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HomeMy WebLinkAbout1996-04-18 City Council (23)C ty BIIDGET 1996-98 City of Palo Alto Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES DATE:APRIL 18, 1996 CMR:211:96 SUBJECT:BUDGET ISSUE: NEW POSITION REQUESTS RECOMMENDATIONS This is an informational report, and no Council action is required. This staff report provides Council with background information about new position requests that are addressed in the 1996-98 Budget, for discussion at the Council study session on budget issues. EXECUTIVE SUMMARY The 1996-98 Budget includes 9.5 new General Fund position requests, 1.0 new Utility Fund position request, and 2.0 temporary-to-permanent conversions. Of the General Fund positions, 3.6 would be entirely reimbursed by the Utility Funds. The positions provide for a number of service enhancements, including permanent graffiti prevention and removal services; a comprehensive tree program that includes tree protection, trimming, planting and removal services; improved parking adjudication services; personal computer support to accommodate the growth of computer usage citywide; leadership of the City’s GIS program; in-house programming expertise for the new Utilities Customer Information System and improved Utilities computer applications support; improved inventory control and receipt inspection; improved contract administration; and financial support for the growing City investment portfolio and debt financing projects. The cost of these service enhancements has been incorporated into the 1996-98 Budget and totals $344,882 for the General Fund and $378,387 for the Utility Funds. This amount does not include one-time costs associated with these positions (e.g., computers, equipment, furniture, training, etc.) that has been budgeted in 1996-97. The positions are summarized in the table below. Following the table, each position request is discussed in more detail. CMR:211:96 Page 1 of 12 SERVICE/NEED POSITIONS REQUESTS Permanent Graffiti Program Implement Tree Task Force Recommendations Implement Tree Protection Ordinance Improved Parking Adjudication Services Improved Citywide Personal Computer Support Improved GIS Support Programming Support for the Utilities Customer Information System Improved Computer Applications Support Improved Inventory Control and Receipt Inspection at the MSC Improved Contract Administration Financial Support for Investments and Debt Financing Projects .5 Office Assistant (new) .5 Office Assistant (temporary to permanent conversion) .5 Traffic Control Maint II (new) .5 Traffic Control Maint II (temporary to permanent conversion) 1.0 Coordinator Public Works Projects (new) 1.0 Arborist (new) .5 Parking Examiner (temporary to permanent conversion) .5 PC Technician (new) .5 PC Technician (temporary to permanent conversion) 1.0 Systems Analyst (new) 1.0 Senior Programmer Analyst (new) 1.0 Utility System Technician (new) 1.0 Storekeeper (new) 2.0 Contract Managers (new) COST~UNDING SOURCE $8,105 General Fund $11,400 Utility Funds $73,088 General Fund $73,650 General Fund 4,808 General Fund $43,405 General Fund $47,989 General Fund $31,993 Utility Funds $75,723 Utility Funds 65,558 Utility Funds 1.0 Senior Financial Analyst (new) $46,992 Utility Funds $63,183 General Fund $96,775 Utility Funds $30,654 General Fund $49,946.Utility Funds CMR:211:96 Page 2 of 12 PERMANENT GRAFFITI PROGRAM Staffis requesting to convert two half-time temporary positions (Office Specialist and Traffic Control Maintenance worker) in the Public Works Department to two full-time permanent positions, in order to continue successful graffiti removal and prevention efforts. The current program resulted in response to about 1,100 calls during calendar year 1995. Services include a 24-hour hotline for reporting graffiti; a hotline coordinator who responds to and logs calls, generates work orders, and tracks data on the program; and the actual field work of removing graffiti. By converting these positions to permanent full-time positions, staff will also be able to expand the program to provide cleaning and maintenance activities at the 22 County bus shelters in Palo Alto. The County discontinued this service when Palo Alto opted not to participate in a proposed shelter advertising program. IMPLEMENT TREE TASK FORCE RECOMMENDATIONS In order to effectively implement increased trimming, planting and removal services in support of the City’s Tree Program, staff recommends the addition of a Coordinator of Public Works Projects position. This position would be responsible for identifying dying trees for removal; preparing and administering removal contracts; identifying sites for planting of new trees and selecting the appropriate species for the site; inspecting and purchasing trees and preparing planting contracts; and assisting with the inspection and administration of clearance and shade tree (ash and elm) pruning. This employee would also serve as liaison with the nonprofit tree group’s planting and pruning activities. This position has been recommended in reports from both the Tree Task Force and the Hughes-Heiss Organizational Review. IMPLEMENT