CC 11-19-2024 Item No. 16. FY 2024-25 One-time Funds Allocation Plan_Supplemental Report1
CITY COUNCIL STAFF REPORT
SUPPLEMENTAL 1
Meeting: November 19, 2024
Agenda Item #16
Subject
Allocation plan for funds uncommitted from the Sales Tax Repayment reserve.
Recommended Action
Option A:
A. Adopt Option A
Option B:
A. Adopt Option B
B. Adopt Resolution No. 24‐XXX approving budget modification No. 2425‐366, increasing
appropriations by $11,688,705
C. Adopt Resolution No. 24‐XXX amending the Unrepresented Employees’ Compensation
Program
D. Approve new three‐year limited term Grants Analyst position for grants management
E. Approve new Assistant Director of Administrative Services, Grants Analyst, Senior Business
Systems Analyst and Supervising Code Enforcement classifications
Option C:
A. Adopt Option C
B. Adopt Resolution No. 24‐XXX approving budget modification No. 2425‐366, increasing
appropriations by $11,688,705
C. Adopt Resolution No. 24‐XXX amending the Unrepresented Employees’ Compensation
Program
D. Approve new three‐year limited term Grants Analyst position for grants management
E. Approve new Assistant Director of Administrative Services, Grants Analyst, Senior Business
Systems Analyst and Supervising Code Enforcement classifications
Background:
The below table corrects the CalPERS Projected Funding Status table in the staff report to
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revise the legend description.
Staff’s responses to questions received from councilmembers are shown in italics.
Q1: Why was paying off the City’s debt not considers? (Council member Chao)
Staff Response: The 2020 Certificates of Participation (COPs) are non‐callable, meaning they cannot
be prepaid before their scheduled maturity. This restricts the Cityʹs ability to pay off this debt early,
even if sufficient cash is available.
Q2: How does 115 Pension fund work with Additional Discretionary Payment? (Council
member Moore)
Staff Response: The Section 115 Trust provides a strategic reserve to manage pension obligations,
offering public agencies flexibility to set aside funds for future costs. If desired, these funds can be
utilized to make an Additional Discretionary Payment (ADP), reducing the Unfunded Accrued
Liability (UAL) and interest burden while stabilizing long‐term pension contributions. The City
created the 115 Pension to retain investment authority over these funds, and to use as a smoothing
tool should CalPERS returns fall short or actuarial assumption changes and result in higher
payments.
Q3: In Option A, if inflation outpaces investment returns why would the City invest any of
its money? (Council member Moore)
Staff Response: Legal and accounting standards require the City to maintain certain reserves to
reduce the risk of insolvency. There may be prudential reasons for the City to maintain additional
reserves above the required minimum levels. The investment of these funds is a critical strategy to
combat the impacts of inflation, which historically has outpaced the returns available through
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permissible investments under the California Government Code. By actively managing the City’s
portfolio, we seek opportunities to enhance returns while maintaining compliance with safety,
liquidity, and yield priorities.
Active investment management allows the City to strategically adjust the portfolio to respond to
market conditions, mitigate risks, and protect purchasing power over time. This approach balances
the need to retain adequate reserves for operational stability and service delivery while maximizing
the value of public funds to support long‐term fiscal health.
Q4: Can you provide a summary of Service Level Reductions (SLRs) and other budget
reductions (Council member Chao)
Staff Response: For fiscal year 2023‐24 budget reductions are listed on pages 48‐52 of the final
budget document. In addition, 13 positions were also eliminated as shown on page 42, both are
included for reference below:
For fiscal year 2024‐25 service level reductions are listed on pages 52‐54 of the final budget
document. In addition, five positions were also eliminated as shown on page 46, both are included
for reference below:
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Description
FY 2023‐24
Original
Budget
FY 2023‐24
Proposed
Budget Reduction Service Impact
COUNCIL AND COMMISSIONS
Materials $ 286,824 $ 161,259 $ 125,565 Reduced meeting expenses,
general supplies, and food and
drink for Council meetings.
TOTAL COUNCIL AND
COMMISSIONS
$ 286,824 $ 161,259 $ 125,565
ADMINISTRATION
Materials $ 535,812 $ 400,223 $ 135,589 This reduction is primarily
related to savings in supplies,
meeting expenses, and
conference and travel. This
should have minimal impact
on services throughout the
department.
Contract Services $ 1,362,790 $ 941,380 $ 421,410 This reduction is primarily
related to contract negotiations
to reduce cost for services
throughout the department.
