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HomeMy WebLinkAbout0626.093December 9, 1993 THE HONORABLE CITY COUNCIL Palo Altoj California , r'" MISSION nRrvEN BtrpGETING: PRELIMINARY RE90MMt:MJ_~rO!{~_ ).Nt) ISSUES Members of the ccur.cil: llUORT IN BR I EP This is an informational report responding to the City Council's request for a discussion of the "overarching principles of Mission Driven Budgeting" (MOB). This report sum~ari2es the progress to date in implementing Mission Driven eudgeting~ ~s well as outstanding issues that will require resolution to successfully implement MOB. The study session to update Council on MDB, oriqinall~t scheduled for December 14, has been rescheduled to February 7. An upd3te to this report will be prepared for that meetinq~ Council will ultimately take action on these recommendations when the changes to the Municipal Code are presented in late 19S4. A prototype MDB document will be prepared in July 1993. lR7HCIPLES or MPB The following principles ~ere used to develop MOB: 1. The current b~dget does not meet the needs or ~hat we consider our most important audiences --council and the public~ It also is not useful to City staff~ 2. The City has a mission and all the department missions should support it and flow from it; Similarly, any other orqaniza­ tional divisions in departments should have missions which directly support the department, and thus the City mission. 3. The Mission Driven Budget should be built around services provided. It should enable the Council as veIl as city departments to set priorities and malte resoU.rce allocation decisions effectively~ within and between departments, by providing information on the_ cost of services provided. It should provide useful information on services that are important to the Courlcil which cross departmental lines. CHR.:626:93 . '.- · /' 4.. There must be a balance between providing more useful informa­ tion to the Council and pllolic and the ad:'1linistrative burden of qathe:r'ing and reportif'lq on that inforI!lation~ 5. The budget should be a IIlivingA doc'.1roent, with de:par-tment.s providing information throughout the year to the Council en how the}~ ar-e achieving their mi$sions. The Council p'I':"iority setting process should also be coordinated 'With the budget process4 6, The Mission Driven sudget process should provide incentives for departme!'lts to be crea.tive and innovative, as \IIe11 as efficient. It should empower staff at all levels of the organization to find the best vays to achieve missions. It is with these principles in mind that the conclusions belo~ have been made~ KPB lXELEMENTATIQN ISSUES Durinq the preliminary discussion of HDB ... ith the Council .. staff identified areas that would. need furthe~ stUdy and policy decisions that would need to be rnade before HOB CQuld be implemented. An or­ ganization-lliide HOB steering committee was fanned to identify issues and propose recommendations for the implementation of MD9~ Approximately 20 City staff members participated on the steerin~ co~ittee, coordinating the ~ork of seven subcommittees formed to address specialized topics. lo.pproximately 70 staff par~icipated on these subcommittees. It is e~timated that each participant has put in at least 70 hO\Jrs on ~DB st.e~rin9 c.ommittee and subco}1:1mittee work l with Eany staff putting in well over 100 hours~ This work is in addition to the work each departm~nt has done on its own depart­ .ant's missions l impact measures, and Moa functional area struc­ ture~ The areas staff have been addressing include: cross-departmental programs; budget controls; savings end incentives; budget presentation and document format; budgeting and accotJ!'lting for allocated costs; employee timekeepinq/i~pact measures system requirements; and budgeting fer capital projects. These areas were outlined in CMR 463:93, -Mission Driven Budgeting: Progress Report-. This report sLlll'l.!l"larizes staff work to date regarding the implementa­ tion of MDB. For each area, the iss~es~ any conclusions to date, and any issues outstanding are incli.lded~ CROSS-DEPARTMENTAL PROGRAKS The issues tha~ were identified with regards to cross-departmental proqrams ",'ere: CMR:626:93 , , 2 I , Q What are the functional ar2as (and mission statemen~s) and/or major .activities within the City which cross departmental lines; o HoW' 'Will coordination of missions and impact measures be handled; and o What tormat .. ill be used foY' presenting citys..