# Audit-Identified Efficiency & Accountability Opportunities in the FY2027–FY2028 Budget

**Deep-dive cross-walk · Berkeley Transparency Hub · 2026-06-10**

Sources: Proposed FY2027–FY2028 Biennial Budget (Item 21, Supp Packet 2, 2026-05-19); Berkeley City Auditor's Recommendation Dashboard (384 recommendations across 54 audits, snapshot 2026-04-24); FY2027 Audit Plan + first Whistleblower Annual Report (2026-06-10). Confidence is High throughout unless noted — figures are quoted directly from these documents.

## The frame

The budget closes a ~$29–30M/yr General Fund gap and removes 164 net positions (−9.3%), landing a paper surplus that depends on a November 2026 sales-tax measure. Meanwhile the Auditor has produced a standing inventory of efficiency, internal-control, and accountability fixes. The signal worth surfacing: **the structural problem and many of its named solutions already sit in the audit record — and a large share were dropped or never started.**

Headline numbers from the audit dashboard:

- 384 recommendations; 265 implemented (69%), **76 dropped (20%)**, 43 still open.
- By category, the findings cluster exactly where a structural fix lives: **Efficiency & Effectiveness 180 (47%)** and **Transparency & Accountability 111 (29%)**.
- The departments with the most dollars have the weakest follow-through. **Public Works** (largest department, $234M FY27): of 64 recommendations only 21 implemented (33%), 24 dropped (38%), 19 open. **City Manager** (88 recommendations, the largest audit footprint): 44 implemented (50%), 32 dropped (36%).

A structural caveat on "dropped": many lapsed automatically under the Auditor's rule that a recommendation is dropped if not implemented within five years — i.e., the fix expired untried, not after a documented cost-benefit rejection. Others are affirmative "will not implement / risk accepted."

## The structural-deficit fixes the City dropped

The most direct finding: the audit that diagnosed the structural deficit — *Berkeley's Financial Condition (FY2012–FY2021): Pension Liabilities and Infrastructure Need Attention* (2022) — had 5 recommendations, and **4 were dropped.** Dropped items include a Section 115 Trust funding plan, a reserve-replenishment plan for the Stability and Catastrophic reserves, an enterprise-fund balance policy, and a capital/deferred-maintenance funding plan. The City's stated reason: dropped "to allow for updated recommendations in the FY2025 updated financial condition report." So the structural fixes weren't resolved — they were deferred into a later report, the same deferral pattern the deficit-history table documents from 2019 onward.

This matters because the budget itself leans on the Section 115 Trust and reserves as balancing tools (per the FY2026 history), yet the audit recommendations to put those tools on a sustainable, policy-governed footing were set aside.

## Opportunities mapped to the departments the budget is reshaping

### Public Works (largest budget; weakest audit record)

- **Fleet Replacement Fund Short Millions (2021)** — 12 recommendations, 11 still only Partly Implemented four years on. The fund is chronically underfunded and was actively raided: **$2M (FY25) and $0.5M (FY24) transferred out of Equipment Replacement Fund 671** to the Maintenance Fund. Open asks: a real funding model, an optimal fleet-size ("right-sizing") study, and an Administrative Regulation requiring documented justification before diverting replacement money. The right-sizing survey was launched twice (Mar and Aug 2025) and drew fewer than 10 responses. Underfunding here converts into deferred replacement and a future cost spike — the textbook one-time-deferral trap.
- **Zero Waste (enterprise fund)** — across *Underfunded Mandate: Zero Waste 2020 Goal* (2014) and *Unified Vision of Zero Waste* (2016), 27 recommendations, **18 dropped.** Dropped efficiencies include a comprehensive route audit to align billing with actual service delivered (under-billing/revenue-leakage risk), franchise-fee recovery on recyclables, mobile route technology, and a strategic plan with performance measures. One dropped recommendation cited **~$496K/yr potential savings** from biweekly garbage collection (needs a state waiver). Enterprise-fund stabilization is an explicit budget pressure; these are the efficiency levers inside that fund.
- **Lease portfolio — *2009 Leases Audit Follow-Up: Same Risks 16 Years Later* (2025)** — 8 recommendations, 7 just "Started," 1 Not Started. The City still has no centralized lease inventory capturing contract numbers, COLAs, terms, and locations. Re-issuing 2009's recommendations verbatim in 2025 is itself the finding: missed escalators, unbilled revenue, and weak oversight on city-held property. A Real Property Administrator was hired August 2025; work has barely begun.

