06/06/1989 - Minutes MINUTES: Committee of the Whole
Tuesday, June 6, 1989
7:30 - 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
Hardman, Tom Godfrey, Roselyn Kirk, Willie Stoler, Mayor Palmer DePaulis,
Cindy Gust-Jenson, Linda Hamilton, Mike Zuhl, Christine Richman, Lee King, Cam
Caldwell, Steve Fawcett, Gordon Hoskins, Kevin Bergstrom, Larry Failner, Louis
Miller, LeRoy Hooton, John Wheat, Jim Lewis, Sgt. Larry Thorum, Press
1. The City Council discussed internal auditing in the City. Cam
Caldwell, Council Budget Analyst, reviewed his proposal for implementing a
legislative audit function in the City Council Office. A copy of Mr.
Caldwell's briefing is attached.
Linda Hamilton, Director of Finance, reviewed her proposal for internal
auditing on the Administrative side with the City Council. Ms. Hamilton
indicated that the role of a legislative auditor is different from that for
which she plans to use her three auditors. She stated that she agreed that
the Council needed some method for ensuring that their policy objectives were
adequately addressed by Administrative departments, but felt that it would be
to the detriment of the entire City if the Council chose to address their
needs by eliminating funding for one of the Administration's internal
auditors. She indicated that if the Council funded a legislative auditor
rather than the Administration's internal auditor they would be sending the
message that management auditing is more important than fiscal control. Ms.
Hamilton stated that this message is the exact opposite of what the Council
said in their management audit of the Finance Department just a few months
ago. Ms. Hamilton observed that when the funding for the third internal
auditor was eliminated from the Fiscal Year 1988-89 budget, the Council felt
that it was a "last ditch" option to balance the budget.
Council Member Kirk asked if either of the options would be more cost
effective. Ms. Hamilton stated that basically the overall budget impact would
be the same. Council Member Hardman asked Ms. Hamilton to clarify the
difference between her internal auditor and a legislative auditor. Ms.
Hamilton stated that a legislative auditor would verify that the Council's
policy directives were fulfilled by departments. An internal auditor would
verify the existence of procedures and the effectiveness of implementation.
She observed that an internal auditor works with the "nitty-gritty" of City
government which is crucial to its cost effective management.
Council Member Bittner stated that the whole issue of internal auditing
is extremely complex, and she would like to delay its discussion until after
the budget. Council Member Bittner indicated that it is the duty of the
Council to verify that the tax payers' money is spent appropriately. She
observed that administrative oversight is a statutorily mandated function of
the Council and that due to budget constraints the method by which the Council
is currently fulfilling that duty is slow moving and, she feels, ineffective.
Ms. Hamilton stated that she currently only has two internal auditors
which is insufficient to fulfill the direction she had received from the
Council. Council Member Bittner stated that she wanted to ensure that the
best budgetary control is in place and therefore would like to suggest that
the Council go into the question of an Internal Auditor in-depth at a retreat.
Cindy Gust-Jenson, Executive Director, briefed the City Council on how
a Legislative Audit function could fit into the City Council office. A copy
of her report is attached. Council Member Kirk asked how the Office would
need to be reorganized if the Council took on the Legislative Audit function
without adding any new staff. Ms. Gust-Jenson stated that the Council
currently has an Analyst/Auditor on staff whose time has been diverted to
other projects. She stated that it is possible for the Council Office to take
on the Legislative Audit function immediately, but it would require that the
Council redefine its goals for its staff.
Council Member Godfrey stated that he endorsed the idea of an
independent Audit Committee to direct an internal auditing staff. According
to Council Member Godfrey, the problem with hiring additional staff is the
fact that some Council Members feel that land use analysis is a more pressing
need than auditing. Council Member Hardman asked how the Council would ensure
that their priorities were the same as the independent audit committees
priorities. Council Member Godfrey stated that the use of the committee would
bring some objectivity to the Council Members perceptions of what is a crisis
situation requiring auditing. Council Member Hardman asked who would develop
the charter for the committee. Mr. Caldwell stated that the committee would
develop its own charter. Ms. Hamilton indicated that the fact the she will
have the auditors performing financial control audits for the next year does
not necessarily mean that the same type of audit will be the priority for the
committee. She stated that with the Council's input the committee will
probably decide to conduct a combination of financial control and management
audits. Council Member Hardman asked who would hire new staff when the
committee is in place. Ms. Hamilton stated that staffing issues will be one
of the committee's duties.
Mr. Caldwell observed that the most important question for the Council
Members to address is who will be on the audit committee. He indicated that
if there is only one Council representative, the committee will be weighted in
favor of the administration. Council Member Hardman indicated that he would
like to delay hiring the third internal auditor until the committee is in
place so that a new face is guaranteed. He fears that if all of the auditors
answering to the committee were originally employees of the administration,
they will not be objective enough. Council Member Hardman observed that he is
not opposing the administrations's internal auditor in order to hire an
auditor in the Council, because he is not in favor of hiring new Council
staff. Council Member Godfrey observed that by opposing the hiring of the
third internal auditor Council Member Hardman is indicating that he does not
agree with Ms. Hamilton's proposed audit schedule for fiscal year 1989-90.
Council Member Godfrey stated that in his opinion completing the schedule as
proposed is imperative to fully assess the financial status of the City.
Council Member Godfrey indicated that the Council would have the option of
eliminating the third auditor in the next budget year, but that he felt that
the work schedule should be completed.
Council Member Fonnesbeck stated that in her opinion it is offensive to
imply that an internal auditor would allow him/herself to be co-opted. She
indicated that the real concern is what happens with the information once the
auditor has compiled and presented it. Council Member Hardman stated that it
is too much to ask an individual to immediately change his/her loyalties.
Council Member Fonnesbeck stated that the Council has been receiving
information from independent auditors and their own staff but has not taken
action on any of their recommendations. She stated that in her opinion the
Council refuses to face issues and make the hard choices. She said the
Council has become passive, and has not passed any major legislation in the
past two years. Council Member Hardman disagreed. Council Member Fonnesbeck
asked Council Member Hardman if he could name any major legislative action
taken by the Council in the past two years which was of benefit to the
residents of the City. Council Member Hardman stated that property taxes had
not been raised in two years. Council Member Fonnesbeck observed that no new
property taxes had been proposed by the Mayor, therefore the lack of a tax
increase was passive, not an Council initiated action. She stated that the
lack of a tax increase was based upon the economics of the region not the
strength of the Council.
Council Member Stoler asked if any of the Council Members would be
willing to fund a legislative auditor in the Council Office immediately. None
of the Council Members indicated that they were interested.
2. The City Council conducted a straw poll on potential cuts identified by
the Council staff. A copy of the list of potential reductions is attached.
The Council discussed the issue of auto allowances with the Mayor prior to
taking their poll. Mayor DePaulis stated that it was his impression that when
the Council reduced auto allowances last year they had done so simply to find
adequate funding for an employee bonus, not as a result of a policy against
auto allowances. Council Member Hardman indicated that he felt the current
auto allowance policy is too generous, and therefore his decision to reduce
auto allowances in fiscal year 1988-89 was based upon a policy decision that
they should be lowered. Mayor DePaulis indicated that he is currently
revising the auto allowance program because he felt their were inequities, but
that he has run into some legal problems. Mayor DePaulis stated that his
intent is to tighten up the overall policy. He asked that the Council give
him time to address the issue, before the reduced funding.
The results of the Council's straw poll were as follows:
All cuts ranked "A": 6-0 in favor of reductions
$20,000 from Urban Forestry 6-0 against reduction
Employee Newsletter 5-1 against reduction
Veteran's Cemetery 6-0 against reduction
Increase in Chamber dues 4-2 against reduction
Increase in Ut. League 6-0 against reduction
Third Internal Auditor 4-2 in favor of reduction
Employee Appreciation Day 6-0 against reduction
Auto Allowances 6-0 against reduction
Business District Maintenance Delay consideration
Finance Travel 6-0 against reduction
Police Travel 6-0 against reduction
Attorney Travel 6-0 against reduction
Retiree Gifts 6-0 against reduction
Eliminate One Dispatcher 4-2 against reduction
Sister Cities 6-0 against reduction
UEDC 6-0 against reduction
$100,000 Fleet Replacement 3-2 in favor of reduction
$50,000 Fleet Replacement 1
Recreation Manager 5-1 against reduction
Fire Inspector 6-0 against
Burglar Alarm Fees 6-0 against.
The Council Members chose not to discuss any changes in charges to Enterprise
Funds.
W. " illie" Stol r, Cha r
ATTEST:
Ci y ec r
•
OFFICE OF THE .CITY COUNCIL
•' CITY AND COUNTY BUILDING . •
451 SOUTH STATE STREET. SUITE 304
SALT LAKE CITY, UTAH H 84111
•' ' 535-7600
• TENTATIVE AGENDA
•
•
SALT LAKE CITY COUNCIL COMMITTEE OF THE WHOLE MEETING
DATE: Tuesday, June 6, 1989 •
TIME: 6:45 p.m. , or immediately following the regular meeting
of the Salt Lake City Council.
PLACE: City Council Conference Room •
City & County Building, Room 325
4151 South State Street
The City Council will discuss the City's capacity to conduct internal audits.
The City Council will review a budget summary of the proposed Fiscal Year
1989-90 budgets.
3
OFFICE OF THE-'CITY.:COUNCIL
- CITY AND COUNTY BUILDING •
451 SOUTH STATE STREET.SUITE 304
SALT LAKE CITY.UTAH 84111
535.7600
MEMORANDUM
•
TO: Council Members (�1i^(
FROM: Cindy Gust-Jenson )S
DATE: June 2, 1989
RE: Misc. budget Information
Attached is various information relating to the budget which has been
requested.
1) Summary of Community Affairs budget-
A discussion on this budget was not scheduled, since it is part of the
Mayor's Office.
2) Municipal Building Authority-
This was discussed briefly during the Finance briefing and we promised to
provide a written summary.
3) Internal Auditing-
An additional copy of the internal auditing information that has been
provided to you previously by our office and Finance. This is for your
convenience and use during the Committee of the Whole discussion on
Tuesday, June 6.
Community Affairs Budget
Council Staff Analysis
Prepared by Cam Caldwell
The FY 89-90 budget for Community Affairs is $288,467, or 7.4% higher than the
budget approved by the Council last year. The budget information on Page 118
of the Mayor's budget book shows a smaller percent increase, based upon a
$9,439 difference in the reported FY 88-89 budget figure. This difference
represents a reallocation of the Mayor's Telephone budget.
Personnel Changes
The staffing document on Page 188 of your budget book shows the Volunteer
Coordinator in City Administration. It should be reflected in Community
Affairs, which is labelled Constituent Services. Otherwise, a part-time Clerk
IV has been reclassified to a part-time Office Tech I.
The cost differential in changing the Volunteer Coordinator from a contract
employee to a full-time employee involves less than $300 this year. However,
other merit increases, COLA, health insurance and other employee benefits make
up about $5,200 of the increase in this budget.
Service Level Changes
There are no significant service level changes and the function of the
division continues to be related to assisting community groups, responding to
requests and complaints, and coordinating the work of volunteers.
Information which is provided shows that the statistical detail regarding
volunteer hours and contributions includes all the Parks Department programs
which have historically been supported by volunteers for many, years.
Nonetheless, the contribution of volunteers is substantial.
Budget Issues
One Council Member has expressed philosophical discomfort with establishing
positions on a contractual basis, and subsequently changing the position to
full-time status.
The department has budgeted $1,870 for a tape streamer. This is a magnetic
• tape backup device that greatly reduces the time required to make a backup
copy of the computer information put into the computer each day. The
department estimates that this will save the department a couple of hours each
week and eliminate the need for backing up the system with floppy disks.
SALT'f:: ITYt'GORPARATION1
COMMUNITY AFFAIRS
324 SOUTH STATE STREET. ROOM 116 •
STEPHANIE PETERSON SALT LAKE CITY,UTAH 84111 PALMER DEPAULIS
Di RECTOR MAYOR
535-7975
TO: Cam Caldwell
FROM: Stephanie Peterson
DATE: June 2, 1989
SUBJ: Budget Summary for Community Affairs for FY 1989-90
In response to your request of June 1, 1989 for a budget summary, I have
prepared the following information. I am happy to clarify any points or •
provide additional information. I will be available through June 9, 1989.
The Community Affairs Division is the city-wide liaison for neighborhood and
community organizations. It is also responsible for responding to community
requests for information and services, and for tracking the follow-up of
departments to those requests. The division also assists in a variety of
tasks essential to providing public notification to residents about community
issues and handling the details associated with the City Council's four annual
neighborhood meetings.
The Community Affairs office, a division within the Office of the Mayor, is
responsible for facilitating communication between the City and the public.
The office works with residents, community councils, SLACC (Salt Lake
Association of Community Councils) and community-based organizations. With
the recent staff reductions in the Mayor's Office, the Community Affairs staff
members have assumed additional responsibilities in responding to citizens'
concerns.
The Community Affairs office provides the following services:
1. Acts as a clearinghouse for the disbursement of information from
departments about projects, programs and resources to the public.
2. Handles requests for service from citizens and transmits to
appropriate city departments.
3. Coordinates the Request for Services computerized system, insuring
that departments' responses and actions are made in a timely manner.
4. Coordinates the use of volunteers within the City.
5. Provides support to community councils, SLACC, and other community
based organizations.
Cam Caldwell
June 2, 1989
Page 2
6. Provides education and training to residents on effective leadership
skills and participation in city government.
- 7. Provides technical assistance to city departments in presenting
projects, programs and resources to community councils and community
based organizations.
Salt Lake City Volunteer Program
During the past year (FY 1988-89) the Volunteer Coordinator/Public Information
Specialist has been working on a contractual basis with departmental staff to
expand the utilization of volunteers to enhance city services and develop
public information, the Community Affairs Newsletter, and the Community
Calendar. The coordinator has developed a training manual for city staff that
provides a system for recruiting, hiring, placing, and training volunteers.
Two training sessions for department heads and numerous individual training
sessions for departments have been held.
Volunteers have been placed in Finance, Police, Fire, Public Works, Human
Resources, Parks, Administrative Services, and the Mayor's Office. Volunteers
have supported such projects as a major cleanup of city streets and parks in
Westside neighborhoods which yielded over 3 tons of trash which was hauled
away by crews from the Public Works Department. The volunteers spent three
hours on a Saturday and donated over 500 hours to the improvement of Salt Lake
City. The Leaf Bag Program last fall benefitted by 1,000 hours contributed by
volunteers which saved the Streets Division budget by more than $4,000 over
the previous year. The Police Department has had 19 volunteers since January,
1989 assisting with computer data entry and microfilming for a total of 600
hours. And the Parking Administrator's Office has put 11 volunteers to work
on various jobs for a total of 584 hours of assistance.
