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10/6/2016 1 1 st Annual Better Budgeting October 6, 2016, and January 12, 2017 Copyright 2016 by Government Finance Officers Association Government Finance Officers Association Welcome and introduction GFOA’s First Annual Better Budgeting Webinar An annual training event for government budget professionals Similar to GFOA’s Annual Governmental GAAP Update Objective To help budget professionals better serve the needs of decision makers Approach Focus on selected aspects of the budget process Offer practical tips for improvement 2 This year’s topics 1. Setting up a longterm planning process 2. Creating a truly effective capital budgeting process 3. Better assessing the potential impact of changes in service level 4. Making better decisions on the appropriate levels of fees and charges 5. Designing more effective measures of performance 6. Improving the process of budgeting for salaries and wages 3 “Housekeeping Items” 1. This twohour program is worth 2 CPE Credits. All paid participants will receive a certificate by regular mail in 23 weeks 2. Multiple participants sharing one computer were captured in the text box on the registration page. If you accidentally skipped this step, you can email the list of participants to [email protected] 3. A copy of the PowerPoint slides are available under the “resources” tab at the top right of the screen 4. GFOA staff are available during the program to answer contentrelated questions. You can submit questions through the “chat” tab 5. Polling questions – test material (incorrect answers do not affect CPE). We encourage you to participate 4 Instructors John Fishbein Senior Program Manager Government Finance Officers Association(GFOA) Michael Bailey Finance Director City of Redmond, Washington 5 6 Explanatory slides outline the major points covered in this presentation. The explanations are then reinforced with examples. The bullet points in the explanatory slides that are highlighted in red and italicized specifically relate to the corresponding examples. Please note that the bullet points that are not highlighted are equally important. In each of the example slides, the name of the entity appears in the upper right corner of the slide and key points of the example are emphasized in a red underline. A few notes about the format of this presentation…

Transcript of 1 Annual to Better Budgeting - Webinars, Webcasts, LMS...

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1st AnnualBetterBudgeting

October 6, 2016, and January 12, 2017

Copyright 2016 by Government Finance Officers Association

Government Finance Officers Association Welcomeandintroduction

• GFOA’s First Annual Better Budgeting Webinar

• An annual training event for government budget professionals • Similar to GFOA’s  Annual Governmental GAAP Update

• Objective• To help budget professionals better serve the needs of decision makers 

• Approach• Focus on selected aspects of the budget process

• Offer practical tips for improvement 2

Thisyear’stopics

1. Setting up a long‐term planning process

2. Creating a truly effective capital budgeting process

3. Better assessing the potential impact of changes in service level

4. Making better decisions on the appropriate levels of fees and charges

5. Designing more effective measures of performance

6. Improving the process of budgeting for salaries and wages

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“HousekeepingItems”

1. This two‐hour program is worth 2 CPE Credits. All paid participants will receive a certificate by regular mail in 2‐3 weeks

2. Multiple participants sharing one computer were captured in the text box on the registration page. If you accidentally skipped this step, you can e‐mail the list of participants to [email protected]

3. A copy of the PowerPoint slides are available under the “resources” tab at the top right of the screen

4. GFOA staff are available during the program to answer content‐related questions. You can submit questions through the “chat” tab   

5. Polling questions – test material (incorrect answers do not affect CPE).  We encourage you to participate 

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Instructors

• John Fishbein

Senior Program Manager 

Government Finance Officers Association(GFOA)

• Michael Bailey

Finance Director

City of Redmond, Washington

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• Explanatory slides outline the major points covered in this presentation. The explanations are then reinforced with examples. 

• The bullet points in the explanatory slides that are highlighted in red and italicized specifically relate to the corresponding examples.

• Please note that the bullet points that are not highlighted are equally important.

• In each of the example slides, the name of the entity appears in the upper right corner of the slide and key points of the example are emphasized in a red underline.

Afewnotesabouttheformatofthispresentation…

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Part1

• Setting up a long‐term planning process

• 1.1  Convince decision makers of the need

• 1.2  Develop a binding financial policy

• 1.3 Initial phase

• 1.4 Methodology

• 1.5 Decision phase

• 1.6 Execute/monitor phase

• 1.7 Communicate

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1.1Convincedecisionmakersoftheneed

• Explain LRFP (Long‐Range Financial Planning)

• Find out any qualms or objections that the decision makers may have

• Diagram the process and where it would fit in

• Note other peer governments that do LRFP

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Long‐Range Financial PlanThe first draft of the redesigned Long‐Range Financial Plan (LRFP) was presented to the Long‐Range Financial Committee in April 2015. The LRFP is intended to serve as a tool for financial planning and decision making in the years ahead, and the City aims to update this plan annually. The LRFP is a ten‐year forecasting model for the General Fund. This plan should be considered a working document that will constantly change as trends begin to develop.

