San Diego Budget Review Committee Final Day: Fiscal Year 2016 Proposed Budget Review

The San Diego City Council Budget Review Committee held its final day of hearings on May 8, 2015, to review the proposed Fiscal Year 2016 budget. The committee heard presentations from several city departments, including Performance and Analytics, Fleet Services, Real Estate Assets (including Qualcomm Stadium, PETCO Park, and airports), Purchasing and Contracting, Information Technology, and Human Resources. Councilmembers, Independent Budget Analyst (IBA) staff, and members of the public provided comments and questions on proposed budgets, staffing levels, performance metrics, and operational challenges. No consent calendar items were considered.

Public Comments & Testimony

• Marcos Cardenas (AFSME representative) spoke in favor of the fleet budget but argued that the proposed 11 new mechanics are insufficient; he stated the city needs at least 20 more mechanics to address equipment downtime, noting fire trucks, street sweepers, and packers are constantly down. He urged the council to add more mechanics in the May revise.
• Martha Welch (public comment on Real Estate Assets) criticized the city's financial management of Qualcomm Stadium and other funds, questioning the use of bond proceeds and the deficit at the stadium. She expressed confusion over the $17 million budget for Qualcomm and asked for clarity.
• Tricia Tackey (IBA) provided IBA comments on the Department of Information Technology budget, highlighting concerns about the website redesign, contract renewals for IT services, and the need for performance measures and a roadmap for SAP investments.

Discussion Items

Performance & Analytics Department

• Presentation: Director Alma Soudries and analyst Maui Hugar presented the FY16 proposed budget, which increases from 8 to 11 full-time equivalents (FTEs) and from $1.4 million to $1.8 million in expenditures. Major additions include one program coordinator for a citywide 311 platform ($176,000), one program coordinator for open data ($176,000), one word processing operator for performance management ($53,000), $80,000 for a resident satisfaction survey, and $5,000 for training.
• IBA Comments: Christiana Gagger recommended regular updates to the committee on the 311 strategy, revisiting the managed competition savings calculation (currently reported at $9 million in annual savings from fleet managed competition), and adding more robust performance measures, including those related to infrastructure and fiscal health. She also noted the need for performance measures for open data, operational excellence, and 311.
• Council Questions: Councilmember Kate expressed strong support and asked about timelines for the 311 program and the budget visualization tool. Councilmember (not identified by name) asked about the status of the San Diego Works initiative and open data implementation, with staff confirming 20% of departments would have data sets released by July 1, 2016. Councilmember Alvarez questioned the accuracy of managed competition savings displayed as a performance measure, arguing that projected savings are not actual savings. Chair Gloria noted that the performance indicator for managed competition uses the winning bid amount, not actual savings, and asked for reconsideration.
• Key Disagreements: Councilmember Alvarez and Chair Gloria debated the transparency of using projected vs. actual savings. Staff argued that actual savings are difficult to isolate due to changing fleet conditions. Council President Leitner raised concerns about the mosaic effect and data security in open data.

Fleet Services Department

• Presentation: Interim Deputy Director Roy Kirby and analyst Alia Curry presented the FY16 proposed budget of approximately $50 million with 177.5 FTEs. They requested 16 new FTEs (including 2 master fleet technicians, 4 fleet technicians, 2 apprentice technicians, 2 motive service technicians, 1 welder, 1 assistant fleet technician, 1 fleet attendant, and administrative positions) and an increase of $10.4 million for vehicle replacements. The addition of 11 mechanics is intended to address service gaps and support an aging fleet.
• IBA Comments: Charles Modica noted that the managed competition process (FY2012) anticipated $9 million in annual savings, but those savings cannot be accurately quantified due to changes in fleet size and composition. He highlighted that only 3 street sweepers were reported operational at the time and recommended continued council updates on this issue.
• Public Comment: Marcos Cardenas stated the proposed 11 mechanics are not enough and urged more.
• Council Questions: Councilmember Cole asked for the total number of operational vehicles and the availability rate for priority vehicles (fire at 89.2%). She pressed for a plan to fill positions quickly and expressed concern that 11 mechanics are insufficient given the need for 28-30. Councilmember Alvarez sought clarity on street sweeper count (total 26, 9 operational, with 6 new arriving by end of May) and asked for metrics on what the 11 mechanics would accomplish in reducing backlog. Councilmember Kate requested a list of availability targets for each priority vehicle category. Chair Gloria noted that overtime was over budget by $900,000 at mid-year but asked for an updated figure; staff stated overtime is still over budget but less than projected, without providing a specific number.
• Performance Measures: Chair Gloria pointed out that on page 575, the performance measures for fleet managed competition show no actuals for 2014, and IBA stated that the current service level is not sufficient. Staff agreed the new positions aim to achieve better availability.

Real Estate Assets Department (including Qualcomm Stadium, PETCO Park, Airports)

