OFFICE OF
THE CITY COUNCIL
117 WEST DUVAL STREET, SUITE 425
4TH FLOOR, CITY HALL
JACKSONVILLE, FLORIDA 32202
904-630-1377
FINANCE
COMMITTEE BUDGET HEARING #7 MINUTES
August 26, 2016
9:00
a.m.
Location: City Council
Chamber, City Hall – St. James Building; 117 West Duval Street,
In attendance:
Council Members Anna Lopez Brosche (Chair), Aaron Bowman (arr.
9:57), Katrina Brown (arr. 12:22), Bill Gulliford, Sam
Newby, Matt Schellenberg
Excused: Greg Anderson
Also: Council Members Lori Boyer, Reggie Brown.
John Crescimbeni (arr. 9:05), Garrett Dennis (arr. 9:14), Joyce Morgan (arr.
9:17), Reggie Gaffney (arr. 10:40); Peggy
Sidman – Office of General Counsel; Kirk Sherman, Kyle Billy, Kim Taylor, Brian
Parks - Council Auditor’s Office; Katrin MacDonald – Legislative Services
Division; Sam Mousa and Ali Korman Shelton – Mayor’s Office; Mike Weinstein and
Angela Moyer – Finance and Administration Department
Meeting Convened:
9:00 a.m.
Chairwoman Brosche convened the meeting and the attendees introduced
themselves for the record.
Kim Taylor reported that an error needed to be corrected from
yesterday’s meeting. The negative impact to the Special Council Reserve fund
from the downtown CRA actions should be $4,237,969, $112 less than reported
yesterday. Ms. Brosche reported that the Special Council Contingency stands at
a negative $2,696,003 at the start of the day.
Page references from this point refer to
Council Auditor’s Meeting #7 Handout
Finance and Administration Department
In response to a question from Council Member Schellenberg, CFO Mike
Weinstein explained the addition of several positions, including an unfunded
position, to increase the staffing of the Accounting Division to keep up with
the workload and to provide flexibility to hire replacement personnel when
employees stop working and run out considerable leave time before officially
leaving the payroll.
Motion (Schellenberg): on
p. 8, approve Auditor’s recommendation to correct the allocation of
administrative costs to reduce the City’s administrative costs by $243,367,
with a corresponding positive impact on the Special Council Reserve – approved unanimously.
In response to a question from Council Member Schellenberg, City Risk
Manager Twayne Duckworth reported that case law in the workers’ compensation
area has changed considerably in recent years with regard to allowable expenses
and time frames and the City has been adjusting accordingly. The City has seen
its workers’ compensation claims fall in the current year.
General Employees Pension Fund Administration
Council Auditor Kirk Sherman made a suggestion that the GEPP be funded
in an amount equal to the greater of the dollar amount or the payroll
percentage calculation method, even if actual salaries come in lower by the end
of the year. This will assist in paying down the unfunded accrued liability
more quickly.
In response to a question from Council Member Anderson, City Treasurer
Joey Greive reported that the City’s investment management fees are 57 basis
points (0.57%) compared to 62 basis points (0.62%) for similar public pension
systems. He noted that the City reduced its number of domestic stock managers
from 10 to 6 during the past year.
Mr. Sherman reported that the GEPP funding ratio stood at 66.8% as of
October 1, 2015; the Corrections Officers Pension was at 50.03% and Police and
Fire Pension Fund at 43.1%.
Police and Fire Pension Fund Administration
Motion: on p. 20, approve
Auditor’s recommendation #1 to reduce Personnel Services by $13,834 on Revised
Schedule AC and decrease Trust Fund Revenues on Revised Schedule AB by the same
amount – approved unanimously.
Motion: on p. 20, approve
Auditor’s recommendation #2 to move the salary line for the Executive Director
from a non-Oracle line to an Oracle salary line - approved unanimously
Motion: on p. 20, approve
Auditor’s recommendation #3 to increase the Indirect Costs budget to $3,342 and
increase the Trust Fund Revenues by the same amount, and adjust Schedules AB
and AC accordingly – approved
unanimously.
