Oakland’s Roadmap
To A Sustainable Budget
November 2024
Pg. 6 Oakland Already Commits a Majority of its General Fund Budget to Public Safety and Frequently Overspends
Pg. 8 Balancing the Deficit Through Cuts to Non-Sworn Services Alone is Not Practicable
Pg. 9 Reports of Dramatic Increases in City Worker Compensation are Overstated and Don’t Distinguish Between Public Safety and Civilian Employees Pg. 12 Sharp Increases in Police Overtime is Driving Deficits, but Hiring Officers is Becoming Too Expensive
Contents
“The Oakland Roadmap to a Sustainable and
Equitable Budget demonstrates that the city can
respond to even the most severe budget challenges
with strategies that seek to protect critical public
services, provide fairness to dedicated employees,
and move towards fiscal stability.
When confronting major budget shortfalls, polemics
accomplish nothing.
Serious analysis is needed, and this document is
a constructive effort to initiate the kind of critical
thinking Oakland requires.
”
Bob Brownstein
Chief of Staff, Santa Clara County Supervisor Susanne Wilson, 1978-1990 Public Policy and Budget Director, Office of SJ Mayor Susan Hammer, 1990-1998 Research & Public Policy Director, Working Partnerships USA, 1999-2023 BA Princeton University
MA Stanford University
MS SJS University
Executive Summary
Oakland’s budget deficit is part of a nationwide trend of government agencies facing declining revenues as a result of rising interest rates. In Oakland, these external challenges are compounded by internal ones: years of mismanagement and a pattern of overspending. The city’s fiscal health is particularly strained by unaccountable spending in the Police Department. Despite drastic budget cuts that were enacted in many departments, deeper structural reforms are needed to restore fiscal stability, protect essential services, and invest in Oakland’s future.
Key Findings
Police Overspending
• The City of Oakland cannot balance its deficit without reining in police expenses. • The city’s spending on police and fire services consumes 70% of the general fund, far higher than other cities.
• In 2024-2025, police overspending alone accounts for 56% of the deficit. • Growth in sworn compensation, primarily driven by police overtime, has outpaced both the rate of revenue growth in the general fund and the rate of inflation. • The city has failed to fully implement recommendations for more efficient police operations, despite audits highlighting issues with overtime oversight, including a finding that 83% of sworn overtime approval records could not be located or verified. • The majority of city employees earning over $200k are sworn police officers, as are 64% of employees earning over $300k.
• The city has not fully implemented the Reimagining Public Safety T ask Force recommendations, which could save up to $19 million. Oakland cannot balance its deficit without reigning in police expenses.
Revenue Decline
• Since the pandemic, Oakland’s revenue collections have plummeted. • In 2023-2024, there was a 33% drop in parking violation enforcement and a $6 million shortfall in meter collections.
• Uncollected business tax delinquencies have skyrocketed from $4.7 million in 2019-2020 to $16 million in 2022-2023.
• Oakland’s tax code has lagged behind the region and ongoing revenues will be needed to restore service levels. City leadership should initiate a process now to identify revenue reforms for 2026 and any other upcoming elections.
Budget Mismanagement
• The city’s budget is increasingly inflated and unrealistic for many services. • In 2022-2023 alone, non-personnel spending surged by 50% and over 288 staff positions were added—many of which remain unfilled. Right-sizing the city’s budget to reflect actual spending levels would save millions.
• Additionally, executive compensation has seen large increases. In 2022, non-union executive management staff received over $8 million in wage and benefit increases for just 66 total employees, an average increase of $116k per executive.
4 Recommendations: A Roadmap to a Sustainable Budget
The recommendations below total between $142-$204 million in potential new revenue and cost efficiencies, which is more than enough to close the city’s budget gap. Immediate action will not only protect our vital public services here and now, it will put Oakland on the path toward fiscal sustainability and economic growth.
1. Grow the Tax Base for Public Safety & Promote Efficiency and Accountability in the Oakland Police Department
• Funding Public Safety Improvements through Measures NN and MM ($20 million in new funding)
• Initiate a Process to Identify Revenue Reforms to Support Public Safety Expenditures ($20 million+ in additional funding)
• Implementing recommendations of the Reimagining Public Safety T askforce & Continuing Investments in Ceasefire (up to $19 million)
• Stay Within Budget for Police Overtime ($24 to $52 million in savings)
2. Restore Enforcement of the City’s Tax Code, Revenue Collections, and Traffic Laws • Staff Up Parking Enforcement & Revenue Generating Positions ($8 million+ in improved revenue collections)
• Improve Business T ax Collection Process and Compliance (up to $11 million annual ongoing revenue, plus an additional $34 million in one-time Revenue )
3. Strengthen Fiscal Policies for Oakland’s Future
• Bolster Reserves to Invest in Oakland’s Future (more than doubling service stabilization reserves for the next downturn)
4. Realistic and Streamlined Budget
• Create a Realistic Staffing Budget and Reducing Non-Service Spending ($15 million+ in cost efficiencies)
• Controlling Growth in Executive Compensation (up to $8 million in cost savings)
5. Economic Development for all of Oakland
• The Coliseum Site: An Opportunity for a Boom Loop ($4.5 million+ in revenue growth through economic development)
• Apply for funding to Staff up Oakland (up to $13 million in potential grant awards) 5 Economic Opportunities
• The City of Oakland still has over 650 vacant positions. Many of these unfilled positions are outside the general fund and could be filled, providing a boost to the local economy. Millions in grant awards for hiring resources and apprenticeship programs are available to support these hiring efforts.
• Development opportunities, like the sale of the Coliseum site, could generate additional tax revenue and stimulate economic growth.
What is Causing Oakland’s Deficit?
Many government agencies across
California and the United States are facing
budget deficits due to raised interest
rates and their impact on local revenues.
