San Leandro Finance Committee Special Meeting - May 20, 2025: FY 2026-27 Biennial Budget Review
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San Leandro Finance Committee Special Meeting - May 20, 2025: FY 2026-27 Biennial Budget Review
Note: The agenda and transcript indicate the meeting occurred on May 12, 2025, but the instructions provided state the date as May 20, 2025. This summary uses the latter date as instructed, with the discrepancy noted.
This special meeting of the San Leandro Finance Committee focused on the proposed FY 2026 and FY 2027 biennial budget. The committee reviewed a second round of proposed reductions following the April 23, 2025 presentation, aiming to reduce the city's reliance on fund balance to achieve a structurally balanced budget. Staff presented updated general fund projections, department-specific cuts, and a request for $500,000 for polling on a potential revenue measure. The committee discussed the impact of cuts on services and vulnerable populations, and ultimately directed staff to work over the next 12 months to ensure that operating expenses (excluding transfers) equal projected revenues by FY 2028.
Discussion Items
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General Fund Forecast & Fund Balance: The proposed budget projects a use of fund balance of $6.0 million in FY 2026 and $6.7 million in FY 2027—a significant reduction from earlier projections. Ending fund balance as a percentage of operating expenditures is 32.7% for FY 2026 (meeting the 20% policy) but drops to 14.9% for FY 2027 (below the policy). Staff explained that the city also has a $5 million emergency reserve and other obligations (non-spendable, restricted, committed, assigned) that reduce available unassigned balance.
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Department Reductions: Staff detailed reductions across all departments, totaling approximately $250,000 in the City Manager's Office, $434,000 in Public Works, $1.4 million in Fire (one-time freeze of three unfilled positions and 50% academy reduction), $500,000 in Police (operational cuts from prior round), and significant cuts in Human Services including elimination of the winter shelter hotel voucher program, reduced funding for Building Futures' domestic violence case management and mobile outreach, and elimination of the Vietnamese American Community Center funding in FY 2027. Library hours would be reduced: elimination of Sunday hours and Monday hours changed to 10 a.m. to 5 p.m. Recreation and Parks would reduce summer camp locations from three to two, freeze various positions, and reduce lifeguard hours at Farley Pool.
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Transfers & Capital: General fund transfers to other funds include $1.5 million for a new fire truck in FY 2026, $475,000 for park major maintenance, $3.6 million for road rehab, and $150,000 for ADA transition. The parking fund subsidy of $376,000 is proposed for FY 2026 only, with the fund expected to be self-sustaining by FY 2027.
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Revenue Measure Consideration: Staff requested $500,000 across two fiscal years for polling and campaign costs related to a potential revenue measure. Mayor Gonzalez expressed reluctance, noting a citizen-led bond initiative may be underway, and suggested not competing with it.
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Committee Questions & Concerns:
- Councilmember A. asked for clarity on the percentage of cuts relative to each department's total budget and requested a breakdown of assumptions from the April 23rd proposal.
- Councilmember B. questioned the Police Department's small reduction ($36,000) and whether lateral hires could reduce academy costs. He also asked about library hour impacts and the reduction in software maintenance for IT.
- Mayor Gonzalez inquired about the composition of the $6.45 million loans in fund balance, the city's obligation for Alameda County Fire's unfunded pension liability, and the impact of ARPA funding expiration. He also requested a benchmark of legal costs.
- Councilmember C. expressed deep concern about the disproportionate impact on Building Futures, a key service provider for vulnerable populations, and asked about the connection between cuts and ARPA funding.
Key Outcomes
- The committee agreed to recommend the proposed FY 2026-27 biennial budget to the full City Council, with the understanding that staff will work over the next 12 months to identify strategic cuts, efficiency improvements, or revenue enhancements so that by FY 2028, total operating expenses (including transfers) equal projected revenues (i.e., no use of fund balance).
- Staff was directed to include department-specific percentages of cuts and prior assumptions in the presentation for the June 2nd City Council work session.
- The committee did not approve the $500,000 polling request; the mayor indicated opposition, but the matter may be revisited in the coming year.
- The next steps are a City Council work session on June 2, 2025, and a public hearing and adoption on June 16, 2025.
Meeting Transcript
I'm afraid we'll show that. Yes, thank you. Last week was just the real person. So the one time it's kind of reading. I think we have zero favorite. And then it's evil. I don't know. Maybe some of this one I think we've been in terms. I don't think very well I can do that. Just to make sure we see that on the home. That's what she said. I just heard these years. Okay, so I'm calling an order of the meeting of finance committee. Today is Wednesday. Council Member Videos Wellton. Councilmember Agilan. Present. Mayor Gonzalez. Present. Would you please make your announcement? After each agenda item is presented, the mayor will ask for committee member comments and then take public comment. You will have two minutes for your comment. The countdown timer will appear for the convenience of the speaker and attendees. And beginning in 2028, all expenses should be equal to projected revenue. And both of these directions were uh to help the city continue to address the fiscal um uh use of fund balance uh uh in in the proposed two fiscal years and beyond. Um so the directive was to look to balance our budget and reduce our dependency on using fund balance to balance our budget each year. So this just high-level a quick agenda for the presentation this evening. We'll we'll do an update on the general fund forecast. We'll review the general fund estimated fund balance. In an effort to balance our budget, we will look at the department operation reductions that are being proposed. We will also take a look at transfers from the general fund to other funds, and then an overview of the citywide operating budget, and then last to look at our next steps, and then have an opportunity for discussion and feedback. So the next several slides are the city's general fund 10-year forecast. The slide is a reminder here was the 10-year forecast for the general fund prior to the proposed budget, which was presented on April 23rd 2021. Next slide. So just wanting to highlight here the general funding tenure forecasts reflect again the proposed 2026-2027 by annual budget that was presented on April 23rd. The committee supported a drafting the significant projected use of fund balance in the current fiscal proposed budget for 26 and 27. And again, that directive was for fiscal years 26 and 27. The operating expenses less transfers would be equal to the projected revenue. And again, that would allow us time to continue to address ongoing operational uses of our general fund fund balance. And then beginning in 2028, all expenses, including the transfers, would be equal to the projected revenue, which would ultimately result in no use of fund balance in those future years. Next slide. So this evening we will be looking at a second round of a proposed fiscal year 26-27 with feedback that was incorporated based from the committee committee we received on April 23rd, 2025. Here you will see for fiscal year 26. We are projecting a use of fund balance at about 6 million. You will see that on line 16, and then in column D and then column E, which is the proposed 2027, we are projecting a 6.7 million dollar use. So significantly less use of reserves than we saw on April 23rd, 2025. Again, wanting to point out a number of things. So again, just wanting to remind everyone in this room, this committee, and we're looking at the general fund balance. We are looking at total revenues, which are projected revenues, our estimates as we know of today. That's on line one.
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