April 14, 2011
Fellow City Staff,
I will try to be as brief as possible with this update but there are many updates that need to be communicated. I want to start by thanking the many groups of employees that I have had the opportunity to personally meet with over the last two weeks. I appreciated the many tough questions and I gave frank and honest answers to those questions. I look forward to carving out more time in the near future to continue as many of these meetings as possible.
On the issue of the budget several points need clarification. First, the current year budget (FY 2010-2011 ending June 30, 2011) has a $1.6 million dollar gap. It is impossible to predict exactly where the year will end but this is our latest estimate (based on projections from January). With the discontinuation of the ABLE Program effective July 1, 2011, the City reduced its on-going expenditures by approximately $800,000 per year and upon the dissolution of the ABLE Program, funding of approximately $2,000,000 in ABLE fund balance will come back to the General Fund. Because of this structural change to the budget, the City Council is not looking for any additional changes for the current year budget.
For next budget year, we are focused on the development of the FY 2011-2012 Preliminary Budget. Based on the submittals from Departments, we have a $5 million problem. This is a very significant and difficult problem that must be resolved by July 1, 2011. The following is occurring:
- The City Council Budget Working Group and I discussed the concept of focusing on the $5 million dollar problem now but also developing a longer-term real solution and financing plan for our many other needs. This list of financial needs is being developed by our staff and will include issues like the PERS under-funded liability, retiree health liability, numerous financial needs for capital projects like roads, technology improvements, alleys and facility improvements, etc. There are issues that need attention and a plan to fund the improvements. The value of these deficiencies is in the tens of millions of dollars. We will develop a 5-year projection list that will include a comparison of future revenue and expenditures and a detailed plan for funding as many of the issues on our list of financial needs as possible. In addition, the preliminary budget for next year must have a plan to balance the $5 million dollar gap now. Over the next few weeks the plan will be develop and it will involve significant cuts to our operations and significant service level reductions. We cannot afford the service levels we are currently providing to the community. I will provide more information on these issues in the near future as well as at the April 26 Budget Briefing. I have also provided a briefing to most of the association boards. You can also discuss these issues or ask questions of your department director. More information to follow.
- On April 26, 2011 at 4:30 we will be holding a Budget Briefing for the City Council, employees and the community in the Council Chambers. The focus of this meeting will be an overview of where we are going with the budget for next year but also a briefing on our current fund balance situation as well as an independent perspective on our future PERS rates and underfunded PERS liability. The goal is to help get all of us on the same page about where we are at with these important issues. I don’t know if we will ever get everyone to agree but the interest is to work together to find solutions and not spend valuable time disagreeing about what the problem is. I have high expectations that this meeting will help clarify and build agreement about the details of our financial problems.
- The video production team of Dane Bora and Brad Long are being transferred from the Administrative Services Department to the CEO’s Office. We need their focus and assistance on helping to increase communication related to the details of the budget. They will be designing informational videos that record members of the City staff including Interim Finance Director Larry Hurst, as we seek to clarify financial issues and provide an understanding of how we project various revenues sources for the City.
- The RFP’s for possible outsourcing continue to be developed and no detailed update is available at this time. I will provide a detailed update on the status of this work in a few days.
Peter Naghavi and Public Services Staff are working on creating a memorial plaque and planting a tree for Huy Pham. The memorial to celebrate his work for the City is planned for the south side of City Hall and/or the Estancia Adobe location. More information will be available shortly.
Finally, as we continue to work through this very difficult time, please continue to be supportive of one another and sensitive to the needs of our fellow employees. The organization has long been recognized for its quality customer service and professionalism and never before has our need for our best skills been called into service. Thank you for all you do for our organization and community.
Thomas R. Hatch.
Chief Executive Officer