The Community Affairs office has had 4,359 hours of contributed time for a
variety of special projects which could not be completed as soon without the
volunteers. The "Citizens Guide to City Hall" is being coordinated almost
exclusively by volunteers. The second annual Neighborhood Conference will be
held on June 10 in the City & County Building. By the end of the conference
volunteers will have donated 2,407 hours in planning and providing
professional training in the workshops.
The City has had 1,771 volunteers for a total of 26,016 hours contributed. If
we assess a conservative $6.00/hour value for these hours it is a contribution
of time equal to $167,467. We have also had cash and inkind contributions
totalling $850,388. A full-time professional position is necessary to expand
the possibilities for volunteers and for departments. The Volunteer Program
has already been a valuable asset and has tremendous potential for becoming a
valuable management tool for city staff during a period when demands for
services are increasing and resources are decreasing.
OBJECT/GIMP/4 PROGRAM SUMMARY BY PROGRAM - REPORT • IS • DATE: MAY 20, 1229 PAGE : 167
t CURRENT YEAR EXPENSES
DEPARTMENT 04000 MAYOR
PROGRAM 13330 CONSTITUENT RELATIONS
OBJECT ACCOUNT ACTUAL ADOPTED 6 MO.ACTUAL 12 MO, EST. DIFFERENCE : O1FF
1587-66 ■OGT1588-12 114$-89 1286-89 REQUESTED
PERSONAL SERVICES
.1 SALARIES 8 WAGES
211101 EXECUTIVE ANNUAL BASE PAY 31.194 • . 30.816- 15-,577 • - 30,816 54,670 23,254 77.4
215101 CLERICAL ANNUAL BASE PAY 34.182 41,040 20,734 41.040 42.43$ 1.398 3.4
215102 CLERICAL LONGEVITY PAY 603 800 304 600 904 304 50.7
2112 HOURLY PAY-OTHER EMPLOYEES 5,901 10.010 5.186 10,080 10,175 56 1.0
2159 SALARY CONTINGENCY 2.315
• SUBTOTAL SALARIES 6 WAGES 74.241 12.536 41,803 42,535 108.188 25,652 31.1
EMPLOYES BENEFITS
211110 ITS-FICA 5,442 1,116 3,140 6,111 7,744 1,54$ 25.0
219113 EMPL BENEFITS-STATE RETIREMENT 5,372 5,102 3,058 6.102 7_110 1,002 16.4
211114 401 DEFERRED BENEFIT 484 416 252 496 SI6 20 4.0
2195 EN►L BENEFIT GROUP LIFE INSUR 2.85$ 4,114 2,627 4.161 1,476 4.20$ 98.8
212504 EMPLOYEE BENEFITS-FH► 713 24-
• SUBTOTAL EMPLOYES BENEFITS 14.540 17.714 9,013 17.761 25.246 7,476 42.1
•• TOTAL PERSONAL SERVICES 44.1121 .,L00.30,8 50,886 100,304 -.•433,434'! 33.130 33.0
•
OPERATING I MAINTENANCE SUPPLY
OPERATING 8 MAINTENANCE SUPPLY
2200 O.M, AP►RO►. CONTROL FACTOR
▪ SUBTOTAL OPERATING 6 MAINTENANCE SUPPLY
IAL AND SUPPLIES
2213 PERIODICALS 225 200 SO 120 • 200 80 -66.7
2221 STATIONERY SUPPLIES 2,411 2,500 1.032 2,200 2,347 147 6.7
2223 DUPLICATION SUPPLIES - 2 212 • 3,900 135 3.000 3.900 900 30.0
2224 POSTAGE 4,235 6,650 2.247 6,650 6,600 50- .6-
2225 COMPUTER SUPPLIES $17 1,352 72 1,276 671 800- 47.0-
2225 COPIER SUPPLIES 210 300 200 300 100 50.0
2246 COMMUNICATION COUP 6 SUPPLIES 48
2223 PHOTOGRAPHIC SUPPLIES 122 200 85 250 SO 200- $0.0-
2299 OTHER MATERIAL I SUPPLIES 431 400 119- 400 450 SO 12.5
• SUBTOTAL MATERIAL AND•SUPPLIES. 11,341 15,502 3,422 14,016 14,523 427 3.0
•
OBJECT/OIMP/4 PROGRAM SUMMARY IY PROGRAM - REPORT • IS 4' DATE: MAY 20, 1189 PAGE : 16A
CURRENT YEAR EXPENSES
DEPARTMENT 08000 MAYOR
g15t PROGRAM 13330 CONSTITUENT RELATIONS
OBJECT ACCOUNT ACTUAL ADOPTED 6 MO.ACTUAL 12 MO. EST. DIFFERENCE : OIFr
1167-68 IDGTI288-81 198•-89 1988-A9 REQUESTED
.• TOTAL OPERATING 6 MAINTENANCE SUPPLY 11,34$ 15,502 3,462 14,03$ 14,523 427 3.0
CHARGES ANO SERVICES
CHARGES AND SERYICES
2305 CONTRACTUAL SALARIESBBENEFYTS 11,944 .211 000. 13,275 26,000 .'=e '.I 11 26.000- 100.0-
. SUBTOTAL CHARGES ANO SERVICES 11,944 28,000 13,275 24.000 . 28,000-•100.0-
CHARGES 8 SERVICES
2321 CITY OATA PROCESSING SERVICES 1,515 7,211 3_646 7,291 7,291
233601 TELEPHONE MONTHLY SASE .
233602 TELEPHONE-LONG DISTANCE 198 191
233603 TELEPHONE-CHANGE OROERS 235 235 23S- 100.0-
2340 MICRO COMPUTER RAINY CONTRACTS 1.003 1.222 1,031 • 2,229 2,169 60- 2.7-
2341 OFFICE EQUIPMENT MC'S 3,818 3.416 519 2,671 3,416 54S 19.0
2370 PRINTING CHARGES 51S 1,000 137 ' 700 1 000 300 42.9
2371 PRINTING-PUBLIC NOTICES 250 -'
2506 TELEPHONE LEASE EXPENSE ' {;I,1311 4,830 9.431 A-'.;I$7, 448 4.7
• SUBTOTAL CHARGES 4 SERVICES 7,001 22.375 10,476 22.765 23.961 1,196 5.3
OTHER EXPENDITURES-CHG • SERV.
•
2512 BUILDING RENTALS 487 800 372 621 241 320 51.5
2513 EOUI/MENT RENTAL 32 204 350 400 50 14.3
2522 MEMBERSHIPS 367 300 23- 120 SO 70- 58.3-
2523 IN CITY CONVENTIONS 8 WORKSHOP 1.361 1.083 1,047 2,400 1,253 1,147- 47.8-
2524 MILEAGE 261 261 241
2525 OUT OF TOWN TRAVEL 7.800 5,315 279 5.200 5,315 115 2.2
2549 RISK MANAGEMENT ►REMIUM 221 219 295- 100.0-
2590 OTHER EXPENSES 1,049 1 24S 106- 750 94S 195 26.0
• SUBTOTAL OTHER EXPENDITURES-CHG 6 SERV. 11,083 6,114 2.072 9,740 9.115 57S- 5.9-
.• TOTAL CHARGES AND SERVICES 30.024 59.352 25.425 6O,SO5 33,125 27,379- 45.3-
CAPITAL EXPENDITURES
l CAPITAL EXPENDITURES
2700 CAPITAL EXPENOITURES 4,346-
276050 OFFICE EOUIP 6 FURNISHINGS 4,304 m•Tn %. 500 i-y1;;.67.00 1.370 274.0
_ SUBTOTAL CAPITAL EXPENOITURES 44- SOO 1.670 1,370 274.0
.• TOTAL CAPITAL EXPENDITURES 44- 50o 1.870 1,370 274.0
.•.• PROGRAM TOTALS 13330 CONSTITUENT RELATIONS
130,151 173,115 80,193 175,405 182,953 7,544 4.3
, 02JECT/02./4 PROCRAM SU MMMMM 21 PROGRAM REpORT • is • DATE: mAy 20. 1841 PAGE : 1.2
DEPARTMENT 08000 1412011
2140GRAM 13320 CDMMUNITY SERVICES
OBJECT ACCOuNT ACTUAL ADOPTED 4 MO ACT122 12 040 31, ______.____ _..,,i•FRERcE • 5,4
II/17." BDCT If"-21 1 2414•22 1.21-62 RE0uESTED -
PERS0NAL SERVICLS
IES 1 WAGES
- " '' • • 1
211101 EFECUTIVE ANNUAL BAsE Psy 22,754 28.176 14.242 22.176 26.740 54 2.0
2,6102 EXECUTIvE LONG12121 221, 804 772 321 771 200 122 1..1
i
215,01 C1,ExICAL ANN., BASE 227 12,722 16,892 6 211 12,000 23_,2211 10,222 24 1
212102 CLERICAL 1.01462 v I TT p•V 200 SOO
• 502207AL SALARIEs 2 WAGEs 45 142 45,642 20 863 41 921 24.166 I].OTT 22 1
MMMMM YES BENEFITS
21.110 EmPLOYSE 2ENEFITS-FICA 2,225 3,42. 1,557 3.420 3.440 460 12.5
2621,2 EMPt EEEEE ITS-STATE RETI 2,442 2,7114 1.625 2.700 322 2.1
2 EEEEE 401 OEFERRED BENEFIT 767 7.8 2.2 766 7114 16 2 ,
2125 EMPL EEEEE IT GROUP L/FE INSUR 4.585 5,544 2.24. 6,224 740 12.2
• SU2TOTAL EMPLOYES BENEFITS •,_,82 13,532 6,224 ,2 437 14,276 1 244 11.5
•• 20TAL PERSoNAL SERVICES 26.222 52.175 22.727 52.323 62,144 12,72, 24..
0 EEEEE ING 4 MAINTENANCE SUPPLY
MATERIAS AND SUPPLIES
a
' 2221 STATIONERy SUPPLIES 182 700 200 700 500 250.0
2224 POSTAGE 180 230 30 230 200 2.6/
2222 ComPUTER SUPPLIES 32
2226 COPIER SUPPLIES 200 100 200 100 100.0
22.2 OTHER MATERIAL 2 SUPPLIES 240 564 2.00 568 22 il .
• SU AAAAAAAAAAAAA L .10 SUPPLIES 164 1.718 820 1.716 462 107.0
a
•• TOTAL 2PERAT1NG 4 MAINTENANCE SUPpLy 214 ,714 420 1.712 408 107.0 ..
CHARGES AND SERVICES
CHARGES a SERVICES
2221 C/TY DATA PROCESsING SERVICES 6,215 22.502 111.723 22,605 32.274 7.221. 18.2.
2240 HICRO caMPUTER mAINT CONTRACTS 1.111 222 12 822 622
224, 2FFIQB COUIPMENT mc.s 126 2,722 63 1,250 i 731 482 29.1
• SU AAAAA t CHARGES a SERV/CES 2.270 41,683 12,2,4 41,324 34,852
'..'
015JECT/02mP/4 120CRAm 2020422y Br 11 RD 6R•m • •2•66, • ” . 02TE: 0424 20. 1 8 a. 2•62 -. ,66
CU AAAAA TEAR 29622122
DEPAATMENT 02000
PROGRAM 13330 CoNSTITUENT RELATIoNs
OSJECT ACCOUNT ACTUAL •001•112,0 2 mD.AcTUAL 12 mO. EsT. DIFFERENCE 2 OIFF
1287.22 .OG71288-82 141111-.4 1262-81. RE01.1EsTED
•• TOTAL CHARGE, AND semvues _, 270 Al 242 12 914 42,224 24,252
awn. pROGR414 TOTALs 13320 CONN.", SERVICES
(2 402 102 77. 4. 674 17 227 105 514 7,107 2 /
. .
..— '
MI=W'
Salt Lake City Donation List
FY '88 - '89
DEPARTMENT OFFICE/PRQJECT CASH IN-KIND
ADMINISTRATIVE SERVICES -
Animal Control
Pet Supplies 100,187
Arts Council
Office Operations 25,000 10,000
Vying Traditions Festival 65,000
Brown Bag / Twilight Series 12,000 20,500
MAYOR'S OFFICE -
Women Helping Women 1,500
Thanksgiving Dinner Baskets 3,120
Community Affairs
Office Furnishings 520
Community Group Concessions 2,728
Volunteer Recognition 300*
Volunteer Reception 722
Volunteer Brochure & Logo 800
Training Consultants 1,500
Neighborhood Conference 1,562
DEP ' is OFFICE/PROJECT CASH IN-KIND
PARKS & RECREATION -
Tracy Aviary
Friends of Tracy Aviary 20,000 - 130,000
Urban Forestry
Tree Planting 13,800
Recycling Project 2,000
Parks -
Special Events 68,000 • 350,000
Marigold Project 105
Donations for the following events are unavailable at this time:
Homeless Project
Olympic Bid
Celebrate the City
* This is an approximated figure.
OFFICE OF THE CITY COUNCIL
CITY AND COUNTY BUILDING
451 SOUTH STATE STREET. SUITE 304
SALT LAKE CITY. UTAH 84111
535-7600 •
MEMORANDUM
To: City Council Date: June 1 , 1989
From: Cam Caldwell Subject: MBA Budget
Council had requested that we provide a brief memo summarizing the Municipal
Building Authority Fund. Enclosed is a detailed ;budget summary which I
reviewed with Dan Mule.
Also provided are amortization tables and bond information which explains in
detail the financing plan for each piece of the MBA package. The information
is simple to understand and does not require a great deal of narrative
explanation.
As I indicated to you, I have reviewed this information carefully and am
comfortable with the amounts and the balance. I asked specifically about the
garbage packers and was pleased to note that the Finance staff had modified
the amortization plan for the packers, reflecting the concerns that were
discussed at the Refuse Collection budget meeting. '
Please get back to me if you have any questions about this information.
