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2015-03-30 BudgetMeridian City Council Budget Workshop March 30, 2015 A meeting of the Meridian City Council was called to order at 3:00 p.m., Monday, March 30, 2015, by Mayor Tammy de Weerd. Members Present: Mayor Tammy de Weerd, Charlie Rountree, Keith Bird, David Zaremba, Joe Borton, Genesis Milam and Luke Cavener. Item 1: Roll -call Attendance: Roll call. X David Zaremba X Joe Borton X Charlie Rountree X Keith Bird X Genesis Milam _X_ Lucas Cavener X Mayor Tammy de Weerd De Weerd: I will go ahead and get this meeting started. For the record it is Monday, March 30th. It's 3:00 o'clock. We will start with roll call attendance. Item 2: Adoption of the Agenda De Weerd: Item 2, adoption of the agenda. Bird: Madam Mayor? De Weerd: Mr. Bird. Bird: I move we approve the agenda as printed. Rountree: Second. De Weerd: I have a motion and a second to adopt the agenda as printed. All those in favor say aye. All ayes. Motion carried. MOTION CARRIED: ALL AYES. Item 3: City Council Budget Discussion De Weerd: Okay. Item 3 is under City Council Budget Discussion. I will turn this over to Councilman Rountree. Rountree: Everybody gets an agenda. Bird: After it starts. Meridian City Council Special Budget Workshop March 30, 2015 Page 2 of 36 Rountree: I suggested this meeting after consideration of what's in the Sterling codified information for the budget and some other budget related separation and financial policies that occur in draft form, apparently, and are out there providing guidance for finance, that it appears that we are not necessarily following that information particularly close in some areas. One of the reasons I wanted to have this meeting is that there is a reference in the city finance manual that says with respect to the revenue manual, following City Council's consideration of the budget, the Finance Department will prepare and distribute a revenue line and so I intend that this meeting serve that function. We consider the budget. And in considering the budget we need to, I believe, take a closer look at what we are doing and have a better understanding of what we are doing. Some of the things we are not doing. Per -- per code, actually, we have budget workshops scheduled, but the budget workshop as identified in our code is for only discussion of enhancements. I believe the workshop ought to discuss the budget in general and, hopefully, we can do that with this meeting as well. It's not clear in the document about some of rules that I think we need to have in place about major classes and how that money can move between major classes, personnel, operating, and capital. Kilchenmann: That's in the fund balance. Rountree: It's another location, but we need to -- we need to bring that out and I think that's something we all need to know. There is other things that -- that have one -- additions of full or part-time equivalent positions require the prior approval of the Mayor and Council. That's not being done. Some of the items in here are suggested. Says the budget should serve as a policy document and in that opinion it is a policy document and shall be a policy document with respect to the budget. So, there is some issues with the -- with the codification stuff. There is some issues with -- we are not applying what's in there in some cases and we haven't really sat down and talked about the budget in terms of a workshop and what our expectations are. I can tell one of the expectations are when I look at my city tax bill that it's getting up there and it's not just the city, obviously, but are there ways where we can take a look at the base budget and understand that and start working on either flattening that budget or reducing that budget or in those cases where we have to, raising that budget. I have asked Stacy to do some -- some training, education, and answer questions related to the base budget, so, Stacy, if you want to take it from there and talk about the base budget, what it is, how it's made up, why it continues to grow, what things we can and can't do in terms to control that growth and/or hold it or at least minimize the growth. Kilchenmann: Okay. So, I prepared a presentation. I'm not sure if it hits on the topics we all want to hit on, but it gives us a starting point and, yes, the accesses are labeled incorrectly and there are other typos throughout, so I'm going to talk about performance measurements at the end and typing would not be one of my primary functions and I'm not very good at it. So, I kind of want to look -- oh, before we start we handed out these notebooks, called Budget Questions. We are trying to replace our -- it's just -- well, in here we have org charts for every department, which is something I spent the past week doing and it was an interesting exercise. I want to explain to you, unless you have questions about it, how we went about doing this. But what we are trying to do is draw Meridian City Council Special Budget Workshop March 30, 2015 Page 3 of 36 data from one central location, so that all the org charts are accurate and they are all like validated or double-checked. I think we got most of them. We have not completed police, so the one you find in here for police is still a draft and that's largely because they change their reporting frequently, so we just couldn't quite catch up to that. It was -- it was a good experience, it was actually -- we probably should have thought to do this. I didn't think of how to do it. Rita and Jenny figured out how to do it. But we will probably replicate this exercise on an ongoing basis. Not sure if we will do it by name, because that added a few complications how frequently we will do that. But they are there in this notebook for you to look at. Also, the fact of the notebook, I had Rita just throw in some statistics on that back page that has a history of wage and salary increases approved by Council for the last -- about this last ten years and some basic history on our FTE growth. We thought maybe this notebook can just be a place for you to stick in random facts and figures or information that you need to use that you don't want to cart around in that giant budget document. So, having said that, back to the presentation. When I look at the budget and how to bite it off in pieces and I thought about it as I was thinking about what to put in this presentation, I thought of it as in the pieces of revenue is a piece; the base budget, which is operating personnel cost is a piece, and capital is another piece. So, I sort of tried to tackle each of those three pieces to make up the whole. So, this -- this is just a graph on growth. We all know that we have grown tremendously. We have grown both in population -- I use the measurement population and also square footage. There is lots of measurements you can use, you know, number of residents, number of households, number -- miles of roads, miles of sewer and water lines -- all kinds of different measurements you can use. So, I just kind of -- this was one that it's easy to find and kind of -- I just threw that out there. So, budgeting is always challenging. It doesn't matter if you're a corporation, if you're a partnership or you're my husband, who has hasn't grasp the concept yet or you're government, it's -- it's challenging. So, we know, especially for the General -- well, it's not just the General Fund, but both funds -- it's -- there is factors that make government budgeting even more challenging. One our research -- resource availability. So, you all create growth. We actually -- that comes from the Council when you approve developments, commercial and residential and that revenue might come up to two years later in the case of property taxa So, there is definitely a lag. It's also unique in that we do budgeting -- typically by law it's year to year. So, Councilman Zaremba, I'm just going to answer the question now about why we keep rebudgeting capital and we -- each budget is unique in that it's only for a year period of time. Now, obviously, if we took that short sight of a vision we would -- it wouldn't be very good shape. But when we are legally approving them it's just for that year and in order to have that control over capital you're really approving every single line item, every single number for one year and because we don't want you to go through and approve pencils and pens, we generally put that into operating. But we -- as an internal control we control capital projects on an annual basis. So, that's why we keep doing it over and over again. So, challenges, opportunities particular to Meridian. These are not the only ones, they are just -- that threw out there. One, we don't have control over our revenue, especially in the General Fund. So, we are not a company that can say I am going to make 33 of these best selling widgets, because those are the ones that sell big time. We have no control over how we generate revenue from our largest revenue sources. Now, the challenge is financing public safety, so I'm sure every single entity in the United States. The EPA challenges Meridian City Council Special Budget Workshop March 30, 2015 Page 4 of 36 that we have coming, again, not unique to us, but a challenge for everyone. This is my challenge. Off -budget projects. I don't know if you have ever heard the term off balancing sheet financing, but projects that are initiated and created in Council or executive session that don't have any money. So, they go to budget process and they are not in the financial plan. So, one of the things that I want to do -- or I hope comes out of that when I get to the end and I talk about long term planning is that we filled that in. So, we have -- so, you do have that flexibility and it is built in. Bird: Stacy, on your charts there take that executive session out. We make no agreements or decisions in executive session, whether it's budget money or not. Kilchenmann: Okay. So -- I don't think I agree with that, but -- Bird: Well, that's -- that's -- if you don't agree with it you better look into it, because that gets into open meeting laws. Kilchenmann: Okay. Well, we won't -- created in Council that don't go through the budget process. So, opportunities. So, we are not sitting here because we are a failing city, we are here because everybody wants to make this better, we want to make it great. We have a -- we are in a solid financial condition. There is no way around it. People would -- mean people admire the kind of condition we are in for -- with all of our funds. You're young and you're already planning for the future, so you're planning for the future before you have gotten to the point where you're looking back and saying, oh, how are we going to replace that. We have a strong quality program instruction place. In other words, our key functions, fire, police, water, sewer, parks, community development, we have strong functions that are in place that have grown over the last ten years and I think we have an experienced quality workforce. We have people who are educated, they are knowledgeable, they have been here for a long time. So, now I'm going to move in -- I'm going to talk about each of the sets of funds. I won't -- I will try not to get into detail too much, so that everybody falls off their chair. So, the way you service the governmental funds, I now refer to the audit a lot -- go back to the audit. So, this -- in the audit we did two things. One thing is we convert the entire city into something that replicates any business you would see anywhere across the United States and we do that because of a movement to create -- it's for banks and borrowing, so they want to look at their company, they want to look at Micron, and they look at the City of Meridian and they meet and will make a decision