City of Santa Rosa, California

1.2Developabindingfinancialpolicy

• Add long‐range financial planning to your financial policies

• Number of years (time horizon)• Starting point (base year)• Which funds (scope)

• Major funds• Don’t just focus on the general fund

• Those with structural deficits• Aggregate non‐major funds

• Which categories (content)• Major revenues• Major expenditures or departments• Debt

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City of Wilsonville, Oregon

• The base year of the forecast is the adopted budget for the fiscal year (FY) 2014‐15. The adopted budget for FY 2014‐15 is then adjusted for various known items that have occurred since the Council adopted the budget in June 2014, and projections for 2014‐15 are developed. The five‐year forecast is then grounded by Council intent and levels of service as reflected in the adopted budget, adjusted for updates to revenues and expenses as FY 2014‐15 unfolds. 

• This five‐year forecast aggregates all personnel services costs into one category. Key components of this category include wages, retirement, and health insurance. 

1.3Initialphase

• Responsible party• Individual

• Project team

• Recognize any special issues• Political

• Legislation

• Link to strategic plan

• Comply with financial policies

• Define purpose and scope12

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Discussion on future service delivery merger will take place.  Future discussions and decisions on the most equitable means of providing law enforcement services within the County may occur. Discussions may occur to review the possibility of a merger between the City and County for Crime Scene/Forensic Services. The possible merger of the County’s 911 Center and the Sheriff’s Communication section will be discussed in the near future. 

Forsyth County, North Carolina

Assumptions for Public Safety Service Area ‐ Sheriff

1.4Methodology

• Moving averages• Regression• Trends

• Historical• Structural imbalances

• Scenario analysis

• Environment• Demographics

• Growth• Composition

• Economy• Inflation

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Below is the detail of the cost of estimated compensation and insurance increases for comparison purposes ($millions).

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Item 2016Adopted

2017Projected

2018Projected

2019Projected

2020Projected

2.5% compensation

n/a $4.3 $8.8 $13.3 $18.1

5.0% Insurance n/a $1.2 $2.5 $3.8 $5.2

City of Aurora, Colorado

The “Compensation Increase” scenario contains:

• A salary increase of 2.25 percent for all employees in 2016 and 2.5 percent for each year thereafter through 2020.

• An increase of health benefits of 5.0 percent in 2016 followed by 5.0 percent increases in health and dental benefits per year for 2017‐2020.

1.5Decisionphase

• Responsible Parties• Officials

• Staff

• Public

• Decisions made on such items as

• Taxes/fees

• Service levels

• Fund balance

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Town of River Bend, North Carolina

During the FY 2016 budget preparation process, the long‐range outlook and projected deficits were thoroughly discussed by the Council. If all projections hold true, we anticipate a small deficit at the end of FY 2016. In subsequent years, it is projected to increase. Currently, those deficits are minimal and will not have a substantial impact on our cash balance. In fact, as noted earlier, cash balance is projected to increase through the end of FY 2019.

1.6Execute/monitorphase

• Execute strategies• Officials

• Staff

• Monitor

• Operational (performance measures)

• Financial (budget)

• Time interval of monitoring (dollar value and significance of activity)

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City of Portland, Oregon

The City Budget office (CBO) is releasing an update to the December five‐year financial forecast that incorporates new information on inflation, business license and transient lodging revenue, and a Council decision to allocate money to affordable housing development. This update also includes information on the general fund’s performance in FY 2015‐2016 as well as the latest local economic indicators.  Largely resulting from a higher business license tax forecast, CBO now projects that the City will have $4.4 million in excess of ongoing revenue and $15.9 million in excess of one‐time revenue in the FY 2016‐17 budget. Both the ongoing and one‐time figures are up from December, consistent with what one would expect given current economic conditions. A final budget forecast will be released in late April.

1.7Communicate

• Web

• Board meetings

• Presentations• What level of detail

• Through tables or graphs• Round to thousands or millions

• Include projections, assumptions,  and concise discussion

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St. Johns County, Florida

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City of Cottonwood, Arizona 

CONCLUSION

This five‐year analysis of the General Fund demonstrates that operating revenues will not keep up with operating expenditures for the next five years. This reflects the City’s inability to substantially increase the current revenue streams via rate increases or through diversifying the current revenues with additional fees or charges for services. The present economic situation will also stifle future revenue generation.

