Twin Cities
Minneapolis
Budget Committee May 18, 2023 5/18/2023
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Budget Committee May 18, 2023
5/18/2023
Attachments
Budget Committee May 18, 2023.pdf
Discussion
1. 2024 current service level budget
2024 Current Service Level Budget Presentation
Discussion
Emily Koski
00:00:20
Good morning.
00:00:20
My name is Emily Koski and I'm the chair of the Budget Committee.
00:00:24
I'm going to call to order our committee meeting for Thursday, May 18th.
00:00:28
At this time, I'll ask the clerk to call the roll to verify the presence of a quorum.
SPEAKER_11
00:00:33
Councilmember Payne?
00:00:34
Present.
00:00:35
Wonsley?
00:00:36
Present.
00:00:36
Rainville?
00:00:37
Present.
00:00:38
Lita?
00:00:39
Present.
00:00:40
Ellison?
00:00:41
Absent.
00:00:42
Osman?
00:00:43
Absent.
00:00:43
Goodman?
Robin Wonsley
00:00:44
Present.
00:00:45
It comes to Ellison.
00:00:46
Oh, sorry.
SPEAKER_11
00:00:47
Jenkins is absent.
00:00:51
Chavez?
00:00:51
Present.
00:00:52
Chuktay?
Robin Wonsley
00:00:53
Present.
SPEAKER_11
00:00:54
Johnson?
00:00:55
Present.
00:00:55
Vice Chair Palmisano?
00:00:57
Present.
00:00:57
Ellison?
00:00:58
Here.
00:00:59
Chair Koski.
Emily Koski
00:01:00
Present.
SPEAKER_11
00:01:01
There are 11 members present.
Emily Koski
00:01:02
Let the record reflect that we have a quorum.
00:01:05
Colleagues, the reason for our meeting today is to receive a report relating to estimated revenues and expenditures for budget year 2024.
00:01:14
Our Finance and Property Services Department is here to present, so I will invite the interim budget director, Robert Harrison, to introduce this item.
00:01:26
Welcome.
SPEAKER_09
00:01:26
Thank you, Chair Koski, members of the Budget Committee.
00:01:30
My name is Robert Harrison.
00:01:31
I'm the city's budget manager.
00:01:32
I'm the interim budget director.
00:01:35
I report to Dashani Dye and I'm joined this morning by a team of dedicated budget and evaluation analysts who have been doing a tremendous amount of work this past spring to pull together in partnership with our departments and others across the city the information that we'll be reviewing in this presentation this morning.
00:01:53
We're always very excited to present the current service level
00:01:56
budget.
00:01:57
This is the work that the budget division kind of kicks off early in the year and that's where we take a look at the ongoing costs of all of the people and programs that were approved on an ongoing basis in our budget last year.
00:02:10
I will say that this is a charter requirement as well.
00:02:12
The budget division is required by city charter to provide this information to our board of estimate and taxation and to the mayor's office by July 1st of each year.
00:02:22
Last year we began bringing this information forward to the Budget Committee as well as a business item that we understand is very important for the Budget Committee's work over the course of the year.
00:02:32
One thing I did just want to note before I jump into the presentation that's very important to understand is this is really just the 2023 budget rolled forward.
00:02:40
This does not include any new decisions, new change items, new budget proposals or anything.
00:02:45
This truly is just the cost of last year's budget, assuming that everything continues forward into the coming year.
00:02:53
We have a simple agenda for us today.
00:02:55
We're going to review the cost of the positions and programs that were approved on an ongoing basis last year, i.e.
00:03:01
our current service level budget.
00:03:04
In a few places, we'll be able to provide a comparison to our 2024 plan that was approved this past December for additional context.
00:03:12
We will explore our revenue forecast for 2024
00:03:16
and what that reveals about our local revenue sources.
00:03:20
We'll check in really briefly on timeline and next steps in the budget process too.
00:03:24
And I do just want to know, we're planning on standing for questions at the end of this presentation to the extent that you have any questions that we're unable to address.
00:03:32
At this time, we're happy to work with Budget Chair to get timely responses back to this committee.
00:03:41
So I wanted to touch on some key financial takeaways before we really delve into this presentation.
00:03:46
If you take nothing else away from this presentation, we want to make sure that this is front and center across all of our funds, our general fund, our enterprise fund, special revenue funds.
00:03:55
At this point, using this snapshot in time, our expenses are growing, our revenues are growing, our revenues are growing faster than our expenses.
00:04:04
When you delve into our general fund, however, the opposite is true.
00:04:08
We are seeing expenses growing faster than our revenues.
