CALL TO ORDER
Budget Committee Meeting
April 25, 2011 6:00pm
Civic Center Council Chambers, 1175 East Main Street
The Budget Committee Meeting was called to order at 6:00 p.m.
Mayor John Stromberg, Committee Members Dee Anne Everson, Douglas Gentry, Chuck Keil, Greg Lemhouse, Michael Morris, David Runkel, Russ Silbiger, Dennis Slattery, Roberta Stebbins, Lynn Thompson, and Carol Voisin were present. Keith Baldwin and David Chapman were absent.
Mr. Lee Tuneberg presented the City Recorder’s budget in Barbara Christensen’s absence. Budget has remained relatively flat since 2008. There is an increase of $109,000 due to bank credit card processing fees. These fees are then allocated out to appropriate departments; water, sewer, electric, etc. City Recorder’s budget is fully located in the Central Service fund, allowing charges to be tracked and reported on. The 2012 Proposed Budget slide was reviewed showing Salaries and Benefits of $167,106 (54%) and Materials and Services $143,650 (46%).
The work for 2012 (see slide) was reviewed. Highlighted items were Records Management relating to educating staff on records retention, electronic storing of documents in order to save storage space and have access to documents, processing Public Records requests and managing banking services, including monitoring legislative changes regarding fees associated with credit cards. There was a Committee discussion as to other duties the City Recorder is responsible for, including the City’s investments, Council Meeting minutes and recordings, oversees liquor licenses and handles all applications for Commissions.
A performance measure was requested by the Committee. It was noted the City Recorder is elected and responds to the public and that performance is internally driven. Ms. Thompson questioned the percentage increase of 10% and why it is so high? Mr. Tuneberg stated he will ask staff to research the answer to the percentage increase.
The Performance Drivers slide was addressed and noted there are no changes.
Lee Tuneberg, Administrative Services/Finance Director, presented the Administrative Services and Finance budget. He reviewed the Budget Over Time (see slide) reflecting both the operating and non-operating sides of the Department to show trends. The Proposed Operating Budget (see slide) shows like so many other departments, it is over half personnel costs. This department does a lot of internal services, is located in the Central Service and Insurance Funds, and provides services throughout the City such as utility billings, licenses and taxes.
Mr. Tuneberg moved to the Non-Operating side (see slide) and discussed the differences in the operating and non-operating side. A large portion on the non-operating side includes areas of capital projects that do not have ownership in other departments. An example of that would be parks, funded through proceeds of the Food and Beverage taxes. Salaries and Benefits represent the Band Director. Materials and Services represent the economic, cultural and social services grants. The Debt Service section is debt that does not relate to enterprises. The Committee discussed there is no salary and benefit time attached to the non-operating side. Mr. Tuneberg advised that historically no staff was allocated to these grants and was part of overhead. It is kept in Central Services, whereas Materials and Services are located in the General Fund. There was a general discussion on Capital Improvement Plan (CIP) Bonds fund and future financing campaigns using meals tax in the future.
Mr. Tuneberg moved to the Work in 2012 (see slide). He pointed out that with the help of this Budget Committee and Council, the department has been successful in fiscal stability, including Ending Fund Balances (EFB), what are the right projects to fund and rates and fees. Staff does comparisons of other agencies, reviews balance sheets and income statements, infrastructure and
personnel to see how we compare. Replacement of the utility billing system to improve efficiencies is budgeted. The timing for this system conversion is 9-12 months. Discussed the biennial budget goal and that it has not been determined how the process will run. The changes in audit requirements and financial reporting were discussed.
Mr. Tuneberg spoke to performance measures/compliance (see slide). He pointed to areas that are worked on that lend themselves to fiscal stability, well being of the organization and community. The department is governed by Federal and State mandates, budget and audit guidelines and responds to auditor’s comments. Cannot always resolve an auditor comment in a single year as some projects take more than one year; such as replacing the utility billing system. Hope to respond at a 50% level this year and 100% next year.
In the operational efficiency/fiscal health category, he addressed 85% EFB met the target. Some funds have fallen short; debt service and water funds are examples. Percentage rates were set by Council. Ms. Voisin asked if the state sets EFB requirements. Mr. Tuneberg responded that the Oregon Budget Law does not identify what EFB should be; it grants the city authority to decide and recommends adequate funds to be carried forward into the subsequent year.