·ide func- tions/activities in the budget document? Cross-depQrtmental programs are different programs or actIvities ~~at are spread among departments, have the same mission or purpose and are of interest to the Council and the public. An example is pa:kinq management. This proposed cross-dep;t;rtmental program involves Police~ public Works, Finance and Planning~ As part of MOB, depart~ents ~ill need to plan and budget for these programs together. This will allow the programs to be grouped together 'to show the total ~o~t of a program citywide. Conclusic48 1. Definition of Cro5s-Depa~tmental Proqr~~~ Cross-departmental programs are those that ccoss departMental lines 'Which are of high public visibility and :meet the threshold criteria below: o within a department~ the activit~· must involve at least .5 Full Time Equivalent (FTE) and cost at least $50,OOO~ and the main purpose of the activity in the deP4rtment .ehould be to suPt---crt the cross-dapartmental program. It the departmental activity has fewer resources devoted to it, the collection of costs is optional; o Total city cost for the program should exceed at least $500,000; o A cress-departmental program must involve at least three depart12lents. A proqr~ may be a cross-departmental program and not achieve the above criteria if it has been identified as a Council priority~ 2. Missions for Cross-Oep~rtmental programs: The proposed cross-departmental programs and mission state­ ments are.: o Computer Systems -Development ar.d implementatiorl of new computer systems affecting multiple de~artments~ CKR:626:93 J - . o c~uncil priorities -M~jor issues desiqnated by Council thco.t 'Warrant intensified effort of actt""ity to implement a policy, resolve a problem. or accomplish a qoal. An example of a Council priority is graffiti control. Graffiti -p~evention, abatement and clean-up of graf­ fiti, and the apprehension a~d prosecution of offenders. o Cubberley - A Pale Alto Unified School District facilit~7 made available to the community though a long ~erm lease to the city for educational. cultural and recreational activities, requirinq the collaborative efforts of three or more city departments. o Events Major public or private eveni;:.s requiring coordination of several departments. o a Hazardous Materials To provid~ tor the storage, regulation and cOlllpliance with reg·..I1atory requireI!le.nts rEla~ed to hazardous materials. Land. Development applicatiol",s fer construction. Projects Processing development projects and Processing monitor ing a Parkinq -Activities which support the planninq, design, implementation~ enforcement, ~aintenance and resolution of motorized vehicle par~ing issues. o T.l'aftic Management -Activities that facilitate safe~ efficient traffic flow~ Attach!'!d are two charts. Appendix: 1 shows .... hich depart,']!Ients are involved in the different programs. Appendix 2 shows the program, f~nctional areas and major activities for which the costs for the cross-departmental prO<;'ram will be captured. 3. Due to tne difficulty in pred,icting the co~t.'S for each program during the first year of MOB, jt is anticipated that there ",'ill be no projected budget for 'the cross-departmental programs. At the end of the fisc~l yea~, staff will report back to counci 1 reqar-dinq the act~al expendi tur-es in each cross-departmental proqram. Staff anticipates ~udgetinq for the cross-departmental programs as part of the second half of the 1995-97 budget once staff has some experience with cross­ departmental p~ograms. outstanding Issues Staff is continuing to develop procedures for coordinatinq missions and impact measures. CHR:626:93 / Bl1tlGE'I' CO""TROLS The issues identified ~ith regards to budget controls were: o What wi 11 be the rules: fo~ moving flmds and pcrsonn~l between functio~al areas and between major activities; including ap­ provals requirp.d for movem6nt of various types of funds; anj o What changes .... ill be required to the applicable Municipal Code section to reflect MDB policY/~ormat changes? 