Oakland is no different, however declines
in economically sensitive revenues
compounded on top of years of inaction
and mismanagement from prior leadership
and sharp increases in public safety costs,
especially in the police department. 1
Many departments have already enacted
millions in budget cuts and revenues are
beginning to show some signs of recovery,
however, the City of Oakland must tackle
its longstanding budget issues head on in
order to achieve a realistic and sustainable
budget moving forward.
Oakland Already Commits a Majority
of its General Fund Budget to Public
Safety and Frequently Overspends
Oakland’s General Purpose Fund makes up
40% of the city’s total budget and covers
all discretionary spending. The city’s
budget shortfall is almost entirely in this
fund, which heavily depends on real estate
transfer taxes and other economically
sensitive revenues.2
The city’s 2024-2025 midcycle budget
dedicates 65% of its General Fund to public
safety, which is higher than the average of
56% in similar cities.3
Actual general fund spending is even more
heavily weighted toward public safety
due to consistent overspending in the
police department and underspending in
most other services. Actual public safety
spending accounted for 67% of actual
general fund spending 2023-2024, despite
making up only 63% of budgeted spending
in that year,4 and in fiscal year 2024-2025,
public safety is projected to comprise 70%
of total spending. 5 Over the past decade,
the police department has overspent its
budget by over $14 million on average
each year and has only been within budget
twice. On average, all other departments
underspent their budgets by $19 million
annually over the same time period. 6 At
the end of the first quarter in fiscal year
2024-2025, public safety departments
are expected to overspend by $30 million,
despite a $14 million increase to the police
department budget at midcycle.7
0% 10% 20% 30% 40% 50% 60% 70% 80%
Piedmont
San Jose
Fresno
Berkeley
San Leandro
Sacramento
Alameda
Long Beach
Hayward
Oakland
Fremont
65%
72%
64%
62%
62%
56%
52%
50%
48%
45%
43%
Public Safety Spending as Share of General Fund Revenues 2024-2025 Adopted Budget Comparisons
Figure 1, Source: Adopted budgets for fiscal
year 2024-2025.
6 2024-2025 Adopted Budget
Public Safety Share of Adjusted
General Fund Budget
The Police Department
overspent by $14
million each year
All other departments
have underspent by an
average of $19 million
Average Annual Department
Overspending Over Past 10 Years
2014 to 2024 in Millions
$0
$10
$20
$0
$10
$20
7 Figure 2, Source: Fourth Quarter Revenue and Expenditure Reports. 8 Balancing the Deficit Through Cuts
to Non-Sworn Services Alone is Not
Practicable
The current projected deficit for the
upcoming budget process is $120 million
in each year. Given the dominance of
public safety spending in the General
Fund, balancing the projected deficit
without changes to public safety spending
or new revenue sources would be near
impossible and would severely impact all
city operations, including in public safety
services. Balancing the budget without
managing spending in safety services
would require slashing all other budgets
by 83% according to city reports, including
critical functions like IT, payroll processing,
revenue collection, performance auditing
and hiring support. It would also cause
significant damage to community facing
services like parks, recreation centers,
senior centers, and economic development
as well as human services and violence
prevention, all of which would also see
their budgets cut by 83%.8
Cutting wages and benefits for civilian
staff similarly would do little to balance
the budget while hurting recruitment and
retention in critically understaffed services
like dispatch and revenue collections. Only
34% of non-sworn payroll spending is
supported by the general fund while 66%
is in other funds that are largely healthy.9
As a result 2023-2024 raises for civilian
employees were projected to add only $8
million to the General Purpose Fund—less
than 1% of total spending. 10 Even fully
rolling back all recently negotiated union
contracts for civilian workers for multiple
years would close less than half of the
projected deficit and would worsen the
city’s hiring crisis as nearby cities continue
to raise wages.11
Figure 3, Source: Oakland’s Adopted Midcycle
Budget for fiscal year 2024-2025.
Police
43%
All Other Services
28%
Fire
22%
Non-
Departmental
7%
2024-2025 Midcycle Adjusted Budget General Fund
Expenditures by Service Type
2024-2025 Midcycle Adjusted
Budget General Fund Expenditures
by Service Type
9 Reports of Dramatic Increases in
City Worker Compensation are
Overstated and Don’t Distinguish
Between Public Safety and Civilian
Employees
In the aftermath of the Great Recession,
City of Oakland employees made deep
concessions, including furloughs, wage
freezes, increased employee pension
contributions and lower pension benefits.
Most city workers have never recovered.
Between 2008 and 2023, spending on
civilian employee payroll declined by 19%
adjusted for inflation. 12 Over that same
time period, the city’s revenues increased
by 10% (also adjusted for inflation), a total
increase of $621 million across all funds.13
Even after accounting for retirement and
medical benefits, total compensation costs
fell behind the pace of inflation and revenue
growth for many years, only recently
rising to match inflation. Growth in total
compensation costs for civilian staff are
still far outpaced by revenue growth.14
Importantly, many of these costs reflect
changes in CalPERS policy or medical cost
inflation and do not represent increased
benefit levels for the city’s workforce.
Wages for Oakland’s civilian staff also
remain far behind other public employers,
with some positions paid as much as 38%
less than neighboring cities while receiving
similar benefits.15
Some proponents of the recall and critics
of city leadership have recently claimed
that civilian, non-sworn staff have received
wage increases exceeding the rate of
inflation, over-correcting for wage losses
after 2008. However, these analyses rely on
unreliable datasets and aggregate data that
combines civilian and sworn employees.16
These same analyses have also pointed to
the rising number of city employees earning
$200k or more while calling for reductions
to civilian wages. However, civilian, non-
management employees account for only
2% of total employees earning at this
level and many of these employees are
specialized senior attorneys or senior
engineering staff in highly competitive
fields. 53% of employees earning $200k
or more are actually sworn police officers,
as are 64% of employees earning $300k or
more, the remainder is primarily composed
of highly paid executive management.
