Fort Walton Beach Council agenda — 09-08-2010 Special-1st Public Hearing FY 10/11 Budget — reading text

to maintain its three defined benefit pension plans in a fiscally sound manner. Investment earnings and employee /employer contributions comprise the plans' income. General employees and police officers contribute 5% of wages and firefighters contribute 6. 6% of wages into their respective plans.The City's actuaries estimate investment earnings at 8% annually for each plan and estimate annual salary increases as follows: General 5. 4 %, Police 7. 5 %, and Fire 6. 5 %. The City's annual funding contribution is based on these actuarially determined estimates and must be adjusted in future years to make up for any deviation from these estimates. The City's actuaries provide a percentage of payroll for the City to use for budgeting as well as calculating quarterly contribution payments. However, the City's percentage must be adjusted upward to compensate for state contribution dollar amount being " frozen" and therefore comprising a smaller percentage of total annual payroll. Contribution as % of Payroll 2006 -07 2007 -08 2008 -09 2009 -10 2010 -11 General Employees - Pension 14. 900% 14. 726% 15. 465% 18. 890% 20. 920% General Employees - DC Plan n/ a n/ a n/ a n/ a 5. 000% Police Officers Plan - Pension 12. 800% 11. 495% 15. 212% 19. 800% 25. 747% Firefighters Plan - Pension 10. 900% 10. 800% 15. 658% 25. 300% 29. 149% The City's contribution to the General Employees defined benefit plan is budgeted at $ 1. 2M, a decrease of $ 175K or 12. 9% due to the reduction in staffing and transition to a defined contribution plan for all new hires effective January 1, 2010. The City contributes 5% of wages to the defined contribution plan, at an estimated cost of $ 41 K. The City's contribution to the Police Officers plan is budgeted at $ 561 K, an increase of $ 65K or 13. 0% due to the " frozen" state contribution comprising a smaller percentage. The City' s contribution to the Firefighters plan is budgeted at $ 580K, an increase of $ 77K or 15. 3% attributable to the "frozen" state contribution. Interest Earnings The City's excess funds are invested in certificates of deposit, money market bank accounts, and money market mutual funds. These investments are largely tied to the Federal Funds target rate, which the Federal Reserve has held at an " exceptionally low" level for " an extended period ". The Reserve Board has indicated the target rate will likely not be increased until 2011. Many of the City' s multi -year CD' s at rates between 4. 5% - 5. 5% have matured and are being reinvested at significantly lower rates between 0. 25% - 1. 0%. Citywide, interest earnings of $ 230K are budgeted, a $ 339K or 61 % decrease from the prior year. OTHER ASSUMPTIONS & CHANGES REVENUES (detailed discussion on pages 34 -37) 1. Revenues are estimated at conservative levels to guard against unanticipated economic shifts, legislative changes, or collection levels. General government revenues are largely budgeted based on historical collection and growth levels. Enterprise revenues are based on historical usage and /or number of customers, and adjusted for current rates. 2. Water and sewer rates will increase 1. 5% on October 1, 2010, following a mid -year increase on April 1, 2010, to address the shortfall emanating from the transition of wastewater treatment and disposal to the County's facility. The City Council adopted a multi -year rate plan in March 2010, with annual increases for inflation each October 1 through FY 2013 -14. EXPENSES (detailed discussion on pages 38 -41) 1. Wages have been adjusted as follows: a. Cost of living adjustment - Employees have customarily received a cost of living adjustment effective October 1. Due to fiscal constraints, for the second consecutive year no cost of living adjustment is budgeted for general or police employees. City of Fort Walton Beach, FL City Manager' s Budget Message b. Performance adjustment — Employees have traditionally been eligible for a pay increase on their anniversary date contingent upon a satisfactory performance evaluation. Due to fiscal constraints, for the third consecutive year no monetary adjustment is budgeted for general employees. However, vacation hours will be awarded in increments of 4 hours in lieu of pay increases based on the performance evaluation score. Hours must be used before the next anniversary date and will not be paid in the event of separation from employment during the year. c. Fire Unions — Battalion chiefs and firefighters have signed three -year collective bargaining agreements, with no pay increases in FY 2010 -11. Union members are eligible for vacation hours based on their performance evaluation. d. Police Unions — Police officers and sergeants voted to unionize in May 2009. Little progress has been made in negotiations. These employees' wages and benefits are frozen until such time as collective bargaining agreements are approved and, therefore, are not eligible for vacation hours based on their performance evaluation. 2. Benefits have been adjusted as follows: a. Medical insurance — As a result of transitioning to a multi -tier program and issuing an RFP for medical insurance, the cost of providing insurance coverage is budgeted to decrease $ 344K or 17. 