FINANCIAL PLAN FRAMEWORK
Ratio of reserves to the City’s General Fund operating budget‐ The City’s goal is to maintain a prudent level of savings that allows the City to plan for future needs and “weather” economic downturns. The industry standard target is to have a 20% reserve as a percent of the operating budget.
Debt Ratios‐ The City’s Debt Management policy is to generally keep the ratio of general fund debt service costs below 10% of General Fund revenue and never exceed 15%. A ratio under 5% is considered to be favorable by credit rating agencies. Asset Maintenance and Replacement: These costs are often first to be cut in hard times and, if left unfunded, will create significant liabilities. The City should ensure deferred maintenance is prioritized by setting aside funding for asset replacement as funds become available.
Programs and Services
Development and delivery of new programs and services or modification to existing programs and services provided to the community are based on an evaluation of need thorough an annual process that invites submittal of Significant Operating Budget Changes (SOBC’s) by Department Heads to the City Manager. The SOBC provides the City Manager with a written proposal for adding resources to a department’s budget. The written proposal must include:
A summary of the current situation and need that the SOBC will address and any relevant background to support the request.
A description of how the requested resources will address the identified need. Identification of intended results in terms of efficiency, quality of service, outcomes, and key performance indicators.
A description of how additional resources will address a high priority City service need or Major City Goal.
An analysis of alternative solutions to address the identified problem. The expected timeline for implementing the request, including major milestones along the way.
SOBCs that are recommended by the City Manager are dependent upon Council priorities, existing service needs, the availability of funding, consistency with existing policies and budget balancing strategies, and the anticipated results or outcomes that will be achieved by adding the resources.
Requests for new capital projects are evaluated bi‐annually by the CIP Review Committee as part of the development of the two‐year Financial Plan. Proposals for new projects require submittal of a Project Initiation Form which must include:
Proposed project title.
Project function (community and neighborhood livability, community safety, culture and recreation, environmental health and open space, fiscal health and governance, or infrastructure and transportation).
Identification of project as being annual asset maintenance, asset replacement, a new asset or a non‐asset project.
Identification of project alignment with related City priorities (Local Revenue Measure, Major City Goal, adopted planning documents, or other important objective,). A description of the project purpose and need, including a detailed scope of work.
Financial Plan Page 28
FINANCIAL PLAN FRAMEWORK
Identification of project consistency with the Climate Action Plan or Diversity, Equity and Inclusion considerations.
Information about project schedule and delivery, including planning or design phase services and any expected permit needs, advisory body reviews, or anticipated public outreach. Project cost estimates and identified funding sources. As a part of this, departments should also identify ongoing costs to maintain assets, including staffing and needs.
Employee Compensation and Workforce Investment
The City is committed to providing competitive compensation as part of an overall strategy to attract and retain highly qualified employees. City staff and negotiators work to develop and maintain positive employee relations while also ensuring that negotiated labor agreements are fiscally sustainable and acceptable to the community. The City Council‐adopted Compensation Philosophy and Labor Relations Objectives establish the intent of and guide the City’s approach to labor relations.
The City Council adopted a Compensation Philosophy in 2011 which indicates that the City should require the following in evaluating competitive compensation:
Financial sustainability
Community acceptability
The relevant labor market
Internal relationships
Other relevant factors, including changes in economic condition, natural disasters, states of emergency, changes in City services, and changes in regulatory or legal requirements The City Council also adopted the following Labor Relations Objectives in 2014, which were revised in 2018 to operationalize the Compensation Philosophy and guide labor negotiations with employee groups:
Maintain fiscal responsibility by ensuring that fair and responsible employee compensation expenditures are supported by on‐going revenues. (Theme – Fiscal Responsibility) Continue to make progress in the area of long‐term systemic pension cost containment and reduction, including reversing the unfunded pension liability trend and other actions consistent with State law. (Theme – Cost Containment/Reduction) Continue to effectively manage escalating health benefit costs through balanced cost sharing and other means while maintaining comprehensive health care coverage for all eligible employees. (Theme – Cost Containment)
As necessary to attract and retain well qualified employees at all levels of the organization, provide competitive compensation as articulated in the City’s Compensation Philosophy, including relevant local, statewide or national labor markets. (Theme – Recruitment and Retention)
Employee labor agreements will be negotiated in good faith, in a timely manner that avoids retroactivity provisions unless there is a compelling need. (Theme – Cost Containment) Contract provisions shall take into consideration the City’s ability to effectively and efficiently implement and administer them using the City’s financial and human resources systems to ensure accuracy and compliance with federal, state, and local laws. (Theme – Best Practices and Compliance)
The City recognizes that improvements to and success of programs and services for the community is Financial Plan Page 29
FINANCIAL PLAN FRAMEWORK
dependent upon recruiting and maintaining a talented and skilled workforce.
Financial Plan Page 30
STRATEGIC PLANNING PROCESS
Financial Plan Page 31
STRATEGIC PLANNING PROCESS
Strategic Planning Process
For over thirty years, the City has used an extensive process to create its two‐year financial plan and corresponding budgets. The benefits of budgeting based on a two‐year plan include:
1. Reinforcing the importance of long‐range (“strategic”) planning in managing the City's fiscal affairs.
2. Concentrating on budgeting to accomplish significant objectives over a multi‐year period.
3. Establishing realistic timeframes for achieving objectives.
4. Creating a proactive budget that supports stable
operations and assures the City's long‐term fiscal health.
The fundamental purpose of the City’s budget process is to link, through public engagement and strategic deliberation, the interest of the community to the available financial resources to achieve desired outcomes. The process allows the City Council to engage the community in identifying strategic priorities in the form of Major City Goals while also providing information regarding the City’s established ongoing services, including the day‐to‐day work and responsibilities carried out by City employees to support residents’ quality of life.
Public Engagement
As a part of the financial planning process, there are a variety of opportunities for the community to provide input to the City Council relative to establishment of their Major City Goals. Every two years, the City seeks input through a community survey, outreach to advisory bodies, and public comment at regular City Council meetings, including the Community Forum.
Community Survey
The public engagement process for the 2025‐27 Financial Plan formally kicked off in mid‐November, with the release of a community survey to gather community input relative to the priorities that should guide development of Major City Goals for the 2025‐27 Financial Plan period. The survey was open for one month and community members were notified of the survey through utility bill mailings, social media posts, promotions on the City’s website and at advisory body meetings. In total, 1,629 community members responded to the survey, representing a 25% increase in participation compared to the prior community survey for the 2023‐25 Financial Plan. The top five priorities identified in the survey were:
homelessness, infrastructure maintenance, downtown vitality, housing supply and affordability, and open space. With expectations that the budget will tighten in the coming years, the survey also provided an opportunity for respondents to identify how the City might adjust funding current projects or services to accomplish any new priorities. Approximately 45% of respondents provided input, with recurring suggestions for prioritizing basic services, addressing homelessness, improving cost efficiency, and balancing priorities.
The chart below summarizes the priorities identified by respondents in the community survey:
Major City Goals represent the
most important, highest
priority goals for the City to
accomplish over the next two
years, and as such, resources
should be included in the 2025‐
27 Financial Plan.
Financial Plan Page 32
STRATEGIC PLANNING PROCESS
The top 20 themes in the ‘other’ category included (in order):
1. More Parks and Recreation facilities
2. Parking rates and policies
3. Transportation/traffic improvements
4. Addressing homelessness
5. Healthcare access and medical system
6. Neighborhood wellness and code
enforcement
7. Less bike lanes and infrastructure
8. Housing supply and affordability
9. Adobes and historic preservation
10. Broad Street corridor improvements
11. Downtown vitality and cleanliness
12. Tobacco concerns and second‐hand
smoke
13. Rental protections
14. Public safety issues
15. Prioritize Righetti Park construction
16. Infrastructure maintenance
17. Accessibility for seniors and disabled
community
18. Laguna Lake dredging
19. Permitting process improvements
20. More bike lanes and infrastructure
The information gathered through the Community Survey helped the City Council in finalizing plans for the Community Forum, including establishment of the topics for the stations that were set up for community members to learn more about the City’s programs and services and vote for ideas to advance the community’s priorities.
264
272
279
295
372
415
482
518
543
672
724
729
766
975
0 200 400 600 800 1000 1200
DEI
Cultural Vitality
Safe Housing and Neighborhood Wellness
Childcare
Public Safety
Sustainable and Multi‐Modal Transportation
Other
Climate Action Plan
Fiscal Sustainability and Responsibility
Open Space
Housing Supply and Affordability
Downtown Vitality
Infrastructure Maintenance
Homelessness
Count of Survey Responses
Priorities Identified in Community Survey
Financial Plan Page 33
STRATEGIC PLANNING PROCESS
Community Forum
The Community Forum was held on January 23, 2025 at the Ludwick Community Center in San Luis Obispo. Over 200 community members participated in person or virtually. The forum kicked off with a welcome by the Mayor, and introductory comments by the City Manager and Finance Director, and included a walk‐through environment and nine interactive booths including:
1. Diversity, Equity and Inclusion
2. Downtown Vitality and Economic Development
3. Homelessness
4. Housing Supply and Affordability, Neighborhood Wellness
5. Infrastructure, Sustainable and Multi‐Modal Transportation
6. Climate Action, Open Space
7. Fiscal Sustainability
8. Public Safety
9. New Ideas
Each booth was staffed by
employees with expertise
in each topic area and
attendees had the
opportunity to have
conversations with each
other and with staff and
submit votes on actions
that the City could take to
make progress in priority
areas. The meeting
concluded with public
comment.
After the forum, the
community feedback and
ranking of priorities was
compiled and presented to
Council at the all‐day goal‐
setting workshop held on
Saturday, February 8,
2025. The goal setting
workshop is described
below and results can be
found at www.slocity.org.
Local Revenue Measure Annual Citizen Oversight Meeting & Advisory Body Input The Community Forum also met requirements related to oversight of the Local Revenue Measure (the City’s one‐and‐a‐half percent local sales tax), by providing an opportunity for the Revenue Enhancement Oversight Committee (REOC) to review and discuss the use of the revenue generated by the Local Financial Plan Page 34
STRATEGIC PLANNING PROCESS
Revenue Measure with the community.
With passage of the Local Revenue Measure in 2020, the community set the spending priorities for the measure funding as (not numbered by priority): 1) Protect Financial Stability, 2) Community Safety and Emergency Preparedness, 3) Creek and Flood Protection, 4) Address Homelessness, 5) Safe and Clean Public Spaces, 6) Economic Development and Business Retention, 7) Youth/Senior Services and Recreation Facilities, 8) Street Maintenance and Transportation, 9) Open Space/Natural Areas Preservation and Maintenance, 10) Other Services and Projects.
Goal Setting Workshop
The City Council’s goal setting process was a day‐long facilitated Goal Setting Workshop on February 8, 2025. At this workshop, the Council reviewed all community input provided via the Community Survey, at the Community Forum, via public comment at regular City Council Meetings, as well as input provided by several of the City’s advisory bodies. The culmination of all the community input resulted in the development of the City Council’s Major City Goals for the 2025‐27 Financial Plan. The Major City Goals adopted by the City Council are discussed in more detail later in this section and include:
Financial Plan Page 35
STRATEGIC PLANNING PROCESS
Budget Calendar
December 10, 2024: Setting the Stage &
Strategic Scan Provide Council with the
framework for the two‐year financial plan
and present an update on the City’s fiscal
status, general plan, and Major City Goal
work programs.
January 15, 2025: Budget Foundation
Review with Council the goal setting
process, approve City’s budget and fiscal
policies, discuss economic outlook, and
review current and long‐term capital
outlook plan.
January 23, 2025: Community Forum
Council Meetings
February 8, 2025: Council Goal‐Setting
Workshop Review and prioritize goals and
establish strategic priorities for the 2023‐
25 Financial Plan.
April 15, 2025: Strategic Budget Direction
Provide feedback and guidance to City
Manager and staff regarding the draft
budget allocations and Major City Goal
work programs.
June 17, 2025: Preliminary Budget
Review 2025‐27 Financial Plan and 2025‐
26 Budget and adopt if there are no
changes directed by Council.
NOVEMBER
2024
JUNE
2025
Community Surveys
Advisory Bodies
Letters from
Community Groups
Public Comment
Community Forum
FINANCIAL PLANNING
Public Engagement
Revenue & expenditure
forecasts
Departments prepare base
budgets and propose
operating changes
Draft Major City Goal work
programs
Draft Capital Improvement
Plan
Prepare Financial Plan
Document
Financial Plan Page 36
Staff Budget
Preparation
FINANCIAL PLANNING
STRATEGIC PLANNING PROCESS
Financial Plan Page 37
STRATEGIC PLANNING PROCESS
Cultural Vitality, Economic Resilience, and Fiscal Sustainability Financial Plan Page 38
STRATEGIC PLANNING PROCESS
Cultural Vitality, Economic Resilience, and Fiscal Sustainability (continued)
Financial Plan Page 39
STRATEGIC PLANNING PROCESS
Diversity, Equity, and Inclusion
Financial Plan Page 40
STRATEGIC PLANNING PROCESS
Housing & Neighborhood Livability – Healthy, Safe, and Affordable Financial Plan Page 41
STRATEGIC PLANNING PROCESS
Homelessness Response
Financial Plan Page 42
STRATEGIC PLANNING PROCESS
Homelessness Response (continued)
Financial Plan Page 43
STRATEGIC PLANNING PROCESS
Infrastructure and Sustainable Transportation
Financial Plan Page 44
STRATEGIC PLANNING PROCESS
Open Space, Climate Action, and Resilience
Financial Plan Page 45
STRATEGIC PLANNING PROCESS
Open Space, Climate Action, and Resilience
Financial Plan Page 46
FINANCIAL PLAN OVERVIEW
Financial Plan Overview
The financial plan overview provides a summary level presentation of the City’s budget information.
Included in this section is:
An overview of the City’s fund structure and description of the major funds; A summary of the City’s ‘all funds’ budget (including the General Fund, Capital Projects funds, Special Revenue funds, Debt Service fund, Enterprise funds, and Internal Service funds); An overview of the City’s revenue sources and expenditure categories; An overview of transfers between funds;
An overview of the proposed use of Local Revenue Measure (LRM) dollars; and The long‐term forecast for the General Fund.
More detailed information about individual department budgets can be found in the ‘Operating Budgets’ section of the budget document.
The budget document includes detailed information for fewer fundsthan are included in the City’s Annual Comprehensive Financial Report (ACFR). For information pertaining to funds other than those included in the budget document, please refer to the City’s ACFR, which is available on the Finance Department’s website.
Fund Structure
The City’s financial structure is separated into governmental and business activities. Revenues and expenditures are balanced at the fund level to ensure that the City hasthe capacity to support anticipated costs. Business activities (proprietary funds) are distinguished from governmental funds by their similarity to private sector enterprises and are financed largely through user charges.
The following graphic provides an overview of the City’s budgetary fund structure and additional information about each fund included in this document follows.
Financial Plan Page 47
FINANCIAL PLAN OVERVIEW
Governmental Funds
General Fund
The General Fund is the main operating fund for general government operations and is primarily funded through various tax revenues and user fees that are intended to recover the cost of providing specific services.
General Fund
Funding Sources Funding Uses
Tax & Franchise Revenue Municipal Services
Sales Tax Public Safety
Property and Lodging Tax Parks & Recreation
Utility User and Business Tax Public Works
Cannabis and Franchise Tax Community Development
Service Fees General Government
Planning and Building Administration
Parks & Recreation Fees City Attorney
Public Safety Fees HR and Finance
Local Revenue Measure (LRM) funding is part of the General Fund and accountsfor the local 1.5‐centsales tax measure approved by the voters in 2020 via Measure G‐20. LRM funding is used in accordance with the community’s priorities for services and capital improvement projects. The City’s Municipal Code, under Section 3.15 – Community Services and Investment Transactions and Use Tax, guides the use of LRM revenue and provides fiscal accountability provisions. The Revenue Enhancement Oversight Committee, as directed by Municipal Code Section 2.14, makes recommendations to the City Council regarding the use of LRM funding.
Special Revenue Funds
Special revenue funds are established to separate and account for revenues that are restricted or committed to specific governmental activities. Special Revenue Funds include:
Downtown Business Improvement
District
Gas Tax Fund
Transportation Development Act Fund
Law Enforcement Grant Fund
Public Art (Private Sector Contributions)
Fund
Tourism Business Improvement District
Fund
Avila Ranch Community Facilities District
(CFD)
San Luis Ranch Community Facilities
District (CFD)
Financial Plan Page 48
FINANCIAL PLAN OVERVIEW
Capital Project Funds
The Capital Project Funds account for financial resources used for the acquisition, construction, maintenance and replacement of major capital assets. The City has typically prepared a five‐year Capital Improvement Plan (CIP), which is refreshed every two years with development of the two‐year Financial Plan. The plan does not appropriate funding but rather serves as a budgeting tool to identify appropriations to be made through the adoption of the City’s annual budgets. The CIP included in this financial plan presents a ten‐year plan forthe construction of capital projects based on projected revenues for the entire ten‐year planning horizon. More information on the Capital Improvement Plan can be found in the ‘Capital Budget’ section of this document. Capital Project Funds include:
Capital Outlay Fund
Parkland Development Fund
Transportation Impact Fee Fund
Open Space Protection Fund
Airport Area Impact Fee Fund
Affordable Housing Fund
Debt Service Fund
Fleet Replacement Fund
Los Osos Valley Road sub‐Area Fee Fund
Information Technology Replacement
Fund
Major Facility Replacement Fund
Infrastructure Investment Capital Fund
The Debt Service Fund is set up to receive dedicated revenues used to make principal and interest payments on City debt. It is used to account for the accumulation of resources for, and the payment of, general obligation and special assessment debt principal, interest and related costs, except the debt service accounted for in the Special Revenue funds and Enterprise funds.
Proprietary Funds
Water Enterprise Fund
The City’s Water Fund is a business‐activity and is funded predominately through its own rates to provide service. The City treats and delivers water to the public from three surface reservoirs as well as recycled water for landscape irrigation. The water service is provided to all property owners in the City including parks and sport fields.
Water Enterprise Fund
Funding Sources Funding Uses
Service Charges and Fees Sources of Supply
Water Service Charges Water Treatment
Base Fee Revenue Water Distribution
Cal Poly Sales Water Resources Management
Recycled Water Sales Administration and Engineering Development Impact Fees Capital Infrastructure
Debt Financing
Financial Plan Page 49
FINANCIAL PLAN OVERVIEW
Sewer Enterprise Fund
The City’s Sewer Fund is also a business‐activity and fund and operates and maintains the City’s sanitary sewer system and the Water Resource Recovery Facility. An efficient sanitary sewer system that collects and treats wastewater provides a foundation for public health and community well‐being. Rates and charges are the primary source of revenue for this fund.
Sewer Enterprise Fund
Funding Sources Funding Uses
Service Charges and Fees Water Resource Recovery Facility Sewer Service Charges Wastewater Collection
Base Fee Revenue Water Quality Lab
Cal Poly Sales Environmental Compliance
Development Impact Fees Administration and Engineering Industrial User Charges Capital Infrastructure
Debt Financing
Parking Enterprise Fund
The City’s Parking Fund implements the Access and Parking Management Plan and directs the operation and maintenance of the City’s parking facilities. These facilities include parking lots in Downtown and Railroad Square, on‐street parking,residential parking districts, and three parking structures(with a fourth structure coming online in 2026). The operation is paid for by parking user fees.
Parking Enterprise Fund
Funding Sources Funding Uses
Service Fees Parking Operation, Security, & Cleaning
Parking Meters Collection Public Education & Engagement Parking Structure Collection Administration
Parking Leases Capital Infrastructure
Long‐term Parking Debt
Parking in‐lieu Fees
Parking Citations/Fines
Transit Enterprise Fund
The City’s Transit Fund provides daily fixed‐route transitservice to the general public within City limits and to Cal Poly University. It also includesthe downtown trolley service connecting downtown with the lodging district on upper Monterey Street. The services are paid for by user fares and federal and state funding.
Federal funding is subject to single audit requirements.
Transit Enterprise Fund
Sources of Fund Uses of Funds
Federal & State Grants Public Transit Operation
Fare Box Revenue Administration
Financial Plan Page 50
FINANCIAL PLAN OVERVIEW
Insurance Internal Service Fund
The Insurance Fund accounts for the payment of the City’s annual premiums for liability, workers’ compensation, special events, volunteer, property, and other insurances needed to protect the City and to manage the fluctuations in claims‐related expenses.
Relationship Between Funds and Departments
The City’s organizational structure consists of departments performing various activities necessary for the operations of the City, while the City’s finances are reported in funds. The following table portrays the City’s departments and the sources of revenue they use to provide services. *Solid Waste and Stormwater programs only
**The Public Works department manages the Capital Improvement Plan, but the funds support capital projects for all departments
Financial Plan Page 51
FINANCIAL PLAN OVERVIEW
All Funds Budget Summary
The following tables provide a high‐level summary of the City’s total budget (including General funds, Capital Projects funds, Special Revenue funds, Debt Service funds, Enterprise funds, and Internal Service funds) for the most recently completed fiscal year, current budget year, and the two Financial Plan years.
Total Funding Sources – All Funds Combined
The following table provides a summary level view of proposed revenue for all funds. It does not include an assumption for use of or contribution to fund balance, which is detailed later in this section.
Total Funding Uses – All Funds Combined
The following table provides a summary level view of proposed expenditures for all fund types by fund:
The following table provides a summary level view of proposed expenditures for all fund types by expenditure category:
Actuals Budget Financial Plan
Citywide FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Tax & Franchise Revenue 100,917,864 103,548,018 105,593,017 108,595,745 Fee & Other Revenue
General Fund 18,921,201 22,531,267 11,638,024 12,002,916 Water Fund 29,218,924 28,656,148 34,409,451 32,178,522 Sewer Fund 23,891,953 20,798,900 21,768,825 23,320,050 Parking Fund 13,247,779 9,991,861 9,575,955 10,472,230 Transit Fund 6,475,111 17,059,186 12,028,458 14,365,515 Other Funds 11,094,797 9,907,111 10,627,752 11,165,663 Total Revenue 203,767,628 212,492,492 205,641,483 212,100,641 YoY Change 4% ‐3% 3%
Actuals Budget Financial Plan
Citywide FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
General Fund 118,691,743 126,511,337 117,607,178 120,844,660 Water Fund 29,876,176 40,870,113 40,025,257 33,548,476 Sewer Fund 38,716,328 35,805,101 29,034,524 28,106,201 Parking Fund 28,922,763 52,855,425 11,514,113 10,101,970 Transit Fund 6,560,413 17,220,676 9,615,713 14,236,283 Other Funds 8,315,742 9,378,496 9,817,626 10,224,310 Total 231,083,164 282,641,147 217,614,410 217,061,901
YoY Change 22% ‐23% 0%
Financial Plan Page 52
FINANCIAL PLAN OVERVIEW
These expenditures are higher than revenues due to assumed use of fund balance, which is detailed Fund Reserves
The following table shows reserve balances for each of the City’s five major funds (General Fund and four enterprise funds). Reserves are intended to help the City to address unanticipated, one‐time needs or opportunities. The City’s Fund Balance and Reserve Policy requiresthat the City maintain a minimum fund balance of 20% of operating expenditures in the General Fund and 20% of operating expenditures in each of the four enterprise funds.
Undesignated Fund Balance
The following table shows the undesignated fund balance for the General Fund and unreserved working capital for the enterprise funds. This is the amount of fund balance above and beyond the amount required for reserved and assigned balances.
Actuals Budget Financial Plan
Citywide FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Staffing 83,892,572 92,379,683 93,392,221 98,791,633 Other Operating Expenditures 50,862,532 64,542,218 61,764,911 58,547,011 Capital Expenditures 83,379,691 110,309,845 47,124,561 44,707,596 Debt Service 12,948,369 15,409,401 15,332,717 15,015,661 Total 231,083,164 282,641,147 217,614,410 217,061,901
YoY Change 22% ‐23% 0%
Actuals Budget Financial Plan
FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
General Fund 10,826,500 14,586,832 14,974,278 15,441,535 % of Operating Budget 15% 20% 20% 20%
Water Fund 4,560,481 5,545,556 6,391,710 5,742,308 % of Operating Budget 20% 20% 20% 20%
Sewer Fund 3,730,854 4,145,169 4,251,397 4,311,282 % of Operating Budget 20% 20% 20% 20%
Parking Fund 1,366,872 1,557,229 1,529,383 1,528,548 % of Operating Budget 20% 20% 20% 20%
Transit Fund 885,711 1,026,210 1,198,438 1,409,159 % of Operating Budget 20% 20% 20% 20%
Actuals Budget Financial Plan
FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27
General Fund 9,167,831 42,768 1,670,321 1,203,064
Water Fund 35,687,583 13,751,272 7,727,498 11,182,990
Sewer Fund 42,985,231 17,618,524 10,559,771 5,908,795
Parking Fund 48,555,133 5,501,212 3,590,901 3,961,997
Transit Fund 1,265,386 961,870 3,202,388 3,120,899
Financial Plan Page 53
FINANCIAL PLAN OVERVIEW
The General Fund undesignated balance is typically used to fund additional discretionary payments towards the City’s unfunded pension obligations and additional unbudgeted fund balance will be needed to meet the $2.0 million annual target.
Overview of City Funding Sources – General Fund
The City’s operations are funded through a variety of sources. Following is a summary of the City’s major revenue categories for the General Fund and identification of factors that are considered when forecasting revenue for the coming budget year. Information about funding sources for the City’s four Enterprise funds are included in the ‘Operating Budgets’section of this document, under the Public Works and Utilities departments, which administer Enterprise fund programs.
Sales and Use Taxes
Sales Tax is regulated by the State and applies to all retail sales of goods and merchandise except those sales specifically exempted by law. Use Tax is also regulated by the State and generally applies to storage, use, or other consumption of goods purchased from retailers in transactions not subject to a sales tax.
Use Tax may also apply to purchases shipped to a California consumer from another state. The Sales and Actuals Budget Financial Plan
General Fund FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Tax & Franchise Revenue
Sales Tax 53,404,212 56,383,599 55,470,441 57,110,216 Property Tax 23,723,431 23,446,385 25,944,966 27,112,490 Transient Occupancy Tax 11,063,012 10,586,256 11,099,705 11,145,652 Utility User Tax 6,301,505 6,622,639 6,605,306 6,671,359 Business Tax 2,942,923 3,317,338 3,230,170 3,262,472 Franchise Fees 2,366,286 2,091,800 2,242,429 2,293,556 Cannabis Tax 1,116,495 1,100,000 1,000,000 1,000,000 Total Tax & Franchise Revenue 100,917,864 103,548,018 105,593,017 108,595,745 YoY Change 3%2%3%
User Fees
Development Review 6,276,972 6,585,331 4,606,812 4,706,435 Parks & Recreation 2,415,605 2,079,727 2,280,283 2,320,590 Fire 2,267,237 1,629,575 1,759,183 1,774,654 Police 1,022,145 819,293 690,200 690,200 Business Licenses 703,544 700,600 632,470 732,469 Total User Fees 12,685,503 11,814,526 9,968,947 10,224,348 YoY Change ‐7% ‐16% 3%
General Government 6,235,698 1,984,742 1,669,077 1,778,568 2023 Storm Reimbursement 8,732,000
Total Revenue 119,839,064 126,079,285 117,231,041 120,598,661 YoY Change 5% ‐7% 3%
Financial Plan Page 54
FINANCIAL PLAN OVERVIEW
Use Tax rate in the city is 8.75%, of which 2.5% is paid to the City. Sales and Use Tax revenue projections are based on forecasts provided by HdL, the City’s sales tax consultant.
Property Tax
Property Tax is regulated by the State and collected and distributed to various governmental agencies by the County. The formula for calculating property taxes is determined by Proposition 13 (the People’s Initiative to Limit Property Taxation), which was passed by California voters in 1978. Prop 13 sets the tax rate for real estate at one percent of a property’s assessed value and limits changes to a property’s assessed value based on the Consumer Price Index to two percent each year. Under Prop 13,reassessment of a new base year value is only set upon a change of ownership or the completion of new construction.
The City receives approximately 10% of all property taxes collected in the city limits. Property Tax revenues are projected by the County Assessor each year based on the total assessed value of the city, which is estimated by taking into account inflationary factors such as the Consumer Price Index, new construction, and transfers of ownership which trigger a reassessment of property values.
Transient Occupancy Tax
Transient Occupancy taxes (TOT), commonly knowns as a “bed tax,” are charged to visitors who stay in hotels, motels, short‐term rentals or similar lodgings for less than 30 days. The TOT rate is currently set at 10%. TOT revenue is projected each year by taking into account the number of beds, average daily rates, occupancy statistics, and other historical trends.