Part2

• Creating a truly effective capital budgeting process• 2.1 Definition

• 2.2 Calendar

• 2.3 Identify needs

• 2.4 Capital project requests

• 2.5 Prioritize

• 2.6 Determine costs

• 2.7 Develop financing strategies

• 2.8 Capital project detail in the budget document

• 2.9 Monitor/report23

2.1Definition

• The definition of a capital project can be designed in a way that is broad enough to encompass a variety of different situations

• Governments frequently refer to asset life, asset type, and dollar threshold in this definition

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Asset Category Considered a Capital ImprovementProject

A Maintenance Project orExpenditure

PublicFacilities

• New facility construction. Major replacement or upgrading of the design of existing major building components (roof replacement, major heatingsystem improvements).

PublicFacilities

• Major remodeling and structural alternations to improve space utilization or increase capacity.

Preventive maintenance repairs that do not significantly upgradethe structure or increase itspreviously estimated useful life (for example minor roof patching or gutter repair work).

• Program to make energy‐relatedphysical improvements.

• Program to make handicapped‐accessibility physical improvements.

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Definition of Capital Expenditures

Incorporated County of Los Alamos, New Mexico 

2.2Calendar

• A calendar showing key dates in the capital budget process should be presented, along with text describing the process

• Responsible parties (departments) and statutory deadlines are useful in describing the process

• The capital process calendar could be a part or juxtaposed with the operating budget calendar

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City of Tempe, Arizona

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• Capital assets that require repair, maintenance, or replacement that, if not addressed, will result in higher costs in future years

• Infrastructure improvements needed to support new development or redevelopment

• Projects with revenue‐generating potential

• Improvements that support economic development

• Safety

• Changes in policy or community needs

2.3 Identify needs

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Regional Municipality of York, Ontario

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• Understand project scope• Clarify project goals

• Verify alignment with strategic needs

• Clarify intended customer(s)

• Understand project costs• Develop/validate project reporting format and frequency

• Validate project assumptions by project phase• Cost, including labor and materials

• Timeline

• Ongoing maintenance costs

• Who can fill it out• Project originator

2.4 Capital project requests

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City of Springfield, Oregon

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• Information on how capital projects are evaluated and prioritized is critical

• Consider a structured process for prioritizing need• Link to strategic plan

• Identify changes in priorities• Include stakeholders in the process

• Citizens

• Public officials

• Businesses

• Community groups

• Staff

• Other agencies, including regulatory

2.5 Prioritize

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Town of Windsor, Colorado

All improvements must by prioritized and ranked based on the following categories: 

Priority I: IMPERATIVE (Must‐Do) – Projects that cannot reasonably be postponed in order to avoid harmful or otherwise undesirable consequences. 

A. Corrects a condition dangerous to public health or safety B. Satisfies a legal obligation C. Alleviates an emergency service disruption or deficiency D. Prevents irreparable damage to a valuable public facility. 

Priority II: ESSENTIAL (Should‐Do) – Projects that address clearly demonstrated needs or objectives. 

A. Rehabilitates or replaces an obsolete public facility or attachment thereto B. Stimulates economic growth and private capital investment C. Reduces future operating and maintenance costs D. Leverages available state or federal funding. 

Priority III: IMPORTANT (Could‐Do) – Projects that benefit the community but may be delayed without detrimental effects to basic services. 

A. Provides a new or expanded level of service B. Promotes intergovernmental cooperation C. Reduces energy consumption D. Enhances cultural or natural resources. 

Priority IV: DESIRABLE (Other Year) – Desirable projects that are not included within five‐year program because of funding limitations. 

PRIORITIZING CAPITAL IMPROVEMENTS  2.6Determinecosts

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• The scope and timing of a planned project should be well defined in the early stages of the planning process

• Agencies should identify and use the most appropriate approaches, including outside assistance, when estimating project costs and potential revenues

• For projects programmed beyond the first year of the plan, governments should adjust cost projections based on anticipated inflation

• The ongoing operating costs associated with each project should be quantified

• A clear estimate of all major components required to implement a project should be outlined, including land acquisition needs, design, construction, contingency, and post‐construction costs

• The non‐financial impacts of the project (e.g., environmental) on the community should be recognized

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The costs of future operations and maintenance for new CIP projects are estimated by each department based on a detailed set of cost guidelines that is provided to all departments each year. These guidelines are updated annually in conjunction with the various departments that are experts on different types of operating costs. The FY 2016–2025 CIP reflects the following estimated operating cost for capital projects:

• between $1.97 and $2.80 per sq. ft. annually for electrical and gas costs in a building;

• between $2.00 and $3.00 per sq. ft. annually for building  maintenance, including heating, ventilating and air conditioning (HVAC), plumbing, electrical, and structural repairs;