$300K?
10 Figure 4, Source: Annual Comprehensive Financial Reports (ACFR) and CalPERS actuarial reports. Includes full-time benefited payroll and excludes part-time, unbenefited employees. The City of Oakland shares a combined pension fund with the Port of Oakland and payroll attributable to Port of Oakland has been removed based on data in the Port’s ACFR.
Figure 5, Source: ACFR for data on covered payroll costs, annual pension contributions and annual other post-employment benefits (OPEB) contributions. 32% of total OPEB contributions are assumed to be attributable to miscellaneous employees based on their share of total OPEB liabilities. The city budgets medical benefits as a share of payroll, typically 26% for miscellaneous employees based on the most recent Five-Year Financial Forecast and administrative budget instructions provided to departments.
Inflation Adjusted Change in Miscellaneous (Non-Safety) Payroll & Revenue Growth (All Funds)
Inflation Adjusted Change in Miscellaneous (Non-Safety) Total Compensation & Revenue Growth (All Funds)
-35
-30
-25
-20
-15
-10
-5
0 5
10 15
10%
-19%
All Funds Revenues
CalPERS Covered Miscellaneous Payroll (City Only - Excludes Port of Oakland) -35
-30
-25
-20
-15
-10
-5
0 5
10 15
10%
1%
All Funds Revenues
Miscellaneous Covered Payroll + Pension and OPEB Contributions (City Only - Excludes Port of Oakland) 2008-2009
2008-2009
2014-2015
2014-2015
2011-2012
2011-2012
2017-2018
2017-2018
2021-2022
2021-2022
2009-2010
2009-2010
2015-2016
2015-2016
2012-2013
2012-2013
2018-2019
2018-2019
2022-2023
2022-2023
2010-2011
2010-2011
2016-2017
2016-2017
2020-2021
2020-2021
2013-2014
2013-2014
2019-2020
2019-2020
11 Figure 6, Source: California State Controller Government Compensation in California database.
Figure 7, Source: Source: California State Controller Government Compensation in California database.
City Employees Earning $200k+ in Total Wages by Category City Employees Earning $300k+ in Total Wages by Category Sworn Police
53% (406 FTE’s)Sworn Fire
34% (257 FTE’s)
Civilian Management
6% (42 FTE’s)
Civilian Executive Management
4% (34 FTE’s)Civilian
3% (23 FTE’s)
Elected
0% (1 FTE)
Employees Earning $200k+ in Total Wages by Category
Sworn Police
64% (114 FTE’s)
Sworn Fire
33% (59 FTE’s)
Civilian Management
0.56% (1 FTE)
Civilian
0.56% (1 FTE)
Civilian Executive Management
1.69% (3 FTE’s)
Employees Earning $300k+ in Total Wages by Category
12 Sharp Increases in Police Overtime is
Driving Deficits, but Hiring Officers
is Becoming Too Expensive
For public safety employees, full-time
pensionable salary expenditures have
similarly dropped relative to inflation
since 2008. However, public safety
employees typically receive large amounts
of overtime compensation and a larger,
more costly benefit package relative to
civilian employees. 17 When accounting
for benefits and overtime expenditures,
public safety compensation costs have
risen sharply, exceeding both inflation and
the rate of revenue growth in the General
Purpose Fund, which supports over 90% of
all public safety expenditures. This sharp
increase is driven primarily by overtime
spending in the police department. Much
of this spending is unbudgeted, causing
cuts to other services to balance overages.
T otal public safety overtime costs reached
an unprecedented $81 million in 2022-
2023, up from $55 million at the onset of
the pandemic in fiscal year 2019-2020,
with the police department accounting for
over 62% of the increase.18
In 2023-2024, elevated levels of public
safety overtime spending continued,
increasing to just under $85 million. 19
Even as sworn police staffing levels have
improved since 2021-2022, overtime
spending has continued to rise.20
While these increasing overtime costs
are putting pressure on the city budget,
the high cost of sworn benefits means
that budgeting additional personnel
would be more expensive and would add
substantially to the city’s deficit. In 2022-
2023, if the city had budgeted additional
public safety personnel to entirely offset
overtime expenditures, it would have
increased the deficit by an additional $60
million or 50%.21
Managing the cost of these expenditures
will require greater fiscal controls to ensure
that all overtime is strictly necessary and
within budget. It will also require a plan
to identify sustainable revenue sources to
support public safety expenditures.
Figure 7, Source: Annual Comprehensive Financial
Reports (ACFR) for safety covered payroll, pension
contributions and contributions to OPEB. 68% of
total OPEB costs are assumed to be attributable
to public safety based on their share of total OPEB
liabilities. The city budgets medical benefits as a
share of payroll, typically 15% of payroll for safety
employees based on the most recent Five-Year
Financial Forecast and administrative budget
instructions provided to departments. Overtime
expenditures are from Fourth Quarter Revenue and
Expenditure Reports, audits of police overtime and
fire department quarterly overtime reports.
Inflation Adjusted Change in Public
Safety Compensation & General
Purpose Fund Revenue Growth
-30
-25
-20
-15
-10
-5
0 5
10 15
7%
3%
General Fund Revenue Growth
Public Safety Total Compensation Including Overtime
2008-2009 2014-20152011-2012 2017-2018 2021-20222009-2010 2015-20162012-2013 2018-2019 2022-20232010-2011 2016-2017 2020-20212013-2014 2019-2020 Oakland’s Roadmap
to a Sustainable Budget
The 2024-2025 midcycle budget already included painful cuts to many services, including reductions to civilian crisis response teams, cuts to neighborhood crime prevention programs and a hiring freeze in all non-sworn positions. Due to delays in receipt of Coliseum sale funds and the recent implementation of the contingency budget plan, many departments are enacting even steeper reductions. Most departments are meeting or exceeding budget reduction targets, with the exceptions of police and fire, which are expected to overspend by over $93 million.
