Budget Reduction Strategies
CITY COUNCIL STUDY SESSION
OCTOBER 22, 2024
ALAN ALTON, CHIEF FINANCIAL OFFICER
VERONICA CONNER, BUDGET MANAGER
SCOTT WAGNER, DEPUTY DIRECTOR
General Fund Review
FY 2023-24 Performance
2 Timeline of Budget Performance
▪ General Fund structural imbalance has been building over a number of years
▪ FY 2021-22 budget initially approved with $11 million deficit ▪ Volatility due to COVID
▪ Mid-year adjustment to increase revenues by $9.5M; Exp by $8.2M ▪ FY 2022-23 budget was balanced
▪ FY 2023-24 budget presented with $2.5M deficit; passed with $3.3M deficit
▪ August 2023, CM and CFO presented a status of the General Fund showing that it was unstable with widening structural deficit ▪ FY 2024-25 budget adopted with $13.3M deficit
3 General Fund Long-Range Financial
Forecast (in $ millions)
4 Description Amount
Recurring Revenues & Transfers In $203,800,819
Recurring Expenditures,
Transfers Out & Encumbrances ($206,938,691)
Total Operational Deficit ($3,137,872)
Preliminary Results June 30, 2024
5 Budget vs. Actuals FY 2023-24
6 Adopted Budget
Revenues & Transfers In $204.8M
Expenditures & Transfers
Out ($208.1M)
Deficit ($3.3M)
Actual Results
Revenues & Transfers In $203.8M
Expenditures, Transfers
Out & Encumbrances ($206.9M)
Deficit ($3.1M)
7 Major General Fund Revenue Lookback
Impacts on Unassigned
General Fund Reserves
8 ➢ Operational Surplus (Deficit)
➢ Council Action to appropriate reserves mid-year
• Occur outside of the annual budget process
• $2M for BVGC Irrigation, $800K for Police Radio upgrade, Graffiti Abatement & Vacant Lot Programs, etc.
➢ Interest Earnings/ Gains & Losses on Investments
➢ Release of Appropriations and Encumbrances
Structural Deficit
Structural Deficits
▪ Result from ongoing programs and services expenses exceeding ongoing revenue
▪ Cannot be addressed through reserves and one-time funding Ongoing Expense Increases
▪ Increased staffing
▪ New service levels to the community
▪ Diverted revenue
▪ Require action at budget development to address, increases in certain areas will result in decreases to others
9 Reserves Summary
10 Council Policy - Mandated Reserves
▪ 15% to 17% of annual expenditures
▪ Used to address unforeseen events like disasters or sudden dramatic economic downturns
▪ If below 15%, upcoming budget is to address shortfall Unassigned Reserves
▪ Amount above 17% Council reserves policy
▪ Used by the City to fund one-time expenditures
▪ Infrastructure, facilities, capital projects
▪ One time programming
Fiscal Stability Reserves
▪ Used to address adopted deficits
Description Amount
FSR Balance 6/30/2022 $27,300,000
Budgeted Deficit FY 2023-24 (3,300,000)
FSR Balance 6/30/2023 ($24,000,000)
Budgeted Deficit FY 2024-25 (13,300,000)
FSR Balance 6/30/2024 $10,700,000
Fiscal Stability Reserves (FSR) June 30, 2024
11 Description June 30, 2023 June 30, 2024
General Fund Reserve Balance $84,809,468 $68,893,573
Fiscal Stability Reserves (24,000,000) (10,700,000)
Total Unassigned Reserves June 30, 2024 $60,809,468 $58,193,573 17% Mandated Reserve Policy (32,598,117) (35,872,804)
Amount Over Mandated Reserve Policy $28,211,351 $22,320,770 Preliminary General Fund Reserves
June 30, 2024
12 Budget Reduction Planning
13 Budget Reduction Strategy
▪ Phased approach with Departments identifying immediate reductions to be made in current year, followed by deeper reductions in subsequent years budget development.
▪ Ongoing reductions to reduce deficit
▪ One-time reductions to boost reserves and allow for more time to make deeper ongoing cuts to reduce deficit
▪ Ultimately create an organization that is more efficient and fiscally sustainable at the end of the process
14 Strategy – Administrative Cuts
➢ Administrative Cuts: Target overhead and streamline administrative functions within city departments, with the goal of reducing costs associated with management planning and support services; minimizing the impacts to service delivery as much as possible.
Areas under review:
▪ Reduce travel and training costs; exploring salary adjustments and furloughs; implementing strategic staff reductions where feasible
▪ Conducting comprehensive review of administrative support roles to identify opportunities for efficiency improvements and potential restructuring 15 Strategy – Operational Cuts
➢ Operational Cuts: Changes in day-to-day service delivery, focusing on improving efficiency and reducing overhead costs. Secure long-term savings while maintaining the quality and reliability the Community expects.
