State of the Budget
FY 2025 -26 Proposed Operating Budget
May 13, 2025 - Work Session
City of Hayward
Sharif Etman, MBA
Interim Director of Finance
Agenda
• Finance Basics
• Current Financial Situation
• Projected Revenue and Expenses
• Deficit and Mitigation Strategies
• Next Steps
Finance Basics
• $232 million General Fund City ($469 million total)
• Surplus = Revenue exceeds Expenses
• Deficit = Expenses exceed Revenue
• Reserves = Funds set aside for a specific purpose
• Fund Balance = the leftover general fund $$ from year to year • Unassigned Fund Balance = Assigned by Council each year when available
• Use of Reserves = Approved by City Council
General Fund Reserve Policy
City Council Policy for General Fund Reserves = 20% of Approved Operating Expense Budget
For Example: $232 million Expense Budget
20% of $232 million = $46 million
Currently Hayward has $31.6 million in available spendable GF reserves. • 14% or 1.7 Months
$10 million Non-Spendable for Theater and Watkins Garage Current Financial Situation
• Current Fiscal Year projected to end in deficit
• One time fixes no longer available
• Structural deficit of $12.6 million in General Fund for next fiscal year • Expenses will continue to exceed Revenue
• Spendable Reserve Amount has been reduced by $10 million FY 2025 -26 Projected Revenue
$219.7 million Projected Total General Fund
Net $8.5 million less than current year
• $2.5 million Increase in Property Tax ($80.3 million total) • $4 million Less in Sales Tax ($68.4 million total)
• $4 million Loss in ARPA
• $2 million Less in Real Property Transfer Tax ($13.5 million total) • Transient Occupancy Tax Adjustments ($3.5 million)
• $1 million other less revenue
FY 2025 -26 Projected Expenses
$232.3 million Total Projected General Fund Expenses
$11.2 million increase Is Salary and Benefits
• First full year of MOU and staff commitments
• Overtime for Fire reduced from $7 million actuals to $3.5 million budgeted • Overall overtime reduced from $15 million to $11.5 million Strategies to Balance Budget
ARPA funds
TOT Increase
Real Property
Transfer Tax
½ cent sales tax
UUT Increase
Fund Transfers (Worker’s Comp)
Reserves
Vacancy Savings
Actions Taken by Departments
• Department wide reductions of $480K
• City Manager: $70K
• City Attorney: $15K
• City Clerk: $14K
• Finance: $116K
• Human Resources: $150K
• Maintenance Services: $55K
• Public Works: $60K
• Vacancy Management ($500K-$1 million potential savings) • Suspension of MIHU
• Program Reviews of Police and Fire
• Planning for Fall Reviews
Recommendations / Mitigation
Strategies
• Period of Respite / Rest / No growth
• Evaluate All Programs / Departmental Reviews
• Redefine Core Services
• Encourage Staff, Council and Community Feedback
• Identify Revenue Enhancement
• Position Management
• June Adoption – Fall Revise – Mid-Year – June Adoption 5/12/2025
S. Etman
11 Next Steps
What’s Our Message?
• Serving our Community is our priority
• Everything is on the table
• Input from all stakeholders is key
• Integrity and Stewardship of Funds
• Measured and Thoughtful Approach
Change Takes Time
• Multiple year approach ( July Budget. Fall Revise, Mid- Year)
• Priority Based Decisions / Redefine Core Services
• Evaluate all positions based on Priorities
• Monitor Federal Funding
Questions
Resident Satisfaction Survey
Highest ranked community concerns
• Cost of Housing
• Homelessness
• Crime
• Potholes and Street Maintenance
• Litter and Graffiti
Resident Satisfaction Survey
Community's municipal services priorities
• Fast emergency response
• Safe neighborhoods & safe and well-maintained streets and sidewalks
• Healthy local businesses that stay in Hayward
• A clean, well-maintained city & well-maintained street lighting • Effective police protection and crime prevention
Resident Satisfaction Survey
City service/policy areas with greatest room for improvement • Homeless encampment monitoring, intervention and cleanup • Creation and preservation of affordable places to live • Neighborhood police patrols
• Street and sidewalk repair and maintenance
• Traffic circulation
Discussion