February 19, 2013 – Special Meeting

Staff presentation
Collaborated with other providers to address the mumps outbreak as they saw they couldn’t manage it alone.  Outcome of coordinate effort allowed the issue to be managed effectively.  Duration of the outbreak was 4.5 months. Proud of the effort as the collaboration was noted statewide.

Mental health
Implemented 38 out of 58 recommended improvements from consultants .
Increased supervision and support of direct line staff.
Working on implementing new wellness and recovery services.

Fiscal and administrative unit
Issues facing the department:  further staff reduction, programmatic changes and funding challenges.
There was no fiscal consistency across all departments and programs.  This model is not sustainable under current processes.  There are too many work-arounds.  Working on continual process improvements, feasibility studies etc. and at other funding opportunities.
Want to assist all residents of Berkeley in all their needs.  Need to weave together the services the city provides.

Councilmember Comments
Maio:  Concerned about the state audit process and money they have sequestered.  How can we help?
Wozniak:  Good that you are managing with less staffing.  Presumably you need less space.  Do individual departments/programs pay for their space?  What kind of software changes are needed do to make our staff more productive?
Arreguin. How much do we get in shelter plus care on an annual basis?  What are the implications on our community?  Are we getting less money due to the new census?  What is the cumulative impact of this?  This hurts those most affected during this economic crisis.  The cut in HIV services is troubling. I am concerned we don’t have the money for testing and counseling.  Are there other sources for funding?
Capitelli:  When will you be able to get back to us with the impact of the affordable health care act benefits?  I hope you will share that with us once we know more.
Wengraf. How many mental health people do you treat annually?  Serve both Berkeley and Albany. Approx 500.


Staff presentation
2 changes in revenues.
Property transfer tax has increased.  The new projection is up by $1.5M to $10.5M
Interest income projection has been decreased by $500K
Will end up with $600 less in General fund revenue
Expenditures general fund:  will decrease to ensure a balanced budget

Councilmember Comments
Bates: How many more budget meetings will we have?
Worthington. We have been reading that property sales are up.  Is this increase because of residential sales or does it include the larger property sales?
Capitelli. Seems like we have a couple of major property sales.  Anecdotally activity in Berkeley: sales are higher than others in Alameda County and at higher prices.
Wozniak. There is some discussion on property transfer tax the first 6 months was 6 million. We put all money in excess of over 10 million into the capital fund. Our staff is good at estimating our budget.

Public comment
Total 4

Staff presentation
CalPERS rates are actuals for 2013/14 with estimates for 2015
PERS funding status is actuarial value, not market – Police PERS fund status is the only one below 80% funded at 70%
PERS payments are hard to project due to 2 tier status of some employees
Arc payment is what the actuary states we should pay. Arc is applied to the payroll costs for employees
Payroll will increase by approx 25% and benefits by approx 45% over the next 10 years
Police Retiree Health Fund is 0% funded
Bond payout has been reduced from .95% to .047%  there is room for adding additional indebtedness without impacting taxes on property owners  Council has not directed the issuance of Measure M bonds yet – this will happen over the next 2 years.
All the infrastructure needs have been limited to 5 year horizons as per the report resolution requirements.

Public Buildings:  Need $19M

Streets and Roads:  Need $39.6M

Sewers:  Need $53M

Storm Drains:  Need $37.4M

Information Technology:  Need $8M

Options – Employee Costs

Allocate savings from refinancing existing bonds to PERS payments

Allocate savings from decreasing Retiree Medical Benefit payments to new unfunded retiree medical plans

Prepay PERS when economically reasonable – will result in a 3.8% benefit

Options – Infrastructure

Measure M funds will cover $30M of street and watershed needs

Set aside all revenues from transfer taxes over $10.5M to fund capital improvements (as directed in 2006)

State/Federal grant funding

Future Bond capacity

Councilmember Comments
Bates. All cities face the same issues and this needs our attention now.  I see 4-5 problems going forward. Police PERS costs: need to put more money into that account need ideas on how we can address this.  How are we going to pay for retiree health plan and reallocate the diminishing fund to the new health plan needs?  Infrastructure/sewers are not an immediate issue.  Watershed management is.  If we keep the debt rate and people allow us to keep paying then this is an opportunity to help with capital projects. Would like a projection of how these opportunities might play out. We cannot ignore the IT problem.  Go back and see how we might approach addressing these needs.  We might need to find money in our current budget.
Capitelli. Berkeley Budget SOS comments were complete and measured.  Not dripping with sarcasm.  If we look back historically, when did the police costs start to exceed fire and misc employees?  You have made an assumption for PERS increases and it increases by 46% and it is a staggering increase. We are sitting in a public building that needs seismic improvement.  Cost of routine maintenance far exceeds existing funds. This is sobering.  We have a $23million gap.  I think the glossary can be expanded and it should include the acronyms. The clean storm water program fund will see a decrease of $700K which will have additional impact on the need.  The prepayment calculated by CalPERS is a shame.  How can we fix that?  I hope we will show some fiscal disciple and set aside some money to deal with the benefit liabilities.  It would be great if the voters will allow us to hold our current level of bond indebtedness so we can fund some of these capital needs.  You are also assuming a 2% ad valorum increase. FUND$: I can’t believe a new system wouldn’t increase efficiency by 20%. Could we lease this equipment?
Wozniak. I would second the last remark on efficiency.  I generally support the previous comments.  I am not a fan of funding more into police retirement and health.  This should be handled in negotiations.  Cannot handle this projected growth.  It would be helpful if we had some projections of our revenues and what potential there is to increase revenue throughout the city.  We need a long term consistent policy.  If we can get the benefits under control we will need to decrease the number employees to make up the deficit.  Will we be able to run the city?  We need a longer outlook on infrastructure – 5 years is not long enough.  I think there are opportunities in bonds.  I think the city is underfunded with bonds. But to do that we need to look longer term and currently we are doing things piece meal.
Arreguin.   Projected future payments to CalPERS: Are these actuarial or market value?  Cost for active employees:  If we have 1308 FTE what does that transfer to in actual employees?  Now we allocate $2.3million to storm drains.  Is that to maintenance?  Does that include the money from the University?  We are now down 60% in our efforts to improve our storm drains.  The longer we take to repair it the worse it gets so the cost of repairs will only compound.  I am concerned about our storm drain system and the need for underfunding ongoing maintenance.  There is some other information that is needed.  There was no cumulative impact of unfunded needs and a way to aggregate the impact.  We need a line item breakdown of employee costs.  What would it take to get to 100% funded?  We need to look at that.  I am anxious to see the report on public buildings.  Investing in new technology would result in efficiencies.  We need to make some tough decisions.  I would agree to a comprehensive plan on how we can address all these needs.
Wengraf.  Important to invest in new software program, will improve efficiency and transparency.  A more comprehensive approach:  could we set some goals?  Would having a goal be useful?  It is important to ask ourselves how we are doing.  Having goals will help us do that.
Bates. Could you get back to the agenda committee with when we could expect answers to some of these questions?  Also some of our employees need to make larger contributions.  We need to also look at new revenues and how development might impact our budget.
Arreguin.  I see that parks department is going to be making a presentation.  Will we get an idea of their facility need at that time?