This is the second of the Vanguard’s series of 11 questions. Answers are limited to 250 words.
Question 2: The budget shortfall is projected over the next twenty years. The city is looking at revenue measures, economic development, but without cost containment, no remedy will work in the long term. What steps will you take to ensure cost containment? Please include concrete proposals.
Cost containment will be particularly important in the first twelve years of the budget projection. I consider the following ideas worthy of the Council’s consideration alongside revenue enhancement ideas:
- Lower the $500/month maximum cash in lieu of benefits available to employees. In most industries, health and dental benefits are available to those who need them but can’t be traded for salary. Keeping some level of maximum will provide an incentive for employees to not be double covered with a spouse.
- I don’t agree that “the City should endeavor to keep staffing levels per capita relatively constant.” The grass grows at the same rate no matter the city’s population. I’m sure we can find better ways to measure if and how each department’s relative costs are variable and budget accordingly.
- Review the rates used in the internal service funds to make sure we are truly just asking our departments to reimburse one another’s actual costs. In other words, departments shouldn’t be making a profit off of each other.
- The 20-year forecast is just for the general fund. I’d like to review how much in general funds is really needed in the public works departments given their hefty reserves. Same with capital projects.
- The forecast includes reasonable estimates for annual unfunded pension requirements. Ultimately, however, governments may need to go the way of private businesses and adopt defined contribution pension plans rather than defined benefit plans.
Cost containment is essential for keeping a healthy budget. I believe strongly in cost containment that maintains quality and integrity. Most challenging in this regard is meeting our unfunded liabilities. To do this we must engage our employees in finding solutions that are equitable. Accurate expense forecasting is crucial in budgeting.
We must know what actual cost are and look to see what solutions make the most sense for Davis. Many other cities face this problem and we can examine what has been most effective. Other areas for cost containment include efficiency in departments.
We must have measures for cost-effectiveness. Every dollar invested in a service or department should yield an optimal return. Perhaps some departments or commissions can be consolidated.
One of the best ways to increase our efficiency is to ensure our technology is up to date and can effectively support city operations. Outsourcing services, while a common practice to save money, should always be re-evaluated from time to time to ensure that it cannot be done more cheaply in house. Green Fridays or Mondays:
Four day work weeks have been used to improve production and reduce cost not only to employers but to the environment by keeping commuters off the road. Purchases should be clearly funded. When considering new additions be it a new park structure or downtown bathroom we should be sure the funding is available.
The city should aggressively pursue grants to help in this effort. Finally whatever solution we consider we must do so thoughtfully and collaboratively.
As state fiduciary officer, my duties include contract administration, budget planning, approving and tracking expenditures, and staying within budget. I am responsible for fiscal accountability, transparency and ensuring public dollars are properly spent.
As Davis City Council member, I would review the city budget shortfall, identify areas of improvements within cost containment measures and support budget change adjustments accordingly. I would conduct a complete analysis of the city budget, the General fund, expenditures, services, capital improvement projects, payroll and pension requirements. I would advocate for cost containment within flexible parameters to ensure the City would be running efficiently and without sacrificing essential services. For example, each city department would review their expenditures, carryover, and develop a cost-savings plan for a city commission review.
Another proposal for cost containment begins with the City’s computer use management strategies like energy-efficient standards and power usage policies like ‘green IT policies’ to help curb electricity expenses. The City can work with local energy firms to assist in this cost containment measure within the City Hall offices. Another tangible proposal would be using Light Emitting Diode bulbs for the City’s traffic lights to save energy and cost overall. The City can take many cost containment measures; and at the same time, support energy-efficient methods for infrastructure and services. The City can also hire police officers on bicycle patrol for the downtown area, saving on fuel prices, vehicle cost and maintenance. These are some of the cost-savings measures the City can implement in the long term.
- Reduce reliance on consultants. Davis has commissions filled with intelligent, passionate, problem-solving people: professionals in their fields who live in Davis. My experience with City commissions and community task forces gives me confidence in relying on their abilities.
