Attachment A: FY 2022-23 Q3 Detailed Report
T
ABLE OF CONTENTS
The r
eport has the following major sections:
1. G
eneral Purpose Fund Q3 Revenues
2. General Purpose Fund Q3 Expenditures
3. General Purpose Fund Q3 Fund Balance
4. Reserves
A
ppendixes:
Consolidated Fiscal Policy
Attachment A
1 Summar
y of FY 2022-23 Q3 GPF Revenues & Expenditures
FY
2022-23 GPF Revenue is projected to come in $203.13 million lower compared to the Adjusted Budget of $918.86 million. GPF Expenditures are estimated to come in $120.88 million under the Adjusted Budget of $918.86 million. Table 1 below shows the FY2022-23 General Purpose Fund revenue and expenditures Adjusted Budget, Q3 year to date actuals, and year end estimates which currently project a year end operating shortfall of $82.26 million T
able 1: Summary of FY 2022-23 Q3 GPF Revenues & Expenditures Budget to Estimated Year-End Actuals ($ in millions)
Summary
FY 2022-23
Adjusted
Budget
FY 2022-23
Q3 YTD
Actuals
FY 2022-23
Year-End
Estimate
FY 2022-23
Year-End $
Over / Under
Adjusted
Budget
Projected Year-
End % Over /
(Under)
Adopted
Budget
FY2022-23
Revenues 918.86 457.75 715.73 (203.13) (22.1) %
FY 2022-23
Expenditures 918.86 595.99 797.98 120.88 13.2 %
Operating
(Shortfall) / Surplus — (138.23) (82.26) (82.26) (8.9) % I. G
ENERAL PURPOSE FUND Q3 REVENUES
Thi
s section of the report provides an assessment of the City's revenue condition in the current fiscal year as compared to the FY 2022-23 Adjusted Budget based on actual performance during the first nine months of FY 2022-23 and quarterly trends established in prior fiscal years.
Based on this analysis, the overall GPF tax and fee revenue is projected with a net decrease of $14.37 million. The Adjusted Budget also assumes $77.77 million in use of fund balance, $42.99 million in prior year carryforwards, and an interfund transfer from ARPA that will remain in the ARPA fund instead. Without accounting for the before mentioned one-time use of available funds, the GPF revenues forecast to come in at $715.73 million which is $203.13 million lower compared to the Adjusted Budget of $918.86 million.
O
verall, the effects of persistent high inflation, high gas prices, high interest rates, decreased consumer confidence, and well-publicized layoff notices in the in the technology sector will continue to pose risks to City revenues. The well-documented rise in interest rates will continue to negatively affect real estate transfer taxes by reducing demand and price of properties on the market. Elevated interest rates also increase the cost of financing a car for prospective buyers and consequently affect the sales of automobiles. For these reasons, the Administration will continue closely monitor economic conditions and the performance of all City funds.
Attachment A
2 Q3 REV
ENUE HIGHLIGHTS
P
roperty Tax: The largest revenue source for the City is projected to exceed the adjusted budget totaling $274.48 million from the adjusted budget of $265.49 million. The projected increase of $8.99 million is driven by the overall increase in taxable values of approximately
8.2% and therefore the increase in the amount of property tax assessments. The overall increase in taxable value of 8.2% is made-up of prior year transfers of ownership (4.04%) that reflected on the FY 2022-23 Property Tax rolls, Prop 13 growth (2%), newly developed and occupied commercial property (1.06%), newly developed and occupied residential property (0.64%) and other increases (0.46%).
The s
ignificant slowdown in the real estate market, both in the volume of properties sold and in the sale price that affected the Real Estate Transfer Tax in the current fiscal year, could impact the amount the property tax in the next fiscal year and beyond. The drop the volume means less number of properties will be re-assessed from the prior value that is typically lower. The drop in sale price could lead to more appeals regarding the assessed value.
B
usiness License Tax: The second largest revenue source is projected to increase by 10% or $11.33 million over the mid-cycle budget. There are two significant factors contributing to the increase in revenue projection. Recent economic conditions, such as the increase commercial vacancy rates, the rise in borrowing interest rate, the decline in personal income and taxable sales, are putting downward pressure on tax revenues. As a result, the revised forecast for the current fiscal year is a decreased by $10.7 million from the midcycle adopted. However, with the passage of 2022 Measure T, the projected revenue includes 19.12 million directly from the measure.
R
eal Estate Transfer Tax (RETT): The third largest revenue source for the City is projected to decrease by an estimated $38.81 million from the adjusted budget of $112.20 million. The significant reduction is attributable to rising interest rates that impact the affordability factor and consequently the number of property sales subject to RETT. The number of properties sold through the first nine months dropped by 39.9%, or 1,693 less properties, compared to the number of properties sold in the same time period in the prior year.
