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Home My WebLink AboutStaff Report 4.A 12/02/2019Z, d A z85a DATE: TO: FROM: SUBJECT: December 2, 2019 Honorable Mayor and Members of the City Council through City Manager Brian Cochran, Assistant City Manager Corey Garberolio, Finance Director Introduction to Fiscal and Organizational Sustainability Planning Process RECOMMENDATION Receive a report on the upcoming Fiscal and Organizational Sustainability ("FOS") planning process and provide feedback to staff on the process and the public outreach components of the plan. BACKGROUND The City of Petaluma has struggled to maintain a balanced General Fund budget for many years, an issue that was exacerbated by the Great Recession and is forecasted to persist into the future. During that time the City made a variety of difficult decisions to cut dozens of staff positions, eliminate services, consolidate departments, contract out certain services and negotiate employee wage and benefit concessions. Notably, except for the past two fiscal years, employees went approximately eight years with no wage increases. Since 2013, the City has generally been able to adopt a balanced budget one year at a time, often with the assistance of various belt -tightening measures; deferring facility and infrastructure maintenance needs; refinancing debt at lower interest rates; negotiating additional employee concessions; and spending virtually no General Fund funds on capital improvements. DISCUSSION In its recent goal -setting session, the City Council has identified "A City That Works for Everyone" as one of its key strategic initiatives for 2019-2021. Objective #1 seeks to "ensure a fiscally and organizationally sustainable City", including a Fiscal and Organizational Sustainability (FOS) plan with the community that achieves a strategic balance of available revenues with City services. Staff will introduce a proposed FOS process including public outreach opportunities. The process will include a series of in-depth workshops examining virtually all aspects of General Fund finances: • Revenues • Departmental Operations • Staffing Levels • Employee Compensation / Classification • Pension and Benefits • Infrastructure / Roads / Bridges / Storm Drain / Pathways • Facilities and Parks • Technology The goal of each session will first and foremost be to educate the Council, staff and community about the financial and operational implications of each topic area. Additionally, each session will seek to provide 3-5 potential policy choices / options / service levels and the long-term costs and benefits associated with each one. These options will be utilized to populate a web -based "Fiscal Sustainability Options Tool" that will be a key component of the City's public outreach regarding long term FOS decisions for the community. The Fiscal Sustainability Options Tool will provide the community with an interactive, web - based platform to model the actual financial and organizational implications of making various decisions in each of the categories defined above. The tool will show the impact on the City's General Fund bottom line and allow the user to see, in real time, whether the choices they have made for the City result in a balanced budget or not. The community will also be able to weigh the pros, cons, and impacts of various decisions. The tool will demonstrate the challenges of providing the desired services levels with the currently available General Fund revenues; or, stated differently, it will show the amount of revenue necessary for the General Fund to be able to sustainably provide the service levels selected. The Council's preferred choices within the options tool will assist staff with creating an FOS Plan that will ultimately be adopted and implemented. Staff requests feedback during this session on the overall proposed process. PUBLIC OUTREACH This item was listed on the agenda of the December 2, 2019 City Council Agenda, published in accordance with public noticing requirements. There are no financial impact resulting from this item. ISI W IIXG I I►I I milli Il.� PowerPoint Presentation N Introduction, Purpose and Process Dece m be r 2, 2019 0 Provide context on what it means to achieve fiscal and organizational sustainability ("FOS") ■ Provide an overview of the FOS process next 12 months Receive input from Council and public on process ■ Provide example "fiscal sustainability options tool" '18513 ■ Learn more about the organization — "uncover every rock" ❑ Fact -based data gathering ❑ Not based on assumptions ■ Educate the community about our services and service levels ■ Determine what it means for Petaluma to be sustainable ■ Quantify budgetary impacts /revenue requirements ■Provide policy options and decisions ■ Determine a plan to achieve sustainability Achieving a strategic balance of available long-term revenues with agreed-upon g:: ,..rdo e.err levels, a e infrastructure maintenance needs, and a talented & cap ` AL QS 5 13 #3 - Increase Revenue and Fees to Ensure Cost Recovery Balanced with Ensuring Access and Overall Competitiveness #1- Managing Employee Compensation Balanced with Sustaining a Talented Work Force #2 - Commercial & Residential Development Balanced with Retaining Community Character and rM 2N L Neighborhoods #4 - Control Operating Expenses & Improve Efficiency Balanced with Retaining Flexibility and Resources to be Responsive