city of stockton (ca) city council special staff report on economic conditions (march, 2011)

7/31/2019 City of Stockton (CA) City Council Special Staff Report On Economic Conditions (March, 2011)

1/27

March 22, 2011

TO: Mayor and City Council

FROM: Bob DeisCity Manager

SUBJECT: 2011-12 GENERAL FUND BUDGET WORKSHOP AND POTENTIALSERVICE REDUCTIONS

RECOMMENDATION

This item is informational and no formal Council action is proposed.

Summary

This workshop updates the City Council and the public on local economic conditionsand continued deterioration in General Fund revenue projections. Severe program andservice reductions are identified that may become necessary to further downsize Cityoperations by the July 1st start of the 2011-12 fiscal year. Final reductionrecommendations are pending employee bargaining group discussions about voluntaryconcessions. As previously discussed, there is an alternative to most of these cuts viafair and equitable concessions. The public is invited to a series of Town Hall meetingsin April to provide feedback on these reduction alternatives and the priority of themunicipal services they receive.

DISCUSSION

This workshop is the first in a series of City Council agenda items to introduce the 2011-12 fiscal year budget, which starts on July 1, 2011. A balanced budget is necessaryprior to the start of the fiscal year to appropriate operating funds and to enable theinternal borrowing necessary to support Citys General Fund cash flow requirements.Because property and other major taxes are received in arrears, the General Fund isdependent upon internal borrowing to finance its operations.

The focus of this report is the Citys General Fund, which is the depository for the Citysunrestricted tax revenues. These revenues are available to finance public safety, which

receives approximately 80% of General Fund revenues, and other discretionary serviceand administrative programs, which are financed with the remaining 20%. Other non-General Fund program budgets are also under development and will be presented toCity Council during May and June budget workshops. Non-General Fund programsinclude the Citys utilities, grants, capital/public facilities fees, and city-wide internalservice fund programs such as workers compensation, general liability, healthinsurance, and equipment programs.


2/27

March 22, 2011

2011-12 GENERAL FUND BUDGET WORKSHOP AND POTENTIAL SERVICEREDUCTIONS(Page 2)

The City continues to find itself with a leveling but much depleted revenue base. Theimmediate budget challenge is a direct reflection of the broader economic problems

facing the residents of the city, the state, and the nation.

This report walks through the following updates:A. 2011-12 Budget Deficit and Changes Since Last ReportB. Status of 2010 Fiscal Emergency Plan/Action Plan for Fiscal SustainabilityC. Current Economic EnvironmentD. General Fund RevenuesE. General Fund ExpendituresF. Five Year Projections and Status of Employee ContractsG. Department Reduction ProposalsH. Risks and Opportunities

I. Next Steps/Town Hall District Meetings

Background

A. 2011-12 Budget Deficit and Changes Since Last Report

Current 2011-12 General Fund projections include $162 million in revenues andbaseline expenditures of $196 million, for an estimated budget deficit of $34 million or17% gap. While General Fund revenues are expected to level and begin a slowrecovery, most of the $34 million gap, approximately $27 million, is derived fromuncontrolled pension, health, and other benefit cost increases that are adding to the unit

cost of each of the Citys employees.

This projected $34 million budget gap is $7 million worse than reported in the lastbudget update heard by City Council at its February 15, 2011 meeting. Because of theseverity of the Citys financial condition, staff has started a systematic review of a broadrange of employee compensation and financial management practices, includinganalysis of the regional labor market, revenue assumptions, and internal fund charges.This recent increase in the 2011-12 budget gap was primarily driven by updatedanalysis of year-to-date revenue trends. We noted a decline in business license andcode enforcement collections, both of which will be subject to further research andaudit. A variety of external subject matter experts have been identified to further dig into

revenue, benefit costs, and program analysis with an overall objective to get the Citysfiscal house in order and to identify a game plan to restore the Citys fiscal health.

B. Status of 2010-11 Fiscal Emergency/Action Plan for Fiscal Sustainability

Following years of budgeted deficits, the General Fund reserves are depleted. AvailableGeneral Fund fund balance has declined from $23 million at June 30, 2006, to about $1million at June 30, 2010. General Fund reserves have declined every year since 2006.


3/27

March 22, 2011


To address these deficits and to create a road map going forward, last year, on June22, 2010, the City Council adopted an action plan for fiscal sustainability. The plan

identified long-term principles for addressing and reducing the Citys escalating laborand benefit costs. These action plans continue to set overall long-term employeecompensation objectives.

Action Plan Principle 1: The City shall reduce or eliminate additional pay categories.

Action Plan Principle 2: No side agreements or past practices shall be binding on theCity unless the agreement or practice is approved in public by the City Council.

Action Plan Principle 3: The Citys labor agreements shall not provide for automaticwage adjustments that are premised on formulae or automatic cost of living inflators.

Action Plan Principle 4: The City will strive to have its labor agreements expire at thesame time particularly with public safety unions.

Action Plan Principle 5: The City shall require its employees to make reasonablecontributions toward the cost of health care coverage provided throughout the City.

Action Plan Principle 6: The City shall offer one or more additional health careinsurance plans. The Citys contributions shall be negotiated based on the lowest costplan made available by the City.

