Budget Committee August 24, 2026   8/24/2026

Good afternoon.

My name is Aisha Chugtai and I am the chair of the Budget Committee.

I'm going to call to order our regular meeting for Monday, August 24th, 2026.

Before we begin the meeting, I want to offer a friendly reminder to all members, staff, and the public that these meetings are broadcast live to enable greater public participation.

These broadcasts include real-time captioning as a further method to increase the accessibility of our proceedings to the community

Therefore, all speakers need to be mindful of the rate of their speech so that our captioners can fully capture and transcribe all comments for the broadcast.

We ask all speakers to moderate the speed and clarity of their comments.

Councilmember Payne is absent.

Wonsley is absent.

Beto?

Present.

Warren?

President Osmond is absent.

Stevenson?

Present Chaudry?

Present Palmisano is absent.

Vice Chair Schaefer?

Present And Chair Chigtai?

Present

Let the record reflect that we have a quorum.

I'll also remind my colleagues that we're using speaker management today, so please make sure to sign in to participate in discussion if you are having any trouble with speaker management.

Our clerks at the end of the dias will be more than happy to help.

We have one item on our consent agenda today, which is to receive and file the mayor's 2027 recommended budget.

This is our formal receipt of the recommended budget and the Budget Committee's first step in our process leading up to the adoption of the budget in December.

We will discuss the budget process in much more depth in future meetings when we receive a presentation of the budget and presentations diving into the details of each department's proposed 2027 budget.

Is there any discussion on what I have outlined so far?

Thank you Chair Chuck.

Thank you, Chuck.

I don't see someone who would be appropriately equipped to answer the question right now.

I know the discussion right now lives between the mayor's office and the administration of the Minneapolis Park and Recreation Board.

I know that we have finance staff present and the crux of the conversation is living between

the electeds right now, to be honest.

And so I don't see someone here from the mayor's office who's able to address your question.

I think you are bringing up an important one.

If you're okay with it, can we note it for administration response so we can get a clear understanding of where things are as it relates to the NPRB levy.

Before we continue, I'll note that we've been joined by Vice President Osman.

and let me check you to see if there are any further questions.

I'm not seeing any.

I'll ask the clerk to file the mayor's recommended budget.

The next item on our agenda is receiving a presentation on the Capital Long Range Improvement Committee's annual report.

For this, I will invite the chair of the Capital Long Range Improvement Committee, John Bernstein, to join us and begin this presentation.

Good afternoon.

I'm John Bernstein and I am the chair of the Capital Long Range Improvement Committee, otherwise known as CLIC.

I'm going to give you a brief presentation highlighting the CLIC report, which was published about six weeks ago.

Hopefully you've all had a chance to review it.

When I'm finished, I would be happy to take questions.

Since many of you are fairly new to the City Council, let me start with a brief primer on what CLIC is and what CLIC does.

When fully staffed, we are 33 members.

That's two appointees from each ward and each council member and the seven at-large mayoral appointees.

This results in a geographically diverse committee across the city.

However, there is an unwritten rule.

While it's okay for an individual member to advocate for a project within their ward, it is a generally accepted notion that we are all trying to do what's best for the city overall.

We are a citizen advisory committee, so our recommendations are non-binding.

CLIC considers and prioritizes capital budget requests, better known as CBRs, and those are submitted by various city departments.

This click does not originate or propose capital projects.

We may, however, suggest the city consider a specific project when we get public input about an unmet need.

And a great example of this from a few years ago was the Northside Greenway, which was a group of citizens that came to us in a very well organized manner.

Here's how the click process fits within the overall capital budget process.

From January to March of each year, city departments develop budgets, write and submit capital budget requests.

From March to June, the CLIC process occurs.

And then in July, CLIC presents to the mayor and the mayor develops a budget.

In August, the mayor's budget is released.

And then in the fall, the City Council continues the budget process.

And finally in December, the budget is passed.

Now a little more detail on the CLIC process.

CLIC meets weekly from March to June each year.

CBRs are completed by city departments and are made available at the end of March.

April is what we call the information gathering period, and that's when we hear presentations on all 130 plus projects from the various city departments that develop them.

And that's typically two full days of presentations.

In May, we divide into two task forces and begin drafting comments and members complete their individual ratings on each project.

And then in June, the full committee finalizes comments and funding of projects is completed based on aggregated ratings.

And finally in July, the report is published and the executive committee presents it to the mayor.

This year, CLIC reviewed and ranked 134 projects.

Those projects totaled a little over $1 billion in various city funds, plus additional money from other funding sources, largely federal, state, and county.

CLIC is recommending projects which total roughly $775 million in city funds.

And let me just point out with city funds, that's not just debt, that's all sources of funds.

And that's over the six year window from 27 to 32.

In order to accomplish this, the committee met 13 times and held three public meetings for a total of more than 40 hours.

This does not include many more hours spent by each member reading and reviewing more than 130 CBRs and the preparation necessary to make those meetings effective.

CLIC's role is to assess how each project fits with the City's goals as stated in the current long-range plan.

The committee prioritizes projects based on the city's goals as well as other factors and then matches them with a budget.

Our report and the comments it contains pertain to that process and the issues that result.

CLIC does not make recommendations nor comment about broader policy issues.

And as a result, CLIC's recommendations should not be interpreted as commentary on policy except as it narrowly relates to our role as I just described.

Long-range planning is a challenging process.

It can be difficult to estimate the cost of a project six years in advance.

In some cases, it is also difficult to anticipate needs six years in advance.

And those needs can change and unexpected projects can arise.

Ideally, each project would be planned six years in advance and move up in the queue each year, but life doesn't work like that.

With the understanding that this process by its nature is sometimes messy, I'd like to give an example of a project that presented difficulties for the committee this year and how we chose to address it.

The example I'm going to use is the Community Safety Training and Wellness Center, also known by its CBR code, PSD 23.

At the moment, it's unclear where the site will be and what the design of the building will be.

That uncertainty makes the timing of the project and estimating the costs difficult.

The request for this project was $9.5 million in the two near-term years, 27 and 28.

That amount represents about 10% of the annual net debt bond budget in each of those years.

The committee chose to address this problem several ways.

We are recommending funding the design and project management phase of this project.

That's a total of $775,000 split evenly over 27 and 28.

And I would note that that amount includes $600,000 of previously authorized but unspent funds for this project.

The remaining balance of the request has been pushed out to 28 and 29, which we believe is a more realistic timeline for the project.

Each year we try to balance the annual net debt bond allocations, also known as NDB, to within plus or minus two to three percent, and the six year total to within plus or minus five percent.

This year we stayed very close to that goal for the six year total, but did not for the yearly allocations, so I'd like to explain why.

Several years ago, CLIC recommended a very large increase to the net debt bond budget of about 50% over the six-year period.

At that time, we asked the finance department to provide us the maximum amount that could be spent without needing a property tax increase, as CLIC works within the budget you all set with respect to property taxes.

While that has been a positive change, there has been an unintended consequence that we would like to see remedied.

Previous to this change, the net debt bond allocations could be characterized as gently rising over the six-year time frame.

Since the large increase to the net debt bond budget, the opposite has been the case and the annual allocations decrease.

These are the maximum net debt bond numbers that were provided to us this year, and as you can see, these allocations generally decrease over the six-year period.

If we look at this from the perspective of a very conservative annual inflation rate of 2% over the next six years, you can see how unrealistic these numbers are.

Focusing on 2032, the roughly 82 million allocation will need to be about 92 million in that year to have the same buying power that $82 million has today.

Additionally, large and expensive projects are often scheduled in the out-years of the window.

This becomes more difficult when those allocations are lower, and as a result, impacts CLIC's ability to make recommendations that are congruent with good long-range planning.

The Committee understands that the City uses a conservative approach to its financial projections, particularly as it pertains to debt issuance.

Additionally, CLIC understands the importance of the prudent use of debt and maintaining the City's exemplary credit rating.

The Committee also believes that it is important to balance those goals against realistic capital budgeting and declining NDB allocations do not seem very realistic.

Finally, it is important to note that increasing the allocations in the out-years of the six-year window does not commit the City to issuing that amount of debt.

Each year, bonds are only issued for the current year of the plan.

The goal should be realistic planning with the understanding that unforeseen and or extraordinary circumstances may require a change to those plans.

We understand that there is a natural tension between conservative fiscal planning, debt issuance, and realistic long-range capital budgeting.

So our ask is that the City return to the previously gently rising trend line for NDB allocations over the six-year window.

In that vein, our funding recommendations nudge the allocations in that direction.

We did this for all of the reasons I just described and because it fits with recommending funding for certain projects.

In particular, PSD-22, the Minneapolis Animal Control and Care Facility, also known as the MAC.

Everything I've talked about so far relates to the net debt bond budget and the projects that are funded from that source.

CLIC also reviews several of the enterprise funds.

As you may all know, enterprise funds are closed systems where the revenue generated from the asset can only be reinvested in that same asset, either by directly spending or using the revenue to service the debt on bonds issued.

A common misinterpretation of enterprise funds is that they are self-funding so there isn't a need to scrutinize them.

While this may be technically accurate, it is important to remember that the users of the asset are funding it through the fees that they pay.

CLIC reviews the pro formas for enterprise funds to understand the impact of capital budget requests on future rate increases.

I want to emphasize that CLIC does not make great recommendations.

Rather, we assess the reasonableness of expected future rate increases that result from undertaking the proposed projects.

Next, I want to again bring your attention to the fact that the Park Board continues to effectively circumvent the CLIC process by submitting projects that exactly match the funding they will receive from the City because of the Neighborhood Parks and Streets Ordinance, also known as NPP-20.

The text in quotes comes directly from Chapter 35 of the Minneapolis Code of Ordinances, which codifies CLIC and its role.

As you can see in the bold text, which is emphasis we added, the park board is clearly one of the departments that is required to use the CLIC process.

Additionally, in the second paragraph, where we have again added emphasis, the Capital Program shall include all sources and uses of financial resources used to acquire, replace, or increase the use of the life of the City's assets.

The ordinance cited above makes two things clear.

First, even as a semi-autonomous body, the park board is subject to the capital project review process outlined in chapter 35.

And second, all capital projects, regardless of the funding source, must be presented as part of this review process.

Unfortunately, the park board continues to submit projects that exactly match the MPP $20.

that they will receive from the city.

This effectively makes CLIC's work with respect to the park board nothing more than a rubber stamp.

Over the past 10 years, the Park Board's response to this has been that the MPP-20 funds can only be used for neighborhood parks and as stated in the ordinance.

While this is true, it is also true, as I have shown you in Chapter 35, that the Park Board should be participating in the click process in the same way that every other city department making capital requests does.

The park board also holds the position that the MPP 20 ordinance narrowly defines how neighborhood park projects should be prioritized and therefore submitting additional projects could upset that prioritization.

While it is true that the MPP 20 ordinance narrowly defines how projects must be prioritized, it is also true that CLIC's recommendations are advisory and in no way restrict the park board from making the final decisions.

It does seem possible that portions of the MPP-20 ordinance and Chapter 35 may contradict one another.