•
-1-
Budget Summary
For the years ended June 30, 1989 and 1990 _
GAAP
Budgetary Basis Basis
('' FY 88-89 FY 89-90 FY 89-90
FY 87-88 FY 88-89 Projected Requested Requested
Operating revenues: Actual Budget Actual Budget Budget
Charges for services:
Garbage trucks and cans tease $ - $639,000 $639,000 $785,000 $785,000
Street tights tease-SID - 125,000 125,000 135,000 135,000
Telephone system tease - 338,000 338,000 338,000 338,000
Public Safety Building and
City's share of street tights - 604,083 604,083 1,044,416 1 ,044,416
Golf course tease - - - 321 ,298 321 ,298
Total operating revenues - 1,706,083 1 ,706,083 2,623,714 2,623,714
Operating expenses:
Depreciation:
Garbage trucks and cans - -:w - - 709,217 ,*
Street tights - - - - 235,582
Telephone system - - - - 358,575
Public Safety Building - - - - 296,845
Amortization of bond issue costs - - - - 36,700
Total operating expenses - - - - 1 ,636,919
Net operating income - 1 ,706,083 1 ,706,083 2,623,714 986,795
Other sources: ---------- _�__�___
--'ond proceeds 19,595,875 9,424,410 9,424,410 - -
\ y terest income-debt service 213,096 - - - -
Interest income-capitalized 150,938 125,000 130,000 - -
Interest income-capitalized-golf - - 20,000 12,000 12,000
.Interest income-reserved 63,014 - 174,000 195,000 195,000
Interest income-golf construction - - 202,800 90,000 90,000
Total other sources 20,022,923 9,549,410 9,951,210 297,000 297,000
Other uses:
Bond issue costs 381 ,746 161 ,794 161 ,794 - -
Debt service-principal - 1 ,310,000 1 ,310,000 1 .395,000 -
Debt service-interest - 1 ,798,511 1 ,798,511 1,814,859 1,814,859
Debt service-fees - 10,000 10,000 13,200 10,000
Capital outlay:
Golf course construction - 7,725,525 5,000,000 3,018,325 - -
Trucks and cans 3,898,235 104,364 91 ,563 - -
Street tights 4,711 ,637 - - - -
Telephone system 1 ,311 ,368 204,888 204,888 - -
Pubtic Safety Building 51,500 6,000,000 6,000,000 - -
Transfer to General Fund 77,235 - - - -
Total other uses 10,431 ,721 17,315,082 14,576,756 6,241 ,384 1 ,824,859
Increase of fund balance 9,591,202 - - - -
Use of fund balance - -6,059,589 -2,919,463 -3,320,670 -
-_liecrease to retained earnings - - - - ($541 ,064)
Beginning fund balance - 9,664,042 9,591 ,202 6,671 ,739 =_________
Ending fund balance $9,591 ,202 $3,604,453 $6,671 ,739 $3,351 ,069
=====_==== __====__==_ =========== _____=____ •
.
, Budget Summary
For the years ended June 30, 1989 and 1990
FY 88-89 FY 89-90 •
• FY 87-88 FY 88-89 Projected Requested
eevenues and other sources: Actual Budget Actual Budget
Charges for services:
Garbage trucks and cans lease $ - $639,000 $639.000 $785,000
Street lights Lease-SID - 125,000 125,000 ' 135,000
Telephone system lease - 338,000 338,000 338,000
Public Safety Building and
City's share of street lights - 604.083 604,083 1,044.416
Golf course Lease - - - 321.298
Total operating revenues - 1,706.083 1,706,083 2.623,714
Other sources:
Bond proceeds 19,595.875 9,424,410 9,424,410 - '
Interest income-debt service 213.096 - - -
Interest income-capitalized .150,938 125,000 130.000 -
Interest income-capitalized-golf - - 20.000 12.000
Interest income-reserved 63.014 - 174,000 195.000
Interest income-golf construction - - 202,800 90,000
Appropriation/use of reserves - 6,059.589 2.866,212 3.320,670
Total revenues and other sources $20,022,923 $17,315,082 $14.523,505 $6,241,384
Expenses and other uses:
Other uses:
Bond issue costs $391,746 $161,794 $161,794 $ - ,
Debt service-principal _ - 1,310,000 1,310,000 1,395,000 .
Debt service-interest - 1,798,511 1,798,511 1.814.859
Debt service-fees - 10,000 10,000 13.200
Capital outlay:
Golf course construction - 7,725,525 5,000,000 3.018.325
Trucks and cans 3,898,235 104,364 91,563 -
Street Lights 4,711.637 - - -
Telephone system 1,311,368 204,888 204,888 -
Public Safety Building 51,500 6,000,000 5,946,749 -
Transfer to General Fund 77.235 - - -
Increase of reserve 9,591,202
Total uses $20,022,923 $17,315,082 $14,523,505 $6,241,384
Budget Summary - state Form
For the years ended June 30, 1989 and 1990 •
`�v, FY 88-89 FY 89-90
i; FY 87-88 Projected Requested
Actual Actual Budget
Operating revenue:
Charges for services - 639,000 2,623,714
Interest 427,048 526,800 297,000
Other - - -
Total operating revenue 427,048 1,165,800 2,920,714
Operating expenses:
Personal services -
Contractual services
Materials and supplies
Depreciation .4, 633,906 1,526,008 1 .600,219
Bond issue costs amortization 10,604 36,700 36,700
Other - - -
Total operating expenses 644,510 1 ,562,708 1 ,636,919
Operating income (loss) -217,462 -396,908 1 ,283,795
Non-operating revenue (expenses)
Debt service-interest -527,818 -1 ,798.511 -1 ,814,589
Debt service-fees - -10,000 -13,200
Net income (loss) -745,280 -2,205,419 -543,994
Cash operating needs:
Operating income (loss) -745,280 -2,205,419 -543,994
Transfers -77,235 - -
Plus depreciation 633,906 1 ,526,008 1 ,600,219
Less capital outlay -9,972,740 -11 ,296,451 -3,018,325
Less bond principal - -1 ,310,000 -1 ,395,000
Increase in investments or
other assets net of increase
in accounts payable -9,434,526 - -
-19,595,875 -13,285,862 -3.357,100
Source of cash required:
Cash balance at beginning of year - - -
Investments and other assets
converted to cash - 3.861,452 3.357,100
Issuance of bonds 19,595,875 9,424,410 -
19,595,875 13,285,862 3,357,100
i '
AMORTIZATION TABLE Public Safety Building
6 , 077 ,032
-rincipal
Interest rate 7 . 08
Number of payments 14
Payment amount
Payment - Payment Payment
Number Balance Amount Interest Principal Balance
FY89 6 ,077 , 032 360,000 215 , 127 144, 873 5 , 932 , 159
FY90 5 , 932 , 159 537, 501 419 , 997 117, 504 5, 814, 655
FY91 5 , 814 , 655 772 , 583 411 , 678 360, 905 5 ,453 , 749
FY92 5 ,453 , 749 775 , 115 386 , 125 388 , 990 5 , 064, 760
FY93 5 , 064 , 760 758, 060 358 , 585 *399 ,475 4, 665 , 285
FY94 4, 665 , 285 643 , 085 330 , 302 312, 783 4, 352 , 502
FY95 4, 352 , 502 643 , 085 308 , 157 334, 928 4, 017 , 574
- FY96 4, 017 , 574 643 , 085 284, 444 - 358, 641 3 , 658 , 933
FY97 3 , 658 , 933 643,085 259 ,052 384,033 3 , 274, 901
FY98 3 , 274 , 901 643 , 085 = 231 , 863 411 , 222 2 , 863 , 679
FY99 2, 863 , 679 643 ,085 202 , 748 440, 337 2,423 , 342
FY2000 2 ,423 , 342 643 , 080 171 , 573 471 , 507 1 , 951 , 835
FY2001 1 , 951 , 835 1 , 123 ,450 138 , 190 985, 260 966 , 575
FY2002 966 , 575 1 , 035 , 008 68 ,433 966 , 575 0
,
A.MORTIZATION TABLE Street Lights .
rrincipal 4, 822 , 072
Interest rate 7 . 08
Number of payments 12
Payment amount 641 , 915
Payment Payment Payment
Number Balance Amount Interest Principal- Balance
FY89 4, 822 , 072 369 , 083 341 , 403 27 , 680 4, 794, 392
FY90 4, 794, 392 641 , 915 339 ,443 302,472 4,491 , 920
FY91 4, 491 , 920 641 , 915 318 , 028 323 , 887 4, 168, 033
FY92 4, 168 , 033 641 , 915 295 , 097 346, 818 3 , 821 , 214
FY93 3 , 821 , 214 641 , 915 270, 542 4371 , 373 3 ,449 , 841
FY94 3,449 , 841 641 , 915 244, 249 397 , 666- 3 ,052, 175 -
FY95 3, 052 , 175 641 , 915 216 , 094 425 , 821 2 , 626 , 354
FY96 2, 626 , 354 641 , 915 185 , 946 455 ,969 2 , 170,385
FY97 2, 170, 385 641 , 915 153 , 663 488 , 252 1 , 682 , 133 .
FY98 1 , 682, 133 641 , 915 119 ,095 " 522;820 1 , 159 , 313
FY99 1 , 159 , 313 641 , 915 82 , 079 559 , 836 599 ,477
FY2000 599 ,477 641 , 920 42,443 599,477 0
v
4MORTIZATION TABLE Telephone Equipment-Old
?rincipal 1 , 342, 105
Interest rate 7 . 08
Number of payments 5
Payment amount 319 , 000
'Payme-nt Payment Payment
Number Balance Amount Interest Principal Balance
FY89 1 , 342 , 105 319 , 000 47 , 511 271 , 489 1 , 070 , 616
FY90 1 ,070, 616 ' 319 ,000 75 , 800 243, 200 827 ,415
FY91 827,415 319 , 00.0 58 , 581 260,419 566 , 996
FY92. 566 , 996 319 ,000 40, 143 278 , 857 288 , 139
FY93 288 , 139 308 , 540 20,400 288 , 140 -0
•
1 '
AMORTIZATION TABLE Telephone-New Equipment
' Principal 209 , 690
Interest rate 7 . 08
Number of payments 7
Payment amount 29 , 085
Payment Payment Payment
Number Balance Amount Interest Principal Balance
FY89 209 , 690 19, 000 0 19 ,000 190, 690
FY90 190, 690 19, 000 13 , 501 5;499 185, 191
FY91 185 , 191 67 , 000 13 , 112 53, 888 131 , 302
FY92 131 , 302 67,000 , 9 , 296 57, 704 73, 599 ,,,
FY93 73 , 599 78, 809 5 , 211 73, 598 0
AMORTIZATION TABLE Garbage Cans
f7N.
- .'rincipal 2 , 493 , 918
Interest rate 7 . 08
Number of payments 7
Payment amount 487 , 975
Payment Payment Payment
Number Balance Amount Interest Principal Balance
FY89 2 ,493 , 918 350 , 700 176 , 569 174, 131 2 , 319 , 787
FY90 , 2 , 319 , 787 487 , 975 164, 241 323 , 734 1 , 996 , 053
FY91 1 , 996 , 053 487 , 975 141 , 321 346 , 654 1 , 649 , 399
FY92 1 , 649 , 399 487 , 975 116 , 777 371 , 198 1 , 278 , 201
FY93 1 , 278 , 201 487 , 975 90 ,497 397 , 478 •880 , 723
FY94 880 , 723 487 , 975 62 ,355 425 , 620 455 , 103
FY95 455 , 103 487 , 325 32 , 221 455 , 104 -0
AMORTIZATION TABLE .. Garbage Trucks
i .
Principal 1 , 589 , 396
Interest rate 7 . 08
Number of payments 7
•
Payment amount 297 , 025
Payment _ Payment Payment
Number Balance Amount Interest Principal Balance
FY89 1 , 589 , 396 288, 300 112 , 529 175 , 771 1 ,413 , 625
FY90 1 ,413 , 625 297,025 100 ,085 196 , 940 1 , 216, 685 •
FY91 1 , 216 , 685 297, 025 86 , 141 210 , 884 1 , 005 , 801
FY92 1 ,005 , 801 297, 025 71 , 211 225 , 814 .4 779, 987
FY93 779 , 987 297, 025 55 , 223 241 , 802 - 538, 185
FY94 538 , 185 297 , 025 38, 103 258 , 922 279, 263
FY95 279 , 263 299 , 035 19 , 772 279 , 263 0
MUNICIPAL BUILDING AUTHORITY
ACQUISITION BALANCE
January 31 , 1989
•
As of 7 / 1 /88-
6/30/88 1 /31 /89 Total Budget Balance
Building 51 , 500 5 , 923 , 466 5 , 974 , 966 6 , 000 , 000 • 25 , 034
Telephone 1 , 311 , 368 153 , 666 1 , 465 , 034 1 , 516 , 256 51 , 222
Street Lights 4 , 711 , 637 4 , 711 , 637 4 , 711 , 637 0
Trucks and Cans 3 , 898 , 235 91 , 563 3 , 989 , 798 4 , 221 ,418 . 231 , 620
Carrying Costs 77 , 235 77 , 235 68 , 342 -8 , 893
Cost of Issuance 381 , 746 381 , 746 393 , 602 11 , 856
Capitalized Interest 720 , 620
Reserve Fund 1 , 964 , 000
Original Issue Discount 44 , 125
Encumbrances - 23 , 283 . 30 . 23 , 283 -23 , 283
10 , 431 , 720 6, 191 , 978 16 , 623 , 699 19 , 640 , 000 287 , 556
r
ri.: ALLOCATION OF BONDING EXPENSES
Allocation
of Bonding
Cost Expenses Total
Trucks 1,552,996 36,400 1,589,396
Cans 2,436,802 57,116 2,493,918
Telephones-Old 1,311,368 30,737 1,342,105
Telephones-New 204,888 4,802 209,690
Street Lights 4,711,637 110,435 4,822,072
Building 6,000,000 140,633 6,140,633
16,217,691 380,124 16,597,815
•
•
•
•
TABLE 7
SOLIDATED DEBT SERVICE SCHEDULE CONSOLIDATED DEBT SERVICE SCHEDULE
ICIPAL BUILDING AUTHORITY OF SALT LAKE CITY
f LAKE COUNTY, UTAH
;E REVENUE BONDS SERIES 1988 LEASE REVENUE BONDS SERIES NOVEMBER 1, 1988 CONSOLIDATED
640,000 S9,510,000
FISCAL FISCAL
PERIOD YEAR PERI00 YEAR PER100 FISCAL
PRINCIPAL COUPON INTEREST' TOTAL TOTAL PRINCIPAL COUPON INTEREST TOTAL • TOTAL CONSOLIDATED CONSOLIDATED
-Oct-88 S1,310,000 5.10% $900,809 S2,210,809 S2,210,809
-Apr-89 $604,964 $604,964 S2,815,773 S292,738 S292,738 S292,738 S897,701 S3,108,510
-Oct-89 S1,395,000 5.40% $604,964 S1,999,964 S321,298 S321,298 S2,321,261
-Apr-90 S567,299 $567,299 S2,567,263 S321,298 $321,298 S642,595 S888,596 S3,209,858
-Oct-90 S1,475,000 5.60% S567,299 S2,042,299 S685,000 6.00X $321,298 S1,006,298 S3,048,596
-Apr-91 $525,999 $525,999 S2,568,298 $300,748 $300,748 S1,307,045 $826,746 S3,875,343
-Oct-91 S1,565,000 5.90% $525,999 $2,090,999 $735,000 6.20X S300,748 S1,035,748 $3,126,746
.Apr-92 S479,831 S479,831 $2,570,830 $277,963 $277,963 f1,313,710 $757,794 S3,884,540
Oct-92 $1,660,000 6.15% S479,831 $2,139,831 $785,000 6.40X S277,963 S1,062,963 S3,202,794
Apr-93 S428,786 S428,786 S2,568,618' S252,843 $252,843 S1,315,805 $681,629 $3,884,423
Oct-93 $1,065,000 6.35% $428,786 $1,493,756 $840,000 6.55% $252,843 S1,092,843 $2,586,629
Apr-94 $394,973 S394,973 S1,888,759 $225,333 S225,333 S1,318,175 S620,305 S3,206,934
Oct-94 S1,135,000 6.50% S394,973 S1,529,973 $895,000 6.70% S225,333 S1,120,333 S2,650,305
Apr-95 $358,085 $358,085 S1,888,058 S195,350 $195,350 $1,315,683 $553,435 S3,203,740 ..-1
Oct-95 S1,210,000 6.70% $358,085 S1,568,085 $960,000 6.80% S195,350 S1,155,350 $2,723,435 ^1
Apr-96 $317,550 S317,550 S1,885,635 , , $162,710 $162,710 S1,318,060 $480,260 S3,203,695 N
Oct-96 $1,300,000 6.85% $317,550 S1,617,550 S1,030,000 6.90% $162,710 $1,192,710 S2,810,260
Apr-97 S273,025 S273,025 S1,890,575 S127,175 $127,175 $1,319,885 S400,200 $3,210,460
Oct-97 S1,390,000 7.00% $273,025 S1,663,025 $1,110,000 7.00% $127,175 $1,237,175 $2,900,200
Apr-98 S224,375 S224,375 S1,887,400 $88,325 S88,325 S1,325,500 S312,700 S3,212,900
Oct-98 S1,055,000 7.10% S224,375 S1,279,375 $1,190,000 7.10% $88,325 $1,278,325 $2,557,700
Apr-99 $186,923 $186,923 S1,466,298 S46,080 S46,080 S1,324,405 $233,003 $2,790,703
Oct-99 $1,135,000 7.20% $186,923 S1,321,923 $1,280,000 7.20% S46,080 $1,326,080 S2,648,003
r-2000 $146,063 $146,063 S1,467,985 S1,326,080 S146,063 S2,794,065
t-2000 $1,220,000 7.30% S146,063 $1,366,063 S1,366,063
r-2001 $101,533 $101,533 S1,467,595 $101,533 $1,467,595
t-2001 S1,310,000 7.40% $101,533 S1,411,533 $1,411,533
r-2002 $53,063 S53,063 S1,464,595 •
S53,063 S1,464,595
t-2002 $1,415,000 7.50% S53,063 S1,468,063 $1,468,063
r-2003 SO SO $0 $1,468,063 ' SO S1,468,063
)TALS: S19,640,000 S10,225,742 S29,865,742 S29,865,742 $9,510,000 $4,609,680 S14,119,680 S14,119,680 S43,985,422 $43,985,422
2ED BY EHRLICH BOBER & CO. INC.
