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HomeMy WebLinkAbout2024-05-07 Finance Committee Summary MinutesFINANCE COMMITTEE SUMMARY MINUTES Page 1 of 21 Special Meeting May 7, 2024 The Finance Committee of the City of Palo Alto met on this date in the Community Meeting Room and by virtual teleconference at 5:30 PM. Present In Person: Burt (Chair), Lauing, Veenker Present Remotely: None Absent: None CALL TO ORDER Chair Burt called the meeting to order. The clerk called roll with three present. Action Items 1. Fiscal Year 2025 Budget Process Overview 1) Penny E. described how the Palo Alto Link service is not a fiscally sustainable program. She hoped the City would consider geofencing schools during school commute times to eliminate the impact of Palo Alto Link cars on safety impacts on the school roads and campuses and look at conformance with the Comprehensive Plan Goal T1. Lauren Lai, Administrative Services Director, gave a slide presentation about the FY 2025 proposed operating and capital budgets detailing budget conversations and calendar, new information (as of May 7 9 am), budget hearing guidelines, “parking lot”, opportunities to join the budget conversation, overview, City vision and Council priorities, economic outlook, path forward, proposed budget overview, citywide budget strategies, cautious optimism and positive assumptions, all funds sources and expenses, historical full-time staffing comparison, full-time staffing and vacancies and retiree benefit funding policy. Paul Harper, Budget Manager, resumed the slide presentation detailing general fund sources and expenses, FY 2025 general fund balancing, major tax revenue, investments funded by business tax revenue, gas equity transfer funding (Measure L), FY 2025 proposed budget investments, opportunities for additional funding, capital improvement program (CIP) – overview 5-yr plan, CIP – general fund investment in capital improvement fund and 2025 capital improvement fund revenues by source: $117.5 million. SUMMARY MINUTES Page 2 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 Vice Mayor Lauing asked where the rest of the money was going on the affordable housing piece. He asked if the things mentioned in the slides of certain funds were already in the draft. He wanted to know the advantage of talking about the difference in vacancy rate with and without public safety. Director Lai explained that it was showing the disbursements. She stated items in the proposed budget that the Committee wished to have reconsidered, they could be moved to the parking lot. She provided an explanation about public safety with vacancies. Chair Burt wanted an explanation for having the utility users tax as a 1.4 percent increase on the revenue side, where there is a 9 percent increase on the utility categories that constitute the basis for the utility users tax. He discussed reasons to separate the general fund from the enterprise funds. He wanted to know if the base transfer was the budgeted amount each year or the total of the budgeted and discretionary amounts. He was interested in seeing the breakdown and going back a few years on the budget versus the base. He asked where the supplemental contribution could be found in FY 2020. He questioned where they are on authorized staffing versus what was authorized pre-COVID and on actual staffing versus actual pre-COVID. He talked about defining the terms “keep up” and “catch up” included in the CIP. Director Lai indicated they are asking their staff who specialize in revenue assumptions to look into utility users' taxes versus utility categories. She pointed out the information on headcount summary by department pre- and post-pandemic. She agreed to bring information back about the numbers of authorized police staffing. She requested making a motion on this particular ask. Mr. Harper stated on the CIP – general fund investment in capital improvement fund chart, from 2020 through 2023 those were actual amounts. In 2024, it was the estimated amount that included the $1.7 million that was added as part of mid-year. In 2025, it is the proposed amount that is recommended based on CPI growth from the 2024 budget. The 2026 amount did not include the supplemental projection. He clarified the amount they were trying to get back to in 2026 is related to the budget that was set in 2019 and 2020. He offered to look into how much additional funding they had in 2020. City Manager Shikada pointed out the staff comparison was needed as context for the departmental review and wanted to get Director Lai’s best judgment as to what it will take to turn it around within that timeframe. He thought defining the terms “keep up” and “catch up” would be a topic when they have the capital discussion. MOTION: Vice Mayor Lauing moved, seconded by Council Member Burt to direct staff to compare FTW staffing data for Police and Fire Department’s from pre-pandemic levels in FY 2019 to staffing levels recommended in FY 2025 Proposed Budget. MOTION PASSED: 3-0 SUMMARY MINUTES Page 3 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 2. Infrastructure and Environment: Capital Improvement Program, Capital Fund Projects 1) Ken H. offered suggestions for funding the Cubberley project. 2) Sara A.D. supported adding Eleanor Park to the plan for new bathrooms and explained why it should be moved up as a priority. 3) Nancy K. described the need for a restroom at Eleanor Pardee Park. 4) Leanne M. (Zoom) urged the Committee to investigate the cost to revert back to natural grass fields to reduce cost and for environmental health. 5) Sue (Zoom) addressed the safety issues related to PFAS in artificial turf used at El Camino Park. 6) Cortney J. (Zoom) requested that the budget and master plans for playing fields, parks and other playing surfaces be focused on natural grass and specifically exclude artificial turf. Naomi Hsu, Senior Management Analyst, gave a slide presentation for the FY 2025 proposed budget hearings general capital improvement fund and Cubberley Property fund capital improvement plans including FY 2025-2029 proposed budget summary (expenses), FY 2025- 2029 proposed budget summary (revenue), FY 2025 general capital improvement plan, FY 2025-2029 general fund continuing capital projects, FY 2025-2029 new general fund capital improvements, general fund capital project summary, FY 2025 Cubberley improvement plan and FY 2025-2029 Cubberley Capital Projects. Chair Burt queried if there is a page reference for projects that have had adjustments in cost. On the Infrastructure and Environment section, he wanted to understand how the term “environment” is used in this context. Ms. Hsu explained there is not a specific page reference. She offered to provide a page summarizing the changes. Brad Eggleston, Public Works Director, stated it is related to the physical environment in the capital projects. Council Member Veenker asked for explanation on the listed amounts on the general capital improvement plan slide. She asked if the updated number, 2.2, would have a ripple effect. She asked about the delta above 3 million being available for other purposes in the outyears on the Cubberley improvement plan