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HomeMy WebLinkAbout1982-139-10/05/1982-ADOPTING THE FINANCIAL AND MANAGEMENT POLICIES RELATING TO THE 1983 FINAL BUDGET RESOLUTION 82-139 OF THE COUNCIL OF THE CITY OF FORT COLLINS ADOPTING THE FINANCIAL AND MANAGEMENT POLICIES RELATING TO THE 1983 FINAL BUDGET WHEREAS, the City Manager and City Council have reviewed various financial and management policies in conjunction with the annual budget process and five year plan, and WHEREAS, the City of Fort Collins is committed to sound financial planning and direction, and WHEREAS, these policies form the basis for various decisions affecting the 1983 final budget, and WHEREAS, City Council wishes to formally adopt these financial and management policies in conjunction with the adoption of the budget ending fiscal year 1983 NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the following financial and management policies be, and the same hereby are, adopted as the basis for the resolution adopting the 1983 Budget for the City of Fort Collins 1 CATEGORIZATION OF CITY SERVICES In 1981 , the City Council categorized all City services in order to set priorities for allocating available money These categories are Basic or Core Services - these are services that are best performed at the local level and are most closely linked to protecting the health and safety of the citizens Legally mandated services or commitments are also included in this category Maintenance of Effort Services - these are services which the City has traditionally -provided or which reflect a major capital investment re- quiring an expenditure of funds to maintain Quality of Life - these are activities which are provided for more spe- cia ize groups and enhance the desirability of Fort Collins as a place to live These categories were applied to City services in the following manner Basic or Core Services Police Fire Water and Sewer Light and Power Storm Drainage Streets Debt Payments Maintenance of Effort Services General Administrative Services Park Maintenance Cemeteries Transfort Street Lighting Open Space Facilities Engineering Airport Internal Service Activities Quality of Life Library Recreation Museum Lincoln Center Golf Community Services 2 SALES TAX DISTRIBUTION Background As part of the 1983 budget process, City Council recommended the addition of 75 of a 14 sales tax to provide increased financing for the City' s current capital requirements Action Based upon City Council direction to increase the sales and use tax by 75 of 14 for 1983, the sales tax distribution policy is SALES TAX DISTRIBUTION TOTAL 1¢ 1¢ 1/40 3/40 DISTRIBUTION 1968 1980 1982 1983 PER 10 Seven Year Capital Program Operation & Maintenance -- 30% -- -- 30% General Fund 100% 25% -- 6%* 131% Transfort -- 10% -- -- 10% General City Capital Improvements -- 6% 25% 69% 1000%, Street Debt Service -- 25% -- -- 25% Reserves -- 4% -- -- 4% TOTAL 100% 100% 25% 75% 300% *Includes Sales Tax Rebate Program and increase in Social Service Agency Contributions The debt service for streets is to pay for the street rehabilitation and new construction program from 1980-1982 As the debt service payments decrease, the difference between the debt service and the revenue generated by 1/40 sales and use tax will be allocated to the General Fund 3 WATER AND SEWER UTILITIES Formally adopted financial policies are an important factor in plan- ning the financial operations of the Water and Sewer Utilities Neither of the utilities has had the advantage of utilizing a comprehensive set of policies in the past Comprehensive financial policies should include statements concerning o Net Income Requirements o Capital Cost Financing o Reserve Requirements o Rate Requirements Policy statements have been developed for each area listed above and incorporated into the 5-year Water and Sewer financial plan NET INCOME The net income of the Water and Sewer Utility shall be at least equal to the annual cost of the following - Principal reductions of outstanding bonds - Loan repayments to Federal or State agencies - Annual operating reserve increases RESERVES The following reserves shall be established and maintained in the appli- cable utility - Operating reserve at least equal to 2% of the projected annual operating revenue - Plant Investment Fee reserve equal to the annual fees less annual cost allocated to System Expansions - Capital reserve equal to the amount of bond proceeds available at the end of one fiscal year to be expended in the next fiscal year - Debt reserve equal to the amount required by individual bond ordinance RATE REQUIREMENTS Utility rates shall be set at a level to provide for the net income requirement in each fiscal year Levelized rate increases are preferred and should be achieved through levelized expenditures CAPITAL COST FINANCING Annual capital cost shall be identified as one of three types 1 Normal replacement of the existing system 2 System improvements that benefit the existing and future popula- tion (Systems Improvements) 3 System expansions that benefit future populations ( Systems Expansion) Normal replacements shall be financed on a Pay-As-You-Go basis from a reserve for depreciation