10 cos saio COUNCIL AGENDA REPORT POLICE COST COMPARISON BETWEEN LOS GATOS AND MONTE SERENO,

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1 MEETING DATE: 02/ 17/ 15 ITEM NO: 10 cos saio COUNCIL AGENDA REPORT DATE: February 12, 2015 TO: FROM: GREG LARSON, TOWN MANAGER SUBJECT: POLICE COST COMPARISON BETWEEN LOS GATOS AND MONTE SERENO, RECOMMENDATION: Establish a Police Services Contract Ad Hoc Committee to report back to the Town Council by August 2015 with proposed amendments to update the existing contract and make it financially sustainable and fair for the residents of Los Gatos and Monte Sereno. BACKGROUND: Review of the Monte Sereno Police Services Contract has been a Town Strategic Goal since February 2010 and currently reads as follows: Review and update the contract with Monte Sereno for police services to reflect needs and resources. On October 7, 2014, the Town Council heard the final report of the Los Gatos /Monte Sereno Police Services Ad Hoc Committee (then Council members Barbara Spector and Diane McNutt) following several meetings with a similar ad hoc committee from the City of Monte Sereno. The Town' s Ad Hoc Committee reported (Attachment 1) that the City of Monte Sereno was satisfied with the contract as it stands and saw no reason to modify it or to reimburse Town costs incurred on behalfof Monte Sereno beyond what was specified in the contract. The Town' s Ad Hoc Committee presented the Town Council with four possible actions, as follows: The work ofthe Ad Hoc Committee is now complete and the Council must determine what, ifany, future actions are desired. Possible actionsfor Council consideration include: 1. No further action, maintain the status quo; PREPARED BY: MATT FRISBY Chief of Police Reviewed by: Town Manager Attorney NAMMAdminWorkFile \2015 Council Reportffeb. ITTC Rprt - PD.Monte Sereno.dm

2 2. Direct staffto provide additional information such as the potential impacts ofcontract termination or police service cost comparisons between Los Gatos and Monte Sereno; 3. Schedule Council consideration ofcontract termination upon 12 months' notice as required by the contract; and/ or 4. Referfuture action to the Council' s Strategic Goals Retreat in February 2015 or as part ofthe Budget. " The unanimous Council action was " to optfor a combination of #2 and #4 and to direct staffto present the information that is indicated in #2 when it is available, with a view to bringing it backfor discussion in February with the strategic goals plan. " Monte Sereno Police Services Agreement The Monte Sereno Polices Services Agreement is provided as Attachment 2. The key provisions of the Agreement are as follows: 1. The Police Chief is the Town' s designated contract administrator working with the Monte Sereno City Manager; 2. The agreement specifies a nearly 30 year term commencing on Sept. 1, 1995 and ending on June 30, 2025, for a remaining term of 10 years and 6 months; 3. Either party can terminate the contract with 12 months' notice (First amendment); 4. The contract provides for a specified 80 hours per week of Police Patrol services in Monte Sereno; 5. In addition, the contract specifies that Monte Sereno will receive all other police services provided to the Town of Los Gatos, which includes 24/ 7 Police Response, Dispatch, Records, Investigations, Traffic Enforcement, School Resource Officer, Property & Evidence, Community Services, Training, Volunteer Programs, Management & Administration, Facilities, Vehicles, Equipment, Technology, Training, Vacancies and Recruitment, Parking, etc.; and 6. The contract charges and costs paid by Monte Sereno are based solely on the direct personnel costs of providing 80 hours of Police Patrol, with no costs charged or provided for the other services specified in #5 above. The contracted payment from Monte Sereno to Los Gatos for the current fiscal year is $579, In addition, Monte Sereno has directed $ 100, 000 of annual State funding ( SLESF) for additional increased traffic enforcement ( 8 hours per week) and has provided direct municipal contributions totaling 23, for a license plate reader and radar speed feedback trailer. In 2011, the Town of Los Gatos incurred additional unbudgeted expenses of $198, in overtime directly resulting from the investigation of the murder of Monte Sereno resident Raveesh Kumra. The City of Monte Sereno previously rejected the Town' s request to reimburse some or all of that extraordinary expense paid by the Town.