slide. Ms. Hsu explained why the chart was not updated. She confirmed the number 2.2 would have a ripple effect. She talked about the intention during the 2024 adopted being to remove operating expenses that did not have to do with facility maintenance so there could be more for capital projects on the Cubberley improvement plan slide. Vice Mayor Lauing questioned the process if they were successful in wanting to move forward in a big way on Cubberley. SUMMARY MINUTES Page 4 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 City Manager Shikada explained how it would depend on what the vision was. Chair Burt discussed how the Cubberley improvement plan that is a separate funding had been redefined in terms of its usage. Mr. Eggleston gave a detailed explanation of the uses of the terms “keep up” and “catch up”. Kristen O’Kane, Community Services Director commented if the Committee or Council would like artificial turf to be evaluated, they would need resources and support. Chair Burt asked if they were looking at replacing the same synthetic turf. He had assumed it had already been replaced. He also mentioned the waste disposal of the material. He asked if they could extend the life of the artificial turf if they wanted to reexamine the replacement of the two fields going to natural turf. Director O’Kane stated it was just replacement of the infill material because it was clumping in the heat. Staff has looked at alternate infill material and they are likely to go with cork. The turf will still be synthetic. She thought they could get a little more life from the El Camino Park field but Mayfield less so. She said they could increase level of effort on maintenance to get through another year. Lam Do, Superintendent Community Services, talked about the maintenance that could be done to extend the life of the fields. He thought if there was to be a moratorium for a year, it would likely delay the project more than a year. With a moratorium in place, they could continue to research the cost to no longer have artificial turf. Council Member Veenker asked for clarification of the issues with the black rubber infill. She wanted to know if replacing the infill with cork could buy a year. She wanted to avoid putting in new synthetic turf. She wanted to see an analysis of what it will take to go back to grass. She asked if there is any kind of warranty or liability on the TPO. Superintendent Do explained the composition of the synthetic turf and the infill. The two fields have thermoplastic elastomer infill rather than black rubber, which is what is clumping. Removing 100 percent of it will cause damage to the blades and the carpets. They estimate they have removed 60 to 80 percent. When they replaced the new infill, the infill they could not remove is making its way to the surface and is clumping. He explained how replacing the existing infill would cause more damage to the integrity structure of the carpet. He explained the contractor that provided the TPO is no longer in the business so there is no warranty. Chair Burt was surprised there had been no evaluation regarding the concerns over synthetic fields. He encouraged that they be more strategic and proactive in their thinking. He advised looking at the comparative injury risk from synthetic and natural turf. He asked for direction on moving forward. SUMMARY MINUTES Page 5 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 City Manager Shikada instructed the Committee needs to come up with an alternative proposal and see what would be required in order to do the analysis that would inform a decision on the synthetic replacement. Staff needs to look at the time and expense involved. The county has just kicked off a similar analysis of alternatives and there may be some synergy to be gained in consultation with the county. Vice Mayor Lauing thought they needed to frontload the analysis and air it at PRC and address the potential contamination as the core issue in the decision. Chair Burt wanted to ensure they look at this through the environmental lens. He wondered if they were aware of additional concerns on PFOS materials and significant sources like this. Mr. Eggleston believed there is more attention being paid to this now by the Regional Water Board with respect to storm water and the municipal storm water permits. He would check on specifics of that. Chair Burt requested to return to the issue of toilets at the parks. Vice Mayor Lauing talked about a Parks Commission Master Plan that identified a number of parks that should have bathrooms and some outreach done in 2015 about Pardee Park. The feedback was almost universally negative on that. The new Master Plan prioritized about eight parks to receive bathrooms including Pardee. He stated it becomes a question of prioritizing which one gets done first. Director O’Kane described the criteria used to identify parks that would benefit from a restroom. She confirmed which parks were deemed by the Master Plan to receive restrooms. She stated they can do outreach on Eleanor Pardee again in the fall. Vice Mayor Lauing thought it was acceptable to look at what changes have happened since the publication of the Master Plan. Council Member Veenker expressed interest in further outreach regarding a Pardee restroom. Chair Burt explained why he thought the park restroom prioritization decision should have come to the Council. He discussed ways to potentially reduce the cost on the park restrooms. He talked about technology advances that reduce a lot of the problems that were a basis for the pushback of neighbors at Pardee Park. He mentioned a new company that appear to be a good competitor for the fully automated self-cleaning toilets and asked if Mr. Eggleston has had a chance to look at them. Director O’Kane described how the prioritization decision was made. Mr. Eggleston stated they looked into the new toilet company with respect to a potential alternative to the JCDecaux self-cleaning toilets and it was described in the staff report that they were not thought to be a good fit. He added CSD determines the priorities and Public SUMMARY MINUTES Page 6 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 Works implements the project. He explained they have generally provided funded about every other year for a new restroom so there is funding in FY26 and in FY28 from park impact fees without projects allocated to it yet. Chair Burt talked about the demand and need at Magical Bridge Playground and Pardee versus some of the other parks mentioned and did not understand the methodology used in the prioritization decision. Vice Mayor Lauing agreed Rinconada could potentially be deprioritized since it already has bathrooms. He thought if looking at prioritizing Pardee or any others, they would want to do another formal outreach. Holly Boyd, Public Works Assistant Director, remarked the four parks mentioned were already under construction so could not be deprioritized. Mr. Eggleston added that the Mitchell Park work had not started. Council Member Veenker questioned placing Pardee next in line after Mitchell and asked if there was anything to do now to get that moving. Mr. Eggleston commented the outreach on Pardee could being later this year and if it was determined to be next in line, Public Works could begin work on the project in FY26. He stated in order to get it moving they could make the recommendation. Chair Burt wanted to know what the timing would be on providing the prioritization methodology related to park restroom installation. Director Lai requested clarification on what the turf discussion means relative to a parking lot so they can do the necessary research. Chair Burt proposed that there be an evaluation of the environmental health and safety and a life cycle cost analysis of replacing synthetic turf with synthetic turf versus natural turf for the parking lot. He asked when they would hold off on a budgeted expense and if they would add an analysis expense. MOTION: Council Member Veenker moved, seconded by Council Member Burt to recommend the City Council approve the Cubberley Property Infrastructure Fund and parking lot items. 