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Budget & Finance Committee Recommendation FY 2015ACKNOWLEDGMENTS The City of South Miami 2015 Budget and Finance Committee Members would like to thank the Commission for their dedication and commitment to the City of South Miami and its residents. It is an honor for this committee to serve the City of South Miami in this important task of making recommendations regarding the City’s proposed budget. Special thanks to City Manager, Steven Alexander, and his staff for their tireless support and guidance in this complex process. The positive encouragement and exceptional knowledge of the Chief Financial Officer was invaluable for the committee. This report was a collaborative effort and as such we would also like to thank the department directors, the staff of the City of South Miami, and South Miami residents for their cooperation and support. Respectfully, Budget & Finance Committee August 13, 2014 Budget & Finance Committee Members: Patrick M. Bell, PhD, Chair James Dundorf Maximo Monterrey Kyle Saxon GOALS AND OBJECTIVES The purpose of the committee as stated in section 2-26.8 of the city’s code of ordinances is to provide advice and recommendations to the city commission regarding the adoption and implementation of financially sound annual budgets and investment policies. To accomplish this purpose, the committee is charged with reviewing and evaluating the draft proposed budget, the city's investments, employee pension and other retirement accounts; examining ways to preserve existing revenue sources and exploring additional funding sources; and giving advice to the city commission on projected earnings of investments and desirable or necessary further investments, revenue, expenditures and strategic planning (which includes analyzing existing service levels and determining sufficiency and appropriateness). The committee shall also review the annual comprehensive audit report. The 2014 Budget and Finance Committee met several times from April through August 2014 in order to provide informed recommendations. In addition to studying the City of South Miami’s established policies, committee members conducted individual research via internet as well as other resources. The Committee also interviewed experts with knowledge in public administration, finance, budgeting as well as service providers that offer services similar to the City of South Miami’s services. Further, input from South Miami residents was evaluated and taken into consideration. The Committee undertook a detailed examination of the City’s proposed budget to assess the strengths and weaknesses present in the City’s operations. Particular attention was paid to those operations which have a financial impact on the City’s budget. The Committee anticipates that adopting the recommendations herein will have both an immediate and a long-term financial impact on the City. Each recommendation is provided to improve the overall financial health of the City of South Miami. The City remains committed to conducting the Charter required performance management audit. For fiscal year ending 2015, the City is completing the performance audit of both, the Planning and Police Departments. The Budget and Finance Committee Chair will act as a liaison between the Commission and the department and assist the Commission in reviewing those results. BUDGET REPORT SUMMARY The format is in compliance with Government Finance Officers Association (GFOA) principle. GFOA specifies best practices in public budgeting: “A government should develop a policy that defines a balanced operating budget, encourages commitment to a balanced budget under normal circumstances, and provides for disclosure when a deviation from a balanced operating budget is planned or when it occurs.” This is quoted from the GFOA website: http://www.gfoa.org/ Operating Budget The City of South Miami follows the GFOA recommended principles in the proposed budget for FY 2015. This is well documented in the General Fund Summary and is illustrated in the following graph. Note: The graph shows the following: 2003-2013 (actual numbers), 2013-14 (estimated numbers), 2014-15 (proposed numbers). 0 500 1000 1500 2000 2500 Do l l a r s Comparison Revenues to Expenses (100s) Revnue Expenses After three quarters of FY 14, actual revenues are on track to meet FY 14 revenue projections in most cases. Unexpected revenues more than offset unforeseen shortcomings. Revenue projections for FY 2015, while conservative, are by no means understated, in line with historic numbers, and take known condition changes into account. The Management Team under the leadership of the City Manager, Steven Alexander, continues the excellent work shown during FY 2014 in developing the proposed budget for FY 2015. Overall the Committee was impressed with the amount of detail provided by management and is supporting the budget as proposed. Committee recommendations were discussed during budget meetings and arrived at by consensus. It was the sense of the committee that these recommendations were arrived at unanimously. GENERAL