about who we loan money, should we float a bond. So, I'm not going to go into those statements. It looks like, you know, I don't -- I'm not sure even the accountants really think they achieve the purpose they were supposed to achieve. I'm going to go to the one we call the governmental funds, which are the way you're used to looking at it. Some approvals that we -- basically on a cash basis. So, carry forward. We talk about all that all the time and that just means -- I think we all -- everybody knows what that means. It's just you're -- you're reappropriating a project you didn't finish and for us we do have some operating there, but it's typically capital. And, then, the operating -- well, I'm going to do the operating reserve last. So, then, public safety fund, that was a fund that we had set up to save money. Initially we set it up to save money for fire trucks and now we use that -- we have used it for the fire department -- the fire department. Meridian City Council Special Budget Workshop March 30, 2015 Page 5 of 36 Surprise. We have used it for the public training center. So, that fund currently doesn't have any money in it. Nonspendable is just an accounting term that means our accounts payable -- we have to pay by the end of the year. The impact fee fund is the fund we collect for parks, police and fire infrastructure. Very restrictive, because we can only spend it on replacement -- or not replacements, but new project that keep us at the same level of service and a capital project is an internal fund that the city set up and the way we use it -- some cities use it for every capital project they do. We use it for -- to control the money we earn from building permits. So, we -- what we have done -- or what has been -- was done originally was any revenue from planning and the building department that exceeds their cost we roll into this fund. So, you will -- I'm going to show you the history. The fund kind of goes up and down depending on what we -- what projects we have completed and how revenue fully -- then the unreserved fund balance in bright yellow, that's the pieces of fund balance -- or that fund balance that is left that you can do basically -- you can spend it on anything. It's not restricted, not reserved, not for any particular purpose. Now, we have used a lot of that in our capital improvement plan. As we have gone through and developed that we have said this is coming out of fund balance. This is coming out of fund balance. Then the operating reserves. So, we talked about the operating reserve and what it's for and if you read in the ordinance it's pretty standard to reserve four months operating reserves -- four months of operations. Now, a lot of that stems because most cities, as they reach maturity, have to borrow to make it from property tax. So, we, essentially, get our General Fund revenue twice a year from property taxes paid. We -- I have gone in and looked at reducing it somewhat. It's gotten to around 12 million. So, I looked at it -- and you have to remember that almost all of the General Fund is in personnel. It's got personnel and very small operating. So, I went in and I stripped out every one time operating. So, if we have -- we have police furniture and fixtures and they are a one time thing. I stripped it out. When I strip it out it comes down to about ten million, so that's what I'm showing through the FY -15 budget. There is a couple of things about this operating reserve beyond just the fact that it's four months operations. It also is an emergency cushion, so if something happens you got the operating reserve and I mean it could be a legal issue, it could be something completely unforeseen. It could be something regulatory. So, I'm not opposed to reducing it further if we come up with a good matrix to do it. I -- I'm not comfortable doing that right now when the unreserved fund balance is so low. So, that's -- obviously, that's up to you. We would have to change the ordinance. This is just a history of the change in fund balance and governmental funds. So, it just kind of shows you if -- it's like a history of the city. When look at this I go, oh, that's when we did this, oh, that's when we had this big building boom. Oh, that's when the recession hit. Just for you to look at in the future. I mean you can -- if you know what each fund is for you can kind of start to see and -- oh, I know what that was. I threw in the Locust Grove overpass, because that was kind of a blast from the past. I mean most of you won't remember, but when I went back as far as 2004 it popped up. So, that was kind of a project that was something that might be appropriate for that fund balance and we agreed to help with the Locust Grove overpass. So, this is what -- so we looked at fund balance. So, this is -- we have got this money sitting here and each of those fund balance accounts is a unique cash investment account. So, we cannot transfer -- the only way we can transfer money between them is by writing a check. I mean there are literal transfers and there is a portion in the ordinance about -- that has the Meridian City Council Special Budget Workshop March 30, 2015 Page 6 of 36 fund balance policy in it. So, they all have -- most of them have restrictions and reservations placed on them. Some of them are by accounting standards, some of it is buy out. So, I don't go through the restrictions in any more detail -- and each of them we can talk about them later, but we can't just Willy nilly transfer between them. So, we have got this money, so how does that money get there? This is what -- this is your income statement, basically. This is for the year -- or most recent audit tells you -- it kind of restates everything and something that looks familiar to most people. We got revenues, we have expenditures, we have net change in fund balance. We don't call it income from the General Fund. We go through and if you look on the right-hand column, 39 million is revenues, 38 million in expenditures and we go down to the column -- we get to the change in fund balance. So, switch to cash basis. So, this hasn't got anything that's in the carry forward, anything that we have already budgeted. This is strictly -- almost strictly cash. Fund balance from the beginning, fund balance at the end. So -- but it doesn't show you what is already in the carry forward, for example. What have we already said we are going to use. If you went year after year and this was negative, then, you would be concerned. We have got that transfer, so you see I highlighted the operating transfer in of 2.3 million. That generally is from the Enterprise Fund. It's usually about 1.5 million, but they shared in the cost of the fiber -- of the dark fiber this year, so they should have the cost -- 750,000. So, that's larger than normal. So, there is the revenue, minus expense, equals fund balance. So, what it -- what makes up the revenue? So, I'm going to talk mostly about what we could call underactive revenue. In other words, not impact fees, because impact fees are very restrictive. Not grant money. Very restricted. But just money that can flow into a pool that we can use. Not restricted by ordinance, law, or some agreement we have with another agency. We will start with the minor ones. Service fees, 1.1 million. Park rentals and recreation fees, 630,000. We do internally -- we kind of looked on that as covering the recreation costs of 418,000, but we are not restricted to doing that. Other income, small, interest income, miscellaneous 138,000 and, then, court claim seizure, 409,000. The bulk of that 450,000 is -- flows through Ada County for fine revenue. Those are like the little guys. So, the big guys. Property tax. And it's little -- I call it the little cousins, sales tax revenue and liquor sales. So, '14 property tax is 22.5 million. Then we come way down -- sales tax, 3.7 million, and you have to remember this 3.7, 3.8 million is our next highest source of revenue next to property tax. And, then, we have revenue which is state sharing -- another state revenue sharing, about 560,000. So, we need property tax. Property tax is the life blood of the General Fund. It's the -- it's stable, it's the one we know it will not go below. And sales tax, all over the board. I don't think I put a history in here, but up, down, up, down. So, just -- just an example of why we need property tax. This graph shows public safety, personnel, and operating. Remember that most of that is personnel cost. Very little operating compared to property tax revenue. Right on top of each other. Right on top of each other. Then if you add in all the rest of it -- parks, you know, half of admin, half is paid by Enterprise Fund, you get to the total government PC and that's the bigger line that the little cousins have to pay for it. So, this is how we calculate property tax. I'm not sure anybody wants to go through this, but -- so, what we do is we start with the last -- the prior year budget. So, last -- or'13 it was 22 million. We multiplied by three percent. We can multiply by three percent and we come up -- this is if we collected the most that we can collect, we come up with a number. Then we take new construction, then, we get from the Meridian City Council Special Budget Workshop March 30, 2015 Page 7 of 36 county, we take annexation, we multiply it by the prior year levy and we add that in. Add those up, we get to the maximum property tax we can collect. Divide it by the taxable value, there is our levy rate. I had to do this like, for ten years before I got it and you probably don't want to drill it. If we want to we can come back to that. So, how much influence -- we talk a lot about -- it feels good when you do taxes, but how much influence do we really have over the amount people pay for property tax? Remembering that we have no legislative or parity over any tax collected as a city in Idaho. So, I kind of like -- well, how much -- how much can we really change it and how much does the market value change it? So, we have these properties that -- that -- that we keep track -- tracking three years and there are -- you will see them again. So, I took one of them, took kind of an average one and I said, okay, what do they -- what do they actually pay. What does this property pay? Well, it pays five -- about 5,100 dollars. How about if we kept the levy rate at .004. Well, they would have paid 5,700 dollars, because when market value goes up, the levy rate goes down and vice -versa. Well, how about if we lowered it to .035? Well, then, they pay 5,000 dollars. So, the low rate from the actual difference is about a hundred bucks. So, the top graph says, well, how does the market value change? That bright yellow line. Well, obviously, it changes a lot up and down. I mean I -- I -- I didn't track this before I worked for the city, so -- I don't really look at my own property tax, but it has been particularly volatile this last decade. I think probably historically more volatile than it has in the past. Then we have the homeowners exception, which is the blue line that's controlled by the legislature and set by the legislature and it changes every year and so the middle line is a taxable value and you can see just up and down and up and down. So, again, this is looking at the R-4 houses and four areas in Meridian that we track and this shows you changes in values for each home and changes in the amount of property tax you paid -- or they paid. So, the conclusion is that you -- if you could control market value and you could control the levy rate you could control the amount of tax people pay significantly. You can control somewhat the levy value, but you're only controlling a tiny number, so you're taking this massive billion dollar market value -- taxable value and the