Utility Users Tax
Utility User taxes(UUT) are imposed on the consumption of utility services, including telecommunications, electricity, gas, video, and water. Utility companies collect UUT from their customers as part of their regular billing procedures and then send collected funds to the City. The UUT rates for each utility were approved by voters and are currently set at 4.8% for telecommunications and video and 5% for electricity, gas and water. UUT revenue is projected each year based on historical trends.
Franchise Fees
Franchise Fees are a form of rent for use of public streets and roadways. Examples of businesses that pay franchise fees include trash collectors, cable television companies, electric utilities and oil and natural gas pipeline companies. Federal and state law limits the amount of some franchise fees (for example, video and cable television franchise fees). Franchise fees for provision of video services (like television programming) are overseen by the state. Franchise Fee revenue is projected each year based on historical trends.
Business Tax
The City imposes a tax on the approximately 9,300 business operators that do business within the city.
Payment of the annual business tax is required in order for businesses to maintain an active business license, as required by the Municipal Code. The City’s business tax rate is fifty cents per thousand dollars or 0.05% of a business’ annual gross receipts. Business Tax revenue is projected each year based on historical trends.
Financial Plan Page 55
FINANCIAL PLAN OVERVIEW
Cannabis Tax
In 2018, voters in the city supported Measure F‐18, enabling a cannabis tax on all cannabis businesses that operate in the city. The measure passed by voters enables the City to charge a tax of up to 10% of gross receipts for retail and delivery businesses and up to $10 per canopy square foot for cultivation. The tax rate is currently set at 6% of gross receipts. Cannabis tax revenue is projected each year based upon the number of cannabis operators and historical trends.
Fees for Service
The City charges fees for individualized services that are only used by certain members of the community (these services include but are not limited to: checking plans for new construction, certain recreation services, and issuance of business licenses). Fees for these services exist so that the burden of covering the cost of these services is borne by the individuals using them, rather than the general taxpayer. Fee revenue is projected each year based on changes to the City’s fee schedule and other trends such as construction activity or external economic factors which indicate demand for services. Development Review revenue is proposed to decrease by $2.0M or 30% compared to FY 2024‐25, based on revenue collection trends in the first half of FY 2024‐25. Revenues are projected to remain stagnant over the next two years asthe new budget projections are more aligned with nationwide development trends.
Parks & Recreation revenue is proposed to increase by $0.2M, or 10%, due to a continued rise in outdoor rentals and special events, leading to more applications and permits; improved tracking of childcare and camp revenues, which have historically exceeded budget estimates; an increase in youth athletic program revenue; and a trend toward customers purchasing multi‐day swim passes instead of single‐use passes. Fire revenue is proposed to increase by $0.1M or 8% due in large part to an updated contract with Cal Poly for fire services that increases with annual CPI and now includes contributions to a replacement tiller‐ladder truck that would be heavily used on the campus’s many multi story buildings. Other increases come from the department’s Certified Unified Program Agency (CUPA) and Fire and Life Safety Inspections.
Police revenue is proposed to decrease by $0.1M or 16%. Drivers include more accurate forecasting of alarm tracking fees (the fee for permits and false alarms decreased slightly as well due to the fee study earlier this fiscal year) and lower administrative citation revenue based on recently observed trends.
Business Licenses revenue is proposed to decrease by $0.1M or 10% largely driven by fewer cannabis business license renewals.
General Government
This category is a catch‐all for revenues that do not fit into one of the major revenue categories discussed above. Revenues in this category come from a variety of sources including investment income, rental payments, grants, and other miscellaneous revenue. Revenue in this category is projected each year based on a variety of factors, including historical trends, City fee and rent amounts, and availability of grant funding. In recent years, this line item has significantly outperformed budget driven by higher than usual interest rates and investment income and the budget has not been increased to reflect this trend in order to remain appropriately conservative in an uncertain environment.
Financial Plan Page 56
FINANCIAL PLAN OVERVIEW
Overview of City Funding Uses – General Fund
Expenditures by Department – General Fund
The following chart shows how much of the expenditure budget is allocated to each department within the General Fund.
Expenditures by Category – General Fund
This table shows the breakdown of operating costs by category:
Staffing
Staffing includes employee wages and benefits (including the pension, health benefits for employees and their dependents), other benefits provided in labor agreements, and applicable payroll taxes. This category represents the single largest expenditure in the City’s budget and in individual departmental budgets. Staffing costs are projected based on the number of City employees, labor agreements, and the cost of employee benefits.
Actuals Budget Financial Plan
Department FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Police 23,246,393 23,493,292 25,598,563 26,920,831 Fire 15,943,005 16,972,642 18,225,120 19,003,900 Public Works 15,832,158 17,210,449 17,428,593 17,855,449 Administration & IT 11,561,925 11,789,346 11,319,639 11,371,325 CDD 7,171,915 8,827,700 8,374,657 8,424,562 Parks & Rec 5,401,385 5,989,589 6,222,696 6,363,030 Finance 2,277,595 2,616,331 2,770,356 2,852,226 Non‐Departmental 406,522 1,225,038 2,401,694 3,463,325 HR 2,171,424 2,277,718 2,037,833 2,118,360 City Attorney 1,470,929 1,514,049 1,657,575 1,719,298 Utilities 1,652,306 1,608,927 1,381,663 1,430,212 Total 87,135,556 93,525,079 97,418,388 101,522,518 YoY Change 7% 4% 4%
Actuals Budget Financial Plan
General Fund FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Staffing 68,749,198 74,412,682 78,762,988 83,299,523 YoY Change 8% 6% 6%
Other Operating Expenditures 18,395,830 19,112,397 18,655,401 18,222,995 YoY Change 4% ‐2% ‐2%
Total 87,145,028 93,525,079 97,418,388 101,522,518 YoY Change 7% 4% 4%
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FINANCIAL PLAN OVERVIEW
Other Operating Expenditures
Other Operating Expenditures include contract services, materials, equipment, utilities and other expenses to support delivery of City programs and services. Contract services represent approximately half of operating expenditures, as the City relies heavily on consultants and contractors to deliver services and supplement the work of City staff. Other Operating Expenditure costs are projected based on the cost of contracts, changes to the Consumer Price Index and the need for services and supplies to support City operations.
In order to constrain budgets in response to reduced revenue projections, all departments were required to submit Other Operating Expenditures budgets with no increase from approved ongoing FY 2024‐25 levels. This exercise generated savings of $1.6 million and the primary impact will be limited ability to respond to unplanned needs citywide.
Financial Plan Page 58
FINANCIAL PLAN OVERVIEW
Consolidated Financing Sources and Uses Summary
Cancellations of reserves and designations reflect use of those funds and allow the City to fund expenditures with assigned or reserved fund balance rather than revenue.
Actuals Budget Financial Plan
Citywide FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Financing Sources
Tax & Franchise Revenue 100,917,864 103,548,018 105,593,017 108,595,745 Fee & Other Revenue
General Fund 18,921,201 22,531,267 11,638,024 12,002,916 Water Fund 29,218,924 28,656,148 34,409,451 32,178,522 Sewer Fund 23,891,953 20,798,900 21,768,825 23,320,050 Parking Fund 13,247,779 9,991,861 9,575,955 10,472,230 Transit Fund 6,475,111 17,059,186 12,028,458 14,365,515 Other Funds 11,094,797 9,907,111 10,627,752 11,165,663 Other Financing Sources* 27,315,536 70,148,655 11,972,927 4,961,260 Total Sources 231,083,164 282,641,147 217,614,410 217,061,901 *Includes cancellation of reserves and designations and use of fund balance Financing Uses by Function
General Fund 118,691,743 126,511,337 117,607,178 120,844,660 Water Fund 29,876,176 40,870,113 40,025,257 33,548,476 Sewer Fund 38,716,328 35,805,101 29,034,524 28,106,201 Parking Fund 28,922,763 52,855,425 11,514,113 10,101,970 Transit Fund 6,560,413 17,220,676 9,615,713 14,236,283 Other Funds 8,315,742 9,378,496 9,817,626 10,224,310 Total Uses by Function 231,083,164 282,641,147 217,614,410 217,061,901 Financing Uses by Type
Staffing 83,892,572 92,379,683 93,392,221 98,791,633 Other Operating Expenditures 50,862,532 64,542,218 61,764,911 58,547,011 Capital Expenditures 83,379,691 110,309,845 47,124,561 44,707,596 Debt Service 12,948,369 15,409,401 15,332,717 15,015,661 Total Uses by Type 231,083,164 282,641,147 217,614,410 217,061,901 Financial Plan Page 59
FINANCIAL PLAN OVERVIEW
This table includes all budgeted City funds and is intended to provide insights into the total consolidated budgets. Year‐over‐year changes are generally driven by capital expenditures, appropriations of which can change from year to year and will carry over into future years until spent.
Interfund Transfers
In order to align the costs and benefits of various City expenditures and support the goals and policies of the City Council, transfers are made between funds. The following table shows the various funds making transfers to the General Fund. Additional detail on each transfer can be found below.
Public Art Fund: Annual operating transfers to the General Fund cover the cost of the Public Art Coordinator position and annual operating costs for supplies and services.
Gas Tax Fund: Gas tax revenue is received in a separate fund and transferred into the General Fund to be spent on City roads and transportation infrastructure.
Housing Fund: The Affordable Housing Fund makes an annual transfer to the General Fund to cover its operating costs, including the cost of the below market rate administrator.
Transportation Impact Fee Fund: This ongoing transfer is made to cover at least half of the debt service for the obligations incurred to finance the Los Osos Valley Road overpass project.
TBID Fund: The Tourism Business Improvement District transfers 2% of its assessment revenue to the General Fund to cover operating expenses.
Parking Fund: This transfer includes debt service costs on an interfund loan used to acquire the parking lot at 1166 Higuera, an annual transfer related to construction at the former Garden Street parking lot, and a reimbursement for right of way maintenance covered by the cost of services plan.
Sewer & Water Funds: These transfers are for right of way maintenance costs incurred by the General Fund covered by the cost of services plan.
IT Replacement Fund: This transfer covers the annual cost to administer the EnerGov software tool.
Operating Transfers In FY 2025‐26 FY 2026‐27
From:
Public Art Fund 93,403 93,403
Gas Tax Fund 1,413,527 1,415,380
Housing Fund 207,000 207,000
Transportation Impact Fee Fund 280,000 280,000
TBID Fund 44,399 44,583
Parking Fund 300,444 440,635
Sewer Fund 1,326,870 1,326,870
Water Fund 1,150,922 1,150,922
IT Replacement Fund 152,000 152,000
Avila Ranch CFD 234,122 337,373
San Luis Ranch CFD 207,243 142,826
Total 5,409,931 5,590,991
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FINANCIAL PLAN OVERVIEW
Avila Ranch & San Luis Ranch CFDs: As called for in their respective agreements, the Community Facilities Districts make transfers to reimburse the General Fund for agreed upon costs, such as police, fire, infrastructure construction and maintenance, and administration.
The General Fund also makes transfers out for certain expenditures detailed in the table below:
Public Safety Equipment Replacement Fund: These transfers are used to generate a balance to replace equipment at predetermined intervals. By using a replacement fund, the City is able to set aside funding for significant purchases while shielding General Fund budgets from irregular spending trends.
Insurance Fund: These transfers cover the cost of workers’ compensation and liability insurance policies.
The transfers are in excess of the annual premium amounts and the difference can be used to pay uninsured claims in current and future years.
Debt Service Fund: Transfers to the debt service fund are made to cover annual debt service payments on General Fund obligations. The FY 2025‐26 amount includes $161,601 to alleviate an outstanding interfund balance created by an error made in a prior year.
The following table details transfers out of the General Fund, which includes the Local Revenue Measure Fund, to the various Capital Outlay funds:
The table below details the transfers into the General Fund under the Cost Allocation Plan:
Operating Transfers Out FY 2025‐26 FY 2026‐27
To:
Public Safety Replacement Fund 236,226 236,226
Insurance Fund 6,000,000 6,000,000
Debt Service Fund 1,886,566 1,512,468
Total 8,122,792 7,748,694
Capital Transfers Out FY 2025‐26 FY 2026‐27
To:
General Capital Outlay Fund 22,539,982 24,560,448
Fleet Fund 1,103,000 212,000
IT Replacement Fund 1,625,784 492,228
Facilities Maintenance Fund 44,838 ‐
Public Art Fund 210,000 310,000
Total 25,523,604 25,574,676
Reimbursement Transfers In FY 2025‐26 FY 2026‐27
From:
Water Fund 1,668,116 1,751,522
Sewer Fund 1,813,285 1,903,949
Whale Rock Fund 301,576 316,655
Parking Fund 1,420,288 1,491,302
Transit Fund 467,804 491,194
Total 5,671,069 5,954,622
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FINANCIAL PLAN OVERVIEW
The Cost Allocation Plan was presented to Council on April 15, 2025, and can be found at the following link: https://opengov.slocity.org/WebLink/DocView.aspx?id=207438&dbid=0&repo=CityClerk Local Revenue Measure Investments
Introduction
In November 2020, the city’s voters approved a local sales tax measure (Measure G‐20) to provide additional revenue for community services and infrastructure improvements. As a General Purposes Tax, the City’s Local Revenue Measure (LRM) expenditures are categorized as General Fund capital improvement project costs or operating costs. The community set the spending priorities for the measure funding as:
Protect Financial Stability
Community Safety and Emergency Preparedness
Creek and Flood Protection
Address Homelessness
Safe and Clean Public Areas
Economic Development and Business Retention
Youth/Senior Services and Recreation Facilities
Street Maintenance and Transportation (includes bicycle and pedestrian improvements) Open Space/Natural Areas Preservation and Maintenance Other Services and Projects
Staff’s proposed allocation of the revenue is reviewed by the Revenue Enhancement Oversight Commission (REOC), an advisory body to the City Council, to ensure alignment with the prioritiesidentified in the ballot language.
Revenue and Expenditure Forecast Highlights
LRM represents the single largest funding source for the City’s General Fund. As a result, fluctuations to LRM can have a significant impact on the City’s ability to provide high quality programs and services and deliver needed and desired infrastructure projects to the community. Staff works with HdL, the City’s sales tax consultant, to track LRM revenue and develop projections for how this revenue source will perform in future years.
The Local Revenue Measure is the City’s largest revenue source. It is also one most volatile to economic conditions and recessionary impacts.
The current revenue projections reflect a cooling of the economy over 2023‐25 but not a recession. The forecast of revenues may change over time and updates will be provided to the REOC and Council.
Higher labor and raw material costs along with inflationary pressures drive taxable good prices upward and, absent any changes in consumer behavior, increase Measure G‐20 revenue; however, higher prices have also significantly increased the City’s own expenditure costs.
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FINANCIAL PLAN OVERVIEW
Balance between Capital Investment and Operating Budget Support LRM funding is primarily used to fund capital projects. In the first full year after passage of Measure G‐20, the budget allocated 74% of the LRM towards capital projects. These previous allocations towards capital projects have exceeded staff’s capacity to deliver those projects, leading to delays and funds sitting idle when they could have been used elsewhere.
The table below details the original annual budget allocations since passage of Measure G‐20:
To better align funding availability, community identified needs, and capacity constraints, the Financial Plan includes an increased allocation to operating expenses. Staff will carefully evaluate this allocation going forward as needs shift.
Local Revenue Measure Uses
Expenditures are broken into the ten categories as identified in the Measure G‐20 (Local Revenue Measure) ballot language. The tables below summarize the proposed allocation of LRM by ballot measure category:
FY 2021‐22 FY 2022‐23 FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Capital Allocation 74% 70% 73% 70% 69% 67%
Operating Allocation 26% 30% 27% 30% 31% 33%
Total LRM Expenditures FY 2025‐26 FY 2026‐27
Youth/Senior Services and Recreational Facilities 8,584,621 2,676,539 Street Maintenance and Transportation 7,623,547 7,892,703 Community Safety and Emergency Preparedness 5,501,353 7,085,023 Protect Financial Stability 4,635,346 4,695,532
Open Space/Natural Areas Preservation and Maintenance 1,620,420 1,859,512 Other Services and Projects 1,040,084 1,154,192
Address Homelessness 934,256 994,834
Safe and Clean Public Areas 666,433 586,329
Creek and Flood Protection 556,016 5,120,335
Economic Development and Business Retention 409,922 440,000 Total 31,572,000 32,505,000
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FINANCIAL PLAN OVERVIEW
Capital expenditures of LRM fall under the following ballot measure categories:
Capital Expenditures FY 2025‐26 FY 2026‐27
Community Safety and Emergency Preparedness 1,843,668 3,111,133 Youth/Senior Services and Recreational Facilities 7,418,330 1,400,500 Street Maintenance and Transportation 6,786,601 6,977,000 Open Space/Natural Areas Preservation and Maintenance 675,000 743,500 Protect Financial Stability 4,000,000 4,000,000 Creek and Flood Protection 293,682 4,833,315 Economic Development and Business Retention 409,922 440,000 Safe and Clean Public Areas 455,000 355,000 Total 21,882,204 21,860,448
Community Safety and
Emergency
Preparedness
Youth/Senior Services
and Recreational
Facilities
Street Maintenance
and Transportation
Open Space/Natural
Areas Preservation and
Maintenance
Protect Financial
Stability
Creek and Flood
Protection
Economic Development
and Business Retention
Safe and Clean Public
Areas
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FINANCIAL PLAN OVERVIEW
For LRM expenditures supporting the City’s operating needs, the following table summarizes Operating Expenditures by Priority stated in the ballot measure:
Operating Expenditures FY 2025‐26 FY 2026‐27
Community Safety and Emergency Preparedness 3,657,685 3,973,890 Youth/Senior Services and Recreational Facilities 1,166,291 1,276,039 Street Maintenance and Transportation 836,946 915,703 Open Space/Natural Areas Preservation and Maintenance 945,420 1,116,012 Address Homelessness 934,256 994,834
Other Services and Projects 1,040,084 1,154,192
Protect Financial Stability 635,346 695,532
Creek and Flood Protection 262,334 287,020
Economic Development and Business Retention ‐ ‐
Safe and Clean Public Areas 211,433 231,329
Total 9,689,796 10,644,552
Community Safety and
Emergency
Preparedness
Youth/Senior Services
and Recreational
Facilities
Street Maintenance
and Transportation
Open Space/Natural
Areas Preservation and
Maintenance
Address Homelessness
Other Services and
Projects
Protect Financial
Stability
Creek and Flood
Protection
Economic Development and Business Retention
Safe and Clean Public
Areas
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FINANCIAL PLAN OVERVIEW
The tables below include line item detail on Capital and Operating expenditures by priority:
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FINANCIAL PLAN OVERVIEW
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FINANCIAL PLAN OVERVIEW
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FINANCIAL PLAN OVERVIEW
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FINANCIAL PLAN OVERVIEW
Long‐Term Forecast for the General Fund
The forecast is used to provide a long‐term vision in the financial decision‐making process. While staff cannot predict the future, it is important to identify future events that will have a material impact on the City’s finances and the forecast helps staff navigate these events. The forecast for the General Fund is balanced for the two‐year Financial Plan based on the following assumptions:
The City’s practice is to budget for staffing costs without an assumption of vacancies throughout the year. This conservative approach ensures that the City is able to meet its payroll obligations and also helps to support unanticipated and unbudgeted overtime costs that departments may incur throughout the year. The City has historically assumed a 3% staffing savings each year and that assumption has been increased from 3% to 4%. This is in line with recent trends and realizing a 4% savings will save the General Fund $0.6M annually. The percentage of Local Revenue Measure funds allocated to capital projects, which has ranged from 74% in FY 2021‐22 to 70% in FY 2024‐25, has been reduced to 69% and 67% in FY 2025‐26 and FY 2026‐27. These percentages do not take into consideration the allocation of any costs associated with staffing who are necessary to develop and build the City’s capital projects.
Additionally, it is not anticipated that this shift will change the amount or type of capital projects that the City will complete during the lifetime of the current Capital Improvement Plan (CIP) because the number and type of projects that the City is able to complete in each year of the CIP is driven by the staff resources available to manage the projects. The proposed CIP has been developed to more accurately reflect the City’s capacity to complete projects based on staff resources.
These solutions, in conjunction with the development of constrained base operating budgets, should allow the General Fund to operate throughout the term of the Financial Plan withoutservice level impacts.
The out‐years of the forecast, however, still indicate a deficit, driven by the following factors:
A fifth fire station will come online in FY 2027‐28 and the operating costs are assumed to be $2.0M per year, including one‐time startup costs, staffing, and other operating costs. Capital Expenditures are programmed to increase after the 2025‐27 Financial Plan ends.
The actions taken to balance the budget for FY 2025‐26 are consistent with the City’s Budget Balancing Strategies but are short‐term in nature and are not intended to address the forecasted deficit in future years. During the financial plan, staff will work to develop longer‐term strategies to address forecasted budget deficits consistent with the Budget Balancing Strategies.
The forecast for the General Fund, including recommended Significant Operating Budget Changes, a staffing contingency, and salary savings assumptions not included in the budgetary tables above is shown below:
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FINANCIAL PLAN OVERVIEW
The forecast above indicates balanced budgets for the two‐year Financial Plan, deficits in the out‐years, and would have the following impacts on fund balance:
Undesignated fund balance is generated when revenues exceed expenditures or when reserved or assigned fund balances are eliminated. Relying on this balance to fund ongoing operations would lead to structural deficits and is not recommended.
Actuals Current Budget Financial Plan Forecast
FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 Ending Fund Balance 43,096,828 42,664,776 42,288,640 42,042,640 39,069,857 37,131,450 Operating Reserve 10,826,500 14,586,832 14,974,278 15,441,535 16,186,567 16,623,984 Committed & Assigned Funds 23,102,497 28,035,177 25,644,041 25,398,041 25,398,041 25,398,041 Undesignated Fund Balance 9,167,831 42,768 1,670,321 1,203,064 (2,514,751) (4,890,575) Reserve Level 15% 20% 20% 20% 20% 20%
Financial Plan Page 71
OPERATING BUDGETS
Financial Plan Page 72
OPERATING BUDGETS
Operating Budget Introduction
This section of the document provides detail on departmental budgets. Each departmental section includes:
The department’s mission statement;
An overview of the services that the department provides; A budget summary that breaks out staffing costs from other operating expenditures and compares budgeted amounts to the current year budget and prior year actuals; Detailed information about the department’s programs (budgeted in cost centers), along with the total expenditures for each cost center and Full Time Equivalent staff positions budget to each cost center;
A fiscal analysis to describe notable changes to the department’s budget, compared to the current year;
A summary of Significant Operating Budget Changes (SOBCs) proposed for the department; A discussion of opportunities and challenges the department expects to address in the Financial Plan timeframe;
A summary of the department’s contributions towards addressing the City Council’s adopted Major City Goals;
A summary of 2025‐27 departmental goals; and
The department’s performance measures which are designed to evaluate departmental performance in meeting the City’s goals and objectives.
Most departments are budgeted entirely within the General Fund and are primarily supported by tax and user fee revenue. The exception to this is the Public Works Department and Utilities Department which both operate programs that are supported primarily by rates paid by users of those services (Parking and Transit programs in Public Works and Water and Sewer programs in Utilities). The departmental sections for Public Works and Utilities are expanded to include information about Enterprise Fund programs, including a long‐term forecast and fund analysis (similar to the information provided for the General Fund in the ‘Financial Plan Overview’ section of the document).
This introductory section includes information to provide the reader with more context, including information about all SOBCs requested by departments and a summary of regular staff positions allocated by the City Council.
Significant Operating Budget Changes (SOBCs)
The City provides programs and services similar to those provided by other municipalities in California.
Over time, the services that the City provides have been adjusted in response to the needs and desires of the community and now include a large spectrum of departments, programs, and objectives.
Existing services are considered ongoing and the costs for those services serve as a starting point for development of the two‐year Financial Plan and annual budgets. However, those services could change based on the community engagement, changes in business needs, new technologies and goal‐setting process as the evolving needs of the community change and other, not yet established services might become more urgent or desired. It is therefore important to consider the current programs as a switch Financial Plan Page 73
OPERATING BUDGETS
often requires a trade‐off due to lack of available funding.
The City’s budget development process requires that augmentations to the budget to support new services or address existing service needs be formally requested via submittal of an SOBC. Requests are reviewed by the City Manager who determines which requests will be recommended to the City Council for consideration and budget appropriation. A request can be brought forth for a variety of reasons but is generally considered under the following circumstances:
1. Essential for the protection of health and safety.
2. Needed for the advancement of Major City Goals.
3. Needed to provide ongoing services to the community.
SOBCs are divided into two categories:
1. One‐time: requests that create a budgetary impact the during the Financial Plan period, but do not impact the budget on an ongoing basis.
2. Ongoing: requests that adjust the operating program budget for long‐term service delivery.
In line with guidance from previous plans, departments were asked to submit only very critical new operating budget requests, specifically ongoing budget requests. The Leadership Team reviewed the SOBCs with the City Manager and narrowed the requests down to only mission critical core services and/or health and safety related items that could be funded within available resources.
Requested SOBCs
The table below summarizes all of the SOBCs submitted by departments as part of the 2025‐27 Financial Plan development process. The requests recommended for approval are highlighted in yellow. More information on the recommended SOBCs can be found in the departmental summaries that follow.
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OPERATING BUDGETS
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OPERATING BUDGETS
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OPERATING BUDGETS
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OPERATING BUDGETS
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OPERATING BUDGETS
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OPERATING BUDGETS
Recommended SOBCs by Funding Source
The total recommended SOBCs by funding source, net of any offsets which include grants, assigned fund balances, and contributions from other funds, is detailed in the table below:
FY 2025‐26 FY 2026‐27
General Fund 741,199 609,042
Water 1,449,535 945,067
Sewer 988,857 850,924
Parking 26,523 26,523
Transit 861,299 1,885,840
Total 4,067,413 4,317,396
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OPERATING BUDGETS
Employee Summary
Department specific employee counts by program can be found in the Department Operating Budget section. This section is intended to provide an overview of full‐time‐equivalent regular staffing. These positions are approved by Council on an ongoing basis and generally are essential to delivering the City’s core services. Temporary staffing is not included here as the need for temporary staff resources can vary based on community demand. Because the need for temporary staffing is variable, departments that rely on temporary staffing are provided a temporary staffing budget that they can flexibly use to support temporary needs and community demand, rather than allocated, regular positions which are specific to a particular program and staffed on an ongoing basis.
The chart below shows how regular FTE (not including temporary positions) are allocated among departments:
The table below presents the Full Time Equivalent (FTE) positions based on their reporting structure.
Some positions work across different programs or departments. Sometimes positions are moved between programs; however, net changes in the number of positions overall requires Council approval.
This table will differ from ‘Department Program’ tables included in the operating department summaries in this section, which show how headcount is allocated according to budget and frequently include Administration & IT
9%
City Council
1% City Attorney
1%
Community
Development
9%
Finance
3%
Fire
12%
Human Resources
2%
Parks &
Recreation
6%
Police
20%
Public Works
20%
Utilities
17%
Citywide Position Overview by Department
Financial Plan Page 81
OPERATING BUDGETS
smaller allocations to allocate costs more accurately. For example, one employee in Administration & IT is included in the table below as 1.00 FTE but is included in the Administration & IT department summary as 0.67 FTE and in Utilities as 0.33 FTE because of how the position is funded.
As shown above, this budget recommends an increase of 6.25 FTE or 1.3% compared to FY 2024‐25 approved staffing. The additions are detailed in the recommended Significant Operating Budget Changes for the respective departments, and include two Police Officers, one Heavy Equipment Mechanic, one Communications Coordinator converted from temporary to regular staffing, one Water Treatment Plant Maintenance Technician, one Engineering Technician, and an increase in staffing for an existing Utility Billing Assistant position from 0.75 FTE to 1.00 FTE.
Actual Budget Financial Plan
Department FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Change Administration & IT 42.50 42.50 42.50 ‐ 42.50 City Council 5.00 5.00 5.00 ‐ 5.00 City Attorney 6.00 7.00 7.00 ‐ 7.00 Community Development 40.00 43.00 43.00 ‐ 43.00 Finance 14.00 15.50 15.50 ‐ 15.50 Fire 60.50 61.00 61.00 ‐ 61.00 Human Resources 10.00 10.00 10.00 ‐ 10.00 Parks & Recreation 30.00 29.00 29.00 ‐ 29.00 Police 95.00 95.00 97.00 97.00 2.00 Public Works 94.50 97.50 99.50 99.50 2.00 Utilities 77.00 77.75 80.00 80.00 2.25 Total 474.50 483.25 489.50 489.50 6.25 Financial Plan Page 82
Operating Budget Administration and Information Technology
ADMINISTRATION AND INFORMATION
TECHNOLOGY DEPARTMENT
Mission Statement
Providing leadership for the City organization in our quest to deliver exceptional service by facilitating community participation and government transparency, implementing City Council goals and programs, and fostering trust, respect and dignity for the City and the community members we serve.