TREE PROTECTION ORDINANCE On August 8, 1995, the Policy and Services Committee directed the City Attorney’s Office to lead an interdepartmental effort to draft a tree protection ordinance. Staff plans to bring the ordinance to Council for approval in 1996-97. After studying the staffing needed in other communities to properly enforce and administer such an ordinance, staff has concluded that a full-time arborist position is required to implement the ordinance. Should this ordinance be adopted, staff is requesting Council approval of an arborist position in the Planning Department. The final position classification will be determined by the Human Resources Department. The arborist would be responsible for minimizing harm and damage to trees on private property in the City, including education and community outreach efforts; issuing permits for certain categories of tree removal, which would result in the protection of significant trees that should not be removed; monitoring replacement of trees that are removed; and coordinating appeals for removal permits that have been denied. CMR:211:96 Page 3 of 12 IMPROVED PARK]NG ADJUDICATION SERVICES The responsibilities of this position were mandated by State Assembly Bill 408 (AB408) that went into effect July 1, 1993. This legislation decriminalized parking offenses, removed parking citation processing from the court system and established a system of administrative adjudication. Since 1993, when this legislation was enacted, a temporary employee served as the parking adjudicator. The 1,000-hour limitation on the number of hours that temporary employees can work each year, in order to comply with retirement system regulations, has resulted in delays in adjudicating parking citations. Additionally, a recently-adopted State law requires a significant amount of professional training for parking adjudicators. Each year, the adjudicator has exceeded the 1,000-hour limit in order to prevent lengthy delays in scheduling hearings. Since the work associated with this position is part of an ongoing program, staff is recommending converting this to a permanent half-time position. This would ensure fair, impartial and speedy hearings for everyone who contests parking citations and would maintain qualified staff. The City issues approximately 40,000 parking citations each year, the third highest in the County. In addition, the City averages approximately 1,000 hearings annually. The City of Mountain View and the Mid-Peninsula Open Space District are under contract and use the City adjudicator services, adding an additional 30 to 50 hearings each year: IMPROVED CITYWIDE PERSONAL COMPUTER SUPPORT The City’s increased dependency on personal computers, software, application sharing, and data networking has placed greater requirements on the staff who install, maintain and implement these technologies. The City utilizes more than 650 personal computers. In addition, there are the peripherals and communications devices which form the data network. These functions are supported by two full-time personal computer technicians in Information Technology, as well as a half-time contract employee performing personal computer support solely for the Police Department. The 1996-98 Budget recommends increasing computer support by converting the half-time contract employee in the Police Department to one full- time regular employee, and contracting for additional citywide support. The Police Department has unique support requirements, including laptop computers installed in the police cars and radio connectivity to various data bases. Virtually all Police employees, reserve officers, and volunteers utilize computers in their daily work, from inquiring into in-house, Federal, State and County data bases, to writing, processing, storing and retrieving reports on-line. The Fire Department is also adding laptop computers to its fleet of fire trucks. These computer resources are critical to the Departments’ ability to provide quality public safety programs. Currently, there is no ongoing maintenance program in place, due to unavailability of staff. The expanded use of personal computers in the Police and Fire Departments necessitates the increase of the half-time contract employee to a full- CMR:211:96 Page 4 of 12 time position, to ensure the timely exchange of information which is essential in the law enforcement and public safety environments. Due to the desire to centralize computer resources, the position is recommended to be assigned to the Information Technology Division of the Administrative Services Department. Complete support of the Police Department’s personal computers, hardware, sotb,vare, and networking, as well as support for the new Fire Department laptops, would be added to the responsibilities of Information Technology. The requested increase to the Information Technology budget is $61,308; the Police Department budget would be decreased by $17,903. To accommodate the growth of computer usage citywide, Information Technology has requested funding of $50,000 to contract with an outside organization for personal computer support. Contracting for this