number you control is like 22 million dollars. So, does anybody want to talk more about the property tax at this point? Now that you're all asleep. You want to -- you want me to go through the whole thing and, then, come back? Okay. So, we are going to quickly push through Enterprise Fund. So, again, here is their income statement. Theirs is a full accrual basis. They are committed just like they were any other business. A number that's highly -- that you don't see a lot of times, because they have kind of removed it from the cash basis budget discussion is depreciation. So, when we get to the bottom line for them we are including depreciation, which is a noncash expense and '14 their depreciation cost was 7.2 million dollars. We start with operating revenue and operating revenue is just sales in water utility that you pay every month. We might take out personnel. We take out these groupings of expenses, including depreciation, and we end up with net operating income and we take net operating income and we -- we add and subtract what we call other financing sources and uses. Interest revenue. That's the big one is connection fees. So, when you look at those audited financial statements, those are handled a little differently than we handle them during the budget process, so in the budget process we just roll every -- all the revenue up together. Technically we separate the connection fees, so we have operating revenue, like how much does it cost to keep the thing going day to day. And, then, we put connection fees in another class. How Meridian City Council Special Budget Workshop March 30, 2015 Page 8 of 36 much money do we have to bill the thing out. Fair market -- fair market value, raw sales, investments. Then we get to income before contributed capital. Contributed capital is the value of utility lines and pieces of infrastructure that developers put in and turn over to the city for maintenance. So, a number in the statement, number impacts the Enterprise Fund, because that's when our assets -- they take care of looking at our nuts and bolts -- probably not that important, but I have it included here. I have given you income before contributed capital. So, this is for -- for'14 the 6.3 million, then, there is the transfer to the General Fund. The 6.3 million is net of depreciation. So, that is not a cash number. If you add it back in the depreciation it would be seven million plus the six million. So, they, too, have a fund balance, which is a unique account. They only have one fund balance account. We have -- when we do the financials -- the audit financial statements, we don't report all those little pieces like we do in the General Fund. So, for clarity purposes I took out the carry forward -- in other words, all these projects that have been budgeted. So, the black is what we could typically call the unrestricted, unreserved fund balance and that kind of gray color are all the capital projects. Again just kind of a history of their fees. So, their usage fees are -- they are dependable, we know what it's going to be this month. We are pretty comfortable it's going to increase this much. Their connection fees -- they are like all over the board, depending on development. So, this was looking at just some history that you can look through later on the history of the income statement. They are -- unlike the General Fund who are all personnel almost, they are 50-50. So, their base is 50-50, personnel and operating. Or that's what their base is -- and, then, their capital is typically 50 percent. A little different composition. So, then, I was like, okay, that's kind of how we get here, how we get it -- how much money we have. Then we switch to when we are sitting down and we are looking at enhancements. So, these are questions that -- that have learned from working for a private corporation, from working for the state, any kind of situation where somebody who is in the position of having to make a decision. So, I -- they are just randomly thrown out here. So, adding staff. What is the future impact? We added positions because we got a grant. How does that fit into your five year staffing plan? There is no free money. Free money is gone and all of a sudden our base has increased. Again, there are no free lunches and there are no free parks. Nothing is free. What isn't here? Asking for a building. So, you look at something and you go, okay, this is what's here, but may what might not be here. So, you ask for a building. Well, what happens a year after construction? Maintenance, operating, landscaping, staff, office supplies, utilities, wall art, extra staff -- there is always extra staff. I don't care what you tell me, eventually they will be here. Consulting and professional services. Ask what is the end product and when will we see it? How much have we already spent on this project and what do we get for the money we already spent? How do we know we get to the end of the project? That's just a universal problem. It never ends. It never ends until we get just tired of consultants. Follow up and make sure you get a summary before you approve more money. Ask for the product. Should we contract or hire? Do an evaluation. Is it cheaper to hire part -- somebody to contract on his part? Is it cheaper to do it ourselves? You know, we have -- governments are consultants' dreamland and in a lot of cases it's legitimate, because they do specific things for a short period of time that we don't want to -- we don't want all that expertise on our staff. For example, the project manager for the big IT project we are doing. We don't want to keep that kind of person on staff full time. We don't have a need for that. But for a short period of time it works great. Meridian City Council Special Budget Workshop March 30, 2015 Page 9 of 36 Other things it might be like, okay, we are doing this every year, maybe we should hire someone. So, make sure there is an evaluation, a business plan. What is the desired result or goal? So, I'm telling you last year Todd and I went through 97 enhancements. It's the Meridian way is not a goal. It should be patrolling 500 more miles of the Meridian city limits between the hours of 8:00 and 5:00. That's a goal. I'm picking on the police, just because it was on my mind, but that's a goal. So, look for that. Ask for that. Break out committees. I mean it's hard to absorb all this information in a workshop -- a public workshop. So, these are just some ideas. Maybe break out committees to look at public safety. Enterprise Fund. Support staff. Require a fiscal impact statement signed by Finance for everyone. Okay. There is my self promotion. But, you know, require it. Ask for it and make sure it's double checked. Asked what happened with positions or projects approved last year. We can start each new process by following up on what we did with what you gave us last year. We used to do that. We called it budget dollars at work and we kind of -- we got away from it, because we were doing the strategic plan presentations. But, you know, you're not going to remember what somebody said they did 11 months ago. So, if we do that again, just make it short. We have a question on the enhancement form. How does this impact other departments. Believe me, it almost always impacts other departments. So, between the '14 budgets, the '14 amendments, and the '15 budget, we hired like 30 new employees in 24 months. Impact on IT, HR, Legal, Purchasing -- big impact. Yes, it does impact other departments. Construction projects. I don't have any good answer for that. We will skip that one. A lot of market changes and materials is really hard to predict 24 months or so in advance. The fiscal impact statement. We have talked about it. We kind of have this tool. We have really dusted it off and used it, but when we do big subdivisions or big commercial projects, we need to start looking at that. If we add a hundred miles of traffic or a hundred miles of road to patrol, what is the impact of that? We need to start talking about it. Should we even be doing this? If our main core is making blue widgets, should we just suddenly decide to hand out free ice cream? I mean we have got -- when we are getting to short resources, look at your core function. So, I just -- some of the tools that we have now that we worked on -- obviously, the capital improvement plans. Todd's new creation that we are calling the comprehensive financial plan, which he is putting everything -- he's putting all the personnel and all the expense and all the capital in one document. The revenue manual, you know, we go through an economic forecast, but forecast -- there is, actually, forecast revenue out for five or ten years. We have got the budget, fund ordinances that are standards and based on best practices. But to my mind where we have to go is cost of service and outcome measurement. So, okay, like I know that this bullet is smaller at this point in time. But, anyway, this is just a synopsis of some things that I just came out really quickly. This is a big area. Again, what are our core functions? I'm taking notes for you. Traffic control. Traffic control is a core function that we think is important. What are we doing now and how much does it cost. And I know I totally made these numbers up. But let's say we are patrolling a thousand miles of road with five officers and going to cover 200 miles, 15 hours a day and it costs 500,000 for each unit of five officers. What if we reduce the number? Well, we think that car crashes will go up about seven and a half percent. How much will it cost to increase the number of officers and what would be the impact? Well, we think if we hired one more for each shift we could reduce crashes by X amount. How about if we just shift resources? How about if we just tell police we don't Meridian City Council Special Budget Workshop March 30, 2015 Page 10 of 36 want you to to do your community policing anymore. All we want you to do is patrol. There is a cost to that. How much will crime -- property crime increase if we do that? Well, we should have some idea. We might not know exactly, but we should have some idea and, you know, so on. So, that's just a broad overview. You can see how it goes. You're evaluating how effective is the program? The state did that with like the kidney dialysis program. Well, it really affected a few people in the state. It really -- it's a life and death for them. They decided not to do it, because it has impacted so few people. Now, how many people use it? Do ten people do it and they love it, but 80,000 don't do it? Do ten employees participate in this program and love it, but 350 don't? So, those are the kind of questions -- that's a place I think we need to get and it sounds a lot easier than it actually is, but it's very common. It's standard practice and we can do it. So, end of slide show. De Weerd: Thank you, Stacy. I guess we will open it up for discussion at this point and the whole reason we are located around the table is to have a dialogue, so comments, questions, from Stacy on the material that you just received? Rountree: I guess my comment is that comment is that from this point forward as each of you sit down with the various departments that you liaison with, these are the kinds of things that we need to be thinking about when we go over that General Fund and the Enterprise Fund for operating and personnel costs and what's the value added -- I always put it in what's the value added of doing that. Some other things that I think about is that -- and I'm surprised at the number, but I guess I'm not. Apparently we have -- we have incorporated 30 new employees this past year and I know we have approved some of those, but I know we have not approved some of those yet. We are supposed to be approving