Fort Walton Beach Council agenda — 05-15-12 special budget policy — reading text

Re ere, As a full -service government, employees are the City' s most important asset in providing police and fire protection; cultural and recreational facilities and programs; planning and zoning services; infrastructure maintenance and construction such as streets, sidewalks, and cemeteries; and utilities such as water, wastewater, stormwater management, and garbage and recycling collection. As the following graphs illustrate, public safety wages and benefits ( police & fire) consume the entire amount of the General Fund' s two largest revenue sources ( ad valorem & other taxes). en » a xe. eaoo c,rmae c. re. e, _ Ponenne- O Capital Uebl Geneevl FUnd • Fmerpnse •l' untlx Ulbee FUnd • 0o.. 9 I< 4 88— 810 $ y 6 J 2 2 $ p 3 Wastes — The number of full -time equivalent ( FTE) positions has decreased by 58. 09 FTE' s or 16. 3 % over the past five years, a savings of nearly $ 2. 6M. General and police employees last received a wage adjustment in FY 2009; firefighters last received an adjustment in FY 2010. As in the prior two fiscal years, no wage adjustments are anticipated for FY 2012 -13 and employees will likely be afforded a lump sum payment, which does not cumulatively increase pay or the City' s pension liability. Benefits —Benefits include Social Security tax, Medicare tax, worker' s compensation insurance, unemployment compensation insurance, medical insurance ( health, dental, & life), and pension I or 17 Packet -P ®.10  3. 1. a FY 2012- 13 Budget Policy Meeting benefits. Affordable health insurance providing quality coverage is an important part of the City' s benefits package. The City' s total medical benefits expense is nearly the same as five years ago, in large part due to reducing the City contribution to 50% of the family premium for new hires after October 1, 2008. The City is required to maintain its three pension plans in a fiscally sound manner. Investment earnings and employee /employer contributions comprise the plans' income. General employees and police officers 20' contribute 5% of wages and fire personnel contribute 6. 6% of wages into their respective 10 plans. Factors such as lower than anticipated investment earnings, higher than estimated a007-0e 20081, 2001 - 11 2010. 11 Zoo - iz em °n salary increases in previous years, and more ral ror« . r- participants due to early -out retirement •(,,— programs have contributed to the City' s contribution increase. Pension plan changes will be brought forth for City Council consideration at a future date to reduce the City' s contribution as a percent of payroll from the current level of 28% - 37% and to increase the funded ratio of the plans. Operations & Maintenance —This category of expenses includes materials and supplies, repair and maintenance, utilities and fuel, insurance, and other charges. These expenses are largely driven by program and service delivery levels as well as fixed costs over which the City has little control, such as utilities, fuel, property & casualty insurance, concrete, and steel. Capital Outlay —Includes the purchase of computers, vehicles, equipment, and other assets with a value greater than $ 500 and a useful life of more than one year. A fiscally sustainable budget includes funding for vehicle and heavy equipment based on a 10 -year replacement cycle and numerical scoring derived from objective criteria for age, mileage, repair /maintenance expense, and overall condition. Capital Improvements — The acquisition, construction, replacement, renovation, or repair of facilities and infrastructure with a value greater than $ 25, 000 and a useful life of ten years or more ( e. g. buildings and facilities, parks, streets and sidewalks, as well as water and sewer lines, tanks, and pumps) are identified in the City' s five -year Capital Improvements Program and part of a fiscally sustainable budget. 6 of19 Packet Pgrll  F3 1.. a FY 2012 -13 Budget Policy Meeting FIVE -YEAR FINANCIAL. FORECASTS Long -term financial planning is the process of aligning financial capacity with service objectives so policies may be developed to achieve long -term sustainability. Highlighting the long -term impact of current decisions is crucial to fiscal sustainability. Staffs goal is to enable City Council to make policy decisions today in the context of current and future resources and service levels. By linking resources to objectives at the beginning of the budgetary process, the primary focus is on outcomes — City Council' s desired service levels — rather than organizational structure or departmental funding levels. GENERALFUND Preliminary calculations indicate a FY 2012 -13 General Fund budget gap of SLIM. Decreases in various revenues coupled with increases in pension contributions contribute to the shortfall. No wage adjustments are proposed for FY 2013, although an average 2% adjustment is included in the forecast for fiscal years 2014 through 2017. The majority of the deficit identified in the five -year forecast has been closed with savings from the police department restructuring approved by City Council on May 10. The budget presented to City Council in August will close the remaining FY 2013 gap. Pension plan changes are forthcoming for City Council consideration and will contribute to future fiscal sustainability of the General Fund as well as improve the funded ratio of the pension plans. PROJECTED 2013 -14 2014 -15 2015 -16 2016- 17 201E -13 TOTAL REVENUES 16, 803, 217 16, 971, 398 17 ,273. 954 17, 813, 456 18, 162, 998 TOTAL EXPENSES 17195L840 18, 368, 680 18, 956,639 19, 578, 407 20, 005, 356 1, 397, 282) 1, 682, 685) 1, 764, 951) 1, 842, 558) Net Cnhlncr /( Deer) 1, 148, 624) PROJECTED o/ Polies restructuring 201E -13 2013 -14 2014 -15 2015 -16 2016 -17 TOTAL REVENUES 16, 803, 217 16, 971, 398 17, 273, 954 17, 813, 456 18, 162, 798 TOTAL EXPENSES 16, 902, 655 17, 379,689 17, 940, 629 18, 534,263 18, 931, 884 408, 290) 666, 675) 720, 807) 769, 086) Net C. 1h lner /(Deer) 99, 438) UTILITIES FUND Preliminary calculations indicate the Utilities Fund will have a decrease in net assets over the next five years. The budget presented to City Council in August will eliminate this decline. Revenues are predicated on 3% annual fee increases per the adopted fee schedule. An average 2% wage adjustment is included in the forecast for fiscal years 2014 through 2017. Projected 2013 - 14 2014 - 15 2015 -16 2016 - 17 2012 -13 268, 273) ( 20845) ( 146,851) ( 84, 990) ( 23, 324) CHANGE IN NET ASSETS ( 7 nr 17 Packet Pg. 12  3. 1. a FY 2012 - 13 Budget Policy Meeting SANITATION FUND Preliminary calculations indicate the Sanitation Fund will have a positive change in net assets through fiscal year 2015. Thereafter, rates may need to be adjusted or expenses reduced to prevent a decrease in net assets. Revenues are predicated on 0% annual fee increases. An average 2% wage adjustment is included in the forecast for fiscal years 2014 through 2017. Projected 2013 - 14 2014 -15 2015 -16 2016 -17 2012 -13 CHANGE IN NET ASSETS 191, 864 104, 576 15, 082 ( 79, 265) ( 178, 865) m sd U T GOLF FUND o a Preliminary calculations indicate the Golf Fund will have a decrease in net assets over the next five years. The budget presented to