However, Chapter 35 also makes clear CLIC's responsibilities.

The Committee shall not duplicate evaluation and or ranking tasks performed by other processes managed by city, state, or federal laws, ordinances, or regulations.

It seems that a modification to MPP-20 may be appropriate, whether that is an amendment or a clear interpretation that allows the Park Board to seriously consider CLIC's advisory recommendations without violating the prioritization set out in MPP-20.

It is worth noting that several years ago when there was a large increase to the net debt bond budget, as I mentioned earlier, many projects received additional funding and projects were recommended that might not have otherwise received funding.

This was not possible with a park board because they submit projects that exactly match the MPP 20 funding that they are scheduled to receive.

As a result of all of this, CLIC chose to recommend funding for park board projects in a single lump sum that represents the funding they will receive through the MPP 20 ordinance.

This more closely aligns with the lack of discretion that is available to CLIC with respect to these projects.

Our request is that the City and Park Board work to resolve the conflicts that may exist between Chapter 35 and the MPP-20 ordinance in a way that aligns the capital budget process between both organizations so that the CLIC process can return to being fully effective with respect to Park Board capital projects.

Finally, I'd like to review the potential impact on CLIC from the proposed Boards and Commissions Reform.

The Committee is very concerned that some of these proposals could reduce our ability to issue robust capital recommendations to the Mayor and City Council each year.

We acknowledge the need for reform among all of the City's boards and commissions, but it appears that it is being done with a single consideration, standardization.

So I'm going to go through some of the issues.

Tier 2 status.

We believe it is important that CLIC be established as a Tier 2 body.

This will allow the committee to continue to be established and guided by city ordinance.

I would note that Tier 2 status normally means that a body is not advisory.

We do think the CLIC's recommendations should continue to be advisory.

There is a proposal to reduce the membership of CLIC from 33 to 23.

We believe that CLIC has been well served by its current structure, specifically the geographic representation in the form of each of you having two appointees from your ward for a total of 26 and the mayor having seven at-large appointees.

Having two appointees from each ward serves several purposes.

First, as I mentioned earlier, this work is demanding and fairly intense for about four months each spring.

Having two appointees from each ward helps ensure that each ward is always represented at meetings.

Additionally, it provides multiple perspectives from each ward.

The larger committee size can also provide additional forms of diversity beyond the obvious areas.

There is also professional background, life experience, and primary mode of transportation, among many others.

Having committee members who view proposed projects through different lenses results in a more robust final report.

Reducing the size of the committee has the potential to limit diversity and, in turn, impact the current strength and quality of the final report.

I don't know if you are aware of this, but the Clerk's Office would not allow any new appointees this year to fill the existing vacancies on the committee.

That resulted in four of you and your constituents having only one representative on the committee and two of you and your constituents having no representatives.

requiring appointees with specific professional backgrounds.

Under this proposal, eight appointments will be made by the finance department for specific professional experience, such as municipal finance and city planning.

CLIC has always operated as a group of engaged residents and users of the city's infrastructure.

We tend to look at projects from a broad perspective and only get into the details when warranted.

Having appointees with specific expertise will change that practice.

The City already employs these types of professionals in the Finance Department and Public Works, and they are heavily involved in generating the projects that are presented to CLIC.

The Committee is most effective when members view these projects through a different lens than City staff.

Additionally, the Budget Office is heavily involved in the CLIC process and has plenty of voice.

Allowing the Finance Department to appoint one-third of CLIC's membership runs the risk of giving them undue influence on the committee.

Finally, as many of you already know, recruiting folks to serve on CLIC can be challenging because of the significant commitment required to serve.

Having such narrow requirements for these eight seats will make recruitment even more challenging.

Term limits.

If folks were lining up to serve on CLIC, this would probably be a reasonable change.

However, that is not the case, and it is generally accepted that it's about a three-year learning curve before a new member fully understands the CLIC process.

Additionally, all of us serve at the pleasure of you, our respective appointing authorities, for two-year terms.

Given all of this, imposing term limits seems unwise.

Quorum should be calculated as 50% plus one of the seated members of the committee, not based on the full capacity of the committee.

This is the standard practice at the state level as well.

Finally, there's a proposal to prohibit city employees from serving.

We are all required to go through ethics training and take an oath of office.

My question to the clerk is what about that system do you not trust such that you need to exclude any group of people

from serving, including city employees.

Additionally, CLIC has a process whereby any member is expected to recuse themselves if they believe they have a conflict of interest.

We currently have two thoughtful, productive members of CLIC who would no longer be allowed to serve if this reform occurs.

Thank you for this presentation, Chair Bernstein, and I will ask my colleagues if there are any questions on your annual report.

Thank you so much for that, Chair.

How do we know which wards lack the representation?

Yeah, thank you for that question.

That information

is right there.

So in your case, you have no representation for Ward 5, but this is on page 8 of the Clarence Click Report.

Excellent.

Thank you so much for this.

I greatly appreciate it.

And so just to make sure, I'll just summarize this table here.

It feels as though Ward 5 has no representatives, Ward 12 has no representatives, and Ward 4 has one vacant representative.

And then there's some at-large seats that are open.

But just looking at the Ward 4 and Ward 5 examples,

You know, the north side should have four representatives and they have one on click.

And I would imagine that has an impact, as you were describing, really succinctly.

So yeah, for all the reasons I stated, I think this committee has been well served by being as large as it has been.

I've served on this committee for 20 years, so I try to be very cognizant of not being

Gotcha.

Thank you.

Thank you.

I just want to make sure that things are clarified here with the number of members.

People have to apply for this.

This is not an issue of, it's not always the case where a council member

is not like actively working.

People have to want to serve on this.

And then you receive applications and you go through those applications and appoint people.

So I think we should start out by, because it's coming off kind of defensive, like council members aren't doing their jobs.

Some of these council members, you acknowledged in the beginning of your presentation that there are new council members here.

and this has not been an easy year for some of these new council members and I know that the click is a priority for a lot of people but when you get down here and you're just trying to find your way, it's a learning curve and you have to figure out how to do this and this isn't the only committee.

These new council members get bombarded with lots of applications and lots of committees that they need to fill

and I would say the main thing is you have to have people willing to apply to be on these committees.

So it's not always that people aren't appointed.

Sometimes people aren't interested and it takes a lot of time to get people interested.

I would say especially in something like CLIC.

This is a big committee with a lot of people on it.

Everyone is not up for personalities and you know, the finances and the things that come along with this project.

I would just say for me,

You know, I'm lucky that I have a person who was willing to serve on this committee, but it's not easy It's not one that you put up and start searching and people are like, oh I want to get on that one It's quite the opposite.

That's exactly why composing term limits makes no sense But let me just back up for a second.

My purpose in putting this up is not to try to embarrass any council members Well, it seemed that way.

Well, so let me explain

What I stated was that the Clerk's Office cut off any recruitment for this year for these vacancies.

So even if somebody who has vacancies here had wanted to do something about it, the Clerk's Office said no.

So what I'm calling out is the Clerk's Office because it strikes me that this is an attempt to

I think that's great, but I also do think, again, there are people who are new here that don't understand that dynamic.

There are vacancies, and there's a cutoff, and that is not a vacancy.

It's a cutoff.

There's a pause.

So for me, if it wasn't to shame people, it's just a pause, not vacant, because you can't feel it.

It's not open.

It's not available for you to put anyone in that seat right now.

This is really helpful, and before we continue with Q and there's several members getting in Q, Chair, so just for your awareness, I think there will be a lot more questions.

I'll just quickly apologize, though.

When I was going through the chart that Mr. Bernstein had put up, my intention was to help reiterate the point that he was making, which is some communities have less representation, and it is at no fault of the appointing council member.

Can I just add, sorry, can I just add too that I completely acknowledge what you're saying that a new council member is literally drinking from the fire hose and in this day and age and what's going on in this city you have lots of priorities and filling citizen advisory boards naturally is not going to be at the top of that list and it may take some time to get those filled so this was in no way intended to call out City Council people.

I would also say that, as you pointed out, this is something that's really tough to recruit, too.

And I think one of the things you can do is use city staff and others in your ward to try to help you find people, because it is tough to find people.

Most people, when you ask them to serve on CLIC, the first question is, what's CLIC?

That was my question 20 years ago.

I had no idea what it was when my council member asked me to serve on it.

and then you get people on it and they don't really understand what they've signed up for and some of them stick with it and some of them don't because it was too demanding or not what they thought it was going to be.

Alright, we've got five council members in queue right now.

Thank you, Madam Chair, and thank you, Chair, for your presentation.

I think first off, just kind of starting with the I guess I'll go backwards with what was in your presentation, starting with the appointments.

I appreciate you bringing light to it because as a Councilmember with two openings, I've been looking for the opportunity

to offer that to Ward 12 constituents and we are currently in a process of recruiting for boards and commissions.

It's August 1st to August 30th and then on the page you can see what the current openings are to apply for and there is not openings available for the Capital Long Range Improvement Committee.

March.

Yes.

And our next appointments is usually in March, right?

We open up in spring to do

So that is an open question for this body and I would ask council leadership, our president and our vice president to work with their clerk's office to figure out when can council members actually recruit for their vacancies because I do have a number of people

neighborhood associations, community members that come to my office hours about budget that I would like to recruit into the Ward 12 positions.

But as a council member, there hasn't been like a notice or a place where it's been identified where we would be able to do that.

And I'm a returning council member.

and I could imagine for new council members how that would be difficult.

I'll also just share to our leadership, I think this is a place where there is a lack of training to new council members and bringing us all to a standardized place on boards and commissions.

It's a very important thing that we have to do, but kind of thinking back to my orientation,

three years ago and then this year for what was offered to new council members, I never was offered a training on boards and commissions.

It's just kind of something you have to figure out and these are powerful and important advisory positions that we have to point people to and I also do think commenting on the other things that you mentioned in

In the ordinance, it would be helpful to get clarity from Council President, Council Vice President, or leadership.

When are we going to be taking up the ordinance related to the Capitol Long Range Improvement Committee?

Because I don't know when our calendar is set to take it.

because we'll obviously have to prepare for these considerations that are there.

I'll comment.

It's really important to me that we do have this type of way for constituents and community members to participate in a participatory budgeting format that we do have.

I think it's integral and I think we create a lot of barriers if we require professional finance staff

quite frankly you count out working people who don't have that background from several positions without it and so that's my initial reaction.

yeah and I mean I think we should figure out how we can do that and if if there's an ordinance that I'm missing or piece of code I don't know that dictates that I think it would be important to get clarity because I would certainly love the opportunity

I can share a little bit of information on this.

I know that the budget office is in conversations with the clerk's office about having recruitment in November for this very reason.

I can also tell you that this back in some of the things that I pointed out I think you'll find at least under the current state of the proposal

may no longer be an issue.

The last I heard the clerk's office is planning to make click tier two, but the reality is this has been going on for 18 to 24 months and it's been changing.

So that's why I brought all of it forward in case it changes again.