Attachment A
3 T
able 2: RE
TT Growth Rate ($ in millions)
FY 2021-22 to date FY 2022-23 to date Year-Over-Year
Variance Thru Q3
Sale Price Gross Sales Volume Gross Sales Volume Gross Sales Volume $300,000 or below $52.10 323 $27.15 167 (47.9) % (48.3) % $300,001 to $2 Million $3,482.11 3,753 $2,125.57 2,334 (39.0) % (37.8) % $2 million to $5 Million $768.62 283 $498.23 182 (35.2) % (35.7) % $5 -10 Million $183.29 27 $119.89 17 (34.6) % (37.0) %
$10 - 50 Million $445.83 21 $282.26 13 (36.7) % (38.1) % $50.01-100 Million $65.00 1 $147.65 2 127.2 % 100.0 %
Over $100 Million $327.50 1 $0.00 — (100.0) % (100.0) % Total $5,324.46 4,408 $3,200.74 2,715 (39.9) % (38.4) % S
ales Tax: Based on the data provided by the City's Sales Tax consultant for the period of July 2022 through December 2022 and broken down by the Major Industry Group, as shown in Table 3 below, the City experienced a net positive gain of 3.9% when compared against the same period in the prior year. The gain was mostly driven by the highest gas prices on records across the state during the summer months of 2022 with Oakland averaging $6.55 per gallon for regular unleaded gasoline1, exceptionally strong sale of building and construction materials, and the rising prices, especially restaurant menu prices. Since then, gas prices have dipped below its highest with Oakland averaging $4.81 per gallon for regular unleaded gasoline 2, inflation
eases but continues to persist, and increased interest rates, all of which will limit economic growth and a gradual change in consumer behavior away from taxable goods to non-taxable items such as services and travel.
For
the reasons above, the fourth largest revenue source for the City is projected to exceed the adopted budget by approximately by $2.52 million, totaling $65.12 million from the adjusted budget of $62.60 million for FY 2022-23
1Source: https://gasprices.aaa.com/?state=CA#state-metro 2Ibid
Attachment A
4 Table 3: Sales Tax Comparison by Category FY2021-22 and FY 2022-23 ($ in millions) Category
Thru Q2
FY 2021-22
Thru Q2
FY 2022-23 Inc/Dec
State/County Pools & Transfers 3.14 3.03 (3.5)%
Restaurants & Hotels 2.41 2.63 9.3 %
Autos & Transportation 2.18 2.33 7.0 %
Fuel & Service Stations 1.72 2.15 24.8 %
Business & Industry 1.79 1.73 (3.2)%
Building & Construction 1.38 1.52 10.1 %
General Consumer Goods 1.54 1.47 (4.3 )%
Food & Drugs 1.48 1.38 (6.5)%
Average 1.95 2.03 3.9 %
Service Charges: This fifth largest revenue source for the City is projected to come in at $48.20 million, which is lower by $7.69 million compared to the adjusted budget of $55.89 million.
Service charges are primarily parking meter revenue, franchise fee, and other fees which include fire inspection.
Int
erfund transfers & Transfers From Fund Balance: The adjusted budget assumes $77.77 million in use of fund balance to balance budgeted expenditures and $42.99 million in use of fund balance to support carryforward expenditures. Additionally there is $70.91 million budgeted in anticipated interfund transfers. Of which, $68.00 million that were anticipated to transfer over from the ARPA Fund (2072) will not be transferred. Instead an accounting adjustment will be made to transfer eligible expenditures out of the GPF and into the ARPA Fund, since Federal guidelines require ARPA funds to be allocated separately.
T
able 4 summarizes the FY2022-23 GPF revenues by category.
Attachment A
5 Table 4: FY2022
-23 Q3 Adopted Budget to Actuals and Year End Estimate ($ in millions) Revenue Category
FY 2022-23
Adjusted
Budget
FY 2022-
23 Q3
YTD
Actuals
ARPA
Adjustment
FY 2022-
23 Q3
Year-End
Estimate
Year-End $
Over /
(Under)
Adjusted
Budget
Year-End %
Over /
(Under)
Adjusted
Budget
Property Tax 265.49 173.69 274. 48 8.99 3.4 %
Real Estate Transfer
Tax 112.20 46.51 73. 39 (38.81) (34.6) %
Business License Tax 111.88 29.59 123.21 11.33 10.1 %
Interfund Transfers 70.91 70.91 (68.00) 2.90 (68.00) (95.9) % Sales Tax 62.60 38.85 65. 12 2.52 4.0 %
Service Charges 55.89 22.60 48.20 (7.69) (13.8) %
Utility Consumption
Tax 54.40 38.20 62.