TOTAL ADMINISTRATION $ 1,898,602 $ 1,341,603 $ 556,999
INNOVATION & TECHNOLOGY
Materials $ 2,794,442 $ 1,812,505 $ 981,937 Reduced applications utilized
by staff, residents, and
customers. Commissioners and
part time staff limited to E‐
mail; Prolonged tech refresh
cycles and significant reduction
in replacement parts and
supplies. Reduced Training
and Conferences for
department. Drone program
and training reduced, and
eliminate Wi‐Fi in parks.
Contract Services $ 791,240 $ 620,119 $ 171,121 Reduce expert technical
training; less outside technical
support, and reduced
LaserFiche document scanning.
Reduced maintenance of
equipment
TOTAL INNOVATION &
TECHNOLOGY
$ 3,585,682 $ 2,432,624 $1,153,058
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ADMINISTRATIVE SERVICES
Materials $ 186,223 $ 108,808 $ 77,415 Reduced conference
attendance, office and general
supplies, recruitment
advertisements, printing,
citywide coffee and tea and
reduced citywide employee
events.
Contract Services $ 4,152,414 $ 4,020,746 $ 131,668 Reduced citywide trainings,
reduced executive recruitments
and reduced consultant costs.
TOTAL ADMINISTRATIVE
SERVICES
$ 4,338,637 $ 4,129,554 $ 209,083
PARKS AND RECREATION
Part‐Time Staffing ‐ Department
Wide
$1,606,998 $1,381,602 $225,396 Reduced PT Staff budgets to
minimum levels necessary to
operate currently open
Recreational facilities and
ongoing programs.
Materials $779,829 $457,723 $322,106 Simplification or streamlining
of current programs and events
and fewer marketing efforts
and printed materials thereof.
Removed budgets for
nonessential trainings and
conferences in the Department
and additional savings from
reduced expenditures for
meetings and events for staff.
Contract Services $4,532,489 $3,953,917 $578,572 Reduced expansion of current
or new offerings for contracted
programs, camps, and classes.
Reduction of free events
offered and removed budget to
cover fees for festivals
TOTAL PARKS AND
RECREATION
$6,919,316 $5,793,242 $1,126,074
COMMUNITY DEVELOPMENT
Materials $1,186,321 $1,121,866 $64,455 Reduced conference
attendance, professional
development opportunities,
and materials and supplies.
Contract Services $655,080 $565,580 $89,500 Termination of on‐call
contracts and negotiation of
new contracts will reduce
service level and response time.
TOTAL COMMUNITY
DEVELOPMENT
$1,841,401 $1,687,446 $153,955
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PUBLIC WORKS
Materials $5,439,339 $4,852,483 $586,857 Reduced or eliminated office
and general supplies; meetings,
conference and trainings;
memberships; safety
equipment not covered under
the MOU; small tools and
equipment; and printing and
advertising.
Contract Services $5,460,208 $4,859,824 $600,384 Delayed services and response
to work requests; deferred
maintenance at City parks,
facilities, streets and trees.
Special Projects $5,290,259 $4,496,264 $793,995 Delayed or deferred sidewalk
repairs and pavement
maintenance.
Capital Outlays $1,100,280 $880,224 $220,056 Delayed or deferred pavement
maintenance, which will lower
the Cityʹs Pavement Condition
Index (PCI) rating.
TOTAL PUBLIC WORKS $17,290,086 $15,088,795 $2,201,292
TOTAL $ 36,160,548 $ 30,634,523 $5,526,026
Staffing Changes
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Department Grouping Service‐Level
Reduction Fiscal Impact Service‐Level Impact
Narrative
Parks and Recreation Community Benefit Reduce 4th of July
Funding $ (123,344) Elimination of 4th of July
evening fireworks.
TOTAL COMMUNITY BENEFIT $ (123,344)
Administration Fiscal
Accountability
Contract Services and
Materials $ (226,561)
Potential need for
additional appropriations
if unanticipated legal
costs arise
Administration Fiscal
Accountability
Material operations
that are no longer
needed
$ (8,892) Reduction aligns budget
with actuals
Administration Fiscal
Accountability
Econ Dev Strategy
Outreach $ (20,000)
Reduction will result in
minimal impact as
existing staff is already
implementing these
duties.
Administrative
Services
Fiscal
Accountability
Reduce
Unemployment
Insurance
$ (64,148) New costs are reflective
of post‐COVID estimates
Innovation and
Technology
Fiscal
Accountability
Reduced Budget for
I&T $ (2,850)
Reduced outside expert
technical support. This
reduction would reduce
efficiencies from some
technology uses where
the city has historically
been comparatively
advanced.
