TO: HONORABLE MAYOR FROM: Jim Shannon
AND CITY COUNCIL Rick Bruneau
SUBJECT: REALLOCATION OF AMERICAN DATE: May 24, 2023
RESCUE PLAN FUNDS
Approved Date
5/24/2023
RECOMMENDATION
(a) Approve the reallocation of funding within the American Rescue Plan Fund and the General Fund to ensure completion of community and economic recovery activities previously authorized by the City Council.
(b) Adopt the 2022-2023 Appropriation Ordinance amendments in the American Rescue Plan Fund and the General Fund as described in Attachment A.
SUMMARY AND OUTCOME
The recommended budget actions reallocate funding between the American Rescue Plan (ARP) Fund and the General Fund in accordance with U.S. Treasury Department regulations to mitigate the risk of a ‘claw back’ of the City’s remaining allocation of resources within the ARP Fund that may result from the federal debt ceiling negotiations between the White House and Congress. The recommended budget actions will not impact any services previously authorized by the City Council and will result in the expenditure or obligation of all ARP Funds prior to the end of May 2023.
BACKGROUND
As a result of the American Rescue Plan Act (ARPA), the City of San José received a total allocation of $212.3 million of Coronavirus State and Local Fiscal Recovery Funds. Budgeted and expended in the ARP Fund, these resources have provided critical community and economic recovery support including, but not limited to, food distribution, homeless support services, youth education and workforce development, small business assistance, and child and youth services.
SPECIAL MEETING: 05/25/23
FILE: 23-856
ITEM: 3.1
HONORABLE MAYOR AND CITY COUNCIL
May 24, 2023
Subject: Reallocation of American Rescue Plan Funds
ARPA requires that local governments obligate all ARP funds (e.g., encumber funding through the issuance of contracts/purchase orders) by December 31, 2024, and to expend all ARP funds by December 31, 2026. Due to this timeline, a number of the community and economic recovery workstreams were anticipated to be spent over a multi-year period. Of the $212.3 million initially received in the ARP Fund, a remaining amount of $94.3 million is included in the 2022- 2023 Modified Budget. The current unencumbered balance is $44.9 million.
Negotiations taking place between the White House and Congress regarding the debt ceiling reportedly involve the potential claw back of ‘unobligated’ ARPA funds. Due to the uncertainty of what would be considered unobligated, the Administration recommends budget reallocations between the ARP Fund and the General Fund to mitigate any impacts to community and economic recovery workstreams previously authorized by the City Council.
ANALYSIS
ARPA allows for governments to reimburse themselves for lost revenue due to the pandemic, and then use that revenue to pay for government services. In accordance with regulations provided by the U.S. Treasury Department, the City’s calculated revenue loss (calculated across all eligible City funding sources) exceeds the $212.3 million in total ARPA allocated to the City.
The City may decide to allocate any and all relief funds to this purpose. Prior to this action, the City has allocated $62.7 million through the revenue loss provision.
Actions included in the Attachment – 2022-2023 Budget Adjustment Detail recognize $87.9 million of revenue loss reimbursement that will be used to partially support Police Department field patrol expenditures in 2022-2023. This budget action and subsequent movement of Police Department expenditures from the General Fund to the ARP Fund will enable $87.9 million of community and economic recovery workstreams currently budgeted in the ARP Fund to be budgeted in the General Fund. While this $87.9 million is larger than the remaining balance of $44.9 million, the reallocation of the larger figure provides for cleaner reporting of expenditures to the Treasury Department. Any remaining unspent community and economic recovery funding in the General Fund at the end of 2022-2023 is anticipated to be rebudgeted into 2023-2024 as part of the Adopted Budget process.
EVALUATION AND FOLLOW-UP
Given the expedited nature of this memorandum, technical budgetary clean-up actions may be included in the Approval of Various Budget Actions for Fiscal Year 2022-2023 memorandum that will be considered by the City Council at its meeting on June 20, 2023. This memorandum will include a range of year-end budgetary adjustments to help ensure that appropriations are not over-expended at the end of 2022-2023, align revenues and expenditures with actual performance and assumptions used in the development of the 2023-2024 Operating and Capital Budgets, and recognize new revenues and associated expenditures.
HONORABLE MAYOR AND CITY COUNCIL
May 24, 2023
Subject: Reallocation of American Rescue Plan Funds
COST SUMMARY/IMPLICATIONS
The recommended budget actions will not result in any service level changes from what was previously authorized by the City Council. This urgent budget action ensures that all ARPA funds provided to the City will be obligated or expended prior to the end of May 2023.