5 %. The savings will likely be even greater if all new City Council members do not elect family coverage. There are five Council seats up for election in March 2011, and full family coverage is budgeted for all seats. 3. One new division has been created this year to better account for the cost of providing services: 1205 Planning and Zoning. The Sewer Operations division 1320 has been eliminated with the outsourcing of services to the County wastewater treatment plant. 4. Department goals and capital improvement projects are tied directly to the Vision Plan and /or Strategic Plan, as illustrated by the use of icons ( reference pages 3 -5) throughout the document. The following projects are directly related to 2008 Strategic Plan goals: Structural Change a. Conduct departmental operational reviews — streamlining operations resulted in the elimination of 17. 42 full -time equivalent positions, a 5. 5% reduction. b. Examine alternative compensation plans — vacation hours in lieu of pay increases awarded on anniversary date on sliding scale of 4 -hour increments based on evaluation score. c. Examine healthcare and benefits alternatives — medical insurance RFP resulted in modest average increase of 5. 5% for 10/ 1 / 10 renewal. Natural Environment a. Create stormwater utility — stormwater master plan will be developed to identify and prioritize infrastructure improvement projects. Economic Development a. Continue 50/ 50 allocation of CRA funding — current year projects are 77% residential and 33% commercial due to Soundside affordable housing project. 5. Certain capital improvement projects, grants, and /or purchases that were authorized, budgeted, and appropriated by City Council in a prior fiscal year but are incomplete as of September 30 are carried forward into the new fiscal year. These special projects and purchase order encumbrances are identified in the budget resolution at the end of the document. GOING GREEN & EFFICIENT The City of Fort Walton Beach has transitioned to paperless agendas for City Council, Board, and Committee meetings. Old police department laptops were " recycled" for the purpose of equipping each seat at the dias with a laptop for ease of accessing the agenda and backup material during meetings. The cost of producing hardcopy City Council meeting agendas was roughly $ 3600 for paper alone, not to mention ink cartridges and staff time. Minutes will be taken electronically as of October 1, thereby reducing staff in the City Clerk' s office by 0. 50 FTE while improving turnaround time and accessibility of information to citizens. Minutes will be available the next day, rather than with the next agenda two weeks later. Furthermore, citizens will be City of Fort Walton Beach, FL City Manager' s Budget Message able to click on an agenda item online and jump directly to that part of the meeting and listen to the full discussion rather than just having the highlights documented in hardcopy minutes. PERFORMANCE MEASUREMENT Performance measurement is the regular collection of specific information regarding City services. Together with strategic planning, benchmarking, and continuous improvement, performance measurement forms the nucleus for managing for results and addressing the effect we are having in our community. The collection and measurement of performance data is a central requirement for improving performance. In late April, City Council was presented with staff's recommended new approach to conducting day -to- day business in the City of Fort Walton Beach. The presentation highlighted the many benefits of implementing the concept of " performance excellence" in all aspects of city government. Performance excellence is a culture whereby organizations utilize proven standards as a guide to making improvements that generate better operations, customer value, and overall results. The City Council' s direction was simple: " move forward!" This initiative was originally going to be rolled out in time for implementation with the new fiscal year on October 1. However, given possible operational changes as a result of reduced revenues, it was determined that it makes more sense to embark on this endeavor after City Council establishes desired service levels and programs during the budget process. As such, current performance measures —many of which aren' t truly meaningful for evaluating services and others can't be easily supported by system - generated documentation /reports and must be manually tracked — haven' t been updated for the current year or upcoming budget year. In the near future, employees can expect to be introduced to management practices and business concepts that are proven to increase both internal and external customer satisfaction and will promote a culture of excellence throughout our city government. Over the next several months, a Core Performance Team will be assembled to work with leadership and staff to develop Mission, Vision, and Value Statements to guide the City's future efforts toward Service Excellence. Annual Goals, as well as Short - Term and Long -Term Strategic Goals, will be developed with input from employees. As part of the new Performance Management System, and as a way to bolster employee participation and involvement, a new Bright Ideas Employee Suggestion System is being developed. Departmental Mission Statements and Annual Goals will be developed