There was discussion on the collection of utility fees and the City’s efforts to find solutions to assist residents to keep them current.
Mr. Tuneberg moved to risk management and insurances (see slide). There is one staff member dedicated to this area and three managers to assist. Premium costs have been reduced because of the City’s good history. Emphasis is placed on training and educating staff, finding the best coverage at the best price and utilizing a risk manager advisory group. There are changes in costs of claims; some factors can be controlled and some not. An example of a factor the City does have control over is repairs to infrastructure in advance of a claim being filed. There has been a reduction in the number of claims over time.
Mr. Tuneberg noted it is a requirement in the financial report to maintain cash reserves and is an obligation of the bonds. It is a requirement to have revenues available to pay debt service. Change in water sales and change in operating expense impact the coverage ratio.
Performance to budget was addressed (see slide). The department’s goal is to provide accounting services and staff support to Council, management and to the citizens. Services are provided internally and externally. There was a customer service performance measure discussion and sending out surveys in bills was entertained.
Mr. Tuneberg reviewed the significant budget changes (see slide). One position was cut in accounting and bid for parking services generated a $30,000 increase. The Committee discussed the savings in outsourcing for these services as opposed to in house. Costs for utility billing forms, processing and postage has increased. The electronic billing system was discussed and Mr. Tuneberg noted not all residents use it and a bill needs to be generated. Tourism projects that Council wanted to appropriate of $82,546 is included. Parks previously covered this.
Looking at Preparing for FY 2013 (see slide), Mr. Tuneberg noted the department continues to look for ways to save on processes and still meet the demands of the departments and community.
ADMINISTRATION, HR, LEGAL
Martha Bennett, City Administrator presented the Administration, Legal and Human Resources budget. She introduced staff: Ann Seltzer-who helps to prepare budget, Municipal Court Judge Pam Turner, Vicki Christensen – Municipal Court Supervisor, and Tina Gray – HR Manager.
Ms. Bennett noted Administration has overhead and service functions that do not fall into other departments. Budget overall as a department has hovered around $2 million for the last 4 years (see slide). She reviewed the breakdown of each area.
Ms. Bennett went over 2012 Proposed Budget showing distribution of Personal Services and Materials and Services for Mayor and Council. She moved to the Administration Division-Central Services, noting Materials and Services of $91,390 covers areas such as the City Source Newsletter, City’s website and the majority of publications and materials.
She then addressed the Administration Division –General Fund and Human Resources budgets (see slides), breaking down the Personal Services and Materials and Services. Most of the HR budget is city recruitment. When the recession hit in 2008, employees delayed retiring, which was not anticipated. Retirements are starting to pick up again. There was discussion on in house recruiting and use of outside recruiters.
She moved to Municipal Court in the General Fund budget (see slide) with 75% people and 25% other. This is a very lean department and staff shortages create operations problems. The Legal Department’s budget is almost identical to last years. Included are 3 people and general outside council as needed.
Ms. Bennett reviewed the work coming in FY 2012 (see slide). These include implementation of City Council goals, complete turnover in legal department staff, and substantial projected employee turnover. There was discussion about the reasons for the estimated turnover of about 20% in the next 5 years and the efforts the department is making to prepare for it. There are three union contracts coming up in the next 2 years. These include Police, Fire and clerical technical unit. Continue working on keeping health care costs down. The Committee discussed legislative factors that affect the plan, including covering employees’ children until they are 26. Continue transition to performance-based budgeting.
Ms. Bennett reviewed the Performance Drivers-Matrix (see slide). Areas she emphasized include: Minimize workers compensation and employment related claims with good supervisory and hiring practices and safety training. Achieve timely responses to Council direction and goals. Adopt a clear and comprehensible municipal code and currently researching other cities having a code that is legally current and easy to administer for Council and departments. Maintain an appropriate ratio of City Full Time Employees (FTE) of 12 per 1000 citizens. The Committee had discussion about what the appropriate ratio should be, factoring in contract labor and tax and fee burden to the community. Ms. Bennett said she believed the City is doing a good job of providing core programs and services at the right level to the community and affordability of government is important.
