455 EAST CALAVERAS BOULEVARD, MILPITAS, CALIFORNIA 95035-5479 G ENERAL INFORMATION: 408-586-3005, WWW.MILPITAS.GOV
5/9/2023
Item No. 1
SUPPLEMENTAL MATERIAL
RECEIVED AFTER
AGENDA DISTRIBUTION
May 9, 2023
CITY OF MILPITAS
Pg. 38 City of Milpitas (FY2023- 24 Proposed Budget)
Property Taxes .......................................................................................................... $46,023,854 $46,023,854 Financial Information
Budget Summary
Grand Total General Fund (1)
Estimated Revenues
Sales Taxes ............................................................................................................... 35,868,560 35,868,560 Licenses, Permits & Fines....................................................................................... 8,662,020 8,662,020 Transient Occupancy Tax........................................................................................ 11,811,236 11,811,236 Franchise Fees ......................................................................................................... 5,961,868 5,811,868 Charges For Services .............................................................................................. 73,448,148 8,111,025 Other Taxes ............................................................................................................... 5,438,621 1,088,586 Use of Money & Property ........................................................................................ 3,468,469 414,000 Other Revenue.......................................................................................................... 15,052,663 389,525 Intergovernmental Revenue.................................................................................... 4,368,554 670,572 Other Financing Sources
(Increase) Decrease in Fund Balance................................................................... (2,842,166) 2,399,999 sub-total 225,987,336 126,532,672
Operating Transfers In ............................................................................................. 15,883,343 7,681,426 (Increase) Decrease in CIP Reserve..................................................................... 8,574,029 0 sub-total 5,731,863 2,399,999
Other Financing Sources......................................................................................... 0 0 Budgeted Appropriations
Personnel Services .................................................................................................. $111,917,764 $98,901,529 TOTAL $231,719,202 $128,932,671
Non-Personnel Expenditures.................................................................................. $64,551,686 25,020,381 Operating Transfers Out.......................................................................................... $15,883,343 3,243,817 Capital Outlay............................................................................................................ $2,080,906 538,944 Capital Improvements.............................................................................................. 32,581,100 0 sub-total 194,433,699 127,704,671
sub-total 37,285,500 1,228,000
Debt Service.............................................................................................................. 4,704,400 1,228,000 Fund Balance
Fund Balance 7/01/2023 ......................................................................................... 321,001,047 58,152,948 TOTAL $231,719,202 $128,932,671
Net Changes in Fund Balance................................................................................ -5,731,863 (2,399,999) Restricted................................................................................................................... 29,235,873 $0 TOTAL $315,269,184 $55,752,949
Committed for CIP.................................................................................................... 83,998,835 0 Restricted for CIP ..................................................................................................... 113,243,688 0 Committed, Technology ........................................................................................... 6,200,000 6,200,000 Committed, Artificial Turf.......................................................................................... 1,670,000 1,670,000 Committed for PERS................................................................................................ 13,366,502 5,096,052 Committed, Facilities................................................................................................ 400,000 400,000 Committed, Workers' Compensation..................................................................... 2,348,962 2,348,962 Unassigned, Unrestricted................................................................................................ 2,975,206 319,035 ERAF Reserve .......................................................................................................... 1,181,451 1,181,451 Future Deficit Reserve ............................................................................................. 1,452,576 1,452,576 Contingency Reserve, Unassigned ....................................................................... 18,542,436 18,542,436 Capital Reserve, Unassigned ................................................................................. 14,894,048 TOTAL $315,269,184 $55,752,948
Budget (Rate) Stabilization, Unassigned.............................................................. 25,759,605 18,542,436 (1) General Fund, Abandon Vehicle Abatement Fund, 1452 S. Main St Fund and administration funds of the former Redevelopment Agency. (2) Other Funds include Community Benefit Fund, Community Facility District Funds, Community Planning Fee Fund, Gas Tax Fund, Equipment Replacement Fund, Housing and Community Development Fund, Information Technology Replacement Fund, Law Enforcement Grant Funds, Light & Landscape Maintenance District Funds, Measure B Fund, Permit Automation Fund, Public Art Fund, and Solid Waste Services Fund. The decrease in Fund Balance is mostly attributed to changes in Solid Waste Services and Housing Authority Fund.
Revised Page
Housing
Authority Other Funds (2)
$0 $0
0 0
0 0
0 0
100,000 4,024,999
0 150,000
65,658 873,959
0 4,350,035
0 747,982
0 4,953,514
0 343,817
165,658 15,444,306
265,981 1,518,958
0 (79,640)
0 0
265,981 1,439,318
$431,639 $16,883,624
$0 $5,115,550
431,639 3,227,405
0 978,066
0 7,562,605
431,639 16,883,626
0 0
0 0
0 0
$431,639 $16,883,626
1,980,366 31,616,978
(265,981) (1,439,318)
$1,714,385 $30,177,660
$1,714,385 $27,521,488
0 0
0 0
0 0
0 0
0 0
0 0
2,656,171
0 0
0 0
0 0
0 0
0 0
0 0
$1,714,385 $30,177,659
Pg. 39 City of Milpitas (FY2023- 24 Proposed Budget)
$0
Financial Information
Capital Projects(3) Water Fund(4) Sewer Fund(5)
$0 $0
0 0 0
0 0 0 0
0 0
23,539,248
0 0 0
0 37,672,876
1,181,754
0 0 0
0 933,098
0 7,290,332 1,002,155 1,417,137
2,950,000 0
0 18,098,432 39,608,129 26,138,139
7,858,100 0
- (300,495) (6,726,609)
1,308,838 (613,245) 7,958,076
0 1,308,838 (913,740) 1,231,467
0 0
$27,369,606
$245,170
$19,407,270 $38,694,389
$4,368,065 $3,287,450
20,000 26,278,704 9,573,557
253,025
200,000 3,121,298 1,755,623
0 310,871
14,869,655
18,942,100 3,571,000 10,068,000
465,170 34,078,938
2,431,950
18,942,100 4,615,450 12,499,950
0 1,044,450
$27,369,605
118,669,384
$19,407,270 $38,694,388
56,522,365 54,059,006
-1,308,838 913,740 (1,231,467)
$52,827,539
$0 $0 $0
$117,360,546 $57,436,105
20,385,367
47,420,192 22,399,315 14,179,328
69,940,354 22,917,967
0 0 0 0
0 0
0 0 1,097,481 7,172,969
0 0
0 0 0
0 0 0 0
0 0
6,206,815
0 0 0
0 8,687,233
4,883,060
$117,360,546 $57,436,105 $52,827,540
0 2,334,109
(3) Capital Projects include Street Improvement Fund, Park Improvement Funds, General Government Capital Improvement Fund, Storm Drain Capital Improvement Fund and Transit Area Impact Fee Fund. (4) Water Fund includes Water Maintenance & Operations Fund, 2019 Water Bonds Fund, Water CIP Fund, Water Line Extension Fund, and Water Infrastructure Replacement Fund.
(5) Sewer Fund includes Sewer Maintenance & Operations Fund, 2019 Wastewater Bonds Fund, Sewer Fund CIP, Treatment Plant Construction Fund and Sewer Infrastructure replacement Fund.
Revised Page
Financial Information
FY 2023-24 Revenues
(All Funds)
$231.7 Million
Pg. 40 City of Milpitas (FY2023- 24 Proposed Budget)
Property Taxes , $46,023,854Sales Taxes , $35,868,560 Transient Occupancy Tax, $11,811,236 Licenses, Permits & Fines, $8,662,020 Charges For Services , $73,448,148 Franchise Fees , $5,961,868 Use of Money & Property , $3,468,469 Other Taxes , $5,438,621 Intergovernmental Revenue, $4,368,554 Other Revenue, $15,052,663 Operating Transfers In , $15,883,343 *$231.7 Million revenue excludes changes in fund blance and/or CIP reserve of -$5.7 million and interfund transfers of $22.3 million Revised Page
SPECIAL MEETING OF THE
MILPITAS CITY COUNCIL
May 9, 2023 Milpitas City Council Agenda Page 1
AG E N D A
TUESDAY, MAY 9, 2023
BARBARA LEE SENIOR CENTER, 40 N MILPITAS BOULEVARD, ROOM 140/141, MILPITAS, CA 5:30 PM
For assistance in the following languages, you may call:
Đối với Việt Nam, gọi 408-586-2400
Para sa Tagalog, tumawag sa 408-586-3051
Para español, llame 408-586-3072
The City Council meeting is held in the City Council Chamber at City Hall, 455 E. Calaveras Blvd., Milpitas and via teleconference/Zoom webinar.
Councilmember Garry Barbadillo will participate remotely from:
24326 35th Pl S
Kent, WA 98032
Pursuant to California Government Code Section 54953
You may watch the Council meeting without providing public comment by accessing it via links here.
Meeting shall be livestreamed - Go to:
Facebook: https://www.facebook.com/CityofMilpitas/
YouTube: https://www.milpitas.gov/youtube
Web Streaming: https://www.milpitas.gov/webstreaming
PUBLIC COMMENT INSTRUCTIONS
Oral public comments may be provided live during the City Council meeting in person or by registering for the zoom meeting in advance. To register you will need to provide an email address (not disclosed) and a name. To minimize technical difficulties, please make sure that you have the latest version of the Zoom Application. Below is the link to register for this meeting only:
https://ci-milpitas-ca-gov.zoom.us/webinar/register/WN_Qp2OD-R7RziI-YlAWBso9Q After you register a link will be sent to you to join the City Council meeting in order to give your comments.
