San Diego Budget Committee Meeting - February 1, 2018
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San Diego Budget and Government Efficiency Committee Meeting - February 1, 2018
The Budget and Government Efficiency Committee convened on February 1, 2018, to review the mid-year budget monitoring report, a proposed network services contract, a deferred compensation plan change, and to establish City Council budget priorities for fiscal year 2019. The committee heard public testimony on franchise fees, arts funding, and pedestrian safety. Key decisions included approving the mid-year report with no general fund adjustments, recommending approval of a $79.6 million network services contract with Zensar Technologies, approving the transition to a CalPERS 457 plan, and forwarding the FY19 budget priorities to full Council with an amendment adding lifeguard positions.
Public Comments & Testimony
- Martha Welch: Expressed opposition to franchise fees appearing on cable bills and property sewer/water fees, arguing they were imposed without a vote.
- Arts and Culture Advocates (Rise Up for Arts and Culture): Multiple speakers (Rob Sidner, Jimmy Saba, Molly Tarbovich Reidnauer, Peter Komiskey, Jaclyn Silverman, Lita Levine Klager, Frank Casciani) urged continued or increased city funding for arts and culture, citing a $1.1 billion annual economic impact and the threat of a 33% cut to the Commission for Arts and Culture. They thanked council members who included arts in their budget memos.
- Maya Rosas (Circulate San Diego): Highlighted seven pedestrian deaths in January 2018 and urged support for safe streets projects, thanking council members for prioritizing pedestrian and cycling safety.
Discussion Items
- Mid-Year Budget Monitoring Report (FY18): Tracy McCraner (Financial Management Director) and staff presented. Revenues projected $7 million over budget (driven by property tax growth of 6%, TOT up $2.2M, and fire rescue reimbursements). Expenditures projected $12.6 million over budget (due to hepatitis A sanitation efforts, fire rescue lease expenses for helicopters, increased water usage, and the Clean San Diego program). The net deficit is $5.6 million. The mayor recommended no immediate appropriation adjustments but continued monitoring and hiring review. The IBA noted a process concern: the Clean San Diego program ($2M estimated for FY18, $6M projected for FY19) was not formally presented for council action, limiting council's role. Clean San Diego would increase the FY19 deficit from $10M to ~$25M when combined with pension increases. The committee discussed vacancy rates (9.1% as of December 4, 2017, with 1,042 vacancies), the RPTTF redevelopment dissolution impact, and the need for additional information on hepatitis A education spending, transitional camp costs, and Clean San Diego funding sources.
- Network Services Contract with Zensar Technologies: CIO Jonathan Banke and Deputy Director Sean Kilpatrick presented a contract to manage the city's phone, internet, and network services for up to 10.25 years, not to exceed $79.6 million. The contract follows an RFP process with 8 responses. Zensar, rated #1 in customer satisfaction by Gartner, will provide 28 dedicated staff (50% in San Diego) and subcontract with local SLBE IMG Networks. The contract includes improved service levels (less than 1 hour internet downtime per year), stronger governance (30-page governance section), and estimated $7 million in savings compared to the current contract over six years. Public speakers Nishit Verma (Zensar) and Ed Arguellas (IMG Networks) spoke in support. The IBA recommended quarterly reports back to committee. The committee approved the contract with an amendment to report in October 2018 (after transition) and January 2019 (after three months of service).
- CalPERS 457 Deferred Compensation Plan: Julio Canizal (Risk Management) recommended terminating the city's current 457(b) plan (administered by BALIC, with $160M in assets and 3,200 participants) and joining the CalPERS 457 plan. Advantages include simplified investment options, lower fees due to economies of scale, and no cost to the city or employees. All employee organizations were notified and raised no concerns. The committee approved the resolution unanimously.
