AGENDA and NOTICE
Special Meeting
Thursday, March 14, 2024
5:30 P.M
A. ROLL CALL
B. CITY MANAGER REPORTS
1. Work Session for 2024-2026 Biennial Budget
C. ADJOURNMENT
MEETING INFORMATION
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Send an email to City Clerk by 3:00 p.m. the day of the meeting. Please identify the agenda item number in the subject line of your email. Emails will be compiled into one file and will be distributed to the City Council before the meeting.
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The agenda packet is available for review at Agendas and Minutes. The packet is typically posted to the City website the Friday before the meeting, but no later than 24 hours before a special meeting.
Pursuant to Government Code 54957.5, supplemental materials distributed less than 72 hours before this meeting, to a majority of the City Council, will be made available for public inspection at this meeting and will be posted at https://www.newark.org/departments/city-manager-s-office/agendas-minutes and will concurrently be made available for public inspection during regular business hours at the David W. Smith City Hall, 37101 Newark Boulevard, Newark CA. Materials prepared by City staff and distributed during the meeting are available for public inspection at the meeting or after the meeting if prepared by some other person. Documents related to closed session items or are exempt from disclosure will not be made available for public inspection. For those persons who require special accommodations, please contact the City Clerk at least two days prior to the meeting at City Clerk or 510-578-4266.
Item B. 1.
DATE 03/14/2024
TO Honorable Mayor and City Council Members
FROM Krysten Lee, Finance Director
SUBJECT Work Session for 2024-2026 Biennial Budget
The City is currently in the process of developing the 2024-2026 Biennial Budget and Capital Improvement Plan, which will include hosting multiple work sessions to discuss the budgetary needs of the City.
During this first session, staff will present to the Council an overview of the City's budget process, review various economic trends and factors that could impact our budget, provide an update on the City's current year's operating budget, and present draft policy objectives and goals, and discuss recommended prioritization of various specific projects for individual departments. A PowerPoint containing the most up-to-date financial information is attached.
The work session will focus on the operating budget. The related Capital Improvement Plan will be discussed at a future Newark City Council meeting, tentatively scheduled for Thursday, April 11, 2024.
Attachments
Presentation v1
2024-2026
Biennial Budget
Work Session
March 14, 2024
1 2
Department Priorities
Agenda
Economic Trends
Budget Process
Agenda
Next Steps
3 Financial Update 514
2 BUDGET PROCESS
3 Biennial Budget in the Context of a Five-Year Forecast FY 2025
Two-Year
Budget
FY 2027 FY 2028 FY 2029
FY 2026
Two-Year
Budget
Mid-Year review to include
refinements to the Five-Year
Forecast 4
JAN - FEB
OCTOBER
NOVEMBER
DECEMBER
MARCH
APRIL
MAY -
JUNE
JUNE
JULY 1
JUNE
(Year 1)
JULY 1
(Year 2)
Internal
Review
Revenue &
Expenditure Estimates
Five-Year Financial
Forecast
Baseline Budgets to
Finance
Capital Improvement
Plan
Proposed Biennial
Budget
New Fiscal Year
Year 2 Review & MidYear Adjustments
New Fiscal Year
Budget Adoption
Biennial Budget Review
& Work Session
JANUARY -
FEBRUARY
Biennial Budget Cycle
5 ECONOMIC TRENDS
6 Source: Redfin
California’s Housing Inventory Shortage Continues…
Year over
year
decline
since April
2022
Existing SingleFamily home
sales fell 6.7%
THOUSANDS
35 30
25 20
15 10
Oct
18 Apr19
Oct
19 Apr
20 Oct
20 Apr21
Oct
21 Apr
22 Apr23
Oct
22 Oct
23 7
Source: Redfin
Median Sale Price for Single-Family Homes
California
$843,340
Alameda
County
$1.1 M
City of
Newark
$1.2 M
800
600
400
1 M
THOUSANDS
Oct
18 Apr
19 Oct
19 Apr
20 Oct
20 Apr
21 Oct
21 Apr
22 Oct
22 Apr
23 Oct
23 8
California’s Job Openings and Unemployment
Source: Bureau of Labor Statistic
500
3500
3000
2500
2000
1500
1000
0 Sep
17 May18 Sep
18 May
19 19 20 Sep May 20
Sep 21
May Sep
21 May
22 Sep
22 May
23 Sep23
Job Openings Unemployment Persons