All Zoom meeting attendees who wish to speak must click on the “raise hand” icon when the Mayor calls for public comments. If participating via phone, dial *9 to use the “raise hand” feature, and when called to speak, dial *6 to unmute your phone. Your phone number will be displayed in the live meeting. The Mayor will call speakers by name to address the City Council.
All comments provided shall be limited to three minutes or less as determined by the Mayor. All members of the public will be limited to one comment per agenda item, and one comment for non-agenda items.
NOTE: If a member of the public wishes to share any presentation materials for Council consideration, they must be submitted to the Clerk’s Office by email to [email protected] by 12:00 p.m. on the day of the meeting. No presentations will be accepted in person in the Council Chambers.
1 May 9, 2023 Milpitas City Council Agenda Page 2
MILPITAS CITY COUNCIL CODE OF CONDUCT
Be respectful and courteous (words, tone, and body language). Model civility.
Avoid surprises.
Praise publicly and criticize privately.
Focus on the issue, not the person.
Refrain from using electronic devices while on the Council dais. Disclose conflicts of interest and affiliations related to agenda items. Separate governing from campaigning.
The Council speaks with one voice after making policy on issues. Respect the line between policy and administration.
Council will hold one another accountable to comply with this Code of Conduct.
CALL MEETING TO ORDER by Mayor and ROLL CALL by City Clerk
PLEDGE OF ALLEGIANCE
PRESENTATIONS
PUBLIC FORUM
Those interested are invited to address the City Council on the agenda item listed below only, by using the “raise hand” in the zoom webinar online (see instructions on page 1). Speakers may state their name and city of residence for the record, and limit spoken remarks to three minutes, or less, at the discretion of the Mayor.
ANNOUNCEMENT OF CONFLICT OF INTEREST AND CAMPAIGN CONTRIBUTIONS
READING OF THE CITY COUNCIL CODE OF CONDUCT
APPROVAL OF AGENDA
AGENDA ITEMS
1. Receive Presentation on the FY 2023-24 Proposed City of Milpitas Operating Budget and Provide Feedback (Staff Contact: Lauren Lai, Finance Director, 408-586-3111) Recommendation: Receive a presentation on the FY 2023-24 Proposed City of Milpitas Operating Budget and provide feedback to staff.
ANNOUNCEMENTS
ADJOURNMENT
KNOW YOUR RIGHTS UNDER THE OPEN GOVERNMENT ORDINANCE
Government’s duty is to serve the public, reaching its decisions in full view of the public. Commissions and other City agencies exist to conduct the people’s business. This ordinance assures that deliberations are conducted before the people and City operations are open to the people’s review. For more information on your rights under the Open Government Ordinance or to report a violation, contact the City Attorney’s office at Milpitas City Hall, 455 E. Calaveras Blvd., Milpitas, CA 95035 e-mail:[email protected] / Phone: 408-586-3040
2 May 9, 2023 Milpitas City Council Agenda Page 3
The Open Government Ordinance is codified in the Milpitas Municipal Code as Title I Chapter 310 and is available online at the City’s website www.milpitas.gov by selecting the Milpitas Municipal Code link.
Materials related to an item on this agenda submitted to the City Council after initial distribution of the agenda packet are available for public inspection at the City Clerk’s office at Milpitas City Hall, 3rd floor 455 E. Calaveras Blvd., Milpitas and on City website. City Council agendas and related materials can be viewed online: www.milpitas.gov/government/council/agenda_minutes.asp (select meeting date)
APPLY TO SERVE ON A CITY COMMISSION
Commission application forms are available online at www.milpitas.gov or at Milpitas City Hall.
Contact the City Clerk’s Office at 408-586-3001 for more information.
If you need assistance, per the Americans with Disabilities Act, for any City of Milpitas public meeting, please call the City Clerk at 408-586-3001 or send an e-mail to [email protected] prior to the meeting. You may request a larger font agenda.
3 CITY OF MILPITAS
AGENDA REPORT
(AR)
Item Title: Receive Presentation on the FY 2023-24 Proposed City of Milpitas Operating Budget and Provide Feedback (Staff Contact: Lauren Lai, Finance Director, 408- 586-3111)
Category: Leadership and Support Services
Meeting Date: 5/9/2023
Recommendation: Receive a presentation on the FY 2023-24 Proposed City of Milpitas Operating Budget and provide feedback to staff.
Background:
This agenda report is supplemental to the FY2023-24 Proposed Operating Budget (Proposed Budget) and Acting City Manager transmittal letter. It also provides updates on available funds for Council consideration and summarizes the changes to the fiscal policies and budget guidelines. Modifications to the Milpitas American Rescue Plan Act (ARPA) Investment Plan were most recently discussed on February 21, 2023, which are reflected accordingly in an ARPA section of the Proposed Budget and will be reported periodically thereafter to Council.
At the FY 2023-24 Preliminary Budget Study Session held on January 31, 2023, the City Council received the preliminary ten-year General Fund Financial Forecast, the budget community engagement plan, and reports on accomplishments and workplans by City Service Areas.
On April 28, the Acting City Manager released a balanced FY2023-24 Proposed Operating Budget, available on the City’s website and attached here, consistent with her duties as Acting City Manager as outlined in the City’s Municipal Code. The Proposed FY 2023-24 Budget in the amount of $231.7 million continues to transition the City towards fiscal stability with tempered optimism. We are optimistic about the future but remain tempered by possible near term economic impacts that may stem from the continued war in Europe, high interest rates, high inflation rates, continued supply chain challenges, tech company layoffs, and banking sector uncertainty.
This balanced budget includes enhanced service levels especially in public works, infrastructure, and public safety and modest investments in internal support departments, housing and community services. This is a budget that maintains Council approved contingency and budget stabilization reserves and leverages funding from the ARPA to support impacted residents and businesses in our community. We continue transitioning with incremental and measured strategies to maximize City resources and optimize services to the community.
Over the past year, the City has been working closely with internal stakeholders and consultants to review the City’s service delivery model and organizational structure. After a careful review, it was determined that consolidating certain departments will allow the City to improve service delivery to our residents and businesses, and also achieve cost savings of $433,000 to the General Fund and $222,000, net to all funds.
This budget consolidates the Public Works and Engineering Departments, the Planning and Building Departments, and shifts housing services over to the Office of Economic Development.
Additionally, we are cognizant that the expiration of a key revenue source - the Milpitas Public Services Measure (Measure F) – in 2028-29 will require the City to continue to maintain fiscal discipline and look for ways to simultaneously increase revenue while controlling expenses. During the finalization of the Proposed 4 Item # 1.
Budget, the Measure F Oversight Committee held its meeting on March 16, which is summarized in this report.
In addition to the Proposed Budget, Staff also recommends updates to the fiscal policy and budget guidelines.
Analysis:
This staff report provides supplemental information related to the FY 2022-23 Proposed Budget such as a summary of recommended changes to the City’s fiscal policies and budget guidelines including attached redline versions of the documents, summary of available funds for Council consideration and next steps in the FY 2022-23 budget process.
Fiscal Policies and Budget Guidelines Recommendations
As part of the annual budget process, staff reviews the Fiscal Policies and Budget Guidelines. These policies and guidelines set the fiscal framework for the annual budget process and long-term financial decisions. Below please find a summary of recommended changes to the Fiscal Policies and Budget Guidelines. Included in the Council’s agenda packet are clean and red line versions of the recommended changes.
Recommended Changes to Fiscal Policies
The City’s Fiscal Policies are broken down into General Financial Goals; Operating Budget, Revenue, and Expenditure Policies; Utility Rates and Fees; Capital Budget Policies; Debt, Reserve, and Investment Policies; and Accounting, Auditing, and Financial Reporting Policies. It is important to note that the City Council also adopted separate debt and investment policies consistent with State law.
This balanced proposed budget remains focused on sound City fiscal policies and preserving existing reserves. The proposed changes emphasize contingency and budgetary reserves, pension, facility, infrastructure, and SPAR (Strategic Property Acquisition Revenue) Fund. The revision to the PERS Stabilization Reserve clarifies that the pension budgetary savings, if any, are contributed subsequent to the Contingency and Budget Stabilization Reserve targets are met, and it also removes the second contribution to PERS Stabilization Reserve. Other changes pertain to the waterfall of operating surplus wherein subsequent allocations emphasize facility and infrastructure, stormwater and SPAR Fund.
The policy #57 states that the City may direct 10% of any General Fund audited year end operating surplus to the SPAR Fund to support strategic property acquisition, development, and long-term revenue opportunities, after General Fund Contingency and General Fund Budget Stabilization reserve requirements have been met and pension budgetary surplus are allocated to the PERS Rate Stabilization Reserve (Policy Statement #43).
Changes to Budget Guidelines
Through adoption of this budget, the City Council also approves the Budget Guidelines. The Budget Guidelines set forth the Basis of Budgeting; Budget Calendar requirements; form and content of the City Manager's Proposed Budget; adoption of the Budget by June 30; the City Manager’s budget authority; requirement that budget amendments be approved by the City Council; budget transfers and modification procedures; automatic adjustments and re-appropriations; budget monitoring and reporting; and reserve requirements for all funds.