And on the recruitment, you know,

I started by saying that I understand that there's a need to standardize what I believe was 170 commissions and boards in the city, right?

Great.

I still have a few more questions if that's all right.

Please go ahead.

I think it will be helpful for our clerk's office to prepare something regarding our conversation here.

It's good to hear that there's a recruitment plan in November.

But there are a number of other outstanding things that we should talk about.

I haven't had a chance to hear from the clerk's office in regards to boards and commissions.

A presentation, a briefing, anything of that matter would be great and that's just feedback to leadership to speak to the department.

In terms of the rest of the presentation, I did want to ask about the net debt bond.

So could you

Sure.

So I think it was either three or four years ago now, the years kind of blend together when you get old like me, that we went to the budget office and asked them how much the net debt bond budget could be increased without getting anywhere near

a property tax increase because as I mentioned CLIC tries to stay away from policy that you guys should be setting.

And so in that year we ended up increasing the net debt bond budget with the approval of the budget office by roughly 50% over the six year window.

as a result of that, that obviously moved those budget numbers closer to what is risk of having to raise property taxes, right?

So they're approaching, I don't want to put words in their mouth, but my presumption is that the people in the budget office or the finance department that are tasked with figuring this out try to stay very conservative and not do anything that

would compromise the city's currently stellar credit rating, which of course means the city borrows at the cheapest rates possible in the market.

That would be something you would not want to do.

But as a result, that conservative approach in having those numbers, you know, they're a little bit noncommittal, right?

When you're roughly $100 million in the front years of the window and cutting it to $75 million in the out years.

that's just not a reasonable way to approach this.

I mean, as I tried to show just on inflation alone, those numbers aren't gonna work.

So we're just trying to, and again, I think the most important thing to remember is that there's no commitment here, right?

I mean, it's a projection.

The only thing that's being committed to is the first year of the window.

That's what's gonna get bonded for.

Awesome, thank you.

Thank you.

I wanted to thank Councilmember Vitai and Mr. Bernstein for raising the vacancy issue.

That's been something that people in my ward have reached out to me wanting to have my vacancy filled, and I've not been able to fill it.

my member on CLIC came to me very early on in my term and told me another thing which is that CLIC in her mind is not very diverse outside of professional diversity and so having these vacancies that we're not able to fill has harmed our ability to make CLIC look like the city that we represent so I do think a little

Clarity from leadership and from the clerks on how we can address filling these vacancies because we're not serving the city as well as we could slash should be if we were able to fill these people from our board who can bring different perspectives that are already represented.

I would just acknowledge that it is 100% true that on more typical types of diversity measures, we are not diverse.

We are too male and too white and too old.

I think I bring up that average a lot.

Maybe age doesn't matter so much.

But that's an interesting problem, right?

Because there's 14 people that are making appointments to a board that's kind of hard to find people for.

Thank you.

Yes, I had a question around the gently decreasing plan.

And you talked about how it's better to have it increasing, but yet I see your proposal is gently decreasing at all as well as the proposed.

Sure.

You know, we're not privy to all of those numbers and shouldn't be.

That's not our job.

That's the finance department's job.

So one of the things, so I use the word nudge.

So our proposal declines less than what was given to us.

But the other thing that we try to keep in mind is what the total for the six-year window is.

and if we were to try to rearrange that, we can't really pull money out of the early years because there's all sorts of projects that are in the queue that would suddenly not be able to be funded.

It's a little late for that.

So the only way to fix this is to push up the out years.

Well if we do that so that it's gently increasing, it's going to make the total for the six years much higher than it currently is and that could in fact run into the problem that the finance department is trying to avoid which is getting too close to

a number that's going to impact the debt capacity of the city or something else along those lines.

So we try to stay within 5% of the total and we're at about five and a half this year.

That is helpful.

It's relatively recent, and it comes out of this major increase to the net debt bond budget.

It's true that does put us closer to limits than we were in the past by roughly 50% right so It's it's a legitimate concern.

I just think it could be balanced better Like I said, I've served on the committee for a long time So I was on the committee when the o8 crisis happened and you know all bets were off then and those budgets got cut dramatically I don't remember the exact numbers, but it was probably not gently increasing for a couple of years back then and

OK, that's helpful.

Then I have a couple of questions around some specific questions within your report.

One was trail condition markers and that you had been having difficulty.

And can you speak a little bit to what that request was?

And was that coming from public works, or is that an MPRB request?

It was public works.

Part of the problem there is sometimes the relationship between the public works and the park board is not entirely clear about who's responsible for what, whether we're talking about streets or trails.

So to the extent the park board should be a part of that, then that's who it's directed at, too.

But our understanding is, for the most part, that's public works.

So the trail metrics we're talking about is for the city streets, they use Pavement Condition Index, better known as PCI.

which is a well-known, well-accepted metrics that uses a 100-point scale just like we all experienced in school that tells you the condition of a road and the overall condition of the city streets.

It's very easy to understand, 80%.

Okay, you gotta be minus, right?

They don't have a system like that for trails and using that exact system on trails wouldn't make sense because you have bikers, walkers,

Inline skaters, skateboarders that are using those trails.

So imperfections in the trail that might not matter on a road could matter dramatically on a trail.

As an example, a crack in a trail that runs along the trail longitudinally, that could take somebody out on a bike if it's the right width, right, to grab a wheel and take them down.

Or a skater or something like that probably doesn't matter on a road that is a one-inch crack in the road from the perspective of a car.

I think it would be helpful for the CLIC committee to reach out to the park board because there has been some detail done.

I mean, many of those trails are on park land, and they have invested in trying to have some analysis of those that were closer to failing.

I don't know if it would be an official, you know,

trail condition marker to the level CLIC might anticipate.

But I think you could get some great insight into what data they currently had and that would have happened within the last two to three years.

I think just because we needed to have an idea of where to invest, they needed to have an idea on where to invest the limited dollars as we all do.

But that might be just a follow-up item for the click.

And of course, could you speak just a little bit more, I mean, you go into detail in the report about our pavement falling behind.

Yeah, that's a really important question.

There is a brief comment that I did not highlight today because I already went pretty long as it is, but thank you for bringing it up.

There's a long, long history to this.

If you ask Public Works, they can give you a chart that goes back at least 30 years that shows you the overall PCI for the city.

It used to be somewhere in the 80% range.

Starting sometime in the 90s, that has declined down into the 60% range.

There's lots of reasons for it.

Some would say climate change.

I am certainly a believer in climate change.

I'm not sure that that has had enough of an impact yet to have moved those numbers that much.

The cut to LGA spending that happened in the early 2000s under Pawlenty

had an impact on this and so the the city's response to this was MPB 20 the neighborhood parks and streets infrastructure ordinance that was passed in 2016 which was the the idea behind that was to give a boost to both

Parks and Streets.

And so it commits a certain amount of money each year to those two items.

It's roughly, I want to say, $20 million a year for streets.

I'm speaking personally now, not the committee.

I don't know if people would agree with me or not.

I personally don't like these kinds of ordinances, not because I'm not for fixing streets and parks, but because they create unintended inflexibility.

And that's what's happened here.

An unintended consequence of this ordinance is that now PSD projects like the Community Wellness and Training Center, which is a big bullet to swallow, right, $20 million, is really tough to fund.

Because as I mentioned, it takes up 10% of the budget in two of its years.

So all of those kinds of projects that are big dollar projects, fire stations, police stations, anything along those lines is really tough to fund because $20 million comes off the top of the streets every year.

And that's by ordinance.

So unless you're going to change the ordinance, there's nothing you can do about that.

The other issue is that we're 10 years into that ordinance and at best,

the PCI for the city is held steady, maybe declined a little bit.

So it's not working, right?

I mean, we're not getting back to where we once were.

So it begs a much larger question, which is, how is the city going to keep up with maintaining its current infrastructure?

And that's the comment that we made to Public Works, which it goes far beyond Public Works.

It goes to this level, too, to you guys as well.

We asked Public Works to look into other ways to get creative to figure out how to maintain the infrastructure that the city has.

You know, it's more challenging in a northern city, right?

Thank you.

Thank you, Chair Chuktai.

Just wanted, since we're talking about the ordinance of CLIC, the Capital Long Range Improvement Committee Reform Ordinance was introduced on February 19th.

Given its first reading and then referred to Committee of the Whole, it's being authored by Councilmember Palmisano.

And then on March 3rd, it was referred to staff.

Thank you, Chair.

I just had a question.

So you're saying that you don't think that neighborhood parks is like working out in a way that is helping the city.

I think the goal of neighborhood parks was to like create equity throughout the park system so that buildings could be fixed so like infrastructure wasn't falling apart in North Minneapolis but it was looking good in other parts of the city right like I'm certain that that was what they gathered around and then I recently worked on something around parkways because certainly

the parkways were terrible in some parts of the city and then you had like Kings Highway took all the money years ago and was fixed and people were sticking post and no some I do on Theo Worth Parkway when I was a Parks Commissioner right so like

I guess I'm trying to understand what do you think an alternative to be for that?

So let me just be clear.

I'm not saying what you just said.

I'm not saying that neighborhood parks are very important.

And I think that the equity metrics that the Park Board has developed are probably nation leading and are great.

And that should continue to happen.

But they're leaning on that as the reason for not coming to us with their entire budget

We see no projects that are funded by any other source than those MPP $20 and they're saying we can't give you any more than the projects that we're going to fund with the dollars we're getting because we have this system we have to follow and if you tell us we should do

Number five, as number three, now we have a problem.

And our response is, we acknowledge that you've got this system you've got to use, but nothing we do is binding, it's advisory.

You can take it under advisement and decide, okay, maybe they've found something here and we should adjust things a little bit, or maybe they shouldn't.

And I guess part of this is, like I said, trying to align what the MPP 20 ordinance says about all of that with what Chapter 35 says CLIC is supposed to do.

I think there is actually some contradiction there, right, that it says that we're not supposed to duplicate somebody else's evaluation process.

So there's no point in us saying, yep, Parkport has said, here's the equity metrics, here's what they ought to do.

Stamp, go ahead.

So you're not saying you want to change the ordinance, you're saying you want to talk to the park board.

Yeah, I did.

I think there's a conflict between that ordinance and chapter 35 that defines CLIC's role.

So I think it's beyond click.

It's up to you guys or the mayor to have a discussion with the park board and see if there's a way to figure out how to adjust that conflict.

And that might be as simple as the city attorney's office and the attorney for the park board may be able to come up with a different interpretation and you don't have to touch any ordinances.

Just interpret it slightly differently than it's being interpreted now.

I mean, honestly, most committees, most departments don't really like budgeting, right?

So to the extent that you can provide the projects you want and not go under any scrutiny, why wouldn't you do that, right?

And so that's what they're doing.

I'm so confused.

I would be more than happy to meet with not only you, but any of you that want to discuss anything that I'm talking about or just want more of a primer.

I appreciate that.

Thank you.

Thank you.

Thank you, Chair Tuckside, and thank you for the presentation.

It's really helpful as someone that is brand new to this process and really trying to get kind of into the weeds of what this is, and so thank you for the work and to the members of our CLIC team or committee.