r
AL EUILIIRG AUTF061TY
i9EHUE AHD DEBT SERVICE
Plus Tctal
Cap:tal::ed Debt
Interes', Service
Public Street Total Street Telephone Telephone
"otal Remaining Total Including MBA
i Eafety Licht: Generai Lighs Equipment Egvipnert Cartage Carbar.e Lease Prcceeds and Furds Trustee and Cash
Bu:ld:ng CenFend Fund SID Old Neu Trucks Cans Revenue Reseraes Available Legal Fees Balance
r
' 360,000 244,083 404,083 125,000 319,000 19,000 238,300 350,100 1,706,063 1,119,690 2,825,773 2,825,773
537,501 5C6,915 1,044,416 135,000 319,000 15,000 297,025 427,975 2,3C2,416 220,047 2,582.462 462 2,502,498 0
772,583 506,915 1,279,498 :35,000 119,000 67,000. 297,025 487,975 2,585,498 585,498 2,58C 498 0
775,115 506,915 1,282,020 135,000 210,000 67,000 257,055 487075 2,588,03C 2,-
758,040 506,915 1,264,975 135,000 308,540 78,809 297,025 487,975 2,572,124 11,494 2)585,818 2,585,818 0 1 0=5,750
443,085 504,915 1,150,0CC 135,000 297,025 487,975 ,0.0,C00 841,717 , -
643,085 506,915 1,150,000 135,000 299,035 407,325 2,0714340 134,424 2,205,184 1,905,258 1,398,908
C43,085 50.',915 1,150,000 135,000 1,265,000 136,08 1.421.098 1,902,825 1,01 ,212
643,085 50.6,915 1,150,000 135,000 1,285,000 128,563 1,413,563. 1,907,775 593,949
r 1,285,000 137,C28 1,422,028 1,904,6C0 153.429
64c,085 5Cc,415 1,150,000 125,CG0 :,285,000 554,730 2,639,730 1,463,499 520,524
642.08C 506,92C 1,150,000 135,0002 1,285,000 102,12. 1,287,126 1,425,185 459)118
642,08C 506,+'LC 1,150,450 lE5,000
1,123,450 1,123,450 2,123,450 104,324 :,227,774 1,484,795 234,616
1,123,44? 104,905 1)2230,354 1,481,795 0
1r12e,44i 1,123,440• D . 0 1,485,263 1.485,263 '.,465,263 0
M
•
'+ •, 1
1 :i. �• of
iu • •
SAirli.LAITJ.6131Arg VOW- IC,
OFFICE or THE.CITY.;;COUNCIL
ii; SUITE 300.•CITY HALL • ...:
-324 SOUTH STATE STREET 4;4
SALT:L•AKE"CITY;+.UTAH-84111-
"535:/600=" '' '
•
May 17, 1988
MEMORANDUM
•
•
TO: MEMBERS OF THE CITY COUNCIL
FROM: CIrD)Y GUST-JENSON J' (3
RE: ORGANIZATION OF COUNCIL OFFICE
RE: IN1ERNAL AUDITING
•
As promised when I forwarded Cam Caldwell's staff report on internal
auditing, I am now providing more information about how placement of the
internal audit function in the Council Office could effect the office
operation, budget and service levels, should the Council elect to enhance the
internal auditing function. I am providing this memo as information to you;
whether or not the internal audit function is enhanced is, of course, up to
the Council.
I apologize for the delay in providing this information -- I felt a need
to take some time to observe the office work load during the budget process
before I finalized this report. Also, as I'm sure you're aware, things have
been rather hectic lately with the move and the budget process.
The following areas are addressed in this memo:
•
1. Budget impact of addition of internal audit function
2. Current organization of Council Office
3. Possible organization of the office if the Council elects to
add a staff member for internal auditing
4. Work load and service level impact of enhanced internal audit
function
rays
1. To ltrt impact of addition of internal audit function
As you are aware, the Council Office had budgeted $155,000 for external
audits next year, $49,800 of which is for the City's financial audit. This
leaves $105,200.
The Council could elect to use some of the amount budgeted for internal
auditing to add a staff member. If the Council elects to enhance the internal
auditing function and add a staff member, the first steps in the process could
be taken right after July with our existing staff, and we could wait until
October to hire the new staff member.
It may be possible that the two audits the Council has indicated
interest in, Administrative Services and Public Works, could still be done,
since much of the "leg work" could be accomplished by Council Office staff,
thus saving money. I have no way of ensuring that this would be the case,
though. We would need to evaluate this after the cost for the first audit is
established. If the Council wishes to do an in-depth audit on the uses by _
other City departments of the resources provided by Administrative Services
( i.e. fleet and data processing), as was mentioned in the Administrative
Services policy discussion, it probably would not be possible to pay for an
audit of that scope, and complete the first part of a Public Works audit and
still add a new staff member. Since a new director.of the Administrative
Services Department has just been appointed, the Council may want to discuss
further whether they wish to have the Administrative Services audit done in
the same time frame as originally planned.
You'll recall that each year .the Council Office makes every effort to
encumber funds from the current fiscal year for the.next year's financial -
audit. This practice does give us some flexibility. If the Council
determines it to be the best course of action, you could elect to spend the
full amount budgeted for auditing in fiscal year 89-90, as well as any funds
we encumber in the 1988-89 budget (from $40,000-50,000, still to be
determined). If you elect to do that, it would help ensure that the audits of
the scope desired are completed in 89-90, but it would eliminate for future
years the flexibility we have gained by encumbering funds. If you would like
more information on this, please let me know.
If the Council elects to enhance the audit function within existing
resources and add an additional staff member in October, the following would
be the budget impact over the next two years:
Fiscal year 1989-90
Financial Audit $49,800 -
Outside Audits $70, 196
Staff member salary $19,845 (October-June)
Staff member benefits, etc $ 6,459 (October-June)
Cubicle $ 3,000
Computer terminal $ 5,000
Misc. supplies $ 300
Training & Development $ 400
rays
There is no net effect on the budget, but outside audit dollars
are reduced by $35,004 -- to $70,196, from $105,200. This could
e have the effect of reducing the number of outside management
audits to one.
Fiscal year 1990-91 •
Finance Audit $52,000
Outside Audits $67,515
Staff member salary $26,460
Staff member benefits, etc $ 8,625
Misc. supplies & training $ 400
Outside audit dollars are reduced by $37,685 -- to $69,715, from
$105,200 by the addition of a staff member, and because of
increased costs for the first year in a new contract for a
financial audit (we estimate $52,000, rather than $49,800).
Again, this could have -the effect of reducing the number of
outside management audits to one.
The Council should also be aware that it may be appropriate to have an
outside review of the internal audit function every three years. It is
estimated by Council staff that this would cost around $5,000. If this review
could be added to the responsibilities of the City's external financial
auditor,. the cost could be less. Another factor to be aware of is that we
will be re-bidding the outside financial audit in fiscal year 90-91, and costs
could go up in that area. This has been accounted for in the above figures.
If the Council wishes to retain the full amount in the outside audit
area and still hire an additional staff member, the alternative is to add
$35,004 to the Council Office budget this year, and to add $37,685 in fiscal .
year 90-91.
2. Current organization of the office
Currently the Council has, under the direction of an executive director,
five staff people including one budget analyst, one budget analyst/auditor,
one community relations coordinator, one administrative assistant and one
staff assistant.
As authorized by the Council, a deputy director has been designated.
The deputy director is the budget analyst/auditor, Lee King. The deputy is
responsible for the management of the office while the director is away, and
also assists with administrative duties. A current organization chart is
attached. As you'll note, all positions report to the executive director. In
the absence of the director, or on special projects, staff report to the
deputy.
At this time, both the budget analyst/auditor and the budget analyst
participate in budget work, auditing and policy analysis. In addition, they
follow-up to gather information for individual Council Members and have at
( times assisted with citizen complaints relating to the departments for which
they have budget responsibility. Because the two individuals have budget and
policy work to do, auditing has not had the attention that the Council may
. a u7� -s
wish it to have. To give you a better picture of the functioning of the
Council Office currently, I have summarized here each of the Council staff
members" major ..responsibilities:
*Lee King, Budget Analyst/Auditor and Deputy Director: Liaison with
financial audit and outside audits. Has conducted several audits, including
car per officer and car take-home. Responsible for budget analysis of
Development Services, Parks Department, Administrative Services, Public
Utilities, Golf, Data Processing, Fleet and the Library. Is responsible for
follow-up on audits on Departments for which he does budget work; at this time
he is following-up on Development Services and Parks. Also analyzes budgets
for CDBG, CIP and CBID. As deputy, he will be responsible for final wrap-up
of the budget, coordinating drafting of intent language and management of the
Council Office budget. Lee is also charged with keeping the Council up-to-
date on Olympics activities. Other staff assignments include District Heating
and Cooling, the West High Track, etc.
*Cam Caldwell, Budget Analyst: Responsible for the budgets of Police,
Fire, Attorneys Office, Public Works, Airport, Finance, Human Resources, and
Misc. Funds. Responsible for follow-up on audits on Departments for which he
" does budget analysis; at this time he is following-up on the Police and Fire
Department audits. Cam has researched-and. completed the staff work on the
" placement of the internal audit function. Other staff responsibilities
include refuse collection policy, transportation, financial reporting review,
revenue analysis and the enterprise fund study.
*Ed Snow, Community Relations Coordinator: Responsible for writing,
editing and distribution of Council Members" newsletters. Responsible for -
follow-through on constituent complaints, and for writing letters, comments
and reports for Council Members. Coordinates with Community Affairs and all
City Departments on matters of citizen interest, including the Neighborhood
Conference, the pending official recognition and early notification ordinances
and other issues. Ed is responsible for board appointments, including
assisting Council Members in making recommendations to the Mayor, facilitating
the appointment process through the Council agenda, and keeping the Council
Office Board records current.
*Christine Richman, Administrative Assistant: Responsible for
preparation of the Council agenda, including ensuring that all paperwork is
available and all open meeting and other technical requirements are met.
Serves as liaison with Mayor's Office, Bond Counsel, City Departments and
others on most requests for official Council action. Takes minutes at
Committee of the Whole sessions. Prepares Council Office budget and monitors
expenditures. Supervises staff assistant. She attends the Capital City
Committee and related meetings, and keeps the staff informed on downtown
development activity. She is also responsible to attend RDA meetings and
parking district discussions, along with the Director. Christine also handles
alley vacations and a variety of other special projects.
*James Hall, Staff Assistant: Responsible for assisting the Council
Members and staff in a variety of research and clerical tasks. Works with
Council Members and citizens on complaints utilizing the Request for Services
System. Arranges all travel for the office, takes minutes in Committee of the
Whole, responsible for maintenance of filing system, schedules meetings for
Council Members, etc.
1.ujc ✓
3. Possible organization of the office with one additional staff mpuher..
If the Council elects to add a staff member and establish a more formal
internal audit function in the Council Office, the positions of the budget
analyst and budget analyst/auditor would be the most impacted. We would have
several options, including:
A. Select either the current budget analyst/auditor or budget analyst
(Lee or Cam) to be the leader of the Councils internal audit
function, and advertise to fill the newly-created position.B. Advertise for an internal audit leader and accept applications from
both the current staff and others. If an individual from outside is
selected, either our current budget analyst or budget
analyst/auditor could be selected to fill the second position.