The change to the Budget Guidelines authorizes the City Manager to amend the budget for grant interest earned to update the grant budget revenue(s) and associated grant appropriation(s) accordingly. Some grant balances accrue interests that are restricted to the allowable use(s) per the grant. For administrative efficiency, this Budget Guideline update allows Staff to administer the necessary budgetary and accounting entries to apply the restricted grant interest to the appropriate grant revenue and appropriation accounts, accordingly.
Available Funding for Council Consideration
As part of the annual budget process, Staff also identified one-time funding available that Council may consider during the budget deliberation. There is a total of $848,400 comprised of $298,400 unallocated APRA, $450,000 CIP savings from the previously proposed City Attorney’s Office project, and $100,000 savings from the Library contribution not required for FY2023-24. Council may consider retaining funds on-hand and/or appropriating to one-time priorities, current or future capital needs and/or current or future operational needs.
5 Item # 1.
Next Steps
Adoption of the FY 2023-24 Budget is scheduled during a public hearing on June 6, 2023. In preparation for the public hearing, staff will bring forward any amendments to the Proposed Budget, budget and position related resolutions, the debt ceiling calculation, Gann Limit calculation, and request authorization for award of contracts related to the approval of the FY 2023-24 Budget.
Policy Alternative:
Not applicable
Fiscal Impact:
The FY 2023-24 Citywide Proposed Budget of $231.7 million includes 448.0 funded positions (full time equivalent FTEs), with the General Fund proposed budget estimate at $128.9 million.
California Environmental Quality Act:
This item is not a Project under CEQA in accordance with CEQA Guidelines Section 15061(b)(3) (Common Sense Exemption) as it can be seen with certainty that a general discussion of funding priorities by the City Council will not have a significant effect on the environment. Further, the item is also not a Project pursuant to CEQA Guidelines Section 15378(b)(2) as an administrative activity which is defined in the CEQA Guidelines to include the purchase of supplies and personnel related actions. It is further exempt under CEQA Guideline 15378(b)(4) as it is a government fiscal activity that does not involve a commitment to any specific project which may result in a potentially significant physical impact on the environment. Although the use of funding will be discussed for various potential projects, future environmental analysis will be conducted for the various potential projects prior to the City making any commitment or approval of any project, or it is covered by the CEQA Guideline 15061(b)(3) and/or 15378(b)(2).
Recommendation:
Receive a presentation on the FY 2023-24 Proposed City of Milpitas Operating Budget and provide feedback to staff.
Attachments:
1. FY 2023-24 Proposed Budget (binder edition previously distributed to City Council)
2. Recommended Fiscal Policies and Budget Guidelines – redline version
6 Item # 1.
Visit the following link to the FY 2023-24 Proposed
Budget:
https://www.milpitas.gov/wp-
content/uploads/2023/04/FY23-24-Proposed-Budget-
2023.04.25-FINAL-compressed.pdf
7 Item # 1.
Fiscal Policies and Budget Process
City of Milpitas 1
Fiscal Policies
General Financial Goals
1. To maintain a financially viable City that can maintain an adequate level of municipal services.
2. To maintain financial flexibility in order to be able to continually adapt to local, regional, and national economic change.
3. To maintain and enhance long-term the sound fiscal condition of the City.
Operating Budget Policies
4. The City will adopt a balanced budget by June 30th of each year.
5. An annual base operating budget will be developed by accurately and realistically projecting revenues and expenditures for the current and forthcoming fiscal year.
6. During the annual budget development process, the existing base budget will be thoroughly examined to assure cost effectiveness and need of the services or programs provided.
7. Once the City Council has adopted the budget, the Administration will track revenues and expenditures closely and will bring forward budget adjustment recommendations at Mid-Year, as needed.
8. Annual operating budgets will include the cost of operations of capital projects.
9. The City will avoid balancing the current budget at the expense of future budgets, unless the use of reserves is expressly authorized by the City Council.
10. The City’s operating budget will be prepared on a basis consistent with generally accepted accounting principles (GAAP) except that encumbrances are considered budgetary expenditures in the year of the commitment to purchase and capital project expenditures are budgeted on a project length basis.
Revenue Policies
11. The City will try to maintain a diversified and stable revenue system to avoid over-reliance on any one revenue source.
12. Revenue estimates are to be accurate and realistic, sensitive to local, regional, and national economic conditions.
13. The City will estimate its annual revenues by an objective, analytical process utilizing trend, judgmental, and statistical analysis, as appropriate.
14. User fees will be reviewed annually for potential adjustments to recover the full cost of services provided, except when the City Council determines that a subsidy is in the public interest. To maintain cost recovery, annually, staff shall bring forward the Master Fee Schedule as part of the budget process with an escalation to reflect increases in staff cost.
15. The City will actively pursue federal, state, and other grant opportunities when deemed appropriate. Before accepting any grant, the City will thoroughly consider the implications in terms of ongoing obligations that will be required in connection with acceptance of said grant. 8 Item # 1.
Fiscal Policies and Budget Process
2 City of Milpitas
16. One-time revenues will be used for one-time expenditures only including capital outlay and reserves. 9 Item # 1.
Fiscal Policies and Budget Process
City of Milpitas 3
Expenditures Policies
17. The City will maintain levels of service, as approved by the City Council, to provide for the public well-being and safety of the residents of the community.
18. Employee benefits and salaries will be maintained at competitive levels.
19. Fixed assets will be maintained and replaced as necessary, minimizing deferred maintenance.
20. The City will develop and use technology and productivity enhancements that are cost effective in reducing or avoiding increased personnel costs.
Utility Rates and Fees
21. Water and sewer utility customer rates and fees will be reviewed annually as part of the budget process and adjusted as needed to ensure full cost recovery.
22. All utility enterprise funds will be operated in a manner similar to private enterprise. As such, the City will set fees and user charges for each utility fund at a level that fully supports the total direct and indirect cost of the activity, including depreciation of assets, overhead charges, and reserves for unanticipated expenses and capital projects.
Capital Budget Policies
23. The City will develop an annual Five-Year Capital Improvement Program (CIP) with the goal to develop and maintain infrastructure in support of existing residences and businesses and future anticipated development.
24. The CIP will identify the estimated full cost of each project which includes administration, design, development and implementation, and operating costs once the projects are completed.
25. The CIP will identify potential funding sources for each proposed capital project, prior to submitting proposed projects to the City Council for approval. When appropriate, the CIP will seek other funding sources such as State and Federal funds, private funds and leverage these funding sources with public money to help meet the highest priority community needs.
26. The City Council will provide funding for the first year of the Five-Year CIP as a component of the annual operating budget and appropriate funding at the project level. Funding for future projects identified in the Five-Year CIP may not have been secured and/or legally authorized and is therefore subject to change.
27. Each CIP project will be assigned to a project manager whose responsibilities are to monitor all phases of the project to ensure timely completion of the project and compliance with the project budget and all regulations and laws.
Debt Policies
28. The City will limit long-term debt to only those capital improvements or long-term liabilities that cannot be financed from current revenue sources.
29. The City will utilize debt financing for projects which have a useful life that can reasonably be expected to exceed the period of debt service for the project.
30. The City will utilize conservative financing methods and techniques so as to obtain the highest practical credit ratings (if applicable) and the lowest practical borrowing costs. 10 Item # 1.
Fiscal Policies and Budget Process
4 City of Milpitas
31. The City may utilize inter-fund loans rather than outside debt to meet short-term cash flow needs.
32. The City will not issue long-term debt to finance operating expenses and routine maintenance expenses. 11 Item # 1.
Fiscal Policies and Budget Process
City of Milpitas 5
Investment Policies
33. The Finance Director/City Treasurer will annually render an investment policy for the City’s cash pool for City Council’s review no later than the beginning of the Fiscal Year and recommend modifications as appropriate. The review will take place at a public meeting and the policy shall be adopted by resolution of the City Council.
34. City funds and investment portfolio will be managed in a prudent and diligent manner with emphasis on safety, liquidity, and yield, in that order.
35. Reports on the City’s investment portfolio and cash position shall be developed by the Finance Director/City Treasurer and reviewed by the City Council quarterly.
36. Generally Accepted Accounting Principles require that differences between the costs of the investment portfolio and the fair value of the securities be recognized as income or losses in a government’s annual financial report. These variances shall not be considered as budgetary resources or uses of resources unless the securities are sold before maturity or the values of the investments are permanently impaired.
37. The City has set up an Other Post Employment Benefits (OPEB) Trust Fund to prefund its retiree medical benefit to eligible former employees with the California Employers' Retiree Benefit Trust (CERBT). Bi- annually, the City shall engage an actuary to provide the City with an actuarial valuation. Working with the actuary, staff shall review the assumed interest earnings, investment strategy, and other factors to ensure the long-term health of the fund.
38. Per the pension valuation provided by the City’s actuary, the City’s pension costs will continue to rise during the next ten plus years. The City set aside and invested the CalPERS Rate Stabilization Reserve funds in the City of Milpitas Section 115 Pension Trust Fund in order to invest funds with moderate risk achieving a 3% to 6% investment earnings goal during the next 5 to 10 years to mitigate the rising pension costs. The City may use the trust funds to fund either the annual actuarially determined pension contribution amounts, pay down unfunded pension liabilities with CalPERS, or reduce the length of pension cost amortization schedules with CalPERS.
