Employee Budget Questions and Concerns

Updates from September 23, 2008 City Council Meeting:

• $1.6 million in projects were postponed or cancelled
• Mayor Chavez announced that the Councilmembers will participate in the furlough, and they will no longer have meals at Council meetings.

Updates from September 30, 2008 City Council Meeting:

• City Council approved furloughs to be implemented as each bargaining group agrees.  Unrepresented/Confidential furlough deduction is effective with the October 7th pay check.
• City Council approved the proposed furlough calendar.

Updated November 6, 2008: Questions 96 - 97 added

1. Are we looking at cuts for one year or more than one year?

The same economic uncertainty that faces us this year may impact us next year. The primary sources of revenue for the General Fund have all been impacted: a reduction in property tax due to the reassessment of properties purchased in the last 4 years; sales tax, business license tax, motor vehicle license, and utility user’s tax, all have declined due to a softening economy and lack of consumer confidence and spending.

The City is working to secure the Utility User’s Tax by placing Measure U on the November 4, 2008 General Election Ballot. Measure U is not a new tax. The purpose of the Measure is to modernize ordinance language and secure the existing revenue of $11.65 million per year in communication users tax. Other taxes are not within the City’s control. Property tax is collect by the County and the City’s share is based on a State approved formula. Of course, sales tax, business license tax, and motor vehicle license tax have all declined due to a lack of consumer spending.

2. My biggest concern is layoffs:

The current budget challenges are impacting the General Fund. Most employee salaries are paid for from the General Fund. Salaries and benefits comprise the largest percentage of costs. Unfortunately, layoffs may be required to achieve the cost savings necessary. The City Council will consider a number of cost reduction items in the coming weeks, as part of City Council Agendas.

3. I would like to know when to expect a decision about the possibility of furlough around the holidays? Everyone I have spoken to about it has been for it and thinks it is a great idea.

The City Council will consider a number of cost reduction items in the coming weeks, as part of the City Council Agenda. Furloughs are one of the options that will be presented by staff.

4. With a minimum $10 million deficit, how will implementing the Voluntary Separation Program (VSP) save money?

The savings from offering a voluntary separation incentive comes from: Encouraging long term employees who may be at the top step to separate and replacing with lower cost employees (different classification or first step that do not qualify for all the add pays such as longevity), not filling positions by restructuring, or not filling positions by reducing or eliminating services. The cost/savings analysis will be completed on a system-wide basis consistent with the budget prioritization, rather than a one-for-one or position by position basis.

5. Will the furloughs include the Mayor and City Council members?

The Mayor and City Council members do receive a salary. They will determine if their salaries will be impacted by furloughs.

6. How will the subsidies to Paragary's, Arena, etc. be affected by the budget problems?

Redevelopment funds were provided to Paragary’s by the Redevelopment Agency. Redevelopment funds are separate from the General Fund. (Please see question 16 for an explanation of Redevelopment Areas and funding.)

7. Are the City Council and City Manager going to be asked to contribute with the rest of the City employees to decrease the budget shortfall? Are they also going to participate in the furlough program?

Mayor and City Council members do receive a salary. They will determine if their salaries will be impacted by the furloughs. If the Council approves the furlough program, the City Manager will participate in the furlough.

8. The budget challenge is causing major morale depression department-wide as there are so many unknowns at this time.

These are difficult times. We understand that it causes significant distractions. The Council approved a contract with a consultant to assist with expediting the prioritization process that will lead to a revised budget.

9. Mandatory Furlough for (10) days for each union employee? These are the people that do the work. Drivers, clerical, receptionists, workers. Mandatory Furlough for (30) days for each program Manager, for each Department Head. People in those positions do not have a union, they do not answer the phone, type the letter, greet citizens at the window. The budget for these highly paid employees, gone for 30 days, would help balance the budget while not disturbing work flow.

The City Council will consider a number of cost reduction items in the coming weeks, as part of the City Council Agenda.

10. Loss of personnel; layoffs.

These are very difficult times. Whenever people leave an organization, there is a loss of institutional knowledge and expertise. All other alternatives are being examined to reduce costs, prior to recommending layoffs.

11. My concern is that information is not being disseminated in a more systematic way. Rumors are rampant. Employees are fearful. There are lots of unanswered questions. While I realize management is trying to shake this all out, even having someone in authority address us would be helpful. I have been through this before in another City and the CM addressed all employees in several different meetings. It helped to promote a sense of calm and that we were all in this together. Would it be possible to schedule employee meetings at the Civic and have the CM tell what he knows and doesn't know? It really helped in my other City. Thanks for your consideration.

We recognize that, in the absence of information, the void will be filled with rumors. This Q&A is an effort to provide an opportunity to express concerns and get answers. As decisions are made, information will be communicated.

12. My fear is that you're going to blow it big time. I'm afraid you're going to balance the budget on the backs of the employees and cause a mass exodus of the very people you should seek to keep.

It is very important for Department Heads to communicate and advocate the priorities of your particular Department. City Council will rely on a foundation of staff research and recommendations to minimize the impact to both employees and the community.

13. How come all of a sudden, City officials just found out that we have a deficit of $18 M and maybe more?

Primary sources of revenue for California cities include: sales tax, property tax, utility user tax, business taxes, and fees for services. Sales tax receipts are lower due to decreased consumer confidence and the availability of discretionary income; foreclosures and declining property values have significantly eroded the property tax base; and other use taxes and fees have decreased due to a sluggish economy.

Our budget plans were predicated and anticipated on revenues from these sources, based on assumptions available in December. Economic data typically used to forecast revenues, which includes analysis of recent trends, was used to develop the budget adopted in May. Adjustments were made for unusual economic conditions that were beginning to become apparent. Even those conservative estimates did not reflect the current economics.

14. How could the City leave it's reserve account at a $0?

The City Council adopted a fiscal policy that requires a contribution to reserves based on current revenues and expenses and a contribution to make up for the years that such a policy did not exist.