and Creative V #5 - Maintaining Long -Term Assets Facilities Balanced with Meeting Immediate Resource Needs — Migl'o'� Balance = Fiscal Sustainability Plan Revenues evenues -------------- ------- A ------- --------------- Contracting Step 2: Yellow Zone Reorganization Employee Reduce costs Services 7U7 Eliminate Eliminate Positions Program, Step 1: Red Zone Ve/ noetic 0 'O'.ne'7t 77ent Increase Taxes I Increase Fees Phase 2 What is the deficit? What service level? What revenues? Phase 1 6 2008-2012 2013-2018 2019-2020 . . . . . . . . . . . . . . . . . Reduced 1/3 of all Depleted General $1M Employee staff (90 positions) Fund Reserve pay /benefit cuts & furloughs Legally allowable Aggressive No salary Increases from 2009-2017 pension reform 0 outsourcing of City undertaken services Departments consolidated and reorganized 0 a �. m �e � � e • What kind of organization do we want to be? • What are our goals? • What is our vision? • What service levels are we trying to achieve? Do we have the right amount and levels of staffing? • What is a sustainable level of infrastructure investment? • What is a sustainable level of technology investment? • How much should we have in reserves? • What is our employee compensation philosophy? • How competitive can we be in the labor market? 0 What level of revenue can support all of the above? 0 Do we need additional revenue, or do we need to adjust expectations? willilim or 9 FOS Work Plan and Process Roll -Out 9 Department Reviews * Revenues * Human Resources I — Pension / OPEB Benefits * Technology Investments * Human Resources 11 — Comp / Benefits / WC e Human Resources III —Staffing Levels * All City Infrastructure (3 sessions) * Options Tool Review • Draft Fiscal Sustainability Plan • Deliberation and Decisions ■ Education and background about the topic areas ■ Draft options and strategies ■ Focus to be on broader policy choices - not a laundry list °° ■ Council to provide direction to staff on which options to include in options tool ■ Goal —finalize 3-5 options within each topic area to add to tool ■ Options tool will be updated with final selections Fill o I W!" E 'M a 14 5 •Background and History •What Petaluma has done to -date `- •Updated Forecast and assumptions •Overview / analysis of each topic area (revenues, compensation, etc) •Description of choices included in the options tool • Recommend scenario(s) •Final plan —includes the final options that Council selects ALUX 15 ■ Decision modeling tool Demonstrates the impacts, tradeoffs, and financial implications of a variety of future choices 4 -dimensional puzzle: ■ Dollars; Time; Values, service levels, tradeoffs; Probability/likelihood ■ 30-40 major choices at a broad, city-wide level ■ Allows the user to select/unselect various options ■ Deficit /Surplus /Reserves update automatically ■ Qualitative —pros /cons /service impacts of choices A TI 16 SUSTAINABILITY OPTIONS TOOL (SAMPLE) Rsr-al SuslainabWTy Opflons, Tool 17 ftfich ctonvnwk Cr,�;� C, "ZA C W RNIKW 7- INTM Koh' Qn. Q"" 4 LOW RA n A I vmj "1 0494 YY op,:: wv yamno ym, r m� ow vK. 5 0 1 0 ?OCX)w 5 T" UN, wool Am Q K, -.. Ir, H xld -,Ca, Xr,:,,s L XC ,jZ, S1 Ru w ewwol; !WWI g"M v dp ."c !owl 1 YAM 0 "? v mom j=X0 01 C7)" 6 &MOM, qW i MY "M sa OU 44, KA WAArQN., ZA W" pwn�m W "N HMWQ A www lwrvicp I ovol Ad ditimw / Redudifflk'; VA Rrv*mvnxd Fac Samoa . nh Is :VK, Mr -7., bw,� 1b and 0 hov—,, 1,10y1 I -N o ms 17 Online tool will provide Petalumans the opportunity to weigh-in on the City's FOS options :T CHALLENGE 7'; ! : F Status Quo Spend 35„ 9 billion f-onn e.. F, it ding so ,,s o, Fr -j I ,,dac-d F -op t", of the ey" of S- I, Tti,tfut.d �-12 cm,-Popl spe,djng a Rftl. -I e 4n R^ovq :he P --'limed noo-F] sve,age cmicfe accoo-Un'l fol g&oprap it;,- djfmr=-ces svNch a,m r ph._: in Ce: foo a lion !hE wl3n.-, Spend $0.6 billion Spend iSCC ltllfian Dna-ti to Eddy- SreirP to full-CIFy vjnd,q,ne, No Budget Change I-P,i fE% nt Minn of $ 9F fur d= to sttrpud p,&d ,p-1.1 -do,_It on in it, a h;,'- Ior:c Y eddtiw zi,,03,ts Spend 52 billion 1--&- K-1 __d,fi,,r fond, -g by at t 52 tilko cnftnq p-, pil p-dinq , iNn I'm ndF 2;'4 of sl, -I, i- terms If F*V-1 PP:Qfl sPdilg ze4 - .,Infilg fv- cc,d-.f 16ng d,ffe- Spcnd 89.7 biliton In K -I 2 Ezincefl- sa&nd rj I,,e- 2D-0- i 9 1:; ICI -.- _q 7 d1l;ti-an the hndjeL Fnl'-q sp-no!'D ahFut _77,L t",, RV.— ;,-.U-doq ro, ,flfra-,-, Fund m 9 'D I- K-'' 5 cho�, I I a Pd C --, mr, n I I N' : 0 1 le aes I I plovem ec -'; P 10po sinol 9E ca 5 bod ar I D 3 a , 0 L r C1 C:1 15 l.'s a Mifr] i o j 19 a 9 n L a i fhair g yja ra r tE c To r K- 14 In I of 5 1 K-"12 5 on 007S an - cult muggy �t;. c , Ile ge: . It e 9 a b] s ac I ,, c fund an t. ',,E - P Pace vfi lth or I-, omg I,,t I I a I-, C on -od Ii rent (,,v n ;: n Is exp e ned tc, of e s a I Y I a. L -der the ext 5 vea rs V -no PC S 1110 n �6 'U P 1 ng co nsltu' le s , , e- 7,' erc e' ' , of lot a] K- 12 1-ur d is an .1 R rY1,11 tA C -t I I -C! 5 Of too 11 'C"'I "Ll Tly F 111 a 91 f1i 11 G11, g My Budget 18 ■Council meetings/ workshops ■Social media website promotion to encourage participation ■Featured in upcoming City newsletters ■ Options tool ■ "World Tour" presentation to community groups ■ Updates to labor groups and employees ■Town hall /open house meetings with options tool 19 8513 F llll 1, Ell ■ Provide feedback on process and timeline ■ Provide ideas and input for community outreach (4�- ro"lli . 20