Action Plan Principle 7: The City will require its employees to contribute a fair share oftheir pension costs.

Action Plan Principle 8: The City will establish vacation use work rules that limit theaccumulation of vacation time and provide for use with management approval to ensurethat the needs of the public take priority and overtime is minimized.

Action Plan Principle 9: The City will regain its management rights to supervise,manage, and direct its workforce.

Action Plan Principle 10: The City shall restructure its labor agreements to bringovertime obligations in line with the minimums required by the Fair Labor Standards Act.

Further, on May 26, 2010, the City Council enacted Resolution 010-0166 declaring a

state of fiscal emergency based on fiscal circumstances, and directed the City Managerto take appropriate and lawful measures to achieve a balanced budget for fiscal year2010-11. On June 22, 2010, the City Council approved Resolutions 10-0200, and 10-0201 adopting emergency measures affecting the terms and conditions of laboragreements for sworn employees in the Police and Fire Departments. The emergencymeasures temporarily suspend scheduled pay increases from taking effect during fiscalyear 2010-11, as scheduled by labor agreements with both the police and fire unions.


4/27

March 22, 2011


In addition, the measures restrict firefighter time off and temporarily closed Fire TruckCompany 4, which reduces Fire Department overtime. These measures have been

reviewed quarterly as required by the enacting resolutions and reaffirmed by CouncilResolution 010-0300 on November 16, 2010, and Resolution 011-0050 on February 15,2011.

Both the Police and Fire labor groups affected by the emergency measures haveinitiated legal actions against the City. These actions are designed to reverse theemergency measures by restoring suspended contract terms and retroactivelyreimbursing affected employees for lost wages and benefits. The emergency measuresimposed on Fire employees were submitted to arbitration at the beginning of the 2010-11 fiscal year. The arbitration hearings were concluded in February 2011, and decisionfrom the arbitrator is not expected before May 2011. The emergency measures

imposed on Police employees have been challenged by their labor group in SuperiorCourt. A date has not yet been set by the court to hear that case. The potential 2010-11 retroactive employee compensation costs to the City, for losses on both Police andFire issues, are estimated at $4-5 million. This is additional money we have not setaside.

C. Current Economic Environment

The City continues to be deeply impacted by the Great Recession. Following adevelopment boom with rapid population increase, the City now continues to face highunemployment, high foreclosure rates, and declining property values.

Population Since 2002, the Citys population has increased by over 36,000 to 292,133residents. Although this increase has recently slowed, moderate population growth isexpected to continue, along with increasing demand for City services.

City of Stockton Population (2002-2010)

230,000

240,000

250,000

260,000

270,000

280,000

290,000

300,000

2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Department of Finance Population Estimates for Cities, County and State


5/27

March 22, 2011


Unemployment The unemployment rate in the City of Stockton has been steadilyincreasing since February 2007, with minor dips due primarily to the seasonal nature of

labor within the agricultural sector. In March 2010, the rate within the City reached ahigh of 22 percent. Since that time, unemployment has decreased slightly to 21.5percent in December 2010, but still remained significantly higher than the state averageof 12.5 percent for 20101.

Feb

07

Apr07

Jun07

Aug07

Oct

07

Dec07

Feb

08

Apr08

Jun08

Aug08

Oct

08

Dec08

Feb

09

Apr09

Jun09

Aug09

Oct

09

Dec09

Feb

10

Apr10

Jun10

Aug10

Oct

10

Dec10

UnemploymentRa

te(%)

UnemploymentInStockton,CA(Feb2007 Jan2011)

U.S Bureau of Labor Statistics, Local Area Unemployment

Foreclosures The City of Stockton faced a debilitating housing foreclosure crisis thatpeaked in 2008-09, with many months of over 2,000 combined reported Notice ofDefault, Notice of Trustees Sale, and Real Estate owned properties within the City.Since July of 2009, overall foreclosure activity in the City has improved and decreasedto 1,000 reported foreclosures in November 2010.

1University of the Pacific Business Forecasting Center


6/27

March 22, 2011


0

500

1000

1500

2000

2500

ForeclosureActivityinStocktonCA(IncludesNoticeofDefault, NoticeofTrustee'sSaleandRealEstateOwned)

Source: RealtyTrac

U.S Foreclosure Market ReportProperty Values Beginning in 2008-09, property values in the City began to decreaseslowly at first by 1.3 percent from the previous year. In 2009-10 they dropped another11.7 percent, and continued to drop another 5.9 percent in 2010-11. This drop inproperty values directly contributes to a decline in the Citys property tax apportionmentand the tax revenues available to support services.

Stockton Assessed Value of Property (in $ billions)

$8.4 $8.6

$10.1$11.2

$12.5

$14.3

$16.8

$19.8$21.5 $21.2

$18.7$17.6

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

Fiscal Years

Source: San Joaquin County Auditor-Controller

D. General Fund Revenues

2011-12 General Fund revenues are now projected at $162 million, which reflects a 16percent and $31 million decline from the Citys high mark of $193 million in 2007-08.


