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Home My WebLink About05/00/1989, 1 - FINANCIAL SERVICES STUDY - PHASE II ii1��III��In� =l I MEETING OATS II _� city of sa►n Luis oBispo May 24-25, 1989 COUNCIL AGENDA REPORT ITEM NUMBER FROM: William C. Statler, Director of Finance SUBJECT: FINANCIAL SERVICES STUDY - PHASE II CAO RECOMMENDATION Review and discussion of the findings and recommendations of the Comprehensive Financial Management Plan (Phase II of the Financial Services Study). OVERVIEW In conjunction with the Financial Services Study approved by the City Council on February 23, 1988, the Comprehensive Financial Management Plan (Phase II of the Study) has been completed, and the resulting Executive Summary (along with the full report document) has been distributed with this agenda report. The purpose of this study session is to review and discuss the findings and recommendations of the Comprehensive Financial Management Plan (CFMP) in conjunction with the 1989-91 Financial Plan process. Accordingly, no action on this item is recommended at this time. After Council review, City staff and the consultant will respond to any Council thoughts and comments, and present the study results to various community groups (including the Chamber of Commerce) prior to returning to the City Council with recommended implementation actions. SUMMARY OF REPORT FINDINGS Rather than restate the findings and recommendations of the CFMP which are concisely addressed in the the Executive Summary, the following are highlights from the Consultant's report: • The City has adopted comprehensive budget and financial policies which place the City at the forefront of municipal financial planning in California. These policies have provided a prudent financial course of action while being flexible to respond to changing needs and conditions. • The City's current financial condition is strong by California and national standards, and significantly contributes to its favorable credit rating and financial stability. • Although the City has exhibited prudence in its current and past financial management and policies, significant financial challenges continue to face the City in achievingJA its capital improvement plan goals while maintaining operating program levels. However, through this planning effort, the City has taken the opportunity to identify and respond to problem areas before, rather than after, they occur. ��m��H�uIIIIIIII�IIn l l city of sai uis osispo i COUNCIL AGENDA REPORT DOCUMENT ORGANIZATION The primary findings, conclusions, and recommendations of the CFMP are provided in the enclosed Executive Summary, which addresses the following issues: Page Overview and Background 1 Scope of Plan, Approach and Methodology 2 Findings and Conclusions: 3 Current Financial Conditions, Trends, and Policies - 1978 to 1988 4 Capital Improvement Program 5 Projected Financial Trends - 1989 to 2000 5 Recommendations: New Revenues 7 Capital Improvement Finding 10 New Financial Policies 11 The complete report document, which has also been distributed with this item, expands on findings and recommendations provided in the Executive Summary, and contains supporting narratives, financial schedules, and projections used in developing the CFMP. BACKGROUND At their February 23, 1988 meeting, the City Council approved the performance of a Financial Services-Study with consultant assistance from the firms of Evensen Dodge and Vertex Cost Systems. The overall Financial Services Study is composed of three major phases summarized as follows: Phase I - City-Wide Cost Allocation Plan and Cost Recovery Program This portion of the work program was primarily the responsibility of Vertex Cost Systems acting as a subcontractor to Evensen Dodge, and includes the following elements: • Development of a City-wide cost allocation plan to determine the total operating costs of providing municipal services. • Determine current and potential user fees and related activity costs. • Comparison of the City's current and proposed fees with other agencies. • Development of indirect cost rates for use in federal and state grant programs. This component of the workscope is completed, and the report findings were submitted to the City Council on January 9, 1989. 1111QQBIIfN1§J city of san Luis oBispo COUNCIL AGENDA REPORT Phase II - Comprehensive Financial Management Plan Using the cost of service information developed under Phase I, this portion of the workscope is the responsibility of Evensen Dodge, and includes the following elements: • Review of capital financing requirements. • Evaluation of existing debt. • Review of financial policies. • Analysis of current financial position. • Development of financial projections through the year 2000. • Identification of financing alternatives. • Recommendations regarding financing plans and schedules. Phase III - Proiect Financings Evensen Dodge is also responsible for this element of the workscope by acting as Financial Advisor to the City for any specific debt financings issued in accordance with the Plan developed under Phase II. SUMMARY The Executive Summary of the Comprehensive Financial Management Plan (along with the full report document) is being distributed to the City Council for review and discussion in conjunction with the 1989-91 Financial Plan process. As discussed previously, no City Council action is recommended at this time. The purpose of this study session is to introduce the the report's findings and conclusions to the Council, respond to Council questions and concerns, and then present the study to community groups prior to returning to the City Council for implementation of recommended actions. iAR PPini _ty A strative O icer City Attorne I FIN SRVCS/PHASEIIR