Finance & Management Committee
June 9, 2026
AGENDA REPORT
TO: Elizabeth Lake FROM: Bradley Johnson
Acting City Administrator Finance Director
SUBJECT: Informational Report on the
Implementation and Performance of
the City of Oakland’s Prompt Payment
Policy
DATE: May 18, 2026
City Administrator Approval Date:
RECOMMENDATION
Staff Recommends That The City Council Receive An Informational Report On The Implementation And Performance Of The City’s Prompt Payment Policy.
EXECUTIVE SUMMARY
This report was prepared in response to a request from Councilmember Janani Ramachandran regarding the implementation and performance of the City’s Prompt Payment Policy. The City is required under Chapter 2.06 of the Oakland Municipal Code (Prompt Payment) to compensate local vendors and grantees who do not receive payment, for undisputed invoices, within 20 business days of receipt by the City. The calculation of the penalties is performed in the City’s financial system at the time the payment is issued.
BACKGROUND / LEGISLATIVE HISTORY
Council Ordinance No. 12857 C.M.S. was established on January 15, 2008, and codified as Chapter 2.06 of the Oakland Municipal Code (OMC). The purpose of the Prompt Payment Ordinance is to establish policies and procedures to assure that local vendors receive prompt payment and to increase local business contracting opportunities with the City of Oakland.
On November 19, 2014, Council Ordinance 13269 C.M.S. amended OMC Chapter 2.06 to expand eligibility for this program to local grant recipients.
ANALYSIS AND POLICY ALTERNATIVES
OMC 2.06 establishes an interest penalty on valid invoices that remain unpaid for more than 20 business days, which is equivalent to a 30 calendar day month in the Oracle Financial System.
The penalty is calculated at an interest rate of 10% annually and paid monthly. Thus, the Betsy Lake (May 28, 2026 13:57:49 PDT)
May 28, 2026
Elizabeth Lake, Acting City Administrator
Subject: Informational Report on the Implementation and Performance of the City of Oakland’s Prompt Payment Policy
Date: May 18, 2026 Page 2
Finance & Management Committee
June 9, 2026
interest compounds at each 30-day period. Interest calculation is automated and is applied to invoices from Oakland vendors and grantees when payments on valid invoices have not been completed within 30 calendar days.
Payment of prompt payment penalty interest is a relatively rare occurrence. As shown in Table 1, approximately ninety six percent (96.0%) of all payments made to vendors covered by the Prompt Payment Policy were issued within the required timeline.
Table 1: Five-Year History of Prompt Payment Penalties
Fiscal Year
Total
2022 2023 2024 2025 2026
year-to-date*
Number of Interest
Payments 167 343 158 282 231 1,181
Total Number of
Payments 6,776 6,414 6,416 5,801 4,311 29,718
% of Payments made
within required timeline 97.5% 94.7% 97.6% 95.1% 94.6% 96.0% *Reflects payments processed through May 11, 2026.
The citywide compliance rate provides an overall view of prompt payment performance, but compliance can differ across operational areas. While the City does not currently track a standardized metric for average invoice processing time across departments, a review of payment workflows provides insight into the factors that influence processing timelines. Once a complete payment request is submitted to Accounts Payable (AP), the Controller’s Office typically processes and issues payment within approximately 7 to 10 calendar days. Most delays occur prior to AP submission and are related to departmental approval workflows, incomplete or incorrect invoices, contract compliance checks, funding issues, or vendor documentation issues. Although average processing time across departments is not available, the number of interest-bearing payments provides a useful indicator of where delays are occurring. Table 2 summarizes each department’s five-year totals for payments, interest-bearing payments, and the resulting compliance rate.
Table 2: Five-Year Departmental Prompt Payment Compliance Summary Number of
Interest
Payments
Total Number of
Payments
Compliance
Rate
Animal Services 6 216 97%
Capital Improvement Projects- Citywide 79 172 54%
City Administrator 26 424 94%
City Attorney 5 80 94%
Elizabeth Lake, Acting City Administrator
Subject: Informational Report on the Implementation and Performance of the City of Oakland’s Prompt Payment Policy
Date: May 18, 2026 Page 3
Table 2: Five-Year Departmental Prompt Payment Compliance Summary (Continued) Finance & Management Committee
June 9, 2026
Number of
Interest
Payments
Total Number of
Payments
Compliance
Rate
City Auditor - 10 100%
City Clerk 5 76 93%
City Council 6 94 94%
Department of Transportation 56 1,697 97%
Department of Violence Prevention 48 1,120 96%
Department of Workplace and
Employment Standard 9 94 90%
Economic and Workforce Development
Department 211 1,713 88%
Finance Department 15 824 98%
Fire Department 41 1,526 97%
Housing and Community Development
Department 30 1,239 98%
Human Resources Management
Department 9 582 98%
Human Services Department 364 5,481 93%
Information Technology Department 6 266 98%
Mayor 4 29 86%
Non Departmental and Port 53 1,550 97%
Oakland Parks and Recreation
Department 5 416 99%
Oakland Public Library Department 8 1,040 99%
Oakland Public Works Department 119 8,303 99%
Planning and Building Department 40 514 92%
Elizabeth Lake, Acting City Administrator
Subject: Informational Report on the Implementation and Performance of the City of Oakland’s Prompt Payment Policy
Date: May 18, 2026 Page 4
Table 2: Five-Year Departmental Prompt Payment Compliance Summary (Continued) Finance & Management Committee
June 9, 2026
Number of
Interest
Payments
Total Number of
Payments
Compliance
Rate
Police Commission - 47 100%
Police Department 72 1,441 95%
Public Ethics Commission - 51 100%
Race and Equity Department 2 9 78%
The City continues to monitor the circumstances that lead to interest-bearing payments. When late payments occur, AP reviews the underlying workflow to identify whether delays were caused by incomplete invoices, departmental approval bottlenecks, or contract compliance issues. Corrective actions typically include additional staff training, clarifying documentation requirements, and reinforcing departmental approval timelines.