Innovation and
Technology
Fiscal
Accountability
Reduced Budget for
I&T $ (743,175)
Reduced applications
utilized by City staff;
Cancelled ERP
Implementation;
Reduced outside expert
technical support. This
reduction would reduce
efficiencies from some
technology uses where
the city has historically
been comparatively
advanced.
Innovation and
Technology
Fiscal
Accountability
Reduced Budget for
I&T $ (33,522)
Prolonged tech refresh
cycles; Significantly
reduced replacement
parts and
supplies, Reduced
outside expert technical
support.
Law Enforcement Fiscal
Accountability
Align law enforcement
budget with actuals $ (1,000,000) Reduction aligns budget
with actuals.
Parks and Recreation Fiscal
Accountability
Consolidate Swim
Lessons Program $ (72,971)
Consolidate Swim
Lessons into BBF
Operations, reducing
overall part‐time costs
and program supplies.
Parks and Recreation Fiscal
Accountability
Consolidate Swim
Lessons Program $ (14,147)
Consolidate Swim
Lessons into BBF
Operations, reducing
overall part‐time costs
and program supplies.
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Department Grouping Service‐Level
Reduction Fiscal Impact Service‐Level Impact
Narrative
Department Grouping Service‐Level
Reduction Fiscal Impact Department Grouping
Public Works Fiscal
Accountability Utility True‐up $ (564,278) Reduction aligns with
budget actuals
TOTAL FISCAL ACCOUNTABILITY $ (2,750,544)
Non‐Departmental Infrastructure Transfers Out $ (2,000,000)
City will initiate and
complete CIP projects
with the current Capital
Reserve fund. Th A
reduction in capital
renewal will lead to a
longterm aging of
infrastructure impacting
the attractiveness of this
infrastructure to the
public.
Public Works Infrastructure Contract Services $ (810,764)
Tree maintenance moved
in‐house/Reduction in
tree maintenance
Public Works Infrastructure
Defer vehicle and
equipment
replacements,
increasing the
replacement cycle from
approximately 7 years
to 10 years on average.
$ (137,000)
May increase cost and
staff time to repair assets
that were deferred for
replacement.
TOTAL INFRASTRUCTURE $ (2,947,764)
Department Grouping Service‐Level
Reduction Fiscal Impact Service‐Level Impact
Narrative
Administration Operations and
Maintenance
‐ Management Analyst
reclassification to
Administrative
Assistant
‐ Removal of vacant
shared Senior Office
Assistant between
CMO and City Clerk
‐ Removal of PT Intern
$ (61,755)
Staffing for the
department has been
reorganized for efficiency
and to streamline
workload.
Administration Operations and
Maintenance
Reduced a limited term
Project Executive
position
$ (404,221)
Use of cost recoverable
contract services will be
used instead
Administration Operations and
Maintenance
Minimum Wage
Enforcement and
Mailers
$ (23,202)
Reduction will result in
minimal impact on staff
time to administer
enforcement of min wage
annual increases.
Removing printed
mailers will require
businesses to print it out
and post in their place of
business.
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Department Grouping Service‐Level
Reduction Fiscal Impact Service‐Level Impact
Narrative
Administration Operations and
Maintenance
Regulate Diversified
Retail $ (5,000)
Reduction will result in
minimal impact as
existing staff is already
implementing these
duties.
Administration Operations and
Maintenance
This reduction will
remove funding for a
PT Intern and
Overtime
Compensation. This
reduction also includes
the reclassification of a
Public Information
Officer to a
Communications
Coordinator.
$ (78,249)
Staffing for the
department has been
reorganized for efficiency
and to streamline
workload.
Administration Operations and
Maintenance
Reduce cost of the
quarterly Scene
Newsletter by moving
to a digital‐only
publication.
$ (53,600)
Residents will no longer
receive the Scene in the
mail and will have to find
the Scene on a City
webpage instead.
Administrative
Services
Operations and
Maintenance
Reduce Budget for
Internal Audit $ (40,000)
Reduction in the number
of internal audit projects.
Audits would occur on a
less frequent basis.
Administrative
Services
Operations and
Maintenance
Shift credit card fees to
customers $ (39,000)
Customers would pay a
credit card transaction fee
for any payments made
using a credit card.
Currently, the City does
not charge credit card
fees to customers. Many
jurisdictions charge
customers a credit card
transaction fee for any
payments made using a
credit card.
