Mayor's Message

ONE FRANK H. OGAWA PLAZA • 3RD FLOOR • OAKLAND, CA. 94612

Office of the City Administrator (510) 238-3141

Edward D. Reiskin FAX (510) 238-4731

City Administrator

May 2022

THE CITY OF OAKLAND FISCAL YEAR 2022-23 PROPOSED MIDCYCLE POLICY BUDGET

HONORABLE CITY COUNCIL & OAKLAND RESIDENTS:

We present the Fiscal Year (“FY”) 2022-23 Proposed Midcycle Policy Budget, a just spending plan seeks to ensure that the City recovers together. This plan totals more than $2.2 billion over the fiscal year. As Oakland recovers from the devastating impact of the COVID-19 pandemic and navigates a new global environment filled with challenges like inflation, war, and climate change, this budget responsibly meets our obligations and reflects our shared priorities and values.  This budget invests in the residents and communities of our great City and strengthens the infrastructure of people and systems that support it, while addressing our medium-term fiscal challenges and uncertain economic circumstances.

As shown in Table 1  below, the FY 2022-23 Proposed Midcycle Budget totals nearly $2.2 billion, across all funds, including restricted funds and capital funds.

For the second time, the budget is being presented on an accessible on-line platform to make it easy to dig into the details. We also continued the incorporation of Racial Equity Impact considerations to note how any proposed service changes would either benefit or not disproportionately impact low-income Black, Indigenous, and other communities of color.

Oakland’s budget is very complex. It contains more than 130 budgeted special funds – each with its own set of spending rules. Just 40 percent of budget dollars are in the General Purpose Fund and many of their uses are not discretionary. Coupled with numerous special purpose grants and restrictions imposed by ballot measures the City’s budget can be difficult to balance and communicate. Within the complex set of rules this Budget addresses the most pressing demands of the day -- like homelessness, housing, streets, and public safety -- but also our future liabilities that place unacceptable strain on the City’s fiscal health. We must honor the promises we have made to past and current employees to pay for their pensions and healthcare when they retire. We must also preserve the fiscal health of the City for future generations of Oaklanders.

Addressing our current and future needs would not have been possible this year without the one-time infusion of $188 million Oakland was granted from the Federal American Rescue Plan Act (“ARPA”). In 2021, the City Council allocated one-time funds for use in the FY 2020-21 and FY 2021-22. This budget allocates the remaining $68 million.

Sustaining the Principles & Priorities Established in the Two-Year Budget

This budget continues the focuses and priorities established in the adoption of the Biennial (two-year budget) The Biennial budget was developed according to Oakland’s Consolidated Fiscal Policy, beginning with a statistically valid community survey representing the full diversity of Oakland’s adult population, with questions developed in conjunction with the City’s Budget Advisory Commission.

Some top findings from that poll were:

• 59% rated the quality of life in Oakland as “excellent” or “good” – down 5 points since 2018 and 11 points since 2017; and only 41% approve of the City’s job providing services.
• 50% ranked homelessness or housing costs as the top issue they would like to see prioritized in the City’s budget.

We continue to use the guiding principles that we began with in Fall 2020 for the development of the two year budget:

• Advance racial equity by ensuring service impacts create a net benefit for historically under-invested, low-income communities of color.
• Preserve services and staffing by minimizing service reductions, restoring vacancies, and preventing layoffs.
• Protect the City’s long-term financial health by addressing unfunded retirement liabilities, negative funds, and deferred maintenance, and maintaining positive credit ratings

As a part of the biennial budget process the City Council approved four policy and budget priorities based on the values of equity, transparency, and effectiveness:

• Affordable Housing and Homelessness Solutions
• Public Safety and Violence Prevention
• Good Jobs and Vibrant Economy
• Clean, Healthy, Sustainable Neighborhoods

Summary Budget Impacts

This Proposed Budget proposed no layoffs and maintains the City’s prudent fiscal policies of paying down unfunded liabilities & negative funds, and restoring our Rainy Day Fund and Reserves. The Proposed Budget invests in our City’s workforce by funding a 3% increase in wages for Non-Sworn employees (noting we have yet to conclude labor negotiations) and adding resources to tackle the crisis of vacant positions affecting most City Departments.

Sustaining Investments

The Proposed Budget sustains the critical investments made during the biennial budget. The Proposed Budget maintains current levels of City services and makes critical enhancements in key areas.

