Budget Committee Meeting
Draft Minutes
April 29, 2004, 7:00pm
Civic Center Council Chambers, 1175 East Main Street

CALL TO ORDER
Chairman Marty Levine called the Budget Committee meeting to order at 7: 00 p.m. on April 29, 2004 in the Civic Center Council Chambers, 1175 E. Main Street Ashland, Oregon.

ROLL CALL: Councilor Laws, Amarotico, Hartzell, Jackson, Morrison and Hearn were present. Budget Committee Member DeBoer, Christensen, Olsen, Silbiger, Stepahin , and Moore were present.

 ABSENT: Budget Committee Member Williams was absent.

APPROVAL OF MINUTES
The minutes of the Budget Committee Meeting of March 4, 2004 were approved as presented.

PUBLIC INPUT
Zane Jones/227 W. Hersey St./ Suggested that the committee reconsider supporting school grounds maintenance in the 2004-05 Budget. He suggested deferring other budgeted items to support maintenance of schools.

BUDGET MESSAGE AND OVERVIEW
Gino Grimaldi, City Administrator, spoke to the events that had taken place over the past budget year. He spoke to the approach of the budget, which it is a long-term view of the financial perspective, and it projects 2-3 years out. He noted that the staff is working to control expenses, capital outlay, materials and services, personal services, PERS, and health insurance costs. He added that the goal is to maintain existing services. He expressed the need to manage the revenue sources. He added that they are not proposing a tax rate increase. They have put a 2% limit in growth on materials and services and are looking at rate increases in AFN, water, sewer, and electric. Fund balances are adequate, but are not as healthy as they have been in previous years. He expressed the need to find addition funds for expenses and not use fund balances. He added that one change in the budget is that temporary positions are now included in the personnel numbers. There are new positions in the budget in Courts, Police, AFN, Public Works, Community Development, and Computer Services. Some of the increases are dedicated to the past and present Council Goals. They are looking at managing costs and implementing a cost of services study and rates that are charged.

BUDGET MESSAGE
Lee Tuneberg, Finance Director, guided the committee through the budget document and mentioned that the City received the Government Financial Officers Award for the 2003-04 budget. The budget is meant to be a financial plan, a communication device, an operations guide, and a policy document. Alex Amarotico, Councilor, asked how many cities participate in the GFOA award program, and how many receive the award. Mr. Tuneberg responded that several hundred compete but less than 100 receive the award throughout the United States.

Mr. Tuneberg spoke to the budget process on 1-25. He pointed to the tables throughout the Budget Message on 1-6 through 1-17. The ending fund balance shows a comparison between the past and current years, and the targets that were established. Page 1-14 includes a proposed increases table and shows they have not increased rates in 3 years. They will study System Development Charges for future improvements or reimbursement of debt. Personal Services increased 4.7%. Materials and Services reduced 1.4 %. Debt service is a sizable increase due to restructuring of AFN debt. Capital outlay fluctuates each year.

There was concern from the Committee regarding the increase in the FTE counts. Mr. Tuneberg clarified that this year the temporary employees are included in the number counts and organizations charts. The approximate 13.55 FTE are temporary positions that were in the budget last year, but were not recognized in the counts. The 9.15 include the additional positions that are necessary adjustments in the 2003-04 and 2004-05 budget. There was concern if there would be a need for additional staff that is not budgeted and Mr. Tuneberg responded that short-term temporary employees are in the budget and will be accounted for. Mr. Grimaldi suggested asking what the cause if of the need for the positions, and what would happen if they do not have the position, what would not get accomplished. The question of cost of temporary compared to fulltime employees was asked. Mr. Tuneberg responded that normally a temporary employee would cost less than a full time employee.

Jim Moore, Budget Committee Member, spoke to the changes in population compared to the increases in staffing levels and that staffing levels have increased higher in percentage compared to population. Cate Hartzell, Councilor, commented that the population should not be the only figure looked at for determining what a department will need to do for staffing. Mr. Tuneberg clarified that the 13.55 includes some that are less than the full time equivalent of a 1.0 position.

