FISCAL

brianwellner

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FISCAL YEAR

Operating Budget Review

Workshop

January 9, 2016


Schedule

FY

BUDGET

20


Today

• Budget Process Review

• General Budget Introduction

• Financial Conditions

• Year-end Review

• Assumptions

• Operating Budget Overview

• General Fund

• Decrement Lists

• Department Dashboards

• Special Topics for Discussion

• Employee Health Fund

• Retiree Insurance Plans


Budget Process Overview

Budget Kick-Off Budget Inputs Budget Review

- Core Competency

Presentations

- Department Business

Plans

- Payroll Projections

- Revenue Projections

- Department Operating

Requests

- CIP Requests

- Payroll

Expenditures/Expenses

- IT Allocations

- Risk Allocations

- Vehicle Replacement

- WPCP Projections

- Debt Estimates

- Review of Department

Requests (Meetings)

- CIP Review Committee

- Business Plan Updates

- Staffing Updates

- Decrement Exercise

- Fund-by-Fund Analysis

- Council Budget

Workshops


Balanced Budget

Core-Competency Driven

Maintains current levy rate

of $16.78


FISCAL YEAR

GENERAL

GENERAL BUDGET INTRODUCTION

BUDGET INTRODUCTION

BUDGET OVERVIEW


Year-End Summary (For FY 2015)

• Added $353K to reserves during FY 2015, bringing the total

unassigned reserves category to $8.89M.

• Represents 19.8% of operating expenditures

• City Council Policy – between 15% and 20%


General Fund Unassigned Reserves

Millions

$10.0

$9.0

$8.0

$7.0

$6.0

$5.0

$4.0

$3.0

$2.0

$1.0

$0.0

19.8%

Unassigned Fund

Balance

Minimum Council

Operating Reserve

(15%)

Maximum Council

Operating Reserve

(20%)


Trust and Agency Fund

Millions

$6.0

$5.0

$4.0

$3.0

$2.0

$1.0

$0.0

Fund Balance

25% Operating

Reserve Goal


SF 295 Overview

• Property Tax reform at state level

• Created relief for commercial properties

• 90% commercial rollback (5% change from FY 2015)

• New multi-residential rollback classification begins in FY 2017

• 86.25% multi-residential rollback (was 90% in FY 2016)

• Previously taxed as commercial (90%)

• 8-year rollback schedule until reaching the residential rollback amount in FY 2022

• State providing full backfill amount through FY 2017; in FY 2018

and beyond, backfill will be capped at the FY 2017 amount.

• Future of backfill amounts are uncertain

• Creates budget difficulties/uncertainties through FY 2024


100% Valuation

Residential

Commercial

$5.0

$4.5

$4.0

$3.5

$3.0

$2.5

$2.0

$1.5

$1.0

$0.5

$0.0

FY 2004

FY 2005

FY 2006

FY 2007

FY 2008

FY 2009

FY 2010

FY 2011

FY 2012

FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

Billions


Taxable Value

$2.5

Residential

$1.5

$1.0

$0.5

Commercial

$2.0

$0.0

FY 2004

FY 2005

FY 2006

FY 2007

FY 2008

FY 2009

FY 2010

FY 2011

FY 2012

FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

Billions


Bond Rating

• City receives bond ratings from both Moody’s and Standard and

Poor’s

• Both rating agencies note two key factors in City’s continued

success and improved conditions:

• Improved fund balance

• Strong financial management practices

Aa3

AA-


Bond Rating Key Statistics (2015)

From 2015 Moody’s Report

Estimated full valuation: $6.4B

Estimated full valuation per

capita: $64K

FY 2014 available operational

fund balance: 19%

Net direct debt burden: 2.5% of

full valuation

Institutional framework score:

Aaa

From 2015 S&P Report

Market value per capita: $62.6K

FY 2014 available fund balance:

14%

Total available cash: 15.4% of

governmental fund expenditures

Strong management with good

financial policies

Strong institutional framework

score


Full-Time Employee Counts

On December 30 of each year (taken from City’s CAFR)

860

840

820

800

780

760

740

720

700

680

847

746

Full Time


FISCAL YEAR

BUDGET INTRODUCTION

OPERATING BUDGET OVERVIEW

OPERATING BUDGET INTRO


Budget Overview

• Current fiscal condition in FY 2016 is balanced

• Revenues and expenditures are generally on track with Budget

• Monthly financial updates distributed to show any variances

• No current change in overall tax levy ($16.78)