It's a lot in reading through the report.

One, thank you for putting together.

It's helpful to kind of go through that to actually wrap your head around this work.

Just kind of questions related to

how you prioritize and make recommendations.

I'm looking at a few and I was looking at the kind of in the individual sections of like the capital projects particularly for like the property services capital projects and then looking at clicks recommendations of the dollar amounts allocated to those.

When a click recommendation is let's use for example Northside Community Safety Center has a higher rating than South Minneapolis Community Safety Center, but zero dollars were allocated to

The Northside Community Safety Center, whereas there's the $3 million allocated.

You would think, logically, that if it's $0 allocated, it would have a lower recommendation than one that has a higher recommendation.

No dollars were allocated to it.

Yeah, that's a great question.

Thank you.

So we'll back up.

When we have 33 members, each individual member rates individually all 134 projects.

The budget office takes those numbers and aggregates them into an aggregate score.

And that's what you're seeing in the report is the aggregate score that reflects what all 30, well, this year 23 of us thought.

Having said that, if you look at that, it goes out to one tenth of a point, right?

Because there's a whole bunch of these.

If you look, the way our process works is we start by picking a cutoff score and saying if you're above this score, you're funded.

If you're below this score, you're not funded.

That tends, depending on the year, that tends to be somewhere in the 150 to 160 range out of a total point system of 300.

But the reality is that some of those projects are separated by tents, which are not meaningful, right?

Nobody's scoring on tents.

It's just the way the numbers worked out.

So I'm really glad you brought this up because there's been an impression in the past by the City Council, not this City Council, past ones, that if you don't like one of our recommendations, you can just drop down the list to the next one and say, oh, well, that's the next one that we should put in.

It's not how it works.

It's a combination of a whole bunch of things.

It's the score for sure.

The reality is sometimes it's what fits with the budget.

We have a hole in 2028, and there's $2 million that we need to spend to get to the maximum.

And there's a project that needs $2 million in 2028, but it's 10 points below the cutoff.

There's a motion made, and that gets in because of that.

So there's a whole bunch of pieces to this.

Yeah, that's really helpful, thank you.

And I guess the only other one is a more specific question related to the Southside Community Safety Center.

One, I thought we were done funding it.

I think that is maybe my question.

I see there's a $3 million allocation for 2027.

Do you know what that allocation is for?

I can't see the details on here, and maybe that's an email I could note to staff.

It's probably not going to tell me exactly why there's additional funding requested.

I can tell you that this often happens, and I'm not throwing anybody under the bus.

Doing this kind of stuff is uncertain work, right?

I gave you this example with inflation at 2%.

If you talk to Public Works, I'm confident they'll tell you that the inflation rate on some of the work they do is well over

Two percent, right?

And so it could be something as simple as that some unanticipated needs.

So here it is Here's the three million dollars in 2027 Yeah But sorry, I can't give you any more detail than than that public works.

I'm sure can That is helpful.

Um Councilmember

But the Council member does bring up an important point that the Council has decided not to move forward with this project.

So how come it's in the capital budget?

Through the Chair, Council Member Whiting, the reason for the $3 million extra is just simply because they need more revenues based on the estimate that they arrived at for the South Community Safety Center.

There's no specific reason as to what, you know, they're not technically building a certain specific item with $3 million.

Thank you.

Correct.

Thank you.

And I'm sorry.

Yep.

I'm caught up now.

I'm not seeing anyone else in queue.

So I want to thank you, Chair Bernstein again for being here today.

I will note this is the most robust conversation we've had about the click annual report.

In my memory, we've spent about an hour in discussion here and it's been very, very robust.

Thank you and I agree.

I think this is easily the most robust conversation we've had about this while I've been chair.

And I'd also like to very briefly recognize the folks in the budget office and the finance department that support the work we do.

Thank you.

With that I will ask the clerk to file this report.

We've got three more items to get through on our agenda today.

So our next item is receiving a presentation on the 2026 second quarter financial status report on select city funds.

For this I will invite our city controller George Hargrove to begin the presentation.

Yes, thanks Chair Chugtai and City Council members.

Give me a sec here.

Excuse me.

I'll get the presentation going.

Okay, so to start off with, we'll kind of switch to the operating budget here, which I have a deputy controller laying here as well, too, that'll cover some of the general funds, but this is mainly about the operating budget.

So anyway, just to kind of go over the overview of the presentation, just remind the City Council that this is a point in time report as of June 30th or so.

The figures are unaudited.

We have one audit a year.

So the fourth quarter eventually becomes audited.

So it is subject to change as the year progresses and finance certainly would invite anyone to come and check in if you need the latest information or anything like that as the numbers do tend to change, especially for things like payroll and things like that because people are hired and people leave the city and things like that.

That can cause the forecast to change throughout the year.

So our agenda today, we'll cover some key items, key takeaways, some of the most important things.

We'll go through, spend quite a bit of time on the general fund today.

We'll also cover some of the other funds that you see here, the special revenue funds, internal service funds, enterprise funds.

And then finally, to conclude, I'd like to go through our planning worksheet for our general fund balance, and then the budgetary control report as well, two that's contained

annual financial policy.

So some of the key takeaways today.

I started off with just saying not much has changed since I was here on May 4th to talk about the city finances.

We did give a little preview of 2026 at the time.

It's fairly similar now.

It's within about $2 million, our forecast.

So we continue to spend down the general fund.

We're projected to spend down about $49 million.

We'll certainly cover that.

in more detail and then we think at year end we'll have to restrict about 2.2 million of public safety aid.

I'm happy to say that our self-assurance fund continues to improve.

We expect that to go up about $23 million at year-end in terms of our assets, and then we're hopeful, barring any unexpected legal cases or things like that, that the liabilities may drop at the end of the year.

But we'll start working on that late this year.

As I mentioned before, the general fund does show a spend down of about $49 million.

We talked about the public safety aid.

Departments over budget that we project the end of the year are all in the public safety area of the city.

The police department, Fire 911, and the Office of Community Safety.

And then finally, if you look at the book value of our cash investments, as of June 30th, it was about $1.02 billion.

That's about a 7% decrease from, or about $71 million decrease from last year at this time.

And again, that kind of mirrors the general fund drawdown.

And then moving on to talk about some of our fund balances in a little bit more detail.

You know, some of the issues that we see and also in terms of our net position and just to kind of explain, fund balance is really like equity, like in the private sector that would be like stock or

retained earnings.

So that's a little different than net position where we add in our net investment and capital assets, but they're in some ways kind of related measures.

So finally, our self-insurance fund, it does have a negative about $135 million negative net position as of last year.

We do think that'll go improve by at least $23 million, and we'll look at the liabilities on that.

Moving on, our Engineering, Materials, and Testing Lab in Public Works is slightly under the target by about a couple hundred thousand for its debt position.

They should have about four hundred thousand.

It's about two hundred thousand.

I do believe they're looking at the rates there as well.

And then we have a new area this year for 2026.

That's our traffic camera citation area.

That's a special revenue fund.

We believe that at year end will show a deficit of about $141,000 or so, although the hope is that the revenues will improve as we undertake collection procedures for some of the citations that we're having to, you know, trouble getting people to pay those as well, too.

So we do tend to, I do believe we're gonna step that up.

The next one is the CPED Enterprise River Terminal.

That's always been on my detailed report, kind of towards the end of the package that we send out.

But I did feel that I should move that into the presentation at this time.

That does have a negative net cash balance of about $4 million or so.

And then that position has started to go negative now, because it has a cash deficit that's more than the value of the land itself.

too.

So that's certainly something that we're talking to our CPED area about that as well too.

And then finally, I did talk about the general fund.

We're projecting a net fund balance at the end of the year of about $88 million, and that's about $22 million under our policy.

Yeah, yeah, thanks to Chair Chugtai.

I believe it's related to its Upper Harbor Terminal.

I think it's like leased out.

We get lease revenue for it, but it does have some cost to it too, like property tax we have to pay, as well as like property maintenance costs and things maintenance, things like that.

So it's, I believe it's, I think it's where the amphitheater is going.

I see Jane shaking her head, so yeah, yeah.

All right, so moving on.

Just in terms of external review, as of last year at the end of the summer, the city retained its AAA bond rating for all three major rating agencies.

We met with the rating agencies last week.

We do believe our CFO office will issue an announcement very soon on that.

We're just waiting for the

rating agencies to make everything the summaries public at this time.

So we should get that.

That should all be public very shortly now.

In terms of our annual audit, we did receive a good audit opinion, a clean audit.

I'm happy to report there's no serious audit findings.

That's a little unusual, at least in my career.

There's two different types of audit findings.

There's one that's called a significant deficiency.

We have a few of those and a few verbal ones, but then there's a worse one called material weaknesses, and I'm happy to say we don't have any this year if we can get by another year with that.

Then we'll move into like a low risk oddity for the federal government.

So we're working on that.

And then finally, the 2020 offer was issued on time before the end of June around June 25th or so.

And then a big issue for us in finance here, especially on the federal grant end is these OMB

potential rule changes.

We're very concerned about that.

It just seems to us that it would lessen the objectivity of the federal government awarding grants and introduce more political elements into that.

It does appear that the Senate, the federal Senate,

did in their initial bill to fund the federal government, has put those on hold, but that's just their proposal, so we continue to monitor that.

The city made sure we contributed, sent comments to the OMB director out in Washington.

Thank you very much, Controller Hargrove, and good afternoon, City Council.

My name is Rob Lang, I'm the Deputy Controller, and I monitor and report on the General Fund, which we'll be going through.

So to start, cash balance.

We are projected to end the year at $126 million in the General Fund.

This is about a $49 million decrease.

On that related note, the fund balance, which is assets less liabilities equals your fund balance, almost like net worth, is going from $137 million down to $88 million projected.

Around May 4th, we projected about $87 million, so this is about in the same projections as we presented at the last report.

The 17% minimum fund balance requirement.

So we are to maintain a 17% of the 2026 budgeted expenditures, less transfers and a couple internal service charges.

At the end of 2025, we were above our minimum policy.

At the end of 2026, we are forecasting that will be about 14% or about $22 million under our financial policy.

And why is that important?

Well, the general fund provides us the most ability to quickly and nimbly react to situations throughout the city.

And when the general fund is above its minimum policy, we are more able to react in that way.

When it's under the policy, we have to use those funds generally to keep operations continuing.

So it is important to continue to look at this policy and move forward.

So general fund revenues.

Here we have the primary revenues.

We have budget, the projected 2026 balance, and then over and under budget.

So property taxes.

We are projected to be $9.3 million under budget.

I will say that this is about a 97.5% collection rate, which is an improvement from the last two years.

So we are seeing collection increase.

Additionally, I will say that about $7 million of non-collection, that's about 2%, is in our contingency budget.

So the net amount is about $2.3 million that we're not collecting that was part of the budgeted process.

Service charges were $3.5 million favorable.

This mostly relates to the work Public Works does for charges for services to both internal and external clients, very similar to last year.

Franchise fees.

We have had 10% growth forecasted year over year from 25 to 26.