15. Why do we have to pay for the mistakes made by mismanagement?

The challenges we face today are, for the most part, related to the foreclosure crisis and the softening economy. The major sources of funding for the General Fund have suffered locally and nationally. Please see the web site for an explanation of the City Budget General Fund and sources of revenue: Link to General Fund and Sources of Revenue

16. Why did the City pay Paragary’s Restaurant $2.5 and no rent till 2012?

The funding provided to Paragary’s did not come from the General Fund; Redevelopment Agency funds were provided to Paragary’s. Redevelopment funds can be used to enhance business in areas designated as Redevelopment areas. In fact, these funds are restricted and must benefit the area from which the funds originated. Please take a few moments to read “What is Redevelopment?” on the City’s web site: Link to "What is Redevelopment?"

17. If the City's budget is in jeopardy, why hire three additional City deputy managers?

The decision to add two additional Deputy City Managers was made prior to the current budget impacts. Cities of this size and smaller typically have more than two Deputies and/or have Assistant City Managers, in addition to the City Manager. Additional Deputies expedite the decision-making process, allowing more decisions to be made without directly involving the City Manager in the day-to-day operational decisions of the individual Departments. The current structure allows the City Manager to focus on the bigger, more global needs and issues that face the City of Stockton.

18. Let employees choose furlough days; don’t completely shut down:

In addition to saving salary costs, closing buildings saves money through reduced energy usage. Advertised furlough days would allow the public to adjust business needs and transactions with City offices.

19. Code Enforcement is a revenue generating Department; furloughs should not apply to Departments that generate revenue:

Revenue generation will be a consideration as decisions are made, as will cost reduction.

20. Why did it take management so long to engage employees in this matter?

All Department Heads were made aware of the significance of the budget challenges in July, as soon as Budget staff determined that most revenues were coming in lower than anticipated. All Departments were asked to identify areas where cost savings and revenue generation could be realized, and they were asked to engage employees in the process.

Note: Sales tax results lag by nearly two financial quarters, making it difficult to forecast. In addition, after the current 2008/09 Budget was prepared, the San Joaquin County Assessor’s Office notified the City of Stockton that property taxes would be re-assessed to 2004 levels; we did not, yet, know the impact when the Budget was adopted in May 2008.

21. In the event of layoffs, will the City honor the MOU's and eliminate Temporary, Seasonal. Part-Time, and Probationary employees prior to laying off full-time employees?

Yes, unless otherwise agreed to.

22. What is being done to eliminate waste? i.e., excessive overtime; non-working managers, etc.

Department Heads have been told to restrict overtime wherever possible. Productivity issues are the responsibility of management, up to and including, the Department Head.

23. The citizens of Stockton are going to take a budget hit through loss of services. Employees, many of whom are Stockton residents, will be significantly impacted and may suffer financial devastation:

Citizens will experience reduced services. There is no way to provide the same level of service with fewer resources, both employees and expenses. The City of Stockton will make every effort to minimize the impact to both citizens and employees.

24. The Police Department has positions that can be combined and retired employees are being paid where volunteers can be used. Officers should be used in the field instead of the office:

Every Department is currently in the process of identifying priorities. The Police Department, as with all other Departments, will identify areas for cost reductions.

25. Layoffs would lead to a heavier workload for a smaller number of staff.  Without sufficient staff resources, there is potential for decreased quality of service provided by City employees:

Every Department is currently in the process of identifying priorities. Certain programs and services will be eliminated or reduced to achieve a manageable workload.

26. Concerned that expenditures will continue, even without funding:

City leadership is extremely focused on the budget and the realities of today’s economy and the potential for future economic challenges. Every expense item will be scrutinized for appropriateness and to ensure that funding is available today and in the future.

27. Job cuts for full-time City employees:

The magnitude of revenue shortfall cannot be addressed without reducing the number employees. The impact to full-time employees is not yet known, until project prioritization is complete and the City Council has determined what services will be continued. However, management would like to minimize these cuts as much as possible by implementing other measures first.

28. City Councilmembers should read every suggestion posted online, before approving any budget plan:

Employee feedback is posted and accessible to anyone. A link to the page has been forwarded to all Councilmembers.

29. Why aren't we hearing from the Mayor, City Council and the City Manager regarding what is being done and how they feel about work furloughs?

The Mayor and Council are required to conduct business publicly. Budget study sessions have been held and are scheduled for the first week in October. As the City Manager and Council consider issues, information will be communicated through public forums.

30. If the City Manager announced a hiring freeze in May, prior to Council adopting the deficit budget, why then were 2 new Deputy CM positions created and filled? Why were all the vacated positions allowed to be back-filled, with pay increases for all?

Please see question 17, which addresses the reason for additional Deputy City Managers. The positions the new Deputy City Managers formerly held were back-filled to address critical responsibilities; the positions that were held by these individuals were not filled, their former responsibilities have been layered onto their current job and absorbed within the Departments. When the budget was adopted in May, Budget staff reported that final revenue numbers for the 2007/2008 fiscal year would not be available until September or October. Budget staff built in conservative estimates to address anticipated revenue shortfalls and advised the Council that adjustments may need to be made after the results of the 3rd and 4th quarter were received. The actual revenues have just been determined in the last few weeks.

31. If we are required to take furlough days and take a hit of 3.85% on our salaries, is it going to be put in writing when we will get the 3.85% back; and, if the City plans to give it back at all (1, 2 years, etc.)?

The purpose of furloughs is cost reduction, not deferral. Employees would not be working on furlough days; reimbursement would not occur for hours not worked.

32. Certainly, the current economy can be blamed for some of the problems Stockton is facing. Redevelopment is important, but, right now, dinner at Paragary’s and tickets for entertainment venues are out of reach for most Stocktonians. Each day those buildings are not used to their full potential, Stockton loses money:

Even if buildings and venues are closed, there is a cost of maintaining the facility and a risk of deterioration of the investment already made. There are people who enjoy these facilities, even during these difficult economic times. The Council has stated that they would like to see all of the venues booked more frequently, as people make choices about how to use their discretionary income, they need options for entertainment close to home.

33. Is there a Federal or State Law that requires 30 days advanced notice whenever an employer is going to layoff 50 or more employees? The MOU states one pay period advanced notice. How much advance notice will be provided to the following employees: represented, unrepresented, confidential, part-time, provisional, probationary, and interns?

There is no state or federal law that requires 30 days notice for a reduction in force. The government code does not provide a mandatory notice period, only the reasons for a reduction in force (lack of work or lack of funds).

