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2016 Budget Discussion; HarkessCITY OF HOPKINS FINANCE DEPARTMENT MEMORANDUM Date: August 11, 2015 To: Mayor & City Council From: Christine Harkess, Finance Director Subject: 2016 Budget Staff has been working to put together a 2016 budget based on the needs of the community and the services they have come to expect. The 2016 budget is prepared using the Financial Management Plan approved in February 2014; it includes a 2.5% salary increase and a 5.3% increase in health insurance contribution per bargaining contracts. Most other costs had little or small inflationary increases. Due to the changing workforce and the evaluation of departments we are working more efficiently which has resulted in personnel savings. The budget was prepared with two scenarios – one with current staffing taking into consideration changes due to retirements and one adding police property room staffing and fire adding two full time firefighters. Both the police and fire chiefs have included a memo detailing their request and will be present to answer questions on these staffing proposals. 2016 Budget Info The budget as it is currently presented is a 3.46% or a 4.66% increase over 2015 depending on which version we consider.As a comparison 2015 had a 3.66% increase. The increase is consistent with the FMP o Tax Levy We are not subject to a levy limit in 2016 o We are receiving $413,944 in LGA which is a $25,342 increase over 2015 and a o $98,702 increase over 2014 when we began receiving LGA again. Arts Center and Pavilion levies continue per the FMP o Debt service levies adjusted per FMP o Attached are the following: 1.2016 Budget – items impacting the budget 2.2016 preliminary Budget power point slides 3.Memo from Police Chief 4.Memo from Fire Chief 5.Summary of Financial Management Plan – talking points Items that impact the 2016 budget – comments based on version 2 of the budget Revenues The City will receive LGA and $413,944 has been budgeted. MSA maintenance was increased by $5,000 to reflect receipts Court Fines were increased by $5,000 to match collections. These funds are used to offset legal prosecution fees which have been increasing. City Clerk – revenues from local elections ($20,000) has been deleted as these are only received during local election years Police – Police Aid for police pensions increased to follow actual receipts Expenditures General Council salaries have been adjusted for the approved increase o Salaries show an contractual increase of 2.5% o Health insurance contribution was increased for the contractual 5.3% increase o Administration – administrative assistance is now split 50/50 with reception Finance – staff was reorganized and UB positon is now split with reception, however all costs are shown in this department. Legal – increased prosecution Municipal Building – a department was added for the Albert Pike Lodge (APL) and budgeted at $2,270. Receptionist – current two positions are eliminated and replaced with 50% of admin asst and finance personnel Assessing – Hennepin County assessing contract increased by $8,000. City Clerk – contractual services were adjusted to provide for election judges for the presidential election Police – added staffing for property room personnel Fire – added two full time firefighters Public Works – contractual services adjustments, inflationary adjustments Recreation – Joint recreation was increased by $3,300 Joint Rec continues to provide $15,000 in support to the Depot. o Activity Center – heating fuel costs. Planning & Zoning – Professional services increased by $8,000 for the implementation of the Shady Oak Zoning and services for studies in advance of the comprehensive plan that needs updating. Community Services – personnel is now shown at 100% in the general fund. Previous budget had 35% in Economic Development Fund. Contingency – decreased from the $150,000 we had in 2015 to $50,000. The large increase in 2015 was to provide for unknown costs as a result of open bargaining contracts. Other Items of Note: Personnel related costs remain at 77% of the budget Health insurance for retirees is currently at 21 retirees. One aged out in 2015 and six new came on in 2015. Three will age out in 2016. The cost is again decreasing as some of the older retirees on the full benefit plan age out. Currently despite adding to the list we will save $8,027 over 2015 after adding the new retirees in. 8/7/2015 City Presentation •2016 Preliminary General Fund Budget –Prepared according to Financial Management Plan –History of FMP •8-13-13 Kick off Meeting to discuss FMP concepts •10-8-13 Draft FMP presented •1-14-14 Updated FMP presented •2-18-14 Final FMP presented and approved •2015 Budget –First Use of Plan 1 8/7/2015 City Presentation •2016 Preliminary GF Budget - continued –Two Versions of the Budget were prepared •Version 1 –staffing at current levels •Version 2 –PD Property Room personnel and 2 FT Firefighters –LGA totals $413,944, a $25,342 increase –Police aid & MSA increased –GF budget increase of 3.46% (V1) or 4.66% (V2) –Levy is in line with the FMP adopted in 2014 City Presentation •2016 Budget Impacts –Salary adjustments according to bargaining contracts –Health insurance increase –Requests for increase/additional personnel –Changing workforce 2 