• $1.22 per sq. ft. annually for custodial services;• $0.195 per sq. ft. annually for building water usage;• $341.26 per month for refuse (two 6‐yard containers picked up three times a week)

City of Glendale, Arizona

2.7Developfinancingstrategies

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• Anticipate expected revenue and expenditure trends, including their relationship to multi‐year financial plans

• Prepare cash flow projections of the amount and timing of the capital financing

• Ensure compliance with all established financial policies

• Recognize appropriate legal constraints• Consider and estimate funding amounts from all appropriate funding alternatives

• Ensure reliability and stability of identified funding sources

• Evaluate the affordability of the financing strategy, including the impact on debt ratios, taxpayers, ratepayers, and others

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City of Woodstock, Illinois

2.8Capitalprojectdetailinthebudgetdocument

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• Note capital projects as recurring or non‐recurring• Provide concise project detail with justification and benefits

• Project costs through the complete cycle • Timetable that includes the different phases and scheduled completion date

• Pictures tend to be more effective than maps• Operating impacts• Link to strategic plan

Significant Non-Routine Capital ExpendituresBotanica Expansion

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Council District: AllType: New ConstructionCategory: ParkStart & Complete Date: 2012‐2013Cost (total): $2,650,000Operational Costs (additional): $50,000Operational Staff (additional): Minimal

Botanica continues to provide a premium attraction on the river that supports the Core Area and Neighborhood goal. The development of the gardens and infrastructure will strengthen the economic viability of the Botanica organization and support the City of Wichita in providing cultural arts programs for citizens and visitors.

The first phase of the Botanica Expansion Project included the development of a children’s garden comprised of approximately one acre located west of the current complex. New infrastructure for utilities and a road linking North Amidon to Sim Park Drive and Museum Boulevard were included. Additional improvements include more meeting and classroom space. Additional operating costs are estimated at $50,000 for maintenance and utilities.

City of Wichita, Kansas

2.9Monitor/report

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• Develop reporting requirements through policies

• Include whether project is on schedule and within budget

• Incorporate a provision on how to handle changes and amendments to the plan

• Close out projects when completed

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Illinois State Toll Highway Authority

Part3

• Better assessing the potential impact of changes in service levels• 3.1  Identify services

• 3.2  Link to goals/policies

• 3.3  Summarize

• 3.4  Reasons for change

• 3.5  Service standards

• 3.6  Equity (fairness)

• 3.7  Financial sustainability

• 3.8  New risks

• 3.9  Customer satisfaction/quality of service 42

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3.1Identifyservices

• Purpose

• Categorization

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Mecklenburg County, North CarolinaThe four quadrants of the Choice matrix are:

No Choices (Red) – Items in this category offer the Board no options when it comes to providing services or the amount of funding. 

No Program Choice/Funding Choice (Blue) – Programs listed in this category are imposed on the Board, yet the County has the flexibility when it comes to the level of funding necessary to meet the program needs.

Program Choice/No Funding Choice (Purple) – The Board has the option to provide the services in this category. 

Program and Funding Choice (Green) – The Board has complete control over both program and funding decisions. This category offers the Board the greatest degree of budgetary flexibility.

The Choice matrix is organized by Priority levels, listing each service within each matrix quadrant.  

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Mecklenburg County, North Carolina

$ in millions

$334

$801

$23

No Choices(Service or Funding)

$412

No Service ChoiceFunding Choice

$801

Service ChoiceNo Funding Choice

$23

Service ChoiceFunding Choice

$334

No Funding Choice Funding Choice

No Service Choice

Service Choice

3.2Linktogoals/policies

• Relate to strategic plan

• Relate to long‐range financial plans

• Assign budget dollars to services

• Are you getting what you paid for

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Town of Hillsborough, California

Town Goals Related Budget Items

1. Community Service POLICE – Fund one Service Clerk position which will result in increased patrol time by shifting administrative duties, such as fleet maintenance, transport of evidence to labs, etc. from the officers. New role as Alarm Service Technician will provide single point of contact to residents/alarm installer for set up of new alarm monitoring accounts ($75K).POLICE – Fund one Lieutenant position to provide single point of contact for community outreach, to oversee training program, to manage analytics from new dispatch and records management system, and to enhance investigations case management in partnership with countywide crime prevention. In addition, the position will improve effectiveness in solving crime by applying more resource to internalinvestigations and case reviews and will improvetraining programs ($170K).