57 8.17 15.0 %
Transient Occupancy
Tax 23.99 10.70 20. 83 (3.16) (13.2) %
Fines & Penalties 19.00 10.08 21.61 2.61 13.7 %
Parking Tax 12.39 6.10 11.01 (1.38) (11.1) %
Licenses & Permits 6.08 0.60 2. 83 (3.26) (53.5) %
Miscellaneous
Revenue 2.22 8.42 8. 42 6.20 279%
Interest Income 0.48 0.39 0.48 — — %
Internal Service
Funds — —
— — N / A
Grants & Subsidies 0.57 0.67 0.67 0.10 14.9%
Subtotal 798.10 457.75 (68.00) 715.73 (82.38) (10.3) %
Transfers from Fund
Balance 77.77 — — (77.77) (100.0) %
Project Offsets &
Carryforwards 42.99 — (42.99) (100.0) %
Total 918.86 457.75 (68.00) 715.73 (203.13) (22.1) %
Attachment A
6 II.
GENERAL PURPOSE FUND Q3 EXPENDITURES
GENERAL PURPOSE FUND EXPENDITURE HIGHLIGHTS
The GPF expenditures are forecasted to come in at $797.98 million, which is a decrease of $120.88 million, compared to the Adjusted Budget of $918.86 million. The majority of the savings are attributable to a transfer in the amount of $68.00 million of expenditures out of the GPF into the ARPA Fund (2072). The Adjusted Budget also further required a use of fund balance in the amount of $77.77 million to balance the expenditures as budgeted. This follows a trend in recent years, during which one-time funding was needed in the balancing of the FY2019-20, FY2020-21, FY2021-22 and FY2022-23 expenditures in the budget by programming CARES dollars ($36.99 million), ARPA dollars ($188 million), and use of VSSF ($14.65 million) for a total of $239.64 million, which would equal 26% of FY2022-23 GPF budgeted expenditures. The budgeted personnel expenditures also assume a vacancy factor of
10.25 %, expediting hiring to a large degree could change the outcome. Overall, the increase in the appropriations level compared to previous years merits further consideration as it reflects the current global inflationary trend affecting the economy.
Table 5 below reflects the GPF expenditures forecasted to come in at $797.98 million which is $120.88 million or 13.2% under the adjusted budget of $918.86 million.
Table 5: Summary of FY 2022-23 Q3 GPF Expenditures Budget to Actuals ($ in millions)
FY 2022-23
Adopted
Budget
FY 2022-23
Adjusted
Budget
FY 2022-23
Q3 YTD
Actuals
FY 2022-23
Q3 Year-End
Estimate
Year-End $
(Over) /
Under
Adjusted
Budget
Year-End %
(Over) /
Under
Adjusted
Budget
FY 2022-23
Expenditures 872.07 918.86 595.99 797.98 120.88 13.2 %
Attachment A
7 Depart
ment Level Spending Trends
Table 6 reflects department level spending and projected year-end GP F expenditures, adjusted to reflect the impact of the $68.00 million in expenditures transferred out to the ARPA Fund. As a result, City-wide GPF departmental expenditure projections are projected to come in below the Adjusted Budget by $120.88 million. All Departments, except two, are projected to be under budget at the end of the fiscal year. The two Departments are the Fire Department, projected at
0.6% over budget and the Police Department projected at 1.8% over budget.
Table 6: S
ummary of FY 2022-23 GPF Projected Expenditure Variance ($ in millions) Department
FY 2022-23
Adopted
Budget
FY 2022-23
Adjusted
Budget
FY 2022-23
Q3 YTD
Actuals
FY 2022-23
Q3 Year-
End
Estimate
Year-End $
(Over) /
Under
Adjusted
Budget
Year-End %
(Over) / Under
Adjusted
Budget
Capital
Improvement
Projects 3.44 4.66 2.78 4.33 0.33 7.0 %
City
Administrator 9.90 11.32 6.06 9.32 1.99 17.6 % City Attorney 21.04 22.45 15.26 20.78 1.67 7.4 % City Auditor 3.12 3.12 1.63 2.13 0.99 31.8 % City Clerk 10.37 11.52 4.43 9.32 2.21 19.1 % City Council 7.32 7.42 4.84 6.55 0.87 11.8 % Department of
Transportation 22.69 24.82 11.60 16.38 8.44 34.0 % Department of
Violence
Prevention 13.57 18.42 7.52 17.47 0.95 5.2 % Department of
Workplace and
Employment
Standard
5.96 6.32 2.61 3.85 2.48 39.2 %
Economic and
Workforce
Development
Department
16.46 21.27 8.99 19.48 1.79 8.4 %
Finance
Department 28.92 30.18 15.85 24.33 5.85 19.4 % Fire Department 179.82 186.03 127.62 187.17 (1.14) (0.6) % Housing and
Community
Development
Department
2.18 2.68 0.40 2.44 0.24 8.8 %
Attachment A
8 Department
FY 2022-23
Adopted
Budget
FY 2022-23
Adjusted
Budget
FY 2022-23
Q3 YTD
Actuals
FY 2022-23
Q3 Year-
End
Estimate
Year-End $
(Over) /
Under
Adjusted
Budget
Year-End %
(Over) / Under
Adjusted
Budget
Human
Resources
Management
Department
8. 72 8. 60 6 .11 8. 21 0. 39 4.5 %
Human Services
Department 51. 54 50. 68 42. 05 43. 58 7. 10 14.0 % Information
Technology
Department 19.40 19.97 9.35 16.82 3.15 15.8 %
Mayor 4.54 4.37 2.69 3.55 0.82 18.8 %
Non
Departmental
and Port 77.
