HomeMy WebLinkAbout0347.095,
City of Palo Alto
City Manager's Summary Report
TO: HONORABLE Cfrv COUNCIL
A1TEl\'TION: FINANCE COMMlTIEE
FROM: CITY MANAGER DEPARTMENT: ADMINISTRATIVE
SERnCES
D .... TE' Jl.JL Y 15, 1m CMR:M7:95
SUBJECT: CRITIQl'E OF FIRST MISSION DRIVEN BUDGET
REOUEST
Sta..ff requests F~ Coonnittec feedba<:k on the inaugural Mission Driven Budget (MOB)
docU!llC!ll and relmed budget process. Staffbas compiled the ;uggestions made by members
of the Council and the Chamber of Comm= during the budget hearings, and has
StIlIIIllMized the wort that still has 10 be clone to complete and stabilize MDB over the next
yeat.
RECOMMENDATION
This is an infonnatioo report; no Cooncllactioo is required.
FISCAl. IMPACT
There is no fiscal impact related to this report
POucy IMPLICATIONS
This staff repo<1 is consistenl with current City poli<:y.
EXECIl]lYE SUMMARY
Staffbegan work OIl MOB in January 1993. culmi'lating in the adoption of the first Mission
Driven Budge! on June 19. 1995. Staff eflOrls 10 date have included the outlines of several
systems to """"""",,Ie MDB. Considerable work remains to be done 10 implement the
"infrastructure" for MOB, including automated systems. as weD as policies and procedures.
l'1I&o 1 _Ill
TaskJ remaining fall in!., four major areas: timekeeping. a.x:ounting and budget system
infi'astnKture, budget do.."UIIIellt publication softw...... and impact measure reporting.
Admi!listrBtive Services Department ,;taff will be devoting its effurts to these projects over
the next year, in OIldition to its ""going respoosibiliti<:s. lt is with this in mind that
suggestions fOr MDB improve=nts have been miewed by staff.
Slaff believes several of the sugge:.1ioos, made by thP. ('.ounciI and the Chamber of
Commerce during budget bearings this past Spring lOr improving the MDB budget
document, stmoJld be mode: temporal·Y staffing levels will be displayed by department in
next real's budget document; historical costs and sta.ffing levels (FTEs) will be displayed
after I full year's histoty is aVll11able 10 report IS part of the 1997·98 document; historical
budget information will be displayed on capital budget project description pages next year;
the "Using the Document" section of the budget document will provide more description
aboot 1he diffi::renl types of salary expenditure categories; ~il priorities will be <flSplayed
in a single location and Public Worl<s' impact measures wHl be reviewed by statfthls Fail
Staff also believes that the budget process, as redefined this year foe MDB and incorp<xating
• more vigorous and earlier dialogue with the ('ooneil through the budget guidelines and
budget issues pr<>eesscs, is a vast improvement over prior processes, and will be continued
in future yean.
Staff elb:ts over the next year wm be 10 romplete an system, process, and pr<>eedure
changes needed 10 cootinoe MDB OIl aD OIli!Oing basi<. After that time, it will be fruitful 10
prioritize fi4ure analyticaI projects. socb IS benchmarking and revie1>ing ser.ice atea3 lOr
privatizatfoo oppOrrunities that C8!l be under!akea by Administrative Services sta.tr
PREPARED BY: runSteeIe,Bud~getManagerr,1 C
DEPARTMENTHfADAPPROV :) ;-{(~ " < '-'--~
E HarrisOn 0:::::
~1CIo< of A . e Services
CIlY MANAGER APPROY AL:
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City of Palo Alto
City ~fanager's Report
CRITIQUE OF FIRST MISSION DRIVEN BUDGET
BEQUEST
SIalfrequcslS Finance Committee feedback 00 the inaugural Missioo Driven Budget (MOB)
docwnenI and related budget process. Staffhas compiled the suggestions made by members
of the Cou.-x:il 8IId the Chaml>er of Cornmer<:e during the budget hearings, 8IId has
summarized the wort that still has 10 be done 10 complete and stabilize MDB over the next
year.
RErnMMENpATION
l'his is aninformotion report; no Council action is required.
l1SC 6J IMPACT
There is no fiscal impact related 10 this report
pouex IMPLICATIONS
This staffreport is coosislel!t with current City policy.