Linking Goals to Significant 2015‐2016 Budget Items3.3Summarize

• Choose a format

• Could be for either enhancements or reductions

• One‐time or recurring

• Include different funds

• Don’t get too detailed

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City of Maple Valley, Washington

3.4Reasonsforchange

• Legislation

• Cost

• Revenue

• Demographics

• Changes in demand

• Politics

• Service quality

• Safety

• Maintenance 50

51

City of Maple Valley, Washington

3.5Servicestandards

• Parameters

• Ratios

• Acceptable levels

52

53

City of Leawood, Kansas

3.6Equity(fairness)

• Make service‐level decisions in a just manner

• Take the following into consideration

• Legislation

• Geography

• Ethnicity

• Accessibility

• Affordability

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King County Department of Transportation Metro Transit Division, Washington

The task force felt that it is imperative for any future allocation of service to provide transit services to those who have no, or limited, transportation options. They defined Social Equity and Environmental Justice to mean using transit service to address gaps in mobility, and to avoid or mitigate disproportionately high and adverse social, economic, or human health impacts for populations that have limited transportation options, including youth, students, elderly, disabled, people of color, those with limited English. 

In addition to considering trip origins for people with limited transportation options, consideration should be given to destinations for employment, education, healthcare, social services, and other civic engagement activities.

3.7Financialsustainability

• Long‐term financial plan

• Compatible with financial strategy

• Supports financial sustainability

• Range and level of services that best meet service‐level needs and preferences

• If current service levels jeopardize ongoing financial sustainability

• Consider alternative strategies

56

57

More specific to the issue of the aging population is the increased number of elder‐living communities that offer independent, assisted, or full care. These communities value the presence of fire, rescue, and EMS and generate increased call demand. For ambulance transport, this is especially significant in both the demand and the reimbursement rate. Ambulance transports for Medicare patients are almost always reimbursed but at a much reduced rate. Thus while the District may have increased gross revenues, roughly half of the increase will be classified as non‐allowed. This restricts the CFPD’s ability to increase the response capacity. 

Cunningham Fire Protection District, Colorado

3.8Newrisks

• Change in service providers

• Budgetary constraints

• Choices have to be made

• Legislation

• Unfunded mandates

58

59

• We expect the demand for public safety and human services to continue to increase for 2015. We have increasing calls for EMS service; growing crime rates (which brings associated jail or alternative correctional needs); increased demand for mental health services (for all ages); waiting lists for individuals with developmental disabilities; and helping to keep the increasing number of elderly in their homes instead of costly long‐term care.

• None of these are services we can cut. For many of these, we are obligated to provide mandated services on behalf of the state, at a cost of $150 million, of which Sedgwick County only receives about 15% of the funding needed from the state. The choice is — do we use local property tax dollars to meet the gap in services, and if so, what other programs do we eliminate to do that?

Sedgwick County, Kansas

3.9Customersatisfaction/qualityofservice

• What level of service is acceptable

• Use of technology

• How to track/measure

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We are working to enhance our communication and outreach efforts with patrons and residents. While this will support our marketing efforts, it is also intended to provide new channels for patrons to communicate with the district. Key items in the budget for this theme include:• Funding to develop a mobile app to provide another 

tool for patrons to interact and conduct business with the district

• Funding to develop new reports, which are now becoming a financial management best practice, for communicating budget and financial information to residents in a concise and easily understood manner

• Continued funding for a system that allows park and facility users to provide real‐time feedback on the quality of our facilities as well to provide immediate notice of problems

Tualatin Hills Park and Recreation, Oregon

Question1

In presenting information about long‐term planning, governments tend to be weakest in regard to which of the following?

A. Showing the projections

B. Describing the assumptions used to make projections

C. Discussing the significance of the projections

62

Question2

Which of the following statements best describes rounding for purposes of long‐range financial projections?

A. Most round to the next whole dollar

B. Most round to thousands of dollars

C. Most round to the next whole dollar, but rounding to thousands of dollars is better

D. Most round to thousands of dollars, but rounding to the next whole dollar is better

63

Question3

Governments are least likely to take into account which of the following when quantifying operating impacts?

A. Cost savings

B. Additional expenditures

C. Additional revenue

64

Question4

Maps are the most effective way to present project information on capital projects:

A. True

B. False

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Question5

Which of the following would be least likely to affect a long‐term service level decision?

A. Unfunded mandates

B. Demographic changes

C. Weather

D. Politics

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Question6

When presenting expenditure amounts, governments tend to focus least on which of the following?

