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HomeMy WebLinkAboutM-77-0772■ eItY OF MIAMI. FLORIDA INTER -OFFICE MEMORANDUM TO: FROM: Honorable Members of the City Commission Budget Advisory Panel: Irving Fantl, PhD., CPA Harvey Hendrickson, PhD., CPA John Remington, PhD. William Welch, PhD. DATE SUBJECT October 3, 1977 REFERENCES ENCLOSURES. FILE Analysis of the 1977-1978 Budget Estimate At your request, we have analyzed the evidence presented by City management and by Dr. D. Marshall Barry to determine whether resources are available in the 1977-1978 General Fund Budget to retain 167 City employees at a cost of $3.377 million (as stated in the September 2, 1977 Budget Message of Manager Joseph R. Grassie). Despite the time constraint, we performed analyses that we consider adequate to give a valid, reliable response to your request. Responses elicited during three days of public hearings and the data and analyses provided by city employees and Dr. Barry indicate that 1977-1978 budget estimates were developed on a conservative basis. We, too, have applied a conservative approach. Our analyses of the evidence indicates that the funds required to retain the 167 employees will be available dur- ing 1977-1978 from the following sources: a Hohofable Meftbers of the City Co`nifiieeion From -the.1977 -1978 General Fund Budget Budgeted severance costs not needed if the 167 employees are retained Salary lapse in e x c es s of the budgeted $1.5 million in salary savings Elimination of the transfer to the enterprise funds of an amount equal to the budgeted de- ficits in five of these funds since it has not been demonstrated that this is the amount of cash needed for the financial self-sufficiency of these funds; or, if this is the amount of cash necessary, that it cannot be borrowed or transferred from other funds .. From 1976-1977 General Fund Operations Increase in the fund balance carryover in excess of $1,000,000 shown in the 1977-1978 Budget Estimate due largely to the overstatement of estimated encumbrances at September 30, 1977, of approximately TOTAL: $ B00,000 to $1,400,000 1,000,000 to 1,200,000 ,06,611 to 669,806 1,000,000 to 1,350,000 $3,306,811 to $4,649,806 We consider the above to be our response to your specific question. 3I IC 11 ti The Rohotable Metnbers of the City Cofunissioh Cttobet While not a part of our charge, our investigation also disclosed a ntiinber of related points concerning the budgeting process, costs of laying off employees, and identified and alternative sources of funds. We are including these points here since you may find them useful now or for fur- ther study to help you in the future; these are as follows: 1. We have estimated that the severance costs to the City of terminat- ing the 167 employees to be approximately $800,000. These are not the only costs to the City of terminating these employees. The cost of dis- charging employees and later replacing them has been studied. In addition to severance pay, it includes recruitment costs, training costs, overtime costs, and the inefficiency arising from the absence of the terminated employees. 2. The stated purpose of the City of Miami Enterprise Funds is to be financially self-sufficient. The charges for their goods or services should be sufficient to recover costs plus a reasonable return on capital invested in them. To support such operations out of General Fund revenues on other than a loan basis could lead to situations where City of Miami tax- payers are subsidizing residents of the County or special interest groups. 3. Since the General Fund (or any fund) can be affected by discretion- ary management actions, such as, the accrual of estimated encumbrances, the actual carryover balance for any given year's budget cannot be deter- mined until such time as the estimated encumbrance becomes an expenditure or is written off. As a result, the budgeting and accounting system used by the City of Miami (and most or all other cities) permits budgets and fund balances to be changed substantially by discretionary actions of manage- ment. 4. An alternative that should be considered is to use CETA monies to pay for part of the cost of many of the approximately 180 unfilled positions - many of which are new - in the 1977-1978 budget, rather than for the recall of the 167 employees proposed for termination. 5. The adoption of zero -based budgeting should be considered to supple- ment present budgeting practices. This process could be instituted currently 3:=- in the allocating of the 180 unfilled positions proposed in the 1977-1978 3; budget. =_ 3, • III 3( 3t 3: 3- 31 I: Iti I` It The I onorable Members o the ity Cissioh 6etober 107 In recognition of the time constraints placed on those testifying, we appreciate the cooperation and assistance received from all concerned. We are especially grateful to Commissioner J. L. Plummer, Jr., who con- ducted the deliberations to provide the maximum disclosure of information in the time allotted and whose skillful efforts caused these hearings to be conducted with dispatch and decorum. We hope that our findings and conclusions will assist the Commissioners of the City of Miami in arriving at equitable decisions to their delibera- tions and thank them for this opportunity to serve them. ILF/HH/JR/WWW/cs VING L F TL WILLIAM W. WELCH irg lbw OAR 2 we 2' • 2c�= 2:_ 2( 3( 31= 3: 3: 3� 3' 3� 3f7-- 3 ■ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 31 33 34 35 36 37 38 39 40 41 42 43 tr '• l t 20 20 eu'F EMAttilT 1 $ 27,286,01 60;220.00 74,537,94 29,947.41 $Mffiffiaty_of_tayof_Selterande,Cott,fot talide, rite and Other City bepattritehts pheral FUnds 1. Police Department 2. Fire Department 3, Solid Waste Department 4. Other City Departments It. Enterprise Fund 1. Golf Course III. Unemployment compensation for 167 employees TOTAL 11,287.88 41,082.00 $244,361.24 pow_ nom- m • • •• r-7 = Ex‘At!atT C OM' OF MIAMI. FLORIDA IN1'ER.OF ICE MEMORANDUM 10: Honorable J. L. Plummer, Jr. City Commissioner sRom. Howard V. Gary, Director Department of Management S-ces DATE. September 30, 1977 PILE $UIJEct RiPERENCE! Response to Questions Raised by Committee of F. I. U. Professors ENCLOIURES. In response to Questions 3 and 4 asked by the Committee of Professors who are studying the City's fiscal problems, the following information is submitted. Ouestion # 4 Request the City to specifically address the quantitative allegations provided by Dr. Barry in both sets of minutes and Exhibits UF and UI. Response to Exhibit UF, Page 3 In Dr. Bary's report which has been identified as Exhibit UF and to which the panel has requested a response from the Ctiy Administration, a con- clusion was reached that there is $1,362,345 of salary savings over and above the required $1.5 million accruals built into the City's Budget. Utilizing the computer printout of salary disbursements as of September 10, 1977, Dr. Barry determined that a "typical" bi-weekly payroll involved the disbursement of $1,812,877 (see UF, page 3, point A.1.). Dr. Barry in his report, then attempted to annualize his bi-weekly figure by multiplying same by twenty-six payrolls. Firstly, it should be understood in no uncertain terms that the cash dis- bursements for salaries as of the September 10, 1977 computer printout do not reflect a typical payroll period of the year. Since the presentation of the Budget Manual on May 12, 1977, Department Directors have been aware of the impending layoffs. Despite the fact that a great deal of uncer- tainty had surrounded the issue of which positions would be eliminated up until the time of the budget summission to the Department of Management Services in early July, Department Directors drastically reduced the rate at which they filled vacant positions which occurred through normal attrition. Consequently, the cost of a normal staffing patterm cannot be based on the payroll cost accuring near the end of this fiscal year. A more normal or typical pay period would have to be found in the second quarter of the 1977 fiscal year. The Management Services staff did, in fact, find more normal payroll dis- bursements in the second and third quarter of this fiscal year. Unlike Page 1 of 16 W W- WW w br. Barry, Management Services staff did not want to draw an unsound conclusion from a single data item (i.e., a single payroll). Instead, the Management Services staff studied an eighty -day period in order to develop an average payroll which would be typical of normal staffing patterns. The total payroll applicable during the eighty -day period from February 12, 1977 to May 21, 1977 was $14,977,438. Thus, the average daily rate of salary disbursements was $187,218 and $1,872,180 for one average pay- roll of ten (10) days. Already, the fallacy of Dr. Barry's argument can be seen since he had understated the cost of each payroll by $59,303. The Management Services staff then annualized the average payroll figure of $1,872,180 by dividing same by ten (10) days to develop a daily rate ($187,218) and then multiplying the daily rate by the number of days in the fiscal year (261). Following the above described procedure, an annual figure of $48,863,891 was developed (see Appendix I). It is quite apparent that Dr. Barry's report of the annual cost for fiscal year 1977 was understated by $1,729,089 (see Exhibit UF► pg. 3, Point A.1.). It should also be noted that the faulty methodology utilized in the report (UF, pg. 3, Point A.1.) wherein the typical payroll figure was multiplied by 26 payrolls resulted in the loss of one payday which is not the case in the City's procedure (i.e., 26 payroll @ 10 days ea. = 260 days. However, Fiscal Year 1977 contain 261 paid days over which salaries are distributed. Thus, 261 actual days less 260 days implied in Dr. Barry's procedure equals one (1) day not accounted for in his report). Instead of the breakdown of salary cost for Police and Fire versus General Employees as given in the report (UF, pg. 3, Point A.2.) which was based on an incorrect payroll cost assumption, the breakdown should be as follows: Police and Fire Annualized Salary General Employees Annualized Salary Total General Fund Annualized Salary $29,625,413.42 19,107,978.84 $48,733,392.26 Since Dr. Barry's initial payroll cost assumption was in error, as would be expected, all of his projected figures based on same are wrong. Thus, the magnification of the annualized current year salary cost to reflect Fiscal Year 1978 salary rates in the report (UF pg. 3, Point A.3.) are erroneous and should be calculated as follows: UF pg. 3, Pt. A.3.A. should be: Police/Fire General Employees (Calc. $29,625,413 x .144* x 1.035 x 1.05) Police/Fire Sworn (Calc. $29,625,413 x .856 x 1.05) UF pg. 3, Pt. A.3.B. should be: General Employees (Calc. $19,107,979 Less $1,021,627** =$18,086,352 18,086,352 x 1.035 x 1.05 = ) 2 of 16 $ 4,636,140 26,627,321 $31,263,461 19,655,343 UP pg. 3, Pt. A.3.C. should be: Total Applicable General Funded Salaries Longevity and Anniversary Increase Factor 1977/78 Salary Requirement OF pg. 3. Pt. A.4. should 51,147,436** reflecting 51,682,586 salaries - (535,150) deficit 00,018,804 s: 1.015 $51,682,586 be: layoffs t $1.5 M required salary ravings Normal Staffing pattern As can be asen from the above, there is no day one built-in savings as Dr. Barry contends. In fact, a normal staffing pattern as in fiscal year 1977 will not be possible in fiscal year 1978 but rather cut- backs will be necessary as the City Administration has repeatedly asserted. This assertion does not mean that Budgeted positions which are vacant have not been included in the City Manager's Proposed Budget and in fact such positions have been included in the $51,147,436 dollar figure given by Dr. pBaoriHwe veanrd nthoet wnitchluiothn e opuvrvawoetin the cpiaoppasned lb. udOgnet y itha Commission can make a determination regarding such budget priorities. It should be noted at this point that Dr. Barry's analysis as well as the counter -analysis presented above are good only for discussion at a conceptual level. These procedures cannot and were not utilized in developing a budget. The procedure utilized by the Department of Management and Budget and the rest of the City Administration are explained below. As you will see below the methodology for developing the budget document is a much more precise procedure. The methodology employed by the City Administration began with the development of budget limits for each spending agency in the General Fund. The limits were derived as follows: a 1. The salary requirements to support existing service levels were determined by reviewing the Fiscal Year 1977 Adopted Budget. 