7~o types of budget control issues have been discussed by staff. The first was the translation of the current Municipal code language on department budget appropriations and restrictions on movement of funds into a f~rmat compatible with MOB. The second ~as the devel~pment o~ a set of internal, administrative controls not explicitly part of the Municipal C~e~ Current Municipal Code sections require that Council appropriate budgets to departments by ~ajor expenditure categories: employee services, contract services~ supplies and materials, general expenses, rents and leases, ar.d equiprnent~ Council has repeatedly told staff that they do not find ite~s of e--vpenditure particularly useful in making resource allocation decisions. The information that ar. expenditure is a ~supply~ or a ·contract~ does not give Council sUfficient information ~bout the relative merits of services they are being asked to allocate funds for; nor does line item information provide adequate explana~ion to the public on how city funds are actually being spent. Therefore, staff felt more attention should be focused on the purpose of expenditures~ the mission to which the expenditure will be applied., and the impact that the expenditure ~ill have on the public rather than on whether the expenditure is a ~supply" or an -equipment­ purchase or a "rent and lea$e~ expenditure. CODel.u.io.lUiI 1. Administrative Controls: Under the: MOB structure~ departments will he responsible to the City Manager 3nd ultimately the Council .for the services: tbey deliver-to the community and. for communicatir,q to the Manager and the Counci 1 their accoDlplish­ ments through impact measures. Department heads would have the flexibility to authorize the movement of personnel (and therefore salaries) between functional areas ~i thin their department as long as they achieve their impact meaS1..Ores. Department heads ~ould also have the authority to move non-salary budgets between func­ tional areas and maj~r activities. Movement of funds between employee and non-employee services would reguire City Manager approval. CMR:626:93 5 - "' 2.. The following Municipal code restrictions \;IiIl be I:!03intained und.er MDB: o No funds be appropriated in or out of utility co~odit.y purchases, except by budget a.mendme~t appro'\'ed by council; o No funds be moved between departments, enterprise funds j except by budget amendment council; or bet;.reen approved by o No funds be moved between operating and capital funds~ except by budget amendment 3.pproved by council; o No funds be moved bet .. een capital pl"ojects j e:xcept by budget 21mendmel"'.t approved by Council. outDtan~inq Issues In order to ensure that council and the City Manager are kept in­ formed of the success on meeting impact measures, a departmental quarterly impact measure reporting process will b~ developed. Issues to be decided include: o At what level impact measure performance should be reported, and how much det~il should be provided; o HOY the reports shall be presented; a~d o For budget control and/or budget savings and incenti .... es purpose.s~ shoJ.;ld indirect/allocated charges should be dif­ ferentiated from other non-salary expenditures? UVUIGS AND IIiCEII'rIV!:8 The issues identified with regards to savings and incentives were: a H~ should Mission Driven Bl..oIdgetinq provide incentives for departments to save budget allocations; o How should budget savings be carried oYer~ and what should the polLcies and pr~edures for this be; and o What should the policy on base budgets be? A number of other cities that had established some form of savings carryover procedures were intervie· .. ed to provide background information~ Four principles were developed to judge the savings and incentives conclusions. The ccnclusions should: CMR:626:9) 6 I "-,,,;:, - >.",.~".·.