A. Spending by expenditure component

B. Spending by department

C. Spending by goal

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Part4

• Making better decisions on the appropriate levels of fees and charges

• 4.1 Consider applicable laws and statutes

• 4.2 Adopt formal policies

• 4.3 Calculate the full cost of providing a service

• 4.4 Review and update

• 4.5  Benchmark

• 4.6 Utilize long‐term forecasting

• 4.7 Communicate to stakeholders

• 4.8 Present fee information 68

4.1Considerapplicablelawsandstatutes

• Look at laws and statutes before implementation

• Be aware of current and proposed legislation

69

TwoIllinoisStateSenateBillstoRestricttheAdministrativeFeesChargedbyCities

70

• Senate Bill 2261 would limit the administrative fee for impounding vehicles from exceeding the actual cost of the service provided. It also prevents an illegally parked car from being impounded unless it has been   abandoned for more than 48 hours, and exempts cars left behind in an emergency.

• Senate Bill 2265 requires that daily storage fees for impounded vehicles cannot accrue for at least five days after a car is towed. It also requires that a notice of seizure must be sent by mail, and allows a lease holder to take possession of an impounded vehicle.

Source:  Bellview News‐Democrat April 14, 2016

4.2Adoptformalpolicies

• Identify the factors (affordability, pricing history, inflation, service delivery alternatives, and available efficiencies) to be taken into account when pricing goods and services

• State whether the jurisdiction intends to recover the full cost of providing goods and services

• Outline the considerations that might influence governmental pricing decisions

71 72

Park & Recreation FeesA. The City will attempt to cover at least 45 percent of the total cost of 

recreation programming by charging fees for recreation activities  and use of city facilities and equipment.

B. The City will establish and maintain the following fee categories and related cost recovery goals:

1.  Maximum Fee Support: Program fees should fund 80% or more of the cost for the following programs: special instruction classes, competitive swimming, recreation trips and outings, adult sport leagues, major special events, latchkey services, and golf.

2. Partial Fee Support: Program fees should fund 33% to 80% of the cost for the following programs: preschool activities, introduction to sports (primary grades), outdoor recreation, special craft workshops, and aquatics.

3.  Minimum Fee Support: Program fees should fund up to 33% of the cost for the following programs: community centers and activities, youth centers and activities, minor special events, playground activities, junior athletics, non‐sponsored outdoor recreation, and co‐sponsored special interest activities.

City of Ankeny, Iowa

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4.3Calculatethefullcostofprovidingaservice

• Calculating the full cost provides a basis for setting the charge or fee

• Full costs incorporate direct and indirect costs

• Costs of collection need to be addressed

73 74

Cost of Services Analysis and Fee Methodology 

City of Minneapolis, Minnesota

Source: City of Minneapolis 2013 Study

Following the determination of direct cost, attention was turned to the identification and calculation of indirect costs associated with the support of the direct staff. For this study, indirect costs were deemed to include: 

4.4Reviewandupdate

• Look at various factors• Impact of inflation

• Other cost increases

• Adequacy of cost recovery

• Use of services

• Competitiveness of current rates

• Update fees on a periodic basis• Helps to smooth charges and fees

75 76

• As a part of the budget process, the Board set water rates that will go into effect on January 1, 2016.

• The planned water rate adjustment is 2.5% based on a cost of service analysis. This represents an impact of $1/month for the typical residential customer. The main cost drivers that make an increase in 2016 necessary are investments in infrastructure replacement, labor expenses, security enhancements, and a gradual decline in indoor water use.

• The 2016 rate is consistent with WaterOne’s approach to avoid rate volatility by creating incremental rate adjustments. Stable, predictable rates are preferred by customers and promote the growth of the local economy.

WaterOne, Kansas

4.5Benchmark

• Benchmark individual fees and charges with those charged by comparable or neighboring jurisdictions

77 78

City of Burnsville, Minnesota

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4.6Utilizelong‐termforecasting

• Service fee plan should be consistent with long‐range financial projections

• Recognize the plan may be amended to reflect changing conditions in the future

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Keep Rates and Expenses at the Rate of Inflation. 

• The Board has established a priority of maintaining sewer rate affordability by striving to keep rate growth to no more than the Consumer Price Index (CPI). This has been challenging, as the District’s operating expenses (wages, health care, retirement, electricity, chemicals, etc.) tend to increase faster than CPI.

• For the past 9 years, the District has maintained the goal of not increasing rates beyond inflation by investing in capital projects and processes that reduce operating expenses.

• The calculation of sewer service charges rates based on asset life cycle costs (in the Ten‐Year Financial Forecast section of the budget document) highlights that, even with the cost saving measures implemented by the District, the sewer service charges are not adequate to meet the renewal and replacement needs of the District. 

80

NAPA Sanitation District, California

4.7Communicatetostakeholders

• Provide information on charges and fees to the public

• Give citizens feedback opportunity

81 82

City of Daytona Beach, Florida

• The new proposal aims to create consistency and clarity in fees across city venues. The changes include suggestions to assess non‐city residents rental fees that are 25 percent higher, remove fees that keep families from using open space for free play at some parks and community centers, establish consistent fees for all athletic daily rentals for practice and games and lower the base rental fee of facilities but add surcharges based on the impact and requirements of planned events.