2. These salary requirements were adjusted to eliminate restricted or inappropriate funds and then magnified to reflect the 31, 5 and 11/2 compounded percentage salary rate increases anticipated for Fiscal Year 1978. Excluded salaries were than added back in to determine the salary figures for Fiscal Year 1978. 3. Overtime, shift differential and holiday pay previously budgeted in Special Programs and Accounts were then reallocated to the various user departments. These figures, when added to the magnified salaries generated the projected 1978 Personnel Services Cost. *This factor is the ratio of General Employees in Police and Fire to Total employees (including sworn employees) in Police and Fire. **At this point, because of a lack of time, Management Services staff have assumed Dr. Barry's figures to be correct. 3 of 16 4. f1oh.payroll items were increased by 6% after a review of the appropriate consumer price indices and an internal study regarding same. S. Total cost for each department was determined by adding the appropriate Personnel Services Cost with non -payroll costs. 6. All departmental costs were aggregated and compared with the City's projected miscellaneous revenues combined with Ad Valorem proceeds assuming a tax rate of 10 mills. A budget gap of $6.122M was de- termined. 7. The total projected appropriations when divided by the budget gap • precipitated the percentage cut of 7.653 that each department had • to cut. 8. The various department heads in computing budget request forms de- termined the exact salary requirements for each individual employee position (including vacant positions). These salary requirements were then aggregated by title, by division and by department. 9. Department Director then had to provide for mandatory non -payroll cost and for other needed items. 10. Department Director then reduced their budgets by 7.653% in the manner which would, in their estimation, best allow them to fulfill their legal and administrative responsibilities. It is during this process that hard decisions were made which in some cases led to the abolition of a filled position (e.g. a Clerk position) in order to retain a more important position (e.g. an Inspector position) some of which were vacant at the time. MI _ 11. All budgets were submitted to the Department of Management and Budget where MEE they were audited, corrected, adjusted for such items as fringe benefits, sue_ budget and making adjustments to reflect his priorities, the budgets were 1111 summarized and presented to the City Manager. After reviewing each returned to the Management and Budget Department. OHM UMW 12. Management and Budget then incorporated the City Manager's adjustmentsIM into the detailed budgets, audited and summarized same for inclusion in the budget document. 13. The City Manager and staff then reviewed the total document and developed alternatives to preclude the layoffs. Their alternatives were included in the City Manager's Budget Message. 14. After the document was printed, it was submitted to the City Commission with additional summaries prepared by the Department of Management and Budget. As a final note it should be understood that each position authorized by the City !tanager was budgeted on an individual basis with only the exact requirements in- ( eluded. Therefore, THERE ARE ABSOLUTELY NO SURPLUS FUNDS INCLUDED IN THE BUDGET mom mom DOCUMENT. 4 of 16 ilEgPONS _.' EXHtB1T UP PAGH__2 in reapotse to Dr. Barry's assumption that a $978,591 surplus in salary aaVirgs is available to offset the proposed layoff, we contend, assuming his figures are accurate, that this surplus would be eliminated in order to cover existing deficits in other accounts. Dr. Barry's projected salary surplus as per UF, Page 2: $978,591 Account Appropriation Severance Pay 1,000,000 Overtime 600,000 Holiday Pay 576,913 Workmen's Compensation 1,760,000 TOTAL 3,936,913 31% Salary Account Increases to Police and Fire (Ord. 8666) Latin Amer. Trade Exhibition (Ord. 8656) 2,625,000 (923,811) (306,000) Expenditure 2,339,358.40 845,504.71 641,345.87 2,436,000.00 6,262,208.96 1,395,169 DEFICITS (1,339,358.40) ( 245,504.71) ( 64,432.87) ( 676,000.00) (2,325,295.98) Overage as per Dr. Barry's UF, Page 2 978,591 Available Balance 2,373,780 Deficits (as detailed above) (2,325,296) Balance 48,484 As can be readily seen, by utilizing Dr. Barry's salary accruals as well as the 31/2% salary adjustment account, the balance is not sufficient to fund the proposed layoff positions and cover existing deficits in the above -stated accounts. ■ fthibit til is a titied The City of Miami Puhd halithee to The det eral hth fort+7).