City Council Study Session - 2010-03-31 - Blue Ribbon Commission - Phase II Report
BLUE RIBBON COMMISSION
PHASE II
March 2010
City of Boulder
Blue Ribbon Commission - Phase II
Commission Members
• Susan Graf - President, Boulder Chamber
• Tom Hagerty - Retired City Employee - Finance
• Suzanne Jones - Regional Director, The Wilderness Society; Environmental
Advisory Board
• Dan King - Ambassador of Cool, Boulder Outlook Hotel
• Michelle Krezek - Intergovernmental Affairs Director, Boulder County
• Beth Pommer - Former Planning Board Member
• Dorothy Rupert - CU Instructor; Retired State Senator
• Jeffrey Wingert - Partner, WWR Real Estate Services, LLC. WW Reynolds
• Richard Wobbekind - CU Assoc. Dean, MBA and Executive Programs; Assoc.
Prof. of Business Economics; Dir. Business Research Division
City of Boulder Staff
• Jane S. Brautigam, City Manager
• Paul Fetherston, Deputy City Manager
• Stephanie A. Grainger, Deputy City Manager (retired)
• Bob Eichem, Acting Executive Director for Administrative Services and Finance
Director
• Maureen F. Rait, Executive Director of Public Works
• Lynne Reynolds, Municipal Court Administrator
• Patrick H. Von Keyserling, Communications Manager
• Jim Reasor, Budget Manager
• Kathy McGuire, Budget Officer
• Jay Newberg, University of Colorado, MBA Intern
• Peggy Bunzli, Administrative Analyst
BLUE RIBBON COMMISSION (BRC) - PHASE II
Table of Contents
Document Pate(s)
Executive Summary ..........................................................................................................1
Chapter 1: The Problem
Overview .......................................................................................................5
Background ..................................................................................................5
Process ...........................................................................................................7
Chapter 2: The Findings
Overview of BRC II Findings .....................................................................11
Enhancing the City's Budget Process .........................................................12
Emphasizing Performance Measurement of City Services .........................14
Understanding the Cost of Providing City Services ....................................15
Efficient Delivery of City Services .............................................................16
Dedicated Funding ......................................................................................17
Adjusting the City's Financial/Management Policies .................................18
Chapter 3: Next Steps
Budgeting Process ......................................................................................21
Performance Measurement of City Services ..............................................22
Financial/Management Policies - Compensation .......................................23
2010 Budget Stabilization Plan ..................................................................23
Conclusion .................................................................................................24
Appendices
Appendix A: Overview of Revenues & Expenditures A-1
Appendix B: Business Plan Terminology ..................................................B-1
Appendix C: `Basket of Services" ............................................................C-1
Appendix D: Overview of General Fund Transfers to Other Funds......... D-1
Appendix E: Overview of Dept Master Plans & Performance Measures..E-1
Document Pate(s)
Appendix F: Template for Department Presentations F-1
Appendix G: Listing of Department Presentations by Date G-1
Appendix H: BRC II Presentation - Update to City Council H-1
Appendix I: Update on Compensation Program Review I-1
Appendix J: Cost Accounting and Cost Allocation in Local Government.J-1
Executive Summary
By nearly quadrupling its population in the 30 years between 1950 and 1980, the City of
Boulder saw a dramatic increase in revenues and a corresponding demand for city
services. Citizens came to expect that the city would not only provide a high-level of
core services', but would also provide many more specialized programs and services.
However, as the pace of growth slowed, so did the growth of new revenues but residents
and the city organization continued to desire an extensive set of services.
By using dedicated2 revenues through restricted sales and property taxes, the city funded
specific programs and met long-term goals that were important to many citizens. In
addition, the city's budget process resulted in each individual city department looking at
its programs and services in isolation, without regard to the bigger picture. In this most
recent decade, the financial condition of the city has become increasingly constrained -
with the long-term trend showing that revenue growth will not keep pace with the growth
in expenditures. The current budgeting process and restricted revenues make it more
difficult to develop a comprehensive budget across all departments that will address the
long-term funding gap3 the city is facing.
In order to address this situation and place the city organization on firm financial footing,
the culture of the organization and the community's expectations must change. The Blue
Ribbon Commission - Phase II recommends that the city manager and the city council
adopt several key strategies to facilitate the changes necessary to put the city on a path
toward long-term financial stability. These strategies include:
Budget Process - adoption of a budget process based on prioritizing services will
allow the city to allocate limited resources in a way that most effectively4 meets
the city's key goals or top priorities.
Performance Measurement - the use of meaningful measures and feedback on the
attainment of city goals will allow the organization and the community to have
confidence that programs and services are being provided in the most efficient
manner possible.
' Core services are those services that are considered the fundamental responsibility of a local government;
these typically include but are not limited to police, fire, transportation and water/wastewater utilities.
z Dedicated funding refers to allocating a revenue source, such as sales or property tax, to a specific
expenditure item either through a ballot initiative, city council/city manager direction or city charter; the
Blue Ribbon Commission - Phase I (BRC I) used the term "earmarking" to refer to this form of funding.
3 The Blue Ribbon Commission completed a long-range analysis of city revenues and expenditures from
2006 through 2030. The analysis indicated that city revenues are projected to grow at a 3 percent annual
rate and expenditures at 4 percent. This ongoing difference between revenues and expenditures is referred
to as the funding gap.
4 Using city resources in the most effective way means that the city is providing the right combination of
services to meet citywide goals.
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Full Costing of Services and Programs - the total costs for all city services,
including subsidies, must be known so that informed budget decisions can be
made.
Efficient Delivery of City Services - looking for ways to end duplication of
services through centralization of administrative functions within the city
organization or partnering with the private sector, nonprofits or other
governments to provide services will increase efficiencies.
Use of Dedicated Revenue Sources - dedicated funds should be used sparingly
and that, if such dedicated taxes are used, they should come with a full
understanding of their impact on the city's finances, including any corresponding
incremental operating and maintenance costs. In reaching this determination,
there were generally two perspectives expressed among members of the BRC II.
One, that if dedicated fiends are used, they should only be used for capital
purchases and construction. The second and minority perspective expressed was
that dedicated funds may be appropriate not only for capital purchases and
construction but for some broader applications.
Financial/Management Policies:
- Compensation - the manner in which employees are compensated (both in
terms of salary and benefits) greatly impact the city's finances. A balance
must be maintained between total employee compensation and the city's
ability to pay. By recognizing the need to balance both of these interests, the
city should be able to attract and retain good employees, as well as minimize
necessary reductions in city programs/services.
- Asset Management - the city must be proactive in the management of its
assets, including land, facilities, vehicles and equipment. The asset
management policies need to be routinely reviewed to ensure maximization of
efficiencies.
- Transfers from the General Funds - the practice of transferring General Fund
monies to other city funds should be the exception rather than the rule. These
transfers are acceptable only when the funding helps to achieve high priority
city goals rather than simply based on historic practices.
Implementation of the strategies described in this report will not be easy and will not
occur over night. It will take a commitment on the part of all city stakeholders, require
difficult decisions and will have to be adapted and adjusted as new information becomes
available. The projected long-term funding gap has been called "the new normal."' It
represents a fundamental shift in the outlook for the city and will require profound
changes in how the city operates. All city services and programs must be part of the
s The General Fund is one of five governmental fund types and typically serves as the main operating fund
of the government. The General Fund is used to account for all financial resources except those required to
be accounted for in another fund.
6 "New Normal" economy refers to the expectation that the economic growth following the 2008-09
recession will be slower than economic recoveries following other recent recession: the slow growth rate is
attributable to consumer credit constraints, decreased wealth and increased saving rates.
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discussion. The stakeholders of the city must answer the questions: Is the city providing
the right services? Are the services provided in the most efficient way possible? Are the
services effectively achieving their objectives? Even after these questions are answered,
there may be services that the city can no longer afford to support.
The looming fiscal constraints will require changes beyond just managing the city's
spending and budget. In order for these strategies to be successful, it is critical that the
city organization engage the community in a robust public process. This process must be
a two-way dialogue. The city organization needs to inform the community regarding
current and long-range financial challenges and the corresponding difficult trade-off
decisions; and the community needs to inform the city regarding which services are most
important on a comprehensive, citywide basis. The traditional practice of each group
protecting its own political turf and self interest does not produce positive results. This
will lead only to viewing services in isolation rather than the balanced perspective
necessary to meet the needs of the broader community.
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4
The Problem
Overview
On Jan. 15, 2008, the Blue Ribbon Commission on Revenue Stabilization (BRC I)
presented a report to city council that focused on stabilizing revenue sources. The
primary finding of BRC I was that growth in city revenues will not keep pace with
anticipated inflationary costs for city services. This "structural gap" between revenues
and expenditures means that the city will be faced with an estimated $90 million shortfall
by 2030, even if the current sales taxes set to expire are extended. It should be noted that
the city's annual budget adoption process works to close the funding gap each year since
the city charter and state law both stipulate that the city maintain a balanced budget. The
BRC I's stabilization effort focused on diversifying and extending current revenue
streams, evaluating new revenues, implementing financial policies and ensuring efficient
and effective use of public funds.
While the scope of BRC I focused on revenue stability and the identification of the
structural gap, BRC I also noted that fiscal stability would be achieved through a
combination of both increased revenue sources and expenditure management. To support
a more detailed review of city expenditures, the City Manager's Office appointed and
convened a second Blue Ribbon Commission (BRC II) in September 2008. In this
second phase of work, the BRC 11 was asked to "review the city's expenditures to identify
opportunities to enhance organizational efficiency? and to ensure the community's
continued confidence in the use of public funds. In addition, the BRC II was asked to
review, consider and recommend necessary action steps to implement the recommended
approaches, strategies and policy guidelines developed in the first phase of the BRC
work."
Background
The Blue Ribbon Commission I (BRC I) projected revenue and expenditures for nine
City of Boulder funds from 2006 through 2030 as a starting point for its revenue
stabilization endeavor. This modeling exercise revealed that Boulder's revenues would
grow approximately 3 percent a year over the planning horizon while expenditures are
anticipated to grow at approximately 4 percent per year. This one percent difference each
year projected over 24 years results in a $90 million annual shortfall in the expanded
General Fund in the year 2030 assuming all expanded General Fund sales taxes are
renewed through the period. The expanded General Fund provides funding for services
Efficient delivery of programs and services refers to providing them as economically as possible or in the
least costly manner.
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and programs typically considered basic city services (including, but not limited to,
police, fire, library, parks and recreation).
The principal reasons for the growth differential is the decreasing productivity of sales
tax revenue and the above average inflation rate of government inputs. Specifically, the
BRC I found that sales tax productivity will continue to decrease due to:
■ a flat inflation rate associated with durable goods
■ durable goods diminishing as a percentage of total consumption
■ changing demographics leading to fewer purchases of sales tax eligible products
■ continuing increases in e-commerce
Conversely, the cost of municipal inputs will outpace revenue growth due to inflation
rates associated with:
■ energy (to operate offices, recreation centers, libraries and fleets)
■ building materials (oil for streets, cement for sidewalks)
■ personnel (salaries, pensions, health care).
This gap is compounded by the fact that 41 percent of Boulder's expanded General Fund
sales tax rate is set to expire during this same planning horizon. Factoring this into the
model expands the gap for the General Fund to $135 million a year in 2030 (in 2030
dollars). This means, it will cost $135 million more than Boulder's revenue system will
generate to provide the same bundle of services at the same service standard in 2030 as it
did in 2006. Even if the expiring sales taxes are continued, the gap in 2030 will be $90
million. Furthermore, simply increasing sales tax rates, as has traditionally been the
revenue tool relied upon by municipalities in years past, can only solve the problem in the
short term, and continues the trend of over-reliance on a volatile revenue source. The
work of the BRC I concluded that the city's financial challenges were structural in nature
and would have long-term impacts due to demographic changes and decreased
productivity of sales tax.
The BRC I identified the renewal of existing sales taxes as the top priority for revenue
stabilization in Boulder. At the conclusion of BRC I, six sales taxes were set to expire
during the planning horizon that account for 41 percent of the city's sales tax rate. In
addition, the BRC I called for the full "de-Brucing" of the Boulder property tax, changing
the development excise tax to a level competitive with surrounding municipalities and
ideally set at a rate that fully recovers costs, and exploring a sales tax on selected
services. These changes alone will not eliminate the gap. BRC I concluded that a
combination of additional increased revenues and decreased expenditures must also be
implemented.
The city has moved forward with a number of the BRC I recommendations. In
November 2008, ballot measures to extend indefinitely the 0.38 percent sales/use tax and
to remove the remaining TABOR restrictions on property tax (referred to as "de-
Brucing") were approved by voters. In 2009, a measure to extend indefinitely the 0.15
6
percent sales/use tax was also approved by Boulder voters. The impact of the approval of
these measures has reduced the projected long-range funding gap from $135 million to
$95 million, as reflected in the graph below.
