Good afternoon.

My name is Aisha Chugtai, and I'm the chair of the budget committee.

I'm going to call to order our budget committee meeting for today, Monday, September 8th, 2025.

Before we begin the meeting, I want to offer a friendly reminder to all members, staff, and the public that these meetings are broadcast live to enable greater public participation.

These broadcasts include real-time captioning as a further method to increase the accessibility of our proceedings to the community.

Therefore, all speakers need to be mindful of the rate of their speech so that our captioners can fully capture and transcribe all comments for the broadcast.

We ask all speakers to moderate the speed and clarity of their comments.

At this time, I'll ask the clerk to call the role so we can verify the presence of a quorum.

Councilmember Payne.

Wandsley is absent.

Rainbow is absent.

Vita present.

Ellison is absent.

Osman present.

Is absent.

Jenkins.

Present.

Chavez.

Present.

Chowdry.

Present.

Paul Masano.

Present.

Vice Chair Koski.

Present.

Chair Chogtai.

Present.

And Councilmember Rainbow.

Present.

Thank you.

There are 10 members present.

Let the record reflect that we have a quorum.

I'll also remind my colleagues that we will be using speaker management today, so please make sure to sign in.

Colleagues, we have four items on our agenda today.

Our first item is on the consent agenda, which is Mayor Fry's 2026 recommended budget.

This is our formal receipt of the recommended budget and the budget committee's first step in our process leading up to adoption in December.

We will discuss this in much more depth when we get to item number three on our agenda, but for now I will simply direct the clerk to receive and file this item, and we will move on to item number two.

Item number two is an appointed position in the 311 Service Center Department of Deputy Director of 311 Service Center.

I will now invite Brenda Miller from the Human Resources Department to begin that presentation.

Thank you.

The cost is in the 2025 budget and changes our effective September 11th of 2025.

This position meets the criteria of section 2010-10 of the Minneapolis Code of Ordinances.

It reports to the 311 Service Director.

It's a member of the 311 Service Center Executive Management Team.

It assists in leading the development and implementation of city policy goals and strategic planning for the 311 service center.

It requires leadership vision, team building and strategy implementation.

And finally, it establishes policy goals and strategies that are consistent with the goals and priorities established by the mayor of city council and the 311 service director.

Please find that the Deputy Director 311 Service Center meets the appointed criteria as defined in section 2010 10 of the Minneapolis Code of Ordinances and forwarded on to council for approval.

Thank you.

Thank you.

And I'll invite Director Nizimbi from the 311 Service Center to just join us and share some additional context about this appointed position.

Thank you, Cheshiktai committee members.

Good afternoon.

My name is Moindan Zimbi, and I'm the 311 Service Center Director, and I will uh provide some additional context to this position.

I want to stop by saying that this is not a new position.

This is the operations manager position that is being reclassified to the deputy director position.

Currently, this position is the central point of contact for all operations of the 311 Service Center, which includes the 311 call center, the service center, the public safety public safety building, and uh the East Leak Street location.

So this current uh position carries uh most of the work uh uh workforce for the department and it made sense to reclassify it to the deputy director position for succession planning and continuity in all the other factors that uh Brenda just mentioned.

Thank you.

Thank you very much.

Um, are there any questions from members of the committee?

I am not seeing any, so I will move approval of this item.

Do I have a second?

Um we have a proper motion before us.

All those in favor, please signify by saying aye.

Aye.

Those opposed say nay.

Any abstentions?

The ayes have it, and that motion carries.

We will now move on to item number three, which is a presentation related to the 2026 city budget.

I will call up budget director Jane DeSenza to begin this presentation.

Okay.

Good afternoon, everyone.

Jane DeSenza from Finance and Property Services.

I'm the budget director, and I'm here with budget manager Coles to present an overview of the mayor's recommended 2026 supplemental budget.

We'll first go through the budget book overview and take some time to walk through in detail two of the key sections to direct your attention to.

We'll also spend some time discussing our budget process this year, highlighting some accomplishments and challenges.

Budget manager Coles will then pivot to give you some details on city spending and revenue changes as well as the property tax levy.

So we continue to work to improve our budget, but our budget book year to year.

Um it's currently available in its interactive online format, but we will be PDFing a copy and adding that to the LIMS file this week for posterity.

The budget team works hard to publish our budget book twice per year, and we make refinements annually based on feedback from all of you, from the public, and also from our industry standards.

Our goal is a readable document that explains the financial and policy decisions impacting the budget.

And we design each page so that we're answering your key questions right off the bat.

This year we've added even more detail on each department page, especially as it relates to staffing.

So this is information that was available publicly last year but was a little bit harder to find.

We've now brought it into each department page.

We've also added a 2026 budget changes section to each department page that tells you about the funding reductions, some limited increases, and some shifts of funding between departments.

We work with dozens of city staff across the enterprise to produce the budget book.

Um department budget liaisons are essential partners in our work.

We're very grateful to them for their efforts, especially when we give them short deadlines and ask them to produce quite a bit of writing.

So at this point, I'm gonna transition to look at the actual budget book online with you all.

Um I think this is important to do just so that we can all have a shared sense of what's out there and also so the public is aware of how to use this document.

So I'm going to transition us over to the city website.

So on the slide deck that's in front of you, there's a QR code and a link, and that takes you to a Minneapolis Mn.gov/slash budget, where you can find the mayor's recommended budget for 26 alongside the budget for the current adopted year.

So we'll click into the recommended budget now.

And I'll say the QR code is great, it's a little bit easier to navigate on a desktop, so just be aware of that.

So first off, what we see at the top of the page is our fair city, along with a navigation pane that you can use throughout, and an instant translate function.

So we'll navigate down to the table of contents.

And I'd like to first draw your attention to the budget summary section.

There's a budget in brief, which we've also done in a plain language version this year to add some more transparency.

For the moment, I'm going to click on our standard budget and brief page.

And this is really the summary of the summary.

So this is where you can go if you're trying to get a quick overview of the sort of trends and accomplishments within our city and some basic understanding of how the budget is structured.

So this first section is where we're talking about the highlights.

So what are the factors that are impacting budget decisions this year?

Below, as we scroll down, we get to some basics on expenses.

So you'll see there's a narrative format as well as a bar chart that shows you two years of actual spending alongside two years of budgeted spending.

So 2023 and 2024 represent actual spend, and 25 and 26 are budget years.

If you scroll over each of these categories, you can see the dollar amount for that particular category.

So you can compare year to year what those changes were.

We do the same thing below for revenues.

And I should note in the summary section, there's also a more detailed page for both spending and revenues.

So you can go into even more depth.

Next, we discuss in brief the property tax levy, and we show how all of the levies stack together to reach the overall levy increase.

So this is a good place to look for the public if you're trying to understand what are the different components of the taxes that you're paying related to the city.

Down here we take an average property tax amount and sort of split it out across the city's budget so that you sort of have a sense of how many dollars are going to which area of the budget.

Below, we get into the general fund.

