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05/31/1989 - Minutes M0 —a-- MINUTES: Committee of the Whole Wednesday, May 31, 1989 5:45 - 9:30 p.m. City Council Conference Room City & County Building, 325 451 South State Street In Attendance: Florence Bittner, Wayne Horrocks, Sydney Fonnesbeck, Alan Hardpan, Tom Godfrey, Roselyn Kirk, Willie Stoler, Cindy Gust-Jenson, Mayor Palmer DePaulis, Christine Richman, Lee King, Cam Caldwell, Linda Hamilton, Scott Bond, Sheryl Gillilan, Kevin Bergstrom, Steve Fawcett, John Gust, Rick Graham, Scott Gardner, Buzz Hunt, Karen Suzuki-Hashimoto, John Gisler, Larry Failner, Gordon Hoskins, Gary Mumford, Sgt. Larry Thorum, Press 1. Mayor Palmer DePaulis briefed the City Council concerning the killing of two birds, one of which was a Golden Eagle, at the Tracy Aviary over the previous weekend. The Mayor indicated that he was concerned that comments made by Administration personnel may have offended the City Council Members by implying that they had not been supportive of the Aviary. He stated that he wanted to make it clear to the general public that he and the Council had invested a considerable amount of money in upgrading the Aviary through operational enhancements and capital improvements. He apologized to the Council for the comments which discounted the Council's support of the Aviary. He indicated that he plans to continue in his commitment to the Aviary, and hoped that the Council would choose to do so as well. Council Member Fonnesbeck stated that the Council has always supported the Aviary and would like to see the facility continue to develop its reputation as a premier avicultural program. Council Member Bittner stated that she was concerned that City tax payers subsidize the Aviary when the user base is much broader. She suggested that the City investigate shifting responsibility for the Aviary in a way similar to when they shifted responsibility for the Hogle Zoo to the State. John Gust, Director of Parks and Recreation, stated that since the Aviary is located within one of the City Parks, he would be uncomfortable having another agency responsible for the program. Mayor DePaulis stated that he would like to see the attention now focused on the City's security measures turned to pursuit of the perpetrators. Rick Graham, Deputy Director of Parks and Recreation, reviewed the Parks Department's proposed Fiscal Year 1989-90 budget. Mr. Graham indicated that there are a number of policy issues facing the Parks Department. He stated that the Department is requested the purchase of a truck to empty and transport sewage from the Mountain Dell Golf Course, Washington Park, and Police shooting range area. Mr. Graham indicated that until the City can afford to extend the sewage system up the canyon, the Parks Department will have to continue to deal with waste management on this level. Mr. Graham indicated that the Parks Department is also requesting funding for the upgrade of the Glendale Youth Center facility. He indicated that because of a re-focusing of programs, more of the children in the Glendale neighborhood are using the facility as an alternative activity. Council Member Bittner asked if usage of the facility had increased. Mr. Graham stated that although he did not have the numbers in front of him, he could assure the Council that because the Center has become more youth oriented, it has seen an increase in usage. Mr. Graham then indicated that the Parks other major policy issue concerned the upgrading of the Aviary facilities. He stated that the Department is recommending the implementation of a 5 1/2 day/week admission fee of $.50 for children and seniors and $1.00 for adults. He indicated that in addition to the admission fee, the Department plans on increasing income potential at the Aviary by opening a concession stand. As part of the new admission fee, the Department will offer additional programs for Aviary goers including the bird show seven days a week. Mr. Graham stated that to attract more people to the Aviary they will be launching an advertising campaign similar to that used by the Hogle Zoo. Council Member Fonnesbeck asked if there were any electronic security systems designed specifically for Aviary. Mr. Gust indicated that he was not aware of any specialized electronic systems, but that with any system, the important factor is what sort of backup response is available. He stated that in researching the security issue, they had determined that an armed, bonded, private security guard would cost the City approximately $28,000 per year. Lee King, Council Budget Analyst/Auditor, stated that in reviewing the options connected with security at the Aviary, they had determined that hiring an in- house security guard would cost $19,000 per year in salary and benefits, but that the additional costs of training and supervision would justify spending the extra $9,000 to hire a specially trained private service. Mr. Gust observed that the Parks Department's track record with in-house security people is not very good, and that the Police Department had requested that they think very carefully before doing this again in the future. Mr. King indicated that the City has four options for funding security measures at the Aviary use. The first is to either increase the fees or charge the fees all seven days. Mr. King stated that he would recommend the Council increase the fees rather than charge all seven days. The second option is to reprioritize Parks Department programs to accommodate the hiring of a security service. Mr. Gust stated that if the City opted for this method, he would simply delay the capital improvements planned for the Aviary. The third option is to appropriate the funding from the General Fund Contingency account. The fourth option is to transfer funding from programs in other departments to the Aviary. Mr. Gust stated that he would prefer an increase in admission fees. Council Member Fonnesbeck asked how much impact there would be on Parks Department programs if the Council asked the Department to repriortize for one year. Mr. Gust stated that he would simply delay capital improvements for one year. Council Member Godfrey stated that he was uncomfortable with the option of reprioritizing programs because all of the scheduled Aviary improvements are necessary. Council Member Bittner asked if school groups would be charged the entrance fee. Mr. Gust stated that they would unless they came on the free days of Monday or Saturday morning. Council Member Bittner asked Council Member Hardman if he could support the fees at the Aviary. Council Member Hardman observed that his neighborhood councils had traditionally opposed a fee at the Aviary, but with the 1 1/2 free days, he could support a fee at the Aviary. He observed that there is a study which indicates that 64% of the patrons at the Aviary reside outside of the City limits. Council Member Hardman stated that concerning the funding of a security service, he would rather reduce another department's budget than increase entrance fees at the Aviary above the proposed $.50/$1.00. Council Member Bittner asked if an electronic security system would be sufficient. Council Member Stoler observed that design of an electronic system which could be set off by the birds themselves may cost more than a security service. Council Member Hardman asked how much the additional fee would raise. Mr. King stated that a conservative estimate is $30,000. Council Member Stoler asked if any of the Members had a problem with the Aviary capital improvements plan. All of the Council Member indicated support for the proposal. Council Member Hardman indicated that he would like to fund the security service by reducing a staff person in another department, if such a reduction is not supported by the Council, then he will support the increase in fees. The Council voted 4-3 against Council Member Hardman's suggestion indicating that they would like to use funding from cuts in other departments to fund the Neighborhood Trash Pickup program, and use an increase in Aviary fees to fund the security service. The City Council discussed the proposed increases in the Urban Forestry Program. Mr. Graham stated that the $100,000 will be used to increase the number of trees trimmed and sprayed. He observed that there is no additional funding for new trees in the budget. Mr. Graham stated that another service level increase requested by the Department is the hiring of a Recreation Manager. He indicated that the current director of golf and recreation is paid wholly by the gold fund, and that with the addition of two new golf courses, he will need additional supervisory help on the recreation side. Mr. King presented the Council with a staff analysis of the Parks Department budget. He stated that the recreation program can justify the attention of a manager of its own. The City Council conducted a straw poll of the staff recommendations concerning the Parks Department budget. The Council voted 7-0 in favor of recommendation number one: That the additional funding for Urban Forestry be approved. The Council voted 6-1 in favor of recommendation number two: That the Recreation Manager position be funded. The Council indicated that they will review the Parks Department's written response to the audit findings and then request any additional information they may need. The Council voted 7-0 in favor of recommendation number four: That the Council request staff and the Parks and Recreation Department to obtain additional information about the revenue impact of charging organized sports leagues for maintenance of playing fields. 2. Mayor Palmer DePaulis briefed the City Council on the status of labor negotiations with the City's employee unions. He distributed a letter outlining the most recent offer he had made to the negotiators. He indicated that if the City offers anything further, it will require a tax increase to cover the costs. Council Member Godfrey moved and Council Member Kirk seconded a motion to enter Executive Session to strategize concerning labor negotiations. Council Members Godfrey, Kirk, Bittner, Horrocks, Fonnesbeck, Hardman and Stoler voted in favor of the motion. Mayor DePaulis, John Gisler, Linda Hamilton, Karen Suzuki-Hashimoto, Gordon Hoskins, Kevin Bergstrom, Cindy Gust-Jenson, Cam Caldwell, and Lee King were present for the discussion. Council Member Godfrey moved and Council Member Hardman seconded a motion to close the Executive Session. 3. Linda Hamilton, Director of Finance, reviewed her proposed Fiscal Year 1989-90 budget request with the City Council, She indicated that she had reorganized her department to better address the areas of financial control which were found to be lacking in the recently completed independent audit of her department. She stated that in the Purchasing Division limited use of running tickets will be implemented for small purchases, but that it was not wise to make independent contracting too wide-spread because money could be lost through loss of control. She stated that an additional savings will be derived in the Purchasing Division by assigning a purchasing agent to the Airport and paying that individual with Airport revenues. Ms. Hamilton stated that the FTE which will be freed up by funding a purchasing agent through the airport will be used to increase the centralized contracting function. Council Member Bittner expressed concern over the Airport having a purchasing agent of its own. She Observed that the Airport Authority had requested greater autonomy from the City but that City officials had indicated that they were not willing to allow the Airport to become a separate entity. Ms. Hamilton stated that she and the Purchasing Director did not want to lose control over the Airport's purchasing practices either. Larry Failner, Purchasing Director, stated that the agent assigned to the Airport will be trained and supervised by the City's purchasing department. He indicated that the airport has adequate volume to justify the exclusive use of an agent and that by locating the agent on site the purchasing system will be functionally more cost effectively. Ms. Hamilton stated that she had reassigned the financial reporting duties to the Accounting Division to prepare the way to make the Internal Auditing function an independent function reporting to an Internal Auditing Committee. She indicated that the functional change will occur in one year. In the interim the Internal Auditors will be conducting a methodical review of the financial controls in the City. Ms. Hamilton distributed a copy of the review plan stating that the plan requires 3 full-time auditors to complete the review in one year. Ms. Hamilton indicated that she is refocusing the department to provide a year-round emphasis on policy and budget issues in order to maintain adequate financial control of Administrative Departments. She stated that in his analysis of her budget Mr. Caldwell had stated that there was an increase in the travel training budget. She indicated that all but $2, 200 of the amount he identified as an increase was actually a transfer from the Mayor's Office Budget when the Policy Division positions were transferred. Ms. Hamilton stated that the $2, 200 increase was not reflected in the Department's base budget, but had been identified by reprioritizing existing resources. Cam Caldwell reviewed his staff analysis of the Finance Department budget with the City Council. He indicated that additional reorganization is possible, and will be considered by the Department in the coming year. Council Member Bittner stated that she felt that the direction outlined for the internal auditors is a good one, but that she was concerned that the legislative branch's concerns were not being addressed. She stated that internal auditing capabilities are necessary in both the administrative and legislative branches, and that the Council and Mayor need to discuss possibilities for addressing those needs. Ms. Hamilton stated that she agrees that the Council's needs should be addressed as well, but asked that the Council's needs not be addressed at the expense of her ability to conduct audits. Council Member Bittner stated that she asked only that the Administration needs not be addressed at the expense of the City Council. Council Member Fonnesbeck observed that in the past two years the Council's financial advisory staff had doubled, but that the only result for the Council has been increased data, not better decisions. Council Member Bittner stated that the decisions may not be better, but that they are easier to make. Council Member Fonnesbeck stated that she is satisfied with the use of outside audits, and would rather the Council not always address issues by advocating for more staff. Ms. Hamilton stated that she is not proposing that the Internal Audit function remain in the Department of Finance for more than one year. She indicated that if the auditors did remain in Finance, it would be tempting to divert their time to other issues. She stated that she is making a public commitment to transfer responsibility for internal auditing to the independent audit committee. The audit committee would determine and prioritize audits, and would be in a position to respond to the Council's requests for audits. She stated that it is possible that the audit committee would include either a member of the Council or their staff. Council Member Bittner observed that some administrative problems could have been avoided if the function had been audited when the Council first noticed that there was a problem. Ms. Hamilton stated that it is the Administration's intent to identify problems before they become ungovernable. Council Member Stoler asked if the work plan distributed by Ms. Hamilton could still be completed if the Department only had two auditors. Ms. Hamilton indicated that only two thirds of the work plan could be completed prior to appointment of the independent audit committee. The result of an incomplete work plan would be that the audit committee would not have a complete body of information on which to establish their priorities. Council Member Hardman indicated that in light of the fact that the Council is investigating the possibility of hiring their own auditor(s) he would like the Council to discuss the internal auditing issue as a whole prior to making a decision. Cindy Gust-Jenson, Executive Director, stated that if the Council chose to hire an internal auditor using the funds they already have in their budget, the could delay that discussion until after the budget. Council Member Hardman stated that before he made any decision concerning internal auditing, he would like to understand how all of the internal audit functions work together. The City Council conducted a straw poll as to whether or not to schedule a Committee of the Whole discussion of the internal audit issue. The Council voted 7-0 in favor of holding the discussion. The Council then conducted a straw poll on the staff recommendations concerning the Department of Finance. The Council decided to vote on recommendation number one, concerning the funding of an internal auditor, after the Committee of the Whole discussion of internal auditing. The Council voted 7-0 against recommendation number two: That the Travel/Training budget be reduced by either $4,024 or $2, 224. The Council voted 7-0 in favor of recommendation number three: That funding for parking allowances and Wild Wave payments be eliminated, and $10,000 be transferred to the Utah League of Citie and Towns for the increase in the annual membership fee. W. . "Wi lie" S er, Chair ATTEST: '44Ahf Cit Rcor !4 EXECUTIVE SUMMARY PARKS & RECREATION DEPARTMENT GENERAL FUND BUDGET Prepared by Lee King * ' The General Fund Budget for Parks & Recreation is $5,631,727. This is a $330,933 or 6.24% increase over the current adopted budget. The department has prepared their budget with recommendations from the Hughes Heiss Audit in mind. Included as part of this report is the department's formal response to the audit. * Major service level increases are $100,000 for tree trimming and spraying contracts in Urban Forestry and establishment of a fee structure for Tracy Aviary. This necessitates an increase in part-time staffing for the Aviary to implement the program and staff a gift shop. Additionally, there will be an increase of $16,448 in the Glendale Youth Recreation Center Program to fund a game room, a school program, and an expanded summer program. * There is an overall increase of 1.73 FTEs in the • General Fund portion of the department. Major changes are: adding a Recreation Manager, an Urban Forestry Program Coordinator, and Admission & Concession Clerks at Tracy Aviary; elimination of a Storekeeper in warehouse operations; transfer of one maintenance position to Urban Forestry; elimination of seasonal staff in Urban Forestry; and adjustments to seasonal base pay scales. * Travel and Training cost are decreasing by 22% from $8,525 to $6,633. • PARKS & RECREATION DEPARTMENT MATERIAL CHANGES IN BUDGET The General Fund budget for the Parks & Recreation Department for FY 1989-90 is $5,631,727. This is a $330,933 or 6. 24% increase over the current adopted budget. The Parks & Recreation Department has prepared their budget with recommendations from the Hughes Heiss Audit in mind. Personal Services increased by 4.62% or $142,660. This figure includes anticipated salary adjustments, several position reclassifications and an overall increase of 1. 73 FTE. Materials & Supplies increased by $51,133 from $616,659 to $667,792. The majority of this increase is for materials and supplies to stock the initial inventory for the Tracy Aviary Gift Shop. Charges & Services increased by 9.43% from $1,533,166 to $1,677,712. The majority of this increase is in the Urban Forestry Program with $75,000 for additional tree trimming contracts and $25,000 for additional spraying contracts. The remainder of the increases are small incremental changes in janitorial and micro-computer maintenance contracts, and a $35,000 increase in risk management premiums. Capital Equipment decreased 11% from $63,609 to $56,203. Capital expenditures requested are two micro-computers and software for automating work orders and tree trimming contracts, and various lawn care equipment (mowers, replacement mower engines, etc,) Travel and Training is decreasing by 22% from $8,525 to $6,633. BUDGET ISSUES There are three major budget issues in the Parks & Recreation Department for 1989-90, all of which are in response to findings and recommendations of the Hughes Heiss Audit. In the audit report, John Heiss concluded that "while basic infrastructure for an Urban Forestry Program has been established, insufficient resources have been allocated to implement a quality program on a continuing basis. " The Parks & Recreation Department has proposed that additional resources be allocated to Urban Forestry so that a systematic tree management program, whereby scheduled maintenance is done on a timely basis, rather a complaint approach, is implemented. Their proposal includes $100,000 for tree trimming and spraying on a contractual basis. Additionally, they have transferred one full time equipment operator position from Parks Operations & Maintenance to the Urban Forestry Program to strengthen the crew that performs tree maintenance. Although this transfer has no impact on the overall department budget, it does increase the resources allocated to the program. It will also give the Urban Forester the flexibility of running two tree crews rather than the one crew that they currently use. The department has eliminated seasonal, hourly, and consulting budgets and allocated the savings to fund a full-time Forestry Technician position. 2 With the present four person staff and outside contracts, trees are trimmed on a schedule of once every 25 years. The department's goal is to establish a trimming schedule of once every 10 years. Although the additional resources in this budget will not solve the total problem, the combination of increasing the staffing level in the in-house maintenance crew and increasing the trimming contract will reduce the frequency from 25 to 18 years based on 1989 dollars. The additional $25,000 proposed for spraying will increase the number of trees sprayed trees from 14,000 to 20,000. In reviewing aviary operations, John Heiss reported that to "allow Tracy Aviary to better realize its full potential and to arrest the steady increase in General Fund subsidies required to support Aviary operations, it is recommended that ,the City implement a six-day a week admission fee for the facility. " Analysis of this proposal indicates that an admission fee, complemented with a revenue generating gift shop, could contribute revenue for Tracy- Aviary, over and above the incremental costs associated with an admission fee and gift shop program. After a review of this recommendation, the department is requesting a 5 1/2 day per week admission fee at Tracy Aviary. Their analysis concludes that revenues would be in the range of $133,000 from admission fees and $133,000 from the gift shop. The department's estimate on gift shop revenues is double that of Hughes Heiss. In either case, the revenues generated should exceed operating costs. In addition to operating and maintenance costs appropriated from the General Fund, the Capital Improvement Program has budgeted $150,000 for capital improvements at the Aviary. These improvements include perimeter security fencing, security lighting, and sidewalk repair. The Hughes Heiss report recommended that a mid-management position be established to direct recreation activities. This budget contains a request for $35,660 to fund a Recreation Manager (320) to manage the day-to-day responsibilities of recreation programming. Closely tied to this recommendation is a similar recommendation in the Golf Program. The audit report stated "A full-time dedicated management position should be established to oversee golf operations on a day-to-day basis. With the construction of the two new golf courses, the golf program is demanding increasing amounts of attention. Considering the financial exposure associated with the debt service related to the two new courses, continuing attention to golf operations is likely to become even more demanding. " The auditors felt it impractical to assume the Recreation Director can devote adequate attention to both the recreation and golf programs. Rather than fund two new positions, the department chose to place the mid-manager over recreation rather than golf. The Recreation Director will utilize his golf course superintendents to a greater degree in the management of the courses but will still devote most of his daily routine to the golf program. If the decision was made to place the mid-manager in the golf program, the General Fund would still be impacted because the entire portion of the Recreation Director salary and benefits is currently charged to golf. Funding a golf manager position would most likely lead to the General Fund paying a major share of the Recreation Director's salary and benefits. If the Recreation Manager position is not funded, opportunities to improve the recreation program identified in the audit will be delayed. In either case, the complexities of the combined golf and recreation programs indicate a need for an additional full time manager in at least one of the programs. 3 OTHER ISSUES Attached as part of this analysis is the Parks & Recreation Department's formal response to the Hughes Heiss Audit. It was not provided to you earlier because many of the responses had major budgetary impact and had not been. reviewed as part of the Administration's formal budget process. The department has responded to all the recommendations contained in the audit. However, several of the corrective actions were not funded because of other higher priority needs and will have to be reevaluated by the department. Corrective action that did not make it through the process are: Parks Operations & Maintenance, response # 8. Funding for a part-time position to reclaim unused cemetery lots was not approved. The Cemetery will try to implement this program on a limited basis with in-house personnel; Golf response # 2, the department choose to place a mid-manager over recreation rather than golf; Recreation response # 2, funding for a needs assessment for recreational services for the citizens of Salt Lake City was not approved. This still leaves the question of duplication of services unanswered; Recreation response # 3, funding for part-time hourly recreation coordinators to full-time status with fringe benefits and career series salaries was not approved. This leaves the division with the potential for continued high turnover. In their budget presentation, the SLACC Budget Committee recommended that the City charge organized sports leagues for maintenance of playing fields. The Parks & Recreation Department's current practice is to charge non-city sponsored leagues for light only. No other maintenance or utility charges are assessed. Salt Lake County does not charge for maintenance, while Sandy and Bountiful do assess these type charges. .Neither the department nor Council staff are prepared at this time to give you an estimate on the amount of revenue this would generate. Further study of this policy issue is required before a recommendation can be given. STAFF RECOMMENDATIONS 1. Council staff strongly support the need to provide additional funding for the Urban Forestry Program but at the same time are sensitive to the needs to fund other high priority programs. I recommend that this increase be fully funded. 2. Although I do not recommend it, Council may wish to consider eliminating the Recreation Manager (320) position at a cost savings of $35,660 because it is a new position. 3. Council may wish to request the Parks & Recreation Department review audit recommendations not funded in this budget and report when final corrective action is anticipated. 4. Request Council staff and Parks & Recreation Department to obtain additional information about revenue impact of charging organized sports leagues for maintenance of playing fields. 4 • Your Salt Lake City 41% Parks&Recreation 1965 West 500 South Salt Lake City, Utah 84104 Telephone 801 972-7800 Palmer DePaulis, Mayor John Gust, Director of Parks May 17, 1989 W. M. "Willie" Stoler, Chairman Salt Lake City Council City & County Building 451 South State Street Salt Lake City, Utah 84111 RE: Parks & Recreation Department Budget Review Dear Willie: Attached, please find a review and analysis of my departments general fund budget for 1989-90. In accordance to your directive we hopefully have provided you with the information you will need to fully understand the purpose and reasoning behind our budget request. I look forward to the opportunity of reviewing this information with you and the entire City Council . Sin , JOHN GUST Director of Parks JG/rg/jsw Attachment cc: Mayor Palmer DePaulis Scott Bond Staff BUDGET OVERVIEW The purpose of the Parks and Recreation Department is to design, build and maintain public parks, park facilities and golf courses in a manner that will enhance the appearance of Salt Lake City, and provide recreational opportunites for the residents. While we feel that we have a budget and program that can adequately meet that challenge, some areas exist that require improvement and enhancement. This point was obviously shown through the recommendations made in the Parks and Recreation Audit that concluded last December. The 1989-90 budget was prepared with the audit recommendations in mind. Our budget package addresses the most significant recommendations of the audit. More importantly, they were addressed in a manner that is cost effective and presented minimal impact to the base budget. The budget will show an overall increase of 6.2% over our 1988-89 budget. In light of what we are trying to accomplish, we feel this is a fair and justifiable increase. Service level increases of approximately $260,600 are reflected in our budget package. Of this amount $37,600 will be allocated to recreation Community Events, $100,000 to Urban Forestry, $17,000 to Glendale Youth Recreation Center, $8,000 to Park Operations and $98,000 to Tracy Aviary. Contained within the service level increase package is the potential to raise new revenue by $274,186. In addition to increases, the budget also reflects a service level decrease of $44,548. This includes the elimination of one full-time position and $20,000 in materials and supplies. The budget shows that staffing will increase by 1% over 1988-89 or a total of 1 .73 F.T.E. positions. New positions are being requested for Recreation and Tracy Aviary. Two new policy issues are contained in this budget and will need to be addressed. The audit concluded that the City has established the infrastructure for an Urban Forestry Program, but has not allocated enough resources to implement the program. Figures in the range of $156,000 to $579,000 were mentioned to bring the program to various service levels. The Council must decide what level should be supported. The budget package includes $100,000 in new funding for forestry. The audit also recommended that the City should arrest its general fund subsidy for Tracy Aviary by initiating an admission fee. The Council must decide on what level of funding support they want to give the Aviary and how operating costs above that level will be supported. The budget package reflects a 52 day a week admission fee that shows revenue earnings far beyound the cost to implement. SERVICE LEVEL INCREASES This years budget package reflects service level increases of approximately $260,600. Each increase was identifed as a recommendation in the department audit just recently completed. URBAN FORESTRY An increase of $100,000 is proposed for this program. Of that, $75,000 is earmarked for contractual tree trimming and removal , and $25,000 for tree spraying. This increase is needed to adequately service all public requests for service and initiate the implementation of a systematic tree managment program whereby scheduled maintenance is done on a timely basis rather than a complaint approach. Contractual funding has been held constant since FY 82-83 while costs have increased. The Hughes, Heiss audit claimed that $158,000 was needed to take this program to a minimum service level . Also, contained in this budget is a proposal to consolidate the seasonal , hourly and consulting budgets and trade them straight across for a full-time authorized Forestry Technician position. By doing this the budget will actually realize a savings of $1,500 in personnel costs in addition to the reduction of .80 F.T.E. ' s. This new position is needed as a support to the Urban Forester. Typical duties will be the review of public requests and the issuance of permits for tree service, monitoring contractual tree maintenance, updating the computerized tree inventory, attending public meetings and providing public education. TRACY AVIARY The budget includes a proposal to initiate a 52 day per week admission fee at Tracy Aviary. The purpose behind the fee is to reduce or hold constant the general fund subdsidy that is currently committed to the Aviary. Future operational and program costs will be supported by fee generated revenue. The fee days will be Tuesday through Friday, one-half day Saturday (12:00 p.m. to close) and Sunday. All holidays will be fee days. Special programs, tours and bird shows will be provided free on fee days. The fee will be charged from April 1 through October 31. The cost of providing the fee will be approximately $32,300 for seasonal personnel and $2,000 for materials and supplies. Revenue estimates could reach $133,313 if the public supports this new program. The fee appeared as a strong recommendation in the audit. It is hoped that surplus revenue can be held in a fund to fund future personnel , operational and capital costs. Again, the intent is to hold current funding commitments at this level . -2- The budget also includes funding for a concession (gift shop) operation. The old garage building has been renovated and now includes space for a temporary gift shop. Merchandise, characteristic of gift shops found in zoos and aquariums but, with an avicultural theme will be sold in the gift shop. Again, the idea is to generate revenue for the purpose of holding current general fund subsidies constant. The cost of the concession operation will be approximately $6,500 for seasonal employees and $43,626 for merchandise and supplies. Revenue projection could reach $133,000. The budget includes $14,000 to support an advertising campaign at the Aviary. With so many new changes going on it is felt that a commitment needs to be made in advertising. With the initiation of a fee, the Aviary now starts competing with other "pay for play" types of recreation programs and must start marketing its product. Currently an advertising program is in place which relys heavily on donated support. Additional funding will permit this current program to use all forms of advertising media to attract visitors. GLENDALE YOUTH RECREATION CENTER The Glendale Youth Center has now been operated by this department for just over one year. Progress has been made in developing a well rounded youth program but, improvement could be made. This budget includes funding for three new programs: a game room for $6,460; a school program that is jointly run with both Parkview and Franklin Schools for $2,588; and an expanded summer program for the youth that includes field trips, swimming and arts and crafts for $7,400. The total cost for these new programs is approximately $16,448. The programs expect to generate revenue of approximately $7,560. The game room will offer a variety of indoor programs like billiards, table tennis, board games and fooseball . The school programs will be run jointly with Parkview and Franklin Elementary Schools. Both schools run year-round schedules. Our programming would coincide with the childrens off-track vacations so that structured recreation programs are made available to them. The summer programs are designed to meet the needs of youth that are not involved with year-round school schedules. COMMUNITY EVENTS The Hughes, Heiss audit stated that the City' s investment in recreation is extremely modest, particularly in the area of staffing and employee compensation. It was recommended that a new position of Recreation Manager be funded to manage the day-to-day responsibilities of the recreation programming. The budget includes funding of this position at a cost of $35,660. This position will report directly to the Recreation Director who will maintain management control of the entire Recreation Division but, who will devote most of his daily routine to the golf program. This new position creates opportunties for greater management involvement, program coordination and fund raising. -3- The budget also includes funding of $2,500 for picnic pavillion refunds. It is not uncommon for people to cancel their picnic reservations after the fee has been paid. We offer a refund policy but have never had a line-item budget to support the policy. Until now programming funds have been used to pay for refunds. PARK MAINTENANCE The Mountain Dell picnic areas in Parley 's Canyon have restroom facilities that use septic tanks. These tanks need to be pumped about every 4-6 weeks during the summer. The vehicle we use to haul sewage is 20 years old and has a replacement value of $65,000. ' We propose not to replace the vehicle but, contract with the private sector to haul the sewage for us. The budget includes $8,000 for this contract. This contract will include first year savings of $57,000. SERVICE LEVEL REDUCTION The budget includes actual service level reductions of $44,548. Included in this figure are reductions of $20,000 in park maintenance supplies (plumbing parts, playground equipment parts, communication equipment and pool supplies) and the elimination of 1 F.T.E. position. The loss of personnel will be strongly felt in our warehouse operation. Routine stocking of items will be delayed, and our plan to automate our entire warehouse inventory system will be delayed and possibly abandoned. The loss of maintenance supplies will cause delays in irrigation system repairs, playground equipment repairs and pool repairs. STAFFING CHANGES The budget staffing document will show a net increase of 1 .73 F.T.E. positions over our 1989-90 level . The overall increase results from the addition of new service level increase positions less service level reductions and seasonal salary changes which reduce seasonal full-time equivalent hours. The staffing changes in the general fund breakdown as follows: DIVISION 1988-89 1989-90 +(-) Recreation 13.10 14.53 1 .43 Office of Director 4.75 4.75 -0- Park Operations 118.82 119.92 1 .10 Park Planning 10.48 9.68 ( .80) TOTAL 147.15 148.88 1 .73 -4- RECREATION The staffing increase of 1 .43 F.T.E. positions is due to the addition of 2.10 F.T.E. positions less the reduction of seasonal F.T.E. 's resulting from pay scale changes within the seasonal base budget. "New" Recreation Manager 1.0 "New" Recreation Program Coordinator 1.10 at GYRC. "Base" Seasonal Pay Scale Changes (.67) 1.43 PARK MAINTENANCE The staffing increase of 1 .10 F.T.E. positions is due to an increase of 4.24 F.T.E. positions at Tracy Aviary; the reduction of 1 .0 F.T.E. Storekeeper position; and the reduction of seasonal F.T.E. 's resulting from pay scale changes within the seasonal base budget. "New" Tracy Avairy Admission 4.24 & Concession Clerks "Eliminate" Storkeeper (1 .0) "Base" Seasonal Pay Scale Changes (2.14) 1 .10 PARK PLANNING The staffing decrease of .80 F.T.E. positions is due to the elimination of all seasonal F.T.E. positions in Urban Forestry; the increase of one Urban Forestry Program Coordinator position (from the consolidation of the seasonal ) ; the addition of seasonal F.T.E. 's in Planning & Development resulting from pay scale changes with the seasonal base budget. "Eliminate" Urban Forestry (1 .95) Seasonal Staff "New" Urban Forestry 1 .00 Program Coordinator "Base" Seasonal Pay Scale Changes .15 .80) -5- NEW REVENUES The budget will reflect the potential of new revenue generation at Tracy Aviary and the Glendale Youth Recreation Center. The Aviary revenue will come from admission fees and gift shop sales. The Glendale Youth Center will gain revenue through fees charged for the game room, school program and summer programs. In all cases the revenue estimate was determined by estimating numbers of participants. The Aviary numbers are best guess scenarios. The admission is new and we are still not sure how the public will recieve it. Tracy Aviary Admission $133,313 Tracy Aviary Gift Shop 133,313 Glendale Game Room 100 Glendale School Program 2,560 Glendale Summer Program 4,900 TOTAL $274,186 POLICY ISSUES Two new policy issues are addressed in this budget. One deals with establishing a minimum service for Urban Forestry and the other deals with setting an admission fee at Tracy Aviary. Over the past several years, this City has taken some significant steps to develop and establish a progressive Urban Forestry program. We have hired an expert forester, developed a detailed inventory and passed an Urban Forestry Ordinance. Yet, the existing resource allocation cannot fund the progressive program that has been developed. Tree trimming schedules are below acceptable frequencies, tree removals exceed replacements and tree spraying is done when a crisis occurs. As a result, we are only partially utilizing the program structure that we have established. The Hughes, Heiss audit found that the current funding allocation for Urban Forestry was $156,000 under minimum professional standards. The audit further stated that the Mayor and Council need to reach a closure on the service level which can be supported. This budget contains a funding increase of $100,000 for Forestry. Of that amount $75,000 is allocated for tree trimming and $25,000 for spraying. In addition to this, through an internal reorganization of park maintenance staff, one employee will be transferred from Maintenance to Forestry and be permanently assigned to that program. That transfer represents a resource increase of approximately $29,000 which results in a net increase to Forestry of $129,000 for 1989-90. That increase almost puts us to the minimal standard recommended by the audit. -6- Just like our forestry program, Tracy Aviary has also taken some significant steps in the last several years. The program is managed by an expert Curator and staff, the stock is larger in number and better maintained, public visitation and participation in education programs has increased, and over $450,000 has been spend on capital improvements. The City has assumed responsibility for significant financial support for Aviary operations. Yet, even with this level of commitment additional improvements from both the operating and capital perspective are required. The Hughes, Heiss audit found future needs exist in staffing levels and capital improvements. The audit recommend that the Aviary be permitted to reach its potential but, at the same time arrest the steady increase in general fund subsidies required to support operations. The audit recommended a six-day a week admission fee. This budget contains funding for a 52 day a week admission fee as proposed by the Aviary Advisory Board and supported by the Mayor. The revenue potential of the fee exceeds the cost of generating the revenue and the difference can be used to fund future operation needs. -7- TRAVEL AND TRAINING The department general fund budget has a combined travel and training budget of $6,633. The major portion of that amount is reserved for out-of-town travel expenses. When compared with the variety of services we provide, very little is spent on travel and professional staff training. When travel and training is done, it is done with the purpose of training and educating staff or of learning new programs or techniques that would be beneficial to our City. For example, we were introduced to the dynamics of the Wave Pool while attending the National Parks and Recreation Convention. Also, our ability to secure rare and endangered birds at the Aviary result from attendance at AAZPA. DIVISION PURPOSE COST Office of Director To attend the National $2,000 Recreation and Parks Convention held annually. To attend the Annual $ 563 Utah Recreation and Parks Association Convention in St. George, Utah. Park Operations To attend the Annual American $1 ,233 Association of Zoological Parks & Aquaria Convention. To attend locally sponsored $ 423 training programs, i .e. irrigation systems, horticulture, equipment maintenance, turf care. Recreation Travel and hotel cost for $ 900 select runners in Salt Lake Classic Race. Attendance at Utah Leisure $ 300 Symposium that is locally sponsored each year. Sponsored by local universities. To attend the annual Utah $ 719 Parks and Recreation Convention in St. George, Utah. Park Planning To attend locally sponsored $ 67 training programs, i .e. irrigation design seminars. To attend the annual $ 428 American Society of Landscape Architects convention. $6,633 • -8- LINE ITEM EXPLANATION OF CHARGES AND SERVICES LINE ITEM TITLE BUDGET EXPLANATION 2305 Contractual Services $ 83,134 Salaries paid to non-status employees who work as referees, scorekeepers, umpires, officials, program support staff coaches. Also includes Tennis Pro contract and computer contract for race results. 2316 Aerial Survey 975 Aerial survey costs associated with park design and development. 2317 Instructor Fees 1,600 Cost of golf instructors for adult golf lessons. 2318 Public Relations 14,000 Cost of advertising program for Tracy Aviary. See SLI. 2321 City Data Processing 39,231 Cost for entire general fund. 2324 Special Consultant 1,575 Cost associated with park design and development when special services are needed, i .e. property surveys, graphic design, field mapping. 2329 Other Professional & Technical Service 1,600 Costs associated with park design and development when technical expertise is needed, i .e. architect, structural engineer. 2331 Electrical Power 173,049 Cost of all electrical uses in parks and in buildings. 2332.01 Natural Gas 66,982 Cost of natural gas use by furnaces and boilers in all park facilities. 2333 Water 451,966 Water costs for all parks, cemetery and buildings. 2336.02 Telephone-Long Distance 2,975 Costs for long distance phone service. -9- LINE ITEM TITLE BUDGET EXPLANATION 2336.07 Telephone-Radio Circuits $ 481 Costs for mobile phone radio line use. 2340 Micro-Computer Maint. Cont. 3,708 IMS costs for micro-computer repairs. 2341 Office Equipment MC' s 920 Service contract for typewriters, calculators. 2346 Janitorial Service MC' s 7,605 Restroom janitorial cleaning for Glendale Youth Center, Boxing Center. 2349 Other MC's 189,186 Costs of contractual service, tree trimming, tree removal and sewage hauling from Mt. Dell . (See SLI. ) 2370 Printing Charges 5,515 Costs of printing educational materials and brochures at Tracy Aviary. 2390 Fleet Management 272,897 Fleet costs for entire department. 2396 Waste Disposal 46,478 Costs associated with Public Works garbage collection and trash hauling to County dump. 2399 Other Contractual Service 87,332 Costs associated with painting contracts and other general maintenance contract work, i .e. elevator service, fire protection alarm, janitorial service, flasher barricades and electrical contracts. Also tree spraying contract for Forestry. 2506 Telephone Lease Expense 57,652 Cost of telephone service from IMS. 2512 Building Rentals 4,130 Costs associated with renting recreation buildings and facilities for recreation programs, i .e. school gymnasiums. -10- LINE ITEM TITLE BUDGET EXPLANATION 2513 Equipment Rental 17,400 Costs of renting portable toilets for the parks and barricades, scaffolding, sound systems, and bleachers used for recreation programs. 2513.02 Office Copier Rentals 700 Xerox copier lease costs. 2521 Meals 1,124 Costs of meal tickets paid to employees who work overtime. 2522 Memberships 1 ,530 Costs of memberships to national , state and professional organizations. Subscription costs for magazines and periodicals. 2523 In-City Conventions 1 ,690 Refer to Page 7 - Travel & Training. 2524 Mileage 1 ,800 Mileage reimbursement costs to employees who use their private cars for City business. 2525 Out of Town Travel 4,943 Refer to Page 7 - Travel & Training. 2527 Auto Allowance 1,975 Auto allowance for Director of Parks use of private vehicle. 2532 Arts and Parks 1,000 Program costs for Arts in the Park recreation program held in Liberty Park. 2549 Risk Management Premium 65,081 2549.01 Worker's Compensation Prem. 34,000 2549 Unemployment Comp. Prem. 7,000 2550 Refunds 2,500 Refund costs for park pavillion reservation cancellations. 2590 Other Expenses 23,978 Costs of veterans flags at the cemetery and for shipping costs at Tracy Aviary. Also, cost for prize money and gift certificates for SLC Classic Race. Your Salt Lake City - Parks&Recreation • 1965 West 500 South Salt Lake City,Utah 84104 Telephone 801 972-7800 Palmer DePaulis,Mayor John Gust, Director of Parks March 29, 1989 Willie Staler, Chairperson Salt Lake City Council 324 South State 'Street Salt Lake City, Utah 84111 RE: Hughes, Heiss & Associates Management Audit of The Parks & Recreation Department Dear Willie: Attached hereto is my response to the management audit conducted by Hughes, Heiss and Associates. I feel that the audit team conducted a fair audit and I am very pleased with the final report they prepared. The audit report contained a number of recommendations. = In my response I identify each recommendation, offer an evaluation and indicate my own recommendation on how it might be implemented. Where appropriate, I have identified the cost for implementation. I have tried to . respond to the recommendations in a way that would keep the impact to a minimum. I have discussed these recommendations with your staff and remain available to discuss them in greater detail with you and the Council if you desire. Si ly, JOHN GUST Director of Parks JG/jsw Attachment cc: Mayor Palmer DePaulis 1. `:J • PARK OPERATIONS & MAINTENANCE I 1. TRANSFER MANAGEMENT CONTROL OF HEAVY EQUIPMENT SKILLED CREW TO PARK PLANNING AND DEVELOPMENT DIRECTOR. This maintenance crew is presently managed by the Park Maintenance Superintendent. The duties of this crew vary from park construction and renewal to hauling soil and sewage. The majority of its time is devoted to completing under budget capital projects. Since this crew is oriented to park development and renewal we support the recommendation that it be transfered for ' the purpose of better utilization of manpower and cost effectiveness. BUDGET IMPACT: SO • 2. ESTABLISH AND MAINTAIN AN AUTOMATED WORK ORDER SYSTEM. Work assignments - and work scheduling are currently done by manual process. This method is fairly informal and lacks detail . Maintenance supervisors do not have the vital information needed to effectively manage their resources. The automated scheduling system will enable the supervisors to establish a framework and a:system for establishing . a timetable for what is to be accomplished .by specific crews on a specific day at a specific location. We support this recommendation and have already begun to look for a system that would meet our needs. . 'BUDGET IMPACT: S 14,000 3. EVALUATE EXISTING RESOURCE ALLOCATION (MANPOWER) TO SPECIAL CREWS IN THE CONTEXT OF OTHER STAFFING NEEDS IN THE DEPARTMENT. (i.e. QUADRANT #3 & URBAN FORESTRY) • The auditors felt that opportunities existed to redistribute some skilled manpower •positions within the maintenance program. We support this recommendation and have already initiated the following changes: a. Redistributed some seasonal employees among the four maintenance quadrants. b. Transferred an Equipment Operator to the Urban Forestry program to strengthen the crew that performs tree maintenance functions. This transfer 'gives us the flexibility of running two (2) tree crews now. c. Realigned the boundaries of the park maintenance quadrants. BUDGET IMPACT: SO 4. IN CONNECTION WITH THE AUTOMATED WORK ORDER SYSTEM, DEVELOP AND INSTALL A MAINTENANCE MANAGEMENT SYSTEM. Basic elements of this type of system include work tasks to be performed; .maintenance standards for completing the tasks; an inventory of the facilities to be maintained; and a defined work program for 1 maintaining those facilities. Our department currently has an informal management system that works effectively but lacks detail and definition. This new type of system will work very effectively with an automated work order system. We'support the recommendation that this type of system will assist maintenance managers in scheduling, monitoring and evaluating performance of work crews. The cost of this system is built into the cost of Item #2. BUDGET IMPACT: SO 5. INCORPORATE THE MECHANIC CURRENTLY ASSIGNED TO THE CEMETERY UNDER THE SUPERVISION, WORK ORDER SYSTEM AND CONTROL OF THE DEPARTMENT FLEET MAINTENANCE COORDINATOR. The Cemetery mechanic operates independently of the other department mechanics.• Given the strength of the park shop program the Cemetery mechanic should be brought under the same control. We support this recommendation and have already moved to make the change. BUDGET IMPACT: SO 6. ACCORD PRIORITY TO THE INSTALLATION OF THE AUTOMATED INVENTORY SYSTEM. ONCE IN PLACE, EVALUATE THE INVENTORY COMPOSITION AND ADJUST THAT COMPOSITION TO INCREASE ANNUAL TURNOVER RATE. The audit calculated our inventory rate to be 65% and stated that inventories of this composition should have a rate of 200%. This suggests that we are stocking items which there is low demand. We question the results of their findings because their analysis was based on a two month period. If carried over a 12 month period the results could be different. The months of. April through August are very busy and the turnover rate is much higher. We do agree with the recommendation that the automated inventory needs to be put on-line as • soon as possible and that the Storekeeper position can be better utilized during the "off season". Over the next six months we will get the inventory system working and monitor the productivity of the Storekeeper. BUDGET IMPACT: SO 7. IMPLEMENT A SIX-DAY A WEEK ADMISSION FEE FOR TRACY AVIARY. The audit suggests that additional funding is needed for the Aviary to - realize its full potential and to address short-term and immediate operating needs. It also states that the city has already committed to moderate general fund subsidy. Instead of placing a greater burden on the general fund, revenue could be generated through fees. Based on visitor surveys, the Aviary is really a regional attraction and not just a neighborhood attraction. The current Sunday/Holiday admission fee appears to have no long-range detrimental impact on visitor traffic. We support this recommendation and have included a proposal for a budget increase in our 1989/90 budget. This same issue has also been analyzed in great length by the Aviary Advisory Board. As you will recall, the Board sent a formal recommendation supporting this action last summer and plans another one for the near future. P1m"7 IMPACT: $ 34,300 REVENUE IMPACT: $133,313 8. STATE LAW PROVIDES MUNICIPALITIESOPERATING CEMETERIES THE RIGHT TO RECLAIM LOTS PREVIOUSLY SOLD BUT UNUSED IN THE LAST 60 YEARS. WHICE THE CEMETERY HAS A LIMITED NUMBER OF REMAINING UNSOLD IT IS RECOMMENDED THAT THE CITY FUND .A PART-TIME EMPLOYEE TO IMPLEMENT A RECLAMATION PROGRAM. • The audit states that only approximately 5,500 lots remain unsold. A re:lamation program could produce up to 10,000 new lots. The reclaimed lots could become part of the inventory for resale and proceeds could he employed to establish a long-range perpetual care fund. We support this recommendation but question the auditors estimate of potential reclaimable sites. We feel more comfortable with a figure of 5,000 sites. We recommend that a part-time position be funded in 1989/90 and that the City Finance Department assist us in a study of creating a long-range perpetual care fund. BUDGET IMPACT: $ 15,500 • PARK. PLANNING AND DEVELOPMENT 1. CLEARLY IDENTIFY THE SERVICE LEVEL THAT WILL BE PROVIDED BY THE URBAN FORESTRY PROGRAM. THIS NEEDS TO INCLUDE CLEARLY SPECIFIED SERVICE FREQUENCIES AND SPECIFIC FINANCIAL REQUIREMENTS REQUIRED TO SUPPORT THESE FREQUENCIES. A CLEAR FINANCIAL PLAN NEEDS TO BE FORMULATED AND ADDRESSED DURING EACH BUDGET DEVELOPMENT PROCESS. The auditors, through -their analysis show that while the City has developed a basic infrastructure for an Urban Forestry Program, . insufficient resources have been allocated to implement that program on a continuing basis. Also, current budget allocations are well below levels necessary to maintain services frequencies consistent with a progressive program. Tree trimming is far below minimum acceptable standards and tree removals exceed replacements and new plantings. . Unless resources are made available to increase trimming and-replacement frequencies, the total city stock will continue to decline. The • auditors suggest that at the very least, the City should fund the • program at a minimally acceptable level. We support this recommendation • . and have developed a budget increase proposal for 1989/90. We propose moving up to the suggested minimal level of service. If needed this proposal could be phased in over a two or_ three year period. We suggest that this program receive the highest consideration during the budget ' development process. BUDGET IMPACT: S150,000° • • 2. TO ENSURE THAT THE URBAN FORESTRY PROGRAM RECEIVES ADEQUATE MANAGEMENT SUPPORT AND CONTROL NECESSARY TO RESOLVE POLICY NAD RESOURCE ISSUES, THE URBAN FORESTER SHOULD REPORT DIRECTLY TO THE DIRECTOR OF PARKS AND RECREATION. We do not fully support this recommendation but, feel that the current organizational structure of this program being managed by the Park Planning and Development Director is sufficient. However, the Director of Parks will take a greater "hands on" role until the policy and funding issues are completely worked out. BUDGET IMPACT: $0 3. INVESTIGATE THE COST EFFECTIVENESS OF THE URBAN FORESTRY IN—HOUSE CREW vs. CONTRACTUAL COST. IN CONJUNCTION WITH THE PARK MAINTENANCE PROGRAM CONVERT THE FORESTRY OPERATION TO AN AUTOMATED WORK ORDER SYSTEM WHICH PROVIDES DATA TO SUPPORT THE EVALUATION OF COST EFFECTIVENESS. We support this recommendation and plan to approach it in the manner that was identified in Item #2 of the Park Operations and Maintenance • section of this report. BUDGET IMPACT: $ 4,000 4. AI{THORIZE THE TREE CREW ONE ADDITIONAL FULL-TIME LINE STAFF. The current tree maintenance crew is understaffed to be the most cost effective. An increase of one position would increase the flexibility with which this crew could be deployed. We support this recommendation. and as has been stated previously will transfer an Equipment Operator from the park maintenance to work permanently with this program. BUDGET IMPACT: 00 • GOLF COURSES • 1. IF THE DECISION IS MADE TO SUBSIDIZE CERTAIN PLAYER GROUPS THROUGH RETENTION OF THE PASS SYSTEM, GREENS FEES SHOULD BE RAISED ABOVE LEVELS CURRENTLY PROPOSED TO PROVIDE A MODEST CUSHION SHOULD ACTUAL PLAY NOT REACH PROJECTED LEVELS.' We support this recommendation however, it will be impossible to implement it because the City Council has set the new fee structure for golf courses that includes a subsidy for senior citizen play. Since special pass play was continued the City will most likely need to adjust fees within the next three years. BUDGET IMPACT: S 2. AUTHORIZE A FULL-TIME MANAGEMENT POSITION TO DIRECT GOLF OPERATIONS. The _audit found that the person having the direct responsibility for planning and managing golf operations should not have dual responsibility for directing recreation services. We support these • findings to the extent that a mid-manager is needed either in the area of recreation or golf to lighten the workload of the Director of Recration. We choose to ,place the mid-manaaer over recreation rather than, golf. The Recreation Director will utilize his golf - course superintendents to a greater degree in the management of the courses however, he will continue to hold direct management responsibility over the entire golf operation. BUDGET IMPACT: SO • RECREATION l I 1. FORMALLY RECOGNIZE THE CITY'S ROLE IN DELIVERING PROGRAMS DESIGNED TO MEET THE SPECIAL NEEDS OF THE COMMUNITIES WITHIN SALT LAKE CITY. THIS • WOULD INCLUDE COMMUNITY EVENTS, SPECIAL : EVENTS AND CERTAIN SPORTS PROGRAMS DESIGNED TO MEET A SPECIAL COMMUNITY NEED. CONCURRENTLY, RECOGNIZE THAT SALT LAKE COUNTY SHOULD HAVE THE LEAD RESPONSIBILITY IN SPORTS LEAGUES FOR BOTH YOUTH AND ADULTS. ADOPT A POLICY STATEMENT WHICH OUTLINES AND RECOGNIZES THE ROLES OF BOTH THE CITY .AND THE COUNTY. ALSO, PROVIDE A MECHANISM TO ADMINISTER AND SET POLICY TO RESOLVE COMPETITION BETWEEN AGENCIES AND PROVIDES FRAMEWORK FOR THE DELIVERY OF COORDINATED SERVICES. WITHIN THIS FRAMEWORK: Establish a Recreation Service Coordinating Committee. Develop an annual service plan. Create performance levels that will be expected of each agency. 2. CONDUCT A fiEEDS ASSESSMENT FOR RECREATIONAL SERVICES FOR THE CITIZENS • OF SALT LAKE CITY. • 3. AUTHQRIZE ADDITIONAL RESOURCES TO PROVIDE _ A FULL-TIME RECREATION SUPERINTENDENT WITH DAY-TO-DAY RESPONSIBILITY FOR RECREATION PROGRAMS. 4. TRANSITION PART-TIME HOURLY RECREATION COORDINATORS TO FULL-TIME STATUS WITH FRINGE BENEFITS AND CAREER SERIES SALARIES. The auditors based their recommendations on the following findings: Significant duplication of effort exists in the delivery of selected recreation program services. The primary areas being adult and youth sports. Major gaps exist in recreation program services being provided within the City. Primary among these gaps are programs for the disabled; after-school programs for children and teens; cultural arts programs (art, dance, theatre); outdoor and environmental education; coordination and use of resources provided by higher education institutions. The City is receiving a proportional share of services and programs from the County. When the City entered the recreation service area they moved to fill the gaps not addressed by the County.- Special focus was given to community events, special events and sports. City's investment in recreation is extremely modest. Analysis indicates that the current investment falls below reasonable levels. • We do not completely agree with the auditors findings and recommendations. DUPLICATION OF RECREATION SERVICE • It is true that both the City and County duplicate some programs, i.e. basketball, softball , volleyball . The reason for the duplication is not competition between agencies but, providing an existing need. Both agency programs are full capacity and in some cases waiting lists exist. Duplication exists when programs exceed participants or need for the program. That is not the problem here. Neither agency can satisfy the need alone. Together however, the need is met. COORDINATION Duplication is not the real problem but, coordination betwen agencies is the problem. The auditors suggested that greater coordination be established .between all service agencies in our community. We fully support that recommendation. By creating a Recreation Service Coordinating Committee a mechanism and framework can be created to administer policy that resolves the problems of unnecessaary duplication and competition. Also, an annual service plan should be prepared and coordinated by this committee.. GAPS IN RECREATION SERVICES The audit suggests that certain service gaps exist and that the City should start new programs to fill them. These gaps include programs for handicapped citizens, senior citizens, outdoor programs and cultural arts. We agree that the gaps exist but, do not feel that the City should take the lead role in filling the gaps. The County has trained staff and adequate facilities to support these programs. NEEDS ASSESSMENT The audit suggests that a needs assessment be conducted to determine community needs and to help future decision making. An assessment is a basic tool required to support planning in this area. Also, the assessment will help define. the gaps that exist in service. • We support the recommendation for a needs assessment and will ask for funding in next years budget. BUDGET IMPACT: $ 15,000 STAFFING The audit stated that the City`s investment in recreation programming is extremely modest. We feel this is true, particularly in the area of staffing . and employee compensation. The audit recommended that a new position of Recreation Superintendent be created to manage the day-to-day responsibilities of this program.1 It also stated that hourly employees should be transitioned into full-time salaried status. We support both of these recommendations and suggest that they be implemented in next years budget. The new superintendent' s position would report directly to the Recreation Director. Funding to convert the current hourly employees to full-time status would come from •redistributing our current hourly budget. BUDGET IMPACT: S 42,000 CITY/COUNTY AGREEMENT Finally, the audit recommends that the City and County finally resolve their • differences. We completely agree with this recommendation and feel confident in saying that an agreement is in sight. We have proposed, and the County has agreed in principle, to enter into a Memorandum 'of Understanding -between both agencies. Within this Memorandum will be a . definition of roles played by each agency; a general policy statement which recognizes the need for delivering service; statements supporting cooperation and coordination; definition of an annual service plan and performance levels that should be expected by each agency. Again, the purpose behind the agreement will 'be cooperation and planning. BUDGET IMPACT: SO Finance Department Executive Summary * The proposed FY 89-90 Finance Department budget, adjusted on the basis of the reorganizations that are proposed, is $4,301 ,821 or 9.98% higher than the adjusted current year budget. The number of authorized staff is proposed to increase from 62.08 to 64.58 FTE. The largest budget increase was in the Parking Collections budget which increased by $240,000 to pay for the serving of warrants and small claims affidavits for parking violations. Budgeted increases in salary and benefits, and the relocation of Mayor's Office staff to the Budget & Policy Division make up the remainder of this increase. * The Finance Department has proposed that its Internal Audit staff be increased by one person, through the funding of the additional Internal Auditor position not funded in FY 88-89. Council may wish to reduce the Internal Audit division budget by $36,900 which is the cost of this third Internal Audit staff position. * The proposed budget includes a Travel/Training budget higher than the budget approved for FY 88-89. Council may wish to reduce the Travel/Training budget by $4,024 or by $2,224 to maintain this budget at the current year funding level. The $1 ,800 difference reflects the travel and training for the staff that was transferred from the Mayor's Office. The additional funds are for training in the Property Management Division. * The Finance Department identified two opportunities to reduce their Other Charges & Services budget in their written narrative. Council may wish to reduce the budget for Other Charges & Services by $30, 150 to eliminate a reimbursement to the County which should be funded in the Parks CIP budget, and parking allowances for clerical and technical employees which are not needed. Council may also wish to transfer $10,000 of this amount to Non- departmental to increase the funding of the Utah League of Cities and Towns membership fee. -1- Finance Department Council Staff Analysis Prepared by Cam Caldwell The proposed FY 89-90 Finance Department budget, adjusted on the basis of the reorganizations that are proposed, is $4,301,821 or 9.98% higher than the adjusted current year budget. The number of authorized staff is proposed to increase from 62.08 to 64.58 FTE. The largest budget increase was in the Parking Collections budget which increased by $240,000 to pay for the serving of warrants and' small claims affidavits for parking violations. Budgeted increases in salary and benefits, and the relocation of Mayor's Office staff to the Budget & Policy Division make up the remainder of this increase. Staffing Changes The annotated staffing document provided by the Finance Department identifies the proposed position increases. An additional .5 FTE is requested for the Property Management program which is now located on the 3rd Floor, physically separate from other Finance staff. The actual beneficiary of this allocation is to increase clerical and secretarial support for the Contracts Section. An additional .5 FTE has also been requested for the Parking Ticket Section to handle the increased workload. The Finance Department report documents the need for this extra staff support with detailed statistics of workload indicators. The department has proposed that the Internal Auditor position not funded for FY 88-89 be funded in FY 89-90. Council has received two written reports on the Internal Audit function which outline the options. Council staff supported keeping the existing internal audit staff in the Finance Department for at least one year, acknowledging the need for these staff to design and implement internal controls. The budget proposed by the department increases the Internal Audit function from "one part-time auditor to three full-time positions." The department 's justification for this third position is included ' in Section 3, Page 8 of the department packet . Council may wish to review whether it would like to fund this third Internal Audit position at a cost of about $36,900. Council staff support the creation of the additional Airport Buyer position which will be funded out of Airport Funds but report administratively to the Finance Department. Council staff anticipate that the Finance Department will report its progress in achieving improved management control and cost savings as a result of expanding staff in Contracting and Purchasing. There were nine reclassifications in the Finance Department this past year. Seven of these reclassifications were part of the City-wide accounting and clerical audits. Policy Issues The department 's response to the Peat Marwick audit recommendation to cut six positions makes a strong case for retaining these positions. Their documentation is spelled out in detail in Section 4 of their report. -2- • The question of the funding of the Refuse Collection Funds through the Municipal Building Authority was reviewed with finance staff. The department has proposed a five year amortization schedule for the garbage packers, effective in FY 90-91 , which seems to be entirely acceptable. The cost of payments will increase about $45,000 per year. The reorganization of the Finance Department is a positive step which is consistent with recommendations in the Peat Marwick audit. According to the Director, additional reorganization issues will be reviewed during the coming year. The Travel/Training budget is $4,024 higher than the budget approved in FY 88- 89. However, the Administration has taken the position that $1 ,800 should be credited to the department, as part of the cost of the transfer of the Mayor's Office staff to Finance. The department has requested that additional training funds be available to the Property Management Division to send staff to a national property management conference. To keep this budget at last year's budget level, Council may wish to reduce this line item by $4,024, or by $2,224 if the Council chooses to give the department credit for the training budget associated with transferring Budget and Policy staff from the Mayor's Office. The department has identified $30, 150 in expenditures which were originally approved in their proposed budget submitted to the Mayor, but which can now be cut. Those cuts include funding which should have been included in the Parks CIP budget to reimburse the County for revenue from land jointly owned with them, and parking allowances for clerical and technical employees. The department notes that $10,000 of this amount should be transferred to the Non- departmental budget to pay for an increase in the Utah League of Cities and Towns for its annual membership fee. Staff Recommendation 1) Council may wish to reduce the Internal Audit division budget by $36,900, which is the cost of the third Internal Audit staff position. 2) Council may wish to reduce the Travel/Training budget by $4,024 to maintain this budget at the current year funding level. In the alternative, Council may wish to cut this budget by only $2,224. • 3) Council may wish to reduce the budget for Other Charges & Services by $30, 150 to eliminate a reimbursement to the County which should be funded in the Parks CIP budget, and parking allowances for clerical and technical employees which are not needed. Council may also wish to transfer $10,000 to the Non- departmental budget for the Utah League of Cities and Towns for the increase in the annual membership fee. -3- F7/7ance 'DepGtrf/71 e/I Jget ?rese/7fafior� • SJ'! a CT1YTC_ UZPO: IOI DEPARTMENT OF FINANCE 324 SOUTH STATE STREET, 5TH FLOOR LINDA HAM ILTON SALT LAKE CITY, UTAH 84111 PALMER DEPAU LIS DIRECTOR OF FINANCE MAYOR (801) 535-7676 MAY 22, 1989 W.M. "Willie" Stoler,Chairman Salt Lake City Council Room 304 , City and County Building Salt Lake City, Utah 84111 Dear Chairman Stoler: 410 Attached for your review are the materials requested regarding the Finance Department budget for fiscal year 1989-90 . Since the volume is somewhat overwhelming, I thought I would use this cover letter to give you a synopsis of each section so that Council Members could go directly to the issues of interest to them individually. It is unlikely that any of you will want to read the entire packet. Background Information (pages 1 - 3 ) : This section simply provides key facts and a general explanation of what major functions each division in Finance performs . This section will only be of interest to Council Members who are not very familiar with the Finance Department or who would like their memory refreshed. Changes in Staffing and Service Level (pages 4 - 5 ) : This section contains the significant changes in the Finance Department budget for next year. These two pages should be of interest to all Council Members . Major Policy Issues (pages 6 - 8 ) : This section reports on the two major policy issues, centralized contracting and internal audit, which we brought to the Council in March. It provides information regarding how the proposed fiscal year 1989-90 budget moves in the direction of achieving these two policy goals . This 411 section will probably be of interest to most Council Members . W. M. "Willie" Stoler, Chairman Salt Lake City Council May 22, 1989 Page 2 Other Issues : The information provided in this section is in anticipation of Council Member questions and concerns . I suspect there will be varying degrees of interest among Council Members regarding the six items discussed. The first part is a one page summary of the reorganizations which we have undergone in the last three months . The second paper is a proposal , which is not currently included in the Mayor's budget, for the placement of a buyer at the Airport. I have the Mayor' s permission to make the proposal at this time because it will enable us to focus more attention in the contracting area . The third paper is our analysis of the Peat Marwick proposal that we implement additional small purchase procedures and their suggestion that staff resources could be saved by doing so . The fourth section is an evaluation of the Peat Marwick suggestion that six positions should be reviewed for possible elimination in the Finance Department . Each position is discussed. Your staff have II/ been provided with detail on Other Charges and Services and the Travel and Training budget under this section as well . Although the volume of paper appears imposing, pages four through eight provide the critical information on next year's budget . All other information has been provided either in anticipation of Council Member questions or was requested by Council staff . Please let me now if I can answer any questions or provide additional information. Sincerely, Linda Hamilton Director of Finance LH/hd Attachment • SECTION 1 • • 411 SECTION I BACKGROUND INFORMATION ON FINANCE DEPARTMENT POLICY AND BUDGET DIVISION The Policy and Budget Division was recently created in response to the Council's audit of the Finance Department . This new Division will be responsible for development of budget policy, revenue projections, coordination of the development of the Mayor' s administrative policies, year-round budget monitoring, analysis of department budget requests , preparation of the Mayor' s budget proposal, reviewing departmental operations, exploration of alternative service delivery mechanisms , conducting cost-benefit analyses, and providing budget information to the Mayor and City Council . The formation of the Policy and Budget Division resulted from the consolidation of several positions previously involved in the budget process . These include three positions from the Finance Department' s Division of Financial Information and Development, five positions from the Mayor' s office, and one position from the Treasurer' s Office. 111 The major goals of the Division include developing policies and procedures which will ensure budget accountability, maximizing the cost-effectiveness of service delivery, and development of comprehensive and understandable budget information for the Mayor and City Council. PURCHASING AND PROPERTY MANAGEMENT DIVISION The Purchasing and Property Management Division is responsible for administering two primary functions : ( 1 ) centralized procurement of equipment, materials, and contracted supplies and services; ( 2 ) coordination of all real and personal property transactions, including acquisition, inventory, fixed asset control and disposition of City property. During the past year, the Procurement Section handled 17 , 867 purchase orders and contract shipping notices . These documents were the end result of 150 formal bids, 675 written quotations, 14 , 141 telephone quotations, 3,851 expedited orders and 926 running tickets . Our purchasing dollar volume varies from year to year, but is usually between 20 and 25 million dollars . In addition, we currently process one-third of the City' s total contract volume annually. We do not currently have an effective mechanism to track the dollar volume handled on contract . 411 During the past year, our Property Section handled over one million dollars in real property sales , which does not include land trades . Our total real property leases were approximately $600 , 000 for the year and the sale of fixed assets and personal property produced $200, 000 in revenue. 411 INTERNAL AUDIT DIVISION Internal auditing has been established as an independent division and has been strengthened from one part-time auditor to three full-time positions . During the 1989-90 fiscal year, audits will focus on the evaluation of internal controls and related policies and procedures . Internal auditors are in an excellent position to assist in studies to design or improve existing procedural controls, and to monitor compliance with legal and regulatory requirements and with policies of management and the City Council . Reviewing and improving procedural controls should be a continuous management process . The enhanced service level of internal auditing will assist management throughout the City to respond to and correct weaknesses prior to the development of major concerns . Internal auditors will work together with operating management to evaluate and improve financial and managerial controls . ACCOUNTING DIVISION IIIThe Accounting Division has two major programs or functions : ( 1 ) accounting and ( 2 ) reporting. The accounting function is one of controlling the disbursements of all City funds through four main systems : payroll, purchase order liquidations, contract payments, and voucher payments . . Under the payroll system, 2, 200 payroll checks are distributed every other week for an annual total of $54 million. We have two check writes to pay purchase orders every week. Each week we process 600 to 1, 000 checks for an annual total between 30 , 000 and 50 , 000 . Through the contract payments system, all construction payments are monitored and controlled, ensuring that funds are available before the disbursements are made. These payments can vary from a few thousand to several million dollars . The voucher payment system allows a department to process a payment directly to a vendor. Payments are controlled by the computer system, thus verifying that funds are available. The vouchers are also monitored to ensure that vouchers are not used inappropriately to bypass the purchasing system. Through these four systems we disburse $200 million each year. . -2- Financial reporting is done on a quarterly basis . This reporting provides information on all year to date expenditures for the current fiscal year. It also provides projected expenditures for the remaining portion of the fiscal year. Each year an annual report is prepared in coordination with the audit performed by an outside auditing firm. TREASURER'S OFFICE Cash management is responsible for record keeping of major general fund revenue sources , investments and portfolio management, debt financing and debt service management, special assessments for all City special improvement districts , and management of all City checking accounts and banking services . The average number of investments purchased and matured each year exceeds 1, 600 . The approximate portfolio size is $130, 000 , 000. The number of new debt financings averages five each year. Special assessments include billing, collection and record keeping for 157 active districts and approximately 10, 000 individual property owner accounts . Cash receipts (cashiering) is responsible for all walk-in traffic wishing to make payment on City tax, fee, or service charge. S Office cashiers process over 120 , 000 transactions per year. Cashiers also perform daily receipt and balancing procedures and register reconciliation reports , and prepare and deliver daily bank deposits . Parking meter collection consists of personal services contract, supplies and capital outlay for the daily collection of the City' s 2 , 600 parking meters . Collection is performed 5 days per week. Over $1, 200, 000 in coins are collected and processed each year. Parking ticket administration is responsible for the collection and adjudication of all parking tickets issued within the City. Approximately 250, 000 tickets are issued each year, and revenue collections exceed $2 , 500 , 000 each year. Over 30, 000 phone inquiries are answered each year, and 26 , 000 informal hearings before hearing officers are completed annually. In addition, over 150, 000 delinquent notices are prepared and mailed annually. Over the past year alone (from 1987 to 1988 ) , the following court related activities have shown significant increases : filing of small claims affidavits, 29 . 7%; return of service processing, 166 . 8%; court judgments received, 96 . 0%; supplemental orders, 234 . 9%; order to show cause, 175 . 7%; and, bench warrants, 429 . 5% . As the system continues to mature, workload will continue to increase. . -3- • • SECTION 2 • • • SECTION 2 CHANGES IN STAFFING AND SERVICE LEVELS PURCHASING AND PROPERTY MANAGEMENT DIVISION PROPERTY MANAGEMENT In our 1989-1990 budget request, it will be noted that we have requested $10 ,000 for a part-time, hourly employee to be used in our Property Management Section. We were required to make this change for two reasons . In our previous location, our entire division was located in the same general area. Under these circumstances, we were able to utilize one employee to provide clerical and secretarial support for Property, Fixed Assets and Contracts . The employee involved devoted one-third of her time to each area of responsibility. We had originally planned to have our entire division housed together on one floor in the City and County Building also. With the recent reorganization of the Finance Department, we were required to make adjustments in the location of our personnel and the most logical proposal required that we move our Property Section to the 3rd Floor. In addition, the need for additional secretarial support has been accented by the rapid expansion of our contract function, which now demands full-time secretarial support. We continue to assume additional responsibilities in this area on a daily basis . The funding of this 0 . 5 FTE will provide needed clerical support for the Property Management Program while freeing up the time of a current employee to work full-time on contracts . The affect of this 0 . 5 FTE will be felt in the Contracts Section. INTERNAL AUDIT DIVISION Internal auditing has been established as an independent division and has been strengthened from one part-time auditor to three full-time positions . During the 1989-90 fiscal year, audits will focus on the evaluation of internal controls and related fiscal policies and procedures . The Division will assist in stengthening the financial control and monitoring responsibilities of the Department of Finance. In future years, the Internal Audit Division will be directed by an independent audit committee. Audit assignments from the committee should include audits of internal controls, compliance audits, operational audits, and program audits from all areas of City government . s -4- POLICY AND BUDGET DIVISION The Policy and Budget Division will have a significantly enhanced service level resulting from the transfer of five FTEs from the Mayor' s Office. None of the positions in the Policy and Budget Division are new positions; each was transferred from somewhere else in the City organization. However, the fact that these positions with a common purpose are now consolidated into a working team, will increase productivity and enhance the level of service. TREASURER' S OFFICE - PARKING TICKET ADMINISTRATION The office is requesting an additional 0 . 5 FTE in parking administration to handle the increased workload referenced above. Over the past year, the office has utilized "Green Thumb" workers , volunteers, community service workers , and welfare system employees to supplement existing staff . While these resources have helped absorb dramatic workload increases, they are inadequate to maintain current service levels and anticipated workload increases . Collection on delinquent accounts is essential for maximizing revenues and establishing program credibility. Anticipated workload increases in court collection process are expected in the areas of bench warrants , garnishments , impounds, and writs of execution. Other collection efforts such as the State Tax Commission "GOTCHA" and motor vehicle registration will also require additional staff resources . BUSINESS LICENSING The Finance Department will no longer provide the service business license issuance. It was decided that too many coordination problems resulted from having license issuance in a separate department from license enforcement. After some review, the City Treasurer concluded that several factors (e.g. , physical location in the City and County Building, potential for receiving support from other organizations during peak work cycles ) indicated that service delivery would benefit from transferring the license issuance function to Community and Economic Development. 411 -5- r • SECTION 3 • • smuTION 3 MAJOR POLICY ISSUES CENTRALIZED CONTRACTING The Finance Department has recce:mended to both the Mayor and the Council that contracting be centralized in the Purchasing and Property Management Division. There is no question in our minds that contracting is an area in which controls are currently minimal to nonexistent and risks high. We believe it should be centralized for the following reasons: 1. Current City ordinance states that the Purchasing Officer is responsible for purchases, including contractual purchases. We need to either change the ordinance or give him the ccnmtrol along with the responsibility. 2. Without centralizing contracts we cannot ensure that funding is available in the budget or that appropriate competitive bidding procedures are being followed in awarding contracts. 3. There is no way within the current procedures to ensure that terms and conditions included in contracts are in the best interests of the City. 4. The decentralized system does not provide for systematic monitoring of • contractor performance to ensure that we are getting what we pay for. 5. A centralized system would enable us to streamline existing procedures and reduce the amount of time necessary to process contracts. 6. A centralized system would provide better access to key contract information. 7. Under the current decentralized system, no one knows or is able to determine what risks or exposure we are incurring. Centralizing the contracting function will be a major project which will involve all departments in the City. It cannot be accomplished quickly. Our first goal will be to gather data on the risks of the current system. There are two alternatives paths to achieve this goal. We will be prepared to make a recommendation to the Mayor and the Council on the practicality of these two paths by September 1, 1989. The first, and preferred alternative, would be to have someone outside of Purchasing perform a risk analysis on contracts. This could be done in a relatively short time frame and objectivity would be assured. The problem with this will be finding an organization with the resources to perform the analysis within the City or money in the budget to pay someone to do it. The second alternative, assuming that the Council approves the additional clerical support for Contracting and the Airport buyer, would be for us to • continue to process (develop specifications, go through bid procedures, and write the contract) the same number of contracts, but to begin to route all contracts through Purchasing. We would be unable to do more at the proposed staffing level than simply observe the possible risks/exposure associated with different types of contracts. This option would take more time. Eventually we would begin to develop a sense of whether all contracts should be -6- S centralized. It may turn out that we do not need to centralize all contracts, but only those over a certain dollar amount or for certain types of services or products. In order to try to achieve this goal without requesting significant increases in general fund appropriations, we have taken the following actions: (1) As time is available, the secretary in the Department Director's office is assisting with preparing contract specifications. (2) We have requested a halftime hourly position to provide clerical support to Real Property Management. They need this support because our recent reorganizations resulted in their physical relocation to the third floor of the City and County building, thus distancing them fiLw their current support staff. The funding of this 1/2 tIt will free the time of their current support person for work on contracts. (3) We have reached agreement with the Airport that they will pay for a buyer in Purchasing to focus exclusively on the needs of the Airport. This action will f to time of current buyers and will result in our ability to redirect approximately one Wit to contractual procurement. Council approval for a halftime clerical and the addition of a Wit to be paid for by the Airport coupled with our other actions will result in increased staffing in contracting of 3/4 to a full 1"ta clerical support and one technician--all at the cost of $10,000 general fund. The Council requested that Finance look at implementing new small purchase procedures under the assumption that such procedures would free a significant 1111 amount of tine of buyers which could be redirected to centralizing contracting. Our analysis indicates that not enough time can be freed up by implementing additional small purchase procedures to make it worth the risks associated with such actions and the inevitability of the City paying higher costs for many items. Although many items are small and relatively inexpensive, the City purchases these items in such large quantity that it is likely that decentralizing would cost the City substantial funds. The analysis of this issue conducted by Larry Failner is included in the last section of this paper. The Council also asked whether any of the six positions identified by the Peat Marwick audit to be reviewed and possibly eliminated could be redirected to contracting. In the last section of this report we have stated our response to the Peat Marwick recommendations in some detail. Briefly, the funding for one position in Business Licensing has been eliminated since it was transferred to Community and Economic Development. Half of the time of the Special Assessment Clerk in the Treasurer's office has been redirected to assist with the graving work load in Parking Ticket Administration. It is the position of the Finance Department that all other positions must be maintained in order to ensure adequate controls over the City's resources. We have, and will continue, to carefully scrutinize our organization in order to make the most effective use possible of our resources. Elimination of these positions would seriously compromise our ability to ensure that all City resources are invested, budgeted, and expended effectively and legally. • With the resources included in the Mayor's budget proposal the Finance Department intends to continue moving in the direction of centralizing contracting. Additional actions anticipated during the upcoming fiscal year include taking the proposal to the City's cabinet, performance of a risk analysis, and the formation of a task force to design a system and develop proposals for funding. -7- A INTERNAL AUDIT DIVISION Effective July 1, 1990, the Internal Audit Division will report directly to an independent audit committee. The membership of the committee should include representatives from the administration, the City Council, and can include volunteer citizens with financial or auditing background. The audit committee should expect internal auditors to: (1) Review the reliability and integrity of financial and operating information. (2) Ensure Lompliance with policies, plans, procedures, laws, and regulations. (3) Review the means of preventing improper or illegal activities. (4) Appraise the economy and efficiency with which resources are used. (5) Review operations or programs to ascertain whether results are consistent with established objectives and goals. Audit assignments for FY 1989-90 have been made to the Internal Audit Division based on three full-time audi.tuLa. `\o internal auditor can only accomplish sane of the responsibilities. With less than three auditors, audits would primarily have to be limited to internal control reviews and procedural reviews located within the Department of Finance. An independent audit • committee would not be worthwhile or justified to oversee fewer auditors who would be busy with projects already planned. With only two auditors, it would also not be practical to be fully independent from Finance at this time. If the Council chooses to fund additional legislative auditors fiun internal resources, the audit capacity of the City would be significantly enhanced. The Council would control their legislative auditors directly and sit on the administrations independent audit committee. The Department of Finance would be willing to have the Internal Audit Manager participate on legislative audit steering committees. This participation will provide at least three advantages: (1) The Internal Audit Division and the administration may be aware of problems or weaknesses where outside auditors could be directed to study and provide recommendations. (2) There will be a greater probability of recommendations being accepted and implemented where the administration is involved with selecting the scope of the audit. (3) The Internal Audit Division can follow-up on recommendations and issue a report on corrective action taken. Although the functions, responsibilities, and opportunities of legislative auditors are very much different from executive branch internal auditors, the spirit of coop ration can greatly benefit the City. Under a strategic plan for auditing, both the legislative branch and executive branch would have enhanced audit capacity and a vested interest in all audit functions. • -8- 0 SECTION 4 • S Section 4 OTHER ISSUES REORGANIZATION OF THE FINANCE DEPARTMENT The Finance Department has undergone significant reorganization in the last two months. There were three major components of the reorganization. The most significant oauponent of the reorganization was the formation of a Policy and Budget Division. This division consolidated budget functions that were fragmented among the former Budget and Financial Information Division (now Accounting Division), the Mayor's Office, and the Treasurer's Office. This Division now has sole responsibility for preparation of the Mayor's budget recommendation to the Council, monitoring the budget throughout the fiscal year, revenue projections, development of the budget process and format, development of budget policy, and development of the Mayor's administrative policies in the form of Executive Orders. The second major organizational change was the decision to transfer the Business License Issuance function to the Department of Community and Economic Development. This decision was based on three factors. First, we recognized the need to consolidate the Business License enforcement and issuance functions under one department to ensure proper coordination. Second, We S recognized that the Department of Community and Economic Development had more flexibility to assign additional staff to assist Business Licensing during peak periods while using Business Licensing staff to supplement in other programs during slack time, thereby maximizing the efficient use of staff resources. The last factor in the decision-making formula was the fact that Business License issuance was to be physically located at the one-stop counter with Community and Economic Development staff. Since they are located there, it simply makes sense to have them report to that department. The final significant change was moving financial reporting (which is responsible for generating the quarterly financial reports, the City's yearly financial statements, and coordinating the City's independent financial audit) from the Internal Auditing Division to the Accounting Division. This accomplished two things. Internal Audit has been relieved of all responsibilities except those directly related to reviewing internal controls and internal audit activities. The time of internal auditors will no longer be diverted to other activities. This shift reflects the administration's renewed policy emphasis on internal auditing. This change also placed financial reporting with the Accounting Division, which generates most of the City's financial information. There are two other potential organizational changes identified in the Peat Marwick Management Audit which will be reviewed this summer. The audit recommended that the Mayor consider moving the risk management functions and capital planning and budgeting functions to the Finance Department. Time has been insufficient to evaluate these options to date. The Finance Department will participate in a review of these recommendations with the Departments of Community and Economic Development and Human Resources/Administrative Services and report to the Mayor sometime this coming fall. • PROPOSED AIRPORT BUYER As we discussed recently, we are proposing the addition of a buyer who would eventually be dedicated exclusively to Airport procurement activities. We have met with Airport representatives and they are receptive to the idea. The essential elements of the plan can be summarized as follows: 1. A new buyer position would be created at the Buyer II, Pay Class 312 level, with a salary ranging from $1,716.00 to $2.578.00. 