Minneapolis Budget Committee Reviews 2027 Budgets and Proposed Engagement Reorganization, 2026-10-20

The Minneapolis Budget Committee met Tuesday, Oct. 20, 2026, with Chair Aisha Chugtai presiding, to review the mayor's recommended 2027 budget for four departments: Intergovernmental Relations, Neighborhood and Community Relations, the 311 Service Center, and Racial Equity Inclusion and Belonging. Eight members were present, establishing a quorum. No formal votes were taken; presentations were filed and several administrative follow-ups were requested. City operations staff also used the meeting to introduce a revised plan to consolidate communications, engagement, 311, and racial equity work into a new engagement department.

Proposed Reorganization and Community Engagement Consolidation

• City Operations Officer Margaret Anderson Kelleher presented a revised organizational proposal following the mayor's August budget recommendation. The revised plan would create a new engagement department combining Communications, Neighborhood and Community Relations (NCR), the 311 Service Center, and functions of Racial Equity Inclusion and Belonging (REIB), while moving Performance Management and Innovation under the Office of Public Service. REIB would no longer move to Human Resources, as originally proposed.
• Kelleher said the goal is to elevate engagement, reduce duplicative overhead, bring work in-house, and build a center of excellence; savings would come partly from not having four department heads. She said the combined department would have roughly 85 employees and cited peer cities including Philadelphia, Edmonton, Durham, Charlotte, Calgary, Raleigh, and Seattle.
• Councilmember Vita objected to the timing and clarity of the plan, saying the chart felt messier, that departments were being moved down to the wire, and that she wanted a briefing on prior analysis and specific cost savings.
• Councilmember Palmasano expressed support for the concept of a larger community engagement department and a centralized communication strategy, and asked about REIB's future structure.
• Councilmember Chavez said she did not support the proposal, warning it could dilute NCR's mission after Operation Metro Surge and hurt the communities that rely on the department's services. She asked for the report and analysis behind the plan and suggested the problem could be addressed without a merger.
• Councilmember Chowdhury criticized eleventh-hour decision-making, raised employee morale concerns, noting employees had learned of possible job losses through a Star Tribune headline, and asked for combined contracting dollars and total employee counts. She said she did not want to set a precedent of consolidations three weeks before budget markup.
• Vice Chair Schaefer summarized the main revisions as moving REIB from HR into the new engagement area and combining 311 with Communications and NCR. She said condensing management roles and standardizing engagement could be positive.
• Councilmember Stevenson said she was concerned 311 would become a promotion tool rather than a service-resolution line. Kelleher replied that 311 would not become promotional and that information sharing already happens through scripts and engagement.
• Council President Payne said he supported removing old silos, but regretted the mayor did not collaborate with the council before the budget announcement. Kelleher acknowledged the budget process was hard and said she was willing to lead change.

Intergovernmental Relations (IGR)

• Interim Director Steve Huser presented the mayor's recommended 2027 budget for IGR, a six-FTE department with a proposed budget of approximately $1.5 million. The proposal reduces IGR from six to five FTEs, with a net budget decrease of $44,000, personnel savings of $114,000, and a $12,000 increase for membership dues.
• Huser said about 75% of the recommended budget is personnel, with contract services at approximately 20% and operating costs at approximately 12%. Professional services for lobbying firms are proposed at $2,300, and citywide membership dues are proposed at $16,600 for organizations including the League of Minnesota Cities, National League of Cities, and Metro Cities.
• In response to questions, Huser said losing one FTE would be manageable through remaining staff and contract lobbyists. He said the mayor's proposal cuts an FTE, not contract services. He described the federal contract lobbyist as important because the city has no Washington, D.C.-based IGR staff, and said two state lobbying contracts add capacity and bipartisan relationships.
• Councilmember Chowdhury noted the FTE added about two years ago came from the Department of Health and was a sustainability coordinator focused on climate and Public Utilities Commission work. She argued IGR demands are growing, especially around LGA and revenue, and said she was wary of cutting a lean department that should grow.

Neighborhood and Community Relations (NCR)