Reserve Policies
39. The City will fund the following reserves as follows with any General Fund audited year end operating surplus after the General Fund Contingency Reserve and General Fund Budget Stabilization Reserve requirements are met and pension budgetary surplus are allocated to the PERS Rate Stabilization Reserve. • Part I
◦ Contingency Reserve (Policy Statement #41)
◦ General Fund Budget Stabilizati on Reserve (Policy Statement #42) • Part II (any remaining balance)
◦ Pension budgetary surplus ar e allocated to the PERS Rate Stabilization Reserve (Policy Statement #43)
◦ If confirmed by actuary, 20% to PERS Rate Stabilization Reserve (Policy Statement #43) ◦ If not confirmed by actuary, 0% to PERS Rate Stabilization Reserve (Policy Statement #43); • Part III (any remaining balance)
◦ Artificial Turf Replacement ($230,000) (Policy Statement #54) • Part IV (any remaining balance)
◦ 3020% to the General Government Capital Improvement Fund (Policy Statement #56); 12 Item # 1.
Fiscal Policies and Budget Process
6 City of Milpitas
◦ 2030% to Storm Drain Fund
◦ 10% to the Affordable Housing Community Benefit Fund (Fund 216); ◦ 10% to Transportation/Transit (Fund 310)
◦ 1520% to Technology Replacement Fund; and
◦ 10% to SPAR (Strategic Property Acquisition Revenue) Fund (Policy #57) ◦ 510% Unassigned
40. The City will periodically review and update reserve guidelines, to ensure that the City has sufficient reserve balances to adequately provide for emergencies, economic uncertainties, unforeseen operating or capital needs, economic development opportunities, and cash flow requirements.
41. The City will maintain a Contingency Reserve of at least 16.67% or two months of the annual operating expenditures in the General Fund to be used only in the case of dire need as a result of physical or financial emergencies and disasters as determined by the City Council. Any use of the General Fund Contingency Reserve shall require a majority vote by the City Council through the adoption of the Operating Budget or by appropriation action during the fiscal year. The City Council will set the reserve amount annually after the results of the prior fiscal year’s Comprehensive Annual Financial Report are known. The replenishment of this reserve may also be incorporated into the annual Adopted Operating Budget if resources are available to replenish the reserve.
42. The City will maintain a General Fund Budget Stabilization Reserve with a target of 16.67%, or two months, of annual operating expenditures. The purpose of this reserve is to provide budget stability when there are fluctuations that result in lower than projected revenues and/or higher than projected expenditures that cannot be rebalanced within existing budget resources in any given fiscal year. This reserve is intended to provide a buffer, or bridge funding, to protect against reducing service levels when these fluctuations occur.
This reserve will be funded only after General Fund Contingency Reserve requirements have been met.
Any use of the General Fund Budget Stabilization Reserve shall require a majority vote by the City Council through the adoption of the Operating Budget or by appropriation action during the fiscal year. The City Council will set the reserve amount annually after the results of the prior fiscal year’s Comprehensive Annual Financial Report are known. The replenishment of this reserve may also be incorporated into the annual Adopted Operating Budget if resources are available to replenish the reserve.
43. The City will maintain in the General Fund and the Water and Sewer Utility Enterprise Funds or in a Section 115 Trust a Public Employees Retirement (PERS) Rate Stabilization Reserve. The City’s actuary has determined that the General Fund portion of the Unfunded Actuarial Liability for the Miscellaneous Retirement Plan is 84.9% and for the Water and Sewer Utility Enterprise Funds portion of the Unfunded Actuarial Liability for the Miscellaneous Retirement Plan is 8.5% and 6.6%, respectively. The contributions to the PERS Rate Stabilization Reserve from the Utility Funds shall be consistent with the General Fund contributions. If confirmed by City’s actuary that contributions are advised for that respective year, then any savings resulting from the pension budgeting methodologies shall be contributed to the PERS Rate Stabilization Reserve. However, the General Fund portion of any pension savings shall only be allocated to the PERS Rate Stabilization Reserve after the General Fund Contingency Reserve and the General Fund Budget Stabilization Reserve requirements have been met. The Utility Funds’ portion of any pension savings shall only be allocated to the PERS Rate Stabilization Reserve after the Capital Reserve and Rate Stabilization Reserve (RSR) requirements in the Water and Sewer utility funds have been met. If confirmed by City’s actuary that contributions are advised for that respective year, then additionally, 20% of any 13 Item # 1.
Fiscal Policies and Budget Process
City of Milpitas 7
General Fund or Enterprise Funds annual operating surpluses shall be allocated to the PERS Rate Stabilization Reserve.
44. Annually, the City will endeavor to transfer $500,000 from the General Fund to the Storm Drain Fund to replace and repair storm drain infrastructure.
45. The City will maintain a retiree medical benefits account established by an irrevocable trust and fund the annual actuarially determined contribution. Any savings resulting from the budgeting methodologies shall be used to pay off the actuarial unfunded liability.
46. The City will maintain a General Liability and Workers’ Compensation Claims Reserve of at least $2 million in the General Fund, which will be reviewed for adjustments annually. As part of closing out a fiscal year, any Workers' Compensation savings in the General Fund may be allocated to this General Fund reserve and any Workers' Compensation savings in the Utility Funds may be allocated to a Workers' Compensation Claims Reserve established for each utility fund.
47. The City will maintain a Rate Stabilization Reserve (RSR) in the Water and Sewer utility enterprise funds with a goal of at least 16.67% or two months of the respective annual operating expenditures after the Capital Reserve requirements have been met. The RSR shall be used to mitigate the effects of occasional shortfalls in revenue or unanticipated expenditures that cannot be rebalanced within existing budgeted resources in any given fiscal year. Revenue shortfalls may result from a number of events such as weather factors (wet weather or drought events and natural disasters), increased water conservation, and poor regional economic conditions. The Rate Stabilization Reserves should be used to assist in smoothing out revenue variability resulting from these factors and ensure that adequate resources are available during such times that might otherwise require large rate increases to utility customers. The City Council will set the reserve amounts annually after the results of the prior fiscal year’s Comprehensive Annual Financial Report are known. The RSR funding will be phased within five years, or sooner, as part of the fiscal year- end closing process. Thereafter, the replenishment of these reserves may also be incorporated into the annual Adopted Operating Budget if resources are available to replenish the reserves.
48. The City will maintain capital reserves in the Water and Sewer utility enterprise funds to provide for future capital projects and unanticipated emergencies, such as water main break repairs, pump station repairs.
The City will attempt to maintain a capital reserve of approximately 30% of the annual operating and maintenance expenses for the Water utility fund and 25% of the annual operating and maintenance expenses for the Sewer utility fund. The City Council will set the reserve amounts annually after the results of the prior fiscal year’s Comprehensive Annual Financial Report are known.
49. In addition, the City will maintain Infrastructure Replacement Funds for both water and sewer utilities. The goal is to accumulate at least $2 million a year from each utility fund to set-aside for replacement of infrastructure as the infrastructure reaches the end of its useful life after Capital Reserve, the Rate Stabilization Reserve, and CalPERS Rate Stabilization Reserve requirements have been met.
50. Reserve levels for Debt Service Funds will be established and maintained as prescribed by the bond covenants authorized at the time of debt issuance.
51. The City will maintain a capital reserve in an Equipment Replacement Fund, set up as an internal service fund, to enable the timely replacement of vehicles and depreciable equipment as cost. The City will maintain a minimum fund balance of at least 30% of the replacement costs for equipment accounted for in this fund.
52. Annually, the City will endeavor to transfer $300,000 from the General Fund to the Technology Replacement Fund set aside in a reserve with a target of $5 million. This reserve shall be used to accrue funding for 14 Item # 1.
Fiscal Policies and Budget Process
8 City of Milpitas
technology projects such as the major rehabilitation or replacement of the City’s technology infrastructure or new technology initiatives.
53. The City will maintain a capital reserve for Facilities Replacement with a target of $10 million. This reserve shall be used to accrue funding for major rehabilitation or replacement of City facilities (buildings/structures). Eligible uses of this reserve may include both the direct funding of public facility improvements and the servicing of related debt. The City Council will set the reserve amount annually after the results of the prior fiscal year’s Comprehensive Annual Financial Report are known. The replenishment of this reserve may also be incorporated into the annual Adopted Operating Budget as resources are available to replenish the reserve.
54. The City will maintain a capital reserve for Artificial Turf Replacement with a target of $2 million and an annual set-aside amount of at least $230,000 until the target is reached. This reserve shall be used to accrue funding for the normal depreciation expense of the City’s artificial turf fields over their useful life.
Eligible uses of this reserve may include the replacement of the City’s artificial turf fields so as to eliminate large spikes in capital expenses and normalize annual costs. The City Council will set the reserve amount annually after the results of the prior fiscal year’s Comprehensive Annual Financial Report are known. The replenishment of this reserve may also be incorporated into the annual Adopted Operating Budget as resources are available to replenish the reserve.
55. The City may direct any loan repayments from the former Redevelopment Agency and residual property tax distributions from the Redevelopment Property Tax Trust Fund to a General Government Capital Improvement Fund to address the funding needs of capital improvement projects.
56. The City may direct 3020% of any General Fund audited year end operating surplus to a General Government Capital Improvement Fund to address the funding needs of capital improvement projects after General Fund Contingency and General Fund Budget Stabilization reserve requirements have been met and pension budgetary surplus are allocated to the PERS Rate Stabilization Reserve (Policy Statement #43). to a General Government Capital Improvement Fund to address the funding needs of capital improvement projects.