those, yet we are being told that that's an administrative function. Kilchenmann: You approved every one of them. Rountree: Every one of them? I bet we didn't. De Weerd: I haven't approved any positions that you didn't approve during the -- Kilchenmann: No, we do not allow anyone to hire someone that's not budgeted and that's kind of where this org chart came from was the report we have called the position spot report that we control and we -- Rountree: I might just leave that. Kilchenmann: Okay. This is kind of basically it, but we can show you the database. Bird: Explain to me why -- what the police -- what the departments are giving us in org charts don't match up to yours? Kilchenmann: Our org charts are driven off that position slot report., so -- and I think they are trying to do theirs by keeping track of them, just -- I don't know. I can't answer, for Meridian City Council Special Budget Workshop March 30, 2015 Page 11 of 36 example, how the police department does theirs. Theirs is very difficult, because by nature they change supervisors. I have Rita's detailed explanation here, but -- so ours is driven off the information that goes into APRA and Time Card and, then, double-checked against the position slot report. So, it might happen that some people might have changed a title, like mine, I changed Todd's title. Not his pay. I never filled out a PAR form. So, for me to get it right in here I had to fill out a PAR form and send it to HR. We had -- they can see people didn't know they had. We had people not realizing coming in that they had. We had more than one person in one position. So, the larger the department the more difficult it is and we just do those by hand. If that makes any sense. And we haven't done this before. So, we haven't ever tried to drive it off the system. Bird: I know this has been -- Rountree: So, when we budget personnel -- I know the manual says all personnel is budgeted for, but do we -- do we budget for personnel classifications or do we budget for people on the job and for those positions that are being actively pursued to be filled? Iceman: I think the strongest control is the position itself, so -- initially it goes into the budget and it's a budget -- a budget analyst. So, we have budgeted a hundred dollars for the budget analyst, so now we are controlling that -- that position as a full time equivalent. Then in the past if the position was reclassed sometimes that -- I'm not sure how it -- if it always went to -- you know, whether you just approved it or how it went, but in the last two years you get that reclass. We have to drive it to this happening in the budget process, so you would get actually an enhancement we call reclassification and they would be the position that was being reclassed, so say we reclassed Todd from budget analyst to ship captain, and his salary went up 10,000 dollars, it should have been in there. We just said now you're a ship captain, but your not having a pay change, that might not necessarily have been in there. Patti or Bill could probably speak to that better than I can, so I'm just telling you from the budget standpoint. Does that answer your question? De Weerd: Patti and Stacy, maybe you can talk about when a position is posted what are the checks and balances? Perkins: Well, I can speak to that. So, if -- when we post a job to hire we are only -- we are only doing that if it is an approved position, such that we have somebody in that position and they left and so we can replace them and in that case the budget dollars are held in most cases at that previous employee's salary level, because that's what we were budgeted for is in that -- in the current year. So, for example, if you found somebody that had a lot more experience than the person you lost and you need to pay them more, you have to do a budget amendment, okay, because otherwise you don't have the money for that more expensive individual. If it is a new position it will have had to have gone through Council approval with a -- either through the enhancement process for the annual budget or if it's a mid year -- oh, my gosh, I have to have this extra person for some reason, then, it has to be done through budget amendment, otherwise it -- Meridian City Council Special Budget Workshop March 30, 2015 Page 12 of 36 Rountree: I keep hearing that it's got to be done through budget amendments, but last year at the budget time we had several departments have created new positions that required more money, but there was no budget amendment and at the first of the fiscal year we had a department create a position and there was no budget amendment when it was asked for, because we were told by Bill and the Mayor that that wasn't part of this Council's business. I mean that's the kinds of things that are going on that we don't get involved in. Kilchenmann: So, that -- I think that was a -- again, this is budget side, but a -- Rountree: Well, that's budget and that's what I harped on -- Bird: Stacy, you do a great job. Perkins: There are a number of jobs that will have different titles that can have the same salary level or a similar salary level and so in the changes that were made last year were done within the available budget. In the -- in the case of police they did some restructuring and they came to you at budget time with the additional ones, but any -- any movement around was within their approved budget and they did not overspend in fiscal '14. But they asked you for approval for those. Rountree: Now that's part of the --they asked for some of them. Some of them were not asked for. They just happened. Kilchenmann: He's right. That is -- Rountree: And it's now in the base and we never approved it and that's what I'm getting at. It's got to stop. Kilchenmann: But that is true. We haven't had a process -- if somebody -- we have always had a process or we don't have a process for reclassifications that aren't either part of a new position or that -- yeah, we haven't always -- Rountree: I mean just because the money is there doesn't mean you can spend it. Kilchenmann: Right. Rountree: And it doesn't mean that it's a one time expenditure and not only is it an increase in salary, it's an increase in Social Security, PERSI, etcetera, et cetera. And it's ongoing. So, it's a budget impact. So, we need a process by which that -- and I agree with your thought process when you do this stuff is you need to think about not only is it a new employee or new class, but it's more money. If it's more money, even if it's -- unless it's the same classification in terms of grade level, it's going to have a budget impact. De Weerd: So, I just want to -- Meridian City Council Special Budget Workshop March 30, 2015 Page 13 of 36 Rountree: Up or down. De Weerd: Okay. Hold on. In a minute ask Patti to talk about the process that has been designed from last year and kind of -- in follow up to the concern that was expressed. But up to that point the process that HR had was that they would work with the department, make sure there was no net impact on budget or FTEs. It gave the department directors the latitude to respond to an ever changing work condition and responsibilities in their structures and staff to respond to the workload. I think you had three or four departments that had reorganization among their -- their departments. HR, police and fire are three that come to mind right offhand. The police were the only ones that had a budget potential impact and they said that they would keep within the budget if Council did not approve the budgetary increase. So, that was all up to -- to the City Council. I asked the Council liaison at the time if the department worked with him and he said yes. I know fire worked with their liaison and HR worked with theirs. So, that was the process at that time. Patti, you have revamped it and maybe you can say in moving forward what that process is. Rountree: Well, I guess just to -- just to state, Madam Mayor, that our policy that's been in place for some time as this statement. Object level -- talking about object level control. Additions of part-time and full-time equivalent positions require that prior approval of the Mayor and the City Council. De Weerd: And that's true. No FTEs were changed. Kilchenmann: But that policy doesn't address if you reclass or you -- Rountree: I'm not talking about reclass. I'm not talking about reclass. Kilchenmann: That would only be the initial approval. So, you could -- one day Todd could have been budget analyst and five years later now he's a sea captain. I could be wrong, because this isn't my -- I am not involved in all that, but I don't necessarily know that that would have come in front of Council. Rountree: Well, if there is a difference in pay it should have. Kilchenmann: Yeah. But -- De Weerd: It would have and that's back to the scenario of the police department, that it did come in front of this Council. Bird: It wasn't a budget amendment. Kilchenmann: No, it was not. De Weerd: Yeah. It was an enhancement, it was not a budget amendment and, again, Lieutenant Overton stood in front of you and said if you do not fund this that's all right, we Meridian City Council Special Budget Workshop March 30, 2015 Page 14 of 36 can still continue to operate. We feel that it's warranted and that's why we are standing in front of you and it was not approved by this Mayor and I will tell you I wouldn't tell you it's not your business, Charlie. Rountree: Well, that's kind of the answer we got when I asked the question both at the budget workshop and in the executive session when I brought up that issue, but not of this Council. Nary: Well, I can answer that. When we were having this discussion -- you got to remember we were talking about duties and -- duties and job function versus head counts. So, like Patti said -- or Stacy said in the past, that code section means the number of employees. That's the way it's always been interpreted the whole time I have been here. So, if there is no increase for the head count it doesn't go to Council. If there is no increase to the budget it doesn't go to Council. Bird: That's not the way it's been. Nary: Well, that's exactly -- De Weerd: Okay. Bill, if there is a Council liaison, Mr. Bird -- there are circumstances -- Bird: I'm not saying anything about that. I agreed with that. De Weerd: But I would like Patti to talk about how we are moving forward. Bird: Then if it's going to be a policy, then, we ought to know it. We have to approve it. De Weerd: And -- exactly. Because that's why she's bringing it forward. If you don't like it you can tell her that and we can go back and do something different. Bird: Well, I would like to hear it, but -- anyway. Perkins: So, there are two things that we are controlling and I'm trying to keep very close tabs on for this coming budget year and they are in new positions added, so new FTEs, whether it's a part time, whether it's a full time, and reclassifications, which is a -- simply taking an existing FTE and, generally speaking, when you talk about a reclass is upward and so it does have a budget impact. So, I have got a spreadsheet that I am keeping tabs on all of the requests from all of the directors. We met with each director to make sure that we -- everybody understood what the business case was for adding an additional individual. Some of these are brand new jobs that require new job descriptions -- I am doing that work. Up to this point we had been utilizing a consultant BDPA who has come before this Council a number of times. I'm trying to minimize our dependence on them. Use them for some other specific projects, but this work I have got all of their methodology and so I'm doing this work and we have a total right now -- well, some of this is in flux, so it is -- so, I don't