However, the budget's a little bit more than our current growth is that we're seeing.

licenses and permits.

There's two main drivers for this $7 million decrease.

Driver one, building permits.

We have seen from 22 to 23 where we had a bit of a high, a decrease in the building permits issued and therefore the revenue associated with it.

Second part, Operation Metro Search.

We as a city decided that there were certain license fees that we wanted to not collect to help those businesses.

Moving on down to other revenues, $2.4 million unfavorable.

Primary driver here is interest.

We have less cash than we thought we might have at this point when we created the 26th budget.

Less cash, less interest.

Here on this slide, I just want to highlight the different revenues that we do collect.

And in particular, just highlighting that property taxes is about 50% of the general fund revenues.

The other portion, state aid, is about one-seventh of the general fund revenues we collect.

So as we try to right-size our budget, we have to be mindful of where our revenues are that they come from.

So let's flip over to the other side, general fund expenditures.

Here again we have the 26 budget, 26 projected, and the over under.

Development, Health, and Livability.

This includes CPED, Health Department Regulatory Services.

We're under budget by about $6.7 million.

This is mostly a timing of projects when we're actually going to expend on certain projects for this.

So usually in a normal year, this would be something we'd look at that might be considered for a rollover into future years, but we'll have to keep an eye, especially as we have low fund balance, the viability of these.

Moving on down to Public Works, $6.2 million over budget, very similar story to 2025.

They are collecting about $6.2 to $6.3 million more in charges for services, as well as some state revenue, offsetting to a net neutral amount.

Public Safety, $26.4 million, unfavorable over budget.

We'll get into the individual departments here shortly.

And then finally, all other expenses, $11.6 million over budget.

That mostly is just the contingency fund.

We have $14 million contingency, which we don't apply costs to directly.

We apply those to departments.

So that's the $14 million contingency.

offset by the settlement agreement that we'll see on the next pages that has about $3.4 million of unbudgeted expenditures to satisfy the settlement agreement from prior years.

I also want to highlight here the various department groupings that drive most of the expenditures.

And here you'll see that public safety is over 50% of what the general fund pays for.

After that would be CPED and health is another large driver.

The important takeaway here is that if public safety as the bigger part of the general fund are unfavorable on the budget, we get into the situation we currently are in with fund balance.

Whereas if like a legislative department was unfavorable, we might not necessarily be in the situation we're seeing.

On this slide, I want to highlight the trends that I have been seeing on the expenditures to budget over the years.

So on the last bar here, you'll see in green is the average of the last three years, and in blue is this year's spend to budget.

In particular, of the last three years average, we spent about 94% of our budgeted expenditures.

It's gone up from 90% to 94 to 97.

And now we're seeing here, at this year, 101.8% of our budgeted expenditures, primarily driven by our largest grouping, public safety.

and the big slide.

It's a little blurry, I apologize.

I wanted to put this slide in front of you as this shows every single department in the general fund, its budget, its year to date actuals, its year end projected, and finally in blue, that is the over under on the budget.

So before we get into the red, let's talk about the black.

We'll see here that excluding public safety, every other department in the city is currently forecasted to be under budget.

I will also say that on the very last column, they're not under budget by a lot.

You'll see most of them, they're 99% of budget, 98% of budget.

Only three of these departments are under 90% budget utilization.

and that's due to, it's a hard budget year for a lot of the departments right now.

They're having to do their normal work with a little bit less and so I just want to express a gratitude to all these department heads that are in these departments for the work that they've been doing to maintain just being under budget and the sacrifices they've had to make in their departments to do this.

Moving on down, let's talk about some of the public safety departments we have here.

So fire department, $6.2 million over budget, same thing as the prior five years over time.

There is about $1.1 million in contractual as well driving this for equipment and things of that nature.

Office of Community Safety is a little over budget.

$71,000 is projected to be over budget.

Primary driver here, a little bit that had some unemployment compensation, there's some fringe elections, and there was some costs in 25 that didn't actually get realized until 26, driving this small over budget in the Office of Community Safety.

Police.

We are forecasting $21.6 million over budget, similar to prior year.

It's vastly over time.

I will say about $4 million of it is contractual as well.

One thing I want to say about over time is that in 2025, they spent about $32 million in over time.

We're forecasting right now about 21-22 million dollars in overtime, so there has been a decrease in that cost despite the fact that we did have Operation Metro Search.

Some of that driver is of course critical

CSOT, I can't think of the acronym name for it right now.

That costs two times the rate, and in 26 we don't have that, so that is part of the driver, but some of that also is just an additional review of these overtimes.

911, they are now joining the list for the first time in a very long time when talking to the department head, unfortunately.

This is also overtime.

A little bit different of a reason though.

For 911, we have a new leave, paid family medical leave, and this department in particular has a bit higher of a utilization of this leave.

and we still need people to answer the phones.

So we have overtime costs negatively impacting 911 resulting in a half million dollar projected overspend.

And then the last one I want to discuss is the settlement agreement.

That is 3.4 million dollars and this is unbudgeted contracts to satisfy the settlement agreement.

With that I will pass this back over to George Hargrove.

Yeah, thanks Deputy Controller Lang.

Yeah, I'll talk a little bit about some of the other funds, non-general fund.

The first one is special revenue funds.

What are special revenue funds?

They're generally funds that have to be restricted due to external restrictions that are given to the city when we accept the money.

For example, the downtown assets fund is one.

There's many state laws that dictate kind of how that can be spent.

We have obviously that funds the Convention Center, we have the police forfeiture fund, a neighborhood and community relations fund, regulatory services, grant funds is a major one, CPED as well has special revenue funds.

Just looking at kind of the big picture here, we project at year end 2026 a little about $380 million or so in fund balance and about $334, $335 million in cash.

That's a decrease of about $30 million from the 2025.

A lot of that's in the downtown special assets fund.

We've increased the transfers to the general fund, so that's had an effect there.

In addition, CPED has projects underway that sometimes has to rely on balances from the past.

These are things like affordable housing, economic development type projects.

And if you look at the detail here, this shows the balance.

You know, the first line on every area is the cash balance.

The second line is our fund balance.

So you can see the 2025 actual in the middle column, and then we project it, what will be end at the 2026.

You can see, again, decreases in the downtown assets.

That's the first three funds mentioned here, Convention Center, Target Center, downtown assets.

Very little change on the rest of them, other than CPED, where you can see about an $11 million decrease caused by moving forward on multi-year projects as well, too.

And then we're moving on to our internal service fund family.

These are funds that fund departments that primarily sell their services internally.

Examples of that are the engineering materials and testing lab that we talked about earlier, our fleet area, our property services area.

our public works stores that maintains storerooms with materials, our IT area, self-insurance fund are certainly some of the bigger ones that we have.

In this case, we're projecting at the end of next year a net position of $49 million or so.

and then at the end of 2026 have about $263 million in cash.

And our self-insurance fund is the biggest driver of the difference between those two amounts given the large liabilities there.

However, this is about a $23 million improvement since 2025.

Again, if we look at the actual funds themselves, you can see very little change except the very last line there next to the total.

You can see the self-insurance fund about $23 million up as we continue to build cash reserves there as well.

And then, of course, that'll reduce our net position at the end to get that closer, but I should say increase it actually gets closer to zero from a negative standpoint.

And then moving on, we also have enterprise funds.

I know John from the CLIC group talked a little bit about this in terms of their capital projects, which these are capital intensive areas in general.

Again, these funds sell goods and services outside of the city primarily.

Certainly a lot of there's a lot of those in public works solid waste parking Stormwater water, you know things like that.

And of course CPED we talked about a little bit.

That's that River terminal project That's considered an enterprise fund and that's really the only one that CPED has

And you can see here it's a little bit more stable at the end of 26, projecting a net position of about $127 million and cash for about $126 million or so, roughly a decrease of $17 million or $18 million from the 2025 year end.

If you look at some of the details here, you can see, as I mentioned, I should say the storm water is going down generally due to funding capital projects.

Otherwise, most of the rest of them have held pretty steady.

You can certainly see our solid waste area as well, too, is decreasing somewhat as their costs have increased.

And there is some uncertainty there, too, in terms of what's gonna happen to the hurt plan, things like that.

We continue to watch that fairly carefully.

So moving on, we'll take just one last look at the general fund before we conclude the presentation here.

I want to just walk through our planning worksheet.

We did a two-year version last year that had 2025 on it.

Now I've taken off 2025, and we're just looking at 2026.

So you can see last time I was here from the May meeting, we were projecting about 140, 141 million or so as the fund balance.

The auditors asked us to move the North Commons, the $3 million payment back into 25.

So for our financial statements, that's the figure that matches our offer that I mentioned earlier, 137 million or so, roughly about 21% of the target.

And then we just look at the forecasted revenues.

You can see that's about $691 million.

Then we have expenses forecasted about $740 million that Deputy Controller Lange went through.

We do project we'll have to restrict about $2.2 million in public safety aid.

So that's about a $51 million reduction or so in the unassigned fund balance.

And you compare that to the target.

We calculate that at about $110 million.

That would give us the 17%.

So you can see at the end of the year, we'll be about $24 million.

under the target, right around 86 million of unrestricted general fund balance, which would equate to about 13% or so, so less than our 17% target.

Just going through some of the major categories.

Why does that go down?

So it was a planned use of fund balance and budgeting.

That was about 9.2 million.

And then we have overspending by departments.

The deputy controller laying went through.

That's about $13 million.

We have less revenue than budget.

That's about $14, $15 million.

But I will say about $7 million of that was planned, because we know we're not going to get all the property tax.

plan for about a 2% delinquency factor there.

But still, you know, it's just money we're not gonna get from the original allocation, or the original estimate for the property tax.

And then there was another about $12 million appropriated out of the general fund balance, as we, you know, I say earlier this year or so.

So that got us, that total up to about the $49 million that's going down.

And then lastly, this is the Budgetary Control Report that Financial Policy 1.3 that the Council adopted at the end of December of last year.

It asked the Controller's Office to come with a report showing departments over budget.

and the General Fund.

And so you can see the, as Deputy Controller Lang mentioned, the Fire Department about $6 million over.

Office of Community Safety about $71,000.

Police did get a little better from last time, about $21.7 million.

9-1-1 about $550,000 over budget.

And then finally our settlement costs that weren't budgeted at all for 26, that's about $3.4 million or so.

And then finally, there's one last department, Public Works.

They're going over $6.3 million in expense, but they also are planning on bringing in $6.7 million more in revenue.

This is generally work for others, and so they have to incur the expense in order to bill it out.

So cash-wise, they're actually improving the general fund by about a little less than $400,000.

So with that, that concludes our presentation today.

Deputy Administrator Lang and myself can stand for any questions at this point.

Thank you for that presentation, Mr. Hargrove and Mr. Lang.

Are there any questions from colleagues?

Thank you, Chair Truc Thai.

I just had one quick question.

Thank you for the presentation.

Always grateful for your presentations.

You said that 9-1-1 is over and it's primarily around the paid family leave.

Is that affecting other departments too?

Yes, thank you Councilmember Vita.