1. Direct staff to explore the environmental health and safety and cost analysis vs replacing synthetic turf with synthetic turf or natural turf, and any additional budget adjustments needed to perform this study. SUMMARY MINUTES Page 7 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 2. Direct staff to provide the prioritization methodology related to park restroom installation, with specific information related to installation of a restroom at Eleanor Pardee Park. MOTION PASSED: 3-0 3. Public Safety 1) Joe P. opined that staffing Engine 62 with overtime runs counter to what the City claims to stand for in regards to creating a healthy, sustainable work environment. He urged putting this in the parking lot to discuss further. Katie Lee, Management Analyst, introduced the Public Safety City Service Area which includes the Office of Emergency Services and the Police and Fire Departments and discussed the FY25 proposed budget. Geo Blackshire, Fire Chief, discussed slides about FY 2025 proposed budget for Fire Department and FY 2025 Fire Department outlook. Council Member Veenker wondered if not having an engine at Station 4 was a barrier to having the cooperative response agreement with Mountain View. She asked what impact the first additional engine would have on response time. Fire Chief Blackshire confirmed and described why not having an engine at Station 4 was a barrier to having the cooperative response agreement with Mountain View. It was his understanding both fire stations required an upgrade to reattract that cooperation. He thought if they got another engine in service now, there would be five total and they are rebuilding Fire Station 4. That reflex time would allow them to have a better idea of the financial forecast, where that puts the City factoring the Measure K funds and the growth that is going to happen on the south end of town. He described how the additional engine would benefit the town. Vice Mayor Lauing asked if his assumption that they are managing it the same way, just have more tools to use. He asked for an explanation of the term “an engine with overtime”. He asked for the financial difference between an FTE or overtime. He asked if overtime was a preference of the firefighters. He asked for comment on where they are with staff, where they want to be and what is going on to make that happen. He asked if they still share a training center with Stanford. He wanted to know the scope and time frame of the community focused strategic planning process. Fire Chief Blackshire said that was in response to the question about response times. They are not putting in an additional unit because that would reduce response times because it would be more units responding to the same amount of calls. He gave an explanation of the term SUMMARY MINUTES Page 8 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 “overtime” as being a way of being creative with what they have at their disposal to bolster their resources within the constraints they are given. He explained when you factor in the cost of the overtime versus the FTE minus the 19 percent Stanford pays through their contract, the difference is about $60,000. The staffing cost compounds over years because of increased salaries and pension costs. He stated the firefighters would prefer the permanent FTE position over overtime. He said the firefighters are in suppression with 10 vacancies. They just made offers to eight lateral firefighters to get them on before the summer. They will have another academy in the fall to fill the last two positions. They have vacancies in fire prevention they will be filling possibly with firefighters that have goals to be in there creating another vacancy. He confirmed the Stanford training center is what they primarily use but in the contract with Stanford there is no guarantee they will provide it moving forward. He remarked they are in the last year of the strategic plan from 2019 to 2024. All the stakeholders play a part in it. They get stakeholders from people they have contracts or agreements with that they work with outside the department. They talk about their expectations and how they think their services are. They do it internally, as well. Then they come up with a five-year strategy. City Manager Shikada explained one FTE typically meant one person available for 2000 hours a year. When referring to public safety, one position is actually three FTEs because it needs to cover 24/7. Chair Burt asked questions about response time. He asked what made them think they would get 90 in the 24 budget and what caused them to not hit that. He asked what might have caused a jump in the service calls. He assumed they needed a balance of experienced new hires to inexperienced new hires. He asked if the new recruits being more local was a pattern. He requested explanation of the switch of fire prevention from development services. He asked how the 10 vacancies compare to historic patterns. He asked if it is more expensive to use the overtime if they have all in with pensions. He wanted to understand the interagency collaboration on the wildland fire risk. He asked where they are out of the emerging technologies. Fire Chief Blackshire answered 90 was just a goal and without adding additional units, it was hard to quantify. He discussed how they try to find ways in policy to reduce the types of calls they respond to. He said when they hire people, they are filling vacancies as opposed to putting additional units and services. They base their model on what happened in the current year so it is hard to anticipate a jump in calls for service. He talked about the pros and cons of hiring experienced versus inexperienced hires. He stated it is their goal to recruit nationally. The initial goal of the switch of fire prevention from development services was to be an enterprise type department but they never got there. There was recently an organizational study of the development center efficiency and appropriate in the way it was distributed and it was recommended that fire separate. As they collect funds from Hazmat and state mandates, that money is put back into the system. Also having the prevention under fire gives them more autonomy