The police department accounts for the majority of overspending. Even within public safety, plans for budget reductions are not equitably distributed. T otal reductions in the Fire department will amount to a combined $36 million decrease from the 2023-2025 adopted biennial budget, a drastic 18% cut. Police will receive only $16 million in cuts relative to their original adopted budget, a reduction of less than 5%.22 Looking forward, preliminary projections are that city leaders will need to close a $120 million deficit next year. 23 As the city faces difficult decisions in the upcoming budget process, calls for unrealistic and even financially dangerous budget gimmicks are growing. 24 The city needs real and actionable solutions. Below are between $142-$204 million in actions the city could introduce now to close this gap equitably and get Oakland’s budget on track to a sustainable future. 13 Grow the Tax Base for Public Safety &
Promote Efficiency and Accountability in
the Oakland Police Department
Funding Public Safety Improvements through
Measures NN and MM
In November, Oakland voters approved two measures that will boost funding for public safety services and provide additional, non-general fund resources for both fire and police. Measure NN, an updated parcel tax and parking surcharge tax for citywide violence reductions services will increase funding for the fire department, increase police staffing and also provide millions in new revenues for violence prevention.
In total, the measure raises $17 million in new revenues for these services.25 Measure MM will add an additional $2.67 million in new funding for fire services and create a new wildfire prevention zone.26 Initiate a Process to Identify Revenue Reforms to
Support Public Safety Expenditures
In addition to these ballot measures, the city should initiate a planning process for 2026 to identify revenue reforms that could provide stable, ongoing growth for the general fund. Potential options include increasing the city’s sales tax to be more comparable with neighboring cities, which would boost revenues by $20 million. Other potential options include updating portions of the city’s business tax that are still far behind neighboring agencies to increase revenues and improve tax compliance.27
14 $20 Million $20 Million
Implementing recommendations of the
Reimagining Public Safety Taskforce & Continuing
Investments in Ceasefire
In 2021, the Reimagining Public Safety T askforce made over 100 recommendations for ways Oakland could address root causes of crime, rebuild trust between OPD and the community and refocus police resources on violent crime. Many of these recommendations have still not been implemented, including recommendations that would create greater cost efficiencies. Suggestions included transitioning internal affairs investigations to civilian staff,28 creating civilian teams to respond to calls where there is no threat of harm, and continued implementation of violence interruption strategies like Ceasefire, which caused a 31.5% drop in gun homicides between 2012 and 2017. 29 These reforms could save up to $19 million annually by allowing officers to focus more on violent crime and focusing police and violence prevention resources on those most likely to commit gun violence.30
Stay Within Budget for Police Overtime
In 2021, OPD’s overtime budget was “right-sized” to match actual spending levels, increasing from $15 million to over $30 million. The 2024-2025 midcycle adopted budget substantially increased overtime again to $44 million, a total increase of $29 million since 2020.31 Despite these increases, the department is still expected to overspend by $24 million over the original budget including Coliseum sale revenues and $52 million over their contingency plan budget, which excludes the sale.
Overspending in the police department accounted for $26 million of the total projected deficit in 2023-2024 and accounts for the majority (56%) of the projected deficit in fiscal year 2024-2025.32 Numerous reports have found that the department lacks sufficient internal controls to ensure that all overtime spending is necessary.
Performance audits by both the City Auditor and the Office of the Inspector General were conducted in 2015, 2017 and 2019, with additional follow-up progress audits in 2022 and 2024. Among the findings was that 83% of overtime approval records could not be located or verified to ensure that the time was appropriately approved and that the department lacks sufficient management and reporting systems.33 The City auditor made over 20 recommendations, including 13 recommendations that have yet to be fully implemented. 34 Many of these recommendations are administrative and oversight reforms and would have no impact on public safety services levels. City leaders could also focus on monitoring and controlling types of overtime that do not lead to increased service levels for residents 35 and require approval from higher level management for all overtime. Additionally, a fiscal management position was added in OPD as part of the 2024- 2025 midcycle budget process, but that position has yet to be filled. 15 Up to $19 Million$24 - $52 Million
Restore Enforcement of the City’s Tax Code,
Revenue Collections, and Traffic Laws
16 Staff Up Parking Enforcement & Revenue
Generating Positions
Recent data has shown that parking enforcement declined by 33% between 2019 and 2023, especially for citations critical to safety and equity, like handicap parking fraud (down 99%) or parking in bike lanes (down 70%). Budgeted positions in parking enforcement have a 40% vacancy rate, leading to millions in lost revenues, as each parking control technician collects approximately $500,000 in annual revenues.36 T otal collection rates for fines and penalties were 10% lower than expected in 2023-2024. If collections had continued at the same level as previous years, parking revenues would have been at least $2 million higher. 37 Parking meter collection is also down, resulting in an additional $6.36 million deficit in 2023-2024.38 In addition to parking enforcement, the city should prioritize filling all positions that generate revenue, such as those in tax compliance functions.
Improve Business Tax Collection Process and
Compliance
In 2022, Oakland’s new business tax was set to generate over $20.9 million. However, it only brought in $17.6 million for 2023-2024 due to thousands of businesses not paying taxes by the March 1st deadline.39 Delinquent taxes payments ballooned to over $16 million in 2023-2024 alone, far higher than previous years, including the peak of the pandemic. 40 In the past, the City’s revenue department had a streamlined collections process and conducted thorough audits to catch delinquent payers. Recently, these practices have been dropped.