funded from current rates System improvements shall be debt financed over the life of the improvement and the annual debt service shall be funded from current rates System expansion shall be funded on a Pay-As-You-Go basis from a combina- tion of Plant Investment Fees and Contributions In Aid of Construction Federal and/or State grants may be utilized to fund portions of or all of capital costs 4 CAPITAL IMPROVEMENT POLICY Currently, the City of Fort Collins operates under the following Capital Improvement Policy 1 The City will develop a multi-year plan for capital improvements and update it annually 2 The City will make all capital improvements in accordance with the adopted Capital Improvements Program and the Capital Project Management Control System 3 The City identifies estimated costs and funding sources for each capital project requested before it is submitted to City Council 4 The City uses intergovernmental assistance to finance only those capital improvements that are consistent with the Capital Improve- ment Plan and City priorities and whose operating and mainte- nance costs have been included in the operating budget forecasts During the budget process, an overall strategy was developed to give direction on how capital projects should be financed based upon the different types of capital improvements These projects ( excluding Water and Sewer) have been categorized as 0 Replacement - capital expenditures relating to normal replacement of worn or obsolete capital plant 0 Expansion - capital expenditures relating to the construction of new or expanded facilities necessitated by growth 0 Unusual - capital expenditures for improvement that enhance the quality of life in Fort Collins and are consistent with the City' s goals, but cannot be categorized as essential for the provision of basic services or maintenance of life The overall policy developed to finance capital improvements (excluding Water and Sewer) addresses these three categories REPLACEMENT In general , capital expenditures relating to the normal replacement of worn or obsolete capital plant will be financed by reserving an amount of annual working capital provided from depreciation These projects will be financed on a Pay-As-You-Go basis with debt financing considered where appropriate The formula for computing the amount of reserves for capital replacement will be integrated with the current Capital Reserve Policy and Debt Financing Policy In those funds in which depreciation is not accounted for, a method for calculating the annual depreciation of replaceable assets will be developed in order to reserve an amount of annual working capital for replacement EXPANSION The present policy concerning capital plant expansion relates to new growth and will continue in effect This policy directs that these capital expend- itures be financed primarily by new development in the form of development fees, plant investment fees, and contributions-in-aid-of-construction These projects will be financed primarily on a pay-as-you-go basis but when the City' s share of the new improvements can be determined to benefit the overall population in the future, debt financing may be appropriate This policy will be integrated with the City' s present Capital Reserves and Debt Financing Policies UNUSUAL The policy relating to unusual capital expenditures directs the City to look to the ultimate beneficiary of each capital improvement in order to determine the source of funding As projects are identified, they will be funneled through a decision process in order to 0 determine whether projects are acceptable from the point of view of municipal goal achievements or cost benefit analysis 0 evaluate each capital projects' relevant cash flow in order to determine if a project is financially viable 0 prioritize capital improvements based upon these findings 5 RESERVE POLICY Formally adopted reserve policies are an important factor in maintaining the City of Fort Collins in good fiscal health Reserve policies have been formally adopted by Council for the three utilities, however, prior to the 1981 budget such policies did not exist for other funds of the City There are three primary types of reserves 0 Operating Reserves 0 Capital Reserves 0 Debt Reserves The degree of need for these reserves differs based upon the type of fund or operation involved However, one policy statement for each type of reserve can be uniformly applied to all funds OPERATING RESERVES There are two types of operating reserves 1 An appropriated contingency which provides for unexpected or unanticipated expenditures during the years This is the amount of contingency budget, normally stated as part of the operating budget 2 Revenue reserve of working capital is established to provide for unforeseen revenue losses If something happens to the economy, there is flexibility without worrying that current expenditures will exceed the total revenue available These reserves are not appropriated as part of the annual budget but are utilized at the end of the fiscal year, if necessary The amount of reserve is based upon potential revenue loss that would most probably occur in a given fund CAPITAL RESERVES Capital reserves are