San Leandro Finance Committee Meeting – Proposed FY 2027 Mid-Cycle Update – March 26, 2026

Note: The agenda and minutes list the meeting date as March 25, 2026, but the transcript begins with the mayor stating "today is Wednesday, March 26th." This summary follows the transcript date as instructed.

The Finance Committee of the City of San Leandro met on March 26, 2026, at 4:01 PM to review and discuss the proposed FY 2027 Mid-Cycle Update. The meeting was chaired by Mayor González, with Councilmembers Aguilar and Viveros-Walton present. The central focus was a multi-year plan to close the structural deficit and achieve a balanced budget starting in FY 2027, as previously directed by the City Council. After more than two hours of deliberation, the committee produced a split recommendation on several items for the full City Council's consideration.

Discussion Items

Presentation of Proposed FY 2027 Mid-Cycle Update Finance Director Nicole Gonzales presented a detailed overview of the city's financial outlook, including a ten-year general fund forecast. Key points included:

• The city had adopted a balanced budget for FY 2026 but projected a use of fund balance for FY 2027. Council granted additional time to identify meaningful reductions.
• The proposed update would reduce general fund expenditures by approximately $8.2 million ongoing starting in FY 2029, with a total ongoing reduction of $3 million from transfers beginning in FY 2029.
• Revenue projections include a $700,000 ongoing increase from recreation program fees.
• The city's reserve policy targets 20% of expenditures for economic uncertainty plus $5 million for major emergencies. The proposed changes would meet or exceed that 20% goal.
• A 'do nothing' scenario would lead to negative fund balance by 2032, potentially forcing bankruptcy.

Department-by-Department Reduction Proposals The committee reviewed proposed reductions across functional areas:

• City Manager's Office: Elimination of $90,000 in crossing guard support (50% cost share with school district), reduction of community investment grants from $100,000 to $40,000, elimination of business license administration contract with HDL (brought in-house), and reductions in employee recognition and investigative services.
• Information Technology: Elimination of public Wi-Fi access in downtown and parks, saving approximately $108,000 in antenna replacement costs and $10,000 ongoing maintenance. Also eliminated a consultant contract and year-up intern. A $96,000 increase for cybersecurity tools was added.
• Library: Reduction of $863,864 (9% of baseline) by closing on Mondays but expanding hours at Mulford, resulting in a net increase of two weekly system-wide hours. Elimination of the public arts fund.
• Recreation and Parks: Net change of $1.2 million (10% of budget), including $716,000 in revenue increases from expanded programming and independent contractor expenses, and reductions in security services at large events and schools.
• Human Services: $550,000 reduction (14% of budget), including elimination of funding for the congregate winter shelter (currently unfunded due to lack of qualified provider) and reductions to the Alternative Response Unit (ARU) from four beds to two, saving $270,000 by FY 2029. A community health worker position and a transition from RN to LVN also saved costs.
• Public Works: $1 million reduction (10% of budget) by cutting third-party encampment cleanup contracts, reducing from $430,000 to $219,000, which aligns with current lower spending levels.
• Community Development: $1.7 million reduction (15% of budget), including elimination of a vacant permit center position, reallocation of the rent registry program to a special revenue fund (removing $650,000 ongoing general fund expense), reduction of first-time homebuyer program by $50,000, elimination of the business incentive program ($157,000), and reduction of downtown ambassador funding from $351,000 to $280,000 over time. An economic development study ($100,000) was proposed for elimination.
• Public Safety: Police reduction of $110,000 (2% of budget) by eliminating a vacant management analyst position; fire reduction of $270,000 included changes to the ARU and a 90% reduction in the city's share of Alameda County Fire retiree medical unfunded liability (though the committee could not determine whether this covered past or future obligations).
• Council Compensation: Staff presented options under state law to adjust mayor and council member compensation, with the last increase taking effect January 1, 2025 (council from $1,323 to $1,900/month; mayor from $2,646 to $3,800/month). The committee did not reach consensus.

Critical Failure Funding Needs Staff identified four priority infrastructure investments to avoid catastrophic failure: City Hall painting ($500,000), Marina Community Center painting ($500,000), Fire Station 10 roof replacement ($625,000), and the CAD RMS system ($3 million). The committee discussed using the $5 million major emergency reserve for CAD RMS, or increasing expenditure reductions further. Mayor González advocated for drawing down the city's pension (38.6 million) and OPEB (25.3 million) trust funds to free up general fund dollars for these needs.

Key Outcomes

The committee voted on recommendations for the full Council, with the following results:

• Unanimous agreement on most department proposals, including finance, human resources, library, recreation and parks, human services, police, and many community development items.
• Split recommendation (2-1):
  • Item 14 (public Wi-Fi): Councilmember Aguilar opposed elimination; the committee recommended proceeding as proposed with a note for Council discussion.
  • Item 58 (economic development study): Councilmembers Aguilar and Viveros-Walton supported retaining the full $100,000; Councilmember Aguilar moved to keep it. The committee recommends keeping the item for Council debate.
• Revised recommendation (unanimous): Item 51 (tenant-landlord services) – reduce by $30,000 instead of the proposed $40,000, preserving the core Centro Legal and ECHO housing contract at $70,000.
• No recommendation:
  • Item 59 (fire retiree medical contribution): Insufficient information to assess; committee directed staff to clarify whether the reduction pertains to future or historical obligations by June 30.
  • Council compensation: No consensus; will be discussed at full Council.
• Transfers: The committee did not approve specific transfer reductions, preferring to explore drawing down pension/OPEB trusts to fund critical infrastructure. Staff will return with options.
• Next steps: The proposed FY 2027 Mid-Cycle Update will be presented to the full City Council at a workshop session in April, with final adoption expected in May. The new adjusted budget takes effect July 1, 2026.

The meeting adjourned at 6:33 PM.