00:04:12
However, this is still within what we had planned within our five-year financial direction last year.
00:04:17
As you look at that chart, you can kind of step through those orange bars or our revenues, the green bars are the expenses, and you can see those expenses are a touch higher in each of those years.
00:04:26
So in 2023, expenses slightly higher
00:04:29
and our plan for 2024 that was adopted last year, expenses slightly higher and then in our 2024 budget expenses higher as well.
00:04:36
We'll touch on a few of those things later in the presentation, but that gap is really important and I wanted to call that out because that gap is the result of strategic decisions that the city has been making over the past couple of years to use one-time sources like ARPA available cash balances to restore services at a faster rate than our revenues were coming back, anticipating
00:04:59
anticipating our revenues to come back to a point where we can support this expenditure activity on an ongoing basis.
00:05:09
Overall, we want to note that we do have still limited resources for new ongoing spending in the general fund.
00:05:14
I think this chart just highlights that.
00:05:16
Due to the offsetting nature of those revenue and expense budget increases, we're not seeing new additional ongoing resources being added onto the budget at this time.
00:05:25
But we do say that this is a snapshot in the budget process.
00:05:29
It's not a recommendation or a decision point at this time.
00:05:32
And this committee is going to be receiving more information over the course of this year, including quarterly financial updates, presentations on our 2023 change items in July, as well as another overview from the budget division of the mayor's recommended budget that will be released in August as well.
00:05:51
A quick word on our capital improvement program.
00:05:53
As we presented last year, we don't have a fully updated capital improvement program at this time this year, so we're presenting on this slide our 2023 through 2028 capital improvement plan, the one that was adopted this past year.
00:06:07
If no new action were taken, we would recommend going forward with our planned 2024 amounts,
00:06:13
Adam Blom in our office is working closely with our Capital Long Range Improvement Committee to develop an updated capital improvement program that will be brought forward later on this year.
00:06:23
So an important part of our overall financial picture, but no new updates at this time as part of this presentation.
00:06:30
So next I'm going to turn this presentation over to our team.
00:06:32
Again, our goal here is to kind of talk through our current service level expenses and our revenues and how they're lining up.
00:06:38
And first off, I'm going to kick it over to Jane Desensa to talk through our current service level expenses.
Jayne Discenza
00:06:46
Good morning, Chair Koski and committee members.
00:06:49
Jane DeCenza.
00:06:50
I'm a principal budget analyst.
00:06:51
I'm currently serving as the interim budget manager on the team.
00:06:55
So just kicking off our conversation with a few quick slides on the expenses and the current service level, how we come up with it, and then the team will be diving into each category in more detail.
00:07:06
So this is familiar to many of you.
00:07:10
The current service level really just means rolling forward those positions and programs that you'd already approved in the prior year.
00:07:16
is really our first step as we're calculating the 24 budget.
00:07:23
The CSL process is laid out in our financial policies, and there's a paraphrase of Financial Policy 1.5 on this screen.
00:07:29
Of course, you all had a chance to approve those earlier in the year, so the full language is available in LIMS or in the budget book if you want to get into more detail.
00:07:37
But there are three main components to the CSL.
00:07:39
The first is the
00:07:41
calculated personnel, which you'll see changes year-to-year based on labor agreements, steps, really it's an effort to reflect our current staffing.
00:07:50
The internal service charges also adjust year-to-year based on anticipated costs.
00:07:55
Those are things like our IT charges, our rent, and the like.
00:07:58
And then the base is sort of the non-personnel category, which is held flat year-to-year, so there's no inflation built into that component of the CSL.
00:08:08
So taking the last part first,
00:08:10
The base is where we'll find things like training, travel, operating supplies, budgets, perhaps contracts with external partners.
00:08:21
Again, held flat so it's very straightforward for us to calculate that going forward into the next year.
00:08:27
What the budget division does is we take a look at that data, we pull out any one-time items, so 2023 and only investments get pulled out of the 2024 base, and then we make sure that anything that is due to start in 2024 is incorporated.
00:08:40
So that last bullet point refers to the CSL in total for 2024 because we're in this biennial structure.
00:08:47
Council was able to plan for items to start in 2024, so that's nearly $10 million of spending that is incorporated as our starting points in the 2024 base.
00:09:00
And $17 million that was 2023 only in nature is coming out of the 2024 CSL.
00:09:09
And with that, I'll turn it over to Justin, who's gonna talk to you more about personnel.
SPEAKER_08
00:09:17
Thank you, Jane.
00:09:18
Good morning, Chair Koski and committee members.
