We will call the order of the Budget and Audit Committee for December 9th, 2025.

Welcome to those of you who have joined us.

And let's start with calling the roll to establish a quorum.

Thank you, Vice Mayor Talamantes.

Council Member Maple.

Council Member Garraway absent.

And Chair Dickinson.

Here.

We have a quorum.

We have a quorum.

And Council Member Maple, if you'd lead us in the acknowledgement and the pledge.

Please join us.

Please stand if you are able.

Please rise for the opening acknowledgments in honor of Sacramento's indigenous people and tribal lands.

To the original people of this land, the Nisanan people, the Southern Maidu,

Valley and Plains Miwok, Pato Nintun peoples, and the people of the Volta and Ranteria,

Sacramento's only federally recognized tribe.

May we acknowledge and honor the Native people who came before us

and still walk beside us today on these ancestral lands

by choosing to gather today in the active practice of acknowledgement

and appreciation for Sacramento's Indigenous peoples' history, contributions, and lives.

Remain standing, salute, and pledge.

I pledge allegiance to the flag of the United States of America

and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all.

Okay. Thank you all for joining us this morning. We're happy to have you here.

If you wish to address the committee on any item on our agenda, you can do that by filling out a speaker form

and giving that to the clerk down in front of the dais, and then we'll make sure to call you at the appropriate time.

we allot two minutes for public testimony.

So as you're thinking about what you want to say,

remember that you've got to keep it within that two-minute limit.

And if there's not objection, let's take the consent calendar

and then we'll move on to the other items.

Chair, I have one speaker for the consent calendar,

Lambert on item two.

Okay.

Mr. Davis.

I had no idea meeting was today, but my family, as we were heading out of town, asked me to stop in.

I don't know why they don't come up here, but I do.

It says the city auditor.

I'm a very huge fan of the last auditor and the one that's here now.

They're doing a good job on what I'm trying to accomplish.

I think they've done a wonderful job.

I hope that they stay alert to the whistleblowing department.

The guy who was here last, he caught a lot of things of people not doing the right thing in terms of whistleblowing.

There was a no written agreement given recently.

and as a business owner, I'd like to get a no written agreement where you can't audit it.

And that's what turned out. The auditor did a wonderful job with that. And it's the lady who's

here now. I think she's going to do a good job, too, but she's got some big shoes to fill

from Jorge. He did a wonderful job. Also, I wanted to give a shout out to Chairman Dickerson

because last week I was out of town and they told me, the millennials,

shout out to the millennials, I know they're listening.

The millennials told me that you brought up Real Linda Boulevard and South Avenue.

Anybody who is from District 2, well, not District 2, it's over 20 communities.

But anyone from Del Paso Heights knows that that intersection has been there for decades.

It's very dangerous there for children walking across there.

And it was City Councilman Dickerson who made sure that it was included in what the employee was talking about.

They hadn't put it in there.

And so for Mr. Dickerson to insist it, that was outstanding.

Thank you for your comments.

Chair, I have no more speakers on consent.

I'll move consent.

We have a motion and a second on the consent items.

Any further discussion?

If not, all those in favor, signify by saying aye.

Aye.

Any opposed say no.

Any abstentions?

Hearing none.

Motion carries.

Thank you.

With the indulgence of the committee,

I'd like to take the vacancy item next

and then the council member proposal

and come back to the risk management

if that's agreeable to all.

Okay.

So, Pete, why don't we jump into the vacancy analysis?

All right.

Do you guys have the...

Oh, thank you.

All right.

Good morning, Chair, Council members, and members of the public.

I'm Pete Coletto, the Finance Director for the City,

and today we're going to go over an analysis of the City's vacant positions in the General Fund.

Just to start off, to kind of orient everyone, as all of you know,

we are still facing a structural budget deficit.

The Council has made progress each of the last two years,

adopting a number of ongoing balancing strategies

to help make progress on our structural budget deficit,

but we haven't solved it yet.

So as of the approved budget,

we're projecting around a $60 million deficit,

and we're going to update that in February.

We'll hopefully know what HAP funding

and the outcome of labor negotiations and our revenues

and all of these things and have an updated forecast.

So the chart below is a summary of the total vacancies

and then less vacancies that fall into certain categories.

So we have some vacant positions that fund another position that is filled,

and this might happen when we're recruiting and we have someone in an out-of-class position,

or there are a number of kind of scenarios where we'll use what we call a non-budgeted position using funding from a vacancy.

We also have positions that are reimbursable, so maybe by grant funds or by fees

or by state or federal revenues.

And if we were to eliminate those positions,

then that revenue goes with it.

And so we wouldn't really see a net savings.

We have a number of positions that are revenue generating.

So, you know, for example, parking enforcement officers,

and, you know, they'll bring in more revenue typically

than what they would cost.

And so, you know, those wouldn't be positions

that we would necessarily recommend eliminating

to solve a budget deficit

because you're just cutting off that revenue side as well.

There are a number of seasonal temp employees.

These are mostly in YPSI, so lifeguards, things like that.

And then there are positions that are in recruitment.

And so when we deduct all of those,

we have 138.5 full-time equivalent vacancies left.

The other thing I'll just stress is this is a point in time.

So this is as of November 3rd, 2025.

you know, we'll be running vacancies kind of as we go through this budget process,

and those numbers will change as people leave or get hired or things like that.

The other thing that I would say is that just because something's a net remaining vacancy,

it doesn't necessarily mean that there's no service impact for removing it.

So, for example, there are a number of those positions are vacant police officers,

And the police department right now is using that savings from those vacant positions to fund overtime to provide services.

And, you know, this is really kind of what you've all seen over the last few years, just the struggle to actually get police officers, recruit police officers.

so those net vacant positions we wanted to kind of show how it fell by department as well as the

the cost of those vacancies so you can kind of see how that that lines out you know there are

some of the departments that you don't see here it doesn't mean they don't have vacant positions

they're just in those other categories and you know we did get a question from from the chair

around can we show a breakout by position

of those other categories, and we definitely can.

We have all that backup information,

and I believe last year we also provided the date vacancy,

or the number of days vacant.

So we can provide all that information,

and we will put that in an SBI.

