HomeMy WebLinkAbout11/16/2015 Work SessionCity of Springfield
Work Session Meeting
MINUTES OF THE WORK SESSION MEETING OF
THE SPRINGFIELD CITY COUNCIL HELD
MONDAY NOVEMBER 16, 2015
The City of Springfield Council met in a work session in the Jesse Maine Meeting Room, 225 Fifth
Street, Springfield, Oregon, on Monday November 16, 2015 at 6:00 p.m., with Mayor Lundberg
presiding.
ATTENDANCE
Present were Mayor Lundberg and Councilors Wylie, Moore, Ralston, Woodrow and Pishioneri. Also
present were City Manager Gino Grimaldi, Assistant City Manager Jeff Towery, City Attorney Mary
Bridget Smith, City Recorder Amy Sowa and members of the staff.
Councilor VanGordon was absent (excused).
1. Strategizing for Long -Term Fiscal Health
Bob Duey, Finance Director, presented the staff report on this item.
The City is beginning its third year using the methodology of priority based budgeting as a tool to help
focus the allocation of available resources to those services that help most to advance Community and
Council goals. For this annual budget process to prove successful it is important that the City has
established long-term fiscal targets or performance measurements that support the long-term fiscal
stability for both a consistent level of base services year after year and allow for expanded or new and
innovative services be planned for in advance. This first work session is concerned with defining the
elements that make up a fiscally healthy organization and to begin to identify how those elements
could be incorporated into the strategic plan for the City. Council is being asked to provide input on
draft Financial Management Policies prior recommended adoption at a later time.
Transitioning from traditional to priority -based budgeting involves learning curves for annual
budgeting as well as strategic planning, performance measurement, and evaluating long-term fiscal
health of the organization. The ultimate goal is to be able to provide consistent services to City of
Springfield citizens, now and in the future. In order to realistically assess that possibility, the City
needs to objectively identify and establish its long-term fiscal health goals for 5, 10 or 20 years into
the future.
This discussion, the first in a series on Fiscal Health, is intended to introduce the importance of
Financial Policies. Topics will include:
• Defining fiscal health
• Showing fiscal health's influence on the annual budgeting process
• The City's current state of fiscal health
• How financial policies steer future fiscal health
• Review of updated financial policies document
Mr. Duey introduced Paula Davis, Budget Officer, who has been lead in the Priority Based Budgeting
and Michele Lewis, Budget Analyst, who has been working on the Fiscal Health.
City of Springfield
Council Work Session Minutes
November 16, 2015
Page 2
Mr. Duey said the definition of fiscal health is: "A government is financially healthy if it can deliver
the services its citizens expect, with the resources its citizens provide, now and in the future". The
reserves in the City's General Fund are currently healthy, but the General Fund is not able to provide
all of the services citizens want. He used the Ambulance Fund as an example of providing services,
but not having a sufficient reserve. It is important to have financial health in order to know what to
expect from year to year, and is also important from a credit rating standpoint.
The City is susceptible with infrastructure costs, insufficient revenues, and personnel costs. He
described each and how we have managed to get through difficult times. Long-term awareness and
planning ensure our citizens continue to receive the services they expect.
Mr. Duey discussed the Priority Based Budgeting (PBB) and how they have used that to work towards
fiscal health. He reviewed how the PBB process worked and the steps Council took to get through that
process. Council has done the PBB for two years. This year departments are rewriting the programs
and costs of services to better fit what is currently being done. They will then be rated again to see
where they fall.
Mayor Lundberg said when PBB first got set up, she thought they would look at all of the services and
possibly change some that could be done outside of the City, etc. She asked where that was in the
process.
Mr. Duey said that part of the process has been internal to this point. They have asked departments to
do analysis on programs that fell into Quadrants 3 and 4, describe the service and how it fits with the
Council goals, and if it could be served outside of the City. It is a difficult task, but they are working
through the process. They haven't found anything to eliminate, but are looking at ways to make some
of the programs more efficient. Staff is looking at programs in Quadrants 1 and 2 to find ways to
make them more efficient, or determine if they need to increase the program. It will take more years
to get really good at this process, but they are making progress. PBB didn't show what the citizens
should be receiving that they currently are not, so they are looking at the fiscal health.
Mayor Lundberg said she would be concerned if there was elimination of a program without Council
input. She wants assurance those changes won't be made outside of Council.
Mr. Grimaldi said any program change would be vetted through the Council.
Mr. Duey said animal control was a good example of a program in Quadrant 3 or 4 that was very
important to the Council. They are looking at ways to make the program more efficient or cost
effective.
Mr. Duey noted the three types of reserve: general reserve, contingency and capital. For reserve
policies, they look at best practices (minimum and maximum reserve ranges and reserve
replenishment). Staff is suggesting that each reserve consider a working capital reserve, contingency
and general reserves. He discussed the four funds of the City: Building Fund; Ambulance Fund; Street
System Funds; and General Fund, and charts of each fund over the last five years and looking ahead
five years. Staff is starting to establish what each of those reserve funds should be to get the City
through tough times.
Councilor Moore asked about the chart for the building fund and growing the reserve in that fund
City of Springfield
Council Work Session Minutes
November 16, 2015
Page 3
Mr. Duey said the City had done grown the reserves in the past, but had no policy in place to ensure
adequate reserves in each fund.