00:09:20
My name is Justin Carlson.
00:09:21
I'm a senior budget and evaluation analyst, and the next portion of the current service level we'll be discussing today is personnel.
00:09:28
Personnel is a significant portion of the total operating budget, and as Jane mentioned, these expenses do fluctuate year to year.
00:09:35
They're not held flat like our base costs.
00:09:37
We have an annual update process, and the budget team has been working closely
00:09:41
with our partners in human resources and our departments across the city to both improve the accuracy of our data, existing sampling levels and compensation, as well as make sound projections for future growth.
00:09:53
And I just want to take a moment to thank all of our departments and their budget liaisons for the incredible work and the diligent work they do every year in updating our personnel budgets.
00:10:02
It's really appreciated and it's a lot of time and effort.
00:10:06
It's a collaborative effort that we have across the enterprise.
00:10:09
as we budget for our public service employees.
00:10:12
We are projecting slightly higher salary and fringe expenses in 2024's budget than what was included in our 2024 plan, in part due to additional collective bargaining agreements that we're able to factor into the current service level now.
00:10:25
These agreements often impact steps and COLAs that employees receive and as we see more collective bargaining agreements settled under the leadership of the Human Resources Labor Relations Division, we'll continue to account for this growth
00:10:38
within the personnel portion of the current service level.
00:10:41
And I'll also note that we do expect some of our fringe costs may shift slightly as cost elements are finalized.
00:10:48
One example of this work that's still ongoing is finalizing the employer portion of the medical and dental costs.
00:10:54
As you may remember from our CSL presentation last year, I know that the city has been able to avoid headline numbers in healthcare costs and that growth that you may have seen in other municipalities because in 2018 the city became self-insured for medical coverage.
00:11:08
As I know last year, that change has resulted in tens of millions of dollars in savings for the city, and that's the exact kind of partnership we're looking for with our Human Relations, Labor Relations Division, their Total Compensation Division, as we continue to support our public workforce as we budget for personnel.
00:11:25
Now we're going to pass it over to Megan.
00:11:26
We'll talk about the final component of the current service level, which is internal service charges.
SPEAKER_06
00:11:35
Good morning Chair Koski, Council members.
00:11:37
My name is Megan Bersch, and I'm a budget and evaluation analyst.
00:11:41
I'll be talking about internal service charges, the way that we develop those and kind of how they've changed from 2023 and our 2024 initial plan that we developed in the biennial budget.
00:11:53
last year.
00:11:55
So internal service departments are those that provide goods and services to other departments within the enterprise.
00:12:02
So we have a provider department and a customer department both within the enterprise.
00:12:08
In this presentation we're focusing on IT, the fleet division of public works, property services and workers comp and liability because those are the ones that use models to distribute their costs enterprise wide.
00:12:23
These departments first estimate their expenses to carry out their work for the coming year and then they allocate them out to customer departments.
00:12:32
using each of their respective allocation models.
00:12:36
Costs and cost distributions are determined using considerations like customer department FTE counts, information on historical actuals, identified department specific projects and needs that they elevate to the internal service departments, and then specifically for workers comp and liability and actuarial reports.
00:12:57
So the graph in the presentation shows charges specifically to general funds departments.
00:13:03
So overall we initially planned for a decrease in internal service charges to general fund departments in 2024 as compared to 2023.
00:13:12
But we're actually finding that all internal service departments and most funds are actually experiencing increases.
00:13:18
So charges to the general fund and also other types of funds.
00:13:23
And there are a few main reasons for that that I'll kind of walk through.
00:13:27
So IT expenses appear to increase primarily because of previously approved 2023 change items.
00:13:37
were paid for through general fund transfers in 2023, but are now being incorporated into the IT allocation model for 2024.
00:13:45
So the biggest example we see of that is HRIS.
00:13:50
For Fleet, we're seeing very small standard increases.
00:13:55
It's held pretty flat from 2023.
00:13:59
for Property Services.
00:14:02
Overall, this graph seems to make rent costs appear to decrease in 2024, but the main reason for that is that we changed how we account for City Hall rent charges in the 2024 budget.
00:14:17
Those costs used to flow through the departments that occupy City Hall, and now we've changed to make that transfer directly to the Municipal Building Commission, just as a
00:14:29
process simplification.
00:14:32
But we're actually seeing the overall property services rent budget increase due to considerations like more of the new building becoming operational, for example.
00:14:44
And then finally we have workers comp and liability.