COORDINATION
This memorandum has been coordinated with the City Attorney’s Office and the City Manager’s Office of Administration, Policy and Intergovernmental Relations.
PUBLIC OUTREACH
This memorandum will be posted on the City’s Council Agenda website for the City Council Special meeting on May 25, 2023.
COMMISSION RECOMMENDATION AND INPUT
No commission recommendation or input is associated with this action.
CEQA
Not a Project, File No. PP17-008, General Procedure and Policy Making resulting in no changes to the physical environment.
PUBLIC SUBSIDY REPORTING
This item does not include a public subsidy as defined in section 53083 or 53083.1 of the California Government Code or the City’s Open Government Resolution.
/s/
JIM SHANNON RICK BRUNEAU
Budget Director Director of Finance
For questions, please contact Jim Shannon, Budget Director, at [email protected].
Attachment – 2022-2023 Budget Adjustment Detail
General Fund
Recommended Budget Adjustments and Clean-Up Actions
2022-2023
Net Cost
Department/Proposal Personal Services
Non-Personal/
Equipment Total Use Revenue
Beginning
Fund Balance
Personal Services (American Rescue Plan Act - Revenue Loss) (87,928,858) - (87,928,858) - - (87, 928,858) DEPARTMENTAL EXPENSES TOTAL (87,928,858) - (87,928,858) - - (87, 928,858)
DEPARTMENTAL EXPENSES
Police Department
CITY-WIDE EXPENSES
BeautifySJ and Encampment Waste Pick Up - BeautifySJ Consolidated Model - 14,963,000 14,963, 000 - - 14,963, 000 BeautifySJ and Encampment Waste Pick Up - San Jose Bridge Program - 7,000,000 7,000, 000 - - 7,000, 000 Build Back Better and COVID-19 Recovery - Community Engagement - 1,199,000 1,199, 000 - - 1,199, 000 Build Back Better and COVID-19 Recovery - COVID-19 Recovery Taskforce - 2,469,000 2,469, 000 - - 2,469, 000 Build Back Better and COVID-19 Recovery - Emergency Public Information - 646,000 646,000 - - 646, 000 Child and Youth Services - Child and Youth Services Master Plan - 3,119,000 3,119, 000 - - 3,119, 000 Child and Youth Services - Child and Youth Success - 355,000 355,000 - - 355, 000 Child and Youth Services - Childcare Tenant Improvement - 900,000 900,000 - - 900, 000 Child and Youth Services - Library - 2,409,000 2,409, 000 - - 2,409, 000 Child and Youth Services - PRNS (Programs, Experiences, and Scholarships) - 4,316,000 4,316, 000 - - 4,316, 000 Child and Youth Services - San Jose Learns - 500,000 500,000 - - 500, 000 Digital Equity - Community WiFi - 699,000 699,000 - - 699, 000 Digital Equity - Device Access - 1,317,000 1,317, 000 - - 1,317, 000 Digital Equity - Digital Equity Communications, Outreach, + Education - 656,000 656,000 - - 656, 000 Emergency Housing - Downtown Homeless Health Response and Support - 300,000 300,000 - - 300, 000 Emergency Housing - Emergency Housing Construction and Operation - 20,000,000 20,000, 000 - - 20,000, 000 Emergency Housing - Sheltering and Enhanced Encampment Services - 2,839,000 2,839, 000 - - 2,839, 000 Energy Saving Retrofits - 480,000 480,000 - - 480, 000 Food and Necessities Distribution - Food Services - 4,143,000 4,143, 000 - - 4,143, 000 Housing Stabilization - Eviction Help Center - 1,813,000 1,813, 000 - - 1,813, 000 Housing Stabilization - Hotel Sheltering Operations + Services - 3,497,000 3,497, 000 - - 3,497, 000 Housing Stabilization - South Hall Demobilization + Housing Assistance Center - 1,930,000 1,930, 000 - - 1,930, 000 Recovery Foundation and Drive to Digital - Effective Teams - 298,000 298,000 - - 298, 000 Recovery Foundation and Drive to Digital - Recovery Management, Coordination and Compliance - 2,112,858 2,112, 858 - - 2,112, 858 Recovery Foundation and Drive to Digital - Safe Workplace - 186,000 186,000 - - 186, 000 Re-Employment and Workforce Development - Environment Resilience Corps - 200,000 200,000 - - 200, 000 Re-Employment and Workforce Development - Food Distribution Resilience Corps - 