established in order to provide for normal replacement of existing capital plant and additional capital improvements financed on a Pay-As-You-Go basis The amount of the reserve is determined by averaging the dollar value of capital needs as shown in the Capital Improvement Program A second type of capital reserve is an appropriated capital contingency, which provides for the conceptual study and preliminary design of unan- ticipated capital improvements Debt financed capital improvements by definition are financed by the proceeds of bond issues and do not require capital reserves DEBT RESERVES Debt reserves are established to protect bond holders from payment de- faults Adequate debt reserves are essential in maintaining good bond ratings and the marketability of bonds Debt reserves are established by bond ordinance and normally provide for a reserve equal to one-half of the average annual outstanding debt service requirement The reserve policy recommended that has been included in the 1982 budget and five-year plan is as follows The City will establish and maintain OPERATING RESERVES 0 Equal to 2% of the annual operating expenditure budget by fund, to protect against unanticipated expenditures, 0 Equal to 2% of projected annual operating revenue by fund, for the purpose of protecting against unexpected revenue losses, CAPITAL RESERVES 0 Equal to the annual average of the five year projected additions for the replacement and additions to the existing capital plant, financed on a pay-as-you-go basis, for the purpose of providing for capital improvement needs of the City, 0 Equal to 5% of the amount annually appropriated for capital con- struction, for the purpose of providing for the costs of prelim- inary study and design, and DEBT RESERVES 0 Debt reserves as required by market conditions in concert with each debt issued and established by bond ordinance These policy statements are intended to apply to the various funds of the City , however, it is recognized that various Federal , State, and local laws and regulations, and specific financial policies may supercede this reserve policy 6 DEBT POLICY In 1981, the City of Fort Collins adopted the following debt financing policy POLICY STATEMENT The City of Fort Collins will use debt financing when it is appropriate It will be judged appropriate only when the following conditions exist 1 When non-continuous capital improvements are desired 2 When it can be determined that future citizens will receive a benefit from the improvement When the City of Fort Collins utilizes long-term debt financing it will ensure that the debt is soundly financed by 1 Conservatively projecting the revenue sources that will be uti- lized to pay the debt 2 Financing the improvement over a period not greater than the useful life of the improvement 3 Determining that the cost benefit of the improvement, including interest cost, is positive Additionally, the City has the following policies in relation to debt financing 1 Total general obligation debt will not exceed 10% of assessed valuation in accordance with the City Charter 2 Where possible, the City uses special assessment, revenue, or other self supporting bonds instead of general obligation bonds 3 Fort Collins maintains good communications with bond rating agencies about its financial condition The 1983 Budget includes debt service payments and reserve requirements for all debt currently outstanding for all proposed debt issues 7 INVESTMENT POLICY In conjunction with the report on the Financial Condition of the City of Fort Collins, 1981 , a number of financial management policies were considered, including Investment Policies The City of Fort Collins has operated under informal Investment Policies which were requested by City Council to be formalized The City of Fort Collins will follow Investment Policies which state 1 The City will continue to analyze the cash flow of all funds on a regular basis to ensure maximum cash availability 2 In order to obtain the best possible return on all cash invest- ments, the City will continue to pool cash from several different funds for investment purposes 3 Market conditions and investment securities will continue to be analyzed on a daily basis to determine the maximum yield to be obtained 4 The City will continue to invest at least 99% of its idle cash on a continuous basis 5 The City will invest in quality issues and will comply with City Charter and State Statutes regarding investment requirements 8 REVENUE POLICY Generally, the City reviews estimated revenue and fee schedules as part of the budget process Estimated revenue is conservatively projected for five years and updated annually Proposed rate increases are based upon 0 Fee policies applicable to each fund or activity 0 The related cost of the service provided 0 The impact of inflation in the provision of services 0 Equitability of comparable fees A Revenue Policy for the City of Fort Collins would include the existing informal policies with the addition of 0 The establishment of a diversified and stable revenue system to shelter the City from short run fluctuations in any one revenue source over the next two years The effect of developing an overall