So here's where we try to give a sense of what's happening in the general fund, what is the percent change from one year to the next.

And we also talk about our budget process here, which we'll get into in a few slides.

And then below you'll see a general fund table that shows you again 2023 and 24 actuals alongside 25-26 budgets.

And then finally, we have a budget highlight section, which is something the budget team assembles trying to get at the city's overall priority categories.

Certainly not meant to be comprehensive, but is a quick overview of some of the key changes.

So at this point, I'm going to navigate back to our table of contents, and I'd like to show a department page so that we all have a sense of what's available there.

Department pages are often where council members are going to be looking to prepare your questions for department presentations.

So there's quite a bit of information here.

I picked CPED because it is one of our most complex departments that does a great deal of policy work.

So there's a lot to scroll through here.

So first off, for every department, we have expenses and revenues by type, similar to that budget and brief section.

You can see the categories of spend for all funds.

And then below in the table format, that's broken out by funds.

So you can see what specifically is the general fund and what is grant funds, which are in the special revenue category.

That's the same for revenues.

And then we get into a longer section in the middle, which is meant to illustrate the department's core work.

So we have org charts for each department, and then below that, there's a narrative for each of these sort of lines of business within the department.

So if you're interested in what the economic policy and development team does, there's a little bit here about how much money of the department's overall budget is segmented for that.

And then there's more information about the various subdivisions of work within that area.

What services do they provide?

And then scrolling down further, there is a racial equity impact discussion for each of those.

So for a department like CPED, you'll be scrolling for a while.

Some of our departments have only the one program.

And then we get into the budget changes section.

So we have this 2026 budget changes with a very clear summary up top that shows you what, in most cases, the budget reduction is for the department.

CPED is a little bit more complex, so it has some decreases, some increases, and some shifts between departments.

So those are all described here, broken out in these numbered in this numbered list with a discussion of their equity and service impact and their performance impact.

So that is described here.

So reduced funding, additional funding, and a transfer.

So this is a section where money was moved from one department to another.

And of course, CPED and all departments will be in front of you in the next two months to describe these things.

So this is really just to show you where to look for this sort of information.

And I'd like to highlight some changes to the staffing section.

So we've added a lot more detail.

The important items here are that we're explaining any net decreases or increases to the FTE count.

So that is summarized up top, and then each bullet point will show you why that's happening.

And then we added a number of tables this year.

So we have the budgeted FTE count for the department by fund, by program, and by job title.

And then finally, each department has a performance management section, which either links to their city dashboard for outcomes Minneapolis or to their impact story.

So there's a tremendous amount of information available in the budget book, and we hope that it is helpful for folks.

So once again, we'll PDF that this week so that that's available in a different format, but for now we have the online version.

Okay.

And I won't I won't reiterate all of this, but we included a copy of the table of contents just for reference as you're looking for different sections later on.

Oops.

Okay.

The budget process this year was different than our standard budget process.

So we'll spend some time talking about that.

So we started the process for trueing up the 2026 supplemental budget about 15 minutes after we publish the biannual budget in January.

So we begin the year by typically briefing the mayor on what was adopted and what the outlook is going to be for the next few years.

So this is where we'll often highlight some trends that we're watching, potential disruptions to revenue.

And then we also begin crafting the current service level budget.

So that means that we are opening up the capital budget request process.

We are beginning the internal service budget process as well.

So those departments like Fleet and IT and property services are putting together their funding packages.

And we also start working with HR to refine our personnel data at this point so that we can make sure we have the right personnel accounted for in the 2026 budget.

In March, we disseminated the mayor's budget message to departments.

So that gives people a preliminary sense of what to expect in the budget process, even though a lot of things are still in flux in that time.

March is the end of March is when we're finalizing internal service budgets and the workforce roster.

So all that data is getting locked in, and that's why we always caution that personnel budget data is a snapshot in time.

It's as of March.

Our capital long-range improvement committee is getting those capital budget requests towards the end of March, early April.

So they're beginning their weekly meetings around that time.

We're also forecasting revenues, making sure we have a correct sense of those in the budget going forward.

And then in April, departments receive budget instructions.

So these are the detailed instructions that tell them what they need to turn in and when and how.

This year they got guidance in most cases for a 1% budget increase from their 2025 adopted budget.

Departments this year were instructed to think really critically about what's your mandated service, what's non-mandated, what's core to your operations.

And so that was meant to all guide that exercise of the budget targets.

In May, department submitted those budget scenarios to the budget division.

Capital Long Range Improvement Committee was also out in community in May doing listening sessions on the north and south side.

In June, we took the budget scenarios that department submitted and put them in presentation format for the mayor.

And so that's when we really begin budget decision processes.

We also, in June and July, we're presenting the current service level budget to all of you and to BET.

In July, we also wrap up clicks work and publish the CLIC report.

And then, of course, budget decisions are happening throughout July, with departments being notified late July, early August of budget decisions, and then of course we have the budget release in mid-August.

So what does that look like for a department?

So to take one example, and certainly this is not an exhaustive timeline of what a department might experience, but to take finance and property services and just sort of apply that timeline to that department.

Finance and property services, obviously, budget sits within that department, but there's also all of our accounting functions, payroll, investment, procurement, utility billing.

I'll probably probably should have listed all of them, but they're all important.

They're crucial internal service providing department.

So in January, finance's budget liaison engages with the budget analyst on our team to verify the workforce roster, make sure we're accounting for the right folks within the department.

Like other departments, our CFO received budget instructions in April.

And like other departments, the directive was to plan for that modest 1% increase.

And so this is where all the divisions did some thinking about our core work, what was mandated and not, and the department came up with a proposal which CFO DI submitted for the mayor's consideration.

Budget packages that in a slideshow, and then it's part of those budget decision processes in July.

So in late July, finance and other departments received that budget decision via their cabinet leadership.

And that's really where the rubber meets the road.

That's where we have to start generating a narrative for inclusion in the budget book.

You know, some proposals were approved by the mayor as submitted, some were uh some were rejected, some were adjusted.

And so, as you can see from this process, it's iterative, it's not a top-down mandate, it's collaborative, and each department had to really do some internal work to think about what they wanted to put forward.

So the goal is always, of course, to align with city goals and of course to serve the people of Minneapolis.

So that's the approach that we tried to bring forward throughout this budget process.

So I wanted to spend just a couple of minutes here on internal service charges because I know that that's a complicated part of our budget.

This is a category of spending that relates to costs that customer departments incur throughout the year.

So we don't have any updated substantial changes for all of you from what was presented in the CSL.

But this slide just gives a little bit more context about why we have internal service charges and what the general process is for those.

So internal service charges are from property services, from IT, our fleet division, and then for self-insurance.

This is one of the first pieces of the budget we build starting in January.

And the idea here is that we're achieving economies of scale.

So it doesn't make sense for each department to go out individually and buy their own cars, but it does make sense to have a singular fleet division so that we're, you know, consolidating the work, reducing duplication of effort, and clearly accounting for the cost of providing that service.