with personnel and how they move them around. The current personnel are sworn but the four vacancies can be civilian or sworn. He said that when COVID happened was the first time they were fully staffed. At that time, they had to find ways to create room when they SUMMARY MINUTES Page 9 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 did the retirement incentives, etc. because they did not have vacancies they could freeze for the money so they had to find a way to remove positions then they applied for the SAFER grant and were able to get some of those positions back funded for three years. The way they fill vacancies is with OT. He stated it is more expensive for the positions in the first year and then the gap would grow by more than $60,000 if you add positions instead of overtime. He described training with agencies within the county. Director Lai included that overtime is not pensionable. Chief Ken Dueker, Director Office of Emergency Services, stated they, along with PD, share the interest in being more efficient in using sensor technologies. He said that cross county collaboration is a big one. Woodside Fire, Stanford University and Palo Alto are in the process of engaging through the Santa Clara County FireSafe Council. He stated it would not have a budgetary consequence to the City. He discussed looking at UAS. Council Member Veenker wanted to know about the upstaffing and the difference between overtime or the alternative. Fire Chief Blackshire described a proposal to have a fourth ambulance and put the engine back in service. They would staff three ambulances with paramedics and EMTs. The firefighters that currently staff those ambulances would be put on the engines. Therefore, they would run a different Emergency Medical Service program without hiring a bunch of firefighters. They have the equipment but not the people. He discussed the differences in cost between overtime or the alternative. Vice Mayor Lauing asked if adding one more staffed ambulance would get faster response times. He thought raising the ambulance fee should be a parking lot item. Fire Chief Blackshire confirmed that was correct and discussed what that would cost. He stated the county EMS backs up their system. He discussed the ambulance fee and the potential to raise it. Chair Burt asked if they could know what increased cost recovery they could have. Director Lai explained the analysis that would require and it would take time. Fire Chief Blackshire advised the extra ambulance would collect more revenue because they would not go to the county. He discussed the cost of a staffed ambulance with firefighters instead of civilians. Council Member Veenker opined there would be a lot of policy things to think about once they get the numbers regarding raising the ambulance rates. Fire Chief Blackshire added they do not balance the bill if there is a difference if the insurance does not pay in full. SUMMARY MINUTES Page 10 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 Director Lai provided a slide discussing Public Safety Department budgeted staffing both pre and post pandemic. City Manager Shikada noted they were not able to pull the vacancy information in time. Chair Burt recalled they had been significantly higher fire staffing and over several years they took measures to reduce that. Fire Chief Blackshire said they eliminated 11 positions after the Stanford contract was agreed upon. He talked about a proposed temporary solution to fill the gap of the fourth ambulance was going to private ambulance providers to back them up. Chief Dueker addressed the cost for service increase. A big driver is more people coming to Palo Alto. He provided slides discussing the FY 2025 proposed budget for Office of Emergency Services and FY 2025 department outlook. Chair Burt asked if they were engaged with the Utilities and SCAP group on perspective microgrids. He asked if they were being asked to weigh in about the reliability and resiliency plan analysis and if that influenced the policy recommendations. Chief Dueker answered the microgrid topic and other derisking strategies were part of what OES helps. They are interested in using their massive ESV to help spread the word about that. He confirmed they are collaborating to give input on the reliability and resiliency plan analysis. Andrew Binder, Police Chief, provided a slide discussing the FY 2025 Proposed Budget (Police) and FY 2025 department outlook. Vice Mayor Lauing asked why he is comfortable with the number of new TBH’s and what is the variety of jobs. In terms of recruiting, he asked how he felt about the diversity issue. He asked if there was any early data on ROI on the license plate readers. Police Chief Binder thought the ask from the community was there and they could find opportunities to provide that service. He talked about the lack of detectives and a school resource officer. He stated there were a number of opportunities where they could reinstate or re-envision how they would use those five remaining officers. He felt good about the diversity issue in terms of recruiting. He stated traffic is one of the number one concerns he hears from the public. He said they were seeing a number of benefits in their ability to address crime as it comes in and getting flagged if there was a stolen car or known vehicles they were interested in coming to their shopping center to engage in organized retail theft or crimes that have been committed on the backend using the license plate reader data as an investigative tool to do follow-up. They have had successes at each one, and he looked forward to sharing that data when they have a year’s worth. Council Member Veenker wanted to understand the alignment of traffic enforcement division staffing. SUMMARY MINUTES Page 11 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 Police Chief Binder answered parking enforcement has not come back since pre-COVID. They have transitioned their CSOs from a more traditional role of parking enforcement in the past and now doing more things out in the field. These were discussions from 2020 about changing up the footprint of law enforcement response. He discussed what the CSOs would handle. They find they have sufficient CSOs in the building to handle the current workload. Eric Jensen, Management Analyst, explained the programs reductions are relative small. One of the programs was fines and penalties they receive from the county from suspects. Prop 47 has changed a lot of that so expense is not there of booking the people in the jail because they are not holding them as long. They gave up that to help offset the addition of the lieutenant. Ms. Lee mentioned in addition to the field service amount that is going to be decreasing, they are decreasing the budget for the technology services amount. It was to realign the budget with what is actually happening. It was originally established to pay for the new SVRIA network bill in 2015 but the accounting changed over the last few years and they are trying to realign the budget for that. Chair Burt asked about a timeline on the authorized positions they anticipate filling. He asked if there would be additional