Source:  http://www.news‐journalonline.com

4.8PresentFeeInformation

• Explain why

• Show dollar impact

• New or existing

• Adjust for consumption

• Do not list every fee in budget document

83 84

Pinellas County, Florida

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Part5• Designing more effective measures of performance (The National Performance Management Commission)• 5.1 Information, measures, goals, and activities should 

be relevant to the priorities and well‐being of the government and the community

• 5.2 Information related to performance, decisions, regulations, and processes should be transparent, easy to access, use, and understand

• 5.3 Goals, programs, activities, and resources should be aligned with priorities and desired results

• 5.4 Decisions and processes should be driven by timely, accurate, and meaningful data

• 5.5 Performance management should help to transform the organization, management, and the policy‐making process

• 5.6 Practices should be sustainable over time and across organizational changes

85

TheNationalPerformanceManagementCommission

• Represented eleven national public interest organizations of elected and appointed state and local government officials (including GFOA)

• Issued a report in 2010, A Performance Management Framework for State and Local Government: From Measurement and Reporting to Management and Improving

• Six major principles were addressed

86

5.1Information,measures,goals, priorities,andactivitiesarerelevanttotheprioritiesandwell‐beingofthegovernmentandthe community

• Use community condition measures to assess resident needs that may not be addressed by current programs

• Use customer or resident satisfaction surveys

• Avoid printing out the full survey and all of the results

• Summarize findings

87 88

City of Bettendorf, Iowa

5.2Informationrelatedtoperformance,decisions,regulations,andprocessesistransparent,easytoaccess,use,andunderstand

• Limit the number and degree of performance measures that provide an efficient and meaningful way to assess the effectiveness and efficiency of key programs

• Report internally and externally

89 90

City of Williamsburg, Virginia

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5.3Goals,programs,activities,andresourcesarealignedwithprioritiesanddesiredresults

• Ensure that the benefits of establishing and using performance measures exceed the resources required to establish performance measures

• Base on performance measures that tie to a statement of program mission or purpose

• Measure program outcomes

91 92

City of Temecula, California

CoreValue

Five‐Year Long‐Term Goal

Performance Measures

FY2013‐14Actuals

FY2014‐15Actuals

FY2015‐16Target

A Safe and Prepared

Community

Minimize The Impact To Life, 

Property, and TheEnvironment FromNatural Hazards 

AndEmergency Situations

Percentage of CSO’strained in the

operation and set upof the MobileCommand Post

60% 75% 80%

Remain Within TheFederal Ranking OfThe Top 25 Safest

Cities

Percentage of patrolofficers maintaining24‐hour perishable

skills training

95% 100% 100%

Police Division/Program Patrol ServicesPERFORMANCE MEASURES FOR FISCAL YEAR 2015‐2016

5.4Decisionsandprocessesaredrivenbytimely,accurate,andmeaningfuldata

• Be verifiable, understandable, and timely• Be monitored and used in managerial decision‐making processes

• Adopt common definitions of key efficiency and effectiveness performance measures to allow intergovernmental comparisons

93 94

City of Maple Valley, Washington

5.5 Performancemanagementhelpstotransformtheorganization,itsmanagement,andthepolicy‐makingprocess

• Provide for resource allocation comparisons over time

• Measure efficiency and effectiveness for continuous improvement

• Be consistent throughout the strategic plan, budget, accounting and reporting systems to the extent practical

• Develop and periodically review supportable targets for each performance measure

• Develop multiyear series of quality or outcome indicators to measure the effectiveness and efficiency of service delivery within programs

95 96

City of Grants Pass, Oregon

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5.6Practicesaresustainableover timeandacrossorganizationalchanges

• Design the practices in such a way to motivate staff at all levels to contribute toward organizational improvement

• Evaluate the data to use in long‐term resource allocation and budget decisions for continuous improvement

• Develop common or improved approaches to the utilization of financial and non‐financial performance measures in making and evaluating decisions

97 98

Town of Chapel Hill, North Carolina

99

Source: National League of Cities 2014

Part6

• Improving the process of budgeting for salaries and wages

• 6.1 Personnel tracking system

• 6.2 Vacancy adjustments

• 6.3 Funded versus unfunded positions

• 6.4 Frozen or eliminated positions

• 6.5 Compensation approaches

• 6.6 Optimal staffing level

100

6.1Personneltrackingsystem

• Budget payroll projections are based on the estimate of budgeted positions for the year• Providing the correct number of budgeted positions is important

• The system to track budgeted positions may reside in the human resources department rather than the budget department

• It is vital that the departments work together to be consistent in reporting

• The system should be able to track all types of employees, not just full‐time 101 102

The City’s Central Organization and Position Management System maintains a complete inventory of the City’s positions, their attributes, and reporting hierarchies. An accurate and consistent Organization and Position Management system is critical in avoiding budgetary over‐expenditure and is essential in providing decision‐making information in support of the City’s Human Resources, and financial planning, and management.

