Fort Walton Beach Council agenda — 11-26-2007 special agenda — reading text

department. There should be a determination as to whether the compensation levels for I accounting positions are indeed competitive or not. A spot check of the City' s targeted market would be helpful in making such a determination and possible internal E adjustment. Recommendation # 14: Human Resources should determine the current market rate in the area for accounting related positions. In addition, additional L training funds for the Finance Department need to be set aside so that accounting professionals can obtain training to upgrade and maintain their expertise. r: Transfer Functions to Third Parties Finding: Certain finance functions may be completed by banks or private I providers. Banks or other private parties, under contract to the City, could do many of the functions in the Finance Department. For example, 990/0 of the cutting and mailing of I checks could be done by the City' s bank. I Recommendation # 15: A systematic effort should be made to transfer as many finance activities as possible first to the bank and secondly to one or more I private contractors. The Finance Department needs to maintain financial control but I Alternative Services Delivery Study for Fort Walton Beach, Florida Page 5-6 I I I Finance II the actual completion of routine finance activities should be done outside of the I Department under contract with the Department. For payroll and tax services, the cost I could range up to $ 65, 000. This would greatly help in reducing the work load pressure that currently exists in this department. I Use Internet to Transfer Data to Finance Department I Finding: Use of electronic data transfer can be enhanced. As much data as I possible should be sent from other departments to the Finance Department, using the Internet on a secured protected basis. For example, the Departmental Coordinating I Secretaries could send all time sheet information via the Internet. After the data is verified for accuracy by the Finance Department, it should be electronically recorded and E processed with an absolute minimum use of paper support documents. Currently, this is E done for about 880/0 of transactions, but it is possible to obtain a 980/0 level. Recommendation # 16: Evaluate all possible opportunities for electronic data transfer. Utility Billing E Finding: The processing ( receiving) of utility payments could be contracted. The City plans to contract out the printing and mailing of the utility billing payments. It I should also consider contracting out the receiving of payments. The county tax collector processes utility payments using a contractor. I Recommendation # 17: Explore the feasibility of contracting for utility I payment processing. The City should investigate the possibility of using the same contractor as the county, and thus providing the same service for the City. The City I employee assigned to utility billing would be reassigned other tasks. I Alternative Services Delivery Study for Fort Walton Beach, Florida Page 5- 7 I t: r- Finance L. Inter-fund Transfers Finding: Inter-fund transfers are not maximized. The City needs to maximize the use of inter-fund transfers of its business activities from other funds such as the Enterprise Funds to the General Fund. The City' s inter-fund transfers are over 3. 2 million per year and this is good. However, there can be more transfers. As is true in most cities, there are remarkable demands placed on the General Fund, which receives most of its revenue from the unpopular property tax. On the other hand, Enterprise Funds typically receive funds from user funds and the public normally better understands the need for them to work on a breakeven basis just as a private company does. In general, the rule is that the Enterprise Fund activities need only pay their fair r share, which is normally done on a proportional basis. c Recently, KPMG conducted an in- depth review of the General Fund and found activities ( accounting, human resources, information technology, public works, and t purchasing) where the General Fund essentially subsidized the Enterprise Funds. Any such subsidization must stop in order to get a true picture of the cost of the Enterprise I Activities but also take as much pressure off of the General Fund as possible. Obviously, filii this will also mean that some Enterprise Activities such as Golf and Utilities may need to L. increase their rates but this is a better and more correct option they having them III' subsidized by a General Fund that cannot currently adequately fund the traditional services of City government. I There is a very long list of expenses that should be partially paid by the I Enterprise Funds. According to one internal City study, these include: 171, 000 of City Council expenses; I 342, 000 of City Manager expenses; I Alternative Services Delivery Study for Fort Walton Beach, Florida Page 5-8 I Ii Finance 227, 000 in Human Resources; I: 125, 000 in City Clerk expenses; 298, 340 in Finance expenses; 106, 000 in Purchasing expenses; 123, 000 in Police expenses; 8, 500 in Parks and Recreation expenses; 125, 000 in Community Development expenses; L 52, 000 in CDBG expenses; 36, 000 for newsletter postage; 76, 000 in Code Inspector II expenses; and, 56, 000 in Code Inspector I expenses. Recommendation # 18: Determine an accurate level of inter-fund transfers from Enterprise Funds to the General Fund. The Finance Department should make L the initial determination, with subsequent approval by the City Manager and the City Council. r Internal Service Fund L. The City has not established an Internal Service Fund. Often in Finding: I governments, the cost of overhead expenses grows disproportional to the other costs of to be the problem in Fort Walton Beach. government. This does not appear I Nevertheless, to help avoid this problem in the future, the City should create an Internal from fund transfers from the I Service Fund. The revenues for this fund should come General Fund and the Enterprise Fund Activities. By having such a fund, the City I Manager and City Council have a sharper understanding of the cost of City overhead. In I Alternative Services Delivery Study for Fort Walton Beach, Florida Page 5-9 I E I Finance addition, such accounting makes it easier to justify overhead costs in any grants that the I City may receive. While GFOA has suggested not to maintain internal service funds, I MAG believes that following this GFOA " best practice" would place unnecessary stress on the general fund. We conclude that the best interests of the City would be to use an I internal service fund. Activities that should be considered under the Internal Service Fund include the I: City Council, the City Manager, Human Resources, the City Clerk, Finance except the I: portion totally allocated to the Enterprise Activities, Purchasing, employee picnic, Planning, Information Technology that is not directly allocated to a department, insurance, and other general expenses of the City. The actual expenses for this fund should be developed by the Finance Department and be approved by the City Manager and City Council. L Recommendation # 19: Identify actual expenses for an Internal Service Fund. E filii L. I I I I I Alternative Services Delivery Study for Fort Walton Beach, Florida Page 5- 10 I E I: 6.0 Purchasing E The Purchasing Department is responsible for acquiring and storing supplies, Ii materials, equipment and various commodities needed for successful City operations. E Staff helps prepare and process bids, proposals, quotations, and advertisements for goods and services. The Department also coordinates the annual auction of surplus City I: assets. 6. 1 Oraanization and Staffina Purchasing is composed of five positions, including: Purchasing Director; Buyer; Inventory Control Specialist; I: Senior Buyer; Staff Assistant II. I: All positions except the Buyer report directly to the Purchasing Director. The Senior Buyer assumes a lead role in the absence of the Director, and handles the more complex purchasing requirements. The Inventory Control Specialist incumbent works a four ( 4) day work week due to distance of the home from the City. The Staff Assistant L handles correspondence, and runs the warehouse on Fridays ( except driving the forklift). The Purchasing Director brings extensive experience to the City due to previous similar work in the Air Force. I Approximately 4, 500 to 5, 000 purchase orders are issued every year and about 30 0 of the purchase orders are issued bids and proposals are solicited each year. Over 900/ I within three ( 3) days of requisition. Purchase requisitions are used for all buying except I in emergency situations. The Police Chief and Fire Chief have City credit cards. Exhibit 4- 1 on the following page represents the current structure as noted in the I Recommended City Manager Budget. I Alternative Services Delivery Study for Fort Walton Beach, Florida Page 4- 1 I t E