(NOTE: This approach would not work as smoothly as the first
approach because, if the Council elects to make this change, I
recommend the secondary position be filled at a grade 318, and the
current staff are grades 324 and 325. The remainder of this memo
will assume that we take the approach outlined in A above. If you
would like a different approach, I will be glad to provide that
•
information as well. )
Regardless of the approach, the enhancement of the internal audit
function in the Council Office would require a realignment of work
(ITT..:-• assignments. As you have seen, although we have one position designated to
deal with auditing, both the budget analyst and budget-analyst/auditor have
audit-related functions in their current portfolio of work.
If the Council wishes to make a change, all audit-related functions
could be reassigned to the individual in the internal audit leadership role.
Specific details of this would have to be worked out over time, but my
preliminary assumption is that responsibilities for the positions could look
something like this:
Internal Audit Coordinator (or similar title)
*Responsible for establishment of audit charter (one time)
*Responsible for drafting audit plan/schedule (annually)
*Responsible for establishing budget for internal auditing, to be
included and reviewed as part of the Council Office budget
*Review of existing Council Office audit policies and preparation of
Audit Procedures Manual (one time, with periodic update)
*Responsible to direct secondary audit staff member
*Liaison with outside financial audit
*Coordinator of outside audits
*Reports to the Council Office Executive Director, except would have
direct communication with the Council or the Councils Audit Committee
on audit findings and recommendations
*During the budget season, both the audit coordinator and the secondary
audit staff member would assist with budget analysis, and any auditing
duties would be very limited.
Budget/Policy Analyst (or similar title)
*Responsible for analysis and research on the budget, will oversee the
audit coordinator and audit staff person's work on the budget
*Responsible for all budget-related_follow-up throughout the -year
*Responsible for evaluation of financial reporting
*Responsible for revenue analysis
*Responsible for bringing issues of concern to the attention of the
audit staff, through the Executive Director
*Analyzes policy issues upon which Council action is requested, or in
which Council Members are interested
*Serves as staff to Council Members on various issues (ongoing concerns
about refuse collection fees, Olympics, special projects,
transportation, Fort Douglas closure, etc. )
I have attached two organization charts for your review. One depicts
having the budget analyst assume the new position (Cam), and the other depicts
having the budget analyst/auditor (Lee) assume the new position.
- Regarding the grade level of the positions in the Council Office,- it is
my recommendation at this time that the positions remain at the current
levels. I have confirmed with Human Resources that the duties to be performed
in the two positions, should the Council elect to expand the auditing function
as outlined here, are well within the scope of the current levels. The
additional duty of supervision of one staff member is not a significant enough
item to create the need for a change in grade level for either position. I
have also checked with the State Human Resources staff regarding the
responsibility level and pay classes of individuals in the State's Legislative
r Audit area,. and ave found the current levels of our staff to be in keeping
_: with those.of their staff performing similar, duties.
•
You'll note I am proposing that the internal audit coordinator continue
to report to the executive director on all matters, with the understanding
that the executive director would not have editorial privilege on audit
reports. Due to the important nature of the reports and the fact that they
will be distributed in public meetings, it is my recommendation that you
continue to have the executive director review the reports to help ensure that
they are clear and concise, and to assist in identifying any potential legal
problems, etc. As is indicated in the "Standards for Professional Practice of
Internal Auditing," the audit coordinator needs to have direct communication
with the Council or Council Audit Committee .to avoid the act or appearance of
having the audit work "toned-down or censored, " and to ensure that the
Council's goals are carried out. I have reviewed literature on internal
auditing, and found the approach I am recommending here to be in keeping with
established standards.
4. Work load and service level impact •
As indicated in item 3 of this memo, the duties in the Council Office
would have to be realigned if the Council elects to enhance the auditing
function. Lee, Cam and I have reviewed this and it appears as though the
Council could continue to be served at nearly the same level on policy items
and at a higher level on auditing, if one additional staff member for auditing
is added, and if the two auditing staff members assisted with the budget
during budget season. This would mean that three months each year, from the
second week in March to the second week in June, audit activity would have to
be very limited.
If we did not have 'the audit staff assist with the budget during this
time, the Council would lose much of .the- ability.to analyze .the.budget.that
- -has been gained over-the past-two years. -In addition, the one budget analyst
would be unable to perform much policy analysis or other staff work during the
budget months.
If the Council wishes to retain the current budget analysis level and to
have the auditors work on audits throughout the year, rather than assisting
with the budget, another alternative is to hire two individuals. This would,
of course, have a significant budget impact. If you would like figures on
this, please let me know.
One other thing I should point out is that, while the Community
Relations Coordinator does get involved in a great deal of research and report
and speech preparation, that position could not possibly have time. to do all
of it. As the office is structured now, we do sometimes have both the budget
analyst and budget analyst/auditor assist Council Members with-research on
issues, preparing reports and speeches, attending meetings, etc. If the
Council elects to have one existing staff member and one new staff member
focus totally on' internal auditing, we would lose a little flexibility since
we would then have the Community Relations Coordinator and-only the budget .
staff member available for this type of assistance. While I am.confident the
work load could be handled, some research may take a little longer, or we may
periodically have some scheduling and logistical difficulties with .the work
load of extra projects spread between two people, rather than three. While I
do want to bring this to your attention, at this time I don't think this will
create unmanageable problems.
Conclusion
I hope this information is helpful to you. If you would like to
schedule a Committee of the Whole discussion of this, or would like additional
information, please let me or the Council Chair know. If you are interested
in reorganizing the office without increasing the budget, as outlined here,
you could elect to wait until after the budget is adopted to consider this.
If you are interested in adding to the Council Office budget to do this, we
would need to schedule a Committee of the Whole discussion soon. I also want
to point out that Finance as part .of their budget discussion, will be
providing information to you on what the Administration proposes as the
structure of the Administration's auditing area for this year and for future
years.
cc: Council Staff • -
•
Chart 1: This chart depicts the current organization of the Council staff.
• •Cindy Christine
Gust-Jenson Richman
•
•
•
•
James
• Hall
• •
•
Lee
. .
King
. ,
•
Cain Ed
Caldwell Snow
•• • • • . — .
•
•
•
. ,
-t 2: This chart depicts one optio , for the organization of the Council
If should the Council elect to enhance the audit function. This reflects
current budget analyst (Cam Caldwell) supervising the new audit position.
Cindy Christine
Gust-Jenson Richman
•
James
Hall
•
Lee
King
Cam Ed
Caldwell Snow
•
•
Internal
Auditor
:t 3: This chart depicts a second option for the organization of the
Icil staff should the Council elect to enhance the audit function. This
Lects the current budget analyst/auditor. (Lee King, who also serves as
ity) supervising the new audit position.
•
• Cindy •
Christine
•
Gust-Jenson Richman
_ James
Hall
•
•
Lee
• King
•
•
Cam Ed Internal
• Caldwell Snow Auditor
Internal Auditing Staff Report
Executive Summary
Prepared by Cam Caldwell
* Internal auditing is an independent appraisal process
established to improve organization performance. It examines the
adequacy and effectiveness of an organization's internal controls
and the quality of performance in carrying out assigned
responsibilities. Standards for the operation of an internal audit
system emphasize the importance of establishing proper
organizational independence, mandating the professional
qualifications of audit staff, defining the audit work scope and
performance standards, and providing managerial capacity and
support.
* The local government internal audit function is most commonly
placed in the Finance Department , the Chief Executive's; Office, or
the Legislative Branch. Advantages and disadvantages of placing
the internal audit in those organizational locations are reviewed
in this report. Internal audit experts, Peat Marwick staff, and
municipal auditors in other communities are quoted in this report.
* According to Dennis Robbins, the City's independent auditor from
Grant Thornton, the City currently does not perform true internal
auditing, although it does perform some review of internal
controls. A summary of the internal audit related tasks currently
being performed by City staff is provided in this report.
* Four options for implementing the internal audit are reviewed in
this report. They include the Finance Director's recommendation,
the recommendation of Peat Marwick, establishing a Legislative
Auditor position in the Council Offices, and establishing an
independent City Auditor position which would report jointly to
the Mayor and City Council.
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Internal Auditing Staff Report
At the March 16th Finance policy meeting, the City Council asked that research
be completed regarding the role of internal auditing in City government . The
City Council has been reviewing the operations of the Finance Department over
the past several months and has been considering the options available in the
placement of the internal audit function.
Overview to Internal Auditing
Internal auditing is an independent appraisal function established within an
organization to assess performance and to identify opportunities for
improvement. The internal auditor's role differs from the independent
auditor. An independent auditor's objective is to verify whether an
organization's financial statement is correctly stated, and whether it
complies with generally accepted accounting principles. The internal auditor's
work is not limited to accounting and financial matters but encompasses the
objectives and end results of an organization.
Standards for Internal Auditing
The handbook, Standards for the Professional Practice of Internal Auditing,
<<_`_ published by the Institute of Internal Auditors, outlines the criteria for
effective internal auditing. The following is a summary of this information:
Independence
Independence is achieved by proper organizational placement and
maintaining objectivity. Independence permits internal auditors to
render impartial and unbiased judgments. Independence should also
be assured by not having internal auditors assume operating
responsibilities. Internal auditors should not be placed in a
position where there is a potential conflict of interest or
'political bias regarding audit findings.
Professional Proficiency
Proficiency consists of a knowledge of accounting and management
principles and the ability to apply broad knowledge to situations
likely to be encountered. It also includes an appreciation of
fundamentals of economics, law, taxation, finance, quantitative
methods and computerized information systems. Internal auditors
should be skilled in dealing with people and in communicating
effectively.
Scope of Work
The scope of the internal audit should include the examination andt
evaluation of an organization's internal controls and the quality of
its performance in carrying out assigned responsibilities. It
encompasses a review of policies, plans, procedures, laws and
regulations which impact on operations and reports, as well as
whether the organization is in compliance with appropriate
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standards. Internal auditors appraise the efficiency with which
resources are employed. They review operations and programs to
determine whether established objectives are carried out.
Performance of Audit Work
Audit work should include planning the audit, examining and
evaluating information, communicating results, and following up.
Information regarding audit findings should support audit results.
Internal auditing should determine whether corrective action has
achieved desired results, or if management has assumed the risk of
not taking corrective action on reported findings.
Management of the Internal Audit Unit
An internal audit manager should be responsible for managing the
internal audit function to ensure that audit work fulfills the
general purposes and responsibilities of the internal audit. A
formal written statement, or charter, should be adopted - which
identifies the purpose, authority and responsibility of the internal
audit group. An annual audit plan should outline the goals, work
schedule, plans,, budget and activity reports to be completed by the
audit staff. Written policies and procedures should guide .the audit
staff. A quality assurance program should be established to
evaluate the operations of the internal audit unit.
Options for Placing the Internal Audit in Government
In an effort to learn more about the placement of the internal audit in
government, telephone interviews were conducted with national authorities on
internal auditing.
Mr. Don Nelson, Director of Quality Review Services for the Institute of
Internal Auditors, identified three areas where the internal audit could be
located in local government. Those three areas are the Finance Department,
the Mayor's Office, or the Council Office. Based upon conversations with Mr.
Nelson and Mr. Rol Malan, former internal auditor for Kent County,
Washington, and editor of the Local Government Auditors Newsletter, the
following are the advantages and disadvantages for locating the audit
function in these three locations:
•
Finance Department
The primary advantage of locating the internal audit function in
the Finance Department is that finance professionals within the
department are knowledgeable about financial controls. A
disadvantage is that the independence and objectivity of the audit
function can be compromised or audit findings can be suppressed
due to the fact that internal audits, by their nature, are
intended to identify opportunities for improvement and may be
critical of management or the Finance Department. In addition,
internal audit staff frequently are assigned non-audit tasks when
they are located in Finance Departments.
Mayor's Office
The advantage of locating the internal audit function in the
Mayor's Office is that it elevates internal auditing to a higher
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organizational level than it would be if located in a Finance
Department. Rol Malan called this option "better than the Finance
Department option.". . At the same time, he noted-that --internal -
audit functions located in the Chief Executive's Office are
frequently under intense political pressure to tone down
potentially critical audit findings. Don Nelson cautioned that
the placement of the internal audit in the Mayor's Office could
cause problems with independence and objectivity.
Council Office
The advantage of placing the internal audit function in the
Council Office is that it can provide greater independence and
objectivity for the audit staff. The disadvantage is that
internal audit staff may not have as much access to information
and may not find their recommendations as well received. A caveat
in placing the internal audit in the Council Office is to
establish proper standards and guidelines for the audit process so
that the internal audit does not become simply a mechanism to
criticize the Executive Branch. Internal auditing model charters
offer specific guidelines to avoid such a problem. Nelson and
Malan both identified benefits in locating the internal audit in
the Legislative Branch and noted that doing so would meet the
criteria identified in the Standards for the Professional Practice
of Internal Auditing handbook. Nelson indicated that he leaned
toward locating the internal audit in the Legislative Branch.
Malan's opinion was a much stronger statement of preference, based
upon his experience as a practicing internal auditor.
Local Expert Opinion
I interviewed Wayne Welsh, Utah State Legislative Auditor General, regarding
the internal audit function. In commenting on the placement of the internal .
audit function in the City of Salt Lake, Mr. Welsh stated that, in his
opinion, the "ideal place" for this function was in the Council Offices.
Mr. Welsh stated that there were several reasons for placing the internal
audit function within the City's Legislative Branch. The primary reason is
• that the internal audit function assists the Legislative Branch in achieving
separation of powers by enhancing its legislative oversight, program
monitoring, and program review functions. Second, placing the internal audit
in the Legislative Branch preserves independence in conducting audits and
reporting audit findings. He added that putting the internal audit under the
Legislative Branch avoids placing the internal auditor in a position having
to compromise audit findings.
In discussing the potential placement of the internal audit in the Executive
Branch, Mr. Welsh related the history of the internal audit function in Utah
State government. He noted that the Legislative Auditor's Office had been
created thirteen years ago. In his assessment, Mr. Welsh felt that the
Legislative Audit function is currently "stronger than ever" and achieving
its purpose.
In contrast, internal audit units in the Executive Branch have come and gone
in some departments, according to Mr. Welsh. He reported that sometimes
those units have continued simply because an external demand, such as a
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federal mandate, has required the audit function to continue. The scope of
the existing internal audit units has often been limited to confirming
�. ..._. . compliance with established procedures, he-reported. - -•-
Welsh identified the purpose of the internal audit as identifying areas
needing improvement in the management of an organization. For that reason,
the internal audit is "a natural element, an inherent part of the structural
mission of the Legislative Branch," according to Welsh.
