Budget Committee - October 22, 2025   10/22/2025

We have five present, two absent, absences being Councilmember Bowie and Councilmember Johnson.

Today we are having two presentations packed in sort of one PowerPoint, but today we are reviewing everyone's favorite department, the Office of Financial Services, and presenting from that department, we welcome our interim director of OFS, Laura Logsdon, to present the 2026 budget for OFS.

So welcome to the chambers.

Great.

Thank you for having me.

I really appreciate it.

For the record, my name is Laura Logsdon.

I'm the Interim Director of the Office of Financial Services.

I'm really looking forward to sharing the great work that OFS does and talking about our 2026 budget proposal.

After my presentation, Nichelle Botko-Woods will come and present on the CIB budget, and then after Nichelle Neil-Young-Hans will present about city debt.

So we do have a lot to get through.

So first, just for the agenda, I'll be giving a summary of the 2026 budget for OFS, review some key highlights, kind of budget recap from 2025.

I'll get into details of the 2026 budget, our spending, FTEs, as well as some ARPA updates and updates about OFS revenues.

So our high level executive summary first, I want to start by saying what a privilege it is to work with the very dedicated, highly skilled and inspiring team at the Office of Financial Services.

Our department is responsible for the daily functioning of the city, all the money, cash that moves in and out of the city and all of our programs, the accounting for every transaction, planning, spending, adhering to budgets,

We have investments, debt management, major capital projects, real estate projects, and our fleet and vehicle maintenance.

We have a really diverse set of work and our grants team, which I'll be talking about more.

So we're responsible for just really a high level of work at the city and making sure that the city can function and our work is really foundational.

So just super grateful to work with this team.

In addition to that, our 2026 goals and priorities are really focused on prioritizing our staff, staff development, succession planning, and meeting our hiring goals.

We're constantly thinking about and implementing ways to innovate and increase our efficiency.

Some kind of key projects that we've been working on and we're going to keep working on are advancing and finalizing a citywide finance manual, continuing the timeliness that we've gained in our annual financial reporting,

We're also really engaged with supporting long-term planning by departments related to grant funded initiatives and in the coming year a shift to priority-based budgeting and then just at a high level some key

changes from 2025.

In our general fund, our general fund allocation is increasing slightly by about $34,000.

There are several kind of reductions and shifts and increases that total that $34,000, so I will get into those details further down.

So to recap our 2025 budget, and it's been a really big year for OFS.

In 2025, we shifted a high-level accountant position from special funds into the general fund, and that person supports citywide grants, so that's been super important, and that's been fully staffed all year.

There was a similar shift on the Office of Financial Empowerment team.

from a grant funded position and the grant was ending into the city general fund and that's been staffed all year as well.

Also this year $90,000 was added for events and festivals grant program bringing that total budget to $155,000 and that remains unspent for the year.

In 2025, OFS's attrition budget was increased by $96,000 bringing our total attrition budget to a little over $300,000.

And one thing to note here, so while OFS has over 90 FTEs, only 30 of our FTEs are funded in the general fund.

So to meet an attrition budget of $300,000, we would have to hold about three FTEs open per year, which means our attrition rate would be at 10% for those 30 FTEs.

budget.

there were investments related to climate initiatives and FTE was added for our climate action coordinator and that's been staffed all year and then funds were also added for the Power of Home program.

And then finally, as you're all aware, 2025 has been a really significant year.

There's been a ton of huge financial pressures on the city and OFS has been really leading city-wide efforts to limit spending for the rest of this year to ensure that we come in on budget

and Citywide.

Some updates on recent initiatives.

In the 2024 and 2025 budgets, OFS had a significant investment for our new grants team.

So we've added four FTEs over those two years.

our grants director, grants administrator, grants specialist and then our accountant position that I just mentioned.

All of those positions have been fully staffed and in a short amount of time that team has really accomplished an incredible amount of work.

It's been a huge value add for the city to have this small but mighty team.

So some of their key accomplishments are highlighted on this slide including

supporting $27.5 million in department-led grant submissions this year and over $73 million in federal earmark submissions supporting kind of cross departmental grant spend down this summer that ensured that the city fully spent a grant that would have otherwise gone back to the state and allowed us to have some really much needed general fund relief in that process.

So that's really key.

The team also led the immediate response to the federal funding freeze that occurred earlier this year

and did very detailed contingency planning with every city department that manages federal grants so that we could be as prepared as possible for what has proven to be a very volatile and unexpected

and the team kind of amidst the cyber incident maintained all of the federal compliance and reporting requirements.

So really great work there.

In addition, I wanted to highlight the electronic payments project and some key achievements this year with that project.

One of the key ones is that the team, the OFS treasury and accounting team implemented

of the City of

on board and pay vendors.

So since the spring, the city has onboarded over 1,700 vendors to that system, of which 80% are receiving electronic payments.

That's a huge achievement for the city.

The vast majority of our vendor payments are still and have been by paper check.

And those type of payments are the highest risk for fraud.

And I'm going to stop you quickly.

Thanks so much, Chair, and thanks, Director, and kudos on this exemplary work and really appreciate the way that you're highlighting it here.

I'm curious about the grants division.

I know when we talked about creating the division, adding the four FTEs, we had some conversation about these folks might actually pay for themselves in the sense that they'll help us pull down more federal and state grants than we were able to do before we had this coordinated function.

Yeah, thank you for the question, Chair Kim and Council President.

I think I probably need to get back to you with kind of specific information.

We have done some tracking of kind of prior year grant applications, how much was going out the door.

One of the barriers we have is that the city doesn't have a central grant system.

and so there's a lot of manual work that goes into trying to figure out how much did we previously apply for as compared to you know what we're tracking kind of manually now but I think we do have some information that we can get you for sure.

I guess one specific example that I can highlight is the city was awarded a federal grant under the prior under the Biden administration

when the Trump Administration took over that was halted and our grants team worked very closely with the City Attorney's Office on a strategy to ensure that we can still advance that grant opportunity and other grant opportunities without agreeing to terms and conditions that do not

and the City Council.

Chair Kim, Council President Naker that the third bullet point on their delivering 1.1 million in general fund relief.

That piece would not have happened without the grants team as they were really working on coordinating across departments.

So where that grant may have just been lost or returned, it was able to be repurposed and reused.

Thank you.

So on this slide I'll get more into the details, this and the next slide, of the 2026 proposed changes for OFS.