service will eliminate the immediate need for added full-time employees, and provide experienced support without the training required for regular personnel. This support will allow the existing technicians to pursue critical projects (such as an automated PC inventory, improved problem management and help desk support, and improved networking for printing, file sharing and application sharing), which cannot progress due to the number of requests for personal computer-related service. A formal Request for Proposal process will be followed to determine the requirements, contractor skills, costs, and level of service. IMPROVED GEOGRAPHIC INFORMATION SYSTEM (GIS) SUPPORT A Systems Analyst is requested to provide coordination for the Geographic Information System (GIS) program. The position will be responsible for working with the GIS Steering Committee to establish short- and long-term GIS strategic plans; directing and overseeing the coordination of GIS with City information systems; assisting departments in the specification of GIS needs; and basic coordination of the development efforts, hardware and software installations, and network requirements. Positioning a staff member to handle all matters of GIS is critical to the success of the project, in lieu of having the responsibilities spread across several City staffmembers and outside consultants. The Interdepartmental Steering and Technical Committees defined the requirements for the position. The Coordinator will lead the project, as it heads into the new phase of application development to allow City staff and the public to gain access to the data stored within the GIS system. Although the City’s initial intent was to add a GIS Systems Analyst in the 1995-96 fiscal year by converting a software training position, a critical need arose in the area of network support, and the open position was converted to a network engineer. The requirement to maintain the connectivity between the users of personal computers and applications processing on the HP9000’s had expanded, and three City facilities were added to the City’s CMR:211:96 Page 5 of 12 local and wide area network. At that time, the GIS project efforts were focused on development, input and verification of the graphical data. As GIS transitions to the use and interfacing of this data with citywide systems, and making the data available to the public, the GIS Coordinator becomes essential. The position will be located in the Information Technology Division of Administrative Services. PROGRAMMING SUPPORT FOR THE UTILITIES CUSTOMER INFORMATION SYSTEM (CIS) Council received a status report and funding request for the Utilities CIS in December, 1995 (CMR:510:95). That report indicated that, in addition to contracted consulting services, staff would return during the 1996-98 budget process with a recommendation for permanent staffing. One Senior Programmer Analyst is recommended to support CIS system development and maintenance in the Information Technology Division of Administrative Services. The employee would assume responsibility for the long-term maintenance of, and future enhancements to, the CIS application upon successful system implementation. This would provide the City with in-house programming expertise for the continuity of the CIS project. IMPROVED UTILITIES COMPUTER APPLICATIONS SUPPORT The onset of deregulation is changing the environment in which utilities are operating and elevating the importance of information.technology. In the past, utilities used technology only to automate or improve the reliability of technical and business processes. Now, it is viewed as a critical element of their strategy for surviving in this increasingly competitive environment. The City’s Utility Department is currently developing and.implementing several new information systems applications. These new systems applications include Load Research, Traffic Control System, Computer Aided Design, Gas Nomination System, and Water-Gas-Storm and Electric SCADA Systems. The Utilities Department is, therefore, requesting a Systems Technician position to support the growing number of information systems applications. This position will enable Utilities to effectively maintain existing systems and support the implementation and maintenance of the new information system applications. IMPROVED INVENTORY CONTROL AND RECEIPT INSPECTION AT THE MUNICIPAL SERVICE CENTER (MSC) WAREHOUSE For a number of years, the Utilities Department has maintained a stock of materials and supplies separate from the City’s central inventory. This practice began because Utility Operations stafffound that materials in the City’s central inventory were not always available when needed. Staff has a number of concerns regarding this practice. These materials and CMR:211:96 Page 6 of 12 supplies are of considerable dollar value (several hundred thousand dollars) and are not adequately secured, nor are they monitored as closely as the City’s central inventory. In addition, they are not tracked on the City’s inventory system and, as a result, the materials are not available if needed to support other City needs (e.g. Public Works