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HomeMy WebLinkAboutBudget Advisory Commission - 09/22/2009 APPROVED MINUTES BUDGET ADVISORY COMMISSION MEETING TUESDAY, SEPTEMBER 22, 2009 6:00 P.M., CITY CENTER Heritage Room 8080 Mitchell Road COMMISSION MEMBERS: Chair Don Uram, Vice-Chair Rick King; Commissioners: Annette Agner, Eapen Chacko, Jon Muilenburg, Richard Proops, Gwen Schultz CITY STAFF: Sue Kotchevar, Finance Manager; Scott Neal, City Manager; Tammy Wilson, Finance Supervisor; Angie Perschnick, Recorder I. CALL TO ORDER/ROLL CALL Chair Uram called the meeting to order at 6:03 p.m. All Commissioners were present except for King and Chacko, who were not able to attend the meeting. II. MINUTES A. BAC MEETING HELD TUESDAY,AUGUST 25th Chair Uram asked for any additions or corrections to the minutes. Agner clarified that on page 3 of the minutes, she intended to include Hopkins as just one possible example of a neighboring community that Eden Prairie could encourage to join the Community Center or the Art Center. Schultz added the following words in italics to a statement on page 4 of the minutes: "Schultz said the BAC may not want to advertise some of its discussions on television due to the nature of the topics." Muilenburg reworded a sentence on page 4 to read that he said meetings would become more formal if they were recorded. MOTION: Schultz moved and Muilenburg seconded to approve the minutes from the August 25"'meeting. The minutes were approved 5-0. III. STAFF UPDATES A. INFORMATION TECHNOLOGY Lisa Wu presented information relating to the IT departmental budget. The IT budget includes 7.5 FTE. There are 4 fiber and 13 wireless connections for the City of Eden Prairie. There are also 19 virtual and 10 physical servers (hardware) Eden Prairie Budget Advisory Commission September 22, 2009 Page 2 included in the budget,but some of these may be reduced in the future. The IT department supports 305 desktops, 114 laptops, 75 printers, copiers and office jets, 11 scanners, 364 phones, 70 digital cameras, and a number of PDAs. In August 2007, a study was done regarding the use of LOGIS, and the City plans to decrease the services they use with LOGIS over time. The City decided to utilize Ceridian for HR and Payroll going forward, starting in January 2010. Proops asked about the software that is used, and Wu responded that there is not one main system supplier for municipal customers. Police and Fire are moving from five systems into one system provided by New World. Proops wondered if the liquor stores and finance applications interface, and Wu responded that they do at this time. Proops inquired as to the reason for the large number of digital cameras. Wu responded that the police use many digital cameras, and the assessing function needs them too. Uram asked about the staffing projections involved in taking applications in- house. Overall Wu expects that some activities will take less staff time, and the IT staff members are cross-trained to handle a variety of challenges. The IT department would like to add a 0.5 FTE if possible to assist with additional support that may be needed for some applications. Uram asked where the City can achieve economies of scale and reduce operating costs through technology. Wu responded that the Department is consolidating services, and most IT staff can already do multiple tasks involving software and hardware. Many files have been moved to electronic storage, which allows for easier access and better service. Scott Neal added both the Building Inspections and Finance areas have been reduced by one employee during the past year, and these Departments need to use technology to ensure their work can still be completed. Proops asked what the IT staff could do to help business streamline if cost were no objective. Wu replied the IT staff would have more time available to train other staff members on systems. Additional work could be done electronically in non-IT areas to help employees be more efficient. Information is currently shared among departments in an effort to increase productivity,but it would be better if data entry could be standardized so it will not need to be entered multiple times. They could use GIS as a centralized database (there would be one central repository for data files). Schultz asked if the new 0.5 FTE Wu requested is included in the 2010/2011 budget; that proposed position is not included currently. Neal added the City expects to reduce Administrative Support in the Fire and Police areas in 2011 at the earliest, and no staff reductions are included in the current 2010/2011 budget. B. ASSESSING Steve Sinell described the activities relating to the budget for the Assessing division. In addition to 1 City Assessor, there are 5 appraisers, 1 assessing technician. The division is down three employees from the time of peak new construction. During the year, there are 14,560 hours for 22,359 parcels, or an Eden Prairie Budget Advisory Commission September 22, 2009 Page 3 average of 39 minutes per parcel. The division spends a lot of time on customer service, mass appraisals and appeals during this time. They analyze sales trends and data to use in statistical testing. Approximately half of the division's staff time is spent on customer service and appeals. On average, the City handles approximately 80 appeals,but there have been 121 filed so far this year. The Assessing Division works to provide oversight and balance the competing interests of taxing districts and individual taxpayers. Assessing staff store photos and sketches for other divisions to use (police, fire,planning, GIS, and LOGIS maps). Proops asked if there are opportunities to further use technology in the Assessing division. Sinell responded there are, and document imaging for tax court appeals is one are they