A Closer Look At City’s Reorganization Plan

While from a policy standpoint this is unfortunate, it does allow us time to evaluate both the proposed budget and organizational changes proposed by City Manager Bill Emlen.

The goal of the reorganization is the close a $1 million structural gap that remains in the budget, primarily due to the failure to meet the goals of the cost-savings from the MOU, restore $700,000 that the city has borrowed from the reserve to close this year’s gap, and provide some additional buffer in case of further deterioration of city revenues or other emergencies.

Despite the rather sensational headlines in the Enterprise about the dissolution of the parks and general services department, the reality is that the city is taking advantage of the retirement of the Director Donna Silva and subsuming the functions of the rest of the department into other departments.  The remainder of savings will be achieved through the deletion of primarily vacant positions as was described in the Vanguard earlier this week.

Writes Mr. Emlen in his memo to all city employees:

“As we approach fiscal year 2010-11, a number of factors are coalescing that will facilitate, or in some cases necessitate changes to the City organization. Economic factors include a continuing decline in revenues (sales tax and departmental) uncertainty regarding traditional sources of funding from the state, and forecasts for continuing slow economic growth for several more years. Organizational factors include the retirement or pending retirements of three department heads and a large number of position vacancies that we have accumulated over the past year and a half. Given these factors, this appears to be a pivotal year for re-tooling the city organization to face the new economic reality.”

The important thing to bear in mind as we quickly evaluate the five-year general fund forecast, is that these remaining deficits exist over and above the amount of spending that was cut last year in the budget and the savings that the city realized from the MOUs.

The city still faces a deficit for each year between around $800,000 and $1.25 million.

Part of that as we have explained is due to a further decline in the revenue assumptions.  Particularly on the sales tax side, the city is doing quite a bit worse than they had hoped or projected in the budget.  As a result, the city is now projecting a zero net increase in revenues across the board for the coming fiscal year, and only very modest growth in the out-years.

Are these assumptions still too rosy?  One of the downsides of having a rosy model last year was that the city needed leverage and a goal for savings in its labor contract negotiations.  Such a need is less necessary this year, and so it makes more sense than last year to create a modest model and then downward adjust as needed.

Still we can see the revenue trend has been downward revised.  Blue was the original trend before the economic downturn hit, red was the revised trend from last year, and purple is the current projections.  Note that really only by 2013 does the city start seeing an increase over its 2008 and even by 2015 it is only modestly growing.  That of course can change, but this appears right now to be a longterm slowdown of the economy as these things go.

This is what the fund balance savings from the re-organization does for the the next five-years.  It puts each year in the positive and even allows the city to save a bit of money.  The apparent recommendation at this time is not to try to spend any surplus, but rather hold it as a buffer in case things get worse.

As we discuss perhaps as soon as tomorrow however, these assumptions are rather fragile and changes in the PERS and other other costs could change them quickly.

As Bill Emlen writes:

“In light of these budget numbers, and the likelihood that the current economic situation will persist for at least a couple more years, we are taking a different tack than last year relative to addressing the budget deficit. This year we have looked more aggressively at structural change that is long term in nature.”

Here are his listed goals and objectives for the re-organization:

1. Consolidate complementary services/ functions
2. Improve effectiveness of citywide management and administrative functions
3. Facilitate succession planning and transition of key management positions
4. Re-evaluate structure of City’s executive management positions and span of control for management and supervision of front-line staff resources
5. Achieve budgetary savings in the General Fund and in All Funds.
6. Manage impacts of workforce reduction to mitigate impacts on priority City services, efficiency of City organization, staff reductions/layoffs.

He then breaks down the changes by department.

Here are the changes to that department:

• Parks and Facilities will move to Community Services and will report to Director
• Elvia Garcia-Ayala upon Donna Silvia’s retirement in mid May.
• Information Systems will be absorbed into to the City Manager’s Office and report to Assistant City Manager Paul Navazio.
• Fleet Services will begin reporting to the Public Works Department.
• We are still evaluating where the City Arborist and staff will report. This should be determined in the next week or two.
• The current Assistant to the Director, Juli Hawthorne, will report to Assistant City Manager Paul Navazio in her grants management role and other management support to the Finance Division.
• The Sustainability/Open Space program and the Parks Planning/Property
• Management will be transferred to the Community Development Department.

Community Development:

“In light of the shifts of personnel from Parks and General Services noted above, the department will be renamed, “The Department of Community Development and Sustainability”.  Consolidation of certain citywide development review functions is being contemplated, with a long term goal of a “one stop” shop. At a minimum, we anticipate that a transportation division will be formed that would include a Transportation Planner, Traffic Engineer, and the Bicycle Coordinator. These all have direct ties with the transfer of the Sustainability program to the department and the high priority we will be placing on transportation issues as an integral component of our climate change efforts. These would be transfer or relocated positions and not new positions.”