Focused strategies:
▪ Reducing fleet size to lower operation and maintenance costs ▪ Renegotiating service contracts to gain more favorable savings ▪ Incorporating Lean Management techniques to further streamline City processes Potential for changes in service levels in community including customer service delays, reduced hours of operation, and a decrease in service availability 16 Strategy – Programmatic Cuts
➢ Programmatic Cuts: Aimed at reducing or eliminating specific programs. Often based on strategic evaluations of program effectiveness, cost-efficiency, and alignment with city priorities
Strategic Focus:
▪ Ensure fiscally sustainable programs
▪ Minimize impact to community
▪ Maintain a balance that reflects both budgetary constraints and our service commitment
17 Citywide Staffing
▪ Personnel costs comprise of over 76% of General Fund
budget, with over 57% attributed to public safety
▪ Substantial financial commitment to maintain essential services
▪ Must thoroughly assess staffing sustainability
▪ Strategically review past and current staffing decisions and optimize staffing structures that align with fiscal realities
▪ Underlying goal is to not compromise the quality of
service
18 5-Year Staffing History
19 DEPARTMENT FY 2008-09 FY 2012-13 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25 City Attorney 15.80 12.90 15.90 15.90 15.90 15.90 15.90 City Manager 12.00 12.00 8.00 9.00 11.00 11.00 11.00 Communications &
Intergovernmental Relations * - - 7.00 7.00 7.00 9.00 9.00 Finance 75.35 63.85 92.85 89.60 62.60 62.60 62.60 Fire 143.75 137.75 151.00 148.00 157.00 157.00 169.00 Housing &
Community Services 74.00 63.50 24.00 24.00 27.00 27.00 27.00 Human Resources 20.40 17.70 21.00 21.00 22.00 23.00 23.00 Information Technology 28.00 24.00 29.00 30.00 31.00 33.00 33.00 Planning &
Economic Development 49.20 27.80 69.00 68.00 74.00 74.00 78.50 Police 274.75 246.75 260.00 256.00 259.00 264.00 264.00 Recreation &
Parks 132.60 82.65 42.00 42.00 44.00 74.00 76.15 Transportation &
Public Works 298.05 268.00 287.00 288.00 292.00 261.00 261.00 Water 253.00 241.00 247.50 248.50 276.00 278.00 278.00 Total FTE Positions 1,376.90 1,197.90 1,254.25 1,247.00 1,278.50 1,289.50 1,308.15 20 5-Year Staffing History
Department Reductions
Departments were directed to review operations and identify 5% and 8% reductions
➢ FY 2024-25 Mid-Year Reductions: $4.8M
◦ Vacant FTEs: $3.3M
◦ Operating Costs: $1.5M
➢ FY 2025-26 Identified reductions: $1.4M
◦ Vacant FTEs: $1M
◦ Operating Costs: $400K
➢ Department Identified Ongoing cuts: $6.2M
21 Department Reductions
22* Adjustments to be made post election
Department 2023-24 Adopted
Budget
2024-25 Adopted
Budget 5% Cut 8% Cut Submitted
Reductions
City Council $934,174 $1,557,693 $77,885 $124,615 $0*
City Manager $3,029,775 $3,390,185 $169,509 $271,215 $359,900 Comm. & Intergov Relations $1,901,762 $1,999,064 $99,953 $159,925 $211,368 City Attorney $4,069,687 $4,328,229 $216,411 $346,258 $2,500 Human Resources $4,262,083 $4,716,153 $235,808 $377,292 $202,435 Finance $7,186,371 $7,703,289 $385,164 $616,263 $10,000 Non-Departmental -$9,590,573 -$8,461,454 n/a n/a n/a
Adminstrative Departments $11,793,279 $15,233,159 $1,184,731 $1,895,569 $786,203 Housing & Community Services $101,000 $161,000 $8,050 $12,880 $8,000 Fire $53,450,873 $58,787,381 $2,939,369 $4,702,990 $900,000 Planning & Econ Development $17,604,609 $19,469,107 $973,455 $1,557,529 $775,447 Police $72,913,865 $79,673,668 $3,983,683 $6,373,893 $750,841 Parks & Recreation $17,956,499 $18,778,367 $938,918 $1,502,269 $1,128,288 Transportation & Public Works $27,007,860 $27,326,861 $1,366,343 $2,186,149 $1,901,605 SR Water $804,466 $798,969 $39,948 $63,918 $40,000
Operational Departments $189,839,172 $220,228,512 $10,249,768 $16,399,628 $5,504,181 Total General Fund $201,632,451 $235,461,671 $11,434,498 $18,295,197 $6,290,384 FY 2024-25 Position Reductions
23 Dept. Position Amount Impact
CMO 1.0 FTE Clean Energy Manager $225,000 New position approved in FY 24/25; no impact to existing services
CMO 1.0 FTE Administrative
Technician – Confidential
$134,900 Extended response time to PRAS; less support for front counter and administrative needs; may impact staff
morale and overtime needs
HR/Risk 1.0 FTE Organization
Development & Training
Manager
$202,435 Training will shift to mandatory and compliance needs only; workload for HR Analysts may increase
Fire 4.0 FTE Firefighter/ Paramedic $900,000 Reduction in personnel for emergency upstaffing and succession planning; may increase overtime; potential
labor union impacts; potential for loss of SAFER grant
Rec & Parks 1.0 FTE Recreation Coordinator $168,000 Reduction of programs such as volunteer program and softball
FY 2024-25 Position Reductions (cont.)
