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HomeMy WebLinkAboutItem 01 FY20 Budget Planning Workshop AGENDA ITEM SUMMARY Meeting Date: 10/15/2018 Meeting Type: Work Session Staff Contact/Dept.: Bob Duey, Director Paula Davis, Budget Officer Staff Phone No: (541) 726-3740 Estimated Time: 50 Minutes S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Provide Financially Responsible and Innovative Government Services ITEM TITLE: FY20 BUDGET PLANNING WORKSHOP ACTION REQUESTED: No Action Required. The City Manager and Executive Team are asking for direction from Council ISSUE STATEMENT: The City Manager’s budget message in the spring of 2018 addressed the importance of planning several years ahead in order to maintain financial stability while being able to provide adequate services to the Community. Discussions at that time with the City’s Budget Committee stressed the importance of FY20 (July 2019 through June 2020) being able to set the proper economic stage for the next 10 years. To respond to these messages the City’s Executive Team has been concentrating on the next five years (FY20 – FY24) and working to put into place a financial strategy that looks at projected revenues and expenditures that would also be responsive to the goal of meeting the service needs of our citizens while remaining a financially healthy organization. Any successful strategy is going to be a combination of taking advantage of revenue opportunities, a reallocation of existing resources among service programs and a reduction or change in some of the existing city programs across all departments. The Executive Team has utilized the updated Council financial policies, the recently established Council outcome strategies and the Priority Based Budgeting (PBB) programs to help in the effort. For the meeting on October 15, staff will identify with Council a range of options that should be part of any FY20 proposed budget which should also meet the stated objectives. Council is being asked to review these range of options and provide direction to staff for the early stages of budget preparation for next fiscal year. ATTACHMENTS: ATT 1) Council Briefing Memorandum ATT 2) PBB Planning Cycle ATT 3) FY19 PBB Council Outcomes ATT 4) General Fund 5 Year Cash Flow Projections ATT 5) PBB Data Driven Decision Model ATT 6) Department Identified Program Reduction Strategies ATT 7, 8, 9) Strategic Target Options 1, 2, & 3 DISCUSSION See Council Briefing Memorandum CITY OF SPRINGFIELD/FINANCE DEPARTMENT MEMORANDUM Date: October 1, 21018 COUNCIL BREIFING MEMORANDUM To: Gino Grimaldi, City Manager From: Bob Duey, Finance Director Paula Davis, Budget Officer Subject: FY20 Budget Planning Workshop ISSUE: The City Manager’s budget message in the spring of 2018 addressed the importance of planning several years ahead in order to maintain financial stability while being able to provide adequate services to the Community. Discussions at that time with the City’s Budget Committee stressed the importance of FY20 (July 2019 through June 2020) being able to set the proper economic stage for the next 10 years. To respond to these messages the City’s Executive Team has been concentrating on the next 5 years (FY20 – FY24) and working to put into place a financial strategy that looks at projected revenues and expenditures that would also be responsive to the goal of meeting the service needs of our citizens while remaining a financially healthy organization. Any successful strategy is going to be a combination of taking advantage of revenue opportunities, a reallocation of existing resources among service programs and a reduction or change in some of the existing city programs across all departments. The Executive Team has utilized the updated Council financial policies, the recently established Council outcome strategies and the Priority Based Budgeting (PBB) programs to help in the effort. For the meeting on October 15, staff will identify with Council a range of options that should be part of any FY20 proposed budget which should also meet the stated objectives. Council is being asked to review these range of options and provide direction to staff for the early stages of budget preparation for next fiscal year. __________________________________________________________________________________ COUNCIL GOALS/ MANDATE: Financially Responsible and Stable Government Services BACKGROUND: Last year while preparing the current FY19 budget, staff went through several exercises to update key information that could assist in this next step in the process. Using the City’s