motorcycle cops. Police Chief Binder explained if this budget gets approved will put them at 87 sworn with 7 vacancies and he has 5 in backgrounds right now that are a mix of new trainees and ones that have been through the police academy. He stated everyone starts out on patrol and that would fill existing vacancies. They will fill in vacancies with overtime but the goal is to be having a permanent body. Once they are comfortable with that number, they can start looking at other opportunities on where they want to place those positions. He said two motorcycle cops would be coming on now. They will have collateral duty where they work some patrol and some traffic. As soon as he gets more bodies in the building, they will be completely committed to traffic. He said the goal is to fill the seven vacancies they have then come back to continue to rebuild the Police Department. MOTION: Council Member Veenker moved, seconded by Council Member Burt to recommend that the City Council approve the budget proposal for Fire, Office of Emergency Services, and Police with the following parking lot items: 1. Direct staff to analyze Fire Emergency Medical Response Fee Adjustments; 2. Direct staff to analyze Fire Emergency Medical Response Contract [Additional ambulance 6 FTE +backfill, Sworn positions vs Civilian positions OR Contracted Ambulance Services]; 3. Direct staff to analyze up staffing Fire Engine 62 with 3 Sworn Staff instead of Overtime SUMMARY MINUTES Page 12 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 MOTION PASSED: 3-0 4. Community and Library Services 1) Olenka V. asked the City to reconsider the proposal put forth to include funding for programming that Magical Bridge had offered to the City to have programs available for all abilities. Rene Escobar, Senior Management Analyst, introduced a slide presentation about the FY25 proposed budget hearings for Community and Library Services and a service area summary. Director O’Kane resumed the presentation with slides discussing FY25 budget summary (community services) and FY25 department outlook. Gayathri Kanth, Library Services Director, joined the presentation with an FY25 budget summary for the library to include recruitment, expanded library branch hours, wellness topics, base budget changes, Strategic Plan update, collections, reference and research services, events and programs focusing on mental health support, DEIB and climate action, collaborating with other City departments and providing technology and support for community members. Council Member Veenker wanted to see the DEIB component promoted more. She asked if there are uses other than warmth under the overnight warming centers (OWL) umbrella. She mentioned recent funding for clean air centers. She wanted to find a way to expand into that. Director O’Kane commented in the past they have had daytime respite centers for heat and air quality. At this time, the overnight warming location is just during cold weather. They are following the county’s guidelines when they issue an increment weather alert. They have not yet explored about other inclement weather or air quality issues they could see in other times of the year. Director Kanth pointed out that just opening the two libraries seven days a week has provided a place for many people to go. Vice Mayor Ed Lauing queried if there is ever conflict between homeless persons or normal library goers with the warming centers. He asked if staffing is the highest cost in the budget request for this year. He wanted to know if the funds the volunteers raise are planned every year in the budget. He questioned what the biggest community service dollar amounts are in terms of the adds. He asked how they prioritize the needs. He mentioned the golf course success and encouraged looking for more revenue opportunities. He hoped they would continue to avoid pricing the local citizens out of being able to play at reasonable times. SUMMARY MINUTES Page 13 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 Director Kanth answered they welcome everyone to the library. She opined everyone is friendly and professional. If there are any concerns, they advise folks to go to the staff so they can resolve it. She confirmed staffing is the highest cost in the budget request for this year for expanded hours, days and services. She stated the library is ending FY24 with 7.4 FT total vacancies. She advised the funds the volunteers raise is not planned in the budget because it varies year to year. Director O’Kane explained adding contract dollars to the budget for recreational programing is the biggest community service dollar amount. The needs are prioritized by waitlists. She added the staff is always looking at opportunities to add new trending classes and programs. Chair Burt wanted to think about ways to more effectively communicate to the public the areas they provide exceptional services. He spoke about benefits and advantages of the library. He asked for color about AI. He talked about a need for a comprehensive approach in identifying the gaps in the unhoused and homeless needs. He wondered if there is a way to leverage the Hotel De Zink efforts in a way that is complementary or different from the OWL. He asked where they stand on getting Dignity on Wheels where it is needed. He was interested in understanding more about it in depth. He talked about a gap between the need where the facilities are not being used. He wanted to know what is keeping them from meeting demand on camps and classes. He asked for a reminder on what was allocated the previous year for youth mental health, where they stand on that and where they are going forward. He brought up a previous discussion about the prospect of a special events fund to support other organizations. He asked for an update on the plan to get more special events. Director Kanth described different ways the library provides educational opportunities about AI for the community. She talked about collaborating with the Avenidas and PAUSD libraries. She remarked that 80 percent of the population in Palo Alto owns a library card. City Manager Shikada explained that a gap analysis regarding unhoused and homeless needs is in process. The hope it to have it at least kicked off if not completed in the summer or early fall. He noted there has been some concern expressed that Dignity on Wheels may not have as much use as they are finding in other locations on their routes. Regarding the camps and classes, he suspected the limitation on meeting demand was a workflow issue. He stated that the discussion of a special events fund was a continued item that would be coming back at one of the next meetings. Steps on adding more special events is funding allocation. Director O’Kane explained that Hotel De Zink as well as Heart and Home Collaborative are referral based and the OWL is immediate. She stated Dignity on Wheels is funded through a HSRAP grant which only provides for once a week and it is at the Opportunity Center on Saturdays. She thought switching to the Opportunity Center could be used as a determinant if that would increase participation. Regarding camps and classes, some of the limitation is