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Memo - Funding Social Service Organizations Administrative Services - Office of the City Manager Memorandum To: From: Date: Subject: Honorable Mayor and Members of the City Council Steven C. Mielke, Hopkins City Manager November 10, 1998 Recommended Funding of Social Service Organizations The City Council, at its September Worksession instructed staff to review and recommend a proposal for funding social service organizations based upon a reduction in funding of one-half (1/2) of the 1998 budget. That reduced spending from $38,150 in 1998 to $19,600 in 1999. Based upon that directive, staff reviewed the 1999 requests and prioritized them based upon several criteria. Those criteria include: Importance of the programs/services to be funded to the mission or purpose of the City. The availability of similar services from other organizations. The likelihood of negative consequences to residents and businesses if the program or service is discontinued. Staff is recommending the following requests be funded: Sojourner Intervention Project Senior Community Services West Suburban Mediation Center Hopkins Area Family Resource Center $10,000 $ 3,600 $ 1,000 $ 5,000 All of the organizations will receive less than they have received in the past. None of the organizations have been informed of this recommendation, so staff is unaware of the organizations response to this recommendation. It is possible that at the recommended funding level the proposed programs are not viable, if that were the case staff would recommend that the issue be re-examined. During discussions, it was considered possible that the City, HRA, or other organizations may be able to provide in-kind or other funding to assist the requesting organization. Finally, the 1999 preliminary budget reflects the reduced funding amount ($ 19,000). Any increases in the total would require adjustments with-in the budget. Administrative Services Office of the City Manager Memorandum To: From: Date: Subject: Honorable Mayor and Members of the City Council Steven C. Mielke, Hopkins City Manager February 10,1998 Funding Social Service Requests The council has requested a discussion of the methods used in determining social service funding levels. The purpose of this memo is to outline discussion topics for council review. 1. Current Practice. The requests we receive for funding usually are for general operating budget support. The City asks for information using the following questions: a. Estimated number of Hopkins residents to be served, b. Total operating budget of the organization, c. Percent of budget used for administration, etc., d. Amounts of funding from other sources, e. How will your organization's activities benefit the citizens of Hopkins, f. Why are the funds necessary, g. What data substantiates the need for this project/service in the City of Hopkins, h. History - Number of Hopkins Citizens served, I. Are you aware of any other agencies providing a similar service in Hopkins, J. If yes (see above) explain why they are not meeting needs. The funding request process falls under the administrative oversight of the City Manager and the Finance Director. Funding decisions are the City Councils. The practice has usually been a small increase for all that ask for one if the budget has room to move. The amounts lately have been frozen. 2. Optional Approaches The council has discussed several options to the existing system. Although not an exhaustive list they include: a. Assign all requests to a specific city department and require the department to justify the request. The effect would likely be some organizations not receiving funding unless the departments were given clear direction on the program purpose and need by the council. Some requests do not neatly fall into a specific department and would not rank highly in priority; others are more clearly appropriate within specific budgets. b. Require all requests to be for specific programs or services that meet identified City priorities. The city has not done well in stating the service levels or goals in this area. Groups hoping to get funding are not given good direction on what the council may be willing to fund. c. Convert the dollars currently allocated to social service functions into a grant program with identified goals. This could be accomplished if the attention was given to setting priorities. The difficulty will be in establishing the priorities and saying no to all other requests. d. Require written agreements for providers that specify outcome based reporting. This should probably be done in any case. It would provide for a better assessment of the effectiveness of the spending decision and future allocations. e. Discontinue practice of supporting social service functions. It has been argued to the council that the city should get out of the social service arena and stick to "basic" city services. To do so would be a major departure from historical practice and national norms. The staff appreciates the opportunity to discuss this issue with the council and looks forward to your direction. M E M 0 RAN 0 U M From: Date: Steve Mielke Jim Genellie April 7, 1993 To: Subject: Donations A question was raised concerning the legality of the City Council giving tax dollars or in kind help to non-city organizations. Specifically, Eden Prairie City Attorney Roger Pauley stated that its illegal to give tax dollars or in kind help to non-city organizations. Researching this in the League of Minnesota Cities handbook, I came upon the following statement: "Nonlegal expenditures include a donation to any person, corporation, or private institution not under the direct control of the city government". (A.G. Op. 99, 1934) There are, however, some specific exemptions in state law. M.S. 469.191 allows contributions to regional or local organizations, specifically: "a city may appropriate not more than $50,000 annually out of the general revenue fund of the jurisdiction to be paid to any incorporated development society or organization of this state for promoting, advertising, improving, or developing the economic and agricultural resources of the city." M.S. 471.941 allows appropriations for artistic activities. This section reads: "For the purposes of this section, an artistic organization means an association, corporation, or other group of persons that provide an opportunity for persons to participate in the creation, performance, or appreciation of artistic activities." A city may appropriate money to support artistic organizations. Finally, M. S. 469.189 allows appropriation for advertising purposes. It reads, "The governing body of any Home Rule Charter city of the second, third or fourth class may annually appropriate money to advertise the municipality and its resources and advantages. The money appropriated shall be used only to advertise the municipality or for cooperative programs of promotion by the area of more than one municipality and its resources and advantages." The Charter does not speak directly to giving gifts. The following is the general welfare language from the Charter: SECTION 12.14. CERTAIN ORDINANCES AND POWERS. Subdivision 1. For purpose of promoting the health, safety, morals or general welfare of the City, the Council may by ordinance regulate, structures and land for trade, industry, business, residence or other