IDSCVSSJON
k< 1his is !be Cilys first Mission Drive. Budget, it is importanIthat Council and staff review
the budget document and process. This report is ocganized into two sections: a SUIIlIIllUY
of MOB implementation tasks still incomplete and requiring dedicated staff efforts over the
next twelve montbs; 8IId suggestions and comments related 10 the content of the MOB
docoment maJe by eoun..,,1 Membets and the Chamber of Comrne= during budget
bearings. Some ~ made during budget hearings can be impkmented with the next
documenL Other suggestions will need 10 be reconsidered after MOB implemenlatioo is
complete.
Relldining MDB Implemeatation Tasks
Staff began wort on MDB in Janwuy 1993, culminating in the acIoption of the first Mission
Driven Budge! on June I 'J, 1995. Staff efforts 10 clate have included the outlines of several
J'aKelolll
systems 10 ac<:ommodate MOB, Considerable work remains 10 be done 10 ilnplemenlille
'infi'astructure" fOr MOO. includdlg automated systems, as ... 'ell as pc1icie< and proc..t.J(OS.
Tasks remaining fall in10 roo.. nujoc areas: timekeeping, budgeting end ac.:oonting system
infrastructure, budget documeol publkatioo soft",,,,,,. and impact measure reporting,
Drrn;keepine
All City staff are currently using paper timecarOs, which ere coll",,'\ed weekly and entered
into 1he payroll system manually by remponuy staff added 10 the Administrative Servkes
Department until an automated limekeeping system can be implemented, In order 10
implemenllimeleeping We MOB purposes, 1he following lash remain:
o Preparation of. R~ We Proposal (RFP) We • long-term timekeeping solution;
issuance oftbe RFP; cwIuation ofn:spooses;..,1ectioo of. cODtracI<J<; and designing
and programmfug, and implementing. timekeeping systerIL
o Design and implementation of interfaces from !he timekeeping system to !he
payrolVnuman =ources system. .c<<>UlIting system and budget/position control
systelIL This includes !he .utomaticn of !he currently manual human t'eW\lrces
systems and processes to ensuretr.at iILlocm.lion is transferred between Human
Resources (hiring, promo6oo,. termination, pay codes, etc,) and the positicn control
system (which controls 1he nu!nbe£ of permanent positicns authorized) and !he
timekeeping system (which will translate hours worked 10 employee costs in !he
accounting system)
o Design and implementation of. new positioo control system Iha! interfaces with both
!he accounting system under MOO and with !he payroIlIbuman resources system
o Design of DeW procedures and proces= 10 ensure Iha! position, payroll. and human
resource information is updated on-line; training staff on the use of an on-line
timekeeping system. when it is deveJopeci
o Design of a time reporting system We managers to be IIble to monitoc their
employees' time, as well as We budget monitoring and planning Purpo5eS-
o Design and implement upgrade 10 the centra! computer equipment. networks. and
operating systems 10 adequately handle Ibe new on-line systems.
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ACCO'Fl'inrJ BIxteet System Tnfrastrpctun:
Remaining tasks to implement MDB in the Interac-o.ive Fund ACC<lWIting System (IF AS)
include the following, which need 10 be done 10 ensure the integrity 0( financial data:
o SIabilizatioo on the ID'9OOO (UNIX) environment, tiler the trar .. rer in June 1995 0(
IF AS !i'om the HP 3000 envirorunent;
o So.~ changes to the acwunting system to &!low for automatic journal entries 00
• monthly basis 10 a/Iocate administrative costs;
o Cooversioo 0( balar= sbeet a«oonts (which are noc part 0( the budgt:1) 10 MDB
fonru!t; and
o Cooversioo ofsubsidiory accoonting!edg= 10 MDB formot (fixed assets, accounts
recer",ble, en..'Umbraoces, purchasing).
SuAm Qnsarmrpt fubUsbinll Software
Up 10 !he. initiatioo o(the MOB documen~ the budget cIocumen1 has been prepared ponially
using a liansfer 0( informatioo from the IF AS budgt:1 module, augmentcl by coosider&ble
cleric8l.ffori fOr word proc=ing. The complexity of!he MOB """wnent ~ired complete
."'ornatjoo of clocum<:nI preparation. However, the software was no! completely de-!>ugged
during preparation o(!he 199.5-% MOB. Tash remaining inc!ude:
o Programming the budget publishing software to IICCOOlIllOdate the additional data
required 10 produce a two-year budgt:1 document;
o Integrating the projeCt descriptions from Capitallmprovemen( Program (CIP) pages
into the budget document publishing software;
o ~g!he functiooality 0( the budget documenI publishing software so !hal it can
be run in-house by Budget Division staff without assistance from programming
coosultants; and
o Cross-training Budget Divlsioo staff in the use 0( the budget publishing software so
!hat it can be run by • number 0( staff.