space and the other is contract dollars. She explained that this year contract dollars has been added to special interest classes to anything that is not a summer camp and the ceramics programs. She explained reasons they try not to do a large RFP for these. She discussed that the allocation SUMMARY MINUTES Page 14 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 for youth mental health came at mid-year budget. They have been working on coming up with a plan for the fiscal year on how that funding will be utilized. She described potentially a youth mental health event for youth and adults working with YCS, Alcove and Project Safety Net or an event from city schools offering opportunities for kids to learn about different career or education opportunities. She said they would also be doing some teen center events focused on youth mental health and the Youth Council just completed a survey of Palo Alto teens for mental health and will come up with recommendations. She stated that they hired a special events coordinator and will provide some support to the other organizations to the level they can. Kiely Nose, Assistant City Manager, determined that Staff will need to come back to figure out how they can effectively create and support more programming. She mentioned the contingent account for special events and innovation that is in this budget and could be used for immediate or program startup costs. They will return to this Committee after the summer break to talk about HSRAP and a follow-up discussion on these items. The requests that were brought forward specifically are included in the additional funding options supplemental memo the Finance Committee received. MOTION: Council Member Veenker moved, seconded by Chair Burt to tentatively recommend that the City Council approve Community and Library services with the following parking lot items: 1. Direct staff to analyze increasing revenue-generating CSD programming in consideration of demand data to inform the recommendation. 2. Direct staff to recommend funding for citywide special events such as UNAFF and Third Thursdays. 3. Direct staff to explore financial, outreach, and policy processes for adding East Palo Alto to resident rates for golf course. MOTION PASSED: 3-0 5. Citywide Internal Support and Administration Kayla Shapiro, Senior Management Analyst, discussed a slide giving a service area summary for the Internal Support Service Department. Darren Numoto, Information Technology Director, provided slides discussing the FY 2025 budget summary for Information Technology and FY 2025 department outlook. SUMMARY MINUTES Page 15 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 Director Lai provided discussion of slides detailing the FY 2025 budget summary for Administrative Services, an FY 2025 department outlook and Debt Service. Sandra Blanch, Human Resources Director, discussed slides detailing the FY 2025 budget summary for Human Resources and an FY 2025 department outlook. Molly Stump, City Attorney, provided slides discussing the FY 2025 budget summary for the City Attorney’s office and an FY 2025 department outlook. Kate Murdock, City Auditor, discussed slides about FY 2025 budget summary for the City Auditor’s Office and an FY 2025 department outlook. Mahea Ah Yun, City Clerk, provided slides detailing FY 2025 budget summary for the City Clerk’s Office and an FY 2025 department outlook. Ed Shikada, City Manager, showed slides talking about FY 2025 budget summary of the City Manager’s Office and an FY 2025 department outlook. Ms. Ah Yun provided slides detailing the FY 2025 budget summary for City Council Office and an FY 2025 department outlook. Council Member Veenker asked if the presumption of the grant management staff was that it would pay for itself over time. She wanted to understand the scope of the risk management function and if it was distinct from the grant compliance. She wanted information on the contract management software. Director Lai believed that support would yield great dividends. The grant proceeds usually go toward a project. They have an administrative support cost; however, are leveraging millions of dollars. They want to compete and be successful and when the monies come in they need to be compliant. She said that position still needs to be funded with local resources. She explained every year as a part of the annual audit there is a federal audit that is a report card of their compliance for randomly selected grants by their auditor. That report card is used when they apply for additional grants. She advised that the risk management function was distinct from grant compliance having to do with insurance requirements within contracts. She asked if any support was needed in unusual contracts. City Manager Shikada added they look at that particular position less in terms in return on investment but as a compliance and risk management role ensuring they are able to deliver on the grants and handle all reporting associated with that to ensure they can continue to get more grants in the future. City Attorney Stump said the key function of the contract management software was housed in the purchasing department in ASD. She advised they did not need support in unusual contracts above what they currently have. She provided an explanation of how contracts are reviewed. SUMMARY MINUTES Page 16 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 Director Lai added within the City they were implementing the eProcurement System and one component is contract management so they are working with the City Attorney’s office so look at the workplan for that implementation. Bringing in existing contracts will be a part of the workplan as a phased approach. It will be a part of the preexisting eProcurement System called OpenGov. Chair Burt asked if there was a way to establish any goals that might be measurable on the procurement process and grants. He asked if the threshold at which they go into the formal RFP versus informal was mandated by the state or internal. He wanted to know if there was a trend line in grant dollars received over years. On the vacancy discussion, he asked what the timeframe and attrition they would normally have in that same timeframe that should be subtracted from that. He questioned what IT is looking to do regarding the audio/visual upgrade for the Council chambers. He queried if the ticketing for the Junior Museum was falling under IT role. City Manager Shikada believed they were close to completing a report from the City Auditor on this topic. He answered that the formal RFP versus informal is City driven. They are looking at changing thresholds. He noted that a particular issue was identified regarding what it would take to increase their throughput on recreations programs. He thought they would be coming back with thoughts on that matter to see where to go with it. He agreed to see if they could put together a trend line in grant dollars received over years dividing general fund from other enterprise. Ms. Murdock said they do have a grant management audit scheduled for FY24 which was not started. Nick Raisch, Assistant Director of Human Resources, responded that they