There was concern about the CDBG Fund being in a deficit and Mr. Tuneberg explained that the CDBG Fund is guaranteed by the General Fund and at the time of publishing the book, they had not applied the reimbursement to the Fund and closed it at a negative.

BUDGET CALENDAR
Mr. Tuneberg spoke to the calendar and explained what will be included in each of the meetings.

There was a question on whether in subsequent years the process will be started at this point in the year rather than earlier as in previous years. Mr. Tuneberg explained that the attempt is to begin earlier in the year but there were projects and other factors that influenced when the process began this year.

Mr. Levine called for a break until 8:15 p.m.

ADMINISTRATION 0000000000 3-3 to 3-16
Tina Gray, Human Resources Director presented the Administration budget. There are no new positions proposed. The total budget increase is just over 2%. Mr. Grimaldi explained the personnel costs are due to cost of living, step increases, fringe benefits, PERS, and one exception is the reclass of the HR Director and it is a lower salary compared to other directors due to the smaller size of the department. Mr. Levine asked what the net change would be if they took last years figure and removed the three people that moved in Courts to Finance. Mr. Tuneberg responded that Finance moved the prior years dollars to the Finance budget. The costs presented are only for the current people in Administration. Ms. Gray spoke to the Mayor and Council 3-6, Materials and Services increased $5,200 to replace chairs in Council Chambers while other items were decreased to compensate. On 3-9, Contractual Services decreased $1,200 as they removed projects and dues and fees as they separated out Mayor and Council from Administration. Programs increase $720 due to printing and processing fees for the City Source newsletter. Overall the total budget increased less than half a percent. The Committee questioned the location of the commission's budgets and if they were under each division. Ms. Gray responded that each have their own budget. The $3000 is for a commission training budget and the $750 is for the Public Arts Commission. The Committee questioned the location of the Conservation Commission in the budget. Ms. Gray answered on 3-9 under the General Fund. Mr. Grimaldi explained that the Contractual Service amount is for RVTV franchise fees. The Committee asked if this was more than the peg access fee. Mr. Grimaldi answered that it is. Ms. Gray spoke to 3-13; the increase is in the personal services salary change of the Human Resource Director, PERS, and benefit costs. Material and Services increased due to recruitments. Communications increased $1,500 due to long distance charges that were under budgeted last year. There is no change in Contractual Services and they are gong into labor negotiations in the spring, $20,000 is for the wellness program. Mr. Tuneberg clarified the Facilities Use Fee covers the remodel of the buildings and each department pays back to the fund that the funds were borrowed from. Ms. Gray continued to the reduced Senior division budget. The committee questioned the line item 610 on 3-13. Mr. Grimaldi answered that the Finance Department will look into that question and get back to them. The Committee questioned 3-7 and the Salaries and Wages showing less in 2005. Mr. Grimaldi answered the Finance Department will review that as well and respond back to the Committee.

