05/02/2005 - Packet Tigard Budget Committee 2005
(Note: Items not completed at scheduled meeting will be held over to following
meeting.)
May 2, 2005
6:30 p.m.
Library Community Room
13500 SW Hall Blvd.
• Call to Order
• Approval of Minutes
• Discussion of Department Budgets
o City Administration
➢ Mayor and Council
➢ City Management
➢ Human Resources
➢ Risk Management
➢ Information Technology
➢ General Government
o Public Works
o Library
• Public Hearing on State Shared Revenues
• Public Comment
• Recess Meeting until May 9, 2005
Budget Committee Meeting
May 2, 2005
Sign In Sheet
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City of Tigard, Oregon
Budget Committee
Meeting Minutes
April 25, 2005
Members Present: Mike Benner, Craig Dirksen, Mark Haldeman, Sally Harding, Katie Schwab, Sydney
Sherwood, Nick Wilson, Tom Woodruff, and Susan Yesilada.
Members Absent: None.
Visitors: Martha Bishop, Henrietta Cochrun, Mike Marr, Gretchen Buehner, and Lisa Hamilton-Triek.
Staff Present: Roger Dawes, Maureen Denny, Tom Imdieke, Craig Prosser, and Michelle Wareing.
Call to Order: Mark Haldeman called the meeting to order at 6:30 PM.
Introduction: Mark Haldeman turned the floor over to Tom Imdieke to familiarize everyone on the new
meeting room and facilities. Tom Imdieke announced that Irene Moszer had resigned from the
Committee and relocated out of the area. As a result, this leaves a vacancy on the Budget Committee as
well as Mike Benner's term expiring June 30, 2005. The City has been soliciting for Budget Committee
membership and the deadline was April 22, 2005. The City received a total of three applications. The
plan is for Councilor Woodruff and Mayor Dirksen to begin interviewing candidates as early as this Friday,
April 29. Hopefully this will result in selecting two candidates that will fill the vacancies.
Tom also discussed the packet of materials given to each member. The packet included copies of the
proposed budget, minutes from last year's final meeting, PowerPoint presentations to be given during this
evening's meeting, copies of the large charts and boards displayed in the room, and issue papers from
the Departments that will be covered during the future meetings. Tom turned the floor back to Mark
Haldeman.
Election of Officers: Mark Haldeman stated that a new Chairperson and Secretary needed to be
elected. Sydney Sherwood nominated Mark Haldeman for Chair. Nick Wilson seconded the motion. All
were in favor of the motion. MSP
Sydney Sherwood nominated Katie Schwab for Secretary. The motion was seconded by Mark Haldeman.
All were in favor of the motion. MSP
Approval of Minutes: Mayor Dirksen moved for approval of the minutes of May 24, 2004. Councilor
Wilson seconded the motion. The minutes were approved. MSP
Budget Basics: Tom Imdieke presented the Committee with a PowerPoint presentation called Budgeting
Basics. The presentation covered the following topics: Oregon local budget law, What is a budget,
Budget as an accounting document, Budget as an operational guide, Budget as a policy document,
Budget as a communications tool, and budget structure. A copy of the PowerPoint presentation was
included in the packet given out at the start of meeting.
A second PowerPoint was presented by Tom Imdieke covering the financial condition of the City. Tom
referred to the chart displaying what the City projected last year to be the financial condition of the
General Fund at the end of FY 2008-09. This was based on the FY 2004-05 Adopted Budget and current
revenue trends at that time. The General Fund would be in a deficit situation at the end of FY 2007-08 by
approximately $318,000. If trends continued, the deficit would grow to $4.3M by the end of FY 2008-09.
The City would have to take specific steps to address the deficit and possibly increase revenues or
continue tightening the spending to prevent this situation.
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The City revisits the Five Year Financial Forecast every year and updates it using current trends. The
revised forecast is based on the FY 2005-06 Proposed Budget and trending out to FY 2009-10. Current
trends are showing the General Fund would be in a deficit situation by the end of FY 2008-09 by almost
$3M. There are many factors contributing to the change in forecast from last year. On the revenue side,
the City has not seen a growth rate in revenues as hoped. Overall the City has seen a growth rate in
General Fund revenues, including transfers, of about 6%. The forecast last year showed a growth of
12%. This is primarily due to a smaller growth in state shared revenues as well as property taxes.
On the expenditure side, the proposed budget does include additional staff for the Library, Police
Department, and Long Range Planning. However, the proposed budget does not include all of the FTEs
that the Departments had forecasted last year for FY 2005-06; in fact it is six positions less. In addition,
City Departments did not spend all of the spending authority it was given last year. This increases the
resources available the following year in the form of beginning fund balance. These factors combined
with tighter budgeting and forecasting, the City projects the General Fund will not be in a deficit situation
until the end of FY 2008-09.