About the Department
The City Administration and Information Technology Department oversees many of the daily operations of the City of San Luis Obispo, ensuring effective implementation of City Council policies and programs.
As a lead department for several of the Council’s Major City Goals, it provides strategic leadership, policy guidance, and operational support to advance the City's priorities.
Through the Office of the City Manager, the department plays a key role in public affairs and communications—promoting transparency, fostering community engagement, and representing San Luis Obispo’sinterests at the regional,state, and federal levels. It advocatesforsupportive policies and secures resources that contribute to the City's long‐term success.
The Office of Economic Development and Tourism drives local economic growth, supporting businesses and enhancing the economy through tourism promotion and placemaking. The Office of Diversity, Equity, and Inclusion works to make both the City organization and the broader community more inclusive and welcoming. The Office of Sustainability and Natural Resources manages critical environmental initiatives, including the Climate Action Program, Natural Resources Program, and Creeks and Watersheds Program.
The department also oversees the City Clerk’s Office, which ensures open government and public access to records, and directs the Information Technology Division, which provides essential network infrastructure, technical support, and strategic IT planning.
The department also includes the Assistant City Manager (ACM) position. The ACM serves as the Community Services Group (CSG) administrator, overseeing the Directors of the Public Works, Utilities, Community Development and Parks and Recreation departments. This purpose of this CSG administrative position, which reports directly to the City Manager, is twofold: 1) focus on improving customer service, process/programmatic efficiencies, and collaboration within and between the CSG departments, and 2) enhance coordination between the CSG departments, Administration and IT and other City departments.
As the City’s primary liaison to key community and regional partners—including the County of San Luis Obispo, Cal Poly, the Chamber of Commerce, Downtown SLO, REACH, Central Coast Community Energy and others—the department strengthens partnerships that enhance San Luis Obispo’s quality of life and long‐term well‐being.
Financial Plan Page 83
Operating Budget Administration and Information Technology Budget at a Glance
Actuals Budget Financial Plan
Administration & IT FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Staffing 6,730,558 7,052,146 7,139,371 7,344,293 YoY Change 5% 1% 3%
Other Operating Expenditures 4,831,367 4,737,200 4,180,267 4,027,032 YoY Change ‐2% ‐12% ‐4%
Total 11,561,925 11,789,346 11,319,639 11,371,325 YoY Change 2% ‐4% 0%
Financial Plan Page 84
Operating Budget Administration and Information Technology Department Programs
Financial Plan Page 85
Operating Budget Administration and Information Technology Financial Plan Page 86
Operating Budget Administration and Information Technology Note: The budgets above may include expenditures outside of the General Fund and therefore will not tie to the General Fund departmental budget.
Fiscal Analysis
Overall department expenditures are proposed to decrease by $418,021 or 4% compared to FY 2024‐25.
In an effort to constrain expenditure growth, which are generally driven by annual adjustments to City employee compensation, non‐staffing costs were reduced or held flat with FY 2024‐25 adopted levels.
This was achieved through a careful review of budgets resulting in trade‐offs and reallocations within the department’s programs. Any increases in non‐staffing costs were primarily driven by contractual agreements for software subscriptions or other services. Offsets included reduced costs for some fees including employee parking, modifying an IT network security project and reductions based on historical spending levels. The department will have very limited flexibility to respond to emerging needs and will assume some operational risk related to network security and computer replacement that is ultimately acceptable, but further reductions would more significantly impact services. The department will also use one‐time Local Revenue Measure funds designated for economic development to continue current economic development initiatives that do not have ongoing funding as described in the SOBC table below.
The proposed budget includes four SOBCs (all one‐time) in the amount of $336,000, summarized in the table below.
Financial Plan Page 87
Operating Budget Administration and Information Technology Significant Operating Budget Changes
Opportunities and Challenges
The Administration and IT Department faces a dynamic and evolving landscape,shaped by shiftsin federal policies, technological advancements, and local funding changes. One significant challenge is navigating changes at the federal level, particularly in relation to grant funding, executive orders, and regulatory changes. Despite these uncertainties, the City remains committed to progressing on the work identified by the community and City Council in the DEI strategic plan and the Climate Action Plan. In addition, Proposition 41 may present opportunities for new funding for climate adaptation and resilience work.
The City Clerk’s Office is experiencing an increased workload, specifically managing a record number of public meetings and public records requests. Additionally, staff from across the department will be focused on the transition to a Citywide Single Vote election system. This presents both a challenge and an opportunity, requiring extensive community engagement and education ahead of the 2026 elections.
In IT, rising costs for infrastructure and software maintenance, coupled with an ever‐evolving cybersecurity landscape, create ongoing challenges. The Information Services Oracle Core Team continues to refine the City’s Enterprise Resource Planning (ERP) system, ensuring compliance and improving efficiency post‐implementation. Artificial intelligence presents both risks and opportunities, necessitating thoughtful policiesto ensure itssafe and effective use. Meanwhile, the execution of the $4.8 million grant‐ funded Broadband Project is a major step forward in expanding high‐speed internet access to unserved or underserved locations in the community, reinforcing the City’s commitment to digital equity.
For the Economic Development and Tourism programs, uncertainty in the economic climate and potential softening of growth in salestax and transient occupancy taxes are challenges. The Economic Development Program has benefitted in recent years from one‐time funding to support local businesses to assist in recovery from the COVID‐19 pandemic. This funding is expected to be fully expended during this Financial Plan and efforts will shift to more focused support through a Business Retention and Expansion program.
In addition, partner organizations in the community are increasingly challenged to find sufficient, 1 Proposition 4, approved in 2024, authorizes bonds for safe drinking water, wildfire prevention, and protecting communities and natural lands from climate risks. 2025‐26 2026‐27
Expense Offset General Fund
Contribution Expense Offset General FundContribution
Funding for voter engagement plan. 90,000 ‐ 90,000 ‐ 30,000 30,000 One‐Time Funding for CAPSLO grant program to
support new and expanded private
childcare options.
25,000 ‐ 25,000 25,000 ‐ 25,000 One‐Time Funding for Economic Development
Strategic Plan implementation.
66,000 ‐ 66,000 66,000 ‐ 66,000 One‐Time Funding to support SLO Restaurant
Month and Buy Local Bonus program,
and advertising in support of local
businesses.
155,000 ‐ 155,000 155,000 155,000 ‐ One‐Time Total 336,000 246,000 90,000 276,000 246,000 30,000 SOBC Description One‐Time/
Ongoing
Financial Plan Page 88
Operating Budget Administration and Information Technology sustainable funding for their operations and programming likely resulting in increased pressure on City programs and funding.
Major City Goal Contributions
The City Administration and IT Department plays a central role in advancing the City Council’s Major City Goals by providing leadership, policy guidance, and operational support across multiple initiatives and programs. Many of the department’s core services and daily operations directly contribute to the progress of key priorities, including Cultural Vitality, Economic Resilience, and Fiscal Sustainability; Diversity, Equity, and Inclusion; and Open Space, Climate Action, and Resilience. Highlights for the 2025‐27 Financial Plan include:
Cultural Vitality, Economic Resilience, and Fiscal Sustainability:
o Implement a Business Welcome program to support business attraction, retention and expansion efforts including start up checklists for the 18 most common business types. o Work with partners to create a roadmap for the development of a potential conference facility in Downtown SLO.
o Work with CAPSLO and other non profits to provide grants to support new and expanded private childcare options and evaluate other approaches, e.g. permit streamlining, fee subsidies, if needed.
o Conduct a study session with the City Council to explore innovative and alternative funding methods to address the needs of business areas throughout the City. Diversity, Equity and Inclusion:
o Implement a communications plan to provide education and information about the City's new Citywide Single Voting System.
o Provide annual and on‐demand training of the City's Public Engagement and Noticing Manual for applicable City employees, including updates to better reach underserved and underrepresented communities.
o Develop and implement equity and inclusivity training for staff of all levels (Directors, Managers, Staff, etc.).
o Develop and implement a set of DEI‐focused best practices in screening and interviewing processes, such as a blind application review. Open Space, Climate Action, and Resilience:
o Complete publicly accessible EV charging projects at various City properties while continuing to develop policy and funding resources to expand access to EV charging infrastructure on public and private property.
o Complete investment grade audits for building electrification retrofits at the Swim Center, City Hall, and Corporation Yard.
o Launch comprehensive community outreach and engagement opportunities on a quarterly basis that (i) provide general climate resilience and disaster preparedness resources, (ii) incorporate climate justice considerations in scheduling, location, and content, and (iii) supports the projects described in the [Major City Goal]. o Pursue priority land conservation opportunities to expand the Greenbelt, identify funding opportunities and resources, and engage with priority landowners on an annual basis.
Financial Plan Page 89
Operating Budget Administration and Information Technology 2025‐27 Department Goals
The department’s strategic priorities for the 2025‐27 Financial Plan are intended to support the advancement of the City’s overall objectives tied to Major City Goals, Department Strategic Plans, and other priorities that may arise. These goals are in addition to ongoing services described in the ‘Department Programs’ section above.
Strategic Goal(s)
Continue to lead the City’s Communications Program and provide timely, accurate and concise communications that provide opportunities for the community to engage with the City.
Continue to manage the City’s Information Technology Program to provide reliable resources for improving organizational productivity, effectiveness and customer service to the entire City organization and the community.
Work with regional partnersto focus on the creation of moderate income plusjobs, promoting innovation and entrepreneurship, and supporting economic activities, including tourism, to ensure the overall economic health and quality of life of the community.
Implement the primary tasks set forth for the next two years as identified in the Climate Action Plan for Community Recovery, Lead by Example Plan, and the Climate Adaptation and Safety Element of the General Plan. Sustain commitment and expand focus on Open Space protection and stewardship, as well as fire fuel reduction and creek and flood control maintenance.
Further the commitment to making San Luis Obispo a welcoming and inclusive City for all by continuing to incorporate diversity, equity, and inclusion into all programs and policies, and advancing the DEI Strategic Plan.
Performance Measures
Performance measures are designed to determine accountability, improve service quality, allocate resources, and evaluate departmental performance in meeting San Luis Obispo’s goals and objectives. 2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Open City Hall Satisfaction/Approval Rating 92% 92% 92% 92% Measure: # of email subscribers 3,490 10,000 15,000 20,000 Measure: # of Pageviews on slocity.org 2,053,372 1,700,000 1,700,000 2,300,000 Notes: The City switched to a new email marketing system and has been in the process of consolidating all subscriber lists. The increases reflected here are mostly due to this consolidation.
Objective: Provide public information to as many people in San LuisObispo as possible.
Strategic Goal: Inform and engage the community
Notes: When users provide input on a topic via Open City Hall, they are asked how they liked using it. This measure allows us to track how satisfied users are with the engagement tool itself.
Notes: Changes in expected targets are due to elections (2025‐26 is a non‐election year, whereas 2026‐27 is an election year)
Financial Plan Page 90
Operating Budget Administration and Information Technology 2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Number of cross‐departmental Green Team
meetings
10 10 10 10
Measure: Number of community engagement events
and opportunties
10 10 10 10
Notes: Implementation ofthe City's Lead by Example Plan is coordinated through the Green Team function Notes: Community engagement events will focus on community wildfire preparedness and resilience, as well as the 2027‐2031 Climate Action Plan Update
Strategic Goal: Work toward the community and organizational carbon neutrality goals Objective: Provide information and receive feedback to inform climate and reslience activities through internal and external engagement events and opportunities.
2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Maintain City Network Reliability Uptime
Status
99.9% 99.9% 99.9% 99.9%
Measure: Data backed‐up in Terabytes 174 185 185 185
Objective: Provide reliable IT resources to the organization and community.
Strategic Goal: Support the efficient and effective delivery of City services Notes: This measures regular network uptime. Network uptime allows for the City to measure the percentage its systems are available to service department and public needs.
Notes: This measures the amount of data backed up by IT, and informs the City's storage needs forecasting. 2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Staff Capacity n/a n/a 5 5
Measure: Community Engagement n/a 12 14 16
Objective: Advance inclusion and belonging by growing staff capacity and improving access and engagement for all community members.
Strategic Goal: Create an more welcoming and inclusive organization and community Notes: Number of Citywide workshops or related training for staff provided annually.
Notes: Number ofDEI‐led or supported community engagement efforts annually. 2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Business Welcome Program n/a n/a 17 17
Measure: Business Contacts 75 75 85 95
Objective: Advance economic development and tourism efforts that contribute to the community's quality of life.
Strategic Goal: Suport business development and job creation Notes: Number ofstart up checklists created as a part ofthe Business Welcome Program.
Notes: Number of contacts with business regarding attraction, retention or expansion in the City.
Financial Plan Page 91
Operating Budget City Attorney
CITY ATTORNEY’S OFFICE
Mission Statement
Advancing excellence and ethics in the delivery of legal advice and services to the City Council, Advisory Bodies and City Staff to support legally informed decision‐making, legal compliance, equity, accountability, and transparency in public service.
About the Department
The legal services program is a support function that provides legal advice and representation to the City Council, all City departments, and City Advisory Bodies to accomplish Major City Goals, other important objectives, and core operational functions in accordance with the law.
The responsibilities include: providing Council, Planning Commission, Advisory Bodies, and staff across all City departments with legal review and advice to ensure general compliance with applicable laws and to minimize liability exposure; defending or managing the defense of claims and litigation against the City and initiating civil actions on behalf of the City; enforcing and prosecuting violations of the Municipal Code, including both criminal violations and civil/administrative enforcement; providing legal analysis and support in the City's review of and response to proposed county, state, and federal legislation; advising City staff on compliance with the California Public Records Act, and reviewing and producing documents subject to disclosure; and administering the appeals process for administrative citations and providing staff support to hearing officers and the City’s Administrative Review Board or Construction Board of Appeals.
Budget at a Glance
Actuals Budget Financial Plan
City Attorney FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Staffing 1,232,227 1,426,135 1,513,000 1,574,603 YoY Change 16% 6% 4%
Other Operating Expenditures 238,702 87,914 144,575 144,695 YoY Change ‐63% 64% 0%
Total 1,470,929 1,514,048 1,657,575 1,719,298 YoY Change 3% 9% 4%
Financial Plan Page 92
Operating Budget City Attorney
Department Programs
Fiscal Analysis
Expenditures are proposed to increase by $143,528 or 9% due to a shift of $57,000 from the Human Resources legal services budget to the City Attorney’s Office; the salary and benefits of an additional regular staff member; and other staffing related costs like annual step and performance increases, and escalating insurance costs. In an effort to constrain expenditure growth, non‐staffing costs are flat with FY 2024‐25 adopted levels plus the budget shifted from Human Resources to centralize management of legal services contracts. The constraint was achieved through analysis of use and alignment with forecasted necessary expenditures, without the need to cut any services or support functions.
Significant Operating Budget Changes
No Significant Operating Budget Changes are recommended for the department.
Opportunities and Challenges
It is an exciting prospect to begin a Financial Plan with a nearly fully staffed department. For years, the City Attorney’s Office has been managing an increasing workload with only temporary or contract staffing assistance. The department still has supplemental staff but has also gained core, permanent positions, all but one of which are currently filled with highly skilled and dedicated staff working to meet the demands of continually changing priorities that come with emerging, urgent and sensitive matters.
The department workload volume and complexity remain high, and during the two years of the 2025‐27 Financial Plan it is expected that housing, development, personnel, climate, elections changes, litigation and many other matters will continue to demand all the focus and time of available legal resources.
Major City Goal Contributions
Various department attorneys and staff have been assigned to support the work programs of each Major City Goal. Staff contributions are difficult to predict in advance but always include advising on legal obligations and compliance for new and changing programs; drafting and review of contracts and other legal documents in support of initiatives; and support for City staff members navigating changing and complex laws and attempting to meet program demands.
Program
Total
Expenditures Staffing
1501 City Attorney: Completes all the legal and administrative support functions under its purview including the provision of legal advice, document review, and direction on legal compliance to City Council, advisory bodies, and staff in all City departments in response to inquiries, with emphasis on legal options; minimizing liability exposure of the City through the practice of preventative law; and keeping City Council apprised of anticipated and current litigation, legislation impacting the City, and othersignificant legal matters. 1,657,575 7.00 FTE
Total 1,657,575 7.00 FTE
Financial Plan Page 93
Operating Budget City Attorney
2025‐27 Department Goals
The department’s strategic priorities for the 2025‐27 Financial Plan are intended to support the advancement of the City’s overall objectives tied to Major City Goals, Department Strategic Plans, and other priorities that may arise. These goals are in addition to ongoing services described in the ‘Department Programs’ section above.
Strategic Goal(s)
Provide timely and responsive legal advice and support to City Council, Planning Commission, Advisory Bodies, and all City departments to ensure legally compliant implementation of Major City Goal work programs and delivery of core services.
Provide proactive and regular training, advice and support to the City Council, Advisory Bodies, and all City departments regarding compliance with public agency transparency and ethics laws, including the Brown Act, Public Records Act, Political Reform Act, and Government Code Section 1090, as well as Land Use, Planning, and Housing laws, regulation of public spaces, public contracting and bidding laws, public employment and labor laws, first amendment and civil rights laws, and elections laws.
‐ Increased time spent training City staff on obligations regarding maintenance of and public access to complete records to ensure all City staff feel prepared to meet the expectations of the City Attorney’s Office when responding to claims, public record requests, administrative appeals and litigation discovery. Provide timely and effective legal representation and case management of civil claims and litigation cases, as well as effective criminal and civil enforcement and prosecution of the City’s Municipal Code to minimize liability exposure and enhance community welfare. ‐ Continuing communication and coordination with County partners to increase the number of people connected to mental health and welfare services as an alternative to criminal prosecution.
‐ Facilitating an efficient and transparent appeals program for administrative citations in support of the existing initiatives of various departmentsto gain code compliance through education and outreach.
Continue with training and assignment of new staff to achieve departmental sustainability and stability, and to enhance responsiveness, efficiency, and effectiveness in the delivery of legal services.
Financial Plan Page 94
Operating Budget City Attorney
Performance Measures
Performance measures are designed to determine accountability, improve service quality, allocate resources, and evaluate departmental performance in meeting San Luis Obispo’s goals and objectives. 2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Administrative Citation Appeals Received by
the City
113 115 125 125
Measure: Appeals closed without need of a hearing 33 51 60 60 Measure: City assisted corrections to defective
appeals to allow access to hearing
21 35 40 40
Measure: City facilitated hearings on the record
without need for personal appearance by Appellant 40 26 30 30 Measure: Number of hearing days scheduled 19 26 25 25
Objective: Efficient and Transparent Administrative Appeals Program Strategic Goal: Department Objectives
Notes: In October 2024, a City Council adopted fee went into effect for hearing officer review of administrative citation appeals. This has significantly reduced the number of appeals processed beyond the initial request.
Historically, some appellants used the appeal process to delay payment oftheir fines when they did not have a valid basis of appeal.
Notes: Ifmore than one hearing officer convened hearings on the same day, those are counted separately. In the Fall of 2024 an experienced hearing officer passed away. The workload he felt comfortable completing in a single day needed to be broken up when managed by the remaining hearing officers. This has increased the overall number of hearing days that need to be scheduled.
Notes: Closed in some way that did not include a decision being issued (e.g., withdrawn by appellant, untimely filed, voided by the issuing department). Increase in this type of closure is related to the implementation of a fee for hearing officer review and enhanced coordination between departments.
Notes: N/A
Notes: N/A
2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Number of Council, Staff, and Advisory Body
legal trainings, legal updates, and compliance advisory sessions
7 16 20 20
Notes: For FY 2024‐25, monthly City Manager check‐ins now being added to the tally Objective: Legal Training & Compliance
Strategic Goal: Department Objectives
Financial Plan Page 95
Operating Budget City Attorney
2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Percentage of Claims Resulting in Litigation 4.2% 4.8% <5% <5% Measure: Liability Claims Against the City
Reviewed/Managed 72 63 70 70
Measure: Budget increases required to fund defense of
City and address unexpected complex legal issues $70,000 $136,000 $175,000 $175,000 Measure: Number ofmulti‐count complaints filed for
misdemeanor municipal code violations
33 35 30 30
Objective: Municipal Claims, Litigation & Prosecution Management Strategic Goal: Department Objectives
Notes: Litigation not arising from a liability claim is not included in this count (i.e. personnel writs) Notes: Number of claims per year is a forecast and not a goal, with the goal always being to minimize claims and litigation to the fullest extent within City control. Each year the City receives and the department coordinates review of, and response to, approximately this number of Claims Against the City.
Notes: With increased outreach to the unhoused community and coordination between agencies (court, County, mental health and housing community partners, and City departments), and the continuation ofthe recently implemented municipal code prosecutiondiversion program, our goal and expectation is that the need to file criminal complaints will decrease.
Notes: Expected budget increases are a forecast and not a goal. Each year is different and mostly driven by the external variables beyond the control ofthe City. The City has a robust Risk Management program, and is self‐ insured as a member ofthe California Joint Powers Authority. However, not all costs can be anticipated, there have been steady increases in litigiousness, including numerous cases of highly questionable merit that nonetheless drive costs, and each year additional funding is necessary to support litigation defense or h ll h '
Financial Plan Page 96
COMMUNITY DEVELOPMENT
DEPARTMENT
Mission Statement
Our mission is to serve all persons in a positive and courteous manner and help ensure that San Luis Obispo continues to be a healthy, safe, attractive, and enjoyable place to live, work, or visit. We help plan the City's form and character, support community values, preserve the environment, promote the wise use of resources, and protect public health and safety.
About the Department
The Community Development Department includes the Administration, Housing Policy and Programs, Planning, Engineering, and Building & Safety divisions, which develop, implement, and track guiding policies in the City's General Plan. Plans for new construction are reviewed through planning applications to ensure compliance with city standards and policy objectives. Construction is supported by implementing zoning, building, and engineering codes and coordinating with various city departments.
The Community Development Department provides services to the community directly at its public counter, and services are offered online on the department’s website. The department helps maintain the health and safety of the community directly through code enforcement activities and indirectly by guiding the City's urban form from concept to construction.
Budget at a Glance
Actuals Budget Financial Plan
CDD FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Staffing 5,642,668 6,415,865 6,416,659 6,647,729 YoY Change 14% 0% 4%
Other Operating Expenditures 1,529,248 2,411,835 1,957,998 1,776,832 YoY Change 58% ‐19% ‐9%
Total 7,171,915 8,827,701 8,374,657 8,424,562 YoY Change 23% ‐5% 1%
Financial Plan Page 97
Department Programs
Financial Plan Page 98
Note: The budgets above may include expenditures outside of the General Fund and therefore will not tie to the General Fund departmental budget.
Fiscal Analysis
Expenditures are proposed to decrease from FY 2024‐25 to FY 2025‐26 by $453,044 or ‐5%. Staffing is projected to remain the same due to the fact that there are no new positions proposed, and that the Department is losing three temporary employees that helped supplement work in the department. Other operating expenditures are proposed to decrease by $453,837 or ‐19%. The decrease is attributed to one‐ time funds that were allocated in previous yearsto complete specific projects to carry‐out Major City Goal work programs as well as the reduction in the department consultant budget due to an anticipated reduction in development projects. Community Development anticipates completing the vast majority of plan checks in‐house. This preserves the consultant budget, which would typically be expended if there were more projects. If development increases, the consultant budget will be utilized to complete the work over the next two years.
Financial Plan Page 99
The budget includes four Significant Operating Budget Changes in the amount of $374,120, summarized in the table below.
Significant Operating Budget Changes
Opportunities and Challenges
The Department has made significant progress with stabilizing staffing levels and filling positionsthat were previously difficult to fill, particularly in the Engineering Division. Now that staffing has stabilized, the Department is focused on onboarding new staff and developing effective teams. In addition, due to the adoption of “pro‐housing” policies, programs, and projects over the past several years, the City is making significant progress toward meeting the provision of additional housing units and fulfilling its Regional Housing Needs Allocation (RHNA) requirements. The ongoing interest from the development community presents opportunities for additional projects that will continue to help the city meet its housing and economic goals.
The Department continues to provide transparency and performance tracking through online reporting of key performance indicators. The Department has created online dashboards that provide accurate expectations for the City’s customers regarding permit processing timelines, code enforcement responses, and customer service results, including planning cycle times, average review times, and division statistics. The Community Development Department remains committed to increased customer satisfaction and devising ways to streamline processes.
Many of the constraints facing the Department are external in nature. Housing and Neighborhood Livability and well as and Homelessness Response are Major City Goals in 2025‐27, and the Department continues to implement its work program to facilitate housing production across the housing continuum and advance programs for homelessness response. However, given the increasingly high housing costs, supporting housing partners to develop below‐market‐rate housing remains challenging. In addition, the economy has experienced turbulence and inflation, resulting in a slowdown of permit and inspection activity. As a result, the Department does not expect to meet revenue projections in FY 2024‐25 and has adjusted revenue projections downward in this Financial Plan, utilizing ‘actuals’ (revenue data). Stagnant building permit activity may also result in less affordable housing. Fewer in‐lieu fees are being collected to leverage additional below‐market‐rate housing through supporting tax credit‐financed projects. 2025‐26 2026‐27
Expense Offset General Fund
Contribution Expense Offset General FundContribution
Funding for expansion of CAPSLO's
Prado Safe Parking program.
‐ 13,000 13,000 ‐ 13,000 13,000 Ongoing Funding for CAPSLO's Rotating
Overnight Safe Parking pilot program.
80,984 ‐ 80,984 29,864 29,864 One‐Time Funding for CAPSLO's Hotel Voucher
Program.
90,000 ‐ 90,000 90,000 ‐ 90,000 Ongoing Funding for consultant expense to
conduct an impact fee and
infrastructure finance program
analysis and impact fee study update.
190,136 ‐ 190,136 ‐ ‐ ‐ One‐Time Total 374,120 190,136 183,984 132,864 ‐ 132,864 SOBC Description One‐Time/
Ongoing
Financial Plan Page 100
Code Enforcement is also experiencing an increasing workload. Last year, the Code Enforcement team consistently received record‐breaking numbers of code investigation requests, which made it difficult to meet target timelines for addressing community concerns. In addition, the increased interest in addressing unpermitted Greek houses and renter protections is requiring a shift in workload within the code enforcement division. The Division will likely need to recalibrate priorities in the upcoming budget cycle to address these emerging issues.
Major City Goal Contributions
The Department is the lead on the Housing and Neighborhood Livability and Homelessness Response Major City Goals and supports workplan items in other major city goals. For Housing and Neighborhood Livability, the Department will focus on (1) facilitating sustainable growth, (2) expansion and diversification of housing opportunities for all, and (3) ensuring that housing is safe, healthy, and affordable while (4) facilitating the study and potential creation of stronger protections for renters and (5) fostering diverse, connected and safe neighborhoods that are livable for all. For Homelessness Response, the Department will focus on (1) collaboration with partners to prevent and reduce homelessness, (2) leverage external funding with regional partners to expand crisis response and continuum of shelter, and (3) support programs that implement the Homelessness Response Strategic Plan and, (4) refine approaches to reduce the impacts of homelessness to balance safety and community well‐being. The specific workplan itemsthat the Community Development Department is responsible for includes:
Goal: Housing and Neighborhood Livability:
o Organize a focus group to explore barriers to residential infill development – including specific discussions about the Downtown Core – and produce a memo to Council to help guide updates to zoning regulations
o Conduct a study session on the status of the City’s growth management regulations o Conduct an educational forum and improve the implementation of Below Market Rate (BMR) best practices to market and streamline the purchase and rental process for BMR units
o Create an informational handbook to assist the community in understanding state and local regulations for the development of ADUs and the creation of Urban Lot Splits and evaluate options for adopting pre‐approved ADU plans
o Annually, or as needed for compliance, and by obtaining information from housing partners, complete updates to the Zoning Regulations to implement state law and to address identified barriers to affordable housing and housing production. o Work with SLOCOG to determine the City's RNHA allocation for the 7th Cycle Housing Element Update.
o Initiate an update to the 7th Cycle Housing Element through the creation of an RFP for consultant services, and present RFP to the City Council with a study session on potential scoping for Land Use and Circulation Element Update
Financial Plan Page 101
o Conduct a study session with the City Council to identify needs and opportunities regarding renter protections, based on the memo produced in 2024, and receive direction on items for further consideration and development.
o Conduct a study session with the City Council on potential Rental Housing Registry. This study session would discuss parameters of potential registry and discussion of resources needed for establishment and ongoing maintenance of registry. o Adopt and implement updated California Building Standards and local amendments (building code)
o Create a strategic plan for the safe housing program, and conduct outreach and engagement with a focus on both tenants and landlords.
o Initiate an update to the Tree Regulations to streamline housing projects. o Conduct a study session with Council on Code Enforcement priorities related to safe/livable neighborhoods and receive feedback on priorities. Discuss potential updates to property maintenance standards.
o Update property maintenance standards to ensure they align with City priorities related to safe and livable neighborhoods and housing.
o Create a project plan and standard operating procedures for Community Development enforcement of zoning code regulations pertaining to Greek houses. Consider potential updates to zoning code to facilitate efficient regulation of Greek houses. Goal: Homelessness Response:
o Data ‐ Support efforts to improve data access between City, County and service providers to more effectively facilitate connecting unhoused individuals to shelter and services.
