December 7, 2021 (Attachment 3). Attachment 3 outlines these reductions and the corresponding service level impacts. Staff identified the $3.8 million position reductions utilizing existing vacant positions, which will carry forward into FY 2022-23 budget development with a few adjustments to serve as the starting base for establishing the new budget.
Staff similarly identified the proposed 2.5% additional General Fund budget cuts utilizing existing vacant positions. Ratifying the proposed reductions (Attachment 2), will defund these and the $3.8 million reduction positions, with a few adjustments, in the FY 2022-23 proposed budget, which staff will submit for City Council consideration as part of a study session tentatively set for April 26, 2022.
City Council previously identified its top three priorities as Public Safety, Infrastructure and Community and Economic Development. The additional 2.5% budget reductions on top of the $3.8 million reduced in the FY 2021-22 budget continue to challenge staff’s ability to strategically identify reductions in line with City Council’s priorities. The cumulative impact of the proposed reductions addresses some of these challenges across the organization.
Police Department
As part of the process to identify the initial $3.8 million in reductions, the City Manager’s Office identified 12 vacant Police Department positions:
4 Police Officers
1 Secretary
1 Police Community Service Officer
2 Parking Control Officers
1 Police Dispatcher
2 Police Records Clerks.
Staff has reduced these positions in the FY 2021-22 budget. The City Manager’s Office identified an additional four vacant Police Officers and one Police Records Specialist to reduce in the FY 2021-22 budget to address the request to identify an additional 2.5% in reductions within the Police Department.
The Police Department contribution to the $3.8 million reductions of four Police Officer positions has had an adverse impact on the Traffic Unit:
Patrol officers necessarily take longer to arrive to traffic accident scene.
The Department no longer deploys motorcycle officers.
The Department has less ability to enforce speeding and aggressive driving.
The Department has less ability to provide Driving Under the Influence checkpoints and saturation patrols.
With the 2.5% budget reductions, this will result in defunding an additional four Police Officer positions. The elimination of these additional sworn personnel will result in further collapse of specialized units as these additional Police Officer cuts will necessitate the reassignment of non-patrol officers to patrol.
Reassigning non-patrol officers in the Special Units to patrol, will further collapse the specialized units (Gang Unit, Directed Enforcement Team, Narcotics Unit, Homeless Liaison Officer Unit and Investigations Bureau) and curtail the services provided by these specialized units. This will lengthen the time it takes to investigate cases and increase the use of overtime to respond to crime problems and community complaints. It also reduces the Police Department’s ability to provide suppression / enforcement of gang activity, provide homeless enforcement and outreach and participate in regional and federal task forces. Such task forces allow the Police Department access to tools and resources not otherwise available for solving investigative cases. Additionally, a reduction of the Narcotic Unit will result in a loss of asset forfeiture revenue generated by work completed on regional and federal cases, which offsets General Fund expenditures for the Police Department.
The Police Department anticipates the cumulative reductions to further exacerbate the City’s ability to recruit new officers and will likely accelerate the Police Department’s attrition rate. These additional cuts also dampen efforts to bring back the previously shuttered areas of the Department like motorcycle traffic enforcement. These cuts would restrict Police Department efforts primarily to critical safety duties of answering and handling 911 calls, investigating reports of crime and shoring up operations needed to support those core functions.
Fire Department
The Fire Department had no suppression personnel reductions on the $3.8 million budget list due to constant staffing requirements. However, the City Manager’s Office identified eliminating the budget for four Firefighters due to vacancies in the Firefighter rank and the request to identify an additional of 2.5% budget reductions.
The Fire Department can only sustain the impacts of maintaining long term vacancies in any rank of the Fire Department, even if filled by overtime, for a limited time as they add an additional workload to each rank. Long-term and a high quantity of vacancies do not allow our Firefighters a proper work / rest cycle because of mandatory, constant staffing overtime leading to increase potential for injuries, burnout and stress on families.
The elimination of positions in the Firefighter rank compounds retention and recruitment issues which trickle up to the fire management ranks due to less incentive to move up within the Department as fire management often covers shortfalls in the firefighter ranks, in addition to providing management level services.
Vacancies prevent the Fire Department from sending Firefighters to paramedic school or responding to wildfire mutual aid requests because of the additional number of vacancies they create. Vacancies can also exacerbate the retention issue as it is tied to the health and future of providing suppression and paramedic services to the City.