+` in this exhibit, the City projects a fund balance Of $1,023,595 tesulting from estimated revenues and expenditures for the period ending September 30, 1977 of $74,820,466 and $73,796,871, respectively. br. Barry alleges that the City of Miami double -counted Florida Power and Light Capital Improvement funds in the amount of $2,820,000; erroneously included $800,000 of expenditures because it counted two and one-half pay, - rolls as being expended for FY'77 when in fact there is only two payrolls that will be expended in FY'77; and that the $2 million salary savings should not be counted as an expenditure since the revenue side did not include the $2 million as anticipated salary savings. In response, the City agrees that the above allegations are in fact true with one qualification. Dr. Barry states that the City should have only con- sidered two payrolls for the remainder of FY'77. However, the City contends that it will expend two payrolls and one day plus the difference between the salary rates accrued in FY'76 and salary rates for FY'77. Hence, if the City's projections are corrected to correspond to the agreed upon allegations, the following information would result: 1. Estimated General Fund Revenues for the period ending 9/30/77 $3478297466 $72,000,466 2. Less: a) Projected Expenditures Based on Expenditure Report # 1 as of 9/15/77 $697807433 $68,441,733 b) Expenditures Not Included in Report #1 as of 9/15/77 2,555,138 c) Salary Savings 278ee,998 -0- {337;967871} (70,996,871) 3. Estimated Fund Balance for FY'77 $ 178237595 $ 1,003,595 As depicted in the corrected figures, the fund balance still hovers around $1 million. Dr. Barry further alleges that the City's revenue projections as shown in Exhibit UI only includes "major revenues to be received during the forth- coming year and does not address itself, nor did it intend to address itself, to smaller so-called revenues" which he feels are "quite sizable." In Exhibit UH3 the Department of Finance's projection of revenues and expendi- tures, dated September 29, 1977, it is projected that revenues will total 6 of 16 1111 IIUUIIO $72,211,175. this projection includes the ''smaller so=celled geitehues" &lidded to by Dr. Barry, and will be sworn to on Friday, September 30► 1977 by the CPA responsible for the projection. If one uses the September 29, 1977 revenue projection and assumes that the expenditure projections are accurate (which will probably not be argued since the only disagreement with same --the addition of FY'76 salary accruals --has been corrected), the following information will result: 1. Estimated General Fund Revenues for period ending 9/30/77 2. Less: a) Projected Expenditures Based on Expenditure Report as of 9/15/77 b) Expenditures Not Included in Report #1 as of 9/15/77 3. Estimated Fund Balance $59,441,733 2,555,138 Furthermore, if one considers the projected revenues and the period ending September 30, 1977 as developed during tember 25, 1977 by the Finance Department, the following result: 1. Estimated General Fund Revenues for period ending 9/30/77 2. Estimated Expenditures 3. Estimated Fund Balance $72,213,175 (70,970,671) $ 1,242,504 02' 2114n 70,996,871 $ 1,216,304 expenditures for the week of Sep - information will It should be noted that the detail expenditures as presented in the Finance Department's report (UH3) of September 29, 1977 is only $26,200 less than the City's projection of September 23, 1977. Also, the difference between the revenues of UI is only $212,709 and not "over a million and a half dollars" as contended by Dr. Barry. Dr. Barry also feels that the City of Miami is projecting a large expendi- ture rate for the last month of FY'77. As you are probably aware, unlike the normal months of the fiscal year, the last month makes it mandatory that departments submit all outstanding liabilities so that they may be paid for in the year the expenses were incurred. A good example of this situation is the funding requirement for the Consent Decree (see Exhibit CK). Even though the City is required to "establish a fund not to exceed $500,000 as the extent of its back pay liability under the Decree...and that there shall be a maximum of $100,000 appropriated each year for five years, beginning with the City's fiscal year 1976-77," these funds have not 7 of 16 mmw SWF MOW =- boon enedmbered and is hot tef1etted ib the September 15, 1977 Mepott * I, 1n somtinary, br. Barry's statement "you still have in excess of $3 million dollars surplus of which I spoke on Saturday, using their own exhibits" is hot accurate. As shown above, even with the corrections suggested by br. Barry, the fund balance is still within our projections, i.e., that fund balance will be approximately $1 million give or take an error of 1% of '76.77 General Fund. -mac Q eatibn 3 bocumentation of Estimation on Severance Pay projectioh and the assumptions used in deriving the figure. severance pay may briefly be described as the required monetary canpensa- tion for accumulated Vacation Time, Earned Time and Sick Time which must be paid to an employee upon termination of their service with the City. In order to determine the appropriation to be made for Severance Pay in the fiscal year 1977-78 budget, the City Administration used a straight- line average of the daily cost for this item in the current fiscal year and projected same for the number of workdays (260) in 1977-76. The total cost for Severance Pay which was used to compute the average daily cost rate is the same $2,025,651.40 which appears on the Surplus/Deficit Recap report of August 13, 1977. This figure was simply divided by the 226 work days that had elapsed during this period to determine the average daily cost of $8,963.06. The average daily cost figure was then magnified for the 260 workdays in 1977-78 to produce an estimated cost for Severance Pay of $2,330,395.60. In order to insure that the year-to-date (as of August 13, 1977) daily average was not a distortion, City Administration compared this average cost figure to an average daily cost figure for the period of April 23, 1977 through August 13, 1977 (i.e., 80 days). The average daily cost during this period was $8,482.65. When this figure is annualized, the estimated cost for Severance Pay would be $2,205,489 or a difference of $124,906.60 from the first projection. In view of such a small change in the two projections as well as the fact that Severance Pay will be paid at higher salary rates for FY'77-78, the administration decided to