Identify data platform needs and develop implementation plans. o Prevention ‐ Collaborate quarterly with SLO County and housing and homeless services providers to streamline resources to enable individuals and families to remain in housing. o Homeless Services ‐ Meet monthly with CAPSLO to support effectiveness of the 40 Prado Homeless Service Center, including updates to Good Neighbor Policy which will be presented to Council in Q2 of FY25‐26.
o Homekey ‐ Utilize State Homekey funding to implement Calle Joaquin Homekey project, providing 75 permanent supportive housing units which are scheduled to be fully occupied in Q1 of FY‐25.
o Encampment Resolution Funds ‐ Complete outreach work as described in the City's Subrecipient Agreement with SLO County for implementation of the Welcome Home Village project to address encampments along the Bob Jones Bike Trail. o Other Funding Opportunities ‐ Actively seek and vet additional funding sources to expand crisis response efforts and continuum of shelter programs in collaboration with regional partners. Report on any progress to Council in Q4 of FY26‐27, unless grant applications are brought to Council for approval in advance of that timeline. o Safe Parking ‐ Facilitate implementation of the Rotating Overnight Safe Parking Pilot Program in partnership with CAPSLO and local faith community partners to expand safe parking capacity and address vehicular homelessness.
Financial Plan Page 102
o Hotel Voucher Program ‐ Continue implementation of Hotel Voucher Program to provide expanded capacity at 40 Prado Homeless Services Center as the CAPSLO Family Shelter is developed at 46 Prado Rd.
o Feedback Sessions ‐ Conduct feedback sessions with six key stakeholder groups to inform updates to the HRSP and address specific issues related to health, safety, and community well‐being for each stakeholder group.
o HRSP Update ‐ Update the HRSP for 2027‐2031 in alignment with the Countywide Plan to Address Homelessness.
o Outreach & Coordination ‐ Facilitate bi‐weekly interdepartmental field team meetings and bi‐weekly inter‐agency outreach meetings to coordinate outreach, enforcement, and encampment cleanup efforts to reduce community‐wide impacts of homelessness. o Ask SLO ‐ Receive and respond to community member Ask SLO requests related to homelessness response and transient encampments to more efficiently address health and safety concerns. In response to Ask SLO requests, Homelessness Response staff will coordinate Field Team process for posting camps, conducting outreach, storing belongings, addressing cleanup needs, and tracking data in alignment with the City's CAMP Standards.
o Environmental Mitigation ‐ Coordinate efforts to mitigate environmental impacts and protect creek systems in collaboration with regional agencies including quarterly meetings with Caltrans, CHP, and SLO County. Develop and implement a Vegetation Management Plan.
Goal: Cultural Vitality, Economic Resilience, and Fiscal Sustainability:
o Complete the update to the City's Historic Resources Inventory. Complete initial phase of the project updating the Historic Preservation Ordinance and Historic Context Statement (Phase 1) and complete the update of the Historic Resources Inventory (Phase 2).
The Department also assists in the implementation of the Open Space, Climate Action, and Resilience Major City Goal by implementation of the Climate Action Plan and Lead by Example Plan Work Programs, implementation of disaster mitigation effortsto reduce risksfrom floods and fires,strengthen community resilience through emergency preparedness, community networks, and planning efforts, protect, sustain and advance open space and natural and historic resources and expand trail connectivity and accessibility to support biking, hiking, and outdoor enjoyment for all community members. In addition, the Department assists with the Cultural Vitality, Economic Resilience, and Fiscal Sustainability goal and the Infrastructure goal through coordination with staff and involvement in infrastructure financing and the review and approval of entitlements and permits for development projects. The Department will also be working closely with the Fire Department to implement actions and requirements related to State Fire Hazard maps, as noted in the work programs led by Fire in the Housing and Neighborhood Livability Goal. 2025‐27 Department Goals
The department’s strategic priorities for the 2025‐27 Financial Plan are intended to support the advancement of the City’s overall objectives tied to Major City Goals, Department Strategic Plans, and other priorities that may arise. These goals are in addition to ongoing services described in the ‘Department Programs’ section above.
Strategic Goal(s)
Financial Plan Page 103
Lead the implementation of the Housing and Neighborhood Livability and Homelessness Response Major City Goals.
Support services to the lead departments in implementing other Major City Goals by collaborating and sharing resources and subject matter expertise.
Provide excellent customerservice to internal and external customers, as well as advisory body members, regarding the processing of permit applications and policy development.
Promote a safe community and healthy neighborhoods by implementing Building and Safety Division programs, including Code Enforcement.
Monitor growth and support and update General Plan policies and Zoning Regulationsstandardsto ensure coordination with all City Departments providing municipal community services.
Performance Measures
Performance measures are designed to determine accountability, improve service quality, allocate resources, and evaluate departmental performance in meeting San Luis Obispo’s goals and objectives.
Financial Plan Page 104
Financial Plan Page 105
Operating Budget Finance
FINANCE DEPARTMENT
Mission Statement
Safeguarding the City’s resources and fiscal health by implementing financial policies, procedures, and reporting systems to serve the citizens and enable operating departments to achieve their objectives.
About the Department
The Finance Department is responsible for managing the City’s financial operations in accordance with applicable law, policies, standards, and procedures. This includes the preparation of the City’s budget and financial reports, administration of the City’s treasury and revenue operations, management of the City’s fiscal resources, and administration of the accounting functions including indirect City‐wide costs not easily charged to operating programs or projects. The Department also prepares the City’s audit and its Comprehensive Annual Financial Report as well as the Popular Annual Financial Report. Lastly, the Department assists the City Manager’s office in monitoring and reporting on both annual revenues and expenditures.
Budget at a Glance
Actuals Budget Financial Plan
Finance FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Staffing 1,780,850 2,124,521 2,196,169 2,275,768 YoY Change 19% 3% 4%
Other Operating Expenditures 496,744 491,810 574,187 576,458 YoY Change ‐1% 17% 0%
Total 2,277,595 2,616,331 2,770,356 2,852,226 YoY Change 15% 6% 3%
Financial Plan Page 106
Operating Budget Finance
Department Programs
Fiscal Analysis
Expenditures are proposed to increase by $154,025 or 6% compared to FY 2024‐25. Staffing is projected to increase by $71,648 or 3%, driven by annual adjustments to compensation and changes related to recently filled positions. No new positions have been added. Other Operating Expenditures are expected to increase by $82,377 or 17%, which reflects a reallocation of $90,000 in budget for credit card processing fees for business license renewals which were previously budgeted and accounted for in a non‐ departmental cost center. Adjusting for thisreallocation, and in an effort to constrain expenditure growth, non‐staffing budgets were reduced by $7,623, despite budgeting for annual increases for contract services. This reduction was achieved through reductions to various accounts, based on a careful review of prior years’ actuals. As a result, the department will have limited ability to complete any ad‐hoc projects requiring external resources. The department also notes that adding credit card processing fees to the department’s budget exposes it to an unavoidable variable cost.
Program
Total
Expenditures Staffing
2001 Administration: Leads, organizes, and monitors the divisions within the Finance Department. It is responsible for managing the City’s treasury function and financial operations in accordance with established accounting standards, policies and strategic plans.
370,023 1.50 FTE
2002 Budget: Coordinates development and preparation of the City’s two‐year Financial Plan budget, the Financial Plan Supplement, corresponding quarterly reports to the City Council, and ongoing budget administration. The program is responsible for implementation of budgetary controls and financial reporting and compliance with adopted Financial Plans and budget appropriations. 239,021 1.00 FTE
2003 ‐ Revenue Management: Administers the City’s treasury and revenue operations in accordance with established fiscal policies and industry best practices. It provides day‐to‐day cashierservice to City customers and is proactive in developing automated features and conveniences for an efficient revenue collection.
586,620 3.00 FTE
2004 Purchasing: Supports and facilitates the timely and efficient procurement of supplies, materials, equipment, and services required by City Departments while ensuring compliance with City Policies, applicable government regulations, and best practices in public sector procurement to obtain the lowest cost while maintaining appropriate internal controls. Purchasing aids all departments in their purchasing activities.
251,548 2.00 FTE
2005 Accounting: Prepares citywide financial statements, ensures integrity of financial data, processes accounts payable and payroll, and prepares financial reports in compliance with Federal and State regulations. Accounting is responsible for developing and monitoring the reporting systems that help assure the City’s long‐term fiscal health, providing quality customerservice, and protecting the City’s financial assets from unauthorized use. 1,323,145 8.00 FTE
Total 2,770,356 15.50 FTE
Financial Plan Page 107
Operating Budget Finance
Significant Operating Budget Changes
No Significant Operating Budget Changes are recommended for the department.
Opportunities and Challenges
The department is prepared for the opportunity to help the City navigate tighter than usual economic conditions. Specifically, the team will focus on improving the quality ofservicesthat it providesto internal customers and the community in order to prepare and manage to constrained budgets. While the difficult budget circumstances present a challenge to continuing to support the programs and services that the City provides to the community, there is significant opportunity to build trust with the City’s stakeholders through proactive and transparent communication about budgetary limitations and the actions needed in order to bring the budget into structural, long‐term balance.
The department also has considerable opportunity to update financial policies and procedures to support the current organization, given the increasing complexity of fiscal issues being addressed by municipal governments throughout the State. These include the challenge of financing infrastructure development to support mandates around the development of housing, and increasingly complicated requirements for financial transparency and reporting. On a more local level, the department hasthe opportunity to engage with Economic Development and other departmentsto refine the City’s Business License and Tax program to ensure that the City is collecting businesstaxesto support the City’s budget, and additional assessments to support Downtown SLO’s work to promote the downtown area.
As noted throughout this document, the current economic uncertainty and higher interest costs for borrowing both present significant challenges for the City as it works to maintain high quality services provided to the community and build key infrastructure projects to support the growing community. The department will play a key role in identifying mechanismsto support future costs, but notesthat tradeoffs will be needed in to support new initiatives. Ongoing reconfiguration of the Oracle Enterprise Resource Planning (ERP)software also continues to pose significant challenges, almostseven years after the system was first implemented. The City must respond to Oracle‐imposed updates that it does not have any control over and that impact major functions of the City. The department will continue to work closely with Information Technology and Human Resourcesto make importantsystem improvementsto minimize compliance related issues, but notes that this time intensive work impacts that department’s ability to perform its primary functions. Finally, the department continues to lead financial recovery efforts related to the 2023 Winter Storms. The process has moved very slowly due to inconsistent guidance provided by the Federal Emergency Management Agency (FEMA), but the department will continue to work with FEMA and the California Office of Emergency Services (CalOES) to secure reimbursement for incurred costs in order to ensure that the City is able to respond to future emergencies.
Major City Goal Contributions
The Finance Department supports all Major City Goals by providing timely and regular reporting to the City Council and the community on the status and progress of the strategic goals. The department has an integral role in the Cultural Vitality, Economic Resilience, and Fiscal Sustainability Major City Goal by leading development and management of annualspending plansthatsupport the City’s basic services and the City Council’s priorities in a sustainable manner. In the 2025‐27 Financial Plan period, the department Financial Plan Page 108
Operating Budget Finance
will develop and implement a long‐term strategy to address a forecasted General Fund deficit, evaluate banking services providersto assist the City in managing itsfunds, engage in an effort to improve the City’s existing infrastructure financing program, and refine the City’s businesslicense and tax program to ensure compliance with Municipal Code provisions and collection of business tax owed to the City. 2025‐27 Department Goals
The department’s strategic priorities for the 2025‐27 Financial Plan are intended to support the advancement of the City’s overall objectives tied to Major City Goals, Department Strategic Plans, and other priorities that may arise. These goals are in addition to ongoing services described in the ‘Department Programs’ section above.
Strategic Goal(s)
Continue to monitor and look for ways to reduce outstanding debt, including bonds and unfunded pension liabilities, to maintain the City’s credit ratings and ensure marketability of potential future debt issuances.
In coordination with Information Technology and Human Resources, continue to enhance and utilize the Oracle Enterprise Resource Planning and Human Resources Management System in support of accurate and timely accounting processes and reporting.
Develop and implement a long‐term strategy to achieve structural balance for the General Fund while minimizing impacts to the community to the greatest extent possible.
Develop financial and budgetary reports that are transparent and accessible to increase understanding of the City’s financial condition and support meaningful community engagement.
Support development of Citywide financial acumen by ensuring that staff has access to information, maintaining comprehensive budgetary and fiscal policies, and providing Citywide trainings on priority areas including budget development and management, payroll, and purchasing.
Administer the City’s purchasing and contracting procedures in accordance with the purchasing policy to support all departments in purchasing goods and services at the best total value for the City’s external and internal stakeholders.
Administer the City’s Business License and Tax program to maximize compliance with Municipal Code provisions and ensure collection of business taxes to support provision of City services.
Performance Measures
Performance measures are designed to determine accountability, improve service quality, allocate resources, and evaluate departmental performance in meeting San Luis Obispo’s goals and objectives.
Financial Plan Page 109
Operating Budget Finance
2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Number of calendar days following year‐end
until ACFR is issued.
170 170 170 170
Objective: Financial Stability
Strategic Goal: Fiscal Policies
Notes: N/A
2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Twelve‐month total rate of return on the
City's investment portfolio.
4.6% 3.0% 3.0% 3.0%
Measure: General Fund debt service costs as a
percentage ofrevenue
1.5% 1.4% 1.5% 1.3%
Objective: Financial Stability
Strategic Goal: Fiscal Management
Notes: Based on market conditions and outside the department's control Notes: Targets based on existing debt loads and revenue forecasts 2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Percentage of business licenses renewed
timely, prior to enforcement action being taken.
91.7% 93.0% 95.0% 95.0%
Measure: Number of Finance‐led trainings provided to
City staff.
5 8 13 13
Objective: Financial Stability
Strategic Goal: Customer Service
Notes: While timely renewals are beyond our control, this measure is designed to track the success achievable through proactive outreach and enhanced education about the business licensing program Notes: Measured by training topic, not count of individual trainings . Many training topics are delivered numerous times during the year, but will be counted as one training.
Financial Plan Page 110
Operating Budget Fire
FIRE DEPARTMENT
Mission Statement
To enhance and protect the lives, environment, and property of our community and its visitors.
About the Department
In addition to providing exceptional and compassionate emergency response, the Fire Department embraces comprehensive fire prevention and education strategies that include fire and life safety inspections, plan review services, fire/arson investigation, fire safety and public safety education, and City emergency management. The Fire Department has automatic and mutual aid agreements with surrounding departments, California Office of Emergency Services, and the Los Padres National Forest.
With the values of Service, Loyalty, Ownership, Family, Integrity, Respect and Excellence, the Department’s vision is to be a progressive organization that leads the community in public safety and preparedness demonstrated through an unwavering commitment to the protection of lives, property, and our environment. The service the department provides will be of the highest quality recognized against local, state, and federal standards.
Budget at a Glance
Actuals Budget Financial Plan
Fire FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Staffing 14,840,169 15,929,133 16,907,084 17,764,994 YoY Change 7% 6% 5%
Other Operating Expenditures 1,102,835 1,043,509 1,318,036 1,238,906 YoY Change ‐5% 26% ‐6%
Total 15,943,005 16,972,642 18,225,120 19,003,900 YoY Change 6% 7% 4%
Financial Plan Page 111
Operating Budget Fire
Department Programs
Financial Plan Page 112
Operating Budget Fire
Note: The budgets above may include expenditures outside of the General Fund and therefore will not tie to the General Fund departmental budget.
Fiscal Analysis
Expenditures are proposed to increase by $1,252,478 or 7% due largely to previously negotiated cost of living increases in the fire union bargaining agreement. Other less impactful salary increases will be for management staff who will receive a 3% cost of living increase in July 2025. In an effort to constrain expenditure growth, non‐staffing costs are flat with FY 2024‐25 adopted levels. This was achieved through eliminating unrealized contract CPI increases, contract savings by hiring Mobile Crisis Unit staff internally (discussed in more detail below), and eliminating outdated budgeted items such as printing and directory subscriptions. Savings realized from those accounts were primarily reallocated to Apparatus Services and Emergency Response medical supplies. Both of these areas have experienced price increases and higher operational demand, yet they remain critical to maintaining the department’s ability to provide timely, effective service to the community.
The proposed budget includes two SOBC in the amount of $40,800, summarized in the table below.
Significant Operating Budget Changes
Opportunities and Challenges
Asthe city grows and service demandsincrease, the department has adapted to evolving challenges while seeking opportunities to improve efficiency and effectiveness. Through thoughtful decision‐making and collaboration, capabilities can be enhanced, innovative solutions implemented, and a high level of service maintained for residents.
The department continuesto apply for grantsto alleviate budget constraints while enhancing capabilities.
Recent awards have funded new electric powered extrication equipment, trained staff to paramedic level of service and provided Personal Protective Equipment (PPE) for prevention staff. Leveraging grant funds, the department can maintain high service standards while easing pressure on the General Fund.
The Mobile Crisis Unit (MCU) was established in Spring of 2022, and was originally staffed with a Transitions Mental Health Association (T‐MHA) caseworker and an Emergency Medical Technician (EMT).
It was quickly discovered that services could be improved by restructuring the team. The T‐MHA caseworker position was replaced with a Community Resources Services Specialist (CRSS) position, an internal position within the City. The CRSS is now paired with a contract Licensed Psychiatric Technician (LPT) from SLO County Behavioral Health. This position is paid by opioid settlement funds received from lawsuits the City joined through multidistrict litigation to seek compensation for costs incurred due to the 2025‐26 2026‐27
Expense Offset General Fund
Contribution Expense Offset General Fund
Contribution
Fire suppression equipment for
electric vehicles.
‐ 10,800 10,800 ‐ ‐ ‐ One‐Time Increase to Fire fuel budget. 30,000 ‐ 30,000 30,000 ‐ 30,000 Ongoing 40,800 ‐ 40,800 30,000 ‐ 30,000 One‐Time/
Ongoing
Total
SOBC Description
Financial Plan Page 113
Operating Budget Fire
opioid crisis. These funds are anticipated to diminish over the coming years, so new funding sources will need to be identified for the contract LPT in the future. Together, these staff members have strengthened the MCU’s capacity to deliver more comprehensive support and provide outreach to vulnerable populations in the city connecting them with resources beyond the initial crisis response.
Staffing remains a challenge with several retirements and resignations over the pastseveral years, leading to an increased reliance on overtime to backfill essential positions. While overtime ensures continuity of service, it also places strain on the budget. Staffing shortages have affected every division which has resulted in some salary savings to offset the increase in overtime. The department anticipates full staffing across all divisions in FY 2025‐26, eliminating salary savings while also reducing some overtime needs.
Repairs on aging apparatus’ coupled with fuel price surges led to savings in other divisions being reallocated to Apparatus Services. Truck 1, which had been experiencing engine failure and driving up repair costs, underwent a full drivetrain refurbishment, including a new engine that was completed entirely in house by the Supervising Fire Vehicle Mechanic. This will extend the life of Truck 1 to its projected 2030 end of lifespan while also reducing repair costs in the immediate future.
CalFire released the Local Responsibility Area Hazard maps for San Luis Obispo during FY 2024‐25. Over the 2025‐2027 Financial Plan, implementation of the measures tied to adoption of the Hazard maps will drive a significant portion of the workload for the Fire Prevention Bureau. The requirements associated with Hazard maps will be a significant challenge but also represent an opportunity to codify several risk reduction activities in the city, such as Vegetation Management, Home Hardening and Defensible Space.
The full fiscal impact of the hazard map implementation is not yet known. Staff will programmatic and budget proposals to address the requirements of the State Hazard Maps by the end of the Fiscal Year 25/26.
Major City Goal Contributions
The Fire Department contributes to the advancement of Major City Goals through core services and daily activities.
Cultural Vitality, Economic Resilience and Fiscal Sustainability 1b. Fire is working with Economic Development on streamlining operational permits and occupancy compatibility for new and existing businesses.
1c. Work with Economic Development on a disaster preparedness and resiliency guide for businesses and host annual training.
5d. Continue to work with various departments on refinement of City’s Business License and Operational Permit programs.
Diversity, Equity and Inclusion
1d. Continue to expand outreach to underrepresented groups in the fire service through intern program and outreach to local educational/ training institutions including Cal Ploy, Cuesta and Allan Hancock College.
Housing and Neighborhood Livability – Healthy, Safe and Affordable Financial Plan Page 114
Operating Budget Fire
1c. Conduct study session in Fall of 2025 on implementation of the Fire Hazard Severity Zone Maps 1d. Implement actions and requirements of the State Fire Hazard Severity Zone Maps. 3d. Fire will coordinate with Building and Safety on Building code adoption and will lead on WUI and Fire Code adoption.
4a. Work with City Arborist and Tree Committee to implement consistent Defensible Space regulations.
Homeless Response
1a. Data ‐ Continue to work with Homeless Response Manager on collecting and coordinating data for MCU operations.
1c Homeless Services ‐ Coordinate with Homeless Response on quarterly meetings with CAPSLO 1d. Justice Services ‐ Coordinate with Justice services on function of MCU. 2c. Other Funding Opportunities ‐ Continue to seek out external funding operations for MCU including ECM and CalAim funded Mobile Crisis services.
4b. SLOFD MCU Team ‐ Continue to refine operations of the MCU and identify external funding sources. 4e. Environment Mitigation ‐ Continue to integrate MCU services with vegetation management opportunities to protect the environment and reduce potential for ignition sources in riparian zones in close proximity to the built environment.
Infrastructure and Sustainable Transportation
1 – Continue to partner with Transportation team on coordination of emergency response and evacuations in the implementation of Vision Zero
3d. Evaluate and implement EV Firefighting tools and technology to protect waterways and infrastructure. 3e. Collaborate with Avila Ranch contractor on design and construction of interim fire station.
Open Space, Climate Action, and Resilience
2b. Continue to work with ONSR to complete the Vegetation Management Plan 3 – Work with internal and external stakeholders on community resilience activities through emergency preparedness, community networks and planning efforts. Includes CERT, FireWise and pop‐up reslience hubs.
Financial Plan Page 115
Operating Budget Fire
2025‐27 Department Goals
The department’s strategic priorities for the 2025‐27 Financial Plan are intended to support the advancement of the City’s overall objectives tied to Major City Goals, Department Strategic Plans, and other priorities that may arise. These goals are in addition to ongoing services described in the ‘Department Programs’ section above.
Strategic Goal(s):
In coordination with Public Works and Human Resources, continue to enhance the department’s diversity, equity, and inclusion through improvements to fire station facilities, firefighter recruitment, and training.
In coordination with the Office of Sustainability, continue to reduce the department’s carbon footprint to support Climate Action through best practices and thoughtful replacement of department apparatus resources. In coordination with the Police Department, expand the Mobile Crisis Unit hours and service through outside funding opportunities and partner agencies.
Continue community preparedness efforts for disasters through development of disaster plans and monitoring creek maintenance and wildfire protection plans.
Continue the implementation of the five strategic directions identified in the Department’s Annual Operational Plan as part of the 5‐Year Strategic Plan by connecting with our community, continuously evaluate programs and service delivery, analyze relevant data to inform decision making, improve organizational culture, sustainability, and health, and support fiscal sustainability in department operation.
Performance Measures
Performance measures are designed to determine accountability, improve service quality, allocate resources, and evaluate departmental performance in meeting San Luis Obispo’s goals and objectives.
Financial Plan Page 116
Operating Budget Fire
2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Meet the Total Response Time (TRT) goal of 7
minutes or less to 90% of all lights‐and‐siren
emergencies in the City as defined by the
Department’s Master Plan. TRT Includes Call
Processing Time, Turnout Time, and Travel Time.
8:30 8:30 7:00 7:00
Measure: Meet the Call Processing Time Goal of 1
minute or less to 90% of all lights‐and‐siren
emergencies in the City as part of TRT
1:32 1:30 1:00 1:00
Measure: Meet the Turnout Time goal of 2 minutes or
less to 90% of all lights‐and‐siren emergencies in the
City as part of TRT
2:05 1:59 2:00 2:00
Measure: Meet the Travel Time goal
of 4 minutes or less to 90% of all lights‐and‐siren
emergencies in the City as part of TRT.
5:45 5:47 4:00 4:00
Objective: Timely Emergency Response to ensure rapid care and hazard mitigation Strategic Goal: Other Department Objectives
Notes: Adjustments in process have allowed turnout time goal to be achieved.
Notes: Travel time is impacted by construction, traffic, and expanded response zones. Some distant locations with greater travel times generate a large proportion of calls increasing travel time.
Notes: While it is not anticipated the department will meet the time performance targets in FY2024‐25, they remain unchanged due to National Fire Protection Association recommended standards.
Notes: Fire Department staff continues to work with Police Department staffto improve call processing times. 2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: % of Fire Department Development Review
activities completed within published cycle times.
58.20% 80% 80% 80%
Notes: High staff turnover and vacancies affected completion rate. A new Fire Marshal has implemented process improvements to continue to improve turnaround time. Vacancies expect to be filled by year end expanding capacity for the division.
Objective: Provide timely service to the development community Strategic Goal: Housing
Financial Plan Page 117
Operating Budget Human Resources
HUMAN RESOURCES DEPARTMENT
Mission Statement
Serving the people who serve our community.
About the Department
The Human Resources Department provides support to all City departments including coordination of recruitment and selection processes; onboarding; classification and compensation; human capital management support; labor relations and negotiations; performance management; employee training and development; employee benefit administration; and leaves and disability administration. In addition, the Department oversees Risk Management and the Insurance Fund which includes liability and property claims administration; workers' compensation administration; employee safety and compliance; insurance oversight; and contract review. The Department’s Wellness program promotes a healthy and safe organization through the Employee Assistance Program, a Preventative Mental Health Services Program for public safety employees, and various education and wellness activities.
Budget at a Glance
Actuals Budget Financial Plan
HR FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Staffing 1,321,146 1,567,596 1,595,615 1,673,257 YoY Change 19% 2% 5%
Other Operating Expenditures 850,278 710,122 442,218 445,103 YoY Change ‐16% ‐38% 1%
Total 2,171,424 2,277,718 2,037,832 2,118,360 YoY Change 5% ‐11% 4%
Financial Plan Page 118
Operating Budget Human Resources
Department Programs
Fiscal Analysis
Expenditures are proposed to decrease in FY 2025‐26 by $239,886 or ‐11% due to items that were moved to the non‐departmental cost center or the City Attorney’s Office, such as legal fees and the leased office space at 994 Mill St. In an effort to constrain expenditure growth, non‐staffing costs are also below FY 2024‐25 adopted levels. This was achieved through a reductions in the Citywide training budget, classification and compensation consultant support, and renegotiated contracts with vendors.
Opportunities and Challenges
The Human Resources (HR) Department is pursuing initiatives to enhance employee engagement and satisfaction through its onboarding process, training and development programs, and benefits offerings.
A Citywide employee engagement survey will be offered during FY 2026‐27, and the results will inform future actions on continuing to prioritize the importance of investing in the City workforce.
The department is looking for ways to streamline administrative tasks and maximize value for employees.
For example, HR staff are working with the City’s benefits broker as well as an employee committee to explore the consolidation of deferred compensation recordkeepers. There is a continued opportunity to enhance the use of the City’s Human Capital Management system (Oracle Cloud), such as expanding options for employee and manager self‐service to reduce manual data entry. However, progress is limited due to the internal Oracle team’s ongoing focus on compliance‐based projects. Additionally, the department continues to work on maximizing use of the City’s applicant tracking system (NEOGOV) for more efficient and effective recruitment and selection process, and fully transitioning personnel filesfrom paper to electronic format.
Program
Total
Expenditures Staffing
3001 Human Resources Administration: The Human Resources Administration Program provides support to all City departments in attracting, supporting, and retaining highly qualified employees. The Program manages a variety of functions including coordination of recruitment and selection, onboarding, classification and compensation, human capital management support, performance management, employee training and development, labor relations and negotiations, employee benefits, leaves and disability administration, and statutory and regulatory compliance.
1,982,033 10.00 FTE
3003 Wellness: The Wellness Program aids in managing the life experience of our employees by providing employee tools and education to improve their physical and emotional well‐being, thus enhancing employee productivity, resiliency, and performance. The program provides employees with education and programs around fitness, nutrition, and health and safety information. In addition, the program provides professional counseling and referral services through the Employee Assistance Program and a Preventative Mental Health Services Program for public safety employees.