priority based budgeting model (Attachment 2 PBB Planning Cycle) staff worked with the Council to review the Council Goals and update the short and intermediate desired outcomes (Attachment 3 FY19 PBB Council Outcomes). Since that time, and still part of the Planning Cycle, staff has reviewed and re-scored all of the City’s programs based upon current attributes and are in the process of identifying quadrant placement for each of the programs. This step is expected to be finalized in November. Staff has also updated the trended financial projections while concentrating primarily on the general fund at this time. The trended projections cover five years beyond the current year encompassing FY20 through FY24. The key components of the projections are: Property taxes are trended at a 3% increase Overall revenue is trended at 2.5% Programs targeted to remain at current level of service unless noted Labor contracts are either included at current agreements or if lapsing during this period at a projected cost of living adjustment. Expirations are IAFF-6/20/18; SEIU-6/30/2019; SPA-6/30/20; AFSCME-(6/30/21) Rates for retirement plan contributions are as recommended by PERS and are anticipated to increase every two years Any considered use of revenue from the Comcast settlement has not been included No decision has been made for participation in the PERS Side Account Program The current general fund projections (Attachment 4 General Fund 5 Year Cash Flow Projections) show a familiar trend in that an expected expenditure growth of 4.9% outpaces the expected revenue growth of 2.5%. With the exception of the additional cost of the PERS increases this is a similar spread that has been seen in past years. The balancing of the annual budget to respond to this spread, in prior years, has been a combination of revenue increases, use of one-time reserves, and one-time and sustainable expenditure reductions. For prior year program reductions, we have attempted to have little impact on services provided to the public. The reductions made over the past five years have totaled $5.3M but the inability to sustain these reductions in the interest of services provided to the public has resulted in a continued imbalance in the comparison of revenue to expenditures. The purpose of the current exercise is to identify solutions that can be implemented beginning in FY20 and forward to FY24 that are sustainable in nature and able to help the City provide a consistent and ongoing level of service in future years within the resources available to the City. DISCUSSION Financial Stability Goal A state or local government is financially healthy if it can deliver the services its citizens expect, with the resources the citizens provide now and in the future. The Council adopted several new financial policies recently with one of them specifically concerned with the status of the City’s reserve balances. For the general fund the amount of required reserve was to be no less that the combined total of its working capital reserve, its contingency reserve, a restricted revenue stability reserve and an unrestricted reserve for program development. The minimum reserve balance at that time was determined to be no less than 20% of the total expenditures of the fund. Strategic Target For the 5-Year period ending 6/30/24 the City will maintain an ending cash balance for its general fund that is not less than 20% of the total operating budget for that fund. Staying with Attachment 4, the actual ending fund balance for FY18 and the projected ending fund balance for FY19 are in the 25% to 27% range which is within the desirable range but on the upper end of the scale. The intent has been to keep the percentage at the upper end while working on the five year strategy. Prior to taking any action to promote greater stability the ending fund falls 8% in FY20, another 11% in FY21 and 14% in FY22. To maintain the minimum 20% ending cash balance in each of the next five years staff is recognizing that changes to the current program service levels are going to be necessary, particularly in the first two years of the effort (FY20 and FY21). Finding the proper mix between possible revenue and expenditures changes as well as the amount of changes in year one versus year two will be important to clearly explain the changes in service levels that may result from this effort. The discussion with Council on the 15th is to intended to help formulate a strategy to keep the ending fund balance at 20% or higher in all years through the first five years while being transparent with our