13 88. 45 73. 98 77. 21 1 1.24 12.7 %
Oakland Animal
Services 6.16 6.27 3.87 5.23 1.04 16.6 %
Oakland Parks
and Recreation
Department
21. 98 22. 43 17. 02 20. 27 2. 15 9.6 %
Oakland Public
Library
Department 14.44 14.44 10.67 13.38 1.05 7.3 %
Oakland Public
Works
Department 2. 26 5. 33 1. 63 5. 01 0. 33 6.1 %
Police
Commission 8.19 8.20 3.25 4.40 3.80 46.3 %
Police
Department 329.67 336.34 248.18 342.51 (6.17) (1.8) %
Public Ethics
Commission 1.81 1.96 0.95 1.25 0.71 36.1 %
Race and Equity
Department 1.46 1.62 0.68 1.01 0.61 37.6 %
Subtotal 872.09 918.87 630.02 865.98 52.89 5.8 %
Transferred to
ARPA Fund — — (34.00) (68.00) 68.00 N / A
Total 872.07 918.86 595.99 797.98 120.88 13.2 %
The fol
lowing section details Q3 projected GPF savings or overspending by Department, as compared to the FY 2022-23 Adjusted Budget.
C
apital Improvement Program (CIP)
Attachment A
9 The Capital
Improvement Program projects to have $330,000 in savings in O&M.
City Administrator (CAO)
The City Administrator’s Office is projected to underspend by $1.99 million, or 17.6% of their budget due to savings in O&M and vacancies. In the General Purpose Fund, CAO has a vacancy rate of 21%, with eight vacant positions.
City Attorney (OCA)
The City Attorney is projected to underspend by $1.67 million, or 7% of their budget primarily due to vacancies. In the General Purpose Fund, OCA has a vacancy rate of 7%, with four vacant positions. In addition, there is a projected $500,000 savings in O&M.
City Auditor
The City Auditor is projected underspend by $0.99 million, or 32% of their budget due to vacancies. In the General Purpose Fund, City Auditor has a vacancy rate of 27%, with three vacant positions.
City Clerk
The Office of the City Clerk is projected to underspend their budget by $2.21 million, or 19% of their budget due to savings in O&M and vacancies. In the General Purpose Fund, City Clerk has a vacancy rate of 18%, with two vacant positions.
City Council
The City Council is projected to underspend their budget by $0.87 million, or 12% of their
budget due to vacancies. In the General Purpose Fund, City Council has a vacancy rate of 3%, with one vacant position.
Department of Transportation (DOT)
The Department of Transportation is projected to underspend by $8.44 million, or 34% of their budget primarily due to vacancies. In the General Purpose Fund, DOT has a vacancy rate of 37%, with 38 vacant positions. Furthermore, there is a projected $3.1 million savings in O&M.
Violence Prevention (DVP)
Attachment A
10 The Department of Violence Prevention is projected to underspend by $0.95 million or 5% of their budget due to vacancies. In the General Purpose Fund, DVP has a vacancy rate of 41%, with seven vacant positions.
Department of Workplace & Employment Standards (DWES)
The Department of Workplace & Employment Standards is projected to underspend by $2.48 million, or 39% of their budget primarily due to vacancies. In the General Purpose Fund, DWES has a vacancy rate of 42%, with eight vacant positions. Furthermore, there is a projected $780,000 savings in O&M.
Economic & Workforce Development (EWD)
Economic & Workforce Development is projected to underspend by $1.79 million, or 8% of their budget, due to vacancies. In the General Purpose Fund, EWD has a vacancy rate of 31%, with nine vacant positions.
Finance Department
The Finance Department is projected to underspend by $5.85 million, or 19% of their budget, primarily due to vacancies. In the General Purpose Fund, Finance has a vacancy rate of 17%, with 20 vacant positions. Furthermore, there is a projected $2.7 million in savings in O&M.
Fire Department
The Oakland Fire Department is projected to overspend by $1.14 million, or 0.6% of their budget. In the General Purpose Fund, Fire has a vacancy rate of 13%, with 74 vacant positions which results in savings in the amount of $14.09 million. However, these estimated savings from the vacancies are offset by $19.67 million in over-time overspending resulting in a net personnel year end projected overspend in the amount of $5.58 million. Based on Q3 expenditure trends, there is projected $4.44 million in savings from O&M in the General Purpose Fund for Fire which partially offsets the personnel overspending. These savings are primarily due to funding for fire prevention/inspection costs that have only been partially spent this fiscal year
Housing & Community Development (HCD)
Housing & Community Development is projected to end the fiscal year at $2.44 million which is $0.24 million or 8.9% under the adjusted budget of $2.68 million.
