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HomeMy WebLinkAbout01-08-2013 goal-setting process for 2013-15Section 7 Background Material s GOAL-SETTING PROCESS FOR 2013-15 counci lAagenba nepont 12-18-1 2 Item Number Meeting Date • C I T Y O F S A N L U I S O B I S P O FROM : Katie Lichtig, City Manage r Michael Codron, Assistant City Manage r Shelly Stanwyck, Parks and Recreation Directo r SUBJECT :2013-15 FINANCIAL PLAN PROCESS AND POLICIE S RECOMMENDATIO N 1.Review and approve the 2013-15 Financial Plan Goal Setting Process . 2.Review and approve the proposed changes to the 2013-15 Financial Plan Policies . REPORT-IN-BRIE F The purpose of this agenda item is to finalize the process for establishing the City's 2013-1 5 Financial Plan including the development of Major City Goals . The report will further review th e policies that past financial plans have relied upon and address recommended changes to a few fo r consistency amongst all City policies . BACKGROUN D The following four features describe the City's Financial Plan process : goal-oriented, policy-driven , multi-year and technically rigorous . For 2013-15, staff plans to continue using a two-year budget that emphasizes long-range planning and effective program management . The benefits identifie d when the City's first two-year plan budget was prepared for 1983-85 continue to be realized : 1.Reinforcing the importance of long-range planning in managing the City's fiscal affairs . 2.Concentrating on developing and budgeting for the accomplishment of significant objectives . 3.Establishing realistic timeframes for achieving objectives . 4.Creating a pro-active budget that provides for stable operations and assures the City's long-ter m fiscal health. 5.Promoting more orderly spending patterns . 6.Reducing the amount of time and resources allocated to preparing annual budgets . Appropriations continue to be made annually ; however, the Financial Plan is the foundation fo r preparing the budget for the second year . Additionally, unexpended operating appropriations fro m the first year may be carried over for specific purposes into the second year with the approval of th e City Manager . This practice has successfully avoided the tendency in large organizations to mak e "use it or lose it" expenditures at the end of a fiscal year . Page 1 2013-15 Financial Plan : Process and Policies The fundamental purpose of the City's Financial Plan is to link what the City wants to accomplish • over a two-year period with the resources required to do so . The Financial Plan process used by the Council does this by engaging the community to identify the most important things for the City t o accomplish for the community, establishing a timeframe and organizational responsibility fo r achieving them, and allocating the resources needed to do so . Attachments 1 and 2 contain th e community-wide priorities survey and the flyer sent to over 200 groups and individuals invitin g participation in this process, both of which are examples of methods to solicit input from resident s and other community member s In order to identify key goals which will drive the budget process, the City begins its Financial Pla n process with Council goal-setting to determine major objectives to be accomplished over the nex t two years . These key goals, "Major City Goals", are in addition to the routine, ongoing services th e City provides to the community . Two major elements of the goal-setting process are the Community Forum and the Council Goal - Setting Workshop which are both held in January . Goals approved by the Council are incorporate d into the budget preparation process . In April, staff returns with draft work plans and requests fo r policy direction which is used to formulate a Preliminary Financial Plan for public comment .A series of study sessions and public hearings are then held prior to approval of the Financial Plan an d Budget by June 30 th . A visual depiction of the Goal-Setting and Budget Process elements and thei r interactions is included in Attachment 3 . Measure Y Integration Measure Y was approved by City voters in November 2006 to preserve essential services for th e community. Measure Y established a '/-cent City sales tax that keeps all revenues local . Thi s general purpose revenue measure generated $6 .2 million in revenue during 2011-12, which is bein g used for important public safety, infrastructure maintenance, traffic congestion relief, neighborhoo d code enforcement and open space acquisition projects . Measure Y includes accountability an d citizen oversight provisions, including an 8-year sunset and annual auditing requirements . In addition, Measure Y includes the following provisions to ensure that consideration of this importan t revenue source is integrated into the financial planning process . The proposed goal-setting proces s for 2013-15 is designed to meet these two requirements . 1.Integration into the City's budget and goal-setting process .The estimated revenue an d proposed use of funds generated by this measure shall be an integral part of the City's budge t and goal-setting process, and significant opportunities will be provided for meaningfu l participation by citizens in determining priority uses of these funds . 2.Annual citizen meeting.An invitation will be extended each year to the entire communit y asking Community members to participate in a forum to review and discuss the use o f the revenue generated by this measure . City staff will also be available to meet with any grou p that requests a specific briefing with their members to discuss and answer questions about th e revenues generated by the measure and their uses . It is important to know that Measure Y is a general purpose measure, and the proceeds are no t restricted to specific purposes . However, the language on the ballot measure approved by voters i n 2006 provided examples of the types of uses that would be funded . The language on the ballot was :• Page 2 • 2013-15 Financial Plan : Process and Policie s "To protect and maintain essential services—such a s neighborhood street paving and pothole repair; traffic congestion relief public safety, including restoring eliminated traffic patrol, Fire Marshal an d fire/paramedic training positions ; flood protection ; senio r citizen services or facilities ; neighborhood code enforcement; open space preservation and other vita l general purpose services—shall the sales tax b e increased by one-half cent for eight years only, wit h citizen oversight and independent annual financia l audits?" In short, while the ballot language provided examples o f the types of uses that could be funded - based o n community input received before placing the measure o n the ballot - Measure Y is a general purpose tax providin g Council with flexibility to respond to new circumstance s and challenges . With each financial plan, staff prepares a Measure Y integration report to show how use of Measure Y revenues is connected to the Council's goals (Attachment 4). The report discusses how Measure Y priorities are determined, and includes detailed information about the types of expenditures made (operating and capital) since the local , half-cent sales tax was approved . As noted above, the Community Forum will give the community an opportunity to provide input t o the Council as to their views on Measure Y priorities . This will help the Council connect Major Cit y Goals and Measure Y priorities . DISCUSSIO N 2013-15 Goal Setting Proces s The first purpose of this agenda item is to finalize the goal-setting process for 2013-15 . With adoption of the Goal Setting and Budget calendar on September 4, 2012 (Attachment 5) an d tonight's workshop as the foundation, the City is using a "two-step" approach to the Council goal - setting process . The two principal elements to this approach are the Community Forum,to be hel d on the evening of Tuesday, January 8, 2013,at the Ludwick Community Center and the Council Goal-Setting Workshop to be held on Saturday, January 26, 2013 at the City/County Library Community Room . Staff and facilitator Don Maruska plan to build on past successes in integrating Council goal-settin g into the budget process following an approach similar to the one used for many years includin g integration of Measure Y goal identification . The specifics are outlined below . Community Foru m •The January 8th Community Forum is intended to solicit suggestions from Council advisory bodies , community groups, other groups of stakeholders and interested individuals on proposed City goals an d fiscal issues . It is also intended to meet the "forum" requirements of Measure Y to "review an d 2011-13 Measure 1 Priorite s •Infrastructure maintenanc e •Preservation of essentia l services : public safety, maintenance service s •Traffic congestion relie f •Neighborhood cod e enforcement Page 3 2013-15 Financial Plan : Process and Policies discuss the use of the revenue generated by this measure ." To ensure that adequate space i s available for the forum, it will be held at the Ludwick Community Center . The proposed agenda for the Community Forum is provided in Attachment 6 . As reflected in th e agenda, it is recommended that the facilitator be responsible for calling speakers to allow the Mayo r to focus on the content . As noted in the agenda details, the facilitator will help organize comment s by general topic and encourage groups to select a spokesperson and have others in the grou p indicate support for the same position with a show of hands . Each speaker will be invited to addres s the "what, why, and how" of his/her suggested goal . The Department Head responsible for th e budget function (i .e ., Public Safety ; Public Utilities ; Transportation ; Leisure, Cultural and Socia l Services ; Community Development ; and General Government) in which the comment falls wil l write the idea on a flip chart sheet and clarify any linkages with existing programs or plans . Staff will post the flip chart sheets with the public comments in the relevant budget functional areas o n the walls . Participants will also receive half-page "post-it" notes for audience members to offer writte n comments such as resource suggestions or concerns to be posted next to goals . To involv e participants further and garner direct citizen feedback on all suggestions offered, "voting with dots " will be used again . At the end of the meeting, each attendee will receive adhesive dots to apply t o the posted items : six green for overall goal priorities and six orange dots for top Measure Y priorities will be provided to each participant . When using the dots the same goal could receive bot h a green and orange dot . That decision is within the control of community member participating i n the process . Participants will be advised to avoid assigning more than one green and one orange do t to any one goal. However, because this is an informal way to gather input for the Council to b e considered for the coming two year-cycle there will be no monitors or ways to prohibit participant s from applying as many dots to any item as they wish . City staff will summarize the results of th e forum and distribute them to the Council on January 15, 2013 before the Goal-Setting Workshop . It is also planned for the Community Forum to be videotaped so there will be a historical record othe r than the flip charts and individual recollections . This will be done in a way that will be low key (on e camera, no lights) so the quality may not replicate a regular council meeting . Should the Counci l object to this effort, concern should be expressed at the December 18 `h Council meeting . Council Homework Assignment (Due to Finance by January 22, 2013 ) Provided in Attachments 7 and 8 are the Council's first "homework assignments" for the Januar y 26 `h workshop . Based on all input received, it is requested that Council members prepare an d submit up to seven candidate goals as Major City Goals by January 22, 2013 .Council member s are also asked to prepare and submit suggestions for changes in other programs and services to fun d their desired goals . Staff will then compile verbatim, composite lists organized by common topics , without identifying who submitted the particular statements for review and consideration before th e workshop . This lists will be distributed to all Council members and the community on January 24 , 2013 . While staff will retain individual submissions in the working files it is recommended tha t Council members refrain from releasing their personal lists so that each Council member ha s flexibility to review all of the submissions and discuss them at the Goal-Setting Workshop befor e taking a position . • • • Page 4 2013-15 Financial Plan : Process and Policie s Council Goal-Setting Workshop At the all-day January 26 th workshop, the Council will review the consolidated goals presented b y Council members to ensure clarity, completeness and understanding ; and then narrow the list t o finalist goals that are supported by at least three Council members . The discussion will note whic h goals address Measure Y priorities . While the Council proceeds with the discussion outlined above, the staff will prepare a final listin g that the Council can use in prioritizing goals . In years past, the Council has used a ranking syste m of 5 through 0 for each candidate goal . Staff recommends continuing to use this ranking system fo r 2013-15, summarized as follows : 5 Most important, highest priority for City to achieve over the next two years . 4 Very important goal to achieve . 3 Important goal to achieve . 2 Address if resources are available . 1 Defer to 2015-17 for consideration . 0 Not a priority goal . Depending on the number of candidate goals, total points available to individual Council member s have ranged in the past from 50 to 75 based on 3 points per candidate goal . For example, if ther e are 15 goals in the final listing, then 45 points might be about right ; if there are 25, then 75 might b e appropriate . The exact number of points is typically figured out on the day of the workshop . Staff will summarize the results of the Council's ranking during a break at the workshop . Based on past experience, it is likely that three priority "tiers" will emerge from this process : 1.Major City Goals . These represent the most important, highest priority goals for the City t o accomplish over the next two years, and as such, resources to accomplish them should b e included in the 2013-15 Financial Plan . If the work program approved by the Council for a Major City Goal is not included in the City Manager's Preliminary Financial Plan, compellin g reasons and justification must be provided as to why resources could not be made available t o achieve this goal . 2.Other Important Objectives .Goals in this category are important for the City to accomplish , and resources should be made available in the 2013-15 Financial Plan if at all possible . 3.Address as Resources Permit .While it is desirable to achieve these goals over the next tw o years, doing so is subject to existing resource availability . In determining these groupings, the Council will note which goals address Measure Y priorities an d determine the desired emphasis among the areas that Measure Y funding supports . Thes e discussions will provide guidance at a policy level, while details of work plans and budget figure s will come forward in April . • The outline for the goal setting workshop is provided in Attachment 9 ; and suggested guidelines fo r Council members during the goal-setting process are provided in Attachment 10 . Included as Attachment 11 are the suggested "Criteria for Major City Goals" which have been used by th e • • Page 5 2013-15 Financial Plan : Process and Policies Council for the past twenty years . These criteria capture the relevant considerations to determine a Major City Goal but the Council could refine the criteria at this time if desired . Continued consideration of goals for 2013-15 is scheduled for the next regular Council meetin g following the workshop . This will be held on February 5, 2013,if needed .No follow-up meetin g has been needed in the last several goal-setting sessions as the Council concluded all necessar y actions at the Saturday Goal-Setting Workshop . Next Steps : Council Goal Work Program s After the Council finalizes goals and objectives for 2013-15, staff will prepare detailed work programs for each Major City Goal . Based on past experience, it is important for the Council t o reach consensus not only on the objective for Major City Goals, but also on the program, actio n plan and resources that will be needed to accomplish it . Unless staff fully understands the scope an d timeframe that the Council intended, needed resources cannot be identified ; and without thi s understanding, the Preliminary Financial Plan may significantly over (or under) fund the desire d work effort . Accordingly, the purpose of each work program is to : 1.Define the scope, scale and intended outcomes of the adopted goal . 2.Ensure that there is consensus about the action steps to be used in accomplishing it s o appropriate resources are allocated . 3.Ensure specific action steps are associated with measurable deliverables so that progress i n achieving the goal can be articulated. For each "Major City Goal," staff will prepare a detailed work program describing the objective o f the goal, the key factors driving the need, work that has already been completed, anticipate d challenges or obstacles, stakeholders, and key assumptions . Also included will be a detailed actio n plan with targeted completion dates for key tasks, a description of the financial and staff resources necessary to complete the work, and the desired outcome and community benefit of the goal . For each "Other Important Objective," staff will prepare an outline highlighting the objective, actio n plan, responsible department, overview of financial and staff resources, and desired outcome an d community benefit . Finally, for each "Address as Resources Permit," staff will prepare a brie f summary of the objective and the key activities needed to accomplish it . The work programs for Major City Goals will be presented to the Council at a special budge t workshop on April 9. 2013 .This meeting will result in strategic budget direction about levels o f investment in the Major City Goals as well as additional investments in the City's general fun d supported capital improvement program . This direction is then translated into the operating an d capital budgets contained in the Financial Plan . In other words, this meeting is used to get broad - brush direction and guidance from the Council which typically helps ensure that the draft financia l plan reflects the wishes of the City Council . Programs and projects related to goals in the other tw o priority categories will be reflected in the Preliminary Financial Plan as appropriate . • • • Page 6 • • • 2013-15 Financial Plan : Process and Policie s Continued Enhancements or Discontinued Elements to the Goal-Setting Proces s The following key enhancements to the process were implemented in the 2011-13 Financial Plan an d will continue with this financial plan to build on past experience: 1.Inclusion of carryover goals, Major City Goals and Other Important Goals underway or no t fully funded in the goal-setting process .This ensures that the Council is looking at the ful l plate of major activities during the process . 