Paul Nolte, City Attorney presented the Legal Division budget on 3-10. Mr. Nolte referred to the total budget being less than the previous year, due to the decrease in the salary for the city attorney position. He added that the division spent more in Materials and Services in 2003-04 to outfit the new attorney that was hired. The Division has had a recent spike in land use issues. The Assistant Attorney has experience in labor issues, and they have used his experience rather than contracted out. The Assistant Attorney is handling all of the prosecutions. Food & Beverage is still time consuming. Criminal complaints have increased as shown on 3-11. The Division has taken over the functions that were previously in dispatch. They have implemented new HIPPA regulations. They are completing the audit for the Americans with Disabilities Act. They had their first Transient Occupancy Tax (TOT) collection filed in circuit court which is an unusual situation. Telecommunications is time consuming and they are looking at tracking who is in the City's right of way. The Committee asked about the increased benefits, when actually they decrease. Mr. Nolte explained that not all the employees were counted in 2003 and in 2004 they were counted with full family benefits. The Committee questioned where the savings are shown now that some of the issues are handled in house rather than contracting out. Mr. Nolte responded that there is not any savings in the labor issues, those issues are budgeted in the other part of the Administration budget in Contractual Services. He clarified that most of the outside contracted legal services come out of the Legal Division's budget. The Committee asked where the TOT penalty funds would go and Mr. Nolte answered that they will probably go to the Finance Department. Mr. Nolte explained that there would be no increase in the FTE's in the budget even though they asked for an increase in the Legal Secretary. Mr. Grimaldi explained that the Division asked for that position but it was not included in the proposed additions to the budget and explained the process of adding positions to the budget. He explained if the need arises, that they can go to Council for assistance with a budget adjustment or transfer help from another Division or Department. The Committee was concerned about the backlog of cases and work. Mr. Nolte explained that there is a backlog of work, but the cases must move forward. There are no cases held up because of not having enough staff due to the defendants right to a speedy trail. The Attorney's are now doing some of the administrative work and the Legal Assistant is working overtime and the Legal Secretary may leave her position. Mr. Nolte explained that the addition of the second Attorney will help with the Food and Beverage tax collection.

The Committee asked about 3-15, line 603 and the fluctuation of communications. Sharon Laws, Senior Program Director, answered that the adjustment was made for the share of telephone and computer services.

FINANCE 0000000000 3-17 to 3-32
Mr. Tuneberg spoke to the Finance Department budget. On 3-19 the budget dropped from $5.3 million to $4.4 million. He explained how they have set money aside in the Insurance Fund for adjustment for PERS in the future. The Municipal buildings affect the Finance Department, but are not managed by Finance. In the Administration Division, Personal Services is reduced due to the PERS reduction. Materials and Services increased from $125,000 to $172,500 due to outsourcing for consulting work, financial advisors. Diamond parking is also included in this budget. The Committee asked what caused the reduction in the Insurance Fund on 3-19 and if all Departments will show the reduction. Mr. Tuneberg responded that they saw a reduction in rates and a change in some of the claim requirements and who participates in the coverage. It depends on the Central Service charge if all Departments will see the reduction. Mr. Tuneberg spoke to the Accounting Division budget. The financings are budgeted in this area and overall there is a $25,000 increase. The Committee questioned the 2003 actual being higher than the adopted. Mr. Tuneberg explained that was due to transitioning the Parks employees over to Finance. Customer Information services Division changed $18,000 primarily in Personal Services. The Municipal Court Division increase in Personal Services was the .75 FTE. This was a correction from last years budget. Additionally the bailiff was never budgeted for. They were understaffed for the workload. The Committee asked why the Courts Division was moved to Finance. Mr. Tuneberg responded that it was due to the similarity of receivables and accounting process. The Administration staff will provide support for software conversion for Courts. There was an Auditor comment on the duties and accounting practices that needed to be addressed. In Materials and Services, the drop is the computer conversion that was moved out to the Equipment Fund along with other technology items. The Committee asked what was behind the Communication changes throughout the budget. Mr. Tuneberg responded that it is the Internal Charges fees, which change, and the goal is to simplify it. The Committee asked what percentage is using auto pay in utility billing. Mr. Tuneberg responded that 20% is credit cards and ACH. Their goal is 30% in the next two years. They are looking at the utility software issue and making it more automated. The Purchasing Division shows a reduction related to PERS. Non-operating is 3-27 to 3-30.

Tuneberg asked to approve budget by each department.

Morrison/Hearn m/s to approve each segment, but can revise and approve at the end of the process. All Ayes.

Hearn/Christensen m/s to accept Finance budget tentatively subject to final review in the last budget meeting. All Ayes.

Laws m/s to approve Administration budget. He withdrew motion due to conflict. Jackson/ Olsen m/s to accept Administration budget as presented. All Ayes. Laws abstained.

ADJOURNMENT
Meeting was adjourned at 9:30 p.m.

Respectfully Submitted,
Bryn Morrison
Administrative Secretary, Finance Department

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