MILLIONS
0.5 1.0
1.5 2.0
2.5 3.0
3.5 0
Sep-23: one job opening for
every unemployed person
(Ratio 1:1)
9 Inflation
Source: Bureau of Labor Statistic
CPI increased
3.1% from Jan-23
6.50%
6.00%
5.50%
5.00%
4.50%
4.00%
3.50%
3.00%
2.50%
Apr 2023 Jul 2023 Oct 2023 Jan 2024
10 CalPERS Updates
Asset Liability Management (ALM)
2021
Began the
ALM review
Conducted
every 4 years
21.3%
Return for
Fiscal Year
2021
Funding Risk
Mitigation
Policy
triggered
Discount Rate
Automatically
lowered to
6.8% on
July 1, 2021
• No changes to
actuarial assumptions
• No changes to
discount rate
March
2024
Mid-Cycle
Review
-7.5 %
Return for
Fiscal Year
2022
5.8 %
Return for
Fiscal Year
2023
11 City’s Proactive Pension Cost Management Actions Spring 2024 Propose Hybrid Section 115 and ADP Strategy June 2022 $5 Million CalPERS ADP (Miscellaneous Plan) June 2021 $10 Million CalPERS ADP (Safety Plan)
February 2017 Adopted Pension & OPEB Reserve Policy;
Funded $5 Million Reserve Fund
June 2016 CalPERS 20-Year Fresh Start (Miscellaneous Plan) June 2015 CalPERS 20-Year Fresh Start (Safety Plan)
Newark’s Proactive Pension Cost Management Actions
12 Pension Cost Containment Strategies – Not Mutually Exclusive (3) Prepay UAL early in Fiscal Year (≈ 3.3% discount)
(1) Negotiate Cost Sharing With Employees
(2) Fresh Start Amortization offered by CalPERS
(4) Additional Discretionary Payments (ADP)
(5) Section 115 Trust
(6) Restructure All or Portion of Remaining UAL Currently not recommended;
Continue to
monitor
13 FINANCIAL UPDATE
14 Projected
Revenues $80.6 M
FY 2024 Projected Year-End
Projected
Expenditures
Projected Surplus
After Transfers &
One-time
Payments
$78.8 M
$200 K
Revenue Sources
Expenditure by Category
15 Projected
Revenue
$80.6 M
Excludes: Transfers &
One-time payments.
Above Amended Budget
= $9M (13%)
Above FY 2023
= $700K (1%)
General Fund Revenues by Category
Revenue Sources
16 Licenses,
Permits and
Fees 13%
UUT 5%
Measure GG
9%
Property Tax 38%
Other 9%
Sales Tax 19%
FY 2024
FY 2024
Total
Revenues
$80.6 M
FY 2024 Revenue Sources
TOT 7%
17 Projected
Expenditures
$78.8 M
Excludes: Transfers &
One-time payments.
Above Amended Budget
= $1.1M (1%)
Above FY 2023
= $7.3M (10%)
General Fund Expenditures by Category
Expenditure by Category
18 Civic Center
Debt 6%
ACFD Fire
Services
16%
FY 2023 Expenditures by Category
Personnel 52%
FY 2024
Total
Expenditures
$78.8 M
FY 2024 Expenditures by Category
FY 2024
Non-
Personnel
26%
19 Five-Year Forecast
Revenue Sources
Expenditures by Category
20 Property Tax
21 Assessed Value – FY 2024 tax roll
Increased a net 10.7%
Sales Tax (Bradley-Burns) & Transaction Use Tax (Measure GG) 22 Transient Occupancy Tax (TOT)
23 Utility Users Tax
24 TAX RATE
3.25%
RESERVE FUNDS
Emergency
Fiscal Uncertainty
Pension and OPEB
Equipment Replacement
As of June 30, 2023
(millions)
17.4%
16.3%
Above Min
Target of
30%
$11.4 M
Fund Balance & Reserves
$10.7 M
$ 12.4 M
$6.2 M
33.7%
25 DEPARTMENT PRIORITIES
26 Police Department
Department Priorities
Operations
Implement
$986K grant
from the State
to address
auto and
catalytic
converter
thefts
Responsive to
Quality of Life
Concerns
such as
inoperable
vehicles and
blight
Increased
Focus on
Training of
new officers
and staff
development
Resource
Deployment
based on
developing
crime and
traffic trends
Department Priorities
27 Police Department
Support Services
Ensure current
practices are
consistent with
department
policy through
policy
compliance
audits
Continued
Recruitment
Commitment
through
focused
candidate
engagement by
Recruitment
Sergeant
Enhance
Community
Engagement
through
renewed
partnerships,
youth programs,
community
events, &
volunteers
Prioritize
professional
development
& succession
planning
including
mentorship &
opportunities
for future
leaders
Department Priorities
28 Alameda County
Fire Services
Review and
support
City’s
Comprehensive
Emergency
Management
Plan
Collaborate
with the City’s
Emergency
Services
Coordinator
to provide
community
training
programs
Including
Listos
PEP
CERT
Newark
residents
Meet
obligations
in delivery of
emergency
response
services
Department Priorities
29 Public Works
Engineering
Implement
traffic
improvement
and roadway
safety projects
Complete
