MINUTES OF THE METRO COUNCIL BUDGET & FINANCE COMMITTEE

Wednesday, September 27, 2000

Council Chamber

Members Present:  Susan McLain (Chair), Bill Atherton (Vice Chair), Rod Park, Ed Washington

Members Absent:  David Bragdon, Jon Kvistad, Rod Monroe

Also Present:    Councilor-elect Rex Burkeholder

Chair McLain called the meeting to order at 1:45 P.M.

1.  Consideration of the Minutes of September 13, 2000 Meeting

Minutes will be considered at the October 11 meeting.

2.  FY 2000-01 Budget Cost Controls

Chair McLain asked for a status update of departmental efforts to ensure that increases for COLAs are contained with FY 2000-01 appropriations. Jennifer Sims, Administrative Services Department (ASD) Director/Chief Financial Officer verified that this update was related to management strategy to deal with the variance between budgeted COLA (2%) and actual COLA (3.7%). She further stated that the departments are completing their compliance reports; she would update the Budget/Finance Committee at its next regular meeting.

Tony Mounts, ASD Financial Planning Manager reviewed the FY 01-02 Budget Framework PowerPoint presentation (a copy is included in the public record). He noted that insurance was estimated at $509/FTE. Chair McLain asked if the Framework only looked at the budget’s historical perspective. Mr. Mounts agreed that it did, but it also projected into the future, based on assumptions outlined in the presentation. Councilor Park asked about the assumption for Insurance of $509 per FTE. Mr. Mounts clarified that this was $509/FTE per month. Mr. Morrissey asked if there were any lawsuits anticipated such as those facing the City of Portland over PERS. Ms. Sims said many issues regarding PERS were expected to arise in the next few months. She promised that staff would update Council as each issue occurred. Chair McLain noted there were several solid waste applications for new transfer facilities in the queue that could effect the fund. Mr. Mounts agreed. He went on to discuss the Zoo Operating Fund.

Chair McLain asked why the attendance figures of 1.1 million at the zoo was used in projections rather than the 1999-00 actual figure of 1.2 million. Mr. Mounts responded that the Zoo Director was uncomfortable projecting higher than average attendance figures for the next 5 years as attendance was dependent on good weather; this year’s weather had been unusually fine. Councilor Atherton noted the fund balance appeared to be leveling off. Mr. Mounts said staff was currently working on an explanation for this phenomenon.

Excise Tax Related Funds: General Fund, Planning Fund and Regional Parks Fund. Chair McLain asked staff to review the purpose of the $1 million reserve in Regional Parks Fund. Mr. Mounts moved on to Process Assumptions. Chair McLain noted that at yesterday’s informal meeting the Council had expressed a desire for a closer working relationship with the Executive Office during the budget process, no matter what the election outcome might be on the Charter Reform.

Mr. Mounts noted that budgets were due to be submitted to the Executive Officer on November 13, while the election would be held November 7. He stated that a good deal of the budgeting depended on the election outcome, particularly the Taxpayer Initiative (Ballot Measure #83). Staff might be required to refine budgets, which could cause a delay in submission. Chair McLain asked if the delay could be limited to no more than 2-3 weeks. Mr. Mounts felt that would be reasonable. Councilors Atherton said there would be a large impact no matter what the results of the election were. Chair McLain asked whether there was a cap for merit increase on MERC’s Operating Fund assumptions. Peggy Coats, Council Analyst, said Council had suggested a mid-level cap for MERC this fiscal year, based on their Pay-for-Performance program. Chair McLain asked if Metro departments budgeted at a similar mid-point in the allowable merit range. Ms. Coats responded that historically the actual expenditure averaged in the mid-range, but departmental budgets could be calculated using either a 3% average, or the actual anniversary date of the employee.