7/27

March 22, 2011


$155

$165

$175

$185

$195

$205

$215

$225

Millions

from200708projectedthrough201314

Year Revenue(Millions)

Percentage Changefrom Prior Year

2007-08 Actual $193 Na

2008-09 Actual $193 0%

2009-10 Actual $167 -13.8%

2010-11 Projection $163 -2.1%

2011-12 Projection $162 -0.5%

2012-13 Projection $165 1.9%

2013-14 Projection $168 1.6%

The following chart shows the sources of General Fund revenues, of which 69 percentis derived from property, sales, and utility user taxes. Since the 2005 triple flip changein State law, most of revenues formerly received from the State as Motor VehicleLicense Fees are now distributed by Counties to Cities as a factor of assessed propertyvalue, and will prospectively be discussed and projected along with direct property taxrevenue.

16% Decline

16% Decline


8/27

March 22, 2011


SalesTax

21%

UtilityUsersTax

19%

PropertyTax

17%

Property

Tax

In

Lieu

of

MVLF

12%

FranchiseTax

7%

OtherRevenues

6%

ChargesforServices

6%

BusinessLicenseTax

5%

IndirectCostRecovery

4%Rents&Reimbursements

3%

FY201011GeneralFundRevenues

Property Tax (including Property Tax in lieu of Motor Vehicle License Fees)Earlier in the decade, Stocktons General Fund property tax revenues almost doubledfrom $32 million in 2000-01 to $59.9 million in 2007-08. It is during these boom yearsthat agencies were pressured to spend the money rather than to set it aside for theeventual bust years. The building boom, driven by increases in market values forresale homes, contributed to this growth rate. The dramatic decline of this revenuesource began in 2008-09, due to the collapse of the housing market.

Property tax revenues dropped by 12 percent in 2009-10 and are expected to drop anadditional 4.4 percent in 2010-11. In addition to downward pressure on housing values,this decline was further amplified by a negative Proposition 13 CPI factor used byCounty assessors to adjust assessed values for properties that remain valued at lessthan market. For the first time in State history, the 2010-11 factor was negative.Typically the Proposition 13 adjustment factor is limited to an annual 2 growth cap, butfor 2010-11 it was a negative 0.237 percent, and in 2010-11 it is projected to be anominal 0.753 percent. The Citys property tax revenues in total, including property taxreceived in lieu of Motor Vehicle License fees, is projected to level off and start nominalrecovery in 2011-12 at a growth rate less than 1 percent.

The following graph illustrates the General Fund property tax revenue trend since 2007-08. As illustrated in the chart, property tax revenues declined over a four-year periodfrom $59.9 million in FY 2007-2008 to an estimated $46.8 million in FY 2011-12. This isa 22 percent decline or a $13.1 million revenue loss.


9/27

March 22, 2011


10

20

30

40

50

60

70

FY0708 FY0809 FY0910 FY1011e FY1112e

Millions

GeneralFundPropertyTaxRevenues

Sales and Use TaxSales and Use tax is the second largest General Fund tax source. Revenues areprojected to decline by 21% from their high mark in 2006-07. This decrease amounts toa $9.1 million revenue loss over this four year period. This decline was due to theeconomic downturn as many Stockton citizens lost their jobs and homes toforeclosures. Loss of consumer confidence in the economy contributed to this dramaticdecline, from $43.5 million in FY 2006-2007 to a projected $34.4 million in FY 2011-2012.

5

10

15

20

25

30

35

40

45

50

FY0607 FY0708 FY0809 FY091 0 FY1 011e FY1112e

Millions

GeneralFundSales&UseTaxRevenues

Point-of-sale sales tax revenues for FY 2010-11 are projected to be approximatelyflat with prior year point-of-sale revenues. A portion of the reported revenue drop for2009-10 reflects a prior year true-up in the Citys share of the County Sales and UseTax Compensation Fund, which is part of the triple flip tax backfill distributionformula from the County established in 2005. The 2011-12 sales tax revenues areprojected to increase 1.7% based on improved consumer confidence. Sales tax is


10/27

March 22, 2011


projected to slowly recover in future years with annual growth rates in the 2-2.5%range.

Utility User TaxThe third largest General Fund tax revenue sources is utility user tax, which hasdeclined for the past two years due to the recession, houses vacated by theforeclosure crisis, and a leveling of population growth. UUT revenues are expectedto see modest growth until housing construction and population growth resume. Theestimated utility user tax revenue for FY 2011-12 represents a 0.4% increase overthe prior year, reflecting minimal growth from this revenue source.

Program RevenuesCity program and staff reductions have contributed to a decline in program

revenues. Local Fire Districts: Districts that contract with the City for fire services are

currently charged based upon a percent of the total Fire Department budget.As the Fire budget has decreased from $50.3 million to $46.9 million,between 2007-08 and 2010-11, revenues from the fire districts also decline asa result of the methodology.

Code Enforcement: Revenues are down primarily due to a reduction instaffing in the Neighborhood Services division. Since 2009, staff has beencut by 14 positions or more than 30%. Further, the timing of the Countysdistribution method for assessments under this particular code citation haschanged. Revenues are no longer advanced to the City through the CountysTeeter Plan. In the past, any uncollected code enforcement liens were sentto the County for collection through property liens. The County had beendistributing cash for the full Code Enforcement liens back to the City throughits Teeter Plan. The Countys cash distribution practice has changed andreduced the Citys cash flow.