Some Notable Critical Investments that are sustained are noted below, though it is not exhaustive:

Affordable Housing & Homelessness Solutions:

Public Safety & Violence Prevention

Good Jobs & Vibrant Economy

Clean, Healthy, Sustainable Neighborhoods

Expanding Investments

In addition to stabilizing existing service levels and sustaining the critical investments made during the biennial budget; the Proposed Budget makes critical enhancements in key areas.

This Proposed Budget invests key City priorities, some notable Critical Investments that are added are noted below, though it is not exhaustive:

Affordable Housing & Homelessness Solutions:

Lake Merritt Lodge

• Add $9M to sustain operations of the Lake Merritt Lodge as a Roomkey / Covid Hotel for 12 months. Sustains housing and wrap around supports including housing navigation for 92 households (115 individuals) who are formerly unsheltered and at risk of death or serious health consequences of Covid due to age and/or chronic conditions.
  • Equity Consideration: The focus community – unsheltered individuals who are elderly, and/or with health conditions living on the street– are predominately Black (70+%) having been disproportionately impacted by policies related to economic, housing and health car access. Approximately 72% of clients served are African American.

Keep Oakland Housed $1M

• Add $1 million to the Keep Oakland Housed Initiative to support legal services and/or anti-displacement interventions (e.g. emergency rental assistance) for Oakland tenants, especially those at 30% and below the Area Median Income (AMI).
  • Equity Consideration: The majority of Oakland residents are tenants, and Oakland’s BIPOC communities are disproportionately tenants who are rent-burdened where more than 30% of their monthly income is spent on housing. The COVID-19 pandemic has revealed great housing instability among tenants, with an estimated 30,000 tenants at risk of eviction. This money will support efforts to keep at-risk tenants housed beyond the federal Emergency Rental Assistance program that is expected to end summer 2022.

Public Safety & Violence Prevention

Additional Fire Academy and Opening Fire Station 2

• The permanent reopening of Station 2 will enhance OFD’s overall span of control and expand the department’s response capacity for incidents at the Port, in the estuary, downtown and for areas below the train tracks, such as Jack London Square, West Oakland, Howard Terminal and the growing Brooklyn Basin neighborhood.
  • Equity Consideration: When opened, Station 2 would become a first due (1st assigned) engine company for several neighborhoods that have historically suffered severe health disparities.

Unfreeze Civilian Investigative Positions in OPD

• Unfreeze 3.00 FTE positions in Criminal Investigations to improve the bandwidth in the Criminal Investigations Division (CID) to process evidence and solve violent crimes.
  • Equity Consideration: OPD’s solve rate for violent crime is currently below desired levels. Black residents and people of color are significantly more likely to be victims of crime. Faster evidence process should improve the ability of sworn officers to solve crimes.

Add 6 FTE to Police Commission

• Add 1.0 FTE Administrative Assistant II, 2.0 FTE Administrative Analyst II, 1.0 FTE Complaint Investigator II, 1.0 FTE Police Performance Auditor, and 1.0 FTE Project Manager III to help with increased demand for service and information, improve data collection and reporting of data to increase transparency to impacted communities, to help meet California Privacy Rights Act (CPRA) reporting, and to monitor, audit and evaluate the OPD for compliance in accordance with the National Security Agency (NSA) tasks.
  • Equity consideration: The Police Commission oversees the Police Department (including approval of the policies of the Police Department), CPRA and – most recently – the Inspector General’s Office (OIG). The activities of the OPD disproportionately affect BIPOC communities, especially Black people, and impact the investigations conducted by the CPRA. Furthermore, responsibility for the newly formed IG’s office also sits under the Police Commission, with potential to critically affect and impact rebuilding public trust between community members and the systems and authorities that make up the public safety space. Officer involved shootings, a specific sort of case addressed here, have historically even more disproportionately affected Black Oaklanders than any other community, as is the case nationally, as well. Furthermore, the OIG per City Charter has overarching jurisdiction to review use of force complaints, complaints of racial discrimination by sworn police officers, and other complaints per City Charter. The work of the Oakland Police Commission to oversee the policies of the Police Department, the investigations of CPRA and the IG’s audits therefore directly addresses a core inequity in existing City performance.