Councilor Atherton asked why Central Business Services was designated at 5%, when the assumption for CPI adjustment agency-wide was only 3%. Mr. Mounts responded that this was the historical factor used for annual cost adjustments. When the assumed 3% CPI adjustment and COLAs were averaged together, it came in close to 5%. Chair McLain suggested that Parks Solid Waste allocation should be flagged for further review, as there was disagreement among the Council as to the correct equation. Councilor Park said he thought that last year Parks department received more than 1% of excise tax. Kathy Rutkowsky, Financial Planning Analyst, said Parks received allocations from 4 sources in the FY 2000-01 budget: 1). income earned from parks funds (approximately $150k), 2). landbanking reserves (approximately $200k), 3) 15 of the 8-1/2% solid waste tax (approximately $600k) and 4). historical allocations to greenspaces, usually used for education programs (approximately $400k). Chair McLain said that these allocations should be revisited with current information on each of those funds, and that an addendum should be placed in the budget manual to clarify parks transfers.

3.  5 Year Forecasts – Update

Chair McLain asked what assumption was used as to the length of time tipping fees remained constant. She said historically tipping fees were stable for 5 years. Mr. Mounts said assumptions were understood to go through 2004. Councilor Park clarified that this assumed no additional transfer stations were added in that time. Chair McLain stated that the assumption for the tip fee should also be included as an addendum in the budget manual, and that it should also go to REM to finalize projections for a number of years.

Chair McLain asked staff if the Weiden & Kennedy profile could be distributed to the full Council. She asked about the facility condition study. Mr. Mounts said normally that a study should be done every 3-5 years; their assumption was that a baseline study would be done in FY 2001-02. Councilor Washington was surprised Mr. Mounts had said the study would provide a baseline to give the desired level of support; Councilor Washington felt a study was not needed to determine what our facilities were. Mr. Mounts replied that the study would determine current condition, or baseline, upon which a renewal and replacement schedule could be established for the future. Councilor Atherton asked if the Auditors Office might be a resource. Ms. Sims responded that it required a certain level of expertise in building maintenance to do such a study.

4.  Key Assumptions Guiding Development of the FY 2001-02 Operating Budget

Councilor Atherton asked if the Council wanted to look at new ways to fund planning in Growth Management and Parks. Chair McLain understood that Metro was awaiting the outcome of the November 7 election to determine the extent of planning for future financing required. She had committed to review new funding sources at the Council Retreat. Councilor Washington agreed that there was too much uncertainty until after the election. Councilor Atherton thought Metro needed to address this issue whether ballot measure #83 passed or not. Councilor Park asked about staff assumptions on ending balances and carry-forwards. Mr. Mounts responded that the General Fund projected balance was $610k and the actual was $772k. Chair McLain asked staff to give the Committee a breakout of where the $162k additional monies came from.

Mr. Morrissey noted that Council had earlier expressed a desire to understand the nature of actual ending fund balances. Council’s concern was based on the fact that if the end-of-year balance assumption was under-expended and not accounted for, the larger balance rolled over to the following year and artificially inflated the next year’s budget. Chair McLain said there were two issues: 1). Under-expenditures and 2). Carry-overs. Ms. Sims said that under-expenditures were still based on approved current expenditures and the key for Council was to determine spending patterns overall. Councilor Park said his point was to spend monies only during the year budgeted, in the amount budgeted. Any funds not spent would require authorization of the Council to be re-allocated for a different purpose, or to be carried over for the same project in the next budget year.

Chair McLain said that money saved in one area could not be spent elsewhere without Council approval. Ms. Sims noted that Council had several opportunities to review the status of spending; including when the budget was brought forward during the budget proposal process and during the technical amendment period in March. Chair McLain stated that once the Executive Office knew what the carry-overs or under-expenditures were Council should review. Council had developed a policy for the General Fund this year, which could apply to other funds: income higher than anticipated at year-end should go into reserves.

Councilor Atherton noted that he was formulating a proposal for a voter-approved utility fee of $25 per acre to support Planning, as well as the establishment of a legacy fund for the maintenance/development of Parks.

5.  Councilor Communications

None

Chair McLain adjourned the meeting at 3:05 PM.

Respectfully submitted,

Pat Weathers

Council Assistant

ATTACHMENTS TO THE PUBLIC RECORD FOR THE MEETING OF SEPTEMBER 27, 2000

The following have been included as part of the official public record:

i:\minutes\2000\budget&finance/09270bdm.doc