It is, however the difference between say finance or HR or attorney's office or any other department of the general fund that might have somebody go on paid family medical leave is that we can reorganize that work.

Either someone else might be able to take it on or their manager might just work overtime but their salary and so that's not going to impact the general fund budget.

Thank you.

And so it's being worked out in other departments.

People are being moved around.

Those expenses are considered in my forecast that I have monthly meetings with the department heads.

And as part of that, we go through

their labor force and we have discussions of, well, this person might be going on leave.

Do you plan on backfilling them?

Yes.

All right, let's put that into our forecast that we're going to have a eight week, ten week backfill.

That is correct.

It is not something I necessarily think will go away.

Okay, thank you.

Thank you.

Thank you, Chair.

So first of all, thank you for your presentations.

Very thorough, somewhat easy to understand.

You do speak a little different vocabulary than I do.

But to be really specific, and I don't think you have this answer today, but I'm curious, it will help us in our budgeting here on the Council.

Fire and Police paid family medical leave.

You had talked about 911 and that's easy to understand but how is it impacting our fire and police departments?

Thank you, Madam Chair and members of the committee.

I'm Luke Scardiglia, I'm the Finance Director for Fire, Councilman Rainville.

So that leave is not impacting fire as greatly as maybe we anticipated or as thought, at least not yet.

We are still most greatly impacted by PTSD leave.

Thank you.

So the overtime expense, it's difficult to quantify here on the spot.

We could do some analysis, but just to put it in perspective, we have roughly 25 people out on PTSD leave right now.

And so we run three shifts, two 24-hour shifts or 48-hour shifts.

So if you say there's eight or nine people on each shift out on leave and we have to backfill each of those people, roughly backfilling one individual in the fire department for a 24-hour shift is $1,500.

So if eight a day, that's $12,000 a day.

So you can kind of take that number and extrapolate it out

to be quite a significant expense.

And that's creating quite a strain on the department.

Right.

And thank you.

Madam Chair, Councilman Lorraineville, yes we can certainly put something together for that that kind of gives a projection.

Based on where we've been the last two or three years with PTSD leave we don't see it slowing down.

I also feel it's important to state that we have

gotten reimbursements from the state for our PTSD leave.

Now they don't reimburse us for the backfill, but they do reimburse us for the members who are out on leave.

And this year we have gotten $1.8 million in reimbursements.

That's not reflected in the $6.2 million.

It actually falls into a revenue category.

but it is a direct reimbursement of individuals who are out on leave.

So that does provide a little bit of relief in my eyes off of that $6.2 million number.

Thank you.

Yeah, thank you Madam Chair.

Sorry, you're just about to sit down.

Madam Chair, Councilmember Chaudry.

So the state has been picking up the pace on those.

Excuse me.

They had been lagging quite a bit.

Like we were getting a reimbursement 12 to 18 months after the time frame.

But they've picked up to the point where we have gotten a couple of reimbursements this year that have caught them up to, I believe, the end of 25 or close the end of 25.

So we would still be looking at reimbursements

all the way up through this point in 26.

And based on where those numbers have been running recently, that's probably about a million dollars.

Madam Chair, Councilmember Chaudry.

Human Resources is actually in charge of filing for these reimbursements and I believe we file for them in either in six months increments or maybe a little bit longer.

I had a couple of questions in regards to the general fund expenditures, the ones in red.

We covered 911 pretty thoroughly, and we covered fire.

So I was wondering, for OCS, could you detail a little bit more of what were the costs that were not

Absolutely, thank you very much councilmember Choudry so on page seven of the detailed report is an explanation of each one of the ones that are over budget a couple paragraphs on this and so for office community safety in particular The forecast of overspend is due primarily to unemployment compensation payout and remember we're talking about $71,000 here so a compensation payout like that for a couple tens of thousands of

Eats into that.

Additionally, that higher health insurance costs, we budget kind of a blended rate when it comes to health insurance, which is very expensive for the city.

Whether you're a family or an individual can have that impact, and so if you weight more towards

Family, that's going to start eating into your budget and all of a sudden you have to supplement your budget to offset insurance costs.

So that's part of it as well.

And then finally there was cost committed, which I don't have the number in front of me right now, I can get that for you, that was committed to be spent in 25 but was spent in 26 and so ended up hitting their 26 budget negatively.

Okay, got it.

Thank you so much.

And then I'm looking at the page seven, but I'm also asking just so we can have a more public conversation about it for MPD.

You mentioned

Overtime, of course, but then also contractual services.

So the list of accounts that are over budget on contractual services is actually pretty long for police, unfortunately.

So as I have here, I can list the few that I identified as one of the larger ones.

That'd be great.

And so I have telephone IT services, vehicle maintenance, utilities, operating supplies, equipment training, other professional services.

Sure, yeah, a good example of that, yeah, thank you Chair Chagte and Councilmember Chaudhuri.

A good example of that is an issue we've had at the Convention Center.

They have a software program called Momentus that runs Convention Center.

And as part of that, as third party software providers have kind of evolved, the auditing standards require that they get us what's called a SOC 1 Type 2 report where the auditors go in and make sure that these third party software

Companies, you know are following the proper internal controls.

It's the system secured They're not like safety and office center something here and there So the first year that we found out about this we didn't do any Compensating, you know work or anything like that and we got what was called a material weakness Finding just saying, you know, hey you're doing business with you need to get the software company to give us the report because we don't really know we know is it is a software good and

And so after that, Deputy Controller Lang and his staff did what's called, you know, did our own audits of the software to try to prove that, yeah, it does appear to be working.

And so the auditors took that into account and said, okay, we'll give you a lesser finding this year called a significant deficiency.

And so they decreased it because we did extra work.

But unfortunately that doesn't get us out of the audit findings altogether.

It just decreased the severity of it.

Yeah, that's really helpful.

And then you had mentioned the OMB rules, that is supposed to, those aren't in effect, those go in effect later in the fall, right?

Yeah, Chair Chugtai, Council Member Chaudhuri.

Yeah, very good question.

Yeah, the original plan by the Office of Management and Budget at the federal level was to implement those starting in October.

That may or may not happen.

Like I said, in the continuing resolution in the Senate, they did, I think it was bipartisan, they did ask the OMB to hold off on those rule changes.

The House version does not have that in there.

So the way I take it is that it may or may not

be suspended depending on who wins out there in Washington or so.

And so it still could take effect in October.

Okay, that's really helpful.

Yes, I got several.

They might feel a little random, but I'll just run through them here.

Welcome, Ms. DeCenza, if you'll begin with introducing yourself, please.

Sure.

Jane DeCenza, Deputy CFO.

Through the Chair, Vice Chair Schaffer, I jumped up here because I was here when we made those original decisions.

So when we first were starting to implement the settlement agreement back in 23 or so,

We had a really healthy fund balance and we had a lot of uncertainty around what exactly would be required by the terms of the settlement agreement.

And so we established a process of allowing for legally required spending to happen from the fund balance.

So for example, the ALIFA contract is a known expense that will end once the settlement agreement has concluded.

So in an effort to keep that off the property tax levy, we

had this process of paying for it through fund balance.

So that's some of what you're seeing in that table today.

You'll notice in the mayor's recommended budget for 2027, we're moving away from that process for greater transparency to give you all an opportunity to vote on that and to encourage the departments to bring forward more long-range plans there.

So we're moving away from that process hopefully in 2027, but for now there are one-time expenses for things like

OK, so for 2027, I'll look in there and find that number.

And can you speak to like, do you have a plan for how many years a settlement agreement will be forecasted out?

I mean, can we kind of budget?

year by year so that we have an idea of how much we're spending and so that we can appropriate.

Yeah, through the chair, I'll just speak to the finance part of this, because I'm sure attorneys maybe would want to weigh in on the whole length of it.

But I think for finance, we would anticipate asking departments involved in that implementation to re-forecast annually through the budget process.

What expenses do you think you're going to need going forward, and can you pivot any existing resources towards that work?

Okay.

And then, I mean, I think it could be helpful for us as a city to have the long-range view.

If we're just starting to look at it annually, that's a great start, but I think we also need to think about, you know, we've got the list of tasks, what is the appropriate

play out of all of that dollar amount and where and when.

So thank you, that's very helpful.

Can you speak to the trends in the self-insurance fund and give me a little more history around that?

If I remember right, we were down, we're negatively, but we've been up 23 million this year in comparison to where we were.

Is that what I understood you?

And then can you speak to what the trends, is that normal?

Yeah, in my two years here at the city, we started off with a negative net position of about 80 million or so.

I think going before that,

A lot of this really came into focus with the George Floyd incident and things like that where there was significant liability.

Since then, as I've talked to our associates in the city attorney's office, there has been some inflation there.

We're kind of worried about jury awards.

You never really know what will be awarded at the time.

That's caused things to go up.

And so even though we've been accumulating a lot of cash, we do have certainly a list of potential litigation estimates and things like what may or may not happen.

And so that did increase the liabilities, but as I mentioned earlier, we're hoping that

You know, this is just a hope right now, but that maybe those liabilities will start to decrease and we're still building cash so we can get that closer to zero.

I will say it does meet the short-term policy.

I mean, the financial policy doesn't require us to fully cover any potential loss.

And certainly, I mean, it's not like we're going to lose every case or things like that as well, too.

Thank you very much.

Thank you very much, Councilmember Schaffer.

I cannot speak to that very well.

We'd have to come back with a better analysis for you.

There's a lot of pension calculations when it comes into these things, including how much you earned during the year, but there is caps to these.

Yep, thank you.

Here's a little specific one.

You said we had lost seven million in permit and license decreases.

So that $7 million number is accumulation of a couple different revenue lines that I have on the detailed report on page 9.

And so we do have business licenses and permits.

That's showing about $2.4 million under budget.

And that is the line that we would capture a lot of the Operation Metro surge

loss on there.

And if I remember the resolution correctly, it was a $4 million forgiveness or repayment back of those license fees.

And so that's where that would be captured.

So approximately, I'm seeing about

2.4 million roughly.

And then the other part of that though was non-business license and permits.

And here I'm showing 4.6 million.

And this is where building permits land.

And this is where we're seeing that portion of it.

So I would approximately say about 2.5 million related to Operation Metrosurge and about 4 million roughly for business licenses.

Okay great and I know that's been an area of yeah okay that's helpful.

That was my main questions.

Thank you.

Thank you.

I had a question about the departments that had underspent.

Do you have any, I'm looking here at Arts and Cultural Affairs, Racial Equity, Inclusion and Belonging, and the Neighborhood Safety.

Thank you very much Councilmember Stevenson.

So we do have a work paper showing each line that they're not going to be spending on.

And I believe it might be more useful if I respond back at a later date with a bit more detail for you on their underspending.

Unfortunately, I focus more heavily on the overspending in my mind right now.

And then Councilmember Stevens.

And just for some context, the Neighborhood Safety Department's underspending.

The explanation that I have received from the Office of Community Safety on this matter is

It's related to the invoicing cycles for the bulk of their contractual services, which makes up the bulk of their budget.

