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January 23, 2013

City of San José. Overview of City Budget Process and the General Fund AGA Budgeting 2.0 Webinar. January 23, 2013. OVERVIEW OF CITY BUDGET PROCESS AND THE GENERAL FUND. AGENDA City of San Jos é Facts Annual Budget Process Overview 2012-2013 Adopted Budget Overview General Fund Overview

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January 23, 2013

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  1. City of San José Overview of City Budget Process and the General Fund AGA Budgeting 2.0 Webinar January 23, 2013

  2. OVERVIEW OF CITY BUDGET PROCESS AND THE GENERAL FUND AGENDA • City of San José Facts • Annual Budget Process Overview • 2012-2013 Adopted Budget Overview • General Fund Overview • City of San José’s Pragmatic Budgeting Approach AGA Budgeting 2.0 January 2013 2

  3. OVERVIEW OF CITY BUDGET PROCESS AND THE GENERAL FUND CITY OF SAN JOSE FACTS AGA Budgeting 2.0 January 2013 3

  4. CITY OF SAN JOSE FACTS • 10th Largest City in the US; 3rd largest City in California (Population: ca. 971,000) • City Manager/City Council form of Government • 2012-2013 Adopted Budget: $2.8 Billion • 5,495 budgeted Positions • 6 City Service Areas (CSAs); 65 Core Services; over 100 Operational Services; over 400 Programs AGA Budgeting 2.0 January 2013 4

  5. OVERVIEW OF CITY BUDGET PROCESS AND THE GENERAL FUND ANNUAL BUDGET PROCESS OVERVIEW AGA Budgeting 2.0 January 2013 5

  6. ANNUAL BUDGET PROCESS OVERVIEW Annual Budget Development Process Sept-Jan Develop Base Budget November Preliminary General Fund Forecast Released January Community Survey/Neighborhood Association and Youth Commission Workshop February Final 5-Year General Fund Forecast Released; Council Review of Community Feedback; Council/Management Priority Setting Study Session March Mayor’s March Budget Message Released April/May City Council District Meetings April/May Proposed Operating/Capital Budgets, Fees & Charges Released May Budget Study Sessions/Public Hearings; Manager Budget Addendums and Council Budget Documents June Mayor’s June Budget Message Released; City Council Final Adoption of Budget AGA Budgeting 2.0 January 2013 6

  7. OVERVIEW OF CITY BUDGET PROCESS AND THE GENERAL FUND 2012-2013 ADOPTED BUDGET OVERVIEW AGA Budgeting 2.0 January 2013 7

  8. 2012-2013 ADOPTED BUDGET OVERVIEW 1 An adjustment of $526 million is necessary to arrive at the $2.8 billion net 2012-2013 Adopted City Budget to avoid the double-counting of transfers, loans, and contributions between City funds. AGA Budgeting 2.0 January 2013 8

  9. GENERAL FUND OVERVIEW RECENT GENERAL FUND BUDGET ACTIONS AGA Budgeting 2.0 January 2013 9

  10. RECENT GENERAL FUND BUDGET ACTIONS$670 Million in Cumulative Shortfalls Balanced Over $300 millions Nearly 1,500 positions *Includes State impact of $10.8 million in 2003-04 and $11.4 million in 2004-05 AGA Budgeting 2.0 January 2013 10

  11. RECENT GENERAL FUND BUDGET ACTIONSCombination of Strategies to Address Shortfalls Cost Saving Strategies:total employee compensation reductions; outsourcing; new service delivery models/efficiencies; departmental consolidations Revenue Strategies:four revenue-related ballot measures approved by voters; fees for service; transfers from other funds Service Reductions/Eliminations AGA Budgeting 2.0 January 2013 11

  12. RECENT GENERAL FUND BUDGET ACTIONSMajor Reductions to Staff/Service Levels 1,395 51 1,109 Down 33% from peak Down 21% from peak 34 Weekly LibraryHours # of Positions 878 758 678* Down 45% from peak Down 11% from peak 480 # of Positions # of Positions *With approval of 2011 SAFER Grant AGA Budgeting 2.0 January 2013 12

  13. RECENT GENERAL FUND BUDGET ACTIONS Major Reductions to Staff/Service Levels 131 169 Only Priority Street Network Funding Down 30% from peak 92 # of Positions 67 23 Miles of Streets Sealed 0 75 68 63 Down 34% from peak 54 Down 28% from peak 45 # of Positions Pavement Condition Index AGA Budgeting 2.0 January 2013 13

  14. OVERVIEW OF CITY BUDGET PROCESS AND THE GENERAL FUND GENERAL FUND OVERVIEW AGA Budgeting 2.0 January 2013 14

  15. GENERAL FUND OVERVIEW Sources of General Fund Revenues Total General Fund Sources: $966.7 million Source: 2012-2013 Adopted Budget AGA Budgeting 2.0 January 2013 15