2.Integration and identification of Measure Y funding with other goals.This emphasizes clarit y and accountability for Measure Y funding . In preparation of the 2011-13 Financial Plan, staff completed a new initiative which gave th e Council and the community another tool to compare and contrast services in deciding how t o address the City's then budget gap (called Service Categorization). Since the circumstances ar e substantially different now it is an imprudent dedication of staff resources to update this assessmen t and staff has not incorporated a service categorization project into the schedule . Summary Goal-Setting Calendar s The following summarizes key dates leading to the January 26 th Goal-Setting Workshop : The following summarizes the remaining key dates after January 26 th . When Council receives goal-setting notebooks, which includes advisory bod y goal recommendations, initial results from Community Prioritie s Survey ; and written suggestions as of December 14 . Council holds Community Forum . Council receives written results from Community Forum. Council members submit goals to Finance Department . Staff distributes consolidated Council member goals organized b y similar topics . Council holds Goal-Setting Workshop . Friday, December 2 1 Tuesday January 8 Tuesday, January 1 5 Tuesday, January 2 2 Thursday, January 2 4 Saturday, January 2 6 Remainin g Ke Dates A ter anua 26 ,h Goal-Settin Worksh oR \I ha t Follow-up to Council Goal-Setting, if needed .Continued consideration of goal-setting at the next regularly scheduled Counci l meeting following the January 26 workshop, if needed . Whe n Tuesday, February 5 Regular Meeting Page 7 2013-15 Financial Plan :Process and Policie s Goal-Setting Workshop Notebook s To help organize all the background information that Council members will receive as part of thi s goal-selting process, notebooks will be distributed by December 21, 2012 with the following sections : Agenda s 1.Agendas for the January 8 Community Forum and January 26 Goal-Setting Workshop . Goal Recommendation s 2.Goals received from Council advisory bodies . 3.Goals from the "Community Priorities Survey" as of December 14, 2012 (additiona l submissions received after this date will be distributed to the Council in a three-hole punc h format for inclusion in the notebook, along with an updated summary). 4.Goals received by December 14, 2012, from community groups and interested individual s (additional submissions received after this date will be distributed to the Council in a three-hol e punch format for inclusion in the notebook). 5.Summary of results from the January 8th Community Forum (to be distributed by January 15 , 2013). 6.Consolidated Council member candidate goals (to be distributed by January 24, 2013). Tuesday, February 1 9 Regular Meeting Tuesday, April 9 Special Budget Worksho p Thursday, May 24 June 10, 11, 1 2 Special Budget Workshop s Tuesday, June 1 8 Regular Meeting Tuesday, June 2 5 Special Meeting (if needed) Mid-Year Budget Review .Consider the City's fiscal status at the mid - point of the fiscal year and make appropriation adjustments a s necessary ; review status of 2011-13 goals and objectives . Major City Goal Work Programs . Review and approve detaile d work programs to accomplish Major City Goals ; provide other budge t direction as needed . Preliminary Financial Plan .Receive 2013-15 Preliminary Financial Plan . Budget Workshops .Review the Financial Plan and consider General Fund operating programs . Consider General Fund CIP projects . Consider Enterprise Fund operating programs, CIP projects, revenu e requirements and rates . Public Hearing and Budget Adoption . Continue to discuss an d receive public comment on the Preliminary Financial Plan ; adopt th e budget . Hold special meeting to continue review and adopt budget, if required. • • • Page 8 2013-15 Financial Plan : Process and Policies Background Materials 7.Status reports on the General Fund Fiscal Outlook ; General Plan programs ; long-term CIP ; 2011-13 goals and objectives ; and current CIP projects as included in the Setting the Table: Background Materials for 2013-15 Goal-Setting and Financial Plan Process report date d November 13, 2012 . 8.General Fund Five-Year Fiscal Forecast presented to the Council separately this evening . 9.Other background information, such as the 2013-15 Financial Plan schedule, Budget-in-Brief, Financial Plan policies and public notifications . 10.Notes and space for other supplemental materials that the Council may receive . 2013-15 FINANCIAL PLAN POLICIE S As noted in the discussion above, Council goal-setting is an important "first step" in the City's Financial Plan process . The second major feature in the City's Financial Plan Process is reliance upon clear polices . In looking at cities across the nation that have reputations for being financially well-managed, and have maintained their fiscal health through good times and bad, one finds tha t they have in common clearly articulated fiscal policies used in financial decision-making . •Formal statements of key budget and fiscal policies provide the foundation for assuring long-ter m fiscal health by establishing a clear framework for effective and prudent financial decision-making . The City's Budget and Fiscal Policies are traditionally set forth in the Policies and Objective s section of the Financial Plan (Attachment 12 contains proposals outlined below). The policie s cover a broad range of fiscal issues, including : •Financial Plan organizatio n • General Revenue Managemen t •User Fee Cost Recovery Goal s •Enterprise Fund Fees and Rate s •Revenue Distributio n •Investment s •Appropriations Limitatio n •Fund Balances and Reserve s •Capital Improvement Managemen t •Capital Financing and Debt Managemen t •Human Resource Managemen t •Productivit y •Contracting for Services . Each financial planning cycle the City reviews the policies in place to see if any updating i s necessary . At this point, several policy changes, focused primarily on revisions and updating o f definitions within different policies, are proposed . These changes are intended to create consistenc y •amongst City fiscal policies and create a system that is efficient and effective to administer . Further, as staff begins preparing the 2013-15 Financial Plan, other additions or revisions to th e • Page 9 2013-15 Financial Plan : Process and Policies City's budget and fiscal policies may arise ; if so, these will be presented for Council consideratio n at that time . Proposed Policy Change s 1 .Capital Improvement Project (CIP) Managemen t The 2011-13 Financial Plan Budget and Fiscal Policies regarding Capital Improvemen t Management section A currently reads : CIP Projects $15,000 or More .Construction projects and equipment purchases which cost $15,000 or more will be included in the Capital Improvement Pla n (CIP); minor capital outlays of less than $15,000 will be included in the operatin g program budgets . The following changes are proposed for the 2013-15 Financial Plan as noted below in strikeout and replace : CIP Projects 415,000 $25,000 or More .Construction projects and equipmen t purchases which cost $4-5,000 $25,000 or more will be included in the Capita l Improvement Plan (CIP); minor capital outlays of less than $44,000 $25,000 wil l be included in the operating program budgets . The reason for this modification is two-fold – efficiency and consistency . As it relates to efficiency , currently every CIP proposal of $15,000 to $25,000 receives the same amount of attention as doe s every other project . As best as can be discerned from staffs research this amount has been in plac e since the two-year financial plan was implemented . As an example, in the 2009-11 financial plan a project to replace the pool cover at the Swim Center is included in the CIP budget as opposed to b e included at a capital outlay in the operating budget . It would be more efficient and effective use o f staff time to incorporate this expenditure in the operating budget . This isn't to say that the Counci l would not be involved in the decision making about whether this expenditure is necessary as th e Council would get the opportunity to consider this expenditure because the Council would revie w the addition of the expenditure through consideration of increase over the threshold for Significan t Operating Program Changes (SOPC). As for consistency with other policies, the City's current Financial Management Manual Sectio n 200, Purchasing Policies and Procedures, currently articulates very clearly the City's purchasin g policies and procedures including ethics, objectives, competitive bidding requirements, an d specifications . In setting forth the policies and procedures which govern staff's purchasin g activities (Purchasing Policy approved by Council on September 4, 2007), the Financia l Management Manual establishes authority, responsibility, and accountability for purchasin g activities on behalf of the City . Fundamental to these activities is the securing of goods an d services at the lowest costs commensurate with quality requirements . Departments hav e responsibility to evaluate and select goods and services up to a certain fiscal threshold following th e clear guidelines of the City's policies . As provided in the City's purchasing ordinance, th e responsibility and accountability for purchasing activities has been delegated to the City Manage r for purchases between $25,000 and $100,000 without prior Council authorization . In addition to th e City Manager, the Director of Finance and IT, and the City Engineer have the authority