And thank you, Chair, for letting me know

that that additional information would be helpful.

So we're, you know, in the midst of our budget process now.

I just wanted to give you an update of where we are.

So currently we have our surveys.

It's still open.

So we encourage people to take that.

The departments are working on their reduction plans and are going to submit them to the city manager's office in the near future.

So we'll have all of those.

And again, a reminder, we asked everyone to produce plans to reduce 15% of their net general fund usage.

And this is to give council that menu of options.

It'll give us more options than our deficit.

In January, as you remember last year, we had a new state requirement for a public hearing on vacancies.

There was a request during the budget process to move this hearing up closer to the beginning of the process versus the very end of the process.

And so the Human Resources Department will be bringing that to council in January.

In February, we'll be giving our mid-year financial update as well as finalizing our gap.

So that will be our target that we need to hit.

in March, departments will present,

and again, these are going to be very focused

on the budget.

So these are going to be departments

articulating their reduction options

and what impact those would have on the community

versus here's all the things that we do.

You've already seen that two years in a row.

So that'll be coming in March.

April, we'll release,

the city manager will release the proposed budget.

In May, you'll have your budget hearings.

you'll hear the capital improvement program,

fees and charges, the equity analysis,

and then in June we'll have more hearings

and ultimately budget adoption.

And with that, I'm happy to answer any questions.

Thanks for the presentation questions.

I appreciate you anticipating

what I was gonna ask you anyway

and had mentioned beforehand

that I think the additional detail would be helpful.

And as I understand,

you'll just send that to us?

Correct, so we'll include that

as a supplemental budget information item,

and so we will send it to you,

and then we will also publish it

with all our future budget staff reports,

so it'll be available to the public as well.

And I think if,

we went through some iterations of this

with the last budget,

and so I think just looking at the cumulative elements

that we included in this vacancy analysis

for the 25-26 budget, Pete,

would then give us the information

that I think is most useful.

Definitely, sir.

So we appreciate you giving us a heads up

on where in the aggregate the vacancies are at this point.

And is it fair to say that with this hearing,

we're satisfying the legislative requirement,

or do we need to do this again in January?

We need to do this in front of full council,

and it needs to be a public hearing.

So HR will bring that.

They're going to use this same data set

so that it's consistent.

Okay, great.

Do we have anyone who wishes to address

the committee on this?

I do have one speaker, Lambert.

Okay.

As a native of Sacramento, I wanted to put this on the record,

that as a person who has studied this city,

I personally believe that there are people organized to intentionally take this city into the red.

And what do I mean by that?

Here's a general fund, but there's no mention of Measure U.

Measure U money is inside the general fund.

So we're organizing to find out where is the money going, whether it's a general fund, Measure U, and combine.

Why? Because I'm a big proponent of people working remotely at City Hall, and there's a lot of people working remotely, should not get a raise. Why should they get a raise? They're at home.

and I'm a big fan of Minty Cuppy receiving a raise and a hiatus with pay because she was inside the

chamber during the pandemic. How many people at City Hall can say that? And the reason I saw it

is because I was calling in because we couldn't come in the chamber and I used to see her sitting

in here and it was another lady too. I can't remember if it was one of these ladies here,

But that's tremendous integrity to me.

You know, I don't think people should get a raise.

Who wouldn't want to work at home and get a raise and you don't come to work?

Even if you're working at home, you don't have to leave the house to take your children to school.

They did a study on 60 Minutes where they showed women going to school, taking their children to school that work remotely and they were dressed in pajamas.

and so were the men.

That's abuse of COVID

and it should be stopped

and that will save you millions of dollars

on the bottom line.

Thank you for your comments.

Vice Mayor Telemontes.

Just a question for our city manager.

I know that you were working with HR

to redo the system of how we do the vacancies

because I know it was like 122 days, 90 days

and that was of concern to the council last time.

Are you still working on that?

No, we've worked with our departments to make sure that they are accurately reflecting each vacancy and how long it's been vacant.

So when the finance team provides you that more detailed report, all of that data should be current.

Okay, perfect. Thank you.

It just actually makes me think of one other question for either Pete or the interim city manager.

what are what if anything is the advice to departments about their about their their

vacancies is it just no device at this point carry on business as usual is that you've got

positions that have been vacant for quite some time you might want to take a look at those and

I'm just curious if you're there's any advice yeah so I think there's kind of two things so one is I

think as you all know for the last two years we've had what I would call us a soft hiring freeze

so you need to go up the chain to get permission to go and recruit and really demonstrate that this is a critical position that we need to get.

Our general guidance to the departments is your reduction plans should minimize the service impact on the community.

So there might be a vacancy, and it's a key vacancy to get filled, and we'd rather you fill that and deliver the service.

but if you have vacancies in an area where you're looking to potentially reduce or it's going to be one of the more minimal impacts on the services you provide to the community,

that's an area you should be looking to include on your reduction plan.

And I'll just say personally, I'm a department head as well. I have a 15% target.

I have a couple of vacancies on there

and we met internally around,

hey, do we really need to fill these?

Can we live without them?

And so you'll be seeing those two vacancies

on my reduction plan.

So it just naturally comes up as part of the process

in effect.

Okay, thank you.

If we don't have any other questions

or comments from committee members,

this is not an item that requires action

by the committee.

So thank you for the presentation.

We can move on to item five,

which is a council member proposal request for committee's consideration.

And maybe I'll just say a few introductory words,

and then I know we have some folks here who would like to address the committee as well.

This is a proposal to study whether to establish

an enhanced infrastructure financing district for North Sacramento.

And I want to thank the economic development staff

and economic planning systems as a consultant

that have already done work

looking at some alternatives

and some possibilities in this regard

for those who aren't familiar

with what an enhanced infrastructure financing district is,

although the council has become increasingly familiar

with this approach,

it allows the fencing off, if you will,

of the growth in property tax in a designated area

in order to devote that property tax revenue

to investment in infrastructure in that area

or approximate to it.

And that infrastructure can cover a very wide range

of items from things like streets,

curbs, gutters, sidewalks,

infrastructure like water lines and utility lines,

parks, lighting, all of those kinds of elements.