Motion: on p. 20, approve
Auditor’s recommendation #4 to add the authorized cap of 8 employees to
Schedule AC consistent with the prior year’s handout, and add 1,040 temporary
hours to Schedule AC to be consistent with other independent agencies - approved unanimously.
New PFPF Executive Director Tim Johnson thanked Beth McCague for her
outstanding work as the Interim Executive Director. He said that the staff is
ready and the office has the resources to begin tackling his 5-year improvement
plan and that he will have a very positive story to tell at next year’s budget
hearing. The four major tenets of his improvement plan are: 1) focus on
governance best practices and fiduciary responsibilities; 2) transparency for
better trust and reputation (including hiring a part-time public records
specialist and digitizing all records); 3) great service to members, including
developing a relationship with the pension office beginning from the first day
of employment; and 4) placing a high priority on solvency.
Council Member Gulliford suggested that the fund owning its office
building may not be the best use of the PFPF’s assets and perhaps the fund
could get a good deal on vacant space in City buildings. Relocation into a City
building would also be a symbolic gesture of unity with the City. Mr. Gulliford
suggested that Mr. Johnson come to a future Finance Committee Special Committee
meeting to make a more detailed presentation on his plans for the PFPF. Council
Member Crescimbeni requested information on the PFPF’s current and historical
asset allocations comparable to the information provided for the GEPP.
In response to a question from Council Member Crescimbeni about the
PFPF’s use of outside legal counsel, Beth McCague explained that the Office of
General Counsel will be used to provide some services to the fund on
non-pension-specific items (public records law, Government in the Sunshine,
procurement, personnel issues, etc.) and an independent counsel will be
contracted to perform pension-specific duties. The board is in the process of developing
an RFP to hire a new attorney to replace its long-time pension law firm, the
Klausner Firm from South Florida. Mr. Klausner’s contract expires at the end of
October and he has agreed to continue on a temporary basis until the Fund hires
its new attorney. Ms. McCague said that the fund’s research has shown that the
hourly rate for pension attorneys will be considerably higher than the rate
that has been paid to the Klausner firm in the past.
In response to a question from Council Member Dennis about how the
current asset managers and other consultants will be evaluated either retained
or replaced, Mr. Johnson explained his methodology for evaluating risk-adjusted
returns for managers within asset classes and getting more information on how
the fund custodian is making returns from the City outside of the immediately
visible fees. President Boyer expressed grave concerns about the person giving
the PFPF board its fiduciary training at the upcoming workshop and suggested
that the Office of General Counsel be invited to participate in that workshop
and address fiduciary responsibility in general. Beth McCague said that General
Counsel Jason Gabriel will be meeting with the PFPF board on September 1st
to discuss how the OGC and the board wish to interact and what services the OGC
will provide to the Fund.
In response to a question from Council Member Anderson about the
fund’s 7% assumed rate of return, Mr. Johnson said that the plan he left in
Pittsburgh had an assumed rate of 7.75% and the board there decided to increase
the risk of its assets to produce a higher return to keep the assumed rate at
that level and pay the accrued obligations. Somehow the income generated by
assets must meet the obligations of the fund, so the rate of return decision must
be based both on the historical investment market returns and adjusting the
design of the plan that produces the payment obligations to maintain a prudent
balance.
Page references from this point refer to
Council Auditor’s Wrap Up List and Enhancements Handout
Wrap up list
#4 Building Inspection and Development Services: Sam Mousa said that
the administration took a closer look at what activities are and are not
eligible for payment with building inspection and development fees and
recommends a change in how some expenses are categorized as a result
Motion (Schellenberg): on
p. 1, item #4, approve the administration’s proposal to move some operations of
the Building Inspection Division to the General Fund resulting in a negative
impact on Special Council Contingency of $180,380; move one General Fund-GSD
position from the Fire Department to the Building Inspection Division, with a
positive impact to Special Council Contingency of $77,560 - approved unanimously.