citizens the reason for these changes. To begin the process of developing options for consideration we based our discussions on a priority based budgeting data driven decision model (Attachment 5 Data Driven Decisions). This model helped to focus the discussion on identifiable steps to move through budget balancing options to a category of possible solutions that could be sustainable through the entire 5-Year planning cycle. These categories were: Department Identified Efficiencies Department Identified Program Reduction Strategies City-Wide Re-Allocation of Existing Revenue Sources Identification of either new City-Wide or Department Revenue Employee Wage or Benefit Package Cost Savings from Contract Conversations Increase or changes to Property Tax Revenue Attachment 6 Department Identified Program Reduction Strategies is the results identified by the departments to address the first phase of this five year planning process. The targeted amount in expenditure reductions for any of the strategies below for department identified program reduction strategies is a low of $450K to a high of $700K in the first year. The current list in Attachment 6 from the departments totals $641K. STRATEGIES FOR CONSIDERATION Each of the three strategies has these elements in common: The base revenue growth remains at 2.5% Expenditure growth is capped at no greater than 4% The utility funds operating transfer to the Street Fund continues Includes an operating transfer from the general fund to the ambulance fund but for no more than two years All recommended actions must be sustainable for all five years of the forecast and each year’s successive actions are in addition to prior recommendations Strategy 1 Attachment 7 Strategy 2 Attachment 8 Strategy 3 Attachment 9 SUMMARY OF STRATEGIES FY20 FY21 FY20 FY21 FY20 FY21 Additional Department Efficiencies $ 200,000 $ 200,000 $ 200,000 Department Program Reductions $ 450,000 $ 750,000 $ 450,000 $ 1,000,00 $ 700,000 $ 1,200,00 Employee Benefit Savings $ 500,000 $ 500,000 $ 500,000 New Revenue $ 299,000 $ 500,000 $ 299,000 $ 200,000 Additional Operating Transfers $ 360,000 $ 360,000 $ 360,000 Re-Allocation of Revenues $ 220,000 $ 220,000 $ 200,000 Single Year Totals $1,529,00 $1,750,00 $1,529,00 $1,700,000 $1,460,000 $1,700,000 Cumulative 2-Year Savings $4,808,000 $4,758,000 $4,620,000 ACTION REQEUSTED After the Council’s discussion at the work session on the 15th, staff is asking Council to select which strategy from Attachments 7, 8 or 9 they would direct staff to implement while preparing the FY20 Proposed Budget. Strategy 2 is being recommended by the Executive Team. In review of the 3 strategies it is important to note that the primary difference between each of the strategies is the adjustments necessary within the department program reductions and new revenues that would be necessary to maintain the ending cash balance at or above 20%. Attachment 6 provides the initial look at how the Exec Team is recommending that FY20 be addressed for program reductions that are in the $450K to $700K range. To continue with the 5-year strategy it will be necessary to continue the effort to identify additional program reduction strategies and other revenue options for FY21-FY24. To distinguish between the options the likely questions to be addressed are: Is there an appropriate balance between expenditure adjustments and revenue enhancements to address the target in the first year Is the an appropriate balance between expenditure adjustments and revenue enhancements to address the target in the second year Does the list of department expenditure recommendations provide adequate options for consideration Is there program reduction strategies that shouldn’t be on the list Are there other program reduction strategies that should be on the list Is the initial list of 4 additional revenues recommendations acceptable In year 2 of each option the additional new revenue ranges from $0 to $200K to $500K. Are any of these too aggressive or not aggressive enough PBB Planning CyclePBB Planning Cycle10+ yearsPBB Planning CycleAttachment 2Page 1 of 1 Priority Based Budget Results Map Information Listed by Council Goals Promote and Enhance our Hometown Feel while Focusing on Livability and Environmental Quality Promotes access to a variety of cultural, artistic and educational events Promote Springfield Promote public art Support and participate in family activities Work with TEAM Springfield to support education, recreation and services Encouraging Council involvement in the community; Provide career, library youth