Fort Walton Beach — Fiscal Year 2019-20 Adopted Budget — reading text

in organizational hierarchy and if individual positions are classified correctly. • A review and revision of the City’s current assignment of exempt versus non-exempt status as related to the Fair Labor Standards Act (FLSA). In June 2019, the City received results addressing internal equity and pay compression. The pay changes related to this review were implemented on August 1, 2019, with excess budgeted funds that were available due to vacant positions. The full year cost of these changes was $213K and impacted 129 employees. The three remaining tasks outlined in the Study have not been received as of adoption of the budget. However, Citywide, approximately $891K has been set aside to implement the recommendations, likely by January 1, 2020. Additionally, a 2.0% Cost of Living Adjustment for all employees, excluding Fire Bargaining Union Members, which have been allocated to each member in accordance with current Collective Bargaining Unit., has been allocated in the budget. The FY 2019-20 budget includes $1.6 million for wage and personnel changes, which are discussed further in this document. Pension Defined Benefit Changes The City is required 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 currently contribute 5% of wages while firefighters contribute 8% of wages into their respective plans. The City’s annual contribution, as a percent of payroll, is based on actuarially determined contribution levels. The actuary determines City contribution requirements using estimated future earnings of members of the plan, as well as other assumptions on investment returns, retirement age, and, among others, expected mortality. Minimum benefits for both the Police and Fire Defined Benefit Plans are mandated by Florida State Statutes 175 and 185. While the Fire Plan meets or exceeds these minimum benefit levels, the Police Plan does not. The proposed budget includes bringing the Police Plan up to par as defined by F.S.S. The minimum benefit options that are not currently in compliance are: • Early retirement penalty – 3% per year for each year prior to Normal Retirement (currently 6%) • Normal retirement eligibility – 55 with 10 years of service, or age 52 with 25 years of service (currently 30 years of service) The City’s contribution to the General Employees defined benefit plan is budgeted at $1.4M, which is a decrease of $714K over the prior year. This plan was closed to new entrants in January City of Fort Walton Beach, FL 7 City Manager’s Budget Message 2010, therefore, contributions will continue at a fixed rate of $1.4M for the foreseeable future. The City’s contribution to the Police Officers plan is budgeted at $1.1M and the contribution to the Firefighters plan is budgeted at $1.4M, which is a combined increase of $282K, or 12.8%. Insurance Increases In 2010, the Federal Government passed the Patient Protection and Affordable Care Act. The Act, which mandates, among other things, that employers offer specific medical insurance for any employee working more than thirty (30) hours per week, has had a negative impact on the cost of providing such insurance. Since this time, the average rate increase has been 6.15%. The total impact budgeted for insurance is $2.7M citywide, an increase of $545K, or 13.31%. The City contributes 100% of the premium for employee coverage in its Standard Insurance Plan and 75% of the employee coverage for those who elect the Premium Insurance Plan. For employees hired before October 1, 2008, the City contributes 75% of all dependent coverage. Employees hired after this date receive a 50% contribution from the City for all dependent coverage. Fleet Replacement The City’s Fleet Replacement Program (FRP) is a planning and budgeting tool that identifies the replacement of vehicles with a value greater than $10,000 and a useful life of eight years or more. The replacement criteria provides a mechanism for the systematic evaluation of vehicle utilization and repair/maintenance costs and serves as a guide for efficient and effective replacement. Generally speaking, police patrol vehicles are replaced on an 8-year cycle and the remainder of the fleet on a 10-12 year cycle. Each year as part of the budget process, the fleet is evaluated based on established replacement criteria and a ten-year schedule of replacements is developed depending on a projection of available fiscal resources and the evaluation scoring. Vehicle replacements are funded objectively based on established criteria and funding resources. To maximize the useful life of vehicles and meet service delivery levels, vehicles may be transferred between departments prior to disposal. Prior to replacing a vehicle, an analysis is performed to determine if a less expensive mechanism would meet employee needs at a reduced operating expense to the City or if the vehicle should be removed from the fleet without replacement. According to the economic theory of vehicle replacement, over time vehicle capital costs decline while vehicle operating costs increase. Ideally, vehicles should be replaced around the time that annual operating costs begin to outweigh annual capital costs. Since 2014, the City, working under a future sustainability plan, has funded replacements based on the