already take into account any known separations that are happening over the same period when looking at the net vacancy number. That would be any people who have submitted for retirement or resignation they know are going to happen but have not been processed out of the system yet. In addition, if he did want to use an anticipated turnover number, they would look to the budget book specifically at the annualized retirement turnover and nonvoluntary turnover. The third figure they track is voluntary turnover. That is not built into the numbers because they are constantly trying to prevent that. He believed the fact that they take into account the notices they have already received accounts for whatever plus or minus will happen over that period of time. He indicated that in the timeframe they have known hires, they have accounted pretty accurately for the attrition that would occur. Director Numoto explained the audio/visual upgrade is looking to keep technology consistent through both rooms. He confirmed IT is helping manage the Junior Museum Project in cooperation with JMZ staff and would provide a report. SUMMARY MINUTES Page 17 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 MOTION: Vice Mayor Lauing moved, seconded by Council Member Veenker to tentatively recommend that the City Council approve Citywide Internal Support and Administration Services. MOTION PASSED: 3-0 6. Review and provide feedback on the Palo Alto Junior Museum and Zoo Operational and Business Analysis Report, recommend FY 2025 staffing adjustments, and ticket fee structure Director O’Kane provided some background as to why this analysis was done. Linda Chew, Consultant, provided a slide presentation about the Palo Alto Junior Museum and Zoo operational and business analysis including details of the key findings. Lauren Angelo, Consultant, provided a description of the role of the Friends of the Palo Alto Junior Museum and Zoo. She wanted to clarify statements on the City’s Staff Report that the proposed pricing increased to align with market rates is contingent upon the adoption of the consultant’s staffing recommendations and what that includes and an increase in ticket price must be coupled with a plan for ensuring that the museum remains accessible to all families. The second point was around the Friends’ funding of the JMZ. They provide funding to the Junior Museum and Zoo for specific initiatives. They cannot commit to general operational funding of the JMZ and she wanted to ensure the Committee clearly understands the ways in which the Friends is willing and able to support the JMZ. She stated they are open to exploring together with the City and their board how the Friends’ might undertake specific new supporting roles in a hybrid operational model as suggested in the report. She noted that the Friends has already implemented programming mentioned in the report to enhance the visitor and community experience. They also remain committed to expanding their access initiatives to ensure the JMZ remains accessible to everyone. Vice Mayor Lauing wanted to know what percentage of the visitors is actually kids. He asked who the competitor on the peninsula was. He referenced the initial year surge and attendance erosion curve chart and questioned if this customer experience is not one that customers want to go back and experience again and want to see new things when they go back. He opined the low-income visitors almost have to be in a different category than the bar that shows how many visitors are coming. He stated the financial factors work against each other in terms of coming up with cost recovery and the only choice is to get comfortable with what the cost recovery percentage needs to be and push as many revenue buttons as they can. Ms. Chew answered the competitor on the peninsula is CuriOdyssey. She agreed with the point that people want to see new things. She commented that museums can have temporary exhibits. Children’s museums tend to have a longer tail on that curve because they act like play SUMMARY MINUTES Page 18 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 spaces and children can go back over and over but over time they will experience some erosion to the attendance curve if they do not reinvest. She explained there is insufficient animal care and visitor services staff to maintain the quality experience. She said the only thing excluded in total attendance was facility rentals. She described that a lot of museums get philanthropic funding to cover the low-income admissions. Director O’Kane added they have part-time staff that they lose because they want to work full- time and then they have to recruit another staff person. She advised that roughly 70 percent of visitors are children. Council Member Veenker queried if there are currently memberships or if that was something they were proposing adding. She asked if they had group discounts. She wanted to know if the membership had been very popular. She queried if it was thought they could get enough rentals to offset the cost of additional staff. She wondered was specialty care was required for animals and wanted information about the animal care specialists. Ms. Chew explained there are memberships and they were proposing increasing it proportionately. She said group discounts were not common but a lot of times it might be treated like a public program. She stated the ratio of members to attendance was well within industry standards. She said memberships made up 2.3 percent of attendance. She stated the cost for additional guest services staff covered all of guest services. She stated it was her understanding that vet care was outsourced. Director O’Kane provided detail of the different rates. Female remarked that because they were so short staffed, the staff was reacting to the different emergencies that pop up on a daily basis. One project they are trying to get up and running is some internal vet care to an extent. At this time, they have to rely on a contracted service. Vice Mayor Lauing queried if almost at capacity meant they could not take any more unless they come at 8:00 in the morning until 10. He asked about peak pricing. Ms. Chew answered they are at indoor capacity. The indoor space is very limited and because of the visitor entry sequence where you have to come to the indoors in order to get to the outdoors, it has created some capacity choke points. She mentioned a new ticketing system, allowing for timed entry, having more staff, doing seasonal events and peak pricing to manage the flow of visitors. She said the ticketing system has the ability do peak pricing. Chair Burt wanted an update on where they are on the ticketing system. He asked how the current ticket system works versus what they are going to have what the anticipated impact is. He wanted to know if they allow any walkup during times that are not peak demand. He asked for a sense of what portion of the open hours are at capacity and what portion are not. He wanted to know the ratio of ticket sales reservations or reservations by members. He hoped they would look at having different categories in pricing. He wanted to know what portion of SUMMARY