services and opportunities that improve graduation rates Encourage diversity and availability for new and affordable housing while fostering a sense of neighborhood Partnerships to promote and encourage a sense of neighborhood Complete land banking project for affordable housing Explore and identify neighborhoods, determine what is already in place and what we can add to Incentive strategies that encourage diversity and availability of housing Fosters an involved, engaged and well-informed community Activate new website Encourage continued social networking interactions Support Springfield staff participation in community projects Ensures public facilities and infrastructure are welcoming and accessible to a diverse community Maintain and develop bike lanes and encourage partnerships to complete bike trails Develop and improve City Hall and Plaza area for public gathering space Public confidence that building are safe Manages and mitigates factors that impact the environmental quality of its air, water, land and other natural resources Continue participation in partnership with MWMC Wetland reclamation projects Protect sensitive environmental areas from illegal or over use Attachment 3 Priority Based Budget Results Map Information Listed by Council Goals Maintain and Improve Infrastructure and Facilities Plan for community sustainability and responsible growth Implement and track sustainable 5-year Community Improvement Plan (CIP) Improve site readiness (make shovel-ready) Minimize natural disaster risk Support publically owned fiber infrastructure Update storm water and sewer master plans Repairs, enhances and continuously invest in well-maintained public infrastructure system Reduce deferred maintenance Reduce backlog of street maintenance and repairs Ensures public facilities are well-maintained and meet the needs of the community Investing in replacement or improvement of key buildings or structures Minimize future impact and costs Designs, operates and manages a well-maintained technology infrastructure Maintain and improve IT infrastructure and security Secures resources and advances community interest for priority projects Partner with development community to determine funding for infrastructure Identify priority projects while identifying funding sources Establish benchmarks for replacement funding of the city’s major infrastructure Attachment 3 Priority Based Budget Results Map Information Listed by Council Goals Foster an Environment that Values Diversity and Inclusion Supports the arts; promotes participation in community events and diversity groups Foster arts reflective of the diverse community Expand outreach to diverse community through community events Participation and representation in diversity groups and activities Promote outreach for small businesses, minority and women-owned businesses Increase small business outreach; minority and women-owned Participate in reverse vendor fairs Fosters an inclusive environment that maintains awareness of accessibility needs for disabled individuals Implement ADA transition plan Increase accessibility for disabled individuals Maintaining awareness of accessibility needs Create a welcoming community that promotes healthy families with avenues for upward mobility and prosperity Support groups who assist new arrivals to community Attracts and promotes a diverse workforce that is reflective of the community Outreach to diversified community for employment opportunities Promote vocational-oriented programs Increase workforce in our community Attachment 3 Priority Based Budget Results Map Information Listed by Council Goals Strengthen Public Safety by Leveraging Partnerships and Resources Provide a continuum of public safety/social services responses that provides access to mental health services Leverage partnerships with service providers to identify entry points for those in need Develop alternative sentencing programs in municipal court for a diverse population Provide training for staff for early recognition and available alternative responses for those in need Engage greater number of citizens in support for safer community Increase public safety outreach programs to promote safer neighborhoods Increase number of community members attending Citizen Police Academy Promote household emergency management preparedness Improve non-vehicular traffic safety through infrastructure improvements Evaluation and assessment of sidewalks, bicycle paths, lighting, and graffiti abatement Continued partnership with ODOT to reduce pedestrian risks through infrastructure Provide grant