think I will give you the -- Meridian City Council Special Budget Workshop March 30, 2015 Page 15 of 36 De Weerd: Yeah. Just -- Perkins: Yeah. Just because it may not be before you. But we are talking about each one of these FTEs and the grade, so that when we get to the budget presentations each director will be responsible for talking their own adds to staff and their own reclassifications. The reclassifications -- I have got about a dozen of them -- De Weerd: And if I could interrupt you, that shouldn't be the first time you hear it for your department. You as Council liaison need to be talking to your directors about those prior to the budget workshop., so you have familiarity on that. Rountree: So, Patti, did I understand correctly that not only are you preparing the descriptions, but you're evaluating them and -- Perkins: That's correct. Rountree: -- their pay grade based on the pay grade that established for the position. Perkins: Yes. Rountree: Okay. Perkins: That is correct. I have got a manual that has the methodology that BDPA is using, so it's all -- Rountree: I'm not worried about that. Perkins: Okay. Rountree: So, I'm sure that's what was said. Perkins: Yes, I did say that. Rountree: Okay. Perkins: So, I'm also tracking the request for reclassifications and I am doing that reclassification with that same methodology and in same cases we -- we will present some increases in grades to you, which will have some salary impacts and in other cases they came out the same. So, we won't-- every reclass isn't necessarily going to result in an upgrade, but many of them do and some of this is because the jobs have changed, may have changed that we need to actually update the job descriptions and that happens as a result of the growth of the city, the sophistication of the systems and the processes and the services we offer and it's not geared to the person, it's geared to the need of the city, the job that is actually required to be filled. So, we have got -- we have got a couple of those going on as well and so, again, each of these will come before you in the individual budget presentations for approval and will be detailed out. Meridian City Council Special Budget Workshop March 30, 2015 Page 16 of 36 Kilchenmann: If I -- Bird: Patti -- Kilchenmann: Oh. Bird: Go ahead. Kilchenmann: I was going to add a thought from Joe. Rountree: Joe had a thought? Kilchenmann: Yes, he did. So, he explained it to me this way and this made sense to me. When we -- when we budget for capital, right, you say I want you to build a -- say we need to build a well over here and a training center over here and you say, okay, you have worn me down, you can do that. When we materially change -- De Weerd: That's hypothetical. Kilchenmann: Yeah. Lavey: And use, for example, everything. Kilchenmann: Yeah. You're a target. So, I think maybe part of what you're getting at is if went and made you totally convinced that I need Todd for a budget analyst and you're like, okay, I'd rather have a traffic cop, but you really need that and, then, again, I change Todd to a sea captain, I have completely changed his function, so when I think about it that way, is that kind of what you're talking about? Rountree: Yes. Bird: I just want to say, Patti and I -- is this what you're going to be presenting to the people and they are going to present to us, this is part of our standard policy now? Perkins: This is our procedure. Kilchenmann: This is new. No, it's not -- Bird: This is a new policy; right? Kilchenmann: Well, it's not a policy, but it is a new way of -- it's a new way of handling this. The policy hasn't changed in terms of you're always supposed to be in the approval mode for any -- for the budget. So -- so, that piece -- Bird: Procedure, not policy. Meridian City Council Special Budget Workshop March 30, 2015 Page 17 of 36 Perkins: And so it's really higher internal control and more -- and Stacy and I are working very close together on this. Rountree: So, in the budgeting control piece any unused account codes for positions that are no longer used, is there a process to make sure those come out of the budget and don't reside as a hold over or carry over? Perkins: Yes. And that -- that is -- Kilchenmann: When you say a policy -- Perkins: -- is a policy -- Rountree: A policy. Perkins: -- and that is what in that -- in that position slot control that finance maintains and the current policy says that if you approve a new FTE today -- or for fiscal '16, that department can have that as an approved FTE for two years. So, through '16 and '17 without filling it. If they don't fill it by the end of '17 it goes away and the reason for that is that some positions -- and part of this is you're trying to anticipate as a director, okay, in October I'm going to have to ask for X, because next December I'm going to need this person, because of the way we work and so you get to December and it takes a long time to find that person. There are a few positions where they will go through the -- through a year and a half before they fill it. There are other positions where everybody -- HR gets very very busy October 1 st. That's when the money is available and everybody wants to hire the positions, you know. So, that's the way the current policy is and so currently the most recent position slot report that I saw there is nothing on there that is over that two year mark. Kilchenmann: It's 12 months. It's one year. Perkins: Oh, it's one year. Okay. Kilchenmann: Then we got to start funding. Borton: That's good, because the last one I saw had three unfilled and the description was don't request to fill it, which is what sparked some of the conversation on that issue. There is a funded position and there is no request to fill it. Rountree: Well -- and that report is generated by you, Stacy? Kilchenmann: Pardon? Rountree: That report is generated by you or our payroll? Meridian City Council Special Budget Workshop March 30, 2015 Page 18 of 36 Lavoie: Is this the report that we are referencing -- is generated by Rita and we forward that onto HR. Borton: Is that our monthly -- Lavoie: That is correct. Borton: Stacy, real quick. The comment you made, which I thought -- in another step beyond what Charlie is saying Is not if there is -- if you hire -- I don't want to strain the ship captain -- I will use A and B, right? So, Todd's Employee A -- or for the position. Excuse me. Employee A in finance is funded and it's not filled, but, instead, Position B is hired and it's revenue neutral -- Kilchenmann: You couldn't take one and make it into two. Borton: Okay. Kilchenmann: But you could take one and make it into -- either something very different or something more. But you couldn't make it into two. Borton: Right. I guess different is what I'm trying to say. Kilchenmann: Yeah. Borton: Instead of A it's -- you're hiring somebody else. So, it's revenue neutral, so that would not necessarily come to Council and I think some of the discussion was if we are presented justification to fund Position A for those particular attributes and it turns out that a revenue neutral position be funded, well, we might not have -- we might say yes to Position B, but we might not -- Kilchenmann: They could have been a lawyer and, then we would have said no way. Borton: So, should that -- should that -- even if revenue neutral were the scenario -- and I don't know, maybe it never happens or it's really rare, but should that scenario come before Council -- for the department director to say, hey, it was going to be A, we actually -- we are going to do B, even though it's revenue neutral -- less that expenditure on this activity. Rountree: Well, my position is if you're going to increase -- if you're going to take A and B and you're going to eliminate A to increase B, it needs to come to Council, because what's going to happen is you increased A and now you have B at this level and a budget -- and, then, next year you're going to come back -- two years later when everybody has forgot and say I need A back. Borton: And does that not come to Council now or is it highlighted in the budget process? Meridian City Council Special Budget Workshop March 30, 2015 Page 19 of 36 Nary: I think the scenario you just raised, Joe, is the gap that we are talking about. Borton: Okay. Nary: That doesn't exist. If you were to -- because, for example, if I have a position for an attorney, and I can't find one for whatever reason and I decide, well, I got to have somebody, so I'm going to hire a paralegal instead, and I reclass them, so that's a lesser position. Borton: Right. Nary: Technically I wouldn't have to go to Council. It's not an increase in the budget, it's actually a decrease in the budget. It's a reassignment, which is really an assignment, which is an operational choice, but I need the Mayor's approval to reassign a position to do something else. But you're right in the sense that should the Council at least be aware of it -- whether they are approving it or not should at least know we changed it. I asked you for something and now we want something different. So, at a minimum at least tell you that. Yeah, I think as a courtesy you should. I don't see a reason you shouldn't do that. If the only issue becomes a -- is that something that requires approval even by state code or city code or does it require just simply, you know, the acknowledgment it exists and a change has occurred for whatever reason, whether it's the business of Council's authority or the Mayor's or whatever, that's a different issue. Should you at least be told? Yeah, I don't see a reason why you shouldn't be told. Even if it's a lesser extent. Rountree: Sure. So, is there in your process in A to B if A is eliminated to enhance B, is your reporting sophisticated enough to take the object code for A out of the budget? Kilchenmann: I don't know that we would know that, unless we did the 12 month thing. If we enforce the 12 month thing, at the end of 12 months we would -- yeah, because we wouldn't -- we would show it as vacant. So, we would have the position slot and it would show it was vacant, unless they came to us and asked us to literally reduce the appropriation. Milam: So, you don't go back and, okay, now I need a lawyer, I need another attorney, then what would happen? Nary: Well, the slot -- the slot would have to get allocated. That's the issue or example in my scenario. The slot itself is allocated to - Milam: So, it wouldn't be left open. Nary: Finance may not know about it until the base budget, right? Because the base budget -- Todd says here is all the allocated positions for your department and some -- or if one of them is wrong, oh, well, this guy's not a lawyer, this is a paralegal, that's when they would see it. Patti would see it before, because when I requested it she would say I Meridian City Council Special Budget Workshop March 30, 2015 Page 20 of 36 don't show you have authority for a paralegal, you have authority for a lawyer. So, where does this come from? So, that's -- that's the internal check. Perkins: And we talk -- Nary: Yeah. And, again, it's a small department, I don't -- where you have 125 people, so -- Perkins: Yeah. Exactly. It's easy with a small department. Kilchenmann: But -- so we haven't used -- so, no, I -- I don't think we would approve what you are talking about until before -- until the end of the year we would see it's vacant and so it could just ride along in there being vacant, vacant. Now we would see it sooner, because we had used the position slot to control the budgeted FTE and per his step, we get that wage report every year to keep that up to date, so we haven't used it to specifically run those org charts and tie it to Time Card. So, I think now we would notice it quickly. Do we control it? No. That's