MINUTES OF THE METRO COUNCIL BUDGET & FINANCE COMMITTEE

Wednesday, October 10, 2001

Council Chamber

Members Present:  Susan McLain (Chair), Bill Atherton, David Bragdon, Rex Burkholder, Rod Monroe, and Rod Park

Members Absent:  Carl Hosticka (Vice Chair)

Chair McLain called the meeting to order at 2:13 p.m.

1.  Consideration of the Minutes of September 26, 2001, Budget and Finance Committee Meeting

2.  Report from the Chief Financial Officer

Jennifer Sims, Chief Financial Officer, spoke to the upcoming Council Informal meeting on October 23, 2001. The meeting would be an executive session to confirm the Metro Council’s direction for budget assumptions. She said the two key elements would be cost of living adjustments (COLA), and health and welfare costs.

Councilor Monroe asked if an Executive session would be held to discuss issues sensitive to negotiations. Ms. Sims responded that would be the same Executive session. Chair McLain said that in the October 9, 2001, Budget and Finance pre-meeting, she had asked staff to document what health care options had been explored. She said a health care survey had been circulated, and that Lilly Aguilar, Human Resources Director, had been asked for a clear explanation of who took the survey, and what choices had been given to respondents. She hoped to have this information by the October 23, 2001, Council Informal meeting.

3.  Ordinance No. 1-921, Amending the FY 2001-02 Budget and Appropriations Schedule by Transferring Appropriations from Contingency to Operating Expenses in the Administrative Services Department within the Support Services fund to Implement GASB 34

Don Cox, Accounting Manager, spoke to Ordinance No. 1-921.

Update on Budget Notes

Pete Sandrock, Chief Operating Officer, spoke to the Executive Officer’s October 1, 2001, response to Budget Notes 2,3, and 8 (FY 2001-02), which is included as part of this record.

He spoke to Budget Note 2. He referred to a Washington Park Parking Lot Pro Forma, updated August 7, 2001, which is included as part of this record. He said that Rick Williams, a loaned executive from Melvin Mark Companies, would be conducting an analysis of paid parking at the Zoo. He said the Pro Forma indicated that previously presented scenarios were not going to meet the need, and that new options would need to be explored.

He spoke to Budget Note 3. He said staff was currently preparing capital and operational needs assessments to be considered during the budget process. He said that although revenue strategies had been considered in the past, consensus had been lacking. The collaborative method in approaching this year’s budget process should facilitate a higher level of strategic thinking to help decide how to approach strategic planning in future years.

Presiding Officer Bragdon commented that the Green Ribbon Committee (GRC) had recently discussed excise taxes with regard to specific Parks needs, and they would be submitting a report in several weeks.

Mr. Sandrock spoke to Budget Note 8. He said it was unlikely that great savings would be realized whether activities were centralized or decentralized.

Chair McLain said she was most interested in 1) construction and maintenance issues, and 2) contracting issues. She noted that Metro projects were diverse in nature, and that criteria would have to be developed accordingly. Mr. Sandrock agreed there was a wide variety of large capital projects. He said general guidelines would act as a mandatory check-off for projects that exceeded a certain dollar value, and act as an advisory for projects below that certain dollar value. He said that adequate training of project managers needed to be addressed. Chair McLain said that maintaining broad guidelines up to a certain dollar value should only apply to Stage 1. She said that Stage 2 still needed to be addressed. In-house projects sometimes resulted in two levels of project managers when contractors joined the internal team. She said that comments should reflect these scenarios in the guidelines. Mr. Sandrock said the Executive Office would try to address that concern. Presiding Officer Bragdon added that coordination was important. The recent Zoo audit noted that expertise could have been shared from other departments in terms of uniform standards. He noted that Construction and Maintenance could be addressed by the Systems Task Force’s Reserve/Replacement policy. He proposed that Resolution No. 01-3113, to be voted on later in the meeting, be folded into the Executive Order.

Councilor Burkholder asked for clarification of the numbers in the Pro Forma responding to Budget Note 2. Mr. Sandrock responded that, given that there was a growing, long-term serious parking problem in Washington Park that affected Metro’s facility, one long-term solution would be the construction of a parking structure. The debt service on such a structure would be a little over $2 million a year. None of the Pro Forma options would generate enough income to meet that debt service. Councilor Burkholder said the Pro Forma showed that current expenses could be met. He asked how charging for parking would affect demand, and whether charges would reduce the need for a structure. Mr. Sandrock responded that Mr. Williams’s analysis would address that issue.

Councilor Monroe suggested encouraging more people to take light rail to the Zoo. He referred to PGE Park’s issued tickets doing double duty as MAX passes, and suggested exploring this option for the Zoo. A shared cost relationship between Metro and Tri-Met, and perhaps the inclusion of paid parking, would serve as an incentive to use the train. Councilor Atherton suggested charging Zoo parking on a seasonal basis. Mr. Sandrock responded that Mr. Williams would test these options in his analysis.

Councilor Burkholder asked how Mr. Sandrock would characterize Portland City Commissioner Jim Francesconi’s and the Forestry Center’s response to this discussion. Mr. Sandrock responded that the response was reluctant.

Chair McLain noted that the Budget Notes announced action to come. She asked whether the needs of Financial Staff to take action would be addressed in the near future. She said that Council was expecting results, and recommended that the Executive Office make this a high priority. Chair McLain said that more discussion was needed on some items, and that those issues would need to be put on a work plan or given some budget. She asked if there would be an offer forthcoming on those issues. Mr. Sandrock assented.

