Category Archives: City Budget

Budget Bits Returns: Shaping Oakland’s 2017-2019 Budget

Oakland Budget

Oakland 2017-2019 Budget Preparation Begins

For many years and several budget cycles, Make Oakland Better Now! has provided Oakland residents with tools to help understand the city budget. We’re proud to dive into the numbers again this year, as Oakland’s Mayor, City Administrator, and City Council move toward adoption of the 2017-2019 budget. Continue reading

3 Takeaways from Our Meeting with City Auditor Brenda Roberts

brenda_roberts

Make Oakland Better Now!’s board recently met with City Auditor Brenda Roberts to talk about how her office can make a greater impact on Oakland’s ethics, integrity, and productivity. We wanted to share three big takeaways from our meeting and look at how Roberts plans to run a “world class audit shop.”

1. More Transparency, Less Arm-Twisting

At her inauguration in January, Roberts promised to be an “auditor for all of Oakland,” for renters and homeowners, taxpayers and small businesses. To reach this goal, her office is not just following the money, but promoting collaboration and transparency citywide.

Roberts is more process than outcome focused when it comes to promoting strong finances. Basically, she says, it doesn’t help to find out at the end of a project that it’s gone over-budget, to do a postmortem for the city. “When it’s already in the headlines, what do you want me to report?”

But Roberts sees more and more departments reaching out first, opening lines of communication, and opening their books for review. This a good sign. It shows the auditor’s office is starting to build trust and inspire teamwork. “When someone says, ‘Can you come and look at my department?’ – that’s exactly what I want to hear.”

This allows her office to do more consulting and less arm-twisting. They’re able to set milestones, track change orders, run user-acceptance tests, and overall make the evaluation process much more rigorous.

2. A Risk-Focused Oakland

As City Auditor, Roberts says she is focusing on Oakland’s greatest risks – risks to the city’s budget and image, to health and safety. Part of this approach is about raising awareness in the community about fraud, waste and abuse, and managing a hotline for new reports.

It’s also about being the best watchdog and breaking up Oakland’s “culture of interference.” This is a wide-ranging effort: The City Auditor’s office is looking at noncompliances, creating business continuity plans, examining hiring and retention practices – including on the job training, talent acquisition, vacancies, technology or skillset deficiencies – and much more.

From all this, Roberts is trying to create a “heat map” of risk. Her office has especially focused on getting resources to decentralized departments, what she calls a “further from the mothership” approach.

She’s also focused on who the city partners with – contractors, service providers, and nonprofits – groups she feels are more likely for budget burnout or fraud.  It’s necessary to keep these partners on a “short, tight rein,” she said.

Roberts is pushing for smarter, stronger internal controls where her office is seeing a general lack of procedures and policy. In this year’s police overtime audit, for example, they exposed a need for more effective overtime and comp time management and more realistic OPD budgets.

3. Oakland Needs a Time Audit

The City Auditor’s risk-based approach is almost a necessity, brought on by her office’s lack of resources. “Right now, there’s no time to say ‘nice job,’” Roberts said.

Roberts heads a 10-person staff with about a $1.5 million budget–that’s a few people and thousands of dollars too short. There are some short-term solutions to make up the difference like getting grants for interns and fellows. There are also policy changes to consider like setting a portion of every department’s budget aside for the auditor’s office.

Right now, they’re preparing a handful of mandatory audits including audits for Measure M and N, an audit of 911 services,  and an audit of the Oakland Fire Department’s wildfire prevention measures.

Roberts notes that these rolling audits sometimes feel “unfocused,” tying up her office, and at their worst risk becoming a waste of energy. She would rather see audit policy more in line with her process-based approach, more open than after-the-fact. (Of course removing a ballot-measure approved mandate requires another ballot measure.)


MOBN would like to thank City Auditor Brenda Roberts for her time and her work at City Hall. We look forward to following her progress.

