Transcript The City of Springfield Presentation to Standard & Poor’s May 20, 2010 The Springfield Team City of Springfield • Domenic J.

The City
of Springfield
Presentation to
Standard & Poor’s
May 20, 2010
The Springfield Team
City of Springfield
• Domenic J. Sarno, Mayor
• Lee C. Erdmann, Chief Administration and Finance Officer
• John D. Judge, Chief Development Officer
• Timothy J. Plante, Finance Director
• LeeAnn Pasquini, Budget Director
• Stephen Lonergan, Treasurer
• Patrick Burns, Comptroller
First Southwest Company
• Cynthia McNerney, Managing Director
Agenda
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Mayor’s Strategic Priorities
Local Control - Financial Management
Springfield’s Success & Continued Priorities
FY10 Update
FY11 Recommendations
Economic Development
Mayor’s Strategic Priorities
1.
2.
3.
4.
5.
Public Safety
Education
Job Creation
Neighborhood Revitalization
Financial Management
Local Control Accomplishments
• Successful recruitment of CAFO
– 30 years of experience
– Successes in another local City
– 32 key goals and objectives identified
– Need to address long term liabilities
Local Control - Accomplishments
Four Year Financial Plan
* based on FY11 Finance Recommendations
$7
$6
Hundreds of Millions
$5
$4
$3
$2
$1
$0
2006
2007
2008
2009
2010
2010
Projected
2011
2012
2013
2014
Expenditures 436,928,949 495,296,122 505,731,534 494,085,999 528,657,502 521,260,686 533,905,178 584,430,214 600,230,073 616,570,551
Revenues
468,408,478 498,548,530 520,041,502 512,396,226 528,657,502 532,744,679 533,905,178 537,896,499 546,252,366 555,512,281
Surplus/(Gap) 31,479,529
3,252,408
14,309,968
18,310,227
0
11,483,993
0
(46,533,716 (53,977,707 (61,058,270
Local Control Accomplishments
• For context, the FY11 budget development process began with a
projected gap of $45.5 million.
• To solve for this gap, ideas from the four year forecast have been
included in the budget recommendations:
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Maximizing offsets to grants
Developing a City-Wide Cost Allocation Plan
Reviewing all organization studies
Consolidating A&F functions of the School Department and City
Programmatic Cuts
Maximizing the use of MUNIS
Consolidating all solid waste activities into the Enterprise Fund
Hiring a Dispatch Director
Maximizing energy savings
• Additional recommendations will need to be considered over the
coming years to solve for the projected gap.
Local Control Accomplishments
• Smart Training
– Conducted leadership training for executive and mid-level
management in the principles of human resource management,
budgeting, communication and continuous improvement.
• LEAN Training & Continuous Improvement
– Conducted 2 day training of all City senior management; conducted
1 Kaizen event and plans in the works for another; Steering
Committee developed to keep the process locally driven.
• MUNIS Payroll
– Implemented module to run all payroll through MUNIS to help
control FTEs and costs.
– Position control within MUNIS has been an important tool to control
costs.
Local Control Accomplishments
• A&F Department Restructuring
– Created a stand alone payroll department; consolidated
HR and Labor Relations; Moved CitiStat under A&F
• Consolidation of City / School Business Functions
– Single Finance Director overseeing both; reviewing
similar model for HR and IT
• Grants Management
– Hired a dedicated grants manager and to date have
applied for $5 million in grants across City departments.
Local Control Accomplishments
• Single Stream Recycling
– Implemented SSR with new trucks and additional
purchase of blue bins anticipated in FY11.
• Capital Improvement Plan
– Includes $374.2 million worth of projects and equipment
for various departments in the City of Springfield; FY11
Capital Budget strives to address the City’s largest
capital needs which are facilities and vehicles for public
safety and public works.
Local Control - Priorities
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Budget balancing and continuing to build reserves
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Trust Fund repayment (dependent on Legislative proposal)
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Continue with City and School business functions consolidation
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Follow and update Financial Policies which are adopted as ordinances
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Continued improvement of the City’s bond rating
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Monthly financial and taxpayer reports
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Quarterly financial and performance reports starting in FY11
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Strategic planning and governing for results
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Maintain strong management structure in place for continued success
Management Structure
CAFO
Labor Relations
Capital Construction
Internal Audit
Capital Planning
MUNIS Division
CitiStat
311
Productivity Bank
Grants Management
Financial Planning
Centralized Dispatch
Training program
Springfield’s Success
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Continued improvement to management of municipal operations
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Streamlined management
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Studied departments
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Implemented improvements, hired managers, outsourced where appropriate
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Trained staff
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Developed and using data to manage operations
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Continued management of cost centers
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Benefits: Projected health insurance savings of $70M - $96M (FY08 to FY12)
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Wages: Wage growth within City’s ability to raise revenue; time and attendance system
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Energy costs: ESCO; improved bidding and management
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Debt Service
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Continued fiscal management
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Implemented MUNIS. Established MUNIS Division to ensure system success
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Developed Capital Improvement Plan
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Energy Savings Contract (ESCO) project continues to yield over $1M in savings annually
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Enacted Financial Policies as ordinances to strengthen financial control
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Consistently managing departmental budgets and controlling expenditures
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Comptroller granted formal sweep authority to prevent overspending
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Improved budget development process to be more transparent, establish performance goals and improve communication
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Created the Productivity Bank to encourage innovation, cost savings and accountability across the City
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Implemented a new Grants Unit to coordinate grants management, ensure proper compliance and prevent turn backs
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Continue to meet reporting requirement required by the State Department of Revenue and the Executive Office for Administration and
Finance
FY10 Update
FY10 anticipated surplus of $11.4 million based on:
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Spending Changes
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Employee benefits
Delayed hiring and vacant positions
Mild winter
Continuous management
Revenue Changes
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License and permits collections
Tax liens
Original Budget Assumptions
Spending
528,657,502
Revenue
528,657,502
Surplus / (Deficit)
March Projection
Spending
Revenue
Surplus / (Deficit)
521,260,687
532,744,679
11,483,992
FY11 Budget
• Budget development began in January 2010 when
Department requests were due; 5-10% reductions from
each department were requested.
