So it's for the point of order to say a road finance committee today is September 15th of 2025.

Would you please take our agenda?

Mayor Gonzalez.

Present.

Council Members Walton.

Councilmember Aguilar.

Present.

Okay, 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, a countdown timer will appear for the convenience of the speaker and attendees.

This is my time.

So good afternoon.

The first item on our agenda this afternoon is the presentation of proposed uh changes to the city's general fund resource policy.

So just to kind of kick us off as a reminder of why we have a fund balance, our student where we have a reserve policy, it's really important to understand what fund balance is and why we have it.

These slides are similar to what we saw during the budget development process in the spring, but what is a fund balance essentially represents the difference between the city's total assets and current or future liabilities, essentially showing the net available resources that a fund has at any given point.

There are five categories when we're talking about fund balance.

There's uh non-spendable, which are resources that cannot be spent.

Those are typically related to loans and things of that nature.

Um there is restricted, which are resources with external restrictions, those are usually centered around things like grants, committed, which is set aside for specific purposes that were um essentially committed by a governing action by the city council.

There's the assigned, which is intended for specific purposes but not legally restricted, so there is a little bit of flexibility with assigned, and those are typically associated with our encumbrances, and then assigned, which is the available for any purpose.

And so when we're talking about the reserve policy, we're really focused on the assigned uh category.

Um, so again, what is what is a fund balance target?

Um balance target is a percentage that refers to the desired level of reserves that a government or an organization aims to maintain in its general fund.

Um we do uh leverage ourselves in and refer to the government finance officers association or GFOA, kind of as our guide for making recommendations to policy changes within the industry.

Their uh recommendation is to have at least two months worth of your total expenditures available in your reserve, which is approximately 16.7 percent, um, and that is just your regular operating expenses, excluding transfers.

Um, so why is the 20% uh fund balance important, which is what the city's current policy is, it does um provide us the ability to pivot for unexpected expenses.

Um it also uh improves our ability to weather economic uh downturns or time of uncertainty, ability to remain operational during any kind of disaster, including natural disasters.

Um it may have an impact or improve our credit ratings again and shows the city um monitors its uh funding availability on any given point, and then of course it enhances the city's financial stability in resilience.

Um so wanting to provide an update on the general fund fire forecast.

This looks slightly different from what we saw in the spring, but this does uh currently show what the city's I should say what shows our current fund balance policy is.

So what we'll see here, focusing really on our column C and D.

Row eight shows what the um projected use of fund balance.

What has changed here specifically are that we have updated our revenues.

Um our revenues are trending uh in a decline in some key areas, and so we have adjusted our revenues based on information that we know as of today, which is different from the information that we do in the spring.

So this reflects some changes in those revenues, and we'll talk about those in a couple agenda items uh later.

Uh this also reflects the uh operational costs for Moford library and the potential acquisitions that are pending under further discussion, and so those are additional expenses that were not reflected during the spring.

And so the fund balance projection or use of fund balance in fiscal year 26 in column C row eight is um 7.9 million and then 11.4 uh in fiscal year 26-27.

Um, what we're looking at is that ending balance um on line 10.

Um, we are showing an ending balance projected for fiscal year 26 for the end of this year at 46.8 million and 35.5 million in the following year.

When we look at our fund balance categories in rows 13 through 17, and really 20, but 15, student 14 through 17 are those categories that are either restricted or have other committed assignments.

And so when we're talking about what we have available for fund balance use, we're looking at line 20, which is the unassigned.

And so fiscal year 26, our current year, we have a projected use or availability of 33.8 million.

For compensated absences, we have to account for about 700,000, or excuse me, yeah, 700,000.

And then the city's current policy right now is to also set aside 5 million dollars in the major emergencies.

And so that's line 22.

Line 23 represents the available percentage that we have set aside for economic uncertainty.

So that's that 20% policy that we're talking about.

So right now, based on the adjustments of the revenue and the adjustments in projected expenditures, the city is below that 20%.

It's 18.8% of total expenditures.

And so wanting to provide an update to this committee as far as what the forecast looks with our current policy today.

So again, I spoke a little bit about it on the previous slide, but as a reminder, when we're talking about the categories, we're really looking at that fine for our fund balance policy.

And what's in that is the 20% for economic uncertainties, $5 million for major emergencies, and then anything that's left over, which there is none in this fiscal year beyond currently, any fund balance would remain in the general fund until it was allocated by the city council for another designated reserve or for another purpose.

So that's kind of what our policy is right now.

The intent is again to ensure fiscal stability and to maintain operations in time of economic uncertainty.

So wanting to just provide kind of an overview of best practices and comparable policy levels, you'll see the city of San Leandro is kind of in the middle at 20% in that purple line.

These are all the cities in Alameda County.

The bottom is that green, which is recommended by GFOA, which is 16.7%.

There are a little anomalies in some of these that you'll see.

So the city of Fremont has a policy of 16.7%.

It also has a policy that includes budget uncertainty reserve, but there's no set reserve level.

Just a reserve that they have set aside, but there's no policy as far as a target.

And then the city of Alameda has a 20% reserve fund level policy, but also has an additional 5% for economic uncertainties.

So again, wanting to really demonstrate where where the city of San Leandro lies currently, at least with its reserve fund target.

So again, we are exceeding the recommendation of GFOA, and so wanting to provide that information.

So what we're proposing to the committee to this afternoon is to make some additional changes.

And so we're looking to really expand the objective of this reserve to show that not only would it ensure fiscal stability, maintain operations in time of economic certainty, but also add language to maintain operations during and in response to natural disasters and to ensure available funding for major emergencies.

And why we've expanded this is because we are recommending that we retain the current 20% level, again, meeting and exceeding GFOA's recommendation, but eliminating the five million dollars set aside specifically for major emergencies.

And then we would continue to retain the language related to undesignated fund balance.

So again, any funds that are available beyond that 20% set aside would be remained in the general fund until allocated by the city council.

And then lastly, because we are proposing to remove the $5 million for major emergencies, it is recommended that we retitle this reserve fund to emergency and economic uncertainty reserve funding.

And then lastly, just wanting to write an update on what the forecast would look like under this new potential proposed policy.

What you will really see the change is in lines 22 and 25.

We will uh remove that designation for 5 million for major emergencies each year.

And we will see that we in fiscal year 26 will then meet the proposed 20% reserve policy, but then we start to see a decline again in future years.

I do want to pause and just say that staff is continuing to work on uh long-term fiscal sustainability.

We are looking at expenditures to ensure that we're meeting council's direction, which was that expenditures were to equal revenue protections beginning in 2028 and beyond.

Um, and so there is still work, and so this picture will continue to change, but also wanting to capture again the potential costs associated with any potential acquisitions that occur, but also the cost of um uh maintaining and operating the uh expanded Mulford Library.

I'm sorry, say that again the I didn't catch the so on line six, you'll see there's additional expenditures there.

So that's a uh combination of costs to uh run the uh expansion of the Mulford Library as well as any potential operational impacts related to any potential acquisitions in the future.

So just for clarity of why that's there, it's the numbers prior to six are was basically based off the budget.

The number and six is directional conversation we had with council after the budget was adopted, okay.

Can we?

Yeah, okay.

Thank you for your presentation.

This point in time we'll take public comment on this item.

Do we have anyone from the public who wishes to speak on the site?

We have not received any public.

Okay, so we'll close public comment.

We'll come back to council members for discussion questions, feedback.

You can run like no more than maybe five minutes and try to cycle through so everybody gets a chance, beginning with yeah, council members.

So can we go back to the following slide for my colleagues for the local?

And can you explain to me that we are getting rid of policy of the recommendation is to give rid of the major emergencies of five million dollars?

Where in this forecast is that being applied?

I know that we're basically now we're facing the structural deficit in this sense, but where are we or are we applying the five million?

So it essentially is close to me, sorry about that.

So it essentially frees up available funding to uh meet this um 20% goal without that five million, the city would not be meeting its 20% uh of expenditure target.

And do we fear, maybe this is a question for the city manager?

Do we fear anything with regards to not having that five million dollars and major emergency funding?

Um, well, there's always the fear of uncertain times, you know.

Sometimes there's I think we discuss 100 year storms in our rules committee meeting this morning where catastrophic events that do happen to communities.

We hope and pray that never we're never in that situation, but no one ever wants to be in those situations, and it's always beneficial to have a nice cushion when things like that happening, depending on how catastrophic the situation is, we may or may not have money to cover it.

Um but as for day-to-day operations of running a city, I don't believe that it is necessary to have the five million, but I also say that with the same way of saying the Morton F-Sage is always a benefit as well.

And when we have the I don't want to try to blank on the economic river, the atmospheric river um storm that came through and kind of destroyed the one shoreline.