34. Sacramento – a much larger city - has four Assistant City Managers. Why does Stockton need four?

Please see the answer to question 17.  In the past, the City of Stockton has had both an Assistant City Manager and multiple Deputy City Managers - concurrently, with two distinct functions. The Assistant City Manager functioned, much like a vice president, assisting the City Manager and stepping into that role when the City Manager was away or the position was temporarily vacant. Deputy City Managers have Departments that report directly to them. Job specs for both positions are accessible from the City of Stockton’s web site: Assistant City Manager and Deputy City Manager I, Deputy City Manager II.

35. Is seniority a factor for layoffs?

Yes, seniority is a factor when more than one position within the same classification is affected. The MOUs provide an order of lay-off. All require the reduction or elimination of part-time, temporary, seasonal, and probationary employees prior to laying off a regular full-time employee. The MOUs differ as to whether the order of lay off for regular full time positions is by City seniority or by classification within the department.

36. Is it true that the City paid $80,000 to 8 residences because the sailboats they didn't have wouldn't fit under the bridge built over Bear Creek? This was an unnecessary expense, as the boats could have been modified.

This was addressed by City Council on January 17, 2006. Here is the link to Agenda item 6.01.

37. Information is limited and coming only from the paper and not our administrators. Communication to employees should be better than having to read about it in the paper.

The purpose of this feedback form is provide the opportunity to submit questions and receive answers. Budget staff is dedicated to addressing the current budget challenges with Department representatives, appointed by the Department Head.

38. Since we are using the City of Sacramento's model for the furloughs, layoffs, voluntary separation, etc., do we know if this has been successful, thus far, for them?

The idea of furloughs did not originate with Sacramento, but rather, has been successfully implemented in other jurisdictions. The Voluntary Separation Program (VSP) was implemented in Sacramento, but using different and more restrictive criteria that the concept the City of Stockton has presented to its employees. Sacramento did not generate the salary reduction they were hoping to achieve with the initial offer, and they were going to expand the program to allow more employees to participate. Lay-offs would be implemented based on MOU requirements in effect for the City of Stockton, not modeled after another jurisdiction.

39. Once this is worked out, what measures will the City put into place to grow and spend at a more conservative rate in the future? There seems to be a sense of "if we don't spend it, we will lose it". This is a dangerous spending attitude. Departments that are able to spend judiciously should have a "rainy day" account where money can be saved and used at a later time.

The City Council has recently adopted various fiscal policies (e.g., General Fund Reserve Policy, Debt Management Policies, etc.) and will be adopting additional fiscal policies (e.g., revenue, expenditure, capital, operating budget, etc.) to create a more fiscally sustainable resource allocation environment for the future.

40. How were 3 new managers for the Library hired during the freeze?

Limited hirings were permitted, with City Manager approval, where positions were identified as being essential to providing basic service levels. Not all of the funding for the Library is provided by the City of Stockton, it is a county system, and some funding is provided by San Joaquin County.

41. If the General Fund is financing the move to the WAMU building, why are new furniture, teleconferencing equipment, appliances for the employee's break room, and a new phone system being purchased for the IT Department?

This memo from the IT Director to the Executive staff provides information about the WAMU building financing and costs associated with the move.

42. Does the hiring freeze apply to the IT Department?

The hiring freeze applies to all Departments, including Police and Fire.

43. How can we afford the downtown waterfront project at a time when we millions of dollars short in our budget? You might say the funds are coming from a source other than the general fund, but the appearance to employees and the citizens is quite negative.

Employees and the public may not understand how large projects can continue, during these fiscally challenging times. Please visit the City Budget page for an explanation of the various Funds and the “What is Redevelopment?” web page for an explanation of how it works and funds projects in Redevelopment areas, such as the waterfront. For specifics about what funds are being used to finance the marina project, please see item 8.01 on the July 29, 2008 City Council/Redevelopment Agency Agenda. You will see in the staff report that a good portion of the money for the marina comes from grants. Grants are awarded based on the merits of a particular project and cannot be used for anything else. The non-grant funds can only be used for this project and have deadlines for use of the funds. If the approved usage and deadlines are not adhered to, the funding source goes away.

44. Why are Public Works projects sent to outside consultants for design and project management? This work should be done in-house by PW staff.

The Engineering Division of Public Works currently has 47 active projects with a total project value of over $1.4 billion. Preliminary engineering, environmental, final design, and construction management services are contracted, because a number of these projects are very complex (Highway interchange projects and highway mainline widening) and require specialized engineering skills. Consultant assistance is required for the volume, magnitude, and complexity of these projects. The engineers in Public Works perform the project management function. The current budget challenges are revenue shortfalls in the General Fund. These projects are not funded by the General Fund.

45. In regards to question 30, if the positions weren't filled, why do we have a number of acting department heads?

The positions vacated by those in “acting positions” have not been filled.

46. With regards to the 2008-'09 budget review, is anyone talking about realigning city services with actual revenues on a permanent basis (like the state should be doing)?  Or are people simply talking about delaying planned expenditures until the current budget crisis has ended?

Some realignment of department functions took place with the reorganization in July of this year. Each Department has recently identified all programs and the cost associated with the programs. These programs will be reviewed and prioritized by the City Council and decisions will be made about what to continue and what to discontinue. Some programs will be discontinued and others may be postponed until the economy and the budget improve. During this process, it is likely that opportunities for realignments will be identified and recommended to the City Manager.

47. Since there's a deficit in the General Fund, are projects and expenses charged to the General Fund going to be reduced and/or cut? The logical (and fair sequence) would be to reduce expenses before discussing layoffs and asking employees to take voluntary pay reductions.

Yes. The sequence is what you have described; expenses and cost saving measures will be implemented first, before steps are implemented that impact salaries and employment.

48. It seems that when things are tight, that is when employees should work the hardest. Why does the city continually hire consultants to give input about things like the budget, redevelopment, job classifications, and other things? Don't we have enough managers and employees with the education and experience to make these decisions on their own?

Consultants provide highly specialized expertise that is paid for only for the period of time during which they are needed. Their objectivity and experience working with other cities or government entities often provides a fresh perspective or approach. Consulting resources are focused on a particular project, need, or purpose, and are not distracted by other daily demands. When that expertise is no longer needed, they are released.

This is the first time the City has engaged a consultant for assistance with its operating budget. Success will not simply be a matter of “working hard,” but ensuring that we are working the right way on the most important issues.

