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Minutes 02-28-11 MiNUTES OF THE FiNANCIAL ADViSORY COMMITTEE MEETING HELD IN CONFERENCE ROOM A, AT THE LIBRARY, 208 S. SEACREST BLVD. BOYNTON BEACH, FLORIDA, AT 6:00 P.M., ON MONDAY, FEBRUARY 28,2011 PRESENT: Don Scantlan, Chair George Feldman Dave Madigan Merline Pamplona (Arrived at 6:01 p.m. ) William Shulman Barry Atwood, Director of Finance Tim Howard, Deputy Director of Finance Kurt Bressner, City Manager ABSENT: Terry Lonergan Michael Madalena Chair Scantlan called the meeting to order at 5:54 p.m. Roll was called and a quorum was determined to be present. There were no changes to the agenda. Motion Mr. Madigan moved to approve. Mr. Shulman seconded the motion. The motion passed unanimously. 1. Introduction of City Staff Budget Team (Introductions were made later in the meeting) 2. Approval of Minutes - (if available) . February 7, 2011 Mr. Shulman commented on Page 7 he wanted it to be clear that, "I agreed entirely with Mr. Madigan's suggestions that some recognition be given to all associations who donate money and, as a matter of fact, I changed my program to so indicate." 1 Meeting Minutes Financial Advisory Committee Boynton Beach, FL February 28, 2011 Motion Mr. Madigan moved to approve the minutes with the amendment. Mr. Feldman seconded the motion. The motion passed unanimously. 3. Review and discussion of Citizen Survey final results (e-mailed in advance and attached) (Merline Pampfona arrived at 6:01 p.m.) Chair Scantlan advised he took the number of responses cast and found a sample size calculator to determine the level of confidence and margin of error with a population of 40,000. The City's population is 66,000; however, he reduced the number to capture only the adults. With an hypothesis of 99% and a margin of error of 5.5% would equate to a sample size of 500. Chair Scantlan thought the response was a good sample size. Mr. Bressner felt the 40,000 number would be high. The registered voters total in the range of 32,000 would have been more appropriate perhaps. It would have made the results even better. The assumption of a normal distribution would hinge on the question, if it was totally random. Chair Scantlan inquired out of the 513 responses, how many were City employees. Of the responses, 66% gave their name and address. It could be an area that would be challenged. Mr. Feldman inquired about the format that would be used to present the survey and the results to the City Commission. Mr. Bressner surmised it would be part of the overall report that would be submitted. It would be an integral part of the Committee's work product along with the individual project reports. The fact it could include City employees is a possible criticism the Committee should be prepared to answer. True randomization is critical to the credibility of the results. Sharyn Goebelt, Human Resources Director, advised she saw two names that were familiar to her as employees. Many responses left the name blank. Self-introductions were made of all those present. Mr. Madigan added the randomization is extremely important. An uninformed person would view the results as not even 2% of the population. It would be critical to include the information and source of Chair Scantlan's calculations. Mr. Atwood would include the information in his report. Observations such as the fact 70% of the responses were in favor of raising the fee to ride the Shopper Hopper and of those that responded 94% had never used the Shopper Hopper would be pointed out. Mr. Atwood suggested the results as they relate to any revenue or expenditure item should be included with those reports also. He noted location and public safety were the most important items for moving to the City and staying in the City which are 2 Meeting Minutes Financial Advisory Committee Boynton Beach, FL February 28, 2011 background type information. Seventy-three percent of the respondents were not in favor of cutting public safety to maintain the tax rate. Roughly half were not in favor of employee layoffs and furloughs to maintain the tax rate at 6.7626. Chair Scantlan cautioned it would be plus or minus 5.5% margin of error. Mr. Atwood suggested any recommendation that is supported by the survey data with a clear majority, could be used as a comment. Chair Scantlan offered the survey was one of his assignments so he would address the initiative in general. If any of the questions related specifically to another topic, the data obtained should be included in the individual recommendations. Mr. Atv'v'ood continued the survey results were 60% in favor of decreasing sanitation services versus an increase in fees. The survey revealed 68% agreed to increasing