City council has called for an audit of internal practices of the city’s revenue collections department, a critical first step in restoring revenue collection capacity. Currently proposed legislation would also create greater financial penalties for landlords that are delinquent on their business taxes, preventing them from increasing rent on rent controlled units if they have not paid local taxes. Landlords are the primary source of business tax delinquencies. 41 Returning to the level of tax enforcement implemented in prior years could add between $3 to $11 million in ongoing revenues. Clearing all tax backlog would add up to $34 million in one-time funds.42
$8 Million+$11 Million Ongoing, plus $34 Million One-Time Strengthen Fiscal Policies
for Oakland’s Future
17 Bolster Reserves to Invest in Oakland’s Future
In the last decade, Oakland’s revenues have soared as property values rose and the Bay Area economy boomed. Real Estate Transfer T axes (RETT) jumped from $31 million after the Great Recession to $138 million in 2021-2022, becoming one of the largest sources of general fund revenue.43 Because transfer taxes are particularly unpredictable, the city has rules to use only a portion of them for ongoing expenses, treating the rest as one-time funds and committing half of them to reserves or paying down debt.
While it is expected that revenues will fluctuate over time, higher reserve levels should mean greater ability to weather downturns. However, the city has rarely followed this policy, leaving it with insufficient reserves during a time of slowing economic growth. Between 2015 and 2022, over $133 million in transfer tax revenues should have been used to bolster reserves and pay down liabilities44 however past administrations suspended the fiscal policy regularly and misused most of these funds to balance short term budget gaps, even in boom years.45 If the city had stricter controls ensuring these funds were set aside in reserve to protect services, as other cities do, reserve balances would have been over $66 million higher, enough to close the operating deficit without use of Coliseum sale funds.46 T o prepare for future downturns, city leaders need rules ensure that these funds are not used for short term operating needs and are prioritized for reserves.
More than Doubling Service Stabilization Reserves for the Next Downturn Realistic and Streamlined Budget
18 Create a Realistic Staffing Budget and Reducing
Non-Service Spending
In the 2022-2023 midcycle budget, former Mayor Libby Schaaf proposed adding 288 new full-time positions and proposed to boost non-personnel spending by over 50% at a time when the city relied on one-time federal stimulus dollars to balance its budget. 47 The former mayor’s budget led to a record amount of vacant positions—a 183% increase in the number of job vacancies since 2012.48
Many of these positions have remained unfilled, but are still included in the city’s projected expenditures. Even with recent midcycle reductions, 650 vacant, fully funded positions still remain across all funds. Unlike neighboring cities that are currently rightsizing their staffing budgets, Oakland has held onto a higher vacancy rate. 49 Recently, as part of a budget contingency plan, the administration identified more than $7 million in additional vacant, non-sworn positions that could be deleted to balance the budget. 50 If departments continue to not fill positions, more vacancies could be identified for budget savings.
Additionally, the 2024-2025 midcycle budget made progress on reducing operations and maintenance (O&M) spending, which dramatically increased from $69 million in 2014 to over $123 million in fiscal year 2022-2023.51 O&M includes contracting out of services and other non- personnel related spending, much of which is not tied to core services.
Midcycle adjustments lowered this amount to $77 million, but more adjustments could be made to reduce spending to prior levels, saving as much as $8 million annually.
$15 Million+ in Cost Efficiencies
Up to $8 Million in Cost Savings
19 Controlling Growth in Executive Compensation
Recent labor contracts have made progress in keeping up with high inflation and making Oakland more competitive with other public agencies. However, long-awaited wage gains for union workers were also provided to top executive management, many of whom already earned over $200k in wages annually.52
In total, almost $8 million in wage increases were given to just 66 unrepresented top management employees, 68% of which was general fund spending. This represents an average compensation increase of $116,000 for each unrepresented employee over three years.53 The cost of these increases to executive pay exceeds the entire average salary of a full-time civilian employee.54
Economic Development
for All of Oakland
20 The Coliseum Site: An Opportunity for a Boom Loop
In September 2024, the city finalized a purchase and sale agreement with the African American Sports and Entertainment Group (AASEG) for the 112-acre Coliseum site. New development at the site has the potential to grow the city’s revenue base for decades to come. The Coliseum site is considered one of the largest underdeveloped, transit serviced areas within a major urban center in California and could constitute a massive economic boost for the city.55
Currently, the property is tax exempt and contributes little to the city’s general fund and the city has made millions in debt payments associated with the facility. AASEG anticipates a $5 billion dollar development project, which could include as much as 20,000 new jobs.56 Recent development agreements for much smaller mixed-use, transit oriented projects are projected to increase city tax revenues as much by as much as $4.5 million. 57 Given the scope of the Coliseum project, new tax revenues associated with the project are likely much higher.
City leadership has already taken steps to ensure that the Coliseum development will not only provide a boom for Oakland’s tax base but will also benefit the local community. 58 A strong community benefits agreement will be essential in ensuring that local investments stay in Oakland, creating a multiplier effect that helps all of East Oakland grow.
$4.5 million+ in Revenue Growth Through Economic Development 21 The city can do the following to ensure that development at the site benefits all of Oakland:
1. Ensure that the city has strong policies requiring a net financial benefit for any public benefits or financing.59
2. Conduct a comprehensive analysis of tax revenue growth and growth in service demands associated with any development agreement.
3. Ensure that invested funds stay local and promote jobs for Oaklanders through local hire requirements and support for Oakland businesses. Added local jobs means added local tax revenues.
4. Leverage investments at the site to attract additional state and federal funds not only for housing and infrastructure, but also for job training programs.