Crash Tax: The City Council approved a fee in early 2010 for cost recoveryof emergency response to car accidents and various other emergenciesinvolving non-residents. The revenue estimate for this cost recovery activitywas projected to be $400,000 in 2010-11. Based on actual billings during thefirst year of the program, the Fire Department is now projecting annual

revenues of $50,000 in both 2010-11 and 2011-12. Vehicle Impound: The Police Department charges a release fee for

impounded vehicles. Due to staff reductions, fewer vehicles have beenimpounded and the related revenue is down 45% or $240,000 from 2009-10.

Inter-fund cost allocation reimbursements: Revenue estimates for inter-fund reimbursements have been reduced to reflect a corresponding reductionin support costs and staff. Indirect costs are based on a Cost Allocation Plan


11/27

March 22, 2011


that uses actual prior year expenditures. Because support departmentexpenditures have been declining since 2008-09, the General Fund will be

charging less recovery to other City special fund programs. A second factor inthe indirect cost revenue is an overhead charge on capital projects. The Citywill be reducing its capital project expenditures once federal stimulus fundingand bond proceeds are expended. It is projected that support departmentcosts and capital project expenditures will not recover at previous levels.

In total, after two years of rapid contraction, General Fund revenues are projected tolevel off in 2011-12 and slowly increase by 1-2% annually through 2014. The totalrevenues of $170 million projected in 2014 are still far below the Citys historical levelsof over $190 Million achieved in both 2007-08 and 2008-09. The City can expect asmaller revenue pool from which to finance its municipal services for years to come.This will require a stark re-examination of the size and cost of City services to adjustexpectations of the community and its employees to live within these reduced means.

E. General Fund Expenditures

A baseline expenditure projection has been established for 2011-12 with the estimatedcost to preserve existing service and staffing levels within the boundaries of existinglabor contracts. Due to ongoing litigation/arbitration with the Stockton Police OfficersAssociation and the International Association of Fire Fighters, this baseline projectionassumes full labor contract compliance and expiration of the interim Fiscal Emergencymeasures implemented and currently in place during 2010-11. In this baselineprojection, General Fund expenditures reach $196.5 million, which is an increase of$29.6 million from prior year budget. Significant portions of this cost increase areassociated with the sunset of labor concessions such as furloughs, cost of livingadjustments (some COLA adjustments are as much as 14%), and the related benefitsassociated with these significant increases in base pay. Despite several years ofsignificant staff cost reductions through attrition, early retirement incentives, furloughs,renegotiation of labor collective bargaining agreements, hiring freezes, and reductionsto operating hours and services, costs are still on the rise, and particularly benefit costs.


12/27

March 22, 2011


Police

50%

Fire

30%

Management

&Support

8%

Community

Services

5%

PublicWorks

4%

Other

3%

Baseline 201112

GeneralFundExpenditures

($196.5Million)

Labor

81%

NonLabor

19%

ProportionofLaborExpenditures

201112

Baseline

General

Fund

Budget

Labor

NonLabor

Public safety, including the Police and Fire departments, represents the most significantcomponent of General Fund expenditures. Police and Fire comprise 50% and 30%,respectively, or 80% of the baseline expenditure budget.

As a service provider, the Citys labor costs drive the General Fund budget. Salariesand benefits comprise 81 percent of general fund costs. The following is a summary ofthe most significant labor cost components. Of particular note is the current load forbenefits and other incremental compensation types (add pays). Total benefits andadd pays add an estimated 115% load onto base pay.

GeneralFundPersonnelCostsFiscalYear201112

BasePay 47%

AdditionalPay 6%

Retirement 22%

Health/Dental 19%

OtherBenefits 6%

Subtotal 53%

GrandTotal 100%

Employee benefit costs are the most significant factor in the projected growth of Citypersonnel costs. The growth in benefit costs are outpacing the Citys tax revenuegrowth and present costs that the City has limited options to control.

Pension: The Citys CalPERS actuary has projected City contribution rates for the nextfive years. Rates are increasing due to CalPERS investment losses and newdemographic/longevity factors. Over the next five years, Safety plan contribution rates


13/27

March 22, 2011


are expected to increase by 10% of pay, while Miscellaneous plan contributions willincrease by 7% of pay. Further, the Citys $7 million annual pension obligation bond

payment is likely to be amortized over a downsized employee workforce as the Cityadjusts operations within a balanced budget, which further increases pension costs as apercentage of payroll.

Retiree Health: Although staffing reductions since 2008 provided salary savings, manyreductions were a result of retirements, which drive a corresponding increase in retireehealth insurance costs. In the past, the City did not fund a reserve for retiree healthbenefits and instead paid for both existing staff and retirees on a pay as you go basis.The City is self funded for a majority of health claims and collects monies fromdepartments to cover active and retiree claims, based on the number of activeemployees in each department. In times of growth, and average attrition, this might

have been a sufficient means of financing health costs, but with the rapid work forcedecline, and sharp increase in retiree beneficiaries, rates have increased more than70% since fiscal 2008-09. Furthermore, our retiree medical benefit is one of the mostgenerous in the state. In fact, some retirees receive more of a benefit from the City inretirement than when they were employed.

