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Home My WebLink About03 21 11 city council work session - budget dates and topicsU x \�!!1 4646 Dakota Street SE Prior Lake. MN 55372 CITY COUNCIL WORK SESSION AGENDA REPORT DATE: TO: FROM: REGARDING: March 21, 2011 Mayor and Members oft Council Frank Boyles, City Mana 2012 Budget Dates and Topics Discussion Enclosed with this memo is: A copy of Jerilyn's PowerPoint presented to the City Council on Febru- ary 22, 2011 to discuss the surplus. It is being provided to give you examples of specific information the City Council may want to discuss. 2. The agenda report and proposed budget / CIP adoption process for 2012. To assure that there is complete understanding of the staff's proposal, the work session is intended as an opportunity for questions. The Council may wish to recommend adoption of the proposed process or an amended version thereof at the City Council meeting following the work session. General Fund Revenues $455,000, 4% Actual > Budget February 22, 2011 Jerilyn ffid(s6n- Finance Director Property Tax +$1 59,000 Building Permits +$214,000 Tower Leases +$52,000 Court Fines/ Prosecution ($56,000) Interest Earnings +$54,000 General Fund Expenditures $524,000, 4% Actual < Budget an Approx $463k or 88% of savings in six areas 2011 Budget Amendment Staff considering options for amending the 2011 budget Reflect additional areas in which savings were realized in 2010 Realistically carry over to 2011 Present to Council at a later date May become a regular part of budget process Water & Sewer Fund Total Revenues +$1 1 5,000, 2% Water Revenues 2010 v 2009 Sewer Revenues 2010 v 2009 Interest Revenues Council Options Fund Balance Reserve Comprehensive Financial Management Policy Planned One -Time Uses Economic Development Initiative Technology Upgrades Bonding Accelerate Street Maintenance Water & Sewer Fund Operational Expense Savings <1 3 %> Capital Improvements < 2 %> CR21 repairs authorized in 2009 Project expenses over multiple years Fund will be segregated as of 12/31/2010 Fund will be segregated as of 12/31/2010 Water Quality Fund Total Revenues +77,000, 18% Grant Funds not budgeted $49k Capital Improvements CR21 extension & CR1 2 projects Pond maintenance authorized in 2009 Project expenses over multiple years Annual Audit Audit Field Work - End of March Audit Presentation - May 16, 201 1 Transit Fund Total Revenues +77,000, 14% State Transit Aid 2010 v 2009 <S1 22k> Bus Fares higher than anticipated but lower than 2009 Operating Expenses - jARC Bus delayed Capital Improvements Eagle Creek Transit Station <S219k> PRip� ti U trf �jNNESO�/ 4646 Dakota Street SE Prior Lake, MN 55372 CITY COUNCIL AGENDA REPORT MEETING DATE: MARCH 21, 2011 AGENDA #: 10D PREPARED BY: FRANK BOYLES, CITY MANAGE PRESENTER: FRANK BOYLES, CITY MANAGER AGENDA ITEM: CONSIDER APPROVAL OF A REPORT ESTABLISHING KEY DATES AND TOPICS RELATED TO THE PREPARATION OF THE 2012 BUDGET DISCUSSION: Introduction This agenda report is intended to be the basis for discussion at the March 21 work session and City Council meeting. The purpose of this agenda item is to propose a process which will encourage complete and comprehensive City Council discussion of all salient issues associated with preparing the 2012 Budgets and Capital Improvement Program. History Last year's budget process began on February 1, 2010. It contemplated 12 work sessions on budget - related issues. My records do not confirm whether all scheduled sessions actually took place. The important point is that at the conclusion of the budget process not everyone was satisfied with the process. Therefore, the Finance Director and I have reviewed the process and propose revisions in an attempt to address all Council concerns. Current Circumstances At