24 Dept. Position Amount Impact
Rec & Parks 1.0 FTE Recreation Supervisor $138,328 Reduction of Steele Ln Comm. Center and other operations
TPW 1.0 FTE Administrative
Technician
$132,000 Redistribute administrative duties and impact other administrative assistants throughout the department
TPW 1.0 FTE Senior Admin Assistant $22,000 80% Funded by projects; redistributing work will impact workload of other Admins
TPW 1.0 FTE Electrician $180,000 Results in corresponding reduction in Street light/ signal maintenance
TPW 1.0 FTE ** $153,000
TPW 1.0 FTE Assistant Civil Engineer $43,000 80% funded by CIP projects; 20% savings to General Fund. Would likely affect PED calculations for fee
recuperation and will slow down materials tests on new
development/CIP projects; Subsequent outsourcing may
increase CIP project cost
TPW 3.0 FTE Civil Engineer
Technician
$99,000
FY 2024-25 Position Reductions (cont.)
25 Dept. Position Amount Impact
TPW 4.0 Skilled Maintenance
Workers - Streets
$420,000 Debris Removal Team would be reassigned to other functions, resulting in debris removal happening less
frequently; MySantaRosa response times will increase
TPW 1.0 FTE Maintenance
Worker - Facilities
$120,000 Would result in increased workload for facilities crew Police 1.0 FTE Field & Evidence
Technician
$160,502 Reduce number of on-call technicians for crime scenes; Impacts Priority 1 response times as Police respond to
service work on lieu of FET
CIRO 1.0 FTE Marketing &
Outreach Coordinator
$211,368 CIRO department would absorb workload
Total $3,309,533
FY 2024-25 Operational Reductions
26 Dept. Description Amount Impacts
CAO Operational Expenditures $2,500 n/a
Finance Operational Expenditures $10,000 n/a
PED Professional Services $457,590 Inconsistent service delivery; increased response times during periods of heavy permit volumes
and/or high staff vacancies
Rec & Parks Pony Express Contract $178,000 Service has remained budgeted but no returned since COVID due to contractor challenges
Rec & Parks Temporary Groundskeeper $84,525 Elimination of Softball reduces need for groundskeeper work
Rec & Parks Tree Removal Contract $110,000 Emergency Tree removal will need to source funds as-needed from other projects or General Fund
reserves
FY 2024-25 Operational Reductions (cont.)
27 Dept. Description Amount Impacts
Rec & Parks Aquatics and Howarth Park
Concessions
$56,203 Concession stands result in operational loss and are not in line with healthy living values of Rec &
Parks
Rec & Parks Youth Sports & Softball $42,748 Reduction of 3 fields and 50 softball teams will reduce coordinator work and maintenance work.
Will evaluate options for Neighborhood Services to
take on youth sports
Rec & Parks Steele Lane Community Center $56,200 Combine public front desk operations with Finley Center; Reduce Steele Lane hours and services
resulting in less staffing needed
TPW 10% Reduction in light-duty
Vehicles
$198,596 Find efficiencies among remaining vehicles
FY 2024-25 Operational Reductions (cont.)
28 Dept. Description Amount Impacts
TPW 10% Reduction in Facilities
Services
$120,854 Reduction in services will lead to longer wait times for facilities requests
TPW Reduced Asphault/ Pothole
Maintenance
$114,374 Longer wait times for repair
TPW Reduced Street Light
Maintenance
$98,781 In-kind funding reductions would lead to longer wait times for repair; some street lights would not be replaced.
