Item 02 2025-01059 Update on Application of Budget Equity Tool (BET) on the Department of Utilities (DOU) and Sacramento Police Departments Budget Reductions — Sacramento City Council, May 20, 2025 (part 1 of 2)

City of Sacramento
City Council - 2PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2025-01059 5/20/2025 Item 2.

Update on Application of Budget Equity Tool (BET) on the Department of Utilities (DOU) and Sacramento Police Departments Budget Reductions
File ID: 2025-01059
Location: Citywide
Recommendation: Receive, comment, and provide direction.

Contact: Aimée Zenzele Barnes, Diversity & Equity Manager (916) 808-1174; [email protected], Human Resources Department Presenter: Aimée Zenzele Barnes, Diversity & Equity Manager (916) 808-1174; [email protected], Human Resources Department Attachments:
1-Description/Analysis
2-Budget Equity Tool (BET) and Instructions
3-BET Council Presentation 5.20.25
4-GFOA-Cutting the Operating Budget Resource-April 2021 5-BERG T Council Presentation 5.14.24
6-BET Racial Equity Committee Presentation 3.18.25
7-DOU BET and SURA Equity Analysis
8-SacPD Budget Equity Tool Submissions
Description/Analysis
Issue Detail: The Human Resources Office of Diversity & Equity (ODE) staff will provide an update on the continued refinement and expanded application of the Budget Equity Tool (BET) [renamed from the Budget Equity Resource Guide and Tool (BERG/T)] developed at the direction of the Racial Equity Committee on January 30, 2024. Adapted from the April 2021 Cutting the Operating Budget and Instituting An Equitable Decision-Marking Report (Attachment 4), the BET provides a standardized approach to understand the local and geographic impacts of potential budget cuts.

Specifically using data to identify unintentional adverse impacts on underserved groups or neighborhoods.

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File ID: 2025-01059 5/20/2025 Item 2.

BET from August 2024 to present date and implementation of the BET for Fiscal Year (FY) 2024/25 and FY2025/26:

The BET was applied to parts of the Office of Innovation & Economic Development (OIED), Convention & Cultural Services (CCS), and the Fire Department (FD) and was presented at the Racial Equity Committee on April 30, 2024, and City Council on May 14, 2024 (Attachment 5).

The City of Sacramento has taken intentional steps to continue to build capacity and embed equity into its budget process as part of the FY2025/26 budget development process through the continued implementation of the BET. This effort began almost immediately after adoption of the current year budget on August 6, 2024, when ODE, the City Manager’s Office (CMO) (Assistant City Manager, Leyne Milstein), and the Finance Department’s Budget Office convened to strategize integration of the BET in the budget cycle.

By September 11, 2024, the team refined the BET to be compatible with the City’s budget software (Hyperion). Integration of the BET into the automated process is an important step in the intentional efforts to normalize this type of analysis within the budget development process. On October 31, 2024, ODE and Finance reviewed the functionality and reporting capabilities to ensure the departments applying the BET would have functional access.

The official FY2025/26 citywide budget development kick-off took place on November 6, 2024, followed by the creation of a shared workspace (Teams) to centralize BET submissions. Additionally, the Human Resources Department hosted a workshop on November 13, 2024, to strengthen workforce equity considerations.

On December 11, 2024, the ODE Manager engaged in a capacity building diversity, equity, and inclusion exercise with the Police Department (PD), effectively broadening the tool’s application. As the new year began, consultations with the Department of Utilities (DOU) on January 2 and 6, 2025, explored the application of the BET on the proposed Sacramento Utilities Rate Advisory Commission Program Reduction.

By January 17, 2025, the following number of BET submissions were received: PD (44), FD (14), DOU (1), CMO (10), and CCS (1). ODE initiated the review and department consultation process on February 7, 2025.

Overview of 5-Year Plan to Implement an Equity Lens Citywide At the April 30, 2024, Racial Equity Committee meeting, City staff were directed to develop a workplan on embedding an equity lens into the budget over the next three to five years. This phased approach to implementing the BET involves simultaneous actions to update the BET, gradually introduce the BET across departments, and provide capacity building and training. By doing so, the

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File ID: 2025-01059 5/20/2025 Item 2.

City can continue to work to understand the equitable distribution of resources without overextending its budget during challenging fiscal periods and understanding and implementing realistic timelines for staff to implement change.

The phased implementation has prioritized departments based on factors such as their readiness, potential impact on equity outcomes, and the availability of resources for training and capacity building. This approach ensures that the integration and adaptation of the BET is both effective and sustainable.

Key Considerations for Implementation:

1. Phased Rollout by Department: Given the $62.2 million funding gap addressed in the FY2025/26 Proposed Budget, a gradual department by department integration of the BET is necessary to ensure equity-focused budget allocation while maintaining financial stability and sustained effort by City staff to implement changes.

2. Capacity Building and Training: Departments require structured training on applying the BET to ensure alignment with equity principles. Capacity building ensures City staff understand historical disparities, use data-driven decision-making, and engage impacted or underserved communities meaningfully.

3. Long-Term Structural Challenges: The City faces $1.8 billion in capital needs, pension liabilities, and potential recession risks. Any budget equity implementation must be resilient enough to withstand these financial pressures while addressing the needs of historically vulnerable communities.

Proposed Strategy:
· Year 1-2: Pilot and refine the BET in selected departments with high-impact equity initiatives. · Year 3-4: Expand implementation, integrating feedback and addressing training gaps. · Year 5: Further refine the BET. Full adoption across departments, ensuring that equity-driven budgeting is fully embedded in decision-making processes.

This plan positions the City to be proactive in identifying future cost measures and/or partnership opportunities to address community needs in planning for future budget cycles. The BET provides guidance on how the City can apply an equity lens to budget reductions and revenue opportunities, while minimizing harm to vulnerable members of the community.

Policy Considerations: This report is consistent with the Racial Equity Committee’s direction to keep informed on the pilot application of an equity lens on the discrete parts of the City budget and application of an equity lens on the City budget over the next three to five years.

Economic Impacts: Not applicable.

Environmental Considerations: Not applicable.

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File ID: 2025-01059 5/20/2025 Item 2.

Sustainability: Not applicable.

Commission/Committee Action: Not applicable.

Rationale for Recommendation: Not applicable.