This is the same way that most people manage a household. You call an electrician or plumber to take care of issues or emergencies. You may have limited skills to take care of things like changing washers, faucets, switches and sockets, but you hire the expertise for larger, more complicated needs. It would not make sense to pay for this skill, year-round, in case you have a need.

49. The Stockton city government has a serious spending problem record that has pushed the city to the edge of financial chaos far too often. Why does this keep happening – and how can we stop it from happening again? Government's cycle of fiscal crises undermines confidence in the leadership of our city and threatens that of what is important to the city and its citizens as a whole. WHAT IS GOING TO BE DONE?

A tradition of maintaining a relatively short (one-year) planning horizon has left the City vulnerable to financial downturns (particularly in those years in which the State balanced its budget on the backs of local municipalities). We are currently dealing with the long-term effects of State takeaways, an unprecedented collapse of property tax and sales tax, and long-term labor contract commitments that exceed the rate of expected revenue increases over the next few years.

The current fiscal crisis is due to a combination of causes never before experienced or anticipated by government entities. The following questions and answers already posted address these concerns and provide information:

Question 1 – What we are doing to secure existing sources of funding
Questions 3 – Cost reductions
Question 13 – Cause and effect of economic conditions
Questions 14 and 39 – Fiscal policy
Question 26 – Spending
Question 46 – Realignment and prioritization

50. Why are almost all legal cases farmed out to outside legal firms? Why does the City settle a lot of these cases?

Outside counsel is used in some cases when specialized legal expertise is needed, for many of the same reasons that we use consultants in other departments (see Question 48 above). Outside counsel may also be used when the current caseload does not allow the City Attorney’s Office to meet legal deadlines.

Settling cases can often be more expeditious and financially beneficial than spending hours and resources tied up in legal challenges.

51. Why was the program prioritization farmed out to a consultant? Does the City not have enough qualified Program Managers to do the job?

The financial challenges we are facing are serious and mounting each day, due to the local, state, and national economy. A consultant with experience using the prioritization process was hired to expedite the process. Without assistance from a consultant, the same process would take significantly longer. The consultant also provides objectivity.

The program prioritization is being conducted exclusively by City staff. The role of the consultant has been to provide process support, facilitation support, and to contribute the experience of a national professional consulting and research firm to ensure quality control and timeliness of the solutions that will be proposed to the City Council.

52. The city needs to look at future budgets. Plan them at least one year in advance with actual numbers based on facts and projected increases or decreases in spending, again based on facts (real information from industry speculations and trends). This would result in "tweaking" the budget in June rather than "damage control" in July, August, September, October, ....

The City is looking toward the future. Please see the other questions cited in Question 49. As soon as the budget for the fiscal year is adopted each year, Budget staff begins working on the next Budget. As stated in previous answers, actual revenues are not available for nearly two full quarters; the highly unusual and significant decline in revenues that we have experienced this year is far more severe than anticipated.

53. Police are being blamed for the budget crisis. City officials agreed to the salary survey three years ago. Poor financial planning and lack of city direction does not eliminate contractual obligations in the name of fiscal mismanagement.

The City has not denied there is a contractual obligation to implement the results of a salary survey pursuant to the Memorandum of Understanding (MOU) between the City and the Stockton Police Officer’s Association. However, there is a dispute over the interpretation of the contractual obligation and the dispute is being handled through the process as provided in the MOU. In the interim, the City has asked all labor organizations and unrepresented employees for input and assistance in resolving the budget deficit caused by the economic downturn, which many agencies – both private and public - throughout the state and nation are facing.

54. Why are only certain departments going to be hit with the furloughs? Doesn't this send a bad message throughout the city? Shouldn't we stand as one?

Furloughs are a concept that has been proposed City-wide. The decision must be agreed to by both the unions and City Council prior to implementation; no decision has been made about how, when and where to apply furloughs.

55. While I appreciate this form as a source of information, I find it an inappropriate substitute for real communication between two parties (City employees and City managers). It does not allow for a two-way discussion with follow-up questions and answers in order to clear up rumors. Instead, with the current format, we have to wait for a few days for an answer to one question. Meanwhile, we employees fill in the gaps with more questions, rumors, doubts and fears. Are there plans to have a "town hall meeting" of sorts for the employees with the managers?

We are in the process of scheduling group meetings, by Department. Please check with your Department Head to find out when and where the meeting will be held for your section or work group.

56. How in the world can we afford the downtown waterfront project at a time when we are millions of dollars short in our budget? If I couldn't afford to meet my financial obligations I sure wouldn't take on an expensive construction project. You might say the funds are coming from a source other than the General Fund, but the appearance to employees and the citizens is quite negative.

The majority of funding for the marina project comes from 20 to 50 year low-interest loans. These loans are specifically identified for this project and were secured years in advance. Just over half of the approximate $20 million will be paid back by other federal funding sources (CDBG funds); the net operating revenues of the marina, over time, are expected cover the future loan payments for the balance of the loan funds. Other funding sources include State of California grants that do not have to be paid back. If these funding sources are not used now, we will lose them and may never be able to put together such a project again. A revitalized waterfront will significantly improve the appearance of our city, allow us to access and enjoy the water and promenade area, attract visitors, and boost economic development opportunities. Improving our city for future generations is essential to the economic vitality of our future.

57. Why was a contract with Youniquely4U approved for the library, when there isn't enough money for part-time help an, lately, even books? Why should the City possibly lose employees for non-essential programs like this?

Youniquely 4U, an online marketing system, allows customers to connect electronically to its web site and offsets the costs of direct marketing to library customers. The Youniquely4U three year contract was approved on December 18, 2007, before the economic downturn was fully realized. The annual cost is about $21,000 per year. For 2008-2009 the Part-time budget was increased by $71,000, again before the economic downturn. The City's Priority-Driven Budget Process will assess all of the Library's programs and services for budget reallocation.

58. If the voluntary separation package is approved, what criteria will be used to determine who qualifies for the incentive?

The criteria that will be used as to who will be accepted will be based on fiscal and operational analysis. The analysis is not one-for-one or position-by-position, but rather viewed from the City operations as a whole. Overall, the result must be a in a savings to the City and one that can be operationally implemented.