Funds Supporting Basic City Services -
2006 - 2030
Revenues assume 2015 and 2024s ales taxes expire and reflect the impacts of the 2008 and 2009
ballot measures (.38%&.15%extension and de-Brucing property tax)
$350,000,000
$300,000,000
$250,000,000
$200,000,000
$150,000,000
$100,000,000
$50,000,000
2006 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2020 2022 2024 2026 2028 2030
Total Revenue (With Tax Sunsets in 2015 & 2024)
-Total Expenditures Incl. Critical Deficiencies & Growth
Even though the scope of BRC I was focused on revenue stability and the identification
of the funding structural gap, the BRC I noted that fiscal stability would be achieved
through a combination of both increased revenue sources and expenditure management.
Both sides of the equation must be considered in addressing the structural funding gap.
To support a more detailed review of city expenditures, the City Manager's Office
convened a second Blue Ribbon Commission (BRC II) in September of 2008. BRC II is
primarily focused on a review of city expenditures to ensure that public funds are being
used effectively and efficiently.
Process
The BRC II held its first meeting on Sept. 23, 2008 and continued to meet twice a month
through the end of 2009. The initial meetings of the BRC II focused on providing the
group with a basic understanding of local government finance and an overview of the
city's financial structure, both in terms of revenues and expenditures. This information
provided the BRC II with a sound framework to begin reviewing city expenditures to
ensure that public funds are being used effectively and efficiently.
After the group was given a base of knowledge regarding local government finance, they
began to tackle its purpose or goal in more detail. Given the size and complexity of the
city organization, the BRC II's charge proved to be challenging and required several
discussions and continued refinement of the vision for the outcome of its work. For
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instance, in order to determine if city services are being provided effectively and
efficiently, the BRC II needed to understand what services are being provided and why.
These early discussions greatly helped the group and staff to identify what was needed in
terms of additional information and analysis to achieve the desired outcomes. The
additional materials provided to the group during this period included:
- the "basket of services"8 provided by each department and how they are
funded
- highlights and issues from recently approved department master plans
- an overview of the performance measures and benchmarking currently
used to evaluate city services
- an overview of the current budget process used by the city, referred to as
the "business plan"9
It was agreed that community values10 have shaped the services provided but a more
defined understanding of how services are actually prioritized was needed. In other
words, which services are considered core services for a local government to offer and
which services are more optional and could be provided more effectively by another
segment of the community. The issue of "which businesses the city should be in" was a
frequent topic of discussion because the type and variety of programs offered by the city
impacts which method of service delivery is most efficient.
The group determined that its efforts should also include a consideration of alternative
options for providing services to the community. For example, does the city need to offer
a full range of recreational services since there are so many options offered in the private
sector. Also, the BRC II wanted to know how often departments are able to partner with
non-profit organizations, private sector entities or other government agencies to avoid
duplicating efforts. The BRC II also asked how services are evaluated and assessed in
each area to make sure they are meeting performance goals. These discussions led to
agreement that it would be beneficial for each department to present a standard set of
information to the BRC II addressing these items. The presentations included:
- Overview of funding sources and uses
- Business plan categorization for services for the department (i.e., essential,
desirable, discretionary)
- Any atypical services provided compared to other municipalities
- Legal service requirements
$ Basket of services refers to the overall or total set of services/programs offered across all city
departments.
9 The business plan is a decision-making tool the city has been using since 2005 to recommend strategic
citywide revenue and expense priorities for current and future funding; as part of the business plan, each
department categorizes its services as essential, desirable or discretionary according to their contribution to
the mission and objectives of the department and aligned with good public stewardship principles.
io Community values are those ethical or moral values that are largely shared by members of the
community; the values identify those conditions or characteristics that members of the community consider
important such as stewardship of the environment, respect for diversity, promotion of healthy lifestyles, etc.
8
- Identification of other service providers and regional partnerships
- Performance measures currently used by the department
These presentations proved to be useful to the departments as well as the BRC II. In
discussing their presentations with the BRC II, it helped departments identify potential
efficiencies and potential ways to collaborate with other organizations (e.g., non-profits,
private sector and other government agencies). It also gave the departments an
opportunity to review and receive feedback on potential budget reductions being
considered for implementation in the 2010 budget.
Based on departmental presentations, the BRC II received additional information on
issues that impact multiple departments. This information included:
- Purpose of General Fund transfers to other funds
- Identification of dedicated revenues
- Fee subsidies
- Update on calculating the cost to provide each service/program
Based on presentation materials and group discussions, the BRC II developed its
recommendations and study conclusions. These are reflected in chapters two and three of
this report.
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10
2 The Findings
Overview of BRC II Findings
The City of Boulder grew significantly between 1950 and 1980. During this time period,
the city's population increased from 20,000 to 72,000. The correspondingly influx of
revenue allowed the city to offer increasingly more services and the community's
expectations for city services grew as well. For example, at one time the city had just one
main library and one recreation center. As the population grew in the outlying areas,
those neighborhoods wanted easier and closer access to library and recreation services.
Once an additional library and recreation center were established, other neighborhoods
saw the benefit and came to expect similar amenities in their area as well.
As the city's prolonged growth in revenues began to slow in the 1980s and 1990s, two
issues became apparent. First, city departments increasingly began to compete for
limited financial resources. Second, and in response, the community sought dedicated
revenues for particular services. This encouraged some constituencies to advocate for
specific service areas and resulted in the community viewing city services in isolation
without regard to necessary trade-offs across all city services.
Beginning in 2001, the city's financial condition became increasingly constrained and the
projected long-term trend is that revenue growth will no longer keep pace with the
growth in expenditures. This long-term trend (the structural funding gap) is a
fundamental transition in funding for the City of Boulder. The city will continue to be
pressed to identify funds to implement new programs as well as to maintain its current
programs. As a result, practices such as considering services in isolation and dedicating
sales taxes, only conceal the central fact that funds for the general operation of the city
are limited and hard choices are necessary to close the structural funding gap.
The organization, both internally and from an external political perspective, must change
in order to adapt and ensure its long-range financial sustainability. Specifically, the city
must change its long-standing practices and culture of-
- Expecting that the city will be "everything to everyone"
- Reacting to interest groups that advocate for specific city services without
considering other service needs
11
- Fostering a silo mentality'1 where each department and service seeks to
protect its own budget rather than viewing its budget as part of the total
city budget
- Viewing city services in isolation
Considering the majority of city services to be essential or core rather than
embracing a more rigorous prioritization
In order to respond to the structural funding gap, the city must change the culture of the
organization and community expectations. Several strategies that will assist the city in
this culture change are: a budget process that prioritizes city services and enables the
community to make informed decisions about difficult trade-offs 12 ; identification of the
full costs for city services; and implementation of a performance measurement system to
measure the efficiency and effectiveness of city services. In addition, the city
organization will need to evaluate and possibly modify financial/management policies,
such as compensation and asset management, that may be exacerbating the funding gap.
These strategies will support transparent and informed decisions that reflect community
values and priorities. The remainder of this chapter describes these key strategies for
driving change.
A fundamental issue that the city will need to address is whether it is providing the right
mix of services. Some city services may no longer be effective, or even desirable, if they
do not appreciably contribute to overall city goals. Also, the city should identify where it
directly competes with the private sector. Although overlapping services may be
appropriate, it merits further review to understand the rationale for providing similar or
duplicative services. If a service is adequately provided by the private sector, both in
terms of public access and affordability, the city should move to phase out the provision
of the service. This is an important point because once residents begin receiving a city
service, it is difficult to eliminate the service even if it does not provide significant
community benefit or is only provided to a limited number of residents.
Enhancing the City's Budget Process
In the city's current budget process, referred to as the business plan, services are
categorized as essential, desirable or discretionary by each individual department. While
this categorization was useful in identifying individual departmental priorities, it resulted
in approximately 80 percent of city services being classified as essential; the majority of
remaining services were labeled as desirable and relatively few services identified as
discretionary. The business plan was focused on each department's priorities rather than
a citywide perspective. This limited its efficacy as a tool to prioritize services between
and among departments.
11Silo mentality refers to an organizational culture that occurs when individual departments or work groups
promote and protect their programs/services without considering the broader needs of the organization.
12 The term "trade-off' refers to the decision to continue or begin funding a particular progran /service
through the elimination of funding for another program/service.
12
Additionally, these categorizations do not adequately distinguish essential functions
between or within departments. It is critical that the city understand the relative
importance of all its programs/services. For example, is it more important to provide
human services to at-risk populations, police patrol services, learn-to-swim programs, fire
prevention, clean water, preservation of open space, or transportation alternative modes.
These are difficult questions to answer since there would be no consensus among
residents regarding how they view city programs/services. In summary, the city's
business plan categories are too subjective and do not adequately distinguish the relative
importance of programs. City service priorities must be more clearly established through
the budget process.
The city must balance its budget every year, and the business plan has been useful in
making short-term corrections to respond to the present economic environment.
However, the business plan is ineffective in addressing the changes that will be required
to resolve the structural funding gap. This gap must be closed by making hard choices
regarding what services the city will eliminate or by identifying additional sources of
revenue. These choices will be difficult, but avoiding them now will only delay the
inevitable and lead to a crisis management approach in the future.
The city's budget process must be changed to improve its effectiveness in order to guide
the allocation of limited financial resources across the entire organization. It also needs
to reflect clearly the city's key goals and top priorities. A direct link between how
funding is distributed and the achievement of citywide goals needs to be clearly
established and demonstrated to the community. Ideally, a return-on-investment should
be calculated using known data and compared to other municipalities. This will require
prioritizing programs/services across the city in a comprehensive manner and
determining how each contributes to effectively meeting the city's goals. The key
components of a new budget process, focused on ensuring long-term financial
sustainability, include:
- Prioritizing all city services based on their individual contribution toward
achievement of overarching city goals
- Incorporating broad community input that informs the budget process
- Improving transparency
- Implementing a rational trade-off decision-making process
- Identifying and reviewing the full cost of programs/services
- Identifying duplicative programs/services, either internal or external to the
city
- Providing a consistent method to evaluate potential new programs/services
In accordance with the city charter, the city manager is ultimately responsible for
developing and presenting a recommended budget to city council for approval. In order
for this structure to be effective, it is important that the key players in the budget process
(i.e., city manager, city council, and the community) understand that trade-off decisions
are going to be difficult and require discipline to implement successfully budgetary
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decisions. The city manager must be able to use the budget as a tool to implement
difficult choices such as recommended organizational and operational changes.
Emphasizing Performance Measurement of City Services
Each city department currently reports on performance measures for its service area.
Thus, every city department uses data and statistics to track and report on performance.
For example, the library reports on the circulation of library materials each year. This
statistic tells how many items have been checked out of the library and provides a picture
regarding whether circulation is increasing, flat or decreasing. However, this data does
not give a clear indication of whether library services are meeting specific goals or
objectives.
The purpose of a performance measurement system is to measure objectively the success
a program/service has had in achieving its stated objectives and goals. The performance
measurement system defines how success is to be measured and identifies the criteria or
benchmarks to be used in judging success. Instead of simply reporting inputs (e.g.,
expenditures for library materials) and outputs (e.g., number of lane miles swept), the
most useful measures include efficiency measures and outcome measures. Examples of
these two types of measures include:
➢ Efficiency measures:
o Number of transactions per purchasing staff member (or FTE)
o Cost per work order completed
o Expenditures per code violation case closed
➢ Outcome (or effectiveness) measures:
o Citizen and customer satisfaction ratings
o Percent of residents who feel safe in the city
o Fires confined to room of origin
An effective performance measurement system provides an objective mechanism to
evaluate whether services/programs are achieving their intended purpose. If performance
data indicates that the desired outcome is not occurring, the program can be adjusted or
resources can be reallocated to another area to improve overall performance. As
mentioned earlier, each city department currently collects performance data for its area
and uses the information to manage its programs/services. Some departments, such as
police, have a fairly sophisticated system for tracking performance while other areas are
in the process of developing/enhancing performance data.
The city needs to embrace a culture of measurement and feedback. As a new
performance measurement system is implemented, the city must focus on developing
meaningful measures rather than simply a large quantity of measures. It is also important
that the performance measurement system provide a way to evaluate the cost-
effectiveness (or return on investment) of city expenditures. In other words, are city
programs/services providing sufficient benefit for the amount of public dollars invested
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in a program/service? The information provided by a citywide performance measurement
system needs to be integrated into the budget process to inform funding decisions.
