Fort Walton Beach Council agenda — 8-11-14--proposed budget — reading text

Classification Study was performed in 2005, and it is recommended that these Plans be reviewed and updated every five years to maintain the integrity of the Plan.On October 8, 2013, City Council approved retaining Evergreen Solutions to perform a Pay & Classification Study and to recommend an implementation schedule for a new, updated Pay & Classification Plan. The City' s current pay scales were benchmarked against 11 local governmental agencies, including Okaloosa County. The City is, on average, 15. 7% below market at the minimum for all benchmarked classifications, 12. 8% below market at the midpoint, and 7. 2% below market at the maximum. Evergreen Solutions recommended a five year implementation for the new Pay & Classification Plan ( all numbers have been adjusted for inflation), which was accepted by City Council on June 30, 2014. The steps for implementing the Pay & Classification Plan are as follows: 1. Increase each employee' s salary, as applicable, to the minimum of his/ her recommended pay grade - if the salary is already within the recommended pay grade, no adjustment will be made. 2. Introduce parity based on the employee' s years of service — each employee would be placed in the proposed pay range based on the following scale ( employees who currently fall into the recommended pay range will receive no increase): Employees employed 0 -5 years — 0% Employees employed 6 -10 years — 15% Employees employed 11 - 15 years — 30% Employees employed 16 -20 years — 45% Employees employed greater than 20 years = 60% The financial impact for Year 1 was estimated by Evergreen Soultions to be a total of $257K, excluding Fire Bargaining Union Members, whose current contract calls for a 3. 5% across the board adjustment on October 1, 2014. Any future adjustments will require negotiation. The total budgetary impact of the Plan is estimated at $ 1. 34M over the five -year implementation period. The financial impact for the future years is: $ 259K for Year 2; $ 264K for Year 3; $ 279K for Year 4; and $ 286K for Year 5. Cost Allocation Plan The City' s first Cost Allocation Study was completed in September 1998 by KPMG Consulting based on data from FY 1997. Since then, the Cost Allocation Study has been updated consistently on a five -year basis. In July 2014, the City' s latest Study was completed and has been included in the FY 2014 -15 budget. MGT conducted an in -depth review of each General Fund department to determine the types of services provided and which divisions benefited from those services; completed time analyses to determine the time spent on services; and reviewed all accounting, purchasing, budgeting, and computer transactions to allocate costs to the appropriate division, department, and fund. Building and equipment use were allocated based on square footage and dollar value, respectively. Both actual financial and statistical data for FY 2013 were used and the Cost Allocation Plan was prepared in accordance with full costing concepts, which incorporate all expenditures of the City except capital outlays, election expenses, and Chy of Fort Wahon Beach. FL City Manager' s Budget Message grants -in -aid. MGT determined the General Fund provides the following services to Enterprise and Other Special Revenue Funds: Accounting —payroll, accounts payable and receivable, general accounting Human Resources — recruitment & retention, benefits administration, insurance & risk management Information Technology —hardware & software management, network support Engineering & Utilities —engineering, service maintenance, fleet maintenance, drainage, general labor Purchasing —competitive bidding, purchase of general goods and supplies Interfund transfers developed from the Cost Allocation Plan account for the reimbursement of business activities provided to the other funds. According to the Governmental Accounting Standards Board ( GASB), there are two major categories of interfund transfers: Residual Equity Transfer — a non -recurring or non -routine transfer that may include . contribution of capital or a residual balance from one fund to another. Operating Transfer — any other transfer between funds. Examples include annual transfers to a capital projects or debt service fund, operating subsidy transfers from_the general fund, or transfers from an enterprise fund that serve as a resource for general fund expenditures. The guidance is silent on the amount of or calculation of the transfer. The Government Finance Officers Association ( GFOA) defines interfund transfers as " flows of assets without equivalent flows of assets in return and without a requirement for repayment." Examples include a general fund' s annual subsidy of an enterprise fund and the remittance of a portion of an enterprise fund' s surplus to the general fund. The " blue book" is silent on the amount of or calculation of the transfer. The final Cost Allocation Study for FY 2014 -15 has been adjusted from the previous year as follows: Cost Allocation Snide - lnterfund Transfers 1 Transfer from Stm€mvater Transfer from CRA Lam Transfer from FBC l I Transfer from Sanitation I k Transfer From utilities 0 2. 