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Trustees press staff on 2026 budget after cost-allocation charges climb; staff explain reserves and process
Summary
Trustees probed Open Space staff on rising cost-allocation and transfer charges in the six-year fund projection and asked for more transparency and possible limits on how much central-service overhead is charged to the Open Space fund.
Board members spent substantial time on the department's proposed 2026 operating and capital budget, focusing on cost-allocation charges and interfund transfers that staff project will climb in the coming years. Trustees asked staff for greater transparency about what the city's central-service cost allocations represent, why those charges rise as a proportion of OSMP operating budget in the six-year projection, and whether the board should limit or challenge such increases when recommending the department's budget to City Council.
Lauren Kilcoyne, deputy director acting for a staff member on leave, walked the board through the schedule for budget submission and the fund financial: staff plan to submit materials to the city manager's office and finance by June 27; the department continues to operate in a fiscally constrained environment and is proposing measures to preserve tier-one master-plan priorities while adjusting other items to fit projected revenues.
Kilcoyne and staff explained the department's reserves and "glide" strategy: the contingency reserve percentage is being reduced from 20% to 16.7% (the city recommended minimum) to free funds for operations and projects; staff are using previously saved fund balance to carry certain master-plan implementation work through the near term, with the expectation of returning to an annual operating balance by the end of the planning horizon. The packet and staff discussion cited an acquisition reserve (used earlier in the meeting for a mineral-rights opportunity) and a separate contingency yard for pay-related liabilities.
Trustees raised these specific concerns and requests: (1) the cost-allocation and transfer line item has risen in recent years and is projected to increase further (board members cited a rise from about $2.8 million to a projected $5.5 million by 2031), representing a growing share of the fund's operating dollars; (2) trustees asked whether that charge is proportional to FTE counts and how seasonal/temporary staffing factors into the calculations; (3) trustees asked for a clearer breakdown of services purchased via cost allocation and whether any of those internal-service charges could be re-negotiated or capped to preserve funds for open-space operations and wildfire resilience. Staff said cost allocation models are updated periodically by finance and that internal-service charges are driven largely by citywide staffing and service levels; staff offered to seek further detail from Finance and the city manager's office.
Kilcoyne also briefed trustees on operational items affecting the budget: the city announced a hiring pause through the end of the year (staff are assessing near-term impacts, particularly on seasonal and temporary field crews), the department retains significant unspent capital carryover in some projects (accounting for a larger 2025 CIP total) and staff are working to align long-term staffing and fixed-term positions to the master-plan priorities. Trustees asked for additional reporting to inform the July recommendation and requested staff seek greater cost-allocation transparency from the finance department ahead of council review.
Trustees did not take a formal separate vote on the budget at the meeting; they will make a formal recommendation in July after follow-up information is provided.
