City Budget In Danger

City Budget Shortfalls Trigger Hiring Freeze

The City of Hayward is facing a potentially $30,000,000 budget shortfall, according to a press release sent out on August 29th. The press release explains that the issues are primarily the result of previous Executive Leadership in the City. “Revenue coming in below expectations, unbudgeted overtime expenses and costs associated with the addition of new staff positions, new labor contracts, and the purchase of a downtown movie cinema—all actions taken under previous executive leadership—have… exhausted the [General] Fund’s operating reserve.”

Since 2021, the City has added the equivalent of 33 positions to the General Fund, negotiated raises for all labor groups in 2023 and 2024, and loaned the Hayward Economic Development Corporation $8,600,000 for the purchase of the Cinemark movie theater building. Unfortunately, by the end of Fiscal Year 2025, the City was $21,000,000 over budget. Meanwhile, General Fund revenue is expected to be anywhere between $5,000,000 and $12,000,000 below projections—resulting in a shortfall of anywhere between $26,000,000 and $33,000,000.

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Interim City Manager Jayanti Addleman is taking direct action to right the ship, “holding most unfilled General Fund positions vacant, placing tighter limits on training and use of consultants, assessing eligible properties for sale and instituting tight cash flow and payroll monitoring practices, among other possible strategies,” according to the press release.

Interim City Manager Addleman is also planning to hire an independent fiscal analyst to review the City’s budget, fiscal controls, and forecasting practices. During a 2024 interview with Councilmember Francisco Zermeño, he described budget shortfalls as something that has happened frequently during his long tenure on Council, but always works out. “It’s always worked out,” he said at the time.

“We are committed to being open and transparent about our budget situation, learning from how we got here, and deciding collectively on how best to move forward responsibly and sustainably, while continuing to provide the services the community needs and deserves,” Interim City Manager Addleman said.

Join us this Sunday at Books on B where I’ll be moderating a discussion about mobility, safety, and traffic in Downtown Hayward. Tickets are available at https://tinyurl.com/hayvoz25. Each $10 ticket directly funds the Hayward Herald, supporting our mission to provide local Hayward news to our community. Hope we can see you there!

HUSD Budget Still Shaky Despite Cuts

At the August 27th HUSD Board Meeting, Assistant Superintendent Amy Nichols presented a budget update with no numbers. However, she stressed that it is due to the budget process being in a delicate position at this time of year. “We are at a delicate time of year,” she said, “in our budget development and budget management process.”

Because of the time between the close of the Fiscal Year at the end of June and when the money is actually spent out of the accounts, the actual amount spent last year isn’t knowable until September. This also means that any impact on the reserves—which are still very small—won’t be known until then, either.

Compounding things are the enrollment numbers for this school year, which are still in flux. Not only can increased Transitional Kindergarten (TK) enrollment mean more revenue, it may be offset by the cost of opening the new classes—hiring new teachers, support staff, etc. “We have a lot of uncertainty, right now,” Ms. Nichols said. And according to Deisy Bates, President of AEOTE, around 100 students are still not enrolled due to staffing shortages holding up paperwork.

Assistant Superintendent Nichols is anticipating “conditional approval” of the budget by the Alameda County Office of Education (ACOE), which is what happened last year. The approval letter is expected by September 15th and will include recommendations from the ACOE for how to address the budget issues. On top of that, due to the District’s low reserve balance, HUSD is going to borrow $30,000,000 to even out cash flow issues for the year—however she stressed that the entire loan will be paid back by April 2026.

The District’s continued reliance on reserves means that another Fiscal Solvency Plan is going to need to be developed this year. Unfortunately, the Board won’t know how much will need to be cut until September, and the plan won’t be presented publicly until February.

Some of the strategies the Business Office is working on include changing procedures for supplies and services requisitions, monitoring Overtime and Extra Duty—“an area where we do see surprises in our budget and changes in our budget that are not necessarily what we want to see,” Ms. Nichols said, freezing new positions, and bringing in more Paraeducators to the Special Education program to reduce reliance on outside contractors.

The District also looked closely at AT&T phone costs and realized around $300,000 by cutting unnecessary lines—a suggestion brought forward by AEOTE President Deisy Bates at a previous meeting.

Impacts and Consequences While Seeking Participation

Trustee Prada asked what the consequences would be of missing the deadline for paying back the $30,000,000 loan from Alameda County. Ms. Nichols said that it could lead to receivership—where someone else would decide how to make the cuts—or the District could take a loan from the State, require interest on that loan, and would result in the State making cuts to balance the budget.

“It’s not something I would like to see us do,” Ms. Nichols said. She said that the way to prevent that would be to stick to the budget.

Trustee Prada then pushed for an impact assessment of the previous Fiscal Solvency Plan, which has now been fully enacted. Superintendent Chen Wu-Fernandez said that the consequences are still being discovered, but one of them is that the Families United Conference won’t be held due to a lack of funding. The full impacts aren’t knowable until the books are closed in September.

Trustee Prada continued to push for some kind of feedback on the results of the cuts. “So that we know, going in to the next one, a little bit more of what impact the cuts have had on our sites,” she said.

Trustee Oquenda asked if there was interest on the County loan that the District is already taking. Ms. Nichols explained that the interest on the loan should match the interest gained by having the money in the accounts—so essentially they would cancel themselves out. “[We are] not budgeting or anticipating any significant interest expense,” she said.

