San Leandro Finance Committee Meeting – Proposed FY 2027 Mid-Cycle Update – March 26, 2026
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.
Meeting Transcript
We're recording, yes. Okay, that's perfect. So our recording is running. We'll call the order the meeting of assembly of the finance committee today is Wednesday, March 26th. That's 401. At this point in time of Madam Clark, please take rules. Mayor Gonzalez. Present. Vice Mayor Vivaros Walton. Present. Council Member Aguilar. Present. And will you please make your announcement? Madam Clerk. After each agenda item is presented, the mayor will ask for committee member comments and then take public comment. You will have two minutes for your comment. The countdown timer will appear for the convenience of the speaker and attendees. Okay, so at this point in time, we will move into the main substance of this meeting, which is our discussion item. Review and discussion of proposed FY2027 cycle update. On this side committee. Thank you. Thank you. Good afternoon, Mayor Committee members. This afternoon, we have a presentation for you related to the proposed fiscal year 27 mid-cycle update and proposed plan changes for uh fiscal years 2029. Um however we will be focusing on the actual adjustments proposed for considerative 27. Um so I wanted to provide background and context on why we're here this afternoon. And so we started the fiscal year 26 and 27 biannual budget um last year and presented to the finance committee in April of 2025. At that committee meeting, uh the committee provided direction to staff that fiscal years 26 and 27, their expenses less than transfers would equal projected revenue. In the beginning in fiscal year 2028, all expenses, so expenses plus transfers must equal projected revenue. So we had several uh meetings throughout the budget process with final adoption on June 16th of 2025. Um the city did present a balanced budget for fiscal year 26. Um, however, fiscal year 27, we did not necessarily meet that full uh objective and a full goal, and we still projected a use of uh fund balance or reserves to balance that budget. Council at that time gave us grace and granted us more time to identify ways to close the structural uh deficit in a meaningful way that provided clear understanding of the impacts not only to the community but also to our organization. And so um we are here this uh afternoon with the uh first presentation of the full proposed reductions and updates for fiscal year 2027 with cycle, so that we are presenting um a but uh uh a balanced budget starting in fiscal year 2027. So this is just a picture that provides a little bit of where we've been and where we're headed. Um we started the process with staff internally from September to January, really taking a look at the city's financial both revenue and expenditures and making um ideas and uh proposals in which we could uh propose to council for consideration, so we presented adopted by balance budget for you for 2027. So in March we had the council retreat and we held two committee engagement meetings um earlier uh this month, and we are here tonight at the finance uh committee to present to you the city's proposal. Um in April we will present um uh tentatively present as we are uh scheduled to uh the 27 mid-cycle update to the council for a full work session for consideration scheduled for May and an adoption of the updated fiscal year 2027 budget with commencement of that new adjusted budget on July 1st. Um we appreciate the great work uh that came from the council retreat on March 6th and wanted to remind the finance committee of the council's priorities for balancing the budget and how these will help guide the budget process and conversation as we move through the next several meetings. Um, with that, one of the uh guiding principles was ensuring that the city was meeting its um reserve policy or its fund balance policy. And so before we get into what we were provided proposing this evening to you for consideration, we wanted to kind of go over again what fund balance is. So I won't go into um specific detail, I don't read off of the the slide here, but did want to provide just some some context on what a fund balance is for this committee, but also those in attendance this evening. So fund balance represents the difference between the city's total assets and current and future liabilities. They essentially will show what the net available resources are available at any given point. There are a number of categories which are restricted or reserved for planned expenditures, and what the city's budget reserve policy focuses on really is that area of unassigned or available for any type of purpose. So what is a targeted fund balance? A targeted fund balance is a percentage that is referred to a desired level of reserves or desired level of amount you want to have in your savings account and any given time to maintain the in the general fund. We often look to GFOA, which is the government finance officers association for recommendations on best practices. They recommend that we have a and maintain an unrestricted fund balance and a general fund of allow of at least two months of expenditures, less transfers, which accounts for about 16.7% of your total expenditures. The city policy includes a target of 20% fund balance.
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