000 4,000 6.000 3. 000 10, 000 12. 000 Hundreds t, FY 2013 - 14 ® FY 2014 - 1 Utilities Fund The Utilities Fund is projected to experience a $ 2. 2M shortfall in FY 2014 -15 primarily attributable to increased wastewater flows to Okaloosa County' s Arbennie Pritchett WRF, due to higher accuracy meters and the introduction of inflow and inflitration ( 11I) into the system. The City has secured $ 1. 25M from a ' State Revolving Fund Loan that will enable the City to immediately begin projects to assist with the UI reduction, thereby reducing these costs. City of Fort Wahon Beach, FL City Manager' s Budget Message A new five -year rate study is underway to determine the required rate increase to generate enough revenue to sustain a renewal and replacement reserve and account for the debt service associated with the new force main and pump station. The Rate Study will be adopted in August, prior to the final adoption of the FY 2014 -15 budget. 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, adjusted for current rates. 2. An estimated 5% water and sewer rate increase on October 1, 2014 is assumed for budget purposes. A new five -year utility rate study is underway to determine the required rate increase to generate enough revenue to sustain a renewal and replacement reserve and account for the debt service associated with the new force main and pump station. The rate study will also assess the possibility of combining the stormwater fund with the utilities water & sewer) fund. The stormwater master plan has been completed and the list of priority projects will determine the appropriate rate structure to fund required improvements. 3. Use of reserves — Appropriations from fund balance ( governmental funds) or net assets enterprise funds) are budgeted as follows: a. Law Enforcement Trust Fund — $ 12, 785 from unassigned fund balance for meth lab cleanup and forefeiture legal fees. The Florida Attorney General has opined that it is not permissible to budget forfeiture revenues, so an appropriation from fund balance is budgeted to record the use of the prior year' s forfeitures for current year activities. b. Law Enforcement Training Fund — $1, 490 from unassigned fund balance for operational needs. c. Florida Building Code — $13, 754 from unassigned fund balance for a portion of the cost of an SUV. d. Community Redevelopment Agency — $ 18, 383 from restricted fund balance to fund a portion of the Master Plan for the Landing. e. Utilities Fund — $2, 158, 692 from restricted net assets ( renewal & replacement) to balance the budget pending the results of the Rate Study. f. Sanitation Fund — $ 58, 176 from restricted net assets ( renewal & replacement) for Walkedge Drive Seawall and other improvement identified in the Stormwater Master Plan. EXPENSES ( detailed discussion on pages 38 -42) 1. Wages have been adjusted as previously discussed. 2. Benefits have been adjusted as follows: a. Medical insurance —health insurance premiums increased by 6 %. Cay of Fort Wahon Beach. FL City Manager' s Budget Message b. General employee pension — the City' s contribution rate increased 2. 79% to 30. 70 %, or 13M, with the assumption that City Council adopts plan changes adjusting benefits to offset required contribution increases. c. Police officer pension — the City' s contribution rate decreased from 43. 6% to 32. 7% per the actuarial analysis, resulting in $ 211K that will be used to offset the cost of the implementation of the Pay & Classification Study. d. Firefighter pension — the City' s contribution rate decreased from 37. 8% to 34. 9% per the actuarial analysis, resulting in $ 81K that will be used to support wage adjustments within the department. 3. The following computer replacements are budgeted at a total cost of $64K; the FY 2014 -15 IT replacement schedule can be found on pages 165 - 169. a. General Fund —network switch, various laptops /desktops, and 4 servers b. Utilities Fund —various laptops and desktops c. Stormwater Fund —various laptops and desktops 4. The following vehicle and equipment replacements are budgeted at a total cost of $739K; the FY 2014 -15 vehicle and equipment replacement schedules can be found on pages 170 -173. a. General Fund —5 EA patrol vehicles ( Police), 1 EA thermal imaging camera ( Fire), 1 EA SUV ( Fire), 1 EA pitching machine ( Recreation), 2 EA trailers ( Recreation), 1 EA chemical sprayer ( Recreation), 1 EA fuel pump generator ( Engineering), 1 EA backhoe