[ Council Communication ]  [ Memo ]

Council Communication

Title:	City and Parks Cooperative Effort to Consolidate Accounting Functions
Dept:	Finance Department
Date:	November 5, 2002
Submitted By:	Lee Tuneberg, Finance Director
Reviewed By: ........................	Brian Almquist, Interim City Administrator

Synopsis:	This is an update on actions being taken by City and Parks staff to consolidate accounting functions, responding to requests from City Council, the Parks Commission Board and the Budget Committee.
Recommendation:	No action required. These efforts will continue unless directed otherwise by Council or the Commission.
Fiscal Impact:	The FY 2002-2003 budget changes will be requested as operational needs to facilitate this transition are encountered. This year the Finance Department's, Personal Services Budget will increase by 2.0 FTE (one Staff Accountant to replace the retiring Parks Office Manager and an Account Clerk II representing the existing Parks Clerk doing accounts payable and payroll transferring to the City). The Parks budget will decrease by the same number next year. Initially, the staffing decrease to Parks will be offset by an increase in Central Service Fund charges. Cost savings from economies of scale and additional expense avoidance will not be immediate due to hiring, training, cross-training and computer conversions but are anticipated to occur over time.
Background:	The Parks & Recreation Commission has several individuals doing a variety of accounting tasks that are very similar to tasks performed by the Finance Department. These include: 1. Payroll, recruitment and benefit management 2. Accounts Payable, receivables and general ledger. 3. Financial reporting and budgeting. Members of both elected boards and the Budget Committee have asked about potential economies of scale from combining accounting and personnel functions. Staff has put together a plan to make this transition happen starting as early as January 1, 2003 for payroll and related activities and by July 1, 2003 for most all other accounting activities. This change will generate costs beyond the status quo until the transition is complete thus there will be very little in the way of initial cost savings. However, there is an expectation of long-term cost savings and expense avoidance by having one unit do the majority of accounting and human resource work. Attached are two internal memorandums that provide greater detail.

End of Document - Back to Top

Memo

TO: Greg Scoles, Ken Mickelson
FROM: Lee Tuneberg, Finance Director
DATE: September 10, 2002
RE: Consolidating Parks Accounting & Human Resources into the City

Parks and City staff have met several times to discuss the potential and challenges of transferring the accounting and human resources functions to the city. There are many reasons to consiCer this shift and they include:

• Perceived economies of scale - savings on redundant systems & processes
• Potential efficiencies beyond economies - improvements on interrelated accountingi reporting and personnel functions
• Cost avoidance for tasks both parties are facing - GASB 34, computer upgrades, training, support
• Change in institutional knowledge due to pending retirements - loss of knowledge that can be minimized by procedure documentation, cross-training and a greater depth in personnel

The discussions have centered on what, and who, could be transitioned by when, and how the needed things could be down without interruption.

The What
All accounting, payroll and general ledger activities and human resource functions would be transitioned as soon as is feasible. Related activities such as audit, budget, daily cash tracking, debt management, financial reporting, recruitment and benefit management are included. Of key interest job costing and daily cash reporting that provides Parks management with necessary decision making information.

The Who
It appears that the solution will require one Parks clerk to move to the city finance deparnent to do accounts payable, payroll and other duties as defined. Also, a replacement for the Business Manager would migrate to the city to deal with accounting, financial reporting and project support.

The When
Payroll and HR are expected to occur on or about January 1, 2003 and the rest of the fufictions would transition as early as July 1, 2003. All transitions to Eden will be done at the optimal ti4ae as determined by Parks and Finance considering a smooth transition and integrity of the data.

The How
The city Human Resources division will manage recruitment, benefits and terminations fOr the Parks in the same fashion as for other departments of the city. There may be the need for Parks administrative staff to provide forms or collect and distribute information on an ad hoc basis with the city HR division responsible for all processing and follow-up.

Finance would provide space and support for the two additional employees, cross-training existing city staff to assist where needed including supporting the HR function at critical junctures. The level of support necessary is yet to be determined but some of the people available to help with the transition are:

• Accounting Supervisor Accounting: auditing & risk management overviev~ and support
• Staff Accountant Accounting: general ledger and GASB 34 conversign
• Account Representative: Purchasing support
• Accounting Clerks (2): Accounts payable, payroll benefit and recruitment ~upport
• Project Coordinator: Project management, accounting and computer conversion
• Administrative Assistant: Project support, web page support, financial reporting

Finance will work toward converting applications from Springbrook in an expeditious manner based upon the Eden system's ability to provide the level of reporting and detailed information required by the Parks management.

Parks would need to fund the two positions either as part of their payroll or through central service fees. At this time it is considered more appropriate that the city number of full time equivalent Ipositions increase by 2.0 and the Parks drop by the same. Central Service Fund charges to the par~s will increase by the total cost of the two employees and related benefits.

On a cooperative basis, the city would need to begin the hiring process of an entry level slaff accountant to work with the Parks Business Manager as soon prior to retirement as is feasible. The position would be hired into the city pay and benefit structure with a one year probation.

Other considerations

• Parks will continue to budget and fund:
• Park's audit and related services
• Maintaining the entire Springbrook system until such time as Converted
• Consulting work for GASB 34 or other Parks studies Finance cannot do
• Any administrative work not agreed upon as part of the conversion

Important Issues
The following are issues and/or assumptions:

1. Parks will maintain their separate tax identification number.
2. Parks will maintain their current PERS number.
3. Parks will remain a component unit and will need a separate financial report each year.
4. Finance will attempt to prepare the CUFR but costs for out-sourcing any part will be Parks responsibility.
5. Finance will take custody of the Springbrook "box" and responsibility for its operations.
6. Finance will not attend or take minutes for Parks meetings.

The above items are subject to discussion and change upon mutual agreement between Parks and Finance and as required by legal and audit counsel.

It is my recommendation to proceed with planning and the transition immediately.

End of Document - Back to Top