RECOMMENDATIONS Important Note: The Committee reviewed the Proposed FY 2015 Budget as of August 11, 2014 which reflected changes made as a result of the August 5, 2014 City Commission meeting, where the Commission decided to keep the City’s Solid Waste and Motor Pool Divisions in-house. Based on this event, City Management was required to redevelop an entirely new FY 15 Budget and the Committee was tasked with reviewing all changes made by management in an effort to provide the City Commission with a balanced budget. Based on the Committee’s review of the proposed FY 2015 budget as of August 11, 2014, the Budget and Finance Committee overall recommends supporting the budget as proposed. Furthermore, please find below specific items of interest by the Budget & Finance Committee. The Budget and Finance Committee is particularly interested in the Outsourcing of the Solid Waste and Motor Pool Divisions. Given the information made available to the Budget and Finance Committee and through general discussions, the Budget and Finance Committee finds the amount of savings and the services being provided to be a beneficial service to the residents. As a result of the discussions, it was the consensus of the Budget and Finance Committee that the City continues to explore the possibility of outsourcing. Before any action is taken, however, it is important to engage the citizenry of the city in a dialogue concerning the cost and benefits of this course of action. One way this could occur would be through the provision of a referendum so that the City residents can partake in deciding if they would be interested in Outsourcing the Solid Waste and Motor Pool Division. In the interest of transparency and accountability, a referendum would allow that all residents be heard and would give the commission a better understanding of the will of all their constituents. The committee was pleased that the city continues to work with the independent performance management auditing firm in achieving the goals provided within the City’s charter. The FY 2015 proposed budget, incorporates an amount to account for this service. It is recommended that the Mayor and Commission continue to support this expenditure and continue to require City Administration to implement a performance management plan. The Government Finance Officers Association (GFOA) issued a Case Study on May 2013, providing a general recommended fund balance for two specific categories; Budget Uncertainty Reserve and Emergency Reserve. Within the Case Study, GFOA recommends a General Fund Reserve of approximately 25%; 12.5% for each of the two specific classifications mentione d above. The City Manager in an effort to follow the GFOA’s recommended amount is proposing to reallocate a portion of the existing general fund unreserved, unassigned fund balance to the Emergency Reserve Fund to maintain 25% of the City’s annual budget. The Budget and Finance committee recommends the City Manager’s proposal. The Parks and Recreation Department significantly increased the Park’s contractual services line item due to newly proposed recreation programs. The Budget & Finance Committee recommends that the City Management evaluate each program and determine the cost benefit with relation to each of the new programs in an effort to confirm a need or community interest. The Committee reviewed and met with the City’s Capital Improvement Program Manager and assessed the fiscal health related to the CIP and proposed expenditures for FY 2015. The Committee recommends that the CIP be fully funded for FY 2015 and a review undertaken to assess progress midway through the fiscal year. The Budget and Finance Committee met with the Police Chief and his staff, which they provided detailed account of expenditures and the rationale for such expenditures. The information provided served to be extremely useful and help provide a great understanding of public safety. The Budget and Finance Committee recommends that the two additional police officers which will be instrumental in the implementation of the Pal Program and Community Policing effort be fully funded. The committee recommends that the Mayor and Commission approve the proposed funding for the parks improvement projects in FY 2015. It is highly recommended that the City all available funds to help improve the City’s existing parks citywide. Due to their constant use, maintenance and improvements are needed to help keep the children safe. In addition the parks serve as a source of pride for the City. CLOSING STATEMENT The proposed budget is a living document and changes almost daily as new information becomes available to management and this information is implemented in the budget. For that reason it is important for the Commission to get regular updates from management before their final approval of the FY 2015 budget. The Budget & Finance Committee considered the most recent information that was available in its consideration of its recommendations. The Committee will be available to review further information, revise recommendations, or answer questions if the Commission desires.