So departments who have those services receive a budget to pay for those costs throughout the year.

And the idea is that it's a cost reimbursement basis.

So we're recovering the cost that the city is expending.

The general process here is that internal service departments are submitting an expense budget to finance in January.

And the idea is that finance reviews that to confirm that it's the current service level.

So we're not expanding the service without authorization, but we're trueing up the costs.

So you could imagine that if the price of gas changes wildly, fleet might have to charge more for that sort of thing.

Once those internal service plans are approved, they're incorporated in the budget, and then we figure out how they're going to be charged across the customer departments.

So that's just a little bit about internal service charges.

And again, no major changes to the numbers there.

Returning to our general fund budget process this year, it was quite different.

So instead of issuing an open call for new spending, we asked general fund departments to submit budget scenarios that were aligned with a specific dollar amount budget target.

So we took the 2025 adopted budget data and we removed internal service charges and one-time expenses, and we calculated for most of them a 1% increase.

Some departments had smaller targets than that because they had limited budget growth over the last several years.

For departments, we presented them the 25 adopted budget data, this target number alongside their 2026 current service level calculation.

So they were able to see that there's some growth inherent in that target, but not in most cases, not as much as their 2026 CSL would have been.

Most of the reductions that you're going to be hearing about from departments originated within those departments.

So again, trying to avoid some top-down process, we wanted to consult our subject matter experts on this.

And finance presented these scenarios to the mayor in June for consideration, as we've said.

So some of the considerations that we asked departments to think about as they were preparing their proposals are listed on the slide.

I think first and foremost is the impact to residents and our core city services.

We've also asked people to start thinking about mandated versus non-mandated work.

Coordination with other jurisdictions is more complicated question, but one that we have to think about.

Participation in outcomes Minneapolis is a factor.

Vacancies, if they've been vacant for a long time, do we need to do something different with those dollars?

Historical spending, both over and under spending, and then revenue generation.

So if a part of your expense budget is something that generates revenue for the city, let's think twice about removing that expense budget.

So as you'll see throughout the next few months, we had a number of major savings strategies that are part of this budget.

So, first of all, finance administratively adjusted our assumptions in the budget for vacancies.

So instead of a mid-range salary expectation, we are budgeting for vacancies at a starting salary.

And we're also lowering our assumptions for those health insurance.

So we previously had budgeted for the most expensive version of the health insurance.

We've moderated that.

That saves the city six million dollars.

We also removed food and beverage budgets from most of the general fund departments, saving about $140,000.

General fund departments identified $16 million of savings that were accepted by the mayor for inclusion in this budget.

So those are those budget scenarios that we talked about.

We were also able to reduce from the 2026 plan the levies for both the permanent improvement levy and the bond redemption levy.

So that saved about two and a half million dollars.

And then finally, we revisited the transfer from downtown assets as we do every year.

So downtown assets fund, of course, is supported by our local sales taxes, most of which are required to be spent on preserving our downtown assets and supporting economic development work.

So every year we take a look at the downtown assets fund health, and then we also tally up the work of that the city is doing in economic development so that we can come up with a justifiable transfer amount.

So we believe we've included a maximal transfer for this budget.

And when we look at use of general fund balance, so this is use of accumulated balances.

So as we often, as we typically do, we have one-time budgets for the election because that varies based on which election it is.

So there's about $6.5 million for the gubernatorial election.

And then we also have implementation of the state's new paid family and medical leave plan.

So we did a lot of work between finance and HR and OPS this year to come up with a strategy for that.

And we were able to come up with a plan that was saves the city some millions, but still costs money, and so that is built in as well.

I did want to include, you know, we've been lucky that we've had our triple A bond rating reaffirmed, but there was a comment in the SP global rating, which is on the screen here, which notes that the city could have its rating lowered if we're to draw down our general fund reserves more rapidly than planned.

So the amount of fund balance that is in this budget is the maximum that finance would recommend.

And I also wanted this slide and the next slide are excerpts from the GFOA, the Government Finance Officers Association.

As we were trying to figure out how to structure this budget process because it is so different than what the city usually does, we went to our industry group to see what the research was.

And so these next two slides are just a summary of those resources that are in on the right-hand side of the screen there, which you are welcome to read.

So I think the question for finance officers is how do we make cuts in alignment with our values and to avoid harming our residents.

And so some of the guidance that they had are, you know, to delay or cancel events that aren't essential, to cut back on discretionary items, to look at big purchases and see if you can delay them.

Um strategies that they really don't recommend, which are shown on this slide.

So we really took to heart the guidance to avoid across the board cuts.

Doing a 2% across the board cut is a simple way of doing things, but it can be really disconnected from priorities.

It could harm core services, it will land really differently across different departments, and so that is why we chose not to do that.

There are also other strategies that could have longer-term negative impacts on your workforce like wage reductions or early retirement incentives.

So these are the things that GFOA did not recommend, and so we did not do that.

So moving on to some accomplishments and challenges, some of which we've we've really started talking about already.

We implemented this department-led budget target exercise to temper growth.

There is still, of course, property tax levy growth in this budget, but it is much less than it would have been otherwise.

We're proud of having brought subject matter experts to the table to make those recommendations, and many departments applied a really critical lens to their operations to think about what is their core work and what can they let go.

We continue to make those budget book enhancements to increase transparency.

We continue to work across the city to refine our revenue projections every year.

Again, that's a collaborative process with each department.

For finance broadly, of course, we're happy to have those bond ratings reaffirmed.

And recently, our banking investment and debt team went to uh went to market with a successful bond sale.

And we've continued our public engagement efforts, which is something we began last year.

And I know I'm looking forward to meeting with several of you about public engagement in your awards.

Here's a couple of images from the Capital Long Range Improvement Committee who were able to get out into our traffic management building and the sewer system.

The team also was at Open Streets this weekend until they got rained out and had a really nice time connecting with folks there.

So connecting the budget to the people who experience it is certainly one of our values as a team.

And to give you a preview of where we're trying to get to, we wanted to include a slide on performance metrics.

We have a really great working relationship with our friends in PMI.

And of course, performance metrics are really driven by the departments themselves.

Again, subject matter experts who can best identify what those appropriate benchmarks and hallmarks of success are.

So we have a long-term goal of getting to a table like you see on this slide in the budget book.

Again, this is a GFOA standard that is has been rolled out over the past year or two.

So we have included this as an option for departments in their presentations to you.

And of course, we are linking to all the outcomes Minneapolis dashboards, because that is really the bulk of the work.

Some challenges.

So of course, as we'll talk about, and budget manager Coles is going to get into this in great detail.

The property tax levy starting point represented too high a burden for residents.

That's something we heard from you all from the mayor as well.

And that just led us to a different budget process and some tough decisions.

That's exacerbated by that burden shift in property values, so shifting the tax burden from commercial to residential properties just makes that all more acute.

And while this budget is not really the site of tremendous FTE growth, we have had a lot of FTE growth in the past several years in this budget.

