Well said. Oakland has more than double the number of employees it had 30 years ago, and most of the growth has been in middle-management and top administrative positions. I think most of the people currently on city council don't even understand pension funding and how it has and will hobble the budget. The actual increase in the number of employees magnifies the significant % salary increases and benefits cited by the author. Oakland budget future must include reductions in staff in less productive departments, such as Violence Prevention, which really acts more like a private foundation and does not report on metrics or results beyond demographics. The city continues to offshore the employee headcount by taking staff out of the general budget under certain types of restricted funding. In 2004, Oakland had 3,822 employees. IN 2012, 4,073, and in 2023, 4,285 (https://dig.abclocal.go.com/kgo/PDF/022824-kgo-opd-agenda-report-pdf.pdf) . (Where Oakland was in 2012: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://cao-94612.s3.us-west-2.amazonaws.com/documents/OAK039273.pdf )
Usual excellent analysis and reporting. Agree with all suggestions, with an important caveat... the city needs to be very cautious in bond refinancing strategies. Refinancing needs to be simple and "fixed rate to fixed rate - ie avoiding bets on variable interest rate financing/swaps schemes. Here is a summary from the 2010-2011 Grand Jury report on Peralta College district's disastrous OPEB Bond scheme, which cost taxpayers at least 150 million dollars due to bad bets on interest rates. "In addition to the fiscal challenges of funding OPEB costs and related bonds,
there remains the issue of whether the board of trustees will avoid similar risks in
the future. During 2010, PCCD saw the departure of the former chancellor, a vice
chancellor of finance, and the outside financial advisors who oversaw the OPEB
financing. The board of trustees is still comprised of all but one of the same
elected members who were ultimately responsible for each of the financing
decisions:
The board of trustees chose exotic, high-risk financial instruments to fund
a large liability for OPEB. Because of the complexity of these investments,
the district hired new outside financial advisors just to monitor these
derivative investments and bond positions at considerable cost to
taxpayers.
The board of trustees made a series of decisions, each of which worsened
the district’s financial exposure by refinancing bonds to avoid payments
from the general fund in the initial years and to try to increase revenues on
the basis of temporary interest rate anomalies.
The board of trustees failed to recognize signs that the district’s financial
management was seriously deficient; e.g., unable to perform basic
functions of producing budgets, closing the financial books, completing
financial audits, and submitting required reports on time. " AC Grand Jury Report 2011 pg 143 - 151 Situation sound familiar ?.. Great job in compiling these suggestion...
Oakland’s biggest problem is that key leadership positions have been dominated by city planning neophytes for far too many administrations. I hope the voters take note of this and put in place experienced leaders that work together to turn the tide in measurable ways.
Thank you for another great piece with tangible options. So appreciate your work. Carefully voted for those only with administrative experience in this election.
Why is all the pressure on the civic law enforcement? Why can’t the community members be just as concerned and aggressive towards petulant violent crime as they are for freeing Gaza? Why aren’t we protesting for destroyed small businesses and murdered shop keepers? More police will solve nothing, we need to hold up mirrors to our communities.
There are at least three major political impediments to City Hall crafting sensible, sustainable budgets:
1. The majority of the Council as well as the Mayor owe the city unions for their jobs. Even local district council winning candidates directly have to spend upwards of 150k to win. Voters rarely contribute to local races.
Our elected officials don’t have the political backbone to resist union compensation demands exceeding inflation. So even if we implemented some of Tim's thought provoking suggestion about cutting our pension interest cost, and could extend the pre prop 13 ad valorem tax, the savings would get gobbled up by compensation increases (and grants to non-profits.)
Elected officials often chose to increase retirement benefits over wage increases because the voters won't see the impact until long after the elected officials have moved on.
2. Much of the unmonitored grants to non profits are political pork. In return the nonprofits get out the vote for favored officials, and bring people to council meetings.
3. There are no laws preventing the Mayor and Council from consistently ignoring the advice of the Budget Department and the Citizens Budget Advisory Commission. The Council can literally make up its own projections and ignore impacts more than one budget cycle into the future.
That’s why my platform includes calling for a charter amendment that requires budgets to be certified by the City Auditor to be sustainably consistent with the short term and long-term City Budget Dept projections as reviewed by the Citizens Budget Advisory Commission. Think of the Congressional Budget Office with teeth.