~f /' -" r-; - o Foster persona.l responsibility and accoul'lt~bilit.y. o Encouri'lge and reward efficiencies ano good budget practices. o Create an en .... ironment that promotes creativity ~ erltrepreneur­ ship~ and risk taking. o Employ budget pra~tices that are simple, clear. and pr~dic­ table. There is in~reasinq consensus that traditional government budget incentives which encourage managers to "use it or lose it-are flawed. If managers de not spend their budgets by the end of the fiscal year. tney -lose" the money they have saved. In additior. there is a fei'lr that they will get less the follo"w'inq year because their entire budget was not spent~ So the :;;;mount cne manager saves goes to. other-managers who overspent their b'.ldgets~ In increasing numbers of state and local agencies, there is a movement to~ard allowing departments tv carry their bUdget savings from year to year vithin a framework called Expenditure Control BUdge-t. This e.ncourages sO' . .md management with prudent and timely expenditure of funds~ The City of Fairfield has used this approach successfully £or over a decade. CODclu:siollll The Senior Management Group is currently discussing the proposals for savings and incentives. under considaration are the f"ollo'il'inq: o The term -base budget" needs to he defined. o How will base budgets be determined and what process will be used to determine hase budqets? 0. What savings will he eligible for carryover? will any part of salary savings or al1oca~ed charges he eligible? o \rI.'bere will the savings be placed"? What portion of savings will qo to the overall General Fund {under the city Manager's direction) r versus the overall departmEnt {under direction of the department head} versus the functional area? o Are there addi tiol'lal incentives ",'I"'.ich would foster budgetary effiCiency and savings in the orqani2ation, including poten­ tial linkaqes to performance and compensation which should be developed? It should be noted that due to Municipal Code and accounting restrictions~ the savings policy for the Enterprise Funds "'ill necessarily be somewhat different from the policy that 'Will be CKR:626:93 7 ... recommended for the General Fund. Ho~ever. it is anticipated that the concepts ~ill be similar. CODNCILfBUDGET PRESENTATION The follo'Wing issues with regard to co~ncil presentations/budget document ~ere identified: o What ~ill the st~ndQrd formats and procedures for MDB presen­ tations to Council be; o What ~ill the format for the new MDB budget document be; and o How will MDB be introduced to the public and ho~ 'Will receive feedback regarding MDB? outstandinq ISSUBS Developing the new budget document and educating the public will be the trask of staff in future months. This summer-r the first prototype ot the Mission Driven BUdget document will be presented to Council. ALLOCM'EJ) COSTS Allocated costs are items that are charged to each departmeJ"l.t such es printing, mailing, utility usage, vehicle maintenance and administrative overhead. The issues identified regarding allocated costs were: o Wha~ are the appropr-iate costs to be allocated, notinq that not all are qeneral administration; and o What should the 9uidelines for :allocating costs between departDlents, and w~.thin each dep-i. ctment be? Collelusiou Administrative overhead will be divided into two types: one for the departJlllent, and one for the functional are.a. Whenever possible, time should ~e charged directly to the major activity. C>IR:626:93 8 Df:?ARTMEIIT 7w:.::tl.anal Ar ... 1w1aiDi.t r. t.iOD Major ActiTitJ' F'uo.cti.oDal Ar ... Ad.iuistratio:a. Kajar ACt.ivit:r When it is il"l1possible to assign a charge directly to a major acti vi ty, allocated charges can be placed in either Department Administration or Functional Area Administ,ration. nKEXBEPDlG Issues were raisea with reqard to collection of timecard data and the record keeping systems for impac~ measures, To collect the infonnation that .. ill be t"E!quired to accurately reflect the goals of Mission Driven Budgeting, more detailed. timekaepinq will be necessary. Because the City is in the process of replacing the current payroll system with a new