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CITY OF SAN LEANDRO <br />MEMORANDUM <br />DATE: June 17, 2011 <br />TO: Finance Committee <br />FROM: Stephen L. Hollister, City Manager <br />BY: Tracy Vesely, Finance Director <br />SUBJECT: Biennial Budget Process for City of San Leandro <br />SUMMARY AND RECOMMENDATION <br />Staff recommends that the City Council defer the implementation of a biennial budget <br />process for one fiscal year, commencing a two -year budget process with the 2013 -14 & <br />2014 -15 fiscal years. <br />DISCUSSION <br />On June 6, 2011, City Council adopted a biennial budget process for the City of San <br />Leandro, commencing with the 2012 -13 & 2013 -14 fiscal years. This decision followed <br />discussions with the Finance Committee and City Council regarding the positive aspects <br />of implementing a biennial budget process. While it was acknowledged that this change <br />would require considerable system programming changes and staff resources, staff was <br />confident that they would be able to implement the process — largely because of the <br />Finance Director's past experience with biennial budgets. <br />The department has lost about 22% of its work force during the last three years and, like <br />many other City departments, is struggling to provide a high level of service and <br />maintain adequate internal controls with diminished resources. The recent <br />announcement that the Finance Director will be leaving, further erodes the department's <br />resources and ability to implement this significant change. <br />A primary reason for a biennial budget is to provide a longer -term perspective on the <br />City's fiscal health. It is an excellent planning tool that allows City Council to make more <br />informed decisions regarding City resources. However, an equally critical (if not more <br />important) planning tool is the multi -year forecast. Following the direction of the Mayor, <br />staff introduced multi -year forecasts for all of the City's revenue funds with the FY 2011- <br />12 budget. The multi -year forecasts frame the budget, providing long -term perspective <br />on City resources, and allow the Council to understand the implications for financial <br />decisions that have impacts on future years. <br />While staff still supports implementing a biennial budget, we ask that Council reconsider <br />the timing of its implementation. Finance Department staff will continue to maintain and <br />update the multi -year forecasts, which will allow Council to make decisions based not <br />only on one year — but on the budgetary impacts for the next four (or more) years. <br />