MINUTES Page 19 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 the visitors are residents, what portion are low income and what portion are kids and parents. He asked about the current volunteer program. He questioned if they know anything on Coyote Point’s Curiosity’s attendance trend the last couple of years. He was curious what portion of their potential market within 30 miles knows about them. He asked about recent discussion about the hotels reestablishing a visitor’s bureau relationship. He wanted to know what the traditional City subsidy was with the old museum. Female stated they have a signed contract from ACME Technologies being routed to go to City Council consent maybe on May 20 with a full report. From her understanding, peak times are 10 to 2 throughout the week, weekends and then the breaks. Cayla Koga, Administrative Assistant, explained the current system is through CivicRec. It is set up so people have to create an account which has been a hindrance of just purchasing a ticket. It was her understanding no account creation was necessary through ACME Technologies. If there are tickets available and folks come in they will do walkup tickets but oftentimes sell out with the presale tickets. City Manager Shikada noted that it was his understanding that a big factor on the underutilization was the degree to which memberships are using up the capacity. He stated they were in the initial stages regarding the hotels reestablishing a visitor’s bureau relationship. Ms. Chew talked about contributing factors but she expected the members grabbing spots and not using them to decrease. She explained that 73 percent of visitors come from the primary market which is a 0 to 30 minute drive time, 18 percent come from within 30 to 60 minutes and 8 percent come from outside the resident market. Director O’Kane said they would have to come back with the answer to the ratio of ticket sales reservations or reservations by members. John Aikin, Community Services Sr Program Manager, stated the volunteer program went through a slump when they lost the last one and it took eight months to hire another and they are rebuilding it. They were down to 15 volunteers and are back up to 35. He described how they can augment the staff. He said that when school is out, they get very busy. Weekends are always sold out. Currently, they have been selling out mornings and midday sessions every day of the week. They sell walkup tickets if they are available based on capacity counts. He stated Coyote Point’s attendance has suffered greatly and they are trying to rebuild their attendance. He said they see a lot of people coming from Walnut Creek and Santa Cruz. He stated the traditional City subsidy with the old museum was about $1.4 to $1.5 million. He said they were interested in trying variable pricing with the new software in order to spread attendance into the times they are less busy. Vice Mayor Lauing asked if the requested staffing was in the draft proposal they have. Director O’Kane said there was a placeholder in the supplemental memo. SUMMARY MINUTES Page 20 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 Ms. Nose remarked that the $500,000 was a net and would be the ongoing. She noted that in FY 2025, there was a prorated number acknowledging startup time and that assumed additional revenue. Chair Burt wanted to understand how to reconcile the medium scenario that adds $110,000 in cost with the report that says the net change is $500,000. He said that brings them up to the vicinity of their historic subsidy. He wanted to see a reconciliation of the consultants’ findings with what they anticipate would be the real cost comparison to the historic numbers, a look at the latest attendance and revenue trends, what they might project would be the impact of the new ticketing, how they can leverage the resurgence in volunteers to mitigate the staffing demands and a couple of scenarios on additional staffing. He advised two tiers in ticket pricing at $14 or $15 during peak demand periods and $10 or $12 at the lower periods. Ms. Nose advised that the staff report has all the financial crosswalks from the staff. Director O’Kane said the difference was likely that when they did the analysis, they did an estimate of staffing cost where in the staff report they used what they expected to be actual staffing costs. She explained that in the staff report they did the cost of what the full recommendation would be and then a tiered proposal that would be some positions in FY25 and then ramping it up in the subsequent year. She advised the hope was that recommendations would be made at that time on the ticket price and how they might be able to support the existing staff with some additional positions. Male added that assumed some increased participation in programs and other support from either the Friends or other funding sources. Even with the capacity, they can manage it better and get 10 percent more. Vice Mayor Lauing agreed with Chair Burt’s suggestion of two-tier ticket pricing. He thought $15 and $10 was more logical. Ms. Chew thought going to $15 in one year was substantial. She recommended phasing it in over a couple of years starting at $14 for peak times and maybe $11 or $12 for nonpeak times. Ms. Angelo thought it was important to remember that it was a free institution a few years ago. Council Member Veenker liked the number 14 because it did not feel like a 50 percent increase. She was resistant to that due to the fact it was free a few years ago but felt it was needed. She wanted to call it a discount on weekdays to $10. Chair Burt said he would support $14 at the peak demand periods and retain $10 at the off with the initial staffing increases in the second table. Female summarized that this captures their most critical recommendations. SUMMARY MINUTES Page 21 of 21 Finance Committee Meeting Summary Minutes: 5/7/2024 Director Lai reiterated they were looking at the column FY2025 on the table. The Committee seemed to be building a consensus around converting the four FTEs around animal care, one FTE for guest service and the ticketing system with the expectation that that additional expense would be accompanied by revenue increases from admissions rates. She hoped they would follow that days process whereby the Committee would do a tentative motion on this. They could put it on the parking lot or the committee referral and bring it back to the Council on the following Monday as a reporting out of the consensus at that time. Chair Burt said they would only be recommending at that time a decision on the staffing increases that are aligned with FY25 and at a future date would figure out if they could go the next step or not. MOTION: Council Member Burt moved, seconded by Vice Mayor Lauing to tentatively recommend that the City Council approve the JMZ Business Plan presented in Report #2403- 2797 3-0 with parking lot items for the FY 2025 Budget: 1. Direct staff to analyze JMZ Revenue Adjustment for Ticketing and Facility Rentals 2. Direct staff to analyze JMZ Staffing Augmentation and Ticketing System Purchase MOTION PASSED: 3-0 Adjournment: The meeting was adjourned at 8:00 P.M.