purposes. It may declare the existence of and provide for the rehabilitation of blighted areas. It may provide for the acquisition and management of privately owned lands, buildings and other real and personal property interests by the City for any purposes in the public interest or welfare, and for the sale or any other disposal thereof, provide methods of procedure for any such purposes, and make any other provisions as may appear desirable for the purpose herein expressed. League Of Minnesota Cites Criteria for valid public expenditures In order for an expenditure of public funds to be lawful, it should meet BOTH of the following standards: . Public purpose. There must be a public purpose for the expenditure. . Authority. There must be specific or implied authority for the expenditure in statute or in the city's charter. Specific authority is usually fairly clear. In contrast, whether authority is implied by a particular statute or charter provision is subject to interpretation. Cities should consult with their city attorneys as to whether authority for a specific expenditure is implied. The Minnesota Constitution requires that taxation must be for a public purpose. It also generally prohibits giving or loaning the credit of the state to aid any individual, association or corporation. Although a state law may be passed to give a city authority to spend money on various purposes, the Minnesota Constitution prohibits the Legislature from passing any local or special law that authorizes public taxation for a private purpose. Thus, a public expenditure must always be for a public purpose. This leads to the question of what is meant by "public purpose." The meaning of "public purpose" is constantly evolving. The Minnesota Supreme Court has followed a liberal approach, and has generally concluded that "public purpose" means an activity that meets ALL of the following standards: . The activity will benefit the community as a body. . The activity is directly related to functions of government. . The activity does not have as its primary objective the benefit of a private interest. The Minnesota Supreme Court has also held that the general objective of a public purpose is to promote the following for all of a city's residents: . Public health . Safety . General welfare . Security . Prosperity . Contentment Although attorney general opinions can be useful for guidance in determining whether a public expenditure is valid, the courts will make the final decision. The proper focus of inquiry for a court is whether the expenditure will benefit the community as a whole and is related to the functions of government. 2 Artistic organizations (Minn. Stat. S 471.941) Counties, cities, and townships may appropriate money to support artistic organizations. The appropriation may be divided among multiple artistic organizations in proportions that are determined by the governing body. An "artistic organization" is an association, corporation or other group that provides an opportunity for people to participate in the creation, performance or appreciation of artistic activities, including: . Music . Dance . Drama . Folk art . Arch itectu re . Painting . Sculpture . Photography . Graphic and craft arts . Costume and fashion design . Motion pictures . Television . Rad io . Tape and sound records . Activities related to the presentation, performance, execution, and exhibition of the art forms . The study of the arts and their application to the human environment Although the above listing is lengthy, this appropriation is not limited to the above referenced activities. Other similar activities or events may also be included. Donations to organizations Cities are often asked to make donations to organizations. While many organizations operate for good causes, they generally cannot receive public money. In some limited situations, however, there may be authority for various types of financial support. Cities should be certain authority for making a donation exists before making one. Any city or county may appropriate an amount to provide grants to nonprofit organizations that operate community food shelves and provide food to the needy without charge. There is also authority to provide public money to support hospitals and certain economic development organizations. The Minnesota attorney general has considered the question of donating public funds to various types of groups and has held such donations are illegal. The attorney general has found the following public expenditures to be improper: 3 . To sponsor a local bowling team. . To sponsor a local kittenball team (similar to softball). . To help the American Legion build a Legion Hall. . To help subsidize the expenses of a drum and bugle corps. The statutes do allow some expenditures to provide musical entertainment or have a city band, orchestra or chorus. . To help support the Red Cross. 4 POLICY 2-D CONTRIBUTIONS TO AGENCIES 1. PURPOSE 1.01 The purpose of the Policy is to establish procedures and guidelines regulating the allocation of funds to non-City sponsored organizations. 2. GENERAL 2.01 The City presently funds organizations that provide services to Hopkins residents. From time to time, requests are made to increase funding or begin a new contribution. 2.02 Because public funds are being spent, the City Council expects that these organizations will keep accurate financial and program records so that the benefit from the City's funding can be readily determined. 2.03 The Council will generally consider such requests when it can be clearly demonstrated that there is a significant potential benefit to City residents or when failure to provide funding would, in the Council's opinion, create a serious hardship for a part or all of the community. Philosophically, the City Council believes that its funding of non-City organizations should be limited. 3. PROCEDURES 3.01 Requests for funding shall be submitted in writing to the City Manager's Office by July 1, to be considered for funding for the year beginning the succeeding January 1. The request will specify the amount requested, why City funding is necessary, the reasons for changes, if any, in the requested amount, the specific benefit to Hopkins residents (number of clients to be served, etc.), previous program statistics related to such benefit, if available, and a proposed budget including expected sources and uses of funds. 3.02 The City Council may request representatives of such organizations to appear at budget work sessions held in August and September, to further explain or justify requests. 3.03 If funded, organizations must agree to keep program statistics, as specified by the City Council, specifically documenting service or benefit to Hopkins residents, and submit such documentation to the City Manager's Office on July 1 and January 1. 3.04 Funded organizations shall submit appropriate financial statements for the most recently completed fiscal year otherwise associated with the organization, which show the financial condition of the organization and that the City's funds were spent for the intended purpose. Legislative Policy Manual-- Chapter 2-D 4. PROVISION FOR COUNCIL INPUT 4.01 The City Council reserves the right to appoint one of its members or a representative to the Board of Directors of all organizations receiving City funding. Established 8/18/87 Legislative Policy Manual-- Chapter 2-D 2