to approve • • • Page 10 2013-15 Financial Plan : Process and Policie s purchase orders for construction projects or general purposes of $25,000 or less . Department Head s have purchasing authority for projects under $7,500 . Given this backdrop of existing policies and the fiscal reality that $15,000 is not a significan t amount of capital in today's dollars, staff proposes that only construction projects and or equipmen t purchase over $25,000 become a Capital Improvement Plan project . Those that are under tha t amount would be subject to all of the normal purchasing checks and balances as described abov e and specifically outlined in the City's Financial Management Manual . By following a mor e streamlined process, many minor projects will be accomplished with more staff time spent on th e completion of the project itself. Staff conducted research on benchmark cities' thresholds for CIP projects (i .e ., what qualifies as a CIP project and requires Council approval) and found a wide range . Several cities require Counci l approval for all capital projects, regardless of the cost . For those cities that do have a specifi c Council approval threshold, the average is $48,000 . The table below shows the findings : %gency outwit Approval Threshol d City of Monterey All capital project s City of Paso Robles All capital project s City of Santa Maria $5,000 or mor e City of Palm Springs $5,000 or mor e City of Davis $30,000 or mor e City of Santa Barbara $100,000 or mor e City of Santa Cruz $100,000 or mor e Based on the requests submitted during the past three financial plans, if the current Counci l approval threshold for CIPs was increased to $25,000, 16 CIP projects (4% of the total 383 projects ) would be incorporated into the operating budget which is approved by the City Council . However t o implement the project it would have been approved at the City Manager level . A summary of thes e fmdings is below : Financia l Plan All CIP Projects CI I'projects greate r than $15 .000 an d less than $25,000 % of Total Projects Tha t Would be Affected b y Policy Chang e 2007-09 147 9 6% 2009-11 116 5 4% 2011-13 120 2 2% Total 383 16 4% This minor modification would create consistency between City policy documents and woul d facilitate more time spent on achieving projects . 3 .Significant Program Operating Changes (SOPCs ) •Currently staffs practice is for any significant operating change to a City program in excess o f $5,000 (either increases or decreases) must be written up and included in the documentation fo r • • Page 1 1 2013-15 Financial Plan : Process and Policie s SOPCs . The purpose is to summarize and compile all materials used to develop the recommende d changes in the Financial Plan . SOPCs are defined as : 1.Major service curtailments or expansion s 2.Any increases or decreases in regular position s 3.Significant one-time cost s 4.Major changes in the method of delivering service s 5.Changes in operation that will significant affect other departments or customer service s 6.Changes that affect current policie s Staff does not recommend any change in what is considered an SOPC . The only chang e recommended is to raise the threshold to $7,500 to provide consistency with the City's Financia l Management Manual which allows Department Heads purchasing approval of up to $7,500 . Staff conducted research on the approval process for operating budget modifications at benchmar k cities . In general, most of these cities require Council approval for all budget increases but have a much less rigorous request process . None of them require full page requests as the City of San Lui s Obispo does but instead utilize budget committees comprised of department heads to revie w requests and decide on recommendations to present to their City Councils . The table below show s the findings : Agency Council '\ pprio al Threshold Approval Proces s Departments submit brief request vi a online system ; Budget Committe e reviews requests and makes recommendations to Council . City of Santa Barbara No specific threshold Small changes can be approved b y Finance D irector and City Manager ; others must go to Council via Budge t Policy Steering Committe e recommendations . City of Paso Robles All budget increases Department Heads review propose d changes and make recommendation s to Council . Council sees all request s (including those not recommended b y Department Head team). City of Palm Springs All budget increases Requests approved by Finance Department and City Manager; Council receives final proposed budge t which incorporates these changes . Based on the requests submitted during the past three financial plans, if the current Counci l approval threshold for SOPCs was increased to $7,500, seven program changes (5% of the total 13 5 requests) could have been approved at the department head level . A summary of these findings i s below : City of Monterey All budge t appropriations modifications and new • • • Page 1 2 2013-15 Financial Plan : Process and Policie s Financia l Plan All SOPCs SOPCs greater tha n 55 .000 and less tha n 57 .500 % of Total SOPCs Tha t Would be Affected b y Policy Change 2007-09 77 6 8 % 2009-11 30 1 3 % 2011-13 28 0 0 % Total 135 7 5% This minor modification would create consistency between City policy documents . 3.Establishment of an Information Technology (IT) Replacement Fun d Under the section Fund Balances and Reserves, staff recommends the addition of a new sectio n focused on the establishment of an if Replacement Fund . This fund would be analogous to th e existing Fleet Replacement Fund . The purpose of this fund is to recognize the significant capita l investment that the City makes in technology on an annual basis . It further recognizes that value of technology as an asset and a tool for Council, the public, and staff . In today's world, IT is a critica l component to the health and welfare of a City and should be budgeted for on an annual basi s reflecting the costs associated with this key component of the City's fiscal sustainability . Th e establishment of this mechanism to save for and replace critical IT resources is consistent with th e Information Technology Strategic Plan adopted by the City Council earlier this year . The propose d policy addition reads in Attachment 12 as follows : Information Technology (IT) Replacement Fun d The City will establish an IT Replacement Fund for the General Fund to provid e for the timely replacement of information technology, both hardware an d software, with an individual replacement cost of $25,000 . The City will begin building the fund balance with the long term objective of maintaining a minimu m fund balance in the IT Replacement Fund of at least 20% of the original purchas e costs of the items accounted for in this fund . 4.Enterprise Fund Reserves — Proposed Modifications to Water and Sewe r As part of the development of the City's Enterprise Fund Budgets, each fund : Parking, Transit , Water, and Sewer, will present information during their fund reviews about each funds' minimu m fund balance (reserves). The appropriate valuation of fund balance varies by fund . Staff does not recommend changes to either the Parking or Transit funds accounting of their minimum fun d balances . However, there are recommended changes to the policies for maintaining fund balance s for both the Water and Sewer Funds discussed below . Rate Stabilization Reserve s Staff recommends adding a section to the Fund Balance and Reserves fiscal policy section t o establish rate stabilization reserves in the Water and Sewer Funds . The goal of rate stabilizatio n reserves (and all reserves) is to provide a level of stability to both the City and the customer . e Reserves help the City to adequately provide for things such as cash flow requirements, emergenc y repairs, local disasters or catastrophic events, and loss of significant revenue sources . The purpos e of rate stabilization reserves is to offset unanticipated fluctuations in sales revenues that woul d • • Page 1 3 2013-15 Financial Plan : Process and Policies otherwise require increases to rates . These reserves are not intended to replace regular and prudent rate increases that are necessary to maintain the water and wastewater systems, but they allo w flexibility in implementation of rate increases should unforeseen circumstances occur (such as a major ratepayer ceases operation). Staff recommends adding the following language to the City's fiscal policies : C .Water and Sewer Rate Stabilization Reserves .The City will maintain a reserve for the purposes of offsetting unanticipated fluctuations in Water Fund o r Sewer Fund revenues to provide financial stability, including the stability o f revenues and the rates and charges related to each Enterprise . The funding targe t for the Rate Stabilization Reserve will be 10% of sales revenue in the Water Fun d and 5% of sales revenue in the Sewer Fund . Conditions for utilization and plan for replenishment of the reserve will b e brought to Council for its consideration during the preparation and approval of th e Financial Plan or as it becomes necessary during any fiscal year . Staff is not proposing to change the current policy regarding minimum level of reserve required to maintain the City's credit worthiness and provide for general uncertainties (a minimum workin g capital balance of at least 20% of operating expenditures in the Water and Sewer Funds). Rather, staff is proposing the designation of an additional reserve of working capital that would be utilize d to provide temporary relief or to "soften" the impact of necessary rate increases that are due t o unanticipated loss of revenues . Annual water and sewer sales can be difficult