Fort Walton Beach Council agenda — 10-22-2007 special agenda — reading text

the cost Department under contract with the Department. For payroll and tax services, could range up to $ 65, 000. This would greatly help in reducing the work load pressure that currently exists in this department. Use Internet to Transfer Data to Finance Department Use of electronic data transfer can be enhanced. As much data as Finding: the possible should be sent from other departments to the Finance Department, using Internet on a secured protected basis. For example, the Departmental Coordinating 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 this is processed with an absolute minimum use of paper support documents. Currently, done for about 88% of transactions, but it is possible to obtain a 98% level. Recommendation # 16: Evaluate all possible opportunities for electronic data transfer. Utility Billing 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 should also consider contracting out the receiving of payments. The county tax collector processes utility payments using a contractor. Recommendation # 17: the feasibility of contracting for utility Explore the payment processing. The City should investigate the possibility of using same contractor as the county, and thus providing the same service for the City. The City employee assigned to utility billing would be reassigned other tasks. Alternative Services Delivery Study for Fort Walton Beach, Florida Page 5- 7  Finance 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 share, which is normally done on a proportional basis. Recently, KPMG conducted an in- depth review of the General Fund and found activities ( accounting, human resources, information technology, public works, and 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 Activities but also take as much pressure off of the General Fund as possible. Obviously, this will also mean that some Enterprise Activities such as Golf and Utilities may need to increase their rates but this is a better and more correct option they having them subsidized by a General Fund that cannot currently adequately fund the traditional services of City government. There is a very long list of expenses that should be partially paid by the Enterprise Funds. According to one internal City study, these include: 171, 000 of City Council expenses; 342, 000 of City Manager expenses; Alternative Services Delivery Study for Fort Walton Beach, Florida Page 5-8  Finance 227, 000 in Human Resources; 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; 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 the initial determination, with subsequent approval by the City Manager and the City Council. Internal Service Fund Often in Finding: The City has not established an Internal Service Fund. the other costs of governments, the cost of overhead expenses grows disproportional to be the problem in Fort Walton Beach. government. This does not appear to Nevertheless, to help avoid this problem in the future, the City should create an Internal Service Fund. The revenues for this fund should come from fund transfers from the General Fund and the Enterprise Fund Activities. By having such a fund, the City overhead. In Manager and City Council have a sharper understanding of the cost of City Alternative Services Delivery Study for Fort Walton Beach, Florida Page 5-9  Finance addition, such accounting makes it easier to justify overhead costs in any grants that the funds, City may receive. While GFOA has suggested not to maintain internal service 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 internal service fund. Activities that should be considered under the Internal Service Fund include the City Council, the City Manager, Human Resources, the City Clerk, Finance except the 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. Recommendation # 19: Identify actual expenses for an Internal Service Fund. Alternative Services Delivery Study for Fort Walton Beach, Florida Page 5- 10  6. 0 Purchasing The Purchasing Department is responsible for acquiring and storing supplies, materials, equipment and various commodities needed for successful City operations. Staff helps prepare and process bids, proposals, quotations, and advertisements for goods and services. The Department also coordinates the annual auction of surplus City assets. 6. 1 Oraanization and Staffina Purchasing is composed of five positions, incfuding: Purchasing Director; Buyer; Inventory Control Specialist; Senior Buyer; Staff Assistant II. 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 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. Approximately 4, 500 to 5, 000 purchase orders are issued every year and about 30 bids and proposals are solicited each year. Over 90% of the purchase orders are issued within three ( 3) days of requisition. Purchase requisitions are used for all buying except 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 Recommended City Manager Budget. Alternative Services Delivery Study for Fort Walton Beach, Florida Page 4- 1  Purchasing 6.2 Maior Policies and Operational Issues Purchasing Policies Finding: The Department' s key policies are consistent with recognized municipal policies. The Department has established progressive policies and practices consistent with widely recognized public sector policies and practices. These include the use of monthly and blanket purchase orders, open accounts with selected providers, use of the ( Florida) state contract system, and the application of various dollar levels for different purchasing requirements. The policies are firm but sufficiently flexible to enable Departments to operate successfully and without interruption. Recommendation #20: Continue existing purchasing policies with periodic review for currency and adherence to modern standards. Finding: The level of staffing in Purchasing may be reduced without substantial impact on service levels. The assignment of five ( 5) positions to the purchasing function for a City the size of Fort Walton Beach is excessive. As a result, it appears that some positions are underutilized and less than productive relative to the amount of work required. The work of the Inventory Control Specialist position could be covered by other staff, and duties reallocated to ensure continuous flow in the office. Total wages and benefits for the Inventory Control Specialist position are anticipated at $ 42,409 for the