City Council Meeting Tonight: Five Budget Proposals and Lots More — It’s Going to Be A Long Night

City Council holds a special meeting tonight at 5:00 p.m., and it’s going to be very long one. Council will be deliberating over the Mayor’s Budget Proposal and the additional proposals of Council President Gibson Mcelhaney’s proposals and additional proposals by CMs Brooks, Guillen and Gallo. Also before Council will be CM Brooks’ proposed establishment of a Department of Race and Equity and alternate proposals by the Mayor and Council President Gibson Mcelhaney. Many of the reports were only issued at the end of last week, and Make Oakland Better Now! is  still evaluating the Mayor’s budget and some seven other reports.  Our initial reactions to CM budget proposals, however, are discussed in our letter today to Council:

June 22, 2015

Oakland City Council President Lynette Gibson Mcelhaney, and Members of the Oakland City Council

Re: June 22 Council Meeting Budget Deliberations,                                                                      Agenda Items 10 and 11                       

Dear President Gibson Mcelhaney and City Council Members:

Make Oakland Better Now! is a citizens’ advocacy group supporting public safety, public works, transparency and accountability in government and budget reform in the City of Oakland.

As we have during each recent two year budget cycle, we are closely monitoring this cycle’s budget process.  With a number of council member proposals having only recently been posted, our evaluation is still in process. However, we do have some initial responses which we will share with you before tonight’s meeting.

Public Safety: The city’s budget priority poll late last year showed what every poll within memory has shown:  that Oaklanders’ number one concern is public safety. This is scarcely a surprise in a city that remains one of the most violent in California (and where serious crime is actually up 5% over last year). We recognize that there are multiple elements to public safety.  However, we have seen no polling that would support, for example, allocation of resources for additional City Council staffing, council member-sponsored festivals, or banner design and fabrication.

As supporters of civilianization and increased investigative capacity, we applaud the proposed additions of police evidence technicians and crime analysts.

However, we are very concerned about the proposal to eliminate the Deputy City Attorney III position for NSA compliance. The recent Swanson report makes it clear how essential this position is to help bring our Police Department and City out from under the ongoing financial burden court oversight. That position will surely be required once court supervision ends to ensure that the NSA-related reforms are sustainable.

We also question the realism of an arbitrary cut to police overtime. We join with council, with the administration, with command staff and, quite frankly, rank and file police in their concern about the heavy burden of police overtime and ongoing overruns of the overtime budget. The department has examined and reported on the causes of this overtime, and until we address those causes – primarily severe departmental understaffing – an arbitrary, budgetary reduction is not reality based.

Fiscal Sustainability:

As shown by the Mayor’s budget, and in multiple reports received by Council over the past few years, Oakland’s long-term liabilities are crushing and have to be faced. The OPEB unfunded liability for contractually required, earned retiree health benefits is close to half a billion dollars. Negative fund balances with no source of reimbursement – which threaten the City’s bond rating – are nearly $76 million.

In past budget cycles, Council has enacted last-minute changes to its fiscal policies that steered the city away from responsibly addressing its debt (by, for example, increasing the availability of one-time funds to meet ongoing expenses instead of to reduce accrued liabilities). Accordingly, we are concerned to see several proposals from Council members to eliminate the proposed pay-down of negative fund balances and reduction of the unfunded OPEB liability. We are also concerned to see proposed reliance on revenue sources that do not yet exist (e.g., an as yet non-existent cannabis producer’s tax), or which the administration believes are unrealistic (e.g., the proposed increase to business tax revenue).  The long-term success of our city depends on a prudent management of the city’s financial obligations and a reality-based projection of revenues.

We will be corresponding and speaking further with you when we complete our analysis of all proposals. We wish you the best in your deliberations.

Sincerely,

Make Oakland Better Now!

Budget Bits No. 6: Budget Advisory Committee Has Suggestions for a Better City Budget

This is the sixth installment in our series on the 2015-17 budget process. Council will be considering the Mayor’s budget, the Council President’s proposed changes, and other changes offered by Council members on Monday, June 22 at 5:00 p.m. and Tuesday, June 30 at 5:30 p.m. in Council Chambers at City Hall. This Budget Bit summarizes the Budget Advisory Committee’s views.  Next, we will provide a comparison of the Mayor’s and City Council President’s proposals. 