• Mayor’s public hearings were conducted in March.
• Drafts were shared with departments throughout the
process to ensure priorities were being properly met.
• City Council is currently deliberating on the
recommendations.
TOTAL SPENDING
TOTAL REVENUE
SURPLUS (DEFICIT)
ACTUAL
FISCAL 2009
GENERAL FUND
494,085,999
512,396,226
18,310,227
ADOPTED
FISCAL 2010
GENERAL FUND
528,657,502
528,657,502
0
PROJECTED
FISCAL 2010
GENERAL FUND
521,260,687
532,744,679
11,483,991
RECOMMENDED
FISCAL YEAR 2011
GENERAL FUND
533,905,178
533,905,178
(0)
$ VARIANCE TO % VARIANCE TO
FY10 ADOPTED
FY10 ADOPTED
5,247,676
0.99%
5,247,676
0.99%
(0)
FY11 Budget – Challenge & Drivers
Drivers:
– School Department
– Employee Benefits
– Contractual Increases
– Other Obligations (legal
and contractual)
Challenge:
– Structural Deficit
– Spending Growth
– Minimal Revenue
FY11 Budget Gap
60,000,000.0
50,000,000.0
40,000,000.0
+37.9M
30,000,000.0
Gap =
$45.5M
20,000,000.0
10,000,000.0
+10M
+2.4M
1
2
FY11 Budget – Solutions
• To solve for the
projected budget gap,
many solutions were
used to balance
budget reductions,
revenues and use of
reserves:
Solutions
Pension Funding
Debt Service
Health Insurance
Departmental Budget Reductions
FY10 Surplus
Net School Spending Change
Net Revenue Changes
Reserves
Total Solutions
7,894,545
2,891,596
3,788,109
5,412,163
1,962,470
6,001,550
5,115,000
12,500,000
45,565,433
Group Insurance Commission
The chart below demonstrates the savings in health insurance
based on the projected costs without GIC. The City continues to
benefit from its use of the GIC for employee health insurance.
FY11 – School Department Budget
• The budget for the School department is $310.0
million in general fund dollars; an additional $5.1
million has been allocated from ARRA grant funds.
• This represents a 2% increase over FY10.
• During the budget process, the School department
solved for a projected $16 million gap.
• The budget has been adopted by the School
Committee and is currently before City Council.
FY11 Reserves – Stabilization Fund
FY 11 Projected Stabilization Reserves
Analysis of Reserves
Stabilization Fund Balance as of 4/30/10
$
25,005,399
FY 2009 Free Cash Sources/Uses
FY 2009 Certified Free Cash
Overlay Surplus
Special Revenue Fund Deficits
Prior Year Bills
Current Year Bills
Land Taking - Forest Park Middle School
Demolitions
Other Priorities
Subtotal
22,319,922
5,000,000
(822,869)
(310,919)
(1,062,733)
(2,000,000)
(1,000,000)
(500,000)
21,623,401
FY 2010 Free Cash Sources/Uses
Projected General Fund Surplus
Projects funded with projected FY 10 Surplus
Subtotal
11,483,991
(1,962,470)
9,521,521
FY 2011 Budget
General Fund Use of Reserves
Subtotal
Projected Stabilization Fund Balance 7/1/10
(12,500,000)
(12,500,000)
$
43,650,321
FY11 Reserves – All Sources
• The FY11 budget recommendation contemplates that
2% over the overall revenues come from reserves.
FY 11 Reserves All Sources
Springfield Reserves
Projected Stabilization Reserve
Promise Fund - State Loan Repayment
Other Reserve Funds
Chapter 656 Reserve Fund
Self Insurance Reserve
ESCO Energy Services Stabilization
Total
$ 43,650,321
43,000,000
6,042,256
564,143
773,249
$ 94,029,969
Improved Financial Management
and Results
The chart below shows a history of Springfield’s Free Cash
balances with recent positive balances deposited into Stabilization.