56.57. The City may direct 10% of any General Fund audited year end operating surplus to the SPAR Fund to support strategic property acquisition, development and long-term revenue opportunities after General Fund Contingency and General Fund Budget Stabilization reserve requirements have been met and pension budgetary surplus are allocated to the PERS Rate Stabilization Reserve (Policy Statement #43).
Accounting, Auditing, and Financial Reporting Policies
57. The City’s accounting and financial reporting systems will be maintained in conformance with generally accepted accounting principles as they apply to governmental accounting.
58. An annual audit will be performed by an independent public accounting firm with the subsequent issuance of a Comprehensive Annual Financial Report, within six months of the close of the previous fiscal year.
59. Quarterly financial reports and status reports will be submitted to the City Council within six weeks after the end of each Quarter and be made available to the public. The report will provide an analysis of budgeted versus actual revenues and expenditures, on a year-to-date basis. At the minimum, the report shall include the status of the General Fund and Water and Sewer utility fund revenues and expenditures.
Budget Guidelines
15 Item # 1.
Fiscal Policies and Budget Process
City of Milpitas 9
Through the adoption of the annual operating budget, the City Council approves the funding of City services and estimates of resources available to fund the City’s services. Through adoption of this budget, the City Council also approves these budget guidelines providing certain responsibilities and authority to the City Manager to adjust the budget given fluctuations in revenues. These budget guidelines provide sufficient flexibility to make budget adjustments during the year, provided these adjustments do not materially alter the general intent of the City Council approved budget, and establish adequate controls through budget monitoring and periodic reporting.
Annually, the City Council establishes Council Priority Areas regarding service levels to provide guidance to management in preparing the adopted budget. This budget reflects the City Council Priority Areas. Through its legislative authority, the Council approves and adopts the budget by resolution.
The City Manager is responsible for proposing to the City Council a balanced budget which is consistent with the Council’s service level priorities and sound business practices. A Balanced Budget is defined as a budget where the anticipated operating revenues and other financing resources including carryover of outstanding encumbrances from prior year are equal to or exceed operating expenditures. The City Manager is also responsible for establishing a system for the preparation, execution, and control of the budget which provides reasonable assurances that the intent of Council priorities is met.
The Finance Director is responsible for developing the operating budget on behalf of the City Manager, synchronizing the operating budget with the annual capital plan, developing a ten-year General Fund Financial Forecast, establishing budget and fiscal policy, providing periodic budget status reports to the City Manager and the City Council, and developing internal monthly budget management reports for the Department Heads to facilitate control and compliance with the budget.
The Department Heads are responsible for assisting in the development of annual budgets and monitoring their respective budgets for compliance with the intent of Council priorities to ensure that appropriations of the aggregate total of the department are not exceeded.
Summary of Budget Guidelines
1. Basis of Budgeting
City budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP) except that encumbrances are considered budgetary expenditures in the year of the commitment to purchase, and capital project expenditures are budgeted on a project length basis rather than a fiscal year. For all governmental funds, revenues and expenditures are budgeted on a modified accrual basis. For all proprietary funds, revenues and expenditures are budgeted on an accrual basis.
2. Budget Calendar
The Finance Director publishes a budget preparation calendar to the Department Heads and to the City Council at the beginning of the budget process each year. The calendar sets forth, at a minimum, dates for the following:
• Review of service level priorities by the City Council at an annual Planning Session. • Review and update of the Master Fee Schedule.
• Community Engagement and Outreach.
• Engagement and Outreach for City employees.
• Capital Improvement Projects Budget.
16 Item # 1.
Fiscal Policies and Budget Process
10 City of Milpitas
• Presentation of the City Manager's Proposed Budget to the City Council, which shall be no later than the second week in May.
3. Form and Content of the City Manager's Proposed Budget The Ten-Year General Fund Financial Forecast and the City Manager's Proposed Budget shall be presented in a form which facilitates the City Council to determine and review, as applicable:
• Alignment of the proposed service level changes to City Council priorities as established at the annual Planning Session.
• Projected revenues by major category; based on an updated Master Fee Schedule. • Operating expenditures by major category.
• Historical and proposed authorized staffing levels.
• Department and Office Proposed budgets as follows:
◦ Service level descriptions.
◦ Summary of accomplishments and initiatives.
◦ Performance and workload measures.
◦ Expenditure comparison with the preceding year's budget and two years of actual results. ◦ Authorized staffing comparison with the preceding three years. ◦ Budget reconciliation from the prior fiscal year to the Proposed Budget. ◦ Recommendations for service level changes with a detailed description, performance outcome, and impact statement if the recommendation is not funded.
• Capital improvement appropriations by project.
• A schedule showing General Fund Revenue and Expenditure projection for the next nine years.
4. Adoption of the Budget
The City Council will adopt the budget by resolution no later than June 30th of the previous fiscal year, setting forth the amount of appropriations and authority of the City Manager to administer the adopted budget. Unless otherwise directed, all funds that are presented in the operating budget document are subject to Council approval of appropriations.
5. Budget Authority of the City Manager
The City Manager shall have the authority to make revisions involving transfers from the appropriated Unanticipated Expenditure Reserve account less than or equal to the aggregate amount of amount adopted within the budget in any one fiscal year ($1,260,000 in FY 2023-24, or 1% of total General Fund appropriations, net of use of prior year surplus from technology and infrastructure reserves), provided that the Council is notified in writing of the revision, giving the reason, the amount of the revision and the year-to-date total amount of revisions as part of the quarterly financial reports.
Additionally, the City Manager shall have the authority to:
• Amend and/or transfer appropriations among departments and projects within any one fund, provided that the amount of the amended appropriation is $100,000 or less; • Amend the budget for grant interest earned to update the grant budget revenue(s) and associated grant appropriation(s).
17 Item # 1.
Fiscal Policies and Budget Process
City of Milpitas 11
• Accept grants or donations up to $100,000 or less (monetary and non-monetary based upon market value), increase department revenues and appropriations accordingly and execute related agreements as long as no matching funds are required, and/or departments do not require additional funding for ongoing maintenance costs or future replacement costs.
• Reasonably deviate from the budgeted personnel allocation schedule provided that at no time the number of permanent funded positions or personnel cost appropriations authorized by the City Council is exceeded; • Hire full-time employees in overstrength positions for no more than one year as long as appropriations are not exceeded to ensure adequate staffing levels for sworn positions, to facilitate training of new employees in critical positions by the outgoing incumbents, or to respond to urgent staffing needs; and • Add/delete positions or to move positions between departments to respond to organizational needs, as long as the number of permanent funded positions and the approved personnel cost appropriations remain the same.
Prior approval of the City Council is required for changes that:
• Increase the overall appropriation level within any one Fund. • Transfer or reallocate appropriations between different Funds. • Cause an increase or decrease in funded authorized position counts in the Adopted Budget. • Cause the aggregate amount of contract change orders to exceed 15 percent of the contract amount and/or exceed prior approved appropriation levels for the subject contract. • Cause transfers from unanticipated expenditure reserve to exceed the aggregate amount of $1,140,000 during the fiscal year.
• Result in changes not consistent with the purpose and intent of the Budget as adopted. • Require an appropriation action from any unassigned fund balances or reserves.
Pertaining to ARPA:
• On August 9, 2021 wherein for ARPA funding, the City Council delegated authority to the City Manager including appropriation and contract approval authority up to the approved amount for each program approved by Council, once compliance with ARPA procurement, contracting and reporting requirements. For budget monitoring and reporting, it includes a quarterly ARPA report for program updates to the City Council.
6. Budget Amendments by the City Council
At City Council meetings, the City Council may from time to time approve expenditures and identify funding sources not provided for in the adopted budget including those expenditures funded through unassigned fund balances or reserves.
7. Budget Transfers and Modification Procedures
Procedures to implement budget transfers or budget modifications are detailed in Standard Operating Procedure No. 21-1, subject to any changes by the Budget Resolution.
8. Automatic Adjustments and Reappropriations
Outstanding encumbrances at prior fiscal year-end will automatically be carried over to current year’s budgets.
Unspent appropriations that are authorized and funded by grant revenues or donations from prior fiscal year will automatically be carried over to current year’s budgets. Unspent City funded grant appropriations from prior fiscal year will automatically be carried over to the current year’s budgets. 18 Item # 1.
Fiscal Policies and Budget Process
12 City of Milpitas
Incomplete multiple year project (capital improvement project) balances will automatically be appropriated.
Any unused non-salary and benefits-related appropriations, subject to the approval of the City Manager, at the end of the fiscal year may be re-appropriated for continued use in the subsequent fiscal year. Furthermore, any outstanding contract and/or purchase order obligations (or encumbrances) remaining at the end of FY 2021-22 are subject to carry over into FY 2022-23.
9. Budget Monitoring and Reporting
Monthly Financial Reports - The Director of Finance will prepare and make available a monthly budget report including actual expenditures and encumbrances for distribution to the City Manager and Department Heads, to facilitate monitoring of the budget.
Quarterly Financial Status Reports - The Director of Finance will periodically prepare financial status reports for presentation to the City Council. At the minimum, the report shall include the status of the General Fund revenues and expenditures; Water and Sewer utility fund revenues and expenditures; and document any use of the appropriated Unanticipated Expenditure Reserve; and report the acceptance of any grants and donations as authorized in these budget guidelines.