Impact Mn'S'J[f Bepo<tinr
o Develop an impact measures reporting anil review process internally, both for internal
J>UIP05CS and for reporting to the City Council.
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o Develop an impl!ct measure auditing process 10 ensure tr.at the data for the impact
measu= arc roIlected in a valid and verifiable mlll\llCJ", and audit one deparllru:nt
Develop standards based on this audit, and mop cut • wcdplao 10 audit all City
departments ",ithin • reasooable number of years.
o Automation of depa.-tmeoI input of impact measures a.-.d key plans so that during the
year, changes 10 !he bundreds of impact measures can be reported 10 ~i1 in an
efficient and consistenl manner, within existing clerical stiffing coostraints.
A<lminisrrative Servkes Department staff will be devoting its etrorts 10 these projects over
the next year, in addition 10 its ongoing responsibilities. It is with this in mind that
suggestioos for MOB improvements C",illch fOllow) bave been reviewed.
Sugg .. tions nd Comme.ts Related I. the Conteut orr.e Badget 00< ament
Included below are specifi<: suggestioos and Comrne!its made by membeto of the Council and
!he Chamber of Commerce during this year's budget bearings. The suggestioos are
B<COlnpaoied by stafY, responses.
Suggestio,,: n. baden doe.ment sboWl Ollly permane.t stamag levels as rlin tim.
eqaivDlellb (FJ'EJ). It .. oold be helpfa! to also ,how total hllrly
(temporary) sfallillg .. weD.
Response: Staff agrees. and will incorporate hourly sta1fu>.g into the 1996-98 budget
Jo<urnent.
Suggestio.: Some iJlrormati •• is lost by only ,bowlo, three expenditure categories
(Salaries, Noa-salaries, and AIIoeated Expenditures). It ... ".Id be lIelpral
10 sllow til. additional expenditure n.tegorles, as iJI til. cld budlltt
doeameal (COBlnet sen-ices, supplies ."d materials, facilities aId
eqaipmewt, and Etlleral expe.se).
Response: This issue was cfl.SCUSSed and much debated over the last two and • balf years,
both inIernaIly by staff, and with the ~iJ as Mission Driven Bodgeting
(MOB) was brought 10 Cooncil cooceptuaDy (eMIU 74:94) In Ibat report 10
~il, this ;.."". was cflSCussed as fOllows:
i •
"The City Coun<:il sets poIi<:y lh1d cf>rectioo. allocates fim4s. prioritizes
services, and gent:ra!Iy looks at the 'big picture.' City deparlmeots a. ... """ice
deJh"Ci)' orpni7J11ions, charged with carrying OIJI policy, hiring and deploying
statJ; buying ma!erials and services, and doi..'8 their utmost to see !hat citizens
are served and !be public money is used efficiently. MDB builds 00 !his
divisioo of responsibilities. It allows the City Council to d<:cide on policy
priorities and appropriate :service provisioo levels, and City maoagemeJll and
staff to detcnnine how to get the wod< done.
"Enhan<:ing the &CCOW1Iability of departments and focusing al!elitioo 00 the
outcomes and perfiJrmance of programs, rather than the input mix of supplies,
malerials, ""d people is key \0 the MOB concept. For example. MOB assumes
tho! citizens and the Coun<:iI walIt \0 lOcus on the results and costs ()(
prcMding a Crime Suppression 1ICIivity, and not 00 whether the inPuts that go
into delivering thai activity are comprIsed of supplies or cootract semce.. As
a result of this lOcus on """!COmeS and perfonnance, I1llIIIa8= under MOB Wlll
be givon more flexibility 10 move money between line jt.ems and eilCOlnaged
10 act more like business managers."
Staff lherefore recommends IllliI fu-rure MOB documeats cootain the saine level of
oxpenditure detBillhat ... BS displayed in the 1995-96 MDB document
SIII&"IlinIl' Provide llistom.! iDformatioD 011 coots IIlId r.n time eqllivale.t ataft
(PTE).
Respoose; Histooica! information will be provided as soon os it ~ available.