00:14:47
Those amounts are developed based on an annual third party actuarial report that projects claims the city will pay out based on past year's actuals
00:14:55
we're seeing increases in both workers comp and liability amounts based on those report projections.
00:15:01
And then just a final note, general fund departments according to our financial policies are provided the budget to pay for their internal service charges each year.
00:15:10
So we load these charges into their budget and provide them the money to pay for them so that they're not required to make kind of program-based trade-offs in order to afford these charges.
00:15:21
And with that, I will pass it on to Ben to discuss revenues.
SPEAKER_01
00:15:31
Thanks Megan, Chair Koski, committee members.
00:15:33
My name is Ben Zimmerman.
00:15:35
I'm a senior budget and evaluation analyst in budget, and I'm here to walk through the revenue section of today's presentation.
00:15:42
So, so far in the presentation we've been focusing on expenses, and it's important at this time to pivot and look at the other side of the equation, revenues which are available to support 2024 CSL expenses.
00:15:53
I will note that we develop our revenue outlook through deep collaboration with departments each year in the winter and spring.
00:16:01
As we walk through revenues, we're going to take a brief look at our enterprise-wide revenues into all funds, but we're largely going to focus on general fund revenues, as that is where most decision-making is made in the city.
00:16:14
As one takeaway, I would say revenue growth in general is in line with our expectations, but there are a few revenue streams where the outlook has improved slightly.
00:16:25
And as one other side note, I believe there may have been some updates coming out of the state's legislative session overnight or this morning.
00:16:32
to the extent there are any changes that impact our revenues.
00:16:34
Those are not incorporated yet because we've not had the time to review them, but moving forward in the budget process we will incorporate them and I believe IGR is coming to Council June 13th and can provide a more comprehensive update about anything changing there.
00:16:52
Okay, one slide jumping into our revenues into all funds enterprise-wide.
00:16:59
I will note that this slide is looking only at external revenues, so we've removed transfers and use of fund balance, trying to hone in really on revenues coming from outside the city into the city to support the work we do.
00:17:12
As the first bullet point notes, enterprise funds, grant funds, downtown assets funds, and capital revenues are still under development.
00:17:20
In the coming weeks, we're reviewing financial plans and pro formas, and as those pieces come together and get finalized, we'll be able to incorporate the updated 2024 budget.
00:17:30
That's why on the slide you only see the two columns, whereas in prior slides you saw all three, we're just presenting the 2024 plan at this time.
00:17:39
That being said, as we finalized the updated 2024 budget, we don't anticipate it to diverge too significantly from what's in the 2024 plan.
00:17:50
transitioning from there into general funds.
00:17:53
And before we get into actual general fund revenues, we want to take a moment to look at general fund transfers.
00:18:00
This will be our only slide where we're looking outside of the 2024 CSL, but we thought it was important to look at some history and out years and help tell the story of how transfers are used and have been used to stabilize general fund activities.
00:18:16
In this slide itself is oriented around the primary transfer each year into the general fund.
00:18:24
Before COVID, the downtown assets fund was the primary transfer into the general fund and that was about $30 million per year, but the downtown assets fund was hit particularly hard by COVID.
00:18:35
So the City was able to use ARPA as a transfer for 2022, 2023 and 2024.
00:18:42
You can see that the red boxes highlighted here in 2023 and 2024 are the final two transfers from ARPA at $47 million in 2023 and $34 million in 2024.
00:18:56
It is the plan that beginning in 2025 as ARPA goes away, we will revert to using the downtown assets fund as the primary transfer to stabilize and support general fund activity.
00:19:08
Before we move into actual general fund revenues, though, while we're on the topic of downtown assets, we do have one additional slide looking at the primary revenue into the downtown assets fund, which is the local option sales tax.
00:19:25
In 2022, we nearly hit our pre-pandemic gross revenue collections, which is great.
00:19:32
The outlook for 2024 continues to be positive.
00:19:35
This year, during our budget process, we increased the 2024 plan by 5.6% or roughly $4 million for a total of $72 million in local option sales tax revenue for 2024.
00:19:48
One additional note is that the recovery has been uneven.
00:19:53
sales tax revenue has surged relative to pre-pandemic levels, while the downtown restaurant and liquor revenue sources are lagging in their recovery.
00:20:06
Okay, now to move on to the general fund, which should be the primary focus when it comes to talking about revenues, as again, that fund has the most flexibility in terms of use, and again, is where most city leadership decision making occurs.
00:20:21
This look again excludes transfers and use of fund balance because we're trying to isolate external revenues coming in to the general fund.
00:20:30
Here again, the outlook remains positive for 2024.
