HomeMy WebLinkAboutR-96-06980
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J-96-1145
10/7/96
RESOLUTION NO.
A RESOLUTION DECLARING A "TRUE FISCAL
EMERGENCY" IN THE CITY OF MIAMI, FLORIDA,
CONSISTENT WITH THE CITY OF MIAMI'S
COLLECTIVE BARGAINING AGREEMENTS AND
DELEGATING TO THE CITY MANAGER THE AUTHORITY
TO RE -OPEN ALL COLLECTIVE BARGAINING
AGREEMENTS FOR IMPACT BARGAINING IN THE EVENT
THE CITY MANAGER DETERMINES THAT THE
AGREEMENTS MUST BE MODIFIED, AND IN THE EVENT
THAT NECESSARY ECONOMIC CONCESSIONS ARE NOT
PROMPTLY RECEIVED FROM THE CITY'S RECOGNIZED
BARGAINING UNITS; AND FURTHER, PLEDGING THE
CITY COMMISSION'S EFFORTS TO CONSIDER ALL
VIABLE, PRACTICAL AND RESPONSIBLE REVENUE
ENHANCEMENTS TO MOVE THE CITY OF MIAMI
TOWARDS FISCAL SOLVENCY.
WHEREAS, based on a preponderance of evidence provided by
the City Manager to the City Commission regarding the state of
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the City of Miami's financial affairs, including a report
entitled "Current and Proposed Budget Fiscal Analysis" presented
to the City Commission on September 26, 1996, and other
information publicly presented to the City Commission by the City
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Manager on this date, all of which demonstrably show that a "true
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fiscal emergency" clearly exists; and
WHEREAS, the City's collective bargaining agreements provide
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for the City's ability to re -open all bargaining agreements in 4
the event that the City Commission determines that a "true fiscal
emergency" exists;
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'CITY COM MSSIO.N
MEETII+IG OF
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NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY
OF MIAMI, FLORIDA:
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Section 1. The recitals and findings contained in the
Preamble to this Resolution are hereby adopted by reference
thereto and incorporated herein as if fully set forth in this
Section.
Section 2. The Miami City Commission hereby declares a
"True Fiscal Emergency" in the City of Miami, Florida.
Section 3. The City Manger is hereby directed to
immediately determine the extent to which the City's recognized
bargaining unions will submit significant cost cutting proposals
sufficient to have a substantively and positive effect on the
City's fiscal emergency or, in the alternative, if the City
Manager and/or his designated representatives determine that the
collective bargaining agreements must be modified, they are
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authorized to re -open the contracts with all of the City's
employee unions and begin impact bargaining in order to achieve If
sufficient economic concessions from the City's labor
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organizations to help eliminate the true fiscal emergency and
accelerate the process of financial recovery for the City.
l Section 3. As part of the City's efforts to
affirmatively address this fiscal crisis, the City Commission
hereby pledges its efforts to consider all viable, practical and
responsible revenue enhancements to move the City of Miami
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towards fiscal solvency.
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City of Miami z
Questions To Be Addressed i
To Deloitte & Touche, LLP
1.
Please explain D&T's overall responsibilities in coordinating the annual audit with the other CPA
(firms and the City Staff.
2.
What was your firm's procedure for evaluating the City's internal controls and accounting
procedures which would satisfy you as to the separation of duties and safeguard the City's assets?
3.
Why was the audit and your Management Letter completed so late after the fiscal year ended
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September 30, 1995.
4.
As of September 30, 1995 the total Due from Other Funds City wide was approximately $55
million according to Footnote 5 (Page 40), of which 24.7 million was the amount due from the
Pension Bond done after September 30th. Is it realistic to believe that the City could recover the
$30 million balance from the Funds which owe these amounts?
i 5.
Can the City be assured that all wire transfers were for legal expenditures and no funds were
directed to bank accounts for which other parties would benefit from short term investing even for
periods as short as over night or over the weekend?
6.
To what extend has your firm performed any preliminary audit work for the year ended
September 30, 1996? Given that the City has implemented a new financial accounting system
effective October 1, 1996, has your firm been involved in any aspect of this conversion, such as
reviewing internal control procedures, staff training, and planning for a clean year end closing of
the old system prior to transferring data to the new system?
7.
Given the preliminary assessment of the City's financial condition and lack of internal controls
and weak accounting and management information systems, how can the City Commission
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comfortable with its existing external audit term.
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City of Miami
Questions To Be Addressed
To Deloitte & Touche, LLP
1. Please explain D&T's overall responsibilities in coordinating the annual audit
with the other CPA firms and the City Staff.
2. What was your firm's procedure for evaluating the City's internal controls and
accounting procedures which would satisfy you as to the separation of duties and
safeguard the City's assets?
3. Why was the audit and your Management Letter completed so late after the fiscal
year ended September 30, 1995.
4. As of September 30, 1995 the total Due from Other Funds City wide was
approximately $55 million according to Footnote 5 (Page 40), of which 24.7
million was the amount due from the Pension Bond done after September 30th. Is
it realistic to believe that the City could recover the $30 million balance from the
Funds which owe these amounts?
5. Can the City be assured that all wire transfers were for legal expenditures and no
funds were directed to bank accounts for which other parties would benefit from
short term investing even for periods as short as over night or over the weekend?