3 DISCUSSION: Last October, the Town Council directed staff "to provide additional information such as the potential impacts of contract termination or police service cost comparisons between Los Gatos and Monte Sereno." As a result of this examination and as detailed below, the difficulties associated with the current police services agreement are: 1. The lack of specified investigative hours as is common in most police services agreements 2. The absence of procedures and/ or authorization for incurring extraordinary expenses for unbudgeted atypical events 3. Compensation for police services beyond patrol and traffic and lack of funding for training other leaves ( vacancy factor) When the contract was drafted 20 years ago, police operations were far less complex and the police department itself was larger (approx. 46 officers). At that time, the police department had the flexibility to provide 24/ 7 services and could forego a billing mechanism for investigative hours or extraordinary events as typical in more contemporary police services agreements. As law enforcement has changed, the Los Gatos Monte Sereno police services contract has stayed the same. Both communities have benefitted through the police services contract agreement over the years and have found great value in that relationship; however a reexamination of expectations, workload and/ or service delivery models would be beneficial to both the Town and the City of Monte Sereno at this time. Potential Impacts of Contract Termination Termination of the contract would have direct impacts to the Town depending on the manner in which the termination is implemented. On one hand, the termination of the contract could be reflected as a loss of revenue to the Town with a corresponding increase in General Fund support required to maintain current staffing levels and hours of service. The staffing hours and resources previously deployed to Monte Sereno would then be solely available to support Los Gatos operations, residents and businesses. On the other hand, Los Gatos police services and staffing could be reduced equivalent to the reduced revenue. However, there are not two specific Police Patrol positions assigned to Monte Sereno that could be reduced or eliminated. Instead, every Police officer and employee spends pieces of time in or supporting Monte Sereno, totaling up to more than the contractually required 80 hours of Police Patrol time in Monte Sereno. Eliminating the equivalent of two police officers would result in reduced on duty patrol staffing for at least two of the four shifts providing 24/ 7 patrol coverage in Los Gatos, and would decrease staffing, response times and within flexibility department operations.

4 Given the 12 month contract termination noticing period, as well as current Police staffing shortages due to illness, injury, retirements and prolonged recruitments, staff would recommend reducing projected revenues and not projected staffing if the contract were terminated. The below listed revenue impacts are reflective of anticipated revenue loss per fiscal year and life of the contract if council chose to implement termination as of April Revenue Impacts Reduction of revenue FY 15/ , 847 Reduction of revenue FY 16/ ,013 Reduction of revenue life of contract 8, 577,793 Service Impacts Patrol 4, 160 hours 7% of available hours over various patrol shifts Traffic 416 hours 10% of available hours between 2 Traffic Officers Investigations 91 cases 5% workload reduction on average based on FY 14/ 15 estimations Records 107 cases 4% workload reduction on average based on FY 14/ 15 estimations Computer Aided Dispatch 1, 920 events 6% workload reduction on average Events ( CAD) based on FY 14/ 15 estimations Dispatch Activity 8, 922 events 16% workload reduction on average based on FY 14/ 15 estimations The ability to increase capacity, or decrease workload as a result of the termination of the contract would only affect the management of available time because the 80 hour patrol requirement of the contract is provided by distributing these hours over 4 shifts and 3 patrol areas in the Town and City. Minimum staffing levels would need to remain the same regardless of termination of the contract in order to maintain current Los Gatos community service level expectations and flexibility. Police Service Cost Comparison: Town of Los Gatos v. City of Monte Sereno The comparison of police costs between the Town and the City of Monte Sereno can be examined many ways including but not limited to: cost per CAD event, cost per individual case investigated, cost per crime /reports processed by staff, cost of service per hour, per program, " gross" cost per capita, " net' cost per capita, and /or various other metrics as requested by Council.

5 The charts below are a brief summary of cost comparisons between the Town and the City of Monte Sereno. It should be noted that the figures represented in the tables below are reflective of both the gross" costs and true " net' costs ( expenditures less revenues) to the Town, the City of Monte Sereno and /or comparison cities herein. Many times when evaluating costs associated with a program or department it is easy to quickly focus on only the expenditures and not take into consideration revenues generated by the department or program being examined. For example, the gross expenditure budget for the Police Department is approximately $ 14.2 million, but when taking into consideration revenues generated through, fines/ fees, grants and other revenue sources associated with police department operations, the " net' General Fund is approximately $ million. For instance, if the Los Gatos /Monte Sereno Police Department were outsourced, there would be a reduction in expenditures, but also a competing loss of revenue ( approximately $3 million), for these reasons both the " gross" and " net' comparisons have been included for full comparisons. SERVICE COST COMPARISON FY 2014/ 15 Los Gatos Monte Sereno Po ulation 30, 391 3, 485 Square Miles Los Gatos Los Gatos Monte Sereno Monte Sereno Gross Costs Net Costs Gross Costs Net Costs Patrol 6, 673, 993 5, 994, , , 514 Budget cost of contract) Patrol Hours 52, , 000 4, 160 4, 160 Cost per 128 (min. cost) 115 ( min. cost) 139 ( max. fixed ( max. hour* cost) fixed cost) note: Monte Serena patrol hours are guaranteed by contract and typically exceeded, while Los Gatos hours are typically less due to vacancies, leaves, illnesses etc. ( ((vacancy factor) Los Gatos Los Gatos Monte Sereno Gross Gross Costs Costs Net Costs Pass Through Costs Traffic 869, , , 000 /SLESF Budget Traffic Traffic 3, 3, , Hours Cost Per 232 (min. cost) 118 ( min. cost) 240 ( max. or fixed cost) Hour The above listed services do not include calculation of a vacancy factor which is detailed below