Len Raphael CPA for Oakland City Council District 1 November 2024
Also understand that most Oakland muni unions have "me too" clauses such that if one union gets an increase, the others all do too. That's not uncommon for CA cities.
What is uncommon, is that all the managers are unionized also.
So if just one union gets an increase, there's a powerful ripple effect.
Len Raphael CPA for Oakland City Council District 1 November 2024
The city claims in their PFRS report that it *might* be possible to extend it without voter approval. I find that hard to believe though, unless the measure says it can be used for any pension (not just PFRS obligations) in perpetuity. The original law needs a close read. That said, I think a tax of that magnitude (even if it's a continuation of one on the books for a similar purpose) should be put to the voters to decide. The role of the council should be to tee that up for voters as soon as possible.
The level of mendacity, collusion, and corruption that exists in the Oakland "government" is almost supernatural if it weren't so destructive. Aspirational boutique programs like MACRO and Violence Prevention are not sustainable with the budget shortfall that plague Oakland. A city must NOT be the main employer of record when the private sector has proven to be the most effective in maintaining long-term fiscal health. Oakland is taking the short suicidal road to bankruptcy.
I have personally seen the MACRO program benefit Oakland citizens with mental health issues. The MACRO teams who have come to support these people were exemplary and kind. Can you provide specifics for why you would recommend scrapping a program that in my estimation seems to be helping people in crisis? And what is the alternative if that happens?
Yes - please check out the article linked at the bottom of this article. The proposal has nothing to do with the kindness or good intentions of the MACRO personnel. It is clear they have both, as noted in the linked article. This has to do with the destructive consequences of not using city resources effectively. Consider that 911 response times are now 45 minutes for life-threatening emergencies and gun violence. There are better uses of $10M, even if the MACRO staff are kind.
Also as noted in the article, the County already maintains a mobile crisis unit for mental health response with clinical behavioral specialists on staff, and the fire department already spends 80% of their energy on EMT matters (that's by design, not a problem). When I called in a homeless person with breathing problems, it was the highly trained fire staff that showed up in 3 minutes, not MACRO. Honestly, we might be better off calling it the "Medical/Fire Department" instead of "Fire Department" -- because it's more accurate.
The right solution is for the county to take responsibility and boost the County mobile crisis unit, and continue to staff our critical fire/medical response resources. Not to create a redundant one with less capacity, training, and effectiveness.
Even members of the Coalition for Police Accountability, of which I was treasurer for seven years, has expressed dismay at what MACRO was turned into. It was supposed to be run as a pilot program, focused on East Oakland, to receive 911 dispatches just below the level at which sworn officers are required because of risk of violence. It was supposed to be transparent so we could all review it and improve it.
I originally thought putting it under Fire, would be better than using a non-profit. We should revisit that.
This account is being used for campaign purposes by
Len Raphael CPA for Oakland City Council District 1 November 2024
Check out how much the Oakland Unified School District has paid to technology vendors, who are profiting off children’s data! That can be reversed overnight.
Why couldn't Oakland discontinue the pension programs and require employees to be on Social Security like mere mortals?
The city would still have to fund any existing pensions, but only to the cutoff date. You would not want to alloe the pensions to keep going for current employees or you will never get out of pensions in a reasonable time.
What's up with all these Asian City councils taken all the f****** money and writing checks to their their self and their family's!?? Because they know AMERICAS STUPID AF what about that!? SMH
MACRO is mainly using state funds. Are you under the impression that Oakland would still receive those funds if iteliminated the program receiving the funds?
MACRO received a $10M state grant more than 2 years ago to fund the pilot program, and about $3M from the city. Those funds are spent out based on an analysis in December of funds remaining, and their planned FY budgets. Thus, the continuation of the program will have to consume the city’s General Purpose Funds — the fund that is running a $120M deficit.
Real solutions to the budget and police emergencies exist, but the political will must be there to implement them. If not, a very real possible outcome is that the City of Oakland will go bankrupt, as other cities have done
If leaders cannot agree and work together, bankruptcy and state control may not be the worst option.