And I think for a lot of us who see North Sacramento

as an area that has not gotten the kind of attention

or resources that it needs and deserves over the years,

this is a mechanism by which many of us hope

we can focus some of those resources

to make investments that will help us

with economic investment and development

as well as quality of life in that part of the city.

And what's good for that part of the city

is good for the city as a whole.

If we can stimulate economic development

in any part of the city, it benefits the entire city.

So I think the potential is enormous.

In North Sacramento, we have a terrific upside opportunity there.

And I would just add that work EPS has done in looking at an alternative that would focus on the commercial areas of District 2 has been estimated to generate roughly between $250 and $350 million, potentially in 2025 dollars, over 50 years for investment.

so it's not inconsequential obviously by any stretch.

The other thing I just would underline at this point

is this is the start of a process.

This is not a decision or a recommendation

to establish a district.

The state legislation requires a lengthy

and detailed process to ultimately establish an EIFD

and so we're at the starting line.

We're hopefully going to send this on for the full council consideration to begin that process.

And that process could take as long as a year.

So it's not something that happens quickly either.

It will include a further analysis of what the revenues could be, that would be generated,

what the service costs would be, what the money might be spent on,

an expenditure plan that would be developed as part of this process.

So there are a lot of steps to be taken and a great deal of opportunity for community engagement involvement in the process along the way as well.

So with those opening comments, if there aren't questions or comments from colleagues at this point, why don't we take public comment?

Thank you, Chair.

I have seven speakers.

The first is Mary Tappel, following Mary is Lambert, Rama Sharma, Greg Jefferson, Christine Jefferson, Rob Kurth, and then Rashaun Davis.

Hello, members of the auditing committee and whatever the full title is.

Sorry, I didn't get it there.

But I want to speak about the Sacramento Northern Bike Trail.

It needs continuous repair from what has happened when the encampments were allowed, and then some of them keep coming back, notably to the gazebo at the corner of Globe and Traction.

And so there needs to be continuous repairs done as infrastructure improvements so that movement of encampments back cannot be allowed to stay to do additional damage.

basically as long as they're in continuous repair

I feel the city staff is going to pay more attention to not

having that recent investment wasted by being allowed to

be torn apart again by occupation people

who want to change those public resources to support

illegal camping in particularly the gazebo structures

along the bikeway. Thank you very much. Thank you. Lambert

Following Lambert is Rama.

Okay, District 2, which I'm very familiar with.

My parents moved here in 1946.

So 1946, and they have been paying property.

They bought a house.

They've been paying property tax in Del Paso Heights since 1946.

And once I finished working and semi-retired back home in Sacramento,

I noticed that a lot of people in District 2, especially in Del Paso Heights,

they pay a lot of property tax.

But because District 2 is one of the most gerrymandered districts in California,

California. I don't know about the country, but California, it has over 20 communities.

Imagine that. When I was growing up here, it was called Del Paso Heights. When I came back here to

semi-retire, I heard East Del Paso Heights, West Del Paso Heights, Del Paso Heights. It's the reason

they gerrymander it like that, because it weakens the power of the dollar that comes into the

community. And that's intentional. On behalf of my parents, I came to speak on this. They're

talking about North Sacramento, but there's more to District 2 than North Sacramento.

I'd like to see some of this money go to Del Paso Heights. It's been going to other communities

that they're so comfortable now. They are what I learned in college, which is a boondocks

And once you identify a boondoggle, they can't hide.

And there are a lot of boondoggles in District 2.

There's not one in Del Paso Heights.

I can prove it.

So get this money to Del Paso Heights because that's a wonderful community.

Thanks.

Del Paso Heights would be eligible.

Rama, then Greg.

Thank you.

Good morning, everybody.

My name is Raman Sharma. I'm from Strawberry Manors. We have definitely been overlooked.

There's so many things that I think these two minutes, I apologize. I forgot my notes and stuff like that.

I didn't prepare well, but definitely need the structure is just, I mean, my street alone, I don't have a sidewalk.

The ditches. We're kind of divided because there's one part of

Strawberry Renters that has residents and houses and sidewalks and things and where my

side is towards South Avenue and Morrie Avenue and everything, it's just forgotten. It's

where the dumping is. It's where no lights. A lot of places where you go down a few streets,

South Avenue, Morrison, Silver Eagle, there's no lights.

We really need a lot of attention.

And I do believe that we are the forgotten ones.

Still Paso Heights, I understand, has gotten.

And it's great.

It's awesome.

There's a committee.

There's everything.

And Strawberry Manor just has been forgotten.

So definitely yes on everything.

And please, you know, I'll be coming to these, I hope, more.

No, I will be coming to these more.

so be a little squeaky well.

But definitely, please, we do need that funding for strawberry minors.

Thank you.

Thank you for your time.

Greg Jefferson and Christine Jefferson and Rob Kurtz.

Good morning, all.

I'm here to stand in support of the proposed EIFD.

We were at our community association meeting last Saturday,

and this was brought up, and there was a general consistence among the attendees of our community association meeting

that this was something that we would support.

So I'm here to support and to appreciate our councilman, Mr. Dickerson, for bringing this to our association's attention.

I think it's a novel and creative way to deal with the current deficit status of the city in general.

And so we have to think out of the box.

This is an out of the box thing for me.

I never heard of it.

So I am here just to voice my support on behalf of the association and myself.

And to thank Mr. Dickinson for even bringing this to our attention.

Thank you so much.

Thank you.

Christine?

Good morning. I too would like to say that I would hope that you guys take this to the full board city council because like you've heard everybody say Del Paso Heights, Manners, North Sac, all of I mean our whole district is in lack.

and so I like what Greg said

really thinking outside the box

Roger thank you for bringing this

to the city's attention

and I'm hoping that you guys will pass

this we need so much

so much lighting and sidewalks

and all kinds of

stuff and just like Mary

was even talking about the

infrastructure on the

bike trail even that

I mean you go past

I think

Northgate, there's the end of that bike trail.

It's beautiful.

Our bike trail should be beautiful too.

But I just want to say, please consider this motion,

taking it to the full body, and I appreciate you listening to me.