Oakland’s Budget Advisory Committee presented its report to the City Council on June 8th. BAC correctly reported that there were many features in the Mayor’s budget of both a fiscal and procedural nature that were improvements over prior years. The major improvements included public safety funding, recognition of debt and long term fiscal problems, an attempt to take salary disputes out of the budget process, increasing public engagement and improving fiscal transparency.

However, BAC also called for improvements in this, or future budgets, including the following:

  • Survey: Funding a more robust professional survey to reach all Oakland Residents not just voters.
  • Revenues: Improving the discussion of the critical importance of revenues. Revenue presentations are often presented in summary charts with a limited discussion of the underlying basis for the estimates. BAC believes the budget process would be improved by much greater attention paid to explaining and understanding the current and potential sources of revenue in our City.
  •  More Metrics on Outcomes. BAC believes that the entire budget process would be greatly strengthened if it contained metrics for each of the City Departments and their principal operating units indicating a) measurable activities and accomplishments in the prior budget and b) anticipated outcomes for the proposed budget. A clear description of activities and outcomes would provide needed information for the Mayor in preparing the proposed budget, the Council in evaluating it, and the public in understanding the accomplishments of our City government.
  • More Context. This budget states that it maintains service levels, but is that in comparison to the previous biennial budget or other benchmark?  What were service levels before the great recession?  A generation ago?   The public would benefit from like comparative analytics to better understand what the historic service levels were – not just comparing money spent, but other metrics as well, perhaps full time equivalent employees, percent of budget, and, most importantly, what did the public receive?
  • More Trend Data. While Revenue and Expenditure summary tables in the Financial Summaries (starting on page E-65 and E-91, respectively) show four years of data (prior year actuals, current year budget, and the two years of the proposed budget), Departmental Summaries do not show prior year actual financial data. BAC believes the City should consider showing this information at the departmental level so the public can compare spending within departments to past trends.
  • More Percentage Comparisons Include year-over-year percent changes in charts. To enhance the value of the trend data presented in revenue and expenditure Financial Summaries, consider including the percentage increase or decrease for each line item and the totals from the current year budget to the first year of the proposed budget and from the first year of the proposed budget to the second year.
  • Departmental Summaries The departmental summaries do not show prior year actual financial data. Consider showing this information at the Departmental level so the public can compare spending within departments to past trends.
  • Easier Navigation. A budget document is a very large set of information to read and process. The public is greatly aided by a Table of Contents that is comprehensive and designed to help readers locate information. The use of a letter-number system for paginating the document hinders readers’ ability to quickly assess how far into the document a particular section is as listed in the table of contents (example: how far into the document is page E-89?). Consider using a standard pagination format that starts with the number 1 and proceeds upwards from there until the end of the document. Especially as more of the public switches to reading documents on-line, being able to enter a page number from the Table of Contents into a page finder is helpful, and also helps readers who still use printed documents. PDF files should not be scanned documents which cannot be searched.
  • Complete Payroll Cost Information. Include information on the city’s total payroll. The budget includes this information for the general purpose fund (which is only about half of budget expenditures) but not for the whole budget.

Budget Bits No. 6 – Our First Take on The Mayor’s Proposed Budget

Yesterday, Mayor Schaaf released her proposed budget with a televised press conference and a “Budget Beer Bash” at Oakland’s Linden Street Brewery. The budget will be presented to City Council on Tuesday, May 5 at 5:00 p.m.  It must ultimately be passed by Council, and will be the subject of much debate, and almost certainly significant amendment over the next two months. Make Oakland Better Now! will be diving deeply into its almost 400 pages and publishing a good deal of analysis in the coming weeks. But here are some of our first impressions: Continue reading

Budget Bits No. 5: Unfunded Pension and Healthcare Liabilities

This is the fifth installment in our series on the 2015-17 budget process, and the last one before the mayor’s budget is released today. Once the proposed budget is released, we will start discussing that document, first with a general summary, then a deeper look. For now, we take a brief look at the oft-discussed subject of pensions.

