I presented a 6-Point Plan of Action in response to the City's fiscal and budget crisis to the City Council at the annual future fiscal issues workshop on January 28, 2003. The report described the nature and scope of the financial problems that the City is facing, outlined six budget strategies to address these problems, and presented an approach for providing public input and a time frame for implementation.

The $11 million gap in the General Fund represents a structural imbalance between expenses and revenues. To address this imbalance, the 6-Point Action Plan called for the reduction in the size of city government in Sunnyvale, and the reshaping of City staff to a level that is sustainable for the foreseeable future. Point 6 is a budget strategy entitled "Reductions to Services, Levels of Service, and Staffing". This budget strategy calls for a fundamental re-examination and reduction of the services provided by the City, a fundamental re-setting of levels of service for the remaining City services, and a phased reduction of the size of the City's workforce in order to establish realistic staffing levels. Sunnyvale's planning and financial systems have created both sufficient cash reserves and time so that this fundamental reduction of services and staff can be phased during a three-year period.

The Fiscal Management Sub-Element to the City General Plan contains several goals, policies, and action statements that address the City's annual budget and resource allocation plan. These can provide guidance for the City Council when it considers recommended reductions to services and levels of service.

Goal 7.1B. Financial Practices: Maintain sound financial practices, which meet all applicable standards and direct the City's financial resources toward meeting the City's long-term goals.

Policy 7.1B.1 Resource Allocation: Allocate resources in direct relation to general plan goals.

Action Statement 7.1B.1c When considering new or expanded services, implement those necessary to support the goals, policies, and action statements of various General Plan elements and sub-elements.

Action Statement 7.1B.1d Involve citizens in the budget process to the extent feasible.

Policy 7.1B.5 Performance Budget System: Maintain and refine the Performance Budget System to assure its use for multi-year planning, full cost accounting and budget monitoring.

Action Statement 7.1B.5d assure that all costs attributable to a budgeted program are fully costed and reflected in program budgets.

Action Statement 7.1B.5e Control the growth of City expenditures consistent with meeting public service needs and the requirements of Articles XIII A and B of the California Constitution which limit the growth of revenues and expenditures in accord with prevailing economic conditions.

I am providing this report in response to the City Council's request for a set of criteria that I am using in developing my recommendation regarding reductions to services and levels of service. As you will see, this report describes a set of principles that I kept in mind as I reviewed and considered the reduction packages presented for each department. The process of reducing the size of local government for an organization that spends $90+ million annually to serve more than 130,000 customers with a complex array of public programs requires more than a simple set of criteria. I hope what I am outlining for you illustrates how the difficult task of recommending reductions to services and levels of service was completed.

Three components made up this set of principles.

• Grounding Beliefs. This represents my grounding beliefs regarding what makes local government efficient and effective. These include: municipal compliance with legal mandates, essential services, internal service systems, and expansion beyond essential services.
• Guiding City Policies. Several documents provide key policy direction regarding City services and levels of service. These include: the General Plan, the annual budget, 10-Year Resource Allocation Plan, and long-term financial plan, and the Quality of Life indices.
• Key Questions that Shape Service Delivery. These question help establish the types and service levels for the public programming that the City provides.

The balance of this report describes these three components in more detail.

Municipal Compliance with Legal Mandates. Examples of these requirements include federal and state mandates and charter requirements. These include compliance with codes established by federal agencies such as the U.S. Environmental Protection Agency, state agencies such as the California Department of Transportation, the California Department of Justice, and the payment of municipal debt service.

Essential Services. The next stage of service considerations includes an assumption that we will create a balanced municipal system that can support essential services such as primary law enforcement and patrol, standard fire suppression, BLS (basic life support) emergency medical services, the provision of potable water, the collection and treatment of wastewater, and the removal of solid waste. Other life safety activities are included in this stage of service provision.

Internal Service Systems. For these essential services to be successfully provided, a primary level of internal service systems should be in place to support the essential services. These include accounting, payroll, procurement, personnel administration, training, risk management, communications, legal, and general administration.

Expansion Beyond Essential Services. From this core, I expanded outward to add levels of service in the essential services and at the same time, added quality of life elements that complement and supplement the essential services. These include such increments of services as criminal and arson investigation, traffic engineering, the provision of parks, library, and long range physical planning. Additional increments of service are added to enhance the quality of life and promote a secure and stable tax base.

I then directed my attention to several other sources of policy priority: the general plan, the existing outcome budget, and the quality of life indices. Each of these documents provides guidance on policies and priorities established by the City Council for the community.

I then asked a series of questions to develop further information on preferred levels of service to justify service level reductions. These questions are grouped as follows:

Public Safety

Are adequate provisions made to undertake neighborhood protection?
Are traffic and special operations incorporated into law enforcement programs?
Are fires prevented through code enforcement and education?
Are emergency communication systems functioning at levels that provide timely response of police, fire, and EMS services?
Are programs and procedures in place to respond to civil emergencies and natural disasters?
Are adequate transportation operations and maintenance in place?
Are codes enforced on property to ensure public safety and the preservation of
neighborhoods?
Are the most serious physical obstacles removed that inhibit pedestrians, cyclists, and motorists?
Is essential infrastructure maintained?

Community Development

Is basic support provided to ensure property owners' rights and community standards are met?
Is land use and community planning in place to support orderly growth and development?
Are medians and roadsides maintained to avoid potential liabilities and enhance aesthetics?
Are neighborhood parks and open space maintained at an adequate level?
Are Public Works Support and Engineering services available to maintain streets and infrastructure?

Environmental Management

Are adequate systems in effect to protect and preserve air and water quality?
Are storm water systems in place to protect property and the environment?
Are refuse collection and disposal systems maintained to protect public health and safety?

Cultural Services

Are core library services of reference, collection management and preservation, and circulation provided to meet the needs of the community?
Are leisure services for dependent populations in place?
Are leisure service facilities provided and maintained to support cultural and recreational needs?

Are heritage programs and projects in support of community participation and education?

General Services

Are communications and office support systems adequate to support essential services?
Are vehicles and motorized equipment adequate and properly maintained to support essential services?
Are information and data systems adequate to support essential services?
Are facilities adequate to support essential services? Are they properly maintained?
Are appropriate risk and insurance management systems installed to prevent catastrophic loss?

Planning and Management

Are financial management, analysis, accounting, and financial reporting sufficient to support essential services and maintain acceptable standards of accountability?
Are continuous improvement and organizational effectiveness mechanisms in place to promote productivity and efficiency?
Are official records and election systems provided?
Are communication systems established to communicate with the public and with internal staff?
Are executive management oversight systems in place?
Is adequate legal support provided to interpret the laws and provide support for essential services?
Are treasury and cash management systems sufficient to insure accountability and an appropriate return on investment?
Are personnel management, training, and human service systems supporting essential services systems?

Are we prepared to continue to focus on recruiting and retaining the best employees?
Are budget management systems available to support our resource allocation and outcome management planning?
Are procurement programs available to assure economical acquisition of goods and services?

Socio-Economic

Are adequate support systems available to foster and promote quality childcare services?
Are neighborhood and community services promoting community engagement with the city government?
Are programs and practices supporting economic prosperity in the City?