So this slide focuses on our general fund changes, which as I mentioned comes to, it's almost neutral, $34,000 increase, but there's a lot changing within that $34,000.

So first there's an increase of just over $300,000 for current service level adjustments.

That's really inflationary.

Inflationary salary and benefit changes.

There's just over $100,000 to remove OFS's attrition or reduce our attrition budget, bringing it back down to about $200,000, which is more manageable within our general fund FTE structure.

A big change then here is next we're shifting 1.5 FTEs out of our general fund and into special funds.

So while it shows, it kind of looks like a reduction here in the general fund, it's actually just a shift.

So OFS is not losing any FTEs there, we're just moving them to special funds.

So that is half of our fleet manager position, so half of that position will stay in the general fund and half will move to the fleet fund.

And then our full FTE for our business support manager will move into a special fund.

there's a small increase here related to state of Minnesota paid leave and then there's a reduction of a vacant position on our accounting team that's an accounting clerk one position we're reducing that and then we're also reducing our general professional services budget

In terms of special funds, there are a few increases, a few one time and then one ongoing proposal that OFS would oversee.

First, grants management software, so I just mentioned that the city does not have a central grants management system and we would like to have one.

It would be incredibly beneficial to have an enterprise-wide system where we can

and all of our funding sources, all of our spend down, reporting deadlines and requirements.

Right now every department basically manages that on their own in varying SharePoint sites, spreadsheets, word docs, people's brains, and we really want to get it all in a system.

budget.

our current expenses related to our budget system and shifting that over to a grant system our budget system is fairly new it came on within the last few years and so we've had kind of a higher level of support from the vendor as we've continued to get that system like ingrained and now that it is we can back off of some of that vendor support and reallocate for the grants team so that's the proposal there

Excuse me.

The next two are one-time requests.

Again, still in the central service fund.

And they're both $100,000.

One is to bring on a consultant to support the city's shift to priority-based budgeting.

That would be overseen by our budget team.

And then the other.

is to conduct a facilities management study that would allow us to look at our facility management practices across the city compared to best practices, think about technology, and also help us with some capital planning, kind of financing around all of our facilities management.

All right.

Next we have the last five-year history of OFS's general fund budget to actuals.

So the main anomaly here in general, our general fund sits at around $4 to $5 million.

The big anomaly is 2022 when there was one-time funding that was budgeted in OFS's general fund budget.

to transfer to the debt fund and pay off some of the city's debt.

So OFS did not actually spend

2 million dollars on OFS that year.

Most of that was a transfer.

I think the other key story here is that kind of historically OFS has tended to underspend our overall general fund budget.

This is really, you know, within the last five years I would say there's been some kind of key retirements of long term staff.

So some of our highest paid employees have left and so there's been some

salary savings throughout the year based on that.

But in addition, OFS, because of the role and responsibility that we have overseeing the city's financial stability, we really have the first line of sight on how the city is doing each year and take very serious the responsibility of ensuring that the city comes in on budget as a whole.

So OFS is often used as a balancer basically for the rest of the city.

We know overspending is happening somewhere else.

Thank you so much.

And I just wanted to be able to, I guess, ask this question in twofold.

One specific to, I think, the Office of Financial Services.

And then I think it gets to some of the stuff that I am seeing kind of cross departmental.

So the budget to actuals this year varies about $1.5 million as of this month.

And I know that with that, there's going to be some budget solving at the end of the year.

it is noticeable to me that that is like a significant off from budget to actuals for this year and it's something that I'm seeing kind of go across the board and then when I look into next year's forecast of like what's being proposed for OFS and then also other departments that number doesn't seem to be going down any and I was wondering if you could share with me like just from what we budget to what we actually spend

Committee.

When we have such a significant variance I would interpret 45% of a variance as significant.

How are we adjusting or accounting or learning from that if we're seeing that across the board?

Sure.

Chair Kim and Council Member Johnson, thank you for the question.

I would say the amount of underspending right now in OFS is different than we've seen in other years.

part of that is when the cyber incident occurred in July kind of immediately at that point we knew in OFS the city would need to really limit spending because of how much spending was happening related to the cyber incident so kind of right off the bat there I think things that we may have looked to do near the end of this year with some salary savings we just knew we weren't going to do so of this you know 1.5 million I think

A few hundred thousand is from our materials budget and our services budget.

We're not going to enter into any other contracts this year and we're not going to buy new desks even though a bunch of our staff need them.

There's probably a four to five hundred thousand amount there that is in that materials and services bucket.

I think the other key factors here is we've had a few long-term vacancies this year and I'll get into that on a later slide as well, but You know I've been the interim director since May and so our deputy director position is vacant We've held vacant a position since February because we knew it was going to be cut in next year's budget and we have another vacancy from a high level vacancy since June that is getting cut from our budget and

and the funds are getting shifted to the city attorney's office for the data practices team.

So there's been a few kind of key vacancies that are being intentionally left vacant this year because of cuts coming next year and then just planned intentional not spending because of the cyber incident.

And that really adds up.

does that get your question?

yeah and then as a follow-up could you just can you remind me again just 2026 general fund the proposed total budget for OFS the total budget for OFS so the total change is an increase of $34,000 the total budget 2026 proposed on the next slide is $5.1 million

And then along that vein, for some of the planned vacancies and some of the planned funding spending, is there movement on, I guess, I'm assuming the director role is one of the roles that would be accounted for next year, but for some of the other variances and other changes and things that weren't filled this year, is there plans to fill them next year?

Chair Kim and Council Member Johnson, I believe, yes, there are plans to officially hire an OFS Director next year.

So then that position would be filled and the deputy role would be filled again.

The two other key vacancies that I mentioned are being cut from our budget next year.

Okay, I think I will stay on this slide.

So this slide gives our overall budget summary by fund.

You can see our first three funds really stay fairly steady over this time period.

That's the general fund, the grant fund, and then fund 211.

The big changes are occurring in fund 215, our assessments fund, and then to a lesser extent,

Fund 700, the Internal Loan Fund, and Fund 710, which is the central service fund.

I'm just going to jump to the next slide where we can look at the visual and then I can talk about those funds a little bit more.

So what this really demonstrates, like I mentioned, is that most of our funds have been fairly steady.

The budgets have been fairly steady over this time period.

The big increase is the huge one that we can see, Fund 700, that dark line that jumps way up in 2024.