payroll/human resource system, the~e will be many variables to be considered in selecting a consistent method of time reporting and salary account distribution. It is ess~ntial that any such new system accommodate the. requirements of MOB in the procurement of the new system, development of timekeeping proc~dures~ ana the interface of payroll and accounting systems. conclusions Daily timekeeping should be available in some manner for each employee. Time can be kep~ in increments as small as one-tenth of an hour, and the level of detail of the time kept would be up to the discretion of the department~ Time records will be entered and authorized by department before being fOnlarded to the payroll syst.em4 Finally, payroll cost detail shOUld he accessible by activity so that MDB program budgets can be p,operly managed and monitored. CKR:626:93 9 -.~, I I .... " OUtstan4inq rssues o wi th the added level of time keeping det~il needed, accounting co~es ~ill need to be simple and lcqical. o A proper interface betweEdl the new payroll/human resources or timekeeping system to l.fAS will be critical to quick account verification and detailed Cl.:cge:t-to-actual reporting capabili­ty. CAP~Tl\L PROJECTS Issues were raised regarding .... ,hether or not capital project budgeting could be int~rated into the MDB format in the first. few ye.ars of MOB or should ... ·ait until staff has had experience .... ith l'mS. Conc.lusions No conclusions for capital projects have ~en developed yet. staff is still diSCUSSing the options for hew to budg€t and account for capital projects ~ithin the HOB framework. oolfCLusrOIi This pa.ckage prese:nts a variety of preliminary conclusions and discusses issues that staff is working to resolve. Respectfully submitted, J'lvV/lrv>.q 11cv.U""Ii-c"y) VIRGINIA HARRINGTON ., S~Ffi:al~lyst --:~AllRlSON ~ Director of Finance NA!'\~hM~ J'mI£ FLEMING City Manager Attachments: Appendix 1 Appendix :2 CMR:625'!.93 Cross-Depart=ent&l Programs Cross-Departmental Progracs Organization Charts 10 .. CROSS-DEPARMIlNTAL PROGRAMS II< DEPARTMENTS THAT MIGHT BE IMPACTED NoYcmbcr U. 199) DEPARTME.'IT CROSS-DEPARTMENTAL PROGRAMS Computer Cubberley Even:UI Council Hazardous Land Parit:ing Systems Priorities, Materials Development Development su('h a~ Projects and Graffili Processing Implementation . - City Attorney X X City Auditor City Clerk X City Council -- " City Manager Finance X X X Fire X X X X Police X X X X ~ Planning X X X X X Public Works X X X X X X X Comnilinity Services X X X X - Utilities X X X X " IRD X HRD X X .'!~,'L )~'1:1 <h~/~i~_~';~~,~:~r~~~· -,\~,!:~ ~~- Traffic Management I I .---,. ." ." m g .. X X X X X ------ I: ~~;:~\J;~~,(~~~~~.~;'., • ,'·c i, ,\~;~.; ). ~,,~ '/ ~ "'\\ l' -f'-I, p' " ;~';~::j- t~ ". " , .1; " APPENDIX Z tJIOSS-DIl'ARTIIJITAL PRllGIWIS OIIGA"llATICil tllART5 Computer Systems Dtvtlopnwnt .nd ImplementAtion of new computer 'Y1temt affectine, multiplt deptI'I'tMfnt!. I -., ~ .. Community \Jllllli •• tnfornltllon ServitfS Rt''iOUr(tfi I I .. --. , ~ .. --. -- .-~ Library Re~:reati~1 DiS1tibutilm Support Tele(.ummunicat\~)ns Centrahzed Centralized Services Sel'Vices System Services and Support Computer A.pptic;l\ion Rllte!!. Support SUppOfT ~\' ;'. , !; ~::'~;.: 1 r--~ ~ 1 • "'-" 1-.~., , -.' System Cus10met AllB(t,witiCl) An actjvitie~ All activities ImproveOlent., Services . '\. ,- " Computer Systems Devrlopmrnt Ind Imptemf-nCI.lon of nf'W (omputf'r 'yltHm .nettlng multiple dep.rtme1lt5. Public Works .. -, _'t -±. -±. ~ I $net\s and Storm Dmin Trees Facilities Wastewater Solil.l Wasie Private \' SIdewalks Treatment Devetn'Pmen,~.' " J r--~ - Information Infonnlltion Information Information Information Information Infortnallon i Management Management Management Management Management Managtment Managl;"ment _.:~:i :/. ", Fil1ancial SYstems Mgm. Computer Systems Dtvf!lopment and Implementllfion of new {'omputer ,ystem, .frettlng multlplr deparlfl1ent!i. Finance Financial Suppa" S",n.ricc:s Accounting Services Fir. Record!