Well said. Oakland has more than double the number of employees it had 30 years ago, and most of the growth has been in middle-management and top administrative positions. I think most of the people currently on city council don't even understand pension funding and how it has and will hobble the budget. The actual increase in the number of employees magnifies the significant % salary increases and benefits cited by the author. Oakland budget future must include reductions in staff in less productive departments, such as Violence Prevention, which really acts more like a private foundation and does not report on metrics or results beyond demographics. The city continues to offshore the employee headcount by taking staff out of the general budget under certain types of restricted funding. In 2004, Oakland had 3,822 employees. IN 2012, 4,073, and in 2023, 4,285 (https://dig.abclocal.go.com/kgo/PDF/022824-kgo-opd-agenda-report-pdf.pdf) . (Where Oakland was in 2012: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://cao-94612.s3.us-west-2.amazonaws.com/documents/OAK039273.pdf )
Usual excellent analysis and reporting. Agree with all suggestions, with an important caveat... the city needs to be very cautious in bond refinancing strategies. Refinancing needs to be simple and "fixed rate to fixed rate - ie avoiding bets on variable interest rate financing/swaps schemes. Here is a summary from the 2010-2011 Grand Jury report on Peralta College district's disastrous OPEB Bond scheme, which cost taxpayers at least 150 million dollars due to bad bets on interest rates. "In addition to the fiscal challenges of funding OPEB costs and related bonds,
there remains the issue of whether the board of trustees will avoid similar risks in
the future. During 2010, PCCD saw the departure of the former chancellor, a vice
chancellor of finance, and the outside financial advisors who oversaw the OPEB
financing. The board of trustees is still comprised of all but one of the same
elected members who were ultimately responsible for each of the financing
decisions:
The board of trustees chose exotic, high-risk financial instruments to fund
a large liability for OPEB. Because of the complexity of these investments,
the district hired new outside financial advisors just to monitor these
derivative investments and bond positions at considerable cost to
taxpayers.
The board of trustees made a series of decisions, each of which worsened
the district’s financial exposure by refinancing bonds to avoid payments
from the general fund in the initial years and to try to increase revenues on
the basis of temporary interest rate anomalies.
The board of trustees failed to recognize signs that the district’s financial
management was seriously deficient; e.g., unable to perform basic
functions of producing budgets, closing the financial books, completing
financial audits, and submitting required reports on time. " AC Grand Jury Report 2011 pg 143 - 151 Situation sound familiar ?.. Great job in compiling these suggestion...
Oakland’s biggest problem is that key leadership positions have been dominated by city planning neophytes for far too many administrations. I hope the voters take note of this and put in place experienced leaders that work together to turn the tide in measurable ways.
Thank you for another great piece with tangible options. So appreciate your work. Carefully voted for those only with administrative experience in this election.
Why is all the pressure on the civic law enforcement? Why can’t the community members be just as concerned and aggressive towards petulant violent crime as they are for freeing Gaza? Why aren’t we protesting for destroyed small businesses and murdered shop keepers? More police will solve nothing, we need to hold up mirrors to our communities.
There are at least three major political impediments to City Hall crafting sensible, sustainable budgets:
1. The majority of the Council as well as the Mayor owe the city unions for their jobs. Even local district council winning candidates directly have to spend upwards of 150k to win. Voters rarely contribute to local races.
Our elected officials don’t have the political backbone to resist union compensation demands exceeding inflation. So even if we implemented some of Tim's thought provoking suggestion about cutting our pension interest cost, and could extend the pre prop 13 ad valorem tax, the savings would get gobbled up by compensation increases (and grants to non-profits.)
Elected officials often chose to increase retirement benefits over wage increases because the voters won't see the impact until long after the elected officials have moved on.
2. Much of the unmonitored grants to non profits are political pork. In return the nonprofits get out the vote for favored officials, and bring people to council meetings.
3. There are no laws preventing the Mayor and Council from consistently ignoring the advice of the Budget Department and the Citizens Budget Advisory Commission. The Council can literally make up its own projections and ignore impacts more than one budget cycle into the future.
That’s why my platform includes calling for a charter amendment that requires budgets to be certified by the City Auditor to be sustainably consistent with the short term and long-term City Budget Dept projections as reviewed by the Citizens Budget Advisory Commission. Think of the Congressional Budget Office with teeth.
Len Raphael CPA for Oakland City Council District 1 November 2024
City Hall Needs an Intervention
www. http://LensForChange.com
Also understand that most Oakland muni unions have "me too" clauses such that if one union gets an increase, the others all do too. That's not uncommon for CA cities.
What is uncommon, is that all the managers are unionized also.
So if just one union gets an increase, there's a powerful ripple effect.
Len Raphael CPA for Oakland City Council District 1 November 2024
City Hall Needs an Intervention
www. http://LensForChange.com
Tim how far did you look into continuing the pre prop 13 PFRS ad valorem? tax after the PFRS pub is retired?