Human Resources Management (HRM)
Attachment A
11 Human Resources Management is projected to underspend by $0.39 million, or 5% of their budget, primarily due to underspending in Personnel. In the General Purpose Fund, HRM has a vacancy rate of 17%, with seven vacant positions.
Human Services Department (HSD)
Human Services Department is projected to come in under budget by $7.10 million, or 14% of their budget due to savings in O&M and vacancies. In the General Purpose Fund, HSD has a vacancy rate of 18%, with 11 vacant positions
Information Technology (ITD)
The Information Technology Department is projected to underspend by $3.15 million, or 16% of their budget primarily due to vacancies. In the General Purpose Fund, ITD has a vacancy rate of 17%, with nine vacant positions. Furthermore, there is a projected $1.7 million in savings in O&M.
Mayor’s Office
The Mayor’s Office is projected to underspend by $0.82 million, or 19% of their budget, due to vacancies. In the General Purpose Fund, Mayor's Office has a vacancy rate of 9%, with one vacant position.
Non-Departmental
Non-Departmental is projected to underspend by $11.24 million, or 13% of the budge t due to savings to funding authorized by Resolution 89377 C.M.S. to cover the increased cost of MOU labor agreements. The actual cost is projected to be lower than budgeted due to the current number of citywide vacancies. These savings are partially offset by under-recovery in central service overhead. Furthermore, there is a projected $4.6 million in savings in O&M funding for long-term liability and insurance claim costs that have been unspent this fiscal year.
Oakland Animal Services
The Department of Animal Services is projected to underspend by $1.04 million, or 17% of their budget, primarily due to vacancies. In the General Purpose Fund, Animal Services has a vacancy rate of 23%, with seven vacant positions. Furthermore, there is a projected $425,000 in savings in O&M.
Oakland Parks, Recreation and Youth Development (OPRYD)
Attachment A
12 Oakland Parks, Recreation and Youth Development is projected to underspend by $2.15 million, or 10% of their budget, primarily due to vacancies. In the General Purpose Fund, OPRYD has a vacancy rate of 26%, with 28 vacant positions. Furthermore, there is a projected $733,000 in savings in O&M.
Oakland Public Library (OPL)
Oakland Public Library is projected to underspend by $1.05 million, or 7% of their budget, due vacancies. In the General Purpose Fund, OPL has a vacancy rate of 20%, with 12 vacant positions.
Oakland Public Works (OPW)
Oakland Public Works is projected to have savings of $0.33 million, or 6% of their budget, due to vacancies.
Police Commission
The Police Commission, inclusive of the Office of the Inspector General (OIG) and Community Police Review Agency (CPRA), is projected to have savings of $3.80 million, or 46% of their budget, primarily due to vacancies. In the General Purpose Fund, Police Commission has a vacancy rate of 50%, with thirteen vacant positions. Furthermore, there is a projected $1.1 million in savings in O&M.
Police Department
The Police Department is projected to overspend by $6.17 million, or 1.8% of their budget, due
to overtime overspending. The overspending in overtime derives from OPD implementing a 30- day crime plan to reduce violent crime in the city of Oakland in Q1. This plan required overtime by sworn personnel. In Q2 the Department implemented and extended plans for a Holiday Safety Strategy, which required more officers to be present on city streets, business districts, and tourist areas. In Q3 of FY 22-23, the Department’s objective was to reduce violent crime.
This plan required overtime by sworn personnel and increased spending in the Homicide Section, District Areas 1 and 3, and the Violent Crime Operation Center (VCOC). As a result of this crime plan, OPD recovered more than 100 firearms and made 140 arrests of violent individuals, and an increase in overtime spending in the Training Division. For additional details please refer to the Public Safety Cost Analysis section. In the General Purpose Fund, Police has a vacancy rate of 9%, with 91 vacant positions. Furthermore, there is a projected $5.1 million in savings in O&M in the General Purpose Fund for Police primarily due to funding for miscellaneous contract services and accident & abuse repair costs that have only been partially spent this fiscal year.
Public Ethics Commission (PEC)
Attachment A
13 The Public Ethics Commission is projected to have savings of $0.71 million, or 36% of their budget, due to vacancies. In the General Purpose Fund, PEC has a vacancy rate of 22%, with two vacant positions.
Race & Equity
The Department of Race & Equity is projected to have savings of $0.61 million, which is 38% of their budget, due to vacancies. In the General Purpose Fund, Race & Equity has a vacancy rate of 20%, with one vacant position.
Public Saf
ety Costs & Analysis
Table 7 below shows the personnel expenditures, including overtime, for Public Safety in the GPF. Once all other personnel costs are accounted for, Oakland Police Department currently shows a projected year-end personnel budget to be overspent by $10.85 million and Oakland Fire Department currently shows a projected year-end budget to be overspent by $5.58 million in the General Purpose Fund. Details are provided on Table 7 below.