Financial Considerations: The BET is being used to inform closing the $62.2 million budget gap and help balance the FY2025/26 Proposed Budget.

Local Business Enterprise (LBE): No goods or services are being purchased under this report.

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1 FY 2025/2026 - BUDGET EQUITY TOOL
Welcome to the City of Sacramento Budget Equity Tool. The Budget Equity Tool (BET) was developed at the direction of the Racial Equity Committee on January 30, 2024. Adapted from the Government Finance Officers Association (GFOA) April 2021 Cutting the Operating Budget and Instituting an Equitable Decision-Making Report, the BET is a decision support approach to understand the local and geographic impacts of potential budget reductions. The strategic direction from the Racial Equity Committee at the April 30, 2024, meeting calls for applying a racial equity lens in budget decisions over the next 3-5 years. This tool is helping to initiate that work by assisting personnel, teams, and departments understand any potential impacts of budget reductions.

Equity work benefits all Sacramento residents in several crucial ways. By addressing and dismantling systemic discrimination in whatever form it takes and for whomever it affects, we create a fairer and more inclusive society where everyone has an opportunity to thrive. When marginalized communities are empowered and provided with equal access to resources and opportunities, the overall economy and social fabric improve. Additionally, racial equity fosters greater understanding and empathy between diverse groups, leading to stronger social cohesion and reduced conflicts. Ultimately, this work enhances the well-being and quality of life of every individual, creating a more just and harmonious society for everyone.

The City of Sacramento racial equity statement from the Feb 2019 GARE Cohort

Both a process and an outcome. For City of Sacramento, this is accomplished by acknowledging and eliminating past and current barriers and addressing the unique needs of each community while creating access for all."

2 Instructions:

Complete the three sections, which contain narrative questions. Developing full answers to the open prompt questions will benefit you as you move and continue your budget development work. You can use this as a worksheet to cut and paste your responses into Hyperion.

Upon completing the questions and submitting your responses in Hyperion, please download the Equity responses and put the PDF report in the Equity Responses and Instructions folder in Teams and let the Office of Diversity & Equity team know it’s there. There is a separate folder for your department. The Office of Diversity & Equity team will have access to all department folders. This will allow the team to provide individuals and teams capacity building support, feedback, and resources.

For immediate help and additional support please contact Aimée Zenzele Barnes, Diversity & Equity Manager at (916)808-1174 or [email protected].

Background:

The City of Sacramento joined the Government Alliance on Racial Equity (GARE) in 2019. GARE has identified using tools such as this one as a best practice. This tool is built upon their racial equity tool worksheet. "Racial equity tools are designed to integrate explicit consideration of racial equity in decisions, including policies, practices, programs, and budgets. It is both a product and a process. Use of a racial equity tool can help to develop strategies and actions that reduce racial inequities and improve success for all groups." ~ Racial Equity Toolkit: An Opportunity to Operationalize Equity | Government Alliance on Race and Equity (racialequityalliance.org) [Note: requires registration. For City of Sacramento personnel, use your cityofsacramento.org email address and choose the jurisdiction. Please see for additional information or contact Office of Diversity Equity for support in registering.

Data Use:

Content that is submitted to the Budget Equity Tool supports internal City work to develop skills and understanding in applying a racial equity lens in all decision-making. Content is expected to be under development and, therefore, not final or necessarily representative of the final decisions by the submitter. The Office of Diversity & Equity may use contact information to follow up to improve the tool continuously or to inquire about further support that may be valuable to the submitter. Further, the Office of Diversity & Equity may periodically review data patterns in submissions to identify any needs and recommendations that might be addressed through other relevant City offices and departments.

3 Section 1: Goal Setting, Budget Classification, & Project Outcomes To get started, identify goals and project outcomes of the service or project being reduced or cut. Consider explaining how your service or project connects to the City’s goals and helps to define the potential reduction/cut’s impact on different communities.

Purpose of Budget Reductions

1. Is this reduction tied to other BCPs? If so, which ones? If grouped, please share which BCPs and why they are grouped together:

2. What are/were the desired program or service outcomes?

3. How did you approach the equity analysis:

Section 2: Service Impacts
A spending cut could reduce the quality of service that the City delivers. Collecting data allows you to identify synergies with existing work and unearth opportunities to reduce the perpetuation of historical and present injustice faced by certain communities. Explore the potential impacts of spending cuts by identifying demographics of community members.

4 Impacts By Demographics
Identify the demographics of residents who may be impacted by the service or program reduction.

5 Section 3: Location Impacts
This section is designed to help understand the geographic character of budget cuts and their potential impacts on vulnerable and already underserved neighborhoods and communities.

Utilize the Sacramento Equity Explore Design GIS Tool to help identify.

Location Impacts (Please be sure to describe each geographic character) Definition:

Citywide – Programs or services that are “geography neutral” usually pose the least risk to equity but could still serve a vulnerable population.

Central Location - Programs or services delivered at locations distributed throughout the city with a service population local to the site.

Mobile Program or Service - These are services where the staff are mobile.

Citywide: Yes/No
Central Location: Yes/No
Mobile Program or Service: Yes/No

List any specific geographic areas the program or service impacts below Examples: Districts, Opportunity/Promise Zones, Neighborhoods, Service Districts Utilize the Sacramento Equity Explore Design GIS Tool to help identify

Program or Service Geography: Citywide
Services that are “geography neutral” usually pose the least risk to equity but could still serve a vulnerable population. If this is a program or service provided to the entire city with little variance by neighborhood, could vulnerable populations be hurt by the cut?

Examples: Downtown Sacramento, Natomas, South Sacramento, East Sacramento, etc... 6 Program or Service from a Central Location
These are programs or services delivered at locations distributed throughout the city with a service population local to the site. Program examples include community and recreations centers, public parks, fire stations. Service examples include building permits and licensing. If the program or service is delivered from a central location and available to the community at- large, but is more commonly used by specific segments of the community, are those segments a vulnerable population? Would a decreased level of service adversely impact any of the equity considerations from our definition of equity?

Mobile Program or Service
These are services where the staff are mobile. Examples include EMS units, code enforcement, road patching crews, and litter abatement teams. Cuts in these services could also pose greater risks of inequitable impact. If this is a mobile program or service that serves a specific community or specific neighborhoods, are those neighborhoods vulnerable?

7 GLOSSARY OF TERMS
As you reflect on and respond to the questions relating to the Budgeting for Equity Tool, please refer to the definitions provided below.