59. The SCEA MOU prevents the City from laying off any permanent employees while employees working in an extra help, seasonal, temporary, provisional or probationary status are retained in the same classification. Does this mean that full-time Parks workers could be replaced with seasonal Park laborers, or full-time Library Aides could be replaced with part time Library shelvers? Although the job classification is different, they can perform the same duties.

The MOU in effect for all bargaining units will be adhered to for staffing all Departments. Reduction of positions and any subsequent layoffs will be determined on a case-by-case basis, in accordance with the MOU.

60. Layoffs and low morale of employees.

We do recognize that uncertainty creates a lot of anxiety for employees. Everyone is working as quickly as possible to address the issues and make recommendations to City Council for action to be taken. The City is also attempting to implement other cost reductions to minimize layoffs, such as furloughs, Voluntary Separation Program, and other cost savings.

61. Why don't the department heads or division heads talk to their staff who understand operations and know how to "save" money? It's been almost a month that all these City budget problems have been brought out, but we do not see anything being done except the proposed furloughs and Voluntary Separation Program. There does not appear to be any urgency. Meetings are held with Department Heads and managers, but nothing trickles down to the staff.

Each Department should be meeting to keep staff informed of how the budget issues are being addressed. All Departments have staff members engaged in a process of prioritizing all programs and services. Decisions will be made based on the outcome of that process.

Department specific meetings are beginning this week (September 22) to answer questions about what is being done and how it will impact employees. Many decisions are yet to be made and information will be shared as soon as it becomes available.

62. Is eliminating lifetime medical for employees who retire in the future being considered? If an employee retires while the lifetime medical is still being offered, can the City take it away in the future (i.e., after the employee retires)?

The City is looking at various alternatives to reduce unfunded liability created by the current retiree medical benefit, which is now a reporting requirement pursuant to GASB (Governmental Accounting Standards Board) 45. One example can be seen with the agreement currently in place with SPOA and SPMA wherein the benefit is based on date of hire and date of retirement, so the change does affect current employees as well as future hires. Other alternatives may include a tiered system whereby the change in benefit affects only new hires. Unlike an employee’s pension, some courts have concluded that healthcare benefits are not a vested benefit and, therefore, can be modified post-retirement, as other agencies have done.

63. How could the City be surprised that the budget adopted in May is now significantly off, when Stockton has been receiving national recognition for foreclosures for months?

The budget adopted in May did have adjustments for the weakening economy. As the media is now reporting, no one predicted the severity that we are experiencing today. Actual revenues for property and sales tax are not available until nearly two complete quarters (6 months). Adjustments being made today are based on data that was received earlier this summer.

The impact of the foreclosures on assessed property values was not known until July 2008, at which time, the City received detailed information regarding the rollback of taxable values by the County Assessor’s Office.

Property tax declines were not the only contributing factor to the budget gap. Sales tax growth has fallen sharply over the past year, while the reporting of the actual economic activity lags by several months.

64. How will layoffs affect employee benefits? Will there be medical/dental/vision available during that time period?

Benefits will continue only through the end of the month in which the separation occurs. For example, if an employee is layed off and separates employment with the City on the 7th of the month, benefits continue through the end of that month. Thereafter, COBRA plans are available to employees who currently receive benefits. These plans offer the employee the option of continuing coverage by paying the entire cost of the benefit premium for a period of 18 months after they separate from City employment. A layoff is considered a separation.

65. Employees on probation are one of the first groups to be layed off. Are there different probation lengths for employees, e.g., 6 months vs. 1 year? What is the methodology and when will layoffs occur?

There are different probationary periods, depending on the Memorandum of Understanding (MOU). Layoffs occur first by determining the position or positions that will be eliminated for budgetary purposes. The incumbent in the position identified to be eliminated will be impacted depending on the status (regular full-time vs, probationary, represented vs. unrepresented, classified service vs. unclassified service). Other budget reduction initiatives aimed at reducing the City’s payroll costs are being pursued, such as the Voluntary Separation Program and furloughs, to minimize the impact or the amount of layoffs that must occur. The extent of the impact of the other initiatives will not be known until mid-October when a revised budget is submitted to Council for adoption

Information about layoffs is available on the Human Resources Department CityLink page or from respective labor representatives. Layoffs must be approved by City Council. If it is determined by the Council that layoffs are required, each situation would be reviewed on a case-by-case basis, since the order of layoff is determined by the specific MOU.

66. Why has Code Enforcement already assigned mandatory furlough days when nothing has been decided by the City Council or our Employee Association yet? Is there a choice as to which days we can take as furlough days?

Code Enforcement has not been assigned furloughs. Possible scheduling options were developed in the event furloughs are agreed upon and implemented. Whether furloughs will be implemented, and how, will be a Council decision, with input from the departments as to how to best meet the operational needs while achieving maximum savings in other areas such as utilities with a uniform application of furlough days.

67. Please explain how these economic issues could have caught those responsible for our budget and finances off-guard?

This is a national economic crisis, not anticipated by the most world-renowned financial experts. In fact, the full impact still is not known. It is very difficult to predict certain market trends. Economists have recognized for several decades that we have a consumer-driven economy, largely dependent on people spending money. When consumers stop spending, they generally start with big-ticket items, such as automobiles, televisions, appliances – all the very same items that drive up and contribute to local sales tax revenues. A lack of consumer confidence, and spending, and a reduction in property tax, among other factors, has significantly impacted the primary revenue sources for our City’s budget.

There is tremendous pressure to spend current revenues on the delivery of local services across the state. This has left many Cities struggling, as we are, to respond to the recent drop in revenues without devastating local services.

68. It has been stated that using furloughs and thus reducing our pay by 3.85% over 10 months would save the City $2.6 million. But if the general fund budget is $195 million and at least 70% of that is salaries, this would add up to a minimum of $4.3 million in savings. Are we not talking about applying the furloughs across all units equally? If we are talking about all units sharing equally in the furloughs, will Police have to reduce their payroll budget by 3.85% below the original budget amount or below the additional 15% pay raise they believe they are entitled to?

We are basing the reductions on the best available data that we have at this time. In fact, the General Fund budget is something closer to $183 million and nearly 90 percent of the budget is salaries. The only way to achieve the savings that we need to accomplish – and reduce the number of layoffs – is to apply furloughs equally – to all City employees. The Police Department budget reduction percentage is based on the current Police Department budget.