City Council and
Commissions
Operations and
Maintenance
Reduce Commission
Expenses $ (468) Reduction aligns with
budget actuals.
City Council and
Commissions
Operations and
Maintenance
Reduce Commission
Expenses $ (1,855) Reduced budget for Teen
Commission.
Community
Development
Operations and
Maintenance
Shift Credit Card Fees
to Customer $ (57,500)
Decrease bank charge
contract services.
Customers would pay a
credit card transaction fee
for any payments made
using a credit card.
Currently, the City does
not charge credit card
fees to customers. Many
jurisdictions charge
customers a credit card
transaction fee for any
payments made using a
credit card.
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Department Grouping Service‐Level
Reduction Fiscal Impact Service‐Level Impact
Narrative
Community
Development
Operations and
Maintenance
Reduce Conferences
and Training $ (10,691)
Reduced conference
attendance, trainings, and
meeting expenses. Thus,
resulting in reduced
service level and
response time. Reduction
could potentially lead to
higher staff turnover
rates. The department is
continuing to offer
training by exploring and
taking advantage of local
and virtual opportunities.
Parks and Recreation Operations and
Maintenance
Reduce Senior Center
Part‐Time Staffing and
Supplies
$ (16,124)
Estimated longer wait
times for the front desk,
reduce rental support
and amenities offered for
Senior programs and
events.
Parks and Recreation Operations and
Maintenance
Shift Credit Card Fees
to Customers $ (159,620)
Customers would pay
credit card transaction
fees.
Parks and Recreation Operations and
Maintenance
Reduce Parks and
Recreation Expenses $ (10,332) Removed budget for
overtime.
Parks and Recreation Operations and
Maintenance
Reduce Funding for
Library Extra Hours $ (160,000)
No immediate impact on
current operational
hours. Santa Clara
County Library District
has historically received
funds from the state to
cover these costs.
Parks and Recreation Operations and
Maintenance
Reduce Park Ranger
Services $ (31,155)
Reduced ranger presence
at the Stevens Creek
Corridor, Environmental
Education Center, and
some nature‐based
programs and events.
Parks and Recreation Operations and
Maintenance
Reduce Parks and
Recreation Expenses $ (5,473)
Elimination of Helping
Hands program,
removed budget for
overtime, and realign
with budget actuals.
Parks and Recreation Operations and
Maintenance
Shift credit card fees to
customers. $ (17,049)
Customers would pay
credit card transaction
fees.
Parks and Recreation Operations and
Maintenance
Reduce Senior Center
Part‐Time Staffing and
Supplies
$ (5,311)
Estimated longer wait
times for the front desk,
reduced rental support
and amenities offered for
Senior programs and
events.
Parks and Recreation Operations and
Maintenance
Reduce Parks and
Recreation Expenses $ (12,391)
Consolidated Preschool
Program with a focus on
the 3‐year‐old program
and removed budgets for
overtime.
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Department Grouping Service‐Level
Reduction Fiscal Impact Service‐Level Impact
Narrative
Public Works Operations and
Maintenance Materials $ (145,794)
Reduction in printing,
ergonomics,
memberships, office
supplies, conference and
meetings, etc.
Public Works Operations and
Maintenance Contract Services $ (659,534)
Reduction in contract
services for fence repairs,
graffiti mitigation, bee
removal, gas emission
inventory, paid
advertising, etc.
Public Works Operations and
Maintenance Salary and Benefits $ (386,406) Reduction in part‐time
staff
Public Works Operations and
Maintenance Special Project $ (55,000) Reduction of replaced
fluted street light poles
Public Works Operations and
Maintenance Staffing $ (463,716)
Eliminate two vacant
Public Works Project
Managers
TOTAL OPERATIONS AND MAINTENANCE $ (2,903,446)
Q5: Why did we choose to pay $10 million in the CalPERS Additional Discretionary
Payment (ADP) and not $5 or 15 million? (Council member Chao)
Staff Response: Staff recommends the $10 million ADP amount as a balanced approach to address
multiple priorities. This amount was chosen because it effectively reduces future required Unfunded
Accrued Liability (UAL) annual payments while also preserving funds for other critical needs.
Specifically, it allowed the City to allocate resources to the capital reserve fund, which has not
received the typical $8–$10 million annual transfer in the past three years.
This recommendation reflects the City’s commitment to managing its long‐term liabilities
responsibly while maintaining financial flexibility to address deferred capital needs.