Tom showed historical General Fund revenues and expenses, percentage changes, CPI percentages,
General Fund operating expenditures by category, percentage change for Personal Services and
Materials and Services, and Personal Service costs per FTE. Although Personal Services are still the
largest expense category, the historical trends show the largest percentage change since FY 2002-03
has been in the area of Materials and Services. Growth in Materials and Services can change over time
due to one time projects or cyclical expenses. The projected needs in terms of staffing show a steady
incline in growth primarily in the areas of Public Safety. The Police Department is reflecting the need for
additional 18 FTE in the next five years. The Library is showing approximate growth of 7 FTE in the
forecast.
Tom also responded to a question posed to him previously. The question was asked of what the
relationship between the increases in current revenues to the increase in operating expenses with no
change in service levels. This would be the difference between the current FY 2004-05 budget and the
proposed budget FY 2005-06. The City's General Fund current revenues are projected to increase by
4.2% over the current fiscal year. This assumes no new revenue sources and excludes transfers
between funds. At the same time, the City's General Fund operating costs are projected to increase by
11.25%. This increase assumes no increases or decreases in service levels or significant program
changes. The disparity in growth between projected revenues and expenditures is being driven by
limitations on property taxes on the revenue side, and union contract requirements, changes in required
police retirement fund contributions, health benefits cost, fuel and utility costs on the expenditure side.
Tom Imdieke presented graphs showing which City Departments budgets are being funded out of the
General Fund. Although these Departments are being budgeted out of the General Fund, it does not
mean they get all of their resources from the General Fund. In some cases, resources from other funds
are transferred to the General Fund based upon the type of expenditure or activity. For example, Gas
Tax funds would be transferred to the General Fund to support the street maintenance program in Public
Works. The charts visually show to what extent a particular Department generates their own revenues,
the portion of the budget funded by non-specific General Fund revenues, and the portion of having to dip
into fund balance. The total amount of the General Fund operating budgets that need to be funded by the
fund balance is $2.5M. Other graphs show the Utility Type (Enterprise) funds, Special Revenue funds,
and Internal Service funds. Not all funds were shown, only the major operating or capital funds.
Tom presented two pie charts showing how the overall operating budget of$33M is allocated by Program
and Department levels. By Program level, the largest portion is made up of the Community Services
Program which had 37%, which consists of Police, Library, and Social Services. Next is Public Works at
33%, Development Services Program of 16%, Policy and Administration of 13%, and General
Government of 1%.
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Tom Imdieke stated that the $2.5 million dip into the General Fund ending balances would have to be
taken out of General Fund programs, dollar for dollar. Tom Imdieke said he will provide more specific
information in a following meeting.
Sally Harding asked where the significant increase in Materials and Services came from. Tom Imdieke
reported that a good portion of the increase is coming from expenses that are always ongoing expenses
such as the costs associated with the update of the Comprehensive Plan update and Downtown
Revitalization. That's why we see such a swing in the graph from year-to-year.
Tom also mentioned that the City is taking a hard look at how revenues and costs are forecasted and are
tightening down for the next five year forecast.
FY-2005-06 Budget Overview: Craig Prosser presented a third PowerPoint presentation that gave an
overview of the FY 05-06 Proposed Budget which included the Major Issues, Council Goals, and Budget
Overview. The overview gave a more detailed look at the Proposed Budget. The Proposed Budget
reflects the direction of the City and the goals of the Council.
Council Goals: Each January, the Council meets to set goals for the calendar year. This year, the
Council adopted three goals. They are listed in the budget document(page 11).
The Council Goals for 2005 are:
1. Revitalize Downtown
2. Improve 99W
3. Address Growth
The proposed budget is designed to comply and make progress on the Council goals.
Revitalize Downtown:To start working on the Downtown Plan, the City will need one new position in Long
Range Planning in Community Development. There is money in the budget to fund Urban Renewal
consultants to put together an Urban Renewal Plan to identify projects specifically for Tigard. Another
aspect of the goal is Capital Improvement Projects including open space acquisition, streetscape design,
and Right-of-Way acquisition for Burnham Street.
Improve 99W.- 99W is State highway and is the responsibility of the State. The City will improve the
highway as able. Capital Improvement projects include McDonald and 99W intersection, Hall Blvd and
99W intersection, Greenburg Road and 99W intersection, and a system improvement study.
Address Growth: The City is looking at updating the Comprehensive Plan, which was adopted in the
1980's and has had some changes, but has not gone through major updates since then. The City is
looking at one new position in Community Development to take the lead on putting together a program to
update the Comprehensive Plan. The Plan will not include any unincorporated areas unless funding from
Washington County is provided.
The City is looking to acquire park land. There is $2M budgeted for acquisitions of various sites.