> and InlbMgm. R~qufret1 Reporting Sy5tem~ ,. Pollc. Infonnation Mgm. Computer Systems Dcvclopml~nt ,. Planning 'nformation Mgrn. Automated Systems Development ,. HumA" Rr$t)urcfs Ernpl(!yc~ R~latil)1is. Cnmpcn~8ttOf1 lind Benefit.:, I , Cla'lsllii.:atwll and ray AdmlnisrfatiOI c <,. '" - CubberJey APlin Allo Untn.d School Di,/rlcl r.clllly mad .... lIable t. the c.mmunll~ through al"ng .~rm ltau to the City fll .. educational, cultural and recreafjonlll attk,ltltt, aqd reqblrloR the coliabor.tJ1If tfforts of thrre I)r more City departmtllt!l. I -• • • Community I Public Works Finance Stnlce. I Ub:tICY I " Park Services '1'" T" aCI Itle!' - Pork-Land Development j Fixed As! Managem ;cts enl ~ Operations Mllj ntenllnce Master Plan Fundtaising Capital rtnprovements J ~ Maintenance '---" Contract Management and elP '-- -, IrRcal £impert rty ent Mal'Htgcmen I 0;; " .' , 1'1 .. , Pulice Human Resources ~vents Major pablk CIIr pmate LJ-~ Commenity rveab requiring Sen;"'" CMnIinltioa of sevenl departm ..... ac .... tM CIty. CityOerk UtilitiEs PubU( Works Erlvlmnmental and Safety --I S . E I • PCClai vents Management _ • Special fvents RISk Mgm. Facilities Sotid Waste City Spol\SQre.l Events Non-City Sponsored Events S.anfon:l Sponsored Events Special Events '. Council Priorities Example: Graffiti Prevention, ablUem.:nt .ad. ele.""up of gramti, and thf .pprehenslon and prolf\:ulloR or offenders. I J , j , Public Commonlty Planning Polite Work. 8o •• It .. I I , ,. , , , , Facililies M Nelghborh ood Cummunity P.rk·Land Streets and Humnn Park Sen'ices Progmlns and Fundamental Education.! Development SIdewalks Services Services Response {'rime Suppression J ~ Huma" ~ Relations j Comm issicmf Maintenance Maintenance Task forces Maintenance Otfttliti \' ,! ~ Coml1\\>nity Partnership, Fire Environmental and H!1ZNOOUS Materi,d~ Safety Management Management Water Distribu:ion OpcratiofiS and System Malnlenance l:tectric Distribution Oper"tions and S)'st~m M::tLntenance Utilitks Gas Distributim:: Operations and ~y:iotem Maintenance Wastewater Opcralions and Colle";lion System Maintenance Hazardous Uaison, Materials Coordination and T edmical Advice T. prGVicIe for the ........ rq.1atioo aDd Neighhotbood compiialKe wit!! ..... lat.ry P1a:nning Services and Programs req_iraneotl mated to bazanleUi llUltet"ials. Public Involvcmenl. Environmental Education and Protection Assistance City Independent DlJties Attorney rl Solid Waste I Public Wastewater Works Treatment Stonn Draina8e Enforc:t.tnent ,:;:, ~, Land Development Projects Processing "..,. ... rna opp!.,o"O". for d ••• lop ..... ' proj .. l. II.td ml)OO«Irin& ...... "".,"',,. .-• J Fir. Cloy Udll1let AlI,...""y J Environmental 11ndtl'<ndt I mstnbutiun and Safety < n 5),>""" or Mllt1agemenl j DuhtS C"U&lton Sy,km Legal Document O.lli«nner f'reparaHtm Sc:vkvs and lIJ:view <~<,~ ----< t I Mlnnlnl ! , '" CCMff~1~OO Dev·"'rmenf Rl!vi(wand Review PrOJect M.onitoring _1 Pruject OcvewpnwM -.--~--,-- .. !>II<­ <orb [1 W. [ t: P'ri¥j$~e lormtm 'uNit Meath ~ Pe-rmJHJog and \J)$ptttion Parking Atth'itles which iupport the plan nina. dU1t,Imptrmentatlon, rnforcemf'nt, malntk'nalltf and telolptlol1 of motor :r.ed vehicle parking Inues. I + -{ -, , Police Public FJnancf Plannhlg Works ,. ,. , Parking Streets and Finandiil Transportation Sen ices racilities SillcW31ks Support ilnd Parking Services Management ,. ,. r--+ ,. --,--- Parking Abandoned Parkini- Parkio8 Citatioll Vehicle Parking S~ace f\ I Ii nlenimce Maintenance Billing and I'arlin~ Enforcement Processing Abatement Adj udkatiOIl UtIlization Collection Managemenl and Research Ttm;;king .. _--- -'", " ... ron .. Traffic Services r-Tramc Enforcement r' .. .., , School Safety j----. DUr Suppression -- ~ Tlaffic Com~l!lint Reso ution - Traffir Management Actlvltl •• that foellillte ,.r ... fficl.nt t",me flo ... t ,. I .- Humin Utllltle. r PhlDnlng Resouttes ~ Tran:ipor1atioll Dialribllr: III I Tmnsptlrt~tion Demand Syslel~; and Parkmg Management Mana~cment ~ >--Trame CcJmmute Opf':ration Engineering Altemativcs .n~ Program Maintenanct' f---. Traffic Signal Managemenl L.--. Bicycle Program Public Works Streets and Si~ewalks r-Prnjcci Development and Implementation Emergency ~ Rl."sponsl! • ~-.~! ~';" , ~', ;" :. ,