The performance measurement system must reflect the city's priorities/goals and should
include the following key steps:
■ Incorporating the performance measurement system as a feedback loop
into the budget process
■ Developing consistent and meaningful measures for each service area
■ Reporting performance measure results to the community via the budget
process
Understanding the Cost of Providing City Services
For the city to make informed fiscal decisions, it needs to understand fully all costs
associated with providing a service. Currently, city departments that charge user fees,
such as recreation and development review, determine the user fees for their services
based on the costs of the services provided. Generally, the city budget reflects the direct
program costs for each program/service. These costs are incomplete since they do not
include the associated department overhead (e.g., division managers, department director)
or citywide overhead 13 (e.g. citywide administrative services such as information
technology, human resources and finance).
Determining the frill cost to provide city programs and services will also provide
information to show what portion of programs/services are funded entirely by taxes, by
the service user through fees or through a combination of taxes and user fees.
Subsidizing programs and services with general tax dollars is a typical mechanism used
by local government and may also reflect community values (e.g., to defray costs for
low-income users).
Without knowing the full cost, some programs may appear to be self funded through user
fees, but are actually partially funded (subsidized) 14 by tax revenues. The city must
ensure that any subsidies are fully identified and are used deliberately rather than as a
result of not understanding the full cost. Program costs need to be reflected in the
appropriate department's budget in order to provide a comprehensive picture of program
costs. For example, although Housing/Human Services (HHS) and Parks & Recreation
both provide youth outreach services, it is difficult to determine how much the city is
spending in total for these services.
Furthermore, subsidies must be directed toward programs and services based upon their
achievement of city goals.
13 Overhead costs are defined as either citywide or departmental administrative, facility or other expenses
that are not directly associated with a particular program or service; rather they are related to overall
general operations and support all city programs/services: examples include finance, human resources,
information technology and general administrative support.
14 Subsidized services refer to city services that do not cover their full direct and indirect costs through user
fees and are partially funded through other funding sources such as sales or property taxes.
15
The following steps are required to calculate adequately the cost of services/programs:
■ The full cost for each city service/program needs to be calculated on a
regular basis; the full cost should include, but not be limited to,
o the direct program costs
o department overhead costs
o reasonable capital/facility costs
o citywide overhead costs
■ The full cost for subsidized programs and its funding source needs to be
identified, presented within the budget process and reviewed regularly to
verify that the level of tax subsidization is appropriate
■ Routinely evaluate which services are funded entirely by tax revenues,
fully funded by user fees or a combination of the two
Efficient Delivery of City Services
The structure for delivering services has a substantial impact on both the cost and quality
of the services provided. A number of areas that need to be evaluated in terms of service
delivery include:
Centralization of Administrative Services
Currently administrative support or overhead services such as accounts payable,
purchasing, computer support, media relations and facility maintenance are generally
provided in a decentralized manner. For example, each operating department is
responsible for paying their own vendor invoices rather than having them all processed
within the Finance Department. Another example relates to media relations or
communication needs. Currently, some operating departments have a staff member
dedicated to responding to media requests or writing press releases. Although this
structure provides a high level of customer service and responsiveness, it may be more
cost efficient to centralize administrative services.
Duplication of Services
There is a potential for overlapping services or service duplication between departments.
This occurs when there are some inherent similarities in the services provided across
departments. For example, staff in Parks, Transportation and Open Space may all be
responsible for maintaining appropriate signage for their designated service area.
However, it may be more efficient to have a sign shop provide services across
departmental lines and this could result in cost savings (e.g., reduces the overhead costs
associated with each separate department) and provide additional back-up for each
department.
Partnering with Other Organizations (e.g., Non-profits, Private Sector and Other
Government A_eg ncies)
The structural funding gap is not unique to the City of Boulder. This creates an
opportunity to find ways to partner with other entities to deliver services more efficiently
16
to the community. For instance, the city may coordinate the service through community
non-profits or provide seed money to assist an outside organization in establishing the
service. Thus, the city may consider a strategy to be more of a "partner rather than the
provider" of the service.
Dedicated Funding
Dedicated funding refers to allocating a revenue source to a specific expenditure item,
either through a ballot initiative, city council/city management direction or city charter. In
the 1980s and 1990s, dedicated revenues were used to secure funding for specific city
services, primarily by passing citizen-initiated ballot measures to raise taxes for specific
expenditures. For example, Transportation, Open Space, and Parks & Recreation all have
dedicated sales/use taxes to fund portions of their services and, at least historically, have
been able to expand their services through these dedicated funding sources.
Below is a table summarizing significant city funds that are currently dedicated for
specific expenditure purposes. Based on the 2010 approved budget, these dedicated
revenues represent 21 percent of the city's projected revenues of $224 million.
Summary of Significant Dedicated Funding
Start Date Nature of
Dedicated Funds Purpose Dedication
1/1/1967 .40% Sales/Use Tax open space City Charter
1/1/1967 .60% Sales/Use Tax transportation City Charter
1/1/2004 .15% Sales/Use Tax open space Ballot Initiative
1/1/1990 .33% Sales/Use Tax open space Ballot Initiative
1/1/1996 .25% Sales/Use Tax arks and recreation Ballot Initiative
9% of Boulder Visitor's and City Council/City
1982 Accommodations Tax Convention Bureau Mgmt Direction
.15% sales tax on Boulder Visitor's and City Council/City
1987 prepared food Convention Bureau M mt Direction
City Council/City
1992 .800 mill property tax affordable housing M mt Direction
1917 .333 mill property library operations City Charter
parks & recreation capital
1961 .900 mill property improvement s City Charter
This table excludes funding received from external entities, such as the federal
government and the state of Colorado, typically distributed in the form of grants.15
On the other hand, basic city services not covered by specific dedicated revenues, such as
the Fire Department, have to compete with other city departments for limited available
resources in the General Fund. As a result, it is not uncommon for one
department/service area to be implementing service reductions while another is adding
new programs/services.
15 Grants are contributions or gifts of cash or other assets from another organization to be used or expended
for a specified purpose or activity.
17
While dedicating revenues is an effective method to assure funding for specific long-term
purposes, it is typically presented to voters in isolation of all other city needs. Thus, in
approving a new ballot measure for one city service, voters are left to assume that the
city's other services are adequately funded. Also by dedicating a sales/use tax for one
service area, the city's potential ability to pass a sales/use tax for general or basic services
may be compromised since there is limited capacity to increase taxes.
Significant progress toward several unique community goals, including Open Space and
Parks and Recreation, has been made with funds from dedicated sales taxes. These
programs and services are valued by the Boulder community and have helped define the
community's identity. However, the city has also maintained valued basic
programs/services, such as police and fire, through the use of unrestricted funds. This
suggests that dedicating revenues may not be necessary to meet community priorities.
The use of unrestricted revenues also allows the city to adapt more quickly to volatile
revenue streams and provides the flexibility to fiend evolving priorities.
Unrestricted revenues provide greater and necessary flexibility to the city manager and
city council to facilitate the allocation of funds for the highest priority services
especially important in an era of decreasing and/or limited revenues. Dedicated revenues
inherently reduce the city's ability to adapt its services to meet the changing needs of its
residents. The city organization must strike a balance between assuring achievement of
specific long-term goals and its inherent responsibility to maintain basic services even
through financially challenging conditions.
In this new era of fiscal limits, it is absolutely essential that the public be educated and
informed on the tradeoffs in the city's budget and be responsibly engaged in the
articulation of city values and the prioritization of how limited city funds are spent.
The BRC II determined that dedicated funds should be used sparingly and that, if such
dedicated taxes are used, they should come with a full understanding of their impact on
the city's finances, including any corresponding incremental operating and maintenance
costs.
In reaching this determination, there were generally two perspectives expressed among
members of the BRC II. One, that if dedicated funds are used, they should only be used
for capital purchases and construction. The second and minority perspective expressed
was that dedicated funds may be appropriate not only for capital purchases and
construction but for some broader applications.
Adjusting the City's Financial/Management Policies
The financial/management policies established by the city reflect the organizational
culture and can have a significant impact on the cost of services delivered. Although
individual policies may appear cost neutral, the cumulative financial impact of an
organization's policies may not be sustainable. As such, the following policy areas need
18
to be considered and BRC II recommends specific actions outlined under each policy
area.
Compensation
Since personnel costs represent the largest expense in the city's budget
(approximately 48 percent of the city's 2010 budget of $230 million), the manner
in which employees are compensated (both in terms of salary and benefits) greatly
impact the city's finances. A balance must be maintained between total employee
compensation and the city's ability to pay. By recognizing the need to balance
both of these interests, the city should be able to attract and retain good
employees, as well as minimize necessary reductions in city programs/services.
In order to provide quality services to its residents, the city needs to maintain
highly productive, motivated and well qualified workforce. The city's employee
compensation strategy is the organization's primary tool used to attract and retain
its employee base.
The city's current compensation practices generally focus on each individual
element of compensation separately rather than as part of a comprehensive or total
compensation system. Both the organization and employees tend to look at
specific compensation issues in isolation rather than as part of a bigger picture.
Although in recent years the city has begun to communicate total compensation to
its employees, greater emphasis should be placed on this effort to ensure that all
staff realize the full value of their compensation. The city needs to clearly
identify and communicate total compensation to its employees. Total
compensation should reflect salary, health benefits, retirement, fringe benefits and
leave accruals (i.e., vacation, sick and holidays). For example, the BRC II
believes that the value of the city's retirement plan (i.e., PERA) is not adequately
recognized by the organization or its employees. The organizational commitment
to total compensation needs to be articulated to all employees through the city's
compensation philosophy.
To realign the city's compensation system with the city's fiscal realities, the BRC II
recommends:
■ Shifting compensation practices to a primarily performance-based
system; this includes discontinuing compensation practices based on
years of service, such as longevity pay, across-the-board salary
increases and appreciation bonuses.
■ Rewarding employees for reaching and exceeding performance goals.
This may include providing greater financial incentives than the
current system allows in order to reward excellent performing
employees.
19
■ Providing a citywide training program for managers and employees to
support the move to a performance-based system. This should include
identifying more consistent approaches to the employee evaluation
process and a periodic review of the performance-based system to
confirm that it is being used in a manner consistent with its intent.
■ Reviewing the city's total compensation policies/practices at least
every five years to make sure the stated goals are achieved, including
recruitment, retention and fiscally responsible use of public funds.
Asset Management
The BRC II recommends the city be proactive in the management of its assets,
including land, facilities, vehicles and equipment. To maximize efficiencies, the
asset management policies need to be routinely reviewed with the following in
mind:
■ To prevent more costly future expenses, maintenance and basic
renovation of city facilities/equipment should not be deferred beyond
industry accepted standards
• A complete land/property/equipment inventory needs to be maintained
(including the current market value of land and facilities) and the city
needs to manage actively the value of its real estate holdings.
• In terms of vehicles and equipment, a balance needs to be maintained
between replacement of vehicles and extending the use of an existing
vehicle. While older vehicles may generally require additional
maintenance, it may be more cost efficient to extend the use of
vehicles that are in good condition rather than automatically replacing
them. The BRC II recognizes that this may need to occur on a case-
by-case basis depending on vehicle type and condition.
• In terms of land/facilities, the asset management strategy needs to
include evaluating property owned by the city (including alleys and
easements). This includes the possible disposition of specific
properties. For example, if the Public Works Department owns but is
not using an undeveloped land parcel in a commercial area of town,
the best use of the land could be for use by a business, in order to
generate additional sales and property tax.
General Fund Transfers to Other Funds
The practice of transferring General Fund monies to other city funds should be the
exception rather than the rule. These transfers are acceptable only when the
funding helps to achieve high priority city goals rather than simply based on
historic practices. In addition, all General Fund transfers should be reviewed in
the annual budget process to determine best use of limited funding.
20
3 Next Steps
The BRC II developed recommendations to change the culture of the city and community
expectations. Although all of its recommendations are important, some will more quickly
result in efficiencies or cost savings. For example, regional partnerships should be
pursued but may take several years to develop and implement with other entities. On the
other hand, the city may expedite the implementation of proposed compensation changes.
The economic downturn that started in late 2008 required city management to take
immediate action on several items the BRC II was considering. While staff and BRC II
members initially thought that the recommendations would be reviewed and implemented
over the next few years, the city's financial situation accelerated this process. As a result,
the city began implementing several items that were concurrently being reviewed and
discussed by BRC II:
Budgetinz Process - It is important to begin implementing a process that clearly
identifies city service priorities based on community goals and values.