• General Fund balanced for FY 2017

• Use of decrement lists to reduce $950K in GF expenditures

• Staffing changes have continued to reduce costs

• Growth of unassigned reserves has eliminated need to earmark funding for reserve

growth

• Unassigned reserves level projected to remain at 19.8%


Looking Ahead

Add new revenue sources

- Gas/electric franchise fees

- Increase property taxes

Utilize assigned/unassigned reserves

- One-time use

- Not an optimal scenario to meet on-going

operational needs

Modify service delivery

- Reduce personnel & reduce level of service

- Adjust service delivery models


Gas/Electric Franchise Fees

• State actions = exploration of more revenue sources

• 96 cities in Iowa currently have gas/electric franchise fees – 40

cities in FY 2013

• Ankeny (2% both)

• Cedar Rapids (2% both)

• Coralville (1% both)

• Council Bluffs (2% both)

• Des Moines (5% both / temporarily 7.5%)

• Dubuque (3% both)

• Iowa City (1% both)

• Sioux City (5% both)


Gas/Electric Franchise Fee Estimates

Fee Percentage

Additional Revenue to the General

Fund

1% $1,350,000

2% $2,700,000

Swap with Local

Sales Tax Fund

(Net to City = $0)

3% $4,050,000

4% $5,400,000

5% $6,750,000


Customer Bill: Before & After

3 Bedroom; 1 Bath

1890

Electric: $50.19

3% = $1.50

Gas: $74.53

3% = $2.23

Total Mo. Increase =

$3.73

Total Annual Increase =

$44.76

3 Bedroom; 2 Bath

1970

Electric: $129.75

3% = $3.89

Gas: $33.38

3% = $1.00

Total Mo. Increase =

$4.89

Total Annual Increase =

$58.68

3 Bedroom; 3 Bath

2014

Electric: $100.82

3% = $3.03

Gas: $32.70

3% = $0.98

Total Mo. Increase =

$4.01

Total Annual Increase =

$48.12


General Fund Revenues

Revenue Dollar Amount % Change

% of Total

Revenue

Casino Fees $950,000 26.7% 2.0%

Cable Franchise Fee $870,000 1.2% 1.8%

Licenses & Permits $1,532,000 3.6% 3.2%

Charges for Services $4,001,400 0.7% 8.4%

Uses of Monies &

Property

$262,000 4.1% 0.6%

Fines & Forfeits $1,544,500 -3.7% 3.3%


HAZMAT Fee Increase

$300

$250

$200

$150

$100

$50

Davenport

Sioux City

Cedar Rapids

Des Moines

$0

Fireworks

Permit

UST Permit AST Permit

Moline - $100

Rock Island - $50

UST – Underground Storage Tank

AST – Aboveground Storage Tank


HAZMAT Fee Increase

Permit Type Current Fee Proposed Fee

Fireworks $35 $75

UST $25 $125

AST $25 $125

• Fee structure still keeps Davenport below all comparables on Fireworks

Permits

• Fee structure brings underground and above-ground storage tank fees in

line with comparables

• Recommendation is to also increase Hazmat Permit Storage Fee schedule

by 10% (last changed in 1991)


General Fund Expenditures

Expenditure Dollar Amount % Change

% of Total

Budget

Salaries/Benefits $37,334,600 0.9% 78.9%

Supplies/Services $4,501,400 -2.0% 9.5%

Allocated Costs $5,363,500 0.1% 11.3%

Equipment $118,500 3.5% 0.3%

Overall (Total) $47,318,000 0.5% N/A


General Fund Salaries

3% 1% 2% 1% 1% 1% 0%

5%

7%

41%

8%

30%

Police 41%

Fire 30%

Public Works 9%

Parks & Rec 7%

Library 5%

Finance 3%

CPED 2%

Admin 2%

HR 1%

City Council 1%

Civil Rights 1%


Decrement Overview (General Fund)

Department

Total GF

Budget

Decrement

Amount

% of Budget

Administration $800,996 $73,000 9.1%

Civil Rights $281,051 $5,000 1.8%

CPED $761,000 $15,000 1.9%

Finance $1,286,805 $26,000 2.0%

Fire $12,066,825 $255,000 2.1%

Human Resources $674,779 $15,000 2.2%

IT $2,317,350 $71,000 3.1%

Library $2,406,642 $53,000 2.2%

Parks $3,826,998 $77,000 2.0%

Police $17,798,345 $362,000 2.0%

Public Works $4,229,736 $75,000 1.7%


Decrement Overview (All Funds)

