The COVID-19 pandemic is creating financial challenges for all levels of government, and the City of Oakland is no exception. Numerous revenues will decrease, if they haven’t already, as the need for municipal services continues. This downturn occurs at a time when the city was facing very significant financial challenges due to underfunded long-term obligations and the emergence of new challenges such as homelessness.
(Read Berkeleyside’s recent coverage: Looming budget crisis ‘like nothing Oakland has ever before experienced’)
Two important reports outlining the state of Oakland’s finances were recently published. We’ll discuss both reports and what they suggest for our city finances. This post summarizes the two reports and provides more details on the City Auditor’s report. The second post will provide more detail on the Finance Director’s report and the Council reaction at its hearing on April 21st.
These two reports are:
1. City Auditor’s report
“City of Oakland Financial Condition For Fiscal Years 2012-13 to 2018-19” was prepared by the City Auditor before the advent of COVID-19. (Its original objective was “to examine the City’s financial well-being by calculating financial ratios, analyzing trends in the City’s financial data over the past seven-year period, and comparing the results to other cities of similar size.”) But the letter of transmittal does note that the current COVID-19 pandemic will likely dramatically compound the issues raised in this report. It reaches a series of conclusions about the fraught condition of Oakland city finances and recommends corrective actions.
2. Oakland Finance Director’s report
The Finance Director’s new report “FY 2019-20 Third Quarter Revenue & Expenditure Report (Preliminary)” concludes with this stark projection:
In sum, we project that, absent rapid adjustments by the City Council, the COVID- 19 pandemic will result in a GPF budget shortfall over the next fourteen months of approximately $80 million ($26.17 million + $53.78 million).
The report contains a list of a number of actions already taken by the administration and recommends a number of policy considerations for the Council. It states: ‘The point is that – absent an unexpected State or Federal bailout – this problem will not be easily resolved, and it will not be fixed by tinkering at the margins. It will require significant action by City leaders.”
So first, let’s take a deeper look at the City Auditor’s report. Here are some notable excerpts:
- “Oakland does not rank favorably in most financial indicators, when compared to similar-sized California cities.” This is illustrated by 9 Charts that compare Oakland to 7 other similar California Cities.
- “This report does not include information on the condition of the City’s infrastructure, the citywide asset replacement value, or the funding gap for infrastructure needs because the City does not produce an annual citywide capital asset report.”
- “This report prepared prior to COVID-19, however, illustrates the City needs to do more to address its increasing pension and OPEB liabilities, quantify its unmet infrastructure needs, and prepare for the future in which, according to the City’s five-year forecast issued in March 2019, expenses are expected to outpace revenues.”
The report concludes with the following recommendations to City Council to address the City’s unfunded pension and OPEB liabilities:
- Convene a retirement advisory group to gather, evaluate, and organize information for a comprehensive solution to address Oakland’s unfunded pension and OPEB liabilities. This Advisory Group will be tasked with designing a plan to impact retirement liabilities on three levels:
• State/Federal — what legislative changes, if any, are needed to be proposed so that the municipalities may be in better control of their financial future as it relates to pensions.
• CalPERS — does CalPERS serve the needs of all its member agencies and how can Oakland and other municipalities have a greater impact on CalPERS policies.
• Oakland — what changes may be made now within the restrictions of CalPERS and State Law, and which of these changes can be agreed to by all stakeholders.
This process should be convened publicly and have clearly defined processes for stakeholder input, including citizens, unions and employees. The Advisory Group should be comprised of a broad cross section of stakeholders, for example, the City should strongly consider including:
• Academia and pension/OPEB experts.
• An independent financial consultant with no ties to the City to perform
analysis on potential reforms as they are recommended by the Advisory Group.
• An independent law firm with no ties to the City to evaluate the legality of potential reforms as they are recommended by the Advisory Group.
- Form a coalition of cities to find common ground to support comprehensive solutions at the State level and CalPERS.
- The City’s Finance Department should provide the City Council with an annual analysis of how the City’s long-term financial position could be strengthened.
- The City should develop a reserve policy that is consistent with the GFOA recommendations to maintain unrestricted budgetary general fund balance of no less than two months of general fund operating expenditures.
- The City should have a centralized report of fixed assets to be able to monitor changes in the condition of the assets and evaluate cost associated with maintaining and repairing them.
We welcome your thoughts. What do you think the City should do to respond to the immediate and long-term challenges facing Oakland City finances?
Before the outbreak of COVID-19 and the shelter-in-place order last month, Make Oakland Better Now! was preparing for a busy and consequential year. We were fundraising and organizing future events on this year’s top issues like Oakland’s mid-cycle budget and a new ballot measure to strengthen the city’s Police Commission. But like many of you – our neighbors, local activists, advocates, and businesses – our lives and plans were disrupted.
Right now Oakland, as well cities across the country and all over the world, faces a major emergency. The community needs much more help, and our priorities need to change in response.