projects). Lastly, this practice makes it difficult to determine annual usage and may negatively impact procurement activities. For example, this practice prevents Purchasing from establishing annual contracts to lock in prices and often results in expensive emergency orders when stock-outs occur. In 1995-96, Administrative Services and Utilities Departments staff developed a plan to transfer these materials back to the City’s central inventory. Staff has jointly reviewed appropriate stock levels, economic order quantities and reorder points. Administrative Services staff has developed a process to provide Utilities staff access to the materials after hours and on weekends. However, in order to effectively support the increased levels of inventory, an additional storekeeper position will be required in the City’s central warehouse. With this position, Utility Operations will be able to get the materials it needs, while ensuring proper security and accountability for the City’s assets. This position would also enhance the service levels provided to Utilities by the addition of a more thorough receipt inspection of incoming materials, and the capability to conduct materials testing and perform quality control reviews of materials received. IMPROVED CONTRACT ADMINISTRATION At the present time, the City’s contracting process is decentralized. Each City department is responsible for ensuring that it complies with City bidding and contracting policies and procedures. More specifically, City departments lead the effort to develop bid and proposal specifications, evaluate responses and, ultimately, select the most responsible contractor or vendor. The City’s Purchasing organization ensures that policies and procedures are in place to guide departments through this process, along with supporting many of the administrative steps involved in the contracts process (e.g. advertising bids, assembling bid packages, etc.). With this current structure, there is no central ownership and accountability for the contracting process and, as a result, a number of concerns have surfaced. In early 1994, Council shared with staff its concerns about the City’s procurement process. Council was concerned that the City may not have adequate numbers of bidders, so that the products and services purchased are of high quality at the lowest possible prices; that the City’s bid process may not be competitive; and that the purchasing process may not be honest, open and efficient. In September 1995, the City Auditor completed an audit of the City’s contracting process, identifying a number of areas in need of improvement. The Auditor found instances where CMR:211:96 Page 7 of 12 City departments did not comply with established contracting policies and procedures. The Auditor also identified that the Purchasing Section was not involved in a pro-active manner in procurement decisions. Among other things, the Auditor pointed out that bid evaluations, selection decisions and negotiated changes to scope and price were not properly documented and reviewed by Purchasing. In addition, the Auditor identified that Purchasing did not review City Manager’s Reports to ensure that contracts complied with City policies and procedures before going to Council for approval. Although staff agreed with the Auditor that improved oversight by Purchasing would add objectivity and value to the selection process, staffing levels did not allow the time commitment that this would require. As a result, staff agreed to evaluate Purchasing’s role in the City organization and to provide Council with a plan to address the need for change in the City’s procurement operation with the 1996-98 Budget. Organization and Process Changes Required for Purchasing: In October 1995, staff hired a new Purchasing Manager and set out to review the costs and benefits associated with -providing the controls recommended by the Auditor. Staff concluded that the benefits that could be obtained through increasing Purchasing’s involvement and assistance to departments would far outweigh the costs. As such, staff has formulated a plan to address the required organizational and process changes that includes five major elements: 1) the creation of new positions in Purchasing (Contract Managers) responsible for overseeing the contracts process; 2) the assignment of Contract Liaisons within each department to support contracting efforts; 3) a process reengineering study and implementation of resulting improvements, including enhanced purchasing policies and procedures and training for project managers. Purchasing Contract Managers: Staffis proposing a reorganization of the Purchasing Section with the 1996-98 Budget that will require the addition of two Contract Managers, with related non-salary costs. Staff also recommends restructuring several of the position responsibilities in Purchasing to provide the proper focus on the City’s high dollar, high value purchases. These proposed changes will provide staff with three Contract Managers in the Purchasing Section dedicated to the contracts process. Each of these three employees would be assigned to specific City departments, providing