55,800 0.00 FTE
Total 2,037,832 10.00 FTE
Financial Plan Page 119
Operating Budget Human Resources
New employment related regulations continue to be introduced, requiring additional staff time to implement new policies and practices to ensure legal compliance.
The volume of recruitments remains high and certain positions are difficult to fill. The department is considering ways to speed up time to hire, such as decentralizing portions of the recruitment process.
There is a greater need for coaching and training to support the large number of employees who are new to their roles, particularly supervisors.
The volume of leave of absence requests, accommodation requests, and other complex personnel matters has also limited staff’s ability to pursue program enhancements.
The department is seeking various ways to contain liability and workers’ compensation claim costs, such as increasing the self‐insured retention level for the liability program with California Joint Powers Insurance Authority (CJPIA) and implementing various policies related to safety and employment practices.
Significant Operating Budget Changes
No significant operating budget changes are recommended for the department.
Major City Goal Contributions
The Human Resources Department supports the Cultural Vitality, Economic Resilience, and Fiscal Sustainability Major City Goal by negotiating successor agreements with employee groups in alignment with Council adopted Labor Relations Objectives, as well as taking action to contain liability and workers’ compensation claim costs. The department also supports the Diversity, Equity, and Inclusion Major City Goal through review and revision of relevant policies and practices, improvements to the recruitment and selection process, and providing DEI‐related training for staff of all levels. 2025‐27 Department Goals
The department’s strategic priorities for the 2025‐27 Financial Plan are intended to support the advancement of the City’s overall objectives tied to Major City Goals, Department Strategic Plans, and other priorities that may arise. These goals are in addition to ongoing services described in the ‘Department Programs’ section above.
Strategic Goal(s)
1. Attract and retain top talent to meet the needs of the organization. a. Decrease time to hire through efficient recruitment processes. b. Increase employee engagement and satisfaction, resulting in fewer vacancies and increased tenure.
2. Empower employees to reach their full potential.
a. Facilitate an evaluation system to deliver clear performance expectations and regular, timely feedback.
3. Reduce the total cost of workers’ compensation claims. a. Facilitate return to work through modified duty assignments to support employee well‐ being while also minimizing costs.
Financial Plan Page 120
Operating Budget Human Resources
Performance Measures
Performance measures are designed to determine accountability, improve service quality, allocate resources, and evaluate departmental performance in meeting San Luis Obispo’s goals and objectives. 2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Number ofNew Hires Processed 104 133 130 130
Measure: Median Time to Hire 93 88 85 85
Objective: Attract and retain top talent to meet the needs ofthe organization.
Strategic Goal: Decrease time to hire through efficient recruitment processes.
Notes: New hires processed refers to the total number of new temporary, contract, and regular part‐ and full‐time employees hired and processed by HR staff (i.e., added to HCM system, provided first‐day orientation, enrolled in applicable benefits, etc.), excluding temporary employees hired in Parks and Recreation.
Notes: Time to hire is defined as the number of calendar days from the date a hiring requisition is submitted to the date a conditional job offer is extended for regular part‐ and full‐time employees. 2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Median Tenure of Regular Workforce 5 Years 4.9 Years 5 Years 5 Years Measure: Vacancy Rate 8% 9% 9% 9%
Notes: The median tenure, in years, ofregular part‐ and full‐time employees.
Notes: Vacancy Rate is defined as the number of vacant authorized regular positions divided by the quantity of authorized regular positions.
Strategic Goal: Increase employee engagement and satisfaction, resulting in fewer vacancies and increased tenure.
Objective: Attract and retain top talent to meet the needs ofthe organization. 2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Percentage ofOn‐Time Performance Evaluations 97% 97% 95% 95% Notes: The percentage of performance evaluations completed within 30 days of due date.
Strategic Goal: Facilitate an evaluation system to deliver clear performance expectations and regular, timely feedback.
Objective: Empower employeesto reach their full potential. 2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Percentage of Eligible Employees Offered a Modified Duty Assignment N/A N/A 80% 80%
Objective: Reduce the total cost ofworkers' compensation claims.
Strategic Goal: Facilitate return to work through modified duty assignments to support the well‐being and recovery of injured employeeswhile also minimizing costs.
Notes: The percentage of employees with temporary work restrictions who are offered accommodations to work in a modified duty capacity resulting from a work related injury or illness. This measure is new and will be tracked starting July 2025.
Financial Plan Page 121
Operating Budget Parks and Recreation
PARKS AND RECREATION DEPARTMENT
Mission Statement
Inspiring happiness by creating community through people, parks, programs, and open space.
About the Department
The Parks and Recreation Department is committed to providing quality parks and facilities (such as the SLO Swim Center, Damon‐Garcia Sports Complex, and Laguna Lake Golf Course) where recreation programs, special events, activities for youth and seniors, and cultural and educational opportunities occur in an effort to encourage wellness and develop community through leisure, cultural, and social pursuits. The department also protects and preserves the City’s natural resources and open spaces and manages the Citywide Public Art and Volunteer programs. Parks and Recreation provides comprehensive program offerings for all ages with increased focus on community building as highlighted in the Parks and Recreation Blueprint for the Future (General Plan Parks and Recreation Element).
The Parks and Recreation budget is predominately comprised of staffing costs. In addition to the annual full‐time Parks and Recreation employees, the department relies heavily on supplemental employees who provide service to the community year‐round. Depending on the season, the department may have 150 to 200 supplemental employees providing services such as lifeguarding and instructional swim lessons, before and after school childcare, special events and pop‐up community events, open space education and enforcement, promoting all of the department’s activities and classes through social media and other avenues to encourage participation, and more.
Departmental Budget
Actuals Budget Financial Plan
Parks & Rec FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Staffing 4,548,190 5,003,999 5,245,267 5,385,601 YoY Change 10% 5% 3%
Other Operating Expenditures 853,194 985,589 977,429 977,429 YoY Change 16% ‐1% 0%
Total 5,401,385 5,989,589 6,222,696 6,363,030 YoY Change 11% 4% 2%
Financial Plan Page 122
Operating Budget Parks and Recreation
Department Programs
Financial Plan Page 123
Operating Budget Parks and Recreation
Fiscal Analysis
Expenditures are proposed to increase by $233,107 or 4% primarily due to increased staffing costs, specifically for temporary staff. In FY 2024‐25, temporary staff received an unbudgeted minimum wage increase, which impacted Parks and Recreation temporary staffing budget lines. In the 2025‐27 Financial Plan, the budget properly accounts for the previously unbudgeted raise, as well as regular wage increases for full‐time employees. One‐time costs from FY 2024‐25 were removed from the 2025‐27 Financial Plan, including: the SLO Healthy and Smart Budget which has been allocated a non‐department specific fund for proper tracking; the annual SESLOC agreement for payment for use of the parking lot adjacent to Damon‐Garcia Sports Complex, which has been absorbed into the operating budget going forward; and scholarship funding that was rolled over to FY 2024‐25 for family childcare services. In an effort to constrain expenditure growth, non‐staffing costs are flat with FY 2024‐25 adopted levels. This was achieved through reductions or elimination of funding across multiple areas, including strategic planning, consultant support, recreational supplies, furniture and various operating accounts, with minimal anticipated impacts to programming. Reductions and eliminations were made to cost centers that have historically contributed back to the General Fund at fiscal year‐end and should not impact scheduled programs. Golf lowered expenditures by reformatting advertising promotions and reallocating funding toward utilities, while anticipating use of CIP maintenance funds for ongoing maintenance of the Laguna Lake Golf Course. Staff parking budgets were restructured based on staffing changes, and reductions to other supplies and materials were made to offset the SESLOC Parking Agreement expense.
The budget includes one Significant Operating Budget Change in the amount of $80,731 summarized in the table below.
Significant Operating Budget Changes
Opportunities and Challenges
The Parks and Recreation Department has several opportunities to enhance its programs, facilities, and community impact. Expanding the user base of the Fee Reduction Assistance Program by increasing 2025‐26 2026‐27
Expense Offset General Fund Expense Offset General Fund Funding for Public Art Coordinator
contract position.
80,731 ‐ 80,731 80,731 ‐ 80,731 One‐Time Total 80,731 ‐ 80,731 80,731 ‐ 80,731 SOBC Description One‐Time/
Ongoing
Financial Plan Page 124
Operating Budget Parks and Recreation
marketing efforts and continuing to utilize both City provided funding and CAPSLO contributions for childcare programs, will help improve access to recreation programs, ensuring that cost is not a barrier to participation. Strengthening fundraising efforts and exploring sponsorship opportunities with local businesses and organizations can provide additional resources to support programs, events, and facility improvements. Engaging more community volunteers presents another opportunity, fostering involvement while assisting with park maintenance, facility enhancements, and program support.
Additionally, pursuing grants for programming and capital projects can help fund new projects, improve infrastructure, and expand services without placing additional strain on the City’s budget. By leveraging these opportunities, the department can continue to provide quality, inclusive, and sustainable recreational offerings for the community.
Parks and Recreation faces several challenges in meeting the growing needs of the community while maintaining existing facilities and services. Supporting childcare and ensuring that programs remain affordable and accessible are ongoing priorities, requiring strategic resource allocation. Rapid residential development has added pressure to establish and maintain new park systems while also addressing priorities outlined in the Parks and Recreation Blueprint for the Future. Additionally, aging facilities such as the SLO Swim Center, Laguna Lake Golf Course, Meadow Center, and Ludwick Community Center require significant maintenance and potential upgradesto remain functional and safe, all while navigating rising construction costs which make renovations and new projects more expensive. Staffing remains a challenge, particularly in recruiting and maintaining seasonal and supplemental employees essential to delivering year‐round high‐quality programs and services. Furthermore, the department must balance effortsto manage and preserve the City’s open spaces and natural reserves with routine trail maintenance and fuel management, while also addressing the presence of transient and unhoused individuals in parks and public areas, ensuring these spaces remain safe and welcoming for all residents.
Major City Goal Contributions
The Parks and Recreation Department plays a vital role in advancing the City Council’s Major City Goals by fostering community well‐being, enhancing public spaces, and promoting environmental stewardship.
Through the development and maintenance of parks, open space, recreation programs, and cultural initiatives, the department directly supports key priorities including Cultural Vitality, Economic Resilience, and Fiscal Sustainability; Homelessness Response; and Open Space, Climate Action, and Resilience. Many of the department’s core services reflect the City’s values of inclusion, sustainability, and quality of life.
Highlights for the 2025–27 Financial Plan include:
Cultural Vitality, Economic Resilience, and Fiscal Sustainability o Support the cultural arts and Cultural Arts District by managing tenant placement and ongoing operations of a vendor in the Mission Plaza kiosk.
o Contribute to workforce development by exploring partnerships with Cal Poly, SLCUSD, and SLO County to establish employer‐supported childcare programs, helping local workers gain access to quality jobs and aiding businesses in talent retention. Homelessness Response
o Collaborate with regional partners to expand crisis response and shelter services by utilizing Encampment Resolution Funds to support outreach and implement the Welcome Home Village project, in accordance with the City's Subrecipient Agreement with SLO County, to address encampments along the Bob Jones Bike Trail.
Financial Plan Page 125
Operating Budget Parks and Recreation
o Help reduce the impacts of homelessness while balancing safety, public health, and community well‐being by coordinating Environmental Mitigation efforts. This includes creek system protection, the development and implementation of a Vegetation Management Plan, and quarterly collaboration with regional agencies, including Caltrans, CHP, and SLO County. Open Space, Climate Action, and Resilience
o Implement disaster mitigation efforts to reduce risks from floods and fires by treating at least 25 acres of vegetative fuels in high wildfire risk areas of City creeks and Open Space. o Strengthen community resilience through emergency preparedness programs and community networks. Evaluate alternative to the Community Emergency Response Team (CERT) / Listos (CAL EOS Preparedness) programs and assess community receptivity to "Firewise" community designations.
o Protect,sustain and advance open space and natural and historic resources by completing the Johnson Ranch Open Space Riparian Restoration Project; collaborating annually with local Indigenous tribes to revive traditional ecological knowledge and cultural activities; and planting at least 125 native trees through partnerships aligned with the "10 Tall" goal. o Improve trail connectivity and access for all users by completing the Firefighter Trail realignment at Reservoir Canyon, extending the HiBar and Panorama Trails at Miossi Open Space, and initiating the Morro View to Durata Vista Connector Trail at Irish Hills. Promote inclusive outdoor engagement through bilingual docent‐led hikes, Junior Ranger Camp, and environmental education, and develop a sustainable trail strategy plan that incorporates passive recreation, public amenities, equitable access, and natural resource protection. 2025‐27 Department Goals
The department’s strategic priorities for the 2025‐27 Financial Plan are intended to support the advancement of the City’s overall objectives tied to Major City Goals, Department Strategic Plans, and other priorities that may arise. These goals are in addition to ongoing services described in the ‘Department Programs’ section above.
Strategic Goal(s)
Continue to activate parks and public spaces with an emphasis on neighborhoods and downtown through community focused events, including volunteer opportunities, and public art that promotes inclusivity, provides cultural unity, develops a sense of community, and supports healthy lifestyles.
Implement objectives outlined in the Parks and Recreation Blueprint for the Future (Master Plan and General Element) and initiate public engagement for prioritization of projects, focused on meeting amenity needs identified by the City‐wide inventory assessment and specific to City subareas, that also factor in to help achieve carbon neutrality, inclusivity, accessibility, and connectivity.
In coordination with the Office of Natural Resources, continue to develop the new trail networks within the Open Space Trails at Righetti Hill and Miossi preserve while maintaining the current 4,000+ acres of Open Space and 67‐mile trail system. Continued focus on encampment clean‐ups, fire fuel reduction, and creek and flood control in support of the Wildland Urban Interface (WUI).
Provide affordable, inclusive, high‐quality programming for all age groups that fosters a sense of community, including enhancing and expanding equitable childcare offerings for the community.
Financial Plan Page 126
Operating Budget Parks and Recreation
Performance Measures
Performance measures are designed to determine accountability, improve service quality, allocate resources, and evaluate departmental performance in meeting San Luis Obispo’s goals and objectives.
Financial Plan Page 127
Operating Budget Parks and Recreation
2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Number of public outreach meetings 6 6 4 4
Measure: Number of updated or new parks and
amenities in process
7433
Notes: Measure is dependant on the number of new or updated parks and amenties Notes: Upcoming projects include Emerson Park, Righetti Parks, DeVaul Park, Future discussions on Laguna Lake
Objective: In Coordination with Public Works, engage the public to prioritize new and revitalized Recreational Amenities
Strategic Goal: Initiate public engagement for prioritization of projects, focused on meeting amenity needs identified by the City‐wide inventory assessment and specific to City subareas.. 2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Number ofDepartment Community Events
(free or low‐cost)
25 25 25 25
Measure: Number oftotal volunteers/hours 164/1935 480/5800 700/6000 920/6200 Measure: Number of volunteer opportunities 35 28 35 35 Measure: Number of Public Art or Cultural Art Events 5 9 9 9 Measure: Number oftemporary/permanent public art
installations
2 23 24 12
Strategic Goal: Activate parks and public spaces through community focused events, including volunteer opportunities, and public art that promote inclusivity, provides cultural unity, develops a sense of community and supports healthy lifestyles.
Notes: Includes all programming, tours, lectures, volunteer events, and workshops/tutorials.
Notes: This includes any SLOMA contracted installations. Numbers fluctuate due to the changing number of Box Art installations.
Notes: Community Services provides a variety of free community events year round. Scramble is only event that is low cost / creates revenue. This includes Monday Meetups, Boo Bash, Super Rec Saturdays Notes: "Number oftotal volunteers" is really the "number oftotal usersregistered on the volunteer management system" as it reads on this sheet. Users are not the same as volunteers (one can be a user and never respond to an opportunity).
Notes: FY 2023‐24 (# ofrecurring volunteer opportunities: 15; # ofsingle day ofservice or expired need: 20).
Objective: Creates and fosters a sense of community through citizen involvement Financial Plan Page 128
Operating Budget Parks and Recreation
2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Number ofmiles ofOpen Space trails
maintained
66.5 67.5 68.5 69.5
Measure: Number ofstaff hours dedicated to fuel
reduction 4,000 4,000 4,000 4,000
Measure: Number of encampment site clean‐ups
removed from Open Spaces
70 60 55 55
Strategic Goal: Continue to develop new trail networks and maintain the current Open Space acres and trail system while focusing on riparian area conservation with encampment clean‐ups, fire fuel reduction, and creek and flood control.
Notes: Ranger staff are currently building more tails and anticipate to do so over the next financial plan.
Notes: Consistent hours indicates proper staffmanagement of vegetation Notes: Siginificantly reduced the number oftransient occupants within Open Spaces due to the increased number of housing opportnities in the areas.
Objective: Open Space Preservation and Enhancement
Financial Plan Page 129
Operating Budget Police
POLICE DEPARTMENT
Mission Statement
To safeguard our community from harm by reducing crime and ensuring dignity, equity, and justice for all we serve.
The department’s Vision is a community partnership built on trust, focused on safety, and the shared values to ensure the SLO quality of life.
About the Department
The Police Department consists of two operating bureaus: Operations and Administration. The Operations Bureau includes patrol services, traffic safety, and neighborhood services. The Administrative Services Bureau includes administrative services, investigative division, communications, and records units. The department maintains public safety in the community and engages in community policing to strengthen relationships, problem solve, and prevent crime.
Budget at a Glance
Actuals Budget Financial Plan
Police FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Staffing 21,641,566 21,979,903 23,764,483 25,141,539 YoY Change 2% 8% 6%
Other Operating Expenditures 1,604,827 1,513,389 1,834,080 1,779,292 YoY Change ‐6% 21% ‐3%
Total 23,246,393 23,493,292 25,598,563 26,920,831 YoY Change 1% 9% 5%
Financial Plan Page 130
Operating Budget Police
Department Programs
Program
Total
Expenditures Staffing
8001 Police Administration: The Police administration program plans, directs, and evaluates all police services, including overall department leadership provided by the Chief of Police. Police administration provides business and fiscal management; personnel hiring and training; risk management; claims/lawsuit coordination; contract service administration; equipment purchases and maintenance; and computer application support for public safety information systems. This program is also responsible for preparing and implementing policies and procedures, ensuring appropriate training and performance standards are maintained and ensuring compliance with mandates.
2,781,586 7.00 FTE
8002 Patrol: The Police patrol services program utilizes uniformed personnel to respond to emergencies and calls forservice; conduct preliminary investigations of criminal activity and routine traffic collisions; enforce state and City laws and statutes; apprehend criminals; manage unusual incidents; implement crime prevention strategies; and provide other public safety services. 13,692,074 52.00 FTE
8003 Investigations: This program investigates criminal activity. Program staff also interview and monitor convicted sex and arson offenders, coordinate and deliver enforcement, intervention, and education services to the high school, and junior high, provide forensic investigative services and evidence collection and analysis, and process and dispose of evidence and property.
4,073,125 14.00 FTE
8004 Police Support Services: The support services program is divided into two divisions: Communications and Records. The program is involved in Department of Justice audits, acts as custodian of criminal records and compliance with State and Federal regulations. Staff are responsible for receiving, processing and dispatching emergency and non‐emergency calls forservice, public outreach, processing police reports and citations, tracking and reporting crime statistics, and maintaining confidential information.
3,703,803 20.00 FTE
8005Neighborhood Services: The Neighborhood Outreach Program is responsible for the coordination of services and outreach to community members with an emphasis on residential neighborhoods. The Program coordinates response to violations of the City noise ordinance, along with related follow‐up, data collection, and the issuance of warning notices and administrative citations to property owners. The program also includes support to various committees and neighborhood groups as well as receiving and acting on concerns of neighborhood residents about issues affecting the quality of life.
327,043 1.00 FTE
8006 Traffic Safety: The traffic safety program provides enforcement of traffic laws, collision investigations, education programs, and coordination and support of special events.
1,020,933 3.00 FTE
Total 25,598,563 97.00 FTE
Financial Plan Page 131
Operating Budget Police
Fiscal Analysis
Expenditures are proposed to increase by $2,105,271 or 9% due to various factors including contractual salary increases, the addition of 2.00 FTE Police Officers and related equipment, increases related to contract services (such as the contract for Animal Services with the County), and other technology needs. In an effort to constrain expenditure growth, non-staffing costs are flat with FY 2024-25 adopted levels. As a result, the department was unable to increase some accounts such as utilities, fuel, and other contract services. This may result in budget overages during this financial plan if third-party costs increase above the constrained budget amount.
The budget includes six Significant Operating Budget Changes in the amount of $630,484 summarized in the table below.
Significant Operating Budget Changes
Opportunities and Challenges
Staff continue to work on the Department’s 5‐year Strategic Plan which was developed in 2024. The goals of the plan include Service to the Community, Community Engagement, Diversity Equity & Inclusion, Recruitment & Retention, Health & Wellness, and Improving Infrastructure, Equipment & Technology.
Overall, each goal has a work program with achievable objectives which are assigned to staff members.
As part of the Strategic Plan, a department‐wide staffing study was conducted in late 2024 and the final report was presented to Council in January 2025. The results of the study reflected the need to hire fourteen additional department personnel (eleven sworn and three professional non‐sworn) within one year; these positions included two sergeants, six police officers, two detectives, one school resource officer, two dispatchers, a half time employee to assist the hiring manager and a half time employee to assist with customer service at the front counter. The funding and resources to hire all recommended positions in one year posed a significant challenge, and, as a result, staff presented to Council 2025‐26 2026‐27
Expense Offset General Fund
Contribution Expense Offset General Fund
Contribution
Funding for public safety Computer
Aided Dispatch (CAD) to CAD
software.
12,500 3,000 9,500 12,500 3,000 9,500 Ongoing Funding for controlled substance
testing.
23,000 5,400 17,600 23,000 5,400 17,600 Ongoing Add 2.00 FTE Police Officers and
associated equipment.
324,282 88,873 235,409 308,604 81,493 227,111 Ongoing Funding for Police Officersafety
equipment (tasers).
17,500 2,000 15,500 17,500 2,000 15,500 One‐Time Funding for four License Plate Reader
(LPR) cameras.
18,140 ‐ 18,140 ‐ ‐ ‐ One‐Time Funding for County contract for
Community Action Team (CAT) and
Mobile Crisis Unit (MCU) Licensed
Psychiatric Technicians.
235,062 ‐ 235,062 246,816 230,615 16,201 Ongoing 630,484 334,335 296,149 608,420 322,508 285,912 SOBC Description One‐Time/
Ongoing
Total
Financial Plan Page 132
Operating Budget Police
implementation options to phase in the hiring over several years. Ultimately, this resulted in the current budget proposal to add just two patrol officer positions that are partially funded through a COPS Hiring Program grant awarded by the US Department of Justice. Budget constraints will continue to be a challenge as the City continues to monitor revenues and expenditures over the next couple of years due to a projected budget deficit in FY 2027‐28.
In 2024, department staff participated in over 40 community events which included visits to various schools, events in Mission Plaza, and neighborhood meet ups. These events offer incredible opportunities for public outreach and education while fostering relationships. The department is looking forward to remaining engaged and attending more events in the upcoming year.
Staffing challenges continue to occur and as a result special assignments have not been fully staffed, this includes the Traffic Safety team which only has one sergeant and two officers. When fully staffed, this team consists of a sergeant and three officers. In FY 2024‐25, the department worked to fill six vacancies which resulted from retirements and separations of employment. The department is still working to fill current officer vacancies.
In 2024, the City contracted with SLO County Behavioral Health Services for a Licensed Psychiatric Technician (LPT) position to work in partnership with the department’s Community Action Team (CAT).
Per the agreement, the cost of the LPT position is split between the County and City. This position has been instrumental in supporting CAT by providing professional crisis intervention outreach and follow up to individuals in the community that require mental health services. This contract will expire in June of 2026. The City is currently funding this contract using opioid settlement funds that have been allocated to the City to help address the negative impacts of the opioid crisis. This funding is anticipated to diminish over the coming years, which will require the City to identify alternative funding sourcesif the LPT contract is extended.
In 2025, the department started a pilot program assigning a Community Services Officer (CSO) to the CAT program. Reallocating a CSO to the CAT program has proven to be a success; this position has added value and resources to the team’s ability to provide proactive outreach.
Major City Goal Contributions
Homelessness Response:
1. Collaborate with partners to prevent and reduce homelessness:
Justice Services ‐ Continue and expand collaborations between the City Attorney/City Prosecutor, SLOPD & SLO Fire (CAT/MCU/CSOs/LPTs), County Behavioral Health, and San Luis Obispo Courts to coordinate criminal warrant and Municipal Code criminal misdemeanor prosecution efforts to enhance criminal diversion, social services, and specialty court connections, including mental health, drug and alcohol, veteran'ssupport, CARE Court, conservatorship and housing and benefits services.
2. Leverage external funding to expand crisis response and continuum of shelter and housing programs with regional partners:
Encampment Resolution Funds ‐ Complete outreach work as described in the City's Subrecipient Agreement with San Luis Obispo County for implementation of the Welcome Home Village project to address encampments along the Bob Jones Bike Trail.
Financial Plan Page 133
Operating Budget Police
3. Refine approaches to reduce the impacts of homelessness to balance safety, health, and community well‐being.
SLOPD CAT & CSO Teams ‐ Continue/refine operation of a coordinated homelessness response including the Police Department's Community Action Team (CAT), Licensed Psychiatric Technician contracted through the County's Behavioral Health Department and a Community Service Officer (CSO). Identify potential funding sources to ensure sustainability of CAT and CSO positions.
Environmental Mitigation ‐ Coordinate efforts to mitigate environmental impacts and protect creek systems in collaboration with regional agencies including quarterly meetings with Caltrans, CHP, and SLO County. Develop and implement a Vegetation Management Plan.
2025‐27 Department Goals
The department’s strategic priorities for the 2025‐27 Financial Plan are intended to support the advancement of the City’s overall objectives tied to Major City Goals, Department Strategic Plans, and other priorities that may arise. These goals are in addition to ongoing services described in the ‘Department Programs’ section above.
Strategic Goal(s)
Continue to implement the department’s 5‐Year Strategic Plan. Specifically addressing the following Goals: Service to the Community, Community Engagement, Diversity, Equity & Inclusion, Recruitment and Retention, Health and Wellness, and Improving Infrastructure, Equipment and Technology.
Continue to foster community partnerships through the department’s relationship with the CSAC (Community Safety Advisory Council) comprised of the Police Advisory Committee (PAC) and the Police Roundtable. Work to expand presence at community events and continue to use social media and other outreach resources for public awareness and education.
Support employee development and advancement through ongoing training and establishing a career track model. Implement a formal mentor program and continue to support employee mental wellness opportunities through the department’s Peer Support Program.
Invest in essential tenant improvements for 1042 Walnut. Phase one will include replacing carpet in high traffic areas, painting some interior spaces, and enhancing security in the lobby. These improvements have not been made in well over twenty years.
Finalize building improvements and relocation of investigative and administrative staff to 1106 Walnut Street upon completion of necessary tenant improvements to enhance safety and function of this new space.
Continue providing excellent public safety services to the community through community policing efforts and proactively address community concerns to reduce crime and improve safety.
Financial Plan Page 134
Operating Budget Police
Performance Measures
Performance measures are designed to determine accountability, improve service quality, allocate resources, and evaluate departmental performance in meeting San Luis Obispo’s goals and objectives. 2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Total Number of Part 1 Crimes per Year 1,568 1,552 1,536 1,521 Objective: Reduce Crime
Strategic Goal: Create a safe community for residents and visitors.
Notes: Includes homicide, forcible rape, robbery, aggravated assault, burglary, and motor vehicle theft. Figures shown are for the calendar year.
Financial Plan Page 135
Operating Budget Police
2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Total Number of Collisions per Year
Vehicle: 549
Ped: 33
Bicycle: 53
Vehicle: 544
Ped: 32
Bicycle: 52
Vehicle:539
Ped: 31
Bicycle: 49
Vehicle:534
Ped: 30
Bicycle: 48
DUI
Checkpoint:
2 DUI
Checkpoint:
3 DUI
Checkpoint:
2 DUI
Checkpoint:
2 DUI
Saturations:
28 DUI
Saturations:
26 DUI
Saturations:
14 DUI
Saturations:
20 Traffic
Enforcement
Ops: 14
Traffic
Enforcement
Ops: 16
Traffic
Enforcement
Ops: 14
Traffic
Enforcement
Ops:14
Distracted
DrivingOps:
5 Distracted
Driving Ops:
3 Distracted
Driving Ops:
14 Distracted
Driving
Ops:14
Ped/Bike
Enforcement:
9 Ped/Bike
Enforcement:
2 Ped/Bike
Enforcement:
2 Ped/Bike
Enforcement:
2 Traffic Safety
Education: 2
Traffic Safety
Education: 3
Traffic Safety
Education: 2
Traffic Safety
Education: 2
Notes: Figures shown are per calendar year.