In any budget process there are many competing interests. Resolving these conflicts and arriving at a balanced budget is more art than science, involves trade-offs, and in the end, always involves prioritization. So what are some of the biggest priorities, aside from police, fire and other core city functions? Pension and retiree health care shortfalls have been the subject of much public attention. They were the subject of a City Auditor’s report about a year ago, a detailed report by the administration to Council in January of last year, and State legislation (the Public Employees’ Pension Reform Act of 2013, or “PEPRA”, more discussion here)  in 2012.

The general sense of the discussion in Oakland has been that

  • The closed police and fire pension plan (“PFRS”) will start requiring very significant annual General Purpose Fund contributions (probably about $34 million and climbing) in 2017-2018,and continuing through 2026;
  • The City’s “Other Post Employment Benefits” (“OPEB”), by which the City pays retirees a fairly modest medical benefit reimbursement is paid on a pay as you go basis. It presently runs just over $20 million per year, and is projected to hit over $35 million in ten years and almost $50 million in less than twenty years.
  • Much like other California municipalities, Oakland faces hundreds of millions of dollars in underfunded pension liabilities for its active employees, and serious State law constraints on steps that would reduce costs.

Continue reading

Budget Bits No. 4: The Matter of Deferred Capital Expenses

This is the fourth installment in our series on the 2015-17 budget process. The mayor’s budget is scheduled to be released on Thursday, so between now and then, we’ll summarize some of the observations in the city’s recently published Five-Year Fiscal Forecast, which help set context for the budget decisions to be made over the next two months. In this post, we look briefly at the City’s severe deferred capital problem.

Anyone who lives, works, drives, rides a bicycle or walks in Oakland knows something about our city’s deferred capital expenses. This problem is readily apparent from the horrible state of our streets and sidewalks. According to the Public Works Department, Oakland has 806 miles of streets and 1,120 miles of sidewalks. As the City acknowledges, the streets are on an 85 year resurfacing cycle, compared to the industry standard of 25 years. And (again, according to the City), 38% of the streets are in good condition, 38% fair, and 23% poor condition.

The Metropolitan Transportation Commission’s recent evaluation of Bay Area city streets paints a bleaker picture. MTC assigns a point value, or “Pavement Condition Index” (PCI) score to cities. This year, MTC assigned a 59 PCI to Oakland. This means the streets are “at risk,” a designation when the city has  “[d]eteriorated pavement requiring immediate attention, including rehabilitative work.”

But the issue of deferred capital expenses goes well beyond streets and sidewalks, and includes storm sewers, technological enhancements, buildings and facilities, including the Police Administration Building, which is in terrible condition.

The Five Year Forecast projects an average of $9 million per year for capital projects, and also states that there are projects that total $1.5billion that are key unfunded capital needs, that is, capital projects that are not included in the annual budget. Given that the average forecast total for all fund revenues over the 5 years is a little less than $1.2billion, that is like telling someone who makes $70,000 a year that they will need to a $70,000 repair on their house. And, like the homeowner who needs to make the repairs, the most likely source for Oakland to fund these projects is either to borrow the money (that is, issuing bonds)or to ask for help from the relatives (that is, go to the voters with a special parcel tax request). Let’s look at the projects listed in the Five Year Forecast and decide what needs to be done, and how to do it. The project categories and projected costs are these (and we would like to see a great deal more detail than appears in this table, or in the forecast):

Key unfunded capital needs

When then-Mayoral candidate Libby Schaaf was campaigning, she promised that if Measure BB passed, she would “bond against the new $8 million per year allocated to Oakland for road maintenance to make immediate upgrades in road conditions that will reduce maintenance costs going forward.” This is an important part of the plan for catching up. But there will undoubtedly have to be more.

The next steps for the city government is to prioritize the above projects, determine which to move forward with most quickly, and develop a plan for doing that.