6 Los Gatos Los Gatos Monte Sereno Gross Budget Net Budget Investigations 2,356,205 2,233, ( no contractual obligation or cost) Budget Records 812, , ( no contractual obligation or cost) Budget Dispatch 992, , (no contractual obligation or cost) Budget Los Gatos Los Gatos Monte Sereno Monte Monte Sereno Sereno Gross CPC Net Net CPC CPC Gross CPC Net CPC Cost Per Capita Capita As detailed above, the gross cost per hour associated with dedicated patrol and traffic enforcement hours are roughly comparable between the Town of Los Gatos and the City of Monte Sereno. In contrast, the difference in " " net' cost per capita between the Town and the City of Monte Sereno is $ $ $ Santa Clara County Contract Cities Santa Clara County Comparable Police Departments Agency Gross CPC Net CPC Los Altos Hills Saratoga Cupertino Monte Sereno AVG Agency Gross CPC Net CPC Morgan Hill Campbell Mountain View Los Altos AVG The more substantive contract issues are the costs of law enforcement services provided to the City of Monte Sereno that are not specified and billed by hour of work or individual task. The majority of these services exist within the program budgets of investigations, records and dispatch/ communications. It should be noted that when making comparisons to other Santa Clara County contract cities the costs associated with records and dispatch are included at " no cost." Conversely, the hours devoted to investigations are delineated specifically and are subject to an hourly rate ( see Attachment 3 Town of Los Altos Hills Law Enforcement Services Contract).

7 Applying the contract terms and hourly rates outlined in Attachment 3, if the City of Monte Sereno were to discontinue the services of the Los Gatos/ Monte Serene, Police Department and contract with the Santa Clara County Sheriffs Office the cost of the contract could be approximated as follows: Patrol Hours Cost Per Hour Total Cost 4, , Traffic Hours Cost Per Hour Total Cost , Investigative Hours Cost Per Hour Total Cost , Total 1 $ 906, Total Less SLESF Funds 806, Monte Sereno Contract 1$ 579, 514 Savings to Monte Serene, 1 $ 227, The investigative hours estimation used above is an approximation ofthe percentage ofcases investigatedfor the City ofmonte Sereno divided by the current hourly ratefor sworn services detailed above ($ ) when applied to the sub -total cost for investigative services detailed below ($134, divided by $ per hour= approximately 964 hours per FY estimates) As outlined in the current Los Gatos /Monte Sereno Police Services contract the police department provides the services of investigations, records and dispatch at " no cost" and the work load associated with these duties and /or responsibilities have been proportionately incorporated, absorbed and distributed to department wide work plans by program. The table below represents an approximation of the number of hours and/ or tasks completed by each of these programs with respect to the overall program budget and approximated costs associated with services provided to the City of Monte Sereno at " no cost." Program Budget of MS Cases of Cost Per Case MS Workload Estimated Costs Investigations 2, 356, % / Case 111, Records 812, % / Case 32, Dispatch 992, , % / Activity 158, Subtotal Costs 1 $ 302, The above sub -total lists shows total costs over all three programs are estimated at $302, or 7% of the combined program budgets ($4, 161, 113). As referenced previously, in researching like comparisons