00:20:34
During this year's budget process, we adjusted upwards the 2024 plan by 1.4% or roughly $8 million.
00:20:43
that revision upwards is largely driven by increases to franchise fees, local government aid, interest revenue and license and permit fee revenue.
00:20:54
I have two more slides for the general fund revenue and with those we're going to drill down into the largest varieties of revenue you see here, the dark blue taxes and the light blue intergovernmental revenues.
00:21:07
So first looking at that largest
00:21:10
variety we saw in the prior slide, the dark blue general fund taxes.
00:21:14
This is disaggregating that into the subtypes of taxes.
00:21:18
As you can see, property taxes are the vast majority of general fund tax revenue, making up over more than 50% of the revenue into the general fund.
00:21:28
We'll note that the property tax revenue follows our five-year financial direction as documented in the 2023-2024 council adopted budget, and that is a 6.5% levy increase in 2023.
00:21:40
and a 6.2% levy increase in 2024.
00:21:44
That planned 6.2% increase in 2024 covers the CSL only and does not account for new spending or decision making which may take place throughout the supplemental budget process this year.
00:22:00
and our last slide on revenues.
00:22:01
This is focusing in on the second largest revenue into the general fund, which we flagged, and that is intergovernmental revenues.
00:22:09
As you can see here, there are several types of revenues rolling up into intergovernmental revenues, but the vast majority of that is local government aid or LGA.
00:22:20
You'll recall that a few slides ago, LGA was one of the four we called out that is driving the overall increase of revenues into the general fund for 2024.
00:22:29
During the budget process this year, we adjusted upwards the 2024 plan by 5.3%, or roughly $3.5 million.
00:22:37
And that is it for revenues.
00:22:41
I will turn it over to Robert to tie it all up.
SPEAKER_09
00:22:48
Thanks Ben.
00:22:49
Chair Koski, committee members, tying it all together, and this is really just a look at the general fund revenues expenses where we have some of our most flexible dollars flowing into the city.
00:23:00
Tying it all together within the general fund, we see that our expenses and our revenues are closely matched.
00:23:04
We have kind of talked through our different major expense categories, those personnel costs, our internal service charges, things like fleet, IT, rents for the buildings that we own, workers' compensation, liability,
00:23:17
We've touched on our base budget and kind of how we handle those costs ie we don't we don't inflate certain amounts of our budget We've talked through different major revenue categories and all together as we put these Expenses in our revenues against each other we see that we're coming in with a balanced budget, especially including those Strategic uses of cash that we talked about in our five-year financial plan last year we see that a balanced budget picture that you have before you today and
00:23:45
And real quick before we stand for questions, I just wanted to touch base on some of the work that departments have been doing over the past several months and will be doing over the next couple of months.
00:23:54
Departments have been analyzing and reviewing their base budgets.
00:23:58
They're developing new budget proposals.
00:24:02
We'll be doing that through June.
00:24:03
In June, departments will present to the mayor on their base budgets and their new budget proposals.
00:24:09
The mayor's office will be reviewing, providing feedback and decisions that will be incorporated into the mayor's recommended budget by August 15th.
00:24:17
And then of course we're going to have a presentation to this committee on July 25th on the status of our 2023 change items that were approved this past year.
00:24:28
Continuing on following the release of the mayor's recommended budget, the budget division will return with an overview somewhat similar to this presentation of the mayor's recommended budget.
00:24:37
The Budget Committee will begin receiving presentations.
00:24:40
We'll have opportunities to ask questions of departments in committee.
00:24:45
There will be a joint presentation by departments that are going to be involved in the MDHR settlement agreement.
00:24:51
That's a new presentation as part of this year's plan.
00:24:55
And then by September 30th we'll have a board of estimate taxation hearing on the maximum property tax levy.
00:25:01
We've called out a couple of our public hearing dates.
00:25:03
There are three of our public hearing dates that occur later in this process.
00:25:06
This is not to say that there's no
00:25:08
community engagement occurring before that, but we do have three planned dates, one in late October, one in early November this year, and then one with budget adoption on December 5th.
00:25:21
With that, we'd like to say thank you for the opportunity to present the current service level budget.
00:25:24
We appreciate the chance to kind of talk through the baseline of what we're seeing right now, and we'd like to stand for any questions the committee may have.
Emily Koski
00:25:33
Thank you, Mr. Harrison.
00:25:34
We do have a few people in queue here, so I'll first start with Councilmember Rainville.
Michael Rainville
00:25:41
Thank you, Madam Chair.
00:25:43
I just have some questions about the revenue side, and if you could help me with that.