69. Are the City Council and management working fast enough or with enough urgency? Estimates are that the City is losing $43,000 per day. Doesn't that mean that every day without reductions may result in more furloughs or employees being layed off?

The Council recognizes the urgency and is holding special sessions to address the budget. Staff is working through a process to determine what programs and projects are a priority. The Council will review that list in the next couple of weeks and make some very difficult decisions.

70. What is the actual deficit number? We heard $16 million and $24 million?

The deficit amount changes as actual revenues are reported and economic projections are made, based on those results. Remember: we don’t know what our actual sales tax revenues are for nearly 6 months after sales occur. Property and business license taxes results also have delays. Budget staff must project out into the future, without fully knowing what has just happened in the last few months. During more stable economic times, there are formulas and projections that can be made with relative accuracy; during times of extreme economic downturn, it is difficult. The fact is, we just don’t know. A range is the best available information.

The $16 million was the deficit under the most likely scenario presented on August 28. The $24 million was presented as the deficit number, should the economy continue to deteriorate. Since August 28, we witnessed a continued economic decline. In response, we have adjusted our most likely scenario to $18.5 million. (The worsening economy scenario has not been adjusted.)

71. City Council approved the move to WAMU. Cost to move IT is $8 million. How can they do this while the City's General fund is hearting? How can the City entertain layoffs and pay this much to move one department?

On June 24, 2008 the City Council approved the expenditure of $8,860,706.21 for improvements of the office building located at 400 East Main Street in the support of the City’s information technology infrastructure. A memorandum sent from the IT Director to the Executive staff on, September 4, 2008, provides information about the WAMU building financing and costs associated with the move. The memorandum clearly outlines the sources from which the funds were derived. It should be noted that the lion’s share of the improvement expenses are related to enhancing the City’s technology infrastructure supporting all of the City’s departments and a much smaller portion is directly related to the IT office space. This is truly an investment in the City’s future.

This is a good time for all employees to watch City Council meetings. If you live in Stockton and subscribe to basic cable television services, you may view the Council meetings live at 5:30 p.m., Tuesdays, on Channel 97. We repeat the Council meeting on the same Channel throughout the week. The meeting is also streamed live on the internet, while it is occurring; the video is then recorded and archived on the web site, so you can even watch meetings that have occurred back to 2003.

72. My concern is that the workers will bear the blunt of the budget cuts. I have been asked to vote on 22 days furlough. That is $5,500. Are the people in City managers office, City Attorney’s office, and City Clerk’s office going to bear a proportional wage cut? That will never happen! The assistants in the City mangers office make $100,000 a year, a $10, 000 cut in pay at that level means nothing, in comparison to a $5,500 cut at my level.

The Mayor announced at the September 23, 2008 City Council meeting that the Council will share in the furlough; all of the departments you mentioned, City Manager, City Attorney, and City Clerk, will participate in the furlough. All employees, at all levels, have financial obligations that will make it difficult to take a reduction in pay. To yield the necessary results, it must be shared by everyone.

73. Regarding: Layoffs It would be nice if we, as employees, were able to come together to do what needs to be done so that no employee would experience a layoff. Given the high unemployment rate in the state (over 7%), not to mention in Stockton (over 12%), this is a poor time for anyone to be looking for a job. It would be nice if we were provided the information on what it would take, e.g. expanding the furlough, requesting medical premium cost sharing, etc., so that not one employee loses their job. This poor economic situation could be an opportunity for us to strengthen as a team. I just wish we were presented more choices.

Unfortunately, the deficit in the General Fund is impacted primarily by payroll costs (salary and benefits). In order to solve the deficit problem, the City’s payroll must be reduced – either by paying current employees less or paying less employees, or a combination of both. Various options, such as furloughs, contributions to healthcare, or any option reducing an employee’s pay must be negotiated.

74. In the event of layoff, has Human Resources staff contacted other cities and/or agencies to see if they are able, or would even consider, hiring staff being laid off? Is HR going to prepare or assist staff in finding other employment?

Nearly every city in the state is experiencing economic difficulties. Those that are in a little better position are those who have less of their budget tied to salaries and benefits, allowing them to expand and contract services. The first action by most cities is to freeze hiring. The League of California Cities publishes a magazine with city and county jobs throughout the country. The publication is available on their web site. If layoffs are necessary, the Human Resources Department will work with San Joaquin County WorkNet and other employment placement organizations to assist those displaced.

75. In regards to question 56 where it was asked: Why is the City taking on additional downtown projects such as the marina during a fiscal crisis? Long term loans and other sources would pay for the marina was the answer given. In the September 16 council meeting a Councilmember stated that the marina was approved without the City Council fully knowing the fiscal impact once the marina was completed. How can the citizens and city employees take any cost cutting suggestions seriously when the Council is approving multi-million dollar projects without having all the information?

The marina project has been years in the planning process. Loans, grants, and permits, have been a long-term gradual process – all of which have to come together at the same time to proceed with the project. Now that those elements are in-place, the project costs can now be determined and presented to Council. The way our waterfront looks today, it discourages both investors and visitors from coming to our city, and does not allow those of us who live here to fully enjoy the waterfront. There are some things, even during difficult economic times, just make sense to continue. Canceling the project would not return money to the General Fund. The $22 million is not from the General Fund.

76. How does Uniquely4You help the library save on direct marketing costs, as previously stated? Even if the cost is "only" $21,000 per year, is the library considering saving that money? It doesn’t work right a lot of the time anyway. That savings alone could save half of a position. Isn't it better to cut extras before taking away someone's livelihood?

The Uniquely4You service reaches many more of the Library's customers to promote all of the Library's programs and services, not just the programs in the selected categories, than a single press release and program flyers accomplish. The savings are gained in terms of the staff efforts to promote the Library's programs and services to a wider audience.

In order to achieve the budget targets, all cost-saving options will be explored.

77.  Why the City is trying to hire a Director of Housing and Redevelopment when it’s trying to cut down on spending?

Our current crisis is with the General Fund. Redevelopment Agency funds are special funds, not part of the General Fund. Housing funds are also from sources other than the General Fund. In fact, the City of Stockton just received word on Friday, September 27th that we will receive $12.1 million in federal funding to purchase and rehabilitate foreclosed homes. The current Housing Director and staff will be exceedingly busy reviewing the terms and conditions under which the money can be used and designing a program in Stockton that is in compliance with those guidelines, so we do not jeopardize that funding and can make the full and best use of the funds.