- FY19 City Council Budget Priorities: Chris Olsen (IBA) presented a synthesis of council members' budget memos. Unanimous priorities included: services for homeless, Climate Action Plan programs, and capital projects. Majority priorities: public safety (police recruitment/retention, fire rescue RAP), stormwater infrastructure, sanitation services, arts and culture funding above the mayor's outlook, Connect to Careers program, enforcement of earned sick leave/minimum wage, and code compliance hiring. Suggested funding sources included excess equity, risk management reserves, and exploring one-time revenues. Chair Bree moved to forward the priorities to full Council with an amendment to add two FTE lifeguard positions (Lifeguard III) for La Jolla Cove and one FTE senior management analyst for lifeguard services, citing $700,000 overage in lifeguard services. The motion was seconded and approved.
Key Outcomes
- Mid-Year Budget Report: Approved with no general fund appropriation adjustments. Non-general fund appropriations for Development Services and Fleet Operating Fund were approved. The committee will receive a year-end report by March 31, 2018.
- Zensar Network Contract: Approved (motion by Councilmember Gomez, second by Councilmember Kate) with an amendment requiring reports to the committee in October 2018 and January 2019.
- CalPERS 457 Plan: Approved (motion by Councilmember Gomez, second by Councilmember Kate) to terminate the current 457(b) plan and transfer assets to CalPERS.
- FY19 Council Budget Priorities: Approved (motion by Chair Bree, second by Vice Chair Ward) with an amendment adding lifeguard positions. The resolution will be forwarded to the full City Council for formal adoption.
Meeting Transcript
Um good afternoon, everyone. Uh we're going to get started. I'll now call the meeting of the budget and government efficiency committee to order. Uh a quorum is now present, consisting of committee members, uh, Vice Chair Ward, Council Members Kate and Gomez, and myself, uh Barbara Bree the Chair. Uh, we're also joined by our CFO, Rolanda Chaval, our C uh IBA Andrea Tevlin, and uh Brant Will from the City Attorney's Office, and our committee consultant uh Vicky Joes. So moving right along, um the committee record of action actions from the November fifteenth, two thousand seventeen meeting will be approved by unanimous consent unless pulled for discussion. Do we have any requests to pull the record of actions? No. Okay, we will now proceed with non-agenda public comment. This portion of the agenda provides an opportunity for members of the public to address the committee on items of interest not on the agenda. We have one member of the public who wishes to speak. Good afternoon. Martha Welch. I'm against these fees. Because these show up on your cable. I saw it one time. And also FFC, I told them about that, and they told me to go to C P and they told me the how the fees get on they didn't not their fees. So that's my that's the money because it's on fantasy or tax and um and um ENT and whatever name Southwests are. Now also it shows also on our guests, probably also the same thing. But I also think right now property um property has sewer and water on that. We didn't vote for that also, but I think that's where the stream goes to your um your funds. All you have are these funds all the time. And that's it have to stream somehow. I was trying to try and figure out how goes the money goes to you. So that's probably what it does. Um it goes there to you from now from the county also, the county does that, but um they're illegal with that because we didn't vote for that. But uh you're you get the money, I think, and I don't like the franchise at all because you're the only county, and um and this whole state uh has has these, and um and they didn't know where they come from. Uh thank you. Um do we have any committee member mayor, IBA, or city attorney comments today? No. Are there any requests to continue an item on today's agenda? Okay. As we have no consent agenda items, we'll proceed directly to the action agenda. Um, item number one uh to review a report from Financial Management Department recommending council approval of the fiscal year 2018 mid-year budget monitoring report. Our presenter is Tracy McCraner. Hi. And Matt Besby. Excellent. Thank you, Chair Bree and members of the committee. My name is Tracy McCraner, Financial Management Director. And to my right is Jose Mendoza, budget coordinator, and Matt Besby, Deputy Director of Financial Management. So we're here today to discuss our mid-year budget monitoring report. This report is based on five months of actual expenditure activity and six months of actual revenue activity. Revenue information becomes available quicker and from other sources to our department. The mid-year report will present revenue and expenditure projections for the end of the year for all budgeted operating funds with personnel expenditures. In this report, we will detail what revenues and expenditures are both projecting over budget, while the expenditures are slightly outpacing our revenue projections at this time. So as we can see, revenues are projecting over budget by 7 million. I'll go over the details of that on the next slide. And expenditures are currently projecting over budget by 12.6. And Jose Mendoza will be going over those.
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