00:25:47
So, it seems like overall our revenue is not matching the budget by a little bit, for 24.
SPEAKER_09
00:25:57
So there's a shortfall we'll have to adjust for?
00:26:09
That's right.
00:26:09
That's right.
00:26:11
And we've been talking about that in our five-year financial direction.
00:26:14
I actually have a slide that I can bring forward for the committee as well.
00:26:18
This is something that we included as part of our budget process last year, and it kind of shows that comparison between our revenues
00:26:26
and our expenses and what the plan was to cover that so that we made sure that we had a balanced budget within the general fund each year.
00:26:35
And you can see on these bars the gray and the black bars are related to our expenses and then the yellow, blue and green bars primarily are related to our different revenue sources.
00:26:46
You can see how we're making decisions to apply American Rescue Plan Act funds.
00:26:51
and some one-time uses of cash balance to help the city to cover the costs of the spending that we had planned in each of those years.
Michael Rainville
00:27:01
Thank you.
00:27:02
And then when you talk about the Downtown Assets Fund, what is included in that as far as revenue?
00:27:11
How do we get revenue into that fund?
SPEAKER_09
00:27:13
Chair Koski, members of the Budget Committee, the Downtown Assets Fund
00:27:16
collects a number of different revenue sources and I'm gonna lean a little bit on my colleague Ben Zimmerman for some help with that.
00:27:24
We include our local option sales taxes are collected into the downtown assets fund.
00:27:29
We have some direct revenues that are collected typically each year from say the parking fund and from operations from things like our Convention Center and Target Center.
00:27:37
Okay, thank you.
Michael Rainville
00:27:38
That's fine.
00:27:39
And then I do have another question.
00:27:45
The property tax revenue, what affects, so we have large buildings in downtown whose value is decreasing considerably.
00:27:56
How is that going to affect the taxes?
00:27:58
So is your forecast, you don't know, you're not looking at a crystal ball, but in your expert opinion, what is happening in downtown with these large buildings that are being given back to the banks?
SPEAKER_09
00:28:10
Chair Koski, members of the Budget Committee, it's a good question what is happening with our, I think that touches on what's happening with our commercial property values and just how property taxes are collected overall and you're absolutely right we don't have that crystal ball.
00:28:27
Later on in this year we expect to bring forward an update to the our Assessor's Office has a very useful tool that can help to explore impacts of
00:28:37
different property tax increases by category.
00:28:39
We'll be bringing that forward as part of this process as well and it'll help to explore what the potential impacts will be.
00:28:45
But then at a high level I would note for the record any increase or decrease in one kind of property tax value, whether it's commercial or residential, does result in a burden shift on other property tax types.
Michael Rainville
00:29:00
So in plain English, if the downtown property tax revenue does not stabilize or increase, we're going to have to go into the neighborhoods on the residential.
00:29:11
So whether you're a renter or homeowner, you're going to pay more if downtown does not succeed.
SPEAKER_09
00:29:18
Chair Koski, members of the Budget Committee, that's, I think the math works out exactly right on that.
00:29:24
The one thing I don't know is what what will actually be be happening there because the opposite could be true I just don't I just don't know thank you very much
Emily Koski
00:29:36
All right, thank you.
00:29:37
Next I have Councilmember Goodman.
SPEAKER_02
00:29:40
Thank you, Madam Chair.
00:29:40
First of all, I just want to thank your whole staff team for being here today.
00:29:43
I don't ever remember seeing so many of the staff that actually do the work on a daily basis.
00:29:48
Usually it's been the director and it just feels really good and positive and refreshing to see so many of you that are doing the actual work.
00:29:54
come to committee and give us a sense of what you're working on.
00:29:58
So thank you so much for being here.
00:30:00
I have a question that is probably a bit odd and it has to do with this current service level expectation that everything we're doing is fabulous and therefore we should just keep doing it.
00:30:11
it seems to me over 20 something years I've been an advocate of zero-based budgeting meaning we go back to the beginning and then try to figure out what's working but this institution has been very resistant to that so what's happened instead is departments just reallocate money and then they tell us that it's kind of what they're doing and then they come in and ask for more and I'm wondering about how we
00:30:35
better daylight that, right?
00:30:36
I just kind of want to use an example that I'll make up.
00:30:40
I'll just make one up just in an area I know something about, right?
00:30:43
So this is not picking on them because I'm making it up.
00:30:46
But like in CPED we're going to do some housing program, but we start doing the housing program and it's not really working that well and it's been budgeted.