Total Active and Retiree Health Costs: The following chart reflects the dramatic $12million increase in the Citys cost of health benefits, from $27.7 to $39.5 million over thepast three years.

Cost of Health Benefits All Funds

Fiscal Year Active Employees Retirees Total

2007-08 $19.2 $8.5 $27.7

2008-09 $20.7 $10.1 $30.8

2009-10 $20.9 $13.8 $34.7

2010-11 $22.7 $16.8 $39.5

F. Five-year Projection and Status of Employee Contracts

Without the necessary cost reductions to match the lower revenue base, the future yearestimated budget shortfalls widen to $34 million in FY 2011-12, $41 million in FY 2012-13, $45 million in FY 2013-14, and $46 million in FY 2014-15. Growth in the Citysexpenditure trend will ultimately be addressed either through a reduction in staffing andservice levels or a reductionin unit labor costs.

Staff believes that a significant portion of projected General Fund deficits could beresolved by using market compensation practices as a guide to negotiating future


14/27

March 22, 2011


employee compensation. All City bargaining groups have been invited to meet with Citynegotiators to discuss early reopening of existing contracts. Some groups have

informally met with the City to discuss options. The following is a schedule of employeebargaining groups and their current contract expiration dates:

Operations & Maintenance Currently OpenInternational Association of Fire Fighters June 20, 2011Stockton Police Officers Association June 30, 2012Stockton Police Management Association June 30, 2012Operating Engineers Local 3 Trades & Maintenance June 30, 2012Stockton City Employees Association June 30, 2014Mid- Management/Supervisory Level June 30, 2014

The Citys negotiating objective, as articulated in its June 22, 2010 Action Plan for fiscalsustainability detailed above, is to continue to address specific employee compensationpractices that are in excess of market.

$155

$165

$175

$185

$195

$205

$215

$225

Millions

TotalGeneralFundRevenueandExpendituresfrom200708projectedthrough201314

Revenues

Projected

Revenues

Expenditures

Projected

Expenditures

G. Department Reduction Proposals

General Fund Departments have been challenged to identify $34 million in program andcost reductions to balance the 2011-12 budget within the current labor contract costmodel. As detailed in the following chart, department proposals would reduce theGeneral Fund workforce by 16%, on top of prior year reductions of 25%, for acumulative three-year workforce contraction of 41%. Current year reductions areestimated to eliminate 223 full-time positions and 9 part-time positions, of which 194 ofthe full-time positions are filled. The scope of these reductions would severely redefinethe Citys service capacity and eliminate essential community services.


15/27

March 22, 2011


It is important to note that these reduction proposals reflect the program departmentsbest attempt to meet budget targets provided by the City Managers office. Our office

has not yet had the time to vet these options or pursue further alternatives. Given themagnitude of potential reductions, we are presenting these alternatives at this time tobegin to engage the community on potential service impacts.

0

200

400

600

800

1000

1200

1400

1600

Adopted

200809

Adopted

200910

Adopted

201011

Prelimanary

Target201112

NumberofFull

time

Employees

PersonnelChangebyDepartment(Adopted200809toPreliminaryTarget201112)

Support

Departments

Economic

Development

Recreation

Library

PublicWorks

Fire

Police Non

Sworn

Police Sworn

1360

11031023

800

Police Department

To meet their budget target, the Police Department has proposed to eliminate or reduceprograms and operations that would result in $13.2 million in General Fund savings andeliminate 115 full-time positions, including 11 sworn police officer positions. Whencombined with reductions since 2008-09 the Police Department sworn staffing willdecline by 109 or 25%, from an authorized staffing high of 441 to the proposed 332.The Police Department proposal would eliminate an additional 104 civilian positions ontop of the 33 full time positions already lost since 2008-09, for a total reduction 137, or59 percent since. Programs identified for reduction or elimination in Attachment Ainclude the following:

Reduction of Animal Control and Animal Shelter programs - Shift AnimalSheltering to County &/or non-profits within one year. Sworn personnel wouldhandle emergency animal calls posing immediate threats. Revenuescurrently received from the County will be eliminated.

Eliminate civilian staffing of Evidence Identification Section. Shift mostevidence tech work to sworn officers to handle collection and processing ofevidence; assigned evidence officers unable to handlecalls-for-service.

41%Decline


16/27

March 22, 2011


Eliminate civilian staffing of the Property Room, replacing with sworn officers.Handling of evidence and other property will be performed by sworn staff,

taking them from police calls. Would also require patrol officers to be trainedin the highly important practices and laws governing evidence disposition,storage, and disposal.

Eliminate all Community Service Officers from Patrol, Traffic, and Parking causing severe reduction/elimination in responses to lower priority calls-for-service. Much of work shifted to sworn as available but sworn would mostlyrespond only to emergency in-progress or violence calls. Parkingenforcement duties shifted to VIP's & Sworn (5 CSOs were General Fund & 3were grant funded). Potential losses in revenues and reduced responses totraffic and parking complaints and issues. Eliminate 2 Motorcycle TrafficEnforcement Officers, reducing impacts on City-wide traffic issues and

abilities to maintain traffic-related grants. Reduce Code Enforcement civilian staffing. Residential Rental Inspection

program suspended & Code Enforcement will not improve from current level.Decreased responses to all types of Neighborhood Services issues, causingincreased blight, decreased revenues for code violation fines.

