The URL can be used to link to this page

Home My WebLink About09/22/1992, 5 - BUDGET UPDATE AND REVIEW OF CURRENT HIRING FREEZE II,I�^I��II�IIIIIIIII II MEETING DATE. c�� _ of Sart-LUIS OBISpo .,TEM NUM6ER., COUNCIL AGENDA REPORT � FROM: John Dunn, City Administrative Officer Prepared By: William C. Statler, Director of'Finance SUBJECT: BUDGET UPDATE AND REVIEW OF CURRENT HIRING FREEZE CAO RECOMMENDATION • Receive budget update. • Return to prior hiring freeze policy of only filling high—priority positions as approved by the CAO on a case—by—case basis and discontinue the absoluie hiring freeze currently in place. • Approve action plan for continued review and monitoring of the City's fiscal condition. DISCUSSION Background I The following is a summary of the impact of the State's adopted budget on cities throughout California along with an overview of the actions that the City has taken to date in preparing for possible State budget reductions as well as responding to our own revenue outlook based on local economic trends. State Budget Status Impact on Cities Statewide, $205 million has been taken from cities by reducing property tax allocations by 910 and another $205 million has been taken away from redevelopment agencies. This results in in a revenue loss to San Luis Obispo of$400,000 annually in property taxes compared with the original estimate in June of approximately $2 million in reduced property taxes and motor vehicle in—lieu fees. Addtionally,we will lose $60;000 in cigarette in—lieu revenues which has already been reflected in 1992-93 Budget. Cost Cutting Actions To Date The following is a summary of the actions we have taken to date in responding to declining revenues due to the recession as well as preparing for possible State budget reductions: • Reduced base operating expenditures by $2.1 million during the 1991-93 Financial Plan process.. • Reduced expenditures by an additional $1.7 million at mid—year. • Approved a reorganization plan affecting the Departments of Community Development, Public Works, and Recreation that will result in the net reduction of 9 positions at an. annual savings of$270,000. ��►n►►►i►ullllillii1° �@III city of San L.JS OBISPO COUNCIL AGENDA REPORT • In response to possible State revenue reductions of$2 million, approved an action plan on June 30 that included: implementing an immediate hiring freeze; eliminating $1.1 million in capital projects; directing departments to prepare 5% and 10% expenditure reduction options; and creating an Employee Working Group to develop additional ideas, with a special emphasis on personnel cost savings and employee retention. I Although difficult decisions remain ahead of us in continuing our committment to financial health and fiscal reponsibility, these actions have positioned us to make these decisions in a careful and reasoned way. Review of the Current Hiring Freeze Purpose of the Hiring Freeze As part of the action plan approved by the Council on June 30, an immediate hiring freeze was implemented. This was put in place as an emergency action in response to the State's initial proposal to take away$2 million annually from the City. It was not intended to serve as a long—term solution to our fiscal needs. Ensuring our future financial health while meeting essential service needs should be based on a thoughtful evaluation of program priorities. Relying on a freeze of vacant positions as a long—term strategy does not recognize this need to closely evaluate the services we provide, the way they are delivered, and to make changes accordingly. Vacancies by their nature are random; they seldom will occur in a manner that reflects organizational priorities, although a freeze allows for analysis on a case—by—case basis,which is one of the reasons why it was initially recommended. Current Status As outlined in Attachment A, there are currently 15 General Fund regular position vacancies ! subject to the current freeze. All but two of these are in public safety (seven positions) or are I related to the reorganization (six positions). It is important to note that all of these positions have been previously authorized by the Council; any action to modify the freeze currently in place will only provide the flexibility to fill these approved positions — it will not au.thorize the creation of any new ones. In fact, since adoption of the 1991-93 Financial Plan, authorized full—time staffing in the General Fund has been reduced by 9 positions. Recommendation It is recommended that we return to our previous hiring freeze policy which only allowed the filling of high—priority positions as approved by the CAO. Discontinuing the absolute hiring freeze currently in place is recommended based on the following factors: • Although significant financial challenges continue to face us, State cuts are not as deep as initially proposed, which was the immediate reason for implementing the total freeze on all positions. I i • It is important to retain our committment to public safety and to the reorganization. • For 1992-93, we have already made expenditure reductions that offset projected revenue losses and position us for the difficult decisions ahead. S_cz ��i�i��►�Ivillilhlli�' IIUIU city of san As osispo COUNCIL AGENDA REPORT • Long—term expenditure and service reductions should be made in the context of our 1993-95 Financial Plan process. • The freeze policy being recommended at this time provides us with opportunities to downsize with minimal impact on existing staff and essential services while still retaining the flexibility to fill key vacancies when necessary: At this time, the CAO intends continuing to freeze at least two of these positions: Records Clerk and Graphics Technician. Action Plan i In addressing our long—term financial needs, the following schedule is recommended which places the decision—making process in the context of preparing the 1993-95 Financial Plan: November 1992 Council Study Session • Review five year forecast of revenues and expenditures. • Discuss departmental 5% and 10% expenditure reduction options. • Approve those reductions that should be made at this time because they will reduce the City's costs without having significant service impacts to the community. • Consider Employee Working Group ideas. • Discuss revenue options. I Community Input After Council discussion and any direction from the November study session, begin soliciting responses to these ideas from community groups (including possible use of a focus group) in preparation for the 1993-95 Financial Plan process. January 1993 Council Goal—Setting to Begin the 1993-95 Financial Plan Process • Discuss financial outlook and result of community input on cost reductions/revenues. • Consider staff recommendations for further expenditure reductions and revenue opportunities. • Establish Council goals and policy direction for 1993-95. SUMMARY Although the State budget reductions are less than earlier projections, significant financial challenges remain: our General Fund revenues have been reduced significantly due to the recession. However, our actions to date have positioned us to make the difficult decisions that face us in a rational and careful manner within the context of our Financial Plan process. Attachment — Summary of Vacant Positions SUMMARY OF VACANT POSITIONS ExhibitA The following summarizes General Fund regular position vacancies as of September 10, 1992 that have been frozen based on Council action of June 30, 1992: Description Position Department REORGANIZATION • Current Planning Manager Comm Development RECOMMENDATIONS • Advanced Planning Manager Comm Development Six Positions Transportation Manager Public Works • Transportation Planner Public Works • Recreation Coordinator (2) Recreation PUBLIC • Police Officers (2) Police SAFETY • Communications Tech (2) Police Seven Positions Evidence Technician Police • Records Clerk Police • Fire Engineer Fire OTHER • Computer Systems Tech Finance OPERATIONS • Graphics Technician Comm Development Two Positions SUMMARY BY DEPARTMENT Police 6 Community Development 3 Public Works 2 Recreation 2 Finance 1 Fire 1 TOTAL 15 J��