00:30:55
So instead CPED just says, well, that money for that housing program is going to go into this other one
00:30:59
that we're doing really well and if it's under what, $175,000, they don't have to get any new approval.
00:31:06
Well, my opinion would be if that one's not working, the 175 should come back to reduce the current service level so that we can make choices about where that money would be spent.
00:31:14
so am I right that that's essentially what happens if there's a bunch of reallocation in the departments and once a department has the money they're reluctant to give it up so it's hard for us to move money from you know CPED to public works for a different priority because everything we're doing is great and here's some more things we can do so I'm wondering if you can speak to that and then second I'm wondering if you could just briefly speak to I know the tax bill is passed already where are we at on LGA for next year
00:31:44
because I mean, what scares me is the 6.4% tax increase and property taxes are regressive.
00:31:53
And so that's gonna hurt people at the lowest level the most and LGA is not.
00:31:58
So is that additional money that could be spent on new things?
00:32:02
If you could comment on that, if you have a sense of where we're at on that, thank you.
SPEAKER_09
00:32:06
Chair Koski, Council members, I heard a couple of questions in there and I'm going to try and get through them.
00:32:12
Let me know if I need to correct course or just miss out on the answer.
00:32:16
I'm happy to try again.
00:32:18
Departments do have the authority to reallocate their budget within their existing budgets.
00:32:25
And kind of the counter side of what we're hearing from you is that departments also do make those decisions to strategically change what they are doing in order to maximize their value delivery.
00:32:36
and sometimes that message can go unheard as well.
00:32:41
And so what we try and do within the annual budget process is try and help departments to elevate that story and one of the things that we're trying to do this year is call out exactly where departments are making those shifts and those reallocations within their base budget so that that can be, so there can be a little bit more daylight on that and so departments can also help to elevate their own stories of how we're saying,
00:33:05
We're not doing this thing anymore for X, Y, or Z reason.
00:33:08
We are moving over and starting to do this thing over here and really tell that story because oftentimes it feels like the overarching focus is on just the new spending.
00:33:18
that we have in the city and we know departments are doing a tremendous amount of work, moving resources, thinking about how they're doing their work and improving throughout the year.
SPEAKER_02
00:33:28
So, Madam Chair, isn't that why there's no room to have other big bold initiatives?
00:33:34
Because we're saying the current service level is great even though the current service level is different than what we approved, not making room for another really big, cool, unique idea.
00:33:44
If we were just saying, we gave you the money to spend on this, this is not working great.
00:33:48
Give us the money back, we'll determine.
00:33:50
Maybe it should be in CPED, maybe it should be in public works.
00:33:52
Isn't that why we constantly have this increase in taxes and this whole increase in everything because we're never saying anything we're doing isn't working?
00:34:03
so we're just adding to everything is great let's do some more of it and City Council you have to fight over 1.7 million dollars worth of things when you want to do something new we can't really do anything new because everything we're doing is fabulous when in fact we make mistakes that's cool that's how it works every program isn't going to be perfect but everyone is so focused on protecting their budget that they don't want to admit something's not working so why aren't we moving to a zero base budget where every year we need to be talking about what's working what's not because
00:34:33
and I hope many of you
00:34:53
I hope I'm not getting in trouble, but pay attention to that because that seems to me to be the problem over the years.
00:35:00
And I'm just curious on the finance staff's position about, I think the two-year budget's good.
00:35:04
How about zero-based budgeting?
SPEAKER_09
00:35:08
Chair Koski, Council members, it's a terrific question.
00:35:12
It's a really hard question and also a policy question that I'd be straying into if I tried to answer on it.
00:35:17
I will say the conversation has come up in the past and I think there's
00:35:22
and how's this for a cop out.
00:35:23
I think there are some pros and cons to it, including the amount of resources that we would need.
00:35:28
But I am I am hearing myself that there is that need to understand what departments are doing, where they're shifting those resources and an understanding of what it means to bring forward a current service level budget where same amounts from the prior year are being brought forward as part of this year's budget.
00:35:44
I don't know if there's any additional questions in there, but I did hear the question on LGA as well and where we are on that.
00:35:51
with the state.
00:35:52
My understanding, and again I'm going to look to Ben for some edification if I get this wrong, but my understanding is the state is settling that work right now and our IGR team is planning on bringing a report to council by, I want to say, June 13th with an update on everything that's there because you're absolutely right, that will change the financial picture for the city depending on what's settled.
SPEAKER_02
00:36:15
Madam Chair, again, thank you so much for bringing your whole team.
00:36:18
I think that more people, more young people who are in this department, I consider you all young, working on this, I think is just incredible.