Annually, as part of the 4th Quarter Financial Status Report, the Director of Finance shall report on all active grants and grants closed out during the fiscal year including the purpose of the grant, the granting agency, the grant amount awarded, remaining grant funds, and grant activities completed or underway.
10. Reserves
Various unallocated reserves are desired in each of the City's funds to protect the City in emergencies, economic uncertainties, and to finance unforeseen opportunities and/or requirements. Key reserve policies for various funds are described in detail in the document entitled "City of Milpitas Fiscal Policies". 19 Item # 1.
Fiscal Policies and Budget Process
City of Milpitas 13
20 Item # 1.
FY 2 3-24 Proposed Budget
Council Study Session
May 9, 2023
2 A cting City Manager Opening Remarks
Budget Calendar
Community Survey Feedback
Fis ca l Sum m a ry
Proposed D epartment Consolidations
A merican Rescue Plan A ct (“ A RPA ” ) Federal Funds
Additiona l Funding Alloca tion
City Council Re fe rra ls
City Council Dis cus s ion
Ag e nda
Budget Calendar and Process
3 Date Milestone
Nov. – Dec. 2022 Statistically-valid Community Survey
January 31, 2023 Preliminary Budget Study Session
February 28, 2023 Capital Improvement Program Study Session March through April 2023 Open Town Hall Budget Survey
March 20, 2023 Community Engagement Meeting #1
April 5, 2023 Employee Town Hall Meeting
April 6, 2023 Community Engagement Meeting #2
April 18, 2023 Master Fee Schedule Public Hearing
April 18, 2023 Capital Improvement Program Adoption
May 9, 2023 Operating Budget Study Session
June 6, 2023 Public Hearing and Budget Adoption
July 1, 2023 1st Day of FY 2023-24
4 Top L ine Survey Results
See Milpitas as a “good place to live, play and work”
Approve of City government overall
Are satisfied with the overall quality of life in Milpitas Are “proud to live in Milpitas”
89%
88%
80%
90%
76%
74% Trust the City to properly manage our tax dollars (up from 67%)
Trust the City to plan for Milpitas' future (up from 68%) 5 City Budget
Fis cal Outlook – Economic Big Picture
6 Economic uncertainty continues –
• Tempered optimism
• Conservative approach
• Preserve City reserves for contingency & budget stabilization Challenges -
• High interest rates
• High inflation rates
• Banking sector uncertainty
• Big Tech layoffs
• Global conditions
Strategy - Continue monitoring, conservative approach and fiscal discipline FY23-24
Revenues
All Funds
($231.7M)
7 P. 7
• General Fund property
tax, sales tax and TOT
• Charges for Services is
primarily utility revenues
• Other Revenues is
TASP , CFD, LLMD
• Revisions provided in
attachment
Property Taxes ,
$46,023,854
Sales Taxes ,
$35,868,560
Transient Occupancy
Tax, $11,811,236
Licenses, Permits &
Fines, $8,662,020
Charges For Services ,
$73,448,148
Franchise Fees ,
$5,961,868
Use of Money &
Property , $3,468,469
Other Taxes ,
$5,438,621
Intergovernmental
Revenue, $4,368,554
Other Revenue,
$15,052,663
Operating Transfers In
, $15,883,343
FY23-24
Expenditures
All Funds
($231.7M)
• General Fund
focuses on Police, Fire
and Public Works
• CIP Projects
• Non-Dept is utility
and water purchases
8 P. 8
9 General Fund – 10 -Y ear Forecast ($ million)
Measure F Expires
10 G eneral Fund R eserves
• PERS Stabilization includes the amount on the balance sheet ($5.1M) and in Section 115 Trust of $30.5M
11 G eneral Fund R eserve Survey
Agency Reserve
Balance
General Fund
Expenditure
Revenue % of
General Fund Expenditures
Los Altos Hills $13.2 M $14.3 M 92%
Morgan Hill $34.3 M $43.6 M 79%
Milpitas $72.6 M $114.9 M 63%
Mountain View $105.7 M $176.2 M 60%
Sunnyvale $120.6 M $205.0 M 59%
Gilroy $32.3 M $55.0 M 59%
Santa Clara $88.3 M $264.2 M 33%
Palo Alto $61.1 M $187.8 M 33%
Saratoga $7.2 M $23.7 M 30%
Los Gatos $13.1 M $47.7 M 27%
Campbell $13.2 M $54.2 M 24%
San Jose $226.0 M $1,219.1 M 19%
Los Altos $9.4M $55.2 M 17%
• Reserve Balance
includes contingency,
budget stabilization,
pension and unassigned
General Fund Balances
• Audited financial
statements FY21-22
were used for
comparison. Cupertino
and Monte Sereno did
not have FY21-22 ACFR
posted.
12 General Fund – R eserve Policies
FY23-24 Proposed Operating Budget
• Retain Contingency & Budget Stabilization @ 33.34% total • Does NOT use Contingency & Budget Stabilization reserves • Retains $1.45M Future Year Deficit Reserve
• Retains $1.2M ERAF litigation set-aside
• Retains $5.1M Pension Stabilization on balance sheet
Proposed Changes
• Pension Stabilization Reserve – set aside budgetary savings after Contingency & Budget Stabilization Reserves are met.
• Re-allocation of remaining balance to fund SPAR (Strategic Property Acquisition Revenue) Fund.
13 Staffing Summary
Full-Time E mployee, I ncrease Net 7.5 FTE
14 K ey I nvestment A reas for FY 23-24
Restored & Enhanced Services, net add of 7.5 FTEs (Full-Time Equivalent Staffing) Public Works (Includes Engineering) (+5 positions)
Investment in fleet, utilities, and staffing for operations and maintenance Public Safety (+1 position)
Succession planning, health and wellness, emergency preparedness, enhanced crossing guard program Economic Development (+1 position)
Business retention and attraction, Main Street Revitalization, Innovation District branding, Workforce Development, Enhanced Permit Assistance
15 K ey I nvestment A reas for FY 23-24
Recreation and Community Services (+1 position)
Support increased recreation program activity and revenues City Manager’s Office and City Clerk (+2 positions)
Ensure compliance and effective use of development impact fees, support citywide administrative and records management needs
Information Technology (+1 position, moved from Community Development) Enterprise wide technology systems, Council Chambers AV upgrade, cybersecurity FY23-24 Proposed restoration of 3 FTE positions, continued defunding 6.75 FTE through FY24 16 Staffing Comparis on with Other Cities
( FY2 2-23)
City Population FTEs FTEs/1000
Residents
Public Safety Utilities
Police Fire Water Sewer Other Utilities
Sunnyvale 153,389 936 6.10 Wastewater treatment Santa Clara 129,604 1,095 8.45 Electric utility Redwood City 82,344 571 6.93
Mountain View 81,527 679.25 8.33
Milpitas 80,839 440.5 5.54
Pleasanton 77,609 432 5.57 -
Palo Alto 69,721 1017 14.59 Wastewater treatment, electric and gas utilities, Airport
Cupertino 60,091 225 3.74 - - - -
Gilroy 55,615 258 4.64
Morgan Hill 44,513 204 4.58 -
Campbell 42,696 207 4.85 - - -
17 Management R ati os
Employee
Groups
Fiscal Year 2022-2023 Fiscal Year 2023-2024
Total FTEs Management Non-
Management
Total FTEs Management Non-
Management
Police 119 10 109 120 11 109
Fire 77 8 69 77 8 69
All Other Depts. 239.5 36 203.5 246 36 210
Total 435.5 54 381.5 443 55 388
Management Ratio
Ratio of Managers to employees in current fiscal year is 1:8 and will remain at 1:8 in the proposed.
Total FTEs excludes City Council (5 FTE).
Proposed
Consolidation of
D epartments
18 19
Proposed Consolidation
Community Development Department
• Includes Building Safety, Code Enforcement, and Planning • Deletes one Director-level position
Public Works Department
• Includes Engineering and Public Works
• Deletes one Director-level position
Office of Economic Development and Housing
• Includes Economic Development and Housing
• Creates capacity to increase focus on economic development 20 Key Benefits of Proposed Consolidation
Enhanced service delivery and customer service
Economic development
General Fund savings of $433,000 – total savings of $222,000 No employee layoffs
Improved collaboration and accountability
Staff development, retention, and succession planning
21 Proposed Consolidation Considerations
Department Director vacancies in departments supporting community development
Opportunity to evaluate some unique functional organization not aligned with most other peer cities
Third party evaluation - Stakeholder interviews, peer cities comparison, review of current functions and service model
Essential to align with annual budget process given linkages to funds, functions, reporting structures, and various technology systems If not approved to move forward, will need to fill director vacancies and reduce service restorations and enhancements since GF savings of $433K will no longer be available
22 Orga niza tiona l com pa ris on to 10 othe r citie s , e xcluding Milpita s
(all SC County above 40K population, Redwood City, Pleasanton) 0 1
2 3
4 5
6 7
8 9
10 Are Planning,
Building, Code
Combined?
Are PW &
Engineering
Combined?
Is Economic
Development in
CMO?
Is Housing in CMO?