to predict as they ar e influenced by many factors, such as weather and customer consumption and conservation patterns . There are certain things that can assist in providing revenue stability and predictability (such a s minimum fixed charges or sewer caps) however, the weather can have significant impact o n revenues and is not predictable . As such, the fiscal analysis of these funds typically provides fo r working capital balances in excess of the 20% minimum in order to respond to changin g circumstances without an immediate need for adjustments to the rates . Therefore, in concept, th e City has traditionally provided for a de-facto rate stabilization reserve in the water and sewer funds , it just wasn't identified as such . Why implement a rate stabilization reserve now ? There are several reasons to formally establish rate stabilization reserves . One is the City's continued efforts for transparency and accountability of funds . Historically, the Water and Sewe r Funds have maintained fund balances in excess of the minimum reserve policy for various purpose s including providing rate stability or positioning the fund for future large capital projects . Identifying fund balance amounts that are reserved or designated for specific purposes will provide the readers of the fund analysis with a better picture of the financial status of the fund . An exampl e of how the reserve and designations would be displayed on the fund analysis statement appear s below . Another reason to formally establish a rate stabilization reserve is to demonstrate strong financia l management to outside entities, particularly to rating agencies . The City's bonds are rated b y agencies such as Standard & Poor's and Fitch Ratings . These agencies look favorably on stron g financial policies and on maintaining adequate reserves . Of the many factors that contribute to a City's bond rating, one analysis calculates the amount of revenue available to provide the annual • • Page 14 2013-15 Financial Plan : Process and Policies debt service payment . This is commonly called the "debt coverage ratio" and gives investors som e sense of the creditworthiness of a city . The City's bond documents include language tha t guarantees to bond holders that the City will set rates that will ensure a coverage ratio of at leas t 125%; that is available revenues will exceed the annual bond payment by at least 125%. Generally, rating agencies would like the ratio to be higher than that, in fact in its recent rating of the Water bonds, Fitch Ratings indicated that the City needs to return to coverage level s approaching 200% by 2015 . Having formal acknowledgement of the use and replenishment o f these specific reserves can alter the calculation of the debt coverage ratio ; therefore it is important for the City to establish these policies . How was the reserve amount established? Staff reviewed original revenue budgets and actual revenue outcomes for the past ten fiscal year s and analyzed the variances each year . In the case of the Water fund, as recently as 2010-11, the fund experienced revenue shortfalls of about 10% of sales revenue budgets . This was the largest variance for the fund during the ten-year analysis period and staff is comfortable that the rat e stabilization reserve does not need to be any larger than the largest variance . At the time thi s recommendation was being developed, Council was considering possible changes to the water rat e structure that could increase the fund's revenue stability and predictability ; however it is too soon t o see the impact of those decisions . Staff therefore recommends initially establishing the Wate r Fund's rate stabilization reserve at 10% of sales revenue . In the Sewer Fund, there are already wel l • established revenue stability measures, which don't entirely eliminate volatility in sewer sale s revenues, but do help mitigate the variance . Because of this, staff recommends establishing th e Sewer Fund's rate stabilization reserve at 5% of sales revenue . Using and replenishing the reserve The use of any or all of the rate stabilization reserves would depend on the financial circumstance s facing the affected fund(s) at the time . The degree to which reserves are utilized or replenished wil l depend on the short term and long term financial projections for the fund . Consistent with th e City's adopted Fiscal Health Contingency Plan, the use of reserves (including rate stabilizatio n reserves) would be recommended as a first line of defense in adverse circumstances and wil l provide "breathing room" while comprehensive response plans are developed . Staff anticipates tha t the discussion of the use and/or the replenishment of the reserve would occur with the developmen t of each Financial Plan or during the annual fund review ; however, unforeseen circumstances ma y occur at any time that would render it necessary to discuss the topic with the Council . In other words, use or replenishment of the rate stabilization would be a policy decision by the Council . • Page 15 2013-15 Financial Plan : Process and Policie s Example of Changes in Financial Position with rate stabilization reserve and capital designatio n identi red. Other Sources (Uses) Operating Expenditure Adjustments (62,900)(64,200)(65,800)(67,400)(69,100) Projected MOA Adjustments 82,000 110,100 (15,500)(18,800)(33,900) Proceeds from Debt Financing 7,000,000 49,800,000 Total Other Sources (Uses)7,019,100 45,900 (81,300)(86,200)49,697,000 Revenues and Other Sources Over (Under ) Expenditures and Other Uses (4,756,500)764,500 2,270,800 3,082,000 (9,921,400) Working Capital, Beginning of Year 12,488,900 7,732,400 8,496,900 10,767,700 13,849,700 Working Capital, Fnd of Year 7,732,400 8,496,900 10,767,700 13,849,700 3,928,300 Reserve (20% of operating)1,731,700 1,589,400 1,641,700 1,703,300 1,746,500 Rate Stabilization Reserve (5% of sales)753,300 783,400 806,900 831,100 856,000 Capital Reserve for WRF upgrade 4,000.000 5,000,000 8,000,000 11,000,00 0 Unreserved Working Capital 1,247,400 1,124,100 319,100 315,300 1,325,800 5 . Investment Oversight Committe e The 2011-13 Financial Plan Budget and Fiscal Policies includes specific policies regarding Investments including the role and membership of the Investment Oversight Committee . At a recent City Council meeting the issue of expanding membership of this committee to include a city council membe r and a financial professional from the public was raised . The appropriate section of the Policies currentl y reads : CHANGES IN FINANCIAL POSITION - SEWER FUN D 2012-13 2013-14 2014-15 2015-16 2016-17 Budget Projection Projection Projection Projection Revenues Investment and Property Revenues 249,800 154,600 169,900 215,400 311,60 0 Service Charge s Customer Sale s Sewer Service Charges 14,266,000 14,836,600 15,281,700 15,740,200 16,212,40 0 Sales to Cal Poly 799,200 831,200 856,100 881,800 908,30 0 Development Impact Fees 200,000 106,000 109,000 112,300 115,70 0 Account Set-Up Fees 116,400 118,000 120,400 123,800 126,90 0 Industrial User Charges 65,700 66,600 67,900 69,800 71,50 0 Connection Charges and Meter Sales 20,000 20,300 20,700 21,300 21,80 0 Other Revenue 3,600 3,700 3,800 3,900 4,000 Total Revenue 15,720,700 16,137,000 16,629,500 17,168,500 17,772,20 0 Expenditures Operating Programs Public Utilities 7,264,200 6,533,300 6,766,500 7,038,800 7,217,700 General Government 1,394,100 1,413,600 1,441,900 1,477,900 1,514,800 Total Operating Programs 8,658,300 7,946,900 8,208,400 8,516,700 8,732,500 Capital Improvement Plan 15,843,000 5,773,000 4,371,700 3,787,900 63,218,100 Debt Service 2,995,000 1,698,500 1,697,300 1,695,700 5,440,000 Total Expenditures 27,496,300 15,418,400 14,277,400 14,000300 77,390,600 • • Page 1 6 2013-15 Financial Plan : Process and Policies K.Investment Oversight Committee .As set forth in the Investment Management Plan , this committee is responsible for reviewing the City's portfolio on an ongoing basis t o determine compliance with the City's investment policies and for makin g recommendations regarding investment management practices . Members include th e City Manager, Assistant City Manager, Director of Finance & Informatio n Technology/City Treasurer, Finance Manager and the City's independent auditor . Staff has not had an opportunity to fully research this issue but on the face of the issue sees little issue with a Council member being appointed to the committee . On the flip side and on its face, there may be som e potential issues with a member of the public serving in this advisory role in that they would have no fiduciar y obligations to the City and may have significant potential conflicts of interest . Staff will do some research on this issue before the City Council meeting and will be prepared to share best practices with the City Counci l at the meeting. No proposed changes have been incorporated in Attachment 12 regarding this issue . ATTACHMENT S 1."Community Priorities Survey" Inserted in City Utility Bill s 2.Notice Sent to Community Groups and Interested Individual s 3.Goal-Setting Process Schemati c 4.Measure Y Integration Repor t 5.2013-15 Financial Plan Calenda r 6.Outline for Community Forum (January 8 ) 7.Sample Form for Council Members to Submit Candidate Goal s • 8 . Sample Form for Council Members to Submit Changes in Other Programs and Service s 9.Outline for Council Goal-Setting Workshop (January 26 ) 10.Guidelines for Council Members During the Goal-Setting Proces s 11.Criteria for Major City Goal s 12.Proposed 2013-15 Financial Plan Policies \\tlstcrs4\team\wunal agenda repor6120122012-12-1S'budget foundation- policies and prows Oichbg-codron-stan near • • Page 17 city o f san Luis oBlsp o COMMUNITY PRIORITIES