This is where the change of Ken Hiatt to Director of the Community Development and Sustainability Department comes into play and the transfer of Katherine Hess to administering Redevelopment and Economic Development.

“A number of personnel changes are associated with the expansion of the department. Ken Hiatt will be transferring from his current position as Deputy City Manager to become the Director of the revamped department. Katherine Hess will assume responsibilities for administering Redevelopment and Economic Development function. Property Management Coordinator Anne Brunette and Sustainability Program Manager Mitch Sears will transfer to the new department, and will now report directly to Ken Hiatt.”

There has been suggestion of course that the move of Ms. Hess to her new post is somewhat punitive.  Obviously there is no reason to move Hiatt in to director of this department unless you are looking to somehow take away responsibilities from Ms. Hess.  Some have complained that she still has too much responsibility given the problems that the NewPath situation among others have caused the city.

“The Fire Department is currently being impacted by the retirement of several key personnel in management roles, including the Fire Chief position. Under such circumstances we would normally proceed with recruitments to fill the positions. It is still our intent to fill the positions, but we are temporarily holding off as we explore a potential merger of the City and UC Davis Fire operations. Discussions have been held in the past, with the primary difference this time being the retirements of the Fire Chiefs from both entities, creating some flexibility for evaluation of the overall staffing model that might evolve. We are also interested in evaluating how the Battalion Chief Management model might be incorporated into a merged department scenario. It will be several months before the outcome of this process will be known. For the Fiscal year 2010-11 budget we are proposing to downgrade the Fire Business Manager position to an administrative support level. This is one of the changes that would make the Battalion Chief option more economically feasible.

We are not recommending any other changes to the Fire Department staffing at this time pending completion of the discussions with UCD and Battalion Chief evaluation.”

As we have previous written, the idea that the Battalion Chief option is economically feasible is a canard.  The city simply shifted existing savings into one category to make it appear to off-set a $400,000 additional expenditure.  In the short term, holding open various positions will save the city short-term money, in the longer term, the battalion chief model will cost the city a lot.

An interesting development however, has occurred with the Chief Conroy’s abrupt departure.  As we surmised a few weeks ago, this was not entirely by choice.  We have now learned that this belief was correct, the Chief retired last November but agreed to stay on as interim chief.  However, she wanted to be able to name her successor essentially by naming the people to the battalion chief post.  City Manager Bill Emlen apparently told her this would not happen and she quickly and abruptly ended her time as interim chief, leaving the city to scramble for a replacement.

“Our goal is to retain current officer staffing levels, and increase the number of officers if budget flexibility allows. We are proposing a funding change for one officer dedicated to downtown patrol. The proposal is to fund a majority if not all of the position from Redevelopment in the context of services necessary to support downtown redevelopment efforts.

The other change is shifting a Police Services Specialist position to Parking Enforcement. This shift saves general fund dollars by placing the position in a revenue generating program.”

“Various changes are under consideration. As noted previously, Fleet Services will be reporting to the Public Works Director.

The largest outstanding issue at this point is which positions related to sustainability and development review might ultimately fit into the “one stop shop” concept evolving with the broadened Community Development and Sustainability Department. Because of the complex relationships that exist between various Engineering functions and various components of Public Works operations, more detailed discussions with potentially affected staff will occur before any formal decisions are made.

One other significant change involves the reduction of one street maintenance crew and replacement with $100,000 for contract services when needed to backfill for reduced available staff.”

“As noted above, the City Manager’s Office will be assuming oversight responsibilities for Media Services and the Information Systems division, as well as Grants Management. We are currently evaluating the Finance Division structure given several existing vacancies. One vacant position (Financial Associate) is on the cut list. The other vacancies are still under evaluation. In Human Resources, we have shifted the HR Assistant (Ann Waid) to the vacant Deputy City Clerk position. The position she vacated is being cut. Shirley Stinnett will assume additional HR responsibilities and will no longer provide direct support to the City Manager’s office other than phone duties.”

One of the things we have noted is that the city simply has too many layers of managements and supervisors and the ability to cut out some of the middle managers could yield a lot of cost-savings with less disruption to the public.

My only other comment is that if this solves the short-term problem, then it does so without huge cuts to public service.

In the coming days, we may run through the scenario where there is no extension of the sales tax measure and how the city could even survive that hit.  We also need another full discussion on the unfunded liability and PERS hits that are likely coming down the road.  That is really the serious issue that the city has yet to adequately deal with in all of this.

—David M. Greenwald reporting