2. The Airport would pay the buyer's salary, including benefits, and would provide the necessary office space and equipment for the buyer to function on-site at the Airport warehouse. Equipment would include a Micro Computer with Terminal Emulator, and a FAX machine to be located in the Purchasing and Property Management Division downtown. 3. While the buyer would be housed at the Airport, this employee would be a member of the Purchasing and Property Management Division staff and would be supervised by the Procurement Control Officer. 4. Implementation of the program would require that the new buyer be trained in the Purchasing and Property Management Division prior to being sent to the Airport, because of the wide range of products and services procured by the Airport. If the Buyer II position was filled • in-house, and it seems reasonable to assume that it would be, we would also need time to hire and train a replacement at the entry level buyer position. 5. During the training period, it is proposed that the new Buyer II would devote full time to Airport procurement, in preparation for the move to the Airport. Some programming changes would be required on the Automated Purchasing System to facilitate a satellite buying operation. We estimate that it would take from 4 to 6 months to complete the hiring, training and computer reprogramming necessary for full implementation. 6. Once implemented, the Airport buyer would handle all procurement requirements for the Airport on-site, with the exception of formal competitive sealed bids and competitive sealed proposals, and perhaps some written quotations. While this program would be an experimental process, the perceived benefits associated with the proposed plan are as follows: 1. The Airport is one of the major users of Purchasing services and their requisitions constitute approximately 200 of our requisition flow. A large portion of their requisitions are telephone quotations, which could be handled very well by a trained and knowledgeable on-site buyer. In view of the significant time loss associated with mailing documents to our downtown operation, it is conceivable that an on-site buyer could expedite the procurement process considerably for certain commodities. 2. The on-site buyer could also assist in preparing specifications for formal bids at the Airport, where he/she would be able to obtain firsthand information as the specifications were being prepared. The Airport purchases some very unique commodities from time to time and visual inspection is often advantageous. Under the present circum- stances and our work load, it is seldom possible for the buyer to go to the site when needed. 3. The addition of the on-site buyer at the Airport would free up a certain amount of time for each of the downtown buyers. This would enable us to alter current buying assignments and we would propose that one buyer would be dedicated to handling contractual procurement. This area of procurement demands unique training, skills and abilities and this has been noted as a serious deficiency in recent months. As additional contracts are centralized, the need for this type of specialization will continue to increase. There are other benefits which we could discuss in more detail at your convenience. For the time being, however, if you need additional information, please feel free to contact me. • . SMALL PURCHASE PROCEDURE I. "CASH PURCHASING" PROCEDURE NOT AN OPTION The Uniform Fiscal Procedures Act requires that each purchase or encumbrance of funds by the City must be ordered or approved by the person functioning as City Purchasing Agent. This severely limits the options available for a small purchase procedure. A "cash purchase" arrangement would not be permissible since there would be no signed document issued on a cash sale. II. THINGS TO KEEP IN MIND We currently have three procedures in place which deal with "small purchases", which are not taken into consideration by the recommenda- tion referenced in the Audit Report. 1. The Emergency Purchase Procedure. 2. The Running Ticket Procedure. 3. The Contract Monthly Billing Procedure. III. POTENTIAL SMALL PURCHASE PROCEDURES In our opinion, the following procedures might be considered as a means to handle small purchases more expeditiously, but we must keep in mind that the law requires documentation and documentation requires time and manpower. 1. A modified version of the current EMergency Purchase Procedure. 2. Expansion of the existing Running Ticket Procedure. 3. A Cash P.O. Procedure currently being used in Mericopa County, Arizona. IV. RISKS AND CONCERNS WITH A SMALL PURCHASE PROCEDURE 1. General acknowledgment by every organization using such procedures that they are abused and it is very difficult to control the abuse. A. Departments will purchase from friends, family members, etc. B. Costs will escalate for commodities purchased. C. Limitation of documentation makes pilferage more likely• to occur. D. Departments will tend to go around existing contracts, placing existing contracts in jeopardy. Small Purchase Procedure Page 2 2. Increase in number of complaints to the Mayor and Council because vendors are not allowed to bid on or sell such items to the City. A. Favoritism is common under Small Purchase Procedures. B. Small Purchase Procedures tend to discriminate against small and new businesses, which the Mayor has been sensitive to in the past. 3. Departments will tend to split requisitions deliberately, in order to avoid the necessity to bid. 4. City-wide time and manpower expended on any "small purchase" procedure are likely to exceed that which is currently being spent within our division. We would merely shift the burden of responsibility from trained buyers to untrained personnel, who will spend additional time locating and purchasing commodities. 5. Implementation of a "Small Purchase" Procedure will almost • certainly increase the cost for commodities purchased and will have a negative affect on the quality level of commodities purchased for City use. 6. Loss of historical data on the commodity purchased. 7. Budget controls may be complicated somewhat, because purchases will be made before the requisition is actually input on the system. Requisition input currently triggers the initial budget check. V. DIRECT IMPACT ON PURCHASING AND PROPERTY MANAGEMENT DIVISION 1. Modified Emergency Purchase Procedure. A. Some reduction of work flow for buyers. B. Increased work flow for clerical support staff. (1) Phone calls. (2) Paperwork. (3) Some reprogramming of the Automated Purchasing System required. • 2. Expanded Running Ticket Procedure. A. Some reduction in work flow for buyers. B. Increased work flow for clerical support staff. • Small Purchase Procedure Page 3 C. No reprogramming required on the Automated Purchasing System. 3. Cash Purchase Order Procedure. A. Limited reduction in work flow for buyers. B. Increased work flow for clerical support staff. C. Extensive and costly reprogramming required on the Automated Purchasing System and the FICS Accounting System. Any time saved on the part of the existing buying staff will be more than offset by the tripling of the flow of R[P's and Bids for addi- tional contracts. The net affect of any of the above moves in conjunc- tion with Centralized Contracting will be a net increase in work flow for the buying staff. VI. DIRECT IMPACT ON USER DEPARTMENTS • 1. Modified Emergency Purchase Procedure. A. Increase in procurement responsibility for department staff. (1) Phone calls to locate commodity. (2) Time to pick up commodity. Most companies will not deliver small orders to every department. When we order, we group the orders. (3) increased work load in order to document the purchase. B. More flexibility for the department in urgent situations. 2. Expanded Running Ticket Procedure. A. Increase in procurement responsibility for various department staffs. (1) Time to pick up commodity. Most companies • will not deliver small orders to every department. When we order, we group the orders. (2) Increased work load in order to document the purchase. • Small Purchase Procedure Page 4 B. More flexibility for the department in urgent situations. 3. Cash Purchase Order Procedure. A. Significant increase in procurement responsibility for department. (1) All phone and leg work. (2) Trip to pick up each check/P.O. (3) Trip to pick up commodities. B. Limited increase in flexibility in urgent situations. • • • CENTRALIZED CONTRACT PROCESSING AND ALMINISTRATION I. STATUTORY REQUIREMENTS 1. Formal written contracts must be signed by the Mayor (3.24.010, Paragraph A, 4.D - City Code). 2. City Recorder must maintain a file of all formal written con- tracts as required by the Fiscal Procedures Act (Section 10-6- 122, Utah Code Annotated). 3. "The City's Chief Procurement Officer must order and purchase supplies and contractual services needed by the City or any of its departments or divisions..." (3.24.050, Paragraph B - City Code). II. CONCERNS WHICH NEED TO BE ADDRESSED THROUGH CENTRALIZED FUNCTION 1. Central and uniform solicitation of bids and RFP's. 2. Uniform application of terms and conditions on City contracts. 3. Reduction of processing time for contracts. • 4. Ensure proper budget control before execution of agreement and at the time of payment for services. 5. Contract inquiry capability for all departments. 6. Central numbering system for all contracts. 7. Monitoring contract compliance. 8. Verification of payments. 9. Advance notification of pending expiration and timely renewal of contracts. 10. Maintain complete files for RFP's and bids solicited. III. CURRENT BARRIERS TO IMPLEMENTATION 1. Inadequate resources. A. Skilled manpower: (1) for specification preparation; • (2) for solicitation of bids and REP's; (3) evaluation of RFP's (Selection Committee); (4) skilled contract negotiators; (5) skilled contract preparation and processing. • Centralized Contract Processing Page 2 B. Electronic communication equipment. (1) Computer literacy level of City departments. (2) Current trust level of key participants in electronic communication equipment. 2. Existing policy and current practice. 3. Time constraints in processing agreements. 4. Present inadequate computerized contract systems. 5. Four current contract numbering systems. 6. Requirement to train three new buyers in new environments over the next 18 months. IV. IMPACT ON THE PURCHASING AND PROPERTY MANAGENNDT DIVISION 1. Triple the number of specifications currently being processed annually. 2. Triple the buyer work load in terms of processing REP's annually. 3. Triple the number of Contract Shipping Notices currently handled by our division, since contract payments would be made on requisitions rather than by voucher. 4. Triple the time currently being spent in contract preparation. 5. Triple the time currently being spent in contract negotiations. 6. Increased data entry time for the support staff. V. PRIORITIZATION OF PROJECTS REQUIRED FOR IMPLEMENTATION 1. Provide adequate secretarial support for the current contract staff. 2. Provide additional technical expertise to: A. handle contract system design and implementation; B. prepare specifications for bid and REP; • C. handle solicitation of REP's and bids; D. draft contracts; E. lead and direct contract negotiations. • Centralized Contract Processing Page 3 3. Review existing contract systems. A. Determine the best co1iom n numbering scheme. (1) Must interface with Automated Purchasing System. (2) Must interface with Recorder's existing filing system. B. Program system to: (1) do budget check at entry; (2) do budget monitoring at time of payment; (3) allow departments inquiry capability. C. Test the computerized system. • D. Implement the system. 4. Write policy and procedures for Contract Processing. 5. Procure equipment required for electronic communication of specifications and contracts. 6. Sell the City Attorney on the electronic transmission process. 7. Convert City-wide to the central contract concept. 8. Provide staff resources to monitor contract compliance. 9. Retire. • • FINANCE DEPARTMENT AUDIT RDATIOMS ON STAFF ELIMINATIONS The Peat-Marwick audit of the Finance Department suggests the possibility of eliminating six currently funded Wins within the Department. Since these recommendations have potential budget implications, it is appropriate that they be discussed during the review of the Finance Department's budget request for FY '89 -'90. Audit Recommendations and Rationale The audit report identifies six positions which Peat-Marwick recommends be eliminated from the Department's current staffing level. These positions include the following: o Treasurer or Deputy Treasurer; o Licensing Clerk; o Special Assessments Coordinator; • ° Special Assessments Clerk; o General Ledger/Payroll Accountant; and, o Purchasing Clerk. Rationale supporting these recommendations are not identified in specific detail; however, the auditor's generally attribute their findings to their controversial "SPANS" survey. They also suggest that position eliminations are supported by interviews, perceived opportunities to streamline or automate, and perceived unnecessary activities which in the auditor's view can be reduced, transferred or eliminated. Weaknesses in the SPANS Survey Much of the rationale supporting recommendations to eliminate staff is based on the SPANS survey. While SPANS is an extremely sophisticated survey mechanism, it is important to note its acknowledged limitations. What SPANS does measure is perceptions (or Mispreceptions) of work activities and relative importance of work activities as perceived by interviewees. In addition, work activities are grouped into generally defined categories, and are therefore subject to interpretations on their true or correct meaning. The reason SPANS measures perceptions is because survey results ultimately rely on responses to questionnaires. These responses, in turn, are • subject to the following cognitive factors: o Perceived meaning of work activity definitions; o Perceptions of time allocation among work activities; i o Perceived relative importance of alternative work activities; and o Potential and invariable differences in above perceptions between supervisors and subordinate employees. The importance of any one or combination of the above factors is critical in understanding SPANS survey results. If, for example, SPANS concludes that Licensing Clerks spend 50% of their time on unrelated activities, this conclusion is subject to any one or combination of the above cognitive factors. Licensing Clerks reported that they spend considerable time in work activity described as "data inquiry. " The activity itself may not be an important end product of the job, but is nevertheless an important step in achieving that end product. As an illustration, customer service invariably involves data inquiry; yet, the end product is good customer service and not data inquiry. During the interview process, however, the clerk may easily identify a considerable time commitment to data inquiry. The Licensing Supervisor, on the other hand, may not identify data inquiry and instead emphasize the importance of customer service. The SPANS survey will simply conclude that Licensing Clerks spend too much time on unrelated activities - data inquiry. Thus, SPANS conclusions support elimination of staff. In this manner, the SPANS survey draws conclusions which lead the auditors to recommend elimination of six Finance Department staff. The Finance Department has reviewed each of these six positions and offers different conclusions, which are briefly summarized below. Treasurer of Deputy Treasurer The audit report suggests two reasons for eliminating either the Treasurer or Deputy Treasurer. The first relates to their recommendations on transferring Business Licensing and Parking Administration. According to the report, "once functions are transferred to other departments there will not be a need for both a Treasurer and Deputy Treasurer. " The second justification is based on the auditors impressions that the functions performed by the Treasurer and Deputy Treasurer overlap, as indicated in their SPANS information. Duplicate activities identified by SPANS include the following work activities: o Direct supervision; o External liaison; o Financial analysis; and, o Investments. According to the report, the time spent by the Treasurer and Deputy Treasurer on these broadly defined work activities is 45% and 50%. Hence, the auditors conclude that one position can be eliminated. In response to the second rationale, it should be noted that direct supervision, external liaison and financial