Public Works – Infrastructure
Staff anticipates reductions in Assistant Engineer and Engineering Aide II positions to extend the implementation timeline for Capital Improvement Projects. The reduction of Maintenance Worker positions has resulted in servicing high-use parks on a biweekly rather than on a weekly basis and servicing low-use parks and median areas only on a four-to-six-week schedule. The cumulative impact of reducing seven Maintenance Worker positions exacerbates the already significant delays in attending to landscaping and maintenance efforts on trails and lower priority parks. The Department addresses medians on a limited basis due to vacancies. Elimination of the seven Maintenance Worker positions from the budget further limits staff's ability to provide adequate landscape services in parks or medians, homeless encampment clean-ups, special projects requested by City Council or other departments and less frequent maintenance of bus stops and downtown cleaning.
Parks and Recreation – Community Service
The cumulative impact of eliminating two Parks and Recreation Assistant positions in the budget will have limited impact since the City has cancelled or reduced some of the larger city-wide events (First Night, Fishing Derby, 4th of July Festival) due to lack of staffing and budget constraints. The elimination of these two positions result in further reductions or cancellation of recreation programs. The two assistant positions provide support in planning and supporting the city-wide events, youth programs and Fullerton Community Center programs and operations. The elimination of these two positions led to reductions in the Thursday Downtown Market, elimination of park reservation permits, moving to a “first come” basis and elimination of fall and winter Camp Hillcrest day camps (summer camp will remain). Elimination of these positions will impact the ability to create new programs and will require a new revenue stream or grant funding. With the onset of the COVID-19 pandemic and programming closures due to initial shelter in place orders, the Parks and Recreation Department has had a staff reduction of seven full time staff and over 100 part-time staff between FY 2019-20 and FY 2021-22. The number of full time staff has reduced from 21 to 14 including the two Parks and Recreation Assistant positions.
Library – Community Service
The loss of a Library Technical Assistant I impacts the timely check out of books, extends the time to prepare library circulation statistical reports, delays the purchase and timely receipt and logging of library materials (books, audiobooks, etc.), which delays the time materials become available to public from four weeks to twelve weeks. Staff reductions delay repair of damaged items and processing donated library materials, resulting in extending time to perform such work from six weeks to several months.
The loss of the 30-hour Library Administrative Assistant further slows the general office work in Library Administration which handles all personnel paperwork, meeting room reservations and reporting and follow-up of facility needs to Public Works. This 30-hour per week position would need to reduce to 20 hours and come from the Library's already overburdened non-regular staff budget.
The third cut of non-regular hours by $39,313 severely impacts flexibility for the Library to respond to the needs of the public. The remaining limited non-regular hours support Administrative Assistant hours, Trustee Board Secretary hours and Library Page hours, who shelve books, set up meeting rooms for use and other support functions. This further reduction of non-regular hours greatly limits the Library’s ability to maintain minimal support for the currently limited operating hours of the Library.
Recruitment and Retention Challenges
As City Council has evaluated the level of budget reductions over the past six months, the City continued to hold positions vacant throughout the organization as City Council deliberated on the desired budget reductions beyond the initial $3.8 million vacancy savings. The determination to hold positions vacant was necessary to mitigate labor impacts such as layoffs. As the time frame for City Council deliberation and determination with respect to further reductions extended, the impacts of attrition and continued holding of positions vacant has had significant service level impacts across the organization.
The City has had a historical turnover rate of approximately 7.5%. For Fiscal Year 2020-21, the City had a 12.5% turnover rate (77 separations). For Fiscal Year 2021-2022, the City has a 9.2% turnover rate (57 separations). This high turnover has resulted in a consistent vacancy rate of 135 – 140 regular positions throughout the organization, which as discussed above, has had a detrimental impact to service levels.
Currently, the City has 135 vacancies of which City Council has approved to fill 67. However, Human Resources does not have the means to adequately conduct recruitments to fill vacancies at the same pace as separations. Until such time that the turnover rate reduces, staff anticipates that the vacancy rate will remain consistent for the foreseeable future resulting in a status quo of current services levels. These impacts are exacerbated with the time it takes to successfully recruit, onboard and train new staff as significant institutional knowledge is lost.
Vacancies within the public safety and public works departments and management vacancies provide some examples of these impacts.