Certified Free Cash History
40,000,000
30,000,000
20,000,000
10,000,000
(10,000,000)
(20,000,000)
(30,000,000)
(40,000,000)
(50,000,000)
General Fund Balances
• The General Fund balance is 15% of the total $533.9
million budget recommendation.
City of Springfield - General Fund
Fund Balance Analysis
As of March 31, 2010
Fund Balance
82,150,889
Unreserved
41,712,840
Undesignated
38,867,229
Collection of Back Taxes
The chart below shows Springfield’s aggressive collection of taxes
that continues to be a priority of the City.
Local Economy
• Strong economic base with hospitals, colleges and finance
and insurance, and precision manufacturing
• Low rental and home owner vacancy rates
• Economic Center of the entire region
• Although unemployment is high we have passed the peak
and expect to see declines
• Taxable value will decline in FY11, but some property types
show signs of stabilizing
Metro Area Residential Vacancy Rates
Lowest Rental Vacancy Rates
City
%
1. Springfield
3
2. Bakersfield
3.3
3. Boston
3.7
4. Albany
4.1
5. Columbus
4.7
6. Honolulu
5.2
7. Portland (OR)
5.3
8. Albuquerque
6.1
9. New York
6.2
10. Buffalo
6.4
Lowest Homeowner Vacancy Rates
City
%
1. Worcester
.4
2. Rochester
.5
3. Springfield
.6
4. Richmond
.7
5. Albuquerque
.7
6. Birmingham
1.0
7. Jacksonville
1.2
8. Los Angeles
1.2
9. Hartford
1.3
10. San Antonio
1.3
Springfield is the Economic Center of the
Region
Springfield is the Economic Center of the
Region
% of Pioneer Valley Employment
Agawam
4%
Chicopee
7%
E. Longmeadow
3%
Other
33%
Holyoke
8%
Northampton
6%
W. Springfield
6%
Westfield
6%
Springfield
27%
Springfield Employment by Industry
Hospitals
8,339 - 11%
Ambulatory Health Services 6,634 9%
Colleges & Universities 2,266 - 3%
Manufacturing
4,455 - 6%
Other Sectors
47,773 - 63%
Finance & Industry
6,429 - 8%
Economic Development –
Recent Highlights
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Demolition and environmental remediation of Chapman Valve/Crane site for
industrial redevelopment
Produced a monthly e-newsletter
Created a Strategic Marketing Committee & Soft Launched Campaign
Hosted a Developers Conference – 240 attendees
Broke ground on Homeless Resource Center
Expended $16.8M to advance State Street Corridor
Received $3.5M in Neighborhood Stabilization Funds
Established a new nonprofit development partner: DevelopSpringfield
Partnered with area colleges on several grant opportunities
Expended $5.5M to advance South End Revitalization Project
Administered more than $4M in Community Development Block Grant
Program, to 40 local projects and organizations
Opened the 100,000 sq. ft medical/life sciences building on Wason Avenue.
This new building had a building permit of $13 million. In addition, a second
much smaller building has been built on that site.
Economic Development –
Current Projects
• Established MOU with UMass to create an Urban Design Center
• Won ULI Technical Assistance Project on Riverfront revitalization
• Moved to redevelop: Union Station; Court Square; former Asylum
building; 1550 Main; Mason Square; former Zanetti School; Waterfront
Club; Eastern Gateway and other key infrastructure projects
• Created Special Tax Assessment to keep Titeflex in the city and saved
103 jobs. Titeflex will invest another $3 M to modernize their 58 yearold facility
• Won Green Communities Award and working with PVPC on greening
city services
• Established a Small Business Forum series in Neighborhoods
• Secured F.W. Webb to purchase land and construct a new 70,000 sq ft
building at Smith & Wesson Memorial Industrial Park.
Economic Development –
2010-2011 Strategic Objectives
1.
Reshape our Economy
2.
Restore balance in our housing stock
3.
Build the Springfield Brand
4.
Green and beautify neighborhoods
5.
Foster Collaboration
6.
Build Capacity
Economic Development –
2010 Strategic Actions
• Establish Springfield as leader in the Green Economy
• Implement Global Partners/Socios Globales
• With Regional Employment Board and other groups, create GED
career-based educational alternatives
• Expand GreenSeal - Springfield’s conservation & energy efficiency
award program
• Break ground on new data center at former Tech High
• Demolish and redevelop former Asylum building
• Market former York Street Jail, Court Square, 1550 & 1592 Main Street
sites for redevelopment
• Develop/refine City’s Marketing Campaign
• Cultivate UMass presence downtown
• Procure Owners Project Manager, Design & Legal for Union Station
Regional Intermodal
• Implement new Acela Inspectional services software system
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Municipalities with General Fund Budgets Exceeding $70 million
Springfield Total Reserves does not Include Promise Program
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Municipalities with General Fund Budgets Exceeding $70 million
Springfield Total Reserves does not Include Promise Program
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Municipalities with General Fund Budgets Exceeding $70 million
Springfield Total Reserves does not Include Promise Program
Questions & Discussion