SURVE Y What are the most important issues facing the City of San Luis Obispo ? The City wants your input ! Every two years, the City establishes the top priorities to make San Luis Obispo an even better place to live, work and play . Then the City Council matches the resources to achieve these priorities through adopting the budget in June . This sets th e City's course of action for the next two years and helps the City to continue to provide the exceptional services and program s the community cherishes . The City anticipates entering the 2013-15 budget planning process in bette r financial shape than two years ago . Some revenue sources have rebounded, budget s have been trimmed and the City has taken steps to reduce costs . All of these action s have helped keep the City financially healthy, even in a time of the "Grea t Recession ." However, other economic uncertainties linger with the State and Federal budgets, the City's budget is still tight, and we face an ongoing need to reinvest in streets, bridges, technology, vehicles and facilities . All of these may lead to potentially complex budget decisions . So regardless of the specific fiscal circumstances, it is critical that we have an effective process for setting the mos t important, highest priority things for the City to do in the next two years . That's where you can help ! The City Council needs to know your thoughts on what the community's priorities should be so that available resources ca n be best allocated to achieve them . Now it's time for you to share your ideas for 2013-2015 priorities . The City needs the hel) of the community in two im sort-ant ways : O Fill out and return the short survey on the reverse side of this bulletin . You can mail it to City Hall at 990 Pal m Street, 93401 or drop it by any City office . If you prefer to complete the survey online, please visit wwwslocitv .ora . ©Attend the Community Forum on Tuesday, January 8, 2013 from 6 :00 p .m . to 9 :00 p .m . at the Ludwick Community Center,864 Santa Rosa Street. This forum is an opportunity to present your ideas to the Council and discus s them with other community members . City staff will compile the community feedback for the Council to review in advance of its goal-setting workshop o n Saturday, January 26, 2013 . During this public workshop, the Council will deliberate to set the Major City Goals an d Other Important Objectives for the next two years . If you have any questions about the City's goal-setting and budget process, please contact Charle s Bourbeau,Director of Finance & Information Technology, at 781-7125 or cbourbea@slocity .org. ®The City of San Luis Obispo is committed to including disabled persons in all of our services, programs and activities .page 1 8Telecommunications Device for the Deaf (805)781-7410 . 2011-21113 Major City Goal s •Economic Hex elopmen l Presen at ion of Essentia l Sen ices & Fiscal Healt h •Neighborhood wcliness •Traffic Congestion Relie f What issues are important to the community ? •What priorities should the City focus on during the next two years ? o How might the City adjust other service needs to accomplish thes e priorities ? Share Your Thoughts on the City'sPriorities ! This survey is your opportunity to tell the City : The City Council wants to hea r from you about what is trul y important for the community . • • • • • Community Priorities for 2013 - 201 5 What should be the City's most important, highest priority goals during 2013-15? How might the City adjust other programs & services to accomplish these priorities? Fold___an__d Tape He 0 0 0 0 0 Page 19 i Key Dates Budget Foundation Workshop TIesils Ialcembo IS, 201 2 h00p m Written Suggestion s /leave vend them 0 1 Aeries 8,nu'horo by. I nts_y . December 14, 201 2 9911 Palm Stac I San Luis 1Mispn .(A 9340 1 Hs 7141710 1 Email ehnuMau:flloc uy orq ('onlnlunity Forum lucvlav, January K, 201 3 h1 $0 pm lo 9 .10 pnl I-isfisick Com mlolimn Cente l KM Santa Rona Shee t Coal-Selling Worksho p Saturday . January 26 . 201 3 K B1am to40llp m Mkt-\ear Budget Review 1 iwsday . I ehman 19,01 3 (,110 p ni Strategic Budget Direction & Major City Goal Programs Workshop 1 a• a1,n . April 4 701 1 ho(l p un Budget Workshop s Intt• 14 . 1 I h 12 . 201 1 010 p m 2013-15 Budget Adoptio n lue%Ln . lore 18 .201 1 640p in Contact Informatio n Please submit your ssrillen comments b y Friday, December 14, 2012 to Oxides Voulblau, Director or Finance & Inlilrmatio n l echnilo}ly, by mail at 990 Palm Street, Sa n Luis Obispo, CA, 934111 . by fah at 781-7401 . Of by email MOOR drehasla'ity leg For more IiRmmalion on the g ash sell in, and budget pmcess, contact Charles al 781-712S . The City et San I uis OtMpo tun Mind lo intruding disabled persons s as d ou r sensors, programs and acth*m . Telecommmicaions devre tar he Mat 0051781 - 7410 ~ clty o fSan tuts ornsp o 2013-15 Financial Pla n What are the mos t important issues facin g the City of San Lui s Obispo ? The City Council want s to hear from you abou t what is truly importan t for the community . Q/all the things that ca n he done to make the City an even better place t o live, work and play . whic h are the most important ? ••• •S What Are the Most Important Needs of the City Over the Next Two Years ? TYeCityWean Your lapel Every two years, the City establishes the to p priorities to nuke San I .ns Obispo an eve n better phre to live, work and play . Then the City Council matches the ;mou e:co to achiev e these priorities through adopting the budget i n June This sets the City 's course of action fo r the next two yam and helps the City t o continue to provide the excgmtnd service s and propene the community cherishes . The City aticipates tittering the 2015 .1 5 budget planning process in better financia l shape than two seam alp . Scow revenu e soirees have remanded, budgets have bee n trimmed and the City has takm steps to induc e costs . All of these actitm have helped keep th e City financially healthy, even in a time of th e "Cheat Recession" However, other economi c uncertainties linger with the State and Federal budgets, the City's budget is still tight, and we fair an ongoing need to reinvest in streets, bridges, technology, vehicles and facilities .Al l of these may lead to potentially complex budget decision s So regardless of the specific fisca l circumstances, it is critical that we have a n effective pmcess fie setting the mod important , highest priority things far the City to do in th e next two yeas . That's where you can help ! Share Veer Thoughts as the (hy'. p itmen' You have the opportunity to tell the City : •Whal issues arc inpnII l Y.the cnmmmity ? •WM amities should the Coy focus on dining the text two years ? •How might the City adjust other service needs loa:amalistitbae pxiorilks , The City Council needs to know your thought s on what the community's priorities should be s o that available resources can he best allocated to achieve than . Now it's time fer you to share yma ideas fur 2013-15 priorities . Major City Goals are identified as the mos t important, highest priority goals fir the City to accomplish once the next twit yar n Current Major City Goals •Economic Devdopmml •Ptevavakn of l'amatld Semites k viral l lag h •Neighbothood Wdlnes s •Tntnc Congestion Rehe f Current Measure Y Prioritie s Adopted by the voters in November 2 :006 . Mane Y set an added 'Wcaat City sales tax . This funding eatables theCity to provide value d services to the commonly for both ehy4o da y operating programs aid one-time capita l itnprtwenetts The Council prioritizes the us e of this resource, so it is imported that the y mtegrae Mature V goal identification into th e overall gad-setting process . •Infinucture Maintenance •1s.&Congestion Relie f •Han Space Nmwwtion •Ibwroosr DMdnmraet k Baatilicaion •Pneserwaon ofEssential Services : o Public Safely .. Maintenance Stacie Helgllxuct eel thdc linfo.menl The City needs the help of th e community in two important ways : O Attend the ('emmunity Forum o n January8,2013 from 6 :110 pm .to 9 :08 p.m . at the l .udwick Communit y Center, 864 Santa Itese Street . This form is an opportunity to present you r ideas to the Council and discuss therm wit h o1M community members . City staff will compile the community feelba k for the Council to review in advance of its gall - setting eocksiltq on Saturday, homey 26, 2013 . During this public workshop, the Counci l will deliberate to set the Mapr City Coals and Other Important Camel! Objectists for the nex t two years . O Provide feedback. Cunmuuty input will be presented to al l Council members .It will be especially hdpfu l if your written comments address : what need s you believe we the highest priority goals for th e community ;wky they are important . and an y treatise ideas you have about km.to adtieve them, such as alternative approaches or opportunities far part wing with others . 2011-13 MajorCityGosh o Year Imporbet Role ia Ibis Process Goal-Setting and the Budget Proces s 2013-15 Financial Pla n Council Goal-Settin g Worksho p January 26, 201 3 Staff Budget Preparatio n 1 Major City Goal Work Programs & Strategic Budget Direction : April 9 Preliminary Budget : May 2 4 Budget Workshops : June 10 . 11,1 2 Adopted Budget :June 18 . 201 3 city of san this osisp o Advisory Bodies ('letters fro mCommunity Group s Current 2~Goais '"%/Long-Term Plans ,Goals &Policies November 13. 201 2 `Setting the Table ' Workshop * December 18 . 