our February 22, 2011 work session, the City Council discussed the 2012 budget process. Since that meeting, various issues have arisen which suggest that further refinement of the process is needed so there is Council consensus before we undertake this effort. The process proposed for Council consider is the third page of this report. To integrate this narrative with the proposed process, we have numbered each step of both documents. In an effort to tie various aspects of the budget consideration process together, we propose the following: consolidate session topics, reduce the overall number of work sessions and, in various cases, lengthened work sessions. By providing for longer sessions it is our hope that the Council will be able to fully discuss and deliberate on each critical issue before moving on to the next. Consolidation of topics is intended to avoid some of the conceptual fragmentation that may have occurred last year as well. We also added some budget steps. Most notable is the identification of when financial information is available to staff and when it should be available to the City Council. (Step 1) This schedule would become an annual part of the process. This work session will also facilitate a discussion of circumstances that could have led or may lead to a surplus or deficit condition. (Step 1) Included in Steps 3 and 4 is the opportunity to factor in any amendments that were made to the 2030 Vision and Strategic Plan into the CIP and budget. A discussion of benchmarks is also provided at the same time the Council discusses the amended budget and again with the preliminary budget for the coming year. (Steps 4 and 7) Perhaps the single most important new step is the annual amendment of the current year's budget at about mid -year taking into account changes in the economy, revenues and expenditures to the extent possible. (Step 4) We believe that this step will provide a better "launching pad" for the coming year's budgeting process and help to mitigate against variances. ISSUES: There are two alternative approaches to the budget / CIP adoption process. The first approach is to schedule City Council review of each individual element of the budget and CIP first so that the component parts of each document could be considered one by one, much like building blocks. The other approach is to focus on the big picture first, i.e. levy and use of reserves to support the coming year's budget and CIP. We are recommending the second approach as it became clear that we would be unable to have elements such as the Facilities Management Plan, Technology Plan, Personnel Plan, and Parks Study done in time to provide for an orderly process using the first approach. This may be the approach the Council wishes to consider for the 2013 budget, however. It is expected that the 2030 Vision and Strategic Plan will be updated by June 6. These activities will be scheduled on non -City Council nights but an additional workshop may need to be added to completely integrate this process with the financial process if we are unable to complete this process by June 6. In terms of length of work sessions, the Council should weigh in on the proposed four 2- and -a- half -hour work sessions. If conducted as we have done in the past, this will mean that the Council meeting following these four meetings will begin at 7 p.m. rather than 6 p.m. There is also a four -hour consolidated workshop proposed on July 5. 1 do not anticipate that there would be a Council meeting that evening. FISCAL IMPACT: Collectively, the expenditures and revenues reflected in the budget and CIP constitute the greatest financial impact upon our residents. Therefore, the proposed process is to assure that adequate time is provided to the City Council to thoroughly deliberate both the budget and CIP so the final products reflect input by fully informed City Council members. ALTERNATIVES: 1. Review the proposed process and discuss the changes at the work session. 