City of Portland, Oregon

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6.2Vacancyadjustments

• Start dates

• Trends• It may be prudent to include a hiring lag in the budget, since most governments experience some vacancies during the year• To determine the dollar impact of this lag is to review trends (average filled positions per year versus average vacant positions)

• Analysis can be conducted at the department level or broken out by individual position

• Technical or higher level positions are usually harder to fill

103 104

City of Rye, New York

6.3Fundedversusunfundedpositions

• Approved positions should be funded in the budget

• Unfunded positions, or those that were requested but not approved, should be noted, especially if management decides at some point to reconsider some of those denied position requests

105 106

Whitfield County, Georgia

6.4Frozenoreliminatedpositions

• Some positions may be frozen

• Other positions may be temporarily frozen

• The dollars saved by not filling these positions should be quantified

• If the positions being eliminated are currently filled, then the government might also need to include severance payouts in the budget

107 108

Whitfield County, Georgia

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6.5Compensationapproaches

• Step and grade systems• Salary range

• Pay for performance• Foster workplace productivity

• Need to design a useful appraisal system

• Wage surveys

• Cost‐of‐living adjustments often are used when forecasting personnel costs 

• The Consumer Price Index (CPI), a broad measure of consumer inflation, is the cost‐of‐living index used most often for determining salary increases 

109 110

Collier County, Florida

6.6Optimalstaffinglevel

• Comparison to other governments• Use population to employee ratios

• Staffing guidelines• Set up specific policies

• Positions classified by goal• Use of volunteers• Seasonal and temporary positions

• Other considerations• Overtime rather than hiring full‐time

• Use of retired employees

111 112

City of Tempe, Arizona

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City of Littleton, Colorado

Communications & Marketing  40Community Development  360Police  17,073Public Works  24Library  3,032Museum  8,344Total  28,873

EstimatedVolunteerHours‐2014

Question7

There is no practical reason to calculate the full cost of a subsidized activity.

A. True

B. False

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Question8

What fees should be listed in the budget document?

A. Those with a high dollar impact

B. Those subject to a high level of citizen concern

C. Those affected by significant changes

D. All of the above

E. A list of all fees should be presented115

Question9

Which of the following statement is true regarding performance measurement (PM)?

A. PM should focus on actual past performance

B. PM should focus on future performance

C. PM should focus on both actual past performance and future performance

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Question10

Which of the following statements is false?

A. To be effective, performance measures must be linked to goals

B. Objectivity requires that performance measures focus primarily on activity levels (measures of output)

C. Performance measures may include comparisons to selected benchmarks

D. Performance measures may include comparisons with peer governments

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Question11

Which of the following statements is more accurate regarding salary forecasts?

A. Assuming full‐time employment tends to result in the least variance

B. Using a hiring lag factor tends to result in the least variance

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Question12

Which of the following compensation approaches should be avoided?

A. Step and grade systems

B. Pay for performance

C. Use of wage surveys

D. None of the above

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Markyourcalendar

• 2017 GFOA Annual Better Budgeting

• Thursday, October 5, 2017

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Biography

John D. Fishbein is a Senior Program Manager in Government Finance Officers Association’s (GFOA) Technical Services Center.

Mr. Fishbein came to GFOA in 2002. He is responsible for the day-to-day operation of GFOA's Distinguished Budget Presentation Awards Program.

He is the author of GFOA’s recent publication, Building a Better Budget Document. He previously authored Preparing High Quality Budget Documents for School Districts and Preparing High Quality Budget Documents.

He serves as staff to GFOA’s standing Committee on Governmental Budgeting and Fiscal Policy.

John can be reached by phone at 312-578-2268 or by e-mail at [email protected].

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Biography

Mike Bailey has worked in local government finance since 1980 and is currently the Finance Director with the City of Redmond. He has served as president of the Washington Finance Officers Association and the state representative for the Government Finance Officers Association (GFOA).

Mike was on GFOA’s Executive Board. He has served as Chairman of GFOA Technology Resource Group and as a member and Vice Chair of GFOA’s Budget and Management Committee.

He is a CPA and has been a GFOA budget reviewer for almost two decades.

Mike can be reached by phone at 425-556-2160 or by e-mail at [email protected].

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