201 2 Budget Foundation ' Workshop • • Page 22 Measure Y Integration – 2013-15 Financial Pla n •MEASURE Y INTEGRATION REPORT - OVERVIE W The purpose of this report is to provide the Council with information about the reporting, uses , accountability, and priorities of Measure Y funds . Background Measure Y was approved by City voters in November 2006 to preserve essential services for ou r community . Measure Y established a 'A-cent City sales tax that keeps all revenues local . Thi s general purpose revenue measure generated $6 .2 million in revenue during 2011-12, which i s being used for important public safety, infrastructure maintenance, traffic congestion relief , neighborhood code enforcement and open space acquisition projects . Measure Y include s accountability and citizen oversight provisions, including an 8-year sunset and annual auditin g requirements . In addition, Measure Y includes the following provisions to ensure tha t consideration of this important revenue source is integrated into the financial planning process . The proposed goal-setting process for 2013-15 is designed to meet these two requirements . 1.Integration into the City's budget and goal-setting process .The estimated revenue an d proposed use of funds generated by this measure shall be an integral part of the City's budge t and goal-setting process, and significant opportunities will be provided for meaningfu l participation by citizens in determining priority uses of these funds . 2.Annual citizen meeting .An invitation will be extended each year to the entire communit y inviting them to participate in a forum to review and discuss the use of the revenue generate d by this measure. City staff will also be available to meet with any group that requests a specific briefing with their members to discuss and answer questions about the revenue s generated by the measure and their uses . It is important to know that Measure Y is a general purpose measure, and the proceeds are no t restricted to specific purposes . However, the language on the ballot measure approved by voter s in 2006 provided examples of the types of uses that would be funded . The language on the ballo t was : "To protect and maintain essential services—such as neighborhood street paving and pothol e repair; traffic congestion relief public safety, including restoring eliminated traffic patrol, Fir e Marshal and fire/paramedic training positions ; flood protection; senior citizen services o r facilities; neighborhood code enforcement ; open space preservation and other vital general purpose services—shall the sales tax be increased by one-half cent for eight years only, wit h citizen oversight and independent annual financial audits?" In short, while the ballot language provided examples of the types of uses - based on communit y input received before placing the measure on the ballot - Measure Y is a general purpose tax , clearly providing Council with flexibility to respond to new circumstances and challenges . • Page 23 Measure Y Integration — 2013-15 Financial Plan DISCUSSIO N How are Measure Y priorities determined ? Measure Y is a general purpose revenue source and the City Council maintains discretion ove r decisions regarding how these funds are allocated . Initially the City did surveying and publi c education/outreach so staff would know where to start, but priorities can change over time , depending upon circumstances . The Measure Y ballot language is always an important source o f information when determining Measure Y priorities . The public goal setting process also play s an important role, which is why the public has an opportunity to weigh in on Measure Y priorities during the Community Forum . Ultimately, the Council will provide priority guidance on the use of Measure Y funds . This will initially occur during the Goal Setting Workshop on January 26 . The Council has made grea t efforts in the past to connect Council goals with Measure Y priorities, and it is anticipated tha t this will continue to be the case for the 2013-15 Financial Plan . How are Measure Y Funds Used ? Measure Y funds have been used for both ongoing operations and capital projects to address th e priorities identified . The following table identifies that approximately $2 .3 million of Measure Y funds have been incorporated into day-to-day operations during the current fiscal year . Measure Y funding allocated to ongoing day-to-day operations in 2011-1 2 Operating Progra m Public safety communications technician 123,100 Operating Progra m Paving crew $77,30 0 Traffic sergeant 229,800 Traffic signal operations 29,00 0 Police patrol officer 186,300 Stormwater management plan : Fire Marshall 147,100 Code enforcement officer 104,50 0 Fire Training Battalion Chief 188,800 GIS specialist 50,70 0 Fire Administrative Assistant 77,000 Collection operators 187,100 Park restroom maintenance 82,900 Utilities workers 119,800 Park landscape maintenance contract 237,100 Building & Zoning : Park maintenance worker 64,500 Code enforcement officer 95,200 Field engineering assistant 113,900 Permit technician 19,300 Neighborhood Services Special 19,000 Total Measure Y funding allocated to operating programs $ 2,152,400 To the degree that these operating programs remain priorities, the amount of Measure Y fundin g available for capital projects, or additional operating programs, is the difference between thi s amount and the total amount of Measure Y funding available . If Measure Y is expected t o generate $6 .5 million during the 2013-14 fiscal year, and $2 .5 million is devoted to these • • • Page 2 4 • • Measure Y Integration – 2013-15 Financial Pla n ongoing operating programs, $4 million would be available to accomplish other Measure Y priorities . During the upcoming goal-setting process, Council will be asked to affirm if the ongoin g operating programs remain a priority use of Measure Y funds, and to prioritize the use of th e remaining revenues . Provided at the end of this report is a list of the Measure Y uses during 2011-12 . This list is included in the City's Comprehensive Annual Financial Report (CAFR) and has been audited b y the City's independent auditors . It provides information on the operating and capita l expenditures during 2011-12 as well as a reconciliation of all Measure Y revenues and uses sinc e 2006-07 . SUMMAR Y Measure Y is now expected to provide over $6 million in funding each year to enable the City t o provide important and valued services to the community ; for both day-to-day operating program s and one-time capital improvements . It is the Council's obligation to prioritize the use of thi s resource, just as it is their job to prioritize the use of all City resources . For this reason it i s important that as the Council sets goals for the 2013-15 Financial Plan, it also considers th e prioritized use of Measure Y funds . Page 25 Measure Y Integration - 2013-15 Financial Pla n CITY OF SAN LUIS OBISPO,CALIFORNIA •MEASURE Y FUNDING SUMMARY SCHEDUL E FOR THE FISCAL YEAR ENDED JUNE30, 2012 Operating Programs Capital Improvement Plan Encumbered / Actual Assigned Actual Encumbered / Assigned Infrastructure Maintenanc e Fire Engine Bay Slab Replacement $$$11,900 $20,000 Andrews Creek Bypass 396,400 49,000 Storm Drain Replacements 206,300 6,800 Toro Street Creek Bank Stabilization 48,300 Playground Equipment Replacement 59,900 163,300 Warden Bridge/Mission Plaza Walkway 2,500 5,000 Street Reconstruction & Resurfacing 2,570,800 438,700 Total Infrastructure Maintenance 3,247,800 731,10 0 Traffic Congestion Relie f Traffic Engineer 21,60 0 Traffic Safety Report Implementation 29,700 1,900 27,800 Traffic Operations Report Implementation 174,70 0 Roadway Sign Replacement 4,800 86,60 0 Bob Jones City to Sea Trail LOW Bridge 124,800 110,80 0 Total Traffic Congestion Relief 51,300 131,500 399,900 • Preservation of Essential Service s Public Safety Police Services 539,300 251,900 98,20 0 Fire Prevention & Training 412,900 Fire Engine/Truck Replacement : Debt Service 129,90 0 Maintenance Services Streets, Sidewalks and Traffic Signal Operations 106,300 11,800 17,10 0 Creek & Flood Protection 462,100 Parks 384,500 45,60 0 Project Management & Inspection 114,000 Neighborhood Code Enforcemen t Enhanced Building & Zoning Code Enforcement 114,500 Neighborhood Service Specialists 19,000 Total Preservation of Essential Services 2,152,600 439,200 115,30 0 Open Space Preservatio n Froom Ranch Improvements 62,50 0 Open Space Acquisition 240,100 495,90 0 Total 5 2,203,900 -4,058,600 1,804,700 • Page 26 • • • Measure Y Integration — 2013-15 Financial Pla n Measure YRevenues & Uses Summary Revenues : Carryover from 2006-07 $ 1,000,00 0 Revenues for 2007-08 5,996,60 0 Revenues for2008-09 5,641,40 0 Revenues for 2009-10 5,252,50 0 Revenues for2010-11 5,616,30 0 Revenues for2011-12 6,237,50 0 Total Revenues 29,744,300 Uses : Operating programs 2007-08 (1,463,700) Capital improvement plan 2007-08 (2,434,100) Operating programs 2008-09 (2,418,300) Capital improvement plan 2008-09 (3,684,400) Operating programs 2009-10 (2,267,100) Capital improvement plan 2009-10 (2,161,200) Operating programs 2010-11 (2,430,200) Capital improvement plan 2010-11 (3,443,000) Operating programs 2011-12 (2,203,900) Capital improvement plan 2011-12 (4,058,600) Total Uses (26,564,500) Measure Yfunding available for future year expenditures $ 3,179,800 Encumbered or assigned for carryover for future year expenditures (1,804,700) Net available for future year appropriations $ 1,375,100 Page 27 2013-15 Master Financial Plan Calendar As of 11/2112 S When Who Wha t August 201 2 August 21, 2012 Public Works • Issue CIP budget instructions / overview . October 201 2 October 2, 2012 CIP Committee Reviews schedule and commitments of Committee . October 4, 2012 Public Works / Finance / Departments Holds briefing on 2013-15 CIP instructions. October II, 2012 CM/Finance • Updates advisory body chairs on the goal-setting process . October 17, 2012 Departments • Complete status of General Plan