What was that potential cost to remedy?

I mean, so it's actually fixed that.

I mean, did that come from?

I don't have the exact number with me, but we did use the major emergency money for that because it's available, but also we had a healthy reserve, so we could have used our reserve monies as well.

Gotcha.

Okay.

Those are those are my questions.

Thank you.

What is a month of uh operations look like in terms of a number?

We you had a percentage, but I just would like to know what the actual number is to run the city for a month.

I mean, I could do the math, but I figured you're much quicker.

Yeah, it's about, sorry, run on it's about 12 million just for operational expenses.

I'm sorry, you said 12 million?

Yes.

A month.

Oh, I'm sorry.

Because the practice is to have two months of operations reserved.

So what would a month of operations?

Yeah.

Yeah, it is 12.5.

Okay.

Um, in terms of timing, what came first, the five million dollar reserve or the 20%?

I'm assuming I'm not gonna say that.

Um, from the information that I was able to look back through the city, it looks like um there's been a variety of different um policies.

Uh there was at one point, I think a very, very low, if not, there was a zero percent um reserve target.

Um, so there was no reserve target at all.

Um, I did see another uh reiteration of like 15%, another brought it to 16.7.

I think it was in 2021, which was the last time it was updated, it brought it to 20% plus that five million in 2021.

2021.

What was the do we know what was the council's uh intention?

Um behind the 20% and a five million, trying to think what happened in 2021 or in 2020.

I mean, I can I mean yes, right.

So I suspect that a lot of it was related probably to the pandemic, and wanting to ensure that there was adequate funding.

I think at that time the city had a much healthier fund balance.

Um so it made sense to be able to put aside that additional five million for major emergencies, and again, it wasn't necessarily specifically to national or natural disasters, but things like the pandemic that came when there was a significant uh amount of uncertainty on whether or not we were going to be reopening what uh impacts it was gonna have to um sales tax, which is the city's uh number one uh highest revenue source, and so it could have been very devastating to the city, and so I think that that's probably why they increased the policy at that second.

Um what are you have we considered kind of a phasing out so in terms of fiscal year 23 would return two million that would leave three million in the emergency?

I guess where I'm at is um, I would I am supportive of the 20%.

I feel like that's you know, the standard is 16 point something, so let's just say 17%.

Um plus a little extra up and we keep the 20% uh contingency, but I'm a little hesitant to kind of flip both the five million all at once in one fiscal year.

Um, so I'm just thinking about phasing it out where fiscal 26 27 we're looking at, you know, keeping a three million dollar emergency reserve, see how things go with the federal administration, and then you know, fiscal year 27, 28, you know, just depending on that.

I I know it adds like a level of complexity in coming back and having an agreement.

Uh, but I'm just hesitant to like let go of all the five million at once, particularly because the council, we're gonna come back.

We don't really have a biannual budget.

Um, we're gonna come back next fiscal year, and I'm just I kind of want to keep a little bit extra cushion to kind of see where that what we're facing at next fiscal year is expand for that.

So I think a different way of looking at it if you look at row 23.

It's it's the available funds that are available, right?

And so row 22 doesn't have the five million.

But 23 is how much money we basically have in the savings, and so what you're saying, for example, is we would add five million to the 33.

We need to make sure that we're covering that 33 million the five million is carved out of that money.

But the problem is in the future we have less money.

So if you reduce in the future, you have less money in the future.

But I think your goal is to have more money saved away versus less money saved away.

Is it something we fund every year versus it's something that's already funded and we carry it forward?

So we have five million saves in the bank and we smooth the five, we every year we make sure that that five million gets taken off the top.

Right.

So the less money you have, the more you would probably need the five million versus the more money you have, the less you need the five million.

Um, I'll stop there.

I have comments to add to that, but I'll I'll pause there.

We just think that's uh that's those are all my questions for now.

Okay, so I'll jump in a little bit on order.

I started their spectral.

What are we gonna spend the five million?

I think that it's really easy once we release the five million to just spend it.

Say, oh, things aren't so bad, and we just kicked a can down the road.

So that's my biggest concern is just releasing it from the district, quote unquote general fund reserve.

Um, I feel quite concerned that we're not going to do the uh belt tightening that we need to do.

I think the direction to council from council had been zero operating loss, and we achieved that this year in the budget.

So I want to get confirmation on that.

So the direction for the two fiscal years in this biennial was um regular operating expenses had to match revenue.

Um, so uh essentially these two years we did not include transfers uh to allow us to phase into that uh direct approach.

So starting in 28 transfers and operating had to equal revenue.

Correct.

So I look at that as operating because we we had to buy the fire truck and we had planned to pay some roads or do some something like that, but just my my regular ongoing operating expenditures, those needed to balance, and the budget that came to us was balanced.

I get that, and so I'm not gonna have that debate.

But setting that aside, it's that line three equals line four, or is it bigger than line four?

Is that the direction that staff thinks it has?

I think you're asking a question.

You're asking a different question.

You're asking why.

I'm just saying is the understanding of the direction from the council that line three in our budgets will be greater than line four.

The budget that you saw in June, yes, that is true, but this is September numbers.

This is a totally different shoot you're looking at right now.

So it's a September reality added to this, not June's projection.

So the question is why are they not the same?

No, that's not the question is purely the direction from council.

The direction from council, I believe, is that line three will be greater than or equal to line four.

Yes, and that's the budget the council adopted in June.

Correct.

So that's that's the direction.

So we're managing costs, expenditures such that line four will be less than line three.

Correct.

Might be one penny less.

Correct.

Okay, that's perfect.

Um, because that that then made me wonder why in the forecast that we are providing in column D, line four is greater than line three.

So during during the budget process, we um we did make significant uh adjustments to the budget to ensure that the reductions we were making got as close to revenues as possible.

Um that we acknowledge during the budget process with the city that the staff didn't get to that directive, and the council needed the staff grace to continue to work on it through mid-cycle.

So we will get to that point.

We are still having conversations, looking at ways that reductions can be made, analyzing how those will impact the organization but also impact the community and being really thoughtful and strategic about those reductions.

And so this is a model that's forever changing, as you know, and as we have more information on revenue projections, those are constantly being updated as we make um changes to expenditures, whether that's reductions or increases based on uh directions from the council, and those will be reflected here, and so this model will be forever changing, and we'll make sure that we're providing these to this committee as well as to the council on a regular basis.

So, I think this is comment, not really question, as long as work is being undertaken to identify the three point something million dollars, because that is council's direction.

$3.7 million being the difference between line three and four and column B.

Okay, so I just want to make sure that we're aligned because that was clear direction, but I know it's taking work.

So the grace was we're gonna give you some time to figure it out.

Um, and so what I heard, council gave us direction.

I just I heard the number 28, which I don't think was, as long as we're clear, lines three and four right now need to be balanced.

Correct, okay.

Um, mayor if I can just ask just for the record, it's three million on this sheet in September of 2025.

Finance is working every day.

You your entire A team is in this room because we are working weekly on our fiscal sustainability.

That three million could be four million next week and five million the week after West Finance.

I just don't want to have a showing number, but the point is that revenue and expenditures equal four revenues greater than expenditures is clear direction of status.

Perfect.

Um there is a question more generally.

We have other, I'll call them reserve accounts.

Um, one of those reserve accounts through those reserve accounts are money that we have set aside in pension trusts to cover the spiking the top of the hill of the caliperist projections for where they're going to keep charging us more and more and more.

Right now we're at 68% of salary.

I think it's gonna peak at 72 or 75 or some number like that.

Um is the right time to release that money to do the smoothing?

Because the whole point of that was to have the money to help smooth when these peaks came.

And is that part of this discussion?

Because I think of those as reserves that we're essentially dipping into, not dipping into, and instead dipping into this general fund reserve.

So the OPEB and the pension trust fund are actually held in a separate fund from the general fund for that particular reason.

And so we have met with our actuarials, talk about different modeling and ways of what makes sense on a drawdown.

Um I know there are other agencies that have used that as a strategy to balance their budget.

It is something that we can continue to bring to this committee as part of the discussion about the mid-cycle adjustment.

Our actual will probably tell us just keep it in there and continue to build and build and grow on it.

And we'll talk a little bit about that trust fund on later today and how that's been performing.

But it is something that we can bring forward to this committee as an option in February when we start talking about the various budget reductions and budget strategies.

That is the strategy that we can we can explore.

We can look at different scenarios of whether or not we do a phased-in approach, or if we when do we think the caliper's peak is?

It changes, it keeps changing.

I apologize if we need to laugh, change it.

No, but I think that we can laugh in this room because this is a reality that cities are facing.

