March 11, 2023
Council
Workshop
Gleam Davis, Mayor
Agenda
Review
1. Agenda Review – Gleam Davis, Mayor
2. Welcome/Opening Comments - David White, City Manager
3. Comprehensive Budget Update – Gigi Decavalles-Hughes, Finance Director
4. Organization Overview and Status Update – Susan Cline, Assistant City Manager
5. Council Priority Setting & Priority Implementation – David White
6. Next Steps – David White
7. Adjourn
Agenda
David White, City Manager
Welcome/
Opening Remarks
Public Comment
Gigi Decavalles-Hughes,
Finance Director
Comprehensive
Budget Update
June
• FY 2022- 23 Budget Adoption
and Public Hearing
March Retreat
• Staff presents 5 Year Forecast for
all funds, state of operations
• Council affirms & adopts priorities
for FY 2023- 25 Biennial Budget
April
• Council adopts FY 2022- 23
midyear budget adjustments
May
• Proposed FY 2023- 25
Budget Published
• Presented to City
Council – Study
Sessions for feedback
June
• FY 2023- 25 Budget
Public Hearing and
Adoption
The City’s Biennial Budget Timeline
High Degree of Volatility/Uncertainty
Financial Sacrifices Made Since 2020
• Reserves provide financial
stability, cushion against
financial shocks
• Unrestricted reserves still
below pre-COVID levels
• Legal Settlements
• Maintaining services
during COVID
• FY 2021-22 reserves are
needed for contingent
liabilities and working capital
71%
Reserve Levels
31%
• Lost $170M in revenues
through June 2022
• Total loss of $250M,
ending in ‘27-28
• Gap reflects capacity to
restore services
• Partial fix: Reserves
(past) working capital
from quicker recovery
(future)
• Additional challengeinflation and new needs
416.0
377.7
325.4
405.2
425.3
433.3
447.5
464.6
481.5
503.9
416.0 415.1
425.0
435.2
445.7
456.4
467.3
478.5
490.0
501.8
320.0
340.0
360.0
380.0
400.0
420.0
440.0
460.0
480.0
500.0
520.0
18-19 19-20 20-21 21-22 22-23 23-24 24-25 25-26 26-27 27-28 General Fund Revenues Before and After the
Pandemic
March 2023 Pre-COVID
General Fund Revenues Still Lagging
• 3.5% average growth
rate
• Included:
• Measure CS
• Kiosks
• Not Included:
• Measure HMP
• Measure GS
• TOT impacted by hotel
renovations in short
term
• Parking rate increases
could improve revenues
Revenue Growth is Steady but Slow
• Liabilities from litigation, urgent infrastructure updates • Pension losses in FY 2021-22, low earnings in FY 2022-23 will impact future year contributions
• Healthcare increases reflecting national trends
• Labor costs are significant but necessary in tight labor market • Utility rates showing steady increases
• Pier and Beach Funds require financial assistance from General Fund
Expenditure Challenges
• New revenue and expenditure
projections
• Pension, labor and healthcare costs
updated
• Beach and Pier Fund subsidies
• Maintaining Library and CRU at
current levels
• Measure CS funding
• Not included:
• Continued Playground Club
payments
• Youth and Library restorations
• Additional CIP starting FY 26-27
• GSH payback
$0.1 $0.1 $0.1
$(0.6)
$(1.5)
$(2.0)
$(1.0)
$-
$1.0
$2.0
FY 23- 24 FY 24- 25 FY 25- 26 FY 26- 27 FY 27- 28
General Fund Five Year Forecast
Revenues over Expenditures
March 2023 Projection
($ in m ilions)
Five Year General Fund Forecast
• Used to smooth years
when projected
expenditures exceed
revenues
• Made available from
earlier revenue recovery
• Programmed over
forecast period
• Covers labor obligations,
continuation of
programs
430.0
440.0
450.0
460.0
470.0
480.0
490.0
500.0
510.0
23-24 24-25 25-26 26-27 27-28
Short Term Use of Working Capital to Fill Gap
March 2023 Revenues March 2023 Expenditures
Need for Working Capital Reserve
Capital needs unmet
• Now at 59% of preCOVID level
• $300M in projects
unfunded, including
parking structure
seismic upgrade
• Deferred maintenance
is unsustainable
• No additional
investments through
forecast period
$-
$5.00
$10.00
$15.00
$20.00
$25.00
FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 Capital Improvement Program Annual Base Allocations
(in millions)
Capital Needs Remain Unfunded
Self-Sustaining: Water, Wastewater, BBB, Airport, Cemetery, Housing Authority, Stormwater
Requiring Attention: RRR pending solid waste rate increases to remain solvent beyond FY 2023-24; Fleet and Information Technology- future year repayments of suspended contributions
General Fund Impact: Beach and Pier subsidies to offset revenue losses and support critical capital expenditures; CBB stopping transfers to General Fund
Other Funds (Non-General Fund)
• Projected: $4.7M; ongoing annual
• From Transient Occupancy Tax increase
• Revenues expected to come in starting April 2023
• Proposed Uses: to address the impacts of