not part of our authority. Milam: Stacy, I really appreciate these org charts. I really -- it's nice to see the breakdown and it has a couple of positions on the bottom. A possible addition would be the -- the financial impact of that department, so amend -- so, if we were to look at this book, we have these and we get an updated set, we can compare this data -- so, here we had 17 and there is date of March 2015, 17 employees, here is the impact, you know, you could take -- go six months from now and look at it or a year from now and you can really compare and it would be a very easy catch if there is something that somebody felt was off. Kilchenmann: Yeah, that's a good idea. Zaremba: I would make one minor suggestion also. Since they do change, each page should actually have a date on it. Kilchenmann: They don't? Milam: At the top. Zaremba: Um? Milam: At the top. Rountree: It's in the title. Zaremba: As of March -- okay. I was looking at the bottom. Kilchenmann: They are a work in progress. Meridian City Council Special Budget Workshop March 30, 2015 Page 21 of 36 Zaremba: Well, perfect. Thank you. You're way ahead of me. Kilchenmann: And they are not -- because they are out of database they are not -- there is not a -- well, they are not really fancy. Milam: I don't need fancy. They are good. Kilchenmann: He did try to make them color appropriate. Bird: But your font is still small. Kilchenmann: I know. Bird: Would you -- Todd, in the finance budget this year would you put in for a new font -- Lavoie: At least my printed budget? Bird: -- so my poor eyes can see it. De Weerd: Do a senior notebook and -- Bird: Yeah. Do a senior notebook. Rountree: Have Nampa Press print it on news prints. Bird: Yeah. Lavey: So, I had a comment on the org charts. So, we have 117.5 people and our org chart is updated every month and we don't switch supervisors every -- we switch supervisors every four months, but what we do is monthly our supervisors and our positions are tied into our IPS system, which is not a paper trail, it's all electronic, and our org chart, our IPS system, and Time Card approval for our officers all funnels into and updated once a month. So, when I get the chart -- well, not once a month. Four months. So, anytime a change is made it's updated. So, when I get the chart from Finance and it's completely off, I'm the one -- why does this not match what we are working with payroll and working with HR. Well -- and that's -- what we found out is that they are using position slots, we are using a different function and they are not -- Kilchenmann: Actually, it's time carding, but -- Lavey: Exactly. So, I asked Mike Tanner- that specifically and he -- I said can we get everybody on the same database -- we make it realtime, you make the changes, we need to follow that out to the rest of -- of the group and he said he's working on it. Kilchenmann: Yeah. We are following up on it. Meridian City Council Special Budget Workshop March 30, 2015 Page 22 of 36 Lavey: I have the e-mail right here that he -- yeah. Kilchenmann: Well, that's a long story, but -- it's going to be more work, but that's fine. We need to do it. De Weerd: Not everyone wanted to look at your org charts. Kilchenmann: It's very close. It's very close. (Simultaneous conversation.) De Weerd: I'm sure whoever is going to transcribe these minutes is going to really have a challenge on this conversation. I didn't mean to kill the conversation, but just kind of rein it in a little bit. Borton: So, somebody speak to Bill's comment about the using the lawyer versus paralegal shift, when that occurs -- you know, that coming to Council to inform us or is there any concern that Council wants to play a role, but merely be informed? Bird: I will speak to Bill and the police, because I have been their liaison quite a few times for both of them and whether they come before Council or not, they have allowed me to -- have told me of changes and if -- and if it ends up at Council, that might be my call, but those two departments have not put any surprises on me and I think that -- what you're talking about, Bill's thing, is where he goes -- he's wanting an attorney, but he can't get a qualified attorney to him, so he takes a paralegal, which is less, but it's still not the same job description, so I would say that if he comes back the next year and wants an attorney, he has to bring it back before the budget and I think he agrees with that. Milam: Then we just say, then, fire the paralegal, because we don't need both. De Weerd: The follow up to your question is do you want it to go beyond just the -- the Council liaison and the Mayor? Do you want it to be brought to the entire Council? And I'm hearing yes. Rountree: Yes. De Weerd: And that's what we have kind of worked with Patti on -- Bird: And I agree with -- De Weerd: -- is we get these that -- this is something that will be brought informationally to the Council if you have a serious concern about it we would like you to express it at that time. Borton: Sure. And the reason I asked that -- I wanted -- this is a really helpful conversation to talk about these things, and to that point it makes sense, but it's not a Meridian City Council Special Budget Workshop March 30, 2015 Page 23 of 36 matter of where Council -- we are thinking that we would need to vote or approve or bless it by any stretch, I agree that that's a different role, but -- because you're getting -- when it comes up at the next budget year and if it's -- you use as an example to now fill that lawyer position again, that's the time, if not before, you're going to have the conversation, well, we need the paralegal or not and those are awkward, you know, conversations, but -- De Weerd: But those first conversations you just -- Borton: -- that's how it can increase and we as a Council need to do a better job of having those kind of conversations. So, I think just being made aware, hey, heads up, here is kind of what we did, moving on, might make our conversation in the budget talk a little easier. If that makes sense. De Weerd: Yes. Bird: And, Joe, I agree with you a hundred percent and I think a lot of the lax has been on our part, because, you know, we do have good directors that have been appointed and we have let a lot of stuff go from when I originally got on here. Budgets are a lot different. Employees were hired a lot different and I just think that we need -- need to be more informed and the policies and stuff we may set, we need to know about, too, Rountree: I have got a couple documents here and one is a -- it says it's a resolution, but it doesn't have any numbers on it. It has information related to Meridian's budget policy. We need to have the city finance piece out of Sterling and they don't quite jive. A lot of similarities, a lot of the same language, but there are differences. Kilchenmann: The ordinance is newer. That's the one Emily did last summer. Rountree: Yeah. There is some things in the ordinance that I think we need to talk about at some point in time. De Weerd: Did it get codified? Rountree: Yep. De Weerd: Okay. Rountree: So, I don't know if today is the day we talk about it, but I think there are some things that we ought to emphasize about -- particularly about the -- that the budget actually is a policy document, as opposed to should that is -- De Weerd: And, Charlie, that doesn't say that? Rountree: -- and -- no. It says should, which to me is, yeah, okay, maybe we don't. It should be shall. Meridian City Council Special Budget Workshop March 30, 2015 Page 24 of 36 Borton: Where are you looking at? Rountree: This is -- Nary: 1-9-313? Rountree: 1-9-313. That's probably the biggest one, but there is -- Bird: There is some other things that I have seen. Rountree: And the rest of you need to go through this if you haven't, if there is things you think need to be changed or discussed. Item G, H1, budget workshop to me is very limiting, when, in fact, the budget is the only one of the few pieces of work on every policy that's coming to Council's wing and it just says we are going to talk about enhancements and I think that the individual budgets should be up for an opportunity to ask questions. It ought to be -- it ought to be more clearer than the workshop is just going to be talking about enhancements. We talked about the operating reserve amount and Stacy and I have talked about that at length and she's done a good job of bringing that down to having a couple million dollars out of what was anticipated needed. Now, I don' t know what that's going to equate to in real dollars above and beyond what we have now, but it's clear under this policy that that's to go to the capital improvement fund, but that brings up the topic that Stacy has brought forward and we have talked about a little bit is auto transferring funds once the base has been set and get -- get anticipated excess revenues transferred to funds that are established for that purpose, as opposed to waiting for the end of the year and, then, doing carry forwards and funding other vehicles. So, I'm not saying cars, but some kind of a fund instrument and, Stacy, you want to talk about that concept a little bit? Kilchenmann: So, again, the capital improvement plan -- capital improvement fund does have that auto transfer in it. We have talked about when we went and we looked at what the discretionary revenue is, so it's the revenue minus the base, there is a dollar amount that we start with, both funds, so as of, what, June what was it, four million something? I think last year. I will just make up a number. So, four million. So, we go -- Todd goes through all this -- like we talked about. He gathers what everybody is being paid, he builds in insurance, builds in everything, and comes up with this number. Call that the base. The FY -16 base. Then we come up with minus the revenue. I came up with -- let's say we have four million dollars, we call it discretionary revenue, and we subtract replacements and we had -- they were high this year. What were they? 1.1 million. We come up with that 2.9 million, so those are like two sub sets of discretionary revenue. One of them is that four million. We kind of auto done the replacements -- I mean the Mayor goes through -- those are really short pencils. They were a lot more. But we kind of assumed that this 1.1 million is -- this is almost -- you know, we need to do this. So, I think what you're talking about is should we say that out of all of that revenue are we going to take one percent or five percent or come up with some other calculation and move that into the fund balance. So, there is different ways to do it. You need to be sort of flexible, because, you know, we might like, boom, discretionary revenue barely covers Meridian City Council Special Budget Workshop March 30, 2015 Page 25 of 36 the base and we also don't want the fund balance to get too high, because that says that we are collecting money we don't need. I don't think we will ever be in that position again. We were for awhile. But I don't think we will again. So, the capital improvement plan is -- fund is a safe place for transfer, because it's -- it can only be spent on capital. So, one time. But the old fire truck, public safety fund would be a really good place to make -- start making transfers up to some point, because it's completely out of money. It is broke. The other thing I thought of is when you have projects that you need to be agile about, like if you actually wanted to bond for a conference center, if you had that opportunity, you have got to have enough money in a reserve, because you got to get the underwriter, you got to have -- you're going to have to hold the reserve balance and your base is going to have to be small enough that you can prove that you can make