Additional Terms & Definitions
Accessibility: The design, construction, development, and maintenance of facilities, information and communication technology, programs, and services so that all people, including people with disabilities, can fully and independently use them. Accessibility includes the provision of accommodations and modifications to ensure equal access to employment and participation in activities for people with disabilities, the reduction or elimination of physical and attitudinal barriers to equitable opportunities, a commitment to ensuring that people with disabilities can independently access every outward-facing and internal activity or electronic space, and the pursuit of best practices such as universal design. (Source) Anti-racist: An anti-racist is someone who is supporting an antiracist policy through their actions or expressing antiracist ideas. This includes the expression of ideas that racial groups are equals and do not need developing, and supporting policies that reduce racial inequity.

Benefit: An advantage or profit gained from the implementation of a service policy, program, or initiative.

Black, Indigenous, People of Color (BIPOC): ‘Black, Indigenous, People of Color,’ is meant to unite all people of color in the work for liberation while intentionally acknowledging that not all people of color face the same levels of injustice. By specifically naming Black and Indigenous people we are recognizing that Black and Indigenous people face the worst consequences of systemic white supremacy, classism and settler colonialism (Source) Burden: To give someone an unequal, overwhelming share of an undesirable, unpleasant or difficult factor; typically associated with causing inequitable outcomes.

Disparities: A measure that indicates a difference between specific groups or population; the difference is usually unfair. (Source)
Diversity: Each person has layers of diversity that make his/her/their perspective unique. The City of Sacramento defines diversity as the variety of human differences and similarities among people, such as: age, belief system, class/caste, culture, disability, education, ethnicity, gender, gender identity, generation, geography, job role and function, language, marital status, mental health, nationality, native or indigenous origins, parental status, personality type, race, religion, sexual orientation, thinking style, work experience, and work style. 8 Equality: Everyone is treated the same exact way, regardless of need or any other individual difference. (Source)
Equity: Regardless of one’s identity, equity is when all people have just treatment, access to opportunities necessary to satisfy their essential needs, advance their well-being, and achieve their full potential while identifying and eliminating barriers that have prevented the full participation of some groups. Although both promote fairness, equality achieves this through treating everyone the same, regardless of need and circumstances. Equity achieves this through treating people differently dependent on need, circumstance and consideration of historical and systemic inequities.
(Adapted from the Government Alliance on Race & Equity definition of racial equality)
Equity Lens/Framework: A way of analyzing policies, practice, and procedures by assessing disparities as well as the needs and assets of underserved communities/populations. (Source) Implicit Bias: Also known as unconscious or hidden bias, biases people are usually unaware of and that operate at the subconscious level. Implicit bias is usually expressed indirectly. (Source) Inclusion: A dynamic state of feeling, belonging, and operating in which diversity is leveraged and valued to create a fair, healthy, and high-performing organization or community. An inclusive culture and environment ensure equitable access to resources and opportunities for all. It also enables individuals and groups to feel safe, respected, heard, engaged, motivated, and valued for who they are. (Source)
Intersectionality: Per Kimberlé Williams Crenshaw, intersectionality is simply a prism to see the interactive effects of various forms of discrimination and disempowerment. It looks at the way that racism, many times, interacts with patriarchy, heterosexism, classism, xenophobia — seeing that the overlapping vulnerabilities created by these systems actually create specific kinds of challenges. “Intersectionality 102,” then, is to say that these distinct problems create challenges for movements that are only organized around these problems as separate and individual. So, when racial justice doesn’t have a critique of patriarchy and homophobia, the particular way that racism is experienced and exacerbated by heterosexism, classism etc., falls outside of our political organizing. It means that significant numbers of people in our communities aren’t being served by social justice frames because they don’t address the particular ways that they’re experiencing discrimination.

9 Privilege: Unearned social power accorded by the formal and informal institutions of society to ALL members of a dominant group (e.g. white privilege, male privilege, etc.). Privilege is usually invisible to those who have it because we’re taught not to see it, but nevertheless it puts them at an advantage over those who do not have it. A systemic valuing, favoring or enhancing that only certain populations benefit from based on the group of which they are a part. (Adapted from source and source)
Race: A social construct that categorizes individuals based on their physical characteristics, particularly skin and hair texture, and not an actual biological fact. (Source) Racial Equity: A situation that is achieved when people are thriving and race no longer statistically dictates, determines or predicts one’s social outcomes or ability to thrive. (Source) The City of Sacramento affirms racial equity as a core value in which race does not affect life outcomes. We acknowledge historical racial inequities and are committed to transparent, deliberate, and actionable solutions that will remedy those inequities and serve all our diverse communities. (Source)
Racial Equity Accountability: In the context of racial equity work, accountability refers to the ways in which individuals and communities hold themselves to their goals and actions and acknowledge the values and groups to which they are responsible. To be accountable, one must be visible, with a transparent agenda and process. Accountability demands commitment. From a relational point of view, accountability is not always doing it right. Sometimes it’s really about what happens after it’s done wrong. (Source)
Social Vulnerability Index (SVI) Map: SVI - developed by the Center for Disease Control and Prevention's Agency for Toxic Substance and Disease Registry (ATSDR) - uses U.S. Census data to determine the social vulnerability of every Census tract to help public health officials and emergency response partners identify and map the communities that will most likely need support before, during, and after a hazardous event. The SVI ranks each tract on 16 social factors, four related themes, and provides an overall ranking. This map provides information related to the 16 social factors, maps the four SVI themes and overall ranking. (Source)

Update on Refinement and Expansion of the
Application of Budget Equity Tool (BET)
City Council
May 20, 2025

How did we develop the BET?
The BET 1 was designed with the following considerations:
• An equity lens during a budget reduction cycle
• Applicable to a portion of the over 250 reduction proposals that departments submitted to the City Manager’s Office (CMO) • Affirm and align with the CMO budget instructions and expense reductions impact analysis (1 = low impact to 4=severe impact) on City services and staffing positions
• Affirm and align with Council's priorities
• Provide guidance to Council in decision making
2 Adapting from the April 2021 Resource Report that provides guidance on how cities can apply the equity lens to budget cuts through two perspectives: 1) Service impacts and 2) Location impacts 1 Previously called Budget Equity Resource Guide and Tool (BERT/G) Background - Our Capacity Building Efforts Fiscal Year (FY) 2025/26 3 August 6,2024
Office of Diversity
& Equity (ODE),
CMO, and Finance
Team began initial
conversations to
discuss FY2025/26
BET.