1,800,000 1,800, 000 - - 1,800, 000 Re-Employment and Workforce Development - Small Business Resilience Corps - 310,000 310,000 - - 310, 000 San José Aspires Administrative Support - 250,000 250,000 - - 250, 000 Small Business, Non-Profits, and Arts - Council District Outdoor Activation - 168,000 168,000 - - 168, 000 Small Business, Non-Profits, and Arts - San José Abierto - 1,228,000 1,228, 000 - - 1,228, 000 Small Business Recovery - Downtown Outdoor Activities Marketing Campaign - 200,000 200,000 - - 200, 000 Small Business Recovery - Quetzal Gardens Operations - 75,000 75,000 - - 75, 000 Small Business Recovery - San José Al Fresco - 719,000 719,000 - - 719, 000 Small Business Recovery - Shop Local Hub to Support Neighborhood Business Districts - 100,000 100,000 - - 100, 000 Small Business Recovery - Small Business + Manufacturing Recovery Initiative - 637,000 637,000 - - 637, 000 Small Business Recovery - Small Business Displacement Index Study - 60,000 60,000 - - 60, 000 Small Business Recovery - Small Business District Outreach (Spanish + Vietnamese) - 197,000 197,000 - - 197, 000 Small Business Recovery - Small Business Technical Assistance Revamp - 117,000 117,000 - - 117, 000 Small Business Recovery - Storefront Activation Grants - 160,000 160,000 - - 160, 000 Small Business Recovery - Supplemental Business Development Communications - 375,000 375,000 - - 375, 000 Small Business Recovery - Supplemental Economic Development Association Capacity Building - 1,711,000 1,711, 000 - - 1,711, 000 Small Business Recovery - Supplemental Legal Assistance for Tenant - 300,000 300,000 - - 300, 000 Small Business Recovery - Underwrite Creation of New Property Business Improvement Districts - 1,000,000 1,000, 000 - - 1,000, 000 Small Business Recovery - Virtual Accelerator Program for New Businesses - 175,000 175,000 - - 175, 000 CITY-WIDE EXPENSES TOTAL - 87,928,858 87,928, 858 - - 87,928, 858 GENERAL FUND TOTAL (87,928,858) 87,928,858 - - - - SourceUse
1 Attachment - 2022-2023 Budget Adjustment Detail
Special Funds
Recommended Budget Adjustments and Clean-Up Actions
2022-2023
Department/Proposal Personal Services
Non-Personal/
Equipment Use Other
Ending Fund
Balance Total Use Source Revenue
Beginning Fund
Balance Net Cost
American Rescue Plan Fund (402)
Budget Adjustments
Police Department 87, 928,858 - - - 87,928,858 - - 87, 928,858 City Clerk's Office - (168,000) - - ( 168,000) - - ( 168,000) - (1,199,000) - - ( 1,199,000) - - ( 1,199,000) - (2,469,000) - - ( 2,469,000) - - ( 2,469,000) City Manager's Office - (646,000) - - ( 646,000) - - ( 646,000) - (355,000) - - ( 355,000) - - ( 355,000) - (3,119,000) - - ( 3,119,000) - - ( 3,119,000) - (2,109,000) - - ( 2,109,000) - - ( 2,109,000) Community Energy Department - (480,000) - - ( 480,000) - - ( 480,000) - (7,000,000) - - ( 7,000,000) - - ( 7,000,000) - (900,000) - - ( 900,000) - - ( 900,000) - (300,000) - - ( 300,000) - - ( 300,000) Housing Department - (2,839,000) - - ( 2,839,000) - - ( 2,839,000) - (20,000,000) - - ( 20,000,000) - - ( 20,000,000) - (1,813,000) - - ( 1,813,000) - - ( 1,813,000) - (3,497,000) - - ( 3,497,000) - - ( 3,497,000) - (1,930,000) - - ( 1,930,000) - - ( 1,930,000) Human Resources - (298,000) - - ( 298,000) - - ( 298,000) Department - (186,000) - - ( 186,000) - - ( 186,000) - (500,000) - - ( 500,000) - - ( 500,000) - (2,409,000) - - ( 2,409,000) - - ( 2,409,000) Library Department - (699,000) - - ( 699,000) - - ( 699,000) - (1,317,000) - - ( 1,317,000) - - ( 1,317,000) - (656,000) - - ( 656,000) - - ( 656,000) - (250,000) - - ( 250,000) - - ( 250,000) - (310,000) - - ( 310,000) - - ( 310,000) - (200,000) - - ( 200,000) - - ( 200,000) - (75,000) - - ( 75,000) - - ( 75,000) - (719,000) - - ( 719,000) - - ( 719,000) - (100,000) - - ( 100,000) - - ( 100,000) Office of Economic Development - (637,000) - - ( 637,000) - - ( 637,000) and Cultural