And you know, just publicly, I've I've told the California League of Cities that I think this is the single biggest crisis that cities face.

Now that's my advocacy work.

I we haven't seen the change yet, but to me that is the single biggest problem.

And for us with a 68% load, that's those are crazy numbers.

So just try and understand that modeling.

When will it peak will inform that decision?

Because I do I do think it's gonna be between the two when we when we have to how long we have to keep the belt tight.

Um, one other quick thing.

I noticed that this says potential acquisitions.

Is that a closed session discussion?

Yes, thank you.

Um, and then one last comment before going back to my council colleagues.

How will this we have a credit line right?

There's some do we have a bank credit line?

A big credit.

We have the bank account.

Okay, bank credit line.

I don't believe we have a credit line left.

I'm looking at my to see a fund reading of the but we don't have a credit line.

So if something blew up in our city and we needed, you know, 20 million dollars of emergency money.

We currently don't have a standing credit.

We're not gonna know that credit.

Okay.

This whole notion of what is our reserve percentage, I'm always thinking about what's the impact on our borrowing cost.

And I don't have a clear understanding because we're making it, we're having an abstract discussion about 20, 16, 20 plus five.

Yeah, but I don't know if the rated rating agencies care.

It doesn't matter until it's a 50% reserve between 50 and 10.

They don't care.

I just I don't really know.

So there's a variety of things that like an agency, a rating agency looks at.

Yes, it looks at your long-term fiscal sustainability, it looks at the policies that you have in place.

Um, it looks to make sure that you're not defaulting on your loan, that you're making your debt service payments, that you're making your payments to CalPers, the city does prepay as unfunded liability.

So we demonstrate that we are fiscally responsible.

And so that often um will play into what your rating agency um uh evaluation will look like.

Um I can't speak to when the last uh rating agency um looked at the city's um uh financials, um so I couldn't speak to that, but those are the type of things that I will say that the city of Stanley and Grove, it looks at the pension and OPEB pension uh fund that has been created.

These are all very fiscally responsible um approaches to city's finances, and those all make uh the city less of a liability to um funds too.

So I think that the just the comment then would just be to the extent that we can get expert advice on the the impact because if it doesn't impact in an expert's opinion, then I'm a little bit less stressed.

Um, but understanding 20, 25%, whatever.

What is the impact on our credit rating?

I have questions for my colleagues.

Thank you.

Um I just I was thinking about some of the other variables that are baked into this projection, and I'm thinking about uh contract negotiations coming out.

How have those been baked into these projections?

So any known um MOU contract agreements, those are included in our model.

So those that are unknown, for example, contract may expire in 2027, we assume a 3% COVID for every year out.

And what are the bargaining routes that are expected to come before?

So the next we don't have, luckily, the city has long-term contracts, so we know exactly what our cost is.

And for PD, does that assume that we're meeting the uh the FTE projection, the FTE goal for PD, or is it at current staff levels?

So we look at labor negotiations and what's going to happen there separately from the staffing because we can have a brand new contract and have staffing issues.

So the PD specifically is true that we lost, and we have a way of project.

We look at point in time, where we are and how we have added FTEs in the last 12 months, the last six months to project future.

And we also look at the number of individuals who are eligible to retire within the next budget still two years.

But then we also look at how many people who were currently employed were eligible to retire and how many of those people didn't retire.

So what percentage of those who could retire are still working here, so they say that's probably gonna happen in the future.

Um we use all the things we know to be true to project.

I will tell you, I just met with PD management yesterday, and with all that and that and all the things we need to be true four months ago.

Our numbers are off in a financially positive way because we are not because of the ends, trees and exits, we're not adding FTEs as fast.

Um, but in a staffing way, it's not a positive, right?

We're essentially saving money because we don't have the staff to do the work.

Got it.

Um, so just bottom lining it, it it's we're assuming a three percent just for just for projections.

And and that's calendar year 28 or fiscal year 28 negotiations, fiscal.

So uh those are all my questions, and then if my colleagues have any up there, okay.

Uh so just in terms of things that I'll be looking for, just information.

So, what's the help risk?

Probably estimated.

That peak is shifted 17 times, so we know that's fine.

But just let's let's put it on the table because that actually arms me for discussions with people at the legislature about that mismanagement.

Um, the second thing is really just trying to understand the impact on our credit rating and doesn't matter because if it doesn't matter, it doesn't matter, and that's that's fine.

And then really being sensitive to um that question about if we were to release, and I'm inclined to go with what Councilman's Walton said, which is yeah, let's not let's not really get rid of that five so quickly because we just we need to be a little tight, but if if we're going to do some releasing of that, where are we gonna spend that money?

Is it gonna keep us because it really because it's not ongoing money is it's one-time money?

It really is sort of capital, just going to those one-time expenses, not into just you know keeping keeping programs running that are not sustainable based on our current revenue cost projections.

Any other asks of information that we'd like?

Wow.

C amendment closes.

I would just say that the five million wouldn't necessarily go to paying for other things, it would be released and would be applied to line 23, which is the available economic funds available for economic and surgeries.

Yes, as we continue to show a use of fund balance.

But what we also see is that we're heading in a direction where we're eating up that balance.

And so there's some sense that oh that number went from 18 to 22.

We're okay.

We can spend it.

So I think it's a there's a certain psychology.

The other piece of this to mayor is this is version two of this particular forecast in this presentation.

Version one is four slides back.

You'll see on this version that line 23 is 28 million dollars.

So in version two, with the elimination of the the proposed elimination of the major emergencies reserve, line 23 goes up to 33.

That's where that five right now.

So oh, we have we've met our reserve threshold, now we can spend it.

Yeah, that's all I'm saying.

There's a certain psychology there that says we can now spend.

So that's all.

I think just the last thing I will um mention on this item is that it's important for staff to know we need direction from the committee.

I understand we have questions, and this needs to go to council, so we can bring answers to those questions to council, but as we prepare this budget, the updates that we are working on constantly.

We need to kind of know where we're going.

So we're trying to to kind of build the house as we're on it, you know.

Um, and so it's important, we still have to go to council to get their direction, but we need to know kind of where are you leaning so that we know exactly because for example, row eight is what we're trying to fix as well, but it all depends on what we're doing at the bottom, how it all works out.

And so if you're if the committee's like, you know, keep the five million, slowly take down five million, remove the whole, we kind of need to know so we know what we're doing overall.

That's perfect.

So in terms of guidance, and then I don't want to mischaracterize what you said, so let me just kind of undertake a stab of what I think the guidance is.

Um, it's in the in this fiscal year right now, in the next nine months, whatever let's let's leave the five, but we are inclined to potentially drop it to three the following year and maybe take it down some more, but that's not that's not set in stone, but for right now, so now I'm gonna turn to my colleagues and see if we feel comfortable with that as guidance.

Um do we have like an interactive Excel where we can plug in the numbers to see what the percentage would I mean I can try to figure it out, um, but what does that look like for major emergencies if we stagger um three million?

I'm asking about column D or C.

So for this year, what I proposed was five for the next nine months, and then consider this impact.

Are you suggesting go ahead and get the three this year?

And column C, no.

So it would be five, so I think you have unanimous agreement about column C, and we keep the five for this fiscal year as well.

Nicole, can you go back to the slide?

Actually, has a five million on the end.

Correct, right?

So this is what we're working from.

And then next year, we're I'm hearing a potential for an inclination to reduce it somewhat next year.

Yes, my question is does that reduce 20%?

In the next year, and then because if it's zero, next year is 13%, right?

So there's still cutting to be done next year.

So anything above zero is somewhere between 10 and thirteen percent, it's three next year.

If it's three next year, then you're at 11%.

So I think this will raise more general question about do we tap into the trust funds?

So is it too soon, too late, blah, blah, blah.

But that's you know, that's not agenda, it's just I don't want to get really into that discussion.

My thoughts is my thought is if we if we completely remove it, and then we we have the forecast on the other slide, um, but if we take out, if we stagger it, I'm just trying to understand how the staggering would help on line 25 of proof with reference to our releasing it next year, part of it next year.

We have a much more painful situation in column D, right?

We'll be really up short.

So releasing it next year, all of us being equal, helps the set of a deeper hole.

Whereas this year we're close, we can squeeze here, squeeze there, and meet our reserve threshold.

But next year it's we have a problem.

And so going to the well in a particularly tough year, is what I'm suggesting is our starting point.

And maybe the question isn't so much what you do this year, because this year, we're almost how we get approved by counseling, or halfway down this year is what it is.

It's really you're talking about 26 and beyond.

What is the direction from the committee and then that's the council on that?

So I think your question I think Councilman Aguilar is going zero versus three million next year.

What is the benefit of doing three million versus zero?