We've largely offset any added positions with reductions to non-personnel expenses or by shifting positions from the general fund to other funds.

Speaking of required spending, the settlement agreement with the state human rights department does mean that we are locked in for spending in both our capital and our operating budgets.

As we've discussed, we also have the implementation of the paid family medical leave policy.

So that is something that we all municipalities and businesses will be learning about that together in 2026.

We are seeing sort of modest growth in our non-property tax revenues.

So while we climbed out of COVID recovery pretty quickly, we're now at a more modest rate of growth in our non-levy revenues.

And of course, the final two bullets are pretty universal.

We have a lot of uncertainty with our federal funds, and we are just going to see the impacts of tariffs with cost of materials for all city departments.

And with that, I will turn things over to budget manager Coles to get into the city spending and revenue changes.

Thank you, Director DeSenza.

Good afternoon, Chair Chugtai, committee members.

My name is Justin Coles.

I'm the budget manager within the budget division of finance and property services.

So in the following slides, I will provide detailed information of changes in city expenditures and revenues in the recommended budget.

The section will specify specifically highlight the differences between the current service level presentation that was finalized in June and the recommended budget released in August, with a focus on total citywide spending and revenue adjustments.

Total city spending in the 26th recommended budget reflects 7.41% increase equivalent to approximately 140 million dollars.

Of this overall growth, 24% is driven by increases in salaries and wages and fringe costs, and 64% is attributed to an expanded capital program, which is represented in the chart by the capital equipment category.

In response to compounding levy pressures driven by double-digit FTE growth since 2022 and the plateauing of non-property tax revenues, strategic decisions were made to temper expenditure growth, including a 9% reduction in nonprofit contractual services, a 34% reduction in overtime costs, and a 3% reduction in medical and dental premiums.

That was driven by vacancy assumptions that Director DeSenza mentioned earlier and changes in incumbent employee selections that occur year over year.

This slide represents a table of new budget items that are included in the 26 recommended budget, but were originally part of the plan that was adopted last December with the 2025-26 budget.

As such, these items are not new initiatives for this cycle, and presentations and discussions were held during last year's budget process pertaining to these items.

Information regarding these investments can be found on the lead department's page in the budget book, which is reflected in the department column on the slide.

In response to interest expressed during previous presentations to this committee, this year's presentation includes a new chart that highlights contractual services recommendations within the general fund.

The contractual services category, as defined in our accounting system, encompasses a broad range of expenditures, from internal service allocations such as IT and fleet, to building utility costs, veterinary services for the K9 unit, and various contracts with nonprofit partners.

Within the general fund, contractual services encompasses around 25% of the recommended budget.

This slide provides a summary overview of enterprise-wide staffing levels.

Departments will be prepared to discuss any changes within their budgeted position counts and current vacancies and their hiring plans during individual presentations over the next few months.

Please note that our workforce reconciliation process concluded in March in order to present the current service level calculation.

Now that we are in September, this data should be used for reference purposes only.

In response to requests for more detailed staffing data, enhancements have been made to the staffing information section found at the bottom of each department's page in the budget book.

Budgeted FTE counts are now presented at the department and program level and by job title, in addition to be broken down, being broken down by fund.

While this information was previously accessible by clicking through the FTE tables in the current 2025 budget book, it's now more readily available by simply visiting each department's page.

Although subject to change, since the data represents a snapshot in time, these figures reflect the positions used to calculate budgeted salary and fringe benefit expenses in the recommended budget.

Changes at the program or job title level may occur due to departmental reorganizations or reclassifications.

Such reclassifications may be budget neutral as they are typically offset by reductions in non-personnel budgets or by other internal adjustments.

As an example of these improvements, the city council department page is shown here.

While the budgeted FTE count for city council remains unchanged, any changes to overall department FTE counts or fund level adjustments would be explained within this section.

This enhanced transparency allows for more effective tracking of budgeted FTEs and serves as a valuable resource for policymakers, departments, and the public to monitor year over year staffing changes.

Regarding financial impacts, the total budgeted salary and fringe benefit expenses across all funds reflects a year-over-year increase of just under $34 million, representing 5.4%.

Breaking that down to the general fund specifically, salary infringed have increased by 16.5 million or 3.6% during that same period.

One final note on personnel inputs to the recommended budget.

There are currently 10 open labor agreements that are set to expire at the end of this year, which are at various stages of collective bargaining negotiations.

Additionally, there are four contracts that are scheduled to expire at the end of 2026 and will begin negotiations next year.

The 26 recommended personnel budget incorporates the actual costs for eight settled contracts, as well as projections based on coordination with our labor relations team for positions not represented by a labor unit, and for the remaining 16 contracts.

These projections include anticipated cost of living adjustments and step increases.

Actual costs for contracts settled after the completion of the current service level budget, as well as those finalized in early 2026, will get reconciled as part of the current service level analysis for the 27 budget.

Pivoting to revenues, total city revenues in the mayor's recommended budget are projected to increase by nearly 8% or approximately 149 million dollars.

Key revenue category changes include charges for services and sales, which are increasing by 5%, intergovernmental revenues, which are increasing by 36%, and this is driven largely by a $34 million U.S.

Department of Transportation grant for the Mini Haha Creek Bridge Project, bond activity, which is increasing by about 24%, use of fund balance, which is decreasing across all funds by 22%, and fines and forfeits, which is increasing by 37%, and this is largely attributed to the traffic safety camera citations pilot project that public works is leading.

While the recommended budget shows an increase compared to 24 actuals in the 25 budget, the majority of that growth is driven by the aforementioned bond proceeds that are increasing.

Current trends in local option sales tax revenues suggest that we have moved beyond the recovery phase and are entering a period of relative stability.

Given the limited number of large-scale events planned in the downtown core for FY26, which is a strong driver in the fluctuations of these revenues, the budget recommends a modest 3% increase over the 2025 adopted budget.

These revenues are closely monitored by the budget office in coordination with our partners in the development finance and downtown assets teams, who track the many factors that influence these sources.

Local government aid is a general purpose funding source that can be used for any lawful expenditure and is also intended to provide local property tax relief.

As such, it is included in the general fund and supports the city's overall operations.

By city ordinance, we allocate a portion of the LGA allotment to the Minneapolis Park and Recreation Board, 11.79%, and the municipal building commission receives 0.3.30%.

These allocations are detailed to the right of the graph, while the bolded figures at the top represent the official certification for each fiscal year.

As shown, there is minimal year-over-year change in LGA as we approach 2026, and that trend is expected to continue.

Having reviewed the overall city spending and revenue outlook, we'll now turn our attention to the property tax levy, the critical funding source that supports many of the essential services the city provides.

The property tax levy is considered a revenue of last resort and serves as the final lever used to balance the budget after all other revenues have been forecasted and finalized.

A key piece of feedback that we've heard was the need for a clearer explanation of the property tax levy and how it interacts with current service levels.

