Financial Management Plan; Bishop
CITY OF HOPKINS
Memorandum
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Nick Bishop, Finance Director
Date: June 14, 2022
Subject: Financial Management Plan
_____________________________________________________________________
PURPOSE
The presentation will be broken down into two parts. The first part is informational. It
will describe our Financial Management Plan (FMP) and how it has been used. The
second portion will give an overview of preliminary financial projections for the 2023-
2027 timeframe. We are seeking input to work towards a final version of the plan that
will help guide future budgets. In the past, the FMP has been updated annually.
INFORMATION
Financial Management Plan
Traditionally cities have taken a short term view for financing city operations. The one
year budget is still the norm for most cities. Hopkins began to use long term planning
for large expenditures such as construction projects and large pieces of equipment in
the 1980s. One year operating budgets were used by the City through 2014.
Beginning with the 2015 Budget, the City decided to take a long term view of financing
its operations through the use of a Financial Management Plan (FMP). The FMP is a
multi-year fiscal plan for all tax-supported funds. It integrates existing debt, Capital
Improvement Plans, Equipment Replacement Plans, future debt, tax base growth and
future operating expenses. The FMP is used to level out expenditures and bond costs
to smooth tax increases, ensure funding is available to carry out the City’s vision and as
a tool to better understand effects of budget decisions.
Finance Department
2023 Projections
Based on available information, the preliminary tax levy for 2023 would be
approximately $19.25 million. This represents a 6.10% increase from the 2022 levy.
The levy includes amounts for the general fund, Arts Center, Pavilion, equipment
replacement, permanent improvements and debt repayments.
The major considerations related to the estimate for the 2023 FMP are:
• Increase to general fund expenditures of 5%. This is to account for COLA
increases in settled and unsettled union contracts, step increases, increased
health care costs and other inflationary increases.
• The addition of 1.0 FTE for a Fire Command Staff employee.
• The capital improvement projects scheduled in the 2022-2026 CIP at the Activity
Center & 907 Mainstreet building will be delayed or paid out of an alternate
funding source. (The 2021 general fund surplus would be an appropriate
source.)
Taxes for a median value home are projected to increase from $2,003 to $2,271 or a
$268 increase.
2024-2027 Projections
During the spring of 2022 the FMP and staffing needs were reviewed internally. The
original request for staffing increases totaled 22.5 new full time employees being added
from 2023-2027. Requested fulltime firefighters were removed from the FMP. Staff is
also proposing using a portion of the general fund surplus for a staffing study to
evaluate transitioning to a fulltime fire department. The current version of the FMP
includes 12.5 full time employees over the same time period. Two of these positions
were funded through ARPA allocations until 2025 and one position will be funded
through increased revenue for building inspections. A more detailed overview will be
provided during the June 14th meeting.
FUTURE ACTION
Further Budget, CIP and ERP discussion are planned at the July 12th and August 10th
Work Sessions. A more detailed Budget Preparation Schedule is attached.
June 14, 2022
City of Hopkins
2023 Budget Preparation Schedule for City Council
The following table outlines the tentative schedule for discussions on important aspects of the City’s Budget and American
Rescue Plan Act (ARPA) Spending Plan.
Meeting Date Meeting Type Subject Details
April-July N/A Internal Preparations -2021 Audit Ongoing
-Departments Prepare Budgets, Equipment
Replacement and Capital Improvement Schedules
July 12 Work Session Review 2023 Tax Levy and
General Fund Budget
-First Draft
August 10 Work Session Review Capital Improvement
Plan (CIP) and Equipment
Replacement Plan (ERP)
-Equipment Replacement Fund
-Park Improvement
-Capital Improvement
August 15 Community
Event
Review 2023 Tax Levy and
General Fund Budget
-Presentation
-Question and Answer Session
September 6 Regular Meeting -Approve Preliminary Tax Levy
and General Fund Budget
-Approve CIP and ERP
-Preliminary Levy must
be approved by
September 30
-Permanent
Improvement Revolving
Fund (Street Projects)
October 11 Work Session Review, Special Revenue
Fund Budgets, Enterprise
Fund Budgets, Activity Center
Budget and Utility Rates
-Water -Sewer
-Storm Sewer -Refuse
-Pavilion -Communications
-Chemical Assessment -Parking
-Economic Development -Depot
-Activity Center -Arts Center
June 14, 2022
City of Hopkins
2023 Budget Preparation Schedule for City Council
Meeting Date Meeting Type Subject Details
November 1 Regular Meeting Approve Utility Rates
November 30
Regular Meeting
(Wednesday)
Truth in Taxation Hearing -Overview of 2023 Budget and Tax Levy
-Public Comment
December 6 Regular Meeting Approve Final Budget & Tax
Levy
-Final Levy must be approved by December 28
Financial Management Plan
Council Work Session
June 14, 2022
Financial Management Plan
Agenda
Overview of the Financial Management Plan (FMP)
2023 –2027 FMP
What is it?
