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Community Budget Advisory Committee:Internal Service FundsJuly 22, 2020
Internal Service Funds
• Facilities and Park Maintenance Fund – 45 min.
• Fleet Fund – 30 min.
• Break – 10 min.
• Information Technology Fund – 25 min.
• Insurance Fund – 20 min.
• Support Services Fund (Mail Room/ Print Shop / Info Desk) ‐ 10 min.
• Employee Benefits Fund – 10 min.
• Accrued Benefits Fund – 10 min.
• Wrap up – 5 min.
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Internal Service Funds
• Provide goods and services to other funds
• “Charge out” to each benefiting department and then use the funds received to pay for the item or service they provide
• More accurately reflect the true cost of providing a particular public service
Internal Service Funds
• Allow for major expenses – such as large equipment or vehicles – to be managed over time, so that large purchases or significant cost increases are less likely to cause a spike in the budget for a particular year.
• Working Capital Balance = Current Assets less Current liabilities (i.e. cash available)
• Working Capital Goal = cash needed for long‐term forecast or contingencies
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Service Assessments
• Fleet Fund
• Information Technology Fund
• Print Shop (Part of Support Services Fund)
• blm.mn/CBAC
Internal Service Funds
As we review each fund:•What is the money going out? (Expenses)•What is the money coming in? (Internal Department Charges)•What are we saving for? (Working Capital Balance)
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Facilities & Park Maintenance FundPublic Works Department
Facilities and Park Maintenance
The Facilities and Park Maintenance Fund pays for the costs related to capital repair and maintenance of the City’s buildings, parks, fire stations, and cemetery.
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Facilities and Park Maintenance
Facilities Maintenance:
The cleanliness, appearance, set‐up, safety, security, and temperature of our facilities impact every event that happens in them.
Park Maintenance:
Serves all visitors to Bloomington Parks by providing safe and inviting recreation opportunities. Parks provide health and environmental benefits to the community and have been shown to improve water quality, air quality, habitat for wildlife and opportunities for people to connect with nature.
• 60 + City‐owned assets – approx. 700,000 SF• Value of more than $120 Million • Range from 0 ‐ 164 years old
• More
Main Buildings77%
Fire Stations7%
Parks11%
Recreation4%
Water Treatment6%
Main
Fire Stations
Parks
Recreation
Water Treatment
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Facilities and Park Maintenance ‐Expenses
Operating Expenses• Staff salaries and benefits (40 full‐time employees)• Utility bills• Custodial services• Contractors (Electricians, HVAC, Plumbers) • Garbage removal from City buildings and parks• Park Maintenance expenses• Internal Charges (ex. IT and Insurance Fund)
Capital Improvements Projects• Roof repairs, doors, LED lighting, energy saving projects
Facilities and Parks Maintenance –Revenues (Charges to Departments)
Space & Occupancy Charges – allocation of operating costs (salaries, materials, services, and supplies) to departments based on square footage
Building Repairs – allocation of capital outlay and debt service expenses based on historical and future projects
Park Maintenance – 100% allocated to the Parks and Recreation Department (salaries, materials, services, supplies, and capital)
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Capital Improvement Plan (CIP)
•10‐Year Planning Tool for Capital Projects• Includes Capital Projects over $50,000•Does not appropriate or authorize funds•City Council must act to initiate each project over $175,000•Projects only initiated when sources of funding are available
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Additional Funding Needed
Capital Improvement Plan Projects* $100 M
Projects funded by department charges($15 M)
Additional Funding Needed $ 85 M
* Not including Community Center
Park Maintenance by the Numbers
• 400 Picnic reservations
• 7,528 Ball diamonds prepped
• 3,000 Gallons of athletic field paint applied• 9,660 Acres mowed
• 535 Circles plowed in each snow event
• 260 Miles of sidewalks plowed each snow event
• 200 Acres of prairie maintained
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Facilities and Park Maintenance –Working Capital
Working Capital Goal Year End 2020:$4,500,000 Pool Vessel Replacement Reserve for 20261,500,000 Regular Building Improvements2,400,000 Reserve for Deferred Capital Projects1,602,000 Two Months operating Expenses
75,000 Old Cedar Ave Bridge Maintenance Reserve$10,077,000
Working Capital Balance Projected Year End 2020:$10,747,625 (107% of Goal)
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How to fund $85M for the next 10 years of Capital Projects?
• Include money in tax levy to build cash reserves?
• Increase the internal charges to departments to build cash reserves?
• Issue bonds and increase debt service amount of tax levy?
•PMP (Pavement Management Program) funding program for facilities
Policy Options – Facilities Maintenance
• Pool Vessel ‐ Continue internal charge of $650,000 from Aquatics Fund? Or reduce Aquatics Fund portion of Property Tax Levy by $650,000?