Yes No
Number of Cities
23 Proposed Community
D evelopment D epartment
Three divisions - Planning, Building Safety, Code Enforcement Seamless review and permitting processes
Shared responsibility and accountability in
delivering high-quality development review,
permitting, and inspection services
Enhanced opportunities for cross-functional
training, staff development, and collaboration
Greater alignment of Code Enforcement with
both Building and Planning functions
24 Proposed Office of Economic
D evelopment & Housing
Two divisions - Economic Development and Housing
Creates capacity to focus on economic
development
Benefits from synergy between economic
development and housing – land use,
workforce development, affordable housing
Creates operational efficiencies and allows
cross training opportunities for staff
25 Proposed Public W orks
Divisions – Engineering; Streets, Parks, Landscape and
Trees; Fleet and Facilities; Utilities O&M, Sustainability and Compliance, Administration
Singular management vision will lead
to improved collaboration and
accountability between Engineering and
Maintenance functions and eliminates
mission ambiguity.
Staff retention, succession planning, and
morale should all benefit. This ultimately
equates to better service delivery!
This structure is common, time-tested,
effective, and just makes sense for
organizations of our size.
FY 2 3-24 Budget
Proposals
26 27
Proposed Budget
Balanced and fiscally conservative due to ongoing economic uncertainty Informed by Council, community, and staff input; legal mandates; and infrastructure and equipment needs
Restores and enhances service levels for the Milpitas community Key focus on public works, public safety, and economic development Consolidation enhances service levels and customer service; focuses on economic development; offers ongoing cost savings; improves collaboration and accountability, and enables staff retention and succession planning 28 Community Services & Sus tainable
Infrastructure CSA Proposals
($1,635,007 Total: $718k General Fund, $917k Other Funds)
1. Consolidation – Reclass CIP Manager to Public Works Division Manager – ($17,000)
2. Consolidation – Reclass Transportation & Traffic Manager to Public Works Division Manager –($25,000)
3. Consolidation – Delete Engineering Director – $368,775 Savings
4. Consolidation – Add City Engineer – ($322,317)
5. Enhance Landscape Supervision & Irrigation System Management -- Add/Delete - Maintenance Worker II to Maintenance Worker III – ($7,677)
6. Restore Equipment Maintenance Worker II (Facility) – ($168,130)
7. Restore Recreation Services Supervisor – ($197,050)
8. Add Permanent Inspector (from temporary FTE) – ($34,091)
9. Cross Connection Control Program – Add Cross Connection Control (CCC) Specialist – ($176,897)
10. Supervisory Control and Data Acquisition (SCADA) - Add Instrument Control Technician – ($174,099)
11. Add Environmental Inspector – ($152,123)
29 12. SB 1383 Edible Food Recovery Implementation – ($19,050)
13. SB 1383 Procurement Strategy Development – ($40,000)
14. Enhancement of Tree Management Program – ($50,000)
15. Public Works department organizational development – ($20,000)
16. Commercial Driver Training – ($25,000)
17. Enhancement of Senior Center Saturday Hours – ($25,799)
18. Alviso Adobe Program – ($6,050)
19. Equipment – Vactor, 2 F250, Concrete Trailer, 2 Ford Mavericks, Valve Exerciser – ($542,799, one-time) Community Services & Sus tainable
Infrastructure CSA Proposals
($1,635,007 Total: $718k General Fund, $917k Other Funds) 30 Public Safety CSA Proposals
($767,042 Total, A ll General Fund)
1. Add Lieutenant (2-year limited term) – ($426,800)
2. Fire Prevention Intern – ($22,736)
3. Comprehensive Drone Management Software – UAS Program – ($8,100)
4. Wellness Testing Services – ($38,000)
5. Transition Crossing Guard Program Management – ($271,400) 31 Community D evelopment CSA Proposals
($5,021 Total Savings: $216k Savings Gen Fund, $211k Spending Other Funds)
1. Delete Building Inspector- $194,700 savings
2. Consolidation – Delete Building & Housing Director - $362,818 savings
3. Consolidation – Reclass Principal Planner to Planning Official ($75,200)
4. Add Administrative Analyst II (Permit Navigator) – ($180,000)
5. Add temporary Intern/Records Specialist – ($27,306, one-time)
6. Consolidation - Reclass Economic Development Director to Economic Development and Housing Director – ($32,500)
7. Consolidation – Reclass Housing Authority Administrator to Housing Division Manager – ($36,524)
8. Housekeys Below Market Rate Program Administration ($200,000) 32 L eadership & Strategic Support CSA Proposals
($494,967 Total: $288k Gen Fund, $207k Other Funds)
1. Add / Delete Customer Service Supervisor to Finance Manager – ($6,100)
2. Add Management Analyst – TASP(Metro) – ($219,511)
3. Enhance administrative support services for the City Clerk & citywide records management - Add / Delete 0.5 FTE Office Assistant to City Clerk from CMO – ($78,663)
4. Enhance administrative support services for the City Council, City Manager and citywide programs and projects - Add / Delete 0.5 FTE Office Assistant to City Clerk from CMO and restore Office Specialist– ($63,106)
5. City Attorney internship program (summer law clerk) – ($17,600, one-time)
6. Legislative Consultant Services for legislative advocacy – ($110,000) 33 Priority Setting: K ey Items completed,
underway, or included in Budget
• Teen Center evaluation (utilizing existing staff resources) • Selwyn Park improvements
• Saturday Senior Center hours
• City Manager letter to new County Sheriff
• Police Substation Feasibility Study
• Youth Skateboarder plaque at skatepark
• Community survey for vacant lot at Adobe Ave and Vasona St 34 Priority Setting: K ey Items completed,
underway, or included in Budget
• Pickleball community survey & $100,000 CIP Investment • Small/local business participation (initial opportunity awareness event)
• SPAR Fund Establishment (included in proposed reserve policies)
• Crossing Guard Program
• Automated License Plate Readers
• ARPA Funding outreach to Chamber of Commerce
35 Priority Setting: Items Dis cus s ed Previous ly
Unfunded Items, to be discussed at June priority setting session
• Surveys underway
• Community Garden @ Vasona Feasibility Study ($50,000) • Pickleball permanent conversion ($100K to $200,000 for 2 to 4 tennis courts)
• Teen Center physical improvements (cost TBD)
• Small/local business full program implementation
36 Priority Setting: Items Not Y et D iscussed
Unfunded items to be discussed at June priority setting session
• Main Street Infrastructure projects
• Appraisals for City owned parcels 2 & 3 on Main Street • Gill Park Lighting evaluation
• Consulate at City Hall
• Library flooding (storm consultant reviewing)
• Library signage
• Navigation center
• Citywide Senior discount
• International cultural festival on Main Street
• City employment job fair @ City Hall
37 Am e ric a n Re s c u e P la n Ac t (ARP A) Su m m a ry ($4.97M expended as of February 2023; $298,400 available to be allocated)
38 Ava ila ble Funding for Cons ide ra tion
$848,400 (one time funding)
• ARPA Savings (2/21/2023 council): $298,400
• CIP Savings (proposed office remodel – 4/18/23 Council): $450,000 • Library Contribution Savings: $100,000
Considerations
• Savings are one-time funds
• Current and future capital needs
• Current and future operational support
Budget Calendar and Process
39 Date Milestone
Nov. – Dec. 2022 Statistically-valid Community Survey
January 31, 2023 Preliminary Budget Study Session
February 28, 2022 Capital Improvement Program Study Session March through April 2023 Open Town Hall Budget Survey
March 20, 2023 Community Engagement Meeting #1
April 6, 2023 Community Engagement Meeting #2
April 18, 2023 Master Fee Schedule Public Hearing
April 18, 2023 Capital Improvement Program Adoption
May 9, 2023 Operating Budget Study Session
June 6, 2023 Public Hearing and Budget Adoption
July 1, 2023 1st Day of FY 2023-24
40 City of Milpitas
455 E. Calaveras Blvd., Milpitas , CA 95035
www.ci.milpitas .ca.gov
(408) 586- 3000
41 Proposed Community
D evelopment D epartment
Three divisions - Planning, Building, Code Enforcement
1. Re-title Planning and Neighborhood Services Director to Community Development Director
2. Delete Director of Building Safety and Housing
3. Re-classify Principal Planner to Planning Official
4. Associate Planners to report to Senior Planners
5. Senior Code Enforcement Officer to report to Community Development Director
6. Move Senior Admin Analyst from Building to Information Technology
42 Proposed Office of Economic
D evelopment & Housing
Two divisions - Economic Development, Housing
1. Re-classify Economic Development Director to Economic Development and Housing Director
2. Re-classify Housing Authority Administrator to Housing Division Manager; will also oversee Housing and Real Estate Services
3. Add an Administrative Analyst II (Working Title: Permit Navigator) position
43 Proposed Public W orks
Four divisions – Engineering; Streets, Parks, Landscape and Trees; Fleet and Facilities; Utilities O&M, Sustainability and Compliance, Administration
1. Consolidate Engineering and Public Works departments to be overseen by current Director of Public Works
2. Delete Director of Engineering
3. Add City Engineer (similar to PW Deputy Director)
4. Consolidate 2 different executive (un-rep) classifications in Engineering into one classification to allow for clearer structure and growth opportunities;
5. Move Utility Engineering Section under City Engineer
6. Move Administrative Services under other Public Works Deputy Director
FY23-24
Expenditure
Proposals
• General Fund
• Total $1.3M proposals
• $0.15M One-time
• $1.1M On-going
• All Funds
• Total $2.9M Proposal
• $0.7M One-time
• $2.2M On-going
• All Funds
• Total $2.9M Proposal
• $1.3M General Fund
• $1.6M Other Funds 44
FY23-24
Expenditure
Proposals
45 ARPA
as of 3/31/2023
46 Council Action
Feb 21, 2023
Defund:
- Small Business Asst (close-
out) $4,500
- Sustainable Communities
($60,000)
- Large Item Pick-up ($85,000)
- Chamber ($200,000)
Allocate $51,500 to BID Phase 2
ARPA Available $298,400
ARPA
as of 3/31/2023
47 Pension Reserve
Comparison
Summary
48 P.
Pension UAL
Summary
49 P.
Pension Cost
All Funds Summary - FY23-24 Budget
50 P.
General Fund - Proposed FY23-24 Revenues
• Overall Estimated 9.6% revenue increase
or 7.6% net of reserves
• Property Tax – per County. Increase in
secured property tax and RDA residual.