To further strengthen prompt payment performance, the City could expand vendor participation in the centralized invoice submission portal, which would reduce manual processing, improve invoice accuracy, and shorten intake timelines. The City is also in the process of implementing a virtual pay system with its banking partner, which is expected to streamline payment issuance and reduce reliance on printed checks. In addition, enhancing departmental accountability for timely invoice approvals and expanding training on invoice completeness and coding requirements would help reduce avoidable delays and improve overall compliance with the Prompt Payment Policy.
RELATED PLANNING EFFORTS
This agenda item is a routine item and does not relate to any Oakland strategic planning efforts.
FISCAL IMPACT
As shown in Table 3, the financial impact of prompt payment penalties is minimal relative to total City payments of nearly $1.8 billion over a five-year period. Although individual penalties may be meaningful to affected vendors, the overall financial impact to the City remains very small. Expenses for prompt payment penalties represented approximately 0.02% of total payment expenses over this period, indicating that the cost of interest penalties is immaterial in the context of overall City spending.
Elizabeth Lake, Acting City Administrator
Subject: Informational Report on the Implementation and Performance of the City of Oakland’s Prompt Payment Policy
Date: May 18, 2026 Page 5
Finance & Management Committee
June 9, 2026
Table 3: Five-Year Financial Impacts of Prompt Payment Penalties Fiscal Year
Total
2022 2023 2024 2025
2026
year-to-
date*
Interest
Payments $56,805 $111,289 $39,829 $119,228 $66,444 $393,595 Total
Payments $345,961,202 $326,802,355 $354,836,852 $423,533,792 $311,530,037 $1,762,664,238 Interest
Cost as
% of
Total
Payments
0.02%
0.03%
0.01%
0.03%
0.02%
0.02%
*Reflects payments processed through May 11, 2026.
Most City departments were responsible for less than $20,000 in prompt payment interest over this five-year period. Departments with total interest payments in excess of this threshold are presented in Table 4 and tended to be the departments with substantial overall payment activity. A five-year history of prompt payment penalties for all departments and vendors is included as Attachment A.
Table 4: Five-Year Financial Impacts of Prompt Payment Penalties by Major Department Fiscal Year
Total
2022 2023 2024 2025 2026
year-to-date*
Human Services
Department $35,162 $40,998 $9,875 $45,125 $16,684 $147,844 Economic and
Workforce
Development
Department
$2,936
$14,561
$13,881
-
$13,409
$44,787
Planning and Building
Department $12,050 $26,449 $ 517 $469 $340 $39,825
Capital Improvement
Projects- City wide $324 $2,775 $5,709 $3,084 $17,704 $29,596 Department of
Workplace and
Employment Standard
$4 $716 - $28,223 - $28,943
*Reflects payments processed through May 11, 2026.
PUBLIC OUTREACH / INTEREST
No outreach was deemed necessary for the proposed policy action beyond the standard City Council agenda noticing procedures because this report is for informational purposes only.
Elizabeth Lake, Acting City Administrator
Subject: Informational Report on the Implementation and Performance of the City of Oakland’s Prompt Payment Policy
Date: May 18, 2026 Page 6
Finance & Management Committee
June 9, 2026
Bradley Johnson (May 27, 2026 11:25:50 PDT)
COORDINATION
This report was prepared by the Controller’s Bureau.
RACE AND EQUITY
This report supports the City’s equity goals through documentation of payments made to local Oakland vendors and grantees that provide services to the City. OMC 2.06 seeks to assure that local Oakland vendors and grantees are paid promptly and establishes a mechanism for their additional compensation when this does not occur. This report documents the payment of such additional compensation.
The Prompt Payment Policy is intended to support small local business enterprises, which often have limited cash flow and rely on timely payments to sustain operations. The City’s overall compliance rate of approximately 96 percent helps reduce financial strain on these vendors by ensuring that most invoices are paid within the required timeframe. Continued expansion of the City’s invoice submission portal and the planned implementation of a virtual pay system are expected to further benefit small and disadvantaged local businesses by reducing processing times, improving payment predictability, and minimizing administrative burdens.
ACTION REQUESTED OF THE CITY COUNCIL
Staff Recommends That The City Council Receive An Informational Report On The Implementation And Performance Of The City’s Prompt Payment Policy.
For questions regarding this report, please contact POOJA SHRESTHA, CONTROLLER, at 510-238-6776.
Respectfully submitted,
BRADLEY JOHNSON
Finance Director, Finance Department
Prepared by:
Pooja Shrestha, Controller
Controller’s Bureau
Attachments (1):
Attachment A: Five-Year History of Prompt Payment Penalties by Department and Vendor