Expand OPD Wellness Program per Police Commission Recommendation

• Incorporates the Police Commission recommendation of $700K one- time O&M for OPD Wellness/Mental Health unit and adds 1.0 FTE Program Analyst III to help oversee the Wellness Unit.
  • Equity Consideration: Officers frequently endure stressful situations and experience vicarious trauma as a result of 1) being affected by violent crime and 2) assisting victims of violent crime. These funds would hire a Program Analyst III who would help officers connect to wellness and mental health resources to help them deal with the trauma. The funding would also include building out a wellness program which would include contracted wellness coaches for officers. Access to mental health and wellness resources enable officers to be better equipped to serve the communities which are impacted most by violent crime.

Added funds for Key OPD software to enhance efficiencies.

• Add $696K in O&M for FY 2022-23 for the following: in one-time expenditures: $250K to renewed contract with Quartech, which is a company that provides application support services for the OPD VISION system, $75K to update Crime Lab equipment, and $36K for Police evidence equipment & testing kits. In ongoing expenditures: $170K for software to enhance audio for body worn cameras, $49.5K for Zencity software which allows OPD to survey a representative portion of the community through the use of online targeted ads via social media, $49.5K for Culture Amp software which allows OPD to anonymously survey employees and provide 360 feedback to managers/commanders, $46K for language line services, and $20K for CrimeView subscription and maintenance as this software connects OPD with incident data to provide useful geographical data visualizations and crime pattern analysis.
  • Equity Consideration: These items enable OPD to have efficient, transparent, and culturally responsive communication and accountability within the department and with the community. BIPOC communities in Oakland are disproportionately impacted by violent crimes and are affected most when communication and methods of accountability are hindered due to lack of resources in the department. These items will also help OPD maintain effective public safety.

Good Jobs & Vibrant Economy

Cannabis Revolving Loan and Workforce Funds.

• Allocate $250,000 in the Cannabis Revolving Loan Fund and an additional $250,000 in Cannabis Workforce Development Program.
  • Equity Consideration: These investments will ensure the City remains competitive for state grants and a hub for equitable cannabis employment and business growth. This local investment will provide workforce programming and business start-up capital for those disproportionately impacted by the War on Drugs to access employment and business ownership opportunities in the regulated cannabis marketplace.

Enhanced positions and funding to support permit processing and related functions.

• Add 2.0 FTE Business Analyst IIs to the Digital Services Division. These additional staff will enable PBD to extend Accela software to other regulatory agencies within the City of Oakland, enhance the functionality of Accela and the Online Permit Center and to support the use of Qmatic software. This position will help to improve PBD’s data collection and reporting. In addition, this position will support the development of performance management systems in PBD so that PBD leadership can better assess the impact and delivery of its services. Also adds 1.0 FTE Public Service Representative. This additional Public Service Representative provides customer service for the recently re-opened One Stop Permit Center.
  • Equity Consideration: PBD collects and manages most of its service-related data through the Accela database. The Accela system is not used to collect demographic information, but it can be used to map development activities, and therefore trends across the City. Data from Accela is used to prepare a number of reports that provide a snapshot of the City’s construction activities, these include the Mayor’s Housing Pipeline report, Housing Element Annual Progress Report (APR), Annual Impact Fee Report, and Consolidated Annual Performance and Evaluation Report (CAPER). PBD also uses data maintained in Accela to produce periodic reports on its code enforcement activities. Additionally, PBD uses Census data combined with Geographic Information Systems (GIS) analysis to understand where development is occurring and to begin to infer impacts from that development activity. The Public Service Representative will enhance customer service and service delivery as the City rebounds from the COVID-19 Pandemic and construction and development activity gradually increases. Walk-in services support people who have less access to on-line services and/or language barriers.

Clean, Healthy, Sustainable Neighborhoods

Measure AA

• Add $11.5 million in new funding from Measure AA to be dedicated to providing additional services in two respective areas: early childhood education and college readiness. These two areas are pre-determined from the ballot language of the Measure AA.
• Equity Consideration: BIPOC children in Oakland have less access to quality preschool programming as well as services that prepare them for college. These new funds will help to close that disparity.