  16. GENERAL FUND OVERVIEWUses of the General Fund Total General Fund Uses: $966.7 million Source: 2012-2013 Adopted Budget AGA Budgeting 2.0 January 2013 16

  17. GENERAL FUND OVERVIEW Uses of the General Fund by Category Total General Fund Uses: $966.7 million * Although budgeted in City-Wide Expenses, Workers’ Compensation Claims and Sick Leave Payments Upon Retirement are reflected in the Personal Services category as these are personnel-related costs. Source: 2012-2013 Adopted Budget AGA Budgeting 2.0 January 2013 17

  18. OVERVIEW OF CITY BUDGET PROCESS AND THE GENERAL FUND SAN JOSE’S PRAGMATIC BUDGETING APPROACH AGA Budgeting 2.0 January 2013 18

  19. San José’s Pragmatic Budgeting Approach • Community Engagement and Planning • Zero-Based Budgeting • Performance-Based Budgeting • Program Prioritization • 2013-2014 Budget Development AGA Budgeting 2.0 January 2013 19

  20. COMMUNITY ENGAGEMENT AND PLANNING Extensive Community Engagement (2007 and ongoing) Several Stakeholder Groups (e.g., Budget Shortfall Advisory Group, General Fund Structural Deficit Elimination Plan Stakeholder Groups, Program Prioritization Effort) Annual Budget Surveys Annual Neighborhood Association/Youth Commission Priority Setting Sessions Senior Staff/City Council Budget Priority Setting Sessions Annual Community Budget Meetings in Each Council District General Fund Structural Deficit Elimination Plan (2008) Fiscal Reform Plan (2011) AGA Budgeting 2.0 January 2013 20

  21. ZERO-BASED BUDGETING Personal Services Costs Annual download from HR/Payroll System Calculation of Step Increases January Update of Health Benefits Information, if necessary (7 Health Plans, various vision and dental plans) Police and Fire Retirement Plan and Federated Retirement System (3 Tiers & Minimum Annual Required Contribution for Pension Costs) Non-Personal/Equipment Costs Detailed review of detail codes with actual experience Detailed review of contractual costs AGA Budgeting 2.0 January 2013 21

  22. PERSONAL SERVICES – PENSION COSTS Annual Required Contribution Amount or Rate Minimal Annual Required Contribution Contribution Rate Budgeted Payroll = Pensionable Payroll Pensionable Payroll AGA Budgeting 2.0 January 2013 22

  23. PERFORMANCE-BASED BUDGETING CSA and Core Service Outcome Over xxx Performance Measures Budget Proposal Submission Impact on Service Level Close Cooperation with City Auditor’s Office Service Efforts and Accomplishments Detailed review of one Department’s Performance Measures AGA Budgeting 2.0 January 2013 23

  24. PROGRAM PRIORITIZATION • Based on Chris Fabian & Jon Johnston’s work • Program Dictionary • Comprehensive Program Ranking as part of 2010-2011 budget process • City-wide Outcomes Ranking includes Outreach to Community AGA Budgeting 2.0 January 2013 24

  25. PROGRAM PRIORITIZATION • Ranking has been pretty consistent over the three years • Public Safety Reductions • Infrastructure Maintenance Investment (Traffic Capital & One-Time funds) January 2012 Program Prioritization Ranking (divide $100 between City’s priority goals) A Safe City $25.40 Prosperous $22.50 Economy Reliable, Well $20.10 Maintained Infrastructure Green $16.10 Sustainable City Attractive $15.90 Vibrant Community AGA Budgeting 2.0 January 2013 25

  26. 2013-2014 BUDGET DEVELOPMENTForecast Under Development • 2014-2018 General Fund Forecast to be issued at the end ofFebruary • Most recent Five-Year Forecast (February 2012): 2013-2017 General Fund Forecast Incremental General Fund Surplus/(Shortfall) Does not include: • Salary increases (with the exception of salary steps for eligible non-management employees and management performance pay) • Fully funding the annual required contributions for police/fire retiree healthcare • Fiscal Reform Plan implementation • Restoring key services to January 1, 2011 levels • Unmet/deferred infrastructure and maintenance needs • One-time revenue sources or expenditure needs AGA Budgeting 2.0 January 2013 26

  27. 2013-2014 BUDGET DEVELOPMENT • Current Challenges • Competitiveness as Employer • Measure B Implementation (Tier 1 City Contribution: 50.8%; Tier 2 City Contribution: 6.68%; Elimination of 13th check for Retirees) • Winding down of the City’s Redevelopment Agency (Level of General Fund Subsidy) • 20 year old Budget System • Continue Pragmatic Budgeting • Zero-Based Budgeting of Personal Services and Non-Personal/Equipment Costs • Community Input for Prioritization • Review of Existing Service Levels AGA Budgeting 2.0 January 2013 27

  28. City of San José Overview of City Budget Process and the General Fund AGA Budgeting 2.0 Webinar January 23, 2013

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