In late 2009, the City of Boulder began examining alternative budget strategies
that would build upon the business plan. The business plan represented the first
phase of implementing a decision-making tool to assist the organization in
making strategic citywide recommendations regarding revenue and expense
priorities for current and future funding. Recently, the city selected the Priority-
based Budgeting (PBB) 16 approach to be used in developing the 2011
recommended budget. This approach builds upon the Boulder business plan work
completed to date and is more easily implemented than other similar outcome-
based budget approaches. A summary of the steps in the PBB process is as
follows:
The first step of PBB involves identifying the results or goals desired in the City
of Boulder. Once the results are determined each result is defined. The
definitions are determined by asking the question:
When the City of Boulder (insert proposed definition) we
achieve this (result).
16 Priority-based Budgeting is a budget approach that prioritizes city programs/services based on how they
contribute to the achievement of overall city goals; the prioritization process provides clarity regarding how
limited resources are allocated in order to meet citywide goals
21
A current example for the City of Boulder follows:
When the City of Boulder contributes to a well-maintained system of
infrastructure, we achieve an accessible and connected community.
When finalized, the definitions become the basis for evaluating each city
program. In addition to the definitions, other factors will be considered as
programs and services are evaluated. Those factors are currently reflected in the
business plan and include customer demand for the program and the degree to
which a program is mandated and addresses user fee guidelines for cost recovery
(under the city's revenue policies).
After obtaining input from the city council, the results and definitions will be
updated and then taken out into the community for input and feedback. Once the
work with the community has been completed, departments will evaluate
programs using the final results and definitions. Departments will then submit
these to the city manager and the findings will undergo review by a peer review
team. The peer review team will be responsible for the equitability of priorities
across departments and meetings will be with the departments to clarify and
discuss findings.
By prioritizing services across departments, PBB is designed to identify which
services the city considers most essential and which services are of lower priority.
As the city allocates its limited resources on a priority basis, it will reach a
determination as to which services are unfunded. The structural funding gap will
require either the elimination of lower priority services or identification of new
revenue sources to support these services.
Performance Measurement of City Services - The BRC II recommends that the
city identify and implement an effective set of performance measures. As such,
appropriate performance measures need to be monitored and communicated by
every city department. The measures should be incorporated into the budget
process to show objectively the effectiveness of city services.
In late 2009, the city joined the Colorado Performance Measurement Consortium
(CPMC). The goal of the CPMC is to develop common key indicators and
measures to evaluate and improve the efficiency and effectiveness of local
government service delivery. The Consortium was developed in response to the
International City/County Managers Association (ICMA) Center for Performance
Measurement's comparative performance measurement data report.
While this program was developed to achieve the same goal as the Consortium's,
it must accommodate several hundred jurisdictions, which limits the flexibility
and applicability of data definitions. The members of the Consortium have had to
prepare data in a way that often does not reflect what they considered key data or
in a way that does not coincide with their data collection measures. As a
22
proposed solution, the Consortium members (currently comprised by 15 Colorado
Front Range municipalities) came together to identify key measures and develop a
methodology that could be agreed upon by a much smaller number jurisdictions
instead of several hundred. By taking a tool that was nationally applied in diverse
organizations and geographic locations, the Consortium is revising it to be a more
locally focused and relevant performance measurement tool. Participation in the
Consortium will allow Boulder to take its current measurement program to the
next level and tie it into the new PBB approach being implemented for the 2011
budget.
Financial/ManagementPolicies - Compensation - The city needs to gradually
shift to a performance-based compensation system rather than a mix of
performance-based and longevity-based (e.g., cost of living adjustments)
compensation.
The city is currently completing a comprehensive review of its compensation
practices and policies with the intent of implementing recommended changes in
2011. The purpose of the compensation study is to undergo a comprehensive and
independent review in context of organizational changes, to be effective in
attracting and retaining high caliber employees, to be technically sound, easily
understood and administered.
In presenting preliminary study findings to the BRC II, the city manager stressed
that she intends to move the organization to a performance-based compensation
system for management/non-union and BMEA employees. For 2010,
Management/non-Union employees were not granted a General Salary Increase
(also referred to as a cost of living adjustment) and, based upon contractual
stipulations, BMEA employees received a 1.5 percent GSI.
2010 Budget Stahilization Plan - The BRC II recommended several action steps
that were used to some extent by city management during the development of the
2010 Budget Stabilization Plan.
In order to maintain a balanced budget, the city implemented one-time budget
reductions (e.g., vacant positions remained unfilled) for 2009 and $5 million of
ongoing budget reductions for the 2010 budget. Although the BRC II's work was
progressing concurrently with the city's efforts to balance the budget, the BRC
II's work influenced the budget stabilization plan.
More specifically, the BRC I and II's recommendations clearly aligned with the
city's 2010 budget reductions in the following areas:
■ General Fund transfers to other funds (Central Area General
Improvement District, Affordable Housing, Open Space and Mountain
Parks, Planning and Development Services, Recreation)
23
■ Centralize administrative services
■ Identify and eliminate service duplication
Conclusion
In addition to the long-range funding gap, the city will continue to encounter normal
cyclical downturns in the economy. As a strategy to offset these short-term
economic/revenue declines, the city needs to adopt a policy which would allow the city to
slow progress toward long-term goals during such downturns. This flexibility may act as
an additional buffer against economic volatility. Although desired long-term goals need
not be abandoned, the city should recognize the ability to flexibly use funds as a short-
term trade-off in order to preserve basic or core services. The funding could then be
restored as the economy recovers.
The implementation of the strategies described in chapter two will not be easy and will
not occur over night. It will take a commitment on the part of all city stakeholders,
require difficult decisions and will have to be adapted and adjusted as new information
becomes available. The projected long-term funding gap has been called "the new
normal." It represents a fundamental shift in the outlook for the city and will require
profound changes in how the city operates. All city services and programs must be part
of the discussion. The stakeholders of the city must answer the questions: Is the city
providing the right services? Are the services provided in the most efficient way
possible? Are the services effectively achieving their objectives? Even after these
questions are answered, there may be services that the city can no longer afford to
support.
The looming fiscal constraints will require changes beyond just managing the city's
spending and budget. In order for these strategies to be successful, it is critical that the
city organization engage the community in a robust public process. This process must be
a two-way dialogue. The city needs to inform the community regarding current and long-
range financial challenges and corresponding difficult trade-off decisions; and the
community needs to inform the city regarding which services are most important. The
traditional practice of each group protecting its own political turf and self interest does
not produce positive results. This will only lead to viewing services in isolation rather
than the balanced perspective necessary to meet the needs of the broader community.
24
APPENDIX A
City of Boulder
Revenue & Expenditures
Overview
October 23, 2008
Key Terms
Fund - A governmental accounting term that is used to
refer to major segments of the city. Similar to a stand
alone business. COB: General Fund, Water/Wastewater
Fund, Transportation Fund and Parks & Recreation
Fund.
Fund Balance - the savings account of the fund.
Measured at the end of each year. Increases if what is
brought in is greater than what is spent. Decreases if
spending is greater than what is brought in for the
year.
Financial Policies - Policies adopted by City Council that
guide financial decisions of the City. Included in the
Budget.
A-1
APPENDIX A
Financial Policy 1.1
. Budgets shall be balanced.
Budgeted expenditures and transfers-out
will not exceed reasonable projection of
the sum of current year revenues,
transfers-in, and available fund balances.
. Debt shall not be utilized for operating
expenses.
Challenges of Government Finance
Is it Balanced?
Need to Accurately Assess the Situation -Revenues nditures
Where Are We Now and Where Are We Headed Fund Balance
18
16
14
12
10
8
6
4
2 `mot
0
Phase I Phase II Phase III Phase IV
A-2
APPENDIX A
The Municipal Corporation of
Boulder, Colorado
Under the Umbrella
Funds = The Businesses of the City
Departments - Divisions - Programs - Services
Restricted Funds
. If legally restricted by law or a vote:
. Can only be used for what the law or the ballot
issue says they may be used for.
. May or may not expire.
. In most cases the money cannot be used or
transferred to other funds (businesses) in the
city. When in doubt the City Attorney Office is
contacted for an opinion.
A-3
APPENDIX A
Dedicated Funds
Dedicated to certain programs or
expenditures by Council.
Reserve Policies
aka Fund Balance
Reserves are used to buffer the City
from downturns in the economy and to
provide an additional source of
accumulated funding for major capital
improvement projects, replacement
capital, or redevelopment.
A-4
APPENDIX A
How Much is Enough?
. No hard and fast rules for appropriate
levels of operating/emergency reserves
• Factors to consider:
. Reliability of revenue sources
. Volatility of revenues and expenditures
. Possible future claims on the fund
• Impact on credit ratings
Where Does the Fund Balance
Target Originate?
NLC Training Program, "Dollars and
Sense"
Government Finance Officers
Association
Standard and Poor's and Moody's Bond
Rating Agency Guidelines
Comparison to Other Cities in Area
A-5
APPENDIX A
It Depends on the
Individual Entity
All of the sources stated that
individual situations can be unique
and may require higher levels.
Replacement - Reserves &
Cost Allocation
. Internal Service Funds (ISF) Reserves and Financial
Policies.
. Significant Good Business Practices &
Comparisons to entities that don't
Fleet Replacement
Telecommunications
Computer Replacement
Equipment Replacement
• Facility Renovation & Replacement
Self Insurance of Property & Casualty - Worker's Comp
Compensated absences
. Cost Allocation GF Source $6.1 in 2008
A-6
APPENDIX A
Primary Revenue Sources for
-i-local Government
. Property tax
. Sales and Use Taxes (use taxes differ)
. Other taxes
. Fees and Charges
Franchise Fees
Utility Fees and Charges
Recreation Fees and Charges
. Licenses, Permits and Fines
Intergovernmental
. Leases, Rents and Royalties
. Investment Earnings
Ongoing vs. One-Time Funds
. Ongoing = the revenues can be
predicted and will come in each
year to pay ongoing costs.
. One-time = the revenues will only
occur once. Therefore, they
cannot be used to pay ongoing
costs. The costs must occur only
once.
A-7
APPENDIX A
Ongoing vs. One-Time
• Ongoing
• One-time
Where Does the Money
Come From in the COB?
2008 Total Revenues = $224,261 (in $1,000s)
Ping & Develop Other
Fees $41,885 Sales Tax
$5,415 19% $87,729
2% 39%
Bond
Proceeds
$1,151
1%
Utility Rates
00 t
$43,496 parks & Intergovern-
190/0 Property Tax
Recreation mental $22,028
$8,167 $14,390 10%
4% 6%
A-8
APPENDIX A
Where Does the Money Come
From in the COB?
Funds Sales Property Other Charges Other
Tax Tax Taxes & Fees
General 46% 19% 15% 3% 17%
Open Space 92% - - - 8%
Transportation 64% - - - 36%
Utilities - - - 90% 10%
Where Does the Money Go?
Citywide
2008 Total Uses = $237,781 (in $1,000s)
Other
Debt service 2%
13% Personnel
Expenses
43
Capital
16%
Interdepartmental
Charges Operating Expenses
5% 21%
A-9
APPENDIX A
Where Does the Money
GO
General Fund Category Citywide
59% Personnel Exp 43%
17% Operating Exp 21%
7% Interdepartmental Charges 5%
<1% Capital 16%
3% Debt Service 13%
<1% Other 2%
14% Transfers to Other Funds In expenses
100% Total 100%
Business Plan Approach
. A framework for making funding decisions
. A link between the comprehensive plan,
master plans, and the recommended budget
• Fiscally constrained plans - reprioritized
service plans within existing departmental
budget targets
. City-wide approach to trade-offs and funding
decisions leading to City Manager's
recommended budget
A-10
APPENDIX A
Business Plan Categorization
• Essential
. Programs/services/facilities essential to ensuring
health and safety of the community
• Desirable
. Services that enhance programs or facilities in ways
that advance desired community values
• Discretionary
. Creates or maintains discretionary services/facilities
that service limited purposes or specialized interests
Why a Business Plan?
. In the absence of a Business Plan, it is
possible that we could propose to:
. restore functions to their former levels without
comparing those uses to competing needs,
implying that what was, represents how the future
should be;
. react to the most vocal constituents, implying that
needs that are heard most frequently and
passionately should receive the scarce resources;
and/or
. fund the first few excellent new ideas or master
plan proposals, implying that whatever comes up
first should grow.
A-11
APPENDIX A
I
Priorities for Funding
Vision Plan
6rh / Discretionary .
5rti Vision Plan
Desired
arh Action Plans
Discretionary Programs/Services `
i
led Action Plans
Desired ProgramslServices
end Action Plans
Essential ProgramslServl as
r8r r
F9scally Constrained Budget
Budget Strategies
Budget Strategies
• "Must Do"
. Maintain adequate reserves
. Fund liabilities adequately
• "Should Do"
. Fund Compensation Philosophy
. Increase facilities maintenance budgets
. Increase materials/supplies (or NPE)
budget (to maintain buying power)
A-12
APPENDIX A
ii
Introduction to
N Performance Measures
w
How Do We Measure Up
s
i
f
outcomes
Effectiveness
Efficiency
Inputs and Outputs
A-13
APPENDIX A
Measuring Productivity -
Operational Assessments and Analysis
• Internal analysis conducted by the
departments.