appro- priate Severance Pay in the amount of $2.3 million assuming a similar experience in the coming year as is estimated for FY'76-77. It should be noted that the actual expenditures to date, not to mention the projected cost to the end of the year, exceed the $1,627,568 appro- priated in this account. The amount of over -expenditure already incurred in this item as of the September 10, 1977 Surplus/Deficit Recap is $444,107.69. At the projected rate of expenditure for this item, there will be an additional amount of $267,682.71 to be added to the current deficit bringing the total over -expenditure to $711,790.66. Furthermore, when the total projected expenditure is compared to the $1 million originally appropriated for Severance Pay* there is a deficit of $1,339,358.66. It has been alleged that after layoffs, the cost for Severance Pay should decrease appreciably. However, it has been the position of the administra- tion that this does not occur. This position is based on the simple fact that normally the first employees to be severed from service will be the least tenured with the least accumulated benefits. A review of the average disbursement cost for Severance Pay prior to the January 1977 layoffs as well as the average after layoffs supports this position. The period prior to layoffs which was used to develop an average daily rate was October 1, 1976 through January 3, 1977 (i.e., 66 workdays). During this period, the average daily rate for Severance Pay was $3,220.36. *Total projected Severance Pay cost for FY '76-77 is $2,339,358.66. 9 of 16 The period after layoffs used to compute an average daily rate was March 26, 1977 through July 2, 1978 (i.e., 70 workdays). The average daily cost for this period was $5,682.88, an increase of $2,462.52 per day aver the sample period before layoffs. Although it has been alleged that the majority of Severance Pais attri- butable to layoffs, it should be noted that of the $2,339,358.40-projected to be expended for this purpose, only approximately $650,000 of this amount was expended during the middle of the layoff period. It would be difficult for anyone to determine how much of this sum is attributable to personnel being laid off and thoseaeaving on an early retirement. In summary, approximately $1,689,358.hg for Severance Pay was expended for terminations other than the amount expended during the layoff period. In fact, during the layoff period, the daily average expenditure for Severance Pay, as indicated earlier, was $3,220.36 while afterwards it increased to $5,682.88. APPENDIX PRo cDuRE_ POR DEVELOPING. 'EA1 L SALARY COSTS to order to develop an average yearly salary cost, the following method= oibgy Was utilized: • The payroll registers covering the pay periods 2/12/77 through 5/28/77 were obtained. • Utilizing each of these pay periods the average yearly cost, by pay period, was determined for General Employees; and Police and Fire employees separately as follows: Total Cost for Pay Period 10 Days in a Pay Period 2/12/77 Police Fire General 2/26/77 Police Fire General 3/12/77 Police Fire General 3/26/77 Police Fire General x 261 Days in Fiscal 1977 Pay Period Costs Days 652,744.16 T 500,979.00 738,470.59 1,892,193.75 646,760.01 498,540.97 735,924.16 1,881,225.04 644,914.17 s 494,551.03 749,446.21 1,888,911.41 643,707.26 497,124.71 T 737,528.28 1,878,360.25 Daily Days Annual Costs In FY77 Cost 10 = 65,274.42 • 261 = 17,036,623.62 10 = 50,097.90 • 261 = 13,075,551.90 10 = 73,847.06 • 261 = 19,274,082.66 49,386,258.18 10 = 64,676.00 • 261 = 16,880,436.00 10 =49,854.09 • 261 = 13,011,917.49 10 =73,592.42 • 261 = 19,207,621.62 49,099,975.11 10 = 64,491.42 • 261 = 16,832,260.62 10 = 49,455.10 • 261 = 12,907,781.10 10. 74,944.62 • 261 = 19,560,545.82 49,300,587.54 10 = 64,370.73 • 261 = 16,800,760.53 10 = 49,712.47 • 261 = 12,974,954.67 10 = 73,752.83 • 261 = 19,249,488.63 49,025,203.83 4 /1Y Pbiice Pine General 4/22/77 Police Fire General S/7/77 Police Fire General S/21/77 Police Fire General Pay Period Costs 643,113.49 459,060.35 ? 774,079.88 1,876,253.72 662,754.49 500,867.20 681,167.25 i 1,844,788.94 638,488.86 i 501,408.28 720,517.78 1,860,414.92 640,112.77 495,459.55 s 719,717.50 i 1,855,289.82 /F Da�iy Days Costs 10= 64,311.35 10= 45,906.04 10= 77,407.99 10= 66,275.45 10= 50,086.72 10= 68,116.73 10= 63,848.89 10= 50,140.83 10= 72,051.78 10= 64,011.28 10= 49,545.96 10= 71,971.75 Days Annual In FY77 Cost 261 = 16,785,262.35 • 261 = 11,981,476.44 • 261 = 20,203,485.39 48,970,224.18 • 261 = 16,253,892.19 • 261 = 13,072,633.92 261 = 17,778,465.23 47,104,991.34 • 261 = 16,664,560.29 • 261 = 13,086,756.63 • 261 = 18,805,514.58 48,556,831.50 • 261 = 16,706,944.08 • 261 = 12,931,495.56 • 261 = 18,784,626.75 48,423,066.39 • The average yearly cost was then determined for Police, Fire and General Employees by summing up each pay period and dividing by eight. Police Fire General Average Yearly Cost 133,960,739.68 s 8 = 16,745,092.46 103,042,567.71 ?• 8 = 12,880,320.96 152,863,830.68 i 8 = 19,107,978.84 48,733,392.26 • Police and Fire costs were adjusted at the rate of 5% for salary and 11/2% for longevity increases. Similarly, General Employee costs were adjusted at the rate of 31/2% and 5% for salary and 1 for longevity. Mr- • a Average Yearly _Cast ...._ _ Salary Adjusthent Yearly Cost Y '78 Average P61i6e 16,745,092.45 51 = 837,254.62 = 17,582,347.08 17,582,347.08 11% = 263,735.21 - 17,846,082.29 Police TOTAL 17,846,082.29 }ire 12,880,320.96 5% = 644,016.05 = 13,524,337.01 13,524,337.01 11% = 202,865.06 = 13,727,202.07 Pire TOTAL 13,727,202.07 General 19,107,978.84 31% - 668,779.26 = 19,776,758.10 19,776,758.10 5% = 988,837.91 = 20,765,596.01 20,765,596.01 11% - 311,483.94 = 21,077,079.95 21,077,079.95 General TOTAL CM TOTAL 52,650,364.31 f APPEND/X tI -lrces: Severance Pay Control -sheet, P/R Surplus/Deficit Recap 9/30/77 , SUMMARY OF ACTUAL PAYMENTS 6 # SEVERANCE PAY, CITY-WIDE OCTOttk 1, 1976 THROUGH AUGUST 13, 1977 