8/7/2015 City Presentation •2016 General Fund Expenditures –V1 –No change in personnel % 20152016Change General Government$1,378,084$1,430,2013.78% Community Services985,8891,047,7556.28% Public Safety5,518,1655,706,4573.41% Public Works2,517,8802,580,6212.49% Recreation591,498618,3624.54% Comm Dev & Planning228,409275,74720.73% Other126,79180,200-36.75% $11,346,716$11,739,3433.46% City Presentation •2016 General Fund Expenditures –V2 –Add property room personnel and 2 FT Firefighters % 20152016Change General Government$1,378,084$1,430,2013.78% Community Services985,8891,047,7556.28% Public Safety5,518,1655,842,8445.88% Public Works2,517,8802,580,6212.49% Recreation591,498618,3624.54% Comm Dev & Planning228,409275,74720.73% Other126,79180,200-36.75% $11,346,716$11,875,7304.66% 3 8/7/2015 City Presentation •2016 GF Expenditures –V1 vs V2 Verson 1Version 2 V1 vs V2 201520162016Change General Government$1,378,084$1,430,201$1,430,201$0 Community Services$985,889$1,047,755$1,047,755$0 Public Safety$5,518,165$5,706,457$5,842,844$136,387 Public Works$2,517,880$2,580,621$2,580,621$0 Recreation$591,498$618,362$618,362$0 Comm Dev & Planning$228,409$275,747$275,747$0 Other$126,791$80,200$80,200$0 $11,346,716$11,739,343$11,875,730$136,387 City Presentation •2016 General Fund Expenditures –V2 4 8/7/2015 City Presentation •2016 General Fund Revenues –V1 % 20152016Change Property Taxes$9,307,729$9,660,5643.79% Intergovt'l Revenue843,112891,9545.79% License, Permits & Fines569,975575,7751.02% Charges for Service209,300188,900-9.75% Miscellaneous401,600402,1500.14% Interest15,00020,00033.33% Total$11,346,716$11,739,3433.46% City Presentation •2016 General Fund Revenues –V2 % 20152016Change Property Taxes$9,307,729$9,796,9515.26% Intergovt'l Revenue843,112891,9545.79% License, Permits & Fines569,975575,7751.02% Charges for Service209,300188,900-9.75% Miscellaneous401,600402,1500.14% Interest15,00020,00033.33% Total$11,346,716$11,875,7304.66% 5 8/7/2015 City Presentation •2016 General Fund Revenues –V1 vs V2 V1 vs V2 201520162016Change Property Taxes$9,307,729$9,660,564$9,796,951$136,387 Intergovt'l Revenue$843,112891,954$891,954$0 License, Permits & Fines$569,975575,775$575,775$0 Charges for Service$209,300188,900$188,900$0 Miscellaneous$401,600402,150$402,150$0 Interest$15,00020,000$20,000$0 Total$11,346,716$11,739,343$11,875,730$136,387 City Presentation •2016 General Fund Revenues –V2 6 8/7/2015 City Presentation Proposed •2016 Net LevyNet Levy Purpose2015Verson 1Version 2Per FMP Tax General Operations General Fund$9,224,7299,575,564$ $9,676,4519,745,775 Capital Levy53,000135,000$85,00035,000 Levy Arts Center Levy85,000125,000$95,00050,000 Pavilion Levy65,00085,000$65,00065,000 PERA Levy35,50035,500$35,50035,500 Subtotal 9,463,2299,956,0649,956,9519,931,275 Special Levies: 2010A GO Improvement Bonds82,19479,43779,43779,437 2012A GO CIP Bonds220,000220,000220,000220,000 2012B GO Bonds70,000141,970141,970141,970 2012B Equipment Certificates96,28596,28596,28596,285 2013A GO Improvement Bonds75,00000- 2014A GO Bonds88,47187,99387,99387,993 2014B GO Refundingf Bonds882,894881,975881,975949,268 2015A GO SROP Bonds0264,261264,261359,939 2015B GO Tax Abatement0135,957135,957 Subtotal Special Levies1,514,8441,907,8781,907,8781,934,892 TOTAL LEVY$10,978,073$11,863,942$11,864,829$11,866,167 City Presentation •Tax Impact on Average Home ($225k) –FMP scheduled at a $94 increase –Levy approximates the FMP recommendation •2015 Results –FMP scheduled at a $89 increase –Actual was approximately $0 –Growth in tax base held tax rate to 2014 level 7 8/7/2015 City Presentation •What this budget/levy gives us: –Funding for Property Room personnel –Funding for 2 FT Firefighters –Funding for general city operations –Funding for road projects –Funding to reduce the Arts Center deficit –Funding for Pavilion operations –Funding for debt service requirements 8 Memorandum To: Honorable Mayor and members of the City Council CC: Mike Mornson, City Manager From: Mike Reynolds, Chief of Police Date: July 14, 2015 Re: 2016 Budget – Police Department Staffing th I will be at the work session on August 11 to discuss a staffing proposal for the 2016 budget. Our discussion will involve increasing the part-time parking enforcement position to a full-time position. My hope is that the parking enforcement position will continue to cover parking enforcement at a rate of 29 hours per week, while adding 11 hours per week to manage the police department’s evidence property room. Currently, the duty of property room management is an added duty of one of our Public Service Officers (PSO). Our PSO’s also bid their positions which creates turnover in the property room. This is a flawed structure which we have gotten by with in the past, but it is becoming all too difficult to continue. As you may be aware, the position of a property room manager is one of the most critical positions within a police department with one of the highest liabilities concerning risk management. Also, our current method of operation is not conducive to the needs of our police officers and case prosecutors’ request for evidence. By having a PSO providing this duty, the property room is only staffed two to three days a week and delays getting evidence and property to our requesters. By moving to the proposed model, we will