Budget Overview.The City's operating budget is up 5.4%, and includes additions to Long Range
Planning Division for Urban Renewal, vehicle replacements, two Police officer positions, and additional
Library staff. The number of authorized positions is up 4.0 FTE and all positions are funded. COLA is
built in based on labor contracts. Health benefits cost increase of 15% is built in.
The Capital budget is down 27.5% which reflects a $7.6M decrease. Primary causes for the decrease
are the completion of the new Library and the reservoir site acquisition and construction was spread over
several fiscal years instead of budgeting in one year.
The service impacts are as follows:
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The Police Department has two new police officer positions. The Department is also catching up on
vehicle replacements.
The Library is adding 1.5 new FTE, maintaining Sunday hours, and has a limited increase in funding from
WCCLS.
Public Works is not taking over sanitary and storm sewer expansion area from Clean Water Services as
budgeted in FY 2004-05. They will also identify non-SDC revenues to fund park land acquisition,
development, and maintenance. Balance water purchases between City of Portland and Joint Water
Commission to obtain necessary supply of water at the best price. The City wants to acquire a reservoir
site and begin construction as well as continue with the Aquifer Storage Recovery project.
City Administration budget includes increasing Cityscape to 12 issues per year, transfer in of one position
from Public Works to Information Technology, and added costs for hiring the new City Manager.
Community Development will increase staffing for Urban Renewal and the Comprehensive Plan update.
An overview of the issue papers was given. The papers are for Recreation Grants, Right-of-Way Grants,
Water Rates, Park Land Acquisition and Development, Library Operational Hours, Police Overtime, Urban
Renewal, and Comprehensive Plan Update. The papers will be discussed during the Department's
presentations. Craig asked if anyone had other issues they would like to have covered to notify staff and
they will prepare any information. He asked they let staff know if advance of the meetings.
Craig Prosser turned the meeting back over to Mark Haldeman. The Budget Committee has been
requested to have a citizen member participate in the Committee for Citizen Involvement. Mark
Haldeman had originally expressed interest, however due to scheduling conflicts he will not be able to
participate. The meetings are held on a Thursday evening, every other month. If anyone is interested
please contact Mark Haldeman, Craig Prosser, or Tom Imdieke after the meeting.
Next meeting is May 2, 2005 and the City Administration, Public Works, and Library budgets will be
presented. Also, a public hearing for State Shared revenues will be held.
Public Comment: There was no public comment.
The Budget Committee was recessed at 7:55 PM until May 2, 2005.
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MEMORANDUM
TO: Budget Committee Members
Craig Prosser, Interim City Manager
FROM: Michelle Wareing, Management Anal
RE: Forecasting Process
DATE: April 26, 2005
The City of Tigard's Finance Department uses forecasting software called Forecast Pro
to forecast its revenues, personal services, and materials and services costs. Forecast
Pro includes a variety of time series methodologies that are most commonly used in
forecasting. The Forecast Pro software is designed to either choose the best
methodology for the data provided or the user can choose which methodology Forecast
Pro should use. The main assumption used in forecasting is that past historical patterns
will continue in the future and no major, unanticipated events such as terror attacks or
taxing authority changes occur.
On the revenue side, forecasts are generated for the large, individual revenue line items
for each fund. Data files for each of the large revenue line items have been created.
The Data files include actual revenue history from FY 97/98 by accounting period
(month) to current. The revenue history date files are used by Forecast Pro to forecast
out over a selected time period. Depending upon the volatility of past history, different
statistical models are run to obtain the most statistically accurate forecast. The
forecasts provided by Forecast Pro are evaluated by Finance staff to make sure the
forecast numbers seem reasonable. The revenue forecasts are then adjusted if
necessary. Adjustments could be due to future fee increases, major development
activity that is projected, but has not occurred in the past or other events that Forecast
Pro cannot predict.
Like revenue line items, data files for each division within the departments have been
created that shows actual expenditure history from FY 97/98 by accounting period
(month) to current. Forecasts are generated for each division's personal services and
materials and services expenditures. Forecasts are not done for Capital Outlay costs
as they are sporadic and unpredictable. Division staff is responsible for projecting
Capital Outlay costs based on vehicle and large equipment replacement schedules and
future needs. The forecasts provided by Forecast Pro are evaluated by Finance staff to
make sure the forecast numbers seem reasonable.
For Personal Services, an average per FTE cost is determined by dividing the Personal
Services budget amount for current fiscal year by the number of authorized FTE. This
V.
average per FTE cost is then multiplied by the growth rate forecasted by Forecast Pro
and the number of projected FTE needed in each of the forecast years. There is usually
a different growth rate for each year due to the varying actual growth changes in the
past. The reason for using a per FTE cost as the base is that Forecast Pro cannot
predict future FTE needs. As the Division projects additional staffing in the future,
Personal Services costs will need to increase and this way of forecasting captures those
future costs. The downside to this process is that the average per FTE cost is applied
to all new positions regardless of the positions classification. However, adjustments can
be made if there is a significant difference between the average per FTE cost and the
actual, current position cost.
