Present:
John Stromberg Arrived 7:23pm
Greg Lemhouse Arrived 7:16pm
Rick Rosenthal
Carol Voisin
Pam Marsh
Mike Morris
David Runkel
Roberta Stebbins
Bill Heimann
Mary Cody
Absent:
Dennis Slattery
Denise Daehler
Other Attendees
Lee Tuneberg Finance Director
Dave Kanner City Administrator
Kristy Blackman Administrative Assistant
Stefani Seffinger Parks and Recreation Commissioner
Rick Landt Parks and Recreation Commissioner
APPROVAL OF MINUTES
Motion
M/S Runkel/Heimann to approve the minutes from the meeting of the City of Ashland Citizens Budget Committee, June 9, 2014.
Stromberg
Yes
Morris
Yes
Lemhouse
Yes
Daehler
Absent
Rosenthal
Abstain
Runkel
Yes
Slattery
Absent
Stebbins
Yes
Voisin
Yes
Heimann
Yes
Marsh
Yes
Cody
Yes
Motion Passed
PUBLIC FORUM
None
BUDGET DISCUSSION AREAS
Budget Incentive Programs
Marsh outlined the Parks and Recreation (P&R) Ad-Hoc Committee’s final report and its budget recommendations. Marsh specifically spoke about the 2nd major recommendation to come out of the Ad-Hoc Committee which was to develop some sort of an incentive program for P&R. Noted that currently P&R has no way of profiting from their entrepreneurial ideas. Also pointed out that, state law gives Council the power to control P&R funds.
Marsh talked to the handout regarding the P&R Ad Hoc Committee’s belief that the P&R funding system should include a financial incentive to reward creative management and innovative programming. They recommend that Council and P&R Commission adopt one of three recommended policies:
Assignment of budget surplus: Monies budgeted but not spent during the biennium will be added to the revenues generated by the department (fees, rental income) that exceed budgeted amounts; the total will be evenly divided between the General Fund and Parks and Recreation. P&R funds would be placed in the department’s capital fund.
Or
Assignment of revenue only: Parks and Recreation will wholly retain revenue generated by the department (fees, rental income) that exceeds budgeted amounts. Funds would be placed in the department’s capital fund.
Or
Assignment of excess Materials and Services revenue: Monies budgeted but not spent for Materials and Services would be placed in the department’s capital fund.
Rosenthal spoke to the 2nd option and handed out an information sheet “Medford Materials and Services Carry Forward Protocol” outlining the idea of incentive ideas for departments who manage materials and services budgets wisely and are allowed to (with the City Managers approval) use unused funds for other department needs using a supplemental budget. This would only apply to the departments who had a carry forward amount and this would be either a percentage or the amount left over, whichever was less. The percentage in question would be the City Manager’s decision. Rosenthal went on to give examples of ways this has assisted the City of Medford (COM) with unexpected costs.
Questions were raised regarding who would be responsible for a shortfall in revenue if the entrepreneurial ideas failed. It was generally accepted that the department would be responsible.
Seffinger pointed out that some programs are subsidized for the public good and to protect vulnerable citizens. She stated that she would like to see P&R be able to develop programs that are more entrepreneurial.
Runkel noted that most programs at P&R run at a loss and all programs are subsidized.
Landt agreed that most of the programs are not making money but that some are close. It was noted that there are potential programs that P&R doesn’t currently have that could make money and the only way to discover these programs is to incentivize the staff to create them.
Stebbins expressed concern that the program may be open to interpretation and noted that P&R has yet to sign the Memorandum of Understanding (MOU). Stebbins believes that the P&R Commission should first outline planned projects. Believes the project should drive the accounting of the programs. She went on to personally recommend that the program be adopted as a particular project, not as a concept.
Agreeing with Stebbins, Heimann gave his opinion of incentives and suggested that every department should be afforded the same opportunity. He also stated P&R and the City should be thought of as one and the same and not as separate.
Stebbins suggested the name be changed.
Lemhouse asked for feedback from Kanner and Tuneberg regarding what the practical effect might be on Ashland’s budget.
Kanner stated that it is a difficult question to answer. COA freezes all spending toward the end of FY and all expenditures are reviewed and approved therefore deterring departments spending remaining funds for the sake of it. He did not know if Medford did the same thing. A program such as this would be purely discretionary by the City Manager.
Marsh suggested P&R be a test case for this program, calling the program “Reward for Entrepreneurial Activities.” This could empower the Commission to be more creative and to be able to retain the benefits of those ideas. This would not be a required program.
Stromberg expressed support for P&R maintaining independence when managing its budget but questioned if this program would stimulate P&R to take higher risk projects. Believes this could go against COA policy. He asked for a specific example of something P&R would do with this program beyond their normal programs.