Elimination of Graffiti Abatement program. Graffiti will only be removed inareas where Landscape Maintenance Districts already fund removal. Adverseeffects would be significant increased blight.

Reduce Civilian support for Investigations Division- Investigative supporttasks shifted to sworn personnel, resulting in slower case processing andclearance; increased case loads would cause concentrating on violent crime

over property crime. Reduction of Records Management Section civilian staffing, eliminating

approximately 40% of civilian support staff in Records & Traffic sections.Mandated clerical work will shift to sworn personnel, taking sworn personnelfrom handling police calls.

Reduce Civilian clerical and fiscal administrative staff. Some administrationwork shifted to sworn personnel for necessary grant management, etc.Reduced grant work to only mandated duties.

Reduce Crime Analysis Unit civilian staffing. Reduced ability to track &analyze crime & focus resources. Officers would be unable to rely on freshintelligence with crime trends.

Reduce Telecommunications and IT staffing, eliminating supervisors & 5vacant dispatchers. Telecommunications supervision would shift to swornpersonnel to handle as available, greatly reducing supervision of 9-1-1 call-takers. 50% Reduction of support staff for Police telecom and computersystems will increase system problems and data loss. Reduced efficiencyfrom reduced utilization of technology.


17/27

March 22, 2011


Elimination of the Vice Unit which is responsible for investigating fraud,business crimes, prostitution, monitoring liquor stores for sales to minors, etc.

Elimination of the Gang Unit comprised of 9 sworn police officer positions.Only GVSU & funded Task Forces would remain, eliminating proactive high-visibility enforcement of gang issues, investigations and activities.

Reduce sworn officer staffing in Personnel & Training Section, resulting inless training, recruiting, & backgrounding. Elimination of Rangemaster andother training unless mandated. Perishable skills training reductions.

Fire Department

Currently, the Fire Department is made up of 13 Engine Companies (which are alsoknown as neighborhood fire stations), staffed with crews of 4, and 3 Truck Companies

staffed with crews of 5. Reductions would first come from decreasing the crew size inboth Engine and Truck Companies to crews of 3 and 4 respectively. This downsizingwould not be sufficient to meet the proposed reduction requirement, and thereforeCompanies would be closed. Truck 4, closed June 30, 2010, would remain closed andTruck Company 3 at 1116 E First Street; Engine Co. 1, at 1818 Fresno Avenue; EngineCo. 6, in Victory Park at 1501 Picardy Lane; and Engine Co. 7, at 1767 W HammerLane would also be closed. A two-person rescue vehicle would be placed in service,staffed with an Engineer and a Firefighter, and used to augment the remaining on-dutystaffing. This rescue apparatus will be based at Fire Station 4, at 5525 Pacific Avenuenear Delta College. Under this level of budget reduction, daily staffing will be 42, a 40%decrease from the current daily staffing of 70 firefighters.

The station closures will require eliminating 78 firefighter positions (73 from layoffs and5 from attrition through retirements), along with demotions of 19 captains and 12engineers. In the Stockton Fire Department response area, which includes the City ofStockton and the contracting fire districts, the number of firefighters will decrease to0.428 firefighters per 1,000 residents. In other San Joaquin valley cities, the averagenumber of firefighters per thousand is 0.9. Call volume for other comparably sized citiesaverages 1798 calls per service year, where Stockton averages 3057 calls per serviceyear. Since June 2009, the number of firefighter positions has decreased by 48, from271 to 223. These additional cuts will leave 145 sworn staff, which is lower than thestaffing level more than 50 years ago when 157 firefighters worked in fiscal 1957-58.

The Stockton population was 25% of todays service population.

Service impacts to the community are expected to include: Arriving fire engines will have to delay interior fire attacks until they can be

supported by a second fire engine or truck company, and safely support interiorfirefighting operations as defined by NFPA 1710.

While exact response times are not easily projected, response times to all typesof emergencies will be extended.


18/27

March 22, 2011


Public Works

The Public Works Department proposed reductions total $917,600, and include theelimination of 6 full-time positions. The programs identified for reduction includefacilities maintenance, park maintenance contract management, and tree maintenance.Since 2008 the Public Works Department has reduced programs, combined andreorganized programs, and outsourced some maintenance activities that have resultedin the elimination of 104 full-time positions from the General Fund.Public Works share of the FY 11-12 General Fund budget cuts was originally set at$1,217,600 below baseline. Public Works first conducted a rigorous review of baselineassumptions which identified a savings of $300,000, leaving $917,600 in remainingreductions needed. These cuts must all come out of Parks, Trees, and Facilities, asthose are the only areas that receive General Fund allocations. To meet these

reductions, the Public works Department proposes the following;

Eliminate a vacant Crafts Maintenance Worker and two vacant FacilitiesMaintenance Worker positions, saving an additional $218,200. No serviceimpacts are identified because no occupied positions are affected.