### City Manager (largest audit footprint)

- **Citywide Grants Management (2016)** — 15 recommendations, **all 15 dropped.** The City never adopted grants policy ownership, a procedures manual, or a grants-management system. The audit warned of misrecorded expenditures, untracked receivables, and clawback risk. With the budget leaning on one-time and external money (Grant Funds ≈ $42.5M/yr), weak grants infrastructure is both a revenue-capture and a compliance exposure. These lapsed via the 5-year rule.
- **Code Enforcement Resources Constrained (2018)** — 12 recommendations, 5 dropped including case-management software, mobile field technology, a staffing/workload analysis, and performance metrics. Code enforcement generates citation revenue and mitigates health/safety risk; the dropped items are foregone efficiency and revenue.
- **Staff Shortages (2023)** — 25 recommendations, several still open: a department-by-department **critical-needs staffing analysis**, a citywide telework policy aligned to best practice, a succession plan, retention goals/targets, a consistent exit-interview process, and reducing unused building space to cut overhead. The budget removes 164 FTE largely through attrition; the audit specifically recommended sizing the workforce by need *before* cutting. The HR staffing-analysis item is only Partly Implemented.

### Fire (being cut: Station 4 browning, −9 FTE)

- **Fire Prevention Inspections (2019)** — 11 recommendations, **all 11 dropped.** Dropped items: a workload/staffing analysis, risk-based inspection prioritization, and a citation issuance/tracking/collections process (foregone revenue), plus database controls. Two were affirmative "will not implement / risk accepted"; the rest lapsed. Cutting Fire while the audit's efficiency and cost-recovery fixes sit unimplemented is the accountability tension in sharpest form.

### Health, Housing & Community Services / Homelessness (active reductions)

- **Homeless Response Team (2025)** — the newest audit, 6 recommendations, **all 6 Not Started.** It asks for expanded public outcome reporting, documented data procedures, adoption of the HMIS Outreach module in city-funded contracts, and a staffing assessment for data/reporting. Homelessness is a major GF spend area with active cuts (Winter Shelter, BACS STAIR Center, DBA outreach worker). Without these, the City cannot demonstrate whether homelessness dollars meet their goals — the exact test for deciding what to cut versus keep. (The City's response notes meaningful interim progress, e.g., a revamped May 2025 performance report, but the contract-level data integration is paced to a 2028 contract cycle.)
- **Berkeley Restaurant Inspections (2024)** — 9 recommendations, mostly open. A completed fee study (pending Council) could let inspection fees fund staffing — a self-supporting revenue fix for a chronically understaffed program that missed targets. Also open: a public inspection-data portal, a placarding program, performance metrics, and revenue-vs-expenditure tracking.

## Cross-cutting patterns

1. **Dollars and discipline are inversely correlated.** The two departments with the largest discretionary footprints (Public Works, City Manager) carry the most dropped recommendations. Audit follow-through is strongest in small, control-focused functions (City Auditor 11/11, Police 34/35, Finance 42/43) and weakest where the money is.
2. **One-in-five findings dropped, many by passive lapse.** 76 of 384 dropped, concentrated in 2014/2016 Public Works grants and zero-waste work. The 5-year auto-drop means efficiency and accountability fixes expired without an explicit decision or a public cost-benefit.
3. **The fixes match the crisis.** 76% of all recommendations are Efficiency & Effectiveness or Transparency & Accountability — the same levers the budget needs and the same language the Auditor's FY2027 plan uses ("ensuring City dollars are spent responsibly and aligned with Berkeley values").
4. **The Auditor is also absorbing cuts.** To contribute to deficit reduction the Auditor reduced its own baseline budget, pausing the public expansion of the Whistleblower Program (42 reports in its first year, CY2025) and limiting staff training — trimming the city's own accountability capacity during the period it's most needed.

## What this is and isn't

This is a neutral mapping of audit findings to budget areas, not a cuts list and not a claim that any specific dollar figure is recoverable. "Potential savings" figures (e.g., the ~$496K biweekly-collection estimate) are the Auditor's own and carry the Auditor's caveats. The defensible conclusion: **before the City balances on attrition and a ballot measure, there is a documented backlog of efficiency, revenue, and accountability work — much of it in the highest-spending departments — that the budget does not engage.**