Morris stated that while he is unsure about the Materials and Services side, he believes P&R should keep what they make from entrepreneurial activities and that overall he would support the program.
Runkel supported Morris’ statement but questioned money going to capital fund.
Marsh noted that these programs are still being developed and would like to know if the council would even support any of the 3 suggested incentive programs.
Lemhouse expressed his support for the idea and also recognized the ability for P&R to manage their own money and thinks it should be used in the next biennium.
The question was again raised regarding who bears responsibility for a failed venture.
Lemhouse said he doesn’t believe that this will happen and P&R should be allowed to try it.
Stebbins questioned if Morris thought P&R should be allowed to retain their profits or revenues. Morris feels P&R should keep their profits and put the revenues back into the operation.
Stromberg suggested that the first round of testing should be based on already promising programs in P&R.
Marsh noted that anything retained above budgeted income would be called excess revenues.
Voisin left the meeting at 8:18pm.
Lemhouse requested that the committee move forward with the process and to allow P&R to retain their revenue and believes that P&R should manage their budgets without interference. He stated his support for Option 2.
Kanner outlined the reason placing money in the capital fund would be more productive noting that if it were in the capital fund it would remain exclusively P&R funds. Stromberg asked P&R commissioners if this were the directive taken, would this suit their needs. Both commissioner Landt and Seffinger answered yes.
It was commonly agreed that for the suggested program to work, ongoing checks and balances would need to be in place.
Lemhouse volunteered a generalized motion;
LEMHOUSE/MARSH M/S
That we move forward on the process to allow the Parks Department to retain their revenue.
Stromberg spoke to the motion;
This body can recommend and do a study and bring this back to the CBC but ultimately this should be a recommendation to the City Council to take action on this matter. Doesn’t believe that the CBC has the power to make a financial policy decision.
To think about how we would shape that policy decision. P&R or Council cannot exclusively make a policy regarding this and this would eventually need to go through the P&R budget.
Heimann suggested rephrasing the motion to “it is the consensus of the Budget Committee that this should be further investigated by staff”.
Lemhouse disagreed stating that this will just drive conversation back to the table. Believes we should move forward.
Marsh expressed concern about logistics of it making it back to the CBC without another meeting scheduled this year and how it would need to go to the CBC during the next budget season.
Stebbins stated she would be voting against the motion because she believes without an MOU the relationship between P&R and the COA is too ambiguous.
It was commonly agreed that an MOU is needed prior to the suggested program being approved.
Runkel expressed his support for the program.
Rosenthal asked Kanner for clarification of delay with the signing of the P&R MOU.
Kanner noted that the MOU is not financial management document.
Lemhouse suggest amending the motion.
Motion
MORRIS / LEMHOUSE M/S
That an amendment to the motion should state “this does not take effect until an MOU is in place”.
Stebbins requested a roll call vote
Stromberg
Yes
Morris
Yes
Lemhouse
Yes
Daehler
Absent
Rosenthal
No
Runkel
Yes
Slattery
Absent
Stebbins
Yes
Voisin
Yes
Heimann
Yes
Marsh
Yes
Cody
Yes
Motion Passed
Discussion ensued around the process needed to approve the program.
Lemhouse envisioned that staff should investigate options of how this program would work and suggested that the CBC reconvene at another meeting and discuss the details. CBC would then make a recommendation to Council and they can take definitive action and that this should happen before budget season.
Heimann agreed noting that this is a policy outside the normal budget process and Council needs to set a policy on how this will be handled.
Stromberg asked if this should be added to the MOU. Lemhouse answered no.
Stromberg asked what Council’s action would be.
Kanner answered that Council would give directive to the Budget Officer to prepare the budget a certain way and that directive would not bind the CBC but rather memorialize it. It would be effective through one budget cycle only.
Motion
LEMHOUSE/MARSH M/S
That the Budget Committee directs staff to explore options or ways for the Parks Department to keep their revenue after the Parks & Recreation Department Memorandum of Understanding is signed.
Stebbins requested a roll call vote;
Stromberg
Yes
Morris
Yes
Lemhouse
Yes
Daehler
Absent
Rosenthal
Yes
Runkel
Yes
Slattery
Absent
Stebbins
Yes
Voisin
Absent
Heimann
Yes
Marsh
Yes
Cody
Yes
Motion Passed
Stromberg gave a brief update on the Ashland Forest Resiliency Program.
Stebbins requested a last meeting.
Runkel asked Tuneberg if he had seen any preliminary numbers for the end of FY. Tuneberg answered that he hasn’t seen them yet.
Heimann encouraged Council to fill budget positions.
Tuneberg pointed out that because P&R’S MOU isn’t signed, there will be a comment on the management report (audit). He noted that while this comment has less of an effect on P&R it will be substantial for the COA, which receives federal money.
