Loading...
05/21/1980 - City Council Finance Committee MEMO TO: CITY ADMINISTRATOR HEDGES FROM: FINANCE DIRECTOR VAN OVERBEKE DATE: MAY 21, 1980 SUBJECT: LOGIS INTRODUCTION Since our meeting with the Finance Committee on March 31 , I have done additional research on the subject of data processing alternatives. I have discussed our situation with a number of municipalities as well as with various vendors. I have attempted to keep from over stimulating the vendors until our plans have been defined in greater detail. I have also had extensive discussions with representatives of the LOGIS organization. QUESTIONS AND ANSWERS As a result of our meeting of yesterday, the following is an attempt to provide answers to your specific questions regarding the LOGIS operation. Perhaps these questions and answers can be used as a basis for further discussion with your- self or with the Finance Committee. 1. What services can be provided by LOGIS and who are the present users? LOGIS is designed to jointly and cooperatively provide for the establishment, operation and maintenance of data processing facilities and management informa- tion systems for the use and benefit of governmental agencies. LOGIS presently operates a financial control system, payroll system, utility billing system, equipment control system, a fixed asset system and is developing a geographical data base system. Unlike typical service bureaus, LOGIS is directed toward governmental information systems and is not a modification of a system designed to operate in a business environment. The current users are Apple Valley, Brook- lyn Center, Brooklyn Park, Coon Rapids, Crystal , Eden Prairie, Edina, Fridley, Golden Valley, St. Louis Park, Shakopee, Hutchinson, Lakeville, Metropolitan Transit, Minnetonka, Metropolitan Sports Commission, Mound, Mendota Heights, Robbinsdale, Cottage Grove, Morris, Richfield and Orono. Eleven of these users were charter members and the other twelve have subsequently joined the organiza- tion. The populations of these cities range from under 10,000 to 46,700 in Edina. These cities also cover the entire range of maturity. The uses range from all applications in some cities to only one or two applications in others. 2. What services would be used by Eagan? I would recommend utilizing the financial control system and the payroll system at the present time. Eagan' s most pressing problem is with the financial system. However, the incremental cost to add payroll would be minimal and there is a Great deal of interface between the two systems. LOGIS Memo May 21 , 1980 Page Two From a practical standpoint, it is not possible to maintain accrual and modified accrual financial records with our present system. Consequently, it is not possible to determine the financial position of any City fund on a timely basis. We have been through this with the Fire Station Capital Improvement Fund and with the Future Street Construction Fund as two recent examples. 3. What would be the impact of LOGIS on current operations? Successful implementation of any automated data processing system should improve the efficiency of the accounting and financial record keeping functions of the City. It would not automatically make our present manual system into a good automated one, but it would give the staff a chance to make some progress. We could resonably expect more timely and much better management information. LOOTS would allow the staff the most time to work on improvements to the City operations since we would not be responsible for the hardware, software and other processing applications. 4. What would LOGIS cost per year and how do we pay for it? LOGIS uses three classes of charges. The first is to cover the organization' s general, administrative and operational expenses. This amount is presently $5,000 per year and is covered by a State grant for new members for their first year of operation. The second class is to cover the cost of design and develop- ment of computer programs and systems and other capital costs. This charge is for enhancements that have general applicability and is presently $2,000 per year. The final class covers the costs of operations and maintenance to individual members determined by their usage. If Eagan were to utilize the financial and payroll systems, I would project the first year costs to be appro- ximately $12,300 or $1 ,025 per month. The subsequent yearly costs would be $17,300 or $1 ,450 per month. This increase reflects the expiration of the grant after one year. LOGIS management is not anticipating increases in user charges although the organization is subject to the same inflationary pressures as is everyone else. Since we are considering only these two systems, the payment would be an obligation of the general fund. Since the State of Minnesota is a participant of the LOGIS system and since the capabilities provided are sub- stantially new to LOOTS members and substantially exceed the minimum require- ments of State law for municipal reporting, the assessments to LOGIS members qualify for exemption under the levy limit law. According to Rich Gardner in the Local Government Aids and Analysis Division at the State of Minnesota, we can special levy in the taxes payable in 1981 for the LOGIS costs incurred in 1980 as long as they were not levied with the taxes payable in 1980. I would recommend using the fund balance for these 1980 costs through a budget adjust- ment and special levying for these costs as well as the 1981 costs in the next budget year. The 1980 costs would depend on the start up date and actual cash flow would also depend on billing date. LOGIS Memo May 21 , 1980 Page Three 5. What are the alternatives if LOGIS is not selected? Assuming that LOGIS is not acceptable as the best of the service bureau/coopera- tive alternatives, the other option would be to explore stand alone systems. Since this becomes much more of a long range commitment to a specific system, it would require much more planning and study than would a decision to go with LOGIS. I would then recommend establishing a selection committee to complete a needs analysis and to control the entire selection process. It is felt that from the needs analysis to getting the hardware in the front door should take from six to nine months. This could be optimistic in Eagan, given the pressure of the present work load. The time period from getting the hardware in the door to getting all systems operating would probably be at least that long and would depend primarily on the support available from the vendor/vendors. Most cities to which I have talked have been disappointed in this area. 6. What would the projected timing be if LOGIS were selected? Assuming that LOGIS could be approved in June, we would probably be able to begin processing in September. It is estimated that it would take approximately two months after approval to get checks printed up and ready for use. Other timing would depend on what kind of commitment could be given to the conversion effort by the City. We would need at least the two months to prepare a chart of accounts reflecting the accounting structure that would be satisfactory to the departments and to the City Council. It would be appropriate that this chart of accounts would be in effect for the 1981 budgeting effort which will begin during this same time period. Hopefully, this timing would allow for the elimination of problems and mistakes in 1980 and allow for a relatively clean operation in 1981. We would have to meet with LOGIS representatives to prepare a detail schedule for implementation. SUMMARY In summary, I feel that LOGIS is the best alternative for the City of Eagan given the present environment. LOGIS can povide the services we need in a time frame that would allow for significant improvements in our operations while not burdening the Staff with data processing requirements. Although it does not alter the fact that it has to be paid for, the option of the special levy for LOGIS does provide some flexibility that might not be available if we pur- chase hardware and incur additional operating costs. With LOGIS we would not have any long term commitments and would retain all options to be explored at any time in the future.