Sept 11, 2024
ODE, CMO, Finance
Team follow up on
actions to redraft
the BET to be
loaded in Hyperion.

Oct 31, 2024
ODE, Finance Team
reviews how the
BET works in the
system and the
what the report
format generated
will print out.

Nov 6, 2024
Finance Team
conducts FY
2025/26 Budget
Kick-Off.

Nov 12, 2024
Finance Team
establishes Teams
space where BETs can
be uploaded for
review.

Nov 13, 2024
Human Resources
(HR) Department
provides workshop
on HR Process.

Dec 11, 2024
Diversity & Equity
Manager attends
Budget Change
Proposal (BCP)
Diversity, Equity,
and Inclusion
Exercise Meeting
of the Police
Department.

Jan 2, 2025
Diversity & Equity
Manager consults
with Department
of Utilities (DOU)
on Applying BET on
Sacramento
Utilities Rate
Assistance (SURA)
Program
Reduction.

Background - Our Capacity Building Efforts FY 2025/26 (continued) 4 Jan 6, 2025
Diversity & Equity Manager
consults with DOU on
application of Sacramento
Equity Explorer Design
(SEED) GIS Tool and SURA
Budget Analysis.

Jan 17, 2025
Police Department submits
44 BETs, Fire Department
submits 14 BETs, DOU
submits 1 BET, Office of
Innovation and Economic
Development (OIED)
submits 10 BETs, and
Department of Convention
and Cultural Services (CCS)
submits 1 BET.

Feb 2025
ODE begins to review
submitted BETs.

Feb 7, 2025
ODE continues to review
BET and prepare and
finalize presentation for
March 18, 2025, Racial
Equity Committee Meeting.

April 15, 2025
ODE meets with Police
Department to review
analysis and offer guidance
in further refining of BET
and identify next steps.

May 9, 2025
ODE meets with Interim
City Manager, HR Director,
and Finance Director to
Prepare for 2 p.m. Council
Meeting Presentation
TO DAY
What is the Budget Equity Tool?
5 What the BET *IS*
A Guide for Thoughtful, Inclusive Analysis
 Ask critical questions: Prompts consideration of who benefits or is burdened by a decision, identifying disparities early.
 Analyze potential impacts: Helps detect if decisions might worsen existing racial disparities or create new ones.  Consider different perspectives: Encourages engaging people of diverse racial backgrounds to ground the analysis in lived experience.
 Identify equity opportunities: Facilitates the creation of strategies to advance fairness and inclusion in decision- making.
 Promote transparency and accountability: Encourages documentation of decisions to clarify how equity was considered.
6 What the BET *IS NOT*
Clarifying Misconceptions and Limitations
 Not a magic bullet: It is a support mechanism, not a fix-all; effective use requires sustained effort and accountability.
 Not a scoring tool: It does not provide a numerical equity rating; it is about process and reflection.  Not a prescriptive manual: There are no exact steps for every scenario—judgment and creativity are needed.
 Not a substitute for lived experience: Analytical tools must be complemented by direct voices from impacted communities.
 Not a one-size-fits-all: Different tools exist for different contexts—choosing the right one is key. 7 Understanding Community Impacts
An Overview of the BET
Goal Setting & Project Outcomes
Establish government-community
mechanisms using the BET for Equitable
Table Design.

Service Impacts & Available Data
Use demographic and service data to reveal
impact disparities across racial and
economic lines.
8 Understanding Impacts
Explicitly consider impacts to avoid
contributing to inequities and
maintain relationships for future
collaboration and implementation.

Location Impacts
Highlight how geographic areas, especially
vulnerable communities, are affected by
proposed budget changes.

Learning while Applying the BET
“Experience Teaches”
FY2025/26
9 How We Are *and Are Not* Applying the BET
Approach and Departments
Applied
● Budget reduction proposals in OIED, Fire,
and CCS in FY2024/25 and FY2025/26.
● Budget reduction proposals in DOU and
Police in FY2025/26.
● Leveraged high-equity centered proposed
reductions.
10 Not Applicable
● Updating or purchasing operating system
or infrastructure maintenance.
● Regulatory or compliance requirement
that are not a direct service impact but a
mandate.
● Legacy or contractual obligations.

Key Point: Even when services have to be cut or reduced - understanding the impact to communities and careholders better positions the City to respond and anticipate for the future.

How We Are Applying the BET

SURA - DOU
11 A program budget reduction would not impact
the quality of services received.

Economically disadvantaged
careholders/communities impacted by
reductions.

SURA program participants more concentrated
in racially diverse and underserved or
underresourced neighborhoods.

A reduction to the SURA program was not
recommended.

How We Are Applying the BET
Police Department
12 Various programs, outreach, and engagement are
proposed to be reduced.

Racially and economically disadvantaged
communities and careholders impacted.

Detailing and understanding reduction impacts
within the intersection of service, geographic, and
systemic impacts on vulnerable communities.

Continue consultation, data collection, and
documentation of intersectional impacts.

Learned So Far in Applying the BET - Future Practice
13 • Be flexible with data to provide understanding and context of diversity and economic disparities, not necessarily definite answers.

• Establish and align vision and purpose with clearly stated criteria and data filters. • Update data filters and user guides on GIS tools as departments find new ways to use them.
• One-on-one consultations made available to departments while working on the process of completing the tool.
• Incorporating through a phased approach an equity lens into existing forms, processes, and workflow.

Thanks!
14 CUTTING THE

OPERATING BUDGET

AND INSTITUTING AN

EQUITABLE DECISION-MAKING

ENVIRONMENT AMIDST A

FISCAL CRISIS

CITY BUDGETING FOR EQUITY & RECOVERY

CITY BUDGETING FOR EQUITY & RECOVERY
Launched by Bloomberg Philanthropies in 201 5, What Works Cities helps local governments across the country drive progress in their cities through the effective use of data and evidence to tackle pressing challenges that affect their communities. The City Budgeting for Equity and Recovery program is a new effort that helps U.S. cities confront budget crises while strengthening their commitment to equity in the wake of COVID-1 9.