4.  Resolution No. 01-3113, For the Purpose of Approving Metro Capital Asset Management Policies

Councilor Atherton spoke to Resolution No. 01-3113. John Houser, Council Analyst, spoke to Resolution No. 01-3113. He reviewed the history of the System Task Force’s inception. He referred to Exhibit A.

Councilor Atherton thanked the Committee and staff for their support and work on this project.

Chair McLain referred to a request she had made for this document to be used in future projects, such as the Capital Improvement Program (CIP). She anticipated budgeting for the implementation of the document’s policies, and asked for guidance from staff on what was needed to start.

5.  Budget Decision Packet Process

Jeff Stone, Council Chief of Staff, reported that Council and agency staff were continuing the previous year’s success of collaboration on the process. Mr. Sandrock agreed that the process had been positive, and welcomed the detailed involvement of Council staff in developing the coming year’s budget packages. Kathy Rutkowski would present a numerical overview of the current year’s budget, which was intended to respond to questions that had arisen about the budget process; and a summary forecast of FY 02-03 on a fund-by-fund basis, which was based on assumptions reflecting no change.

Kathy Rutkowski, Acting Financial Planning Manager, spoke to the October 10, 2001, Numerical Overview FY 2001-02 Adopted Budget, which is included as part of this record.

She said that Personal Services represented 16% of the agency’s total current expenditures, with approximately 688 full-time equivalents (FTE). Councilor Burkholder asked what was signified by the percentages in the FY 2001-02 Non-Represented Regular Salaries/Wages by Department chart. Ms. Rutkowski responded that the percentage was the percent of total non-represented employees in the agency. Councilor Monroe referred to the estimated excise tax impact of a 3% Reduction of Regular Non-Represented Salaries and Wages, and asked if the amount not covered by the excise tax would be covered in a cost-allocation formula. Ms. Rutkowski responded that the amount would be funded by departments’ enterprise revenues.

She said that Materials & Services, before excluding capital funds, debt services funds, trust funds, and certain internal service funds, was $90 million dollars. Chair McLain asked if there was a document showing the source of revenue for each category. Ms. Rutkowski said the chart focused only on expense, not revenue. Councilor Monroe asked why public notices had been categorized as quasi-discretionary since public notices were required by law. Ms. Rutkowski said that the discretionary nature of each public notice would be judged by line item, and that she did not disagree that public notices were required by law.

Ms. Rutkowski spoke to the Capital Outlay, noting that there was a total of $99 million in capital, with the vast majority in capital projects. She spoke to the Cost Allocation Plan. She spoke to the Current Revenues, noting that total revenues were $187 million. Presiding Officer Bragdon asked why the revenues to the Zoo fund were $20 million when the enterprise revenues were $11 million. Ms. Rutkowski responded that the difference was explained through property tax. Presiding Officer Bragdon asked where charitable donations fell in this category. Ms. Rutkowski said they were listed as donations, not enterprise revenue.

Councilor Atherton thanked Ms. Rutkowski for her work.

Ms. Rutkowski spoke to the FY 2002-03 Forecasts, which is included as part of this record. Councilor Park asked if the budgets, when considered status quo for the forecasts, were also service line budgets. Ms. Rutkowski agreed, saying that the service line budget took the current existing budget and inflated it by a certain factor.

Mr. Stone spoke to the Program Preference Survey, which is included as part of this record. He said that this document was an outcome from the Retreat. He asked that the committee members return the survey results by October 15, 2001. He emphasized that it was a preliminary rating of snapshot priority that would help build consensus for developing the budget, and indicating potential areas for reduction. He said it was a useful tool to begin policy discussions. Chair McLain asked that Finance Staff take the survey to the Cabinet to have them review it and identify differences between Council and Cabinet opinions. Mr. Stone agreed and explained that quick turnaround was necessary for the level of analysis required. Chair McLain noted that in Program Priority ratings, choices should be made with consideration to needs in the upcoming year.

Mr. Sandrock addressed some technical aspects of the survey, noting that the survey was not a decision document. He said that wide-ranging responses would provide the opportunity for a deeper discussion to assess priorities. Chair McLain urged committee members to ask questions so they could make informed choices. Mr. Sandrock said that some questions could be answered by consulting the current year’s budget document. He noted that any service level other than “Maintain at current level” would impact the decision package. Elimination or reduction of some of the grant-funded programs would have ripple effects on the cost allocations to Central Services. Councilor Atherton clarified that a “ripple effect” would increase costs for other programs. Mr. Sandrock agreed. He advised committee members to think agency-wide while completing the survey.

Chair McLain asked about the Drug Testing for Cause category on page 27. Mr. Sandrock responded that this was Zoo-related, and that this reflected policy that had come strongly recommended from the Animal Welfare Task Force. Chair McLain asked why the Office of the Chief Operating Officer category stood alone. Mr. Sandrock responded that it was a placeholder.

Chair McLain said that Mr. Sandrock, Mr. Stone and Ms. Coats should be contacted with questions regarding the survey.

Chair McLain referred to the October 23, 2001, Executive session regarding health care benefits. She said she had asked Finance staff to go out of their way to pursue health care options, and that as a public agency, Metro should help set the standard. She said she believed Metro did an inadequate job for part-time workers, and she hoped that Council could come together in leadership on this issue.

6.  Councilor Communications.

There being no further business before the committee, Chair McLain adjourned the meeting at 3:26 p.m.

Respectfully submitted,

Cary Stacey

Council Assistant

ATTACHMENTS TO THE PUBLIC RECORD FOR THE MEETING OF OCTOBER 10, 2001

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

i:\minutes\2001\budget&finance/101001bdm.doc