FY 2026-27 Proposed Midcycle Budget

Revenues are budgeted and recorded into specific accounts. These accounts are aggregated for reporting into categories, such as property tax, fines & penalties, or service charges. Expenditures Expenditures reflect the costs associated with the provision of services and performance of operations by the City. There are two key categories of expenditures: personnel expenditures and operations & maintenance (O&M) expenditures. Personnel expenditures include the cost of paying City employees to perform various functions and provide services to the public. These costs include salaries, overtime, retirement, and healthcare costs. O&M expenditures include non-labor related costs and are processed through the City’s contracting and purchasing systems. O&M expenditures include items such as contracts for services, supplies and materials, utilities, equipment purchases, and debt payments. Expenditures are budgeted and recorded into many different accounts. These accounts are aggregated for reporting purposes into broader categories that include salaries, retirement, debt payments, or capital expenditures, among others. Funds and Fund Transfers Funds are groups of revenue and expenditure accounts that must be balanced individually and separately. They function in the City's Budget like having separate bank accounts to track different personal finances. The City’s Budget contains over 100 funds, the largest of which is the General Purpose Fund. The General Purpose Fund is unrestricted in its use. Other Funds normally have restrictions on the types of activities they support. These restrictions may be established by local ordinance, the City Charter, federal or state law, or grant agreements. The Policy Budget will often summarize information by General Purpose Fund and All Funds. All Funds sums up the General Purpose Fund and all other special funds.   In certain cases, monies may be transferred between City funds. For instance, 3% of the City’s annual unrestricted General Purpose Fund revenues are required to be transferred between the General Purpose Fund and the Kids First! Fund to meet the requirements of the 2009 Kids First! ballot measure (Measure D). When a transfer occurs between funds, the “sending” fund (where the transfer comes from) records an expenditure and the “receiving” fund (where the transfer goes to) records revenue. This is to ensure that the overall budget remains balanced. Department & Organizational Structures The City of Oakland is organized into various departments as defined in Section 2.29 of the Oakland Municipal Code. These departments are responsible for delivering the various external and internal services of the City. Departments are generally established by City Ordinance approved by the City Council. Several departments were established by the City Charter itself and generally include the name “Office” in the title. These include the Mayor’s Office, the City Attorney’s Office, and the City Administrator’s Office. Because departments are not funds, departmental revenue and expenditures may be contained in and/or attributed to one or more funds. Similarly, one fund may contain one or more departments' revenue and expenditures. The relationships between funds and departments are illustrated in the departmental appropriations by fund tables on the Summary Table by Fund page.   Both the budget and financial forecast documents include two quasi-departments: The Capital Improvement Program and Non-Departmental. These two groups are distinguished from traditional departments in that they do not have operational staff attributed to them. These groups are used to record various inter-departmental projects and citywide costs, such as debt service, legally required fund transfers, or major infrastructure projects. Internal Service Funds The City uses Internal Service Funds to charge departments for services that are provided between City departments and are considered a part of the centralized support the departments need in order to complete their work. For example, the Oakland Police Department (OPD) requires vehicles to operate. These vehicles also need routine maintenance. OPD pays the Oakland Public Works (OPW) department to maintain its vehicles. Other departments do this too. Other Internal Service Funds include facilities, telephones, printing, etc. The City has each Internal Service Fund apportions costs across departments and funds at a rate that is determined to be the cost of providing this service. Overhead Rates Overhead rates are used to recover costs of certain administrative functions like accounting, cash management, and information technology, which can be difficult to allocate to specific funds, functions, or projects. The City utilizes an outside actuarial consultant to review rates and methodologies for its overhead rates. Overhead charges are budgeted and recorded as expenditures in any given fund, while overhead recoveries are budgeted and recorded as revenue in the overhead fund supporting the relevant administrative function.   For example, the Oakland Public Works (OPW) Department has a centralized fiscal and human resources staff. Costs for HR staff are budgeted and recorded as expenditures in the funds receiving support from OPW fiscal and human resources, based on the payroll (i.e., charged personnel) within those funds and a calculated overhead rate. Overhead recoveries are then budgeted and recorded as revenues in the OPW overhead fund to offset the costs of OPW fiscal and human resources staff. Fund Balances & Reserves At the end of each fiscal year, each fund’s revenue collections are compared against incurred expenditures. If there were greater expenditures than revenues, then that difference is reduced from the “fund balance.” A negative fund balance occurs when cumulative fund expenditures exceed cumulative fund revenues. By contrast a positive fund balance exists when cumulative revenues exceed cumulative fund expenditures. When revenues a