I think I also have that same question.

We're also not clear staff what I want to sell to them for by having 3 million in there versus zero, because it's all still in the same place.

But what happens, it's just it's purely a mathematical calculation.

Because in essence, it goes down to the line, it goes from line 22 to line 23, so your coverage percentage or percentage goes up.

It's just a categorization.

But I think the point being that there's about the psychology in this year, like you said, the year it will be done by the time that this gets uh approved.

And you know, we're close enough that we can squeeze and meet from 18, we can get to 20.

18.7, whatever it was, coverage.

Oh 16.7%.

Uh, go back whatever the four pages value is.

It's 18, but the question isn't isn't the current year we're in question.

Yeah, well, but that's where we're starting.

Because in theory, we could make the current year zero if we wanted to.

So uh say two point eight, right?

Um but next year, we have a bigger shortfall.

And so part of that, what I think what you would hear, but I think I'm hearing from this committee, is that there's some openness to that recategorization, at least to some degree, and that there might also be some interest in going to the trust funds or at least exploring that, and not just simply everything has to be cut, cut, cut, cut.

So, I mean, there's multiple levers that are being considered by this finance committee.

So, Mayor, there are multiple level levers.

Keep in mind that staff's charge, if you will, is to bring back to this committee and then subsequently council a proposal that balances in top of D, lines three and four.

So if SAT does that job, that frees up 3.6 million dollars in expenditure, so it's $3.6 million dollars, then get added into what would be the reserve.

And if you add then the $5 million on top of the 3.6, and then assume that your base expenditure is 152.3 billion dollars, you're still not sitting at 20%.

At that point, we're probably at about 19 weight or 19.9%.

So then if you factor in the other elements that you just talked about, perhaps drawing down out of that or pension trust.

And by the way, by the way, the peak year looks like it's around 2031, 2032.

We are just now entering that optimal climb, if you will.

But if we do that, then I started that was earlier.

Yes.

Again, it keeps changing.

Okay, so we have so there's there's a lot of moving parts and several ways to slice it.

But if we were to just even if we were to bring forth a balanced proposal for the next fiscal year, and there is consensus to reduce, or excuse me, to eliminate major emergencies, those measures alone still don't get us 20%.

So there's consensus to keep the 5 million major successes for this fiscal year.

For column D, I think there's uh interest in a flexible approach to perhaps reduce it to 3 million, reduce it to 2 million.

Completely use it all, and or dipping into the funds, and or looking at some additional cuts, but I think that that's just getting there, I think would be the next step of the full picture.

But understanding what like here are three scenarios.

There's three ways that we could handle this, because I think that's part of what council member was asking.

Well, what happens if we do this?

And I think I'm layering on top of perhaps council members.

Okay, so if we do this, or if we do this and this or this or this, because having the ability to consider various choices and have a discussion about the pros and cons of those choices, I think would be would be useful.

My other question is, the net use of fund balance, what does that include?

I mean, because I see everything, I see this item line item eight completely in red.

So I'm trying to understand what is this, what is the the net use of the fund balance?

Why are we on the red for that particular net use?

Because it seems like that's also contributing to correct.

So if we as the departments look at program reductions, operational reductions, as we look at potential drawdown from the pension trust fund, um that red number that we see will start to decrease because our expenditures will balance with our revenues, um, and so when that reduces, that just increases the amount of unassigned fund balance that you have available.

So if you if you know, for example, column C, if that uh net use of uh fund balance was zero, you would have 7.9 million more in the unassigned available, which would ultimately improve your percentage of how much you have uh to spend on uh total expenditures.

So it is important from a fiscal standpoint from a policy standpoint to make sure that we are um continuing to make uh strides in making reductions, um looking at potential revenue enhancement so that way um we can make sure that that is um either zero or we are our expenditures equal our revenues, or um really great years, and it's a surplus and the black number.

And I'll add that the other, besides the direction that the mayor mentioned earlier regarding fiscal year 2627, which is column D, and having uh the revenue expenditures match our revenue B greater, the other direction that we have that we are working on is that row eight in fiscal year uh 28 and 29.

So columns E and F is zero.

That's the other direction we gave us.

So what that means, what you're looking at is that we staff's assignment from what we see today, because these numbers are ever changing, is we have to cut 10, 15 million dollars before we come back to the council in the spring on what that looks like, and on row six, how much of that three million dollars is multiferred, and how much is the potential acquisition?

500,000.

It's 2.5 every year.

Correct.

For operational expenses, 2.5 for this acquisition that we're talking about.

Correct.

Okay.

So when will we be discussing that in close session?

I think we just talked about it in June.

Um and staff is working on it, but we can bring back an update.

Okay, I think a question is in this end.

Um, I think the direction is to I guess for I mean, I guess for the fiscal year 2000 2526, keep the five million and then for 26, 27, 3 million, and we can figure out.

I mean, you know, essentially, we have to make some cuts, and the question is where do we make the cuts at?

Um, because we know we we have, you know, we have to maintain a healthy um percentage and by looking at what we're currently at, it's not gonna let's not do any do us any favors.

I mean, you know, we do need some sort of fishing.

I'm just concerned.

Um, but I you know, I would, yeah.

Council member Raveros Walton had made a great comment and suggesting three million.

I think we should stagger it and figure out if we really do need that to meet our healthy percentage of 20%.

Okay, maybe something to time.

I think everyone's had some sort of discussion.

I think there's steps for our next meeting, we're about to be the end quarter, or what that's gonna be um in concerns about moving to our next item.

Okay, so we have our next item, which is item two B.

Mayor, I have to excuse myself.

I have a work commitment, I have to step out.

Thank you.

Oh, make it there.

I will ask, is there anything that we need out of two?

David, does that have to happen today?

Is it a fast item that we click it off and it gets to council?

It is not required to be presented.

Okay, it's just an update and go straight to council because it goes on consent.

Correct.

It's just an update on what the performance was for the first time.

Okay, so this will be going straight to consent period.

Correct.

Okay.

I didn't have any questions.

And that's the same for two C, correct?

I would hope not.

No, that's a it maybe we'll probably go on consent, but we do need to present this evening, but I mean that that's that's that's a big deal from council if I'm understanding correctly, right?

Um, I'm not sure if we can always goes on consent.

Right, it's always a consent.

Yeah, but it's a big discussion in this committee.

I know I wasn't saying that was a the next step where it goes.

Okay, 2C and 2D is the same.

It goes on consent to council.

Perfect, okay.

2D.

Good evening.

Um, here to give an update on Project Elevate, which is our branding, new branding for our ERP project or workday project.

Our agenda.

We're going to talk briefly about Elevate Central, our new project headquarters, key activities and milestones to date, a project roadmap and next steps, project status, key risks and considerations, and then QA discussion.

And I will have at the start of QA some frequently asked questions that I'll cover and then open it up to other questions.

So Elevate Central has a new project headquarters.

It opened August 4th.

And it's our centralized area to collaborate and information exchange.

It's been a huge success.

It's in the location of the former school district offices.

Staff and consultants are working hard on software configuration and system testing.

We have conference rooms and areas for people to work independently and together.

And it also will be our go live home for Elevate Central customer the customer service team when we go live for both phases.

This is just for the implementation phase of the project, but uh from July to December of 2024, but uh the project and budget was approved by council.

Consultants were onboarded.

The strategy phase was completed, and we did have one change order to change our pay cycle from semi-uh monthly, monthly to biweekly from January to June of 2025.

We completed foundational workday training, planning, design, and configuration for phase one.

That would include payroll, and human capital management, time entry, and then from July to October, which would be next month.

We uh we completed unit testing.

End-to-end testing is in progress.

In-to-end testing actually represents just kind of like it sounds full business process testing from end to end.

It is really our quality assurance to make sure we get a quality product and all the business processes function well.

It's extremely important.

And we also initiated phase two uh core financial work.

We do um we do have a change order uh for to move phase one go live to March 1st to allow time for quality end-to-end testing, and I will cover that more in our FAQ section, some details on that.

Project roadmap and next steps.

So moving forward next month to February 2026, we will complete end-to-end testing for phase one and begin and complete parallel payroll testing.

Um we'll execute training and change uh training and change management strategy, and for phase two, we will uh complete foundational finance workday training, complete uh complete planning, design, and configuration.

In March 2026, we'll go live with phase one, and into June of 2026, we'll have go uh post-go live training and support in the and for phase two end to end-to-end testing and training, and then July 1st is the 2026 go live, is the financials, uh core financials go live in July on July 1st.

Project status and risks.

Project is currently on schedule and on Buzz it.

I know there are some questions about how can we be on schedule if we've had changes to our phase one go live, but the overall project and phase phase two go live are on schedule to complete by July 1st.

I'll talk a little bit about in our FAQ section about how we accomplished that and how we were able to move one go live without impacting the other go live.

Change management and adoption, these are now we're moving on to risks.

Change management and adoption.

The transition to bi-weekly pay requires folks change management.

That is a significant change for us.

With that change comes risk.

Workday represents a completely new way of doing work for us.

And implement implementing best practices requires user training and adoption.

With all of that change and comes risk, our mitigation strategy.

We're working on a comprehensive train training plan to ensure a smooth transition.

Another risk is testing.

Additional time may be needed to complete quality end-to-end testing.

We've added time, we are on track to complete the end-to-end testing with the time allotted for the March 1st go live.

However, it still remains a risk.

Parallel payroll testing.

This is where we test our Eden system.

We compare payroll and even to work day, and the risk is encountering a large number of errors or variances and having spend time to resolve those.

Our mitigation on that is to identify and add resources, prepare for a potential large number of errors and variances, even though we may not see them.

And we're in adding resources that includes contractors and additional vendors.

Okay, questions and discussion.

I do have some frequently asked questions that I think will answer a lot of questions that may be on your mind, and then we'll go to additional questions.

So this question is why did why did we delay phase one go live?

The project was first moved from September to January due to the MOU implementation conflict that we had with HR staff working on the MOU implementation and then the shift from semi-monthly to bi-weekly payroll.

That was significant, that required a change order.

With a small team staff capacity has been stretched, and additional testing time to complete testing was needed.

The revised timeline better aligns payroll aligns with payroll cycles and better aligns with payroll cycles and provides more time for both end-to-end testing and parallel payroll testing to extremely critical tasks on the project.

Parallel testing is our biggest concern.

Its success depends on completing end-to-end testing first.

End-to-end testing is scheduled for completion on October 10th.

Parallel testing is scheduled from November 10th through January 9th, covering two full cycles, five weeks and four weeks to complete those two cycles.

The duration will depend on how quickly variances are identified, identified and resolved.

Our goal is to ensure a hundred percent of variances are accounted for prior to go live.

What are we doing to mitigate risk?

Is another another question.

Well um, well, finance has extended its resource pool, engaging multiple resources for payroll.

That's one.

Additional consultants from Robert Half are supporting parallel testing, that's two, and we are engaging pure cities.

City of San Mateo is one, they're doing they have a work the implementation, and vendors with similar similar, similar parallel testing experiences, uh experience, sorry, engaging vendors with similar parallel testing experience to apply best practices and anticipate challenges.

How does this all impact phase two is another question?

Um the delay in phase one does not directly impact phase two because different city staff lead to two phases.

Um minimizing resource conflicts on the city side.

Some overlap exists, particularly for data, the data migration team, but this is being supplemented with external resources.

Also, lessons learned from phase one are all have already been built been built into phase two planning.

Work on the chart of accounts, the um foundational data model started eight weeks early, reducing risk.

Some finance staff training has also been accelerated to provide a head start.

Uh, careful scope and schedule management will be required to keep phase two on track, cost implications is the next question of the phase one changes.

Um estimated estimated cost of of uh schedule changes is approximately 300,000.

Additional cost for the additional cost for advancing some phase two work up early to to reduce risk uh and ensure accessible go life in July.

Uh specifically the chart of accounts, that was approximately 25,000.

All costs are within the appropriated budget to comprove to control expenses.

We have shifted some integration and reporting work forward, leveraging our data migration and leveraging our data migration and integration consultants.

Okay, so that that's kind of FAQs, and with that I'll turn it over for any additional questions.

So we're quite questions.

We have anyone from the public to speak on this item.

No public.

So we are closed on public comment.

Coming back for comments, questions, and the luck.

Um I don't have any questions, just a comment.

Thank you for the presentation.

Thank you.

And then uh just get a few questions.

Umit testing for the financials.

Is it listed on the presentation?

Are there another unit tests that are required?

Unit I mean, I just regging John, our project manager.

So unit testing.

Phase two testing.

Phase two unit testing is the.

So I think I'll couple things.

So I might have missed it, but we can go back.

I just want to make sure that this is specifically for the financial.

It's it's shown in March and June of 2026.

This phase two end-to-end testing.

No, but I was asking about unit.

Unit testing is not highlighted here, but it does exist in its schedule.

We just didn't summarize it here.

And so when will unit testing happen?

So it could happen in around January, February.

So doing the first October through December is the planning phase, and then January, February would be the unit testing, and they thought they had something called customer confirmation sessions that they go through that and immediately alpha that is.

Thank you.

Um are the consultants billing us monthly.

No, it's it's for milestone kind of thing.

So I think they have around what are we doing on six to seven visiting cycles.

And are they delivering on all their milestones and all that?

Yes, okay.

Okay.

One big concern that I have on payroll.

I guess they don't have a lot of confidence in the evening system.

Based on what I've personally experienced and heard stories from others.

Given that lack of confidence, and given that we're not currently doing bi-weekly payroll, why should I have confidence that when we do some kind of parallel test to Eden with our configuration, which will be a bi-weekly, that Eden will deliver something that I can feel confident in?

Would you like to make that maybe take it?

Yeah, yeah.

So we will be running two cycles parallel or correct.

Will we say parallel?

Is that truly parallel because we're looking at uh 24 pay period cycle versus the 26K period cycle?

Um we are working with the consultant so that we can build out a working model that will tell us what results should look like as we run the parallel.

Yeah, so I think again, my biggest concern being will our testing just prove that the consultant's design was inadequate, as it's right, that it's not really doing what it's supposed to do as opposed to work day as we've configured it, is not doing the right thing.

So when I think of parallel testing, I think I've got an existing process and I'm running it separately, and guess what?

They match, so I have comfort.

But that's not what we're doing is we're creating a new process that we're not running, that we haven't tested for the last 20 years, that people haven't complained about, and then we tweak and adjust and all that stuff.

We're creating something, and then we're saying, how does this newly created thing match another newly created thing?

And so I struggle with when I see potential cost overrun that gee, they don't match.

Is it that they don't match because that the the test control is inadequate, or that the new process is inadequate, and are we gonna spend a bunch of money trying to reconcile things that never should have matched because they're just not a source of truth, but even it's not a source of truth.

But when I think of testing, I think if you're trying to match a source of truth, you say okay, it matches, so I feel good, or it doesn't match, why not?

I'm trying to reconcile.

So that's the risk that I see, but I don't I don't know what how to read what what to expect as a reaction.

That is a risk, and that is we have something we're you know we're also concerned about and mitigating.

We are bringing on additional parties that have experience, Reggie can talk about it, that have a lot of experience doing this very same thing.

So that's one of the mitigation strategies.

But yes, it is it is a concern, and we're we're working through that with our current consultant and additional parties that have done this before.

Working with Eden in particular, not specifically.

Not specifically, like tomorrow we are talking with uh City of Sign McLean.

They moved from Eden to vote to they didn't do the 24 to 26.

So that's so that's my concern.

It's not the switch, but yeah, because that's that's essentially you have a source of truth, that's your 24 cycles, and you've you've let employees complain for the last 20 years, and so you feel pretty good about it.

And so you're matching to that source of truth.

Anyway, I don't want to be a dead course, but I view this as a real risk and could become a quadmire of when we say, ah, we're fine.

Um the change to bi-weekly payroll.

When was that decision made?

It was made um around May?

Last year, maybe no, maybe it's due.

So May 2020.

In May of 24.

So it was between July and December of 2024.

But I can't remember the exact month.

You remember.

Was it at so it was after the consultant was hired?

Yeah.

It was off to the consultant, for sure.

It was after the RP processes after the contract.

And I heard something about it's it's uh, like so look at does work they not just naturally accommodate 26.

Still no accommodating any of them.

But I mean, it's like this cannot be the first time that someone's done a 26 versus a 20 dollar at all.

So there's no extra complexity from their perspective.

They just flip this switch and flip that switch and flip a third switch.

The only only extra complexity is parallel testing.

Because you do not what you highlighted is the exact concern, and that's the only additional complexity.

No issues on the workday side.

They can handle it easily, and maybe we have many clients doing it.

That's all I have to do.

So we already have this item.

Thank you for the update.

So for our next item 2C.

We've got the system finance directors, which is still about presenting this side.

Okay.

Um, Silva Assistant Finance Director here with um our fiscal year 24-25 preliminary on audited um year in financial report and performance measures.

And I do just want to emphasize that um these are very preliminary numbers and they are unaudited and they are subject to change all the way up through completion of the audit.

We anticipate completing the audit by the end of the calendar year and um being in front of finance committee in January at this time.

So that I will um just give a quick overview.