Police – The Police Department currently has 21 vacant Police Officer positions, four of which are included in the $3.8 million vacancy savings. Management has evaluated how to best develop the additional 2.5% in budget reduction and has identified an additional four positions to include on the reduction list. If City Council ratifies the Police Department proposed reductions, the Department will fill only 13 of the 21 Police Officer positions. Human Resources has continuously recruited for Police Officers and conducts testing approximately every 60 days. A typical recruitment (application through the start of the police academy) generally takes a minimum of five months. Police Officers are not sworn in until graduation from the academy which takes slightly over six months for a total of 11 months before the City will place a Police Officer candidate in the field and assign to a Field Training Officer.
Fire – The Fire Department has 13 suppression positions (Two Fire Captains, One Fire Engineer, Six Firefighters) currently vacant. If City Council ratifies the Fire Department proposed reductions, the City will initiate recruitment for two Fire Captains, one Fire Engineer and fill only two of the six vacant Firefighter positions. A typical recruitment through onboarding and subsequent training for a new Firefighter to assume full duties takes up to eight months.
Public Works – Of the 192 authorized positions, the Public Works Department currently has 46 vacant positions, including 17 Maintenance Worker positions. If City Council ratifies the Public Works Department proposed reductions, the City will only fill 21 of the 28 Maintenance Worker positions. Specifically, the landscape division has currently five positions filled of 18 budgeted. As Maintenance Worker positions became vacant, the City elected not to fill the positions starting in FY 2017-18 because the City was considering contracting out landscape services. In 2019, the City completed the bidding process and was determining potential savings at the time the COVID-19 pandemic occurred. Due to fiscal uncertainties related to the pandemic, staff had concerns that award of a new fixed-price contract would lock the General Fund into payments that it would not be able to afford. As a result, contracting efforts stopped and services remained in-house. The unknown financial impacts from the pandemic caused the City to freeze additional vacant positions and reduce service levels even more drastically in anticipation of contracting. Since the pandemic fiscal impacts are more widely known, the City has begun recruiting efforts of budgeted positions. However, the City has not been competitive and has not been able to fill all budgeted vacant positions. Additionally, we have had performance issues (no shows, repeated tardiness, poor performance, etc.) with some recently hired individuals resulting in terminations – exacerbating the vacancy problem and service level issues. Also, several recently hired Maintenance Workers have opted to pursue other opportunities after the City invested costs and time in recruitment, testing and on-boarding of these individuals.
Impacts of Management Vacancies - The City currently has 11 vacancies within the management ranks which represents approximately 25% of budgeted non-sworn supervisors and managers. With four each, Community and Economic Development and Public Works have the bulk of these vacancies at levels such as Principal Civil Engineer, Planning Manager, Housing Manager and Economic Development / Principal Planner. Vacancies at these levels create a significant void as these are key leadership positions within their respective departments. This particularly impacts Community and Economic Development as they are currently budgeted for six managers – four of which are vacant. Although Human Resources has conducted recruitments to fill these management positions, recruitment efforts have been difficult due to the limited number of qualified applicants as a result of below market salary levels. Vacancies at this level place a strain on other management staff or require the use of outside consultants to perform critical functions normally assigned to an internal manager.
Continued Challenges to Meet City Council Priorities and Maintain Reduced Service Levels Upon City Council ratification of the additional 2.5% budget reductions, staff will prioritize staffing needs based on City Council priorities and continue / commence recruitments accordingly on the vacant, funded positions. This will start moving the organization to a healthier position, though service levels will remain below past levels ahead of this fiscal year’s reductions.
Coupled with our increasing sales tax and transient occupancy tax revenues, the budget reductions will generally have a positive impact on the overall fiscal health of the City by closing the structural deficit created by lost revenues during the pandemic. However, City Council should use the budget process for FY 2022-23 to assess where to use growing revenues to increase services to prior levels and to adjust compensation to help Fullerton better compete in the local employment market and reduce the attrition rate. Areas for specific focus should first include management positions and Police, Fire and Public Works functions, followed by our other departments. If staffing and service levels do not increase in the coming year there is a likelihood of producing a cumulative risk to public safety, deferred maintenance related to our facilities and increased liability.
Attachments:
Attachment 1 – 031522 Proposed 2.5% Budget Reductions Presentation Attachment 2 – Budget Reductions ($3.8 million and Additonal 2.5%) Proposed Additional 2.5% Budget Reductions
March 15, 2022 - Page 7