Establishing Controls and Internal Auditing
"A control is any action taken by management to enhance the likelihood that
established objectives and goals will be achieved." (Control: Concepts and
Responsibilities, Institute of Internal Auditors)
The Standards for the Professional Practice of Internal Auditing identify the
internal auditor's limited role in establishing controls.
. "The internal auditor's objectivity is not adversely
affected when the auditor recommends standards of control
for systems or reviews procedures before they are
implemented. Designing, installing,, and operating systems
are not audit ' functions. Also, the drafting of procedures
'for systems is not an audit function. Performing such
activities is presumed to impair audit objectivity."(Page
11)
- Dennis Robbins, the partner for Grant Thornton who has been the City's
independent auditor,= distinguished between financial management and internal
auditing in a recent interview. Mr. Robbins stated that, in his opinion, the
City does not currently practice true internal auditing. The existing
internal auditing staff in the City reviews financial procedures and assists
in establishing improved internal controls, but is limited in its scope and
emphasis when compared with traditional internal auditing.
Mr. Robbins added that the establishment of a more classic performance audit
function could play an important role in City government. His opinion was
that the best placement of the performance audit function in Salt Lake City
would be in the Council Office.
•
Mr. Robbins also noted that with proper management the internal audit
function could save money for the City in conducting major management audits.
With proper coordination between internal audit staff and outside management
auditors, the implementation of management audit recommendations would also
be easier to follow up.
•
Internal Audit Models
The internal audit function is widely accepted in national and state
government, and has been implemented in several city governments. According
to Auditing Performance in Government, there are "over 40 states in which the
audit function is part of the legislative branch." Internal audit staff also
can be found in the executive branch of most state governments. The internal
audit function has also been successfully implemented in several cities
across the country.
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One possible comparable for Salt Lake City is the City Auditor position in
Kansas City, Missouri. In that organization the City Auditor reports
_ =. directly to the City. .Council. _ Mark Mark Funkhouser, the Kansas City Auditor, ..
describes his role as an "independent and objective check and balance to the
City Administration" in reviewing the City's programs and services.
Regarding his role in Kansas City, Mr. Funkhouser stressed the importance of
locating the audit function in the Council Office in order to perform an
effective performance audit. In commenting on the role of the legislative
auditor on the Council staff, Mr. Funkhouser suggested that a legislative
auditor should function somewhat independently of other Council staff in
serving as an objective resource for the City Council in the audit role.
Another local government auditor is Richard Tracy, Audit Director in
Portland, Oregon. Portland 's City Auditor is an elected position. Mr. Tracy
functions as the chief of the professional internal audit staff. In his role
Mr. Tracy is independent of the City Administration, although he provides
information for both the Executive and the Legislative Branches. He
advocates that the internal audit function in local government be independent
of the City Administration in order to preserve its objectivity. -
In commenting on the placement of the internal audit function, Mr. Tracy
concluded "There are certainly examples of successful audit functions
reporting to the Executive Branch but the likelihood of success in being
perceived as objective, impartial, and credible by the public and outside
third parties is increased if the auditor is located outside of the Executive
Branch."
Jim Flanagan, City Auditor of Phoenix, is located in the City Manager's
Office and is an appointed member of the Manager's staff. He reports -
administratively to the Manager and • functionally to the City Council Audit
Committee. He describes the advantages of the City Auditor reporting to the
Executive Branch as providing more opportunity for the internal auditor to
focus on improving performance standards within the City departments.
Flanagan noted that elected officials are less concerned with management
methods and practices than a full-time administrator. In addition, the City
Auditor's access to the organization in following up on audit findings and
recommendations is greater if the City Auditor reports to someone concerned
about day-to-day administration than if the auditor reports to the •
Legislative Branch. Third, Mr. Flanagan noted that auditing is an "evidence
based profession." For that reason, Flanagan noted, the work of an internal
audit team frequently does not produce information on issues as quickly as
elected officials may want information about those issues.
Regarding the issues of objectivity and independence, Mr. Flanagan conceded - -
that "you do lose something in the way of objectivity and independence with
the City Auditor reporting to the City Manager." He added that objectivity
had improved, however , since the internal audit function had been transferred
from the Finance Department to the City Manager's Office.
Commenting on the value of information for elected officials , Flanagan
concluded, "An elected official clearly needs an analytical resource to do a
conceptual review of City programs and services in order to understand the
nuances of administrative alternatives. I'm not sure he needs the evidence
gathering function."
-6-
internal audit function was not being given the priority that it deserved and
internal audit resources were being siphoned off into other projects."
Confirmation of the Peat Marwick position was verified in a telephone
conversation with Barbara Speer of the Houston Office. Ms. Speer discussed
the option of the internal auditing function reporting to the Finance
Department and an audit committee. She noted that keeping the internal audit
in the Finance Department was also an alternative to consider. "There are a
number of options. There is not just one that can work. Reporting to the
Mayor would provide the most visibility," she concluded.
Current Internal Audit Related Activities
Over the past year internal audit related activities have been performed to
some degree in the Finance Department, the Mayor's Office, and the Council
Office.
According to the Peat Marwick study, activity for "internal control, internal
audit, operational audit, general internal audit and external audit
assistance" made up less than one full-time equivalent position. The audit
and reporting manager and internal auditor devote virtually all their time to
the external audit function during four months of the year. The Peat Marwick
study also noted that the "internal auditor spends only 50 percent of his
time on internal auditing activities."(Page III-18)
• According to Scott Bond, the former Executive Assistant to the Mayor and the
City's new Budget Manager, the Mayor's Office staff spent about 280 hours
this past year on the Business License audit. Three staff persons were
_- involved who worked on that audit over a five week period. Mr. Bond said
that no other specific audits were conducted by the Mayor's policy analysts.
Three other audit related reports were conducted, he noted, "but they were
more management studies than audits."
In the Council Office, Lee King spent 20 hours on the Business License audit,
4+0 hours on the Car Take Home Policy, 140 hours on the City-County Building
audit, and 120 hours on the Car Per Officer study. In addition, I spent 120
hours on the Risk Management audit, 140 hours reviewing the status of the
Hughes Heiss Fire Department audit recommendations, and 20 hours reviewing
the status of the Burracker Police Department audit. The audit activities
•
conducted by the Council Office staff have been primarily performance and
management audits.
During the past year, two major management audits were conducted for the City
Council on a contract basis, at a cost to the City of about $120,000. Hughes
Heiss and Associates conducted a management audit of the Parks Department and
Peat Marwick conducted the Finance Department audit.
Internal Audit Options in Salt Lake City
The following are four options for the City to consider in implementing an
improved internal audit function.
Option #1: Finance Department
At the March 16th presentation to the City Council the
Finance Director "recommended that the vacant internal
auditor position be funded immediately." She also
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recommended that existing staff be retained and that the
internal audit function be located in the Finance Department
for at least one year. The..purpose of the internal audit --
staff would be to design and implement improved financial
controls. A charter would be established to govern the
operation of the internal audit staff. The Finance Director
proposed that an audit committee be set up, which could
consist of "representatives from the Mayor's Office, City
Council, citizens, and can include City Department Directors
or other City employees with a particular expertise on an
as-needed or rotation basis." Effective March 29th, the
Finance Director assigned the audit and reporting manager to
the internal audit function on a full-time basis. The first
year of the internal audit operation would be spent involved
in developing an improved internal control system for the
Finance Department and developing and analyzing financial
policy options affecting other City departments. The nature
of this reorganization is "an evolving process" with
specific details yet unresolved.
Option #2: Mayor's Office
The Peat Marwick audit recommended that the audit and
reporting manager and internal auditor position be moved to
the Mayor's Office and that the internal audit function be
given increased visibility and independence. Other specific
details regarding the operation 'of the internal audit
function in the Mayor's Office were not addressed by the
Peat Marwick study.
•
Option #3: Council Office - Legislative Auditor
A Legislative Auditor position .could be formally established
in the City Council Office. That position could be
established under an audit charter that would define the
role of the Legislative Auditor. The Legislative Auditor
could report functionally to a three person Council audit
committee. It could also seek input from the City
Administration regarding audit activities, report regularly
regarding audit findings, and meet periodically to discuss
the effectiveness of the internal audit program. The role of
the audit committee would be to review the Legislative
Auditor's annual budget, approve the annual audit work plan,
and work closely with the Legislative Auditor in reviewing
audit reports and monitoring the implementation of audit
findings. The Legislative Auditor could be given an
additional internal auditor position to assist in conducting
audits. The Legislative Auditor could also perform other
audit related duties, including coordinating with the City's
independent auditor and the outside management auditors. The
Legislative Auditor and his staff could also. play a role in
the budget process, if assigned. As part of this option the
newly established internal audit function could remain in
the Finance Department to assist in implementing financial
controls.
-9-
%
Option #4: Independent City Auditor
A City Auditor position could be established by ordinance
that would_ be appointed jointly by the Mayor and Council and ----- - ._ ----- -
report to a joint audit committee. The ordinance would
identify the duties of the City Auditor and the position
could be formally appointed to a fixed term. The City
Auditor would report administratively and functionally to
the joint audit committee consisting of the Mayor and three
Council members. That joint committee would review the City
Auditor's annual budget, approve the annual audit work plan,
and work closely with the City Auditor in reviewing audit
reports and monitoring the implementation of audit findings.
The position would be independent of both the Mayor and City
Council. The City Auditor could be given an additional
internal auditor position to assist in conducting audits.
The City Auditor could also perform other audit related
duties, including coordinating with the City's independent
auditor and the outside management auditors. As part of this
option the newly established internal audit function could
remain in the Finance Department to assist in implementing
financial controls.
Analysis of Options
The advantages and disadvantages of each of these four options are summarized
below:
Option #1: Finance Department
This option gives the Finance Director the opportunity to
expand the department 's ability to design and implement
internal controls and help achieve stronger overall fiscal
control. The establishment of the new internal audit
section on March 29th is an improvement organizationally
which increases the comparative objectivity and authority of
internal audit staff within the Finance Department. Based
on the experience of other cities, it is likely that this
option may not provide as much information to the City
• Council as if the internal audit function was located in the
Legislative Branch. The scope of internal audit activities
would focus primarily on fiscal controls and compliance. As
proposed, this option would add an additional staff auditor
to fill the currently vacant internal auditor position.
Option #2: Mayor's Office
This option would be likely to result in the internal audit
function performing a broader analysis of City programs and
services than it has historically performed. Departments
would be more likely to follow up on audit findings if those
findings were supported by the Mayor. At the same time,
audit findings regarding deficiencies may not be as likely
to be reported to the City Council. The transfer of the
audit and reporting manager and the internal auditor to the
Mayor's Office would deplete the ability of the Finance
Department to implement stronger internal controls.
-10-
Option #3: Council Office - Legislative Auditor
This option would be likely to provide the City Council with
sy ._- -. more _information about . .department programs ,and--services - - -
because audit reports would primarily focus on management
and performance auditing information. The Legislative
Auditor's level of activity would be substantially greater
than the work that has been performed this past year by
existing Council staff with the addition of an internal
auditor and an increased focus on the audit role.
Recommendations to implement operating or procedural changes
in departments would be dependent upon both Council interest
in the specific findings and the Administration's acceptance
of audit results. Procedural and operational findings would
be of less interest to the Council than substantive findings
about efficiency and effectiveness. Access to information
would be more difficult than if the audit was located in the
Executive Branch. The City Council would retain the ability.
touse the Legislative Auditor in other tasks, including
budget review. The Finance Department would continue to be
able to refine. the City's financial control system with its
existing staff.
Option #u: Independent City Auditor
This option would provide both the Executive Branch and
Legislative Branch with objective internal audit
information. It would require the support of the Mayor and
City Council. If the Mayor and City Council did not fully
support a jointly administered internal audit program, it
would not be difficult for either party to limit the
effectiveness of the City Auditor. If the Executive Branch
supports . this option, access to information and
implementation of audit recommendations would be easier than
with Option #3. The City Council would have more
information regarding department programs and services than
if the internal audit was located in the Executive Branch
and had no reporting responsibility to the City Council.
The Finance Department would continue to be able to refine'
the City's financial control system with its existing staff.
•
In attempting to predict the likely financial impact of each of the options,
the least costly option in the short run would probably be Option #2. That
option moves two existing staff into the Mayor's Office and creates no
additional positions . In fairness, it should be noted that this option would
result in a service level reduction in the Finance Department with the
- transfer of the two positions. -
As proposed, Options #1 and #3 would both create one new internal audit
position. Option #3 may also result in a reclassification of one of the
existing Council staff if the Council chose to fill the Legislative Auditor
position from the current Council staff. If Option #1 is approved and an
additional internal auditor position is not funded, the financial cost of
Option #1 would be the same as Option #2.
-11-
Option #4 would require the establishment of two new positions, a City
Auditor and an internal auditor. Options #3 and #4 could generate cost
savings in the form _of reduced consultant fees byhaving the Legislative
Auditor or the City Auditor play a greater role in the administration of
outside management audits conducted for the City Council than Council staff
currently play.
Recommendation
Based upon the study of current audit literature and interviews with
knowledgeable audit experts, I recommend that City Council implement Option
#3 and establish the Legislative Auditor position within the Council Office,
as described in this report. This option enables the administration to
accomplish its goals in improving the City's financial controls and
management systems, while providing the City Council with the objective
program and performance information which they need to serve as an effective
policy maker in their legislative role. Option #4, while theoretically
possible, may not be politically feasible at the present time.
Conclusion
The internal audit function has a valuable potential role in City government
in providing information about the adequacy and effectiveness of the City's
internal controls and in evaluating the performance of departments and
services. In making a decision about the internal audit function and its
location in City government, the City Council should consider the purpose of
the internal audit and how that purpose can best, be achieved. Factors such
as the importance of independence, access to 'information, and how audit
recommendations will be used should be carefully considered in arriving at a
decision. Internal audit functions can benefit both the Executive and
Legislative Branches of City government and providing resources to perform
audit tasks would enable both branches of government to improve organization
efficiency, review and evaluate performance, and strengthen internal
controls.
-12-
rI:
_
S'.' ' `e� �°C' YI' @(ARP i I. N[
OFFICE-OF, THE, CITY:;COUNCIL
!SUITE 300.;CITY`H ALL".