Beeause MD8 "' ... creal<d by <banging the chart of acc<lWlts. the breakdown
of expenditures .. ill be completely different from the old, non-MOB chart of
acwun!s. For example, Police never budgeted or recorded actual expenditures
against an account called "Youth Service.". Therefure, there is no historical
inrormllIion available fur "Youth Service.". After a complete year ofMDB
expendilUreS, thai inbmaIion will be available flJr the subsequent budget
documenl Next yeal's budget docwnent, fur a 1991S-98 two year budget, will
be produced fhxn December 1995 through April 1996, and will not, tbenlfure,
have a full yeal's historical cost information in it How",·er, the interim 1997-
98 document will have a complete yeal's actual costs.
Suggestion: Provid.lLislorkal badget inform.lio. on continlling or ongoing capital
projects .11 tile pro jed deKrfptio. pa,es lliemoel"",,
Saoes6o.: At tII~ ~ .. iIIg of !h. III.dget doe"me.t (page 12) and.r Ih. section
"UIIIIg til. Doc1tme.t", it ...,.Id be ".Ipfal if more information ....
provided bo .arrotive form regarding tII~ differtbl types of salary and
bellelil calegories.
Response: Staff ... ;n provide more informatioo in the next budget document.
Saggestion: Highlight Conncil's prlarioo ill the badget doe. meal 50 they stand oul
more '''iIy.
Response: Staff will add • section, perllaps in the "using the Document" section, which
puns togeth~ 0< summarizes in one pI""" all of the Council priorities. The
sectioo Oft "Cross Departmental Programs' cootalns, where feaswle, Couocil
priorities. For 1995-96, these were 'Youth, FamiJy and Community",
'InIras!ructure", and the "Comprehensive Plan.' The last priority has no
additiooal funds blJdgeted ~ 1995-96, so it was not highlighted in the
document. • Infrastru.."Iure' was prioritized 10 be inventoQillg and
documenIing the coodi6on 0( tbe City's buildings and build'mg systems. (Staff
already has invenllJries 0( trees, streets, sidewalks, and utility sysIems.)
lIIfi'astructur fimcfmg in the 1995·2000 Capital Improvement Program was
highlighted in CMR:1S9:9S and CMR:21l:95. The priority ~ "Youth,
Family, and COOlffiunity' is displayed in the "Cross Departmental Programs'
section.
Suggestio.: Several of the Impact m .......... Ja P.blic Works, lIoviag to do witll
limltillg starr cosf5 10 • certaJa pelftBtage of total project costs, were
collfusl"l lad sbollld be r .... orked.
Response: Staff will work on these prior 10 the next budget.
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Saaestio.: ner. did 80t appear fo be a co".; .. t •• ! appro ••• betw ... departments
iD tlte umber of major aMities i.o those departments. For eDmple, in
IIotlt tile PlanBiq aDd Polk. Deplrtme.ts, some m.jor activities are
b.dgeted 10 I .. clad. portio ... 0' FTE ..
Re.poose: Each department clefined for itself bOw it made !he most sense 10 show
services. S<>me departInen!s which directly serve the public, such as Polk"
and Planning. provide. multitude ofservic<Os. many ofwlrich they believe
shoold be shown in !he budget document.
Suggestio.: Related fo th. last cammellt, maay .. ojor activities are JlnlcflIred .ael.
tllar tltey are .ta fred by portiODJ of FTE.. naf makes It dlftkult for
Co.oeill. IIIggest .... ges In starrUlI or priGrities or r<SOllreeo.
Response: Slaffbelleves that MOB'. power and llSefulness to Council is in showing the
C<l6lofproviding services. That gives Council the cpportunity 10 ask stafflo
ide.atify the amount of additional resources which would be needed 10 provide
a higher level of service, (J£ how much could be saved by scaling back a
service. Staff believes that those are precisely the types of questions that
siJoukI be included as port of!he budget review process. Those questions may
be &IISW<2'Od in many cases, however,ooly &f\er slaffbas researched them. In
other words, it is DOl nccessariIy the case that the budget document it..celf will
show Ihe ~Iative c<JSts of inc:ementllllev.1s of service, nor dtat the document
ilself can make IracIeoff clecisions apparent Rather, it is MDB'. role to elicit .
those questions from the Council. and 10 n..<e the budge! process 10 work
through those questions.