That's the City's Internal Loan Fund.

In 2024, that fund had a significant increase because of two internal loans.

One was for the Port Authority.

There was a $10 million internal loan related to the Heights Project.

And so far, the Port Authority has not drawn down on that at all.

But the budget remains.

And then there was a loan that year also to the HRA.

of the City Council.

That fund is increasing.

We've seen that increase over time because the assessments are used as part of the funding mechanism for street projects and now that we have the local option sales tax coming in we are doing more street projects than we did previously and so between the lost funds and the assessment funds that's how we're funding those increased street projects so the more street projects that we have the more that the assessments fund is going to increase.

This is our FTE summary by fund.

You can see from 2025 to 2026 not much of a change, a slight decrease of a half an FTE, but really over this whole time period from 2022 to 2026 we've had a significant increase in investment in FTEs in OFS which has been incredibly appreciated and I think we're seeing just huge benefits from that investment.

I've already mentioned this a bit in the general fund, though.

We've added four FTEs related to our grants team, and we added one FTE for a deputy director position last year.

In our Fund 211, that one FTE is the climate action coordinator position that I mentioned.

And then in Fund 710, over time, we've added two positions to our treasury team in OFS, which has been super, super beneficial.

The 1.5 FTE is being added to Fund 731, that's our fleet fund.

Half is just a shift of the fleet manager out of the general fund and into the fleet fund.

And then that one FTE is also a shift from public works into fleet.

There's a position related to supporting garbage truck vehicle maintenance that is moving from public works into fleet because that's where that person will work.

This slide just shows our vacant positions.

I've talked about this a little bit already as well.

but that accounting clerk one position it's been vacant since February and we were starting a hiring process but then as we got into the actual budget mayor's proposed budget we decided to put that position up as a cut to help meet overall reduction targets so we intentionally have not filled that because we knew the position was going to be proposed to be cut.

The OFS director position is vacant I've been filling in as interim since May

there's a management assistant for position in the Office of Financial Empowerment that's also vacant related to the interim director position there and then there's a program administrator in OFS that has been vacant since June that is getting cut from our budget and the funds are being shifted to the city attorney's office to support the creation of a data practices team there

All right.

A few updates on projects that were previously funded by ARPA and that OFS oversees.

So I've mentioned the electronic payments project.

We've had a ton of success there with implementing our payment work system.

We have several other projects and assessments lined up that are listed here.

Excuse me.

We're evaluating electronic payment options with US Bank, looking at doing an RFP related to our merchant card provider.

And then this PCI qualified security assessor, that's really a compliance assessment related to city-wide credit card use.

So these are all just a variety of initiatives that we've been overseeing and undertaking that really increases the city's

The grant matching project is one the OFS has been overseeing.

Funds have been used to match other grant sources allowing the city to really leverage more grants over the time that we've had these funds.

So the remaining funds are all allocated specifically for matching requirements and public works with some of the grants that they've received for EV Spot Network.

and then finally the city payroll project is one again that has been ongoing for the kind of life of the ARPA funds.

The funds have allowed us to support additional staff needs related to grants management and payroll legal needs and reporting.

of the City of St. Paul, City Council,

The last slide that I have is a review of OFS's special fund revenues and kind of some changes over time.

We looked at this a bit on the slide that showed the line graph of all of our revenues, but Fund 215 assessments, these are special assessments.

It varies based on projects, and like I mentioned, we have a lot more street projects now because of the lost funding, and so that revenue keeps going up.

Our internal loan fund, mentioned that one as well, that revenue comes in from loan repayments, it varies based on needs and usage

Fund 710, our central service fund.

This fund, the revenue is based on charges.

It comes in from charges to other city funds.

So the general fund and special funds all pay in to central service.

And that's based on the cost for finance and technology needs.

So I think that is all I have.

I wanted to just ask you a question more so about where it's like related to the budget but not necessarily specific to yours.

I am more so wondering just from a lens of if the goal or if some of the goal or appetite from the council is to see us be able to get you know our but have a more frequent budget to actuals conversation

where we're actually seeing the actual real-time numbers for the city throughout the year and not just we have a budget cycle.

We potentially hear about it at the beginning of the spring of 2026 for the years of 2025.

So it doesn't inform any sort of budget conversations or our budget process.

Chair Kim and Council Member Johnson, very happy to have that conversation and talk through how that could work.

The budget to actuals information is available on a daily basis in N4, which is our ERP system.

I believe that some council staff have access to that and can pull the

kind of daily budget actuals for all funds, all departments, so that should be available.

The caution generally is that there are certain expenses that only happen once a year or twice a year.

So the budget actuals on any given day may not reflect what's really going to happen.

And the main example there is transfers.

So there are tons of transfers budgeted across every single fund.

and there are different times of year when transfers occur depending on the department, depending on the fund.

Some transfers don't occur until all the revenue comes in and then it gets transferred out.

Some transfers don't occur until the following year when we know they're actually needed.

So there's just like variability basically in budget to actuals.

So there's always like a qualification with any data that we're looking at on a daily basis.

yeah so council staff don't like you know some of the council staff don't have access I don't I don't believe my legislative aide for example has ever been through at the end for system to plug numbers that's not something that I would be able to kind of just frequently assign and expect her to fully understand the width of the budget

The thing I'm kind of talking about is the budget to actual reporting style that gets back to council that shows the budget to actuals.

And I think, transparently, I really have been watching this in a way that, especially being a part of the HRA and chairing the HRA this year, one of the struggles that we've had in some way, shape, or form has been our transfers.

And some of the transfers only happen once a year, at the end of the year.

and so really tracking some of the actual spending for the city is really hard to do.

And I know that we've had some, you know, I've had HRA staff, I've had council staff and OFS staff working together which I've been really glad to see.

It concerns me sometimes that we aren't able to just actually have those numbers in real time.

on the in-person system or we aren't able to just like real time track those numbers because there's so many things that maybe staff aren't purview to because there's a transfer that's happening or pending.

And so I'm just wondering like what process points would you potentially recommend that could get us there?

I recognize that it'll be like a multi, I think it'll be a couple years before we actually get to a place where we have the budget to actuals readily available when we need them to make

and form other decisions.

But when we're seeing variances by department, and we do see it throughout the city, for whatever reason, vacancies, something happens, and I know there's a lot of things that are happening behind the scenes, and your team works really hard to do that.