Apply for Funding to Staff up Oakland
While many vacant positions in the general fund have been eliminated for budget savings, over 650 vacant positions remained fully funded, mostly outside of the general fund. 60 These unfilled jobs include librarians, head start workers, street maintenance workers, and planning, permitting, code inspection work, among others. Hiring Oaklanders into these positions could also support the city’s local economy. However, the Human Resources Department has experienced deep cuts in recent budget cycles, frustrating hiring efforts.
T o solve this problem, the city could seek state and federal funding for workforce development programs to boost local hiring into city jobs while also helping to close the general fund deficit.
Many public agencies have won grants through the High Road Training Partnerships Program established by the California Workforce Development Board. The Institute for Local Government, which was awarded a grant to support the creation of a statewide local government apprenticeship program,61 and the City of San Francisco, which was awarded a grant to create an IT apprenticeship program. 62 Other agencies have won grants for hiring early child care and education positions,63 community health workers,64 and EMT/Paramedics among others.65 Many awarded grants have ranged from $4 million to $13 million.66
Up to $13 Million in Potential Grant Awards
}
Up to $204 Million
in Potential Savings
$111M
$53M
$23M
$17M
Endnotes
1. San Francisco, San Jose, Fremont, Hayward (see pg. 54), San Leandro (see “Multi-Year Forecast”), and Berkeley are all experiencing budget deficits, as are cities of similar size such as Sacramento, Fresno, and Long Beach. The City of Piedmont, which has median home sale price of over $2.4 million and a median income more than twice that of Oakland, has experienced a 30% drop in real estate transfer tax revenues—a rate similar to Oakland in 2022-2023. Larger cities like Los Angeles and San Diego are also projecting shortfalls, as are cities outside of California, such as New York, Seattle, Boston, Austin, Dallas, Houston, Chicago and others. Description of the drop in transfer taxes can be found in Piedmont’s 2024-2025 budget booklet, page i, “Budget Message for 2024-2025 Proposed Budget”.
2. As of the third quarter of fiscal year 2023-2024, Real Estate Transfer T ax (RETT) revenues alone were projected to have fallen below budget by $57.19 million. At the close of the 2023-2024 fiscal year, revenues improved slightly compared to projections, falling $52.8 million below budget. Sales volume and revenues did improve in the third quarter of the fiscal year, according to consultant reports, suggesting that sales are improving slightly as interest rates decrease.
3. See Figure 2. Sources include adopted or proposed budgets for fiscal years 2024-2025 for all agencies. Calculations include total police and fire general fund budgets as a share of all general fund expenditures and transfers. Some surveyed cities report large general fund revenue sources in separate budgetary accounts and totals have been adjusted for uniformity of comparison. This includes Measure C in Hayward, which accounts for 30% of total general fund sales tax revenues and Measure E in San Jose, which includes 100% of general Real Estate Transfer T axes. Both taxes are legally general fund sources but are budgeted in separate accounts. The city of Sacramento also places Measure U sales tax in a separate budgetary account but reports expenditures in general fund totals.
4. Fourth Quarter Revenue and Expenditure Report, 2023-2024.
5. First Quarter Revenue and Expenditure Report, 2024.
6. OPD was within budget in fiscal year 2013-2014, underspending by $0.97 million inclusive of carry- forwards and was under budget by over $7 million in fiscal year 2021-2022 according to Fourth Quarter Revenue and Expenditure Reports. Average over/under spending by department is from Fourth Quarter Revenue and Expenditure Reports.
7. Fourth Quarter Revenue and Expenditure Report, 2023-2024. See “Preliminary Analysis of the Condition of the FY 2024-2025 Budget, and Information on the City’s Fiscal Condition & Fiscal Challenges. ” Police budget data can be found in the Midcycle Budget Portal.
8. First Quarter Revenue and Expenditure Report, 2024.
9. According to the third quarter revenue and expenditure report, over 50 different funds in the city were expected to end the year with an excess fund balance of $5 million or more.
10. Costing estimates produced by the city can be found here. Note: the city’s costing document presents cumulative costs rather than year-over-year cost increases relative to the prior fiscal year.
General purpose fund wage costs of $25.8 million as of FY 2024-2025 represent the compounded cost of prior year increases as well as the cost of 2024-2025 wage increases. Civilian staff received a 2% wage adjustment on July 1, 2024 and will receive an additional increase of 2% in March of 2025.
The isolated cost of these increases are $8.36 million for the fiscal year 2024-2025 budget. 23 11. Average wage increases for local government employees across the region are 4.7% for fiscal year 2024-2025 and 4.1% in 2025-2026. Increases are as follows: City of Berkeley, 6% in 2024-2025 and 4% in 2025-2026; City and County of San Francisco, 4.05% compounded in 2024-2025 and 4.6% compounded in 2025-2026; Alameda County 5% in 2024-2025; Contra Costa County, 5% in both 2024-2025 and 2025-2026; City of Fremont 4% in 2024-2025; City of Sunnyvale 3.5% in 2024-2025 and 3.5% in 2025-2026; Daly City 4% in 2024-2025; City of Hayward 6% in 2024-2025 and 4% in 2025-2026; City of San Jose 5% in 2024-2025 and 3.5% in 2025-2026. Other agencies surveyed include City of Santa Clara, City of San Mateo, San Mateo County, City of Cupertino and City of Berkeley, however these agencies do not yet have labor agreements for fiscal years 2024-2025 and 2025-2026.
12. T otal miscellaneous payroll can be found in CalPERS Actuarial valuations as well as Annual Comprehensive Financial Reports (ACFR). The Port of Oakland participates in the City’s CalPERS miscellaneous plan and payroll numbers have been adjusted to exclude Port of Oakland payroll.
Port of Oakland CalPERS covered payroll can be found in the Port’s ACFR.