Thank you so much.

Thank you.

Rob Kurth, then Rashawn Davis.

I want to welcome back former District 2 Council Member Rob Kurth.

I offer you all the privileges of the chamber.

Thank you.

That means I only get one minute, I know.

Good morning, and I'm with you today to encourage you to move forward with the proposal that's before you.

We are in the midst of new beginnings in Norsac, and there's a lot of good news almost every week.

I'm excited, which for me is an awful lot.

Now, we all know that there have been many new beginnings in Norsac,

and that together they've resulted in really just so many years of not much.

so the proposal before you will give us momentum to the hopes and the dreams that we have for our community

so please support it with that thank you

thanks very much we should mention that also our SMUD director for North Sacramento

and Rashaan Davis will be our final speaker on this item

hey everyone good to see you

my name is Rashaan Davis I am a community developer in D2

working on a 54-unit project along the Del Paso Boulevard corridor.

And this would be very, very, very helpful to get this catalytic spark happening on the corridor.

So just wanted to show my support.

It's much needed when you're doing development and trying to build projects in D2.

We're going through it firsthand where the infrastructure that's there right now,

we're having to support the cost of it.

And if we could figure out a way to mitigate that, it would help speed things up.

So appreciate you.

Thank you.

Thanks very much.

We'll get to your groundbreaking before May.

Before May.

All right.

That completes our public testimony.

Thank you to all who've spoken and Council Member Maple.

All right.

Thank you, Chair.

And just really want to appreciate you for bringing this forward.

I know that you've been a strong advocate for District 2.

And I remember when I first came on in this role,

I met with the former Council Member

And I started doing tours of the districts because I wanted to make sure, you know, obviously when we vote in these positions, we represent our communities.

But we are all also representatives of the full city of Sacramento.

99% of the votes that we take impact the whole city.

And so I took that very seriously.

And I remember doing my tour of District 2.

And as someone who also represents a very challenged district that has infrastructure needs, that has a lot of challenges and opportunities, I thought to myself, oh, there's going to be some similarities.

and there were, but there also were a lot of differences.

And it was really clear to me that District 2 is the one district in the city

that really needs the most love right now because of so many years of being left behind,

so many years of not being invested in.

And we know, and I'm not saying that there aren't other parts of the city who need that too.

There are, but it was very clear to me the differences.

And so I'm really grateful that you're bringing this forward

because I also am looking forward to the staff being able to look into this

and look at the details

because I know there were some questions.

I have questions too about how it would work

when there's not a catalytic project.

Typically every other EIFD that we have

is tied to something,

whether it be Aggie Square or the rail yards.

And so it will be interesting to find out

what does that look like

if there's not a project like that?

What are the details?

And if it all works out,

which I hope that it does,

is it something that we can apply

to other parts of the city

where there's also a need?

I can think of places in District 3.

I can think of places in District 5.

but I think this is a really good pilot to basically figure that out.

So I'll be looking forward to supporting this moving forward.

And I just also want to say that this is, you know, an imperfect solution,

but it's really what local governments have after redevelopment went away.

It's been really challenging to find the resources that we need to get the infrastructure done

to get these projects moving forward to reinvest back into our communities who need it.

And so looking forward to supporting this to move forward and seeing what it brings forward.

Thank you.

Thank you.

Vice Mayor.

Thank you, Chair. I love my neighbors in Strawberry Manor. I live across the bridge. And literally, once I go across the bridge, I do see the streetlights on Earthgate. I do see my sidewalks. And then you go back across the bridge and you don't see it.

So, like, I love my neighbors in Strawberry Manor, Del Paso Heights, and North Sac, and you will always have a champion in me to help support you and your council member, Dickinson, in whatever it is that we need to do to make sure that D2 is successful and the residents and the community feels heard, invested in.

And this is equity in action.

This is actually putting money where our mouth is because we always talk about District 2 and we talk about, you know, lifting up our forgotten neighborhoods.

And this is exactly what we need to continue doing, not just with this source of funding,

but with other pots of money that the city of Sacramento has.

Well, thank you.

Thank you for the comments and the support.

If there's not anything further, I believe the appropriate motion is to move this on to the council.

I'm happy to second your motion, Chair.

And I will make that motion and happily accept that second.

If there's nothing further, all those in favor signify by saying aye.

Aye.

Opposed, say no.

Any abstentions?

Hearing none, the motion carries, and this will go next to the full council.

And thank you all to those who've been here and to the economic.

Leslie just snuck out, but all the economic development staff for their good work, too.

Okay.

So I think we are back to the risk management.

Yes, we did.

Yes, unanimous.

okay

you want to say something yeah yeah okay so let me just this is item three the risk management

workshop and the interim city manager wants to make some opening two enough can we okay yes

just don't ask just don't ask okay um uh this was at the request of council member gara so i hope

his staff is listening and they go back and watch this i also want to acknowledge that this is

Patrick's Patrick Flaherty our risk manager last meeting he is moving on to different opportunities

and I just want to thank you for the time that I've had and we have had with you as a city and

your professionalism and in bringing this work that supports really so much of what we do for

every department so thank you Patrick. Well thank you very much I appreciate that it's been a pleasure

working for the city it's been a great 20 years so I've enjoyed it. Good morning members of the

of the Budget and Honor Committee.

My name is Pat Flaherty, Risk Manager

for the Risk Management Division of the HR Department.

On March 25th of this year,

we presented the Risk Management Annual Report

to the Committee.

And at that time, you request we come back

with more detailed information on claims

and claim mitigation strategies.

So we're here today to present that information.

And presenting today will be myself and Kevin Bibler

from Alliance Insurance Services.

And Kevin is the broker, Alliance Broker for the City, as well as for PRISM, which is the

broker for, which is provides the excess workers' comp and liability programs for the City.

And we have Natalie Dempsey, our workers' compensation manager.

And we have Sharnil Kumar, who is our EH&S safety manager.

So with that, we'll start with Kevin with a brief overview of the insurance market and

benchmarking.

Thanks, Pat. Good morning, Chair, member of the committee. So we were here several months

ago and I gave an update on the insurance market. And I won't belabor things because

not a whole lot has changed. But the general liability market in particular remains very,

very challenging. The factors that have caused what we call a hard market remain. And those

Those are more and more very, very large losses.