What I think would be really helpful, though, in some of the budget conversations, though, is understanding a little bit more about those things in real time.

And so I'm just wondering if the goal was to have budget to actual reporting,

budget.

Chair Kim and Council Member Johnson, I think we would need to meet and map out how that would work because what you're describing is a significant amount of work for staff.

So we would just need to work through what information is needed and how we can do it with current reporting and try to limit the amount of manual

and not to belabor the point but I think one of the goals for the city you know is to also be able to have their I don't know if it's what the proper term is but I know when they're reporting their year their month-end spending or I don't know what it's called I think it's like like the month-end book and spending or that they're doing that they're supposed to do it monthly or like hypothetically that's the goal right like I was like we're supposed to be able to see the reports from departments monthly

I think it would be really great to get to that place in a space where that's not just aspirational, but that's something that we actually implement and process.

And so I'm really interested in knowing from a processing standpoint, especially with some of the savings from OFS.

Like last year, one of the things that I talked with at the time, Director McCarthy, about was about

budget to actual discussions, this is something I will share as a personal priority of our office to see our city reporting mechanisms get a little bit tighter in ways that I feel like maybe it requires additional investment, maybe it requires additional staffing, maybe it requires additional capacity, whatever the case may be.

But when we have conversations

to a two-year budget process, there's going to be a lot of work that goes into that, and I think being realistic about what that could look like, because we wouldn't be able to go two years without having budget to actual conversations and budget to actual reporting.

We probably would be able to make that closer if we have two-year budget cycles to have quarterly reporting, and that's probably all LinkedIn.

Committee.

In so many different ways I would appreciate that kind of follow-up in-depth conversation, in particular starting with the HRA budget, but that's just because I'm the HRA chair and I care about our HRA audits and I would love to see them done on time.

And separately when we're having budget to actual conversations there's just been numerous times this year where

I think knowing when the transfer is happening, maybe accounting for it next year, helping to have the transfers and such out earlier on our end would be really helpful to know just from what would be beneficial to OFS.

And so I welcome that conversation.

And it's something that I just want to be transparent to my colleagues about.

I think in one way is when we're handling the budget in spaces and overseeing things or making financial decisions,

It's hard to do that when you're not getting that information before we have to make a budget vote.

Millions could be out there that we don't know about until the end of the year.

And so it's hard sometimes to know like, do we need this funding here?

Do we need the funding here?

And so in many ways I'm sure your team empathizes with that because that's your day to day.

But I think the reporting piece is just as equally as important as seeing it in real time.

and I can't tell quite a few of the council staff about INFER and how to just go pull the numbers.

It takes a specific person, which I'm really thankful for our chief budget officer and having a director that has an accounting background is important too.

But if you don't, how are you accessing that information that's readily available?

I've got just a quick general question and then just a very brief comment on that.

I appreciate you lifting that up, Councilmember Johnson.

I've been writing down what the funds are.

Is there, and I'm sorry if this exists, is there an index that kind of helps us refer like what is fund 100?

What is, you know, 100 is General Fund, 200 is ARPA.

I've kind of quickly jotted down, you know, 710 is Central Service, but is there an index somewhere we can kind of quickly reference that?

Chair Kim, it's not included in our PowerPoint, but it's in the budget book.

Okay.

So in the budget book, in the OFS section, all of our funds are listed by number and name.

Okay, perfect.

I appreciate you pointing to me to the correct resource.

The other thought is that one of the questions that I had sort of during one of our one of the pre-presentation meetings was about the professional services and

there was a I had a I guess a general concern about it more so because there was an interest in investing in sort of moving towards the project based budgeting and sort of that effort of looking at like what does the biennium budget look like and kind of like where what types of reports are we looking for so it was rest assured it was included but I think to compound the point that Council Member Johnson made feeding into sort of those quarterly reports and what it looks like and what we're even asking for is it's definitely a topic of conversation we're interested in.

So we're going to keep it pushing.

I think that was the end of our interim director's presentation.

Thank you.

Thank you.

Welcome up.

Hello, I'm Nichelle Botko-Wood.

I am a senior budget analyst here and I am the primary person who is staffing the CIB committee and I just wanted to recognize Shannon in the yellow over there.

She is the other person who works with me on CIB and has been amazing.

I'm here to talk about CIB.

This is a pretty general overview of the

of the process, which is actually honestly pretty complicated.

So stop me if you have questions.

It helps me to feel less nervous.

And also, I'm used to it because it is complicated.

But today I'm going to go over just the overview of what the CIB budget, bonds, and committee are, talk about our proposed budget, and then also just sort of touch on our upcoming and current processes that we're working through.

So capital improvement budget, and one of the things that I spend a lot of time talking with residents, with potential committee members about, is that CIB can mean a lot of different things.

CIB, like within the same paragraph, I will use CIB to mean the committee, the bonds themselves, and the CIB budget book.

The CIB budget book is what we're talking about here.

The capital improvement budget is how we fund our infrastructure.

It's our physical spaces.

and it primarily funds projects in public works, parks, libraries, but essentially any place that has a physical capital.

And I always include these types of pictures because I think that when we think about the CIB budget we're often thinking about projects like our fire stations, our parks, our rec centers,

are big projects, and those are a big portion of what we love about the CIB budget, but it's also a lot of other types of projects, things like pedestrian safety, bump out school, safe routes to schools, and it is, and all of those are important and part of the budget.

The budget is, not managed, the advisory committee is the CIB budget committee.

so the capital improvement budget committee was established in state law in the 60s and it is an 18 member resident well resident mostly sorry board appointed by the mayor they meet monthly they review all budget amendments and I think they're the best people you'll ever meet I'm really excited that I have the privilege to be able to warn our departments that they're gonna ask a lot of in-depth questions and

Yeah, I recommend hanging out with them once a month.

They review the process for funding, funding process for capital improvement bonds, and they also review budget amendments for any funding source that comes through.

So that's where you'll see budget, the CIB statement on some of your resolutions you pass.

They review community, they have the CIB bond process project

of the City of St. Paul.

Our processes which I will go over which include community proposal and department process they also review CDBG funding recommendations for projects and capital maintenance which we will go into.

Every single year all of our processes follow the same structure which

to review the proposals for that year, to review tentative recommendations they may be previously had, and depending on the year, they have different processes.

They send a letter of recommendation for the CIB to the mayor, who then creates the proposed budget.