homelessness and enhance public safety
New Funding Stream: Measure CS
• Projections pending more information
• Accumulation of funds will take several months to a year • Required Uses
• First $10M to School District;
• Next $40M to homelessness prevention and affordable housing • Revenues above $50M shared 20% District /80%
housing/prevention
• Limited resources to General Fund but large impact to Community Services Department and housing programs
New Funding Stream: Measure GS
• Continued suspension of Unfunded Pension Liability paydowns • Amount available in General Fund $2.5M
• Measures taken to date
• $88.1M paid down
• All Classic employees have given up additional EPMC benefit • Miscellaneous Classic employee negotiation ~$35M decrease in unfunded liability
• Reconsidering most urgent priorities now vs. 2019
• Unrestored services
• Reserves low
• Other liabilities high
Reallocated Funding Stream: CalPERS Paydown
Susan Cline, Assistant City
Manager
Organization
Status Update
Simple Title 1
• Workforce reduction by approximately 20%
• 2,298.3 to 1,877.2 positions
• Loss of 421.1 positions
• 298.7 permanent full-time equivalent positions
• 122.4 as-needed positions
• Budget reduction of approximately 24%
Organizational Structure: 2019/2020
Simple Title 1
• All branch libraries partially reopened
• Some youth services restored
• Some essential maintenance of public infrastructure resumed • Persistent gap remains between staff’s ability to deliver services and meet community expectations
• 88% of the staffing levels compared to 2019
Organizational Structure: Today
Programs and Services at Reduced Levels
Pla nning / Gove rna nc e C uts
Development Agreement
Monitoring
Lease Management
Finance
CityTV
C lose d / Susp e nd e d
Miles Playhouse
Camera Obscura
Safe Routes to School
Preferential Parking Requests
Permitted Park Events Support
Re d uc e d Hours/ Pa rtic ip a nts
Library
Youth Programs (waitlist)
Human Services Grants Program
Recreation Facilities/Programs
Transit and MODE
Crossing Guards
Animal Care Officers
Re d uc e d C ustom e r Se rvic e s
Plan Checks
Planning Permits
Code Enforcement
Parking
Proactive Tenant Protection Services
Police Officers
Police Records Technicians
Animal Control Officers
Re d uc e d Fre q ue nc ie s
Graffiti Removal
Facility Maintenance/Cleaning
Alley Paving
Tree Pruning
Services Impacted by Vacancies & Demand
Inc re a se d Ne e d / Volum e
311– 170% rise in customer requests adding RRR
& in person customer service
Fire –
• 9% increase, calls for service in 2022 from 2021
• FY21/22 - 31,699 hours of “assign-hire” overtime
in the Firefighter/Firefighter Paramedic
HR– Increase in recruitment and classification
work, increased labor issues
Polic e De p a rtm e nt –
2022 Downtown homeless calls up 16% over 2021
2022 Encampment calls up 15% over 2021
Hig h Va c a nc y Are a s w / Se rvic e Im p a c ts
BBB - MCOs required for Service = 317
Current Staffing = 264
(vacancies or leaves = 53)
Inte rna l Se rvic e s:
HR– No staff development
Longer recruitment times
ISD – Tech support resolution time up by 65%
Dedicated enterprise tech support slashed
preventing modernization of key systems
Polic e De p a rtm e nt –
• 53 (22%) sworn members eligible to
retire in 2023/2024
CSD – Out of School Time Programming
• 290 youth on waitlist
Infrastructure Maintenance &
Replacement($100+M)
• Parking Structure Seismic Retrofit &
Guardrails
• City Yards Modernization
• Fire Station, City Hall, Library System
and Security Replacement
• Fire Station and Fire Training Facilities
• Technology, Vehicle & Equipment
Replacement
Streetscape & Lighting ($23M)
• Bergamot Station, Lincoln
Corridor, Promenade
• Streetlight Modernization
Community Facilities ($167M)
• Airport Park Expansion
• MemorialPark
• Pier Deck & Safety Upgrades
Unfunded CIP Projects (Not Comprehensive)
Estimated at $300M ++
High Vacancy Rate & Increased Turnover 190+ / 10.3%
Increased Number of Recruitments 633+ position requisitions in past 12 months
Reduced Number of Applicants / Increase Advertising
Investment
56% reduction industry wide
50-80% reduction at CSM
Increased (longer) Time to Fill Vacancies Multiple recruitments needed to fill vacancies
High Number of Acting Assignments 15
High Rate of Self Reported Burnout, Exhaustion and Low
Morale
2022 Engagement Survey
Anticipate high number of potential future turnovers based on EPMC and Normal Attrition (excluding retirements)
18.4-23.4%
Impacts on the City Team
• Strategic, creative and incremental restorations
• Roadmap aligning community needs & City resources
Restoring Services, Restoring Morale
Questions?