I think it's worth digging into more just to understand how much of that is the case versus where where the department is just under spending over and over and over again.

And then

Arts and Cultural Affairs has a similar contract related to the Vibrant Storefronts Initiative.

That could be the cause of it.

And I will say that that is generally when you see these large budget savings, it's mostly due to exactly what was mentioned.

It's related to the timing of cash flows, with the idea being some of them might be rolled over into the future, if that was a possibility.

Awesome.

Thank you, Chair.

I have a question.

Going back to the license fee forgiveness, I think you mentioned $2.4 million.

That's how much I have here on my line for all of the license fees and business because that resolution wasn't specific to every single business from my understanding.

Okay, so then there will be around 1.6 million left at the end of the year or

My understanding is that these were automatic and we allocated four million dollars towards this and it was automatic.

The business didn't really have to do much.

If they qualified, they qualified.

So I guess my question is, well I have a lot of questions.

I will have to get back to you on that.

This is a year long forecast.

So this forecast is assuming all transactions have taken place.

And so at the end of the year, we would have this $2.4 million shortfall, which you're then recognizing the 1.6 million variance from the resolution.

yep and then my question is well my understanding is if there is gonna be money left over here the goal was to help small businesses and one of the things that wasn't included that was advocating for was the forgivable loans of small businesses this is nothing to do with you but I'm bringing it up right now if we

are having money that was not used, allocated for license fees, and we were advocating for forgivable loans for small businesses that are still being impacted by the occupation that happened in our city by the federal government.

I guess this is a question for CPED.

I know CPED's not here, but why have we been alerted that there is still money left from this resiliency fund when businesses are still on the verge of collapsing?

So that's a flag for CPED.

I hope I can get an answer, but

There are literally businesses that are going to close because they still cannot pay their rent.

They cannot be above water.

There seems to be millions of dollars left in this fund.

It went to license fees.

I thought they were all, I thought it was all gone.

It might just be helpful to note here.

Mr. Lang, can you speak to

My understanding of the numbers that you presented around license fees is that you're demonstrating, here's the revenue we were supposed to collect.

And we didn't get it for different reasons.

So is there money left over?

Thank you very much.

This does show that from our original budget and the resolutions that have taken place, we have a budget showing what we want to collect.

We are not collecting that amount because of certain actions that have taken place.

So for this instance, we had a plan for the city for the full year and that plan has now changed and now we have a shortfall.

and that's eating into our fund balance, resulting in this $88 million balance.

Okay, so I guess I have more questions now.

So we allocated $4 million for these, like and see forgiveness.

That's separate from now also $2.4 million that is also going over.

It's two separate pieces of information, right?

So there's what we've budgeted.

which is $4 million.

With the Small Business Resiliency Fund, we should disregard that for the purposes of this conversation.

Yes, my question is, we forgave already $4 million of license fees, correct?

And then we also are not going to be able to collect an additional $2.5 million that is being mentioned.

Because now, well, the question is very clear.

What is the $2.5 million that we're not going to be able to collect?

Is it because we forgave $2.5 million, but we actually allocated $4 million for that?

Absolutely, I'm sorry for the confusion City Council members.

So this forecast does include if you'll see here in the budget I mean, there's a 15 million dollars of budgeted license fees and so it's an aggregate account of multiple different business licenses within here and as part of the forecast we're looking at of why we're not collecting all 15 million dollars a portion of that is because of this resolution and

We will have to get back to you on how much of four million dollars is used to date.

Great, thank you.

Excellent.

I have myself in queue last and just wanted to note a couple of questions.

You're welcome to respond to them in writing.

That's okay.

For the $3.4 million for the settlement agreement, the

The report itself has a really, really specific number, so I'm sure it's coming from somewhere, but the explanation has the most broad language about a settlement agreement existing.

And so I'm just wondering what that $3.4 million was spent on since it's such a specific number.

And then the second one was around the $4.1 million for MPD contractual services overspending.

I mean, these are all similar categories that have been brought up in the past, still awaiting a response from MBD about their spending from 2025.

I do see some concerning categories listed here like vehicle maintenance.

And there was another one because just

The rumor mill is very active in this institution as we know and I've heard some really concerning things about what that could be so it would be really helpful to get a very detailed and direct accounting as to where this overspend is coming from

and the thing I would really appreciate your help with is if you can usher along getting a response from MPD, I've tried asking, I'm still waiting to hear back.

Perhaps if you ask, you might be more successful in getting an answer because I haven't been.

I'm not seeing anyone else in queue, so I will direct the clerk to file that report and we'll continue to item number four.

Thank you both very much.

All right, item number four is a presentation on the second quarter administrative FTE additions.

For this, I will invite Bethlehem Yohalwerk to begin this presentation.

Members, as the presentation is getting pulled up, I will note

We have captioners until 4 30 p.m. And I understand we're gonna end up running late.

We have a pretty full agenda today.

So just if anyone here has a deadline by which they need to leave here, if you could just Teams me to let me know so we can have clarity about quorum and plan accordingly.

Thank you.

Good afternoon Chair Tuktai and members of the Budget Committee.

My name is Bethel Hamya Holowerk and I am a budget and evaluation analyst with the Finance and Property Services Department.

I'm here to present on the 2026 second quarter FTE administrative ads that were included in the summary memo within the LIMS file.

So as mentioned during our Q1 presentation in May and shown in this slide, this quarterly report is provided in accordance with financial policy 1.5.3 and this requirement supports greater transparency around administrative changes to the city's budgeted FTE count.

In quarter two of this year, eight FTEs were added administratively as shown on this slide.

And I'll briefly summarize these by department.

I do want to note that administrative adjustments may increase a department's FTE count or it may simply reflect a change in funding source.

So for example, moving an existing grant funded position to the general fund does not change the department's overall FTE count.

However, we still track and report these funding changes as shown in the emergency management example, which I'll start with.

So the Emergency Management Department added two positions to the general fund that were previously supported by grant funding.

This change better aligns the use of this grant with its intended purpose and to ensure the action remained budget neutral, the department moved an eligible project from the general fund to the grant.

This does not increase the budget FTE count in the department overall.

Next, the Health Department.

Three FTEs were added administratively.

One position in the Special Revenue Fund and two positions in the General Fund.

The position in the Special Revenue Fund is offset by grant revenues and funding for the two General Fund positions.

were originally budgeted for in contractual services in 2026 with the intention to formally establish these positions.

This action shifts the existing funding from the department's non-personnel budget to its personnel budget.

And lastly, Public Works added three positions in a special revenue fund, and these positions are also fully offset by grant revenue.

In addition to the administrative ads, two departments, the Office of City Clerk and the Police Department, reduced their FTE count administratively, and these changes supported organizational and administrative adjustments intended to better meet the department's operational needs.

Short and sweet presentation.

Thank you for this presentation.

Short and sweet, not a very small number of administratively added positions as well.

So it makes a lot of sense.

I will see if any council members have any questions on this item.

I'm not seeing any.

So, thank you again for this presentation.

That brings us to our final item.

which is a presentation regarding the legislative budget processes.

All right.

Um, chair, chair, chair, chair, vice-chair Schaefer, members of the committee.

My name is Andrew Hawkins.

I'm here today in response to a staff direction that was given to LRO.

On July 28th the Committee of the Whole requested LRO conduct a review of comparable legislative budget processes in comparable jurisdictions to identify any trends or best practices and provide some examples for consideration.

Ultimately any specific legislative budget process should be reflective of the respective legislating body and designed to function effectively in each unique city environment.

With our first slide, although each city may begin and end its respective budget process at different places in the calendar, we are able to isolate the core legislative budget processes across examples to identify the overall timeline in each location.

For the examples reviewed, general legislative budget processes range between one and two months.

In the case of Detroit, budget timelines were tightened due to the requirement that the city submit its budget through the State of Michigan Financial Review Commission.

Which was created to monitor city compliance with the plan of adjustment followed by bankruptcy court ruling in 2014 One additional point of review was a length of time between the delivery of the mayor's proposed budget and council beginning department presentations This is considered to be a pretty common starting point across the legislative budget process This review noted that Seattle and Detroit had the shortest turnaround with presentations beginning just two days after the mayor delivered their proposed budget and

Milwaukee's calendar showed eight days between mayor's proposed budget delivery and department budget presentations commencing.

I will note, just relevant to our specific situation, one of the unique things that the City of Minneapolis has to accommodate for is the existence of an independent BET and the additional park board conversations as they relate to the budget and the subsequent levy.

So there, again, with all of these timelines, it's not necessarily going to be an apples-to-apples comparison because there's gonna be unique environments that all of these cities have to operate in.

Additionally, with the condensed processes, as lovely as the one to two month timeline seem, one thing that's definitely present there that I don't necessarily know we have reflected in our current process is there's a lot of coordination on the front end.

So as the mayor's budget is being created and proposed, there's a lot of information sharing that goes back and forth with council so that council's in a different position when they receive the budget versus coming in somewhat cold with a kind of bifurcated process as we have in the city.

Looking at the way that legislative budget processes accommodate department hearings, once department presentations have commenced, the approach taken by each city differs greatly.

Seattle utilized a condensed four-day schedule to receive presentations from a select group of departments.

This example is also notable because it's not only for its brevity, but because it's the only example that does not schedule budget hearings for a majority of city departments.

Milwaukee's departmental budget hearings are held over two consecutive weeks meeting each day at nine o'clock in the morning.

Detroit's budget hearings last slightly longer at 12 days and are scheduled over roughly a three-week period.

By comparison, in 2025 the city of Minneapolis also held department hearings across 12 separate days but spaced those hearing dates out over a five to six week period.

Next we'll move to information requests.

During the legislative budget process, the amount of information being requested, gathered and delivered can be significant.

The examples reviewed highlighted consistent use of a formal memo process to request information in advance of meetings or in response to a presentation from a specific department.

While the memo process is by no means unique, the formalization observed in the examples provided useful transparency and allowed for additional insight into how specific budget items were created, discussed, and proposed.

Additionally, these processes outline clear roles for those involved in the legislative budget process, which works to support shared understanding and expectations related to what memos are utilized for, how they are routed, and who they are to.

These processes also demonstrated that many distinct lines of communication can operate successfully throughout the budget process when there is shared understanding of roles.

Next we have the budget amendment process.

The budget amendment process is often the most contentious stage of the legislative budget cycle and can require significant discussions, negotiations, and consideration.

For the examples reviewed, the City's approach seems to fall on either side of the segmentation versus conglomeration decision.

Seattle had multiple examples that attempt the segmentation approach that divides the budget amendment process up into distinct stages.

The first one of these is a use of what's referred to as the chair's balancing package, which provides an opportunity for the budget chair to bring forward an initial budget modification package that incorporates administrative changes and consensus items amending the mayor's initial proposed budget.

By incorporating these initial modifications early in the budget process, the Council is able to reduce the total number of proposed amendments that are needed at later stages.

For amendments that do occur at these later stages of the process, Seattle utilizes an amendment classification framework that attempts to reserve the most time for the items that have demonstrated the greatest need for additional discussion.