Um, so we're I'll dive in a little bit to the the general fund.

Um, if you can just move that mic, yeah.

Send comfortable.

Can you hear me?

Yeah, I just want the recording to hear you.

Okay, can you hear me?

Oh, um in a big picture overview, again, looking at general fund, we have general fund revenue um of uh 146.8 million in actuals.

Uh that is a 3.4 million dollar favorable variance compared to budget.

Our budget was 143.3 million, um, and a favorable variance of um 4.1 million over fiscal year 23-24.

Actuals, 146.8 million, um yeah, 146.8 million for actuals, 102% of our amended budget of 143.3.

3.4 million dollar favorable variants compared to budget and uh 4.1 million dollar revenue um favorable revenue variants when compared to prior year.

That favorable variance is uh led by increases in uh property tax, franchise fees, business license, interest in property income, and intergovernmental, and it was offset by decreases in sales tax, other taxes, and licenses and per permits.

So with that, um I'll just quickly go into some of the uh positive variances.

So um, and if you're looking, you can see here um budget to actuals on this slide on the next slide.

We have a similar presentation.

Um, I know we're up on time, so I'll just move through these very quickly.

Um, but our property tax, which is the second largest um revenue source that we have, uh, came in at about $800,000 higher than um what we had projected, and that was primarily due to uh $710,000 dollars of um what we call ROPS um residual property tax revenue, and that ROPS residual property tax revenue is basically the leftover property tax that is due to us after we paid all of our recognized obligation bonds associated with redevelopment.

So those property tax funds are returned to the city.

So that was a positive variance.

So what we see, the proper uh the business license is uh increased and then the main business license category, and we saw a little bit of a decrease in the penalties, just again trying to be up front and get that in compliance, and that was about $300,000 more compared to the prior year.

So franchise fees had a revenue budget of $7.2 million and came in at 7.7, and that was led by electricity came in, um, favorable rec use as well as the oraloma fees, and um that really helped bring in that extra $500,000 there, and then we have our interest income, which is actually in uh the other revenue.

So we we have it rolled up here in this presentation, and um actual interest was $2.5 million budgeted versus $5 million earned, and that was due to investment balance, higher investment rates, that yielded greater returns, as well as some active cash flow management as we met our cash flow needs throughout the year intergovernmental, which again is also in the other revenue category there, is also a positive source of revenue for us this year, and we had about $655,000 in grant reimbursements that we were not anticipating.

About 585 of that were FEMA reimbursements that were associated with prior year uh grant adjustments.

So it's common for our revenue reimbursements to straddle fiscal years based on the timing of when we get the reimbursement, and in the case of FEMA, it could be years.

So we were pleased that we were able to get some of our cost recouped associated with some of the storms as well as some of the COVID disasters that and emergencies that were declared.

So looking now at declines, um sales tax uh, which is our greatest source of general fund revenue, came in at about um 1.3 million below budget.

We had already reduced our revenue expectation by 2.8 million at mid-year, and um we ended up with a budget of uh 53.3 million, and so we came in at about 52 there.

Um that's primarily due to this uncertain economy, and also we continue to have folks spend more on services versus um various products and items that are taxable, and then there was also a sales tax uh reporting correction that also contributed to our sales tax number, and other declines, not much small, but um again in the other revenue category, um, transient occupancy tax came in below budget by about 290,000, and that primarily was related to the Nimitz hotel closing.

So we in 23-24 we were still getting some remittances from the Nimits, and then licenses and permits, the largest building is building permit revenue, and that was down from about three point um one this year compared to 3.3 million last year.

So, all in all, um again, looking at positive year over year revenue of about 4 million.4.1 million when compared to last year and 3.4 million when compared to our budget.

And then this is just showing in percentage this the same, so I'm not going to go over that.

Looking at general fund expenditures, general fund expenditures authorized 164.2 million, expended 152.5 with 11.7 million remaining.

Looking year over year, all the departmental spending was in line with prior year.

I think the one change that we saw that was a little bit outside of the norms in human services as they entered into a lot of their service contracts and got some of the spending underway there.

I do want to take a moment here and pause.7 million dollars because that will definitely change and be a lot lower.

And with that, looking at other funds, other funds again trending pretty much in line with the prior year.

We have enterprise funds, which is our water pollution control plant, shoreline, internal service funds, where we've got our fleet and our facilities and our insurance.

Again, I looking at it year over year, pretty much in line with prior years, nothing noteworthy here in terms of other funds.

And with that, I'm finished with my financial presentation, but I did want to take a moment and also acknowledge that we incorporated our performance measures into this financial report here for Q4.

All of the departments as part of the biannual budget came up with performance metrics that we then tracked throughout the year, and uh that was also attached, and we have the departments here to answer any questions you might have on the performance measures and uh looking at the performance measures that we did track.

Uh I we did a great job.

It looked like we were meeting about 80 percent of the performance metrics that we outlined and planned to compare against.

Okay, so thank you for your presentation.

Uh we have any public comment on this item.

No public comments we'll closing public comment, council member.

You know, did you have some questions and or commentary?

Uh yeah, thank you for the presentation.

My question is with regards to the intergovernmental um grant reimbursement, so that was $655,000.

Is that just one particular um?

Or was it multiple?

It was multiple grants, and the largest variance was um we got a slew of FEMA reimbursements from the state for for various disasters and emergencies that we sought reimbursement for from from prior years.

Thank you for that.

And um with regards to property tax and sales tax, what we budgeted, um, the actual schema just slightly under what was budgeted.

Property tax um was favorable, and again, primarily related to that ROTS residual um payment that we get annually after we met all of our redevelopment obligations.

Any of that residual property tax comes back to us, so that was favorable sales tax did come in a little bit lower uh than we anticipated.

Um, and so we are uh incorporating that into our forecast.

We had already looked at that at mid-year and adjusted that number and um the economic uncertainty, the fact that uh consumers continue to spend on services, all of that is impacting our uh sales tax base, right?

And so year over year is about 2.1 million under um what we received last year.

Uh thank you those are my questions.

Thank you.

Um I've got some um I think mostly comments, a few questions here.

How much really around how we present financial information?

Um I think we really need to have multiple slides, and they need to be in this PowerPoint format.

Um first we should always have our best estimates of actuals over the last three to five years.

We have four actuals and one estimate where the financials are closed.

It should be just like here's the five years or ten years, so that we can quickly look at revenue trends of actual numbers, um having budget and then revised budget and where we are relative to the budget, that's useful, but that sits on a separate slide.

Looking at actuals and trying to get a good sense of the relative importance, is there growing importance of transfer tax, falling importance, growing importance of transit occupancy tax, whatever, but but being able to look at those numbers.

I know Council Mara has always been a big advocate of hotels and the TOT, right?

And so I think I'm glad that you called out TOT as falling because guess what, the numbers is gone as a hotel.

But to see that impact that that number in the city of San Landro used to be two million dollars and now it's 1.5 or whatever, that's very hard to see.

And I see this over and over and over in our presentation.

So that's why I'm kind of like a really really really think that we need to have that kind of trending on actuals.

And then we can do percentage train trending also uh percentage grows, percent percentage falls, but we we just have to have actuals through time.

Um that's number one.

I think showing budget to actuals through time.

Here's where we started the year with the budget, not the amended budgets, because we keep amending budgets, but when we start a year, are we do we end the year high low?

We on average we hit it about right.

That's really useful information for the council because it gives us a sense.

Are we conservative?

Are we aggressive, are we neutral?

But we can't really assess that without seeing the original budget and the final number for that fiscal year.

Um so the that's just kind of how we share data and how we can evaluate um what the numbers mean.

Um I do think that uh understanding oh, by the way, I'm really excited that we're gonna get our audit before the end of the fiscal year.

So I'll give you the praise right now.

We've been talking about why are we doing audits, you know, nine 12 months later, so thank you for that.

Um in this, I guess in the end, this might be different from traditional government reporting.

I just I don't want to get caught up if we have to.

We have traditional government reporting of these slides that traditionally reporting, you can have those two.

What I'm asking for is for information that really helps us see trends, trends through time, and and percentage growth, like for example, the most basic level, inflation should drive higher sales tax revenue, all us being equal.

But the trend that you identified, more service experiences as opposed to goods and services, less alcohol consumption, which is true for the younger generation.

These are things that we really need to be sensitive to that we then say, okay, how does our forecast over the next three to five years reflect the fact that this trend will continue or at the very least stay flat?

We don't we don't expect significant increase in alcohol consumption.

Um I can I can follow up afterwards.

Um but thank you.

We have anything else from you want to I do I do want to get to the performance metrics piece.

So there wasn't going to be any presentation around performance metrics.

There's not a formal presentation, it was material that was included in your packet.

Um all of the executive team is here to answer any questions that the committee may have on specific status to any of the performance metrics.

Um again, this is kind of a review of the last fiscal year and doesn't necessarily include uh the correct performance metrics, um, but we're happy to answer any questions, um, clarify anything, um, and in the future we can we can uh include some kind of summary in the presentation as well.

Um, that's what we've done in the past.

Oh, okay.

Right, there was actually a discussion of the metrics and should we tweak the metrics and how do we take the metrics to the next level?

This kind of feels like we're slightly supposed to be.

So, this is the report out from the feedback that was provided when the metrics were set, right?

And so the new metrics that are set for 25-26 came to the committee in Mar.

ADS, and this is our as director Gonzalez has mentioned we can change the practice in the future, but this is our normal practice for summarizing the year and it's the mid-year that you make adjustments because at this point we're three months from this time period even happening.

We wouldn't change 15 months ago.

I just remember being in the sister cities room.

Yeah, where the departments were presenting, yeah.

So this is just saying what the year end results.

Yeah, this is just kind of a report out.

When will we talk about seeing as we're three three months into a new year?

When do we talk about tweaking the metrics?

And because that's I seem to remember that that meeting where we were talking about metrics was in the fall of 24, but I could be misremembering my years.

Um, so that would be mid-year, which is winter.

Because we need to get to the first six means it's the big year has to happen than we discuss it.

Okay, but to your question about tweaking, because we have a lot of changes to make, and um, as we discussed earlier in this meeting budget changes, when we come with mid-cycle, it's an excellent time to discuss those metrics because some of the metrics may cost more than we have the money go for.

It's also the kind of place where we talk about things like how are we using AI to help us write emails?

If I'm using AI to help me write a speech, I expect people to be using AI to help them write emails or responses and these are just things.

I know I think you're using AI first to do some some responses, right?

It's the first draft.

Uh I use AI all the time.

Yeah.

So I just think it's these are the kinds of things that are very real that we need to be thinking about.

So when I look at some of these performance metrics, I think, okay, well, for example, a performance metric might be how how have how have departments incorporated AI?

How many emails or you know, people can attest to each each week they used AI to generate five emails or what?

I don't really care.

I just I don't feel like we are putting those kinds of things in place to keep moving us forward.

Um, it's not visible to us, how's that?

That is um I I can see that feedback because we are not at a point yet where it's council facing, we can, but I can't tell you that we have our since our IT director is in this league, which know he's not in our finance committee meeting, that he is the executive sponsor for what we have as an AI working group, and he's implementing a new software system for AI uh called Madison AI.

He also has a city policy that's almost done regarding generative AI, and there is an ACERI committee, which includes a lot of the people sitting in this room on that committee, plus other staff.

So the AI work is we have um a good portion of staff working on this work to make sure that we are made are we're moving forward with technology but also keeping the city safe at the same at the same time.

Um once we finalize everything we can definitely share with the council.

And not to take us too far into something that's not on our channel.

Does everyone have access to copilot?

Yes, okay.

I use copilot regularly.

Yes.

We also have to be sensitive to the type of information we put in AI.

So my question is with regards to the taxes.

I know this earlier this morning.

You know, we had a meeting of this committee with um potential cannabis dispensaries, and so I'd like to see what potential revenue could look like with um, you know, the thought of council mustering around figuring and working with staff um where dispensaries go, what potential revenue could be generated from that.

Um because you know, I we are like I said, we are facing a structural deficit to see how much money that could potentially cost.

And the mayor had mentioned that you know there's a there's uh I mean I think Steph also mentioned that there's you know certain trends that are happening and what is happening in the the cannabis world as there are higher consumption, or you know, people medicating themselves because with reality of uh inflation.

Um I I'd like to see what those numbers potentially could be, um, and I know we have that kind of in here, but um, I'd like to take a deeper dive on and what that revenue generating number is.

Sure, we can't really take a look at that.

Um, it's really dependent on how the applications are by council, um what that rate is at, um, it is based on both receipts and I'm not taking it.

So it is something that we can take a look at.

And just want to be clear on the the ask uh councilman value.

You're looking at currently our status or what the potential would be if we were to expand the ability to move to different locations in the city.

Both okay.

Thank you.

We kind of explored briefly this morning, but part of what was missing was just this topic.

I know it wasn't on the agenda, but I think the same sort of questions were were asked by sport.

Okay, so I do have questions with what's on the performance metrics.

Can we pull up the performance measures?

It was one of the attachments or I can.

So we can just start with parts and rec.

Yeah, it's just so much easier if you come forward and grab a mic and there's so many mics.

So let's start with, you know, the these actuals are amazing.

There have been some significant increases in delivery.

So I think you know, you should be really excited about that.

And curious about your goals, because the numbers and several cases are meaningfully off from the goal.

Are your goals quote unquote too high?

Um, do you feel comfortable with okay?

Well, we increase 30% or increase 40%.

So I can rest now, or just kind of fill that out a little bit, please.

So for our um targets, so for the first one, um, those figures, and those figures are based on uh two fiscal years, so uh fiscal year 22 and 23, the total combined for those two fiscal years was 14,000.

So um, sorry, my left count.

So our total projection was 16,800 uh program registrations, um, we exceeded that two-year goal of 16,800 by approximately about 2,600, um, and to answer your question as far as continued growth.

Um, we still see a lot of opportunity.

Um, I believe the utilization rate for uh facility rentals as well as programs offered um still allows for increased programming and facility rental hours.

So I think our new targets are on them in front of me, but I think the 10% annual increases, so we're still trying to continue that momentum of activating um community centers and programs.

That's for so now I understand that they're annual.

Yes, okay.

Okay, sorry, just to make sure I can hear so now we sit there by annual targets.

I think that we have a habit, I won't add an adjective to that.

We have a habit in the city of using that terminology fiscal year 2425, which is a little bit confusing because that's fiscal year 25 to some people.

Yes, in your interpretation, that's really two separate fiscal years.

I would ask that we just stick to one, and that if in your way that should say FY25 to prevent that confusion FY24 slash FY25.

And if I can just add real quick, that agreed that the presentation does need to confusing, though the target is by fiscal year 24-25.

We will have a achievement this goal.

So the way he's breaking it down is in the two years, we did meet that goal by that year, but I will say the way that we present it now, we just do singular year.

So it's no longer a combined number for the biennial budget.

We said it's per year.

How do we uh plan to meet our goal?

Which is good, but it just lets me chime off on my pet peeve, which is it should just be fiscal year 24 in other places.

I see this happening.

So it should be a fiscal year with one number agreed.

And it's always a fiscal year ending 24, fiscal year ending 25, etc.

Thank you.

Um, I'm gonna just go to the character.

Okay, just very quickly, let's go up to library services.

Thank you.

So great things happening at our libraries as well.

Um this reflect uh the addition of the um student library cards, the scholar cards, uh no, it does not actually.

Okay.

Uh is that now in place?

Uh some of them are, yes.

So we've got uh the cards for San Leandro Unified School District for the middle schoolers fully in place, excuse me, and we're working on getting the uh elementary school in place as well.

Okay, so I think it would be good to include those numbers, and obviously, you've exceeded.

As you're talking about that 31% target, that's at the end of fiscal year 25.

We will have reached 31% penetration.

That is correct.

Perfect.

Okay, well let's just kind of get let's do a little extra sunshine with uh uh and then if you can go down to the next one on this side.

Um how do I read that 26,000 or 263,520?

Is that at in fiscal year 25 will reach that number?

Is that and it's some kind of addition?

So that is uh would be the that would be the target at the end of 25.

So we far exceeded it.

Okay.

And then where were we before the pandemic?

Excuse me, before the pandemic, I'd have to um look at that exactly.

I don't remember off the top of my head.

I want to say for library visits, we were near 400,000 a year.

That's my recollection that you've given that number before, it may be a little bit over 400, 420, 400.

Um, so as you think about the future, is that is that your target to get back to pre-pandemic?

I would love to say that, however, with having to close uh hours because of uh reduction in budget, it's hard to meet the same visitor number when we have less hours open.

Um so that's I think the other thing that we I would add to that is behavior of humans has changed pre-pandemic and post-pandemic, and so what's um I think just even thinking about living in virtual space, a lot of what we used to do pre-pandemic was to go in person to all different types of things, and what we are noticing now is that that's not what a lot of people do for even when I think about um not just visiting the library, going to the grocery store.

A lot of our practices were going in person, and now that's not really our practice.

So our library staff does look at different ways of engaging people to want to come to the building, it may not be for a book because now they receive that information a different way.

I'm assuming when you say library visits, that's people walking through the front door, correct?

