January 31, 2005

SUBJECT       City Programs Selected for the FY 04/05 Service and Budget Review Process

REPORT IN BRIEF

This report lists four programs that the City Manager has recommended to be included in the FY 04/05 service and budget review process by City Council.  This process calls for Council to consider this program group, and approve, add to, or delete programs.  It is also recommended that Council schedule a special meeting on March 26, 2005 to review and potentially revise the services, service levels, and costs for these programs.  There are three alternatives described in the report.  A staff recommendation is also included.

BACKGROUND

The City Council approved on December 7, 2004 the process it will use to review and potentially adjust services, service levels, and program budgets.  This process calls for the City Manager to suggest a selected group of City programs that will reviewed by Council.  At the annual Fiscal Issues Workshop, Council will consider this group of programs, and accept, add to, or delete programs.  The review process will be completed at a special meeting or workshop that will be scheduled for late March.  Council asked staff to determine the additional work hours that would be required if all City programs  were reviewed once every four years, rather than once every eight years as approved by Council.  This information was provided to Council in the December 17, 2004 Friday Report.

EXISTING POLICY

Fiscal Sub-Element of the General Plan

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.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.

DISCUSSION

The following City programs are being recommended by the City Manager to be included in the service and budget review process for FY 04/05:

·         Program 321 Water Supply and Distribution

·         Program 322 Solid Waste

·         Program 342 Wastewater Management

·         Program 720 Utility Billing, Collection, and Revenue

It is also suggested that a special meeting be scheduled on Saturday, March 26, 2005 for Council to review these programs.

Attachment A provides a list of program groupings for the next eight years.  It is anticipated that these program groups will be modified, based on Council direction and program changes that may take place in the future.  The City Manager will recommend a program grouping annually for Council consideration. 

FISCAL IMPACT

There will be no direct fiscal impact for completing the service and budget review process.  Departments will absorb the additional work hours required to complete the process.  This process will require fewer work hours than the process that was developed and used as part of preparing the recommended FY 04/05 budget and long-term financial plan.

There will be a fiscal impact if Council provides policy direction through the review process.  The fiscal impact on a specific program or service will be described and quantified by preparing budget supplements.  These supplements will be included in the City Manager’s Recommended FY 05/06 Budget and Long-Term Financial Plan.

Conclusion

The City Council approved a process that it will use annually to review a selected group of City programs.  The City Manager has submitted a group of programs to be included in the review process for FY 04/05.

PUBLIC CONTACT

Public contact was made through posting of the Council agenda on the City’s official notice bulletin board, posting of the agenda and report on the City’s web page, publication of the Council agenda in the San Jose Mercury News, and the availability of the report in the Library and the City Clerk’s office.

ALTERNATIVES

Three alternatives are presented for Council consideration.

1. Approve the program group recommended by the City Manager for the FY 04/05 service and budget review process.  Staff will prepare a report that will provide background information on the services, service levels, and costs for these programs.  This information will be provided prior to a special City Council meeting that will be scheduled for Saturday, March 26, 2005.

2. Revise the program group that has been recommended by the City Manager.  This may increase staff work hours, if a significant number of additional programs are selected, or if the programs selected are more complex or contain more service delivery plans that the program group recommended by the City Manager.  Staff will prepare a report that will provide background information on the services, service levels, and costs for these programs.  This information will be provided prior to a special City Council meeting that will be scheduled for Saturday, March 26, 2005.

3. Take no action at this time.  This may result in a new date for the annual service and budget review special meeting, or a delay or deferral of the process for FY 04/05.

RECOMMENDATION

Alternative 1. Approve the program group recommended by the City Manager for the FY 04/05 service and budget review process.  Staff will prepare a report that will provide background information on the services, service levels, and costs for these programs.  This information will be provided prior to a special City Council meeting that will be scheduled for Saturday, March 26, 2005.

Approved by:
Amy Chan

City Manager

Prepared by: 

Charles J. Schwabe

Deputy City Manager

Attachments

Attachment A: Recommended Program Groupings for the Annual Service and Budget Review Process