the bond payment for either fund. It's the same case. So, those are just some options about what you can do, so that ability I think for your projects is important, that the fire -- or public safety fund is important. That's really important. Because a fire truck costs so much and a lot of this replacement is for the police -- picking on the police again, but if you look at the size of it it's -- we always have about 300 -- 200 to 300 thousand in cars and, then -- Milam: Don't they have a third of the employees? Kilchenmann: Yeah. They are the largest department in the city. Bird: Public Works is getting there. Borton: Stacy, isn't that -- the two million -- the unrestricted fund balance after these reserves annually rolled into that capital -- Kilchenmann: No. Their operating reserve was 12 million and it just went nowhere. It just stayed in reserve there. If I reduce it it will just go into unrestricted fund balance. Borton: No, I'm not suggesting that -- Kilchenmann: Oh. Borton: -- that it be changed at all. I'm referencing the grid you have up here when you're speaking to the unrestricted fund balance after replacements. Kilchenmann: Uh-huh. Borton: -- that's exclusive of the reserves; right? Kilchenmann: Right. That's new -- Lavoie: Joe, just to clarify, this is just new -- new dollars. Yeah. Just new revenue. Like no fund balance. Borton: Okay. Meridian City Council Special Budget Workshop March 30, 2015 Page 26 of 36 Kilchenmann: And some of these enhancements will use fund balance, like parks -- Borton: Yeah. When you scroll down to the bottom of this -- this report does show that final net number that was transferred over; is that right? Lavoie: That is correct. Borton: Okay. Got you. Okay. Nary: If I could clarify, Council. So, the code section that we were talking about in your capital improvement fund and it says when revenues for the building and planning department exceed their expenses in a minimum of four months operating reserve has been covered, the excess may be transferred to the capital improvement fund. Do you want -- as one of the changes we are talking is changing that to specifics I think is what Councilman Rountree was suggesting or more categories. I mean how -- whatever you -- Kilchenmann: I think it was more categories. Rountree: More categories. Nary: More categories. Bird: More categories. I think that's just strictly the -- Nary: So, this is restricted for more, but if you want to add more -- Rountree: I don't know if that's what we really want to do, though. Nary: Right. Kilchenmann: And so that particular one -- Bird: I think -- yeah. Something like that or -- Rountree: Yeah. We can create it. Fire improvement fund. Kilchenmann: Uh-huh. The public safety. Actually, the capital Nary: I mean this code section could say as directed by the City Council. I mean that -- you could direct all of it. Rountree: And that would be fine. Meridian City Council Special Budget Workshop March 30, 2015 Page 27 of 36 Borton: As long as the parameters are still limited to things like the capital improvement -- Rountree: Or one time. Borton: -- expense. Nary: One time expense. Bird: One time. Kilchenmann: I wouldn't change the one that deals with the transfer from building and planning, because that's very unique and I wouldn't change the operating reserve with that one, because they can go from here to here -- Bird: But, truthfully, Stace, if we -- if we do like Bill said -- change that statement, it can still stay the same as it is, but we still got the right to use it as other discretion. Nary: Right. Bird: I mean it still covers the development -- economic development. Borton: It's almost -- Stacy, I think you're saying something different is you have -- that paragraph C that you're reading, Bill, now -- Nary: Uh-huh. Borton: -- was that for the building and planning department -- blah, blah, blah, that should be limited solely to capital improvement, but if maybe add another one where -- Kilchenmann: Yeah. Borton: -- excess revenue from -- Kilchenmann: General revenue. Borton: Yeah. General revenue. That might have a broader -- Kilchenmann: This one is unique, because -- I think. Bill can correct me if I'm wrong. But this -- so, we are charging more than our expenses, but we are saying not really, because we know that this additional growth is going to go for infrastructure to maintain growth. Is that correct? Nary: Uh-huh. Meridian City Council Special Budget Workshop March 30, 2015 Page 28 of 36 Kilchenmann: So, that's -- under the statute we don't really have the ability to charge fees for services, other than to cover costs. Nary: Not covered by General Fund. Kilchenmann: Right. Nary: Yes. Kilchenmann: So, it's a unique animal that I think should be preserved by itself and when you can create something similar that you can apply to the other general revenue funds -- Bird: It's -- I agree, Stace, on that. It's something that we -- the contract that we have down there and away we go and it's just been volume that has really made the excess in that department so good and -- and the negotiation that Bruce does with the -- with the inspectors and stuff, you know, so -- yeah, I wouldn't want to change that at all. Kilchenmann: You could just create in another area -- Bird: Yeah. I think they will understand what we mean. Nary: Yeah. We will just find the right spot for it and I understand what you're saying, though, but -- Kilchenmann: Yeah. This has -- this has been around for awhile, so it's definitely no problem changing it. Rountree: Well, that statement probably ought to come out of the capital improvement plan paragraph. Kilchenmann: Yeah. That one I think shouldn't change, but -- we could find another place -- because the way that accounting standards for the General Fund -- and the same thing for the Enterprise Fund where you only have one fund, so you can direct transfers. We could create more -- 45 firms, just because that wouldn't be practical, but you get creative funds only from depreciation, a fund only -- we are collecting this EPA fee amongst the EAP. EPA free units are only going to -- Bird: We are overdoing it already. Kilchenmann: But the standard for the General Fund specifically calls out that ability of Council to restrict -- not restrict, but designate funds. Bird: Yeah. Meridian City Council Special Budget Workshop March 30, 2015 Page 29 of 36 Kilchenmann: So, I think we have a lot of funds. I mean we got a lot of money pots existing, so we don't really need to make another one, but if you want to make some kind of direction on how we fill those funds, then, that's what you're sort of trying to do. De Weerd: Or do that at the workshop as you establish the budget, say those funds will go X. Kilchenmann: You can do that. You can -- Barry: You could do it after your year-end accounting. Revenue remaining. Kilchenmann: Right. That's when you get capital improvement. Barry: After all the leveling up. Kilchenmann: Yeah. You kind of want to do it at the workshop. In fact, I would specifically budget for the fire truck fund -- or the public safety fund. You might want to -- because I have money at the end. That's not like we guarantee there is going to be $500.63. If you appropriate it, then, we guarantee it's going to be there. De Weerd: Well -- and that's what they have appropriated before and whether it's for public safety -- I think one year it was to park. Kilchenmann: Yes. We have done that. Uh-huh. De Weerd: So -- and that would just be a budget item to make sure we had the conversation. Kilchenmann: Yeah. We kind of do it like we do -- we are saving for this 77 acre park or the recreation center. We have set a little bit this year, a little bit this year. But it's not in its little cash piece, but -- so, yeah, that's probably how I would do it as an actual -- not an enhancement, but treat it as an enhancement. Appropriate it. Now, who is going to come up with -- I mean somebody has to decide what you want to do. Rountree: And I don't think it's going to happen today, but that's something that's on our plate. We need to decide where do we want that directed. Kilchenmann: Uh-huh. And that's part of that big plan on -- Rountree: And that should be part of the budget process -- Kilchenmann: Uh-huh. Rountree: -- that we are going to have to assign at some point in time. Kilchenmann: Uh-huh. Meridian City Council Special Budget Workshop March 30, 2015 Page 30 of 36 Rountree: I assume at the workshop stage. De Weerd: Would it be helpful in your -- your budget calendars perhaps adding prior to the workshop, about this time, have this kind of workshop on the capital improvement plan, so you are refreshed on what is in that, doing annual -- Rountree: Yes. Yeah. I'd like to do what our policy says we are supposed to do, we are supposed to convene on (unintelligible) revenue manual. Kilchenmann: It's actually already in our budget calendar. So, the capital improvement plan is built into the budget calendar, we just haven't been getting it done on an annual basis and we should. De Weerd: Well -- and we should have the conversation about it. Kilchenmann: Yeah. It's -- it definitely is more than a two day workshop. It's growing into more than that. De Weerd: Well, I guess what I'm suggesting is that that's -- that's far before the workshop, so we have something that's anticipated in the coming year that you might see in front of you, that you have those conversations and have a little bit more -- this -- the process has evolved over time and, you know, it's good to have this conversation. In the past our workshops were two days and the comment was that's too long and so we tried to split it out, the strategic pieces to that, this is what we did last year, this is what we are doing the coming year, those were as workshops, topics that each of the departments would be highlighted, but you might have approved that nine months ago and now you're starting to see it in the budget process -- we need to bridge those times and the directors have had that conversation and how we can bridge again that information that was presented. Stacy mentioned in her introductory remarks kind of your dollars at work. We can build those back into your budgets. Finance and I and I think have involved Joe when he was Council liaison, was looking at a priority base type of budgeting approach and maybe it's more of a hybrid is looking at those things -- again, the examples that Stacy had in levels of service, determining what those costs are, so when you get an annexation request in front of you and a plat for 700 homes you know the impact on our levels of service and the reason our budget grows every year is our population is growing every year. Some of the new demands to levels of service and those are discussions that you all should be having and we were trying to find a better way of framing that, so that we can have good policy discussion about it. - Rountree: My comment to that, Mayor, is they have got to have it before we sit on the dais. It's going to happen in a room like this. Bird: That's right. Meridian City Council Special Budget Workshop March 30, 2015 Page 31 of 36 Rountree: Across the table and shoulders on the table and just throwing stuff out. It's too formal the other way. It's hard to get people to open up. So, I'd throw that suggestion out -- Kilchenmann: I agree. Rountree: -- for you all to consider in the years to come. Bird: I think our workshop -- our second Tuesday should be done right here like the old workshops where you take your business and put in on first or the third, your -- I don't care if it's consent or what, you leave that off and we go back to like we used to, get around the table. If you want to cover Public Works you come in and we put you before the grill or whatever you wanted to cover. It