This slide outlines the process we followed to arrive at the recommended 7.8% levy increase, illustrating the true cost of maintaining services at each step of budget development and the strategic measures taken to reduce that burden.

So to walk through this journey from left to right on the screen here, at the time of adopting the 2025 budget last December, our initial projection for the 2026 levy indicated a planned increase of 10.8%.

This served as the starting point for our long-range financial planning in January.

As we advanced through the 2026 development process, we conduct we conducted a comprehensive recalculation to determine the actual cost of maintaining current service levels.

This included updating expenditure projections and forecasting all non-property tax revenues.

The completion of those stages revealed that maintaining existing services without change would require a levy increase of 13.1%.

This figure represents the true cost of maintaining the status quo at that time without new investments or efficiency gains.

Confronted with that figure, we identified significant expenditure savings by adjusting our vacancy assumptions, specifically related to salary step progression and health care elections.

Rather than applying a traditional vacancy factor, this management approach achieved similar savings while providing departments with clearer budgeting parameters.

Under this approach, departments will be expected to manage their hiring processes in a way that ensures they do not exceed their total annual budget.

These actions reduced the estimated levy growth required to maintain service levels down to 11.2%.

This revised figure was presented to the Board of Estimate and Taxation during the CSL presentation, as is required by City Code.

And now we are here today presenting a 7.8% levy increase.

This reflects a series of careful and challenging discussions throughout the budget process.

It represents not only the cost of maintaining existing services, but also incorporates additional strategic reductions and policy decisions to arrive at a more fiscally responsible number.

This discussion is intended to demonstrate that the 7.8% levy is not just a number, it's the result of deliberate efforts to balance cities' needs with prudent fiscal management and a strong commitment to providing meaningful property tax relief.

This is a table that we represent that we present at key touch points throughout budget development, and it's composed of several individual levies, each supporting a different aspect of city operations and services.

The orange box highlighted on the slide shows the recommended total levy for 2026 from the 25 levy, which is showing a 7.8% increase.

For long-term financial planning, we project costs through 2031 using known wage grace wage growth data and internal service charge assumptions to inform that future planning.

I'll now go into a breakdown of each of the components that make up the total levy.

The general fund supports our core city operations, and that is increasing by 8.6% over 25%.

This is primarily due to projected growth in personnel costs and internal service charges, coupled with general fund non-property tax revenues, which have slightly decreased.

The park board levy reflects a 4.92% increase, which is also driven by wage and fringe benefit adjustments, and this was submitted by the Minneapolis Park and Recreation Board over the summer.

This is below their official request of 7.15%, however, it does follow an 8.3% increase in 2025.

The bond redemption levy supports the repayment of debt for capital projects and is showing modest growth.

Notably, it has decreased by over a million dollars from the plan adopted last year.

This is due to increased capacity within our bond program, thanks in large part to the city's strong bond rating.

The permanent improvement levy funds the city's technology improvement plan.

This levy has been reduced from what was planned in 2026 to help mitigate the overall impact on the total levy.

Pensions and teachers retirement remains relatively flat, with sufficient funds being levied to meet our obligations and maintain the health of those funds.

The municipal building commission also remains consistent with the financial plan, providing partial funding for MBC's total operations.

The Board of Estimate and Taxation is also consistent with our planning, although discussions are underway with BET staff to evaluate future needs down the road.

Finally, the Minneapolis Public Housing Authority is steady at $5 million, and additional support for MPHA is provided elsewhere in the recommended budget.

Looking ahead, the Board of Estimate and Taxation is scheduled to vote on the maximum property tax levy on September 17th, and the city must certify that levy to the county by September 30th.

This slide mirrors the previous one, but is designed to highlight the level of expenditure reductions or additional non-levy general fund revenues required to reduce the property tax levy impact by just one percentage point.

While the 1% reduction may sound modest, in the context of the 2026 recommended budget, it equals approximately $5.4 million.

To lower the levy by that amount, we would need to either cut $5.4 million in spending or identify an equivalent amount in new or existing non-tax revenue, non-property tax revenue, such as fees, grants, or other income sources.

This is not a symbolic shift.

$5.4 million represents real trade-offs.

It could mean reductions in services, delayed infrastructure maintenance, staffing impacts, or scaled back programs.

On the revenue side, generating this level of non-property tax revenue in the short term can be extremely challenging.

The purpose of this slide is to demonstrate that even a 1% adjustment to the levy requires careful consideration and often difficult choices, either in how we raise revenues or where we reduce spending.

It's also intended to serve as a reference point for this body as you receive budget presentations and begin the process of adopting the final budget.

The slide provides a breakdown of how property tax dollars are allocated across city services using a median value Minneapolis home as an example.

With a 7.8% levy increase, the estimated annual property tax bill for such a home would be approximately $2,272.

Here's how that would be distributed.

$655 would go to supporting general government services, which includes items such as administration, 311 and 911 communications, and city planning, to name a few.

500 of that would go to the Minneapolis Police Department, 393 towards parks and recreation.

271 is allocated to capital projects and debt service.

210 dollars would go to the Minneapolis Fire Department.

165 goes to public works, covering essential services such as street maintenance and snow removal.

57 is allocated to pension and retirement obligations, and $21 would go to support the Minneapolis Public Housing Authority.

This breakdown highlights the broad range of services supported by property taxes, from public safety and infrastructure to housing and long-term obligations, and illustrates how each tax dollar is allocated across city services.

As we've seen, the property tax levy funds a wide range of essential services to help both policymakers and residents better understand how proposed changes to the levy may affect their individual property tax bills.

We've worked again with the assessing department to develop an interactive levy impact estimator.

This tool allows users to input specific property values and see how different recommended levy scenarios could impact their tax bill.

It's designed to support data-informed decision making and enhance transparency as we move through the budget process.

This tool is live-linked in our budget book and can also be found on the assessor's website.

The property tax levy impact estimator is a user-friendly dashboard designed so users can select their property group ward and adjust the percent change in the levy to see the corresponding impact.

In this example, we're looking at a citywide residential homestead property with an 8% levy increase applied.

The table below shows the estimated tax impact across a range of market values, while the map at the top illustrates the relative impact by ward.

Please note that the tool adjusts levy changes in 0.5 increments, balancing usability with a reasonable level of granularity for broad-based analysis.

In this view, a home valued at $333,000 would see their tax bill increase by $242 year over year.

These figures are estimates as some components of the final tax calculation, such as assessed values and other state aids are not finalized until later in the year.

Now that we've concluded with the financial overview, I'll close by reviewing the upcoming key milestones in the budget process.

This will guide us through the remaining months, identifying opportunities for public engagement and input and timely adoption of the final budget.

So we are here before you in September presenting the recommended budget.

On the 10th of September, there will be a public hearing for the property tax levy.

Beginning the 15th, there will be budget department budget presentations that will go through the end of October.

The setting of that maximum tax levy, as I mentioned, will be the 17th of September, and the first of four public budget hearings will be on the 19th.