I’d expect that to be challenged in court as an end run around Prop 13.
The city claims in their PFRS report that it *might* be possible to extend it without voter approval. I find that hard to believe though, unless the measure says it can be used for any pension (not just PFRS obligations) in perpetuity. The original law needs a close read. That said, I think a tax of that magnitude (even if it's a continuation of one on the books for a similar purpose) should be put to the voters to decide. The role of the council should be to tee that up for voters as soon as possible.
The level of mendacity, collusion, and corruption that exists in the Oakland "government" is almost supernatural if it weren't so destructive. Aspirational boutique programs like MACRO and Violence Prevention are not sustainable with the budget shortfall that plague Oakland. A city must NOT be the main employer of record when the private sector has proven to be the most effective in maintaining long-term fiscal health. Oakland is taking the short suicidal road to bankruptcy.
Great piece. specific, actionable solutions. Leadership with ideas like these is needed.
I have personally seen the MACRO program benefit Oakland citizens with mental health issues. The MACRO teams who have come to support these people were exemplary and kind. Can you provide specifics for why you would recommend scrapping a program that in my estimation seems to be helping people in crisis? And what is the alternative if that happens?
Yes - please check out the article linked at the bottom of this article. The proposal has nothing to do with the kindness or good intentions of the MACRO personnel. It is clear they have both, as noted in the linked article. This has to do with the destructive consequences of not using city resources effectively. Consider that 911 response times are now 45 minutes for life-threatening emergencies and gun violence. There are better uses of $10M, even if the MACRO staff are kind.
Also as noted in the article, the County already maintains a mobile crisis unit for mental health response with clinical behavioral specialists on staff, and the fire department already spends 80% of their energy on EMT matters (that's by design, not a problem). When I called in a homeless person with breathing problems, it was the highly trained fire staff that showed up in 3 minutes, not MACRO. Honestly, we might be better off calling it the "Medical/Fire Department" instead of "Fire Department" -- because it's more accurate.
The right solution is for the county to take responsibility and boost the County mobile crisis unit, and continue to staff our critical fire/medical response resources. Not to create a redundant one with less capacity, training, and effectiveness.
Even members of the Coalition for Police Accountability, of which I was treasurer for seven years, has expressed dismay at what MACRO was turned into. It was supposed to be run as a pilot program, focused on East Oakland, to receive 911 dispatches just below the level at which sworn officers are required because of risk of violence. It was supposed to be transparent so we could all review it and improve it.
I originally thought putting it under Fire, would be better than using a non-profit. We should revisit that.
This account is being used for campaign purposes by
Len Raphael CPA for Oakland City Council District 1 November 2024
City Hall Needs an Intervention
www.LensForChange.com
Check out how much the Oakland Unified School District has paid to technology vendors, who are profiting off children’s data! That can be reversed overnight.
Why couldn't Oakland discontinue the pension programs and require employees to be on Social Security like mere mortals?
The city would still have to fund any existing pensions, but only to the cutoff date. You would not want to alloe the pensions to keep going for current employees or you will never get out of pensions in a reasonable time.
What's up with all these Asian City councils taken all the f****** money and writing checks to their their self and their family's!?? Because they know AMERICAS STUPID AF what about that!? SMH
Thanks for this, Tim. Oaklandside just ran an article on the budget--did they ever reach out to the Oakland Report?
No. They have never contacted us.
I didn't think so.
Assuming you've seen it but if not it's here: https://oaklandside.org/2024/10/22/oakland-police-fire-budget-cuts-unavoidable-2024/
I emailed the reporter with a link to this article. Appreciate the important work you're doing.
MACRO is mainly using state funds. Are you under the impression that Oakland would still receive those funds if iteliminated the program receiving the funds?
MACRO received a $10M state grant more than 2 years ago to fund the pilot program, and about $3M from the city. Those funds are spent out based on an analysis in December of funds remaining, and their planned FY budgets. Thus, the continuation of the program will have to consume the city’s General Purpose Funds — the fund that is running a $120M deficit.
Vital information -- are the mayor and City Council aware of this analysis?
Real solutions to the budget and police emergencies exist, but the political will must be there to implement them. If not, a very real possible outcome is that the City of Oakland will go bankrupt, as other cities have done
If leaders cannot agree and work together, bankruptcy and state control may not be the worst option.