We call them nuclear verdicts.

And nuclear verdicts cause what we call nuclear settlements because entities are afraid to

go to trial and risk tens of millions of dollars in bad verdicts.

This is happening more and more.

Unfortunately it happens here in California more than other states across the country

and it happens to public entities more than private commercial companies.

So that's what's driving things.

In fact, unfortunately, this morning down in San Diego,

the city council is expected to approve a $30 million settlement for a bad shooting case.

Terrible facts, but the dollars are just huge.

And it's cases like that, the tens of millions of dollars that are causing the market to just be very, very challenging.

The workers' compensation market is not nearly as dire as all of that.

It is much more consistent.

but we are seeing factors that are causing pricing to go up.

Medical cost inflation, for one, causes the cost of care to go up,

and so we do see increased pressure on rates,

especially in the general liability market,

but also in the workers' compensation market.

Happy to answer any questions about the general market,

but we also wanted to take a look at some benchmarking data.

So this is how the city's loss performance compares to sort of peer groups.

The city of Sacramento is part of PRISM's General Liability II program for GL.

And so the first thing we did was compare the average cost of your claims and the frequency of your claims against the other cities that are within that program.

There are about 14 or 15 total cities within that program.

The city is the second largest city in the group.

So you would expect that you would have more exposure to losses.

What this is showing is that your frequency of claims,

so the number of claims per million dollars of payroll,

is considerably better than the group.

So at 1.24 claims per million versus 1.72.

But the average cost per claim is higher.

You can see it's almost $25,500 versus almost $22,000.

So having a better luck at avoiding claims,

but the claims that we're having are bigger.

not a whole lot bigger but bigger nonetheless.

Can I just ask you a question, quick question?

Yes, sir.

Is this a standard measure of claims frequency

as opposed to measuring against number of employees

or other indicia?

Yeah, there are different ways to look at it.

Payroll has been a consistent exposure basis

for the GL2 program.

That's what premiums are based on

or at least the starting point

and it's consistently reported.

So we've got 35 years of payroll data, so that's how they look at it.

So this is how PRISM's benchmarking would go about it.

I see. Okay, thanks.

The next set of slides looks at more primary data.

This comes from your actuarial firm, and they're looking at the same things,

but they're looking at 10 similarly sized cities, not just within the GL2 program, but in the state.

and they're looking at claims that are limited to $100,000.

And so it's more predictable, there's more volume.

And here you can see that your average cost of claim

in that subset is actually better

than the 10 cities in the control group

and your frequency is better.

So this bodes well, you're having less claims

and when you have them they're less expensive

than the other 10 cities that we're being compared to here.

Any questions on the general liability benchmarking?

Okay, we'll move on to the workers' compensation.

Here we're first looking at PRISM's high hazard group.

And what we mean by high hazard, these are members that have safety payroll that are at least 40% or more of their total payroll.

So police and fire, which bring with them, of course, more exposure.

And here you can see that your frequency is about average, 1.78 versus 1.76.

So I would say right there with everybody else.

but the average cost per claim is significantly lower.

So you're doing a good job of keeping the cost down when you do have claims

compared to the control group, so that's a very positive thing for the program.

Next set, and that was against PRISM members,

and this, again, is against 10 similarly sized cities,

and the claims are limited to $100,000.

Similar result, you actually have better frequency than the control group

and several thousand dollars less average cost per claim.

So on the workers' comps, yes, sir.

I do have just, are these all California cities?

Yes, these are all California cities.

Okay.

So in summary, before I turn it back over to Patrick, I believe,

whatever you're doing on the workers' compensation side,

what Natalie and her team are doing, are keeping the cost down,

and that's a great thing.

The liability side, we're doing a good job of controlling the number of claims

and can improve on the size of the claims,

and a lot of times, though, that's not really under anyone's control.

So with that, I'm happy to answer any questions, and I appreciate the time.

Councilmember Maple.

Thank you, Chair, and thank you for the presentation.

It's always really helpful.

I know right now one of the big concerns that we hear across –

I'm a representative for the California League of Cities,

and we just recently had our board meeting last week,

and one of the things that I heard from cities all over California

is that, one, we're experiencing budget deficits,

and two, that costs are increasing,

and that includes our insurance costs,

workers' comp, all of it.

And so I guess one of the questions I have is,

I'm sure that we, on a regular basis,

are analyzing and assessing how we can continue

to expect the risk and implement changes

that will keep that risk low,

but are there things that we could be doing

that we're not already doing

to help with some of these changes?

What we're seeing a lot of entities do, especially of your size, is analyze on a regular basis

the amount of exposure that you're retaining, so your self-insured retention.

So on the general liability side, you have a $2 million SIR.

So that means every single loss you have, you pay the first $2 million.

And in that program, you also have a one-time additional $2 million that, again, takes more

exposure and keeps the premium down.

You could look at the cost savings, premium savings of taking that higher and taking more

of that exposure to the city. But on the other hand you have to fund for that. So you have

to look at it in concert with your actuarial estimates for taking on the higher exposure.

On the workers' compensation side it's a $2 million SIR. So again you could take a look

at that. In terms of other ways to mitigate losses, loss control efforts, those type of

things, there's always more and additional things that you can do. But I would say that

that you're doing a good job of looking

at different loss control programs

to help mitigate and reduce losses.

That's helpful, thank you.

Thanks, all right, thank you.

Great, thank you Kevin.

And we did actually do a study of the

amount we retain in the spring,

and I provided a memo on that to you,

and the actuary recommended keeping our numbers

where they are right now.

maybe in a year or two do that again,

see if there's options to change that.

But as of right now, they said basically

you probably better off where you are right now,

that those numbers.

So we're gonna move on to the actuarial report.

And this just came in, numbers as of June 30th, 2025.

And the first one is number of general liability claims.

This is what the actuary thinks at the end of the day,

total number of claims are gonna be for the city.

And you'll see in FY23, there was a little bit of a spike

and that was because we had a big windstorm that year,

and that creates a lot of claims.