FRP. Vehicles totaling $1,618,000 are scheduled for replacement. Detailed information on vehicle replacement can be found in the Fleet Replacement Schedule on page 166. Facilities Plan In FY 2014-15, a Facilities Assessment was completed for all City-owned facilities. In the past, the annual budget did not account for the necessary repairs and maintenance to allow for proper upkeep of City facilities. In the Facilities Assessment, AVCON, Inc. developed a 20-year replacement, repair, and maintenance program. The priorities involved in the Assessment included the following: a. Public Safety Concerns b. Code Compliance City of Fort Walton Beach, FL 8 City Manager’s Budget Message c. Replacement Due to Exceeding Service Life d. General Maintenance of Systems The immediate needs for City facilities were laid out and the FY 2019-20 proposed budget includes funding for the highest priority facility repairs to HVAC systems and controls, in the amount of $121K. In June 2015, City Council completed a master plan for City facilities. While the master plan focused on all City-owned and operated facilities, the priority for replacement was quickly determined to be the field office complex, which includes engineering, sanitation, utilities, fleet, and various field operations. In FY 2017-18, $865K was utilized for the design of a new consolidated field office complex. The design was completed and the Guaranteed Maximum Price (GMP) for the Complex of $12.5M was approved by City Council on June 27, 2018. The Complex, which is currently under construction, is scheduled to open in October 2019. It includes the replacement and consolidation of eight (8) separate City facilities. Financing for the construction was approved in the form of a twenty year note with Sterling Bank. More information on this debt issuance can be found on page 26. Through the elimination of duplicative services, operating costs and capital outlay, the debt service payment fits within current revenue streams. OTHER ASSUMPTIONS & CHANGES REVENUES (detailed discussion beginning on page 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. Ad Valorem and State shared revenues are budgeted based on external estimates received from their respective authorities. Enterprise revenues are based on historical usage and/or number of customers. A new five (5) year utility rate study, which includes water & sewer, sanitation and stormwater, is currently in process. The study determines the required rates to generate sufficient revenue to sustain renewal and replacement reserves and account for debt service requirements and will be updated on an annual basis to account for real-time revenues, expenses, and changes within the enterprise systems. FY 2019-20 will include the implementation of Year 1 of the new five (5) year rate study, which will likely be adopted in January 2020. 2. Use of reserves – Appropriations from fund balance (governmental funds) or net assets (enterprise funds) are budgeted as follows: a. General Fund - $1,118,639 from Restricted Fund Balance, accumulated through the ½ cent local sales tax that was approved by Okaloosa County voters in August 2018. b. Law Enforcement Trust Fund - $5,000 from fund balance for forfeiture related expenses. EXPENSES (detailed discussion beginning on page 40 1. Wages have been adjusted as previously discussed. 2. Benefits have been adjusted as follows: City of Fort Walton Beach, FL 9 City Manager’s Budget Message a. Medical insurance – health insurance premiums, including medical, dental, vision, and life, increased by 4.7% based on actual rate changes and 8.61% based on enhanced coverage for employees. b. Employee defined benefit pension – as previously discussed, for a total impact of $3.9M. 3. Computer replacements are budgeted at a total cost of $78K; the FY 2019-20 IT replacement schedule, which details each replacement, can be found beginning on page 161. 4. The following vehicle and equipment replacements and building improvements are budgeted at a total cost of $2.7M. The FY 2019-20 vehicle replacement schedule can be found beginning on page 166. a. General Fund – 6 police patrol cars; 5 trucks/SUVs; 1 playground unit (recreation); 2 trailers (parks); library books; 1 fire engine, cardiac monitors, 1 ATV for transport, 36 ballistic vests, 1 hose testing machine, various fitness equipment (fire); 1 message board with speed trailer, license plate readers, 1 shooting simulator, 1 drone, 2 light towers, 5 rapid ID kits (police); 1 asphalt truck, 1 curb roller (streets) b. Building Code Fund – 1 iPlan Table c. Community Redevelopment Agency Fund – Landing playground equipment d. Utilities Fund – 1 generator table, 3 trucks, 1 pump station control set and 1 generator fuel pump e. Sanitation Fund – 2 sideloaders f. Stormwater Fund – 1 dumptruck, 1 plate compactor, 1 brush mower, 1 truck 5. The following capital improvement projects (CIPs) are budgeted at a total cost of $545K. More detailed information for CIPs is available beginning on page 169. a. General Fund – street resurfacing, pedestrian and intersection improvements b. Community Redevelopment Agency Fund – district branding c. Utilities Fund – sewer line grouting 6. 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 30th 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.