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City Council Unanimously Votes to Move Forward with Voluntary Early Separation Incentive Program and to Create a Plan for Major Organizational Changes
April 15, 2020
SANTA MONICA, Calif. – At its online meeting last night, April 14, 2020, the Santa Monica City Council took the first major step in addressing changed operations and declining revenues resulting from the novel coronavirus (COVID-19) public health emergency – authorizing City staff to implement a Voluntary Early Separation Incentive Program (VESIP) for eligible staff this week.
The City relies heavily on revenues impacted by State and County stay at home orders, including retail, tourism, dining, and entertainment. Projections show that by June 30, 2020, the end of the fiscal year, the City will have a $72 million budget gap in the General Fund. Projected deficits for July 2020 through June 2021, show an additional shortfall of $154 million. Similar impacts are being felt in the City’s Enterprise Funds.
The VESIP authorized by Council will provide monetary incentives for staff who voluntarily choose to leave their City employment. Staff who voluntarily separate will receive a lump sum of $15,000 or $10,000 (depending on their date of hire) and 18 months of medical benefits. The last day of employment for City staff who choose to participate in the VESIP will be May 9, 2020.
Mayor Kevin McKeown shared at the meeting that the City Manager and City Attorney volunteered a 20% reduction in pay effective May 1, 2020.
“COVID-19 and the economic repercussions have had devastating impacts across our country,” said Mayor Kevin McKeown. “Our thoughts are with all those stricken, and their families, while we soberly assess our City’s finances. Santa Monica, like communities across America, faces the daunting task of rebuilding our economy, adapting how we live, and restructuring how our government operates.”
Council also directed the City Manager to return on or before May 5, 2020, with a proposed plan that restructures City operations and balances the City budget in response to the pandemic.
Restructuring City operations will focus on foundational programs, emergency response, and economic recovery from the impacts of the COVID-19 pandemic. The following goals will guide the plan:
- Preserve essential public health and safety functions to deal with the ongoing and future impacts of the public health emergency.
- Create long-term fiscal and community sustainability that preserves institutional knowledge to the extent possible and aligns available community-centered resources with the City’s values, and in particular social justice, understanding that some programs cannot continue or must be significantly altered in order to maintain public health and safety and to live within our means.
- Prioritize efforts that encourage business retention, rebuild the economic and social health and resilience of the community, make the community more economically competitive, and restructure revenue-producing programs to sustainable levels.
- Recognize that even important priorities must be postponed and as the economy improves, we can expand and rebuild our efforts to address them in the future.
- Pursue realignment by making reductions across the entire organization including executives, managers, supervisors, and front-line staff.
“This is an unprecedented situation, forcing massive changes in how we operate and drastically reducing revenues to an extent never seen before. The altered situation and the gaping hole it has made in our budget requires us to make heartbreaking decisions. In the end, the crisis will force reductions in important and valuable services to the community and affect the lives of our incredibly dedicated workforce,” said City Manager Rick Cole. “We will strive to make intelligent and compassionate recommendations to support our community beginning the long road towards economic and social recovery. Ideally, we’d have time for a thoughtful, collaborative process – but as we’ve seen events are moving with breathtaking speed. The longer we wait to make hard decisions, the greater the long-term threat posed to essential services and the staff who provide them.”
The proposed restructuring plan will be presented to Council at its May 5, 2020 meeting.