Police Cost Comparison between Los Gatos and Monte SerenoMEETING DATE: 02/17/15
ITEM NO: 10
cos sAio COUNCIL AGENDA REPORT
DATE: February 12, 2015
TO: MAYOR AND TOWN COUNCIL
FROM: GREG LARSON, TOWN MANAGER
SUBJECT: POLICE COST COMPARISON BETWEEN LOS GATOS AND MONTE SERENO,
POTENTIAL IMPACTS OF MONTE SERENO CONTRACT TERMINATION, AND
POTENTIAL OUTSOURCING
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 behalf of 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 of the Ad Hoc Committee is now complete and the Council must determine what, if any,
future actions are desired. Possible actions for 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
PAGE
MAYOR AND TOWN COUNCIL
SUBJECT: POLICE COST COMPARISON BETWEEN LOS GATOS AND MONTE SERENO,
POTENTIAL IMPACTS OF MONTE SERENO CONTRACT TERMINATION, AND
POTENTIAL OUTSOURCING
February 2, 2015
2. Direct staff to provide additional information such as the potential impacts of contract
termination or police service cost comparisons between Los Gatos and Monte Sereno;
3. Schedule Council consideration of contract termination upon 12 months' notice as required by
the contract; and/ or
4. Refer future action to the Council's Strategic Goals Retreat in February 2015 or as part of the
2015 -16 Budget. "
The unanimous Council action was "to opt for a combination of #2 and #4 and to direct staff to present
the information that is indicated in #2 when it is available, with a view to bringing it back for 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 $579,514.00. 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
$23,989.31 for a license plate reader and radar speed feedback trailer.
In 2011, the Town of Los Gatos incurred additional unbudgeted expenses of $198,537.78 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.
PAGE
MAYOR AND TOWN COUNCIL
SUBJECT: POLICE COST COMPARISON BETWEEN LOS GATOS AND MONTE SERENO,
POTENTIAL IMPACTS OF MONTE SERENO CONTRACT TERMINATION, AND
POTENTIAL OUTSOURCING
February 2, 2015
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 flexibility within department operations.
PAGE
MAYOR AND TOWN COUNCIL
SUBJECT: POLICE COST COMPARISON BETWEEN LOS GATOS AND MONTE SERENO,
POTENTIAL IMPACTS OF MONTE SERENO CONTRACT TERMINATION, AND
POTENTIAL OUTSOURCING
February 2, 2015
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 2015.
Revenue Impacts
Reduction
of revenue
FY 15/16
$177,847
Reduction
of revenue
FY 16/17
$745,013
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.
PAGE
MAYOR AND TOWN COUNCIL
SUBJECT: POLICE COST COMPARISON BETWEEN LOS GATOS AND MONTE SERENO,
POTENTIAL IMPACTS OF MONTE SERENO CONTRACT TERMINATION, AND
POTENTIAL OUTSOURCING
February 2, 2015
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 $11.2 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
*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
Monte Sereno
Po ulation
30,391
3,485
Square Miles
1 15.6
1.5
*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
Monte Sereno
Gross Costs
Gross Costs
Net Costs
Gross Costs
Net Costs
Patrol
$6,673,993
$5,994,443
$579,514
$566,514
Budget
Traffic
3,744
cost of contract)
416
Patrol Hours
52,000
52,000
4,160
4,160
Cost per
$128 (min. cost)
$115 (min. cost)
$139 (max. fixed
$136.18 (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)
*The above listed services do not include calculation of a vacancy factor which is detailed below
Los Gatos
Los Gatos
Monte Sereno
Gross Costs
Net Costs
Pass Through Costs
Traffic
$869,817
$442,839
$100,000 /SLESF
Budget
Traffic
3,744
3,744
416
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
PAGE
MAYOR AND TOWN COUNCIL
SUBJECT: POLICE COST COMPARISON BETWEEN LOS GATOS AND MONTE SERENO,
POTENTIAL IMPACTS OF MONTE SERENO CONTRACT TERMINATION, AND
POTENTIAL OUTSOURCING
February 2, 2015
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 $205.65.