And then similar to the operating budget,

you work through this process all through the fall and pass an adopted budget by winter.

I always just mention this because I do also often work with people who have proposed funds who want to maybe advocate for more funding and I send them to you guys at this time of year.

So that's I think important to know is just like that I may be directing folks to come talk to you and

The two processes that the Capital Improvement and Budget Committee follow is the department process and the community proposed process.

We do this every other year.

This year was a department process year.

This year was a department process year.

We also have two other funding cycles that happened this year.

one is capital maintenance so that is a portion of the CIB bonds that go to capital maintenance projects within the city and they're reviewed individually by the committee the other is the community development block grant which we'll talk about that's a federal grant program that's a managed by PED the CIB committee just does the selection does the initial review of project proposals for that funding

So continuing in the overview here, just talking a little bit about the major revenue sources.

A lot of our budget is funded by local funding sources and our local general obligation bond is our, it's what I spend the most of my time talking about.

Capital improvement, public safety library, street reconstruction bonds, these are the

the local general obligation bonds and Neil will talk about them but they're backed by our property taxes so as Neil will mention they come like increasing a capital improvement bond funding comes with a necessary need to increase the taxes to sort of pay that back right other funding sources a lot of other funding sources make up the capital improvement budget and they all have their own requirements for what types of projects they can fund where they can fund them and sort of how those things work together

So I always like to bring up municipal state aid.

It is our portion of the state's gas tax.

And it is a lot of the work that Public Works does around improving streets.

However, only about 20% of our streets are actually eligible for MSA.

It has to be an MSA eligible road.

Similarly, we have things like our St. Paul Streets program, which is funded through street improvement bonds.

and assessment funding sort of similar to what we were talking about the assessments for roads.

They can fund residential and arterial streets and then we have the rest of these but my point with this is that I think that our department to do a really good job in particular and I know Public Works will talk to you about their five-year plan soon of finding the project that they're prioritizing and then using the funding sources available

you'll see in just a moment CIB is a small portion of the CIB, CIB bonds is a small portion of the CIB budget and but it is considered our most flexible which is why we tend to spend the most time talking about it right so if a road is not eligible for MSA funds or other funding sources we then tend to come to us with CIB requests as an example.

So here's my big table.

This is our funding sources for project budgets in 2025 and the 2026 proposed budget.

As I had mentioned, our local financing sources make up about 82% of our budget.

And only 3.7% of that is capital improvement bonds.

So another view of that is here.

It's just the lightest blue sliver that is capital improvement bonds.

for 2026.

What makes up the proposed budget for 2026 is for CIB in particular is the city department proposal process.

This process follows the same process that I've worked through before and it's actually really similar to how we manage all of our processes.

We have departments

to create proposals.

So departments submitted their proposals in the spring.

A work group of CIB committee members and then also department representatives reviewed those proposals and then spent time sort of discussing and trying to strategically plan to make sure that we had the ability to fund all of our projects to create a proposal which they present to the CIB committee.

The CIB committee members do review the proposals also.

and then they review the recommendations from that work group.

They create a tentative recommendation that they publish and then they have a public hearing.

And the reason I do mention this is that I do think that sometimes those tentative recommendations can cause panic among our proposers.

And so it's something that I do try to spend time communicating to proposers, to community members that I talk to.

because the tentative recommendations are really intended to be just an idea for those people who are interested in presenting to the public hearing so that they kind of know where the committee is at.

After the public hearing and other outreach, so we often do, for many of our processes, we do community polls.

Oh, and actually I think I'm done.

Thank you, Chair Kim, and thank you so much.

As somebody who is very new to all of this, this is so incredibly helpful.

And I have an extremely basic question just on terminology.

Yes.

OK.

Excellent.

Thank you so much.

Thanks, Chair.

This is going to relate to a question I have later on about a specific decision by the CIB Committee.

But kind of while we're talking about the general process, I'm curious how

How transparent is the decision making?

I mean, this is really important, right?

This is a group of 18 people who are making recommendations on all of the capital investments that we're going to make in the city of St. Paul.

So it's a big deal.

Chair and Council President.

I think it's a complicated question.

We try to do our best to have the committee members include information about their reasoning and what their priorities are in their letter of recommendation to the mayor.

When we can, I think we try to work with community groups that have reached out who want that information.

It can be kind of hard to determine

I think that you guys make decisions and probably for different reasons each time you do each individual so we can spend time kind of offering information about what the conversation was we have our minutes available so for example CDBG funding I think has come up this year the committee did change from their tentative recommendations following a conversation about

wanting to prioritize two projects in particular, our vacant and hazardous building projects, as well as the Hmong Community Center.

And so that's captured in the minutes that they had wanted to do those.

But I will say that I think that we have received feedback that that is helpful.

And I think that there's tension between the fact that we need to be able to provide that.

And it can be difficult, because I think each year,

members change the way that they make decisions and have conversations change and process to process.

I'm always excited to be surprised by how they respond and how they have conversations.

I will also say, though, that we do review with them ahead of time at the rubrics.

We try to tailor the questions and documents ahead of time to that.

I appreciate that, and I know that this is complicated.

I'm looking at the minutes of the meetings in question, and I'm not seeing discussion of these specific projects.

No, we don't do that.

So if I'm not seeing a specific project discussed, is that just it may not be showing up in the minutes?

I'm wondering whether after the presentations are made and before the committee sort of signs off on the final recommendation, where is the discussion happening about how to prioritize one project over another?

So I think, oh gosh, that's a hard question to answer because I think it depends on which process we're actually talking about.

When I said that we don't do a survey, they do do scoring individually, which we pull back together and then provide to them aggregated.

So they do do that piece of that, and we keep that.

they don't have rules that they are required to like follow that scoring or even necessarily that they will keep that so I do think that past processes that I have seen can be really impacted by things like who shows up to the public hearing and that piece but the discussion about which projects are funded is part of the discussion although it is true that

I think one project is prioritized over the other necessarily because all of our funding sources are finite.

I will say that I think that more often that this conversation is related to the project that they would like to see funded rather than, I mean it is which ones, the main conversation, the main thrust of the conversation and what would typically be in the minutes would be the conversation about working to fund those projects.

So when I was mentioning the vacant and hazardous buildings

for that meeting.

But I don't know that we would have detailed the conversation around why each individual would want to select which projects to pull from to fund that.

committee.

