MANAGEMENT PARTNERS, INC. (2011 Budget Analysis)

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Mr. David Ream Page 3 are proud to say that as a result of our quality work, many of our clients ask us to complete subsequent assignments. Understanding of the Engagement Like most California local governments, Santa Ana has faced continuing challenges from the economic recession over the past several years. The City's budget documents indicate that median home prices have decreased over 40% in Santa Ana while the mid-2010 unemployment rate reached 14.8%. Lower discretionary spending in the area coupled with the continuing pressure on state transfers to local government have compelled all jurisdictions to move beyond short-term budget adjustments to longer-term structural changes to public service delivery. The City of Santa Ana has been effective in responding to its declining revenue sources by aggressively pursuing other revenue opportunities, such as fees and user charges. Additionally, the City's budget documents show that the City has reduced staffing by over 15% during the last two years. Costs have been reduced in other ways as well, including deferring negotiated increases in salary and benefits. As a result of the City's budget challenges, there is a need to create a multi-year budget stabilization plan. Management Partners has helped other cities create such plans, which have been successfully implemented. In each case, our recommendations were practical and relevant to the specific city and most of our recommendations have been implemented. Like Santa Ana, these cities are complex, with capable staff and elected officials. However, they found that expert outside assistance was critical to their ability to create an effective budget stabilization plan. We will prepare a multi-year budget stabilization plan that will enable the City to provide services within its projected resource capacity. The plan will be actionable, with practical results that can be implemented on a phased basis. We will work collaboratively with City staff and elected officials to create the plan while providing independent expertise and experierice from our work with numerous other municipalities. In preparing the plan, we will do the following. • Review city financial and budgeting methodology to identify opportunities to reduce costs and generate new revenue, including identifying additional cost recovery avenues. • Identify alternative service delivery methods and organizational changes that will reduce costs while maintaining service quality. • . Provide an opportunity for City employees to offer their their recommendations for reducing costs and increasing revenue. • Analyze and provide recommendations for reducing employee costs through negotiated changes to memoranda of understanding. Our Approach Management Partners has outlined a plan of work comprised of seven key activities. The outcome of this plan will be a report that clearly sets forth the City's revenue and expenditure trends over the past five or more years and projections for the next five years. The report will contain a multi-pronged strategy for achieving a stabilized and sustainable fiscal plan. There is no "one quick fix" to achieving budget stability so the plan will necessarily involve all parts of the City's revenue and expenditure components of the budget. As described below, we will engage elected officials, executives, other managers and employees in the process to ensure that a ;;00