2. Provide staff direction regarding desired changes at the City Council meeting. RECOMMENDED Alternatives 1 and 2. MOTION: 2 2012 Budget Dates and Topics Discussion March 21, 2011 Step Date Hours Discussion Topics Adoption 1 Mon, 2.5 Comprehensive Financial Management Policy Apr 18 Apr 4 - Reserve Balances for: • General Fund • Water Fund • Sewer Fund Availability of Financial Information n/a 2 Mon, 1.5 Long Range Financial Planning n/a Apr 18 • Use of Reserves • Maximum Levy 3 Mon, 2.5 Draft CIP: Aug 15 Jun 6 Transportation Plan • Water Operating Plan • Sewer Operating Plan • Equipment Replacement Plan • Park Equipment Replacement Plan • 2030 Vision and Strategic Plan Does NOT include Facilities Management Plan or Technology Plan 4 Mon, 2.5 Benchmark Discussion n/a Jun 20 Amended 2011 Budget Jul 5 • 2030 Vision and Strategic Plan 5 Tues, 4 Facilities Management Plan Aug 15 Jul 5 ** Technology Plan Aug 15 Personnel Services Plan Aug 15 ** No City Council meeting this evening. 6 Mon 2.5 Park Analysis Aug 15 Aug 1 7 Mon 1.5 Preliminary 2012 Budget with additional Sept 6 Aug 15 benchmark presentation GENERAL FUND RESERVE HISTORY Year Fund Balance % Change FB % of Next Year's Budget Beginning Ending Total Change Cumm Change 1990 1 1 81 81 5.8% 43.1% 1991 1 1,516,096 19,738 101 1.3% 42.5% 1992 1,516,096 1,346,047 (170,049) (68,590) -11.2% 33.9% 1993 1,346,047 1 385,728 317 28.7% 36.3% 1994 1 1 (246,760) 70,378 -14.2% 28.9% 1995 1 1,968,019 483,004 553,382 32.5% 36.1% 1996 1,968,019 2,039,480 71 624,843 3.6% 33.1% 1997 2,039,480 1,815,122 (224,358) 400,485 -11.0% 26.6% 1998 1,815,122 2 439,431 839,916 24.2% 31.6% 1999 2 2 195,435 1,035,351 8.7% 33.4% 2000 2 3 1,031,273 2,066,624 42.1% 46.3% 2001 3,481,261 4,354,441 873,180 2,939,804 25.1% 56.8% 2002 4,354,441 4,840,126 485,685 3,425,489 11.2% 56.0% 2003 4,840,126 4,088,907 (751,219) 2,674,270 -15.5% 44.8% 2004 4,088,907 4 281,922 2,956,192 6.9% 45.0% 2005 4,370,829 4 (73,459) 2,882,733 -1.7% 39.6% 2006 4 5,276,400 979,030 3,861,763 22.8% 45.2% 2007 5,276,400 5,020,666 (255,734) 3,606,029 -4.8% 40.4% 2008 5,020,666 5,489,435 468,769 4,074,798 9.3% 43.6% 2009 5,489,435 6,036,756 547,321 4,622,119 10.0% 49.8% 2010 Est 6,036,756 7,016,014 979,258 5,601,377 16.2% 57.6% Average (1990 - 2010 Estimate) 266,732 9.04% 41.47% Source: 1994 - 2009 Annual Financial Reports; 2010 based on preliminary numbers as of 02/20/2011 Note: 2002 FB was restated in 2003; 2010 numbers are preliminary as of 02/20/2011. Reduction to Fund Balance: 6 of last 21 years Average Change from Revenues 331,338 Average Change from Expenditures (64,606) Average Change to Fund Balance 266,732 Change Due to Revenues Change Due to Expenditures Adj Exp Variance Adj Expenditures % Pos (Neg) Var Adj FB Change from Operations - Pos 122 3.7% 81 75,000 % Pos (Neg) Budget Actual Variance (Neg) Var Comments Budget Actual Variance Var Comments Contingency Info 3,309,845 3,269,293 (40,552) -1.2% 4,655,918 3,309,845 3,187,572 122 3.7% 81 241 $100k used $37k 3,469,175 3,401,443 (67,732) -2.0% 2.5% 3,469,175 3,381,705 87 2.5% 19,738 $75k to Capital Park Fund $100k used $74k 6,676,814 153,386 2.2% 439,431 250,000 7 (28,052) -0.4% 445,435 - $85k to Capital Park Fund; $200k to 76,583 3,570,485 3,682,989 112,504 3.2% (363,917) 3,570,485 3,853,038 (282,553) -7.9% (170,049) establish Sev Comp Fund. $100k; used $160k 1,000,000 8,701,387 (64,855) -0.8% Pmt in lieu of taxes $131k; Dev Agree 250,000 8,595,021 521,955 5.7% 531,922 784,000 9,195,888 3,966,430 4,399,485 433,055 10.9% $331k. 3 ,966,430 4,013,757 (47,327) -1.2% 385,728 No addl transfers. $49k; used $54k 4 4 (66,022) -1.4% 7.0% 4 4,955,918 (180,738) -3.8% (246 ,760) $300k to Rev Equip Fund. $100k; used $144k; 5,130,765 5,372,031 241 4.7% 5,130,765 4,889,027 241 4.7% 483,004 No addl transfers. $100k; used $39k $100k to Rev Equip Fund; $100k to Sev Comp Fund; $135k to 5,447,005 5,719,305 272,300 5.0% 5,447,005 5,647,844 (200,839) -3.7% 71 Construction Fund. $140k; used $111k 6,153,718 6,268,231 114,513 1.9% 6,153,718 6,492,589 (338,871) -5.5% (224 ,358) $450k to Rev Equip Fund. $150k; used $152k 6,830,200 7 286,045 4.2% 6,830,200 6,676,814 153,386 2.2% 439,431 No addl transfers. $100k; used $26k $100k to Rev Equip Fund (1998 storm - Chg for Sery $104k (incl FF); Dev equip damage); $150k to Street Agree $66k; Permits $70k; Int $22k; Collector Fund (Hwy 13 Intersection 7 7,601,069 473,487 6.6% Prop Sale $86k. 7 1 127,582 7 (278,052) -3.9% 195,435 Imp); $50k; used $23k Chg for Sery $321k (incl FF); Dev Agree $230k; Permits $125k; Int 7,334,944 8,289,634 954,690 13.0% $135k 7,334,944 7 76,583 1.0% 1,031,273 No addl transfers. $50k; used $16k Chg for Sery $371k; Dev Agree $293k; Permits 341k; Int $134k; Prop 7,517,047 8,754,144 1 16.5% Sale $112k. 7 ,517,047 7,880,964 (363,917) - 4.8% 873,180 No addl transfers. $50k; used $194k $750k to F420 for City Hall /Police Chg for Sery $518k; Dev Agree Station; $100k to Rev Equip Fund; 7,661,883 9,312,561 1,650,678 21.5% $144k; Permits $626k; Int $129k 7,661,883 8,826,876 (1,164,993) -15.2% 485,685 $150k to F230 Sev Comp Fund. $50k; used $143k $1M to F420 for City Hall /Police 8,636,532 8,950,168 313,636 3.6% 8,636,532 9,701,387 (1,064,855) -12.3% (751,219) Station $150k; used $494k $250k to F420 for City Hall /Police 9,116,976 9,126,943 9,967 0.1% 9,116,976 8,845,021 271,955 3.0% 281,922 Station $75k used $92k $784k to F420 for City Hall /Police 9,716,031 9,906,429 190,398 2.0% 9,716,031 9,979,888 (263,857) -2.7% (73,459) Station $250k used $140k Dev Agree $386k; Int $99k; Prop Sale $415k; Excess TIF Dist $115k; $500k to F420 for City Hall /Police 10,840,734 12,059,159 1 11.2% Franchise $190k Etc 10,840,734 11,080,129 (239,395) -2.2% 979,030 Station $200k used $142k $150k to F230 Sev Comp Fund; $250k $250k contingency; used 11,685,807 11,748,959 63,152 0.5% 11,685,807 12,004,693 (318,886) -2.7% (255 ,734) for Pike Lake Pk. $143k for dump cleanup; 12 12,021,394 (405,037) -3.3% 12 11,552,625 873,806 7.0% 468,769 No addl transfers. $275k; used $90k 12,576,974 12,087,937 (489,037) -3.9% 12,576,974 11,540,616 1,036,358 8.2% 547,321 $100k to Park Equip Fund $300k; used $7k PRELIMINARY 2010 RESULTS; NOT 12 12,575,807 455,261 3.8% 12 11,596,549 523,997 4.3% 979,258 FINAL! $69K; used $6K 331,338 4.62% (64,606) -1.39% Additional Transfers, Etc Addl Transfers Deducted from Expenditures Adj Exp Variance Adj Expenditures % Pos (Neg) Var Adj FB Change from Operations - 3,187,572 122 3.7% 81 75,000 3,306,705 162 4.7% 94 285,000 3,568,038 2 0.1% 114,951 - 4,013,757 (47,327) -1.2% 385,728 300,000 4,655,918 119,262 2.5% 53,240 - 4,889,027 241 4.7% 483,004 335,000 5,312,844 134 2.5% 406,461 450,000 6,042,589 111 1.8% 225,642 - 6,676,814 153,386 2.2% 439,431 250,000 7 (28,052) -0.4% 445,435 - 7 76,583 1.0% 1,031,273 - 7,880,964 (363,917) -4.8% 873,180 1,000,000 7,826,876 (164,993) -2.2% 1 1,000,000 8,701,387 (64,855) -0.8% 248,781 250,000 8,595,021 521,955 5.7% 531,922 784,000 9,195,888 520,143 5.4% 710,541 500,000 10,580,129 260,605 2.4% 1 400,000 11,604,693 81 0.7% 144 - 11,552,625 873,806 7.0% 468,769 100,000 11 1 9.0% 647,321 - 11,596,549 523,997 4.3% 979,258 208,204 2.31% 539,542 Average Change from Revenues 331,338 Average Change from Adjusted Expenditures 208,204 Average Change to Fund Balance 539,542 C: �DOCUME - 1 �cgreen�LOCALS - 1 �Temp�ELF20110322 085532�General Fund Reserve History 1990 - 2010