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OtCITY QF
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MINNESOTA
TO: Mayor and City Council
FROM: Adam Flaherty, City Administrator & Finance Director
DATE: May 28, 2019
SUBJECT: Budget Kickoff Meeting
On Tuesday, Council and staff will begin the 2020 budgeting discussions. This meeting is intended
to focus on the big -picture and not specific departmental budget requests. I have developed an
outline of discussion topics below, however; the most important aspect of this meeting is to provide
the opportunity for the Council to set priorities, set expectations and to provide direction to staff for
preparation of the draft budget.
Council Roundtable
This is an opportunity for the Council to express their current view on City services and programs.
This would also be the time for the Council to share any comments they have received from the
public regarding City services or programs. Please use this opportunity to outline your priorities and
expectations for the 2020 budgets.
Assumptions
The most significant assumption within the General fund budgeting process is those in relation to
personnel. It is important for this assumption to be clearly defined at the beginning of the budgeting
process. In past years, assumptions for personnel costs have included a combination of informal
salary surveys obtained by City staff, inflation indices, and employment cost indices.
To begin the discussion, I have attached three regional indices from the Bureau of Labor Statistics.
The City's pay plan for full-time employees includes 21 grades, each with 9 steps. The percentage
increase for each step within a pay grade is 2.75%. Employees who reach the highest step within
their pay grade do not move to the next grade. There are 9 employees at the City projected at their
maximums for 2020.
2020 Staffing
As mentioned above, personnel costs are the single largest component of the General fund budget as
they made up nearly 32% of the 2019 budget. This portion of the meeting will provide the
opportunity for City management to review their respective department staffing plans for 2020. It
will be important for the City Council to provide direction to staff for preparation of the draft
budget.
City of Otsego 113400 90"' Street NE, Otsego, N N 553301 Tel. (763) 441-4414 Fax (763) 441-9163
Fund Balance Policy — Calculation of Transfer
The City's fund balance policy outlines that the ending fund balance in the General Fund should be
45% of the subsequent years budget. The policy further outlines that any balance more than the
defined 45% minimum, can be transferred to a capital reserve fund at the Council's discretion. A
calculation is attached with this memorandum for review at this meeting.
Calendar
Attached with this memorandum is a calendar that outlines the budgeting process as it has been
completed during the past two years. This process can be kept the same, expanded upon, or even
reduced at the discretion of the Council.
Next Meetings
June 10 — At this meeting, staff and Council will begin to review the proposed property tax levies
and cash flows for the capital project funds.
June 24 — At this meeting, staff and Council will begin to review the proposed property tax levies
and cash flows for the special revenue and debt service funds.
Materials Attached for Discussion
1) Bureau of Labor Statistics Indices
a. Consumer Price Index — Midwest Region
b. Consumer Price Index — Minneapolis Metropolitan Area
c. Employment Cost Index — Minneapolis Metropolitan Area
2) Budget Calendar
3) Calculation of Transfer in Accordance with Fund Balance Policy
City of Otsego 113400 90"' Street NE, Otsego, N N 553301 Tel. (763) 441-4414 Fax (763) 441-9163