City Revenue Policy has been 0 Adoption of financial policies for the Water and Sewer Funds regarding net income requirements, capital cost financing, reserve requirements, and rate requirements 0 Rate increases for various fees and services provided by the City 9 PARKS AND RECREATION FEES In 1981, the City Council adopted the following fee policy for Parks and Recreation 1 The Recreation Division shall recover a minimum of 50% of its total cost in revenue generated through fees and charges 2 Total direct revenue from all Recreation programs shall not fall below a 100% recovery of total direct costs 3 Categories have been created for the Recreation programs in order to evaluate which programs must cover total or partial expenditures These categories are A Total Support 1 Sports 2 Dance and Fitness B Partial Support 1 Aquatics 2 Outdoor Recreation 3 Arts and Crafts 4 Special Interests C Minimal Support 1 Senior Citizens 2 Special Events 3 Therapeutics 4 Youth Centers 5 Northside Recreation Total revenue from fees and charges shall cover a minimum of 80% of "Total" and "Partial" support program costs The difference between 80% and 100% will be supported by the General Fund as well as for those programs requiring minimum support 4 Revenue generated from rentals, concessions, and other miscella- neous sources shall be considered an equal priority with class registrations when establishing fees and charges 5 The Recreation Division shall provide designated programs for senior citizens and developmentally disabled persons at 1/2 the established fee and to low-income citizens at 1/3 the established fee 6 The Recreation Division shall charge rental for rooms, pool time, gym, ball field, and special equipment, as specified in written policies 7 An admission fee shall be charged at the Northside Community Center for use of the weight room, locker room, and gym, during drop-in hours 8 Solicitation of funds through donations, fund raising events, non-traditional sources, and various other needs shall be encour- aged by the Parks and Recreation Advisory Board and City Council Funding collected for any special purpose shall be earmarked for that purpose, and the utilization of foundations for the further- ance of this goal shall likewise be encouraged The proposed 1983 Recreation Budget and fees have been developed utilizing the policy as adopted for 1981 10 GENERAL FUND FEES AND TAXES A number of miscellaneous licenses and taxes have not been reviewed for the last three years As a result of the Revenue Policy, these fees were analyzed for equitability, comparability, and cost recovery rates for 1982 and have been updated for 1983 Telephone Franchise Fee was last negotiated with Mountain Bell in 1978 when a rate per account was established Generally the City' s franchise fees have increased by at least the rate of inflation, with the exception of the Telephone Franchise Fee Amusement Licenses are comprised of operator licenses for game machines, theatres, dance halls, and bowling alleys The purpose of the license is for the City to control and be advised of these activities and provide additional policing as required The fees for these licenses were estab- lished in 1959 and have not been adjusted since that time Miscellaneous Licenses include licenses for operations that the City has determined to require certain restrictions and specific require- ments The various fee schedules for miscellaneous licenses have not been adjusted since 1976 even though certain activities impact the cost of City services In conjunction with the Revenue Policy , miscellaneous fees and taxes should be reviewed annually to determine rates and fee schedules for the coming year As these revenue items have not been changed for at least three years, significant rate increase are included in the 1982 budget Additionally, there appears to be inequity in fees charged for amuse- ment and miscellaneous licenses In order to minimize the discrep- ancies and simplify the administration of these licenses , a Business License has been included to replace the current Amusement and Miscel- laneous License categories Business License - Class I would be used for licenses designed to ensure the qualifications and liability insurance coverage of the applicant as well as protect the rights of the general citizenry The licenses have minimal impact upon the City' s cost of administering and monitoring these licenses Business License - Class II would be used to ensure the qualifications of the applicant, to provide more control of the scope or hours of opera- tion, and recover the increased police, street, or administrative costs involved with monitoring these operations The General Fund estimated revenue based upon these fee adjustments are included in the Annual Budget 11 PAYMENT-IN-LIEU-OF-TAXES In accordance with the City Charter regarding utility accounts, the City charges an estimate of the amount of property taxes and franchise fees that would be charged to each utility if owned privately Currently, the City levies a payment-in-lieu of taxes (P I L 0 T ) against the Water, Sewer, and Light and Power utilities In 1981, City Council approved a policy to reduce the rates of