• External analysis of departments or
programs.
• Departments are at various stages due
to where they are with master and
strategic plans.
Employee Performance Plans
• Goal Setting . Reviews
. Goals aligned with . Feedback given
Council,Master,
Strategic & (360 degree, merit)
Business Plans
. Common behaviors - Continual coaching
and feedback
. Set high standards
. New goals set
. Developmental
goals encouraged
A-14
APPENDIX A
Questions
1.) What concerns do you hear or have
about city services and potential
inefficiencies?
2.) What current city services and
programs do you or others believe the
city should no longer provide?
3.) What does efficiency look like to you?
A-15
APPENDIX B
BUSINESS PLAN TERMINOLOGY
The business plan is a set of documents (such as the departmental master plans or
strategic plans) that guide the city of Boulder municipal corporation in terms of program
and services to be provided to the community. It is a decision-making tool to recommend
strategic citywide revenue and expense priorities for current and future funding. There is
a distinct set of terminology originating from the Business Plan that permeates the
language of the organization and appears in other city documents. This paper will
explain the most common terms.
INVESTMENT LEVEL - The investment level refers to an overall level of funding.
There are three investment levels noted in master/strategic plans, business plans and
budget documents. They are:
FISCALLY CONSTRAINED - Fiscally Constrained is a baseline level of
funding. For planning purposes, this is the funding level associated with
the FY 2006 Budget. This represents a bundle of services that was
provided by the city at its lowest or near lowest level since the 2001
revenue peak.
ACTION PLAN - Action Plan is the next step of service expansion or restoration
that should be taken when additional funding is available.
VISION PLAN - Vision Plan is the complete set of programs, services and
facilities desired by the community and aligned with values and policies,
with alternative proposals to fund them.
PROGRAM CATEGORIES - Within each investment level, there are a bundle of
services provided. Each city department was challenged to create a Fiscally Constrained
budget in which services are prioritized according to their contribution to the mission and
objectives of the department and aligned with good public stewardship principles.
Services were prioritized into the three categories according to the following principles.
Essential
■ Programs, services or facilities essential to ensuring the health and safety
of the people and property in the community and municipal corporation
■ Services ensuring the integrity of the most fundamental responsibilities of
government
■ Programs or expenses that are legally mandated by federal or state law or
City Charter
■ Investments that contribute the most to achieving the core mission of a
department
■ Businesses the city of Boulder is required to be in and/or essential services
that no other entity provides
■ Actions required by obligations such as bond covenants, laws and other
requirements in order to avoid fines or penalties
B-1
APPENDIX B
Desirable
■ Services that enhance programs or facilities in ways that advance desired
community values
■ Services that enhance essential services or quality of life improvements
■ Funding for ongoing operation, maintenance and replacement of an
existing facility, infrastructure, program or service
■ Services valued by the community and created by the legislative action of
the city of Boulder City Council
■ Actions required to meet Council's adopted budget and financial policies
■ Programs maintained as "seed corn" to provide a base for restoration in an
economic recovery; maintaining core elements of a program of higher
priority to make future restoration possible
Discretionary
■ Creates or maintains discretionary services/facilities that serve limited
purposes or specialized interests.
■ Programs desired by the community but not required to provide or
enhance an essential service
■ Services that people could obtain through other means, private or other
governmental and non-profit agencies
Each department created its prioritization logic, based on the principles above, and in
terms that are meaningful to its unique business. This was then expressed as short, clear
statements of the investment strategy that guide a department's prioritization of its
programs/services
SERVICE STANDARDS - Lastly, associated with each program is a service standard.
This is a basic rating system that is subjectively applied by departments. It is intended to
provide a status as to the condition of the program or service and is based on the
following three descriptors:
BELOW STANDARD
STANDARD
ABOVESTANDARD
B-2
2009 City of Boulder Draft • "Basket of Services"
APPENDIX C
A 8 C D E F G H I J K L M N 0 R S T U V
t 2009 Budget Some of these ex enditures are contingent on meetin economic or program goals.
Departments Primary Funding
Sources Community Planning • Downtown & Univ Hill Mgmt
(Sales, Property or Arts City Attorney City Council City Manager Citywide Environmental Affairs Community Planning • Planning District/Parking Services
Finance
Funds Other Tax, Fee,
2 Intergov't)
3 10 General
4
5 110 Capital Development Excise Tax
fi
7 111 Lottery IG
8
9 112 Planning & Fee and Transfers 3,015,936 37.0% of fund
10 Development Svcs 100.0% of dept 26.78 FTEs
11 114 Affordable Housing IG and Other Tax
12
13 115 Cmmnty Hsg Asst Prgm
14, (CHAP)
15 tfl.lSCentSalesTax Sales Tax 318,000 11.0%offund 318,000 11.0%offund
16 59.9% of dept 1.00 FTEs 13.4% of dept 1.20 FTEs
17 118.25 Cent Sales Tax Sales Tax
18
19 120 Library Transfer and Prop Tax
_00-
21 130 Recreation Activity Fee and Transfers
22-
0 d
24 FTEs
23 140 Climate Action Plan Tax OtherTax 378.31 66, of 000 dept 4 4 10.0.00 FTEs
25 150 Open Space Sales Tax
26-
27 170 Airport Fee and IG
28
29 180 Transportation Sales Tax and IG
30
31 181 Transportation
32, Development Excise Tax
33 182 Transit Pass General
34 Im rovemnl District
35 191 Community IG
36 Development Block Grant
37 192 HOME IG
a8-
39 230 Permanent Parks and Property Tax
40 Recreation
41 310 General Obligation Debt 25,000 100.0% of fund
42 Svc Transfer 1.0% of dept .00 FTEs
43 321 .15 Cent Debt Service Sales Tax
44
45 510 Water Utility Fee
46
47 520 Wastewater Utility Fee
48-
49 530 Stormwater and Flood Fee
50, Mgmt Utility
51 540 CAGID Fee, Tax and Transfers 7,522,401 100.0%offund
52 82.3% of dept 24.78 FTEs
53 550 UHGID Fee, Tax and Transfers 429,242 100.0% of fund
54 4.7% of dept 3.62 FTEs
55 610 Telecommunications
_66-
57 611 Property & Casualty 77,829 5.2% of fund 1,414,923 94.8% of fund
58 Insurance 4.0% of dept 1.00 FTEs 57.3% of dept 1.50 FTEs
59 612 Worker Compensation 1,594,113 100.0%offund
60, Insurance 64.5% of dept 2.50 FTEs
61 679 Compensated Absences $381,240 100.0% of fund
sz 15.4% of dept .00 FTEs
63 621 Fleet
64
65
66 630 Computer Replacement
67
68 640 Equipment Replacement
69 650 Facility Renovation &
70 Replacement
71 530,791 1,929,561 335,782 4,963,257 3,102,240 2,381,280 3,015,936 9,135,011 2,471,398
72 Totals by Dept 100.0% 1.50 FTEs 100.0% 18.65 FTEs 100.0% 1.00 FTEs 100.0% 22.50 FTEs 100.0% .00 FTEs 100.0% 10.50 FTEs 100.0% 26.78 FTEs 100.0% 42.25
FTEs 100.0% 28.37 FTEs
74 Programs & Services Arts Grants Consultation & Advisory City Manager's Office Risk Management Administration Administration Administration
Budget & Treasury
75 Theatre Guild Prosecution & Civil Litigation Internal Audit Citywide Contracts Waste Reduction Information Resources Debt Service Risk
Management
76 Boulder Arts Center Economic Vitality PolicelFire Pension Wildlife/integrated Pest Mgmt Long Range Planning Public Info &Events Controller/Financial
Operations
77 Space for Dance City Clerk/Support Services Climate Action Plan Land Use Review Community Improvements Finance System Admin
78 Communications Engineering Review Economic Vitality
79 Non-Departmental Contracts Building Construction Transportation
80 Citywide Programs Code Enforcement Garage Improvements
81 Meters, Ops & Enforcement
82
83
84
85
86
87
88
Page 1 of 3
C-1
2009 City of Boulder Draft • "Basket of Services"
APPENDIX C
A B W X Y Z AA AB AC AD AE AF AG AH AI AJ AK AL AM AN
1 2009 Budget Some of these Some of these expenditures are Contin ent on meeting economic or rc ram goals.
Departments Primary Funding
J Sources
(Sales, Property or Fire Housing and Human Services HR10rg. Effect. Information Technology Library Muni Court Non-Enterprise & BMPA Debt Open
Space & Mountain Parks Parks and Recreation
Funds Other Tax, Fee,
2 Intergov't)
3 10 General
4
5 110 Capital Development Excise Tax
fi
7 $525,000 43.8% of fund $675,000 56.3% of fund
e 111 Lottery IG 2.0%ofdept .00 FTEs 2.7%ofdept .00 FTEs
9 112 Planning & Fee and Transfers
10 Development Svcs
11 114 Affordable Housing IG and Other Tax 3,816,512 100.0! of fund
12 24.6% of dept 5.32 FTEs
13 116 Cmmnty Hsg Asst Prgm
14, (CHAP)
15 117.15 Cent Sales Tax Sales Tax 1,906,000 65.9% of fund 352,000 12.2%offund
16 12.3% of dept 6.03 FTEs 1.4°% of dept 1.00 FTEs
17 118.25 Cent Sales Tax Sales Tax 6,960,072 93.9% of fund
18 27.7% of dept 19.82 FTEs
19 120 Library Transfer and Prop Tax $6,991,956 100.0%offund
20 100.0%ofdept 79.95 FTEs
21 130 Recreation Activity Fee and Transfers 10,420,465 100.0% of fund
22 41.4% of dept 76.62 FTEs
24 140 Climate Action Plan Tax OtherTax
25 150 Open Space Sales Tax $78,780 0.3% of fund $25,044,145 99.7% of fund
26 0.6%ofdept .66 FTEs 97.4%ofdept 89.68 FTEs
27 170 Airport Fee and IG
28
29 180 Transportation Sales Tax and IG
30
31 181 Transportation
32, Development Excise Tax
33 182 Transit Pass General
34 Im rovemnl District
35 191 Community 850,894 100.0% of fund
36 Development Block Grant G 5.5% of de 4.11 FTEs
37 $1,293,087 100.0% of fund
38 192 HOME G 8.3% of dept 1.25 FTEs
39 230 Permanent Parks and Property Tax $2,711,866 100.0% offund
40 Recreation 10.6% of dept 9.50 FTEs
41 310 General Obligation Debt Transfer
42 Svc
43 321 .15 Cent Debt Service Sales Tax $558,170 100.0% of fund
44 25.0% of dept .00 FTEs
45 510 Water Utility Fee
4s
47 520 Wastewater Utility Fee
48-
49 530 Stormwater and Flood Fee
50, Mgmt Utility
51 540 CAGID Fee, Tax and Transfers
52
53 550 UHGID Fee, Tax and Transfers
54
55 610 Telecommunications $1,591,090 100.0% of fund
56 32.41 of dept 2.50 FTEs
57 611 Property & Casualty
58 Insurance
59 612 Worker Compensation
60, Insurance
62 619 Compensated Absences
63 621 Fleet
64
65 630 Computer Replacement 1,565,717 100.0% of fund
ss 31.9% of dept .00 FTEs
67
68 640 Equipment Replacement
69 650 Facility Renovation &
70 Replacement
71 Totals by Dept 13,671,935 15,537,859 1,618,193 4,914,166 6,991,956 1,686,163 2,236,523 25,709,179 25,170,821
72 100.0% 112.33 FTEs 100.0% 57.42 FTEs 100.0% 16.63 FTEs 100.0% 35.25 FTEs 100.0% 79.95 FTEs 100.0% 18.00 FTEs 100.0% .00 FTEs 100.0% 91.00 FTEs 100.0% 146.99
FTEs
74 Programs & Services Administration Administration Employment & Diversity Applications Main Library Services Adjudication Debt Service
Administration Business & Finance Mgmt
75 Emergency Services Community Services Compensation & Benefits Database/Systems Admin Branch Services Case Management -Admin Policy
& Information Services
76 -General -Human Services Employee & Labor Relations Microcomputer Support Adult Programs -Financial Mgmt Planning & Construction
77 -Training Division -Human Rights Employee & Org. Development Infrastructure Childrens' Programs -Fleet City Parks
78 -Wildland Division Children, Youth & Families Projects Volunteer Services -Communications -Admin
79 Prevention Services -Community Based Services Literacy Real Estate -Operations/Maintenance
80 -Child care resources Acquisitions -Capital Acquisition & Devel -Conservation/Forestry
81 -Youth opportunities Building -Debt Service -Cultural Assets
82 Senior Services Land & Facilities Recreation
83 Affordable Housing -Trail ConstructionMlaint. -Admin
84 Community Housing Asst. -Project Management -Access & Inclusion
85 Home Ownership Resource Systems -Recreation Centers
86 Comm. Devel. Block Grant -Ranger Naturalist Services Business & Finance Mgmt
87 Affordable Housing -Resource InformationlEnvir Plan. -Aquatics & Boulder Reservoir
88 -Community Services -Boulder Reservoir & Colt Course
Page 2 of 3
C-2
2009 City of Boulder Draft • "Basket of Services"
APPENDIX C
A B AO AP AS AT AU AV AW AX AY AZ
1 2009 Budget Some of these Some of these expenditures are contingent on meeting economic or program oats.