In October, as I mentioned, will be the bulk of the department budget presentations as well as that second public hearing.

In November will be the third hearing, and in December will be the bulk of budget markup, final public hearing, and budget adoption.

And with that, we will stand for any questions.

Thank you for that presentation.

Are there any questions from members of the committee?

I will first recognize Council President Payne.

Thank you, Vice President Chucktai.

On slide 30, uh you show this difference between a 13.1 increase and 11.2 for current service level.

And I'm just trying to recall our presentation at BET.

And if I'm trying to, you may have explained this, and maybe it just I glossed over it, but my understanding was that difference was based on one-time allocations included in the 13.1, and then once you remove those one-time allocations, it's 11.2 that was ongoing.

Is that the correct understanding?

Through the chair.

Um not quite, Council President.

So the difference between 13.1% and that 11.2 was that adjustment of how we budgeted the vacancies.

So we administratively adjusted our vacancy assumptions so that we were picking a starting salary rather than a mid-range salary and adjusting the health insurance as well.

Okay, thank you.

Uh Councilmember Jenkins.

Thank you, Chair Chuck Ty.

Um I think there was a mention of an 11 million dollar uh I guess payment to the park board.

And I'm trying to understand is that separate from the 17% that goes to the park board, and the LGA.

Pardon me?

The LGA.

I think it's a the LGA is the 11 million coming out of LGA?

Through the chair, Councilmember Jenkins, we are required to send 11.79% of our total LGA award to the park board.

And so that, yes, that's an addition to the levy that they receive.

So it's not 11.

Oh, yeah, and it's 11.7%.

1.7%.

Wow.

Is are you aware?

Does that go to the Minneapolis Institute of Arts?

Or, um, through the chair, I I think it goes um unrestricted, like it's unrestricted for the city.

Uh, it's up to them how they how they spend that.

I think it offsets um some of their other revenue expense needs.

I am aware that the Minneapolis Institute of Arts does get a percentage of the city budget.

So you're suggesting that that comes through the part board levy, or through the chair.

I think I would need to to follow up um to get some more clarity on that for you.

I don't have that offhand.

All right, that would be very helpful.

Um, you know, I I do want to just say this presentation was very informative and very helpful.

Appreciate it.

It's very detailed.

Um kind of surprised we have any four public hearings, but that's engagement, I guess.

Um, really appreciate the efforts to get us to the 7.8 percent.

Um, you know, I know myself and my colleagues would like to see that even lower.

Uh and I'm sure many of our constituents will as well, and hopefully we'll be working towards that.

So thank you.

Yeah, thank you.

Um councilmember, just to address your brief question about the Minneapolis Institute of Arts and the allocation of a the a levy um that they receive.

Um this came up earlier this year while we were working through a land use issue, so I happen to know the answer to your question.

It is um I I think it's actually like in the 30 million range.

Um, and that is an award they receive through the county.

Um, and so that's how that transfer happens.

It it it or the county gives it to the park board, the park board gives that money to the Minneapolis Institute of Art.

Um, 398 does I mean like anyone?

Well, the count the city contributes to the county, but it's not a direct city allocation, you're saying it's a county directly allocation.

Yeah.

All right, thank you.

Vice Chair Koske.

Thank you, Madam Chair.

Uh thank you so much, Director, for the presentation and to your team.

I know that a significant amount of work went into this, and I see many of you are here, so uh really appreciate it.

I just want to commend you on the additional changes that you've made to the budget book.

Just more thorough information, easier to read, easier for the public to understand.

So just grateful for that.

Excited to have you in Ward 11 to come and talk to Ward 11 residents.

I had just a couple questions.

One actually, Council President Payne already touched on, and you went in further detail just about how you went from the you know how we how we moved the shift from the projected levy.

So I appreciate that.

I do have a question about the projected levies into the future.

Um I know I see that, for example, in 2027, the levy projection is 5.6%, which is 2.2% decrease from the 2026 recommended levy.

Last year's the out year levy projection was 1.7% higher than the recommended levy.

This is gonna get a little wordy here, so bear with me and I'm happy to just send us in a memo too.

Um and then post adoption, the out year projection increased an additional 1% when we got to the 10.8.

And then the few years before that, um I noticed that the out year levy projection was only one or 0.1% lower than the recommended adopted levy.

Um so the shift between 2026 recommended levy and the 2027 levy projection seems atypical, as rather being an increase or a moderate decrease, it's more of a significant decrease.

Is this this year the levy was reduced as you talked about targeted cuts and the use of savings?

Can you just talk about how we get to the projected um the projections in the years out?

You know, is are we looking at further cuts or use of one-time savings?

Um, you know, what data and factors are driving this reduction of 2.2% for 2027 specifically.

Through the chair.

Um, Vice Chair Koske.

Um, moving from 2026 into 2027, I think what you'll see if you look at the percent changes for the individual rows.

The biggest change is within the permanent improvement levy.

So those technology projects, because we pushed a lot of them out, there's a little bit of congestion in the 2027 year.

And so that is that was one of the sort of shifting factors.

Um, we do not have uses of fund balance programmed in the out years.

Um, and that is so that we're not you know artificially relying on savings when we should be planning to increase taxes or cut spending instead.

Um, so there are no uses of fund balance in here beyond uh what was adopted in 2025 and then what we've recommended here for 2026.

Um there is always a little bit of flux um in the out years, but we plan for standard increases to our personnel.

Um we plan for an inflationary amount for internal service charges.

And the idea here is just so that we're not getting caught flat footed.

We know that those costs will increase.

Um we have to refine annually once we know more of what that actual increase is.

Okay, thank you so much.

I appreciate it.

All right, thank you.

I'm not seeing anyone else in queue.

Thank you for this presentation.

I will ask the clerk to receive and file this report.

Um, before we move on to our final item, I want to take the opportunity to review for both the public and for my colleagues uh the anticipated timeline in which we will work to complete the city's 2026 budget.

Over the next two months, this body will be receiving presentations diving into the details of each department's proposed budget.

We began that process today with the presentation of the overview of the 2026 recommended budget.

Departmental presentations will continue throughout the months of September and October.

Council members will have already received invites for all of these meetings, and these meetings have been noticed for the public on the city's legislative information management system at LIMS.minneapolismn.gov.

Additionally, this committee has scheduled three public hearings on the proposed budget.

Those will be held on Friday, September 19th, so that's next Friday at 10 a.m.

in these chambers.

After that, we have hearings slated for Monday, October 6th at one thirty p.m.

And Wednesday, November nineteenth at six.

Oh five PM.

Following this, council members will have the opportunity to submit proposed amendments by Thursday, November twentieth at five p.m.

for the body to then consider in early December.

Finally, I'll note that we will begin to consider amendments to the recommended budget at our meetings on Friday, December fifth.

And if needed, we will continue that work on December eighth and ninth.

These revisions will be forwarded to the City Council for final consideration at a fourth public hearing to be held at a meeting of the City Council that's scheduled for Tuesday, December ninth at six oh five p.m.