,, 324 SOUTH STATE STREET '
SALTLAKE-CITY,..UTAH.84t1_-1:4•
June 2, 1989
MEMORANDUM•
TO: COUNCIL MEMBERS
FROM: CINDY GUST—JENSON
RE: BUDGET SUMMARY
Following is the summary of the straw polls you have taken which have a
fiscal impact:
STRAW POLL REDUCTIONS
Finance -- items budgeted elsewhere $30, 150
• Public• Works -- travel accounting error 3, 109
Total reductions to date 33,259
STRAW POLL ADDITIONS
Weed & Demolition fund 5,000
Public Works neighborhood trash program 277,000
Municipal Affairs -- League increase 10,000
Admin. Svcs. Election Costs 30,000 (to be offset by
projected increase in
state revenue)
Total additions to date 322,000
Less State revenue offset 30,000
Net additions 292,000
TOTAL
Additions 292,000
Reductions 33,259
Out of balance 258,741
ADDITIONAL INFORMATION
The Director of Administrative Services briefed the Council Staff on
Friday and indicated that her recommendation for the consolidating of the
Human Resources and Administrative Services Departments will allow for a
savings of $101 ,427. This amount is included on the list of cuts outlined by
Council staff for your consideration. The documentation from the
Administration on this is included in this packet.
The cuts outlined by Council staff are provided under separate cover.
Attached for your information is the internal staff document Lee has prepared
to help us track the changes that have been made and the items still
unresolved.
r
FY 1989-90 BUDGET SUMMARY -
FUND INITIAL FTE CHANGES MOTION UNRESOLVED ORDINANCE LEGISLATIVE
TYPE REQUEST CHANGES REQUIRED ISSUES REQUIRED INTENT
*********************************************************************************************************************
ENTERPRISE
************
Golf $5,577,426 None -1 CRS Marshall Yes No No No
-2 Bldg/Equip
Public Util $46,070,360 Fee Increase None Yes No Yes No
Garbage $2,723,974 None None No Yes No No
Airport $87,442,700 None None No No No Yes
Internal Svc
************
Fleet $7,579,268 None None No No No Yes
IMS $4,592, 127 None None No No No No
Risk Mgt $11 ,941 ,976 None None Yes No No Yes
Gove Immun $366,796 None None No No No No
MBA $6,241 ,384 None None No No No No
Debt Svc
Bldg Debt $1 ,954, 155 None None No No No No
SIDs $1 , 143,014 None None No No No No
Special Rev
************
CDBG $4, 147,000 Several None No No Yes Yes
Demo/Weed $30,000 + $5,000 None Yes No No No
CBID $145, 107 None None No No No No
Street Light$434, 162 None None No No No No
E911 $448,000 None None No Yes No Yes
CIP $13,711 ,285 Pending None Yes Yes Sunnyside No Yes
. & Fire Station
General F :.J k ,..7
************
Admin Svc $3, 197,482 + $30,000 Election Yes Yes No Yes
- $101 ,427 -3 FTE
Attorney $1 , 168,588 None None No No No No
Council $571 ,331 None None No No No No
Dev Svc $3,478,887 None None No No No No
Finance $4,301 ,821 - $30, 150 -1 Internal Aud Yes Yes No No
- $36,900 poss.pending decision
Fire $17,662,473 + $15,000 None Yes Yes No Yes
Human Res $784,947 None None Yes No No Yes
Mayor $886,945 None None No No No No
Parks $5,631 ,727 Fee Increase + 1 FTE Yes No Yes Yes
+30,000
Police $18,918,232 None None No No No Yes
Pub Works $13,822,455 + $277,000 Possible Yes Yes Trash No ?
- $3, 109
Non-Depart
************
Civic Spt $809,757 None None No No No Yes
Mun. Affairs$456,525 + $10,000 None Yes No No No
•
KAREN SUZUKI-HASHIMOTO DEPARTMENT OF HUMAN RESOURCE MANAGEMENT
DIRECTOR 451 SOUTH STATE STREET, ROOM 404 PALMER DEPAULIS
SALT LAKE CITY, UTAH 84111 MAYOR
PROGRAM ADMINISTRATORS. (801) 535-7844
PATRICIA CAMPBELL, C.C.P.
FRANK FRASER
JANE ERICKSON, A.R.M.
1 June 1989
W.M. "Willie" Stoler, Chair
Salt Lake City Council
451 South State, Suite 304
Salt lake City, Utah 84111
Dear Chairman Stoler:
As a result of the recent consolidation of departments of Human
Resources and Administrative Services, I would like to propose the
following budget reduction of $145, 291 in the Administrative
Services Budget. Accordingly, I am requesting the addition of
$43 , 680 for the creation of a Administrative Officer, or a net
decrease of $101, 611.
As detailed in the attached, I have identified the elimination of
all personal service costs in the "Office of Director" budget, with
the exception of three months . of salary for the Administrative
Assistant (Richard Rutledge) . Mr. Rutledge will be working for the
Support Services Division to establish to implement a facilities
equipment maintenance software program. He will also assist in
various contractual agreements for the City, including janitorial
services, and a preventative maintenance program. The department
will also require a transition of Mr. Rutledge's knowledge of the
cable television relationships with the City.
The establishment of an Administrative Officer position is
essential to the successful transition and consolidation of the
departments of Human Resources and Administrative Services. The
complexity that this new department requires administrative review
and analysis. I chose to establish an administrative officer,
rather than a deputy director at this time, to concentrate on the
fiscal, budgetary, and administrative demands this diverse
organization requires.
I have also amended my original request and now recommend that the
Administrative Secretary be cut (a general fund savings of $29 ,277)
and the original Secretary II in the. Human Resource Management
budget (a Risk Management fund) be accepted.
Thank you for your attention regarding this matter. If there are
any questions, please advise.
Sincerely, J'
Karen Suzuki-Hashimoto, Director
Department of Human Resource Management
& Administrative Services
KSH/k
cc: Palmer A. DePaulis
Cindy Gust-Jenson
Lee King •
} attachments
Mayor's Proposed Revised
Recommended Department Budget
FY 1989-90 Cuts FY 1989-90
Executive Director 74,189 74,189 0
Administrative Secretary 29,277 29,277 0
Administrative Assistant 33.760 25.320 8.440
Total Personal Services 137,226 128.786 8,440
Technical Books 350 350 0
Periodicals 700 700 0
Stationery Supplies 1,800 1.800 0
Duplication Supplies 200 200 0
Postage 200 200 0
Photographic Supplies 100 100 0
Other Mat. & Supplies 350 350 0
Total Operating & Maint. 3.700 3,700 0
Data Processing 4,159 0 4.159
Other Prof & Tech. Serv. 1,000 1.000 0
Long Distance -. 468 468 0
-. Micro Maintenance 2,448 0 2,448
Office Equip. MC's 270 0 270
Comm. Equip. Maint. 300 0 300
Telephone Expense 3,524 3,524 0
Meals 500 500 0
- Memberships 1.400 555 845
Travel 3,674 2,674 1.000
Mileage 300 300 0
Auto Allowance 3,600 3,600 0
Risk Management 38,722 0 38.722
Total Charges & Services 60.365 12,621 47.744
Total Office of Director 201,291 145,107 56.184
Additional Staffing Changes:
Administrative Officer 0 0 43.680
201,291 145,107 99.864
ti
L . r
. EXPLANATION
Administrative Fiscal/Budget Officer - This position is an
administrative level position which will coordinate all
administrative issues of the Department of Human Resource
Management and Administrative Services. This will include, but
will not be limited to: coordination of all internal service
funds, governmental immunity, and general fund agencies. This
individual will be required to analyze diverse and complex
accounting and budgetary systems. It is the goal of this
department to review the current cost-allocation system of the
internal service funds as identified in the Peat Marwick Audit.
Although this position has yet to be classified, a projected pay
class of 320 - 324. This is not a service level increase, but
simply replaces the administrative assistant- position. The
establishment of this position will serve to better
manage/coordinate the fiscal elements of this newly created
department.
Administrative Secretary - As part of the budget cuts, this
position was originally requested to be "held harmless" . The
intent was to use the FTE to satisfy the service level increase of
a secretary in Human Resource Management. We would like to amend
that request to now ask for the elimination of this administrative
secretary and retain the original request in Human Resources. This
action will result in a savings to the General Fund of $29,277.
The secretary position in Human Resources did not have associated
budget cost and would be charged to the Risk Management budget in
the amount of $21, 096.
•
•
SALT' :A . . IUYf0ORPHATI. E
OFFICE:OF,THE;CITY_COUNCIL
r: • SUITE 300„CITYHALL ' •
, • 324 SOUTH STATE STREET
SALT-LAKE-GMy,.UTAHr8471f--
,535-7600"=-r;�
June 2, 1989
MEMORANDUM
TO: MEMBERS OF THE CITY COUNCIL
FROM: CINDY GUST—JENSON .
RE: BUDGET SAVINGS IDEAS
As is always the role of the Council staff at this time, we have
attached for your consideration a listing of potential budget modifications.
The purpose of this list is to provide options for you to consider in order to
fund the alternative programs Council Members have expressed interest in
during the budget process.
The potential modifications are prioritized within categories labelled
• A, B, C and D on the spreadsheet. Staff recommends that the Council make the
modifications proposed in the A portion of the spreadsheet. Of the A
category, the first nine items are those the administration has indicated can
be eliminated. The other items in the A priority are actions the staff
recommends. The B section contains options for reductions which will have an
impact on the delivery of City services and/or employee morale which offset
their potential financial benefit . The B section also includes items that
have an impact on other organizations. The C section contains options which
would significantly affect City services and are recommended only as a last
resort. The D section contains items that could have an effect on agreements
with other organizations.
In the area of revenue enhancements, the staff is recommending that the
Council consider funding an additional fire prevention inspector, which is
expected to have a net increase in revenues of $15,000. The Council may also
wish to adopt a legislative intent encouraging the Administration to enforce \,
the existing ordinance on police false alarms. This could increase revenues
by as much as $32,000. Both of these items are heavily dependent on
administrative support for their success, though, and neither the Fire
Department or the Police Department have recommended them. It may be
-r-'-`j difficult to consider these_as firm revenue enhancements. . -
Because the Council has not formally reviewed the ordinance suggested by
one Council Member on fire department false alarm charges, we do not recommend
you consider that to be a revenue enhancement at this time, but we do
recommend that you look seriously at it following the budget.
Regarding the Charges to Enterprise Fund study, in your Committee of the
Whole discussion on May 23 you voted to request the administration to respond
to the study. You also requested that the Council staff look at this further.
-We have not included potential savings to the general fund on the main list we
have provided here, since the Administration has indicated that they wish to
consider this thoroughly and will report their recommendations to the Council
• by October.
We have attached for your information a memo from Cam Caldwell which
indicates items in the Enterprise Funds the Council may wish to consider,
should you wish to find additional savings to the general fund at this time.
Acting on these items at this time does not, on the surface, appear to be in
• keeping with the intent you expressed on May 23, and we do not have specific
information on how any of these items would impact the enterprise fund
budgets, but this information is provided in the event you find it necessary
• to find further enhancements to the general fund. We received the Public .
Utilities Advisory Committee's initial response to the study and it, too, is
attached for your information. The Council should be aware that the time
frame has not allowed us to consider the whole issue of charges to Enterprise
Funds, and it is likely that the funds would want to bring to your attention
the items they take care of for the general fund.
If there are other potential cuts you would like information on and/or
if you need more information on any of the items listed here, please let me or
one of the budget analysts know.
We will begin preparing the official motions and optional motions for
you next week, with the goal of sending the,motion sheets home in your packets
on Friday, June 9. We will need to hear from as soon as possible, at least by
close of business on Thursday, June 8 regarding additional motions. We will,
of course, be prepared to add additional motions based upon your Thursday
•
evening, June 9 Committee of the Whole discussion.
Please let us know how we can be of assistance to you.
cc: Mayor's Office & Departments with items on list
Council Staff
POTENTIAL BUDGET REDUCTIONS
COUNCIL STAFF NARRATIVE
Finance-Land Rentals
The budgeted figure was $27,5440 which is also in the CIP budget to pay the
County for their portion of rent on land jointly owned by the City and County
from Wave Tech. The Finance Department proposed this as a $27,540 reduction
in their budget with $10,000 of that amount to- be transferred to the Non-
departmental budget to go to the Utah League of Cities and Towns.
Finance-Employee Parking
Historically clerical and technical employees in the Finance Department
received a parking allowance if they did not have an assigned parking place.
However, parking is now provided for all employees through a centralized
contract funded by Support Services. The Finance budget can be reduced by
$2,610.
Public Works Travel
The Public Works Department, was given an erroneous figure from which to base
their Travel/Training budget . Council approved reducing their budget by
$3, 109 to the same figure as last year.
Administrative Services FTEs
Subsequent to the Administration submitting their recommended budget for FY
1989-90', the Mayor consolidated the Department's of Administrative Services
and Human Resources. As a result of this consolidation there are three FTEs
' that could possibly be eliminated. They are the Director's position (03),
Administrative Assistant (318) , and Administrative Secretary II (312).
Elimination of these positions would save $101 ,427 in Personal Services,
Travel, and Auto Allowance.
Reduction in Consultant Services
This past week we noted that the federal government is rethinking its plan to
enforce Section 89 of the Tax Reform Act. This is the section of the act: that
requires organizations to evaluate whether their health benefits are
discriminatory against lower paid employees. According to the best available
information, the enforcement of Section 89 is "on hold" until further notice.
Accordingly, the $20,000 which was part of the HRM budget can be eliminated.
In discussions with the HRM staff we note that the City has already paid for
some consulting services for this program this year. On that basis, given the
change in the status of the enforcement of this act, we can feel comfortable
in knowing that we could demonstrate that we have already made "good faith
progress" in evaluating our system should this "on hold" status be removed
during the 1989-9090 fiscal year.
Urban Forestry
The reslult of elimination or reduction of this funding would be to delay tree
trimming and change the frequency from 18 to 25 years. The goal is 10 years.
It will also decrease the number of trees sprayed from 20,000 to 14,000. The
overall impact will be to put the Urban Forestry in a reactive role rather
than a proactive one. It will also continue the decline in the City's Urban
Forest.
Employee Newspaper
Last year. Council reduced this budget by $9,000, which cut the size-of -the- - -
paper in half. The paper comes out once per month and is four pages long.
The April edition is a spoof on City government. Otherwise the content of the
paper includes pictures of newly hired staff and promotions, information about
employee benefits, a horoscope, and a couple of articles. Some departments
also have their own newsletter. There is no impact on service delivery. This
action may impact employee morale.
Veteran's Cemetery
The Utah Military & Veteran's Affairs Committee has raised over 1 million
dollars for a Veterans Memorial Park and Cemetery in the vicinity of Camp
Williams. They need an additional $200,000 to complete their plans. Not
funding the requested $10,000 could delay the completion of the project.