This What Works Cities City Budgeting for Equity and
Recovery resource is a collaboration among the following organizations and institutions:
3 The Problem
The COVID-1 9 pandemic has had an undeniable financial impact on local governments.

According to surveys conducted by the Government Finance Officers Association (GFOA), in mid-2020 about 70 percent of cities expected to experience a shortfall in their budget despite state and/or federal aid. Larger local governments were more likely to expect a shortfall than smaller local governments. While recent infusions of funding from the Federal government provides some welcome relief, it does not mean local governments can go back to “business as usual”. This is because federal funding is temporary but financial challenges wrought by the pandemic may be further reaching for many governments.

Further, federal funding may not necessarily be a dollar-for-dollar replacement for everything a government has lost. Federal funding does, however, provide some breathing room to think more strategically about finances, including the equity impact of budget decisions.

The often unavoidable response to budget shortfalls is to cut back on spending.

The conventional approach to cutting back spending has been the “across-the-board” cut, which applies cuts equally to all areas of service. This approach has been popular because it is simple and is perceived as “fair” to those that have to implement the cuts – oftentimes department managers.

Across the board cuts, however, might have an inequitable impact on the different communities that local governments serve. Often, those that feel the consequences of the cuts the most are a city’s most vulnerable, under-represented groups and communities of color. Some people and neighborhoods have the means to weather the impact of a cutback in
government services, while others don’t.

The City of Toledo, Ohio, has recognized the risks posed by across the board cuts. To take a simple example, the City recognized that reducing the resources spent on cutting the grass in public areas would contribute to blight – and that the neighborhoods most vulnerable to blight would be the City’s lower-income areas. Another example might be cutting summer camps, the effect of which would be felt more acutely in a working class neighborhood where replacing the service that such a program provides might be harder for some parents.

Cities need a more nuanced view of how to cut budgets fairly.

Applying an equity lens to budget cuts can help cities reduce budgets to an affordable amount for the city while minimizing harm to vulnerable members of the community. In fact, severe financial difficulties often present an opportunity to rethink traditional approaches to public finance. Applying an equity lens can be just such an opportunity.

EXAMPLE IN ACTION
Toledo has found that using data to assess
the community’s and organization’s needs
can be an effective way to home in on the
City’s highest priorities when identifying
potential budget cuts. After identifying
its highest priorities, the City used data
to identify unintentional adverse impacts
on certain groups or underserved
neighborhoods. This has allowed the City
to be proactive in identifying cost saving
measures or partnership opportunities to
address community needs.

This resource provides guidance on
how cities can apply the equity lens
to budget cuts.1
1 The ideas that appear in this article were inspired by the many different people and organizations that are working on bringing an equity perspective to bud- geting, including: Government Alliance on Race and Equity (GARE – see “ Advancing Racial Equity and Transforming Government Action”), local governments that are working on this issue, and other experts on local government budgeting, notably PFM. 4 Recognize Where Inequity Exists
The first step is to recognize where inequity exists. There will be differences in access to opportunity and well-being between different groups of people and between different neighborhoods. Budget cuts could exacerbate these disparities. For example, in many communities, race is predictive of public health outcomes like infant mortality, life expectancy, and incidence of chronic illness (e.g., diabetes). A city government should identify specific population segmentations (e.g., low income, historically disadvantaged groups, etc.) for analyzing equity.

Even if a local government cannot perform a rigorous statistical analysis on inequities, trends can be seen in data collected by outside entities (e.g., US Census Bureau or a state health department). And, statistical cases should be complemented by stories.

Narratives, not numbers, are often more influential in decision-making, so the numbers should be brought to life with stories.

Finally, it should be noted that low-income communities historically have had reason to mistrust the government. As a result, they may not always call in for service.

Hence, when considering equity and using data, cities should assess the geography of complaints and feedback. If there is under-representation in certain communities, particularly those that lack investment from the City, the local government may want to reach out to those communities, listen to their concerns, ensure their needs are being met and be more proactive in providing services to those areas (rather than reactive).

Grass cutting can be an expensive operation
depending on the weather. A few years ago,
Toledo had a record amount of rain that made it
difficult for the City to maintain their grass cutting
operation within budget. The City’s response was
to use micro-enterprise vendors and create bid
packages by geography and type of property.

The packages included thoroughfares as well as
nuisance residential and commercial properties.

The City saved money by having a vendor regularly
cutting properties before the grass was too high
and was able to increase minority-owned business
participation.

This year, the City is monitoring the warmer
temperatures that may lead to increased rain. If the
City has to consider scaling back grass operations,
it will take into consideration that neighborhoods
with high vacancy and crime rates may need to
be prioritized to deter dumping and other illegal
activity in those communities.
5 Defining “Equity”
Next, a city should define what “equity” means. To illustrate, the City of Charlotte, North Carolina has defined equity as “the fair treatment, access, opportunity and advancement for all people, while at the same time striving to identify and eliminate barriers that have prevented the full participation of some groups.” Groups that Charlotte has identified as the focus for its equity lens include people of color and low- income communities.

Defining equity will help local governments evaluate potential budget cuts from the perspective of which cuts could work against equity. There are two perspectives on impact to the public that a potential budget cut could be evaluated from. Let’s explore each perspective below. Each perspective comes with a series of questions that a city can ask about any given proposed budget cut in order to help evaluate equity impacts.2 Perspective #1: Service Impact
A spending cut could reduce the quality of service that a government delivers. Cities might consider the following questions:

What is the potential for reduced access to services?
This includes fewer places to receive service, fewer hours of service delivered, fewer employees to provide a service or longer response times.

Examples: Closing a fire station results in higher response times…reducing branch library hours makes it harder for residents to use it after hours…closing one recreation facility causes residents to have to walk or drive farther to use another facility…reducing customer service representatives increases the wait time for service at walk-up counters. 2 These two perspectives were originally drawn from the author and members of PFM, who took inspiration from GARE, the Urban Institute and others. Hence, the two perspectives should not be taken as an original idea of the author, but rather as the product of the many people who have been working on the role of budgeting and equity.

6 What is the potential for reduced quality of service? Residents can still access service, but the quality of service is measurably lower or does not meet resident expectations.

Examples: A city purchases cheaper vehicles that have shorter useful lives, are less energy efficient or are more susceptible to breakdown…city uses pothole patching instead of street repaving…city uses staff with less experience or training to perform a service.