property taxes rather than reducing police coverage or response time. Sixty-one percent were in favor of increasing utility fees semi-annually rather than annually. A list of all percentages had been compiled and included with the minutes. Chair Scantlan added in his contact with the citizens, it shocked him how many people indicated they only put their garbage can out once a week. The industrial size garbage cans contributed to the reduced need. Mr. Atwood concurred and it was verified in comments from retiree communities. Mr. Feldman advised in his community, twice a week pickup would be needed. Mr. Bressner questioned if there was enough scalability in the system that some areas could opt to continue to pay for twice a week service while others, as a community, could opt going to a single pickup a week. It would depend on the staffing schedule and if the equipment and manpower would be reduced to meet the lesser demand. Jeff Livergood, Director of Public Works and Engineering, noted it would be difficult. There was further discussion and it was determined it would have to be an entire community subscribing to once or twice a week pickup, not an individual homeowner choice. Mr. Feldman noted the communities would have to be contacted and given the option including the price differential. Mr. Livergood advised his Department wanted to provide the service the public was willing to pay for. It would be easier to do in communities with well established homeowner associations; otherwise it would be very difficult. 4. Presentation of budget development plans by City Staff Budget Team Mr. Bressner advised the Team had started last year and over the last four weeks was determining if the fundamental assumption of the way business has been done could be reframed. Two core areas of operation were public health and safety, and sustainability defined as development, building code, environment, parks and recreation. Public health and safety would include police, fire, water and sanitation. The idea was brought up to establish a public safety fund showing index revenues to pay for the services. There would then be indexed revenues to meet the other needs. Utility and Solid Waste are enterprise funds. Public Safety includes a variety of revenues; property taxes, charges for services such as interlocal agreements, fines and forfeitures and others. The concept was to show the citizens where their tax dollars and revenue streams are going. Sustainability revenues would include building permit revenues, state shared 3 Meeting Minutes Financial Advisory Committee Boynton Beach, FL February 28, 2011 revenues, sales tax revenues, park fees for recreation services and others. The change would delineate the revenue streams and the shortfalls to provide the core services. The survey did indicate the citizens were willing to pay more in property taxes and fire assessment to maintain the level of services. The residents and businesses would know what monies are dedicated to meet the purposes. Mr. Bressner acknowledged that all the property tax revenues of $28 million would only cover 50% of the cost for Police and Fire. The fire assessment revenue is $3.8 million and reduces the gap in cost to maintain the service level. The intergovernmental revenues from Fire and Police would also be added in. The final shortfall has not been determined. The concept would be a way to communicate to the community and Commission the cost to maintain the level of service and the available revenue to offset the cost. Chair Scantlan asserted the line item expenses would have to be available. Mr. Bressner advised they would be recommending the creation of a Public Safety Fund which would capture the pension cost, payroll cost, operating cost and equipment as a total cost analysis. Pending State legislation may have an impact on pension costs, but not until next year. The survey indicated the citizens liked the level of service and were willing to pay for it. Chair Scantlan asserted the first assumption would be taxes would not be raised. Mr. Bressner contended that would be a false assumption this year. Chair Scantlan asked if no tax increase were the starting point, would it reveal the 15% reduction exercise would be the consequence. Mr. Bressner advised that would be a political assumption. Services were being provided and the question is, are the taxpayers willing to pay for those services and at what level. It is not a symbolic gesture of maintaining a property tax rate any more. It has been done with one-time revenues to fill the gap created by an over 40% drop in the taxable value in the City within the last two and a half years. Mr. Bressner recalled when the taxable value peaked in 2007 the