Councilor Moore asked if the reserve would be maintained at a set level until it was needed.
Mr. Duey said it would be re-evaluated as they moved in the future to determine if those amounts were
adequate.
Councilor Moore confirmed each fund would have its own reserve.
Mr. Duey said they have not had a policy in the past to know how much contingency is needed in each
fund and how to respond to a downturn. There could be a time when they are overfunded in one area,
so it is a balancing act. As an example, the Ambulance Fund is maintaining on its own and starting to
build reserves, but in January another drop in Medicare reimbursement is expected so there would be a
drop in revenue. He explained how that might be addressed.
Councilor Wylie asked if some of these problems should be solved one at a time.
Mr. Duey said nothing is urgent, but staff would like to have direction for the Budget Committee
meeting during the Spring of 2016. The City is not unhealthy, but this is a good time to build on our
strength, making prudent decisions.
Councilor Ralston said the Ambulance Fund is one of the more important enterprises and should not
be abandoned. He feels we have been cutting costs enough over the years. He would like to see what
effect a $5 increase would be to this fund. The fee is reasonable and for a purpose.
Mr. Duey said goal is to make this process interactive. He spoke regarding street funds and the
funding gap the City is experiencing.
Councilor Moore asked about `other reserves' that was listed on the Street Fund chart.
Mr. Duey said that could be funds carried over for capital projects. The General Fund has always
gotten special attention. The reserves have been maintained through staff reductions, service changes,
etc. Staff wants to make sure they have direction to keep the General Fund healthy while maintaining
stability. Whatever is done should be sustainable and maintain service levels.
Mayor Lundberg referred to the General Fund drivers and that 81% is personnel costs and 10% is
indirects and internal charges. In the non-profit world, they try to keep their administrative costs to 5-
6%. She used the Community Development Block Grant (CDBG) funds used for emergency home
repairs as an example. Ten percent going to administration is a lot of money. She wants to take a look
at those costs because they have to take funds from other services.
Mr. Duey said the bulk of indirect costs are from stormwater, wastewater, ambulance and others
considered enterprise. It also includes the cost of how much it costs to run the City in overhead and
divided by FTE. Each employee has a certain share of those indirect costs. He explained further. The
indirect cost to CDBG is 18% to run the program. The City caps the indirects from CDBG to the
General Fund.
Mayor Lundberg said she wants to point these things out for another discussion. She is concerned
about how we are doing business.
City of Springfield
Council Work Session Minutes
November 16, 2015
Page 4
Mr. Duey said he will do a written report on how indirects work.
Councilor Moore asked about state shared revenues from liquor and cigarette taxes, and if we can
anticipate funds from the marijuana tax.
Mr. Duey said they anticipate funds, but have no idea how much.
Councilor Moore said that might be a place we could see an increase.
Mr. Duey said last week during the discussion about marijuana, Council spoke about dedicating those
funds to a particular service rather than just the General Fund.
Councilor Ralston said it might be helpful to separate indirect and internal charges.
Mr. Duey said he could do that when he prepares follow-up information.
Councilor Moore asked about the comparison with other cities regarding services provided by Albany
and Corvallis.
Mr. Duey said the comparison is not apples to apples. Some of the other cities might include a parks
department. He spoke regarding financial policies and the document attached to the agenda packet.
There are not many changes in the first part of the document. He asked for Council feedback.
Councilor Moore asked about the self-insurance and if the City invests those funds in pool funds.
Mr. Duey said so far, going with self-insurance has gone well, and reserves have increased since going
to that program. They don't yet know the impact of the Cadillac tax or if we will owe anything. Staff
is looking at other possible changes to keep from paying that and minimize impacts.
Councilor Moore asked if the State mandate regarding sick leave affected the City.
Mr. Duey said our employees are already covered.
Mr. Grimaldi said the initial calculation shows we could hit the Cadillac Tax mark in a couple of
years.
Mayor Lundberg said benefits are part of the 81 % of personnel costs.
Mr. Grimaldi said the City did not have a Cadillac version of benefits. Health costs are a major driver
of personnel costs, but we are not at the Cadillac level. Over time, we project the City will reach the
level for that tax as the price of the program increases. He explained that the Cadillac Tax is calculated
based on total cost, not the benefit. The purpose of the tax is to fund the healthcare system.
Councilor Wylie asked which fund property taxes go to when received by the City.
Mr. Duey said most goes into the General Fund, some into the Fire and Police levies, and some into
the General Obligation (GO) Bond. He described how we invest our funds and why we are required to
do that. Lane County Assessor's Office transfers our taxes to the State pool account which pays
.055%. The number one criterion for investment policy of General Fund dollars is safety. The
Retirement Fund has different criteria.
City of Springfield
Council Work Session Minutes
November 16, 2015
Page 5
Mr. Grimaldi said this discussion can be continued at another work session.
Mr. Duey said he would provide a copy of the investment policies.
Mayor Lundberg asked about transferring funds such as supplemental budgets.
Mr. Duey said staff is looking into a new budget system that would reduce the number of funds from
44 to about 21.
ADJOURNMENT
The meeting was adjourned at 6:57 p.m.
Minutes Recorder — Amy Sowa
Christine L. Lundberg
Mayor
Attest:
Amy SoIA@
City Recorder