We also anticipate that the city council will adopt the budget at that evening at that meeting.

As I mentioned, the entire schedule is published on the calendar that is posted in LIMS at Limbs.minneapolis Mn.gov.

With that, we will move to item number four, which is a presentation on the biannual personnel report.

For this, I will invite Director of HR operations, Deb Kruger, to join us and begin that presentation.

We are having a little bit of technical difficulties.

Give us one moment here, please.

Take your time.

Good afternoon, Chair Showtai, members of the budget committee.

I am Deb Kruger, the Director of Operations and Human Resources.

My sincere apologies for the my flash drive is corrupted, so let's see if I can get it to work here.

It comes in.

Yeah, you're welcome.

A little bit about the biannual personnel report.

The biannual personnel report was requested through a legislative directive for comprehensive personnel data to support the budget committee's annual work plan for the years 2024 and 2025.

This report was has been prepared by the human resources department in partnership and collaboration with the finance department's budget office as well as city department leadership.

And the full report provides a summary of approved FTE's full-time equivalent positions in the 2025 budget, the status of those positions, whether they're vacant or filled, the personnel budget and expenses year to date, departmental cost savings initiatives, and personnel administrative actions.

Today's presentation as well as the full report has the workforce data in the FTE count in there as well as the status of those positions vacant or filled, is with data out of our comet HR system as of August 12th.

So it's it's you know a couple of weeks older, so it's not current as of today.

Again, I'll be providing a high-level overview of the more comprehensive data and information that it has been provided in the biannual personnel report PDF document that is available in LIMS.

The workforce summary will detail the number of 2025 council approved FTEs in each department, and for the city enterprise oral.

One point of clarification I want to um I'd like to point out on this, particularly this slide's data.

Um we talk about um approved FTEs, really, that is it it's going to um mirror how the budget office represents FTE counts, approved FTE counts in the budget book, which is inclusive of regular, sometimes called permanent, you know, and seasonal positions.

Um te counts will not include capital-funded temporary um positions or temporary hires or short-term grant-funded FTEs in the approved workforce count.

We will talk a little bit about those in further and further slides, though.

So you get a more accurate sort of overall headcount perspective.

I'm sorry, the 4,272.61 FTEs as approved by council for 2025, which is also reflected in the 2025 budget book in Schedule 5 of the budget book.

There are an additional 250 FTEs that were active as of August 12th that are funded.

Um, including some various FTE allocations and temporary employees, which we'll discuss more in depth in the next two slides.

And there is a breakdown of FTEs per individual city department on pages one and two of the full biannual personnel PDF report.

Positions that are filled.

So of that official 2025 FTE count of basically about 44,273 FTEs, 91.6% of those positions are filled, which equates to right around 3,914 positions are filled.

Eight city departments are fully staffed or were as of August 12th.

The number of filled positions has increased by 1.6 percent since April when the last biannual personnel report was presented.

And so one of those categories are these filled positions.

One of those reasons is for instance 28 FTEs are funded through new or very short-term limited duration grants or projects that weren't either aren't included in the budget book per the budget office's reporting, or they are new grants received after the 2025 budget adoption.

There are 60 FTEs who are active at the city again as of August 12th, who are trainees, apprentices, or individuals in a pathways program for hard-to-filled positions, primarily in public works with the service worker trainees and the auto mechanic trainees, as well as in the police department through their pathways program hires, such as the community service officers and police cadets who, upon graduation from those pathways programs become full full-fledged police officers.

The funding from for those, again, funded but not approved through the official budget book comes from the vacancy savings from those full budget approved post-training positions.

So their individuals are hired at a trainee level, a lower level, once they complete their training, then they move into that fully budgeted position.

And in addition, there are 33 approved administrative ad FTEs year to date.

The funding for those additional FTEs primarily is coming either from a capital capital funding, capital funds, or from a department's existing non-personnel budget.

The full list of the administrative ads are in the biannual personnel report.

We're also going to cover it a little bit more in depth in a few slides.

So in addition to those 122 sort of funded but unallocated FTEs, there are an additional hundred and 200 FTEs that are temporary employees that were active again as of August 12th.

Total at the city as of August 12th, temporary employees that were just a little over 491 temporary employees.

So that is inclusive of a large election judge contingent, very intermittent, a few days a year.

They keep them on the books for the year in case there are multiple election cycles throughout the year.

Almost 41 interns.

Generally, most of those are summer internships that just hadn't quite reached their end time when this report was recruited was created.

There are just shy of 24 temporary employees, also sometimes called permit employees.

So they're hired on a short-term basis to either backfill a vacant position until that position can be hired again on a permanent basis or on a special project that isn't associated with a budgeted funded position.

There are 40 to just a little over 42 outside trade FTEs.

These are skilled trades individuals who are hired from a union hall for a duration of time, typically construction or or capital project related.

And then just shy of 21 FTEs who are considered seasonal hires.

Those includes the supplemental elections staff that helps support and bolster the elections staff in the city clerk in the Office of City Clerk during times of upcoming elections, as well as summer environmental health technicians.

There are 10 city employers 10 city departments that had temporary employees active on their staff as of August 12th.

And that is inclusive, about 15 fewer temp employees for this report as compared to April.

Again, employment ranging anywhere from a few days, like with election judges to up to a year.

60% of our C of our temporary employees are employees of a seasonal nature.

Excuse me.

They are working on construction projects, capital improvement projects, summer internships, and then of course the elections support staff that supplement the permanent staff.

Vacant positions.

Again, as of August 12th, 8.4% of the council approved FTEs or vacant equates to about 358 positions or FTEs.

That is down from 10% vacancy rate in April.

Roughly 50 less positions vacant.

Departments with the highest vacancy rates, the police department.

Again, as of August 12th, they had 126 vacancies, which is about 13% of their overall workforce total.

That's down from a 16% vacancy rate in April.

Public works, 97 and a half vacant positions, comprises about 9.5% of their total workforce number.

And pretty stagnant from a filled vacancy perspective.

Public works does a lot of promotional hiring internal.

So as soon as you fill one, another one becomes vacant.

So they tend to be a bit of a wash.

And then the convention center, just shy of 37 vacant FTEs, comprising about 22.5% of their overall workforce.

Again, pretty stagnant filled vacant rate.

The convention centers workforce is made up of a large contingency of intermittent sort of on-call staff.

And so they do their hiring and their workforce needs are really based on an event-based system.

Length of vacancies.

On the opposite end of that spectrum, 36.5% of the vacancies have been vacant for a year or more.

And then about 15 and a half percent right in the middle of about seven to twelve months.

Of those positions that have been vacant for a year or more, 81% of those vacancies are either sworn positions in the police department or the seasonally hired positions where there's you know they have planned seasonal hiring, and this just isn't the season for that for that hiring.

I will add a note that uh positions that have been vacant for uh a year or longer.

We know that's those have come under a bit of scrutiny over the past year.