• Delay Capital Projects • Complete only critical projects now
• Leads to higher expense in future• Already falling behind with large deferred bank of projects
• Funding projects in the Capital Improvement Plan
• Facilities Operational Study
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Policy Options – Park Maintenance
• Service Levels• Ball Field Condition• General Park Mowing
• Parks Programming / Parks Master Plan
• Reduce irrigation water use for athletic turf
• Handling park trash and recycling collection in‐house
• Expand low mow and native prairie areas reducing traditional turf
Fleet FundPublic Works Department
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Fleet Fund
• This fund pays for the costs related to the operations, maintenance, repair, and replacement of City vehicles and equipment.
• Departments are charged for vehicles and equipment used by their department.
Fleet Fund‐ Expenses
Operating Expenses• Staff salaries and benefits (Recently reduced from 15 full‐time employees down to 12)
• Materials, supplies, and services
• Internal charges from IT Fund and Insurance Fund
Capital Outlay• Purchases of Vehicle Expenses
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Fleet Fund –Revenues (Charges to Departments)
• Charges are based on maintenance and replacement costs and charged to departments based on their assigned vehicles.
• In past years, there was just one “Fleet Equipment Charge”
• Beginning with the 2021 Budget, it will now be split out between:oFleet Equip Maintenance & RepairsoFleet Vehicle Replacement
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Fleet Fund –By the Numbers
• 600 units and 250 attachments serviced and maintained
• 18,645 hours annually to service and maintain
• 9 fulltime technicians
• $4.9 million operational budget
• $2.5 million replacement budget
Fleet Fund –Steps Taken recently to increase efficiency and reduce expenses
• Reduced number of units from 650 to 600
• Combined warehouse and parts operation to eliminate redundancies
• Outsourced parts procurement eliminating three (3) full‐time employees
• Reduced operational costs from $5.4 million to $5.2 million
• Revamped chargeback system to be more transparent and help user departments make better fiscal decisions
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Challenges
• Outdated and undersized facility• Identified as a safety hazard by consultant in 2014• Identified as undersized by consultant in 2019 causing inefficiencies• Both studies recommended right sizing the building to improve safety and hiring two (2) more fulltime technicians to reduce outsourcing needs
• Vehicle replacement schedule is lagging• Funding has not been adequate to replace units when scheduled, which results in higher operational costs and more vehicle down time
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Fleet – Working Capital
Working Capital Goal:
$ 448,000 1 months Operating Expenses
200,000 Fuel Contingency
2,575,000 Equipment Replacement Reserve
$3,223,000
Working Capital Balance Projected Year End 2020:
$3,546,423 (110% of Goal)
Policy Options – Fleet Fund
• There are still opportunities to further down size the number of units in the fleet
• Reduce redundancies by consolidating fleet operations• Continue to replace combustion engines with electric vehicles where they make sense
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Information Technology FundInformation Technology Department
Information Technology
Information Technology (IT) provides the City with computer hardware and software and coordinates the networking and communications of the system in accordance with the City’s long‐range Information Technology plan.
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Information Technology by the Numbers
IT Supports:• # of servers = 175• # of software applications = 280+• # of endpoints (laptops, desktops, and printers) = 1,200• # of sites = 26• # of installed fiber = 20 miles
Information Technology
IT services affect the Public by providing a better experience for events and services.
Specifically in the following areas:• Extending public Wi‐Fi at City facilities• Ensuring technology is accurately configured at WIC clinic• Providing wireless services for Farmer’s Market• Providing GIS Mapping services which are made available on the City’s web site
• Providing networking and technical support for Artistry groups• Providing streaming capabilities for public events at Bloomington Ice Garden
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Information Technology
The IT Department completed a review of the structure and services of personnel in 2018
Information Technology
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Information Technology ‐ Expenses
Operating Expenses• Staff salaries and benefits (Recently moved 4 full‐time Public Works IT Employees to the IT Department. For 2020 budget, there 18 full‐time and 2 part‐time employees, some still in Public Works budget. For 2021, it has been reduced to 17 full‐time and 1 part‐time and all are in the IT budget.)
• Materials, supplies, and services• Internal charges from Insurance Fund and Facilities Fund• Annual software maintenance fees• New software purchases
Capital Outlay• Computer hardware, servers
Information Technology –Revenues (Charges to Departments)
• Charges changed in the 2021 budget to be a per employee Technology charge
• In past years, charges were allocated based on number or laptops or desktop computers in departments
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Information Technology – Working Capital
Working Capital Goal:$ 100,000 Capital Expenses
505,000 Software Expenses445,000 One Month Operating Expenses 174,572 Fiber Projects
$1,224,572
Working Capital Balance Projected Year End 2020:$970,741 (79% of Goal)
Policy Options – Information Technology
• Interfund “Loan” from Strategic Priorities
• The CBAC may have interest in assisting with evaluation of services that we either haven’t offered in the past or would consider expanding.
•We can reduce volatility in the IT budget by moving to subscription services rather than increasing capital spend.