millage rate was reduced appreciably and then the free fall happened. A $12 million dollar gap has to be met and will require re-positioning of staff resources by consolidating department operations, programs and services. Duplication of services has to be continually monitored to buy efficiencies and cost savings more predominately in the sustainability portion of the operation. It covers only 25% of the total cost in the General Fund. Mr. Feldman understood the 15% reduction had already been done. Mr. Bressner questioned how realistic it was to maintain the level of service. The information would be available on the decrease in service levels to meet the 15% reduction. The survey results are an intricate part to begin discussions on the budget. He commended the Financial Advisory Committee for having the tenacity to ask the questions of the taxpayers. Mr. Atwood noted a 6% cut last year was presented but the Commission would not apply it to public safety and all other departments were forced to pickup that share. To 4 Meeting Minutes Financial Advisory Committee Boynton Beach, FL February 28, 2011 compensate for not including public safety, it would mean 20% cuts from all other departments. Mr. Bressner recalled all the special interest groups came and lobbied to maintain programs that were feel-good programs that survived another year. The budgetary process was littered with programs that were recommended to be shed and the Commission brought them back. The Budget Team wanted to make sure the Financial Advisory Committee would be engaged early in the process before the Commission sees the budget and sit in concert on the direction to be taken. There may be a few fundamental differences, but Mr. Bressner did not feel they would be significant. Mr. Madigan supported indexing expenses rather than revenues to determine the amount of revenue needed. Controllable and uncontrollable expenses can be separated to find efficiencies and then calculate the revenues needed to cover all expenses. Mr. Bressner commented the City has $8 million of unfunded mandates by State and Federal government covering all departments. The programs are good programs, but expensive and required by law to maintain the programs. Mr. Bressner was pleased with the input from the Financial Advisory Committee and the different perspective that it reveals. The individual recommendations should be turned in to the City Manager by March 14th and staff would format the recommendations for consistency. Chair Scantlan announced the March 21 st agenda would include voting on each recommendation. Motion Mr. Feldman moved to cancel the meeting on March 7 and the next meeting be March 21st. Mr. Madigan seconded the motion. The motion passed 4-1 (Mr. Shulman dissenting) . Lori LaVerriere, Assistant City Manager, distributed a draft of the budget schedule. Mr. Bressner noted he planned to submit the budget to the Commission on June 15th. The budget workshops were tentatively scheduled for July 11, 12, and 13 to meet statutory guidelines for adopting a tentative millage rate. It would be helpful to have a preliminary budget prepared for the Committee's review by May 9th. Mr. Atwood noted the detailed department budgets would be available and the City Manager would prepare a summary format. It was anticipated from May 9th to June 15th the Budget Team and Finance Committee could work together to finalize a formal proposed budget to the Commission. Mr. Bressner advised the Committee should decide how they want to integrate their findings into the budget. Chair Scantlan proposed the report be in the budget as a separate chapter, following the City Manager's summary. Chair Scantlan thanked the Budget Team for attending the meeting. 5 Meeting Minutes Financial Advisory Committee Boynton Beach, FL February 28, 2011 5. Progress update on assigned projects by each Financial Advisory Committee Member In response to Mr. Shulman's question, Chair Scantlan advised all the assignments were not allocated. Chair Scantlan's two projects were the online billing that was accomplished and the survey he had reported on earlier. Mr. Feldman advised he had interviewed Mr. Livergood of Public Works and his team. He also interviewed Howard Ellingsworth, Chair of lrle Delray Beach Financial Advisory Committee. Deiray has been contracting their sanitation services for the last 20 years. Discussions with ivir. Livergood revealed if the service was contracted to the County, at least $3.5 million would have to be realized to cover the transfer to the General Fund. Mr. Ellingsworth advised their contract had some negative points and would not discuss any positive points. Mr. Feldman remarked Mr. Livergood had a solid team and was very