Q6: What restrictions does the City have on its investments that limits our investment
returns? (Janet/Toni). (Council member Moore)
Staff Response: Per the City’s Investment Policy, page 11, that was adopted on May 14, 2024, see
information below.
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16. Ineligible investments are those that are not described herein, including but not limited to,
common stocks and long‐term (over five years in maturity) notes and bonds are prohibited from
use in this portfolio. It is noted that special circumstances arise that necessitate the purchase of
securities beyond the five‐year limitation. On such occasions, requests must be approved by
City Council prior to purchase. Additionally:
State law notwithstanding, any investments not specifically described herein are
prohibited, including, but not limited to futures and options.
In accordance with Government Code, Section 53601.6, investment in inverse floaters,
range notes, or mortgage derived interest‐only strips is prohibited.
Investment in any security that could result in a zero‐interest accrual if held to
maturity is prohibited. Under a provision sunsetting on January 1, 2026, securities
backed by the U.S. Government that could result zero‐ or negative‐interest accrual if
held to maturity are permitted.
Trading securities for the sole purpose of speculating on the future direction of interest
rates is prohibited.
Purchasing or selling securities on margin is prohibited.
The use of reverse repurchase agreements, securities lending or any other form of
borrowing or leverage is prohibited.
The purchase of foreign currency denominated securities is prohibited.
Q7: Please provide a list of services cut last year for consideration for restoration. (Council
member Chao)
Staff Response: The 4th of July Fireworks and Shakespeare in the Park events were defunded last
year. However, Shakespeare in the Park continued in the current fiscal year through the use of the
Mayorʹs discretionary fund.
Q8: Please provide a projection of interest earnings for $10M in 1‐year, 5‐year, 10‐year
investment, since the public has suggested to save some as Rainy‐day fund or endowment
fund. (Council member Chao)
Staff Response: Assuming a 10‐year average annual return of 1.4% from the Local Agency
Investment Fund (LAIF), interest earnings on $10 million over 1 year, 5 years, and 10 years would
be approximately $0.14 million, $0.7 million, and $1.4 million, respectively, assuming the earnings
are not reinvested.
It is also important to note that the City currently maintains a “Rainy Day Fund,” officially called
the Economic Uncertainty Fund, which has a balance of approximately $24 million.
Q9: Please provide a list of grants that the staff plans to pursue with the 3‐year limited term
grant management position (Council member Chao)
Staff Response: In addition to identifying projects eligible for grant funding, the Grants
Management Analyst will manage all aspects of grant application submittal, reporting, and ongoing
compliance within City policy. No specific grants have been identified for the position to apply for,
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but City staff identify grant opportunities as part of normal city operations.
Q10: Why do we have a Q1 budget amendment for the proposed agenda items. Why not
include them with the normal FY 2025‐26 budget? (Council member Chao)
Staff Response: The Q1 budget amendments are for FY 2024‐25, reflecting items that were not
originally anticipated or inadvertently excluded, therefore not included as part of the FY 2024‐25
Budget. These are requests that would have been made regardless of the CDTFA settlement
agreement.
Q11: It was mentioned it is not worthwhile to put the fund in investment of the city fund.
Please clarify what limitations are there? (please quote any government code etc) What
would be the anticipated returns for such Investment? (Council member Chao)
Staff Response: To clarify, the statement was not that investing City funds is not worthwhile but
that it is not a sustainable strategy to invest funds solely to generate yield, as discussed in Q2.
Instead, funds may often be more effectively utilized by investing in capital projects or making an
Additional Discretionary Payment (ADP) to reduce long‐term liabilities.
The City’s investments must adhere to its adopted investment policy, which is guided by California
Government Code Section 53600 et seq. The Government Code prioritizes safety, liquidity, and
yield (in that order) and restricts the types of allowable investments, often resulting in conservative
returns.
Attachments Provided with Original Staff Report:
A – One‐time Funds Allocation Plan Fiscal Year 2024‐25
B ‐ Committed, Unassigned Fund Balance, and Use of One Time Funds Policy Options A and
B (Redline)
C ‐ Option A Committed, Unassigned Fund Balance, and Use of One Time Funds Policy
(Clean)
D – Option B Committed, Unassigned Fund Balance, and Use of One Time Funds Policy
(Clean)
E – Detailed allocation plan for current use
F – Budget Resolution
G – Assistant Director of Administrative Services Position Description
H – Grants Management Analyst Position Description
I – Code Enforcement Supervisor Position Description
J – Senior Business Systems Analyst Position Description