By Sandra Emerson
Posted: 10/12/2012 06:52:36 AM PDT
Updated: 10/12/2012 07:10:44 AM PDT

UPLAND – City leaders must aggressively cut spending in order to avoid declaring a fiscal emergency and filing for bankruptcy protection, according to a city memo obtained by the Daily Bulletin. Among the cuts being considered are contracting out police and fire services and reducing compensation or benefits for city employees.

According to the memo, which Upland’s City Council considered in closed session on Monday, the city has only $1.4 million in its general fund reserve, which is nearly $2.7 million less than what was projected.

“Our situation is severe, and we have to take measures,” City Manager Stephen Dunn said Thursday. “We have no choice unless we want to file bankruptcy. I don’t want to file bankruptcy. The City Council doesn’t want to file bankruptcy.”

The city had projected reserves to be at $4.1 million at the end of the last fiscal year. When the city closed the books in August, officials found the reserve fund had only $1.4 million, according to the memo.

“That’s freefalling, and we can’t afford to freefall anymore,” Mayor Ray Musser said. “It’s got to stop and stop now.”

According to the memo, the budget miss was attributable to a variety of cost overruns. The reasons included that:

Reducing city employees – through layoffs, termination of contracts and retirement incentives – from 345 to 277 over the last 14 months has cost the city $1.2 million more than projected.

The city paid $353,000 more in legal costs than projected, adding up to $2.1 million spent during the last fiscal year.

City departments exceeded their budgets by $568,000 collectively. Additionally, animal services and the city’s self-insurance funds are running in the red, according to the memo.

The Animal Services fund requires an infusion from the general fund of $1.3 million.

The self-insurance fund, which accounts for the city’s workers compensation, unemployment, long-term disability and liability claims, ended the fiscal year with a $5.6 million deficit.

Former City Manager Robb Quincey, who was fired in May 2011, cost the city an additional $36,000 because his housing allowance was not properly budgeted.

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