So that was the reason for the spike in FY23.

And the next slide is gonna be the dollar amounts.

These are the ultimate cost for general liability claims.

This is the actuaries estimate when all the claims

are paid and settled, you know, five, 10 years down the road,

this is what they think we're gonna end up paying.

And again, a few large claims, as Kevin mentioned,

can cause a big difference, big spike in the numbers.

You'll see we drop down at FY22,

and we're back up kind of where we were in prior years.

FY20, which isn't on this scale,

was actually higher than FY21.

So we're not actually doing that back

considering claim costs keep increasing.

So is it correct that the dollar figures for FY24

and perhaps even more so for FY25

are to a certain extent a reflection

of the higher claims made in FY23?

That could be and again, as Kevin mentioned,

a lot of times it's just the big dollar claims.

Seems like we're just getting more big dollar claims.

The volume of claims isn't really dramatically different.

It's just they're getting more expensive.

And the next slide is the auto liability claim number

and this is a good slide.

we've been harping on auto liability claims

for the past two or three years.

And you'll see a pretty dramatic drop in FY25,

so we're excited about that.

And Sharni will talk more about some of the efforts

we've done to reduce claims,

but that number is a really nice number to see,

big decrease in auto claims.

And the next slide is the cost of auto claims.

And you'll see with the claim numbers going down,

we're also seeing the dollars going down as well.

And the last two years are much lower

over the two prior years.

So again, a good trend for the city

and we were trying to get those numbers down

and the department's doing a great job

of trying to reduce those costs.

And the next slide is workers' compensation claims

and you'll see a big spike in FY22

and that was basically COVID claims

and since COVID is kind of going away,

the numbers are going down

and it's a nice trend there as well

with reduction in claim numbers in recent years.

And then workers' compensation claims costs.

This is an interesting one.

We've been pretty steady for four years.

We are seeing a big jump in FY25.

There were numerous high dollar claims reported in FY25

that are driving this increase,

as well as just increase in medical and benefits costs.

And Natalie will discuss that in more detail

in a few minutes.

Okay, now we're gonna break it down to the department level.

And so these are no longer actuarial numbers.

These are actually numbers from our loss runs.

So recent years like FY25 aren't fully developed.

They'll increase a little bit, but this kind of gives you a comparison between the different

departments.

And you'll see, as expected, police and public works have the highest number of claims.

But both show a pretty good decrease in FY25 from the prior year.

So also a very good trend in general liability claims.

Then the next one is the dollars for those claims.

And here you see a dramatic decrease in claim costs in FY25.

Those numbers will go up as claims develop,

but nonetheless that's a really big decrease.

And again, it's a good sign that FY25

is gonna be a pretty good year for claim costs.

And the next slide is auto liability claims.

Again, dramatic decrease in claims reported.

as of June 30th, 2025, literally half the prior year.

The number will increase a little bit.

People have six months to file a claim in California,

so all the claims have been reported by this time,

but that number is dramatically lower,

so it's gonna be a very good year

for auto liability claims as well.

And then the next slide is the dollar amounts,

and you can see a big reduction in claim costs

in 25 and actually in 24.

So things look good for the auto side and we're happy to see that.

And next slide.

Some of the mitigation strategies we've been working on.

Just to start off with, we're a big city.

We have the same risk as any other city in California with tree claims, sidewalk claims,

street, utilities, auto liability and police liability,

very similar to other large entities.

But some of the things we do to try and keep the claim cost

down are we send all the liability claims to each department

every month so they can address their liability issues

and we have regular claim reviews with the larger departments

to try and manage the claims that do occur.

We have an annual risk team meeting with departments

and we provide them a lot of data,

a lot of detailed data on claim activity,

their claim trends, talk about their safety training,

and we develop risk initiatives each year

to work on to try and reduce some of these costs.

And the next slide.

And one of the things that we do once claims that do occur,

the city attorney handles claims primarily in-house,

and they also meet with departments regularly

to review all litigated cases to try and control

the litigated costs and settlement costs

of the larger claims.

One of the best things we can do going forward is continue to invest in preventative maintenance

of trees, streets, sidewalks, and utilities.

That's probably one of the best things we can do to try and keep costs down.

We did give you an addendum in your packet.

In FY23, we went to all the departments and developed a memo that summarized all the citywide

practices and policies to reduce liability by department.

And you can review that when you get a chance.

And then the last thing we have on the list is loss prevention training, which Sharnia

will talk about in a few minutes.

So that concludes my portion of the presentation.

Any questions?

Any questions?

I know the question I had was whether there's a category of claims generated in public works

that is dominant? Is there something that really stands out in public works?

Public works claims? Yes. They well, tree claims and sidewalk claims and then more recently with

some of the bad weather pothole claims as well. So those are the ones that are driving the volume of claims.

So for those types of claims that come up then, trying to do some kind of preventive

work of surveying where the worst spots are and addressing them, it probably is a strategy.

Is that right?

That's a wonderful strategy, right?

It has its practical limitations.

I understand that.

but that would, and I mean, you know,

the thing that I wanna just underscore is,

well, we're talking about this

in rather clinical detached terms of claims.

These are people getting hurt.

These are people getting hurt.

And so it's not just a financial matter,

it's also obviously a matter of what happens

to our residents and our visitors.

And it's not to say the city is always liable, because obviously it's not in each and every instance,

but we want to be known as a place that's safe to be in every respect, too.

So, okay, thanks.

Thank you.

Natalie's up next.

Thank you members of the budget and audit committee as well as members of the public

for hearing us speak today.

As Patrick mentioned, my name is Natalie Dempsey and I'll be going over the workers' compensation

data.

So on this next slide, we have the total number of claims broken down by each department.

Over the last five fiscal years, the city has reported 2,987 workers' compensation claims.

The highest annual volume occurred in fiscal year 22 with 822 claims, followed by a steady decline each year through fiscal year 25.

The departments that have the highest number of claims is fire and police.

These departments operate in environments that are inherently hazardous, and the risks faced by first responders extend far beyond what most employees encounter.

Because of these unique physical, emotional, and occupational dangers embedded within their duties, first responders are afforded specific presumptions under the California Workers' Compensation Law.