Affairs - (60,000) - - ( 60,000) - - ( 60,000) - (197,000) - - ( 197,000) - - ( 197,000) - (117,000) - - ( 117,000) - - ( 117,000) - (160,000) - - ( 160,000) - - ( 160,000) - (375,000) - - ( 375,000) - - ( 375,000) - (1,711,000) - - ( 1,711,000) - - ( 1,711,000) - (300,000) - - ( 300,000) - - ( 300,000) - (1,000,000) - - ( 1,000,000) - - ( 1,000,000) - (175,000) - - ( 175,000) - - ( 175,000) - (14,963,000) - - ( 14,963,000) - - ( 14,963,000) Parks, Recreation and - (4,316,000) - - ( 4,316,000) - - ( 4,316,000) Neighborhood Services - (4,143,000) - - ( 4,143,000) - - ( 4,143,000) Department - (200,000) - - ( 200,000) - - ( 200,000) - (1,800,000) - - ( 1,800,000) - - ( 1,800,000) - (1,228,000) - - ( 1,228,000) - - ( 1,228,000) Finance Department
Public Safety Personal Services (American Rescue Plan Act - Revenue Loss) Small Business, Non-Profits, and Arts - Council District Outdoor Activation Build Back Better and COVID-19 Recovery - Community Engagement Build Back Better and COVID-19 Recovery - COVID-19 Recovery Taskforce Build Back Better and COVID-19 Recovery - Emergency Public Information Child and Youth Services - Child and Youth Success
Child and Youth Services - Child and Youth Services Master Plan Recovery Foundation and Drive to Digital - Recovery Management, Coordination and Compliance Energy Saving Retrofits
BeautifySJ and Encampment Waste Pick Up - San Jose Bridge Program Child and Youth Services - Childcare Tenant Improvement Emergency Housing - Downtown Homeless Health Response and Support Emergency Housing - Sheltering and Enhanced Encampment Services Emergency Housing - Emergency Housing Construction and Operation Housing Stabilization - Eviction Help Center
Housing Stabilization - Hotel Sheltering Operations + Services Housing Stabilization - South Hall Demobilization + Housing Assistance Center Recovery Founda
tion and Drive to Digital - Effective Teams
Recovery Foundation and Drive to Digital - Safe Workplace Child and Youth Services - San Jose Learns
Child and Youth Services - Library
Digital Equity - Community WiFi
Digital Equity - Device Access
Digital Equity - Digital Equity Communications, Outreach, + Education San José Aspires Administrative Support
Re-Employment and Workforce Development - Small Business Resilience Corps Small Business Recovery - Downtown Outdoor Activities Marketing Campaign Small Business Recovery - Quetzal Gardens Operations
Small Business Recovery - San José Al Fresco
Small Business Recovery - Shop Local Hub to Support Neighborhood Business Districts Small Business Recovery - Small Business + Manufacturing Recovery Initiative Small Business Recovery - Small Business Displacement Index Study Small Business Recovery - Small Business District Outreach (Spanish + Vietnamese) Small Business Recovery - Small Business Technical Assistance Revamp Small Business Recovery - Storefront Activation Grants
Small Business Recovery - Supplemental Business Development Communications Small Business Recovery - Supplemental Economic Development Association Capacity Building Small Business Recovery - Supplemental Legal Assistance for Tenant Small Business Recovery - Underwrite Creation of New Property Business Improvement Districts Small Business Recovery - Virtual Accelerator Program for New Businesses BeautifySJ and Encampment Waste Pick Up - BeautifySJ Consolidated Model Child and Youth Services - PRNS (Programs, Experiences, and Scholarships Food and Necessities Distribution - Food Services
Re-Employment and Workforce Development - Environment Resilience Corps Re-Employment and Workforce Development - Food Distribution Resilience Corps Small Business, Non-Profits, and Arts - San José Abierto Ending Fund Balance
- - - (3,858) ( 3,858) - - ( 3,858) Budget Adjustments Total 87,928,858 (87,925,000) - (3,858) - - - - American Rescue Plan Fund (402) TOTAL 87,928,858 - - ( 3,858) - - - - 2