• Deputy COO Katie Topinka presented NCR; Director Karen Moe answered questions. NCR has 23.5 FTEs, a 2026 adopted budget of $12.7 million, and a recommended 2027 budget of $8.2 million.
• Topinka noted a technical correction: some special revenues and expenses were unintentionally omitted from the mayor's recommended budget, with no general fund or property tax levy impact; the correction will be submitted as a technical amendment in December.
• NCR supports neighborhood organizations, language access, the Office of Immigrant Refugee Affairs (OIRA), and the Office of Two Spirit LGBTQIA+. The organizational chart correction says OIRA has three FTEs, not two.
• The mayor's recommended budget includes a new web accessibility (WCAG) position, but Topinka proposed using existing positions and $190,000 in contracted services instead. The mayor recommends divesting $500,000 from the Partnership Engagement Fund; base neighborhood organization funding remains $3.8 million. Six FTE reductions totaling $815,000 are proposed, but Topinka said the actual NCR reductions may be lower because vacancies and the merger are being reviewed holistically.
• Councilmember Chavez asked about the history of the Partnership Engagement Fund; Director Moe explained it grew out of the Neighborhoods 2020 process and supports hyperlocal projects chosen through an annual RFP. Chavez listed funded examples including Spanish-language driver's license education, environmental justice education, Lake Street business support, Hmong language outreach, youth programs, and immigrant rights education, and said eliminating the fund would have a devastating impact; she urged restoring it.
• Vice Chair Schaefer asked for historical data; Moe distinguished the Partnership Engagement Fund from formula-based neighborhood funds. Moe also said the 2026 allocation of $500,000 was used to honor 2025 contracts and no new RFP was run; unspent funds returned to the general fund. Historical data will be provided.
• Councilmember Warren raised questions about unused NRP funds; Moe clarified that NRP funds are pre-allocated, subject to oversight and approval processes, and can be reallocated through proper steps. Follow-up was promised.
• Councilmember Warren also said he was wary of promised merger efficiencies, citing last year's communications consolidation, and requested detailed financials for the proposed reorganization.
• Councilmember Chowdhury asked why the Partnership Engagement Fund was selected for elimination; Topinka said it was the mayor's budget decision. Chowdhury requested administrative follow-up asking the mayor's office for the rationale and voiced concern about repeated cuts to programs supporting underrepresented communities.

311 Service Center

• 311 Director Mwendon Zembi presented the department's recommended 2027 budget. The 311 Service Center has 43 FTEs, and the recommended budget is $7.8 million, up from $7.1 million in 2026, an increase of about $667,000 or 9%.
• In 2025, the in-person service center, with five FTEs, served approximately 19,000 residents in about 25,000 transactions. The call center, with 27 FTEs, handled roughly 412,000 interactions: 247,000 agent-assisted calls, 101,000 completed through the interactive voice response system without an agent, about 32,000 emails, and about 32,000 online submissions.
• IVR was introduced in late 2023 after turnover had reached about 50%; about 29% of calls are now handled without an agent, and attrition is currently about 7%.
• The 2027 budget adds two positions for the South Minneapolis Community Safety Center and eliminates two positions, a net divestment of about $40,000. Salaries and fringe rise 6%; contractual services rise 16%, driven by internal service charges and the new Safety Center footprint. The call center will go from 27 to 25 agents, with possible longer waits or disconnects.
• The new 311 system, Mars, had Phase A go live on Oct. 13, 2026. Phase B is scheduled to begin in January 2027 with rollout in the fourth quarter of 2027. The director said technology improvements do not automatically reduce staffing needs.
• As of Sept. 30, there were five vacancies; two of those vacant positions are proposed for elimination. About 17% of the remaining call center staff are on PFML leave. Overtime was about $9,000 in 2026 and $5,000 through Aug. 31, 2026; supervisors are covering calls, which the director described as not sustainable.
• Discretionary contracts include IVR service budgeted at $80,000, compared with average annual expenditure of $60,000 to $65,000, and translation services budgeted at $100,000.
• Councilmember Palmasano congratulated the director on the Phase A launch. Councilmember Chowdhury thanked 311 staff for being a critical access point, including during the ICE occupation. Chair Chugtai said 311 is like 911 for non-emergency services and should not be merged into community engagement.

Racial Equity Inclusion and Belonging (REIB)

• Deputy COO Topinka presented REIB; Director Corbett was absent, and Equity and Inclusion Manager Isadora Collins was present. REIB has 5 FTEs, a 2026 adopted budget of $1.1 million, and a recommended 2027 budget of $677,000. The mayor recommends reducing REIB from 5 to 2 FTEs; salary and wages fall 47%, fringe 62%, and contractual services 20%, with a small increase in operating costs.
• REIB's work includes racial equity consultation and technical assistance, training, support for departmental equity teams, and facilitated processes to address racial harm. Topinka said the racial equity ordinance also includes external-facing responsibilities such as community engagement guidelines, data analysis, and community advisory boards, which supports moving REIB into an engagement department.
• Topinka said the Government Alliance on Race and Equity (GARE) membership will continue and that REIB's 2026-2030 strategic plan will need to be revisited because of the budget and possible reorganization.
• Councilmember Chowdhury asked which two positions would remain; Topinka said analysis was still being finalized and staff would be informed before the council. Chowdhury said it was sad to see racial equity work atrophied and expected further discussion in committee of the whole.
• Councilmember Vita requested a staff memo on the cost and timeline of REIB's strategic planning, noting the city invested in a plan and then proposed cutting more than half the department.
• Vice Chair Schaefer asked about contractual services; Topinka noted a 20% cut in contractual services from the 2026 adopted budget to the 2027 recommendation.
• Topinka said FTE reduction details would be provided at briefings the next day, after staff had been notified.

Key Outcomes

• All four presentations were filed with the clerk; no motion or vote was taken.
• Administrative follow-ups were requested on: combined contract and spending data for NCR, 311, and REIB; historical Partnership Engagement Fund data; the mayor's office rationale for selecting the Partnership Engagement Fund for elimination; the REIB strategic plan document, cost, and timeline; and final NCR and REIB FTE reduction numbers.
• The committee is scheduled to reconvene Thursday, Oct. 22, 2026, for budget presentations from Finance and Property Services and Communications.