contri- bution to the General Fund by each of the utilities in an effort to 0 establish a rate more comparable to the rate that would be charged if privately owned, and 0 provide a more consistent rate for all utilities A five year program to achieve this objective was adopted for 1981 The City Council set the PILOT rates for 1982 to achieve the objec- tives established in 1981 As a result, the PILOT rates for the Water, Sewer, and Light and Power utilities will be 5% of operating revenues per year for each utility This policy reduces the amount of income the General Fund will receive from the Water and Sewer Funds for 1982 This reduction has been incorporated in the General Fund 1982 Budget In conjunction with the 1983 Recommended Budget, payments-in-lieu of taxes from the Light and Power Fund will be adjusted by the cost of street- lighting within the City This accounting adjustment will not impact the projected ending fund balance in the General Fund or Light and Power Fund 12 ADMINISTRATIVE CHARGES The General Fund provides services to all funds requiring a formula for the allocation of Administrative Charges The formula approved in 1981 is 0 Allocation of 50% of the cost based upon the ratio of each fund' s budget (operation, maintenance, and capital) to the total City budget, and 0 Allocation of 50% of the cost based upon the number of City employ- ees in each fund to the total number of City employees This policy was applied to all funds in 1982 with the exception of those funds which are subsidized by the General Fund 13 ENTERPRISE FUNDS The City currently has nine Enterprise Funds They include Cemeteries, Golf, Light and Power, Lincoln Center, Performing Arts, Sewer, Storm Drainage, Transfort and Water The Enterprise Fund classification has been used to account for various services for which there exists a significant potential for financing through user charges In many of these funds a subsidy from the General Fund has been necessary to cover operating ex- penses Historically, services were accounted for in an enterprise fund only if they were financed more than 50% by user charges In the proposed 1982 budget, there are two funds which do not meet this 50% level The Lincoln Center expenditure total for 1982 is $421,101 Anticipated revenue for 1982 is projected at $183 ,665 The user fee revenue coverage is therefore 44% Transfort is the other fund which does not cover at least 50% of its expenses with user fees In 1982, total expenditures are projected at $660,538 and user fee revenue is projected at $139,000 The user fee revenue coverage is 21% There has been a nationwide trend towards the regulation of the demand for governmental services through user fee mechanisms The Fort Collins City Council supports this concept The long term goal of all enterprise accounts is self sufficiency Towards this end, those funds which are not presently self sustaining shall incrementally adjust their rate structures to achieve a positive income position Those operations which cannot achieve a positive income position within a five year timeframe, shall be accounted for as subsidized operations and not as Enterprise Funds beginning in 1983 This does not mean that these operations will not continue to rely heavily on user fees to help support their operations Revenue/ expense accounting will be provided through customized monthly statements to indicate their income/disbursement posi- tion The 1983 Budget accounts for the Transfort operation and the Lincoln Center as part of Special Revenue Funds 14 ENERGY The City recognizes a three-part responsibility in energy management and conservation As a consumer with 64 buildings, 350 vehicles, and 750 employees, the City strongly encourages building retrofits, alternate fuels, and changes in operating practices which will save the City money or enable it to benefit from new technologies As the operation of an electric utility and a member of a power generation cooperative, the City is an energy provider City Council is therefore interested in helping its consumer public reduce the energy it uses City Council , recognizing certain responsibilities for leadership and regulation which are inherent in local governments, is willing to shoulder some of the risks which innovation and being first in the field entail Towards these ends, the City Council will look for implementation of the following programs and policies 1 The in-house Energy Management Program will continue to hold a high priority The decentralized approach has worked well and because this strategy promotes more innovation and greater depart- mental involvement, it remains the preferred approach 2 The principal goal of the program is cost savings To this end, a minimum of $150,000 will be set aside each year for the next five years for energy conservation retrofit work in City facilities 3 Whenever possible, and to the extent practical , life cycle costing will be used in developing bid specifications and awarding con- tracts 4 The greatest long-term benefits from energy conservation will result from broad participation by the community To encourage this participation, a community education program will be devel- oped It will address consumer