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Fremont finance director explains vacancy savings, reserves and salary placeholders as council asks for clarity
Summary
Finance Director David Purcellin told the council that historical savings average about 6.6% of budgeted expenditures and that the proposed budget includes a 2% placeholder salary increase; council members pressed for more detail about property tax share, health benefit allowances and the city’s $3.4 million budget uncertainty reserve.
Finance Director David Purcellin addressed council questions on June 2 about how the city calculates budget savings, the composition of those savings and assumptions in the proposed fiscal-year budget.
Purcellin said vacancy savings are the primary contributor to the citywide savings in the general fund but that non-personnel savings (supplies, services, capital) also matter; the city’s average actual expenditure savings versus final budget over the last 10 years is about 6.6 percent, he said. He explained that the city models the savings estimate as a percentage of budgeted expenditures rather than as a simple sum of estimated vacancies and other savings.
Council members asked whether the budget included a placeholder for salary negotiations; Purcellin confirmed a 2 percent placeholder is in the proposed budget and said if negotiated settlements exceed that amount the operating budget would be rebalanced through reductions elsewhere or updated revenue estimates. Purcellin summarized that the city maintains two general-fund reserves: a contingency reserve (set by policy at 16.7 percent of budgeted expenditures) to respond to major emergencies, and a budget uncertainty reserve — identified in the hearing as about $3,400,000 — intended as a fiscal shock absorber.
Council members also pressed for context on Fremont’s relatively low share of property tax revenue (a product of historical allocation formulas after Proposition 13 and AB 8) and for clearer presentations that separate vacancy-related savings from other categories. Several public commenters asked staff for greater transparency about where maintenance and capital deferrals remain in the budget and requested more detailed breakdowns and pie charts for large departments.
Purcellin said staff will return with further analysis and that, rather than piecemeal adjustments, rebalancing for negotiated settlements will be addressed in the year-end budget report in the fall. The council and public pressed for added clarity on the mix of savings coming from personnel versus non-personnel categories so residents can better understand trade-offs.
Ending: Council members thanked staff and asked for follow-up materials on vacancy savings, maintenance deferrals and the composition of the city’s budget savings assumptions ahead of further budget deliberations.