Eliminate a currently-filled Parks Supervisor position, and shift portions ofanother Parks Supervisor and two Senior Parks Workers (10% each) to (non-General Fund) Landscape Maintenance District accounts. The impact will bereduced oversight of the contractor that is currently maintaining the Parks(mowing, trimming, picking up trash, and cleaning restrooms). Also, an Associate

Civil Engineer who is currently helping oversee Parks will assume the vacantParks Superintendent position, and his vacated position will be eliminated. Thesavings will accrue to Parks, but the impact will be reduced ability to delivertransportation projects. This will generate a General Fund savings of $264,000.

Under-fill the vacant (but funded) Arborist position with a Senior Tree Surgeon,then backfill the resulting vacancy with a Parks Worker employee, then eliminatethe Parks Worker position. The net effect will be to save $69,400while losing theexpertise of an Arborist. Losing this expertise will limit the Departments ability toprovide technical assessments of potential tree hazards; however, it is deemedmore important to retain a 5-person Tree crew. The Department also proposes to

reduce contracted Tree services by $75,000 (30%) this will further impact theDepartments ability to respond to major storms and other emergencies.Incidents will be prioritized based on the severity of the threat to public safety.

The final reductions will shift a portion of the charges for existing personnel toGas Tax. Specifically, payroll costs for the Tree crew will be charged 50% to GasTax rather than the 21% presently charged, based on the fact that at least 50%of City trees are street trees and eligible for Gas Tax funding. This will remove


19/27

March 22, 2011


from the General Fund 1.45 FTEs. Similarly, 20% each of two EngineeringTechnicians, and .67% of a Senior Parks Supervisor position, will be charged to

Gas Tax. The former will administer federal aid transportation projects, the latterCommunity Enhancement street cleanup efforts. Total General Fund savingsequals $291,000, with an equal increase to the Gas Tax. This will further reducecritical maintenance efforts on local streets.

Community Services Library

The Community Services Department is proposing reductions totaling $905,076 for theCity portion of the Library system budget in 2011-12. This includes the elimination of 11full-time positions and 2 part-time positions, and would be in addition to the 48 full-timeand 33 part-time staff that have been eliminated from the Library system between 2008

and 2011. The Library is also bracing for a reduction in funding from the State ofCalifornia, which will reduce the librarys ability to provide literacy and outreach servicesto the community.

Hours reduction - These further reductions to library services will have significant andfar-reaching negative outcomes, the most visible of which will be a 27% reduction inopen hours City-wide (from 103 hours per week to 75 hours per week). Hours at theAngelou and Weston Ranch libraries in south Stockton would be cut 32% more than thecurrent schedule.

Less service - Not only will all four City libraries be open fewer hours, but a public

services staff reduction of eight FTE (full time equivalents) will necessarily lead to longerwait times at all service points during operating hours. Also of great impact, both to theCity and to our County libraries will be the reduction of three FTE support staff, resultingin longer processing times for new and donated books, movies, music, andmagazines to become available to our customers.

Special events Event, planning and professional marketing materials will not beavailable. Statistical collection, analysis, and reporting will be added to the workload ofremaining staff, leading to productivity delays. Public technology training will cease totake place on a regular basis.

Inter-branch deliveries - Delivery of books and materials to City and County brancheswill take longer as a result of reduced part-time staff and delivery services to 49-99member libraries will be eliminated

In short, the proposed reductions, eliminating 11 additional positions, will devastate boththe quantity and the quality of library services in the City of Stockton.


20/27

March 22, 2011


Community Services Recreation

The Community Services Department is proposing recreation program reductionstotaling $475,435 for fiscal year 2011-12. Programs proposed for reduction includerecreation coordination; marketing and administrative support; reduction in open-to-public hours for Van Buskirk and Stribley community centers, and shifting the City costfor Sports Commission to the Tourism Business Improvement District.

These further reductions in funding for recreation services will impact communitycenters and the surrounding neighborhoods. This will require elimination of three FTEpositions on top of the 21 full-time and 297 part-time positions that were eliminatedsince 2008. These positions provide direct services to the neighborhood around VanBuskirk Community Center and Park. Among the three new community centers, this

facility has the least potential in generating additional revenue next fiscal year to helppay for its operating and maintenance costs. Operating hours at Van BuskirkCommunity Center will be reduced by 57% resulting to a reduction in operations at thiscenter from 49 hours per week to 21 hours per week.

Most affected will be the Conway Housing Community which is directly across the streetfrom Van Buskirk Community Center. Seniors will lose the opportunity to socialize andexercise in the morning hours. Youth and teens will not have an opportunity to socializeand participate in activities until 3 p.m. and there will be no recreation opportunities onFridays. This may increase negative behavior and vandalism around the community.

One administrative support staff will also be eliminated. This will result in an increase ofworkload of the remaining administrative staff, which will result to inability to handletasks in a timely manner. There will be an increase in backlog and longer processingtime for requests. A total reduction of 4 full-time staff will result to slower service inRecreation and Administration Divisions.

The Sports Commissions annual operating costs in the Recreation Fund will betransferred/allocated in full to the Tourism Business and Improvement District Fund.This action will reduce the funds available for sponsorships and for conducting sportsevents in the City.