Motion (Schellenberg): on
p. 1, approve recommendation #5 to reduce the FY16-17 employee cap in the Fire
and Rescue Department by 12 positions and reduce the department’s salary and
benefits line by $822,964 to the benefit of the Special Council Contingency
fund; also recalculate the department’s lapse and allocate an additional
$1,196,519 to Special Council Contingency for a net positive impact to Special
Council Contingency of $2,019,483 - approved
unanimously.
Motion (Gulliford):
allocate up to $8 million of FY15-16 year-end fund balance (the projected
excess fund balance over the reserve funds target of $77 million) to the FY16-17 budget in Special Council
Contingency for one-time uses (capital expenditures, pay-go projects, or
rectification of the $4.2 million transfer from the downtown CRAs to the
General Fund) -
In response to a question from Sam Mousa, Brian Parks of the Council
Auditor’s Office said that the projected year-end fund balance is currently
estimated at $85 million. President Boyer asked Mr. Gulliford to amend his
motion to delete the potential to fund the $4.2 million deficit operating revenues
caused by the Committee’s decision to reverse the proposed transfer of fund
balance from the downtown CRAs.
Amendment (Gulliford): remove
the possibility of use for the $4.2 downtown CRAs fund balance for rectification of the reversal of
the use of the downtown CRA -
The Gulliford motion to allocate $8 million in FY15-16 year-end fund
balance as amended was approved unanimously.
Motion (Schellenberg): on
p. 1, approve Auditor’s recommendation #1 to remove reference in the budget
ordinance to Section 106.309 of the Ordinance Code as it relates to the CIP – approved unanimously.
Motion (Schellenberg): on
p. 1, approve Auditor’s recommendation #2 to revise Schedule B to add a missing
line title for Ad Valorem Taxes - approved
unanimously.
Motion (Schellenberg): on
p. 1, approve Auditor’s recommendation #3 to remove Attachment C from the
budget ordinance and the corresponding language relating to that Attachment
within the ordinance because the attachment is unnecessary given existing
language in Sec. 106.422(c) of the Ordinance Code that requires Mayoral
certification of the original and revised employee caps on a quarterly basis - approved unanimously
Motion (Boyer): regarding
the Shot Spotter pilot project, allocate the $202,438 in excess budget for the
Sheriff’s Office firing range lead removal project “below the line” earmarked
for the Shot Spotter pilot project capital expenses (pending receipt of
additional capital funding from other sources) and reallocate the $150,000 allocation of Jacksonville
Journey funds for the Shot Spotter program to the Special Council Contingency
fund – approved unanimously.
Mr. Mousa distributed and discussed a preliminary Shot Spotter pilot
project budget and answered questions about how the pilot project would be
pursued.
Motion (Schellenberg): on
p. 1, approve administration recommendation #7a to allocate Fair Share Funding
to 26 projects as shown on a handout list for Sectors 2.1 through 6.2 at a
total of $17,374,805 – approved
unanimously.
Mr. Mousa answered questions about how the list was compiled, how the
phasing would occur for projects for which these appropriations are not
sufficient to cover the full project cost, and project timing. President Boyer
thanked the administration for their hard work in compiling this list and
putting accumulated fair share funds to work.
Motion (Schellenberg): on
p. 1, approve Auditor’s recommendation #7(b) to remove the Jax Baldwin Trails
from the budget, leaving them in the CIP – approved
unanimously.
Motion (Schellenberg): on
p. 1, approve Auditor’s recommendation #7(c) to approve the project
descriptions for the CIP projects added during the CIP Budget Hearing - approved unanimously
Motion (Schellenberg): on
p. 1, approve Auditor’s recommendation #7(d) to amend the CIP listing for the
Northbank Riverwalk project scope to remove reference to the project beginning
in FY17 - approved unanimously.
