05/21/2003 - City Council Speciali
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MEMO
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TO: <~1<,.~., t:)t:~,P.~.]ltt'i'-'iF1'?lli' I~.E.~S
FROM: C'7 I'~r ~,~t'~YI1~1IS ~"R~'.I'Ol~ ItIEI-CE~v
DATE: MAY 2:I, 2c;(!3
SUBJECT: SPECIAL CITY COI?i~CIY., ME1F:TI~C `z%~'EDIZIESI1t?~'i', ~r~fA~' ~~ ; :LO~~
A special thanks to all of you for your do diligence in working on the 2.(304 ven~:ral ~'=~;.s~.f ~~1)E,raii!;~
Budget. Due to the anticipated loss in mazket value cre~;it acid state aid that ccs~,l~:l to*al
approximately $1.3 million in 2004, and an equal loss of revEnue in ?005, file ~~~,il~;~. t 1~oc,~-.ss will
be more difficult than in recent yeazs. The City Council has flt the need xo rriF~s;r a.i~Y ~?ruvi,Ye. tl~~Fir
input and public policy direction so the budget information they receive fi°o.m staff is helpf~_il r~-id
useful. This is part of the reason direction was given at tl'a° ,Prb~•uary 11 and 1?_ ~~e~tr~:~ryt, tl~e iV(arct~ ~
retreat and the Joint CounciUDepariment retreat on Apri122. {t°lease refer *.o an attach~t~ tint entitled
2004 Budget Process, May 21, 2003 on pages ~ t}~rouglrA__.>
Enclosed on pages through ~ is a list of questions, direction and inp».t t~:iat +;y>as shared
by members of the City Council at a meeting on Wednesday, ?fay 2 i. ~ corr?~r~enr,'. else E~ouncil and
especially the Mayor for his guidance in keeping the budget preparatirn. at t1;F l~eparurr~;c~t xnd City
Administrator level while gaining input from the City Council about what their exY~ectations are for
the budget documents they will review during the next two to tli:•e:~~ ~nontlis.: will have; that
information ready to present on Tuesday morning at th~° Ag~;~+d~: Review meeting.
A special thanks to all of you for your added patience these past l'e~• day°s as I have had to sperFd an
inordinate amount of time with the City Council on the bt:dg~:t proc~;ss. I cannot emphasize ens~Tc~;h
the importance of satisfying the various directives the City (~`~?tu~cil has given. this spring regardirib
the budget, which is outlined in the attached memo.
We will talk more on Tuesday, Have an excellent and relaxing Pie*norial Day we~:i;~;n~~.
/s/ Thomas L. Hedges _
City Administrator
Cc: Senior Planner Ridley
Chief Building Official Schoeppner
Attachment
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2004 BUDGET PROCESS
MAY 21, 2003
• February 11 & 12 -Outcome at City Council retreat^adoptg1Goal No. 11
which reads "address the state budget impacts by analyzing and
implementing tax saving measures". The two (2) recognized objectives
at the retreat.include; 1.) streamline City operations and staffing to
reduce City costs and improve efficiencies and output, and 2.) research
the impacts of the possible reduction ofnon-essential services currently
provided within the City's annual budget.
• February 27 - At the February monthly Senior Management meeting,
Goal No. 11 and the specific Council objectives were outlined to all
Department Directors
• March 5 - At the follow-up Council retreat held on March 5, specific
direction was given by the City Council that "all Department Directors
do an in-depth review of operations when preparing their department
budgets". For example, the Council asked that each department give a
summary of programs provided, as well as the manpower associated
with each. The Council would also like to see which programs are
"winners" or "losers" when it comes to generating revenue, recognizing
that many essential programs will be losers.
This information was shared with all Department Directors following
the March 5 retreat.
• Apri122 Joint City Council Department Retreat - At that retreat, the
Council was informed that staff is beginning the budget process two
weeks earlier, starting on Apri129. There was discussion about
including the following items in the budget process:
- Formulate budget recommendations fora "worse case scenario"
- Identify the potential funding necessary to off-set startup costs at
the Community Center
- Layout options and implications should legislation be enacted
regarding a reverse referendum
- Contingency plan
- Review savings made in 2003 in each of the departments and
determine potential ways to apply the savings to 2004
- Update the Council throughout the budget process on any state
legislation being proposed that. could affect Eagan
- There was also a discussion regarding additional input by the
City Council early in the budget process. There was agreement
that a meeting in mid to late June would serve as a check-point
when department budgets could be preliminarily reviewed giving
the City Administrator further direction. In the past, the Council
typically hasn't seen the budget until August.