For these service impacts, the local government can ask if the impact affects equity.

For example, certain library branches might be used more by lower income people, so closing those branches
would have important equity impacts. On the other hand, perhaps certain types of permits or licenses are not disproportionately used by vulnerable populations, so to reduce office hours would not have equity impacts.

Earlier, we saw Toledo’s example around grass cutting and how cuts would have resulted in unacceptable losses in quality (i.e., more blight). The City has also been mindful of how its cut back strategies impact access to community assets, like parks and recreation, in low income neighborhoods.

Perspective #
2: Location Impact
Many of the inequities that a local government would be focused on have geographic character. For example, some neighborhoods might have more low income residents or people of color than other neighborhoods. Cites might consider the following questions about location:

7 Is the service geography neutral?
These are services that are distributed across the entire municipality with little variance by neighborhood. Examples include internal services like information technology, human resources and fleet management (for smaller communities) and citywide elected officials. Services that are “geography neutral” usually pose the least risk to equity, but could still serve a vulnerable population.

Does the service have a fixed geography with specific customers? These are services that are delivered from a central location and available to the community at-large, but used by specific segments of the community. Examples include building construction plan review and many kinds of licensing. In this case, equity impact would depend on who the customers of this service are. For example, for a given type of license, would a decreased level of service adversely impact any of the equity considerations from your definition of equity? Is the service delivered from a fixed site to a specific community? These are services delivered at locations distributed throughout the city with a service population local to the site. Examples include recreation centers, public parks, health clinics, and fire stations. These services pose greater risk of inequitable impact.

Is it a mobile service that serves a specific
community?
These are services where the staff are mobile
and focused on particular neighborhoods.

Examples include EMS units; code enforcement;
road patching crews; and litter abatement teams.

Cuts in these services could also pose greater risk
of inequitable impact.

Toledo has been thoughtful about the impact
of location. For example, the City is installing
LED street lighting throughout the community.

However, because it has limited resources, it can’t
install LED light throughout the entire community
at once. Therefore, the installation program
is driven by crime data: neighborhoods with
the most violent crime get lights first because
better lighting may help deter crime. This is an
example of a service with a fixed geography and
specific customers.

An example in Toledo of a mobile service that aids
a specific community is leaf collection. Similar to
grass cutting, leaf collection helps keep up
quality of life and prevent blight. However, some
neighborhoods produce more leaves than others
due to the types of trees. Toledo has tuned its leaf collection strategy to concentrate more resources in areas that produce more leaves.

In Toledo, leaf collection and grass were
major frustrations for residents. The City used
resident complaint data to develop a strategy
to more efficiently deliver services. With leaf
collection specifically, the City recognized
that certain neighborhoods had trees that
produce more leaves. The City determined
that those neighborhoods needed two
passes and rerouted crews to pick up leaves
in those neighborhoods first and last.

8 The table below recaps the two perspectives and questions cities might ask under each:

TWO PERSPECTIVES TO CONSIDER ON

THE EQUITY IMPACT OF BUDGET CUTS
Perspective #1: Service Impact Perspective #2: Location Impact What is the potential for reduced
access to services?
Fewer places to receive service?
Fewer hours of service delivered?
Fewer employees to provide a service?
Longer response times?
Is the service provided to the entire
municipality with little variance by
neighborhood?
Could vulnerable populations be hurt by the cut?
What is the potential for reduced
quality of service?
Will the quality be measurably lower?
Will the quality meet citizen expectations/needs?
Is the service delivered from a central
location and available to the community
at-large, but which is used by specific
segments of the community?
If so, are those segments a vulnerable population?
Is the service delivered at locations
distributed throughout the city with a
service population local to the site?
Are the populations served vulnerable?
Is the service one where staff are mobile,
but focus on particular neighborhoods?
Are those neighborhoods vulnerable?
9 A Word about Time Horizons
Budget cuts are, by their nature, focused on the short-term. However, the City of Toledo views the move toward a more equitable budget as a marathon, not a sprint. For that reason, Toledo has found great value in complementing its budget deliberations with a long-term financial plan and ten-year forecast. This helps the City keep an eye on its long-term objectives and ensure that decisions made today don’t unfairly burden future generations of citizens.

Conclusions
In a time of budget cuts it is almost inevitable that services will suffer.

By taking into account equity, a local government can reduce the pain experienced by disadvantaged parts of the community and reduce the pain experienced by the community as a whole. For any given budget cut, a city can ask the following to guard against disproportionate impact on its most vulnerable residents:
• What is the service impact? Could this cut reduce access to services or reduce the quality of services for vulnerable groups?
• What location within the city will be impacted? Does the service or program being cut serve a particular community or neighborhood? Those types of program cuts have the biggest risk of
inequitable impacts.

With the answers to these questions, cities can consider alternative cutback strategies. The Government Finance Officers Association has catalogued a large number of cut-back strategies and other tools for dealing with budget deficits at its Fiscal First Aid website.3 Cities can use these resources to find alternatives to strategies with inequitable impact.
3 https://www.gfoa.org/ffa

City of Sacramento
City Council - 2PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-01004 5/14/2024 Discussion Item 9.

Update on Development and Pilot Application of a Budget Equity Resource Guide and Tool (BERG/T) on the Office of Innovation and Economic Development, Fire Department, and Convention and Cultural Services Department Budget Reductions File ID: 2024-01004
Location: Citywide
Recommendation: Receive and file.

Contact: Aimée Zenzele Barnes, Diversity & Equity Manager, (916) 808-1174, [email protected], Human Resources Department Presenter: Aimée Zenzele Barnes, Diversity & Equity Manager, (916) 808-1174, [email protected], Department of Human Resources; Megan Van Voorhis, Director of Convention & Cultural Services, (916) 808-5979, [email protected], Department of Convention & Cultural Services; Denise Malvetti, Deputy Director, (916) 808-7064, [email protected], City Manager’s Office of Innovation and Economic Development Attachments:
1-Description/Analysis
2-Budget Equity Resource Guide and Tool
3-GFOA-Cutting the Operating Budget Resource-April 2021 4-BERG.T Presentation 5.14.24
5-CCS Budget Equity Resource Guide and Tool
6-OIED Budget Equity Resource Guide and Tool - Programs 7-OIED Budget Equity Resource Guide and Tool - Staffing 8-SacFD Budget Equity Resource Guide and Tool - DOR
9-SacFD Budget Equity Resource Guide and Tool - Single Role 10-SacFD Budget Equity Resource Guide and Tool - Suppression Description/Analysis
Issue Detail: The Human Resources Office of Diversity & Equity and additional City staff will provide an update on the development and application of the Budget Equity Resource Guide and Tool (BERG/T) developed at the direction of the Racial Equity Committee (REC) on January 30, 2024.