Property Appraiser – on p. 2, item #8 Property Appraiser Jerry Holland
and Kay Ehas, Chief Administrative Officer for the Property Appraiser, explained
the department’s request for new aerial photography and change detection
technology ($112,000) and for computerized building sketch software ($263,000).
The committee took no action on the request.
Court cost uses: Deputy General Counsel Peggy Sidman reported that
legal research has determined that the $65 Court Innovation fee may be used for
the hiring of additional attorneys the Court Administration has requested to be
funded by City General Funds. The
committee declined to appropriate General Funds to the additional attorneys
pending a future request by the Chief Judge for use of the $450,000 carry-over
in the Court Technology fund.
Enhancements
Motion (Schellenberg):
allocate the $8 million of year-end fund balance to pay-as-you-go vehicle
purchase – dies for lack of a second
Motion (Boyer): amend the
Office of General Counsel budget to increase the employee cap by 1 paralegal
position and increase the salary and benefits line by $76,067 - approved unanimously
Motion (Anderson): allocate $5,135,901 of the $8 million FY15-16
year-end fund balance to the purchase of self-contained breathing apparatus for
the Fire and Rescue Department with cash instead of borrowing, and deposit the
resulting debt service savings of $569,828 from the avoided borrowing in the
Special Council Contingency fund – fails
1-6
Motion (Schellenberg): on
p. 2, approve Enhancement Request #1 to increase funding for the City Council’s
vacant ECA position up to $55,000, with a net negative effect on the Special
Council Contingency of $28,512 – approved
unanimously.
Motion (Schellenberg): on
p. 2, approve Ethics Office Enhancement Request #2 to allocate an additional
$38,509 from Special Council Contingency to the Ethics Office for salary and
benefit increase for the one full-time employee ($13,784) and to provide 1,300
part-time hours ($24,725) for an executive assistant – approved unanimously.
Motion (Gulliford): on p.
2, approve Enhancement Request #9 to appropriate $140,726 of prior-year revenue
in the 5-Year Road Program to the Railroad Crossings project – approved unanimously.
Motion (Gulliford): on p.
2 approve Enhancement Request #8 to amend the Jacksonville Journey budget to
increase the LEAP supplies account by $4,913 - approved unanimously.
Motion (Gulliford): on p.
2, approve Enhancement Request #10 to add SAFER grant revenue of $5,274,990
(2-year amount) and add 27 FTE positions to Schedule B1-a for new firefighters
– approved unanimously.
At the request of Council Member Gulliford, Mike Weinstein explained
how the administration budgets for payment of large legal settlements and said
that the administration is not inclined to create an account for that purpose
which would give opposing legal counsel a rationale for making claims on that
fund because it is available. Mr. Mousa said that the administration has always
been able to find funds in reserves and reallocating other unused funds to meet
settlement payment needs.
In response to a question from Council Member Gaffney, Public Works
Director John Pappas said that the City has a $6.5 million backlog of sidewalk
repair projects. Mr. Mousa said that figure does not include the $30+ million
for the ADA settlement sidewalk work. $5.5 million is allocated in the first
year of the new CIP for new sidewalk construction and $2 million for sidewalk
repair.
In response to a question from Council Member Anderson, Kim Taylor
said that library materials acquisitions are budget as a capital expenditure. Library
Director Barbara Gubbin stated that the Library Board’s original budget request
to the Mayor’s Office prioritized materials acquisition over addition of new
hours and said that the addition of extended library hours in the coming year
should be considered a permanent move – the board does not want operating hours
and personnel added in in one year only to be reduced again the following year.