13. Revenue data: Annual Comprehensive Financial Reports, Statement of Activities. Inflation data:
San Francisco-Oakland-Hayward, CPI-U 12-month percent changes, June to June. $621 million in revenues reported is not adjusted for inflation.
14. T otal annual pension contributions and OPEB actuarially determined contributions can be found in the ACFR. The share of OPEB costs attributable to civilian employees was estimated at 32% of the total annual contribution based on the 2018 actuarial valuation of the City’s OPEB plan, which found that civilian employees account for 32% of total OPEB liabilities. Health benefits and paid leaves (also known as fringe costs) are budgeted as a percentage of payroll and a 26% fringe rate was assumed based on data provided via public records request as well as the 2023 Five-Year Forecast.
15. Examples: Electricians in Oakland are paid 38% less than their counterparts in San Francisco based on top step annual wages. Senior Librarians are paid 18% less than their San Francisco counterparts, Criminalist II’s are paid 16% less and recreation supervisors 10% less. These workers upgrade street lights and other electrical infrastructure, manage the city’s libraries, work in the crime lab and manage recreation centers, respectively.
16. These analyses rely on the California State Controller’s Government Compensation in California Database and other public records. This data is self-reported by agencies and contains significant inconsistencies, especially for benefit costs. For example, recent blog posts by the Oakland Report Substack cite total compensation for all city employees in 2013 as $440 million using the State Controller’s database. The Controller’s database for 2013 shows total defined benefit pension costs of $69 million for that year. According to audited financial reports, actual CalPERS pension costs for that year were $89.4 million for both miscellaneous and safety plans, over $20 million higher (see page 97). Conversely, in 2023, the Controller’s database slightly overstates pension costs, citing $214 million in total contributions while the ACFR reported $207 million (see page 96). Use of these two data points would drastically overstate pension cost growth between 2013 and 2023 by over $27 million. Oakland also inconsistently includes payroll and benefit data for the Port of Oakland in their reports for some years, creating additional inconsistencies. Generally, audited financial statements and official CalPERS records are a more reliable source of actual total compensation data, especially for benefit costs, as these are verified by third parties. 24 17. Safety employees receive a higher pension benefit and retire at an earlier age than civilian employees. According to CalPERS, the average pension benefit for a civilian retiree from the city of Oakland is $46,091 and the average pension benefit for a safety employee is $88,2543. In addition to higher pension benefits, many public safety employees receive a more substantial retiree medical benefit. As a result, a 2018 analysis found that 68% of Other Post-Employment Benefits (OPEB) liabilities are attributable to public safety employees. See Attachment A.
18. Fourth Quarter Revenue and Expenditure Report, 2022-2023.
19. Fourth Quarter Revenue and Expenditure Report, 2023-2024.
20. OPD Biannual Staffing Report, September 2024.
21. Calculations use fringe rates for sworn personnel reported in administrative instructions to departments. This data was provided via public records request.
22. First Quarter Revenue and Expenditure Report, 2024.
23. March 26, 2024 report describing $175 million short term deficit and $60 million ongoing operating deficit can be found here.
24. Recent blog posts by those aligned with the recall have called for issuing $1.9 billion in pension obligation bonds, something the Government Finance Officers Association strongly warns municipal governments not to do. The same authors have also called for using legally restricted tax levies dedicated to covering pre-1981 pension obligations to cover current public safety service expenditures, which would create substantial legal and financial risks to the city. They have also called for renewing the city’s pension override tax, despite existing policies and promises to voters replacing the retired tax with added affordable housing and infrastructure spending.
25. Currently, Measure Z, which is set to expire in 2024, brings in approximately $30 million in revenue while Measure NN is projected to increase revenues to $47 million. Measure NN ballot submittal form including revenue projections can be found here.
26. Measure MM ballot submittal form, including revenue projections can be found here.
27. Currently, Oakland’s sales tax is 10.25% compared to 10.75% in neighboring cities like Alameda, Albany, Hayward, San Leandro and others. The city of Richmond and Berkeley also charge $28.80 per $1,000 in gross receipts for residential landlords with 5 or more units, compared to $13.95 per $1,000 in Oakland (see Richmond’s ordinance here and Berkeley’s information here).
28. The Internal Affairs Division (IAD) is a unit within OPD staffed by 17 senior officers who conduct internal investigations of officer misconduct. Civilianizing these roles would allow the officers to be redeployed for criminal investigations at an estimated savings of $1 million. The police department’s Negotiated Settlement Agreement also includes a number of tasks related to IAD reform, which the department has struggled to reform for two decades. In total, noncompliance with the NSA has cost the city as much as $17 million. Civilianizing the division could move the department closer to ending the NSA and save additional funds over time. IAD civilianization was included in the adopted 2023-2025 budget but has not yet been implemented.
29. See “Oakland Ceasefire Audit Report & Findings: a Report on Gun Violence Reduction Efforts, ” December 2023 produced by California Partnership for Safe Communities. 25 30. The task force’s report estimated that diverting non-violent calls to civilian response teams could save between $13 million to $18 million annually. Continued investment in programs like MACRO could help implement these recommendations and achieve savings in the long-term
31. OPD’s overtime budget doubled from fiscal year 2019-2020 to fiscal year 2021-2022 and the city was found to be in compliance with the auditor’s recommendation to realistically budget for overtime as of 2021. Despite these improvements, spending increased and the overtime budget has been adjusted upward to $44 million. Midcycle Adopted Budget for 2024-2025 overtime can be found here.
32. First Quarter Revenue and Expenditure Report, 2024.
33. OPD’s Office of the Inspector General’s Quarterly Progress Report (July – September 2017), pg 42.
This problem was also identified in 2012 by the city auditor, see page 2.
34. “AUDIT RECOMMENDATION FOLLOW-UP AS OF DECEMBER 31, 2023, ” Acting City Auditor Michael C. Houston, MPP , CIA. Current status of all audit recommendations begins on Appendix B, page 14.