So these presumptions recognize that certain injuries and illnesses such as cancer, heart disease, infectious disease, the back injuries from duty belts, PTSD, and even at its time, COVID, are inherently industrial in nature.

This notable increase in claims in fiscal year was primarily driven by a surge in COVID claims.

So although there were a large number of COVID claims, generally speaking, the cost of these claims were relatively low, with the exception of a few more serious and long-haul COVID cases.

On our next slide, we have the total incurred table, which is broken out by fiscal year.

In case you're not familiar, the term incurred refers to the total amount of reserves on

a file, which include both what we've paid to date as well as what we anticipate we're

going to pay for the future expenses.

Since the city is self-insured, we are required by the state of California to set aside funds

in order to pay for the expected cost of each of these claims.

So as you can see, over the past five fiscal years, the city has held a total reserve of

$71 million.

The two departments that stand out the most are fire and police.

Combined these two departments make up over 80% of all incurred costs across the city.

Fire continues to be our highest cost department with more than $33 million total reserved.

Although we do see a downward sloping trend from fiscal year 23 through fiscal year 25,

These numbers do have the potential to increase since many of these claims do remain open

and there could incur additional unforeseen costs.

On the next slide, we have percentages broken down by the cause of injury or illness over

the past five fiscal years.

Across the city, strains is the largest cause at 41%, followed by COVID at 16.

The third largest is the other category, which is comprised of several smaller categories, including cumulative musculoskeletal injuries, internal injuries, cardiovascular, cancer, and so on.

On our next slide, this chart breaks down the number of costs by total incurred.

So strains are certainly the primary cost contributor at 44%, followed by the other category at 21%.

So cardiovascular cancer and cumulative trauma claims, though less frequent, also represent a high severity of losses.

Psychological claims rank third overall in a cost impact at 13%.

On the next slide, this pie chart shows a percentage of the workers' compensation claims based on the number of claims filed across the city.

It compares three categories, being fire, police, and all other departments.

to illustrate which groups generate the highest portion of workplace injury claims.

As you can see, fire and police, our first responders,

represent the majority of our workers' compensation claims at about 70%.

On the next slide, we have a pie chart that shows how workers' compensation costs

are distributed among the city's apartments.

Most of the dollars spent claims still continue to come from both fire and police.

Although fire accounts for 37% of the claim count, it represents 47% of the total costs, showing that these injuries are more severe in nature.

On the next slide, we have injury on duty hours, which shows the number of hours employees were unable to work due to job-related injuries across five fiscal years.

As a city full-time career employee, they are entitled to IOD, otherwise known as salary continuation, should they have an accepted workers' compensation claim.

So in total, more than 514,000 work hours were lost due to workplace injuries, creating significant operational and financial burden to the city.

Each department does actively commit to implementing and supporting strong return to work practices to help employees recover as quickly and as safely as possible.

The workers' compensation unit partners closely with each of the supervisors and the department leadership throughout this process, coordinating medical guidance, identifying modified duty opportunities, and ensuring employees receive the support needed to return to work quickly.

This collaborative approach strengthens a recovery outcome while helping maintain operational

readiness across the city.

On the next slide we have IOD costs which have totaled nearly 25 million over the past

five fiscal years.

Again we do see another noticeable spike in fiscal year 25 reaching just a little over

6.4 million, the highest of this period. Fire and police continue to be the primary cost

drivers for this increase, accounting for the vast majority of all IOD spending. Notably,

for that year, it was driven primarily by a 67% increase in IOD costs specifically within

the fire department. It is worth noting that after working with both fire and police departments,

Despite the number of higher injury numbers

and the associated cost,

both of these departments continue to prioritize

injury prevention, safety training,

operational risk assessments,

and injury reduction initiatives.

So these efforts really do-

I'm sorry to interrupt you,

but was there something in particular

that you identified that drove this very large increase

in the fire department in fiscal 25?

Yes, it's really a complex issue in which we saw a higher number of more severe injuries being reported.

Specifically, it dealt due to higher claim costs, staffing shortages, as well as an aging workforce,

which has led to somewhat of a breaking point for that department.

So then you would, absent replenishment of the ranks and lowering inferentially, I suppose, the age, you'd expect to see this trend line hold or even grow? Is that fair to say?

It's a very complex issue to deal with.

We certainly work diligently with the department to address all issues, whether it be additional

safety training, specific preventative measures.

So it's hard to say.

If you deal with one issue successfully, that doesn't necessarily mean another issue won't

arise and cause an increase.

Okay.

Not exactly a direct answer.

I can also invite the fire department up here to talk a little bit more about some of the challenges that they've faced recently and some of the efforts that they've done to combat these issues.

Well, I was asking more whether actuarially you would expect, given this and the factors

you cited, to be something that's going to continue until the point where those factors

are addressed, which you cited shortage of personnel and two of the things you cited,

and age of the workforce.

And so what I was really asking is would you expect unless and until those elements are

addressed that this we would continue to see either at least this level or a greater level

of claims and cost?

Yes.

I would see that if none of these issues are addressed that these costs could continue

to increase.

Thank you.

Okay.

Okay.

So I think that's it for my portion.

Are there any other additional questions?

I think none.

Thank you.

Okay.

Thank you.

So now I'll turn it over to Sharniel to go over the health and safety.

Good afternoon.

A budget audit committee.

I'm Sharniel Kumar here, environmental health and safety manager here.

to tell you about our Workplace Safety Management Program

and also efforts in place to reduce

and prevent vehicle collisions.

On the Workplace Safety Management side,

I do want to share that we have dedicated

environmental health and safety specialists

assigned to all of your large operating departments

who provide direct support and consultation

to control risk.

These efforts include vehicle collision

and employee injury investigations.

for every injury investigation for most departments,

root cause analysis is completed to identify factors

that may have played into the incident

and to ultimately determine why these occurred

and how to develop a good corrective action plan

to keep them from occurring again.

Safety training is a large part of what we do.

Based on the specific job tasks, exposures and hazards,

our team identifies and provides

Cal OSHA compliant training.