With this in mind, MOBN! has just donated to the Oakland Fund for Public Innovation, which operates The Oakland COVID-19 Relief Fund. This fund was launched recently by Mayor Schaaf and Councilmembers Kalb, Bas and McElhaney as an emergency fund to serve Oakland’s most vulnerable residents and first responders during the pandemic. Among other outreach efforts, it is partnering with The Alameda County Community Food Bank, SOS Meals on Wheels, Bay Area Community Services, Keep Oakland Housed, La Clinica, Oakland Public Education Fund and Working Solutions.
These are all entities playing a critical role in providing services we need right now. We strongly encourage Oaklanders to consider contributing to the Oakland Fund for Public Innovation as well or making contributions, whether in time or money, to its partnering organizations.
A few other local entities that can use our help: The Boys and Girls Club of Oakland; East Bay Feed ER, which works to feed the emergency department and the ICU of five East Bay hospitals two meals a day; and Steph and Ayeesha Curry’s non-profit Eat.Learn.Play, which focuses on childhood health and hunger and has been serving over 300,000 meals a week during this crisis.
Right now, the community needs us all. So for those of us who can, let’s pitch in!
On March 3, vote YES on Measure Q.
Join the campaign at its kickoff event this Saturday.
Measure Q is a March 3 ballot tax measure, designed to generate revenue to be used for city parks improvement, homelessness services and clean water. The Make Oakland Better Now! board has voted to endorse it, and urges Oaklanders to support it. We join a wide coalition in support of this measure. Among other organizations, it is supported by the Oakland Chamber of Commerce, Sierra Club, SF Bay Chapter, League of Women Voters of Oakland, Outdoor Afro and Oakland Tenants Union. Continue reading
(image source: Oakland Homeless Response)
On November 14, Oakland’s City Council passed a resolution to submit a parcel tax to voters on the March 3, 2020 primary ballot. The amount of the tax will vary depending on forms and usage of real property, but residential property would be taxed at rates of $148 per single-family residential parcel and $101.08 per residential unit for multiple residential parcels with a 50% reduction for affordable housing projects, and for non-residential units, a rate based on frontage, square footage and building area. (Read the Chronicle’s recent article on the parcel tax here, and East Bay Express’ coverage here.) Continue reading
For several years now, Make Oakland Better Now! has urged elected officials to adopt and implement a comprehensive public safety plan, involving coordinated activities from every city department – from police to parks and recreation and more – playing a role in violent crime prevention.
In 2013 the City’s police consultant, Robert Wasserman, argued for this in a report titled, “Zeroing Out Crime.” Mr. Wasserman wrote, “Every agency must see itself as part of the crime solution and coordinate initiatives.” He urged regular meetings of heads of every department with any responsibility for crime reduction.
While some of Oakland’s elected officials have agreed, they have not been able to coordinate adoption or implementation of such a policy.
A new City leader is taking up the work of making this finally happen, and we are hopeful. In October, three of our board members were pleased to meet with Guillermo Cespedes, the first Chief of Oakland’s new Violence Prevention Department, who assumed that position on September 23. He said at the start of his tenure, “I am honored and very excited to return to Oakland to join professional colleagues, community advocates and elected officials in building a balanced comprehensive violence prevention strategy.” Continue reading
The annual Art + Soul Festival is this Saturday and Sunday from noon to 6:00 p.m. in downtown Oakland. It’s a really exciting weekend featuring local organizations, artists, food and musicians. This year’s lineup includes Fantastic Negrito, Kev Choice, Jennifer Johns, Estelle, West Coast Blues Society, Oaktown Jazz Workshop, and a special tribute to the tragically departed drummer Victor McElhaney. The weekend is a don’t-miss event.
Make Oakland Better Now! will have a table there all weekend. We’ll be at booth 267 (on Clay Street by City Center). Come visit us! Board members will be there ready to talk to people about our organization’s history, advocacy positions, and future. We’ll have hand-outs telling newcomers about MOBN!
We’ll also be doing some fundraising for the projects we have lined up, so we hope to see you there. If you can’t make it, you can still donate here by clicking the “Donate” button below. Thanks for your support and we’re so excited to celebrate with The Town.
(This is a post in our Budget Bits series, following Oakland’s mid-cycle budget policy and process. Read our previous updates: post one, two, three, and four.)
On June 24th, the City Council unanimously adopted its two-year, $3.29 billion budget. (The full budget document can be read here.) The final adoption reflected a combination of the Mayor’s Proposed Budget and augmented by $44.4 million in amendments proposed in the “Oakland Together Proposal,” which was a combination of amendments by numerous council Members. The Mayor’s Proposed Budget included the funding needed to continue many necessary city services and required funding for continuing obligations such as bond payments, retirement and healthcare. The Council amendments added increased services in a number of critical areas.
Make Oakland Better Now! believes that many of the service issues presented in both the Mayor’s proposed budget and in the adopted budget are critical. However, in the Adopted Budget, the Council took little action to significantly pay down our City’s long-term unfunded liabilities of $2.7 billion nor did it significantly increase the protections in the Rainy-Day Fund. Oakland also has unfunded Capital projects of $2 billion.
We are now in longest positive economic surge since WWII. However, there have been numerous indications that economic conditions may change during the period of this two-year budget. How will Oakland respond? Continue reading