Charter Officer and Administration

The collective charter officer and administrative units have proposed reductions of$700,538. This includes the elimination of 10 full-time positions and 7 part-timepositions, which are in addition to the 28 full-time positions eliminated by thesedepartments since 2008.


21/27

March 22, 2011


As with the program reductions discussed above, these reductions will likewisesignificantly impair organizational capacity to plan, administer, and serve customers

during a period of rapid organizational downsize.

City Manager/City Council: Proposed reductions eliminate two support and receptionpositions that jointly serve the City Council, City Manager, and City Attorney offices.Work load would be shared by other support staff, with overall reduced customerservice by these executive offices.

City Attorney: Proposed program cuts will slow down the processing of advisoryassignments. This could, in turn slow the pace in which other departments are able toperform certain assignments. This impact will vary from time to time due to workloadand will, as a practical matter, impose the greatest impact on non-urgent matters as

attorneys manage and prioritize their workloads. Since the deputy position that will beheld vacant is already vacant and the assistant position is already filled at a part-timelevel, the impact of these cuts is already being felt. However, since we are at presentalso dealing with an additional long-term absence due to a medical leave, levels ofservice should actually improve somewhat from current levels by June or July. Inaddition, with increased workload comes the danger of employee burnout and/orattrition and the attendant loss of efficiency that comes with staff illnesses, absencesand/or vacancies. At the present time workloads in the advisory division are high, butnot so high that employee burnout is a great concern at present.

City Clerk: Proposed staff reductions will compromise the timeliness or possible

elimination of the following processes and mandated duties: Minutes preparation for the following will be eliminated: Planning Commission,

Council Salary Setting Commission, Cultural Heritage Board, Climate ActionPlanning Advisory Committee, Measure W Committee, Development OversightCommission, and the following Council Committees: Audit, Budget and Finance,Legislation & Environmental, Community Planning/Development

Eliminates Boards & Commissions interviews, while continuing with recruitments Legal Notices, i.e. Public Hearings, Tracking of SEI statements and Ethics

Training Certificates, preparation of City Council and Civil Service Commissionrecord of meetings, Council meeting follow up, i.e. document recordation, bidbond processing

City Auditor: Proposed reductions will reduce opportunities to identify & correct lossesdue to fraud, and weakens the city's overall ethical environment. Fewer hours will beavailable for audits of general fund activities, which may include revenue collectionActivities, Police Department payroll, Fire payroll, and organizational analysis ofdelivering administrative support functions.


22/27

March 22, 2011


Administrative Services: Proposed staff reductions will stall implementation of the Citysnew enterprise information system, which defers City-wide benefits from access to

improved technology. Reductions will also limit capacity to administer the Citys 48bond issues and related investor relations, and may impair ability to timely comply withreporting requirements. Finally, elimination of part-time workers will reduce 25% ofdisbursement unit capacity to provide timely vendor payments and ability to providecentral controls over City disbursements.

Human Resources: Proposed reductions will impair support to the Civil ServiceCommission; will reduce support to program departments in regards to the handling oflabor issues including investigations, grievance processing and resolution; and willresult in a city-wide loss of expertise in policy development and review also at a time ofsignificant downsize to the City-wide organization.

Other Administrative Functions: Proposed reductions include loss of clerical support forEconomic Development staff and City internet web page support for Public InformationOfficer. Funding reductions are also proposed for Community Partnership for Families.

Total Reductions by Department

The following chart further summarizes proposed personnel reductions by departmentover the past three years.

0

50

100

150

200

250

300

350

400

450

Adopted

200809

Adopted

200910

Adopted

201011

Baseline

201112

Prelimanary

Target

201112

Employees

Personnelby

Department

(General

Fund

/Tax

Supported

Programs)

Police Sworn

Police NonSworn

Fire

PublicWorks

Library

Recreation

Economic

Development

Support

Departments


23/27

March 22, 2011


The following chart presents revised 2011-12 program allocations with implementedreduction proposals. Public Safety would still represent 78% of the budget; only

moderately changed from the 80% share in the baseline budget before reductions.

Police

53%

Fire

25%

Management&

Support

9%

CommunityServices

5%

PublicWorks

4%

Other

3%

201112GeneralFundExpendituresAfterReductions($161.7Million)

H. Risks and Opportunities

Litigation and arbitration remain unresolved as the City defends its 2011-12 fiscalemergency actions to modify contractual public safety compensation terms. Ultimaterulings may require the retroactive payment of additional 2010-11 employeecompensation. We have not set aside funds for any retroactive payments.

Further, the potential separation of 195 City employees through the reduction plansdiscussed above will generate cash flow requirements to settle vacation and othercompensated absence payments earned and due to these employees. Inter-fund costallocation and internal service fund rates will also need to be re-benchmarked as themix and level of City programs change and are allocated over a declining employeebase.

Finally, the City is also bracing for the uncertain impacts of the Governors State budgetproposals. Specific impacts may not be known until sometime after the Citys adoptionof its budget. However, the State legislature appears poised to eliminateRedevelopment Agencies. A $2 million placeholder has been included in projections tomitigate the collective risk for the loss of redevelopment and other State grant funds.


24/27


25/27


26/27


27/27

city of stockton (ca) city council special staff report on economic conditions (march, 2011)

Documents