would like to continue to enhance. Then other departments can access the data they have. Currently the Assessing division has to rush through some aspects of their job, and they would like to be able to spend more time on appeals. Assessing has studied the possibility of moving from LOGIS to another system,but LOGIS is working well for the City's assessors at this time. In the future, the City may share a new system with Hennepin County. Muilenburg asked if the inspections are mostly done on site or by pulling data. The City follows up on building permits to gather information on changes, and they rely on a lot of data for mass assessing also. Agner asked if there are categories of typical customer service FAQs that could have answers posted on the web or if less trained staff could handle the simple questions. Some calls are around ten minutes,but most are longer and more personal than factual in nature. Many property owners call because think their house value is too high, and the situations are not well defined. Proops suggested that answers to questions about the link between the value of houses and taxes could be put in Life on the Prairie (such as why taxes may not decrease when the value of a house decreases). Sinell responded he has put this information in Life on the Prairie multiple times and talked to the press. Schultz asked about affordable housing TIF projects. Since several of these projects are ready to expire in a few years, Sinell replied they will need to be assessed so affordable housing can be maintained. Less than three percent of the tax base involves TIF projects, and the City receives more tax money for transportation than for TIFs. Janet Jeremiah added that Sinell's budget has taken a hit, and they are moving to mileage reimbursement and have decreased the size of the department to decrease spending. C. CONVERSION TO PTO Scott Neal stated a significant change to the City's income protection benefits program took place with the conversion to PTO on July 5, 2009. In 2007, the BAC suggested the City look into moving to a PTO leave program, and the City Council concurred with that recommendation. In 2008, HR and Finance staff began the project. The desired outcomes include improved income protection for employees, Eden Prairie Budget Advisory Commission September 22, 2009 Page 4 increased effectiveness for recruiting and ease of management, and reduced long- term costs of the system. The strategy included open communication about the change, simulating the current benefit program while making transformations (no significant losses for employees), and perceived fairness and equity. Although some employees were very invested in the previous system, overall the new system was perceived as fair and equitable. According to Minnesota law, in the public sector, employees have a property right to their sick leave money. One additional goal for the PTO program was to maintain one set of benefits for all City employees. They wanted to maintain employee morale and avoid increasing the potential for unionization so management could maintain a lot of flexibility to work with staff. PTO includes holidays, vacation, personal leave, and sick leave. Employees also have STD and LTD benefits. The Wellness severance incentive has been discontinued for new employees with the transition to PTO. The average amount of sick leave used has been granted to all employees in the form of PTO, so the number employees receive has decreased from 12 to 6 days. Also, there is a limit to how many PTO hours can be carried over from year to year on the books. The number of personal leave days remains the same. There is an official STD program in place now instead of incorporating that into severance accrued sick leave as was done previously. Proops asked if funeral leave or personal and vacation leave were part of PTO, and Neal replied that they are all included in PTO. There are fewer than 500 hours on the books now for long-term employees rather than up to 1400 or 1500 for long career employees under the previous plan. There is no cash value in the extended illness bank, and the hours are not needed because the illness would generally be covered under disability leave. The estimated cost savings of the transition to PTO over the next eight years is between $760,000 and $930,000; in subsequent years, the estimated savings is approximately $250,000 per year. Muilenburg asked if there is a provision for paying out sick leave at the rate it was earned (rather than at the higher retirement/termination rate). Neal said there is not,but the City did look into this option. The maximum carryover amount is two times the annual rate, which is the same as before. Muilenburg noted employees can only carryover forty hours at his company in the private sector, and they work on a use it or lose it policy for vacation time. Neal added that City employees will stop accruing more time off after they reach the maximum accrual rate, so it is similar with a larger carryover amount allowed. If employees did not take time off starting in their third year of employment, they would stop accruing time off. In response to a question about whether or not the City could change the rules, Neal explained that Cities can make their own rules and then the state holds each City to their rules. There is a new system of rules now and a clean slate, and managers need to manage to the current PTO system with no exceptions. Schultz confirmed the City expects to save approximately $100,000 per year on average for the next eight years. Neal confirmed this but clarified that the amount Eden Prairie Budget Advisory Commission September 22, 2009 Page 5 varies by year and is not a constant amount; also, the amount of turnover will make a difference on the actual number. Schultz asked if the STD cost