It's not checking on a book, correct?

Okay, yeah.

And and if I could elaborate on the city manager's comment, uh, as an example of what she's she's uh saying pre-pandemic, our digital circulation circulation of digital items was in the single digit percentage of all total circulation.

Now we're at uh this past year, uh fiscal year 25.

We were uh 20 percent.

So it's so if you don't if 20% of your circulation now don't even need to enter the door, that's a lot less reasons to come in, at least for books.

Um so to double down on what she was saying, we're we're looking at providing other reasons to come to the building, uh, be it exhibits, be it the study spaces, be it um programming, uh, and and who knows what else we might come up with in the next uh in the next in the future.

So that does then kind of go to that third metric, the second line here.

Is circulation growth important if we have less usage?

We have it's it's still important because um we have less physical circulation usage, but we have um greater digital circulation usage, the total of which is what you're seeing here.

So it's we're combining digital and physical uh into this total number, and this number uh pre-pandemic, if memory serves again, we're getting closer to what we were at.

I want to say that was in the 500s 500,000 category.

Um, I'd have to look at that again to you know fully jog my memory, but I want to say we're getting closer to that.

Um, so it's still important because we want people to be reading.

For next year, I'd suggest you have the number of participants in your thousand books program.

It's just so critical, right?

Maybe they're like really core to the community.

Um, and then that last one, I did not understand this.

What the numbers?

Yeah, let me.

I think the there was a the percentages are off.

Um, the top number isn't a percentage, that's an actual uh count.

So it's the basically the average attendance per program.

Um I'm not sure how the percentages what why that got to be a percentage on there.

Um so ultimately what we uh we we saw uh at the end of fiscal year 25, um, we saw a reduction, but in part it was how we were counting.

Um so as we've been going through this, it's also been a little bit of an exercise of uh what are we counting as a program and um and attendance and the fiscal year 24 our um uh our project literacy program, those programs they did were not we didn't count those, and we should have um so the number of programs was less and because and those programs have a very low attendance, they're very high impact because we're teaching people how to read, but it excuse the the ratio, so that's what you're seeing there, okay.

So I think being cognizant of that, um I know that you don't told council at least once, maybe twice, that you've been monitoring data because you want to make sure that as a general principal, your programs have adequate attendance to justify holding that program, which is all really good, right?

Because you're trying to be mindful about how you spend your your time and money, and of course, programs like a program, uh project literacy inherently, just fewer people per person.

We do have volunteers there also, but the point that I'm trying to get to belatedly is that we are I want to make sure that we have a reasonable goal, right?

What's the right goal given your mix?

Is the right goal 50?

50 per program is the right goal 150, is the right goal 22.

And being sensitive to that, and maybe being explicit, we want to have 100 big programs, 50 moderate-sized programs, and two small programs.

Whatever it is, I don't care what it is.

Um, because I think when it all gets blended together, it's really mushy.

I would agree, and I think that's the analysis we're starting to do internally as well.

Um, one of the things on what is the right number?

This has been helpful to for us to kind of try to start to identify that because we were still coming out of the pandemic when we set these goals, so we were still kind of wondering what is the public response gonna be because people still weren't coming out to things when we first established these goals uh in in 20 would be it would have been the year 2023 when this budget was set.

So thank you.

Okay.

And then just very quickly thing out of public works.

So we seem to be doing really well on some of these metrics.

Um I think we had a discussion earlier.

Do you think that some of these metrics are a little bit low?

We're talking about this last year or two years ago.

You know, we're gonna take a weight uh latency attitude.

Uh, but if we're hitting 96%, that's pretty doggone good.

99%.

What would those numbers look like?

Do you think if it was three days?

Five calendar days or something like that.

No, no, I mean, I think your question is so mind you, there's a two-year-old goals.

The council adapted in the spring current goals.

So for example, your three-day point is part of the current goals, but that's not the same as that is for 2026.

Correct, the year we're in and 27, but this is old.

Historical information.

So we did tweak that one in particular.

These the all this information you're looking at, they're not the current goals.

Okay.

Perfect.

I guess just to make that clear, the goals don's a whole different set, some may, but no majority.

90% of what the current goals do not continue into the new biannual budget.

It's a new list of goals.

Can we get them side by side?

The old goal is pretty old.

That'd be useful.

Okay, so that's perfect.

Um A is I didn't understand that part.

For the inspection for cleaned all of Storm and Let's Annually, I'm not sure why that's an A, but we do we did hit the target.

It's usually because when we report out, um it's usually in quarter two and quarter three before the storms, but you do have a record uh that we did hit a hundred percent, and then then it's back sidewalk repairs at this clear 25.

We already amended that uh performance measure, so that's why it's an NA.

Perfect.

And then on police, thank you.

So, please, I was unclear on so the objective is to decrease vacancies.

But I'm unclear if we have decreased vacancies.

But that doesn't say that we decreased vacancies.

Well, we filled our goal.

We have 23 vacancies right now and four people in the academy.

Um the hard part about it is as we hire uh we're losing people to retirement, we can't control who makes it through the process.

So uh so how many vacancies do we have right now?

Well, as of June 30th of 25, how many vacancies did we have?

Uh I have the number of vacancies we have as of today.

Okay, well, what's that number today?

23, but we have four in the academy.

So we have 23 vacancies.

And we're gonna know which of those, yeah.

And we can also send the June 30, 2025 numbers.

Yeah, because I think that's really the the target, I think was to end at 18.

And I think we did we need to be, this is a public document, right?

So we need to be really clear, really transparent.

If we say we're gonna have 18, but we only got to 23, then we need to say okay, here are the impediments to you know why why we didn't get there.

Um property crime cases, I did not understand and a not available or any and the chief is actually here on the phone.

She couldn't be here in person, but she's here to answer some of these questions as well.

Uh so for this year 2025, Chief, what is NA?

Um, are you able to hear me?

Yes.

Okay, perfect.

So for the reason why we have NA for 25 is because we recently transitioned to the umbers um reporting system.

We used to use the uniform crime recording system, um, and since we've transitioned the way that our data is captured, is completely different.

Um, there will be an uh educational uh session presented to council uh later on this year to explain the differences, but at this time we're not able to pull the data in the same way, so we don't have the actual numbers for uh how many um what the percentage was in the reduction in property price.

Will we be able to on some sort of sample basis have an apples tables comparison between years?

I'm sorry, can you repeat the question?

I had a hard time hearing it.

Yeah, no worries.

I'll try to get a little closer to the mic.

So, will we have some sort of apples to apples comparison?

No, um, it is not possible, and that is one of the reasons why uh we want to do a presentation to explain numbers, um, to give you just a very quick overview.

So in the past, um, if there were several crimes that were committed in one incident, the only crime that got reported out was the most serious of those offenses.

Um now with the new NAVERS reporting system, we are reporting every single crime that happened in each incident, and so it may look like initially it may look like the numbers have gone up and they haven't gone up.

It's just that the way that we are reporting it to the state has changed so significantly.

So we won't be able to compare um 24 to 25.

Um, comparatively, the data is not going to match, and we look at at different ways to try to see if we can um find different ways to compare the data, and we have a um a contractor that we've been working with that helped us to uh update our system to the NIVERS system, and our contractor also said there is not a way to report out the numbers from year to year once you make a switch.

So, a couple of quick questions, then we'll let this go because it's six o'clock.

Um, the first one being in the past, did we track all the crimes that were associated with an incident, or did we only track one of the crimes?

For the purposes of the uniform uniform crime reporting system, which was called UCR, we only tracked when reporting out the data, we've only tracked the most serious offense.

Now, in our um our records management system, we do have a way to pull up um the data for individual crimes.

Okay, and then so by by incident, so incident one, two, three had crimes A, B, and C.

Okay.

Correct.

And then in the new system, do we have some sort of uh I'll call it rule book scoring, whatever that still lets us identify the most serious crime?

So the the way that we so with UCR reporting, we have what we call part one crimes, which were um seven major crime types that we specifically reported out on.

Now with the NIVERS incident reporting system, um, because there are so many different subsets, I want to say there are 15 to 20 different crime types that we will be reporting out to include the serious uh part one violent crimes that we were previously reporting out on.

It's just the data is gonna look completely different.

Okay, so thank you for all of that.

Uh, more questions.

Okay, so we are done with our questions and thank you for all the answers.

We're done with item two C have a problem if we just pass to B straight to the council.

Okay, so we have a unanimous consent on here to just take that straight to the council.

I have three public comments for non agenda items.

Do we have any?

No public comments.

Seeing none, we'll close that item in the committee.

No more.

Thank you for your work.

Thank you, staff for the great presentations.

Thank you for you.

So it's six of six or three, and we're done.