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Insurance FundFinance Department
Insurance Fund
This fund pays for all costs, including premiums and losses, related to the following types of insurance:
•Workers' Compensation
• General Liability • Automobile
• Property •Miscellaneous(Fireworks, Medical, Liquor)
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Workers’ Compensation
• Self‐Insured for actual cost of claims up to $500,000 per claim
• Claims over $500,000 are covered by WCRA (Workers’ Compensation Reinsurance Association)
• Departments charged premiums through payroll process based on employees’ W/C codes.
General Liability Insurance
• Insurance purchased through LMCIT (League of Minnesota Cities Insurance Trust)
• $100,000 deductible• Annually, departments pay a percentage of the premium based on their total losses, plus receive a chargeback for actual losses paid by the Insurance Fund prorated over 5 years.
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Automobile Insurance
• Insurance purchased through LMCIT (League of Minnesota Cities Insurance Trust)
• $50,000 deductible• The premium for this coverage is charged to the Fleet Fund, and individual departments receive a chargeback for actual losses paid by the Insurance Fund prorated over 5 years.
Property Insurance
• Insurance purchased through LMCIT (League of Minnesota Cities Insurance Trust)
• $50,000 deductible• The majority of the premium for this coverage is charged to the Facilities Fund, and individual departments receive a chargeback for actual losses paid by the Insurance Fund prorated over 5 years.
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Miscellaneous Insurance
• Fireworks ‐ $100,000 deductible; $225 annual premium (Parks & Recreation)
•Medical Professionals ‐ $10,000 Deductible; $15,000 annual premium (Public Health)
• Liquor Liability ‐ $1,000 Deductible; $5,000 annual premium (Golf)
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How much money since 1986 does the City estimate it has saved by being self‐insured for workers' compensation?
A. $300,000
B. $3,000,000
C. $30,000,000
D. $300,000,000
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Questions about the Insurance Fund?
Support Services FundCommunity Services Department – Communications Division
Mail Room, Print Shop, Information Desk
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Support Services –Mailroom‐Print Shop‐Information Desk
The City’s print shop, mail room and information desk functions provide services to all departments throughout the City. These activities are supported by user fees to departments based on usage.• Print Shop – 1 Full Time employee
• Mailroom – 2 Part Time employees
• Information Desk – 2 Part Time employees
Support Services – By the Numbers
• Mail Room sorts 350 pieces mail/day.
• Print Shop established – 1959.
• Info Desk on evenings and weekends – Center for the Arts attendance traffic totals 72,000 people annually.
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Support Services –Mailroom‐Print Shop‐Information Desk
Department Charges• Print Shop Charge – based on actual jobs
• Mailroom – based on annual postage and mail service usage by department
• Phone Charges – based on number of phones (35% of internal phone revenue supports Info desk, 65% supports IT)
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Employee Benefits FundAdministration Department – Human Resources Division
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Employee Benefits Fund
• Health Insurance
• Dental Insurance
• Life Insurance
• Long‐Term Disability Insurance
• Health Club Reimbursement
• Tuition Reimbursement
Employee Benefits Fund
Goal is to stabilize insurance expenses in departmental budgets and moderate large budget spikes due to increase in benefit costs, especially in the areas of health insurance.
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Employee Benefits Fund
Revenues: Each Department charged based on # of employees
2021 & 2022 charge = $17,510 per FTE
(same as the 2020 charge – no increase)
Expenditures:
Based on insurance premium costs and enrollment
Health Insurance Plan – the City moved to PEIP in 2020
• Last year, facing health insurance premium increases of 17‐28%
• PEIP = Public Employees Insurance Program – open to all public employers in Minnesota.
• PEIP is created in State statute and governed by the Minnesota Department of Management and Budget
• Benefit of being in a very large risk pool with over 20,000 enrollees providing greater stability from year to year
• All employers enrolled in PEIP experience the same annual premium increase
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Health Insurance Plan – the City moved to PEIP in 2020
• The change to PEIP beneficial to the City and employees as resulted in lower premiums
• More employees moved to the higher risk / high deductible/lower premium plans than anticipated
• This is resulting in a projected gain in this fund of $1,174,000
• We will not know the premiums for 2021 until end of September – we are projecting a 5% increase
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Employee Benefits Fund – Working Capital
Working Capital Goal:
$1,000,000 1 months Operating Expenses
1,000,000 Reserve for anticipated future premium increases
$2,000,000
Working Capital Balance Projected Year End 2020:
$3,471,228 (174% of Goal)
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Accrued Benefits FundAdministration Department – Human Resources Division
Accrued Benefits Fund
•Pay‐out of accrued leave time when an employee leaves the City (Vacation, Personal, Comp, etc.)
• Based on total liability for all employees – not just what anticipate paying out per year
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Accrued Benefits Fund
• Each Department is charged 3.5% of its total budget for wages and salaries.
• The number of accrued hours fluctuates based on employee leave balances and employee departures.
• The value of the accrued hours grows each year based on pay increases.
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Questions and Discussion
• Support Services• Employee Benefits
• Accrued Benefits