Trustee Oquenda then asked if a similar loan would be necessary next year. Ms. Nichols said that if the deficit is reduced and reserves are restored, then another loan won’t be necessary. She then stressed that the next Fiscal Solvency Plan would be much less drastic than the last one. “Nothing like what we experienced last year,” she said.

Trustee Bruckner-Carrillo pressed for more labor involvement in budget development. He highlighted the $300,000 savings which were the result of advocacy by AEOTE President Deisy Bates. He also pushed for more detailed reports on actions taken by each department to help with the budget, as well as some report covering the “lessons learned,” he said. This included Prop 28, “who checks the mail,” nurse equipment, and teacher retention.

Trustee Bruckner-Carrillo said that the District, due to the Fiscal Solvency Plan, did not retain enough teachers and characterized the District’s reliance on long-term subs as “horrendous.” The issues around teacher retention and hiring were supported by public comment from Charles Jones, a teacher at Tennyson High School.

“My department has had a long-term sub for 3 weeks because the district said the position was restricted,” he said. “And so we’ve had 5 government classes that have not had a full-time teacher. That means when that teacher enters that class, damage has been done.” He also highlighted the issues with late hiring—after the school year had already started—and the burden that puts on department heads: making materials for substitutes, onboarding new teachers, and more. “That’s not equitable and it’s not fair,” he said.

Planning Commission Gets New Member

After the City Council decided to remove Shay Franco-Clausen from the Planning Commission on August 19th, the City Council conducted interviews for the open seat on August 26th. As we covered last week, three people made the cut for in-person interviews and the City finally released the video of the interviews and deliberations.

The Questions

If you’re ever thinking of joining a City Commission, this information may be good for you to know. The interviews are conducted at City Hall in the Conference Room on the 2nd floor. Councilmembers ask the candidates questions, but each person may get different questions depending on who decides to ask—some Councilmembers didn’t ask any questions the whole evening.

Mayor Salinas asked the candidates to talk about one development that they think the City got right and one that they think the City got wrong. Councilmember Syrop asked about policies the Planning Commission had discussed recently and what the City’s goals were. Councilmember Roche asked about balancing competing objectives—though Councilmember Bonilla asked it once. Mayor Salinas sometimes had a second question about what the candidate thought the height limit of a building Downtown should be.

There were also freestyle questions that not everyone was asked. Councilmember Zermeño asked one person what the City could do to entice independent shops into the City. Councilmember Roche asked one person what they thought their role is as a Planning Commissioner. Councilmember Andrews asked one about CEQA, then a different candidate about mixed use development. Councilmember Bonilla asked one candidate about disaster mitigation and another about land use and equity.

More About Alternates Than Selection

Overall, the interview responses more or less matched with the applications. Vasko Yorgov stood out above the rest and the City Council took notice. Mayor Salinas opened by saying he was “thoroughly impressed” by Mr. Yorgov, despite having reservations last year around his length of residency in the City and “inexperience of city engagement.” This year, however, Mayor Salinas said “he hustled” and rapidly moved to appoint him to the Planning Commission.

Councilmember Bonilla highlighted his “persistence” of reapplying after having been made an alternate. “It really shows his commitment to the City,” he said. “He was the only one that seemingly prepared for tonight.” Councilmember Roche said, “I appreciate his eagerness” and that he had “clearly done his homework.”

Councilmember Andrews highlighted Ms. Nelson-Smith’s past commission appointments and Mr. Zand’s technical expertise and knowledge of Skywest and sea level rise in his answers. Unlike the rest of Council, she was not particularly supportive of Mr. Yorgov.

Councilmember Syrop said, “I appreciated the balance to [Mr. Yorgov’s] answers” and liked his “community-centered approach.” But he also had some good words for Ms. Nelson-Smith, “[I appreciate her] depth of history in the city,” he said. However he stressed that he was not comfortable with having either Ms. Nelson-Smith or Mr. Zand as an alternate.

This sparked a back-and-forth about whether or not to have an alternate this year for the Planning Commission. “I’m pretty confident about Vasko’s attendance,” Mayor Salinas said. Councilmembers Bonilla, Zermeño, and Goldstein pushed for some kind of alternate. “I really think [Ms. Nelson-Smith] would be a great second,” Councilmember Bonilla said. “I think she would be committed to this work. I think that she brings a strong community view.”

However, Mayor Salinas and others on the Council weren’t sold on the idea of either of the other two candidates potentially being moved into a Planning Commission seat midway through the year. Councilmember Bonilla highlighted the need for contingencies, but appeared to view alternates as non-binding. “Just because [Ms. Nelson-Smith] is an alternate, doesn’t mean we automatically appoint her just because there’s an opening,” he said.

Councilmember Roche pointed out that, in the past when there were no alternates, the City Council would just appoint someone. “[The Council has] done that in the past,” she said. “Al Mendall was appointed to an opening on the Planning Commission when there was no alternate.” Councilmember Goldstein then spoke up for Ms. Nelson-Smith, saying she was qualified and that she “understands her community.”

Mayor Salinas finally pushed to break the vote into two pieces: Appointment to the Planning Commission, and appointment of an alternate. Vasko Yorgov was appointed unanimously by the City Council. Councilmember Zermeño moved to appoint Amy Nelson-Smith as an alternate and was joined by Councilmembers Goldstein and Bonilla. Unfortunately the vote failed 4:3, so there is no alternate for the Planning Commission.

Mr. Yorgov’s appointment fills a term that expires in 2026, when he will have to seek reappointment.