I'll come back to this topic later on.

I think it is really, we need to figure out a way to be able to know the reasoning behind these decisions, I think, because they are making recommendations, those go to the mayor, those come to us, and we have the ability to change those recommendations and obviously finalize the budget.

And it's difficult without being able to see, again, usually I look to sort of planning commission minutes, bza minutes, et cetera, to see the back and forth and understand the conversation that took place or to the

or to the scoring sheets.

But in this case, I'm not sure I could tell somebody, for example, why this decision was made.

I know I also have received I'm concerned from residents who they'll have investments in major projects and have seen funds investments not going to Ward 1 projects particularly and having to sort through the minutes I think even we have had a conversation particularly around the process

But can you speak to, because you had mentioned in your response that it really depends on who's in that room and who's advocating on behalf of that project, whether it's the public hearing or the work group or on the actual board.

Can you speak to what is the department's role in ensuring that there is equal representation amongst wards?

In the conversation that we have had prior,

I've learned that there's been quite a few vacancies on this board, but there hasn't been any notice or alerts, particularly with myself as a council member, particularly in Ward 1, about how we can fulfill those vacancies.

And also, if you can talk about if there is a situation where there is a lack of representation amongst a ward, how does the capital improvement budget process move forward?

So right now we do have a council, this is skipping forward a little bit so I might have to not repeat myself later, but right now the CIB committee members are representative of every ward except for ward 4.

We are advocating for

We are working to try and recruit in Ward 4.

I will say both Jamie and well, we're not members.

But there is always at least two Ward 4 residents at every CIB meeting because staff have to go.

But it has been something that I have seen dealt with.

So what I would say is the community process last year was really an example of a time that we found that we did not have projects proposed from wards.

caused some confusion in the process, but I think was important to do so.

So what we did at that point was we paused, we reopened the application process, and then spent more time advocating or working with those awards in particular to try and get additional projects.

I don't think that that is the ideal way of doing that.

But I think that that experience and the confusion that it caused is part of what

is leading the CIB through their conversations around prioritizing.

So the CIB committee is going to be spending time working with their district councils.

A lot of them are really connected to them already and other organizations within their communities.

And then I think also our goal is to continue to improve the way in how we can communicate with your team to help promote those.

Because getting the word out about capital improvement budget,

can be hard, I think.

It sounds boring when you say it that way sometimes.

I personally work to try and recruit folks, and I have to convince them, actually.

It's really fun, and we talk about parks all the time.

But yes, I do think that we try to be cognizant, in particular, of ward membership.

Like I said, the appointments are made by Senate district.

So we have a certain amount by Senate district that we need to recruit.

But in addition, I do track them by district council and ward.

OK, I think I'm skipping ahead a couple of slides.

And I'm hoping that when we get to the, so when I look at the five year CIB budget,

from 2022 to 2026.

A couple questions just because I wasn't here during the 2023 decisions or the 2022 decisions to front load so much of

I'm still wrapping my head around the budget cycle of CAB funding from the community project proposal phase to this process that goes through the city that gets to us.

And honestly, it is a little confusing, at least from my perspective.

but we're also not talking about a significant like it's it's it's funny it's resources but it only goes so far and so I'm just I'm trying to understand like kind of the timing like the five-year plan some of the decisions around like what it looked like in 2022 2023 when the decision was made to like

to where the last three years have really just been kind of, you know, in retrospect of like the front-loading funding, the funding in comparison is not the same.

And then as you look into like the forecast for like the next cycle of things, you know, I see CIB funding recommendations for 2027, and it's heading into this other year outside of the five-year CIB budget.

And so I'm just, you know,

I'm just wondering if you can help that help make sense of just you know how the money moves and when and then also just in general you know coming into the council learning about the community projects you know we had to expand some of the CIB projects because the community projects from my there weren't any very there were very few Eastside projects overall that were submitted from community and I think at the time our ward my ward had none

and I was just learning about that as well.

So now as we head into this project and this cycle, I'm glad to see some of the recommendation lists and I did pay attention to just where some of the wards, where the ward distribution was and some of the, just which projects and where were funded.

I'm actually glad you had the question because you made several of my points that I was going to make here.

So one of the things that is true about this department process, so a typical process, the way that it always works standard, is that every two years we bring forward the proposed budget and the tentative.

So that's what we did for 2026 proposed budget and then the tentative recommendations.

When I come back in two years, it'll be the next two years, right?

but our budget this year is impacted by the decisions made in 2021.

2021 they did decide to do the process differently and they took the funding available for five years including 2026 and front loaded it to fund some larger high priority projects.

So you see those here the North End Community Center, Fire Station 7.

Typically with CIB budget, what it is is $11 million per year of funding.

And it's been sort of set at that amount forever, maybe.

And essentially what we did was we took the $11 million.

What you'll see there is that the annual programs were prioritized and then sort of pooled it at the beginning so that we could do those higher priority projects.

However, what that means is that each year I've kind of brought this table back to you to highlight which year we're at in this five-year process.

2026 is our final year of this process, and we do just have fewer funds available.

So this year it's at $3.9 million in CIB bonds.

and then 2007 will be 11.

So really the 2026-2027 process only covered new funding for 2027 only and then in two years we'll be back to the two year process.

committee.

When we implemented the five-year plan we were in a unique interest rate environment that we opted to take advantage of so we could fund these projects essentially for cheaper.

The average capital improvement bond funding per year is $11 million.

committee.

That 11 million over five years stayed the same.

It was 55 million.

It was just pushed into those earlier years so that we could take advantage of those lower interest rates.

We're not in that same environment anymore as Neil will talk about in the next part of the presentation.

Thanks, Chair.

Just coming backward for a minute, I just want to follow up on Council Member Bui's excellent question about equity across the city.

And I just want to remind my colleagues that our council's audit committee actually took the CIB process as our focus in our last audit.

And Wilder Research presented to us a really helpful set of maps that I will send out again, but they are fascinating.

And they show where our capital investments have gone over the course of the last few years citywide.

you can search for your ward you can search for areas of concentrated poverty you can map the investments over lots of different demographic data

so we have that information and I also want to thank the CIB committee because I note in their letter to the mayor and also in our presentation to them in Wilder's presentation they note that they look forward to implementing some of the process improvements that Wilder suggested as they move forward specifically with regard to equity in the community proposal process so I just want to make sure that that is noted and recognized and we do have that information and again I'll send that out I think one of the things that would be helpful perhaps

in terms of this conversation, I feel as though we're triangulating a bit because you're responsible for talking to us about the committee's decisions and the committee is not here.

