City: San Carlos
Category: Internal Administration
Program: A Different Approach to the Budget:
Cutting Costs & Adding Service
City of San Carlos resolved a $3.5 Million structural General Fund budget
deficit and increased services to the public over an 18 month period. This was done in the areas of Police, Fire,
Parks Maintenance & Recreation Services through a mix of Shared Services,
Contract Services and Becoming a Recreation Service Provider in partnership
with the San Mateo County Sheriff’s Office, the City of Redwood City and the
City of Half Moon Bay.
City of San Carlos has faced some serious budgetary challenges in recent years.
The economic downturn meant that key
revenues including sales tax and investment income had declined and the
formerly dependable year-to-year growth in property tax revenue had ceased —
but costs continued to grow.
Carlos responded by significantly cutting departmental budgets, particularly
those outside fire and police services. The
city tapped some short-term funds and reserves in the hope of an economic
turnaround, which did not materialize. Four
revenue measures were proposed, but voters did not approve them. Despite these efforts, a $3.5 million
structural budget deficit remained. Clearly, the city needed a new strategy.
Talking to the
Council & the Public: A Choice of Two Paths
City Manager and Department Head team developed an overview of the Structural
Budget Problem. This included details on
the history of the problem, service cuts made over the past decade and options
series of public briefings and meetings were held to engage the residents and
business community in San Carlos. This culminated in two all day budget
workshops held on Saturdays. At the
workshops, every department discussed their service level, budget and
City Manager laid out a “choice of two paths” for the City Council and the
community. One path involved more severe
service cuts which could include the closure of a Community Center, several
parks and even the elimination of the entire Parks & Recreation
Department. With this path, the budget
would be balanced for another year but further cuts were likely after that.
other path called for a hard look at how the City was delivering services in
the three direct service areas that had grown the most – Fire, Police and Parks
& Recreation. Public testimony at
the hearings indicated strong interest in the service delivery analysis
approach. Several speakers noted that
they thought the City should bring the budget into balance with the revenues
they had. The speakers also felt that
the current service level should be maintained and they indicated that the
method by which the City was able to maintain services (in house staff, shared
services, contracting, etc.) was of secondary interest to them.
City Council responded by authorizing the City Manager and Department Head team
to explore the second path. This would
involve looking at new ways of delivering and providing services that would
save money while maintaining the current service level. The Council also said that nothing was “off
the table” in this process.
explore each area, the City began discussions with neighboring agencies and
private service providers. The focus
involved the principles agreed to by the City Council after the public workshop
annual costs by $3.5 Million or more
the benchmark cost savings targets proposed by Staff:
- $2 Million per year
- $1 Million per year
Maintenance - $500,000 per year
the same or a higher level of service to the community
this goal in a relatively short period (12 to 18 months)
the City Council with two or more service alternatives or choices in each
the challenge was to explore the alternative service delivery models and see if
the $3.5 Million savings target and the current service level targets could be
Approaches Provide Cost Savings – and More Services
to the nature of police services, the city focused its outreach efforts on
discussions with neighboring cities and San Mateo County. The city did not issue an RFP because only
two agencies, the San Mateo County Sheriff’s Office and neighboring Redwood
City, expressed interest. Both agencies
developed plans that could match the San Carlos Police Department services. In addition, both agencies exceeded the $2
Million annual savings target by using shared management and resources.
City Council selected the County Sheriff to provide police services in San
Carlos, starting Nov. 1, 2010. Because
the projected savings exceeded the city’s original goals, San Carlos used some
of these resources to re-establish services that had been unavailable in the
community in recent years through the city Police Department including:
traffic enforcement unit;
Police Athletic League for local youth; and
school resource officer to serve as a liaison with the schools.
Carlos also used the savings to set up a police substation at city hall, with a
captain, a sergeant and an administrator, so law enforcement would have a local
presence and residents would not have to go to Redwood City to access police
Carlos had received fire services through a shared fire department. The City retained a consulting firm to define
future fire services, draft the RFP and provide advice on selecting the future
the RFP process, the City evaluated 20 different service options. The city ultimately selected re-establishing
a city Fire Department managed by neighboring Redwood City as the best option
which will result in annual savings of $1.3 Million.
new San Carlos Fire Department (SCFD) has matched the services of the prior
shared department. SCFD also provides
additional services in the areas of incident reporting, community events and
involvement and fire personnel training.
City prepared a Request for Proposal (RFP) that described the current service
level in number of work hours provide by City maintenance crews. The City received several responses from
private firms. The Council ultimately
awarded the work to 2 such firms that were able to reduce the City’s annual
expenses by over $500,000. Additional
savings came from selling off City equipment and supplies formerly used for
this work unit.
the services provided by the private firms were actually higher than those
provided by the City. This was due to
both a different in the way that these firms performed the services and the
availability of extra maintenance hours.
summary, San Carlos has saved over $4 Million per year in Police, Fire and
Parks & Recreation services. The
City has also been able to increase its level of service to the public while
simultaneously reducing costs. This was
done with a creative mix of Shared Services, Contract Services and Providing Services
to other agencies.