Department

Total Budget

Decrement

Amount

% of Budget

Administration $1,137,468 $73,000 6.4%

Civil Rights $490,313 $5,000 1.0%

CPED $11,875,532 $15,000 0.2%

Finance $6,851,991 $26,000 0.4%

Fire $18,121,526 $255,000 1.4%

Human Resources $14,241,341 $15,000 0.1%

IT $2,317,350 $71,000 3.1%

Library $4,800,549 $53,000 1.1%

Parks $7,224,693 $77,000 1.1%

Police $25,093,638 $362,000 1.4%

Public Works $49,187,133 $75,000 0.2%


Decrement Summary

BB – Base Budget

Civil Rights ($5,000) (BB - $490K)

- Professional Services

CPED ($15,000) (BB - $11.8M)

- Office Supplies

- Memberships/Publications

- Professional Services

Finance ($26,000) (BB - $6.9M)

- Office Supplies

- Travel

- Professional Services

- Operating Expenses

- Maintenance – Machine/Equip

Fire ($255,000) (BB - $18.1M)

- Management Analyst

- District Chief*

- Lieutenant*

HR ($15,000) (BB - $14.2M)

- Office Supplies

- Technical Services

- Professional Services

Info Tech ($71,000) (BB - $2.3M)

- Office Coordinator (VACANT)

- Maintenance – Machine/Equip

- Office Supplies


Decrement Summary

*BB – Base Budget

Library ($53,000) (BB - $4.8M)

- Senior Clerk (PT)

- Assistant Library Director – Salary

Decrease (VACANT)

- Maintenance – Machine/Equip

- Professional Services

Parks ($77,000) (BB - $7.2M)

- Facilities Operations Manager (VACANT)

- Management Analyst (0.40)

- Turnover Savings

Administration ($73,000) ($1.1M)

- Business Development Manager

- Graphic/Web Designer

Police ($362,000) (BB - $25.1M)

- Juvenile Court Liasion Officer

- Non-Confidential Secretary

- Police Services Generalist (VACANT)

- Turnover Savings

- Vehicle Maintenance

- Travel

- Firing Range Reductions

Public Works ($75,000) ($49.2M)

- Travel

- Memberships/Publications

- Code Enforcement Officer II (VACANT)

- Professional Services

- Office Supplies

- Maintenance – Machine/Equip

- Building Improvements


Department Dashboards (Sample)

• Departmental FY 2017 Goal

#1

• Departmental FY 2017 Goal

#2

• Departmental FY 2017 Goal

#3

Expenditure FY 2017

% Change from

FY 2016

Salaries/Benefits $2,338,882 4.7%

Supplies/Services $4,212,244 -4.2%

Allocated Costs $275,865 3.0%

Equipment $25,000 0%

Overall (Total) $6,851,991 -1.0%


Finance

• Review electronic payment

opportunities

• Transit new route structure

implementation

• Promote regional stop-loss

co-op solution

Expenditure FY 2017

% Change from

FY 2016

Salaries/Benefits $2,338,882 4.7%

Supplies/Services $4,212,244 -4.2%

Allocated Costs $275,865 3.0%

Equipment $25,000 0%

Overall (Total) $6,851,991 -1.0%


Administration

• Focus on customer

experience – Citizens

Academy

• Build a new, centralized web

presence

• Evaluate special events

program

• Utilize Next Door & Constant

Contact to connect w/ our

citizens

Expenditure FY 2017

% Change from

FY 2016

Salaries/Benefits $935,135 -9.6%

Supplies/Services $150,933 0%

Allocated Costs $32,880 -3.4%

Equipment $0 0%

Overall (Total) $1,118,948 -8.1%


IT

• Community broadband

network project

• Upgrade the core network

• Expand customer service

applications (e-plan review,

311, mobile workforce)