Total Expenditures On beginning Date Total Expenditures, txpenditure Ending Date For Pay Period Oct. 1, 1976 Oct. 9, 1976 -0- 60,491.25 Oct. 9, 1976 60,491.25 Oct. 23, 1976 62,320.97 Nov. 6, 1976 124,997.04 Nov. 20, 1976 152,633.63 Dec. 4, 1976 186,059.11 Dec. 18, 1976 188,314.45 Jan. 1, 1977 212,543.59 Jan. 15, 1977 546,661.43 Jan. 29, 1977 868,177.95 Feb. 12, 1977 995,740.73 Feb. 26, 1977 1,105,662.86 Max. 12, 1977 1,197,751.72 Mar. 26, 1977 1,278,489.21 Oct. 23, 1976 62,320.97 Nov. 6, 1976 124,997.04 Nov. 20, 1976 152,633.63 Dec. 4, 1976 186,059.11 Dec. 18, 1976 188,314.45 Jan. 1, 1977 212,543.59 Jan. 15, 1977 546,661.43 Jan. 29, 1977 868,177.95 Feb. 12, 1977 995,740.73 Feb. 26, 1977 1,105,662.86 Mar. 12, 1977 1,197,751.72 Mar. 26, 1977 1,278,489.21 Apr. 9, 1977 1,323,691.48 14 of 16 60,491.25 1,820.72 2,676.07 27,636.59 13 425.48 2,255.34 24,229.14 334,117.84 321,516.52 127,562.78 109,922.13 92,088.88 80 737 49 45,202,27 Apr, 90 1911 1,323,691.48 Apr. 23, 1977 1,347,039.39 May 7, 1977 1,490,105.89 May 21, 1977 1,550,416.68 June 4, 1977 1,583,042.99 June 18, 1977 1,637,265.49 July 2, 1977 1,676,290.95 July 16, 1977 1,704,328.91 July 30, 1977 1,942,979.58 Apr, 23, 1977 1,347►039,39 May 7, 1977 1,490,105.89 May 21, 1977 1,550,416.68 June 4, 1977 1,583,042.99 June 18, 1977 1,637,265.49 July 2, 1977 1,676,290.95 July 16, 1977 1,704,328.91 July 30, 1977 1,942,979.58 Aug. 13, 1977 2,025,651.40 143,066.50 60,310.79 32,626.31 4,222.5o 39,025,46 28,037.96 238,650.67 82,671.82 2,025,651.40 Cumulative Cost from 10/1/76-8/13/77 2,025,651.40 Work Days. Elapsed in FY '76-77 as of 8/13/77 226 Average Daily Cost Average Daily Cost Work Days in FY '76-77 Projected Severance Cost FY ' Cumulative Cost from 4/23/77-8/13/77 (or 80 days) Work Days Elapsed in FY '76-77 (4/23/77-8/13/77) Average Daily Cost Work Days in FY '77-78 Projected Severance Cost FY '77-78 8,963.06 8,963.06 X 261 2,339,358.66 678,612.01 • 80 • 8,482.65 X 260 2,205,489.00 APpti%btX ttt "TYPICAL° 2=MbKTI Pthlett btAtbTiY PP/Olk TO ADb tUttt¢ti3T TO Tflt JA 4t AkY wiYOFFS b tbb r 1 through January 1 Total spent - $212r543.59 Workdays: October 1 261 January 3 - 195 X $3,220.36 per day • • March 26 through July 2 Total spent - $397,801.74 Workdays: March 28 66 days 135 July 4 - 65 k $5,682.88 per day — 1 MEME 70 days i i ,•,00ri4Ft1,dp, N, ,11, I'', III il!'°' I .qp,l M 111;1' i 1111 1111111 I 1111 ''1'Il1!1111yIIIIf I ul 'll!@ II i i IIII II'IIIII'1 i 11111■I1IIIII 11111_ IMPACT OF SALARY SAVINGS ON BUDGETED POSITIONS Average Positions Required to Remain % of $1.5 M $ Portion of Avg. Salary Vacant for 1/2 Yr. Salary Savings $1.5 M Sal. of Dept'l. to Achieve $1.5 M Required Say. Required Positions in Salary Savings Police 39.2812 $ 589,218 $18,115 Fire 14.7304 220,956 20,570 Solid Waste 17.1855 257,782 14,627 Other 28.8029 432,044 14,557 TOTAL 100.0000 $1,500,000 $16,560 '11II II,!' II I'll111'11lPll 11,1111111II!�' 1'1111TII„I� IR�II1III� �q IIII¶Qrill �!rrlll I,�!IIlI�� ���I I i �� I I �I� I 11111 l l l ll�� l q 1�11l1111PIIII II 11'�I'IIII ;I II ! II I IIIIlI,I I � IIIM. or � I II'"i�l'°IIII ICE full !IIIIII IIIICIII IIIII 65.06 21.48 35.26 59.36 181.16 it �IIIIu'I i i i Average Positions Required to Remain Vacant for 1/2 Yr. to Achieve an ad- ditional 1M in Sal. Savings 43.36 14.32 23..50 39_58 120.76 • Average Positions Required to Remain Vacant for 1/2 Yr. to Achieve $2.5 M in Salary Savings 108.42 35.80 58_7f 98.94 301.92 II 101REpqr IIIIIIIIIII I Ii II II�� I J �II � I ��I IIIII� 1,1!!!!, 1 11111111111111 Enterprise Fund Summary Total budgeted for operations Amount subsidized from General Fund for operations % cut if not subsidized by General Fund Total budgeted for Extraordinary Maintenance (Unallocated Funds) Total Extraordinary Maintenance including Orange Bowl (see attached report by Robert Jennings) Total Extraordinary Maintenance excluding Orange Bowl Alternatives: Action (1) Eliminate Extraordinary Maintenance and use $506,811 to subsidize Enterprise operations. In addition, cut operations by $192,995. (2) Transfer $649,995 from General Fund and $49,811 from Unallocated Funds to Enterprise operations. (3) Loan $699,806 to Enterprise Funds. $ 506,811 457,000 377,000 Consequences Curtail facilities' operations and create hazardous operations. Postponing major maintenance will cause further deterioration in City facilities valued at $23.5 million. This would save $49,811 to General Fund. Enterprise Funds do not have the ability to repay. ■ ■ ♦ CttY CF F'IAti' FLOE;;D 1NtER-OFFICE MEMOFANDUi '77 OCT 5 AM to Joseph R. Grassie City Manager tPOm 4t enning 'NDireetOt De,artment of Public Paeilitiet totizc October 4, 1977 r Need for establishment of Unallocated Funds within the City Enterprise Fund. i (1) Major maintenance require - tents at the Orange Bowl Stadiur (2) Major maintenance require- ments at the Miami Marine Stadic (3) Major maintenance require - tents at the Miami Baseball Stadium. (4) Major Maintenance require- ments at the City Marinas. (5) Major maintenance require - tents at the City Auditoriums. The enclosures hereto are prbvided'in response to your recent request. As you can see, the grand total of all estimated major maintenance requirements is presently $3,682,200. Those major maintenance items which are followed by asterisks indicate the $457,000 of work which, in my opinion, must be accomplished in the 1977-78 fiscal year. If, however, the $15 million general obligation bond issue for Orange Bowl improvements passes on November 8, 1977, those Orange Bowl items will be accomplished by bond funds, reducing the need for immediate repairs to $377,000. Enclosure (1) MajorMaintenance Requirefnents = Orange Bowl Stadium If the 1.5 Million dollar general obligation bond issue for Orange Bowi iT iroVehent does not pass on November 8, 1977, the City still must find funds to correct the following list of Orange Bowi deficiencies: Major Maintenance Item 1. Repair or replace landings where vomitory ramps enter into the stadium. 