David White, City Manager
Priority Setting &
Implementation
Prevent housed Santa
Monicans from becoming
homeless and increase
the supply of affordable
housing; address the
behavioral health needs
of vulnerable individuals;
and advocate for
regional capacity to
address homelessness.
Cultivate economic
opportunity and
recovery and invest in
community and cultural
amenities for all
community members.
ADDRESSING
HOMELESSNESS
CLEAN & SAFE
SANTA MONICA
Create an atmosphere
marked by clean and safe
public spaces and
neighborhoods, including
parks for recreation and
leisure activities.
CULTIVATE
ECONOMIC RECOVERY
& EXPAND COMMUNITY
& CULTURAL AMENITIES
Council Priorities
EXPANDED COUNCIL PRIORITIES: FY 23-25 Addressing Homelessness • In 2022, Santa Monica saw an 11% decrease in people experiencing homelessness
• Housed over 140 People Experiencing Homelessness
• Annual point in time count and Moss Adams Report completed • 114 New Affordable Homes Opened at 3 City-Funded Properties • Over 11,000 Outreach Contacts
• Helped Santa Monicans Secure over $40 Million in Rental Assistance • $750,000 Available for Rent-Burdened Households
• Support to Seniors through Preserving Our Diversity Program • $8 million in grants to over 19 local community organizations provided services to vulnerable populations
• Voter approval of Measures CS and GS will generate new funding • Kicked off Behavioral Health Strategy
EXPANDED COUNCIL PRIORITIES: FY 23-25 Clean & Safe Santa Monica • Pier Vending Task Force
• New Technologies and Strategic Deployment Efforts
• 28 New Police Officers and 12 New Fire Recruits
• Convening with Other Westside Cities to Collaborate
• Class 1 Fire Department
• Narcan Leave Behind Program
• Community Response Unit
• 4,000 graffiti removals, Recycled over 12,600 tons of green-bin organics, Collected over 1,100 tons of bulky items, Repaved 2.9 miles of City streets, 2,300 Repairs of Streetlights and Sidewalks, Replaced 40,000 sq. feet of decking on the Santa Monica Pier
• Extensive Maintenance, Sanitization, and Custodial Services Daily Downtown
EXPANDED COUNCIL PRIORITIES: FY 23-25 Equitable Economic Recovery • AAA Credit Rating
• Implemented over 25 Programs to Support Our Recovery
• Art of Recovery
• Permanent Zoning Changes and Outdoor Dining and Retail Program • Miramar Santa Monica and Ocean Avenue Project Approvals and at least 14 More Investments in the Pipeline Downtown
• Rental Assistance
• Over 900 New Businesses
Prevent housed Santa
Monicans from becoming
homeless and increase
the supply of affordable
housing; address the
behavioral health needs
of vulnerable individuals;
and advocate for
regional capacity to
address homelessness.
Cultivate economic
opportunity and
recovery and invest in
community and cultural
amenities for all
community members.
ADDRESSING
HOMELESSNESS
CLEAN & SAFE
SANTA MONICA
Create an atmosphere
marked by clean and safe
public spaces and
neighborhoods, including
parks for recreation and
leisure activities.
CULTIVATE
ECONOMIC RECOVERY
& EXPAND COMMUNITY
& CULTURAL AMENITIES
Council Priorities
Ensure that City policies and programs
enhance our resources, prevent harm to the
natural environment and human health, and
benefit the social and economic wellbeing of
the community for the sake of current and
future generations.
The C ity of Sa nta Monic a a c know le d g e s the e ffe c ts of g e ne ra tiona l a nd institutiona l ra c ism , a nd its c onse q ue nc e s tha t c ontinue to im p a c t our re sid e nts.
The se le ssons of our history c a nnot b e ig nore d . The C ity is c om m itte d to a d va nc ing ra c ia l e q uity a nd soc ia l d ive rsity to im p rove the w e llb e ing of p e op le w ho live , w ork, p la y, a nd d o b usine ss in our C ity a nd c re a te a c om m unity w he re d iffe re nc e s in life outc om e s c a nnot b e p re d ic te d b y ra c e , c la ss, g e nd e r, d isa b ility or othe r id e ntitie s.