Table 7: FY 2022-23 Public Safety GPF Personnel Expenditures ($ in millions) Department
FY 2022-23
Adjusted
Budget
FY 2022-23
Q2 YTD
Actuals
FY 2022-23
Year-End
Estimate
Year-End $
(Over) /
Under
Budget
Year-End
%
(Over) /
Under
Budget
Police Department
Overtime (OT) 30.90 38.03 50.65 (19.75) (63.9) %
Reimbursable OT (Special Events, etc.) (3.53) (3.53) 3.53 All Other Personnel (non-OT) 251.91 187.25 246.54 5.37 2.1 % OPD Total Personnel 282.81 221.75 293.66 (10.85) (3.8) % Fire Department
Overtime (OT) 11.11 23.11 30.78 (19.67) (177.1) %
All Other Personnel (non-OT) 142.00 96.16 127.91 14.09 9.9 % OFD Total Personnel 153.11 119.27 158.69 (5.58) (3.6) %
As shown on Table 7 above, OPD was budgeted $30.90 million for overtime and is projected to exceed this budgeted amount by $19.75 million for a projected year-end total of $50.65 million.
In Table 8 below, are the top five organizations in OPD where overspending has occurred most outlined in Table 8:
Attachment A
14 Table 8: FY
2022-23 OPD Top 5 Organizations in Overtime Expenditures ($ in millions) Top 5 Organizations in
OPD for Overtime
FY 2022-23
Adjusted
Budget
FY 2022-23
Q3 YTD
Actuals
FY 2022-23
Year-End
Estimate
Year-End $
(Over) / Under
Budget
Special Operations 5.29 7.31 9.74 (4.44)
District Area 1 2.51 6.40 8.52 (6.01)
District Area 3 2.45 3.26 4.34 (1.89)
Violent Crime Operations Center — 1.68 2.24 (2.24)
Homicide 0.46 1.68 2.24 (1.78)
Grand Total 10.71 20.34 27.08 (16.37)
The allocation of patrol overtime is determined by the Watch Commanders and is based on a review of crime analysis data and information obtained from the weekly crime meetings. The objective is to reduce shootings, robberies, and other violent crime. The specific location and tasks are not predetermined.
In Q3 of FY 22-23, the Department’s objective was to reduce violent crime. This plan required overtime by sworn personnel and increased spending in the Homicide Section, District Areas 1 and 3, and the Violent Crime Operation Center (VCOC). As a result of this crime plan, OPD recovered more than 100 firearms and made 140 arrests of violent individuals.
Special Enforcement Overtime consists of special events where sworn presence is needed or required to assist with public safety. Reimbursable overtime is categorized under Special Enforcement. In Q3, the Department received a total of $3.53 million in reimbursable overtime as a direct result of special events.
Due to the rise in robberies and shootings in District Area 1 and Area 3, the Department has deployed Community Resource Officers (CROs) for surveillance operations and extra patrols in the area, as they provide a visual deterrent to crime and reassures the community of the Department’s commitment to safety. The operation continues today and requires seven-day-a week coverage.
Officers were also placed in Chinatown due to increased robberies and assaults. Sworn personnel in this area provide a visual deterrent to crime and assist with flag-downs. This overtime started in 2022 and continues to the present.
In Q3, there was a heavy push to increase the clearance rate of homicide cases, as the Department ended 2022 with a 35% clearance rate. This strategy required more officers to be present on city streets, business districts, and tourist areas. To accomplish this, extra hours were required to complete the necessary follow-up work through investigations that would lead to convictions or closures of cases. In Q1 of 2023, the homicide clearance rate rose from 35% to 44%. The Homicide Section continued on this positive track and the current clearance rate is 69%.
Attachment A
15 The Oakl
and Fire Department is projected to overspend in its annual personnel budget in the General Purpose Fund by $5.58 million, primarily due to overtime, which is projected to be overspent by $19.67 million. A contributing factor for the overspending as projected was the increased vacancy rate assumed in the FY2022-23 Budget, which increased from 4.0% to
10.25% for FY 2022-23. This resulted in over $8.0 million less for budgeted FTE than if the vacancy discount rate had remained at 4.0% for sworn FTE. Fire’s overtime budget has also been affected by staff out due to injury, staff out due to Covid-19, and extreme weather events which has made it difficult for Fire to maintain its minimum staffing levels without the use of overtime.
A historical analysis of Fire’s budget is shown in Table 9 below.