Old Town
Streetscape
Improvement
Project
and
Thornton
Avenue
Complete
Streets
projects
Support
residential
and
commercial
construction
Oversee
construction
of Central
Avenue
Railroad
Overpass
project Pursue
outside
funding for
transportation
projects
Department Priorities
30 Public Works
Building Inspection
Implement
software,
programs,
and
processes to
streamline
development
permitting
Support
construction
activity
within the
community
Educate
community on
Building Code
updates
Department Priorities
31 Public Works
Maintenance
Improve
City’s Urban
Forest
Maintain
• Parks
• Landscaping
• Streets
• Buildings
• Vehicle
• Equipment
Complete
Priority
maintenance
needs
for buildings as
identified in the
Facilities Master
Plan and CIP
Implement
Increased
project
management
support to
complete
landscape and
building projects
Department Priorities
32 Public Works
Environmental Services
Update
the City's
Climate Action
Plan with
revised emission
reduction
targets and
updated goals,
policies and
strategies
Complete
a local
Sea Level
Rise
Resiliency
Study in
coordination
with local
and regional
partners
Implement
City’s
Stormwater
Program in
accordance
with permit
requirements
Implement
continued
diversion of
solid waste
from landfills
Address
changes in
State law
Department Priorities
33 Community Development
Planning
Update
NewPark
Place Specific
Plan Mixed
Use II area
and Four
Corners Area
Plan
Implement
Goals,
Policies, and
Programs of
Specific
Plans
• Old Town
• Bayside
Newark
Implement
Affordable
Housing Work
Plan; Housing
Element
Programs
Department Priorities
34 Community Development
Economic Development
Market
Newark to
Businesses
and
real estate
brokers
Attract
New
Businesses
• Retail
• Biotech
• Advanced
Manufacturing
Support
the Chamber
of Commerce
and small
businesses
Department Priorities
Develop
hotel
marketing plan
35 Community Development
Community Preservation
Achieve
compliance
through
outreach,
education, and
enforcement
Partner
with the
community to
maintain
property
standards
Promote
Health and
Safety
by enforcing
minimum
housing and
property
maintenance
standards
Department Priorities
36 Financial Services
Provide
Leadership
and Support
in grant
compliance,
and financial
reporting
Monitor
• Revenues
• Expenditures
• Economic
• Trends
• Fiscal policies
Develop
• Biennial
Budget
• Five-Year
Forecast
Establish
Maintenance
Reserve to
address needs
in Facilities
Master Plan
Department Priorities
37 Recreation & Community Services
Provide
community
special events
and recreation
opportunities
Develop
partnerships
at Newark
Resource
Center
Establish
partnerships
to promote
Human
Services
programs
Department Priorities
Offer
Scholarships
for
recreational
and fitness
activities
38 Human Resources
Department
Champion
employee
safety
and wellness
and utilize risk
management
strategies to
protect the
City's
resources
Promote
the City's
PRIDE values
to build a
thriving
employee
culture
Retain
our talented
employees
with engaging
professional
and
organizational
development
Attract
a talented
workforce
with
innovative
recruitment
and
onboarding
programs
Department Priorities
39 Information Technology
Department
Implement
Technology
Master Plan
and
Broadband
Master Plan
Support
Department
Initiatives
by integrating
technology
solutions
Enhance
Cybersecurity
implement
proactive
measures to
safeguard City
data against
cyber threats
Encourage
Innovation
foster
continuous
improvement
through
emerging
technologies
and best
practices
Department Priorities
40 City Manager’s Office
City Manager, City Clerk, City Attorney, Emergency Management Update
the citywide
Comprehensive
Emergency
Management
Plan and
increase CERT
participation
Administer
Municipal
Election
11/5/2024
coordinate with
Alameda County
Registrar of
Voters
Develop
communication
priorities and
increase
community
satisfaction with
citywide
communication
Initiate
Citywide
Branding and
Marketing
effort
Department Priorities
41 NEXT STEPS
43 Budget Work
Session
May
Draft Biennial
Budget
Document
Presentation
May
Capital
Improvement
Plan Discussion
April 11th
Capital
Improvement
Plan Draft
Presentation
May
Adoption of
Biennial Budget
& Capital
Improvement
Plan
May - June
Next Steps
44