OPRYD Summer Transit Pilot

• Add $450,000 in O&M for Contract for transporting children throughout Oakland to OPRYD programs. Programs would include Town Camp, Town Afterschool Programs, Sports, Aquatics, Cultural Arts, and Nature & Science. Contract would include leasing vehicles with drivers.
  • Equity Consideration: Oakland communities with low household income and communities of color historically have less access to transportation options and experience greater impact of transportation costs. In addition, Oakland's communities of color are more likely to be killed or severely injured in a traffic crash of any type and traffic crashes are the second most common of cause of death for our young population. The additional allocation of funding will allow OPYRD to provide a service enhancement to participants and families, while also reducing barriers to access through safe transportation services. Adding transportation will provide increased exposure, especially for our BIPOC youth coming from underserved Oakland communities. This transportation service will open access to transformative experiences to a broader base of youth in Oakland, with the intentional engagement of youth living in areas deemed by the City's Equity Map as being "Medium" to "Highest" need, with hands-on learning at City pools, boating programs, art centers, athletic facilities, golf course, Natural Environment/Open Space, City Stables, Oakland Zoo, Chabot Space, Science Center, and STEM/Discovery Center.

Enhanced efforts to Clean City Initiatives including environmental enforcement related to construction and demolition

• Add 2.0 FTE Recycling Specialist to meet demands of new SB 1383 mandates, to review the expected large number of building permits for Construction and Demolition (C&D) debris recycling compliance, and to administer C&D Non-Exclusive Franchise (NEF) contracts. Adds 1.0 FTE Environmental Enforcement Officer to conduct field inspections of Construction & Demolition Non-Exclusive Franchise C&D NEF contractors and to conduct enforcement as needed and 1.0 FTE Administrative Assistant II for Environmental Enforcement unit program support.
  • Equity Consideration: Efficient processing of building permit applications for construction and demolition debris recycling facilitates timely completion of construction projects, including those for affordable housing, which would benefit the City’s Black, Indigenous, and people of color (BIPOC) residents. Similarly, enhanced administration of the C&D NEF program has the potential to reduce illegal hauling and, therefore, dumping that primarily impacts the City’s flatlands and communities of color. Enhanced administration of the C&D NEF program, by adding a field component, is anticipated to help reduce illegal hauling of C&D debris and, therefore, dumping that primarily impacts the City’s flatlands and communities of color, which if left unchecked, has the potential to grow as a problem with new SB 1383 mandates expected to increase the number of projects subject to C&D debris recycling requirements.

2M Saba Food Program

• Add $2 million in food cards for families use with small grocery stores in flatlands neighborhoods including East, Central and West Oakland. These cards will provide 2,500 families with $75 for 12 months to buy their groceries from local stores.
  • Equity Consideration: Oakland's low-income BIPOC communities have experienced the highest rates of COVID-19 and other disparate outcomes which have destabilized household incomes. Providing food security to the community can support economic stability and support health outcomes through good nutrition. These cards also support local small businesses largely owned and staffed by BIPOC residents.

Fiscal Sustainability & City Operations

HR Staffing resources to fill vacancies

• Add 1.0 FTE Human Resources Manager, 1.0 FTE Human Resource Analyst, Senior, 3.0 FTE Human Resource Analyst (CONF), 1.0 F TE Human Resource Technician, Senior and 2.0 FTE Human Resource Technician to the Recruitment, Classification & Benefits Bureau. Addition of the above positions will great enhance HRM’s ability to attract and retain qualified candidates. While their time will be needed to hire and train these positions, the future capacity of HRM will match the growth of the City as an organization.
  • Equity Consideration: Filling positions throughout City departments will enhance services which are often most impacted into the most vulnerable communities of color in Oakland.

Department of Race & Equity staffing/funding addition

• Add 1.0 FTE Data Analyst III and O&M to support data collection, demography, analysis, and reporting to meet need across all departments for technical support to complete racial equity impact analyses, establish meaningful performance metrics, and assist the department with developing the data infrastructure to identify disparities and determine steps to advance equity.
  • Equity Consideration: To assure the success of City efforts to advance racial equity the City is focusing on reducing racial disparities in our impacted communities. This additional technical capacity will address the existing gap in expertise in this area, and accelerate progress toward improving conditions for Black, Indigenous, Latina/o, and Asian residents of Oakland who are burdened by inequity.

Funding to sustain translation Services at City Council meetings

• Add $213,000 for meeting translation services (Spanish, Cantonese, and Mandarin).
  • Equity Consideration: The Office of the City Clerk has been effective in encouraging open and transparent government access. Oakland citizens deserve access to clear up to date policy. This funding supports continued work to encourage and support civic engagement. This funding will also ensure access for ESL residents, Indigenous, Latino, Asian, immigrant and refugee communities in Oakland to be able to participate in meetings in real time in their native language. Providing continuous language services will increase public access to public information, which will be beneficial to citizens.