funding to assist property owners for sidewalk maintenance Stabilize public safety financing by considering alternative service models Review response times within City code for appropriateness Stabilize funding for fire services by investigating alternative models for service response Provide services focused on neighborhood level; Sergeants assigned to certain neighbors or communities Reduce property crimes resulting in safer neighborhoods Increase staff training for emergency management and public safety response Attachment 3 Priority Based Budget Results Map Information Listed by Council Goals Encourage Economic Development and Revitalization through Community Partnerships Enables and encourages opportunities for local business to be successful Expand available business sites Support business incubations Partnerships to increase opportunities Stimulates economic growth by encouraging investments Achieve economic growth wins/successes; allocate funds to programs for economic development Invest in programs for economic development; Build partnerships that encourage a regional approach to economic development Advance opportunities and incentives that encourage private investment, bringing about new jobs and capital investment for businesses Fast and consistent speed to market Update development code for clarity Public access to high speed internet Partner with ODOT to finalize transportation plan Identify City with new technologies while promoting community growth Increase and identify City with new technologies: (Tech, natural resources, CLT wood products, healthcare) Partner with community to market and promote Springfield Community engagement with the big picture and goal Advertise / promote public safety Implement Springfield Look initiative Enables and encourages opportunities for citizens to be successful Support, pursue and increase partnerships that increase training opportunities Support partnerships that increase training opportunities for high school students Attachment 3 Priority Based Budget Results Map Information Listed by Council Goals Provide Financially Responsible and Innovation Government Services Supports decision-making with timely and accurate reports and analysis Track budgets, actual expenditures and monitor loans Balance current revenue with expenditures Develop responsible budget that the identifies the communities highest priorities Attracts, develops and motivates a high-quality, diverse, engaged and productive workforce Improve productivity in workforce Partner with other agencies to expand wellness clinic Provide continuous customer service training Establish strong recruitment and succession planning First issue resolution; provided training and grant autonomy to City employee’s to resolve the issues of the community Protects, manages and optimized financial resources Efficiently manage costs Lobby for PERS and public contracting reform Work with State and Federal governments to explore funding options Pursue options/alternatives that will reduce reliance on fire and police levies Continue conversations with state and federal representatives Provide legislative support to staff, officials and regional partners Set clear expectations and track and evaluate intergovernmental agreements, grants, and partnerships in a mutually beneficial manner Delivers responsive and innovate services to customers while sustaining financial health Sustain a credit rating within a health range for our demographics Brainstorming sessions; welcoming suggestions and ideas Leverage new technologies to improve productivity in the workforce Observe financial policies and funding reserves appropriately Maintain a consistent level of service year after year Be adaptive and proactive in our use of best practices Identifies and responds to issues relating to non-regulatory and non-policy compliance Provides assurance of regulatory and policy compliance to minimize and mitigate risk Attachment 3 General Fund Five Year ProjectionsActuals Adjusted FCST FCST FCST FCST FCST(000) FY18 FY19 FY20 FY21 FY22 FY23 FY24Total Operations Revenue37,129 37,199 37,945 38,872 39,832 40,815 41,811Personal Services 28,622 30,45232,633 33,758 36,021 37,151 39,282Material & Services 6,784 6,664 6,901 7,180 7,360 7,544 7,733Capital Outlay 124 79 90 92 95 97 99OPERATING EXPENDITURES 35,531 37,195 39,624 41,031 43,475 44,792 47,1144.7% 6.5% 3.6% 6.0% 3.0% 5.2%Fiscal TransactionsXFR to Street Fd424 447 448 460 479 495 512XRF to Ambulance Fd0 0 513 1,497 1,886 2,104 2,557Xfr to Other Funds 13000000TOTAL FISCAL TRANS. 