Those vacancies that are in sort of that higher timeline of being vacant has decreased four and a half percent uh since April.

So they are filling those longer, longer term vacant positions.

The hiring status of vacancies.

First, my first bullet I want to point out does have a typo.

Um there are 11 sworn vacant positions.

I can't believe I've looked at this 50 times and haven't seen it says non-sworn.

I will get you an updated copy.

Um there are 11 sworn vacant positions where the recruitment is really on a continuous ongoing basis.

31% of vacancies are in an active hiring or job posting development stage.

Active hiring can be anything from accepting applications to being in the middle of a selection process of interviewing, making a job offer, and there's about a dozen cases where a hire has been made, but the higher date is future dated, it's out up to mid-October.

There are 44% of our vacancies that are have have an upcoming recruitment planned.

Everything from their request to fill is sort of in a vacancy review process, which is a new process that was put into place earlier this year.

It's a planned seasonal hiring, and again, it's a you know, a lot of them will come towards the end of the year or the beginning of 2026.

They are trainee promotions into those post-trainee full job title vacancies.

There are probably two dozen vacancies that have been our recent vacancies in the last couple of weeks.

They're gearing up for those hiring processes to begin, and/or positions that are in the classification process of having a job title established so they can begin the recruitment process.

That leaves about just shy of 25% of our vacancies that are being intentionally held, either due to department reorganization, sometimes large scale, sometimes just within a programmatic area, that may change how they look at their vacant positions.

And then there are a number of the vacancies that are recommended to remove the funding in 2026 budget, so they are being held as vacant.

Personnel administrative actions.

And again, there is more comprehensive information to be found in the full personnel report.

There are lists of each position that has been, for instance, reclassified.

There's been 25 job title changes or new jobs, job titles established year to date.

There have been 34.7 FTEs added administratively through the administrative ad process and the financial policy.

Those positions, like for instance, there are 25 of those positions that are being capital funded in one of two public works divisions, and then a few administratively added positions throughout the city departments where the funding for those positions are coming from permanently in an ongoing way from the department's non-personnel budget.

So again, some administrative transfers of positions across city departments.

It is FTE neutral, so there hasn't been an you know an addition or decrease to FTEs, just moving them around.

But I just wanted to point that out because if you look at the schedule, I'm sorry, the Schedule 5 of the 2025 budget book, and if you look at each department and their FTE count, they might be off a little bit because of these administrative transfers.

Okay.

So we had four FTEs transferred from various city departments to the Office of City Auditor.

And then there have been 10 FTE transfers out of the city auditor's office into the Office of City Clerk.

But again, that's that has been an FTE neutral move.

And then budgetary impacts of these types of administrative actions.

The budget office does report those impacts Q2 annually.

So that has been probably initiatives city departments undertaking.

Again, a full list by department.

Some departments have multiple cost savings initiatives that they reported out on.

But the majority of the initiatives are centered around workforce optimization, thinking about how they can reduce their personnel costs by consolidating work functions, then being able to free up some vacancies to reduce personnel.

Resource sharing either within a department or cross-departmentally.

It has also centered around technology adoption, a lot of you know reducing paper-based processes going to a more online automated process that isn't as expensive.

Reducing physical phones, office spaces with virtual or soft phones that include cell phones and sort of the the monthly charges and the maintenance costs for those.

And then retiring a number of departments are retiring some outdated systems in either utilizing enterprise-wide new technologies that have come up.

So again, we're being we're able to save money by having less of these outdated systems, and then also through process improvements, things like optimization of fleet cars.

I mean, our fleet management is a very expensive budgetary item, as well as uh rethinking um city credit card fees and streamlighting per permitted processes, from a personnel budget perspective, the current 2025 personnel budget is $625 million dollars, of which $380 million has been spent year to date, which equals about 39% of the personnel budget remaining for fiscal year 2025, where there's 36% remaining to the year.

So we are running about 3% under budget from a personnel perspective outside of overtime costs, um overtime expenses are a separate category, and there was 11.5 million budgeted or overtime, known overtime expenses in 2025, and I am missing a great big million on this on the second uh bullet point.

My apologies, 26 million has been spent year to date.

Um those have the a lot of a lot of the gap between the budgeted versus spent has been in the public safety departments where they have had larger expenditures than than budgeted.

Um with that, that concludes.

I'm I'm happy to stand for questions.

Wonderful.

Thank you for that presentation.

Colleagues, are there any questions for Director Kruger?

I'll first recognize Council President Payne.

Uh thank you, Vice President Chucktai.

On the slide about um administrative uh actions, could you just give me more context on these administratively added FTEs, especially when sourcing from non-personnel budget, that part is not clear to me.

Yeah, so there off the top of my head.

If I'm remembering the actual personnel report itself, there were eight actually, I think I have it here.

One moment, please.

There were eight administrative ads.

Some of them came about through um, my apologies.

I'm not um through the budget earlier this year, during the the budget to workforce um reconciliation process we always do with departments in March, and there were through some reorganization.

Some of the some two departments um had extra staff.

They needed them.

They were like, for instance, the civil rights department.

I know that they were in the in the midst of reorganizing, and they were coming out about 0.4% over budget from a personnel perspective.

So they took four percent of this one position and added it so that they could get the manager of community grants and contracts position.

There were and the the butt yeah, I know these are um I'm just my apologies.

Let me get to the correct screen.

Oh, that is so small.

Because I'm assuming that these are the budget office may also have additional information.

But for instance, um, the legislative department um had uh I'm sorry, the uh Office of city clerk.

They had a program assistant position that was added.

Again, I do believe no legislative clerk and yeah, and the program assistant.

And again, that was part of their reorganization plans and knew that they were going to have some additional support positions needed.

Um so again, they took that out of their non-personnel dollars to establish those positions.

Um the bureau, one of the new one of the two bureau chiefs in the police department.

Um, one was um an administrative transfer from a vacancy, and then the other, the other second position was an administrative ad, again, taking money out of their non-personnel dollars.

So, I'm assuming these don't require council action, correct?

No.

And then I'm also then assuming that um there's an established policy that sets the criteria that permits this that has been approved by council at some point in the past.

Through the chair, um, Council President Payne, yes.

Um budget office.

Uh, Jane can probably explain, but my understanding is it that this criteria in the process is embedded in the financial policy.

Through the chair, um Jane DeSun's a budget director, Council President Payne.

Yes, it's in financial policies.

There's an administrative ad section 1.5.3.

Thank you.

Awesome.

Um, I'm not seeing any further questions.

Thank you so much for for this presentation.

I will direct the clerk to receive and file this report as well.

And with that, colleagues, we've concluded all business to come before the committee today.

Without objection, we stand adjourned until our next meeting, which will take place on Monday, September 15th at 10 a.m.

where we will continue um receiving departmental presentations.

Um on Monday, September 15th at 10 a.m., we will receive presentations prepared by the Minneapolis Emergency Communications Center or 911, along with the police department.

Thank you, everyone, yes, yes.