I don't think they're here.

They should speak up.

When is the next meeting?

One of the things I know that sometimes it can be hard to get

and volunteers to also then come to the Council meeting during the Workday, etc.

But I am wondering, just from that lens along the vein, would there be a conversation that could happen on November 10th with Council about the recommendations that they put forth?

because one of the things that I've heard I know I have I'm trying to remember through like Ward 7 CIB membership but like I do hear from some of the folks that do serve on the CIB from my ward just because they're you know we have that can we have communication both in the ward but I don't know how often they are able to have that conversation and I know that's something that

I've served on other committees for the city and some of them were grant funding pieces, some of them were around the scoring rubric.

And we did have comments and we had things that we wrote that we knew weren't going to be necessarily publicly shared, but we had reasons and rationales behind our scoring.

And so I think just to the pieces of some of the rubrics, some folks might be more comfortable addressing that head on if there's questions.

I guess I'm wondering if there is a score, but is there something that they're scoring against?

Is there something to tell them?

There is the rubric and we go through it with them.

I mean, we will find a way to unpack it.

I think that we are always excited to have any kind of coordination with your team.

I think that the success of the CIB

and my personal job is easier when we are engaged with you as community leaders.

And by that I'd say my job is easier because we'll have more members appointed hopefully and I don't have to hound them about quorum.

Also, a myriad of reasons.

So I think that we will find ways to make it work.

We have a meeting monthly, so December would likely be too late.

we have and I think that we have a certain amount of flexibility they are planning to have the capital maintenance process presented to them that day but that is not as time dependent as the adopted budget so I think that

I know that sometimes it's just as challenging to get the chair or the members of the committee during this time frame, like we did a 10 a.m. budget meeting.

I don't know how many people could come.

So that's something that I don't want to volunteer to hear over the people, but I have no issue coming to the next meeting to hear about that feedback, to learn more and more so from a lens of just

I, too, have been looking at the recommendations and it would be great to add some context to it in ways that I feel like I'm unable at this time, just of where the decisions were.

I see the scoring.

But if I'm just looking at, I see the scoring and then I see things that I would have probably chosen elsewhere that would be on the list of things that I would fund.

And then it's like, oh, well, I wonder what that went into.

So I don't want to volunteer my colleagues, but if someone wants to come with me November 10th, we'll plant that on the calendar.

It will be at Arlington Hills.

I will say also the Audit Committee came and presented and it really meant a lot to the members of the committee I think.

So thank you and I look forward to working with you on that.

I really appreciate that.

I think the one thing I'll lift up is sort of connecting the points of the Audit Committee and the concerns that Councilmember Bui spoke on.

We have a few historical organizations in the North End that apply every single year and we see a reduction of their investment year over year.

of the request that they had made even over two years or from previous years.

So we're seeing just a significant, and I don't want to call it a trend, of reduction of investment in neighborhoods that Councilmember Bui and I share, like the north end.

And so sort of connecting the sort of what does equitable investment look like across the city, recognizing the work of the Audit Committee,

given other programs that are funded through CIB and CDBG at the level of funding for specifically the North End, we are getting 25% of the historical investment as other neighborhoods with similar economic profiles.

So it's just to say there's sort of a diminishing investment in this neighborhood and when this particular organization presented at CIB, there were only two members present.

And so I think the makeup and who is present at these meetings really matters because then when they go to kind of jockey at the end for what's being invested in, and if it's an 18 person member board, there's only two people that were there to listen to this pitch for a neighborhood just like the east side that has a lot of lower wealth folks that are trying to access home ownership, that are trying to build economic wealth and build economic wealth in our city.

so I just I echo that as just important emphasis that there are two organizations specifically for the north end that have been doing business using this fund and year over year over year over year we see just a decline in the investment in these organizations and I don't it's not to point fingers but it's an observation

and there are worthy areas on the east side, absolutely.

So I'm lifting up the Audit Committee's presentation and connecting those dots and thinking about how we're equitably distributing resources across the city to ensure that we are focusing on the areas that have the greatest amount of need.

So with that, and I really appreciate the candor.

So we're at 11.14.

We are going to pause for questions and let us finish this presentation, because right after this, we still have a debt presentation.

One thing that I wanted to mention, the presentations where we do have presenters come

are not meetings.

They don't do business there.

There was the meeting where we reviewed proposals with the two folks.

We did determine to not reschedule that one.

It had already been rescheduled due to weather, so it happened this spring.

And to try and respect the presenter's time, we just moved with what we had there.

I do think that you're right, though, that

the most that we can more that we can do to document those and to to have that because I think that us telling committee members that we're taking notes and we want them to take notes and share is not enough and it also would frustrate me if I were a proposer so yeah and on an 18 person committee with two people present I would also say that's not equitable representation of the committee itself so we'll keep it pushing thank you I appreciate the comment yeah

So for our city department process, we did collect proposals.

They fell into three categories.

This was a slightly different process from previous years.

and we collected less detailed proposals for the 28-2031 proposals, the goal of which is that we're trying to develop our capital improvement five-year plan as a starting structure for the next process and to also sort of help the committee understand where our departments are going in the future to inform their proposals this year.

anything that I have here that is underlined is actually links and then I include them later so I do link to a lot of our documents the mayor's recommendation letter that they sent details some of their reasoning but really they really prioritize annual programs the review of annual programs was beneficial and they were highly prioritized by each group that reviewed them and then

In addition to annual programs, they prioritize existing facilities, improving and maintaining existing facilities that we have, and completing projects which we are currently working on, which are in existence.

So these are our annual programs.

The highlighted green ones are ones that

have been changed.

In addition to those two, the CIB Committee voted to reinstate the Children's Play Area Improvements annual program.

That is a program that had been removed as part of the 2021 process, I think.

It could have been 22.

But as part of finding cuts in that process, but it was determined to be really important to the way that Parks manages their facilities.

The highlighted green items

are still annual programs being funded.

The 2025 adopted is what we have annually given to those projects previously.

And because the amount is not enough to complete a project each year, so for example $10,000 for railroad crossing improvements, departments have historically sort of stored those budgets until they are able to spend it.