Economic development relating to Ashland tourism was discussed at length. It was noted the Transient Occupancy Tax is used to promote tourism. Mr. Stromberg commented the Visitor and Convention Bureau has changed the basic theme to promote the Ashland experience and not just OSF, but the City’s walkability, recreation, beauty and services, as well as culinary appeal. Mr. Runkel added the percentage of visitors that stay in Medford went from 5% in 2007 to 11% in 2010 and retail shops have taken a huge hit. He also noted a smaller portion of Lodging Tax Income goes to tourism promotion than any other jurisdiction in the State of Oregon, but goes into the General Fund. Ms. Bennett stressed the importance of the City’s role in supporting the visitor industry and the goal of promoting economic health.
Ms. Bennett advised the City is in the process of adopting an economic development strategy. She advised there is a consensus of the citizens that the community does not do a great job of economic development. The Committee discussed some factors, including: job creation and maintaining a sustainable population of young families. Ms. Bennett commented there is no recent reliable data on jobs. Ms. Everson suggested partnering with SOU to create some strong measures and job data, as they are looking for projects.
Ms. Bennett discussed the quality of citizen services, citizen involvement and volunteering, providing public information, quality of the City’s parks and will keep working on it. The City’s engagement process is to let people know their opinion matters through Outreach Programs. She believed Ashland is far above average on benchmarked communities, but still not good enough.
Ms. Bennett moved on to the Performance to Budget (see slide). These measures show the variety of activities the department is engaged in. She addressed significant budget changes (see slide) noting the economic development position will be phased out and this change was clarified, there will be no change in funding for outreach and the library contract will increase 3%.
Ms. Bennett moved to Preparing FY 2013 (see slide). The City is not in a growth phase for increased revenues and will try to use contract negotiations as a way to manage healthcare costs. The Library levy expires at end of FY 2013 and will seek Council’s advice within the next 12 months on this issue. Will be assisting Administrative Services, Finance and the Budget Committee to transition to the biennial performance based budget assuming it moves forward.
Ms. Bennett reviewed the Add Package recommendations (see slide). She proposed to change the Electric Department Director to an Assistant City Administrator and stressed that this position is needed by the City. When the IT function was separated from the Electric Department, one Department Head position turned into two. Electric is a $14 million operation and has a lot of unique contracts and safety issues. It is used to support the General Fund and other City services. She believed a person could do this position in less than full time.
Ms. Bennett further stated that the City Administrator’s position has been structured to not be effective by the best use of time allocated to all functions, needs of direct reports and the City. Position currently has 11 direct reports and a realistic span of control would be 3-7 direct reports.
She recommended the Assistant City Administrator manage: Electric Department, Economic Development function, Human Resources, Municipal Court Administration, and Public Information/Outreach. This position would fill an organizational gap and have a net fiscal impact of $15,000 to the City.
Ms. Bennett reviewed the Existing Organization (see slide) in detail and pointed out the organization is extremely flat. She then moved to the Proposed Organization (see slide), reducing the span of control for the City Administrator to 8. The Assistant City Administrator would have to possess good inner governmental relations and policy skills. A key component to make this work would be to have a good Technical/Operations Superintendent of the Electric Department for day to day operations. Mr. Stromberg added that he recognized the need to breakdown the flatness in this structure and had discussions with Ms. Bennett over the last six months. He further advised of his observations in organizations and how performances are affected by many factors resulting in a management position being spread too thin. The Committee discussed the skills set required for this new position and the unique regulatory and safety issues related to the Electric Department. The Committee then discussed other options for reporting of the Human Resources Department and consensus was it had to remain under the City Administrator.
Mr. Lemhouse inquired how common is it in comparable cities to have an Assistant City Administrator? Ms. Bennett responded that in communities over 15,000 it is pretty common.
The Committee discussed the City Administrator’s challenges of leading, mentoring and accessibility to Department Heads. Ms. Bennett expressed the importance of making sure the channels of communication are open and sees the position as a facilitation and translation function. The need for succession planning was then discussed and the Oak Knoll Fire when the City Administrator was on vacation was an example. It was noted by the Committee that the City previously had an Assistant City Administrator and the structure of that position was discussed.
The Committee then discussed the Electric Department more specifically and that the Director will be confronted by community problems and a Generalist would fit into this position.
Ms. Everson expressed that creating this Assistant City Administrator position is a great opportunity and would open up other areas that the City Administrator could be more visible in the community. Ms. Bennett agreed.
Ms. Bennett moved to the Add package she did not recommend (see slide) which restores a one-half time court clerk due to budget restraints, but to make it a priority next year.
The budget Committee meeting was adjourned at 7:55 p.m.
Temporary Administrative Secretary