Adapted from the Government Finance Officers Association (GFOA) April 2021 Cutting the Operating

Page 1 of 3 ends

File ID: 2024-01004 5/14/2024 Discussion Item 9.

Budget and Instituting an Equitable Decision-Making Report (Attachment 3), the BERG/T is a decision support approach which helps staff understand the impacts of potential budget reductions.

The approach uses data to identify unintentional adverse impacts on underserved groups or neighborhoods.

The BERG/T was applied to parts of the Fire Department, Office of Innovation & Economic Development, and Convention & Cultural Services Department proposed budget reductions. City staff from these teams will share how they utilized the BERG/T and any recommendations or insights from the process. Staff will share examples from the BERG/T pilot project as well as a demonstration of the Sacramento Equity Explore Design GIS Tool (SEED) tool as shared with the REC on April 30, 2024.

Background: Fiscal Year (FY) 2024/25 Budget Balancing Strategies To address the $66 million structural imbalance currently projected in the City’s General/ Measure U (G/MU) Fund for FY 2024/25, the City Manager directed departments under the purview of the City Manager to prepare a reduction plan of up to 15 percent of the departments’ net G/MU Fund reliance in the FY 2023/24 Approved Budget. A combination of 246 revenue enhancements and expenditure reductions that were reviewed, categorized, and finalized by the City Manager’s Executive Team was presented to the Budget and Audit Committee Meeting on April 9, 2024.

In addition, City staff conducted a community survey to receive input on public budget priorities and held three community meetings across the City to inform the public of the City’s budget deficit, answer questions, and receive feedback. From February 27, 2024, through March 24, 2024, a nine- question survey regarding budget priorities and potential reduction strategies was open to the public via the City’s website. The survey was translated into five languages (Spanish, Hmong, Vietnamese, Chinese and Dari). The results were presented at the Budget and Audit Committee Meeting on April 9, 2024.

Policy Considerations: This report is consistent with the Racial Equity Committee’s direction to keep informed on the pilot application of a racial equity lens on the discrete parts of the City budget for FY 2024/25.

Economic Impacts: Not applicable.

Environmental Considerations: Not applicable.

Sustainability: Not applicable.

Commission/Committee Action: During the April 2, 2024 REC meeting, members asked for the SEED GIS tool to be updated to include heat maps with available data to better inform budget decisions. This update was completed by the GIS team and presented at the April 30 REC meeting.

Page 2 of 3 ends

File ID: 2024-01004 5/14/2024 Discussion Item 9.

At that meeting members asked that an equity analysis be included in the budget process going forward. It is important to note that in reviewing examples from how other Cities across the Country have implemented similar processes, best practices have a phased, multi-year approach, that includes training and capacity-building for staff.

Rationale for Recommendation: Staff is providing an update to the entire Council on the pilot work directed and received by the REC relative to an equity review of budget proposals.

Financial Considerations: None.

Local Business Enterprise (LBE): Not applicable.

Page 3 of 3 ends

1 BUDGET EQUITY RESOURCE GUIDE & TOOL
As you move through this budget equity tool, you will be asked to identify your budget classification and impact levels (mandatory, discretionary, impact level 1-4). Please use this information and proposed reductions as approved by the City Manager to answer any related questions in this tool.

How did you approach this process? What methodology did you use while considering budget cuts?

Section 1: Goal Setting, Budget Classification, & Project Outcomes To get started, identify goals and project outcomes of the service or project being reduced or cut. Consider explaining how your service or project connects to the City’s goals and helps to define the potential reduction/cut’s impact on different communities.

Purpose of Budget Reductions

1. Name or Group of Reductions (tie to BCP numbers or totals). If grouped, please share which BCPs and why they are grouped together:

2. What type of program is this? (Mandated, Discretionary):

3. What is the level of impact? (1-4):

4. Brief Description of Reduction:

2 5. Department(s) Involved:

6. Type of Program or Service the budget expense is for:

7. How did you apply your approach to this BCP?

8. What problem or challenge is the Program or Service trying to solve?

9. What are the desired program or service outcomes?
Equity Opportunity Areas
Equity Opportunity Areas are examples of potential equity impacts that were developed by engaging community members. Consider taking this thinking into all follow-up tasks to ensure you are centering the equity opportunities you identified.

Which equity opportunity area(s) will this primarily impact? Select all that apply.

Community Access
☐ Access to public spaces (e.g. Libraries,
centers, parks)
☐ Access to public transportation
☐ Access to broadband internet
☐ Access to information in different
languages
☐ Access to information in different
auditory/visual formats
☐ Access to emergency services for
frontline communities
☐ Access to community involvement in
planning

Human/Social Services
☐ Impact on services for Sacramento
residents
☐ Disproportionate distribution of
resources to frontline communities
☐ Disruption of services to frontline
communities
☐ Impact on social services provided by
religious non-profit organizations
Mobility
☐ Those unable to afford transportation
costs
☐ Flooding of critical road networks
☐ Mobility limitations during heat
waves/storms
3 Food
☐ Food insecurity
☐ Malnutrition and chronic health
disparities
Public Health
☐ Physical and mental health concerns
☐ Air pollution
☐ Water quality
☐ Unfair siting of infrastructure like
landfills, trash incinerators, wind turbines,
and solar panels
☐ Exacerbating disparities from COVID-19
Cultural Impacts
☐ Loss of important cultural sites
☐ Disruption of cultural practices (in
general)
☐ Loss of culture and spirituality involving
Sacramento cultural sites and/or practices

Housing
☐ Ability to afford disaster preparation and
recovery
☐ Ability to afford relocation costs
☐ Increased housing costs
☐ Homeless/houseless communities
☐ Un-insured or under-insured community
members to potential damages
Economic Considerations
☐ Loss of jobs/unemployment
☐ Economic recovery
☐ Economic stability
Livability/Cost of Living
☐ High utility costs
☐ Ability to afford HVAC
☐ Unequal energy burden
☐ Those unable to afford living costs
Other (Please fill in your own)
☐
☐
☐
☐
4 How does the reduction in the program or service outcomes relate to the selected equity opportunity areas?