6. To what extend has your firm performed any preliminary audit work for the year
ended September 30, 1996? Given that the City has implemented a new financial
accounting system effective October 1, 1996, has your firm been involved in any
aspect of this conversion, such as reviewing internal control procedures, staff --
training, and planning for a clean year end closing of the old system prior to
transferring data to the new system? 1
7. Given the preliminary assessment of the City's financial condition and lack of
internal controls and weak accounting and management information systems,
how can the City Commission comfortable with its existing external audit term.
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96- 6918
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CITY OF MIAMI, FLORIDA
INTER -OFFICE MEMORANDUM
To : Honorable Mayor and Members DATE October 7, 1996 FILE
of the City Commission
SUBJECT : Capital Improvement
Liability and Total
Shortfall
FROM : REFERENCES:
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jCity ENCLOSURES:
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f In order to deternline and minimize the City of Miami's Capital Improvement Project
Liability during this time of fiscal crisis the following process was implemented:
1. Staff reviewed our $100 million in capital projects that were approved by the
City Conunission in the City's Capital Improvement Program. For these
projects a $48 million shortfall was preliminarily projected.
2. We then removed those projects that were either completed, not started, or
were projects with adequate funding (i.e., from CDBG or FEMA funds).
3. The net result of these reviews left those projects that presented a liability to
the City. The majority were already in progress but had insufficient funds to
be completed. The remaining projects were considered absolutely essential
and/or presented the City with substantial liability from contract claims,
shutdowns, etc.
4. The remaining projects represented approximately $26 million in unfunded
liability. From that we removed $8 million which we believe can be funded
through either a lease back or other creative financing. `
5. This left Capital projects totaling approximately $18 million in hard dollars f
for which additional funding is required during the 1996/1997 fiscal year.
6. When added to the approximately $50 million shortfall in the general operating
budget the combined total shortfall is approximately �6g million.
96- 698
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P.O. BOX 330708
MERRETT R. STIERHEIM " uaur uuu *
MANAGER ��
MIAMI, FLORIDA 33233-0708
(305) 250-5400
CITY
FAX (305) 285.1635
October 2, 1996
Mr. Sherrill Hudson
Mr. Frank Paredes
Deloitte & Touche
100 S.E. 2nd Street
Suite 2500
Miami, Florida 33131
Gentlemen:
This will confirm our telephone discussion of a Special Commission
Meeting on
Monday, October 7, 1996 at 10:00 a.m. to consider declaring a "true fiscal_ emergency".
At the conslusion of that discusson the Mayor and Commission will request
that you and
other members of your audit team be present to respond to Commission
questions as to
the financial conditions of the City.
'rely,errett
R. Stierheim
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City Manager
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cc: Sharpton Bruson & Company P.A.
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Watson & Company P.A.
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Sanson, Kline, Jacoino & Company
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Aida E. Briele & Associates, P.A.
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Mayor & City Commission
City Attorney
City Clerk V,
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96- 698 y
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FAIRNESS WTI,— FOR ADDRESSING DEFICIT
(Ail dollars in millions)
Year beginning carryover deficit
$19.4
Projected FY 1996-97 revenue shortfall
6.8
Projected FY1996-97 expenditure overruns
12.7
Potential additional revenue shortfalls
9.4
Potential additional expenditure overruns
1.5
Capital Improvement Program shortfalls
18.2
Total
COMPOSITION OF DEFICIT - RECURRING VS. ONE-TIME:
A) Extent of required recurring revenues/savings solutions:
Recurring shortages require recurring solutions $30.4
Capital repair and renovation reserves @ 5% 10.0
Fleet/equipment replacement funding @ 2.5% 5.0
Contingency 1_1
B) Extent to which one-time revenues are reasonable
Total $a$ 9
OF FUNDING SOLUTIONS:
A) Recurring revenue/cost savings breakdown:
Seek pension program cost reductions
$6.0
increases
14.0
(Fee/revenue
Service reductions/modifications & non -union cuts
3.0
Union concessions (approx.10% of total non -pension payroll)
15.0
- Can be workforce reductions, base pay decreases, fringe
benefit reductions or any combination of each
- Police - $7.5 million (half of general fund budget)
- Fire - $3,75 million ( one quarter of gen'I. fund budget)
-AFSCME and Sanitation Workers - $3.75 million
B) One time revenues:
Leasebacks, internal asset sales, MSEA $15.0
Land, other asset sales 10.0
Federal and state grants, match waivers, LETF 1.0
Pension forbearance/loan or other loan or one-time solutions 4_0
Total
to boost cash:
State loan
Additional pension fund loans, forbearances, asset swaps
Loans from City authorities, County and/or state
Long-term solutions:
Non -ad valorem fire assessment
Multi -tier compensation program
Privatization
Further asset sales
Service transfers to County
10/07/96
To: Honorable Mayor & Members
of the City Commission
From: Merrett R. Stierheim
City Manager
This Fairness Matrix has been prepared on a
very preliminary basis after we determined the
total City deficit ($68,000,000) which must be
covered through increased revenue, reduced
expenses, loans, or one time revenues, if the
City is to balance the 1996/1997 budget.
I strongly emphasize that these allocations are
preliminary and are subject to substantial
change. The matrix represents our initial effort
to design a fiscally responsible plan by which
the City could achieve fiscal solvency.
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