Cost Sharing
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Cost Sharing

As we struggle through the current economic mess and as more and more budgets show deficits, we should expect that the media will continue to be filled with reports on the weak economy.

Municipalities have experienced some good economic times in the recent past where increasing revenues have exceeded increasing expenditures. Over the last few years, we have experienced a scenario where expenditures continue to increase and revenues are not keeping up with those expenditures. When expenditures exceed revenues it is known as a deficit and since local governmental agencies are not allowed to print money, they must make up the deficit by drawing on reserves and a long term combination of raising revenue and/or reducing expenditures. Foster City finds itself in a situation where it will be drawing upon its reserves to balance the 2010-2011 budget.

How does Foster City plan to address this financial imbalance? Staff will be classifying each service as either “Core” or “Enhanced” along with an analysis of each. Once the list is prepared, the City Council will review it and make necessary adjustments. Several questions will arise: do we eliminate the service, reduce the level of service, or find an alternative means for delivering the service? Eliminating a service can be painful, more so for some than others. So finding an alternative means of delivery seems to be the most desirable choice.

Since over 75 percent of our General Fund expenditures are employee related, this would seem to be the most likely target area to reduce expenses. However, we must be ever mindful that every service or amenity has adequate staff members responsible for making it happen. The City Council needs to address each service on its own merit and not slash every dollar that comes before us without knowing the long term consequences.

We will be exploring the possibility of sharing staff with other municipalities. Recently and upon the retirement of our Fire Chief, we explored a means of obtaining the same level of service without directly hiring a replacement and came up with a satisfactory solution – share a Fire Chief with San Mateo. Both cities will benefit economically and expectations are that the level of service will be maintained.

There are probably positions where a part-time employee can perform the work. This is probably true with other cities and perhaps even the County. Having the person work part time for both cities utilizes an employee on a full time basis and reduces costs for both cities.

We will also be looking at the potential for more contracting of services. As staff continues to identify opportunities to provide existing service levels at less cost, services that do not require year round staffing could be contracted out.

Another alternative to cost reduction is consolidation of similar departments or sub-departments across cities. This alternative is probably a long term solution as there are issues with the level of service and/or labor groups within each city that would need to be addressed. These potential solutions are not without their speed bumps in the road. We have the best park system in the County and a cooperative venture would pressure us to lower the standards we have come to appreciate. Other cities on the Peninsula have entered shared service partnerships, some with great success and some less successful. However, it is obvious that shared/contract/consolidation of services is the wave of the future. Revenues are going to be hard pressed to keep up with rising expenses of current services much less better services in the future.

As I have stated in the past, prior City Councils have had the prudent fiscal foresight to establish Foster City as an economically sound municipality. I believe the current Council is of a like mind. Other surrounding cities are currently facing the real hard choices and are forced to take drastic budgetary action. Foster City is in less of an economic bind compared to other cities but is positioning itself now so that we will not be forced to take drastic actions in the future.

Over the next six months, the City Council and Staff will be looking at the costs and related service reductions in an effort to achieve a balanced budget. Now is not the time to panic or make impulsive financial decisions; however, business as usual must be considered a concept of the past. We must seriously consider new approaches to budget problem solving. Given the bleak economic outlook, the bottom line choice will most likely be multi-city collaboration and/or service reductions.

I would appreciate your comments on this and other issues by emailing me at akiesel@fostercity.org.

Council Corner

July 28, 2010
Cost Sharing
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