For Materials & Services forecasts, a baseline expenditure amount is generated for
each division within the department for each year in the five year forecast period.
Division staff are then responsible for adding to or subtracting from the baseline
depending on needs that the forecasting software cannot predict. This could include
professional contracts for new programs such as Urban Renewal or office furniture
replacement. The baseline amount plus the additions and subtractions are summed up
and this amount becomes the Materials & Services expenditure amount for the year. If
the amount added is a one time expense, it is removed in the following year. If the
amount added is to be continued, then a growth rate percentage is applied to the
addition. The growth rate percentage is determined by the percentage change between
the baseline amounts for each of the years.
Once the total operating costs are forecasted, they are multiplied by an expenditure
rate. The expenditure rate is based on actual expenditures as a percentage of budget.
It is very rare that any division spends its entire budget. This assumption and averaged
expenditure rate is carried forward in the forecast model.
By forecasting for individual revenue line items and divisions, Finance staff is able to
customize its forecasts. Prior to using the forecasting software, a set growth rate was
applied to most revenues and expenditures. All though this is an acceptable way to
forecast, it assumes that all revenue and divisions' spending and growth patterns are
the same. This of course is not true.
MEMORANDUM
TO: Budget Committee Members
Craig Prosser, Interim City Manager
FROM: Tom Imdieke, Interim Finance Director
RE: General Fund Analysis
DATE: April 29, 2005
Please find attached an analysis of the City's General Fund showing the impact of the
proposed program enhancements on the use of fund balance in order to finance them.
This analysis was prepared in response to a question posed at the April 25 Budget
Committee meeting regarding how the proposed budget changes are impacting the
City's need to utilize fund balance to support the operating costs of the enhancements.
General Fund
Total
Total Current Operating
Transfers In Revenues Transfers Out Expenditures Use of
Current (Operating with Operating (Operating with Transfers Fund
Budget Revenue Support Only) Transfers In Expenditures Support Only) Out FTE Balance
FY 2004/05 Adopted $16,405,935 $2,145,314 $18,551,249 $16,409,209 $3,198,056 $19,607,265 265.2
FY 2005/06 Status Quo $17,091,900 $2,353,897 $19,445,797 $17,264,410 $3,664,287 $20,928,697 265.2 ($1,482,900)
FY 2005/06 Proposed $17,091,900 $2,385,250 $19,477,150 $18,145,495 $3,682,422 $21,827,917 269.2 ($2,350,767)
FY 2005/06 Enhanced
Portion of Proposed Budget $0 $31,353 $31,353 $881,085 $18,135 $899,220 4.0 ($867,867)
Enhancements:
Police-2 Positions
Library-.5 Librarian
Library-Library Services Supervisor
Long Range-2 Senior Planners
Equipment-Police Officers
Police Motorcycle
Library Book Budget Increase
Parks Equipment
Office of Consolidated Emergency Management Membership
Long Range Planning-Urban Renewal and Comp Plan Update Support
Long Range Planning (Temp Help)
Vehicle Replacements
MEMORANDUM
TO: Budget Committee Members
Craig Prosser, Interim City Manager
FROM: Tom Imdieke, Interim Finance Director
RE: Materials and Services Analysis
DATE: April 29, 2005
Please find attached an analysis of the significant changes in materials and services
costs for FY 2005-06 as compared to FY 2004-05. A brief explanation for the reason of
the impact is given for each of the major expense categories.
Significant Changes Citywide in Materials and Services Costs
Expense Category FY 2004-05 FY 2005-06 Difference Comment
Repair and Maintenance $737,043 $795,453 $58,410 Increases for street repairs and signs
Small Tools and Equipment $272,998 $524,105 $251,107 Communication equipment for Police and Public Works (Grant Funded)
Advertising and Publicity $107,666 $133,730 $26,064 Expanded publication of Cityscape; public notices for planning
Fees, Dues, and Subscriptions $134,755 $211,254 $76,499 Emergency Management membership; League of Oregon Cities, and etc.
Travel and Training $187,984 $210,873 $22,889 Funding for required certification training in Police and Building
Computer Software $69,481 $93,166 $23,685 Additional licenses for maintenance management software
Utilities $776,264 $821,307 $45,043 Projected rate increases
Insurance $370,725 $427,804 $57,079 Property insurance increase
Fuel $158,788 $154,172 ($4,616) Increase in per gallon cost included; overall budget reduction
because of not taking over CWS service area
Library Materials $291,450 $338,629 $47,179 Increased book purchase budget (will increase match from WCCLS)
Total $3,107,154 $3,710,493 $603,339