alleviate the issue of getting evidence and property to our requesters in a timely manner and will have accountability of only one person being in charge of the property room management who is properly trained and certified. The following is the breakdown of the estimated increased cost: Estimated 2016 PT Parking Enforcement salary $47,100 Estimated 2016 salary with changes: Salary, FICA, PERA, ect.: $63,830 Family Health Insurance: $15,720 TOTAL $79,550 Increased cost: $32,450 - PSO Savings (contractual) $ 3,200 $30,250 Total Increase: Memorandum Honorable Mayor and City Council To: Mike Mornson City Manager CC: Chief Dale Specken, From: 8/7/2015 Date: Fire Department Full Time Firefighter Re: I will be attending the August 11, 2015 council meeting to discuss a staffing proposal for the 2016 budget. We will propose adding two Fulltime Firefighter Positions. We currently provide a daytime duty crew team from 7:00 to 4:00 p.m. This program is being filled by firefighters that are either not working, have seasonal positions, are part-time or in-between jobs. We are seeing a pattern of being unable to fill these shifts due to these volunteers getting full-time employment. The daytime call volume has increased throughout the past 2 years for both Police and Fire. The present coverage is 4- 6 medicals per day. If these calls are not run by the duty crew then they would be shifted back to the Police Department. We are seeing more and more shifts where only one person signs up which forces coverage of the second position by either our part-time inspector or me, which takes away from other responsibilities. I am seriously concerned that we will not be able to fill these shifts in the near future. We currently run two people at a cost of $14.49 per hour and a total of $63,000per year. To continue the current service levels that we are currently provide, we propose hiring two full-time employees at the cost of: Estimated: 2016 budget impact. Salary: $50,000 PERA: $ 8,100 Medicare 725 Family Ins. $15,720 Total x2 $149,090 The increase to the 2016 budget for the new program will be $110,548. The primary duties of these positions would be to answer daytime medical calls, assist with inspections and public education and perform station repair and maintenance. th I am happy to answer any questions you may have on Aug 11. Thank you. 1 CźƓğƓĭźğƌ ağƓğŭĻƒĻƓƷ tƌğƓ Traditionally cities have taken a short term view for financing city operations. The one year budget is still the norm for most cities. In the 1980s the City of Hopkins did begin to use more long term planning for large expenditures such as construction projects and large pieces of equipment. The City, however, continued to use one year budgets for its day to day operations. Long term planning is becoming the industry standard. Rating agencies, such as {ƷğƓķğƩķ ğƓķ tƚƚƩ͸ƭͲ ƌźƉĻ multi-year plans when assessing the financial health of a city. A better credit rating can result in lower borrowing costs. Long term planning can also help the City spot trends that could adversely affect the budget. During the preparation of the Financial Management Plan, the City looked at overall tax capacity, the general fund balance, what the tax levy pays for, historic and projected tax rates, projected tax impacts on an average home, existing debt and new debt. Two specific issues that needed to be addressed concerned the Center for the Arts and the Ice Arena/Pavilion. Historically, the Center for the Arts received a subsidy from the Economic Development Fund. The reason behind this was that the Center has an impact on the economic health of the City and the downtown area in particular. However, devoting these funds to the Center meant that there were fewer resources to devote to other development projects in the City. According to the adopted Financial Management Plan, this subsidy will be replaced by supplemental funding through the General Fund in a manner similar to the Activity Center. The Ice Arena/Pavilion actually pays for its day to day operations through fees which are charged to the users. The Pavilion, however, will soon be 25 years old. An aging infrastructure and changes to federal and state rules regarding ice arenas will require significant capital expenditures. General fund dollars will have to be used to supplement the user fees in order to keep this facility operating into the future. The Financial Management Plan also maintains a balance in the Capital Equipment Fund of $750,000 and $300,000 in the Capital Improvements Fund. The Plan also calls for slowly increasing the general fund balance. While the initial plan shows that the overall financial health of the City is good, annual levy increases for the next 8 years (2015-2022) will be needed. The planned levy increases should be less than $100 per year for an average valued home. The Financial Management Plan will get updated every year and will be a tool to assist the Council and staff in making decisions at budget time. Having a vision and planning for the future is important in shaping the direction of the city. The Plan will ensure that money is available to finance needed road construction, capital equipment and maintenance of City owned facilities. It also provides adequate reserves/fund balances and it reduces the need for future borrowing.