5 Impacts By Demographics
Identify the demographics of residents who may be impacted by the service or program reduction.

6 Section 3: Location Impacts
This section is designed to help understand the geographic character of budget cuts and their potential impacts on vulnerable and already underserved neighborhoods and communities.

Please fill out only those that apply.

List any specific geographic areas your program or service impacts below.

Examples: Districts, Opportunity/Promise Zones, Neighborhoods, Service Districts

Program or Service Geography: Citywide
Examples include internal services like IT, HR, and Fleet management and citywide elected officials. Services that are “geography neutral” usually pose the least risk to equity but could still serve a vulnerable population.

If this is a program or service provided to the entire city with little variance by neighborhood, could vulnerable populations be hurt by the cut?

7 Program or Service from a Central Location
Examples include building construction plan review and many kinds of licensing. In this case, equity would depend on who the careholders of this service are. For example, for a given type of license, would a decreased level of service adversely impact any of the equity considerations from our definition of equity?
If the program or service is delivered from a central location and available to the community at- large, but is more commonly used by specific segments of the community, are those segments a vulnerable population?

Mobile Program or Service
These are services where the staff are mobile and focused on specific neighborhoods.

Examples include EMS units, code enforcement, road patching crews, and litter abatement teams. Cuts in these services could also pose greater risks of inequitable impact.

If this is a mobile program or service that serves a specific community or specific neighborhoods, are those neighborhoods vulnerable?

8 Program or Service from a Fixed Site
These are programs or services delivered at locations distributed throughout the city with a service population local to the site. Examples include recreations centers, public parks, and fire stations. These services pose greater risk of inequitable impact.

If this is a program or service delivered at locations distributed throughout the city with a service population local to the site, are the populations served vulnerable?

9 Section 4: Re-Evaluating Key Impacts
Recall the purpose of the program or service budget expense from Step #1 and the budget classification including impact level (1-4).

Do you have a better idea of how neighborhoods and/or populations will benefit and how they will benefit?

Do you have a better idea of how neighborhoods and/or populations will be negatively impacted and how they will be impacted?

10 Advancing Equity in FY ’24-‘25
Offer a brief description of the programs and services that are proposed for funding in the FY ’24-’25 budget that advance equity:

11 GLOSSARY OF TERMS
As you reflect on and respond to the questions relating to the Budgeting for Equity Tool, please refer to the definitions provided below.

Additional Terms & Definitions
Accessibility: The design, construction, development, and maintenance of facilities, information and communication technology, programs, and services so that all people, including people with disabilities, can fully and independently use them. Accessibility includes the provision of accommodations and modifications to ensure equal access to employment and participation in activities for people with disabilities, the reduction or elimination of physical and attitudinal barriers to equitable opportunities, a commitment to ensuring that people with disabilities can independently access every outward-facing and internal activity or electronic space, and the pursuit of best practices such as universal design. (Source )
Anti-racist: An anti-racist is someone who is supporting an antiracist policy through their actions or expressing antiracist ideas. This includes the expression of ideas that racial groups are equals and do not need developing, and supporting policies that reduce racial inequity.

Benefit: An advantage or profit gained from the implementation of a service policy, program, or initiative.

Black, Indigenous, People of Color (BIPOC): ‘Black, Indigenous, People of Color,’ is meant to unite all people of color in the work for liberation while intentionally acknowledging that not all people of color face the same levels of injustice. By specifically naming Black and Indigenous people we are recognizing that Black and Indigenous people face the worst consequences of systemic white supremacy, classism and settler colonialism (Source )
Burden: To give someone an unequal, overwhelming share of an undesirable, unpleasant or difficult factor; typically associated with causing inequitable outcomes.

Intersectionality: Per Kimberlé Williams Crenshaw, intersectionality is simply a prism to see the interactive effects of various forms of discrimination and disempowerment. It looks at the way that racism, many times, interacts with patriarchy, heterosexism, classism, xenophobia — seeing that the overlapping vulnerabilities created by these systems actually create specific kinds of challenges. “Intersectionality 102,” then, is to say that these distinct problems create challenges for movements that are only organized around these problems as separate and individual. So, when racial justice doesn’t have a critique of patriarchy and homophobia, the particular way that racism is experienced and exacerbated by heterosexism, classism etc., falls outside of our political organizing. It means that significant numbers of people in our communities aren’t being served by social justice frames because they don’t address the particular ways that they’re experiencing discrimination.

13 Privilege: Unearned social power accorded by the formal and informal institutions of society to ALL members of a dominant group (e.g. white privilege, male privilege, etc.). Privilege is usually invisible to those who have it because we’re taught not to see it, but nevertheless it puts them at an advantage over those who do not have it. A systemic valuing, favoring or enhancing that only certain populations benefit from based on the group of which they are a part. (Adapted from source and source)
Race: A social construct that categorizes individuals based on their physical characteristics, particularly skin and hair texture, and not an actual biological fact. (Source) Racial Equity: A situation that is achieved when people are thriving and race no longer statistically dictates, determines or predicts one’s social outcomes or ability to thrive. (Source) The City of Sacramento affirms racial equity as a core value in which race does not affect life outcomes. We acknowledge historical racial inequities and are committed to transparent, deliberate, and actionable solutions that will remedy those inequities and serve all our diverse communities. (
Source)
Racial Equity Accountability: In the context of racial equity work, accountability refers to the ways in which individuals and communities hold themselves to their goals and actions and acknowledge the values and groups to which they are responsible. To be accountable, one must be visible, with a transparent agenda and process. Accountability demands commitment. From a relational point of view, accountability is not always doing it right. Sometimes it’s really about what happens after it’s done wrong. (Source
)
Social Vulnerability Index (SVI) Map: SVI - developed by the Center for Disease Control and Prevention's Agency for Toxic Substance and Disease Registry (ATSDR) - uses U.S. Census data to determine the social vulnerability of every Census tract to help public health officials and emergency response partners identify and map the communities that will most likely need support before, during, and after a hazardous event. The SVI ranks each tract on 16 social factors, four related themes, and provides an overall ranking. This map provides information related to the 16 social factors, maps the four SVI themes and overall ranking. (Source )

CUTTING THE