Table 9: Year-Over-Year Comparison of Public Safety GPF Personnel Expenditures ($ in millions)
Police Department
Overtime (OT) FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY2022-23 Adjusted Budget 14.05 16.56 15.39 33.36 30.90
Actuals (FY23 Projected) 36.36 35.07 29.18 34.35 50.65 (Over)/Under (22.31) (18.51) (13.79) (0.99) (19.75)
All Other Personnel (non-OT) FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY2022-23 Adjusted Budget 211.35 232.95 239.29 245.01 251.91
Actuals (FY23 Projected) 212.68 242.01 244.23 234.29 246.54 (Over)/Under (1.33) (9.06) (4.94) 10.71 5.37
Total Personnel FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY2022-23 Adjusted Budget 225.40 249.51 254.68 278.37 282.81
Actuals (FY23 Projected) 249.04 277.08 273.41 264.27 293.66 (Over)/Under (23.64) (27.57) (18.73) 14.09 (10.85)
Fire Department
Overtime (OT) FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY2022-23 Adjusted Budget 3.34 2.37 4.22 19.83 11.11
Actuals (FY23 Projected) 19.65 20.63 24.22 29.83 30.78 (Over)/Under (16.31) (18.26) (20.00) (10.00) (19.67)
All Other Personnel (non-OT) FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY2022-23 Adjusted Budget 128.90 142.70 144.73 132.44 142.00
Actuals (FY23 Projected) 117.84 123.59 126.99 119.50 127.91 (Over)/Under 11.06 19.11 17.74 12.94 14.09
Total Personnel FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY2022-23 Adjusted Budget 132.24 145.07 148.95 152.27 153.11
Actuals (FY23 Projected) 137.49 144.22 151.21 149.33 158.69 (Over)/Under (5.25) 0.85 (2.26) 2.94 (5.58)
Historical Police Overtime
Attachment A
16 As T
able 9 above shows, Police has overspent its overtime budget on each of the prior 4 fiscal years. In FY 2018-19, Police overspent the total overtime budget by $22.31 million, in FY 2019- 20,$18.51 million over budget ,in FY 2020-21 police personnel overspending was $13.79 million over budget. FY 2021-22 $0.99 million of overspending was offset by savings of $14.09 million in personnel costs overall since higher attrition rates led to salary savings due to vacancies. The savings were despite rising salary and benefit costs from the City's contract-mandated COLA increase to Sworn employees. In FY 2022-23, Police projects to overspend its Personnel budget by $10.85 million at year end due to overspending in Overtime in the amount of $19.75 million
In FY 2019-20, the Police spent $15.62 million in Special Enforcement overtime, which accounted for 37.98% of the total overtime for that year. Of this $15.62 million, police coverage of demonstrations and protests accounted for $2.63 million, sideshows enforcement accounted for $1.54 million, patrol covered $1.35 million, and Uptown walking patrol accounted for $1.11 million. To meet the FY 2020-21 midyear reductions, the Police Department began to curtail its Special Enforcement overtime in January of 2021, which dropped to $11.9 million for FY 2020-
21. In comparison to FY 2019-20, police coverage of demonstrations and protests dropped to $0.95 million, sideshows enforcement decreased to $1.11 million, patrol was reduced to $0.70 million, and the Uptown walking patrol became $0.34 million.
A significant portion of Police's personnel policies are mandated from the Negotiated Settlement Agreement (NSA), which therefore also impacts the Police Department's overtime use. Of pertinence, two of NSA mandates on Police have particular impact on patrol overtime. The first is that a patrol sergeant may not supervise more than eight officers. The second is that Police cannot use acting sergeants in patrol. Taken together, a significant amount of overtime is generated because Police must have five regular permanent (not temporary acting) sergeants in patrol for every shift to supervise the minimum of 35 officers. The NSA requires the City to therefore expend a portion of its overtime for "backfill" and "extension of shift" overtime to meet this mandate.
The work of the Reimagining Public Safety Task Force and continued public dialogue around police spending initiated the Police Department in undergoing an overhaul of its budgeting for personnel costs, including and especially overtime use, during the FY 2021-23 Biennial Budget.
As a part of the FY 2021-23 Biennial Budget process, the Police Department provided for the first time a detailed breakdown of its overtime allocations and limited or eliminated several categories for FY 2021-22 and FY2022-23. In an effort to realign OPD service levels, there was a careful assignment of available personnel to units and sub-unit for each sworn and professional staffing positions. A new staffing plan was created which primarily focused on sworn police officers’ assignments based on current service level demands in the City of Oakland.
Attachment A
17 Historical Fire Overtime
Overspending in overtime continues to be an issue for Fire. As Table 9 above shows, Fire's overtime went over its budgeted amount by $16.31 million in FY 2018-19, $18.26 million in FY 2019-20, $20.00 million in FY 2020-21, $10.00 million in FY 2021-22, and projects to overspend by $19.67 million in FY 2022-23. This overtime overspending has been mostly offset with savings in all other personnel (non-OT) pay over the years. The savings in FY2022-23 project to be in the amount of $14.09 million reducing the overall personnel overspending in the GPF to $5.58 million.
Fire's overtime use is due to three main causes: their staff vacancy level with unfilled positions, their compliance with the Local 55 MOU for minimum staffing provisions, and a reduced number of Fire Academies in recent years.