Notes: Figures are based on specific grant related objectives outlined in the annual grant agreements which may vary from year to year. The OTS grant period is from October ‐ September.
Objective: Provide Safe Roadwaysfor Pedestrians, Vehicles, and Bicyclists Strategic Goal: Utilize the department's Traffic Safety division to focus on traffic enforcement and create safe roadways.
Measure: Annual Office of Traffic Safety Grant
Enforcement Operations
Financial Plan Page 136
Operating Budget Police
2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Calls for service related to homelessness 8,792 8,528 8,272 8,024 Measure: Number of unique individuals contacted by
CAT
400 410 419 428
Measure: Number of Family and Agency Reunifications 6 6 7 7 Measure: Number of Local Permanent Housing
Referrals
2222
Measure: Total number of Mental Health/Substance
Abuse Treatment Referrals
202 211 221 228
Notes: Figures shown are based on fiscal year.
Notes: Figures shown are based on fiscal year.
Objective: Reduce Homeless Related Callsfor Service Through Proactive Engagement Strategic Goal: Utilize the department's Community Action Team to provide resources and servicesto the City's homeless community.
Notes: Figures shown are based on fiscal year.
Notes: Figures shown are based on fiscal year.
Notes: Figures shown are based on fiscal year.
Financial Plan Page 137
Operating Budget Public Works
PUBLIC WORKS DEPARTMENT
Mission Statement
Preserve and enhance city infrastructure for an accessible, safe, and inclusive community experience.
About the Department
The City of San Luis Obispo’s Public Works Department accomplishesits mission in two primary ways. One is by providing safe mobility options for residents and visitors so that all may enjoy the cultural, recreational, economic, educational, and quality of life amenities in San Luis Obispo. The other is to build and maintain the City’s assets and infrastructure to enhance community safety, health, and wellness.
None of the City’s assets are an end unto themselves butrather enable residents and visitorsto experience an enhanced quality of life. The department’s Vision: ‘Inspiring you to have the best day you have ever had,’ essentially means if we provide high quality mobility options and well‐maintained infrastructure, then users can experience the full benefit of living, visiting, and working in San Luis Obispo.
The department is organized into three divisions, which include the Maintenance Division, Engineering Division, and Mobility Division, housing the department’s fourteen programs, each of which provide a critical and unique role in fulfilling the department’s mission. Most of the department is funded by the General Fund, and two programs, Parking and Transit, are Enterprise Funds, funded by users of those services. Finally, the Flood Control program is primarily funded by reimbursement grant funds provided by the County of San Luis Obispo.
Budget at a Glance (All Funds)
The table above summarizes the total budget for the department, including programs funded by the General Fund and Parking and Transit enterprise funds. The information that follows provides individual fiscal analyses for the department’s budget from the General Fund, as well as the two enterprise funds.
Actuals Budget Financial Plan
Public Works FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Staffing 11,195,749 13,362,412 13,857,234 14,367,981 YoY Change 19% 4% 4%
Other Operating Expenditures 11,938,799 12,936,386 13,513,930 14,582,515 YoY Change 8% 4% 8%
Total 23,134,548 26,298,798 27,371,164 28,950,497 YoY Change 14% 4% 6%
Financial Plan Page 138
Operating Budget Public Works
General Fund
Fiscal Analysis
Expenditures are proposed to remain nearly flat in FY 2025‐26, increasing by $218k or 1%. The Public Works Department was able to re‐allocate existing funding within the constrained base budget to offset identified increases, including inflationary adjustments, the maintenance costs of new assets (e.g. North Broad Street Park and portions of the North Chorro Greenway), and rising utility costs. The budget also reflects the addition of two critical positions: a Heavy Equipment Mechanic and the conversion of the Communications Coordinator position from contract to full‐time regular, both proposed as Significant Operating Budget Changes (SOBCs). These additions require new General Fund dollars, as summarized in the table below. In an effort to constrain expenditure growth, non‐staffing costs are 2% below FY 2024‐ 25 adopted levels. This was achieved by reducing budgets in line with actuals, reducing the service frequency of several maintenance contracts, and reducing some administrative and construction tool replacement budgets. The proposed budget includes two SOBCs totaling $183,312, with $130,266 supported by the General Fund. One of the SOBCs (the conversion of the Communications Coordinator position from contract to full‐time regular) isjointly funded by the General Fund, Parking Fund, and Transit Fund. The table below reflects the General Fund share of cost for this SOBC.
Significant Operating Budget Changes
Actuals Budget Financial Plan
Public Works FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Staffing 9,752,744 10,921,869 11,270,127 11,673,124 YoY Change 12% 3% 4%
Other Operating Expenditures 6,079,414 6,288,580 6,158,466 6,182,326 YoY Change 3% ‐2% 0%
Total 15,832,158 17,210,449 17,428,593 17,855,449 YoY Change 9% 1% 2%
2025‐26 2026‐27
Expense Offset General Fund
Contribution Expense Offset General Fund
Contribution
Add 1.00 FTE Communications
Coordinator for Mobility Services and
Capital Improvement Projects
(previously a contract position, cost
to be paid by General Fund and
Parking and Transit Enterprise
Funds).
88,410 53,046 35,364 88,410 53,046 35,364 Ongoing Add 1.00 FTE Heavy Equipment
Mechanic for Fleet Services.
94,902 ‐ 94,902 94,902 ‐ 94,902 Ongoing 183,312 53,046 130,266 183,312 53,046 130,266 SOBC Description One‐Time/
Ongoing
Total
Financial Plan Page 139
Operating Budget Public Works
Parking Fund
Fiscal Analysis ‐ Revenue
Parking Fund revenue is proposed to decrease by about $416k or 4% in FY 2025‐26, in line with the proposed reductions presented in the 2024 Parking Rate Study and additional action taken by Council to reduce monthly garage permit rates. The intent of the rate reductions is to reduce the financial impact on the community while maintaining service levels, including funding investments in capital infrastructure.
Fiscal Analysis ‐ Expenditures
Actuals Budget Financial Plan
Parking Fund FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Parking Fees 8,458,952 8,188,361 7,786,455 8,613,030 Other Revenue
43103‐Parking Fines 1,267,232 1,288,000 1,231,100 1,276,500 43104‐Police Issued Parking Fines (77,202) (35,800) ‐ ‐ 44101‐Interest on Investment 2,085,569 38,000 41,000 61,000 44107‐Investment FMV Adjustment 174,123 ‐ ‐ ‐ 44113‐Interest Revenue ‐ Leases 800,295 ‐ ‐ ‐ 44204‐Other Rent & Lease Revenue 524,111 475,500 479,600 483,900 44310‐Miscellaneous Revenue 222 37,800 37,800 37,800 47003‐Miscellaneous 14,477 ‐ ‐ ‐ Total Revenue 13,247,779 9,991,861 9,575,955 10,472,230 YoY Change ‐25% ‐4% 9%
Actuals Budget Financial Plan
Public Works FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Staffing 1,053,112 2,111,121 2,199,851 2,292,369 YoY Change 100% 4% 4%
Other Operating Expenditures 1,820,724 1,847,703 1,750,531 1,756,881 YoY Change 1% ‐5% 0%
Total 2,873,836 3,958,825 3,950,382 4,049,250 YoY Change 38% 0% 3%
Financial Plan Page 140
Operating Budget Public Works
Parking Fund expenditures are proposed to remain relatively flat in FY 2025‐26, decreasing by $8,443 overall. The Parking Program was able to re‐allocate existing funding within the constrained base budget to offset identified increases, including inflationary adjustments, maintenance costs, and electric service increases based on rate increases as well as the new Cultural Arts District Parking Garage coming online in 2026. In an effort to constrain expenditure growth, non‐staffing costs are 5% below FY 2024‐25 adopted levels. This was achieved by reducing budgets in line with actuals, particularly with other utility costs (water, sewer, natural gas), and by reducing credit card merchant fees budget based on an average percentage of garage and meter revenue. If actual revenue is higher than budgeted, resulting in a significant increase in credit card merchant fees, then staff will return at Mid‐Year budget review with proposed budget revisions for Council’s consideration. The proposed budget includes one SOBC which is funded by the General Fund, Parking Fund and Transit Fund. The table below reflects the Parking Fund share of cost for this SOBC.
Significant Operating Budget Changes
2025‐26 2026‐27
Total
Expense
Other
Funding
Sources
Parking Fund
Contribution
Total
Expense
Other
Funding
Sources
Parking Fund
Contribution
Add 1.00 FTE Communications
Coordinator for Mobility Services and
Capital Improvement projects
(previously a contract position, cost to be
paid by General Fund and Parking and
Transit Enterprise Funds).
88,410 61,887 26,523 88,410 61,887 26,523 Ongoing SOBC Description
One‐
Time/
Ongoing
Financial Plan Page 141
Operating Budget Public Works
Parking Fund Long‐Term Forecast
The long‐term forecast shows a return to forecasted revenues, following a dip in certain revenues during FY 2023‐24 and part of FY 2024‐25, as the changes recommended by the Technology Roadmap were implemented. With the completion of two key projects—the new gated system at 842 Palm Garage and the new citation managementsoftware in Spring 2025—staff expectsrevenue projectionsto recover, with little to no impact on the next fiscal year.
It should be noted that the revenue projections for the "Parking Structures” for the years FY 2025‐26 to FY 2028‐29 are based on revenue forecasts of the 2024 Parking Rate Study which assume that the new Cultural Arts Parking Garage will realize similar perspace revenue asthe other three existing garages once (A)
Actual
2023‐24
(B)
Budgeted
2024‐25
(C)
Budgeted
2025‐26
(D)
Budgeted
2026‐27
(E)
Projected
2027‐28
(F)
Projected
2028‐29
1 Revenue
2 Charges for Service
3 46401/46402 ‐ Parking Meters 5,927,488 4,312,367 4,312,367 4,312,367 4,312,367 4,312,367 4 46403 ‐ Parking Structures 1,757,776 2,860,504 2,860,504 3,687,079 3,687,079 3,687,079 5 46404 ‐ Long Term Parking 702,797 901,906 500,000 500,000 500,000 500,000 6 46405 ‐ Parking In‐Lieu ‐ 23,824 23,824 23,824 23,824 23,824 7 46406 ‐ City Employee Parking 70,890 89,760 89,760 89,760 89,760 89,760 8 44204 ‐ Other Rent & Lease Revenue 524,111 475,500 479,600 483,900 504,400 508,900 9 Total Charges for Service 8,983,063 8,663,861 8,266,055 9,096,930 9,117,430 9,121,930 10 Total Citations and Fines 1,190,030 1,252,200 1,231,100 1,276,500 1,247,267 1,245,622 11 Total Other Revenue 3,074,686 75,800 78,800 98,800 108,800 128,800 12 Total Revenue without Debt Financing 13,247,779 9,991,861 9,575,955 10,472,230 10,473,497 10,496,352 13 Proceeds from Debt Financing 51,845,000 ‐ ‐ ‐ ‐ ‐ 14 TOTAL REVENUE 65,092,779 9,991,861 9,575,955 10,472,230 10,473,497 10,496,352 15 EXPENDITURES
16 Total Salaries and Benefits 1,991,075 2,111,121 2,199,850 2,292,369 2,361,141 2,431,975 17 Total Contract Services 808,883 662,700 638,380 641,340 660,580 680,398 18 Total Other Operating Expenditures 1,018,041 1,185,003 1,112,151 1,115,541 1,237,139 1,257,004 19 Total Operating Expenditures 3,817,999 3,958,824 3,950,381 4,049,250 4,258,859 4,369,376 20 Total Capital Asset Expenditures 20,701,121 43,437,226 2,146,465 527,292 2,075,000 165,000 21 Total Debt Service Expenditures 3,016,362 3,827,322 3,696,535 3,593,490 3,589,082 3,590,355 22 Total Transfersto / from Other Funds 1,387,281 1,632,053 1,720,732 1,931,937 2,010,959 2,093,841 23 TOTAL EXPENDITURES 28,922,763 52,855,425 11,514,112 10,101,969 11,933,900 10,218,572 24 CalPERS Payment (ADP) ‐ 61,003 97,543 97,543 97,543 97,543 25 Total Expenditures (After CalPERS ADP) 28,922,763 52,916,428 11,611,655 10,199,512 12,031,443 10,316,115 26 Working Capital ‐ Beginning 13,813,435 49,983,451 7,119,887 5,181,730 5,551,991 4,091,587 27 Change in Financial Position 36,170,016 (42,863,564) (1,938,157) 370,261 (1,460,403) 277,780 28 Working Capital ‐ Year End 49,983,451 7,119,887 5,181,730 5,551,991 4,091,587 4,369,367 29 Operating Reserve (20%) 1,366,872 1,557,229 1,529,383 1,528,548 1,569,588 1,591,946 30 Assigned for Pension Contributions 61,446 61,446 61,446 61,446 61,446 61,446 31 Unreserved Working Capital Year End 48,555,133 5,501,212 3,590,901 3,961,997 2,460,553 2,715,975 2023‐25 Financial Plan 2025‐27 Financial Plan
Financial Plan Page 142
Operating Budget Public Works
it opens for operation early in calendar year 2026. However, actual occupancy may vary due to factors such as increased parking demand in that area and decreased demand at other garages. Should demand for the new garage differ significantly from projections, staff will adjust budgets accordingly through future financial planning cycles.
Minor reductions in expenses are budgeted to cover the dip in recent revenue caused by technology issues. Planned upcoming Capital Improvement Plan Projects in this Financial Plan include safety fencing for the garages, surveillance cameras in the garages, and pay station replacement and expansion. Overall, projected unreserved working capital remains healthy in the outer years of the forecast which will be available to support capital needs in the future.
The Long‐Term Forecast table above includes expense for the proposed SOBC.
Financial Plan Page 143
Operating Budget Public Works
Transit Fund
Fiscal Analysis ‐ Revenue
Transit Fund revenues are projected to decrease by $5.0 million (29%) in FY 2025‐26 due to the budgeting of a one‐time discretionary grant opportunity in the FY 2024‐25 that was ultimately not awarded. The decrease in revenue will not affect service delivery. Transit Fund charges for service revenues are proposed to increase year over year by about $34,000 or 3% as passenger rides are trending up.
Fiscal Analysis ‐ Expenditures
Actuals Budget Financial Plan
Transit Fund FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Fees for service
46601‐Bus Fare 250,790 226,000 260,000 265,200 46602‐Cal Poly Transit Agreement Revenues 750,000 750,000 750,000 750,000 Other Revenue
44101‐Interest on Investment 257,261 ‐ 30,455 30,807 44107‐Investment FMV Adjustment 120,063 ‐ ‐ ‐ 45208‐LTF Art 4 Sec 99260 (Discretionary LTF) 496,193 1,992,000 2,000,000 2,024,000 45209‐STA Revenue 717,650 732,000 725,000 725,000 45211‐Other State Grants ‐ 880,000 ‐ ‐ 45302‐FTA 5307 (Capital) 684,498 3,575,985 2,693,785 2,452,006 45303‐FTA 5307 (Preventative Maintenance) ‐ ‐ 210,765 214,980 45304‐FTA 5307 (Operating) ‐ ‐ 2,647,775 3,049,800 45305‐Other Federal Grants 2,802,275 8,893,876 2,701,956 4,845,000 45215‐State of Good Repair (SGR) 394,054 9,325 8,722 8,722 47003‐Miscellaneous 2,326 ‐ ‐ ‐ Total Revenue 6,475,111 17,059,186 12,028,458 14,365,515 YoY Change 163% ‐29% 19%
Actuals Budget Financial Plan
Public Works FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Staffing 389,893 329,423 387,257 402,488 YoY Change ‐16% 18% 4%
Other Operating Expenditures 4,038,661 4,800,103 5,604,933 6,643,309 YoY Change 19% 17% 19%
Total 4,428,554 5,129,526 5,992,190 7,045,798 YoY Change 16% 17% 18%
Financial Plan Page 144
Operating Budget Public Works
Transit Fund expenditures are proposed to increase by $862,664 or 17% in FY 2025‐26. The Transit Program was able to re‐allocate existing funding within the constrained base budget to offset identified increases, including electric service costs to charge electric buses, fuel budget increases based on current trends, new state regulatory fees, charging station contract increases and additional advertising support for ridership promotion. This was achieved by reducing maintenance and other account budgets and removing some of the one‐time expenses that were in the FY 2024‐25 budget. There is no anticipated impact from the reduction in maintenance and other operating account budgets; however, if vehicles experience major failures resulting in higher than budgeted maintenance costs, then staff will return at Mid‐Year budget review with proposed revisions for Council’s consideration. The proposed budget includes five SOBCs totaling $861,299 from the Transit Fund in FY 2025‐26, plus one SOBC funded by the General Fund, Parking Fund and Transit Fund. The table below reflects the Transit Fund share of cost for this SOBC, as well as the other Transit Fund SOBCs.
Significant Operating Budget Changes
2025‐26 2026‐27
Total
Expense
Other
Funding
Sources
Transit Fund
Contribution
Total
Expense
Other
Funding
Sources
Transit Fund
Contribution
Add 1.00 FTE Communications
Coordinator for Mobility Services and
Capital Improvement projects
(previously a contract position, cost to
be paid by General Fund and Parking and
Transit Enterprise Funds).
88,410 61,887 26,523 88,410 61,887 26,523 Ongoing Funding for increased purchased
transportation contract.
181,773 ‐ 181,773 341,514 ‐ 341,514 Ongoing Funding for implementation of Short‐
Range Transit Plan.
581,300 ‐ 581,300 1,446,100 ‐ 1,446,100 Ongoing Funding for Transit Service and Planning
Software.
50,000 ‐ 50,000 50,000 ‐ 50,000 Ongoing Funding for Transit Intern (temporary
position, 900 hours).
21,703 ‐ 21,703 21,703 ‐ 21,703 Ongoing 923,186 61,887 861,299 1,947,727 61,887 1,885,840 SOBC Description
One‐
Time/
Ongoing
Total
Financial Plan Page 145
Operating Budget Public Works
Long‐Term Forecast
The Transit Fund is able to cover all current and forecasted operating and capital costs with support from Federal and State funding sources. Operating costs are projected to increase significantly over the next few years due in large part to the implementation of the Short‐Range Transit Plan service change recommendations. If changes occur in the reliability of State and Federal funding sources, reductions in service or increased reliance on fund balance would be required. Staff will continue to seek reimbursement for the grants awarded and will continue to apply for new grants to fund future capital projects. The Long‐Term Forecast above includes expenses for the proposed SOBCs. (A)
Actual
2023‐24
(B)
Budgeted
2024‐25
(C)
Budgeted
2025‐26
(D)
Budgeted
2026‐27
(E)
Projected
2027‐28
(F)
Projected
2028‐29
1 REVENUE
2 Charges for Service
3 46601 ‐ Bus Fare 250,790 $ $ 226,000 $ 260,000 $ 265,200 $ 270,504 $ 275,914 4 46602 ‐ Cal Poly Transit Agreement 750,000 $ $ 750,000 $ 750,000 $ 750,000 $ 772,500 $ 795,675 5 Total Chargesfor Service 1,000,790 $ $ 976,000 $ 1,010,000 $ 1,015,200 $ 1,043,004 $ 1,071,589 6 Other Revenue
7 44101 ‐ Interest on Investment 257,261 $ ‐ $ $ 30,455 $ 30,807 $ 15,604 $ 19,284 8 44107 ‐ Investment FMV $ 120,063 $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ 9 44310 ‐ Miscellaneous Revenue $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ 10 45208 ‐ TDA Revenue $ 496,193 $ 1,992,000 $ 2,000,000 $ 2,024,000 $ 2,048,300 $ 2,072,900 11 45209 ‐ STA Revenue $ 717,650 $ 732,000 $ 725,000 $ 725,000 $ 725,000 $ 739,500 12 45215 ‐ State of Good Repair (SGR) $ 394,054 $ 9,325 $ 8,722 $ 8,722 $ 8,722 $ 8,700 13 45211 ‐ Other State Grants $ ‐ $ 880,000 $ ‐ $ ‐ $ ‐ $ ‐ 14 45216 ‐ Low Carbon Operation Revenue $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ 15 45302 ‐ FTA 5307 (Capital) $ 684,498 $ 3,575,985 $ 2,693,785 $ 2,452,006 $ 1,803,083 $ 1,744,077 16 45303 ‐ FTA 5307 (Preventative Maint.) $ ‐ $ ‐ $ 210,765 $ 214,980 $ 219,280 $ 223,700 17 45304 ‐ FTA 5307 (Operating) $ ‐ $ ‐ $ 2,647,775 $ 3,049,800 $ 3,443,400 $ 3,554,000 18 45305 ‐ Other Federal Grants $ 2,802,275 $ 8,893,876 $ 2,701,956 $ 4,845,000 $ 2,400,000 $ ‐ 19 45402 ‐ Other Grants/Subventions $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ 20 47003 ‐ Other Revenue $ 2,326 $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ 21 Total Other Revenue $ 5,474,321 $ 16,083,186 $ 11,018,458 $ 13,350,315 $ 10,663,389 $ 8,362,161 22 Total Revenue $ 6,475,111 $ 17,059,186 $ 12,028,458 $ 14,365,515 $ 11,706,393 $ 9,433,750 23 EXPENDITURES
24 Total Salaries and Benefits $ 389,893 $ 330,949 $ 387,257 $ 402,488 $ 416,673 $ 429,174 25 61011 ‐ Maintenance $ 270,443 $ 332,500 $ 382,180 $ 346,615 $ 357,013 $ 367,724 26 61013 ‐ Other Contract Services $ 297,705 $ 161,600 $ 72,100 $ 72,100 $ 74,263 $ 76,491 27 61016 ‐ Purchased Transportation $ 3,006,116 $ 3,800,293 $ 4,481,353 $ 5,580,494 $ 5,747,909 $ 5,920,346 28 62504 ‐ Fuel $ 406,007 $ 365,000 $ 440,000 $ 420,000 $ 420,000 $ 420,000 29 Total Contract Services $ 3,980,271 $ 4,659,393 $ 5,375,633 $ 6,419,209 $ 6,599,185 $ 6,784,561 30 Total Other Operating Expenditures $ 58,390 $ 140,710 $ 229,300 $ 224,100 $ 230,823 $ 237,748 31 Total Operating Expenditures $ 4,428,554 $ 5,131,052 $ 5,992,190 $ 7,045,797 $ 7,246,682 $ 7,451,482 32 Total Capital Asset Expenditures $ 1,668,368 $ 11,630,541 $ 3,155,719 $ 6,699,292 $ 3,167,961 $ 107,541 33 Total Transfers to / from Other Funds $ 463,491 $ 460,609 $ 467,804 $ 491,194 $ 515,754 $ 541,542 34 Total Expenditures $ 6,560,413 $ 17,222,202 $ 9,615,713 $ 14,236,283 $ 10,930,396 $ 8,100,565 37 Working Capital ‐ Beginning $ 2,236,399 $ 2,151,097 $ 1,988,081 $ 4,400,826 $ 4,530,058 $ 5,306,056 38 Change in Financial Position $ (85,302) $ (163,016) $ 2,412,745 $ 129,232 $ 775,997 $ 1,333,185 39 Working Capital ‐ Year End $ 2,151,097 $ 1,988,081 $ 4,400,826 $ 4,530,058 $ 5,306,056 $ 6,639,240 40 Operating Reserve (20%) $ 885,711 $ 1,026,210 $ 1,198,438 $ 1,409,159 $ 1,449,336 $ 1,490,296 41 Unreserved Working Capital Year End $ 1,265,386 $ 961,870 $ 3,202,388 $ 3,120,899 $ 3,856,719 $ 5,148,944 2023‐25 Financial Plan 2025‐27 Financial Plan
Financial Plan Page 146
Operating Budget Public Works
Department Programs
Financial Plan Page 147
Operating Budget Public Works
Opportunities and Challenges
The Public Works Department faces new and recurring challenges as it strives to meet community needs and expectations. In the face of budget constraints and a growing asset inventory, the department will leverage opportunitiesto deliver the highest level ofservice to the community within available resources.
The Engineering Division is managing the delivery of several major projects over the next two years, including the Righetti Ranch Community Park, the Cultural Arts District Parking Structure, the Higuera Complete Streets Project, and Mission Plaza enhancements, all while fostering and building knowledge, skills and abilities in its team.
The Mobility Services Division continues to facilitate and promote sustainable transportation solutions and leverage technology to make the parking experience easy, convenient, and accessible to all users. The completion of the Cultural Arts District Parking Structure early in calendar year 2026 will immediately add about 400 new spaces to the west end of the downtown core. Ridership growth and proposed service enhancements in the Short‐Range Transit Plan (SRTP) are key opportunities identified by the public for Transit. In response, the department has submitted SOBCs to account for increased purchased transportation costs (currently provided via a bus service contract with TransDev), to augment service levels in line with the SRTP, and to fund transit service planning software to more effectively serve riders.
Financial Plan Page 148
Operating Budget Public Works
The Maintenance Division is committed to maintaining the City’s assets under their purview efficiently and effectively while reducing one‐time capital costs through preventative maintenance. The Maintenance Division’s operating programs are leveraging theirresourcesto maintain service levels, while managing an increased number of assets. Additionally, the Maintenance Division is helping advance the City’s climate goals through major facility energy efficiency upgrades, fleet electrification, and the expansion of charging infrastructure.
The department is experiencing a period of service and asset growth and progress, driven by the success of the Ask SLO resident response platform, the expansion of parks and other community amenities, and the advancement of complex capital improvement projects. As infrastructure and service needs evolve, the department remains focused on recruiting and retaining skilled staff to sustain high‐quality operations. By strategically managing resources and optimizing budget allocations, the department continues to enhance services and meet the community's needs effectively.
The department will continue to prioritize communication to build community trust as progress advances on CIP projects and new services and technologies are implemented in the Mobility Services Division. To this end, it has submitted an SOBC for the conversion of a contract Mobility Services Communications Coordinator to a regular full‐time position that will also support CIP related communications.
As operating budgets tighten, the department remains optimistic that despite its lean budget, it will continue to meet community expectations, notwithstanding any major emergencies or disasters.
Major City Goal Contributions
The department supports Major City Goals through cultural vitality, infrastructure and sustainable transportation, and resilience initiatives. Public Works will help stimulate cultural vitality in the downtown area through enhancements to the Mission Plaza and the forecasted completion of the new Cultural Arts District Parking Structure in coordination with SLO REP. Likewise, the department will oversee the development of new and upgraded park infrastructure; street safety and connectivity improvements in line with Vision Zero and the Active Transportation Plan; and long‐term planning efforts to support future growth and development, with projects like the Prado Bridge Widening, the Prado Interchange, broadband infrastructure development and the expansion of mass transportation and public transit. With the completion of the Mid‐Higuera Bypass project, improvements to flood resiliency will reduce the impacts of storm‐related damage.
Diversity, Equity and Inclusion
o Continue the implementation of the Broadband Plan, including building grant funded infrastructure.
Cultural Vitality, Economic Resilience, and Fiscal Sustainability o Finalize a Community Work Force Agreement to support future construction work for the Prado Interchange and Public Safety Center projects.
Financial Plan Page 149
Operating Budget Public Works
o Complete the construction of the Mission Plaza Project to enhance the experience of the plaza and downtown.
o Complete the construction of the Cultural Arts District Parking Structure. o Support SLO REP in beginning construction of the new theatre and manage the City’s Lease and Grant Agreements to help promote a successful public opening. Infrastructure and Sustainable Transportation
o Start construction of the 2025 Arterials Paving project which could include streets such as Sacramento Dr, Tank Farm, and Calle Joaquin depending on available funding. o Start construction of the 2026 Roadway Sealing Project in Pavement Areas 2 & 3. o Start Construction of South/King Traffic Crossing Improvement. o Start Construction of California/Taft Roundabout.
o Start Construction of Higuera Complete Streets Project. o Complete South Broad St. Corridor Plan and initiate Demonstration Project. o Complete public outreach and concept design for Foothill Complete Streets. o Promote Roll and Stroll Education Campaign.
o Bring Final Recommendation for Grand Avenue to Council to be implemented with the 2027 Paving Project.
o Finalize Design Plans for Construction of the Prado Bridge Widening Project. o Complete Prado Interchange Final Value Engineering Report and Council Update. o Start Construction of Righetti Ranch Park (Phase 1).
o Start Construction of Devaul Ranch Playground Replacement Project. o Advertise for construction bids for the Emerson Park Replacement Project. o Execute new SLO Transit Operations and Maintenance Agreement. o Reinstate transit services to pre‐pandemic levels.
o Increase route frequency and reduce headways consistent with recommendations of the 2025 Short Range Transit Plan.
o Provide transit service to San Luis Ranch and Avila Ranch neighborhoods. o Expand and promote the Downtown Access Pass (DAP) program. Open Space, Climate Action, and Resilience
o Complete publicly accessible EV charging projects at the Cultural Arts District Parking Structure.
o Conduct a year‐long campaign to connect employees to low emissions commute options (LBE)
o Complete Construction of the Mid‐Higuera Bypass Project 2025‐27 Department Goals
The department’s strategic priorities for the 2025‐27 Financial Plan are intended to support the advancement of the City’s overall objectives tied to Major City Goals, Department Strategic Plans, and other priorities that may arise. These goals are in addition to ongoing services described in the ‘Department Programs’ section above.