each department with a single point of contact. They would be knowledgeable about the unique purchase requirements of their assigned departments, would be responsible for overseeing their contracting efforts and would act as an interface with Purchasing for all of the other requirements of their customer departments. They would have expertise in the development of specifications, eliminating the potential for poorly drafted and restrictive specifications that limit competition. They would oversee the contract evaluation and selection process, ensuring scope and price changes are CMR:211:96 Page 8 of 12 reasonable, decisions are properly documented, and that the lowest responsible bidder or proposer is selected. They would also have expertise in contract negotiations, providing staff the oppommity to employ their skill to reduce the costs of purchased materials and services. Through aggressive contract negotiations, the City can (conservatively) obtain cost savings of 1 to 2 percent of total contract dollars annually (approximately $150,000 to $300,000), more than offsetting the added cost of the two new positions. In addition, they would review City Manager Reports to ensure that all relevant contract information is provided to Council. Lastly, their single-point accountability will make departmental compliance with purchasing procedures more effective, minimizing the potential for abuse or fraud. Department Contract Liaisons: Staff recommends the assignment of individuals within each department as Contract Liaisons. These responsibilities would be added to the duties of their existing positions. The Contract Liaisons would have extensive training in contracting, giving them the ability to answer questions and provide direction to project managers regarding contract documentation needs. The Contract Liaisons would complement Purchasing’s Contract Managers and would be available to provide Purchasing with a focus group that could be used to identify citywide issues and concerns involving contracting. Finally, the Liaisons would support the development of, and any future modifications to, the purchasing Policies and Procedures Manual and would help to coordinate procurement training sessions. Process Reen~neering: To accomplish the reengineering of the purchasing process, staffhas formed a citywide steering committee. The committee will identify ways to simplify and speed .up the contracting process. Staff plans to utilize tools such as "flow charts" and "benchmarking" to identify process improvement opportunities. Staff is currently updating the Purchasing Policies and Procedures Manual to make it more useful, understandable and to provide better guidance to departments, as well as to incorporate recommendations made by the City Auditor. Staff plans to incorporate the process changes resulting from the reengineering efforts into the new manual. Staff will also develop and conduct training sessions, in cooperation with the City Attorney’s Office. These sessions will effectively communicate the changing role of Purchasing and the improvement made from reengineering the purchasing and contracting process. FINANCIAL SUPPORT FOR INVESTMENTS AND DEBT FINANCING PROJECTS One of the recommendations made during the recent organizational review process, and approved by the Council in 1994-95, was the elimination of the Treasury Manager position. That position became vacant shortly after the organizational review was completed, and is scheduled for elimination July 1, 1996. As a result of Finance CMR:211:96 Page 9 of 12 Committee concerns regarding the investment area prompted by the problems in Orange County, staff was asked to come back to the Council with various options for supporting the investment area, including a review of Treasury staffing. Staff is now requesting that, as an alternative to eliminating the Treasury Manager position, the position be converted to a lower level Senior Financial Analyst. Staff believes that this request is prudent, given the major new debt financing projects planned over the next several years and the need to safeguard the City’s growing investment portfolio. The Treasury function is now staffed by one Investment Analyst, reporting to the Finance Manager. The Investment Analyst manages the City’s bank contract, manages the City’s cash flow needs, invests City funds, manages debt service payments, and ensures the City’s continued compliance with bond covenant requirements. The Finance Manager ensures that investments are made in compliance with City policy, helps guide investment strategy, supervises the Investment Analyst, as well as the Senior Financial Analyst in charge of the Revenue Collections Office, manages debt financing projects, administers the real property transfer tax appeals process, and coordinates department wide projects in the, Administrative Services Department. Several major debt financing projects have been identified for the next several years that were not foreseen during the organization review. They include: the Golf Course Master Plan implementation, acquisition and development of the former Los Altos Treatment Plant