awareness, the impacts of conserva- tion, and other information the community will need to deal with energy issues Like all elements of the Energy Management Program, this segment will be addressed by departments and coordinated through the City Manager' s Office 5 To further encourage energy conservation, City Council will look for ways to utilize community resources for community prob- lems The zero interest loan program is one example 6 City Council recognizes the important role of the private sector in long-term energy conservation and will take steps to be in- volved with the community in a way which encourages energy conser- vation in building design and community layout 7 In 1982, a community energy audit will be made This audit will be designed to provide staff and policy makers the kinds of program choices which can have the greatest impact on the community, so that dollars invested in conservation can have the fullest effect 8 The alternate fuels program will be contrived and expanded, insuring operating cost savings and a reduction of vulnerability to foreign oil reliance 15 TRANSFORT BACKGROUND The current Transfort System is financed by 0 A contract with CSU 0 User fees (non-CSU) 0 A General Fund operating subsidy Additionally, the City received a federal Urban Mass Transit Grant of $3 ,630,960 to construct a maintenance facility and replace four buses with the City' s matching share being $907 ,740 in 1982 ACTION The City will work towards establishing a Quality Transfort System as soon as is practicable (1983 or later) , to be phased in as funds become available Such a system could provide for the following 0 Nine buses serving 85% of the community and all major service areas at reasonable intervals 0 Operation of the system 14 hours per day, 6 days a week 0 Operation of a downtown shuttle 0 Partial funding by fares Working towards the Quality Transfort System, the City designates Transfort to be an essential service to all the community, and will pursue coordina- tion efforts with Care-A-Van and the School District, grant awards, and increased fees through advertising and contracts The 1983 Budget includes the expansion to a nine (9) bus system in 1983 16 STORM DRAINAGE In accordance with the City' s continuing commitment to provide storm drainage lines and facilities within subdivided and developing areas of the City , the Storm Drainage Utility was established in 1980 for the purpose of paying for the cost of capital construction and for the associated operating and maintenance costs of the Storm Drainage Program A monthly storm drainage utility fee was implemented in 1981 to provide financing for operation and maintenance costs In past years, funding for capital construction and development of basin master plans was provided by the Seven Year Capital Fund With Seven Year Capital monies expended, alternative financing for capital improvements had not been identified In order to address the storm drainage capital needs, the City has devel- oped master plans of storm drainage capital requirements for each basin In an effort to balance storm drainage risk and liability, the Storm Drainage Board has recommended a twenty (20) year storm drainage capital program that relates to the system requirements of each basin This twenty (20) year program provides for the installation of storm drainage improvements in existing and developing areas of the City where a positive cost/benefit ratio exists for each project A basin fee for capital construction has been included to finance these improvements Future and existing developments would contribute to the cost of these facilities based upon the benefits to be derived from the capital construction The basin fee for new and existing developments would depend upon the improvements required in each basin, the intensity of existing and proposed development, and the size of each basin A minimum fee will allow critical storm drainage improvements to begin in undeveloped areas while improvements to existing areas are further reviewed in terms of risk and consensus 17 ART IN PUBLIC PLACES The City of Fort Collins is encouraging the development of the arts as a highly satisfying end in itself, but also to improve the quality of life via creative surroundings in the community Visually a community is sterile until the quality of the environment is enhanced by the addition of visual arts to public buildings, parks, and plazas To this end, City Council and staff have developed a program to provide art in public places for the City of Fort Collins 1 Art in Public Buildings An art acquisition program for the City' s major public buildings housing employees and for public gathering places will be devel- oped in 1982 A budget of $5,000 per year has been established to initiate this program until all buildings reflect this policy 2 Art in the Parks The budget for each new park will include $1 ,000 to $5,000 for active sculptures and passive art as a part of the unique park experience This is to be designed into the new park construction schedule 3 Jury Policy A policy for a jury of at least three persons with diversified professional arts background will be established to determine