Housing and Redevelopment used to be combined under one Director. The Departments were split a few years ago. They will, once again, be combined, reducing the total number of Directors by one position. Highly skilled individuals with the expertise to run Departments efficiently and effectively are needed most when economic times are tough. Experienced managers understand funding during difficult times and how to make the most out of the available resources. The two Acting Directors are eligible to apply.

78. You can take a $45,000 a year job and turn it into $120,000+ with little to no oversight. It is referred to as "golden overtime" and is talked about by many employees at the back doors. What is being done to ensure that this is stopped?

The Executive Team has been directed to review all overtime in their respective departments and to approve overtime only when necessary for the sake of safety or customer service.

79. The WAMU building has furniture that is in better condition that the existing IT furniture. However, they are the first Department to move in, so they get to toss out the furniture that came with the building and buy all new furniture, to the tune of $150,000. That same furniture sure has worked out and would be appreciated by others with far less. Is that how all City Departments will operate when they move? Channel 3 just had a heyday with something very similar in Sacramento.

As Washington Mutual (WAMU) personnel relocated their office from of the fourth floor of the building at 400 E. Main Street to other WAMU locations in Northern California a significant amount of the existing furniture was removed from the building. An inventory taken after the City of Stockton closed escrow indicated five office desks and cubical components for approximately twenty-nine work stations remained. After working with the architect and data center design engineers, it became clear that the components available would not work with the layout required to obtain efficient use of the existing space. The remaining cubical components have been removed from the 4th floor and will be used elsewhere in the building as floors become available. Some of the furniture is already in-use in departments throughout the City, including the Information Technology Department.

80.  It doesn’t make sense to pay a consultant $150,000 to tell you to take down the fences because it alienates the public, and then have P.D. Main follow through with security gates because they’re not safe with all the armed officers coming and going and cameras out side their back doors?

The new fence will help mitigate serious security problems that threaten the Main Police Facility which was designed nearly 40 years ago. With greater frequency in recent years, the Police Department has experienced virtually countless security breaches due to both prisoners who have escaped Police custody and unauthorized intruders who have accessed the Police Department's parked vehicles and secured facility. Reasons to justify the fence and its cost are plentiful.

81. Why do you need redundant layering of management if you get rid of all the workers? Will everyone who is left become a project manager, making phone calls to private sector businesses that will do all the work?

Our system of delivering services is very expensive, due to our labor contracts and overhead structure. Often, but not always, it is more cost effective to contract services. We anticipate that for some services to continue, they will have to be delivered by way of contracted services. However, it is not reasonable to expect that it is desirable or possible to get rid of all workers.

82.  I saw this comment on the David Siders’ Blog:"Sep-21 - PTA1 — Check out the inside promotions of the City of Stockton HR Dept. Lots of raises some are 28%!!!!! and the city is BROKE??? TAKE A LOOK SIDERS" Can you give us some facts on this?

Unfortunately, the individual circulating information purporting that employees within HR had received raises over 28 percent was incorrect and did not verify any information with HR prior to disseminating. As with other departments, promotions have occurred as positions have become vacant, as well as deep class promotions. The raises over the past two years have resulted in an average of 6.61 percent; some were as low as 0.51percent, the highest was 10.41 percent for a promotion from an HR Specialist to an HR Analyst I.

83. How is it that Personnel received a lucrative raise with all the cut backs?  They told us about the Police Department, but they kept this a secret.

Please see the answer to this Question 82.  This question is addressed above.

84.  Please explain the details of the "Golden Handshake". I know it is 1 week's pay for every year of service. Will everyone who applies for the VSP automatically be entitled to the "Golden Handshake"? I understand that if there are not enough participants to the VSP, the "Golden Handshake" package is off. What are the conditions for the "Handshake"?

The City of Stockton is offering a Voluntary Separation Program (not to be confused with PERS Golden Handshake). The incentive for employees to take the program is one week’s base pay for every year of service with the City, with a cap of $50,000. A brochure and “show of interest” form are on the Human Resources Department CityLink page. Employees who are interested must submit a form by October 15th. The higher the participation in the Voluntary Separation Program, the greater the potential for salary and benefit savings, and the flexibility for the City to potentially backfill some of the positions is enhanced. The Council will vote on October 28th and employees will separate from the City no later than December 31, 2008.

If you do not have access to CityLink or do not have computer access, please contact the Human Resources Department at 937-8233 for a copy of the brochure.

85.  I would like to see the city use long-term planning (20 years) for costs. The City should have some form of Life-cycle type management for equipment and infrastructure, with costs built in for building and maintaining new facilities for at least 20 years.

This issue was raised earlier this year in the course of our strategic planning process. Our challenge to adequately maintain some of our facilities is a result of not incorporating these costs in our resource allocation process. We expect to have a more complete evaluation of lifecycle costs prior to the acceptance of or building of new facilities.

86.  If layoffs become necessary, how can we be sure that the scope of cuts will be fair and equitable? What if a Department Head decides that all management positions are "essential" and only make cuts to the front line staff, who actually work with the public on a daily basis? Is there going to be oversight by Deputy City Managers regarding the decisions made by Department Heads?

Layoffs are the absolute last resort to meet budget reductions. If layoffs are necessary, the prioritization process that was recently completed will serve as a guide to provide checks and balances and ensure that reductions are made based on identified priorities. Deputy City Managers will work with their respective Departments to ensure that where reductions take place the work either ends or is done by individuals within the appropriate job classification(s).

87.  Decisions regarding what needs to be done, what cuts to be made, are taking too long. There have been too many indecisions and too much confusion. The City has a budget crisis. The longer we wait, the more drastic the cuts to the departments. The City Manager himself needs to hold info sessions with all employees regarding the budget. He needs to ask that we all get on board with him. Morale is at an all-time low.

Effective October 1, 2008, Joe Maestretti has been appointed Budget Officer. There has been a recent re-scoping and reassessment of the process, which includes a blend of the prioritization process and budget reductions for each Department. You will see action very quickly in the coming weeks. A revised 2008/2009 Budget will be presented to City Council for adoption on October 28, 2008. Prior to that date, Budget Study Sessions will take place.