So what we did was we are scheduling the funding for annual programs in order to fund them when they'll be funded.

So right now, the budget book shows those funding for those programs in 2028, and we will reassess that as part of the next two-year budget proposal.

I'm really excited about this.

The other two projects that were funded as part of the capital improvement department process is our two transforming libraries projects, Hayden Heights and Riverview.

These are possible to be funded because of the amazing amount of work that libraries is doing to work with Friends of Libraries and outside organizations so that we were able to use CIB funding in conjunction.

in connection with those.

The other project is a 2021 project, the Randolph Avenue Bridge.

The initial $3 million was needed to complete that funding for that project.

So that is our final 2027 project.

In addition, we have the Capital Development Block Grant, CDBG.

It's a federal grant program, so the federal funding comes to us.

The CIB committee is only involved through the project review process, so that's a lot of what we've been talking about for the process this year.

Today, it's managed by PED, and PED works with the community groups once the funding is awarded or adopted through your process.

The funding available for this process has been $4 million per year for a while.

It's based off of how much funding we receive from the federal government.

And I separated them out.

It's both community groups and city departments which present proposals each year.

and I think that a lot of times the committee spends time trying to figure out the balance between underfunding a proposal or funding more proposals.

A lot of their conversation kind of goes into that.

I think that the way that they make those decisions changes based on the year, but this is the current list.

I just did want to reiterate if there are follow-ups about with additional information about history or what the proposals were I can also send applications to your offices as you review these.

And then my final main piece here

is the two final processes that we work through, which the current one is our capital maintenance.

Our capital maintenance team is currently meeting, and the CIB committee should have recommendations to you for 2026 and 2027 capital maintenance.

Typically those happen between December, or come to you between December of this year and February.

I think our hope is always to get it to you earlier.

and then also we are currently working on the community proposed projects.

I did want to spend the time thanking you for dedicating your resources with the audit committee to the review of the CIB community proposal process.

I found that very, we've ever seen nothing but amazing feedback from the committee.

They have a subcommittee that they are working with or that they are developing

to create committee recommendations around that.

And in addition, we are working to enact as many of those proposals as we can just by staff.

And I think that while I don't have the actual application to give to you, I am hopeful.

I am certain that the application will be simplified, that we will do our work to begin the process of simplifying

the experience for applicants in particular for our community members who are interested in applying and also that those recommendations are part of our continuous improvement steps and can kind of help us develop a process so we can keep moving forward with those.

and honestly if you have additional feedback on tools that can help you to promote them so things like I was asked for a square picture at one point to promote on social media things like that I don't always know what it is you need so if you have specific recommendations I think that that's helpful and we should have that to you soon this is my appendix those are my links we will also be updating you we had a review of our capital maintenance process

which was more deeply in-depth and we are finalizing our status updates report to get to you.

These documents, I'm proud of them.

And I think they've taken a lot of work to get back to being something that we can send to you.

However, they are dead.

So I also just wanted to say, as we get to you our follow-ups and finish these,

Great.

So I know there was a question queue.

We start with Council President.

I just want to note the time.

And so before we go to that question really quickly, we have one more presentation.

We are at time for the day.

It's pretty stacked.

There is, I think, flexibility with staff to do the debt presentation pretty quickly, but I also want to be respectful of the time and energy that they put into it and not rushing through the content.

And debt is admittedly one of my weaker points of the budget.

So I'm just looking at my colleagues.

Would folks like to, I did message them.

They're amenable to presenting on November 5th to get kind of that more 30 minute presentation time.

How are my colleagues feeling around giving the debt presentation a full 30 minutes on November 5th?

I'm seeing thumbs up, thumbs up, thumbs up, OK.

We would love a lengthier presentation on November 5th.

Thank you so much for the flexibility.

Thanks, Chair.

And thanks, Mr. Youngins, for your flexibility.

Sorry about that.

We just want to give you the full time.

Thanks again so much for the presentation, and again to the Audit Committee, and also to you and staff.

or to the CIB Committee for working with the Audit Committee and to you and staff.

It was a ton of time you put in, and again, the audits only matter if the departments we work with actually care about what they recommend.

So the fact that your staff was so helpful and the committee was so receptive and is now taking steps to move those forward really means a lot, so thank you.

I also just want to note, as you just, I think, pointed out, in addition, the CIB Committee recommends, then the mayor responds, and we have in our

of the City Council.

And I have a couple questions I'll send via email, so I won't spend time on them now.

But I just wanted to come back to your point about the annual programs.

You had mentioned that historically we had kind of put money into each of these programs every year.

It wasn't always spent.

It would be aggregated over time, and then the department, when it had enough money, would spend it on something.

And that was not a good financial practice, as you pointed out, because then,

I guess I'm just wondering, given that we're changing that practice, and feel free to correct anything I've misstated when you respond, I'm still seeing a whole bunch of annual programs here that are kind of continuing to get the amount of money they've always gotten.

I'm wondering, is that because these annual programs get spent down every single year, and we are confident this year,

or in 26 and 27, they will get completely spent down again?

Or if not, why would we be giving money into these annual programs rather than saying, look, whenever a department has a proposal, come to CIB Committee, whether it's for asphalt, children's play area, outdoor court, and we'll decide.

So I will say yes, I think that those, the two that were highlighted are the ones that we know are the problems that save those up.

The other annual programs do spend down their funding in a more timely way.

I also will say that we have because of our leadership in treasury have switched some of our processes so that we're not borrowing funds that we don't need to sort of I think help adapt with that and so November 5th you'll probably hear more about that and I think that that's an excellent way to help balance some of these processes.

I also will say that I think that

I think these annual programs sometimes are the only funding source, so I think that changes to them.

It's helpful to stage them and continually review them as we work with departments so that we continue to have the buy-in from departments.

So yes, I do think that those annual programs are spent down.

But also, in addition to that, I think that this will allow us to keep watching that.

And so if that changes, because we've been successful in working through this process with departments,

that will bring less fear because I do think that when I started this was already a known issue a few years ago so I think I've been here three years and it's taken several conversations to convince them that we're not trying to like cut their funding we are just trying to put it to when they'll use it so yes I think that they are those annual programs are spending that down and also

Great, wonderful.

Any other questions for my colleagues?

Wonderful.

Again, a deep appreciation for the presentation stay and the content and the flexibility for the debt presentation to be scheduled.

We really appreciate it.