437 447 960 1,957 2,365 2,599 3,069TOTAL Expenditures35,968 37,64240,584 42,988 45,840 47,390 50,1831,161 (443) (2,639) (4,116) (6,008) (6,575) (8,372)Beginning Cash8,574 9,735 9,292 6,653 2,537 (3,472) (10,046)Ending Cash9,735 9,292 6,653 2,537 (3,472) (10,046) (18,419)% of Expenditures bechmark 20%27% 25% 17% 6% -8% -22% -39%Current Operating Revenue over General Fund 5 Year Cash Flow ProjectionsAttachment 4Page 1 of 1 PBB Data Driven Decisions ModelPBB Data Driven Decision ModelAttachment 5Page 1 of 1 General Fund Program Reduction StrategiesDept STRATEGYSavings QuartileCMO Reallocate.25FTEofPublicAffairsAnalystpositiontoTRTFund 24,079$naCMO Reallocate.25FTEofEDAnalystpositiontoURFund18,985naPoliceEliminateVacantRecordsPosition85,0004PoliceEliminateDetectivePosition&ReassigntoPatrol115,0002PoliceEliminateVacantCSOPatrolposition97,0002Library ReduceBooksandPeriodicalsBudget45,0003Finance ReduceProTemJudgeMiminumShiftTimeto2Hrs 10,2002Finance EliminateDUIICourt 19,0804FLS ReduceStationOvertimeCoverageUsingBrownouts 200,0001DPW DowngradeVacantPlannerPostion27,0001TOTAL641,344$Department Identified Program Reduction StrategiesAttachment 6Page 1 of 1 Strategic Target Option 1Forecast Adj. FCST Adj. FCST Adj. FCST Adj. FCSTFY20 FY21 FY22 FY23 FY24FY20 Baseline Revenue37,94539,795 41,302 42,335 43,3932.50%Revenue Growth2% Increase of Utility Fund Right of Way 299Increase Room Tax Revenue to 5/9 Share 160Booth-Kelly Transfer 200Increase Marijuana Revenue for Existing Services 220new Revenue source 500Total Adjusted Revenue 38,824 40,295 41,302 42,335 43,393FY20 Baseline Operating Cost39,62440,533 40,854 42,103 43,2674.00%Capped Expenditure GrowthMaterial & Service reduction (200)Employee Benefit (500)Program Reduction (450) (750) (500) (500)Fire Levy full funding(370)Total Adjusted Operating Expenditures 38,974 39,283 40,484 41,603 42,767Fiscal TransactionsTransfer Street Fund 448 460 479 495 512Transfer Ambulance fund 500 520Total Fiscal Transactions 948 980 479 495 512Total Adjusted Expenditures 39,922 40,263 40,963 42,098 43,279(1,097) 32 339 237 114 Beginning Cash 9,292 8,194 8,226 8,565 8,802 Ending Cash8,194 8,226 8,565 8,802 8,916 % of Expenditures benchmark 20%21%21%21%21%21%Current Operating Revenue over ExpendituresGeneral Fund Revenue StrategyStrategic Target Option 1Attachment 7Page 1 of 1 Forecast Adj. FCST Adj. FCST Adj. FCST Adj. FCSTFY20 FY21 FY22 FY23 FY24FY20 Baseline Revenue37,94539,795 40,995 42,020 43,0702.50%Revenue Growth2% Increase of Utility Fund Right of Way 299Increase Room Tax Revenue to 5/9 Share 160Booth-Kelly Transfer 200Increase Marijuana Revenue for Existing Services 220new Revenue source 200Total Adjusted Revenue 38,824 39,995 40,995 42,020 43,070FY20 Baseline Operating Cost39,62440,533 40,594 41,833 42,9864.00%Capped Expenditure GrowthMaterial & Service reduction (200)Employee Benefit (500)Program Reduction (450) (1000) (500) (700)Fire Levy full funding(370)Total Adjusted Operating Expenditures 38,974 39,033 40,224 41,333 42,286Fiscal TransactionsTransfer Street Fund 448 460 479 495 512Transfer Ambulance fund 500 520Total Fiscal Transactions 948 980 479 495 512Total Adjusted Expenditures 39,922 40,013 40,703 41,827 42,798(1,097) (18) 292 192 272 Beginning Cash 9,292 8,194 8,176 8,468 8,660 Ending Cash8,194 8,176 8,468 8,660 8,932 % of Expenditures benchmark 20%21%21%21%21%21%Current Operating Revenue over ExpendituresGeneral Fund Revenue & Expenditure StrategyStrategic Target Option 2Strategic Target Option 2Attachment 8Page 1 of 1 Strategic Target Option 3Forecast Adj. FCST Adj. FCST Adj. FCST Adj. FCSTFY20 FY21 FY22 FY23 FY24FY20 Baseline Revenue37,94539,489 40,476 41,488 42,5252.50%Revenue GrowthIncrease Room Tax Revenue to 5/9 Share 160Booth-Kelly Transfer 200Increase Marijuana Revenue for Existing Services 220Total Adjusted Revenue 38,525 39,489 40,476 41,488 42,525FY20 Baseline Operating Cost39,62440,273 40,116 41,335 42,4174.00%Capped Expenditure GrowthMaterial & Service reduction (200)Employee Benefit (500)Program Reduction (700) (1200) (550) (600)Fire Levy full funding(370)Total Adjusted Operating Expenditures38,724 38,573 39,746 40,785 41,817Fiscal TransactionsTransfer Street Fund448460479495512Transfer Ambulance fund500520Total Fiscal Transactions948980479495512Total Adjusted Expenditures39,672 39,553 40,225 41,280 42,329(1,146) (64) 251 208 196 Beginning Cash9,292 8,146 8,081 8,332 8,540 Ending Cash8,146 8,081 8,332 8,540 8,736 % of Expenditures benchmark 20%21%21%21%21%21%Current Operating Revenue over ExpendituresGeneral Fund Expenditures StrategyStrategic Target Option 3Attachment 9Page 1 of 1