analysis are common work • activities of many Finance Department managers and supervisors. It does not follow, however, that because their activities are common (in terms of general categories of work) , that the actual and specific work performed is duplicative. The Treasurer directly supervises the Deputy Treasurer and Administrative Assistant. The Deputy Treasurer on the other hand, supervises the Head Cashier, Special Assessments Coordinator and Parking Administrator. The Deputy Treasurer performs external liaison functions with investment brokers and dealers on investments, trustees and paying agents on debt service obligations and Key Bank on checking account and lockbox services. The Treasurer performs external liaison functions with investment bankers (bond underwriters) , bond counsel, rating agencies, financial advisors, and represents the office in a wide number of meetings and functions with other public and private sector agencies. The Treasure performs a variety of financial analyses related to revenues, cash flaws, debt financing and a multitude of economic and financial matters. The Deputy Treasurer also performs a variety of financial analyses, but again, these analyses are of distinct matters related to the Deputy Treasurers responsibilities, including cash receipts, parking meters, parking tickets, etc. 1111 Investments are the only area in which duties overlap, and such overlap is partially by design, and partially to provide back-up. Day-to-day cash management decisions are delegated to the Deputy Treasurer. Such activities consume 2 to 4 hours each day. However, the Treasurer has statutory responsibilities for investments and must therefore review all cash management activities. Since the City's investment portfolio can exceed $100 million at any point in time, it is essential that the Treasurer review and be involved in cash management activities even though time consuming day-to-day work activities are delegated to the Deputy Treasurer. This division of duties and oversight responsibilities between the Treasurer and Deputy Treasurer has been established for over 8 years and is common among large public sector entities (e.g. , Salt Lake County and State Treasurer's Office) . The transfer of programs recommended in the audit can not be fully implemented. While the transfer of Business Licensing to Development Services has been completer], the transfer of Parking Administration to the Circuit Court has not been implemented. It is not likely that Parking Administration can be transferred under its current decriminalized format. As a civil violation, parking ticket collection and adjudication is an administrative function of the executive branch of government. According to both the State Court Administrator and General Counsel to the State Court System, civil matters are not the appropriate domain of the Circuit Court. It represents an obvious conflict of interest wherein the Circuit Court would be in a position to perform both 411/ judicial functions and administrative/executive functions. Further, even without these legal impediments, the State Court Administrator has expressed opposition to such a transfer without changing the program back to a criminal violation. Recriminalizing parking violations would cost the City $1.2 million in lost general fund revenue. • The duties of the Treasurer and Deputy Treasurer are not duplicative and only overlap to the extent necessary for good management. Although Business Licensing has been transferred, other program transfers are not possible. Management responsibilities of the Treasurer's Office are significant enough to easily justify both positions. Licensing Clerk Business Licensing has been transferred to Development Services, as recommended by the Peat-Marwick audit. This transfer was implemented with all Licensing staff, including Licensing Supervisor, two Licensing Clerks and Clerk II positions. The audit report recommends the elimination of one Licensing Clerk. This recommendation is solely based on SPANS information which concludes that 50% of the two Licensing Clerk's time is spent on unrelated work activities. The work activity which is "unrelated" in this case is "data inquiry. " Although the SPANS survey may have reached this conclusion, it should be noted that data inquiry is vital in the performance of nearly every critical Licensing Clerk function. For example, data inquiry is necessary in responding to any customer service request. Data inquiry is a necessary 410 activity in correcting and updating account files, posting payments, monitoring delinquencies, preparation of revocation hearings, entering new accounts, and coordinating regulatory agency approvals for new applications and renewals of existing licenses. Consequently, Licensing Clerks responded to SPANS questionnaires that considerable time is spent in the activity described as data inquiry. Unfortunately, the Licensing Supervisor was interviewed and responded to the SPANS questionnaire only shortly after being hired. The supervisor's experience was limited to a couple of weeks. The responses therefore may not have properly recognized the importance of data inquiry. As a result, the SPANS methodology simply concludes that data inquiry is not important and that Licensing Clerks spend too much time on this "unrelated" activity. Since Business Licensing is now a part of the One-Stop Counter of Development Services, it may be appropriate for that agency to review its staffing needs and respond to the audit recommendation at some future date. Special Assessments Coordinator and Special Assessments Clerk Audit recommendations in this area are difficult to respond to because the rationale is extremely sketchy. The SPANS information indicates that the Special Assessments Clerk Spends 30% of the time on unrelated activity, but it is unclear what work activity is considered unrelated. The Special Assessments Coordinator is not referenced in the report as one off the positions spending more than 25% of their time on unrelated activities. 411/ The report does point out that significant progress has been made in streamlining and automating the billing and collections functions. Because of these improvements, the auditors conclude that all Special Assessments staffing can be eliminated and that functional responsibilities can be transferred to Accounting and Financial Reporting. • The Treasurer's statutory responsibilities in the area of Special Assessments are fairly clear. The billing, collection and receipting of funds, as well as the monitoring of authorized uses of funds are responsibilities specifically assigned to the Treasurer under state law, city ordinance and bond documents which govern the 157 active districts and 10,000 accounts within those districts throughout the City. While the billing and collections process has been streamlined and automated, both Coordinator and Clerk positions are involved with a variety of tasks which continue to demand adequate staffing. Duties of the Special Assessment Coordinator include all of the following tasks, none of which can be eliminated because of automation: o Ensures all special tax notices, annual invoices, and delinquent notices are prepared and mailed in a timely manner; o Ensures and verifies annual and/or delinquent interest is calculated in accordance with adopted policies; o Ensures all payments are applied to the correct property owner's account; • Processes all returned checks by charging back to special assessment account and accessing collection charge; o Clarifies questions for title and financial organizations on existing special assessment districts and created districts prior to assessment; o Provides assistance to property owners with account discrepancies, experiencing financial difficulties, and selling or acquiring property; o Makes complicated adjustments to property owners accounts, reviews all manual adjustments to SID system, and prepares corresponding journal entries for FICS system; o Researches ownership and account discrepancies primarily on delinquent accounts; o Reviews requests for monthly payment agreements on delinquent accounts, prepares the necessary agreement co.riispondence, and monitors agreements for timely payments and additional charges; o Provides direction and assistance to Data Processing personnel during revisions of existing programming and creation of new procedures; • Prepares monthly and annual fund comparison reports; o Assists other departments during the creation and assessment of special assessment districts and during the bonding of each special assessment district, providing financial and statistical information for the financial advisors and other interested parties; and, • o Supervises Special Assessment Clerk to ensure all routine tasks are completed in a timely manner. Similarly, the Special Assessments Clerk continues to perform numerous tasks which also can not be eliminated simply because billing and collection is streamlined and automated. These duties include the following: o Processes all payments not directed to lockbox, including walk-ins, title canpany payoffs, and exceptions from the lockbox; o Reviews oily payment transactions, and adjusts property owners accounts in accordance with approved policies and procedures; o Prepares monthly ha 1 ance report -to verify each transaction has been recorded on the SID system and FICS system; o Inputs data to generate automated annul billings and delinquent notices; o Researches returned mail to correct mailing addresses and locate • appropriate property owners; ° Prepares correspondence to property owners regarding partial and late payments and inquiries regarding specific special assessment accounts; o Answers Special Assessment phones, responds to basic and routine inquiries ries from property owners, and refers property owners to other departments, Salt Lake County and supervisor for additional clarification; and, o Performs initial research on bankruptcy notices. In addition, the Special Assessment Clerk provides back-up coverage for the Special Assessments Coordinator (e:g. , during vacation, sick leave, etc. ) , and assists other sections of the Treasurer's Office during peak demand or low staffing periods particularly, in the area of customer service. In the coming fiscal year, the Treasurer's Office intends to utilize the Special Assessment Clerk as a Customer Service Receptionist to better enhance overall customer service in all program areas within the office. It is anticipated that approximately 50% of the Special Assessments Clerk's time will be converted to customer service. The remaining 50% will remain in Special Assessments performing duties listed above. The audit report suggests that further staff reductions could be facilitated by staggering annual billing dates to more equally distribute the • workload throughout the year. However, as pointed out in previous responses to this suggestion, City enabling ordinances and bond docents unmistakably prevent any post-bond closing changes in the annual assessment dates. Consequently, the existing 157 districts and 10,000 individual accounts will continue to be billed as specified in ordinance and bond covenants. This admittedly makes the workload swat cyclical, but nevertheless requires staffing of at least two r'ri's during peak billing cycles. General Ledger/Payroll Accountant The audit recommendation for elimination of this position is based on the auditor's misunderstanding or confusion about the functions and duties of the General Ledger/Payroll Accountant. The auditors incorrectly concluded that the staff position was simply keeping a manual log for all year-to-date payroll totals for each employee. In actuality, the General Ledger/Payroll Accountant prepares summary payroll data sheets used to balance and reconcile the payroll reports to ensure that all payroll liabilities are balanced, disbursed, and reported on a timely basis. As pointed out in previous responses to the audit, performance of these functions frequently uncover payroll imbalances and necessary corrections. Reconciliations are performed and information is transmitted to Data Processing for appropriate corrections. As a result, Data Processing avoids the costly time of rest-marching and correcting the problem themselves, and the Finance Department thereby minimizes payroll-related data processing costs. It is also critical that the payroll system be kept in balance at all times in order to maintain appropriate financial and management control. Moreover, Internal Revenue Service filing requirements necessitate that the payroll system be accurate and in balance at all times to enable the City to submit required filings within the time limits specified by federal law. It is 0 therefore essential that this reporting control be maintained by the General Ledger/Payroll Accountant. Purchasing Clerk The audit report suggests three factors which presumably support the recommendation to eliminate one Purchasing Clerk. First, SPANS information contends that three current staff positions spend approximately one-third of their time on unrelated activities, although these activities were unidentified. The auditors further recommend that Purchasing discontinue signature review for requisitions under $5,000, and that the responsibility for sale of City publications (City Code, Traffic Code, Uniform Building Code, Uniform Mechanical Code) be transferred to the respective departments associated with these publications. Oddly enough, the audit also recommends shifting certain responsibilities currently handled by Purchasing Division buyers and others to the Purchasing Clerks, while at the same time eliminating one Purchasing Clerk position. These responsibilities include data entry for the Contracts Section, handling of the Stores Issue Roan, and handling specific small purchase requisitions. In response to the SPANS information, the Purchasing Division conducted an internal survey which required each clerical staff member to maintain a time log for a period of one week. Based upon current job descriptions and time log survey information, the Purchasing Division failed to identify any appreciable portion of clerical time devoted to unnecessary tasks. As to the issue of signature verification, the audit recommendations are ill-advised since that process is a vital financial and management control function which has repeatedly proven to be effective. Removal of this control will dramatically increase the likelihood of abuse. 411/ The transfer of the sale of publications is illusory in terms of potential time or cost savings. Transfer of responsibilities merely transfer costs. More importantly, book sales are not exceptionally time intensive, with the possible exception of the City Code. Moreover, sales of the City Code of Ordinances have been handled by the Purchasing Division for the past 25 years. As part of its sales responsibilities, monthly updates and quarterly supplements must be mailed to every book owner. Transferring this responsibility to the City Attorney's Office in light of these requirements is inappropriate. Purchasing Clerks perform vital control functions. The SPANS information contending that one-third of their time is spent on unrelated activities cannot be confirmed by the Division in-house survey. Further, transferring functions performed by Purchasing Clerks, will not save time or expense, and in the case of signature verification, may invite abuse. Finally, it should be added that to the extent additional time does become available among clerical staff, their services are utilized to assist with the backlog in specification preparation and contract preparation areas of the Division which are both understaffed and backlogged. Summary • The Finance Department's careful review of the audit report recommendations concludes that none of the six positions suggested for elimination can appropriately be eliminated. Rationale supporting the auditor's recommendations is too dependent on SPANS information which is limited to measurements of perceptions (or misperception) rather than reality. Transfer of functions such as Parking Administration in the Treasurer's Office and sale of publications in the Purchasing Division is ill-advised since these transfers would negatively impact revenues and would not reduce (may actually increase) costs. Further, to the extent that spare time becomes available among Purchasing Clerks or Special Assessments Clerk, these resources are fully utilized to supplement other areas in their respective Divisions which are visibly understaffed. Finally, the suggested elimination of the six positions would invariably undermine the Finance Department's efforts to strengthen and enhance its financial and managerial control functions. •