Motion (Boyer): use the $8
million in additional FY15-16 year-end carry-over as follows: $500,000 to new
library materials; $1 million for sidewalk repairs; $3 million for ADA
settlement sidewalk construction; and $3.5 million for pay-as-you-go vehicle
purchases -
Council Member Crescimbeni suggested to Ms. Gubbin that the library
consider changing its policy on book checkout lengths and hold times to reduce
the normal 3-week checkout for newly released books that generate huge hold
lists and lengthy waiting times. Reducing the borrowing length would reduce the
long wait times for books on hold.
Council Member Bowman recommended amending the Boyer motion to reduce
the vehicle pay-go allocation by $500,000 and shifting that amount to the
sidewalk repair account. Council President Boyer advocated for leaving the
$500,000 in replacement vehicle pay-go in order to help build up the vehicle
replacement fund’s capacity to replace vehicles without borrowing. Budget
Officer Angela Moyer said that appropriating cash into the vehicle replacement
fund has a multiplier effect because of avoided borrowing costs and the ability
to build up the reserve for pay-go purchases faster without the need to pay
debt service on borrowing for purchases.
Motion (Bowman): amend the
Boyer motion to reduce the vehicle pay-go allocation by $500,000 and increase the
sidewalk repair account to $1.5 million - second
withdrawn.
Mr. Pappas reported that the City has completed 980 sidewalk curb cut
ramps, has 807 currently under construction and has 2,500 ready to bid. Mr.
Mousa said that the $8.5 million currently being discussed for sidewalk ramps
($5.5 million in the new CIP plus the $3 million additional in the Boyer
motion) would construct approximately 4,500 ramps ($1,900 apiece). The total
ADA sidewalk liability is $20-25 million.
The Boyer motion was approved
unanimously.
The Special Council Contingency stands at $255,846 to the positive.
Motion (Schellenberg for Morgan):
appropriate $100,000 from Special Council Contingency to the City Council
budget for council member postage –
Chairwoman Brosche recounted that the Finance Committee had previously
approved $1,000 for postage for each of the 14 district council members and
$28,500 in the Council central budget for future allocation by the Council
President. Ms. Boyer noted that usage of the postage fund in the current fiscal
year is very heavy and the amount of the FY16-17 appropriation will likely be
depleted before the end of that fiscal year if the spending trend continues.
The Morgan motion failed 0-6.
Motion (Anderson): allocate
the remaining $255,846 in Special Council Contingency to right-of-way mowing
and litter control -
Motion (Gulliford):
allocate $7,500 of remaining Special Council Contingency to City Council
postage and $248,346 to right-of-way mowing and litter control – approved unanimously.
Council President Boyer congratulated the Finance Committee and
Chairwoman Brosche for outstanding work on this year’s budget.
Ordinance language amendments
Motion (Brosche): approve
the Office of General Counsel’s budget ordinance amendment (OGC handout) to
insert language regarding provision by the Public Service Grant Council of a
complete list of the PSG recipients and funding allocations to the Council
Auditor’s Office, Office of the Mayor, City Council and Director of the Finance
and Administration Department – approved unanimously.
Motion (Schellenberg):
authorize the General Counsel’s Office and Council Auditor’s Office to make all
necessary changes to titles, tables of contents, the Ordinance Code, journal
entries, schedules, attachments and editorial and text changes to incorporate
all Finance Committee actions into the budget ordinance and its attachments – approved unanimously
The committee members expressed gratitude to Chairwoman Brosche for
her leadership and the smooth functioning of the budget hearings. Ms. Brosche
in turn congratulated and thanked the committee members, Council staff, Mr.
Mousa and the administration, the Budget Office, the JSO officers in attendance
at the meetings and everyone involved in the process for their outstanding work
throughout the budget process.
Meeting adjourned: 1:07
p.m.
Minutes: Jeff Clements, Council Research
8.26.16
Posted 5:00 p.m.
Tapes: Finance Budget Hearing #7
– LSD
8.26.16
Materials: Council Auditor’s Budget Meeting #7 handout - LSD
8.26.16