HCS Homeless Services
Administration
$8,000 Limits ability to fund unknown contract or supply needs that may come up throughout the year
Water Storm Water staffing costs $40,000 Push off charges to Enterprise Fund; Reduction in assistance to PED for recommendations and technical
advice; less resources for Creek Restoration
Total $1,578,371
FY 2025-26 Position Reductions
29 Dept. Position Title Amount Impact
PED 2.0 FTE ** $317,857 Positions may be absorbed through attrition R&P 1.0 FTE ** $97,522 Absorbed through attrition; no longer needed with proposed operational cuts
Police 2.0 FTE ** $554,000 Reduction of services/ coverage Police Staffing Reorganization $36,339 Eliminating vacant positions and adding lower-paid FTEs to meet departmental needs
Total $1,005,718
FY 2025-26 Operational Reductions
30 Dept. Description Amount Impacts
Rec & Parks Security Contract $109,640 Reduction of foot patrol at LBHG and gates/ bathroom locking; reduce Doyle/ Yu-Chi services
Rec & Parks 0.4 Temporary Rec Specialist $36,973 Spread 0.4 work to other temporary staff Rec & Parks Tiny Tots $20,849 Eliminate preschool program; possibly lease out facility or examine Neighborhood Services for
available opportunities
Rec & Parks Historic Sites Rentals – Church
of One Tree and Deturk
Roundbarn
$7,300 Reduce of services by reducing supplies; would
maintain some lease type agreements and evaluate
other options for the facilities
Rec & Parks Strawberry School $22,000 Eliminate funding for security of non-public space TPW Pavement Maintenance $200,000 This required program from MTC could be funded by gas tax instead of General Fund
Total $396,762
Budget Reduction Summary
➢ One-Time Funds:
◦ PGE Funded projects: $9.2M – detail on next slide
◦ Pension 115 Trust: $12M
➢ Hiring Freeze:
◦ General Fund vacancies: $2.0M
◦ Potential Amount – some vacancies will need to be filled ➢ Department Identified Ongoing Cuts: $6.2M
Potential Identified Reductions:
▪ Ongoing reductions: $8.2M
▪ One-time reductions: $21.2M
31 32
PG&E Funds Available
Department Description Amount
City Council Translation Services (Written and Oral) 402,091 Comm. Engagement Community Equity Capacity Building 34,846 Comm. Engagement Youth Promotores/Youth Council 50,000
Comm. Engagement DEI Spaces 57,860
Comm. Engagement Community Empowerment Plan 127,766
Fire Wildland Resiliency Planning "Response" 261,791
Fire Vegetation Management 2,000,000
HCS Down Payment Assistance 1,451,606
HR City Staff Equity Capacity Training 115,000
HR (DEI) SEED Equity Plan Prioritized Recommendations 150,000 PED Climate Action Plan Implementation 150,000
TPW Fire Station 5 Rebuild 500,000
TPW PGE Fire Damaged Pavement - Non-Reimbursable 542
TPW Fire Damaged Tree Removal Phase 2 82,407
TPW FEMA Fire Damage Fountaingrove 3,800,000
Total $9,183,909
One-Time Funds: PG&E Projects
One-Time Funds: PG&E Projects
▪ City Council -Translation Services
▪Efficiencies gained through Google Translate for agenda translation
▪Language Access-Translation Policy study session is 12/17/2024 ▪ Community Engagement & Human Resources
▪Permanent DEI & EEO Officer position added to address City initiatives
▪SEED implementation prioritization plan completed
33 One-Time Funds: PG&E Projects
▪ Fire
▪ Reductions to vegetation management do not impact current year operations
▪ Remaining funds will facilitate continuity through 2027 and maintain local matching funds for grant
▪ Public Works & Planning and Economic Development
▪ Rebuild Fire Station 5 fully funded and residual contingency funding available for release
▪ FEMA Fire Damage Fountaingrove project is fully funded and near completion, excess funding was to cover any shortfalls through FEMA and that was did not realized
▪ Electric Vehicle Masterplan funded via grant
34 Additional Considerations
▪ Eliminate GF Pension 115 Trust
▪ Approximately $12M in fund to provide one-time funding for General Fund
▪ Move fund growth to GF ($2M), or entire balance over time ▪ Modified Zero Based Budget
▪ Implemented as part of FY 2025-26 budget development
▪ Review Contracted Services to move in-house
▪Janitorial services will provide some savings (approx. $125K/yr) 35 Additional Considerations
▪ CalPERS Early Retirement
▪ Would grant eligible employees additional years of service toward their pension
▪ Must achieve savings supported by a CalPERS actuarial study ▪ Mandatory Furloughs
▪ GF Fleet Reduction
▪ Focus on generating savings across City fleet through:
▪ Reduction of vehicle units
▪ Consolidate uses
▪ Purchasing less expensive vehicles
36 Next Steps
▪ Mid-Year budget adjustment (January)
▪ Budget Development and Input (January - February)
▪ Budget Reduction Study Session (April)
▪ Budget Study Session (May 6-7)
▪ Budget Adoption (June 17)
37 Questions?
38