Monitor ERAF litigation
• Sales tax – per HdL, increase in FY22-23
and almost status quo in FY23-24
• TOT/Hotel Tax– recovery, 2 new hotels
• Charges & fees – increases primarily in
recreation revenues.
• Licenses, Permits & Fines – decreases
primarily in building permit & plan check
• Use of Technology & Facility Reserves for
CIP projects
51 General Fund - Proposed FY23-24 Expenditures
• Overall estimated 9.6 % expenditure
increase or 7.6% net of reserve transfers
• Salaries and benefits per MOU contracts
and CalPERS estimates
(approx. $1.8M of salaries increase is
due to MOU COLA, $0.6M from
additional proposed staffing). Benefits
increased $2.9M($1.8M PERS increase,
$0.9M medical benefits increase and
$0.2M in other benefits)
• Services & Supplies – Increases primarily
due to: IT license & software
$265K, Police - Cross Guard
Program $271K, Utilities $367K, and
Liability Insurance $423k
• Capital Outlay - vehicles acquisition
• Operating Transfers Out – resume
funding to Stormwater Fund and CIP
52 General Fund –
Reserve Policies
- Pension - Commits
budgetary savings,
removes need for
actuary confirmation
and removes additional
20% contribution.
- Change remaining
allocation to fund SPAR
53 54
Cons olidation – cost savings
55 V ehi cl es & L arge E qui pment
in Base and Proposed* Budget
# Dept Vehicle Function
1 Economic Development and
Housing
2001 Ford Ranger Super cab pickup truck Building Inspection Services 2 Fire 2000 Spartan Heavy Rescue Urban Search and
Rescue (USAR)
A/B/C Battalions Operations
3 Police 2018 Ford Marked Patrol Vehicle Patrol Services 4 Police 2017 Ford Marked Patrol Vehicle Patrol Services 5 Police 2016 Ford Marked Patrol Vehicle Patrol Services 6 Police 2016 Ford Marked Patrol Vehicle Patrol Services 7 Police 2015 Ford Marked Patrol Vehicle Patrol Services 8 Engineering 1999 Ford Ranger 4x4 Design & Construction 9 Engineering 1999 Ford Ranger 4x4 Design & Construction 10 Engineering 1998 Ford Ranger 4x4 Design & Construction 11 Engineering 1998 Ford Ranger 4x4 Design & Construction 12 Recreation and Community
Services
2002 Ford El Dorado Aerotech Type III
Paratransit Van
Senior Citizen Services
56 V ehi cl es & L arge E qui pment
in Base and Proposed* Budget
# Dept Vehicle Function
13 Police 2015 Toyota Unmarked Detective Vehicle Investigations 14 Economic Development and Housing 2001 Ford Ranger Super cab pickup truck Building Inspection Services 15 Public Works 1998 Ford F-150 Utility Maintenance
16 Public Works 1998 Ford F-150 Utility Maintenance
17 Public Works 2001 Ford F-350 Street Maintenance
18 Public Works Vactor Utility Maintenance
19 Public Works Ford F-250 XL Utility Maintenance
20 Public Works Ford F-250 XL Utility Maintenance
21 Public Works Concrete Trailer Street/Utility Maintenance 22 Public Works Ford Maverick Park Maintenance
23 Public Works Ford Maverick Trees &
Landscape Maintenance
24 Public Works Valve Exerciser Utility Maintenance
57 COV ID Impact of Revenue L oss –
General Fund ($30 million)
Click to add text
Variety of strategies: Measure F, defund CIP , use of reserves, interfund transfers, deferred maintenance, defund positions (23.75), employee concessions, and one-time revenues
58 MOU Contracts
Employee Group 1/1/2021 7/1/2021 7/3/2022 1/1/2023 7/1/2023 1/1/2024 7/1/2024 MidCon Original 3% 3%
MidCon Updated 0% 2% 2% 3%
MPOA Original 5%
MPOA Updated 0% 2.5% 2.5%
Unrep Original 3% 3%
Unrep Updated 0% 2%
Unrepr Police 2.5% 2.5%
Unrepr Fire 2% 2%
IAFF Original 4%
IAFF Updated 0% 2% 2%
Protech No Change 3% 3%
MEA No Change 3% 3%
59 Objective and Guiding Principles
Organize functions to improve service delivery through better collaboration and clear accountability
Guiding Principles
• Organize workgroups to maximize collaboration and enhance service levels • Identify key leads to ensure accountability
• Consider reasonable span of control
• Provide opportunities for professional growth
• Ensure equity across the organization
Public Works
Department
60 P. 6 0
Public Works
Department
(Continued)
61 P. 6 1
Community
Development
Department
P. 6 2
62 Office of
Economic
Development &
Housing
63 P. 6 3
64 Building Ins pector
Fiscal Year Funded
Positions
Filled/Vacant
Positions
Total
Inspections
Av. # of
inspections
by
inspector/FY
Av. # of
inspections
by
inspector/day
FY 20-21 11 9/2 13,344 1,330 6
FY 21-22 10 8/2 16,695 2,086 9
FY 22-23 10 9/1 10,969 1,371* 6
Proposed FY
23-24
9 - - - -
*Through April 2023
65 Management R ati os
Employee Groups Fiscal Year 2022-2023 Fiscal Year 2023-2024 Total FTEs Management Non-
Management
Total FTEs Management Non-
Management
POA 113 4 109 114 5 109
Unrepresented Police 6 6 0 6 6 0
IAFF 73 4 69 73 4 69
Unrepresented Fire 4 4 0 4 4 0
Mid-Con 57 8 49 58 7 51
Pro-Tech 88 0 88 89 0 89
MEA 63.5 0 63.5 67 0 67
Unrepresented Misc. 31 28 3 32 29 3
Total 435.5 54 381.5 443 55 388
Total FTEs excludes City Council (5 FTE). Ratio of Managers to employees in current fiscal year is 1:8 and will remain at 1:8in the proposed 66 Staffing Comparis on with Other Cities
(CMO)
City Population FTEs FTEs/1000
Residents
CMO FTEs CMO
Exec. Staff
Full Service City
(Public Safety & Utilities)
Sunnyvale 153,389 936 6.10 16* 4
Santa Clara 129,604 1,095 8.45 11.5 4
Redwood City 82,344 571 6.93 12 3
Mountain View 81,527 679.25 8.33 16 4
Milpitas 80,839 440.5 5.54 5.5 3
Pleasanton 77,609 432 5.57 8 3 -
Palo Alto 69,721 1017 14.59 10 3
Cupertino 60,091 225 3.74 14.5 4 -
Gilroy 55,615 258 4.64 4 2
Morgan Hill 44,513 204 4.58 5 2 -
Campbell 42,696 207 4.85 5 2 -
Note: CMO FTEs includes CMO Executive staff, Communications, and Administration Support; does not include Economic Development, Housing, City Clerk or other functions
*Sunnyvale CMO FTE may be closer to 12 total as some of the listed FTE may be supporting Clerk and/or Economic Development. 67 Staffing Proposal Summary
Additions
Position*
Unrep
(misc)
Unrep
(temp)
Mid-Con POA Pro-Tech MEA
Management Analyst 1
Office Specialist 1
Permit Navigator 1
Police Lt. 1
PW Inspector 1
Equip. Maint. Worker 1
Recreation Services Supervisor 1
Maintenance Worker III 1
Cross Connection Specialist 1
Environmental Inspector 1
SCADA Technician 1
City Engineer 1
Finance Manager 1
*The following employee groups do not have any recommended adjustments so are not included in these tables: Fire ( unrep), Police (unrep) and IAFF 68 Staffing Proposal Summary
Deletions
Position*
Unrep
(misc)
Unrep
(temp)
Mid-
Con
POA Pro-
Tech
MEA
Maintenance Worker II -1
Customer Service Supervisor -1
Temp Water Meter Technician -0.5
Building Inspector -1
Engineering Director -1
Building Safety & Housing Director -1
*The following employee groups do not have any recommended adjustments so are not included in these tables: Fire (unrep), Police (unrep) and IAFF
69 Staffing Summary
Additions and D eletions
Position*
Unrep
(misc)
Unrep
(temp)
Mid-Con POA Pro-Tech MEA Total
Additions 2 0 3 1 2 5 13
Deletions -2 -0.5 -1 0 -1 -1 -5.5
Total 0 -0.5 2 1 1 4 7.5
*The following employee groups do not have any recommended adjustments so are not included in these tables: Fire (unrep), Police (unrep) and IAFF