- There was also discussion about a two (2) year budget.
• May 13 Workshop -This is the workshop the Council discussed the
hiring freeze, noting that it applies to all operations including Enterprise
Funds. There was direction given that staff would keep the Council
updated on positions in the City that come open and, further, that research
on vacant positions, including the Skating School Coordinator, would
continue during the budget process.
a.
-_~~~^
DRAFT
MEMO
City of Eagan
TO: DEPARTMENT DIRECTORS
FROM: CITY ADMINISTRATOR HEDGES
DATE: MAY 22, 2003
SUBJECT: MAY 21, 2003 COUNCIL BUDGET WORKSHOP
At the May 21, 2003 Council workshop, the City Council discussed the process for the 2004 operating
budget and made the following comments, inquiries, and requests regarding the 2004 operating budget
preparations. It should be noted that this memo is intended to be a working document for the staff and City
Council, as modifications and/or additions could certainly be made. Rather than expanding on the points
made at the meeting, the memo instead reflects the comments and questions as they were voiced by the
Council at the workshop. There maybe some duplication in the discussion points noted, which was
intentionally done so to further emphasize comments and questions that were raised.
Discussion Points
1. Look at both the short-term and long-term impacts of budget recommendations.
2. Determine essential versus non-essential services (Note: Final decision on what constitutes an
"essential" service will be a future decision for the City Council)
3. Public Enterprise Funds and Revenue Funds-What are the impacts of certain items being cut (e.g.
skating school instructor)?
4. With this shortfall, what is the Council's philosophy regarding reductions-is it best to make many
cuts or a few large cuts?
5. Where is there duplication in staffing? What cross-training opportunities exist? Do department
directors know the workload of their employees (i.e. does everyone have a 40-hour work load)?
6. What are the Council's priorities when identifying reductions? Should the cuts be fairly divided
across the board?
7. Look to the budget scenarios that staff is suggesting when determining reductions to be made.
8. Revenue funds-it is important to maintain revenue funds and protect the City's bond rating.
9. Take a two year approach to the budget.
10. Communicate the budget process and decisions to the public. Be proactive in communications.
11. Utilize the City survey results when determining priority programs and services within the
community.
12. Definitions of essential vs. non-essential-most services are essential and the City is already very
lean (difficult to find 6% "reform" or "efficiencies")
13. The City must look at some visible cuts.
14. Rely on the City Administrator to look at the various budget options, so he can then provide the
Council with potential consequences of various scenarios.
15. Reserves -Comfortable using some reserves if that is the purpose.
a. Reserves could soften a transitions, i.e. to fund a position where the person may soon retire.
b. What are our reserves?
16. How does money go in and out of funds? Are reserves necessary to address City investments?
a. Show snapshot/picture of what our individual fund balances are.
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17.Reducing a few large services vs. reducing bits and pieces of others -Focus should be to best
maintain quality of service.
18. Assume $1.3 million aid loss, Community Center shortfall, inflation costs, and reduction elimination
of grant revenues.
19. Prepare cone-page, ledger-size document showing each department's budget, services provided, and
personnel allocation.
20. Assume $1.3 million loss and zero-increase budget -Departments should prepare budgets under that
scenario and lay out the consequences of any cuts they are suggesting.
21. When considering reductions, the City should look at the best way to preserve programs and
services, which may not coincide with preserving all staff members.
22. Will inflationary costs be covered if the Council were to levy to the maximum?
City Administrator Hedges presented the following informal budget schedule/guide to the City Council:
June
6,'3 -- Presentation of year-end financial report
Mid-June -- Department budgets submitted, City Administrator Hedges reviews budgets
6/24 -- City Council meets with staff for presentation of budget scenarios, further review of financial
statement, and further discussion/inquiries about the budget information presented.
July/August
Council reviews budget and discusses any budget reform necessary
September
Council certifies preliminary budget for the purpose of certifying a levy for Truth in Taxation (It is not
necessary for the Council to approve the final budget at that time)
September through November
Further budget discussions by the City Council (Note: the levy cannot be increased at that time)
December
The Council approves the final levy and certification.
Responses to the above questions and concerns voiced at the May 21 Council meeting will need to be
addressed by staff as part of the budget preparations. I thank you all for your diligence as we work to prepare
budget information for the City Council. We will have the opportunity to further discuss the Council's
directives regarding the budget preparation at our next Agenda Review meeting.
City Administrator
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