• Presentation: Director Sabelle Thompson outlined a $1.5 million increase in the general fund budget and 5 new FTEs (4 for CIP, 1 for appraisals) to support office relocations, tenant improvements, and portfolio management. Non-general fund (concourse and parking garages) increases include $1.1 million in revenue from Civic Center Plaza parking and King Chavez High School rent. User fees for READ were proposed with minor increases (only 5 of 8 fees increased, all under 100% cost recovery). Qualcomm Stadium manager Mike McSweeney requested a $1.37 million increase for maintenance, janitorial, equipment, and charger training facility repairs, funded by an additional $1.3 million in TOT revenue. PETCO Park administrator John Casey presented a reduction of $1.5 million due to bond refunding and reduced TOT transfers, with increased special event revenue from concerts. Airport deputy director Rod Propst proposed a $4.6 million budget, a $600,000 reduction due to a deferred mitigation project.
• IBA Comments (Qualcomm Stadium focus): Christiana Gagger noted that despite the $1.3 million TOT increase, Qualcomm stadium will have a $1.4 million deficit in FY16, leaving a projected fund balance of only $60,000 at year-end, posing a risk to the general fund. She also noted the uncertainty surrounding the Chargers' future.
• Public Comment: Martha Welch questioned the finances, stating it doesn't look good to have a deficit and ask for $17 million.
• Council Questions: Council President Leitner asked about employee parking in the new garage (supportive of free parking for employees) and the status of lease negotiations and the facilities strategy. She requested an update on the return on investment for TOT funds used at Qualcomm and PETCO. Councilmember Kersey (or Kirsey) asked about the Chargers' lease buyout ($50 million for next year if they leave) and outstanding renovation debt ($51-52 million principal, $4.7 million annual debt service). He also inquired about selling city boxes at both stadiums. Councilmember Kate questioned the process for renegotiating holdover leases and the timeline for portfolio management plan. Councilmember Alvarez requested a cost-benefit analysis of Qualcomm stadium if the Chargers leave, and asked for details on PETCO Park revenue increases from the revised agreement.

Purchasing and Contracting Department

• Presentation: Director Dennis Kakunga reported a 64% increase in completed ITB/RFPs (44 more than last year). The FY16 proposed budget includes 55.96 FTEs and $7.2 million (increase of 0.76 FTE and $992,000). Major changes: addition of a payroll supervisor, increased IT costs for legacy database replacement and SAP catalog technology, and no major changes in central stores.
• IBA Comments: Christiana Gagger recommended additional funding for a consultant with contract administration expertise to address audit recommendations on contract oversight. She also noted that the SLBE performance measure target is based on a four-year average and that FY16 will start tracking SLBE awards for goods and services via SAP upgrades.
• Council Questions: Councilmember Sherman asked about the contract oversight audit and job descriptions for procurement specialists, which have not been updated since the late 1990s/early 2000s. He supported the IBA recommendation for a consultant. Councilmember Leitner asked about the timeline for replacing legacy databases (within FY16) and requested progress reports. Chair Gloria asked about the disparity study for SLBE (not funded in the budget) and expressed personal support for funding it. He also noted that the department might need more resources to maintain improvements.

Department of Information Technology

• Presentation: CIO Jonathan Banke presented the FY16 budget with increases across four non-general funds. Key additions include 6 FTEs (cybersecurity, project management, network management, enterprise architecture, water utility support, fiscal/admin) and $1.9 million for website redesign, $900,000 for SAP procurement module upgrades, $600,000 for EAM project resources, $500,000 for single customer login, $300,000 each for hardware/legacy systems, water utility portal, and citywide learning portal. Also, $200,000 for email retention.
• IBA Comments: Tricia Tackey noted that $775,000 is for one-time content migration for the new city website. She highlighted that the current IT outsourcing contracts (with CGI and others) expire in FY2017 with a two-year renewal option. The $300,000 originally requested for a consultant for contract development was not included in the proposed budget. She recommended tracking returns on SAP investments and a roadmap of planned SAP investments.
• Council Questions: Councilmember Leitner supported the use of outside experts and a consultant for contract negotiations. She expressed desire to see performance metrics that go beyond contractual SLAs. Councilmember Kate asked about the timeline for deciding on contract renewals (by July 2015 for a path forward). Chair Gloria asked about email retention costs, noting that $200,000 is lower than previous estimates; staff stated a new vendor solution (extended support for Near Point archive) reduced costs, but the solution is not final. He also expressed concern about not funding the $300,000 IT consultant.

Human Resources Department

• Presentation: Director Judy Von Kalinowski proposed a $141,000 increase for a program manager for succession planning and leadership development, and $80,000 for a survey of represented employees for classification studies (120 classifications, cost $130,000, with a target date of October 1, 2015). She noted the department has no vacancies.
• IBA Comments: Lisa Byrne recommended including a metric for time to fill unclassified positions, similar to classified positions.
• Council Questions: Chair Gloria thanked HR for the earned sick days implementation and asked about staffing for Public Records Act (PRA) requests. Staff stated they are evaluating the process and believe current staffing is adequate, with a timeline of a few months for the evaluation. No significant concerns were raised.

Key Outcomes

• No formal votes were taken during the budget review committee meeting; the committee adjourned as a committee and will reconvene as the City Council on May 11, 2015.
• Directives and next steps:
  • Performance and Analytics will provide updates on the 311 strategy, open data implementation, and incorporate council input on performance measures. The department will also revisit the managed competition savings performance indicator.
  • Fleet Services will provide a list of availability targets for priority vehicles, a detailed report on the backlog of repairs, and metrics on what the 11 new mechanics will accomplish. Council expects progress reports to the relevant committee.
  • Real Estate Assets will provide a cost-benefit analysis of Qualcomm Stadium operations if the Chargers leave, as well as details on PETCO Park revenue increases and the return on TOT fund investments.
  • Purchasing and Contracting will report on the timeline for the disparity study and the update to the SLBE policy (expected in June/July 2015 with implementation in October 2015).
  • Information Technology will bring a roadmap of SAP investments to committee and will work with the city auditor on performance metrics. The $300,000 consultant for IT contract negotiations remains unfunded, but may be reprioritized if needed.
  • Human Resources will complete an evaluation of PRA handling within a few months and report back.
• Key date reminders: The mayor will issue the FY15 year-end budget monitoring report and FY16 May revise on May 19, 2015. The budget review committee will reconvene on May 21 to review those reports. Council member memos with recommended changes are due to the IBA by May 22. The IBA's final report is due June 3, and a final budget is expected by June 8.