8 8 with other in- county contract cities records and dispatch are included at " no cost" and /or are not specifically called out or billed in the contract agreements used in this analysis. Additional factors to be considered when evaluating costs and liabilities associated with the language and services delineated in the current police services contract is the lack of language related to extraordinary events," unexpected overtime costs and the absence of a vacancy factor for sworn hours provided to the City of Monte Sereno. Specific to vacancy factoring, in order to provide 80 hours of sworn officer service the department must allocate more than just 2 full time officers ( FTE' s) to offset training time and scheduled or unscheduled time off. A general industry standard for this variance is approximately 1. 6 FTE' s to achieve 1. 0 FTE. When establishing fiscal budgets and/ or contract services many times municipalities generally factor in this variance as a base cost to the department budget and/ or contract. The Town does not budget police personnel with such a vacancy, rather the Town budgets at a 1: 1 ratio. The following table and formula illustrates the average vacancy factor for a Los Gatos / Monte Sereno Police Officer and helps determine an employee' s effective work hours ( those hours actually spent on duty). Los Gatos/ Monte Sereno 2,080 Hours Worked Per Year 160 Vacation Hours) 80 Holiday Hours) 20 Training Hours 24 Personal Leave Hours) 27 Injury and illness Hours 1, 769 Effective Work Hours or 15% Vacancy Factor Hours used to calculate the vacancy factor were taken from a 3 year average. CONCLUSION: The Police Department and the Town of Los Gatos have enjoyed a very good relationship with the City of Monte Sereno. Both communities have similar residential demographics and the Police Department has provided quality and responsive services. The City of Monte Sereno is nearly bordered on all sides by the Town of Los Gatos and the Police Department has a long history of reaching out to its citizens which has resulted in a strong bond between both communities. Revenues generated as a result of the police services contract with the City of Monte Sereno are the largest revenue source in the police department budget and has provided a stable base when other Town revenues were subject to economic fluctuations.

9 While the police services contract has mutually benefitted the Police Department and the City of Monte Sereno, the current police services contract does not address or reflect contemporary work load or services provided to the City of Monte Sereno. The Town provides approximately $ 302, in services through its work in investigation, records and communications that cannot be billed in the police services contract. These costs are subsidized by the Police Department' s overall budget. That being said, all like in- county contract city comparisons do not bill for records and dispatch. The only delineated service hours billed per contract are associated with patrol hours, traffic enforcement hours, investigative hours, volunteer Reserve Police Officer hours, School Resource Officer hours, Special Services hours, and percentage billing calculations for sub- station costs. There is no language in the current police services contract to address " extraordinary events" and/ or unforeseen overtime costs associated with like events. For example, most recently the Kumra homicide investigation resulted in an unforeseen expense to the Town of $198, Although events such as these seldom occur, it would be beneficial to have such language in the contract or a mechanism to address investigative hours /costs as noted in other contract cities represented in Santa Clara County. Due to the absence of contract language for other services, the " net" cost of police service per capita CPC) for the City of Monte Sereno is $ while the equivalent net cost per capita for Los Gatos is In addition, this week the Mayor requested that possible outsourcing of the Police Department to the County Sheriff be added for consideration with the Monte Sereno contract given overlapping or interconnected issues. Consequently, staff has provided Attachment 4 on outsourcing. ALTERNATIVES: As shown through the comparisons made in this report there are different ways to assess equity and/ or worth with regard to the current police services contract. Some ( but not all) of the potential options that Council may wish to consider are as follows: Continue the agreement with the City of Monte Sereno maintaining status quo Convene a committee comprised of both respective Councils to reexamine the language in the existing contract, specifically the delineation of investigative hours to be billed as contemporary with like comparison contracts Seek to create a new independent contract and determine agreed upon service level expectations to be provided and/ or billed for Schedule termination of the police services contract with the of City Monte Sereno

10 10 FISCAL IMPACT: The police department will have a projected revenue loss of $177, 847 in FY 15/ 16, $ 745, 013 in FY 16/ 17 and will stand to lose approximately $8, 577, 793 over the remaining life of the contract by conservative estimations. If Council decides to terminate the contract an applicable budget adjustment would be required to address these revenue shortages. Attachments: 1. Town of Los Gatos Ad Hoc Committee Report 2. Los Gatos /Monte Sereno Law Enforcement Service Contract and Amendment 3. Los Altos Hills Contract for Law Enforcement Services and Supplement 4. Outsourcing Memorandum (with Exhibits A and B) 5. Public comments received through 11: 00 a.m. February 12, 2015

presentation, which occurred on May 19, 2014 as part of the Council' s regular Budget Hearing.

presentation, which occurred on May 19, 2014 as part of the Council' s regular Budget Hearing. Attachment 4 with Exhibit A & B Los Gatos Monte Sereno POLICE DEPARTMENT 5 ke DATE. 211012015 TO: Town Manager Greg Larson FROM. ChiefMatt Frisby SUBJECT. Police Outsourcing Cost Comparisons Background: