Finance Department FY2018 Proposed Budget Presentation

May 11, 2017

Finance Department Org Chart - General Fund

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Kelly Dowe Chief Business Officer/Finance Director

$19,052,219 FTEs: 110.7

Director’s Office $2,678,655 FTEs: 12.6

Strategic Procurement $5,156,283 FTEs: 41.0

Financial Reporting & Operations $5,605,921 FTEs: 26.5

Financial Planning & Analysis $2,610,975 FTEs: 17.2

Performance Improvement $450,086 FTEs: 3.7

Treasury & Capital Management $2,550,299 FTEs: 9.7

Finance Department Org Chart – Revolving Fund

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Kelly Dowe Chief Business Officer/Finance Director

$6,391,376 FTEs: 62.5

Strategic Procurement $1,042,199 FTEs: 9.9

Financial Reporting & Operations $3,097,021 FTEs: 34.7

Financial Planning & Analysis $2,010,835 FTEs: 15.9

Treasury & Capital Management $241,321 FTEs: 2.0

FY2018 Department Initiatives Initiative Mayor's Priority Plan Houston Strategy

ARC 2.0 – Improve billings and collections/reduce revenue

leakage

Sound Financial Management Increase revenues for the City

Implement Electronic Invoicing Sound Financial Management Spend money wisely

Define and implement a contract management software

program to better monitor all city spend, promoting vendor

consolidation and the ability to leverage total spend

Services and Infrastructure ,Sound

Financial Management

Sustain quality infrastructure, Spend money wisely

Define and implement a robust eBid software program that

will allow two way electronic bid submissions

Infrastructure ,Sound Financial

Management

Sustain quality infrastructure. Spend money wisely

Define and implement an improved supplier management

program including vendor classification and rating system

Sound Financial Management, Complete

Communities

Spend money wisely. Partner with others, public and

private. Grow responsibly

Partnering with OBO, provide quarterly "Doing Business

with the City of Houston" seminars

Education, Complete Communities Champion learning. Partner with others, public and

private. Support our global economy

Partnering with local Supply Chain Management

educational programs (U of H) to implement monthly /

quarterly internal procurement training program focusing

on best practices in municipal procurement

Education, Complete Communities Champion learning, Partner with others, public and

private, Support our global economy

Standardization of procurement process to reduce

procurement cycle time

Infrastructure, Sound Financial

Management

Spend money wisely

Standardization of product specifications for fleet / rolling

stock procurements

Sound Financial Management, Complete

Communities

Spend money wisely, Partner with others, public and

private, Grow responsibly quality infrastructure

Inter-City Collaboration. Partnering with Los Angeles,

Austin, Dallas, Jacksonville and San Antonio to share best

practices in procurement

Sound Financial Management, Complete

Communities

Spend money wisely, Partner with others, public and

private, Grow responsibly quality infrastructure

Finalize and begin implementing Long Range Financial

Plan (LRFP)

Sound Financial Management Sustain quality infrastructure, spend money wisely,

nurture safe and healthy neighborhoods, communicate

clearly and with transparency

Prepare for November 2017 bond election for voter

authorized bond categories to facilitate implementation of

the CIP

Infrastructure, Sound Financial

Management, Complete Communities

Sustain quality infrastructure, spend money wisely,

nurture safe and healthy neighborhoods, communicate

clearly and with transparency

Prepare for November 2017 election to repeal the revenue

cap

Sound Financial Management Sustain quality infrastructure, grow responsibly, spend

money wisely, communicate clearly and with

transparency 4

Revenue By Fund ($ in thousands)

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Variance

Fund

FY16 FY17 FY17 FY18 FY18 Prop/ %

Actual Budget Estimate Proposed FY17 Est Change

General Fund $ 1,761,076 $ 1,769,507 $ 1,801,947 $ 1,814,809 $ 12,862 0.7%

Revolving Fund $ 4,134 $ 5,818 $ 5,192 $ 6,391 $ 1,199 23.1%

Total $ 1,765,210 $ 1,775,325 $ 1,807,139 $ 1,821,200 $ 14,061 0.8%

FY2018 – Revenue Highlights

• General Property Tax increase of $7.3 million (0.63%), based on limitation of Prop 1 + H

• Sales Tax increase of $6 million (0.97%)

• Mixed Beverage Tax increase of $500,000 (3%)

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Expenditures By Funds ($ in thousands)

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Variance

Fund

FY16 FY17 FY17 FY18 FY18 Prop/ %

Actual Budget Estimate Proposed FY17 Budget Change

General Fund $ 17,657 $ 19,625 $ 19,054 $ 19,052 $ (573) (2.9%)

Revolving Fund* $ 4,134 $ 5,817 $ 5,192 $ 6,391 $ 574 9.9%

Total $ 21,791 $ 25,442 $ 24,246 $ 25,443 $ 1 0.0%

* Increase due to consolidation of Public Works and Engineering accounts payable functions

FY2018 Budget Expenditures Net Change (in thousands)

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FY2018 General Fund Budget Expenditures

Net Change to FY2017 Current Budget

FY2017 Current Budget Notes

Operating Budget $ 19,021

Restricted Budget $ 604 1

FY2017 Current Budget $ 19,625

Explanation of FY2018 Incremental Increase/(Decrease)

Operating Budget Adjustments

Budget reduction initiatives (726)

Personnel budget utilization savings (136)

Subtotal Operating Budget Adjustments $ (862)

% Change from FY17 Operating Budget (4.5%)

Contractual or Mandated Adjustments:

FY18 HOPE Allowance $ 98

Health Benefits Active Civilian 116

Municipal Pension (133)

Restricted Accounts 133

Contract Escalation 75

Subtotal Contractual/Mandated Increases $ 289

FY2018 Proposed Budget

Operating and Contractual Adjustments $ (573)

FY2018 Proposed Budget $ 19,052

% Change from FY17 Current Budget (2.9%)

Notes:

1. Restricted Budget includes service chargeback accounts for items such fuel, electricity, IT accounts, etc.

FY2018 – Expenditure Highlights

• Through departmental savings initiatives and personnel budget utilization savings, the department has identified $862,000 in reductions from the FY2017 General Fund Current Budget.

• An increase of $641,000 in the Central Service Revolving Fund for the consolidation of Public Works and Engineering accounts payable functions. These expenditure and revenue are non-General Fund related.

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Functional Org Chart

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Financial Reporting

& Operations

$5,605,921

FTEs: 26.5

• Accounting / Disaster

Recovery

• Fixed Assets

• Cost Accounting

• Grants Management

• Internal Controls / Audit

• Trust Funds Management

• Deferred Compensation

• Accounts Receivable &

Collections

• Liens Management

Performance

Improvement

$450,086

FTEs: 3.7

• Revenue and Cost

Performance

Management

• Process

Improvements

• Citywide

Operational

Performance

Monitoring

• Citywide Strategic

Planning

Coordination

• Open Data and

Innovation

Initiatives

Treasury & Capital

Management

$2,550,299

FTEs: 9.7

• Capital Budget

Planning,

Management,

Reporting, and

Analysis

• Debt Issuance &

Derivative

Monitoring

• Economic Modeling

and Projections

• Manage City's

Liquidity Alternatives

• Tax & Revenue

Management

• Cash Management

• Banking Services

Strategic

Procurement

$5,156,283

FTEs: 41.0

• RCA Administration

• Commodities

Procurements

• Technology &

Services

Procurements

• Formal

Procurements

• Informal

Procurements

• Material & Vendor

Management

• P-Card Program

Management

Director’s

Office

$2,678,655

FTEs: 12.6

• Council

Administration

• Legislative

Analysis

• Pension System

Analysis

• Department

Budget and

MoFR

• Departmental

Admin Support

• RCA Budget

Impact Analysis

Coordination

• Technical &

Administrative

Support

Financial Planning

& Analysis

$2,610,975

FTEs: 17.2

• Annual Budget

• Five-Year Forecast

• General & Continuing

Appropriations

• MoFR / Budget

Management

• Mid-Year Review

• Revenue &

Expenditure

Projections

• Service Chargeback

Fund Management

• Ad Hoc Financial

Reporting

General Fund

$19,052,219

FTEs: 110.7

Functional Org Chart

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Financial Reporting

& Operations

$3,097,021

FTEs: 34.7

• Invoice Reconciliation

and Payments

• Dispute Resolution

• Department Service

Charge Back Processing

• Telecom Schedule

Development

• Spend Analysis Support

• Telecom Project Support

Treasury & Capital

Management

$241,321

FTEs: 2.0

• Capital Planning

Support

• Cost Benefit

Analysis

• Spend Reduction

Analysis

• Operating Budget

Impact Analysis

Strategic

Procurement

$1,042,199

FTEs: 9.9

• Procurement

Planning

• Equipment

Acquisition

• Supplies and

Services

Acquisition

Financial Planning

& Analysis

$2,010,835

FTEs: 15.9

• Annual Budget

• MoFR / Budget

Management

• Revenue /

Expenditure

Projections

• Service Chargeback

Funds Management

• Energy Management

Revolving Fund

$6,391,376

FTEs: 62.5

Questions

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Appendix

• Contents

– Department demographic breakdown (gender & ethnicity)

– Accomplishments

– Performance Measures

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Demographics

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FINANCE DEPARTMENT WORKFORCE ANALYSIS

Males Females Total

Asian/P.I. Black Hispanic White Total Asian/P.I. Black Hispanic White Total Asian/P.I. Black Hispanic White Total

Executives 2 1 0 4 7 0 2 1 2 6 2 3 1 6 12

29% 14% 0% 57% 100% 0% 33% 17% 40% 100% 15% 23% 8% 50% 100%

Professionals 9 17 8 12 46 13 37 16 3 68 22 54 24 15 115

20% 37% 17% 26% 100% 19% 54% 24% 4% 100% 19% 47% 21% 13% 100%

Administrative Support 1 2 0 1 4 4 8 3 0 15 5 10 3 1 19

25% 50% 0% 25% 100% 27% 53% 20% 0% 100% 26% 53% 16% 5% 100%

Total 12 20 8 17 57 17 47 20 5 89 29 67 28 22 146

Department FY2017 Accomplishments

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• Analyzed hundreds of legislative bills and provided financial analysis related to property tax, sales tax, and debt legislation

• Completed the Fleet Asset replacement model and used model as a base for assisting departments with completing PBJs

• Engaged Central Service Area departments for input on a citywide needs of CIP requests for preparation of the Proposed FY18-22 CIP

• Zero Grant Findings Achieved for FY2016 Audit

• Completion of SAP/Cost Allocation Plan (CAP) in-house

• Centralized Accounts Payable function for PWE and reduced Cost of Processing

• Completed all 841 Legacy Grant Closings in SAP

• Anticipate completion of Accounts Receivable (AR) Data Mart Project

• Completed the first ever Procurement Procedure Manual in partnership with SPD

• Completed first phase of transition to Performance Based Budgeting

FY 2018 Performance Measures – Customer

Customer Measures Priorities FY16 Actual

FY17 Budget

FY17 Estimates

FY18 Budget

Debt Service Expenditures as a % of GF Revenues

15% 13% 13% 15%

Variance of Monthly Sales Tax Revenue Forecast to Actual

7.0% 4.0% 1.0% 0.9%

Variance of Property Tax Revenue Forecast to Actual

1.4% 1.0% 2.2% 1.7%

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FY2018 Performance Measures – Business

Business Process Measures Priorities FY16 Actual

FY17 Budget

FY17 Estimates

FY18 Budget

Average Days from Purchase Requisition to Purchase order

Sound Financial Management

5.8 6.0 5.1 5.0

Average Days to Procurement (MOU to Council Award)

Sound Financial Management

121 105 129 105

City Contracts with Negotiated Early Payment Discounts

Sound Financial Management

3.1 3.0% 3.3% 3.0%

Audit Findings – Grant Sound Financial Management

1 0 0 0

Grant Budget Growth Sound Financial Management

N/A 25% 25% 27%

Collection Rate for EMS Sound Financial Management

43% 42% 42% 42%

Cost per Invoice Transaction Sound Financial Management

$39 $41 $39 $41

Collection Rate for Vendor Managed Revenues Sound Financial Management

47% 45% 45% 45%

Invoice Payments Processed within Payment Terms Sound Financial Management

96% 95% 95% 95%

Chargebacks Processed for Departments in 45 days Sound Financial Management

100% 100% 100% 100%

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