Strategic Goal(s)
Financial Plan Page 150
Operating Budget Public Works
Invest in critical infrastructure with the focus of delivering legacy projectsto the community, including the Cultural Arts District Parking Garage, the Mission Plaza Enhancements Project, Prado Road Creek Bridge, Prado Road Interchange and the Public Safety Center replacement.
Provide core services to the community with particular focus on Enhanced Downtown Maintenance and providing maintenance services for recently constructed development projects that are ready to be assumed into the City’s inventory for maintenance. Continue to use Ask SLO as a tool to respond to community needs.
Support efforts by the Finance Department to maximize federal and state reimbursement of City funds for response to the 2023 storms. Continue focusing on Emergency Preparedness, responses to future storms, and ongoing recovery efforts from the 2023 storms that are now programed in the City’s CIP.
Implement sustainable transportation objectives from the Short‐Range Transit Plan and the Active Transportation Plan including increasing frequency and service of transit, as well as trail, pedestrian, and bicycle improvements and street enhancements to uphold traffic safety.
Increase department’s public engagement, marketing, education and noticing through purposeful, multi‐ channel outreach efforts to advance the City’s Major City Goals.
Support and prioritize employee development and growth by investing time in the training, development and onboarding of new and transitioning employees. Develop an implementation plan for the Employee Engagement Survey feedback focused on training and onboarding.
Performance Measures
Performance measures are designed to determine accountability, improve service quality, allocate resources, and evaluate departmental performance in meeting San Luis Obispo’s goals and objectives.
Financial Plan Page 151
Operating Budget Public Works
2023-24
Actual
2024-25
Projected
2025-26
Target
2026-27
Target
Measure: Pavement Condition Index 73 73 70 70
Measure: Bicycle netw ork in total miles (Class
I/II/III/IV)
14.6/31.0/
25.1/2.8
14.6/31.0/2
4.9/3.0
14.6/28.6/2
4.9/5.4
14.6/26.2/
26.9/7.8
Measure: Street miles maintained 143 144 144 144
Measure: Cityw ide fatal and severe injury crashes
(latest annual total/5-year running average) 20 / 19.6 18 / 17.6 16 / 15.9 15 / 14.3 Objective: Enhance safe and efficient transportation
Strategic Goal: Proactively enhance safety by providing a system of safe, reliable and w ell-maintained roadw ays, sidew alks, traffic signals and streetlights Notes: PCI tends to hover around 73, but the staff target is a minimum PCI of 70.
Notes: Based on projects already funded and on schedule for construction in these years and projects anticipated to be funded in 2025-27 Financial Plan based on Draft CIP as of March 2025.
Notes: FY 2023-24 values based on the latest availble collision data set (2019-2023). Projected values for FY 2024-25 and future years are estimated based on an 10% reduction achieved per year.
Notes: About 1 mi w ill be added w ith Avila Ranch Phase 1 Measure: Annual SLO Transit ridership 575,255 625,000 663,900 734,182 Notes: FY 2024-25 based on actual ridership through first 6 months of fiscal year. FY 2025-26 and FY 2026-27 targets are based on the draft Short-Range Transit Plan projections.
Objective: Encourage sustainable transportation
Strategic Goal: Implement sustainable transportation objectives from the Short-Range Transit Plan and the Active Transportation Plan including increasing frequency and service of transit, as w ell as trail, pedestrian, and bicycle improvements and street enhancements to uphold traffic safety.
Financial Plan Page 152
Operating Budget Public Works
2023-24
Actual
2024-25
Projected
2025-26
Target
2026-27
Target
Measure: Public Works Maintenance Division Ask
SLO requests addressed 1,571 1,660 1,660 1,660
Measure: # of trees maintained 13,429 13,479 13,579 13,679 Notes: The urban forest number of managed trees has been aligned w ith the Public Works Maintenance Division scope of services. Many trees in the City's open space have been removed from the Urban Forest Services maintenance metrics as these trees are maintained by the Parks and Recreation Department's Ranger Services Program. The program w ill target 100 new tree plantings annually w ith young tree care provided by volunteers or community partners.
Notes: Projected FY 2024-25 value is based on average daily volume of Maintenance requests. This number is challenging to forecast, but is not expected to decrease as increasing numbers of residents use Ask SLO.
Objective: Effectively manage City assets
Strategic Goal: Provide core services to the community w ith particular focus on Enhanced Dow ntow n Maintenance and providing maintenance services for recently constructed development projects that are ready to be assumed into the City’s inventory for maintenance; continue to use Ask SLO as a tool to respond to community needs.
Financial Plan Page 153
Operating Budget Utilities
UTILITIES DEPARTMENT
Mission Statement
Ensuring safe, reliable, and essential utilities service.
About the Department
The Utilities Department provides water and wastewater services to the City of San Luis Obispo and is responsible for the administration, billing, customer service, operation, maintenance, design, inspection, and construction of the City's water and wastewater‐related infrastructure. Additionally, the department also manages the City’s Solid Waste and Recycling Program and administers the City’s stormwater compliance program.
As a part of these services, the Utilities Department manages two Enterprise Funds (Water and Sewer), an Agency Fund (Whale Rock), and the Solid Waste and Recycling and Stormwater programs, which are accounted for within the City’s General Fund. The Solid Waste and Recycling budget is supported by AB 939 and Franchise Fee funding, both of which are restricted to waste diversion activities. The Whale Rock Fund is managed by the City, but under the governance of the Whale Rock Commission, which is comprised of the City of San Luis Obispo, California Polytechnic State University (Cal Poly), and California Men’s Colony (CMC) representatives. The City’s portion of staffing and operational expenses and capital project contributions for Whale Rock operations are budgeted within the Water Fund’s Source of Supply budget. The Department is responsible for ensuring the financial sustainability and regulatory compliance of all of these operations, optimizing resource allocation, and supporting long‐term infrastructure planning for utilities services.
Budget at a Glance (All Funds)
Actuals Budget Financial Plan
Utilities FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Staffing 12,775,184 13,784,332 14,143,565 14,749,345 YoY Change 8% 3% 4%
Other Operating Expenditures 18,204,739 21,783,645 26,826,287 22,986,577 YoY Change 20% 23% ‐14%
Total 30,979,923 35,567,978 40,969,852 37,735,922 YoY Change 15% 15% ‐8%
Financial Plan Page 154
Operating Budget Utilities
General Fund Summary
Fiscal Analysis
The Utilities Department oversees the Solid Waste and Recycling and Stormwater budgets, which are managed within the City’s General Fund. During the 2025‐27 Financial Plan, staffing budgets remain fairly consistent with slight changes due to standard staffing changes such as retirements, anticipated salary raises, and retirement and Medicare contributions. Operating Expenditures significantly decrease in FY 2025‐26 due to the City’s Stormwater and Flood Control operations being separated out during the next financial plan. Flood control operations are managed by the City’s Public Works department.
Significant Operating Budget Changes
No significant operating budget changes are recommended within the General Fund.
Water and Sewer Enterprise Funds
As Enterprise Funds, the City’s Water and Sewer Funds are primarily supported by revenue collected from water and sewer rates. Therefore, the City’s Water and Sewer Funds are not expected to experience the same constraints over this next Financial Plan as the City’s General Fund. To ensure the continued delivery of safe and reliable water and sewer services for years to come, it is crucial that these funds continue to make strategic investments in operations, maintenance, and capital improvements. To meet these needs, significant operating budget changes (SOBCs) have been proposed and incorporated into the Water and Sewer Fund budgets. Consequently, these funds do not have flat non‐staffing operating budgets. Ongoing investments in equipment, infrastructure, and regulatory compliance are essential to maintaining the community’s water and sewer systems and supporting long‐term operational and financial sustainability.
Actuals Budget Financial Plan
Utilities FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Staffing 1,200,977 1,198,178 1,182,122 1,232,122 YoY Change 0% ‐1% 4%
Other Operating Expenditures 451,330 410,749 199,541 198,090 YoY Change ‐9% ‐51% ‐1%
Total 1,652,306 1,608,927 1,381,663 1,430,212 YoY Change ‐3% ‐14% 4%
Financial Plan Page 155
Operating Budget Utilities
Water Fund Summary
Fiscal Analysis ‐ Revenue
The increase between FY 2024‐25 and 2025‐26 and then decrease between FY 2025‐26 and 2026‐27 is primarily due to a majority of Prop 1B grant revenues for a groundwater project being anticipated to be received during FY 2025‐26. Water Sales and Base Charges are also anticipated to increase with proposed rate increases during both FY 2025‐26 and 2026‐27, as well as a slight increase in projected customer growth. FY 2023‐24 actuals appear higher than the FY 2024‐25 budget, as investment interest revenue is budgeted conservatively to remain fiscally responsible due to potential market variability. Lastly, revenue for miscellaneous penalties (customer late charges) and credit collections have been adjusted to better reflect historical actuals.
Fiscal Analysis ‐ Expenditures
Overall, the Water Fund staffing and operating budgets will have a significant increase during FY 2025‐26 due to the City’s contributions for operations, maintenance, and capital projects for the City's three surface water reservoirs, budgeted for under the Water Source of Supply budget. Because the expenses for capital projects are included, operating expenditures for the City’s Water Source of Supply budget can Actuals Budget Financial Plan
Water Fund FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Water Sales & Base Charges 26,356,629 28,428,148 30,057,771 31,884,916 YoY Change 8% 6% 6%
Other Revenue
42112‐Other City Licenses & Permits 41,580 ‐ 25,000 ‐ 43201‐Miscellaneous Penalties 129,728 118,000 130,000 130,000 44101‐Interest on Investment 1,207,560 50,000 50,000 50,000 44107‐Investment FMV Adjustment 551,555 ‐ ‐ ‐ 44305‐Damage to City Property 32,475 ‐ ‐ ‐ 44306‐Credit Collections 7,331 14,000 5,000 5,000 44310‐Miscellaneous Revenue 58,849 20,000 20,000 20,000 45204‐Prop 1B Revenue ‐ ‐ 4,095,680 62,606 45211‐Other State Grants 752,267 ‐ ‐ ‐ 46102‐Development Review Fees 34,943 26,000 26,000 26,000 47003‐Miscellaneous 46,005 ‐ ‐ ‐ Total Revenue 29,218,924 28,656,148 34,409,451 32,178,522 YoY Change ‐2% 20% ‐6%
Actuals Budget Financial Plan
Utilities FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Staffing 5,429,211 5,957,659 6,214,757 6,499,929 YoY Change 10% 4% 5%
Other Operating Expenditures 12,711,934 16,446,611 20,859,920 17,203,984 YoY Change 29% 27% ‐18%
Total 18,141,145 22,404,271 27,074,677 23,703,912 YoY Change 23% 21% ‐12%
Financial Plan Page 156
Operating Budget Utilities
vary significantly from year to year. Overall, 88% of the increase in total expenditures between FY 2024‐ 25 to FY 2025‐26 can be attributed to increases in the City’s contribution for capital projects for the three reservoirs with the majority of the increase related to the Salinas Dam Access Road Repair project.
Although the County of San Luis Obispo manages the Salinas Reservoir, the City is the only utility that receives water from the reservoir and therefore, must pay for the project. However, the project is expected to be reimbursable by FEMA/CalOES which would cover 93.75% of the project total making the net cost to the City $250,000. Should reimbursement for the project not be received, Staff would have to re‐evaluate the Water Fund Capital Improvement Plan and likely recommend deferral of other planned projects. Staffing costs for the Water Fund increase to accommodate anticipated staffing and benefit increases. Significant funding request changes for the Water Fund, including those for additional staffing changes and the Salinas Dam Road Repair project, are included in the table below.
Financial Plan Page 157
Operating Budget Utilities
Significant Operating Budget Changes
Financial Plan Page 158
Operating Budget Utilities
Long‐term Forecast
Water Fund Five‐Year Forecast
(In Thousands)
(A)
Actual
2023‐24
(B)
Budgeted
2024‐25
(C)
Financial Plan
2025‐26
(D)
Financial Plan
2026‐27
(E)
Projected
2027‐28
(F)
Projected
2028‐29
1 Revenues
2 46102‐Development Review Fees 34,943 $ $ 26,000 $ 26,000 $ 26,000 $ 26,000 $ 26,000 3 46701‐Sales to Cal Poly $ 1,203,461 $ 1,183,946 $ 1,249,069 $ 1,317,761 $ 1,383,649 $ 1,452,832 4 46702, 46714, 46715, 46716, 46717, 46718,
and 46719 ‐Water Sales 16,886,267 $ $ 19,045,319 $ 18,980,886 $ 20,185,033 $ 21,363,839 $ 22,611,488 5 46703‐Utilities Base Charges $ 6,989,566 $ 6,711,653 $ 8,448,140 $ 8,984,090 $ 9,508,761 $ 10,064,072 6 46704‐Reclaimed Water Sales $ 1,009,031 $ 1,161,104 $ 1,052,820 $ 1,061,243 $ 1,114,305 $ 1,170,020 7 46708‐Utilities Setup Fees 194,009 $ $ 261,694 $ 160,000 $ 160,000 $ 160,000 $ 160,000 8 46709‐Other Utilities Charges $ ‐ ‐ $ ‐ $ ‐ $ ‐ $ $ ‐ 9 46712‐Low Income Subsidy $ (20,474) $ (100,000) $ (100,000) $ (100,000) $ (100,000) $ (100,000) 10 46713‐Cal Poly Capacity & Resilience $ 233,025 $ 263,433 $ 266,856 $ 276,789 $ 286,315 $ 296,317 11 46799‐COVID Rate Relief Program (138,255) $ ‐ $ ‐ $ ‐ $ ‐ $ $ ‐ 12 Total Charges for Services 26,391,572 $ $ 28,553,148 $ 30,083,771 $ 31,910,916 $ 33,742,869 $ 35,680,729 13 Total Other Revenue1 $ 3,026,221 $ 3,333,734 $ 4,325,680 $ 4,017,606 $ 9,435,000 $ 205,000 14 Total Impact Fees2 $ 2,643,232 $ 800,000 $ 800,000 $ 800,000 $ 800,000 $ 800,000 15 Total Revenue 32,061,026 $ $ 32,686,882 $ 35,209,451 $ 36,728,522 $ 43,977,869 $ 36,685,729 16 Expenditures
17 Total Salaries and Benefits 5,264,371 $ $ 5,953,053 $ 6,214,757 $ 6,499,929 $ 6,845,210 $ 7,051,690 18 CalPERS Additional Discretionary Payment 164,840.00 $ $ 245,418.0 $ 164,840 $ 164,840 $ 164,840 $ 164,840 19 Total Operating 12,711,934 $ $ 16,713,083 $ 20,859,920 $ 17,203,984 $ 17,759,293 $ 16,122,438 20 Total Capital Asset Expenditures 8,189,987 $ $ 24,006,057 $ 8,265,632 $ 5,029,168 $ 11,742,428 $ 5,970,519 21 Total Debt Service Expenditures3 $ 1,742,901 $ 1,868,807 $ 1,865,911 $ 1,855,405 $ 1,854,858 $ 2,453,348 22 Total General Government Expenditures $ 2,918,361 $ 2,947,417 $ 2,819,038 $ 2,959,990 $ 3,107,989 $ 3,263,389 23 Total Expenditures 30,992,394 $ $ 51,733,835 $ 40,025,257 $ 33,548,475 $ 41,474,618 $ 35,026,223 24 Change in Financial Position
25 Working Capital ‐ Beginning $ 40,261,007 $ 43,032,553 $ 22,282,686 $ 17,267,955 $ 20,255,767 $ 22,759,019 26 Net Revenues
(Revenues minus Expenditures) $ 1,068,632 $ (19,046,953) $ (4,815,806) $ 3,180,046 $ 2,503,252 $ 1,659,507 27 Working Capital ‐ Year End 43,032,553 $ $ 22,282,686 $ 17,267,955 $ 20,255,767 $ 22,759,019 $ 24,368,526 28 Operating Reserve (20%) 4,560,481 $ $ 5,545,556 $ 6,391,710 $ 5,742,308 $ 5,946,438 $ 5,811,141 29 Rate Stabilization (10%) 2,608,832 $ $ 2,810,202 $ 2,973,092 $ 3,154,813 $ 3,337,055 $ 3,529,841 30 Other Reserves4 $ 175,656 $ 175,656 $ 175,656 $ 175,656 $ 175,656 $ 175,656 31 Unreserved Working Capital ‐ Year End 35,687,583 $ $ 13,751,272 $ 7,727,498 $ 11,182,990 $ 13,299,870 $ 14,851,888 NOTES AS NECESSARY 1
Other revenue includes grant revenue and long‐term debt proceeds. Grant proceeds for the Prop 1B Groundwater project are included in FY 26 and FY 27; anticipated FEMA reimbursements for the Salinas Dam Access Road repairs are included in FY 27; debt proceeds for a 30" pipeline replacement on Santa Rosa is included in FY 28; and debt proceeeds for the T3 Water Storage Tank Replacement are included in FY 30. 2 Transfers occur after the close of the fiscal year. Amount shown for FY 24 are for the fees collected during FY 24, but were transferred during FY 25. 3 The City's contributions to Nacimiento debt payments are budgeted for as an Operating Expenditure within the Water Source of Supply budget. 4 Includes CalPERS Unfunded Liability Payment.
Financial Plan Page 159
Operating Budget Utilities
The forecast above reflectsthe Water Fund’s anticipated financial position, including Significant Operating Budget Changes. To address nationwide cost increases and upcoming capital improvement projects that drive water rate increases, the Department has been focusing on an approach to supplement ratepayer funds through the utilization of grant funding. Over the past seven years, the Water Fund has secured over $14.5 million in grants and alternative funding and has recently applied for an additional $2 million for projects that improve resiliency for the community while also decreasing long‐term operating costs.
The Water Treatment Plant Tesla Battery Pack and the Groundwater Contamination Remediation Project were both grant‐funded and provide long‐term operational cost decreases by reducing electricity usage and allowing for electricity to be utilized during off‐peak periodsfor treatment operations. These projects, amongst others, focus on utilizing alternative funding sourcesto stabilize or decrease coststhat otherwise would drive additional annual rate increases.
In addition to these measures, the Department has been exploring opportunities to sell surplus water supplies that the City is unable to use each year pursuant to policy 1.13.2 of the Land Use Element of the City’s General Plan. Surplus water sales programs include the potential to sell surplus recycled water and surplus non‐potable water from Nacimiento Lake. These water sales programs could result in additional revenue for the Department without compromising long‐term water supply sustainability. However, because surplus water sales have not been negotiated and significant additional work is required to finalize any such agreements, the forecast does not include any projected revenue from potential sales.
Sewer Fund
Fiscal Analysis ‐ Revenue
Actuals Budget Financial Plan
Sewer Fund FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Service Charges 20,196,460 20,596,900 21,558,825 23,110,050 YoY Change 2% 5% 7%
Other Revenue
43201‐Miscellaneous Penalties 129,729 118,000 130,000 130,000 44301‐Sale of Surplus Property 2,803 ‐ ‐ ‐ 43303‐Administrative Citations ‐ Utilties 3,291 ‐ ‐ ‐ 44101‐Interest on Investment 1,768,426 50,000 50,000 50,000 44107‐Investment FMV Adjustment 824,227 ‐ ‐ ‐ 44305‐Damage to City Property 783 ‐ ‐ ‐ 44306‐Credit Collections 7,331 14,000 5,000 5,000 44310‐Miscellaneous Revenue 756 20,000 25,000 25,000 45211‐Other State Grants 895,814 ‐ ‐ ‐ 45402‐Other Grants/Subventions 20,183 ‐ ‐ ‐ 47003‐Miscellaneous 42,151 ‐ ‐ ‐ Total Revenue 23,891,953 20,798,900 21,768,825 23,320,050 YoY Change ‐13% 5% 7%
Financial Plan Page 160
Operating Budget Utilities
Similar to the Water Fund, the decrease in sewer revenue between FY 2024‐25 actuals and 2025‐26 budgeted values is mostly attributed to investment interest revenue being budgeted conservatively to remain fiscally cautious due to potential market volatility. FY 2023‐24 also included grant revenue for the Water Resource Recovery Facility (WRRF) project that was not included in the FY 2024‐25 budget, as the project was anticipated to be completed before FY 2024‐25. During both FY 2025‐26 and 2026‐27, Sewer Service Charges are anticipated to increase with proposed rate increases, as well as due to a slight increase in projected customer growth. Rate increases were higher than anticipated for the next two years due primarily to a significant loss in revenue from sales to California Polytechnic State University (Cal Poly).
This is discussed more under the Sewer Fund’s Long Term Forecast section. Lastly, revenue for miscellaneous penalties (customer late charges) and credit collections have been adjusted to better reflect historical actuals.
Fiscal Analysis ‐ Expenditures
Overall, the Sewer Funds’ staffing and operating expenditures increased 8% in FY 2025‐26 compared to FY 2024‐25 and then stabilized for FY 2026‐27 with a slight decrease for FY 2026‐27 compared to FY 2025‐
26. The majority of the increased expenditure costs in FY 2025‐26 are attributed to additional funding to support the City’s new Water Resource Recovery Facility (WRRF). These include funding needs for regulatory compliance, such as the one‐time request for funding to conduct a Local Limits Study required by the Regional Water Quality Control Board (RWQCB) and Environmental Protection Agency (EPA) to establish new wastewater discharge limits for industrial users based on the updated WRRF treatment capacity and modified discharge permit limits. Additional funding includes new plant needs arising from the facility’s upgraded infrastructure, increased electrical usage, specialized maintenance, chemical requirements, instrumentation costs, as well as one‐time requests for additional legal service funding to navigate complex regulatory challenges. Regulatory fees and compliance costs have also increased due to new permit requirements and stricter environmental monitoring and funding for additional biosolids disposal due to increased biosolids production and increased costs for transportation and third‐party treatment. The primary driver for upgrading and reconfiguring the facility was new State‐mandated regulatory requirements. Significant funding request changes, including those for the additional WRRF expenses, are included in the table below.
Actuals Budget Financial Plan
Utilities FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Staffing 5,467,874 5,910,888 6,015,856 6,270,139 YoY Change 8% 2% 4%
Other Operating Expenditures 3,941,034 4,015,570 4,746,764 4,571,635 YoY Change 2% 18% ‐4%
Total 9,408,908 9,926,458 10,762,621 10,841,774 YoY Change 6% 8% 1%
Financial Plan Page 161
Operating Budget Utilities
Significant Operating Budget Changes
2025‐26 2026‐27
Total
Expense
Other
Funding
Sources
Sewer Fund
Contribution
Total
Expense
Other
Funding
Sources
Sewer Fund
Contribution
1 Funding for customer facing improvements to
office area.
20,500 10,250 ‐ ‐ 10,250 ‐ One‐Time 2 Funding for Water and Wastewater Rate Study
and Restructure Study.*
85,000 42,500 42,500 ‐ ‐ ‐ One‐Time 3 Funding for a Local Limits Study. 130,000 ‐ 130,000 ‐ ‐ ‐ One‐Time 4 Add 1.00 regular full‐time FTE Utilities
Engineering Technician.
117,662 58,831 58,831 118,468 59,234 59,234 Ongoing 5 Add 0.25 FTE Utility Billing Assistant (increase
0.75 FTE position to full‐time).
18,282 9,141 9,141 19,055 9,527 9,528 Ongoing 6 Funding for contract position to support
Cityworks integration in FY 2026‐27.
‐ ‐ ‐ 139,197 69,599 69,598 One‐Time 7 Funding for Wastewater Intern. 65,055 ‐ 65,055 67,806 ‐ 67,806 Ongoing 8 Funding for Wastewater legal services to
support implementation of regulatory changes
in wastewater division programs.
60,000 ‐ 60,000 35,000 ‐ 35,000 One‐Time 9 Funding for Sewer Fund strategic staffing plan. ‐ ‐ ‐ 27,000 ‐ 27,000 One‐Time 10 Funding for Water Distribution and
Wastewater Collections staff training to obtain
commercial driver's licenses.
20,000 10,000 10,000 20,000 10,000 10,000 Ongoing 11 Funding for increased biosolids hauling and
disposal services at the Water Resource and
Recovery Facility.
276,630 ‐ 276,630 301,630 ‐ 301,630 Ongoing 12 Funding for modified Water Resource
Recovery Facility program updates.**
252,000 ‐ 252,000 245,700 ‐ 245,700 Ongoing 13 Funding for increased Water Resource
Recovery Facility regulatory requirements and
permits.
44,450 ‐ 44,450 25,428 ‐ 25,428 Ongoing 14 Funding for consultant expense to conduct an
impact fee and infrastructure finance program
analysis and impact fee study update.
30,000 ‐ 30,000 ‐ ‐ ‐ Ongoing 15 1,119,579 130,722 988,857 999,284 148,360 850,924 ID SOBC Description One‐Time/
Ongoing
Financial Plan Page 162
Operating Budget Utilities
Long‐Term Forecast
The Sewer Fund’s Long Term Forecast reflects the anticipated financial position, including recommended Significant Operating Budget Changes and proposed rate increases of 6.5% for both FY 2025‐26 and 2026‐
27. A key driver for the higher‐than‐anticipated rate increases is the significant decrease in anticipated sewer revenue from California Polytechnic State University (Cal Poly). The University is building a new wastewater treatment facility on campus and will begin treating a significant portion of its wastewater.
Projected revenues are based on the projected flows provided by the University.
Sewer Fund Five‐Year Forecast
(In Thousands)
(A)
Actual
2023‐24
(B)
Budgeted
2024‐25
(C)
Financial Plan
2025‐26
(D)
Financial Plan
2026‐27
(E)
Projected
2027‐28
(F)
Projected
2028‐29
1 Revenues
2 46102‐Development Review Fees 30,640 $ $ 26,000 $ 26,000 $ 26,000 $ 26,000 $ 26,000 3 46701‐ Sales to Cal Poly1 $ 1,279,919 $ 1,246,313 $ 367,053 $ 407,572 $ 340,578 $ 326,609 4 46703‐ Utilities Base Charges $ 5,523,236 $ 5,208,612 $ 6,244,610 $ 6,703,713 $ 7,196,570 $ 7,725,662 5 46705, 46720, 46721, and 46722‐ Sewer
Service Charges $ 13,090,223 $ 13,835,916 $ 14,303,628 $ 15,355,231 $ 16,484,148 $ 17,696,062 6 46708 ‐ Utilities Setup Fees 198,146 $ $ 60,000 $ 160,000 $ 160,000 $ 160,000 $ 160,000 7 46709‐ Other Utilities Charges $ ‐ $ ‐ 1,000 $ ‐ $ ‐ $ ‐ $ 8 46712‐Low Income Subsidy (16,464) $ $ (100,000) $ (100,000) $ (100,000) $ (100,000) $ (100,000) 9 46713‐ Cal Poly Capacity & Resilience $ ‐ $ 472,534 $ 472,534 $ 472,534 $ 472,534 $ 472,534 10 Total Charges for Services 20,105,699 $ $ 20,750,375 $ 21,473,825 $ 23,025,050 $ 24,579,830 $ 26,306,867 11 Total Other Revenue2 $ 19,139,782 $ 15,287,000 $ 295,000 $ 295,000 $ 295,000 $ 295,000 12 Total Impact Fees3 $ 943,559 $ 600,000 $ 600,000 $ 600,000 $ 600,000 $ 600,000 13 Total Revenue 40,189,041 $ $ 36,637,375 $ 22,368,825 $ 23,920,050 $ 25,474,830 $ 27,201,867 14 Expenditures
15 Total Salaries and Benefits 5,298,455 $ $ 6,208,914 $ 6,015,856 $ 6,270,139 $ 6,539,419 $ 6,735,602 16 CalPERS Additional Discretionary Payment $ 169,419 $ 250,875 $ 169,419 $ 169,419 $ 169,419 $ 169,419 17 Total Operating 3,941,034 $ $ 4,220,747 $ 4,746,764 $ 4,571,635 $ 4,684,170 $ 4,840,412 18 Total Capital Asset Expenditures 20,049,934 $ $ 37,877,750 $ 8,033,141 $ 6,877,168 $ 4,142,524 $ 4,566,041 19 Total Debt Service Expenditures 6,141,209 $ $ 7,005,933 $ 7,098,607 $ 7,090,097 $ 7,088,453 $ 7,086,939 20 Total General Government Expenditures 3,104,155 $ $ 3,290,250 $ 3,140,155 $ 3,297,163 $ 3,462,021 $ 3,635,122 21 Total Expenditures 38,704,207 $ $ 58,603,595 $ 29,034,523 $ 28,106,202 $ 26,086,006 $ 27,033,535 22 Change in Financial Position
23 Working Capital ‐ Beginning 49,346,787 $ $ 53,797,920 $ 28,865,401 $ 21,944,099 $ 17,430,569 $ 16,769,392 24 Net Revenues
(Revenues minus Expenditures) 1,484,834 $ $ (21,966,219) $ (6,665,698) $ (4,186,151) $ (661,177) $ 168,331 25 Working Capital ‐ Year End 53,797,920 $ $ 28,865,401 $ 21,944,099 $ 17,430,569 $ 16,769,392 $ 16,937,724 26 Operating Reserve (20%) $ 3,730,854 $ 4,145,169 $ 4,251,397 $ 4,311,282 $ 4,388,697 $ 4,493,499 27 Rate Stabilization (5%) 994,669 $ $ 1,014,542 $ 1,045,765 $ 1,123,326 $ 1,201,065 $ 1,287,417 28 Other Reserves4 $ 6,087,166 $ 6,087,166 $ 6,087,166 $ 6,087,166 $ 6,087,166 $ 6,087,166 29 Unreserved Working Capital ‐ Year End $ 42,985,231 $ 17,618,524 $ 10,559,771 $ 5,908,795 $ 5,092,465 $ 5,069,642 NOTES AS NECESSARY 1
Sewer revenue from Cal Poly is expected to decrease when the University brings its on‐campus wastewater treatment plant online. Projections are based on the total annual volumes projected to be delivered to the City, as provided by the University. 2 Other revenue includes grant revenue and long‐term debt proceeds. Delays with the WRRF project resulted in $15M of debt proceeds to be delayed to FY 25. 3 Transfers occur after the close of the fiscal year. Amount shown for FY 24 are for the fees collected during FY 24, but were transferred during FY 25. 4 Includes CalPERS Unfunded Liability Payment and SRF loan payments.