Departments Primary Funding
J Sources Public Works • Development & Support
(Sales, Property or Police Services Public Works • Transportation Public Works • Utilities Totals by Fund
Funds Other Tax, Fee,
2 Intergov't)
3 10 General $79,421,079 100.0%
4 628.55 FTEs
5 110 Capital Development Excise Tax 80,000 100.0% of fund 80,000 100.0%
s 0.9 % A dept .00 FTEs .00 FTEs
7 111 Lottery IG $1,200,000 100.0%
e .00 FTEs
9 112Planning & Fee and Transfers 5,131,185 63.0% offund $8,147,121 100.0%
10 Development Svcs 57.8% of dept 49.78 FTEs 76.56 FTEs
11 114 Affordable Housing IG and Other Tax $3,816,512 100.0%
12 5.32 FTEs
13 116 Cmmnty Hsg Asst Prgm $2,578,745 100.0%
14, (CHAP) 4.08 FTEs
16 117.15 Cent Sales Tax Sales Tax $2,894,001
1s 9.23 3 FTE
FTEs
17 118.25 Cent Sales Tax Sales Tax 450,262 6.1% of fund $7,410,334 100.0%
18 5.1 % of dept .00 FTEs 19.82 FTEs
19 120 Library Transfer and Prop Tax $6,991,956 100.0%
20 79.95 FTEs
21 130 Recreation Activity Fee and Transfers $10,420,465 %
22 76.62 2 FT Es
23 140 Climate Action Plan Tax OtherTax $888,000
24 4.00 0 FTE
FTEs
25 150 Open Space Sales Tax $25,122,925 100.0%
26 90.34 FTEs
27 170 Airport Fee andlG 378,977 100.0%offund $378,977 100.0%
28 1.5% of dept 1.20 FTEs 1.20 FTEs
29 180 Transportation Sales Tax and IG 24,487,544 99.3% of fund 171,859 0.7/ of fund $24,659,403 100.0%
30 94.6% of dept 66.79 FTEs 0.3% of dept .80 FTEs 67.59 FTEs
31 181 Transportation Excise Tax $951,877 100.0% of fund $951,877 100.0%
32, Development 3.7% of dept .20 FTEs .20 FTEs
33 182 Transit Pass General 12,513 100.0% of fund $12,513 100.0%
34 Im rovemnl District 0.0% of dept .00 FTEs .00 FTEs
35 191 Community IG $850,894 100.0%
36 Development Block Grant 4.11 FTEs
37 $1,293,087 100.0%
38 192 HOME G 1.25 FTEs
39 230 Permanent Parks and Property Tax $2,711,866 100.0%
40 Recreation 9.50 FTEs
41 310 General Obligation Debt Transfer $25,000 10010%
42, Svc .00 FTEs
43 321 .15 Cent Debt Service Sales Tax $558,170 100.0%
44 .00 FTEs
45 510 Water Utility Fee 31,206,248 100.0% of fund $31,206,248 100.0%
46 58.4 J of de t 75.67 FTEs 75.67 FTEs
47 520 Wastewater Utility Fee $15,707,167 100.0% of fund $15,707,167 100.0%
48 29.4% of dept 58.81 FTEs 58.81 FTEs
49 530 Stormwater and Flood $6,368,122 100.0% of fund $6,368,122 100.0%
50, Mgmt Utility Fee 11.9% of dept 20.95 FTEs 20.95 FTEs
51 540 CAGID Fee, Tax and Transfers $7,522,401 100.0%
52 24.78 FTEs
53 550 UHGID Fee, Tax and Transfers $429,242 100.0%
54 3.62 FTEs
55 610 Telecommunications $1,591,090 100.0%
56 2.50 FTEs
57 611 Property & Casualty $1,492,752 100.0%
58 Insurance 2.50 FTEs
59 612WorkerCompensation $1,594,113 100.0%
60 Insurance 2.50 FTEs
61 619 Compensated Absences $381,240 100.0%
62 .00 FTEs
63 621 Fleet 6,342,326 100.0%offund $6,342,326 100.0%
64 71.4°! of dept 16.87 FTEs 16.87 FTEs
65 630 Computer Replacement $1,565,717 100.0%
66 .00 FTEs
67 640 Equipment Replacement $1,306,257 100.0% of fund $1,306,257 100.0%
68 2.4% of dept .35 FTEs .35 FTEs
69 650 Facility Renovation 8 1,443,930 100.0%offund $1,443,930 100.0%
70 Replacement 2.7% of dept 1.65 FTEs 1.65 FTEs
71 Totals by Dept $28,013,967 $8,876,620 $25,898,073 $53,453,396 $241,646,105 1288.52 FTEs
72 100.0% 273.25 FTEs 100.0% 81.73 FTEs 100.0% 68.19 FTEs 100.0% 156.23 FTEs $241,646,105 1288.52 FTEs
74 Programs & Services Administration Support Services Transportation Utilities
75 Communications -Facility & Asset Management -Administration -Administration
76 Detectives -Transport. Planning & Operation -Planning & Project Management
77 Patrol Watch -Transportation Maintenance -Water Resources
78 Traffic -Project Management -Water Treatment & System Maint
79 Records & Info Systems -Airport -Wastewater Treatment
80 Financial & Facility Services -Environmental quality
81
82
83
84
85
86
87
88
Page 3 of 3
C-3
_ r _li APPENDIX D
Community University
Planning and Housing Downtown
Recreation Affordable Hill
Development Activity Assistance Commercial Commercial Open Space
Services Housing Program District
District
(CHAP)
A portion of the
Established to General Fund' s A portion of the Established to
provide a source of on-street parking General Fund' s provide funding to
Established to on-street parking maintain the
funding for General provide a source of Established to Established to kiosk revenue kiosk revenue mountain park
Fund services funding to provide funding provide funding (collected within (collected within system after it was
provided by subsidize recreation to support to support the DCD's the UHCD's merged with Open
Cominunity Planning boundaries) is
& Sustainability and programs that do affordable affordable transferred to boundaries) is Space. Prior to the
Public not cover 100/o of housing goals housing goals. offset costs of transferred to offset merger, the funding
Works/Development their direct costs associated costs of associated was allocated to
& Support Services General Fund General Fund Parks and Recreation
programs. for mountain parks).
programs.
c ~
o $2,333,000 $1,854,000 $416,000 $1,363,000 $1,955,000 $255,000 $1,099,000
No No No No (a 0.80 mil No No No
of General Fund (Meter
'L property tax revenues
allocated to pledged as
CHAP based on repayment in
council direction CAGID
in 1992) bonds)
Long -range Programs for Funds used to Funds used to Ecopass program, Parking kiosk Maintenance of
Qo~ planning, historic people with increase increase parking kiosk maintenance/operat mountain parks
c preservation, code disabilities, low- permanently pennanently maintenance/ops, ions, economic
enforcement, income youth, affordable affordable economic vitality,
v, x development review Pottery lab, other housing units in housing units in vitality, Mall supplemental
W programs/facilities Boulder Boulder improve/mgmt, maintenance
event permitting
c•
w c C Segregated based on
.Z „ service costs and Funds Funds Segregated based Segregated based
accepted cost Funds commingled commingled commingled on service type on service type Funds commingled
w s recovery rates
0
U E
m u $
D-1
APPENDIX E
DEPARTMENT MASTER
PLANS
BRC II
November 6, 2008
Master Plans
• Align with the Boulder Valley
Comprehensive Plan
• Provide guidance on city priorities
for funding capital improvements
and services
• Gives direction on operations to
meet department mission/vision
E-1
APPENDIX E
Master Plans (con't)
Key components:
• Clear mission statement and goals
• Investment strategy and service
prioritization (essential, desirable, discretionary)
• Levels of service standards (exceeds,
meets and below)
• Three funding plans (fiscally constrained,
action and vision)
Master Plans (con)t)
Master Plan process includes-
• Input from public meetings
• Feedback from advisory boards
• Approval from Planning Board
• Adoption from City Council
E-2
APPENDIX E
Goals from
Parks & Recreation
• Maintain our parks & recreation facilities
• Become economically sustainable
• Fill in gaps in parks & recreation system
• Engage a broad range of the community
• Emphasize environmental sustainability
• Enhance quality of life
Investment Strategies from
Parks & Recreation
• Fiscally constrained:
- Take care of existing assets
- Develop highest priority park sites
• Action-
- Invest in revenue producing facilities
- Increase maintenance funding
- Broaden access to services
- Complete gaps in park system
- Adapt to changing needs
• Vision:
- Strive for excellence in our parks &
recreation system
E-3
APPENDIX E
Significant Issues Raised in
Parks & Recreation Master Plan
• What services/programs should be
provided (e.g., pottery lab, # of recreation
centers, # of pools)
• What is appropriate cost recovery
level for each program (e.g., should
gymnastics be subsidizing pottery)
• Where to invest capital funding (e.g.,
Valmont City Park vs. completing pocket parks)
PERFORMANCE MEASURES
AND BENCHMARKS
BRC II
November 6, 2008
E-4
APPENDIX E
1980s- 2000s
Dedication to Quality Management
- Tom Peters "In Search of Excellence"
- Deming "Out of the Crisis"
- Quality Circles
- Total Quality Management
- Re-engineering
- Webs of Inclusion
- Balanced Scorecard
- Six Sigma
- Business Process Management
- Knowledge Management
Outcomes
Effectiveness
Efficiency
Inputs and Outputs
E-5
APPENDIX E
The Evolution of Performance
Measures In Local Government
• Early 1980s Statistics a.k.a. Inputs and
Outputs
- Workload: How many of X (lane miles, etc.)
• Efficiency: Output/Input
- Transactions per employee
- Total Cost/# of units of output
The Evolution of Performance
Measures in Local Government
• Effectiveness: What is it now and what do you
want it to be.
- What will it take to reduce the cost of X to $X,XXX per
item?
- Benchmarks - being used by several cities through
ICMA. Some do their own. Sometimes difficult to
compare due to the differences in cities.
- Productivity - how has our work improved over time?
Is the cost of X decreasing over time?
E-6
APPENDIX E
Outcomes
Are the taxpayers and rate payers
receiving the outcomes they want
for the money they are paying the
local government and is the local
government accountable?
• Do they feel safe on our streets?
• Do they feel welcome in our city?
City of Boulder
• Service standards in the Business Plan
(linked to Master Plans)
• Included in the city budget
- Range and quality varies greatly
- Police has good benchmark information
• Community Surveys
E-7
APPENDIX E
Service Standards in the
Business Plan
Service Standards critical to Business Plan:
• Addresses assumption that all essential services
are provided at adequate level
• Provides consistent foundation for making
decisions between competing needs
• Assists in identifying funding deficiencies
Service Standards in the Business
Plan (con't)
Each service is designated as,
• Exceeding minimum service standards
• Meeting minimum service standards
• Below minimum service standards
General principle. all essential services
should meet minimum service standards
before new desired or discretionary services
are implemented.
E-8
APPENDIX E
Service Standards in the Business
Plan (con't)
Key service standards should be identified in
the master planning process through-
• Input from customers
• Review of national, industry, peer city and
other applicable standards
• Feedback from boards and commission
Ultimately, service standards are accepted
by City Council through master planning
process
Examples of Performance
Measurements in the City Budget
• Police:
- Crimes per 1,000 citizens
- Response time per police emergency
- Percent of crimes solved
• Finance:
- GFOA award for financial reporting & budgeting
• Planning:
- Percent of building permit applications
processed "over-the-counter"
E-9
APPENDIX E
Community Survey
Results of 2007 Community Survey provides
insights into citizen satisfaction and identifies
areas for improvement.