Also see “Audit Recommendation Follow-up as of June 30, 2024, ” published October 16, 2024.
35. Officers collect overtime for hours spent off-shift caring for police dogs and also receive guaranteed minimum overtime payments of 2-4 hours for callbacks and court appearances, regardless of actual hours worked (see OPOA MOU provisions on minimum overtime guarantees and canine handlers).
Current overtime reporting to city council does not monitor actual hours of work performed compared to hours of overtime payment received to ensure that overtime subject to guaranteed minimum payments is used as sparingly as possible (see an example of recent overtime reporting here). Recent public reports also do not specify overtime worked by category or type, such as backfill, shift extension, canine handling, special events, etc. Officers also may defer overtime payments to future dates, creating unpredictability in costs (see page 23 of the 2019 audit).
Additionally, 33 officers are currently on paid administrative leave (suspension), including 12 that have been on leave for one year or more (see the 2024 OPD Biannual Staffing Report, page 7). The slow pace of resolving investigations and disciplinary actions may be leading to increased overtime expenditures that would be avoidable. Increased accountability and oversight of the disciplinary process may help move these cases more quickly, returning officers to work or opening positions for staffing improvements.
36. “FY 2024-25 Proposed Midcycle Budget DATE: June 3, 2024 Development Questions/ Responses #2, ” page 2.
37. According to the First Quarter Revenue & Expenditure Report for 2024-2025, 2023-2024 parking fine collections were $16.77 million, however the rate of ticketing was 10% lower than prior years.
Revenue estimates are based on returning to the full collection rate of prior years.
38. First Quarter Revenue and Expenditure Report, 2024.
39. Measure T Implementation Report, November 8, 2023
40. According to data provided via public records request, unrecovered business tax delinquencies were $4.7 million in fiscal year 2019-2020, $7.7 million in 2020-2021, $16 million in 2022-2023 and $8 million in 2023-2024.
41. Legislation was authored by councilmember Dan Kalb and is currently in committee. 26 42. Estimates of new ongoing revenues are based on returning to 2019-2020 levels compared to elevated levels from 2021 through 2024. The fiscal year 2018-2019 fourth quarter report also details a comprehensive account cleanup process that led to collection of $7.03 million in new revenues that year, which falls midrange of the estimate. $34 million in backlog estimate is from public reports issued by the city’s finance department.
43. Annual Comprehensive Financial Reports (ACFR‘s), 2013 to 2023.
44. Data compiled from 4th quarter revenue reports and staff reports from the 2018 update to the Consolidated Fiscal Policy. Additional information on methodology for calculating excess versus ongoing transfer tax revenues was provided via public records request.
45. Exceptions to fiscal policies for excess RETT were sought and passed in 2014, 2016, and 2020, with the 2020 legislation retroactively covering fiscal years 2018-2019 as well as 2019-2020 and 2020- 2021. The policy was suspended again in the 2023-2025 budget due to revenue declines. When the fiscal policy was in place, all adopted budgets, midcycle budgets and fourth quarter revenue and expenditure reports over this time period only account for a fraction of total excess RETT actually recognized in these years. Often no detail is provided for which unfunded liabilities were paid down or which one-time expenditures were covered.
46. The City of San Francisco commits 75% of transfer tax revenues above the five-year average to reserves until reserve targets are met, three times higher than Oakland’s current reserve allocation.
47. Summary of proposed changes in positions can be found here; proposed increases to operations and maintenance spending can be found here.
48. Semi-annual staffing reports, May 2012 (fiscal year 2011-2012) through December 2022 (fiscal year 2022-2023).
49. “Semi-Annual Staffing Report December 2023, ” page 7.
50. See “Alternative Report: (Excluding Sale of the Coliseum) – 6/25/2024”.
51. Actual General Purpose Fund O&M expenditures from fiscal year 2015-2016 through fiscal year 2021-2022 can be found here. Actual spending data back to fiscal year 2013-2014 can be found here. Actuals for 2022-2023 and budgeted amounts for 2023-2024 and 2023-2025 can be found here.
52. See Figure 7.
53. See Attachment I, Labor Costing.
54. Average covered payroll for active miscellaneous employees can be found here.
55. See the Coliseum Area Specific Plan.
56. Interview with Ray Bobbitt of AASEG, KQED.
57. The 500 Kirkham Street development, which included 417 residential units and 22,000 square feet of ground floor retail was estimated to generate $4 million in new property tax revenues and $475,000 in new business tax revenues, in addition to $3.15 million in payments to the affordable housing trust fund and $1 million in payments for job training programs.
27 58. Deed restrictions approved by City Council require that at least 25% affordable housing for residential developments at the site and the negotiation of a community benefits agreement within five years, including agreements to support local and small businesses, union jobs, workforce training programs, living wages, public parks, anti-displacement programs and more. See report on Coliseum Sale.
59. The Oakland Alameda County Joint Powers Authority has already called for analysis of an Enhanced Infrastructure Financing District (EIFD) at the site, a form of public financing that dedicates future tax revenues. Currently, the city has no policy in place requiring a net positive financial impact to the city’s general fund for EIFD’s. The city should create strong policies for assessing the economic impacts of EIFD’s based on models in neighboring jurisdictions.
60. Funded vacant position list can be found here.
61. See “Local Government Apprenticeships: A High Road Strategy for Equity & Resilience”
62. See “Pathways to Public Service Through T ech Apprenticeship”
63. See “Building Capacity to Scale Early Care & Education Apprenticeships Statewide”
64. See “Community Health Worker Career Accelerator and Advancement Pathways Initiative”
65. See “EMT/Paramedic Apprenticeship Program”
66. Award announcements, including dollar amounts can be found here. 28