commissions and selections of artworks for public places Jurying will assure that the selections will have a universal appeal and relieve any single person of the responsibility of selection for a cross-section of tastes 4 Center for the Study of Contemporary Art The City staff and community will be encouraged to become involved with CSU in the development of the Center for Contemporary Art This should expand the community' s awareness and appreciation of contemporary art 18 PENSIONS The City of Fort Collins contributes to five (5) pension plans, including 0 Police 0 Fire 0 General Employee Retirement 0 State Pension - Police 0 State Pension - Fire The Police, Fire, and General Employee Retirement Plans are administered by the City of Fort Collins The rate of contribution for the City admini- stered plans is based upon an annual actuarial analysis for the normal cost and unfunded liability of the number of employees participating in each pension plan In 1981, an actuarial study of the costs and benefits of each plan was completed which recommended 0 The reduction of the City' s normal contribution rate due to changes made in the actuarial assumptions 0 The amortization of the unfunded liability over a twenty (20) year period in order to provide for soundly financed pension plans 0 An adjustment to the benefits provided by the General Employee Retirement Plan in order to maintain comparability with benefits provided by other front range communities The changes recommended in the actuarial analysis have been incorporated in the Revised 1981 and Recommended 1982 budgets for a savings of $396,990 Based upon City Council action, the 1982 pension policy is 1 The City will maintain contribution rates at a level sufficient to meet all current normal costs of each pension plan 2 Any unfunded liability incurred by the individual pension funds will be amortized over a period not to exceed twenty (20) years 3 A thrift plan will be added to the general employees retire- ment plan to maintain comparability with benefits provided by other Front Range communities The 1983 rate requirements to continue this policy are GENERAL EMPLOYEE NORMAL COSTS POLICE FIRE EMPLOYEE THRIFT PLAN estimated City Contribution 8% 8% 4 385% 3 0 max Employee Contribution 8% 8% -- 3 0 max TOTAL 16% 16% 4 385% 6 0 max GENERAL UNFUNDED LIABILITY POLICE FIRE EMPLOYEE TOTAL City Contribution $125,000 $45,700 $227,000 $397,700 19 MEDICAL INSURANCE Currently the City of Fort Collins purchases medical insurance coverage for all permanent City employees through an insurance carrier An analysis of the existing medical insurance rates and the rates that would be required with a partially self-funded insurance plan shows that 0 the City could save $125,000 to $240,000 in the transition year to partially self funded insurance, and 0 monthly contribution rates could be maintained at a lower rate than that charged by the current carrier One of the primary reasons that a partially self funded insurance program has become a viable option to traditional insurance coverage is the crea- tion of a consortium of cities to collectively bid administrative services, stop-loss insurance for unexpected emergencies, and life and accidental death and dismemberment insurance resulting in lower rates The 1983 Budget continues the partially self-funded medical insurance program for City employees and incorporates the projected savings The benefits received by City employees will be the same as those provided by the private medical insurance carrier 20 LEASE/PURCHASE The City of Fort Collins has used lease/purchase financing for the provi- sion of new and replacement equipment In 1981 , this policy was extended to the purchase of new and replacement vehicles and rolling stock in order to 0 ensure the timely replacement of vehicles and equipment, 0 ensure that annual vehicle replacement requirements are included in the annual budget Other advantages that lease/purchase financing can offer over the tradi- tional cash method of financing are 1 Decreasing the impact of inflation on the purchase of new and replacement equipment 2 Reducing the initial impact of the cost to user departments by enabling acquisition costs to be spread over the useful life of the equipment 3 Safeguarding the opportunity to use cash assets to earn higher interest than the interest cost of lease/purchasing Finally, it should be noted that the City is able to discontinue the equipment leases at its discretion so that future City Councils will have the option to continue or discontinue the policy of lease/pur- chasing City equipment 21 PRIVATE CONTRIBUTIONS In reviewing the Quality of Life Services, such as Recreation, Lincoln Center, and the Library, it was determined that the City should make a greater effort in securing private contributions for these ongoing programs and services Quality of life programs represent an "extra" that we have been able to provide in Fort Collins in the past and may not be able to provide at the same level without additional support in the future During 1981 , the Friends of the Library implemented a fund drive to purchase an electronic sensing device to protect against the loss of library materials