Long range fiscal plan for tax supported funds
Levels expenditures and bond costs
Ensures money is available to fund road
construction, capital equipment and maintenance
of City owned facilities
Better understanding of effects of budget
decisions
Plan is developed and updated by Ehlers
What is it?
Goal to increase taxes paid in a predictable
manner
A tool to help put budget decision in context
Projects tax increases for a median value home
Not relying on year-over-year percentage changes
What is included?
Funds included:
General Fund
Arts Center
Capital Improvement (city buildings)
Permanent Improvement Revolving (streets)
Equipment Replacement
Debt Service funds
Pavilion
What is included?
Projected costs included:
Future operating expenditures
Existing and future debt payments
Capital Improvement Plan
Equipment Replacement Plan
What is included?
Tax projections for:
Existing tax capacity
Estimates for
Market growth
New redevelopment
Decertified TIF districts
2023-2027 FMP
Preliminary
Looking for input from City Council
Before COVID-19, FMP was updated annually
2023-2027 FMP
FTE Requests
22.5 FTE’s were requested
12.5 FTE’s in the preliminary FMP
9 firefighters were removed from the plan
o Fire department staffing study is being requested
1 management analyst was removed
2023-2027 FMP
FTE Requests
Fire –Command Staff position in 2023
Building Inspector position added in 2023
Supported by increased building permit fees
2023-2027 FMP
FTE Requests
City Wide Positions
I.T. Part Time in 2024
Management Analyst in 2026
o Sustainability or Equity
2023-2027 FMP
FTE Requests
Police Department
4 Police Officers in 2024, 2025, 2026 and 2027
Civilian Position in 2024
o Crime analyst/forensics
Civilian Position in 2026
o Social worker/mental health/community outreach
Part-Time Cadets in 2025 and 2027
2023-2027 FMP
FTE Requests
ARPA Positions –funded by tax levy in 2025
Entry Level Planner
o Planning, grant administration & economic development
o Starting as soon as 7/1/2022
Police Officer
o Starting on 1/1/2023
2023-2027 FMP
No Capital Improvement Levy
Projects delayed or funded with different
source
Activity Center Roofs -$160,000
907 Mainstreet Windows & Doors -$55,000
Final
Tax Levy 2022 2023 2024 2025 2026 2027
General Fund 13,219,739 13,880,393 14,579,661 15,305,712 16,059,626 16,817,526
Capital Levy 50,000 - 225,000 275,000 275,000 200,000
Arts Center 339,317 347,697 356,328 365,217 374,374 383,805
Pavilion 418,000 445,000 400,000 600,000 500,000 500,000
Equipment Replacement - 130,000 400,000 300,000 300,000 400,000
Permanent Improvement 110,000 290,000 240,000 90,000 225,000 -
Park Improvements - 100,000 100,000 100,000 100,000 100,000
Debt Service 4,003,044 3,942,746 4,312,784 4,241,528 4,847,959 5,447,248
Total City Levy 18,140,100 19,135,836 20,613,773 21,277,457 22,681,959 23,848,579
% Increase 1.98%5.49%7.72%3.22%6.60%5.14%
Requested Positions
Fire - 110,000 113,300 116,699 120,200 123,806
Police - - 250,000 445,500 720,865 948,491
City Wide - - 50,000 51,500 173,045 178,236
Planning - - - 121,000 124,630 128,369
Levy Required - 110,000.00 413,300.00 734,699.00 1,138,740.00 1,378,902.00
Total City Levy w/ Additions 18,140,100.00 19,245,836.00 21,027,073.00 22,012,156.00 23,820,699.00 25,227,481.00
% Increase 1.98%6.10%9.26%4.68%8.22%5.91%
Projected
Financial Management Plan - Projected Tax Levy
Final
Tax Levy 2022 2023 2024 2025 2026 2027
General Fund 1,460 1,638 1,688 1,722 1,774 1,797
Capital Levy 6 - 26 31 30 21
Arts Center 37 41 41 41 41 41
Pavilion 46 53 46 68 55 53
Equipment Replacement - 15 46 34 33 43
Permanent Improvement 12 34 28 10 25 -
- 12 12 11 11 11
Debt Service 442 465 499 477 535 582
Total City Levy 2,003 2,258 2,386 2,394 2,505 2,549
$ Increase 148 255 128 8 111 43
ARPA Funded Positions
Fire - 13 13 13 13 13
Police - - 29 50 80 101
City Wide - - 6 6 19 19
Planning - - - 14 14 14
Levy Required - 13 48 83 126 147
Total City Levy w/ Additions 2,003 2,271 2,434 2,477 2,631 2,696
% Increase 148 268 163 43 154 65
5 year average = $109
5 year average = $139
Projected
Financial Management Plan - Projected Residential Taxes