Similarly, for any items that are going to fall into that consensus bucket, they'll receive a reading but generally can be voted through on a consent agenda.

In Milwaukee, the council has opted for the conglomeration approach to amendments and consolidated a majority of its proposed amendments discussion into a single, presumably very long day.

There are additional discussions that take place during the subsequent week following that date, but they've The best of their ability and try to pack everything in so they start at 9 and they would end at Sometime in the late hours of the evening or early morning the next day I would assume Next we're going to look at how legislative staff support the legislative budget process and the decision-making bodies in this case the City Council

In each of the three example cities, the legislative body leverages their professional research staff to assist with the legislative budget process.

This support fell primarily into three distinct buckets, overview, outreach, and analysis.

The overview category captures reports from these staff that are intended to provide high-level recap-style analysis of larger budget documentation to highlight specific areas of focus or interest to the legislative body.

Often the materials provided a historical context that helps answer the questions of how did we get here.

Next we have the outreach category.

Staff support falling into the outreach category ranged from providing increased transparency and awareness to members of the public to legislative research staff helping organize community engagement and feedback sessions on the proposed budget.

In the case of Detroit, legislative research staff attended community budget input sessions in each ward, captured input from each session, and provided a report back to the council that captured the information from each ward, identified trends, and noted any historical changes for the respective ward.

That brings us to our final bucket, which is analysis.

This is unquestionably the largest bucket of work for the legislative research staff across each example.

Analysis included independent review and presentation of department budgets, specific review of a proposed budget item's background and scope, comparative needs assessments for particular program requests, fiscal impact analysis for proposed change items, and an analysis to determine the approximate levy capacity.

Now we'll move into transparency and accountability measures.

Outside of the budget process itself, cities utilize a range of tools to exercise their oversight authority and improve transparency and accountability related to the operating budget.

One of these mechanisms is done through establishing recurring reports on budget items and programming.

This allows Council to monitor the status of approved budget items and identify potential issues or delays in implementation as soon as possible.

The City of Minneapolis has previously utilized a similar process to receive updates on budget items, but may benefit from formalizing additional timelines and data that's captured.

Next we cover budget lookbacks.

So budget lookbacks are a beneficial tool to establish baselines and potential performance metrics.

Often groups or programs may grow unchecked without any clear expectations or indicators of what the impact of that growth may be.

Similarly, organizations and departments evolve over time.

Identifying ways to categorize budget items to account for these changes allows for more consistent historical data, comparative analysis, and future forecasting.

That brings us to options for consideration.

As noted at the beginning of this presentation, what tools, processes, and structures are utilized for the legislative budget process are ultimately determined by that respective council and based on what approach they believe is best suited to operate in their respective environments.

The following lists were compiled by identifying any consistent trends across the examples reviewed and provide some high-level categories for potential consideration.

Some of these items have been or currently are being utilized by the city but could benefit from additional discussions and or updates.

For the first slide and the first bucket we're going to look at, it looks like opportunities for a condensed budget schedule as I noted previously.

Any condensing of the budget schedule on the legislative side requires a lot of coordination on the front end to ensure that everybody has the same understanding of what information is going to be captured, what they're requesting, and what things are going to look like when they get them rather than having to react in real time.

So this is something where again like should the council want to consider this there is that other side of the equation that would need to be part of the discussion where that's on the administration side as far as like how adaptable they're going to be to getting out in front of that as well to facilitate the condensed schedule on the council side.

So some of the options that or some of the trends that were identified were again like scheduling department presentations to begin following the delivery of the mayor's proposed budget

The justification behind this and some of the cities reviewed was just that it avoids the information gap that exists from the mayor presenting a budget and then having any delay before departments begin their presentations since again in the event of a gap people are going to fill it in with whatever makes sense to them at the time and then by the time the department presentations start you can be dealing with like a misalignment of information and people having different understandings of how we got to that point.

In the case of, I believe, Detroit, there's a formal kind of negotiation process and a memo that goes out about limiting non-budget council committee agenda items during legislative budget consideration period.

So again, generally any presentations that could be bumped or delayed, they ask that the committees all agree to do that.

And so they hold condensed committee hearings on essentially time-sensitive matters to ensure that they have as much time as possible for the budget discussion.

Utilizing morning and afternoon sessions.

This is something, again, I think the city already is doing, but by formalizing that and setting the expectation for when people are going to go.

It allows people that are going to be in the afternoon to not have to play the waiting game in the morning.

And then, as I touched on earlier, leveraging the segmented budget process.

So again, that can be the chair's, through something that resembles a chair's balancing package, through the budget amendment classification process, but again, just finding ways to identify sort of those consensus or administrative items that everybody's in agreement on and move those along at an early stage of the process.

Next we'll look at trends and opportunities related to information capturing.

So the first is just utilizing the questionnaire memos to departments to provide initial information, answer remaining questions, and inform specific presentations.

So this is something, again, in some form we're already doing if there's questions that stem from a presentation.

Almost similar to the questionnaires that we're utilizing for appointed department heads this year.

There could be an opportunity to build on that by getting questions out in advance.

Not necessarily to negate the need for a presentation, but more to inform the questions that are going to be asked at the presentation itself.

Additionally, establishing those standardized memo templates that create consistent medium to communicate with departments, budget staff, legislative research staff, etc.

Leveraging professional staff as liaisons to gather, analyze, and report on specific information.

I think even as we saw demonstrated today, there's a lot of, especially when it comes to the budget, there's a lot of information that lives in a lot of places.

and tracking that down is often one of the most laborious parts of this entire process.

So I think that's an area where there's an opportunity to use legislative staff to help make sure that the right people are in the room and you have all the input that you're going to need to make decisions.

And then again, that determination of clearly defined roles just to avoid any duplicative efforts.

Again, as evidenced in the presentations today, you could get nine different answers from nine different people on the same thing.

which is going to end up creating confusion and duplicative efforts on the part of the council trying to figure out what source of information is the correct one.

With respect to the amendment process, again, adoption of amendment classification to simply discussion and review.

So again, amendments classified based on consensus expedites the most agreeable.

So if it's something that there's not going to be the need for a lot of discussion on, just moving that to a separate bucket that goes through on consent reduces the overall time that needs to be spent on everything.

And similarly, again, the ability to utilize legislative research and oversight's existing consultative process to support budget questions and amendment formulation.

So again, this provides a consistency similar to what we currently do.

It's something that there might be an opportunity there to leverage this process for, again, answering any budget questions, helping out with, again, the information gathering.

and support for the amendment process should there be interest.

And then in Seattle's amendment process, each amendment is assigned to a central staff analyst who's responsible for kind of gathering all the information and ensuring data is reflected correctly and helping to shepherd that item along.

So just wanted to note that there are some examples that we can pull from elsewhere to ensure that there's as much support as we can possibly provide.

Thank you for that presentation.

Are there any questions?

I was curious if you worked with the administration or a budget team on this project, just in terms of comparing and contrasting the other cities, it seems like there's a decent amount of condensing the timeline based on how much collaboration is happening ahead of the budget getting released.

So we did have the opportunity to talk with our budget staff obviously just the timeline of this during a majority of this work they were busy with finalizing the mayor's proposed budget but we tried to stick to examples that at least had some degree of feasibility you know in our environment how much they're able to single-handedly drive the process forward I think is

I'll defer to them on their capacity.

But I think the underlying idea behind it was that it's doable.

In some cities, like Detroit, it wasn't a choice.

Their budget schedule was condensed due to the city's bankruptcy.

But again, as a result of that negative event, it seems like they've pulled everything together in a way that's very organized and coordinated.

As we've learned through, we just had discussion of consent decree related stuff.

Sometimes it does take.

Yeah.

Thank you for the hard work in putting this forward.

I know Chair Chugtai and myself directed this work.

I think there's a lot of good ideas in here.

Absolutely.

Through the Chair, I think the biggest one where there's always going to be the most consternation is the amendment process.

There's a lot of different moving pieces and so I think the more that we're able to help support the coordination of that, ensure that the Chair and Vice Chair have everything.

Once you get it, it merits review as opposed to what you get has to go back several times to be revised and match up with the right format.

So I think it's ensuring that finished products are

are there and helping to drive the timelines.

That's also another one that there was a good amount of effort put in like put in in each city to ensure that people understood that the timelines that were established and agreed upon weren't flexible.

And so whether that means that they're going to vote and everybody approves it and everybody agrees that they're all going to operate under the same rules, I think was one of the big takeaways just to kind of ensure that everybody has the same access.

Everybody's on the same playing field.

And here's what we're going to do going forward.

But then I think understanding what the impact of missing

the deadlines is is also important where it's you know in most of these cities they had a formal process where you know you could you know want to call it an appeals process but you basically had to justify you know this came in late because of x but i think that you know absent that it's

Everything you know everything does seem somewhat flexible then if you know if at any point you can kind of just throw something in And so I think being more deliberate about how that process operates was one of the biggest takeaways I mean to the point of Milwaukee it seemed patently insane to me that they did it in one day But they are able to get through you know

almost all of their amendments.

I can't say I'm recommending that we block off 24 hours to do so, but it reinforces that if, for whatever reason, you decide that's the approach, that there are places that are making it work.

The other one, I think, was how we collect information from departments and being as deliberate as we can be about that.

Department presentations and there's no shortage of opinions on what they should be, how long they should be, what we should ask, what people want to share.

And so I think that being deliberate with how that's approached with respect to Seattle's the four days and using not everybody has to present.

It's interesting.

I think it definitely has some merit.

The issue there, I think, is that they're further along in their process where they've implemented enough of this and reformed it over time.

Whereas where we're at, I think that having those department presentations is really the first bite at the apple that everybody's getting to hear directly from them.

So absent building in those front end communication pieces that would need to exist during essentially the mayor's budget process.

it's tough to start shaving off those presentations.

And so I think that that's an area where some discussion between the council and the administration might merit some agreement.

As far as any other processes, those are the big ones.

The underlying thing that came through with a lot of this is that there's a lot of, even just today looking at the amount of people that are in this room to share budget related information, there's a lot of moving pieces.

And I think tracking everything is of extremely laborious and so again at the risk of like the ire of my team It's I mean, that's something that we're happy to help do I'm gonna make sure that we're not losing sight of you know Like various things and that the right people are where they need to be And so just you know pulling together the organization part of it and being as supportive as we can it's definitely something that we're here for I mean, that's the budget processes of clearly across the three examples for kind of our peer like groups in

Excellent.

Thank you very much for your presentation and for addressing those questions director Hawkins I'm not seeing any further discussion and I'll direct the I'll ask the clerk to file that report.

Thank you With that we've concluded all business to come before the committee this afternoon and without objection we are adjourned until our next meeting which is Thursday September 10th, right as we return from Ward week and

at 10 a.m. where we will begin receiving budget-related presentations.

This is where we'll cover the community engagement aspects as well as just an overview of the entire budget process and timeline for council members in the public.

format.

We should anticipate receiving the budget overview presentation as well as the workforce optimization benchmarking report from the audit department and a biannual personnel report from the human resources department.

We are now adjourned.