SnaestiOB: n. budget pcoceso ."d doc .. m .... are incomplete withoul more olleoooo
spelll Oll "beDcltmarkillg" tit •• ilIt of City services opinst o'Jter citi ... •
.... ts. (Tbis commellt came from tho Gamber o{Comme .... )
Response: Staff believes dtat benchmarking can be • valuable management i0oi. will!
which II> measure the <:OII1parative costs of programs. There are several
reasons, however, why benclurulrking may not be • COSI-eff«tive use of staff
resources at this time.
CMR:347:95 ..... , of 11
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The rceently completed orgaruz.!ion <Mew, whicll included benclunsrking of
GenetaI FWId services I<> "like" communities, COIICIuded that Palo Alto staffing
!e> .. 1s ..... generaUy dlicien!. given the servic<!s offered. While Palo Alto
staffing is in some C3SeS higher !han the norm, this is often due, in line
departments, 10 I higher !e>·.1 0( senice offered, and in support departments,
I<> the services provided 10 Pal<> Afto's six ulilities.
As was evidenced with the orgaillza!ion review, tr>Jly reviewing C<>S!s and
service level> ""lllires a lhoroogh anaIy.is to pul those costs and services OIl
• comparable basis, ie, requires effon 10 "compare awles with awles." For
example, I<> compare the costs 0( replacing sidewalks in a new community
witbouI mature slreetll"<es with I elly such IS Palo Alto will yield results that
..... DOl meaningfuL To actuaUy acbie,·. meaningful results in most areas
wouid require. heavy investment of stalftime and resources. Underfalcing an
analysis of moo: than than one or two services per year would not b<: possible
witbln existing staffing levels untJl MDB is completed and stabilized.
FinaUy, Palo Alto has priOOd itself <lIl baving a higher level of serviee than
most c:ommunities in many service areas (number of h"bratie!i and cultural
facilities, innovative and divers< =rea!ion opportunities, number and acreage
of city pads, open space -=age willrin city limits, number of fire sIatioos,
Dumber of police of'tlctts per capita, general condition of streets, number of
trees, etc.). To beoclunark those services agains! other communities would not
y.eld informa1ioIlthat is comparable, and 1herefure may not be very useful.
Beocbmarking would have limited use in I city thai does DO( set I goal of
merely Ilaving <:omparable services.
SDggestion! ne budget process aDd doc. menl are i • ..,mplele wit •• Dt a •• lytical
effort comp.riD, lhe poloalial .avings from privatizing ,,&rinDS City
ope .... tIons. (I1lis commeat also .. me from th a.amber or Commerce.)
Staff agrees that the c<>st savings from privatizing City servic<!s can be
significant. Staff analyzed and made recommendations 00 privatizing l>asic
park maint~ serviees in 1993. ThaI recommendation was taken up by the
Hughes, Heiss orgonizatioo review and was recently approved by the Council
f<lC implementation in the 199 5-96 budge"" The analytical eflOr! speDt on
comparing in bouse vs. contract park maintenance services look two full staff
h&e 100111
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COD.lasioD
mooihs 10 complete. Until MrlB is funy implemented, DO staffing resoun:e>
C&II be made nail""!. fOC addition.l analysis projects.
Staff belicves several or!be suggestions made fur lmpro,ing !be MOB budget document
sbould be made: IernpOr8:)' stafling lever. will. be displayed by depa,tment in next yeu'5
budget document; blstoricaI rosIs and staffing levels (FTEs) will be displayed der I full
year's history is available \0 report as part of !he 1991-98 document; bistoricll budgot
inlOnnatioo will be d .... ,played 00 capital budget project description page< next year; the
·Using!be Document" section of the budget document will provide moo: description abo ... t
!be dilfercnl !)iPeS of salazy • ...".a.ture categories; Cooncil priorities will be l!1<played in
a single Ioca6oo and Public Wcr1<s' imJ"ICI measures will be reviewed by staff this FalL Staff
also believes that the budget process, as redefined this year fur MOB and incorporating a
roore vigorous and carTier dialogue with the Coonctl L1u'oogh !he budget guidelines and
budget issues proeesses, is • vast improvement over prior processes, and ... ill be continued
in future yean;.
Staff efforts over !be next year will be to COOIplete an system., process. &Del procedure
dlanges needed 10 c:oo:inne MDB 011 an ongoing basis. After!ha! time, ;t will be l'ruitfiIIlo
prioritize the analytical projects !hat tan be urnlertaI<en by Administrative Services staff.
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