programs, long-term capita l improvement plan (CIP), status of current Major City Goals, objective s and CIP projects; general fiscal outlook . October 22-24, 2012 Departments • Meet with Fleet Manager and/or IT Manager to review Fleet & I T carry forward projects. October 29-31, 2012 Departments • Review CM draft write-up with Engineer for carry forward construction projects. October 29, 2012 Finance • Agenda report due for November 13 meeting (Setting the Table). November 2012 November 5, 2012 Finance • Begins sending letters inviting participation in goal-setting process t o community groups and interested individuals . • Begins inserting Community Budget Bulletins in utility bills . November 6, 2012 CIP Committee • Establish process and outcomes for carry forward and new projec t reviews . November 8, 2012 Departments • Provide recommended advisory body goals to Finance . November 13, 201 2 Special Workshop 6:00 to I0 :00 p.m. Council • Holds workshop on status of General Plan programs, long-term capita l improvement plan (CIP), status of Major City Goals and objectives , and CIP projects . November 14, 2012 Finance • Distributes consolidated listing of draft recommended goals t o advisory bodies for their review . November 15, 2012 Departments • CIP write-ups due to Finance for Fleet & IT carry forward projects . November 20, 2012 Finance • Distributes CIP packets to CIP Committee for Fleet & IT carry forward projects . November 26, 2012 CIP Committee • Questions to departments on Fleet & IT carry forward projects . • Review and confirm Fleet & IT carry forward projects . November 29, 2012 Departments • CIP write-ups due to Finance for general carry forward projects . December 201 2 December 3, 2012 Finance • Agenda report due for December 18 meeting (Budget Foundation). December 4, 2012 Finance • CIP packets to CIP Committee for general carry forward projects . December 10, 2012 CIP Committee • Questions to departments on general carry forward projects . December II, 2012 CIP Committee • Review and confirm general carry forward projects. December 14, 2012 Department s Finance • Submit any changes in advisory body goals to Finance . • Receives written comments from community groups and intereste d individuals, and any changes in goals from advisory bodies. • • Page 2 8 • • • When Who Wha t December 18, 201 2 Regular Meeting Council • Finalizes goal-setting process and plans for Community Forum . Reviews and provides guidance regarding Financial Plan policies and organization of Financial Plan . Reviews financial results for 2011-1 2 and general fiscal outlook, including General Fund Five-Year Fisca l Forecast . December 21, 2012 Finance • Binders due to Council members for Community Forum . January 201 3 January 2-4, 2013 Departments Review draft write-ups with Engineer for new construction projects . January 8, 2013 Special Workshop 6:00 to 9 :00 p.m. Council • Holds Community Forum at the Ludwick Community Center t o receive and review goals presented by individuals, community groups , and advisory bodies . January 10, 2013 Finance & Departments • Distributes and holds briefing on 2013-15 Budget Instructions . January 14, 2013 Departments • CIP write-ups due to Finance for new Fleet & IT projects . January 15, 2013 Finance • Distributes Community Forum results . January 17, 2013 Finance • CIP packets to CIP Committee for new Fleet & IT projects. January 22, 2013 Council • Submits goals to Finance. January 24, 2013 Finance • Distribute consolidated Council member goals . January 25, 2013 CIP Committee • Questions to departments on new Fleet & IT projects . • Ranking and recommendation to City Manager on all Fleet & IT projects . January 26, 201 3 Special Workshop 8:30 a.m . to 4 :00 p.m. Council • Holds Saturday goal-setting workshop to discuss candidate goal s presented at January 8 Community Forum ; discusses Council membe r goals distributed on January 24; prioritizes and sets Major City Goals . January 28, 2013 Departments • CIP write-ups due to Finance for new general projects . January 29, 2013 Departments • Attend "usual suspects" briefing on outcome of Council goal-settin g and coordinate work program preparation and next steps . January 31, 2013 Finance • CM packets to CIP Committee for new general projects . February 2013 February 4, 2013 Finance • Agenda report due for February 19 meeting (Mid-Year Review). February 5, 2013 Department Heads • Brainstorm Major City Goal work programs . February 12, 2013 CIP Committee • Questions to departments on new general projects . February 13, 2013 CIP Committee • Questions to departments on new general projects (continued). February 13, 2013 Departments • Submit operating budget requests, SOPC's, Major City Goal work programs, department revenue estimates and narratives . February 15, 2013 Finance • Summarize, compile and distribute Major City Goal work programs , SOPC's and operating budgets to Budget Review Team . February 15, 2013 CIP Committee • Ranking and recommendation to City Manager on all general projects . February 19, 2013 Departments • CIP recommendation to project management staff to begin draft scheduling . February 19, 2013 Council • Considers mid-year budget review. February 19-22, 2013 Budget Analysts • Meet with departments to review operating budgets, SOPC's an d narratives . February 25-March 1 , 2013 Operating departments/BRT/Cit y Manager • Review operating budget requests and Major City Goal work program s with operating department representatives . March 201 3 March 5, 2013 Finance • Summarize results of budget reviews for distribution to BRT and Cit y Page 29 When Who Wha t Budget Review Team Manager. • Review financial position and craft SOPC recommendation for Cit y Manager . March 7, 2013 BRT/City Manager • Brief City Manager on Major City Goal work programs . • Present operating budget recommendations to City Manager . March 11, 2013 Finance • Begin preparing preliminary financial plan . • Begin finalizing Major City Goal work programs packet and Counci l agenda report for 4/9 meeting. March 18, 2013 Finance • Agenda report due for April 9 meeting (Major City Goals). April 201 3 April 9, 201 3 Special Workshop 6:00 to 10 :00 p .m. Council • Approves detailed work programs for Major City Goals . • Sets strategic budget direction in preparing Preliminary Financial Plan . April 15, 2013 Departments • Draft CIP schedule submitted to City Manager . April 16, 2013 Department s Finance • Revised SOPC's and CIF's due to Finance by noon . • Begin work on Appendix B . May 201 3 May 16,2013 City Manager • Finalizes budget recommendations and approves preliminary budget . May 21,2013 Finance • Completes Preliminary Financial Plan and sends to printer . May 22,2013 Planning Commission • Reviews CIP for General Plan consistency . May 24,2013 City Manager • Issues Preliminary Financial Plan . May 28,2013 Finance • Agenda reports due for June 10, 11 and 12 meetings (Budge t Workshops). June 2013 June 3, 2013 Enterprise funds • Agenda report due for June 18 meeting . June 10, 11, 12, 2013 Council • Holds evening workshops to review and discuss Preliminary Budget : — June 10 :Overview and General Fund operating programs . — June 11 : General Fund CIP projects . — June 12 : Enterprise Fund programs, CIP projects and rates . Special Workshop s Preliminary Budge t 6 :00 to 10:00 p.m . June 18, 2013 Council • Holds continued Financial Plan review and adopts budget . June 25,2013 Council • If required, holds special meeting to continue review and adopt budget . Key Council Dates in Bold • • • Page 3 0 • Suggested Guidelines for Council Member s During the Goal-Setting Proces s 1. Encourage advisory boards, community groups and citizens to submi t written comments about desired goals . 2. Invite citizens to participate in Community Forum and to listen and lear n from their neighbors . 3. Receive comments from community and acknowledge their input without prematurely expressing your point of view . 4. Assure the community that you are willing to listen openly to al l perspectives . 5. Focus your submission of suggested goals on a short list of key priorities t o target City resources (not to exceed seven candidate goals fo r consideration). 6. Avoid publicizing your submission of suggested goals . Let staff compil e your submissions verbatim into a composite list of goals by category withou t identification of who made each suggestion . This enables you to see th e whole picture . 7. Give yourself flexibility by not publicly staking positions in advance of th e January 26, 2013 Council Goal-Setting Workshop . 8. Use this process as a way to learn from citizens and Council colleague s about what's important . 9. Explore areas where the Council can come together for positive action . 10.Recognize that this is an important step, but only the first step, in the planning and budgeting for the next two years . Page 31 Criteria for Major City Goal s 1. Be legitimate to our genuine beliefs (real, supported). 2. Agreed upon by a Council majority . 3. Limited in number for comprehension, communication and focus . 4. Set forth in one document—the Financial Plan . 5. Be clear and understandable . 6. Established as a high priority and a real commitment . 7. Reflect major goals that cannot be achieved without Council support . 8. Can be translated into the performance goals and objectives of employees a t all levels of the organization . 9. Created within a supportive atmosphere where participants are not afraid to state their suggestions for improving goals or objectives . 10.Reflect genuine consensus : while unanimous agreement is not required, the y should be accepted to the point where resistance to them is reduced o r eliminated . • • Page 32