and the Lincoln Center has actively solicited contribu- tions for the purchase of equipment to increase the utilization of the facility Contributions such as these reflect the community' s willingness to support the quality of life services provided by the City without jeopardizing other basic and maintenance of effort activities Other opportunities for individual or organizational contributions are currently being developed for City Council ' s review in an effort to continue to encourage private contributions for quality of life services 22 REVENUE SHARING In order to avoid dependency upon federal funds that may not continue for basic or core service areas, the City currently utilzies Revenue Sharing monies only for one-time and/or capital costs The exception to this policy is the use of Revenue Sharing funds for social service programs on an on-going basis (i e , private, non-profit agency contributions, Property Tax and Utility Rebate Programs, and the Volunteer Program) With the possible termination of Revenue Sharing in 1983, the 1982 Budget reflects the first steps toward the phasing out of these funds with total elimination in 1984 Alternative funding sources for these programs will need to be addressed 23 REBATE PROGRAMS The City recognizes that certain segments of the population, specifically handicapped and senior citizens on fixed incomes, are unable to keep pace with increasing taxes and utility costs The City has, therefore, estab- lished Property Tax and Utility Charge Rebate Programs to provide finan- cial assistance to those applicants who qualify under established guide- lines (e g , income, residential , disability certification, etc ) Income guidelines are adjusted periodically in accordance with State income levels established for such programs The 1983 Budget includes a Sales Tax Rebate Program for food using the same applicant guidelines as the other rebate programs The City will continue to maintain these programs and will adjust income guidelines and rebate amounts as necessary 24 CULTURAL SERVICES & FACILITIES FEE POLICY Background The Cultural Services and Facilities Fund shall budget to recover a minimum of 40% of its total cost in revenue generated through fees and charges This shall be accomplished through implementing the following policy 1 Total revenue from fees and charges shall cover a minimum of 55% of Lincoln Center Operating and Maintenance and Performing and Visual Arts Programming budgets This includes revenues generated at the Lincoln Center from rentals, equipment, concessions and other miscellaneous sources and all total direct revenues from the Performing and Visual Arts Programming The difference between 55% and 100% will be funded by a transfer from the General Fund 2 The Cultural Services and Facilities Administration and the Museum and Historic Landmarks budgets provide minimal financial support and will be funded by a transfer from General Fund 3 A rental fee for Avery House shall be reviewed annually and charged on rooms not used by Poudre Landmarks 4 Major capital improvements and renovations will be financed through sources other than Cultural Services and Facilities Fund 5 Solicitation of funds through donations, fund-raising events, and non-traditional sources shall be encouraged by the City Staff, Lincoln Center League, the Cultural Resources Board and the City Council Funding collected for any special purpose shall be earmarked for that purpose, and these funds will be processed through the Fort Collins Foundation ACTION The proposed 1983 Cultural Services and Facilities Budget and fees have been developed utilizing this policy 25 PAY PLAN Background The C, ty' s goal as an employer is to attract and keep quality employees To help accomplish this goal , the City has established the upper third pay philosophy The upper third pay philosophy says that after a survey is made of other organizations in the relevant labor market, the pay for Fort Collins' employees will rank in the upper third of those organizations surveyed The upper third philosophy has been maintained for five general reasons 1 To attract quality employees 2 To retain quality employees 3 To operate the City with fewer employees than comparable juris- dictions 4 To provide an incentive and a reward for productivity 5 To recognize costs savings generated by productive employees The maintenance of the upper third philosophy can be jeopardized by a slow economy The City shall implement plans to accomodate the upper third pay philosophy through sound financing mechanisms ACTION Every effort will be made to provide the economic adjustment necessary for the upper third by January of each year If this is not financially feasible, as much as can be provided (given the priority demands on avail- able resources) will be given in January In April , Council will review the costs of the "upper third" pay plan and ways to fund it based on savings generated and any increased revenue growth At that time, Council will implement all or as much of the upper third as can be soundly financed Passed and adopted at a regular meeting of the City Council held this 5th day of October, 1982 Mayor ATTEST 2VA?.,: �t &" 4t, "1�7 Ci ty C1 e