- Employee compensation. I believe in paying a living wage and providing good benefits to City staff. We do this. Making cost of living increases apply to the entire employee compensation package – i.e. pay, benefits, and retirement combined as opposed to separate increases for the individual components – will help keep these costs contained. Work with California cities to negotiate with CalPers as a group.
- Partner with the University. We can share services with the University; specifically police and fire. It has been done in the past and I would like to revisit those options.
- Community-owned utilities. Valley Clean Energy is a start, but I believe we missed a big opportunity by not exercising our right of first refusal for DWR. I would like to lay the groundwork for taking that option at the next opportunity. We also have the opportunity to have community-owned broad band. While these goals take up-front investment, they are truly investments: they pay large dividends in the future.
- Maximize staff efficiency. We have reduced the number of staff in recent years, but this has been due to attrition, not design. Ensuring our existing staff are organized in the best possible manner with regard to the work load will maximize efficiency.
Mary Jo Bryan
On several occasions Mayor Davis has proposed creating a Cost Containment Taskforce to look closely at strategies and tactics for making real progress in containing costs. Unfortunately, Mayor Davis’ efforts have died without receiving a second from any of the other Council members.
If an open, participative community meetings and workshops can work for getting citizen input on an update of the General Plan, it can also work for creating a public dialogue and action plan for containing costs. So I will carry on where Mayor Davis left off and propose the creation of a Cost Containment Task Force staffed by Bob Leland, the fiscal professional who created the 20-year Forecast included in the City Budget.
My approach to containing City costs would be to apply the following management techniques I have learned through my experience on the executive team of a large electricity utility, and work I do as a consultant for utility regulators reviewing the prudency and efficiency of utility expenditure:
- Review the City’s management systems and policies to ensure they are designed to deliver prudent and efficient (least cost) expenditure outcomes
- Review the staff performance management system to ensure that prudent and efficient expenditure is incentivized in staff performance measurement and compensation
- Drive completion of the process improvement initiative. In my experience, such a review should be completed within 6 mos. Additionally, I would:
- Ensure the study benchmarked City processes against peer cities to identify cost savings and smarter ways of working
- Ensure that the review considered capital expenditure and operational expenditure trade-offs
- Ensure that online self-service and other IT efficiency investments were considered to reduce the cost of labor intensive processes
- Ensure that the City is making prudent and efficient decisions regarding which services to deliver in-house and which to deliver via the market
- Review City management structure and roles, to ensure they are fit for purpose given the process improvement review
- Carefully review any vacant roles to ensure they critical before filling them. It may be that the functions can be reallocated to existing roles, or may no longer-needed
- Ensure we are obtaining any and all grants to help offset costs
To address our city’s $8 million annual funding gap, we need to contain city costs by slowing increases in our growing bill for personnel compensation; aggressively seek grants from outside entities that we could use in place of General Fund resources; and scrutinize every expenditure item to generally prioritize “fixing it first” instead of new spending programs.
Our citizens need someone on council with the technical expertise to dive deep in to the numbers and find budget solutions. I have that skill-set from 17 years at the California Legislative Analyst’s Office and four years on the Finance and Budget Commission.
For example, as commissioner, I examined the city’s long-term plan for fixing our city streets and roads and discovered that it included faulty assumptions about inflationary increases in the cost of road repair that overstated the real costs by millions of dollars.
The city can’t reverse past decisions about the pension plans provided for its staff, but it can help to slow the future growth of pension costs by showing discipline when it comes to negotiating future pay increases that also drive up the bill for pensions.
City staff is now doing a better job at this than in the past, but we must also work hard to go after competitive grant funding from federal and state agencies and nonprofit organizations for local purposes so that we can make our city tax dollars go farther.
Finally, we must prioritize keeping the existing services and infrastructure over new programs in budget-setting.