Expenditure FY 2017

% Change from

FY 2016

Salaries/Benefits $1,063,770 -1.4%

Supplies/Services $1,182,180 -2.4%

Allocated Costs $71,400 -0.2%

Equipment $0 0%

Overall (Total) $2,317,350 -1.9%


Legal

Expenditure FY 2017

% Change from

FY 2016

• Review ordinance processes

compared to actual processes

• Begin strategic succession

planning

Salaries/Benefits $614,659 5.1%

Supplies/Services $157,101 0%

Allocated Costs $29,400 -3.3%

Equipment $0 0%

Overall (Total) $801,160 3.7%


Human Resources

• Create and host a benefits

fair for all City employees

• Progress the deferred

compensation advisory

committee

• Support City Administrator

recruitment

Expenditure FY 2017

% Change from

FY 2016

Salaries/Benefits $740,431 -9.8%

Supplies/Services $13,397,304 0.4%

Allocated Costs $77,771 -4.3%

Equipment $0 0%

Overall (Total) $14,215,506 -0.2%


CPED

• Evaluate and modify the City’s

zoning ordinance

• Heritage Courtyard

improvements

• TIF Policy development

Expenditure FY 2017

% Change from

FY 2016

Salaries/Benefits $2,198,550 4.5%

Supplies/Services $8,874,739 -1.8%

Allocated Costs $768,243 1.9%

Equipment $34,000 0%

Overall (Total) $11,875,532 -0.4%


Civil Rights

Expenditure FY 2017

% Change from

FY 2016

• Development of an ADA plan

review process

• Conduct community

education and outreach

activities

Salaries/Benefits $407,140 -3.6%

Supplies/Services $50,842 -6.4%

Allocated Costs $32,331 -3.2%

Equipment $0 0%

Overall (Total) $490,313 -3.9%


Public Works

• Implement single-stream

recycling

Expenditure FY 2017

% Change from

FY 2016

• Enhance project management

capabilities/CIP coordination

• Initiate Phase II of the

Community Impact Project to

strengthen neighborhoods

• Implement the customer

experience model with PW

staff

Salaries/Benefits $27,904,853 2.9%

Supplies/Services $10,009,489 -3.1%

Allocated Costs $9,245,415 1.0%

Equipment $2,027,376 -8.2%

Overall (Total) $49,187,133 0.8%


Police

• Continue positive community

engagement

• Intelligence-based policing

strategies

• Implement a body camera

program for all Officers

Expenditure FY 2017

% Change from

FY 2016

Salaries/Benefits $22,246,469 0.9%

Supplies/Services $764,630 0.6%

Allocated Costs $1,712,720 -1.4%

Equipment $369,819 7.2%

Overall (Total) $25,093,638 0.8%


Fire

• Provide high level of service

to Davenport community

• Complete the Central Fire

Station renovation project

• Obtain grant funds to

purchase an aerial truck

Expenditure FY 2017

% Change from

FY 2016

Salaries/Benefits $17,146,209 0.4%

Supplies/Services $415,917 1.4%

Allocated Costs $395,900 3.7%

Equipment $163,500 0%

Overall (Total) $18,121,526 0.5%


Parks & Recreation

• Fundraising activities for

inclusion projects

• Complete the reaccreditation

process and obtain

reaccreditation

• Continue to utilize Youth and

AmeriCorps volunteers

Expenditure FY 2017

% Change from

FY 2016

Salaries/Benefits $4,371,454 -1.1%

Supplies/Services $1,730,220 2.8%

Allocated Costs $838,019 0.8%

Equipment $285,000 10.9%

Overall (Total) $7,224,693 0.5%


Library

• Conduct additional outreach

and partner with the

Davenport Community

Schools to get more books to

kids

• Test new models for staffing

service desks

• Plan for the 50 th anniversary

of Main Library

Expenditure FY 2017

% Change from

FY 2016

Salaries/Benefits $4,029,945 2.0%

Supplies/Services $635,929 -3.5%

Allocated Costs $130,675 2.7%

Equipment $0 0%

Overall (Total) $4,800,549 1.2%


Looking Ahead

•Balanced Budget

Add new revenue sources

- Gas/electric franchise fees

- Increase property taxes

•Core Competency Driven

Utilize assigned/unassigned reserves

- One-time use

- Not an optimal scenario to meet on-going

operational needs

•Maintains Current Levy Rate

Modify service delivery

- Reduce personnel & reduce level of service

- Adjust service delivery models


FISCAL YEAR

EMPLOYEE HEALTH/RETIREE FUND/RETIREES INS


Employee Health Fund Condition

• Industry costs are rising faster than tax base

• Claims expenditures are on the rise

• Multi-step process to address rising health care costs

• Actuarial study conducted

• Introduction of wellness plan (non-bargaining & Fire)

• Continue working to bend the healthcare curve

• New third-party administrator

• Regular dependent eligibility verification audits

• Exploration of a stop-loss co-op w/ other municipalities/entities

• Review retiree health plan issues

• Improved benefits monitoring


Employee Health Fund History

$12.0

$10.0

$8.0

$6.0

$4.0

$2.0

$0.0

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

*2016

*2017

Millions


Next Steps

Goal: Align retiree insurance program with City policy

Process

In Progress

In Progress

In Progress

Feb. 2016

Mar. 2016

Jan. 2017

• Review actuarial study and better understand the retiree claims

experience

• Review current premium amounts compared to full value

• Understand and research Affordable Care Act opportunities for

retiree groups

• Provide notification to retiree group of any future changes

• Meet with retiree group to review available options and process

• Transition beginning and effective November 1, 2016 – January

31, 2017 (concurrent with ACA open-enrollment period)


NEXT WEEK …

Same Place – City Hall

FISCAL YEAR

Same Time – 8:30 AM

Topic: Outside Agencies Funding

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