2. Repair and maintain areas above and to the right and left of the main passageways, where decking plates come into contact with supporting members or connect to adjoining decking. 3► Repair portions of the upper and middle walkways, as required. 4. Make further repairs, as needed, to defective precast concrete joists and slabs. 5. Sandblast and paint upper portions of the north and south stands, and replace shelf angle bays and slabs as required. 6 Sandblast, clean, and paint the eight main light towers. (Not necessary if light towers to be replaced as part of major renovation). 7. Sandblast, clean, repair, and paint some of steel columns at the rear of both north and south stands where corrosion is evident. TOTAL Estimated Cost $ 15,000 * 95,000 50,000 * 225,000 12,000 * 1,000 * $400,000 .iiiii iiiiiiiiii.i.III.i Enclosure (2) Major Maintenance Requirements„ = Miani ,_Matit a stadium Major Maintenance Item Repair cracked cement and exposed steel on leading edge of grandstand. 2. Replace deteriorated seats. 3. Improve sound system to attract additional revenue -producing events. 4. Improve stadium physical security to accommodate rock concerts. TOTAL Estimated Cost $ 25,000 * 27,000 * 150,000 , 12,000 $214,000 MAjOt Maintenance Requiremehtt Miaffii_ta$,Oball_8tadium Major Maintenance Item I. Rebuild press box. 2. Replace deteriorated seats. 3. Repair and recoat roof, 4, Recondition concession standta Estimated Cost $100,000 200,000 75,000 15_000 $390,000 Enclosure (4) ta.,b... Maintenance, Re.quir,etents_...._ity._a.ia. If Dinner Key Marina is not leased to private enterprise under lease provisions which require the lessee to renovate the marina in exchange for a long-term agreement, the following major maintenance must be accomplished at City cost. Major Maintenance Upgrade and renovate service. Upgrade and modernize restroom facilities Repair and replace pilings and stringers. Item Estimated Cost electrical 11.Dinner Key Marina Annex If Dinner Key Marina Annex is not leased to private enterprise under lease provisions which require the lessee to renovate the marina in exchange for a long- term agreement, the following major maintenance must be accomplished at City cost. Major Maintenance Item Estimated Cost shower and $2,000,000 50,000 75,000 * OTAL $2,125,000 • Replace dock wiring and improve plumbing. • Repair and replace pilings. III. Miamarina Major Maintenance Item 1. Replace pilings. 2. Install culvert under entrance to improve debris circulation. road $20,000 8,000 $28,000 Estimated Cost $ 7,200 70,000 TOTAL $77,200 Enclosure (5) Nta3 or Maintenance fie uitefnentt_ _3t.._ AUdi_tOr3ui I. Dinner Key Auditorium Currently being renovated with Federal Funds. No immediate Major maintenance required. II. $ayfront Auditorium Major Maintenance Item 1. Roof repairs to the entire building, 2. Renovation andmodernization ,pianos, olightsstage includ- ing switchboard , pinwheel,80,000 curtains, etc. 3. Repairs to terrazzo floors, entire building. 10,000 4. Renovation of rest rooms, including new 20i000 plumbing fixtures. 5. New overhead lighting system, Caribbean and 50,000 Gulfstream Rooms. 6. Repairs to acoustical ceilings, including 25,000 treatment of lobbies. 100,000 7. Replacement of air conditioning system. 75,000 8. Replacement of folding doors. 9. Provide kitchen accessibility to Caribbean 3,000 Room. 10. New plate glass entrance doors, entire facility. 11. Renovation of office and lobbies. TOTAL tstitnated,. Cost $ 50,000 * 25,000 10,000 $448,000 PY 176=777 IoREcASt(1) GEt4 RAL FUND ptOatted Revenues Schedule A (submitted to panel.) Expenditures: payroll - Schedule B (submitted to patte1) Non -Payroll - Schedule C (attached)2)) Projected Surplus (1) Advisory panel took exception to Schedule C, so all other Schedules are not reproduced. (2) Advisory panel took the following arbitrary actions on Schedule C: (a) Reduced $700,000 third party claims and damage reserve by 50%--when in fact t rease in there 412,500s (see eCity cAttorney'sllettaims er attached). (b) Charges to Contingency Account of $74,948 disallowed, even though this amount was transferred to support the Latin American Trade Fair. (c) Reduced encumbrances arbitrarily by $683,200 without considering all depart- mental requests. Schedule C is reproduced as reviewed and approved by four (4) CPA's. The effect of this Schedule is to reaffirm that there is only $1.2 million in fund balance and not $2.0 million or $2.3 million as contended by the advisor panel. $52,651,732 _ 18438,013 $72,2U,175 71,089,711 $ 1,123_,430 Ex .k B'1 & • FY 176.77 rORtCAST(1) G t4 RAL FUND Projetted Revenues Schedule A (submitted to panel) $720.150.75 penditures: Payroll - Schedule B (submitted to panel) Non -Payroll - Schedule C (attached) )) Projected Surplus (1) Advisory panel took exception to Schedule C, so all other Schedules are not reproduced. (2) Advisory panel took the following arbitrary actions on Schedule C: (a) Reduced $700,000 third party claims and damage reserve by 507e-when in fact there was net increase claims $412,500(seeCityAttorney'sletterf attached). (b) Charges to Contingency Account of $74,948 disallowed, even though this amount was transferred to support the Latin American Trade Fair. (c) Reduced encumbrances arbitrarily by $683,200 without considering all depart- mental requests. Schedule C is reproduced as reviewed and approved by four (4) CPA's. The effect of this Schedule is to reaffirm that there is only $1.2 million in fund balance and not $2.0 million or $2.3 million as contended by the advisory panel. $52,651,732 1854381O13 71, 089.745 1.111124122 100,000 62,632 75,406 1,265 12,500 35,Q11 21,371 50,000 1,112,500 306,000 465.572 2,243,157 10,540,344 6,434,435 779 923) $18.438,013 SCHEDULE t NON=PAYROLL EXPENDITURES ENCUMBRANCES AT 9-30-77 HUMAN RESOURCES - CONSENT DECREE RESERVE HARD CASH MATCH - STATE & FEDERAL GRANTS COMMITMENTS) CITY HALL RENOVATIONS -(PUBLIC