Fire has been able to balance their overtime use with salary savings across their total personnel budget from the number of vacancies they currently have. At this point, due to Local 55 MOU, the majority of Fire's overtime is used to backfill required Fire Suppression minimum service levels. Since FY 2020-21, the increase in services due to the COVID-19 pandemic resulted in the highest level of overtime Fire has had in recent years. What also contributes to Fire's higher use of overtime is that a higher level of sworn staff is on paid disability leave, which has forced the department to utilize overtime to backfill In addition, due to the pandemic, Fire was unable to conduct its FY 2020-21 academy to recruit more staff, which has also led to a higher usage of overtime to meet current service demands. Until Fire has more staff, this is anticipated to be a reoccurring problem. Fire has been managing it in part through its overall vacancy savings.
Attachment A
18 III
. GENERAL PURPOSE FUND - FUND BALANCE
The City's GPF Fund Balance, net obligations, is projected to end the year at $59.82 million in FY 2022-23. Obligations are reserves required by City Ordinances and the City Charter (mandated emergency & OMERS reserves). Note that $10.80 million of the mandated FY 2021- 22 emergency reserves is included in the projected year-end expenditures in Table 10 below (as a committed transfer to the designated reserve GPF Emergency Reserve Fund (Fund 1011).
Table 10 below shows mandated reserves required by City Ordinances and the City Charter (mandated emergency & OMERS reserves) totaling $4.46 million, decreasing the estimated FY2022-23 year-end available fund balance from $64.28 million to $59.82 million. The estimated FY 2022-23 available Fund Balance is the amount of unobligated funding available to the City in the GPF.
Table 10
: FY 2022-23 Year-End Available GPF Fund Balance
GENERAL PURPOSE FUND (1010)
FY 2022-23 Q3 Projected
FYE
Estimated FY 2022-23 Beginning Available Fund Balance 147.20 FY2022-23 Performance
Revenue 715.73
Expenditures 797.98
FY 2022-23 Operating Surplus / (Deficit) (82.26)
Unaudited Ending Fund Balance 64.28
Obligations Against Ending Fund Balance (4.46)
OMERS Reserves (Reso. No. 85098 C.M.S) (2.36)
COPS Grant Match (Reso No. 89482 C.M.S) (2.10)
Estimated FY 2022-23 Ending Available Fund Balance 59.82
Attachment A
19 IV.
RESERVES
On December 9, 2014 Council Ordinance No. 13279 amended the City’s Consolidated Fiscal Policies to include designated reserves for both the Vital Services Stabilization Fund and for the acceleration of long term obligations, in addition to the mandated 7.5% GPF Emergency Reserve (refer to the attached Appendix: City of Oakland Consolidated Fiscal Policy, Section I, Part C: Use of Excess Real Estate Transfer Tax. It is important to note that while these balances are designated each fiscal year, reserve appropriations adopted in subsequent fiscal years may include any prior year true-ups.
Emergency Reserve
The City’s GPF Emergency Reserve, calculated by multiplying 7.5% by the FY2022-23 Adopted Budget amount of $872.07 million, is reserved and funded at $65.41 million. The reserve is approximate to one month of FY 2022-23 Adopted Budget of $872.07 million in the GPF. This reserve will be held in Fund 1011 as directed by Council in Resolution 88717 C.M.S. The reserve requirement, pursuant to the CFP has been met.
However, the emergency reserve policy level of 7.5% is inadequate to sustain city services in an economic downturn as evidenced by the events of the last 2 years. The recommended policy level is 16.7% or two months of operating expenditures. This recommended level is supported by best practices outlined by the Government Finance Officer's Association's (GFOA).
Additionally, this recommended level can be witnessed in the levels of funding needed in the balancing of the City's Budget since FY2019-20 budget by programming CARES dollars ($36.99 million), ARPA dollars ($188.00 million) and use of VSSF ($14.65 million) for a total of $239.64 million. Finally, the City Auditor’s Financial Condition for Fiscal Years 2012-13 through 2019-20 Report cites the need for additional reserves to bolster the city’s financial standing.
Vital Services Stabilization Fund
The Vital Services Stabilization Fund (VSSF) was established in 2014 by City Council after the Great Recession to serve as the City's "Rainy Day" fund. Per the Consolidated Fiscal Policy, 25% of excess RETT revenue is intended to go into the VSSF. The beginning balance in FY 2022-23 for the VSSF is $2.58 million, after accounting for the FY 2022-23 GPF budgeted transfer of $7.69 million, the balance is $10.27 million. The target funding level per the City's Consolidated Fiscal Policy is $130.81 million, or 15% of the GPF revenues.
Table 11 below shows the estimated FY 2022-23 year-end reserve balances.
Attachment A
20 Table 11: FY 2022-
23 Q2 Reserve Balances ($ in millions)
Description
FY 2022-23
Beginning
Balances
FYE Estimated
2022-2023
Balances
Mandated Emergency Reserves FY 2022-23* 54.61 65.41
Vital Services Stabilization Fund 2.58 10.27
OMERS Reserves (Reso. No. 85098 C.M.S) 2.36 2.36
Total Reserves 59.55 78.04
*The 7.5% GPF Emergency Reserve is not a cumulative balance Attachment A
21