proactive and aggressive in protecting what has been established in the City of Boynton Beach. It had been the experience of one employee that a private contractor partnership would result in less control over the service. Mr. Bressner suggested Mr. Feldman ask for a copy of Delray's franchise Ordinance with Waste Management that should outline any revenue limitations or rate increases. Mr. Atwood recalled Mr. Livergood had made similar inquiries a few years ago and Waste Management could not generate in franchise fees, using the current rate structure, the same amount that the Sanitation Fund transfers to the General Fund at this time. Tim Howard, Assistant Finance Director, explained the contract would cover all events and the level of service to be provided and Waste Management would ultimately charge the customer to cover everything. Chair Scantlan stressed that Solid Waste Management is a profit generator for the City. Another company would not be able to respond to the citizens' needs and pay a franchise fee at the same rates being charged at this time. Mr. Madigan had no update to give. Ms. Pamplona reported she was finding it hard to come up with pros for a 15% cut. Chair Scantlan pointed out the pro was not increasing taxes for those on fixed incomes. Mr. Shulman had modified the Homeowners Association contribution to the City program based on Mr. Madigan's suggestion that the HOAs be recognized. He distributed his final report. Mr. Shulman's other project related to suggested increases in revenue sources that needs to be reviewed by the City Manager and Mr. Atwood. He submitted 49 suggestions that needed to be reviewed from a technical point of view and legal point of view. Mr. Madigan inquired if the homeowners' letter should use the word donation or contribution or investment. Attorney Cheraf would be consulted. Mr. Bressner added the City would have to acknowledge the donation and provide an appropriate tax letter. Mr. Shulman's third project was cell phones and take-home 6 Meeting Minutes Financial Advisory Committee Boynton Beach, FL February 28, 2011 vehicles that was 90% complete at this time. Current data would be sent to Mr. Shulman. 6. Proposed City Ordinance (Agenda Item attached) amending attendance requirements of the Financial Advisory Committee (First Reading at March 1st City Commission meeting) Chair Scantlan explained the prohibition of missing four meetings is inappropriate for a board that meets every other week. There was discussion to recommend the second option with the percentages. After the budget process is completed the Cormnittee could then meet on a monthly schedule. Chair Scantlan highly recommended the Board members attend the budget meetings when possible. 7. Other Business Motion Mr. Madigan moved to make May 9th a scheduled meeting. Mr. Feldman seconded the motion. The motion passed unanimously. 8. Adjournment There being no further business to come before the Committee, Chair Scantlan adjourned the meeting at 7:11 p.m. udith A. Pyle, C Deputy City Cle 7 FiNANCiAL ADVISORY COMMITTEE BUDGET SURVEY RESULTS Staff Observations of Responses (Numbers in Brackets Refer to Response Page Number) 1. 513 persons attempted the survey (1) 2. 97.3% maintain a residence in the City limits (2) 3. 45.3% are age 65+ (4) 4. 93.5% own their home (5) 5. The City's location and Public Safety were most important factors moving to the City(7) 6. The City's location and Public Safety were most important factors remaining in the City (12) 7. 9.0% own or operate a business in the City (15) 8. 73.3% not in favor of cutting Public Safety to maintain tax rate at 6.7626 mills (20) 9. 51.2% not in favor of employee layoffs or furloughs to maintain tax rate at 6.7626 mills (21) 10.89.8% in favor of continuing Mon-Thu, 7 a.m.-6 p.m. compressed work week (21) 11.69.9% in favor of increasing Fire Assessment ($68 to $88) to maintain Fire Service level (22) 12.56.6% in favor of the City considering outsourcing service delivery (22) 13. Large % either Agree or Strongly Agree to raise user fees to maintain service levels (23) 14.62.6% in favor of decreasing sanitation service pickup vs. increase of fees (25) 15 6Q ')01_ in f,>"rw ",f increa"'in.... n..",n,..,'-+" f'>"es VS .."'rl.,"'in.... O....li",.... "'overage/response t'lme (25\ . V.&.. IV "' IOVVI VI III ;:>II'~ /-"V/-,C;;ILY LOA . 1C;;\,.l\,.lvIlJ~ I VllvC;; v I 16.62.1 % in favor of increasing Utility fees semi-annually vs. annually (26) 17.94.3% have never used the Shopper Hopper (28) 18.70.1 % in favor of raising Shopper Hopper fares to cover operating deficit (28) C:\Documents and Settings\pylej\Local Settings\Temporary Internet files\OLKAB\BUDGET SURVEY - Staff Observations of Results.doc