Financial Plan Page 163
Operating Budget Utilities
To address ongoing expenses related to project deferrals and inflation, staff have identified the following key areas of focus: pursuing grants, improving operations, and exploring infrastructure replacement alternatives. Over the past seven years, the Sewer Fund has received over $7 million in grants and alternative funding sources, such as loan forgiveness, to fund capital projects that would have otherwise relied on ratepayer contributions. The City has also applied for over $5 million of Inflation Reduction Act funding associated with work completed during the WRRF upgrade. Ifreceived, this could be used to offset funding that would otherwise be collected by rates or to support additional needed projects. If this funding is not awarded, the current CIP schedule will remain as forecasted. The Department is also focusing on capital planning projects, such as the Wastewater Collection System Infrastructure Renewal Strategy (long‐range plan) analysis, which allows the department to be proactive in infrastructure maintenance and replacement. Lastly, once the new WRRF facility stabilizes post‐construction, staff will be able to evaluate opportunities to further optimize processes to reduce operational expenditures and maximize the utilization of onsite biogas for energy production.
Financial Plan Page 164
Operating Budget Utilities
Department Programs
Financial Plan Page 165
Operating Budget Utilities
Financial Plan Page 166
Operating Budget Utilities
Financial Plan Page 167
Operating Budget Utilities
Opportunities and Challenges
The Utilities Department continues to focus on providing essential services while planning for and delivering major capital improvement and long‐term planning projects. The Department continues to pursue grants and alternative funding sources to fund infrastructure and sustainability initiatives.
Technology upgrades, such as the implementation of Advanced Metering Infrastructure (AMI) will allow the Department to enhance operational efficiency while strengthening customer service for the community.
Several Capital Improvement Projects aimed at enhancing infrastructure and operational efficiencies will occur over the next two years. Key projects include but are not limited to, construction for new groundwater wells to bring groundwater online to ensure a reliable water supply, implementing AMI, completing the construction of the Water Resource Recovery Facility (WRRF) and optimizing operation of the new facility. Additionally, the Department will continue efforts,such asthe private sewerlateral offset program, to accommodate growth while addressing capacity issues in the wastewater collection (conveyance)system and controlling treatment costs atthe WRRF associated with high flows due to inflow and infiltration. The implementation of SB1383 regulations for solid waste and recycling compliance will also remain a key focus during the upcoming financial plan.
Challenges continue to be rising costs, maintaining and replacing aging infrastructure, increased regulations, and potential financial constraints. While inflationary costs have begun to stabilize, the Department continues to identify increased efficiencies and new ways of doing business to manage increasing costs to ratepayers. Planning remains essential in maintaining reliability and financial stability.
The Department is also working to streamline training programs for onboarding new staff, which will be helpful in addressing the high amount of turnover realized across the City with the modern workforce.
Filling open positions and planning for anticipated retirements will continue to be a challenge that the Department will face over the next two years.
Major City Goal Contributions
In addition to safeguarding public health through safe and reliable utilities services, the Utilities Department also supportsthe City’s goals ofsustainability, focused planning, infrastructure resiliency, and fiscal responsibility. The Departments core services and daily operations advance climate action by promoting water conservation, waste diversion, and sustainable energy use. Investments in pipeline upgrades, leak detection, and water and wastewater treatment ensure reliable infrastructure while providing high quality and reliable water and sewerservices.. Strategic financial management of the Water and Sewer Funds keeps utility servicessustainable without overburdening rate payers. In addition to these core services, the specific Major City Goals the Utilities Department will be addressing during the 2025‐ 27 Financial Plan include:
Ensure public spaces, roads, and utilities support future growth and development:
o Complete the WRRF Upgrade Project
Strengthen community resilience through emergency preparedness, community networks, and planning efforts:
o Conduct a study session to consider options for funding stormwater and / or creek maintenance and flood preparedness in support of CASE programs Continue implementation of the Climate Action Plan (CAP) and Lead by Example (LBE) Work Programs:
Financial Plan Page 168
Operating Budget Utilities
o Partner with the Integrated Waste Management Authority (IWMA) to develop and distribute waste education materials to HOAs and property managers, with a focus on food waste diversion in high‐turnover multi‐family complexes and mobile home communities.
2025‐27 Department Goals
The Department’s strategic priorities for the 2025‐27 Financial Plan are intended to support the advancement of the City’s overall objectives tied to Major City Goals, Department Strategic Plans, and other priorities that may arise. These goals are in addition to ongoing services described in the ‘Department Programs’ section above.
Strategic Goal(s)
1) Continue to pursue grant funding for all funds and innovative strategies to mitigate rate increases and ensure continued affordability.
2) Improve resiliency in water and sewer programs to ensure continued service delivery through emergency planning, infrastructure maintenance, and expansion of source water supplies. 3) In coordination with the Community Development Department, continue to optimize water and wastewater systems to facilitate the City’s housing goals. 4) Continue to partner with the IWMA to provide education and outreach to the community to increase waste diversion and maintain regulatory compliance with State legislation. 5) Develop strategies for Departmental efficiencies and continue to explore new ways of doing business, reducing ongoing operational costs and capital delivery costs while exploring supplemental revenue streams to reduce the rate burden on the community.
Performance Measures
Performance measures are designed to determine accountability, improve service quality, allocate resources, and evaluate Departmental performance in meeting San Luis Obispo’s goals and objectives. 2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27 Target
Measure: Sanitary Sewer Overflows per 100 miles of
sewer publicly‐owned sewer main 1 *3 0 0
Measure: Breaks/leaks per 100 miles of water main 1 4 <13.4 <13.4 Objective: Maintain and manage infrastructure, assets, and facilitiesresponsibly and transparently.
Strategic Goal: Public Stewardship
Notes: *Includes impacts from private infrastructure.
Notes: Breaks/leaks per 100 mile performance measure targeted figures are derived from AWWAUtility Benchmarking Median Figures.
Financial Plan Page 169
Operating Budget Utilities
2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Recycled Water Delivered (AF) 308.52 355 375 395 Measure: Number of customers who have setup an
online profile to view their real‐time water usage N/A 400 1,000 1,600 Notes: The City initiated its transition to Advanced Metering Infrastructure (AMI)in 2024 and the Utilities Department aims to have all water meters and radios upgraded to AMI‐capable technology in 2027.
Notes: n/a
Objective: Provide the Community with High Quality and Reliable Service Strategic Goal: Public Service
2023‐24
Actual
2024‐25
Projected
2025‐26
Target
2026‐27
Target
Measure: Minimize Customer Shut‐Off for Nonpayment 268 440 <400 <400 Measure: Number of water/sewer customers enrolled
in the customer assistance program (low‐income
program).
239 415 465 500
Objective: Enhance Accessibility and Equity in Services Strategic Goal: Public Service
Notes: n/a
Notes: During FY 2023‐24, 3 months ofshutoffs were canceled due to extreme weather, delayed meter readings, and impacted workloads. The number ofshutoffs during FY 2024‐25 is comparable to FY 2022‐23 given the relative increase in number of customers.
Financial Plan Page 170
Operating Budget Non‐Departmental
NON‐DEPARTMENTAL BUDGET
About the Program
The Non‐Departmental Program accounts for indirect Citywide costs not clearly linked to individual departmental operating programs or projects. This budget is managed by the Finance Department, which is responsible for disbursing the allocated budget in coordination with various departments, according to established policies.
Budget at a Glance
Actuals Budget Financial Plan
Non‐Departmental FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Staffing 58,103 793,338 1,533,091 2,586,494 YoY Change 1265% 93% 69%
Other Operating Expenditures 348,419 431,700 868,603 876,831 YoY Change 24% 101% 1%
Total 406,522 1,225,051 2,401,696 3,463,326 YoY Change 201% 96% 44%
Financial Plan Page 171
Operating Budget Non‐Departmental
Fiscal Analysis
Expenditures are proposed to increase from FY 2024‐25 to FY 2025‐26 by $1,176,645 or 96%. Staffing is projected to increase by $739,753 or 93%, driven by Council‐approved negotiating parameters for three bargaining groups. Other Operating Expenditures are expected to increase by $436,903 or 101%, which reflects several re‐allocations from other departments for items more properly accounted for in non‐ departmental. The Non‐Departmental budget has historically included funding for:
A staffing contingency for new labor agreements finalized after the budget was developed; Ventures and Contingency funding for use at the City Manager’s discretion to support needs that arise mid‐year;
Citywide postage and mailing supplies;
Citywide copier maintenance and supplies;
Citywide membership and conference fees for the League of California Cities; and General Fund leave payouts.
Re‐allocations from other departments that drive the increase in the 2025‐27 Financial Plan include:
Funding for the City’s tuition reimbursement program (formerly included in Human Resources’ budget);
Funding for the lease of 994 Mill Street for Human Resources Department office space (formerly included in Human Resources’ budget);
Contributions to other entities (including the City’s share of cost for the City/County Library and the annual contribution to the Cal Poly Performing Arts Center), which are both managed by the Administration and IT Department, but do not directly support the department’s operations (formerly included in Administration and IT’s budget);
Funding for Citywide employee recognition and the Day of Welcome program for new employees (formerly include in Human Resource’s budget);
Partially offsetting the increases noted above, a portion of the budget for credit card processing fees attributable to business licensing fees was moved into the Finance Department’s budget, where charges for actual fees incurred will be recorded.
In order to ensure that overall budgets did not increase, the reallocations into the non‐departmental program resulted in equal reductions to the previously responsible department’s budget. The reallocations noted above did not count towards budget reductions made by departments as a part of the constrained base budget exercise for FY 2025‐26.
Significant Operating Budget Changes
No Significant Operating Budget Changes are recommended for the Non‐Departmental budget.
Financial Plan Page 172
AVILA RANCH
COMMUNITY FACILITIES DISTRICT
Program Description
A Mello‐Roos Community Facilities District (CFD) was established and approved by City Council on October 24, 2017 (Resolution No 10844) pursuant to section 5.02.1 of the Avila Ranch Development Agreement.
The CFD boundaries are identical to that of the Avila Ranch Development project and located at the northeast corner of Buckley Road and Vachell Lane and includes up to 720 dwelling units, 15,000 square feet of office and retail, 18 acres of parks, 53 acres of open space, riparian corridors and farmed agricultural land.
The primary function of the Avila Ranch CFD is a special financing mechanism which was established to fund maintenance services, fire protection services, police protection services, and for construction of facilities within the CFD boundaries. Special taxes are levied on developed parcels located in the boundaries of the CFD through the San Luis Obispo County annual property tax levy which are used to fund the annual costs required by the CFD.
Program Budget at a Glance
Revenue
Expenditures
Fiscal Analysis
The annual costs of the CFD are funded with two types of Special Taxes, the Authorized Services Special Tax and the Authorized Infrastructure/Facilities Special Tax. The Services Special Tax is collected to fund Actuals Budget Financial Plan
Avila Ranch CFD FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Tax Revenue 268,984 523,648 792,617 1,289,186 Total Revenue 268,984 523,648 792,617 1,289,186 YoY Change 95% 51% 63%
Actuals Budget Financial Plan
Avila Ranch CFD FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Authorized Expenditures 41,673 199,000 91,293 94,633 Transfers 17,085 110,814 234,122 337,373 Total Expenditures 58,758 309,814 325,415 432,006 YoY Change 427% 5% 33%
Financial Plan Page 173
costs associated with Maintenance, Trash Service, Street Sweeping, Water Service, Sewer Service, Electrical Service, Materials/ Supplies, Administration, Fire Protection and Police Protection. The Facilities Special Tax is collected to fund costs associated with the purchase, construction, expansion, improvement or rehabilitation of facilities required to serve the project.
Revenues are proposed to increase by $268,969 or 51% due to continued buildout of the Avila Ranch Development Project which increases the number of parcels subject to the Special Taxes as permits are issued. For FY 2025‐26 there is expected to be an additional 62 developed parcels which will be subject to the Special Tax levy. In addition, the Services Special Tax levy is escalated for inflation by 4% annually and the Facilities Special Tax levy is escalated for inflation by 2% annually, which is contributing to the expected increase.
Expenditures are proposed to increase by $15,601 or 5% and can be attributed to the continued buildout of the Avila Ranch Development Project. As new units are constructed and occupied, the demand for operation and maintenance services on CFD facilities and the demand for Police and Fire services will be increased. Therefore, because of the increased demand for services, the expected cost to provide those services will also increase. In addition, a portion of the increase can be attributed to contracts which are subject to annual inflation increases. There are no infrastructure facility items budgeted, therefore the Facilities Special Tax levied will remain in the fund and will be expended as facility needs are identified in future years.
Transfers Out are to the General Fund and represent the budgeted amount for City staff administration, police protection services, and fire protection services.
Financial Plan Page 174
BOYSEN RANCH
Program Description
Boysen Ranch consists of approximately 116 acres bounded by Los Osos Valley Road, Foothill Boulevard, and O’Connor Way. In 2005, the City accepted and currently holds a series of conservation easements that protect approximately 25 acres at the Boysen Ranch to mitigate for impacts to wetlands and waters by the Home Depot, Costco, and other Irish Hills Plaza development projects on Los Osos Valley Road.
Boysen Ranch is part of the City’s designated greenbelt. The funding was set up as an endowment to fund monitoring and maintenance of the restored wetland area.
Program Budget at a Glance
Revenue
Expenditures
Fiscal Analysis
Revenues are proposed to remain unchanged from the current year despite significantly outperforming budget in the prior year due to lower interest rates earned on investments and a volatile market.
Expenditures are proposed to remain unchanged at $7,500.
Actuals Budget Financial Plan
Boysen Ranch FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Investment Income 18,353 7,500 7,500 7,500 Total Revenue 18,353 7,500 7,500 7,500 YoY Change ‐59% 0% 0%
Actuals Budget Financial Plan
Boysen Ranch FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Authorized Expenditures 9,135 7,500 7,500 7,500 Total Expenditures 9,135 7,500 7,500 7,500 YoY Change ‐18% 0% 0%
Financial Plan Page 175
DOWNTOWN SLO BUSINESS
IMPROVEMENT DISTRICT
Program Description
The Downtown Business Improvement District (DBID) was established in 1975 as a parking and promotions district for the City’s downtown area. As a special fee district, fees are collected from business license holders operating within the designated area and revenue supports the operations of Downtown SLO, a non‐profit organization. The City and Downtown SLO (DSLO) agreed by contract that DSLO would provide various services for the economic, social, cultural, and environmental vitality and beautification of downtown San Luis Obispo. The assessment is a special revenue and is administered through a separate and distinct fund.
Program Budget at a Glance
Revenue
Expenditures
Fiscal Analysis
Revenues are proposed to decrease by $11,749 or 5% based on a conservative analysis of recently observed results on assessment collections.
Expenditures are budgeted equal to expenditures. Should revenue exceed budget, the actual amount collected will be transferred to DSLO.
Actuals Budget Financial Plan
Downtown FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Assessments 265,255 258,462 246,713 251,647 Total Revenue 265,255 258,462 246,713 251,647 YoY Change ‐3% ‐5% 2%
Actuals Budget Financial Plan
Downtown FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Authorized Expenditures 396,392 258,462 246,713 251,647 Total Expenditures 396,392 258,462 246,713 251,647 YoY Change ‐35% ‐5% 2%
Financial Plan Page 176
INSURANCE FUND
Program Description
The Insurance Fund and Risk Management Program aim to protect the organization through risk transfer, risk control and risk avoidance. Safety in the workplace and in the community is promoted by minimizing accidents, reducing liabilities and associated costs. The City maintains an Insurance Fund for the purpose of paying its annual premiums for liability, workers’ compensation, special events, volunteer, property, and other insurances needed to protect the City and to manage the fluctuationsin claims‐related expense.
The Insurance Fund is managed by the Human Resources Department which runs the City’s Risk Management Program.
Program Budget at a Glance
Revenue
Expenditures
Fiscal Analysis
Revenues are proposed to remain unchanged as the fund’s only revenue stream is a recurring transfer in from the General Fund. It is expected that the annual transfer amount will need to increase in in future years in order to build and maintain adequate reserves.
Expenditures are proposed to decrease by $141,701 or 2% in line with projected changes to insurance premiums. The City has some flexibility over its premium costs as providers and self‐insurance limits can be changed in order to balance premium savings with risk management.
Actuals Budget Financial Plan
Insurance FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Transfers in 6,407,630 6,000,000 6,000,000 6,000,000 Total Revenue 6,407,630 6,000,000 6,000,000 6,000,000 YoY Change ‐6% 0% 0%
Actuals Budget Financial Plan
Insurance Fund FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Workers Comp 1,605,230 2,610,281 2,069,183 2,355,887 Liability & Other 3,155,160 3,058,578 3,457,975 3,710,366 Total Expenditures 4,760,390 5,668,859 5,527,158 6,066,253 YoY Change 19% ‐2% 10%
Financial Plan Page 177
PUBLIC SAFETY EQUIPMENT
REPLACEMENT FUND
Program Description
The Public Safety Equipment Fund (PSEF) was created with the 2019‐21 Financial Plan to help budget and forecast the replacement of Public Safety equipment that has expired or become damaged. The Fund received an original seed amount in FY 2019‐20 and going forward, an annual allocation is made from the General Fund. Budgeting annual amortized amounts set aside in this project account allows for crucial public safety equipment to be replaced at scheduled intervals, which smooths out the annual contribution, reducing the impact on the budget at time of replacement.
Program Budget at a Glance
Revenue
Expenditures
Fiscal Analysis
Revenues are proposed to decrease by $151,108 or 39% as one‐time funding from the 2023‐25 financial plan to catch up for inflation on significant purchases including breathing apparatus and turnouts for Fire and suppressors and rifle rated vests for Police was not continued.
Expenditures are proposed to decrease by $207,360 or 51% because only smaller asset replacements are scheduled during the 2025‐27 Financial Plan.
Actuals Budget Financial Plan
Public Safety FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Transfers in 391,322 387,334 236,226 236,226 Total Revenue 391,322 387,334 236,226 236,226 YoY Change ‐1% ‐39% 0%
Actuals Budget Financial Plan
Public Safety FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Equipment Purchases 603,889 403,560 196,200 91,900 Total Expenditures 603,889 403,560 196,200 91,900 YoY Change ‐33% ‐51% ‐53%
Financial Plan Page 178
SAN LUIS RANCH
COMMUNITY FACILITIES DISTRICT
Program Description
A Mello‐Roos Community Facilities District (CFD) was established and approved by City Council on April 16, 2019 (Ordinance No 1661) pursuant to section 5.02 of the San Luis Ranch Development Agreement and located in the San Luis Ranch Specific Plan area. The boundaries of the CFD are identical to the San Luis Ranch Specific Plan area and includes 131.4 acres approved for up to 577 dwelling units and commercial development, a 200‐room hotel, 100,000 square feet of office space, 150,000 square feet of retail space, 7.8 acres of parks/ open space, and 52.3 acres of farmed agriculture land.
The primary function of the San Luis Ranch CFD is a special financing mechanism in which municipal bonds were issued to fund construction of required facilities to serve the project. The district is authorized to issue up to $25,000,000 in bonds. There is currently a total of $19,380,000 bonds outstanding. Special Taxes are levied on developed parcels through the San Luis Obispo County annual property tax levy which are used to fund debt service payments for the bonds issued and other operational costs of the CFD.
Program Budget at a Glance
Revenue
Expenditures
Actuals Budget Financial Plan
San Luis Ranch CFD FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Tax Revenue 1,867,271 1,000,250 1,360,981 1,388,201 Total Revenue 1,867,271 1,000,250 1,360,981 1,388,201 YoY Change ‐46% 36% 2%
Actuals Budget Financial Plan
San Luis Ranch CFD FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27 Authorized Expenditures 9,145 10,392 336,956 130,749 Transfers ‐ 26,530 207,243 142,826 Debt Service 911,650 949,450 946,700 964,200 Total Expenditures 920,795 986,372 1,490,899 1,237,774 YoY Change 7% 51% ‐17%
Financial Plan Page 179
Fiscal Analysis
For the San Luis Ranch CFD, revenue received in the current fiscal year funds a portion of current year expenses and a portion of subsequent years expenses. This is required to ensure cash flow of the CFD is sufficient to fund debt service payments that are due in September prior to the 1st installments of Special Tax revenue being received in December.
Revenues are proposed to increase by $360,731 or 36% due to the buildout of the development. Parcels are taxed at the maximum rate as allowed by the Rate and Method of Apportionment (RMA). Revenue is expected to continue to increase at 2% per year until the remaining 15 Final Map Parcels permits are issued, making them subject to the Special Tax and therefore increasing the Special Tax revenue by more than 2%.
Expenditures are proposed to increase by $504,527 or 51% due to the Arbitrage Yield Restriction Liability expected to be paid to the Internal Revenue Service IRS in June 2026. A portion of the increase can also be attributed to the administration contract which issubject to a 5% annual inflation increase. In addition, the budgeted amount for City Staff allows for a 2% annual inflation increase.
The Special Tax revenues collected that are not otherwise needed to fund the administration of the CFD, debt service, or to replenish the bond reserve fund, is allocated 50/50 to the City and the Developer on a Pay‐As‐You‐Go basis. “Pay‐As‐You‐Go” is the use of Special Tax revenues to directly fund or reimburse the costs of acquisition, construction, and improvement of Authorized Facilities as part of an Acquisition Agreement with the City for required facilities needed to serve the project.
Transfers Outs include amounts allocated to the General Fund for City staff administration and includes amounts allocated to the Pay‐As‐You‐Go account for use on authorized facilities which is budgeted though the Financial Plan and Capital Improvement Plan (CIP).
Financial Plan Page 180
TOURISM BUSINESS IMPROVEMENT
DISTRICT
Program Description
The City established a Tourism Business Improvement District (TBID) as requested by the local lodging industry in 2008. The district levies an assessment on all lodging properties for the purpose of tourism promotion for the benefit of the district’s constituents. The assessment is a special revenue and is administered in a separate and distinct fund.
Program Budget at a Glance
Revenue
Expenditures
Fiscal Analysis
Revenues are proposed to increase by $102,690 or 5% based on TBID Board advisement and also informed in part through a commissioned study with Visit SLO CAL and Tourism Economics.
Expenditures are proposed to increase to the same amount in order to align with revenues. TBID policy calls for an initial expenditure budget that is equal to the revenue budget, and enables the budget to be amended during the year as needs arise.
Actuals Budget Financial Plan
TBID FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Assessments 2,267,304 2,117,251 2,219,941 2,229,130 Total Revenue 2,267,304 2,117,251 2,219,941 2,229,130 YoY Change ‐7% 5% 0%
Actuals Budget Financial Plan
TBID Fund FY 2023‐24 FY 2024‐25 FY 2025‐26 FY 2026‐27
Staffing 260,092 269,700 263,115 275,415 Other Operating Expenditures 1,866,570 1,834,244 1,912,427 1,909,132 Transfers 43,611 43,545 44,399 44,583 Total Expenditures 2,170,273 2,147,489 2,219,941 2,229,130 YoY Change ‐1% 3% 0%
Financial Plan Page 181
Financial Plan Overview Debt
Debt
The City of San Luis Obispo is guided by its budget and fiscal policies when managing its debt. In accordance with the policy section “Capital Financing and Debt Management”:
The City’s debt capacity cannot exceed 15% of
General Fund revenues.
Its direct debt will not exceed 2% of assessed
valuations.
No more than 60% of capital improvement outlays
will be funded from long‐term debt.
Debt should only be incurred for one‐time capital expenditures and not for on‐going operations.
Borrowing for one‐time capital expenditures allowsfor the cost of the project to be spread over the useful life of the asset and results in the cost being paid by future beneficiaries as well as current taxpayers.
Debt Management
The City’s bond issues are periodically reviewed by rating agencies to provide insight to the City’s financial outlook and hence its creditworthiness. The 2018 refinancing of three different lease revenue bonds was rated by Standard & Poor’s that gave the City an AA rating. In February 2025, Fitch affirmed the City’s Issuer Default Rating at AA+, also with a stable outlook. The ratings agencies cited:
The City’s strong operating performance, a moderate long‐ term liability burden, strong revenue growth and solid
expenditure flexibility offsetting a constrained revenue raising environment.
The City’s gap closing capacity being superior given ample reserves and moderate revenue volatility.
Budget management at times of recovery being very strong, leaving the City well prepared to manage the current period of economic stress.
The City’s engagement in thorough and conservative long‐ term financial planning with a focus on maintaining
structural budget balance.
The City maintaining its capital assets with minimal debt reliance and proactive efforts to pay down its unfunded retirement liabilities above actuarially determined levels.
AAA
• Extremely strong capacity to meet financial
commitments. Highest rating.
AA
•Very strong capacity to meet financial
committments.
A
• Strong cpacity to meet financial commitments,
but somewhat susceptible to adverse economic
conditions and changes in circumstance.
BBB
• Adequate capacity to met financial
commitments, but more subject to adverse
economic conditions.
BB
• Less vulnerable in the near‐term, but faces
major ongoiong uncertainties to adverse
business, financial, and economic conditions.
CCC
• Currently vulnerable and dependent on
favorable business, financial, and economic
conditions to meet financial committments
CC
• Highly vulnerable; default has not yet occured,
but it is expected to be a virtual certainty.
C
• Currently highly vulnerable to non‐payment,
and ultimate recovery is expected to be lower
than that of higher rates obliations.
Financial Plan Page 182
Financial Plan Overview Debt
The City’s Current Debt
The City currently holds $203 million in overall outstanding debt in a combination of lease revenue bonds, State Revolving Fund loans, Infrastructure‐Bank loans, and other borrowings. The longest outstanding maturity is to 2054.
The City’s debt service costs over the next ten years, including accounting adjustments for amortized bond premiums and discounts, are shown below:
The following tables outline by fund: the current debt, the purpose, the projected outstanding principal as of 6/30/2025, the FY 2025‐26 debt service costs, and the retirement year of the debt. Maturities range from 2029 to 2054
General Fund Debt Detail and Debt Retirement
The following table summarizes current outstanding debt obligations for the General Fund, and its cash payments excluding amortized bond premiums and discounts:
Debt Issue ‐ Asset Outstanding
Principal
Annual
Payment
Final
Year
2014 Lease Revenue Bond – LOVR Overpass $5,885,000 $419,631 2044 2018 Lease Revenue Bond – Refunding (various) $6,874,225 $940,584 2039 2023 Lease Revenue Bond – Refunding (2012 Bonds) $1,640,000 $364,750 2029 $14,399,225 $1,724,965 2044
‐
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
Debt Service Costs by Fund
GENERAL PARKING SEWER WATER
Financial Plan Page 183