Santa Clara County Contract Cities Santa Clara County Comparable
Police Departments
Agency
Los Gatos
Los Gatos
Monte Sereno
Monte Sereno
Gross Budget
Net Budget
Net CPC
Investigations
$2,356,205
$2,233,629
$0 (no contractual obligation or cost)
Budget
$166.29
$162.53
Capita
Records
$812,208.60
$801,498.60
$0 (no contractual obligation or cost)
Budget
Dispatch
$992,699.40
$992,699.40
$0 (no contractual obligation or cost)
Budget
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 $205.65.
Santa Clara County Contract Cities Santa Clara County Comparable
Police Departments
Agency
Los Gatos
Los Gatos
Monte Sereno
Monte Sereno
$122.73
Gross CPC
Net CPC
Gross CPC
Net CPC
Cost Per
$467.42
$368.18
$166.29
$162.53
Capita
$153.08
$147.05
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 $205.65.
Santa Clara County Contract Cities Santa Clara County Comparable
Police Departments
Agency
Gross CPC
Net CPC
Los Altos Hills
$128.72
$122.73
Saratoga
$154.86
$142.15
Cupertino
$162.43
$160.77
Monte Sereno
$166.29
$162.53
AVG
$153.08
$147.05
Agency
Gross CPC
Net CPC
Morgan Hill
$339.48
$288.06
Campbell
$344.64
$316.26
Mountain View
$412.76
$383.48
Los Altos
$533.14
$518.92
AVG
$407.51
$376.68
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).
PAGE
MAYOR AND TOWN COUNCIL
SUBJECT: POLICE COST COMPARISON BETWEEN LOS GATOS AND MONTE SERENO,
POTENTIAL IMPACTS OF MONTE SERENO CONTRACT TERMINATION, AND
POTENTIAL OUTSOURCING
February 2, 2015
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
4,160
$164.90
$685,984.00
Traffic Hours
Cost Per Hour
Total Cost
416
$162.45
$67,579.20
Investigative Hours
Cost Per Hour
Total Cost
964
$159.02
$153,295.28
Total 1 $906,858.48
Total Less SLESF Funds
$806,858.48
Monte Sereno Contract
1$579,514
Savings to Monte Serene,
1 $227,344.48
*The investigative hours estimation used above is an approximation of the percentage of cases investigated for the City of Monte Sereno divided by the
current hourly rate for sworn services detailed above ($139.00) when applied to the sub -total cost for investigative services detailed below ($134,017.74
divided by $139.00 per hour= approximately 964 hours per FY 14115 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
Workload
Cost Per Case
MS
Estimated
Costs
Investigations
$2,356,205
91
5%
$1227.27 / Case
$111,681.57
Records
$812,208.60
107
4%
$303.63 / Case
$32,488.34
Dispatch
$992,699.40
8,922
16%
$17.80 /Activity
$158,811.60
Subtotal Costs 1 $302,981.51
The above sub -total lists shows total costs over all three programs are estimated at $302,981.51 or 7% of
the combined program budgets ($4,161,113). As referenced previously, in researching like comparisons
PAGE 8
MAYOR AND TOWN COUNCIL
SUBJECT: POLICE COST COMPARISON BETWEEN LOS GATOS AND MONTE SERENO,
POTENTIAL IMPACTS OF MONTE SERENO CONTRACT TERMINATION, AND
POTENTIAL OUTSOURCING
February 2, 2015
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.
PAGE
MAYOR AND TOWN COUNCIL
SUBJECT: POLICE COST COMPARISON BETWEEN LOS GATOS AND MONTE SERENO,
POTENTIAL IMPACTS OF MONTE SERENO CONTRACT TERMINATION, AND
POTENTIAL OUTSOURCING
February 2, 2015
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 $302,981.51 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 $198,537.78. 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 $162.53 while the equivalent net cost per capita for Los Gatos is
$368.18.
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 City of Monte Sereno
PAGE 10
MAYOR AND TOWN COUNCIL
SUBJECT: POLICE COST COMPARISON BETWEEN LOS GATOS AND MONTE SERENO,
POTENTIAL IMPACTS OF MONTE SERENO CONTRACT TERMINATION, AND
POTENTIAL OUTSOURCING
February 2, 2015
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