site, implementation of a General Fund Infrastructure Management Plan (if approved by Council), a new Storm Drainage Fund issuance, and (potentially) a Wastewater Plant expansion issuance in a few years. In contrast to these anticipated projects, only one debt financing occurred over the last four years, for Storm Drainage improvements. Work in support of these major debt projects will require a dedicated Senior Financial Analyst. The intensive work required to support these projects is beyond the resources available with current staffing, without jeopardizing the level of oversight and analysis considered prudent for the City’s $195 million investment portfolio. Support for debt financing projects includes intensive financial analysis, prior to the time that the debt issuance process actually begins. Once a large funding need has been identified, a variety of steps are then required, including verifying the size of the project and of funding needs; weighing other options, such as reducing the scope of the capital project, extending the time frame over which the improvements are planned, seeking alternative funding or revenues to fmance the project; and then, fmally, recommending an optimal fmancing size, given revenues and other budget considerations. Once all options have been explored, the actual financing process begins. This includes obtaining a financial advisor, managing the work of the financial advisor on behalf of the City, coordinating efforts for legal issues with the City Attorney’s Office and outside bond counsel, coordinating any issues raised by the financial advisor with the operating CMl1:211:96 Page 10 of 12 department and/or Public Works staff involved in the project, and keeping management abreast of the implications of the recommended financing method as it develops. In addition to additional debt responsibilities facing the Treasury staff, the Orange County investment problems have reinforced the importance of performing various analytical tasks on an annual basis to ensure the continued safety of City investments. These tasks include an annual review of approved brokers, institutions, and instruments the City utilizes for investment. The existing Investment Analyst cannot perform these tasks on an annual basis unless some of her existing workload is shifted. By hiring this new position, all of the existing debt responsibilities could be transferred, providing the Investment Analyst the time to perform these important tasks. Finally, this new position will provide backup to the existing Investment Analyst. In addition, by taking away some of the existing debt service requirements that the Investment Analyst is now responsible for, time will be freed up to do more analysis related to investment strategies. With more time, a more aggressive management of daily bank account balances can occur (e.g. staff can spend time investing bank balances in overnight mutual funds to earn more interest), some increase in portfolio yield should occur. The City’s portfolio has grown substantially over the last five years, meaning that investment oversight is both more important and more complex than it once was. In 1990, the City’s portfolio was $114 million, while it is currently about $195 million, a growth of over 70 percent in five years. The major reasons for the portfolio growth include: The growth of the Electric Fund Rate Stabilization Reserve has contributed about $17 million to the portfolio over five years; A commitment to fund a more aggressive infrastructure spending program for the Utilities has increased the year to year carryover of capital projects by about $8 million; An increase in reserves in the Water, Gas, and Wastewater Collection Funds has contributed to an almost $20 million increase in Utility cash; Changes in the regulatory environment have added about $6 million to fund landfill closure and post closure care costs in the Refuse Fund; CMR:211:96 Page 11 of 12 o o An effort to fully fund employee’s long-term sick leave and worker’s compensation liabilities added about $2.3 million to the General Benefits Internal Service Fund over five years; The Public Employees Retirement System (PERS) retirement rebate from the State added over $6 million to the City’s portfolio; The City’s vehicle replacement fund retained earnings have increased over $4 million. It was this growth that caused City staff to recommend operating budget reductions through lower vehicle replacement charges to departments in the 1994-95 and 1995-96 budgets. It is possible that additional reductions will become necessary in the future to reduce this reserve to a more prudent level; The General Fund’s budget stabilization reserve has increased about $8.5 million over five years, due to prudent budget reduction efforts in the face of State budget revenue reductions, as well as due to an end to the recession and year end budget savings by departments. PREPARED BY: Melissa Cavallo, Assistant Director, Administrative Services Jim Steele, Finance Manager DEPARTMENT HEAD APPROVAL:~~, ~ Emi~ Harrison Deputy City Manager, Administrative Services CITY MANAGER APPROVAL: CC: n/a CMR:211:96 Page 12 of 12