PROPERTIES MEMO) SANITATION - INTERVIEW TRAVEL EXPENSE LAM DEPARTMENT - PROFESSIONAL SERVICES MANAGEMENT SERVICES - VARIOUS ACCOUNTS POLICE DEPARTMENT - FIXED ASSETS AUDITORS FEES - PMM & CO. FY 76-77 AUDIT THIRD PARTY CLAIMS & DAMAGES RESERVE CONTRIBUTION TO LATIN AMERICAN TRADE FAIR, ORD. 6656 $559,072 OPEN PURCHASE ORDERS AS OF 10-3-77 LESS: PROJECTED LIQUIDATION OF P.O.IS g3 500) BEFORE BOOKS ARE CLOSED TOTAL ENCUMBRANCES PROJECTION OF NON -PAYROLL EXPENDITURES THROUGH 9-30-77 PROJECTION OF SPECIAL PROGRAM SS ANDFYACCOUNTS EXPENDITURES 9-30-77 PRIOR YEAR ENCUMBRANCES 7 TOTAL NON- PAYROLL EXPENDITURES AMES E. GUNDERSON INANCE DIRECTOR CARL E. GARCIA, C.P.A. ASST. FINANCE DIRECTOR Jed! a 777 GARY M / HOUCK, M.S.M., C.P.A. ASST. INANCE DIRECTOR M.B.A., C.P.A. DIRECTOR CITY OF MIAMI. FLORIDA INtER•OFFICE MEMORANDUM IIIII IUii111111Iiiii 11111 ■I TO: FROM: James E. Gunderson, Director Finance Department Georg F. Knox, Jr! City torney DATE October 4, 1977 R►LE SUBJECT. Contingent Torts Liability REFEPENCEI tNCLOIURE$: 4,.3 C •6 E7 </K 7 Soo The following is the estimated contingent torts liability: Butcher v. City of Miami: This case has been in litigation since 1963 and involves an ununiformly pay increase given to the Sanitation Department. At this time the estimated $ 350,000.00 liability is The case is presently on appeal. Rosen v. City of Miami. This case arose out of an automobile accident with a police vehicle. The estimated liability 400,000.00 is There are presently 107 claims pending involving various types of auotmobile accidents, including Sanitation Department and Fire Department equipment. The estimated 550,000.00 liability is _ /?,SSvv The City is also a party -defendant in numerous other tort cases involving police civil liability; accidents in parks, on sidewalks, city buildings; wrongful refusal to issue certificates of occupancy and use by the licensing division, damages to boats on city owned marinas, etc. The total general liability in these cases is estimated at GFK/JBA/bbb TOTAL 75,000.00 $1,375,000.00 i ■ i i i IuI i ■ 0 1111 i i 1111 i i A SUMMARY OF THE ADMINISTRATION'S RESONSES TO THE PANEL'S CONCLUSIONS ON THE 1978 BUDGET ESTIMATE CONCLUSION ##1 - Budgeted severance costs not needed if the 167 employees are retained... CONCLUSION #2 - Salary lapse in excess of the budgeted $1.5 million in salary savings. What does this mean and how was it derived? #3 - Elimination of the transfer to the enterprise funds of an amount equal to the budgeted deficits in five of these funds since it has not been demonstrated that this is the amount of cash needed for the financial self-sufficiency of these funds; or, if this is the amount of cash necessary, that it cannot be borrowed or transferred from other funds - Increase in the fund balance carry- over in excess of $1,000,000 shown in the 1977-1978 Budget Estimate due largely to the overstatement of estimated encumbrances at September 30, 1977, of approximately CONCLUSION CONCLUSION #4 TOTALS Panel $ 800,000 to $1,400,000 1,000,000 to 1,200,000 506,811 to 699,306 1,000,000 to 1,350,00 Corrected Totals $ 244,361 1,000,000 506,811 Comments Represents the severance cost for 167i employees proposed to be temporarily laid off. Requires the City to maintain 302 positions vacant for one half year.. Requires City Commission decision not to do any maintenance on $23.5 millions of public facilities assets. The city does not have the option of postponing! the payments for its current obligations_ ll111 1 iulllilPl INI III I11911 111u III 1911I 1 l it I�If I 7il "III 117111711771171 1111111 115 I !,',1111111, 111 ��'iii� III I I I I � I I I� I I� � I� I�I I I. I� I II I I I � I II ImuI�I. I �I J� IIII.I� *i11! III 10 111111111 111111 11111w!Ili III VACANCIES EXTANT BY CLASSIFICATIONL DEPARTMENT AND FUND PER CY'77-78 APL'S C. ae os t M m « ~ 11! "C O a _ N b a iOC st L fl ! o .0'i N .+ 4 E� 'aehier II . ` M M/ :ode Comp'. Inspector 2 nief Sanitation Inspector 1 �•U N 5 ti u N _C 5 .1 N. w 14 Or O t 0 p t ."1 eo Leaa1 Stenographer ' op VV U0 . Y .1 CC Planning Illustrator II 5 " G •1 c 4 a c 'Recreation Leader II ! ~ "• / Y / Y a M (Safety Coordinator w u M U G N i F, y i lllaab Collector Sptd. 'Waste Collector Operator II Ire7 i Mn / a t MY• h a ',uto. !Quip. Operator I I Q T� 111 III Office of the Mayor ■■■�_� •-I_1.111110 _El 0 _■ Board of Commissioners ■■■-�■■- ••■��■■- Cit Clerk Lr 3 1 ■.■ 2 ■.� 1 7 PP! -1111� MIN Civil Service ■■��■•� �■- 0 i :':er ■■■��■■� ••III ■..��••� ■��-�� •_ RPM Pinenae ■■.- 1 ■■� Human Resources ■■■��.■�.■e PPE __ ME Tire .■ 1 ��■■� �■ ■- 1 19 0 1111 :Police ■■■��■.� 1111 NIPPIIIMME 1111911111111111 27 10 04'■11111111 IMIMMIE Public Works 1 1 6 ,..-�■■� 1 Parks .■■-�■.�- Solid Waste 1 1 1 1 1 .�wr.■11111 1 1■ 1 19 Turiam Promotion �■�MM1■■__ 2 111.1111W Trades Commerce ■■■���■� ?N? NM Mil Conferences s woven. 1 .■■ ■■� 1 PEIMININ raN Leisure Services ■■ 24 ■■� 1 se 34 PNIMMI S1 • • . i Zonin • Ins. t . 1 1 1 1 1 ■■■r_ 1 ■� 1 � 7 PIP - i 1 ■..--■■ 1 1 � 3 sa o plan.s Z. admin. Bd.. . ■.■��■■- jlana•ament and Sud•et ■ ■■.�-■■- 1 ■- _ _• _ PRPRIMI Dinner le Off. Bld•s. Communication Saint- ■�- ■�� ■ ■.■��■■� ■-I- .-�= .■.��■.- Citizen Services ■■.�-■■- ■� TOTALS ■ 2 3 1 1 1 1 2 1 1 -1 1 1 3 1 6 1 1 1 1 1■ 1 1 1 34 2 1 1 1 3 3■NM 125 2 1 8 Temporary positions s• Part-time positions ee• Includes 24 temporary . and 34 part-time positions • .n ry ,m., ea .. .o V + n .n r v r o v o .°. m .n v .tD•. o .ni v .r. r ..-. r .n m n O. m ..4 v .v .n m • n 8 v m m - m ./. v , 40,209 ^1 r .o ai o o o. . 0 O o. " 0 ^v - •v+'I'+ m ✓' - O •o. mo N O v ^' - ^' - gy` O .o. m o _ ry co r • m a r r 1 24,804 "' o m a v Q m .o - ^ �•, m m. .n 0 P..et.mate Number Unkr C. E. T. A. ROL/CE GRANTS ca v rr10N own MOD PONDS 102,577 Ex HMI T E COMMUNITY OCVE1.CP,GXf BLOCR GRANT METRO TRANSrT CCN TRACT 1 1 1 4 S6,276 3 7 49,791 102.S77 1 eOi r m i+ n 1 1 1 0 0 1 0 n 1 n 1 1 8 116.311 3 3 49,791 Eet mete Number Unknown