• Residents rate quality of life in Boulder as very high
• Not all people feel welcome
• Transportation and traffic are viewed as important
challenges
• City Council goals generally match priorities of
residents
• City Government performance ratings were
generally positive
Performance Measurement
versus
Performance Management
National Performance Management
Advisory Commission
E-10
APPENDIX E
Performance Measurement
• Mainly for data reporting purposes
• Assumes that the reports are used to
realize significant value for the
organization
• Used for:
- Compliance with statutory requirements
- Demonstration of transparency to
stakeholders,
- Showing accountability to residents
Performance Management
• Focuses on delivering results to customers
• Does not assume that changes are made
• Data is used to measure improvement
• Data is systematically gathered and used
for decision making at all levels
- Great amounts of data collection
- It is not easy
E-11
APPENDIX E
National Performance Management
Advisory Commission (NPMAC)
A commission charged with creating a national principles-based framework
for public sector performance measurement and management.
The Commission's effort will result in voluntary guidelines that:
• Identify general approaches and practices that are characteristic of
successful performance measurement and management
• Emphasize the value of evidence-based and data-driven decision-making in
effectively delivering government services
• Support state and local government implementation of performance
measurement systems
• Reflect the issues and challenges associated with development and
implementation of performance management systems from a broad range
of perspectives including elected and appointed officials, and program and
operational managers
• Provide a flexible framework that is adaptable to the unique and diverse
environments of state and local government.
State and National
• Colorado and national group working on
performance measures and
benchmarking.
• Cost for the national program is $5K to
$1 OK annually.
• Staffing and the time required to compile
the data in the required format are
resource issues.
E-12
APPENDIX E
2009 Colorado Municipal League
October 2008, the Issues and Trends
Committee recommended to the Policy
Committee that the Colorado Municipal
League support the NPMAC effort.
E-13
APPENDIX F
< < Department Title> >
Presentation to the Blue
Ribbon Commission Phase II
<<Date of Presentation>>
Department Mission
o < <List mission statement from
2009 budget document
o Use bullet points as needed. > >
F-1
APPENDIX F
Sources of Funds
<<One pie chart for all departmental inflows-double-click on
sample pie chart to edit data>>
oil
Uses of Funds
<<One pie chart for all departmental outflows-double-click on
sample pie chart to edit data>>
F-2
APPENDIX F
Service Categories
<<Example: Operations and Maintenance
2009 Budget ESS DES DIS
Bikeway Maintenance $316,000 100%
Graffiti Maintenance $95,000 100%
Median Maintenance $731,000 100%
Street Sweeping $601,000 100%
Traffic Signals $1,208,000 95% 5%
Street Lighting $1,207,000 100%
Traffic Engineering $110,000 100%
Transit Service $3,178,000 60% 40x/0
Special Transit $248,000 80% 20%
TDM $781,000 100%
Tran. System Management $120,000 100%
Total O&M $12,673,000 80% 20% »
Atypical Services
o < <Are there programs/services your
department provides that are not typical
in the front range? Are there typical front
range municipal programs/services that
your department does not provide?
o Are there things provided because we are
asked or expected to that we would not or
should not otherwise do?>>
F-3
APPENDIX F
Legal Requirements
c < <Summarize services/programs
that are legally mandated by
federal/state law or city charter -
reference the applicable law or
charter section > >
Service Standard Performance
<< fist the performance measures or standards used to evaluate performance and
actual results for either 2007 or 2008»
<<Description of Measure>> <<Measure>>
<<For example: Employee «93.7%> >
Retention> >
<<Describe any industry standards on which the department's
performance measures are based>>
F-4
APPENDIX F
Explanation of Current Performance
o < <Explain what the most current
performance results mean
o IF YOU ALREADY HAVE IT, can you
share comparable staffing levels in
other front range cities If you do
not already have this info, please do
not reach out to other cities-
citywide benchmarking is in
progress. > >
Other Providers
o < < With what other organizations do
we currently share service provision?
o What services do we currently
outsource?
o Are we competing with the private
sector and, if so, in which service
areas?> >
F-5
APPENDIX F
Opportunities to Outsource
or Partner
o < <Describe opportunities for
outsourcing or partnering with
internal or external agencies to
provide today's services. > >
Budget Reductions
o < <Describe what budget reductions
you would recommend if
needed. > >
F-6
APPENDIX F
Impact of Reductions
o < <Describe what the impact of
these reductions would be. > >
Questions?
F-7
APPENDIX G
Department Presentations to Blue Ribbon Commission - Phase II
Meeting Date Department Presenting
January 22, 2009 Finance Department
Fire Department
February 12, 2009 City Manager's Office
Police Department
February 26, 2009 Transportation Department
March 12, 2009 Housing and Human Services
April 9, 2009 Community Planning
Public Works/Development and Support Services Division
(includes Fleet, Facilities and Asset Management and
development-related activities
April 23, 2009 Parks and Recreation
May 28, 2009 Downtown and University Hill Management Division/Parking
Services
Libra /Arts
June 11, 2009 City Attorney's Office
Municipal Court
Human Resources
June 25, 2009 Public Works - Utilities Division
July 14, 2009 Information Technology
Open Space - Mountain Parks
*The department presentations are available on the city's website at:
http://www.bouldercolorado.gov
Click on Departments, City Manager's Office and then on Revenue Stabilization/Blue
Ribbon Commission in menu bar on the left side of the page. Scroll down the page and
click on Blue Ribbon Commission Phase II to get to the list of Presentations/Meeting
Materials.
G-1
APPENDIX H
Blue Ribbon Commission - Phase 11
Project Update
Boulder City Council
June 9, 2009
Mission of the Blue Ribbon
Commission Phase 11(BRC 11)
The emphasis of BRC 11 is to refine the
revenue stabilization recommendations of
BRC Phase / and to continue the
implementation of the principles and
policies proposed by BRC L
The group is also completing a review of city
expenditures to ensure that public funds
are being used effectively and efficiently.
H-1
APPENDIX H
Members of BRC 11
• Susan Graf
• Tom Hagerty
• Suzanne Jones
• Dan King
• Michelle Krezek
• Michael Leccese
• Beth Pommer
• Dorothy Rupert
• Jeffrey Wingert
• Richard Wobbekind
Process to Date
1. Review of city's current expenditure structure
2. Clarified purpose as "How can the city of
Boulder assure residents that operational
efficiencies are maximized?"
3. Standardized review of services/programs
provided by each department
4. Initial identification of opportunities to explore
for continued increases in efficiency
H-2
APPENDIX H
BRC H Timeline
BRC II Action Timeframe for Completion
Complete review of current Sept - Dec, 2008
expenditure structure and clarify
BRC II purpose
Complete department reviews Jan - July, 2009
Develop final recommendations Aug - Sept, 2009
Prepare final BRC II report Oct - Dec, 2009
1. Review of City's Current
Expenditure Structure
• Financial overview or "Budget 101 "
• Description of city's "basket of services"
and business plan process
• Overview of departmental master/strategic
plans
• Discussion of performance management
and benchmarking approaches
H-3
APPENDIX H
2. Purpose of BRC 11
Clarified purpose as "How can the city of
Boulder assure residents that operational
efficiencies are maximized?"
3. Standardized Review of
Departments
• Services provided (essential, desirable,
discretionary)
• Atypical services provided
• Legal requirements
• Service standards for measuring performance
• Opportunities to outsource services or partner
with other agencies/non-profits
• Possible service reductions
H-4
APPENDIX H
4. Opportunities to Explore for
Increases in Efficiency
A. Service Issues - define services the city should be providing
and prioritize them on a citywide basis
B. Organizational/Structural Issues - identify the best
organizational structure for providing services (e.g.,
centralized vs. decentralized)
C. Policy Issues - refine policies to support efficient and effective
delivery of services (e.g., all user fee subsidies based on need
only)
D. "Tools" - Identify tools to verify services are delivered in most
efficient and effective way (e.g. performance measurement
system)
A. Service Issues
• Define services the city should provide or avoid:
• Where does the city compete with private sector?
• What services should be taxpayer supported & to what
extent?
• Should self-funded programs be provided simply because
they recover their full costs?
• Is the definition for essential, desirable and discretionary
services applied consistently across all city services?
H-5
APPENDIX H
B. Organizational/Structural
Issues
• Evaluate centralized vs. decentralized provision of
services
• Identify areas of service duplication and consolidate
where appropriate
• Explore opportunities to partner with other
agencies/non-profits to provide services
C. Policy Issues
• Continue review and implementation of BRC
policy recommendations (e.g., review fund
balance reserves across all funds)
• Review compensation policies on a regular
basis
• Evaluate subsidies for user fees and determine
if all should be based on need
H-6
APPENDIX H
D. Implementation "Tools-ly
"Embrace culture of outcomes and measurement"
Utilize citizen survey or other public input process to gather
information about community priorities
Implement efficient & effective performance management and
benchmarking systems
Evaluate city's budget approach and verify it encourages
efficiency and effectiveness
Complete external audits of departments/ service areas based
on a rotating schedule
Questions?
H-7
APPENDIX I
I tl X11` l; PIT 11, CONNEC14,0N
City of Boulder
Blue Ribbon Commission Phase II
Update on Compensation Program Review
October 22, 2009
Sue Bohline
sue. boh line~a hcconnection.com
303.443.2347
MCONNECnON
Agenda
■ Introduce HCC, Inc.
• Study objectives
• Total compensation framework
• Environmental context - trends and best practices
• The City's current practices
■ Next steps
I-1
APPENDIX I
I tl 411` l; PIT 1I, CONNEURON
About HCC, Inc.
• Boutique, Boulder-based consulting firm specializing in:
- Compensation
- Performance management/talent management
- Organizational development
- Culture change
■ Broad experience
- Diverse client base - public sector, non-profit, for-profit
- Diverse roles - compensation specialist, senior consultant/practice
leader, senior executive
• "Big firm" experience and reach at "little firm" responsiveness and
flexibility
=GONNEMON
Study Objectives
• Comprehensive, independent review driven by:
- Planned audit
- Organizational/environmental changes
- Increased emphasis on pay-for-performance
• Evaluation factors:
- Compensation philosophy (continued fit, implementation)
- Technical soundness (internal/external equity, performance/pay link)
- Cost effectiveness
- Administrative effectiveness (compliance, efficiency)
- Communications effectiveness
Note., employee benefits included in philosophy discussion; separate process for detailed design
1-2
APPENDIX I
Itll~l 1` l; PIT 11, CONNEURON
Compensation System Alignment
Mission
Vision, Goals,
Strategies, Core
Capabilities
Culture Structure
Norms, Values, Roles, Hierarchy,
Work Environment Accountability,
Career Paths
People Systems
Knowledge, Skills, Planning, Reporting,
Demographics Measurement,
Talent Management
MCONNEMON
Key Component of Organizational Culture
Caring Integrative
a Paternalistic Involved
0
nom.