• Add O&M to support Oracle Migration to Cloud (OCI) and Phase 1 of a migration of all on-premise infrastructure located at 150 Frank Ogawa Plaza to Amazon (AWS). OCI will incorporate new features and bring the City to the most current software releases for safety and compliance requirements. Also added, is funding for a one-year engagement with a professional service organization (consultant) to manage the cloud environment and passing on that knowledge to ITD staff for future years. Phase 1 of the AWS migration is a “lift and shift” and will require a second phase to “modernize” the platforms and applications.
  • Equity consideration: this will improve the experience of vendors, especially small local vendors in getting paid or staff to find local vendors for purchase or reduce staff time working with Oracle to provide more services.

Reorganize the City operations for enhanced efficiencies including transferring Sustainability and American Disabilities Act programs to the City Administrator’s Office, and Contracting Processes to the Finance Dept. And adding staff in the City Administrator’s Office to support implementation of the Children’s Initiative of 2018, as required by the voter-approved charter amendment.

Other Council Priorities

Provides $8 million in One-Time Funds in the General Purpose Fund for a City Council Contingency that can be invested in key priorities to be determined by the City Council.

The Service Impact section of the budget has a complete list of anticipated service level changes.

Respect for Labor and the Collective Bargaining Process

An important caveat to this budget proposal is that we are currently bargaining with our four civilian labor unions whose current contracts expire at the end of this fiscal year on June 30, 2022. We do not have new collectively bargained agreements as of this date. In anticipation of those agreements this budget assumes a 3% wage increase for Civilian employees. Raises for police and firefighters are reflected in this budget according to previously bargained agreements. Those previously bargained agreements included extremely valuable concessions from the Police Officer and Firefighter unions that reduced Oakland’s unfunded liabilities by $240 million.

Compensation increases for our valued frontline workers who have worked so hard and sacrificed so much, particularly during this unprecedented year, is a worthy investment that may be approved prior to this budget’s final adoption. Once the final costs of those agreements are known, we will work with the City Council to make the necessary adjustments.

Key Challenges & Risks

Like many cities in California, Oakland’s finances face an uncertain future. Prior to the Covid pandemic, the City was pressured by rapidly increasing fixed costs that outpace growth in revenues. The cost of the City’s insurance premiums for healthcare, general liability, property, and workers’ compensation were increasing at an unsustainable pace, drawing available resources from other areas of the budget. That trend is now being exacerbated by the historically high rate of inflation.

During the Pandemic and our current recovery process Oakland’s finances were supported by critical aid from the Federal Government. Federal support allowed the City to maintain services and also provided much critical direct support to Oakland communities, business, and residents. Key temporary federal investments in affordable housing, infrastructure, rental assistance, expanded unemployment payments, support for homeless residents and other services to Oakland residents will expire as these programs wind down. The City finances and direct services and the City residents will be challenged as this federal support expires. Oakland has long struggled to adopt a structurally balanced budget, where one-time revenues are not used to pay for on-going expenses like personnel costs, our reliance on the one-time Federal and reduced support for our residents via other federal programs will significantly challenge the City’s finances during the next Biennial process.

Like every year, the demands from our stakeholders and our passion to serve our residents – especially our most vulnerable – exceed our resources. And this year is especially challenging as we see the impacts of an uneven and inequitable national economic recovery combined with substantial inflationary pressures. This Proposed Midcycle Budget Adjustment balances the need to provide critical necessary services to our residents and communities, with the demands of financial responsibility and an uncertain near-term fiscal picture

Conclusion

If there is one thing we have learned over the past few years, it is that we must be prepared for unexpected crises to arise that could put us in financially untenable positions long term. This budget invests in the preservation, restoration and expansion, or key services and protects City jobs.

Our structurally constrained resources require that we invest carefully in what we know works and what our already stretched-thin organization can reasonably absorb.

We are proud of the hard work our committed, talented, and courageous public servants did these past years to respond to the extraordinary circumstances of the pandemic. We owe it to them to keep focused on the core responsibilities of city government, work within our organizational and financial capabilities, all the while safeguarding the long-term future health of the beautiful city, we are so proud to serve – Oakland, California.