is netted out in this number, and Neal replied that it is. Proops added that a benefit of the PTO system is that City managers do not have to play police on sick or bereavement leave. Proops also noted the PTO system as it has been set up does not give as much long-term cash savings as he would have preferred. Neal noted that the median number of sick days used per year(5.2) is approximately what was given to employees. For some young parents and caregivers for elderly family members, this change has had a negative impact since they will be able to use fewer sick days than they did previously under the PTO system. The Employers' Association has recognized the City of Eden Prairie's new income protection benefits program with its HR Best Practices award for 2009. D. FRANCHISE FEES Scott Neal initiated informal discussions with an Xcel Energy representative regarding franchise fees. The City can impose a franchise fee of up to 5%. The City Attorney told Neal that, as a Plan B City, the City of Eden Prairie does not have the authority to collect a street light utility. A franchise fee would,however, be an option for the City. If a franchise fee is particularly inequitable and does not affect all classes of customers, it can be denied. Currently non-taxpayers end up not contributing to street light costs. Proops asked how much more money is realized if non-profit customers are not billed the franchise fee by Xcel Energy for the City. Neal responded this is not an option since the fee is based on meter usage. The cost for Eden Prairie schools would be approximately $1500 per year. Schultz asked about the impact of the franchise fee on other non-profits, and Neal plans to look into that. Uram asked about the next steps regarding the franchise fee option. Neal replied that there was a good conversation at a recent City Council meeting about the best way to evaluate franchise fee information. Neal will present the information to City Council and assess their impressions and leanings about the subject. Uram noted it does not seem franchise fees will generate that much revenue outside of the current tax base. A lot of heat may be generated from non-profits about the fee. Neal clarified that no administrative charges would be involved in the collection process from Xcel Energy. An average franchise fee per customer of 1.32% would generate $875,000 for the City. Muilenburg suggested that the franchise fee might be a good funding mechanism for the City since they are losing development revenue. The City could add in earmarks for Police and Fire divisions from the revenue collected due to the franchise fee. E. LIQUOR-CUSTOMERS OUTSIDE OF EDEN PRAIRIE Kotchevar reported 11% of Eden Prairie Wine Club members live outside of Eden Prairie. There are 1321 Wine Club members overall. 20% of the City-owned liquor store customers at the Kowalski location are from other communities, as Eden Prairie Budget Advisory Commission September 22, 2009 Page 6 are 32% of Den Road location customers, and 25% of the customers at the City liquor store by Rainbow. IV. CHAIR AND STAFF ADMINISTRATIVE ITEMS Proops provided a handout including the many questions he had relating to the budget. Proops asked about the "Negative net obligation end of year$2,120,896" listed from 2007 for the Volunteer Fire Fighters Relief Association. Kotchevar explained the number is unrelated to the cash payment that the City has to make; it is shown due to an accounting standard the City is required to use. The City overfunded FFRA, and that credit was taken into account when the actuarial study was done. If the City had not overfunded the plan, their current obligation would be significantly greater than it is. Proops expressed concern about spending money on the Firefighters' Duty Crew when the advantage was not obvious to him. It was clarified that, in a medical situation, the duty crew would respond right away instead of waiting for other firefighters to arrive at the station. Muilenburg asked why firefighters respond to medical calls. Proops updated him with the information the BAC received from the Fire division at a recent meeting: a lot goes on at the scene of a medical emergency, including a need for extra individuals to perform CPR since it is very labor-intensive and tiring; also, someone needs to take the person's medical history and possibly help manage an emotional spouse. Regarding Proops' questions about the allocation of costs to the operational areas, Kotchevar will prepare answers for the BAC for a future meeting. Regarding Proops' question about the utility construction fund, Kotchevar explained that this is not a cash balance fund. Instead, it includes fixed assets and is similar to retained earnings in a for- profit company. Also, Kotchevar clarified it is not possible to pay off part of the long- term debt(approximately $50 million) with the "money" (actually mostly fixed assets) in the utility construction fund. Schultz would like to see what other cities are doing with their budgets (specifically Burnsville). Neal responded he has the information available for Burnsville. Kotchevar noted there is one more meeting for the BAC before their meeting with the City Council. She wondered how the BAC would like to prepare information or recommendations for the City Council. On December 15, the City Council will set the tax levy. Proops asked if the $230,000 severance figures will be reduced in the 2010 or 2011 budget. Kotchevar replied it has not been because savings relating to severance costs will be realized over time. Employee turnover is what will drive down the costs for severance over time. Neal added the City still has to book the cash value of paid absences. V. ADJOURNMENT The meeting ended at approximately 8:10 p.m. Proops moved and Muilenburg seconded the motion to adjourn.