They additionally manage and update

comprehensive workplace safety training matrix that tracks all classifications

across the city so then we can ensure that those trainings are done within the

required intervals. Along with safety training on the preventative side we do

ergonomic evaluation so folks that work at a workstation in a stationary

location we try to make the appropriate adjustments and modifications to those

work spaces so then the job fits the employee so then we can avoid those

musculoskeletal injuries, cumulative trauma type injuries. We also do job hazard assessments.

This basically breaks down every job into specific tasks or steps, identifies the hazards

and exposures within each of those steps and then identifies appropriate controls to mitigate

those hazards. Inspections of every type, they're done across the board. The goal here

being to identify the problems before they become losses for the city. And on the next

slide we'll look at the system that we put in place. So a little over a year and a half

now we've had great success with our new comprehensive digital incident management system called

Origami Risk. It's transitioned all of our incident reports, our vehicle collision reports,

employee injury reports, and near miss reports to a digital format all within one system

that lets us seamlessly complete intake and review each of those reports so then we can follow up accordingly.

It's brought in our staff, our environmental health and safety specialist and safety officer into the process

so then they can immediately review those submissions, identify if any information is missing, unclear,

and ultimately help frontline supervisors capture the information that we need

to ensure that we can create good strategies going forward to prevent future reoccurrences.

The system is very adjustable. It lets us track specific data points and information we want to focus on and further analyze.

Some could be contributing factors with our vehicle collisions as examples, weather, road condition, lighting, visibility, traffic.

On the next slide, we'll talk about our vehicle collision review committee.

This committee is chaired by Assistant City Manager Ryan Moore, meets three times a year, and has leadership representation from all large operating departments who have employees drive.

We review collision statistics, analyze potential trends, look at all the different types of collisions, including backing, broadside, head object, rear end, and sideswipes.

We look at how many incidents occurred as a city overall and by each department, what those incidents were, and how that translates over to trends and rates we track.

We also look at the contributing factors that played into these incidents, and we try to find if there's any patterns or trends with tight spaces, traffic, visibility, obstructions, road conditions, lighting, potential locations where we're having more intersection incidents overall.

Next slide.

On the driver's safety training part of it,

we've done a lot of work with ensuring

we have the appropriate training for staff.

We have a driver training plan

that actually establishes different driver groups

based on their type of driving, their job level of risk

with the type of driving they do,

outlines initial and reoccurring training requirements

for those different types of drivers.

We've also built a supplemental matrix

that lists every classification into one of the groups

so then we can ensure that they are assigned

initial training upon hire and thereafter on reoccurring intervals.

As far as driver training, behind the wheel classroom training is available to employees

through EVOC at the Mather training facility and also through Environment Health and Safety

staff where we do city employee trainings at city facilities twice a month.

All completions are recorded in our learning management system.

That way we can ensure we closely monitor and track training compliance overall.

With that, I'm happy to answer any questions

the committee may have.

I think you're off the hook.

Thank you.

Do we have any members of the public

who wish to speak on this item?

I have no speakers on this agenda item, Chair.

Okay. Ah, you're back.

I was just going to say thank you for giving us some time

that we really appreciate it.

And I know some of these costs are pretty high,

but I think the auto liability claim reduction

is something that we're proud of.

And police, fire, utilities had dramatic reduction.

and I want to call them out for really working hard

to get those numbers down and save the city a bunch of money.

So again, thanks for your guys' time today.

We appreciate it.

Well, thank you.

There are some encouraging numbers here and results, absolutely,

and if we can keep those trends going,

that's good for all concerned.

So I appreciate that,

and obviously you can eyeball a couple of things

that we probably ought to be paying some additional attention to.

But I did want to say that in looking at the supplemental information we got in the staff report

about the strategies and steps being taken to try to reduce liability,

that I thought they were quite comprehensive and well directed.

They make a lot of sense.

They are smart steps to take to not just reduce liability, but as I said earlier, to reduce injuries,

to reduce the instances in which people get hurt or at worst lose their lives.

So I was quite happy to see this very comprehensive approach,

and I want to thank those of you who are in this business of trying to mitigate loss and reduce loss,

and the departments too.

I see our two chiefs back there among others.

This is every day.

Every day is another opportunity to have a safer workplace for all of us.

And so this, I think, demonstrates the attention

that it's being given and the significance

that it's being treated with.

So that to me is very encouraging.

And so thank you for being here.

And thank you for being patient enough to wait

till we got the other stuff done too.

That's fine.

Thanks to all the departments.

We get a lot of support.

I know Natalie and Sherry will agree.

Department director on down to everybody in the departments

gives a lot of support to risk management

to work together on these things.

and we'd appreciate that.

So thanks to all the departments as well.

Thank you.

Do we have any committee comments, questions, ideas, meeting reports?

Seeing none, do we have any speakers on items not on the agenda?

I do have one speaker, Lambert, for matters not on the agenda.

All right.

I wanted to mention to the chair that something tremendous is happening inside Del Paso Heights, specifically Del Paso Heights.

We were in Southern California during Thanksgiving, and we were able to secure some major moves there.

And that's going to help hire a lot of people.

We're not coming in here talking about deficits.

We're talking about hiring people and creating jobs instantly.

Our projections are in the black.

And it's very difficult to do that.

It seems easy, but it's not.

But because we have a manufacturer down there, we have marketing, we have everything down there we need, I just returned from there.

And I would think that you would be contacting us because we're what we consider very organized.

We don't have any scandals on us.

The founder and CEO is controversial, but the company is in great standing.

It's in great standing.

And shout out to the millennials.

They have inspired me on social media.

I had no idea what Yelp was until Thanksgiving, and they told me that we received five stars from Yelp.

And the first question I asked them was, how does that pay bills?

Yelp.

And then they got back to normal and said, what's next?

By the way, we just received our federal cage code number.

Anybody who knows anything about business knows it's very difficult to secure a cage code number.

That means you can apply for federal jobs, but you have to have the criteria met.

So we look forward to hearing from you, Mr. Dickerson, because I'll be in town until the first of the year.

Thank you for your comments.

Chair, I have no more speakers.

Okay, thank you.

I believe that completes our business for the morning, and so the committee stands adjourned.

Thank you.