would be great. We had good workshops. We were a heck of a lot smaller and we only met twice a month at that time, but we got a lot out of those workshops and I think our directors did, too. Rountree: Yeah. I think it's a good idea. Any other questions, comments? I got one that I mentioned when I mentioned having this meeting and I talked to Stacy and I mentioned to the Mayor -- it was about the possibility of looking at an internal auditor. Now, that butters up a few people and, for lack of a better term -- I don't know what you call it -- I know it kind of came home to roost last -- last week. The top of the page the Idaho Statesman has a reports (unintelligible) for Idaho and it's an F in a number of areas and cities don't do well either as it relates to scrutiny and the ability to look at fraud or misuse or whatever. So, I bring that out as something that maybe not this year, but maybe we have an opportunity real soon and I don't know if it's this afternoon that we talk about it or we talked about it in Executive Session next week as it relates to potential problems that appears to be arising in this city with respect to certain practices. So, I don't -- I'm not saying it's an auditor position, it's kind of like an ombudsman position that would deal with questions of -- for the lack of, again, a better term, questions of budgetary misappropriations or budget handling of rumors and handling of whistle blowing and handling of a multitude of those kinds of things that we don't particularly have the processes for. That was my intent when I said what I said, asking for this meeting. I don't know whether you all are with that kind of a concept. I know Stacy -- Stacy is good and bad with it. Kilchenmann: I'm good with -- I found a state one that they are -- that is so cool Rountree: She's found -- she's found an approach -- actually, it's the performance management group at the state that does that kind of thing and it will take a look at -- Kilchenmann: Everything. Rountree: It will take a look at finance and say finance, you know, you have got too many people doing this and your systems are old and archaic and you need to upgrade and you need to spend some money or you're spending too much money for systems that you don't utilize efficiently and maybe you need to get rid of them and spend money Meridian City Council Special Budget Workshop March 30, 2015 Page 32 of 36 someplace else. Same thing with any other department. Same thing with the Mayor's office and the Council. You know, you're inefficient in this area and so maybe you need training, is this something you're willing to do. Here is things you're charged with doing and the more we look at it from the concept of ethics and concept of practice and you're not doing it all. So, again, you're not doing well. So, again, I just bring that out as something that as a body do we want to explore that? Again, it costs money to have something like that initiated and (unintelligible) is not a good model, because they have way different accounting systems and tracking systems -- but they have, what, four people -- Kilchenmann: They have two and a half people. But he followed up and he said they do do some of those policy audits, so that -- the performance evaluation is eight people and they are like -- I would show you their briefcases. They do the coolest, coolest stuff. If Boise is smaller and he's -- they are not really accountants per se, but he said he does do some of those policy kind of projects, so if you had Policy A and Policy B, which we do, we have got to make this decision, they do some of that, too, and so it's not just strictly auditing accounting systems, they do some procedures just for accounting that, you know, we don't have, we don't have P cards for example, or -- so he said he doesn't -- so we can follow up with him if you -- Rountree: Anyway, I throw that out. Bird: Mr. President? Rountree: What's you're -- what's the temperature with that? Bird: I agree a hundred percent. I don't want to start with eight people, but -- one would -- one would be great. I have been for this for years and not -- not to ruffle any feathers or anything, which we did -- which I did. But, anyway, but I think it's something that we definitely need to look into and it's got to the point that we can't always do what -- you know, Charlie and I have a lot of time, but the rest of you guys have real jobs. Even David now, so -- Rountree: I question the time that I have. Bird: Well, I -- yeah. I'm with you, I -- Milam: He was speaking for himself. He has a lot of time. Bird: Yeah. I will talk for myself. But, anyway, I'm for it. I think we need to look at it. We need to -- we need to spend some time on job description, make sure is it going to be a hundred percent right the first time around? Probably not. But -- and it's going to depend on what kind of person you get in here and we can take care of that by interviews and stuff like that. Kilchenmann: And we agreed that it would be an experienced, well-paid person. Meridian City Council Special Budget Workshop March 30, 2015 Page 33 of 36 Bird: Well, you -- agreed to the well paid and you know how I am. De Weerd: Well, there is a process to go through. Kilchenmann: Experienced. Bird: We will take a look at that. (Simultaneous conversation.) De Weerd: Okay. Anything further? Rountree: (Unintelligible). Kilchenmann: So, I think we are in kind of a wrap up. We have been going this way. But it is going to be just a continual process, so we will do the -- say we do capital improvement plan and (unintelligible) and probably another workshop like this and, then, the other workshop. So, it really -- it sounds easy to do all of this and we do have committed staff, sea captains or not. Crunching all this does take some time. De Weerd: Don't have a change of title. Kilchenmann: I think I want to be a sea captain. Milam: I think you speak the wrong language, Stacy. Kilchenmann: Yeah. We have gotten some resources from IT that starting in June we are going to work on automating the capital improvement plan, so that will be great. That will be a new project that builds some efficiencies in it. I think we can start grinding things out more quickly and we want to build some of these priority based type measurements into it. You know, it's not going to happen overnight. But it's a start. Bird: I think you have got an IT Department up there that's capable of building you about anything you want. Anytime you want -- like Mike and Jamie did back here with the police deal, I -- I mean they could come up with anything you needed. Holman: Mike Tanner's systemated plan to take over the world. Rountree: So, I guess if everybody fully understands base and why the base grows and what you can do to keep it flat and there is not much you can do to make it less, but what you can do is maybe make it more effective as you struggle through the budget book with your individual departments and I know I cut the heck out of the Mayor's budget and she cut the heck out of mine, so -- when there is hardly anything there it's easy to do. Bird: I was just going to say with the Council -- Mayor's isn't very thick either Meridian City Council Special Budget Workshop March 30, 2015 Page 34 of 36 Kilchenmann: And we do realize the whole concept there is a big note, because of archaic -- De Weerd: But I will remind you, you know, we really want our Council engaged from the minute we start talking budget and when you come to the Todd and Tammy good cop, bad cop meetings with the department directors that you're engaged, that you -- you look at the -- the variances in the previous year reports and where the departments currently are and ask questions, because, really, that's -- that's the whole intent of those one on ones with the departments -- they come prepared to talk about it, to say how -- how those line items performed the year before, why they underperformed or overperformed and what the influence is that they are -- are anticipating on those -- those line items. It also is in the G100 form. It will give descriptions of -- so, you may not be that liaison, but look at G100 form in your budget binders and see what -- what the influence is on why that decreased or increased -- primarily when they increase. We kind of -- we give a nice job button to the decreases. But that's -- that's really why we invited you into those one on ones to have -- to be part of that dialogue, so that you have the knowledge of -- of what that department is doing and what they are anticipating and you can, then, follow up with the department directors if you have additional questions and you're prepared to say we did comb through it and we scrubbed it and you know that you have -- we are hoping you feel good about that base budget when we get to the budget workshop. But we listened to you all last year and -- and know that there were a lot of ways that you could be engaged and we want you to be. So, ask questions. The questions that Finance and/or I have are on the enhancements, whether it's to maintain a level of service or to -- to consider an additional program, those questions are on the -- are on those forms and the answers are, too. So, if there is more information we can give you, we can kill you with it. And I know you like to be killed with information. Bird: Are we done? De Weerd: So, if there is -- Rountree: Stacy, would you give me the -- you made a reference to some document where it talks about major classes and the use of those, because I think that's important, too. And that's fundamental to any budgeting. People don't understand the flexibility or lack of classifications of money, they need to. Kilchenmann: They are defined in the fund balance policy, which I think was the policy -- Rountree: Okay. Kilchenmann: Another place you can find them is in the audit report. If you go on the -- De Weerd: Can you just pull it out? Rountree: Well, I know they are defined. Meridian City Council Special Budget Workshop March 30, 2015 Page 35 of 36 Kilchenmann: I can give it to him. De Weerd: Thank you. Rountree: But is it -- does it speak to the flexibility or lack thereof? Kilchenmann: Yes. Bird: Yes, it does. Rountree: Okay. All right. De Weerd: Okay. Anything further? Borton: This is -- this is really helpful, so -- Charlie getting -- kind of getting us talking here, and I know Genesis and I talked about it a little bit last year that the general idea of having this type of around the table discussion, Council, department and the Mayor and brainstorm ideas and share comments and concerns and questions is really hopeful. It's probably helpful to Finance to know if we are off track or we misunderstand how an ordinance works to write it. So, I think this is -- there is something else the building of the budget calendars force us to sit around this table in March or early April and just kind of do this and -- Milam: Yeah. It should help the budget process go a lot more smoothly. De Weerd: Well, I hope it helps the directors that are listening to -- to engage your Council liaison and encourage them to ask the difficult questions or quiz them and see if they read what you gave them, so -- Rountree: It depends on what time of night you're reading them. Item 4: Future Meeting Topics De Weerd: It has to be after midnight for me. So, anything further? If not I would entertain a motion to adjourn. Rountree: So moved. Bird: Second. Milam: Second. De Weerd: All those in favor say aye. All ayes. MOTION CARRIED: ALL AYES. Meridian City Council Special Budget Workshop March 30, 2015 Page 36 of 36 MEETING ADJOURNED AT P.M. (AUDIO RECORDING ON FILE OF THESE PROCEEDINGS) S / a / N MA Y De WEERD DATE APPROVED ATTEST: JAYCE"OLMAN, CITY CLERK Qo RD nu�`sr G04 � �9 oma, City of E R It1N ID IDAHD SEAL n��lfB0ft6e T6f�S���J��