Santa Barbara City Council prioritizes self-insurance fund, the arts, engagement
Friday morning marked the third special budget work session and public hearing of the Santa Barbara City Council and city staff for Fiscal Year 2022-23.
From 9 a.m. to noon, the council heard presentations from the City Administrator’s Office, the mayor and the City Council, and from the Human Resources and Finance departments.
The City Administrator’s Office shared its proposed budget of about $4.1 million for FY 2022, down about $170,000 from a year ago. A key component of the expenditures include funding a new bilingual community outreach officer position with the city, which would cost $168,139.
“I think the city is doing so much that isn’t fully appreciated because we don’t have that community engagement officer,” said Councilwoman Kristen Sneddon. “I’m thinking of some of our big issues like communication with Ortega Park and the community about what is happening with the arts and wanting to support that … I can’t think of anything more important than us being able to communicate and engage and feed information.”
The City Administrator’s Office is focusing its work efforts on: completing the electoral redistricting program following the 2020 Census results; developing the Downtown State Street Master Plan; assisting downtown organizations and expanding improvement districts; supporting the reuse and redevelopment of the Macy’s and Nordstrom’s buildings; and providing guidance for events and parades in the city, among others.
The City Clerk cited workload issues and emphasized the strong need for upgrading the FTE Records Technician position to full-time to provide appropriate customer service and transparency with public records act requests.
The Mayor and City Council’s Office had a proposed budget of more than $3.5 million, down about $180,000 from a year ago. To accomplish that reduction, a 5 to 10% decrease was proposed for the next fiscal year for arts, events and community promotion organizations, along with a 5% reduction in meeting and travel costs for the elected officials and a 5% cut in funds for the South Coast Youth Safety Partnership.
The City Council expressed concern with reducing funding for the youth safety partnership, citing recent youth violence incidents, and asked that the reduction in funds for art grants and loans be taken into consideration with other departments and organizations with a more thorough breakdown of expenses. The Council also requested city staff to explore how to create a paid internship program for young adults within City Hall.
The Human Resources Department’s recommended Fiscal Year 2022 budget was presented as more than $1.8 million with no additional funds needed. City staff within the department highlighted that the employee turnover rate for 2021 was 6.41% despite COVID-19. Turnover rates were 9.6% and 7.24% in 2019 and 2020, respectively.
Staff also mentioned equity has been a big focus in the hiring process, and Councilwoman Alejandra Gutierrez requested a breakdown of the demographics of the administrative and manager positions in the department.
“I really want the city to be an organization where we promote within and we build our leadership, and especially for the director position,” she said. “Santa Barbara is a very unique city, and when we have people that have lived there or they’re invested in this city, it reflects differently in their leadership.”
The Finance Department listed its priority projects for the administration, budget, accounting, general services and treasury departments. These priorities include, among other things: COVID-19 recovery, rebuilding reserves, pension management strategy, deferred compensation investment, police facility debt issuance, website replacement, submitting the city’s two-year budget, vendor payment streamlining, implementing green initiatives, citywide credit card processing, tax compliance and audit services, and utility billing customer service improvements.
The city expects to gain $527,931 in revenue for the General Fund in 2022, a 4% change due to the city’s plan to begin charging late fees on delinquent utility accounts in 2022, along with revenue for unclaimed property. On the spending side, staff proposes more than $6.3 million in General Fund expenditures.
Concerns were raised regarding the city’s self-insurance fund. The current cash balance of $7.1 million in the fund is below the recommended amount by the city’s actuary. The fund is projected to have a balance of $5.4 million at the end of FY 2021, meaning revenue allocations are not keeping pace with expenditures. Staff also anticipate significant increases for insurance premiums.
The recommended reserve balance for FY 2022 sits at around $18 million, but is projected at $2.5 million. If there isn’t enough money in reserves to pay out insurance claims, the Finance Department looks to the General Fund.
“That’s what’s hobbling us is the number of claims adding up, not the size of the claims,” Councilman Mike Jordan said. “When you see those (recommended reserve balance) graph lines going up and up and up, that means that we’re assigning enough resources to a myriad of things — training, education, practices that will help reduce the frequency and drive those lines back down. It’s not just about putting more money in a bucket to handle the increasing costs … It’s really important to make sure we have adequate programs and we’re giving resources to those programs to reduce frequency when we cover ourselves for our losses and have a stop point.”
Overall, Santa Barbara is projected to have incurred more than $35 million of revenue loss. But finance staff said that slightly more than $11 million of federal American Rescue Act funds are slated to be given to the city, all of which will go to offsetting the losses the city incurred.
The next budget hearing will take place Monday with the Parks and Recreation Department, including Creeks and Golf Funds, followed by numerous other hearings for Community Development, Sustainability and Resilience, Police, City Attorney, Public Works and more. The Council is scheduled to adopt the budget on June 22.
For more information or to see the budget hearing schedule, visit www.santabarbaraca.gov/gov/depts/finance/budget/recommended.asp.