RAC IAL EQ UITY & SO C IAL DIVERSITY SUSTAINABLE & C O NNEC TED C O MMUNITY Expanded Council Priorities: FY 23-25
Addressing
Homelessness
Clean & Safe
Santa Monica
Cultivate Economic
Recovery & Expand
Community &
Cultural Amenities
Racial Equity &
Social Diversity
Sustainable &
Connected
Community
EXPANDED COUNCIL PRIORITIES: FY 23-25
Council Direction:
Consider and approve the proposed organizational priorities Expanded Council Priorities: FY 23-25
• Addressing Homelessness
• Clean & Safe Santa Monica
• Cultivate Economic Recovery and Expand Community & Cultural Amenities • Racial Equity & Social Diversity
• Sustainable & Connected Community
Proposed FY 2023-25 budget items:
a. Allocation of Measure CS funds
b. Homelessness Strategic Plan (HSP)
c. Organizational realignment in CSD
d. Resource Reallocation for Restorations
Implementing Priorities: FY 23-25
a. Allocation of Measure CS funds
• Expand Homeless Liaison Program in PD
• Expand homeless multidisciplinary outreach team beyond Downtown & Beach
• 24/7 intakes at SAMOSHEL interim housing
• Continue Clean & Safe programs in Police, Public Works, Code Enforcement, Parking
• Short term rental enforcement
Implementing Priorities: FY 23-25
b. Homelessness Strategic Plan (HSP)
• Develop interdepartmental plan to address homelessness • Builds on the City’s Four Pillars framework
• Moss Adams Audit on Homelessness recommendation
• Sets clear policy direction, promotes alignment across City stakeholders, and supports regional efforts
• Improves focus on measurable objectives & reporting
• Increases internal alignment for effective and expedient implementation of new resources
• One-time CS funds
Implementing Priorities: FY 23-25
c. Organizational Realignment in CSD
Housing and Human Services Department
• Organization point for homelessness services and programs (homelessness executive sponsor; audit recommendation)
• Rapidly achieve Measures CS & GS and Audit objectives • Core focus and leadership on administering a comprehensive array of housing, educational, and social services, programs, and investments to support vulnerable populations.
Recreation and Culture Department
• Creates capacity and leadership to around recreational partnership opportunities addressing conflicts between demand & capacity for recreational amenities • Focus on future of the Miles Memorial Playhouse and Camera Obscura buildings • Elevates arts and cultural affairs work in economic revitalization and social equity Implementing Priorities: FY 23-25
d. Resource Reallocation for Restorations $2.5M GF
• Support public, free, art and cultural programming and events through the Art of Recovery program
• Further restore Library hours and services
• Increase capacity of youth programs
• Continue funding Playground Club
• Establish RRR low-income reduced rate program
• Create Small Business Tenant Improvement Fund
• Restore Planning and Economic Development staffing to support economic development Diversity, Equity and Inclusion Fund
• Designate 2% earnings from Out of Home Wayfinding agreement w/Big Outdoor • Approximately $100,000-$250,000 per year starting in FY 2025-2026 Implementing Priorities: FY 23-25
Addressing
Homelessness
Clean & Safe
Santa
Monica
Econ. Recovery &
Community/
Cultural Amenities
Racial Equity &
Social Diversity
Sustainable &
Connected
Measure CS
Measure GS
Reallocation of
PERS paydown
Digital Kiosk 2%
Funding Sources for FY 2023-25 Budget
Proposed FY 2023-25 budget items:
a. A proposed allocation of Measure CS funds
b. A Strategic Plan to address homelessness, funded on a one-time basis using Measure CS funds
c. A conceptual framework to align organizational structure and focus the City’s work on Council priorities, the implementation of newly adopted tax measures including Measure GS, and the Moss Adams Homelessness Study d. Reallocation of existing resources to reinvest in restorations and initiatives that align with Council priorities
Implementing Priorities: FY 2023-25
Council Direction:
Discuss and give direction for proposed resource allocations David White, City Manager
Next Steps
March 14 Sustainability Report Card and Sustainable City Plan Updates April 11 FY 2022-23 Midyear Budget Review
April 25 Diversity, Equity and Inclusion Update and Workplan May 9 Annual Report on Homelessness
May 15 Publication of Proposed FY 2023-25 Biennial Operating Budget and FY 2023-24 Proposed Capital Improvement Program Budget
May 23 Budget Study Session
June 27 FY 2023-25 Budget Adoption
Next Steps