c
0
1A
~a
CL Exacting
W Apathetic Demanding
Emphasis on Performance
1-3
APPENDIX I
Itli~l 1` l; PIT 11, CONNEC14,0N
Recognize Goals/Needs of Diverse Workforce
Veterans Baby Boomers GenXers Millennials
(1922 -1943) (1943- 1960) (1961- 1980) (1980- 2000)
- 10% of US Workforce 50% of US Workforce -25% of US Workforce -15 % of US Workforce
- 1% of City Workforce 37% of City Workforce - 54% of City Workforce 8% of City Workforce
• Work hard, disciplined, duty Work hard, play hard Work hard if it doesn't Work effectively
before pleasure optimistic, idealistic interfere with play Confident, resilient,
• Dedicated to helping Like stability Value feedback, flexibility, achievement-oriented
organization succeed Want to be involved, to autonomy - Excellent team players
• Great team players know they're valued Self-motivated, want - Respect authority, want
• Like consistency and Loyal autonomy collaboration
uniformity - Good team players Loyal to career Respect and value
• Conform Driven, love challenge Emphasize personal differences
• Patient, comfortable with Focused on satisfaction Want to be judged by
delayed rewards building stellar career Want fun, informal work contributions, talent
• Conservative in spending Highly competitive environment Time is important; demand
•
"Good soldiers" Want more work-life Comfortable with change flexibility
balance Think globally Ethics and benefit to society
• Personal gratification is Skeptical are important
important Value learning & skill Green is essential,
development Loyal to a point
Green is important, must
have a cause
MCONNEMON
Total Compensation Framework
MissionNisionNalues 1
I
People Strategy/Total Rewards
I
Attract & Retain Motivate & Reward Build Capability Engage
Base Pay Incentives Career Paths The Work
Benefits Recognition Tech Training The Environment
Premium Pay Opportunities Prof. Development The Team
Performance Management
Cost of Doing Business Investment in Performance
Degree of influence on performance
1-4
APPENDIX I
I Il l <11` l; PIT 1I, CONNEURON
Compensation Trends
• Public sector organizations moving towards private sector
pay practices
- Broader definition of market
- Stronger focus on performance
- Limited use of COLA/general increases
- Progression to salary range maximum not automatic
■ Private sector trends
- Increased focus on differentiating rewards
- Increased focus on career development
- Targeted strategies to develop and retain top performers
- Increased use of variable pay
MCONNEMON
Total Compensation Toolkit
(Example)
How to Compensation
What to salary Benefits Incentives Recognition Develop. Not at All
Compensate
Market Comp. X X
Increases
Cost of Living X
Individual Goal X X X X
Achievement
Overall Job X X X X
Performance
Job Growth, X X X
Promotion
Knowledge/Skill X X X
Development
Team Results X X
Org Results X X X X
Tenure X X
1-5
APPENDIX I
Itli~l 1` l; PIT 11, CONNEURON
Allocating Scarce Budget Dollars
High performing organizations emphasizing training, career development, flexibility
Programs with increased funding in last 3 years
Merit Budget
Bonus Target
401k Contri bution
Career Development
Work Environment
Learning and Training
Flexible Schedule
0% 10% 20% 30% 40% 50%
D Low Perf. Companies ■ High Pert. Companies
Source: Watson Wyatt 2007/2006 Strategic Rewards Survey
=GONNEMON
What's "Competitive" Varies
Market Entry Market Target Market Premium
Entry
• Employees just entering the job (new hire, promotion)
• Less experience, less developed skill experience at this level
Target
• Fully experienced, fully proficient employees
• Meeting or exceeding all performance expectations
• Target range for most employees over time
Premium
• Employees who have demonstrated superior performance over time
1-6
APPENDIX I
I tl i <11` l; PIT 11, CONNEURON
Emerging Trends/"Best" Practices
From TO
• "Total compensation" = pay and benefits • Comprehensive integrated package
• Pay, benefits, career opportunities, work environment
• Focus on program design/mechanics • Focus on program implementation and communication
• Focus on market analysis, job leveling • Focus on helping managers link pay to contributions
• Focus on merit increase differentiation • Increased use of variable pay
• Increased focus on calibrating skills, contributions
• Performance management: employee performance • Performance management: tool to drive
against job description organizational performance
• One size fits all • Differentiation based on position, skills, contributions
• Targeted solutions for unique needs
• HR-led implementation • Line-led implementation
• Goal: cost control • Goal: maximize return-on-investment
=GONNEMON
Public Sector "Best" Practices
• Forbes: identifies "100 Best Cites for Jobs"
- Implication: tough competition for talent
- Denver #15 on "Big Cities" list, Boulder #21 on "Small Cities" list
• Schuster & Zingheim study: how do the municipal organizations in these
cities compete for talent?
- Confidential interviews with 20 city governments
• Common practices:
- Pay competitively
- Pay scarce skills and top performers the most
- Provide training and development
- Create programs that reward growth
- Address total compensation
- Communicate
- Move forward
Source. Schuster & Zinpheim, "Workforce Retention, Pay and Rewards Practices in Tough Market Cities.
Implications for Public Sector Organizations' World at Work Journa/, Fourth Quarter 2008
1-7
APPENDIX I
Itli~l 1` l; PIT 11, CONNEURON
Emerging Public Sector Practices
Best Practice Representative Tactics
Pay competitively Consistent with employment market, position, person
• Re-visit traditional, internal job evaluation systems
• Private sector market data
Pay scarce skills and Re-allocate across-the-board adjustments
top performers the Increased use of variable pay (limited ability to differentiate through
most merit increases)
• Targeted retention strategies for top talent
Provide training & Prepare for current role and future needs
development Develop "NexGen" skills, broader competencies
• "In-job" development
Create programs • Career paths based on demonstrating skills, increasing responsibility
that reward growth • Performance = results, behaviors, skill/competency development
Source: Schuster & Zingheim, World at Work-loumal Fourth Quarter 1008
MCONNEMON
Public Sector Best Practices (cont.)
Best Practice Representative Tactics
Address total Broaden definition of total compensation
compensation Fully communicate advantages, limitations of benefits package
(e.g., defined-benefit retirement plan)
• Flexible work arrangements
Communicate Enhance communications
- Increased focus on philosophy versus mechanics
• Re-frame conversation; contributions versus entitlement
- Focus on community and customer service
Move Forward Targeted solutions versus organization wide
• Pilot test and adjust
"We're trying to move toward the growth-oriented, agile culture top performers want"
Source: Schuster & Zingheim, World at Work Journal, Fourth Quarter 2008
1-8
APPENDIX I
Ill)~1 1` l; PIT 11, CONNEURON
City of Boulder's Current Practices
Philosophical Construct Current Practice
Definition of "total Narrowly defined - pay and benefits
compensation"
Competitive position Look at base salary and benefits separately
"Attractive package" implemented as 75th% pay and
competitive benefits
Employment market definition Selected local public sector organizations
• Private sector data for selected position
Internal versus external equity Job evaluation process focuses on internal equity
Salary structure design Consistent with "best" practice
Basis for pay progression General increases and merit
• Step increases in police and fire
Performance rewards Primary cash reward is merit increases
• Alternative Rewards Program for non-cash rewards
MCONNEMON
The City's Current Employment Relationship
Attractive total comp, good work environment, opportunity to serve & innovate
1
Attract & Retain Motivate & Reward Build Capability Engage
75" %/To 3 base salary Alternative Rewards • Internal/external training - Important work
p skills & compliance Cutting-edge work
• GSI & merit increases • Team events The "Boulder Brand"
The team
• Competitive benefits • "Honors system" Management Involvement
• Longevity pay development "Outstanding" work
environment
• Legacy payments Stability
Work-life balance (for
some)
_ _ 1 1
"Best practices" performance management tool
1-9
APPENDIX I
Itli~l 1` l; PIT 11, CONNEURON
The Current Compensation Model
How
What Salary Benefits Premiums Recognition Develop. Not at All
Market Comp. Increases X X
Individual Performance X X
Job Growth X X
Knowledge/Skill X
Development
Team Performance X
Organizational X
Performance
Longevity X X X
Involvement X
Emergency Response X
Other?
=11CONNEMON
Program Evaluation Factors
Plus Minus
Compensation • Fits current culture • May not fit desired culture
Philosophy • Consistency • May not fit diverse jobs and businesses
• Implementation gaps
- Pay for longevity
- "Constrained" pay-for-performance
- Total compensation approach only in
BPOA
Technical Soundness • Consistent with professional • Internally focused
practices • Market analysis may not reflect true
• Detailed internal job evaluation employment markets, scarce skills
• well-established market analysis • Technical measurement processes may
process "trump" logic
• well-designed salary structure • Limited differentiation in merit increases
• Merit increase matrix links pay to
performance
Cost-Effectiveness Policies and procedures ensure • Not leveraging variable cost programs
affordability, budget compliance (variable pay, rewards and recognition)
• Programs tend to be viewed as separate
pieces versus integrated whole
1-10
APPENDIX I
Itli~l 1` l; PIT 11, CONNECRON
Program Evaluation Factors (cont)
Plus Minus
Administrative Effectiveness • Processes designed to ensure • Some processes are time-
regulatory compliance, consuming, bureaucratic
consistent treatment • Significant time required to make
• Consistent With City's process- decisions, administer programs
orientation
Communications Effectiveness ' Strong on facts • Light on messages
Fit with "Best" Practices • Performance management • Internal focus
system and tools • Limited focus on career paths,
development
• Market analysis scope
MCONNEMON
Does the City's employment package "fit"?
(Discussion Draft)
Veterans Baby Boomers GenXers Millennials
(1922- 1943) (1943 -1960) (1961 - 1980) (1980- 2000)
- 10% of US Workforce - 50% of US Workforce -25% of US Workforce -15% of US Workforce
- 19/o of City Workforce - 37% of City Workforce - 54% of City Workforce - 8% of City Workforce
Effective Effective Effective Effective
• Attractive pay - Same as Veterans Attractive pay Same as GenXers
• Stability - Culture (involvement, - Cutting edge work Learn from the best
• PERA team, challenge) Time-off/flexibilitys Culture (teams,
• Time-off/flexibility Boulder collaboration)
• Longevity pay Less Effective "Green"
• Legacy programs Defined contribution Work environment Less Effective
• Culture (team, retirement plans in police Same as GenX
consistency) & fire Less Effective Culture (inefficient,
• Pay not strongly linked to Demographics may impact hours, can they make a
performance career growth difference?)
Less Effective Personal gratification (can Limited focus on training and
they make a difference?) development
• Defined contribution
retirement plans in Culture (hours) - Benefits of PERA too far off
police & fire Public service often not first
choice for top talent
• Culture (change-resistant,
hours, autonomy)
I-11
APPENDIX I
I tl <11` l; PIT 11, CONNEURON
Next Steps
Finalize Assessment November 1, 2009
Develop Action Plan January 1, 2010
Employee Communications December/January
Initial Market Analysis Complete March, 2010
Implement Study Recommendations Q1, 2010 - Initial Priorities
2010/2011 - Longer-Term
Development
Monitor and Fine-Tune On-going
1-12
APPENDIX J
• Accounting and
• Allocation
Local Government
BRC II
November 12, 2009
How is it Different than Regular
Accounting?
■ Cost accounting:
❑ management analytical and decision-making
■ Financial accounting:
❑ reporting, monitoring and compliance
■ Two separate software systems for two
different purposes
J-1
APPENDIX J
■
Key Terms: Wrong Method Can
Mean Wrong Decision
■ Direct Cost: Cost assigned to a program
■ Indirect Cost: Overhead assigned to more than
one program or service (multiple levels)
■ Fixed Cost: Does not change with in service
level provided (rent)
■ Variable Cost: Changes with service
provided (direct salary)
■
Key Terms Continued
■ Sunk Cost: cost already incurred so disregard it
(current computer system)
■ Marginal Cost: change in total cost of a
service as increases or decreases
■ Life Cycle Cost: Total of all costs from
acquisition through disposal
■ Opportunity Cost: The cost if an alternative is not
pursued
J-2
APPENDIX J
■
Cost Analysis is Used For:
■ Monitoring and Increasing Efficiency
■ Determining Fees and Charges
■ Changing the Level of a Service + or -
■ Make vs. Buy Decisions
■ Internal or outsource a Program or Service
■ Buying Capital Equipment
The Challenge of Determining the
Cost of
■ Direct costs: salaries, benefits, supplies
■ Applying indirect costs:
❑ at the department level for division costs
. Supervision, office costs, supplies, commodities
❑ Indirect costs at the fund level
. Supervision, support services, commodities
❑ Indirect costs at the city level
. Supervision, support services, commodities
❑ Other indirect costs
. Council, advertising, security at council meetings
J-3
APPENDIX J
■
Options to Account for Program
and Service Costs
■ Direct Cost Only
■ Direct Cost and Cost Allocation
■ Cost Accounting
■ Hybrid (some use cost allocation, some do not)
■
Direct Cost Only
■ Includes only the known specific costs:
❑ The easiest and least costly to do, provides high level but not
detailed information for total cost of a program or service
❑ Used in many general fund programs or services
■ Is what is done in most general fund programs in Colorado
❑ Government financial accounting systems capture salaries,
benefits, supplies and contract costs
■ does not capture shared overhead
❑ Internal Service Funds allocate overhead
J-4
APPENDIX J
■
Cost Allocation
Basic problem in calculating the cost of a service is
that the resources used to support one service
are also used to support many other services.
❑ Costs in support programs are assigned to the
program or service
❑ Allocated indirect costs are based on a nexus:
. Telephone costs based on number of phones
. Payroll costs based on number of employees
■
Direct Cost and Cost Allocation
■ Captures all expenditure in direct cost slide
■ Allocates overhead costs to other funds
■ Cost allocation for general fund departments (e.g., police, fire,
etc.) is not allocated
❑ Cost allocation to general fund could be added and then offset in
the budget to show the cost but not distort the amount of change
in the budget
■ Is cost effective and captures overall costs without having to
purchase cost accounting software or adding staff
❑ An enterprise accounting, payroll and HR system = $3.0 million
J-5
APPENDIX J
■
Cost Accounting Systems
■ 85% of cost accounting is non-financial
❑ The city is required by charter and state law to do
financial accounting and is staffed for it
❑ Cost accounting allocates overhead based on nexus
and is more detailed than cost allocation
■ Additional staff and software is needed
❑ The software for financial accounting is usually not
adaptable for cost accounting without significant
modifications or a separate module
❑ Can be looked at when new software is considered
■
Hybrid
• What is used in the city of Boulder
■ Includes:
• Direct costs
• Cost allocation of overhead outside of the general fund
• Internal service fund costs to all funds if a major costs
• Could be adapted to show overhead
allocations in the general fund then net them
out so as not to distort budgets
• Recreation Activity Fund and Climate Action
Plan Fund do not pay cost allocation
J-6