88.  What happens to an employee's 125 plan if they separate from the City's employment?

Section 125 is the IRS tax code for Flexible Spending Accounts, which the City of Stockton offers through American Fidelity. These accounts are pre-tax dollars, typically set up for 2 purposes: 1) anticipated medical and prescription costs, and/or 2) dependant care costs. The plan runs on a calendar year, rather than a fiscal year, so the commitment to the plan will end in December for the 2008 tax year. You must re-enroll for Section 125 flex accounts each year.

89. The company my wife works for is largely dependent on the state budget. When they had furlough days a few years ago the employees were eligible for unemployment benefits for those days. Will we be able to do this as well?

The furlough calendar adopted by City Council clusters the days off on days that are traditionally slow times. The payroll deduction will take place in smaller increments at approximately 4.4 hours from each pay check for the remainder of the fiscal year 2008/2009. Therefore, employees are not furloughed and not receiving pay for an extended period of time and will not be eligible for unemployment benefits.

90. If City services are going to be contracted out, what program will be implemented to ensure these services are performed correctly, efficiently and adequately. I know for fact that many services that are being contracted out (and touted by City Council as being more efficient) are NONE of the above.

Departments are currently examining opportunities to reduce costs. Proposals to contract services traditionally provided by City employees must be brought forward to the City Manager and City Council. A Department's proposal must be accompanied by a thorough analysis of the operational impact to the organization, an implementation plan, and City staff oversight of performance measures.

91. Today's paper (October 9, 2008) stated the deficit has grown by $5 million. To that end - could the city find a way to save jobs and money by proposing to unions a weekly hours change from 40 to either 38.5 or 35 hours per week and subsequent percentage change in salary percentage i.e, 5 or 10 percent? In this present economy, most employees want to work. Even if this is a short term fix.

Furloughs, which must be approved by bargaining groups, are one method of reducing the payroll, by paying all employees less. Layoffs, which are an absolute last resort, is the only option available to management that does not need to be voted on by labor groups; layoffs are another method of reducing the payroll, by paying fewer employees.

The furlough approved by labor groups included a provision for deducting the pay incrementally throughout the fiscal year. The payroll deduct is approximately one-half day of pay per paycheck, even though multiple furlough days will often occur within a single payroll period. Employees who choose to take additional days off without pay, may do so on their own; however, the full pay deduct for the additional days will occur within the payroll period when the days off occurred, rather than incrementally over the fiscal year.

All Departments have submitted their plans for budget reductions. Recommendations will be submitted to the City Council for consideration. At present, the only City-wide, payroll-related reductions approved by Council are furloughs. A revised budget will be presented to Council. The revised budget will include a list those individuals who requested to participate in the Voluntary Separation Program.

92. I am in the B/C Bargaining Unit. I have never been asked to join anything. I do not pay dues. I was not aware that I had to initiate my joining this bargaining group. This was never explained to me in new employee orientation. I have found that I am not the only one in my department that has never been approached about joining. Consequently, I was not involved in the voting, or discussion, for supporting or not supporting the furlough. Incidentally, I am in support of the furlough. Most of the members in my department are not supporting the furlough. I find this ethically curious and possibly discriminatory. It would appear that I was intentionally not included because of my preference.

New employees are provided a copy of their respective union's MOU and informed which bargaining unit they belong to at orientation. Union representatives typically contact new employees to address union membership.

93. The City is asking the employees to make an effort to reduce costs and save money. The downtown theater area and Arena area are patrolled by 16 police officers from 7:00 am until 1:00 am seven days a week. The cost of supplying these officers tops $2 million a year. Their salaries come directly from the General Fund (Police share of it). Why don't the theater area and Arena rely on private security like every other public shopping area has to in the City? With the hiring freeze in effect the 16 officers would be better used to answer calls for service throughout the city then patrolling a 2 block radius.

The contingency of 14 total bicycle officers are not solely assigned to the Cineplex or Arena (nor any 2 block radius), but rather are mostly responsible for the entire downtown area and are also deployed strategically throughout the entire Civic District (from the Calaveras River to the Crosstown Freeway and from the Louis Park area to about Wilson Way). They are even deployed sometimes to other portions of the City (outside the Civic District boundaries) if needed. Deployment is based on crime trends and issues, but also major pedestrian activity or various events. Field Services Bureau (of which the bicycle officers are a portion) deployment is continually examined.

Operational analysis, changes and recommendations are the responsibility of each Department Head. The Council will be taking action on changes recommended by each department. What appears to be a logical or simple change may have unintended consequences or an effect in another area.

94. Regarding layoffs - The California Government Code specifies various local government duties that must be performed. The Code is very specific about the department as well as the position within the department. Has the Council and Management looked over State mandated functions that various departments need to perform before considering layoffs - so that these duties can be carried out?

Please check with your immediate supervisor or Department Head. This level of operational analysis is the responsibility of each Department. Such duties are their top priority when recommending reductions and/or changes within their respective organizations.

95. You asked for our input and many have given ideas to save or make money. When are you going to let the employees know which ones you are considering? Will you allow non management employees to work with the teams to develop the ideas?

All recommendations are publicly posted for review. Department Heads have access to reviewing the recommendations for consideration or implementation. If you have submitted a particular recommendation for which you would like status, please contact Connie Cochran, Public Information Officer, at (209) 937-8827 or (209) 629-1251.

Your exact recommendation may not be implemented to address the mid-year budget adjustment; it may be considered for long-term planning. There may be reasons why your suggestion could not be implemented, as there may be other consequences or outcomes that you had not considered or had no knowledge of the detail. All suggestions are helpful. While they may not affect a change in the area you suggested, your suggestion may trigger an idea for savings or changes in another, unrelated, area.

96. Currently, the SCEA MOU states that no permanent employee shall be laid off while employees working in an extra help or seasonal, temporary, provisional, or probationary status are retained in the same classification. The administrative directive states that the duration of the need for a temporary agency employee is short-term (less than ninety (90) days) and that long-term requests (longer than ninety (90) days) will be evaluated on a case-by-case basis.

Regular full time employees will have the option of displacing into a part time, temporary, or provisional position for which they are qualified before being laid off.

97. Is it true that part-time employees are allowed to make-up hours missed due to furlough days?  Why are part-time employees not being impacted with a reduction in pay?

Part time employees have been impacted. They have had their hours reduced, or have had their positions eliminated completely.

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