Chamber of Commerce Dues
This $10,000 is a rollback to the current adopted budget of $40,000. The
impact on the Chamber of Commerce would be the same as that of the Utah League
of Cities and Towns.
Utah League of Cities and Towns •
The $10,000 is a rollback to the current adopted budget of $50,000. The total
impact of this reduction is not known at this time. There could a
corresponding spin-off affect if other municipalities chose to follow Salt
Lake City's example.
Internal Auditor - Finance
The Finance Department has requested full funding of a currently unfunded •
Internal Auditor position. Council has received comprehensive staff briefings
on the internal audit function. The dollar savings from not filling this
position is about $36,900. The impact would be to reduce the scope of the
Administrations proposed auditing program.
Employee Appreciation Day
The annual cost of the General Fund portion of Employee Appreciation Day is
$23,000. This amount covers out of pocket City expenses for food and
festivities, including the price of admission to Raging Waters. Each
department is billed based upon the number of employees and employee family •
members who attend this event. This reduction of $23,000 would have no impact
on service delivery to City taxpayers. It could have an adverse impact on
employee morale.
Auto Allowance
The $20,780 is a 25% reduction in auto allowances paid to 43 City Executives
and 300 series employees. The $20,780 is General Fund dollars only. There
would also be a reduction of $11 ,025 in Enterprise Funds. A reduction of
benefits could adversely affect morale and the City's ability to attract and
retain good executives.
-- 2 --
Business District Maintenance
This- dollar amount reflects the reassignment of full-time Neighborhood Trash
Pickup staff to_this- program._,_._1f_the _Neighborhood Trash Pickup -program is---
not restored, this service level could be cut and the existing high level of
business district maintenance would be maintained. If the Neighborhood Trash
Pickup program is restored, these full-time staff would be reallocated to the
trash pickup work force. In that case, this dollar savings would not be
possible.
Finance Travel
These funds are for the training of Finance Department property management
staff. The department has reduced other line items to create this additional
dollar amount. Council indicated no interest in this proposal during the
budget presentation discussion.
Police Travel
These funds are for the Police Travel and Training budget increase. Staff
suggested that there were cost savings possible by doing part of this training
with internal resources within the department and the City. Council indicated
no interest in this proposal during the budget presentation discussion.
Attorney Travel
This amount is for the additional costs associated with training attorneys to
meet mandated legal education requirements. Council indicated no interest in
this• proposal during the budget presentation discussion.
Retiree Gifts
This money represents $300 per employee who retires. We have contacted Salt
Lake County and note that they give no gift to retiring employees, other than •
normal benefits.
Eliminate Dispatchers - Fire
The estimated cost for reducing the number of dispatchers serving the Police
and Fire Departments is $20,000 per dispatcher per year. The number of
dispatchers needed is not currently known. Council has indicated that it
would like to conduct a formal review of the dispatch function after the E-911
system is in effect and the transition to the new dispatching system is
completed.
•
Sister Cities
The .Sister City program establishes relationships between officials of Salt
Lake City and those of selected cities in other countries. It also may have
some positive affect on economic development. Direct benefit to the taxpayers
of the City is difficult to document. A $10,000 reduction eliminates the
program.
Utah Economic Development Corporation
The UEDC is a public-private partnership whose goal is to enlarge capital
investment throughout the Salt Lake Valley and to act as a catalyst for
quality job growth through expansion of existing business and relocation of
outside companies to this region. There are 14 municipal jurisdictions
participating in this venture. Reduction of $20,000 may imply a lack of 100%
commitment on the City's part. A corresponding reduction in contributions by
other jurisdictions could adversely impact the corporation's ability to
accomplish its goals.
-- 3 --
Fleet Replacement
The Fleet_.Replacement_.budget-is _$2,.713,_000.__"This-will_replace 117 vehicles. - - - - -
A reduction of $100,000 will reduce the replacement schedule by 9 vehicles,
assuming a replacement cost of $10,453 for a sedan. The impact would be to
delay rotation of vehicles. It would also increase the operating and
maintenance costs of the vehicles not replaced.
Parks Recreation Manager
The complexities of the current golf and recreation programs indicate a need
to place a full time manager over the recreation portion of the program.
Failure to fund this position would mean that recreation programs would not
"reach their full potential.
Additional Fire Inspector - Fire
The hiring of a Fire Department inspector to implement the Uniform Fire Code
inspections would generate about $15,000 in net revenues if the inspector
completes an average of four inspections per day. At_the department budget
meeting the Fire Chief indicated that the department has not geared up to
begin a full-scale enforcement effort,
Burglar Alarm Fees - Police •
Council had asked the Police Department to develop an approach to charging for
the large number of negligently set off burglar alarms. In FY 1986-87 $32,000
had been generated in this line item. Revenue had been generated through one-
time alarm licensing charges. Council indicated initial support fora
Legislative Intent asking the Administration to investigate this. One option
may be to make the alarm charge an annual fee to the City, with a $25
additional cost for every false alarm responded to. The-Police Department
indicated that the staff previously working on this has been eliminated.
False Alarm - Fire
Establishing a false alarm charge for the Fire Department will probably result
in additional revenues. It is very difficult to project what those revenues
may be. For that reason, no dollar amount has been projected. The proposed
ordinance on this will be available of Council review following the budget
process.
•
•
-- 4 --
)
_4, •
DRAFT Initial Staff Recommendations
& Other Potential Budget Reductions
POTENTIAL CUMULATIVE
PRIORITY PROGRAM SAVINGS SAVINGS
************** *********H********
A Finance-Land Rentals $17,540 $17,51I0,(
A Finance-Employee Parking $2,610 $20,150 y
A Public Works Travel $3,109 $23,259 y
A Adnin Svc FTE's (2.5 FIE) $85,106 $108,365 y
A Adnin Cth/Chg & Sys $10,047 $118,412\1
A - Adnin Svc Tavel $2,674 $121,086\'
A Adnin Svc Auto Allowance $3,600 $124,686 Y .7
A HRH Section 89 Rbllh'rk $20,000 $144,686 Y .
B Urban Forestry $20,000 $164,686 f .
B . Employee Newspaper $9,000 $173,68611
B Veteran's Cemetery $10,000 $183,686(1 _
B Chamber Dues Increase $10,000 $193,686(1
B Utah League of Cities $10,000 $203,6861)
- B Internal Auditor-Finance $36,900 $240,586®/
B Employee Appreciation Day $23,000 $263,5860
B Auto Allowance $20,781 $284,36711 -
B Business Dist Maint $75,000 $359,367'9.
B Finance Travel $2,224 $361,5911)
B Police Travel $6,200 $367,791V\
_-,.'� Attorney Travel $4,887 $372,678 f1 .
:.,i Retiree Gifts $25,000 $397,678 r
B Eliminate Dispatcher $20,000 $417,678 C'
B Sister City • $10,000 $427,678111
B (JEDC Reduce Contribution $20,000 $447,678 rt
C Fleet Replacement $100,000 $547,678 Y t ,Lc, 5`6 4 .
C Eliminate Dispatcher $20,000 $567,678v1
C Parks Recreation Manager $35,660 $603,338'C'
C Add Fire Inspector $15,000 $618,338(1
C Burglar Alarm Fees $32,000 $650,338 n
C ' Fire Dept False Alarm $650,338 •
Items related to the Fhterprise Fund Study
********************************************* ,l •
•
Eliminate Bydrant Charge $126,000 '4' �' •
Airport Structural Fire $25,000
Airport Police $43,600
y'
t ,
.
S ` ' 1 ial .�-�n,,,IVRA IQ f
,whrOFFICE OF THE CITY COUNCIL
CITY AND COUNTY BUILDING
451 SOUTH STATE STREET, SUITE 304
SALT LAKE CITY, UTAH 84111
535-7600
MEMORANDUM
To: Cindy Gust-Jenson Date: June 1 , 1989
From: Cam Caldwell Subject: Enterprise Fund Charges
The following is information about possible enterprise fund charges.
Eliminate Hydrant And Water Charge
The Fire Department is charged $126,400 by Public Utilities for
hydrant rental and the water used in fire suppression. In
discussing this issue with Roger Black, he noted that there was
no pattern across the country for Water Departments charging their
Fire Departments for hydrant rental or fire suppression water. He
indicated that this was a policy option area which the City could
make a determination on at its discretion. Currently the Salt
Lake County Fire Department does not pay for water used in fire
suppression activities. County customers bear this cost in their
water rates. A policy decision to eliminate this charge would
increase the General Fund by $126,400 and reduce the Water Utility
revenues by an equal amount . Ultimately the Water Utility will
have to go back to the water users in the City and the County to
recover this lost revenue. Capital improvements would have to be
cut in FY 89-90, or delayed until they can be funded over two
fiscal years.
•
Charge Airport for Structural Fire Fighting
According to the Peat Marwick study, the City can charge the
Airport for specific General Fund services provided by other
departments which are not now being charged as part of the current
administrative service fees. Specifically, the report says that
"Responses by police investigators to an incident at the airport
or by a fire company to a structural fire, for example, would be
permissible." According to the department, there have been 82
fire run incidents at the Airport this fiscal year through May.
Assuming 100 fire run incidents per year and an estimated average
cost per response of $250 per fire run, the cost for structural
fire fighting would be $25,000 per year. This may have to be
approved by the FAA.
Charge Airport for Police Responses
According to the Police Department, there were 872 verified
incidents of Police Department runs to the Airport in 1988, in
addition to the response made by the two officers stationed at the
Airport. Assuming an estimated cost per run of $50 per run, the
estimated charge to the Airport for police responses would be
$43,600. This too may have to be approved by the FAA.
We anticipate there will continue to be strong oppostion from the
enterprise funds on these items.
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• JUN O 21989
= SALT LAKE CITY COUNCIL
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LEROY W. HOOTON,JR.
DIRECTOR '
WENDELL E. EVENSEN, P.E. �
SUPERINTENDENT 1'�! ►111 a�sal ' , RMIO i WATER SUPPLY 3 WATERWORKS wr�r
E.TIM DOXEY
SUPERINTENDENT DEPARTMENT OF PUBLIC UTILITIES
WATER RECLAMATION WATER SUPPLY & WATERWORKS • PALMER DEPAUUS
JAMES M. LEWIS,C.P.A. WATER RECLAMATION - MAYOR
ACCOUNTING OFFICER 1530 SOUTH-WEST TEMPLE r
GEORGE JORGENSEN, RE. SALT LAKE CITY, UTAH 84115
CHIEF ENGINEER
June 1, 1989
•
TO: SALT LAKE CITY COUNCIL
RE: Response to KPMG Peat Marwick Report on Charges for Services
Between Funds
After considerable review of the report presented to us by Peat
Marwick, we agree with .council staff that the report is limited in
its review of the city's cost allocation system. Therefore, we as
members of the Public Utilities Advisory Committee have the following
concerns:
1. We are generally supportive of the process of equitable charges
for services. We feel that the additional allocation
of overhead charges should be consistently applied to all
departments. Also, that the current inconsistent cost allocation
methods listed in the report need to be adjusted. Such as
allocation of personnel costs by job openings, allocation of
costs for the mayor's office, city council, and budget section
by budgeted dollars and others listed in the-report. It is the
feeling of the board that the total additional revenue realized
in this exchange would be zero to the General Fund.
2. The report includes only a cursory analysis of the Public
Utilities rate structure and legal standing in connection with
the outstanding County Law Suit #236439. This report should
not be construed as a legal opinion as to the effect the
implementation of. a payment in lieu of property taxes would have
on the outstanding law suit. A complete rate analysis would be
required to justify a solid legal opinion.
3. The council needs to be aware that the Sewer Utility Fund
maintains a radio system which the other city departments use.
The cost of this service in FY 1988 was $16,000 and will
increase to $25,000 for budget year 1989-90. Also, the Sewer
Utility Fund maintains storm sewer lift stations, a respons-
ibility of the Public Works Department, at a cost of $99,000 in
FY 1989 and will increase to. $140,000 for budget year 1989-90.
These services would have to offset any payment in lieu of
property tax being considered.
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4. The report ignores the tremendous cost to the Water Utility
in providing fire suppression activities to the citizens of Salt
Lake City. It is the feeling of the board that if we are to be
treated as a private entity we should also be able to charge for
_ services provided for fire suppression. In a recent article in
AWWA entitled "Cost of Providing Water for Protection", by Donald
R. Cote and Alvin S. Goodman, it states "the average cost for
larger systems would be a 6 to 12 percent of the cost of their
fixed asset or operating cost." Using a 6 percent rate against
assets that are attributable to fire. suppression only and within
the city system would amount to 2.8 million dollars. This amount
is based on actual cost value and not replacement value which in
today's dollars could be five times higher. Also, another
appcoach stated could be 6 percent rate against the Water Utility
operating and maintenance cost. Using this rate only against the
cost of maintaining only the city's portion would generate a
charge of $607,000 to the General Fund for fire suppression.
•
5. The Advisory Board is adamantly opposed to the assessment of a
:payment in lieu of property tax. Due to the concern that the
. county could possibly also assess a similar fee on our property
in the county service area. This would have an effect of raising
'water rates both within and outside city limits.
6. If our department is to be treated as a private entity we should
also have the ability to obtain the lowest possible price for
services received. A few charges currently being assessed which
seem relatively high are as follows:
a. Cash receipt processing - $0.73 per receipt
by Treasurers Office.
b. Data processing - charges equal $1.03 per
each bill mailed or $562,100 per year.
c. Purchasing - $36.66 per requisition processed.
d. Personnel - $221.00 per job opening which does
not include the cost of funding one full time
personnel representative position by the
department.
It is felt by the board that service could be obtained at a lower
cost if the department had the opportunity to obtain bids for
such services as those listed above on the outside. We understand
that this might not be economically feasible. However, the
difference in cost should then be deducted from the payment in
lieu of property tax being proposed.
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Page 3
7. The implementation of the payment in lieu of property tax could
greatly hamper the Capital Improvement Program of both Utility
Funds. The Water Utility is currently only asking for a portion
of the water rate increase required to finance the projected
needs of the department. The Sewer Utility has built up reserves
over the past four years, but those funds are earmarked for the
Northwest Quadrant and a future treatment plant.
The subcommittee is concerned that the in lieu of property taxes
• would be perceived as a tax increase to the citizens of Salt
Lake City. For this reason and the others mentioned above, we
respectfully recommend that this matter not be pursued any
further.
Sincerely,
PUBLIC UTILITY ADVISORY BOARD SUBCOMMITTEE
ALL 6 9-C2-421---2—
• Paul B. Keyser
Vir ina e
•
Richard Chong
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