00:36:26
And to be able to see you doing it, it's just really heartening that Shani's team with Amelia's departure has all these rising superstars that are all here today and it's really great for us to see it, so thank you.
Emily Koski
00:36:39
Thank you.
00:36:40
I just want to add I appreciate Councilmember Goodman bringing that to light and just that piece of the conversation and you know there's a lot of us new council members here and went through the budget process for the first time last year and now going through it again for the second time and last year we heard about
00:36:55
the changes the increases right and to your point and we've talked about this of wanting to make sure that departments are also bringing forward what are you letting go what are we moving away from and really thinking what's important to us I think as council members is and what we when we go and have conversations with our constituents
00:37:14
they want to know the outcome that's going to happen and that is the way that I think of this of how are we going to continue to move through this budget process and committee and make tweaks and think about what is the outcomes that we're trying to achieve and how do we get there so just to add on to Councilmember Goodman's question there.
00:37:35
Next we have Councilmember Payne.
Elliott Payne
00:37:38
Thank you Madam Chair.
00:37:39
My question was actually going to be a lot more narrow but Councilmember Goodman basically blew my question up by, and my question was around staffing and we know that we have a lot of unfilled positions and we don't on council have a lot of visibility into that so my question was very narrow as can you provide us maybe not right here right now but as a follow-up
00:38:00
you know where are we seeing budget surpluses in our current service level because of unfilled positions I'd like to have that information and I'll send a follow-up email I also want to have a follow-up email on I'd love to see the actual aerial reports for our liability and workers comp that sounds like that's a document that just couldn't be produced so I've already got my drafted email sent up so you don't have to remember but
00:38:22
I think that what Councilmember Goodman, my narrow question is actually getting at what Councilmember Goodman was raising, which is my lesson from our first budget as an elected person is that the conversations about where we want to put our initiatives needs to be happening right now, not during the amendment process.
00:38:44
During the amendment process, what we're doing is we're looking for
00:38:48
the five unfilled positions here and there so that we can do some sourcing and it's a very marginal process and that feels
00:38:55
completely inverted to what our role is as you know the power of the purse we should be actually dictating and it also sounds like you're working really hard towards encouraging departments to be more transparent about how they're doing these reallocations but I don't think that sounds like that's a courtesy to us I think we shouldn't be waiting for a courtesy of departments to
00:39:19
Let us know
00:39:43
Council Member Wonsley.
Robin Wonsley
00:40:00
Thank you, Chair Koski.
00:40:03
I just want to let Councilmember Goodman know, you just gave a full sermon.
00:40:07
Thank you for highlighting that.
00:40:10
I think, as you highlighted, we have constantly gone in this cycle where, you know, we're not truly evaluating what is working across our departments and that, as Councilmember Payne shared, is often hidden.
00:40:28
from council members who do have the power of the purse, who should be making these decisions rather than waiting after Mayor Frey's budget that I think I've seen you repeatedly state.
00:40:37
We have the ability to do this proactively, and we need to be doing this proactively.
00:40:41
Also, around the current service levels, and I think Councilmember Payne raised this, that is very concerning, and I'm glad that my co-chair, Councilmember Ellison, is working to bring a fuller presentation on this to POGO.
00:40:55
the personnel costs around this.
00:40:58
And it's related to government restructure and really looking at classifications of positions that were moved with different responsibilities but we were told they were net neutral and then reclassified and then given a pay increase.
00:41:12
Or maybe there should have been some further reflection on why we're re-approving positions that came with a $300,000 plus salary more than what the governor is earning.
00:41:23
So to me that does show we really do need to be rethinking Not only the pay scale because we do want to fairly compensate our employees We want to make sure that compensation is competitive But it's very concerning that if we're doing that and it's getting us into a red because I will name this budget looks very bleak and I think as we all name is very concerning because many of our constituents are looking at us to go and do the innovative things and this says that
00:41:50
or what you have to share with us is, sorry, we don't have the money for it.
00:41:55
And as those who have the power of the purse, we have to figure out how to reconcile that.
00:41:59
And if it means reevaluating these positions, which I hope the classification presentation that comes from interim COO, as well as Clerk Carl can help us do that.
00:42:10
But as you mentioned, Council Member Payne, this body should be looking up at the next
00:42:15
I think budget conversations and looking at what policy amendments we need to be bringing forward that actually mandates these changes because we do hold that authority and also I'll even note this for Chair Koski I see the two-year projections where it seems like on board we're moving forward with a bi-annual budget I will note that's in some symbolic gesture only there needs to be an ordinance change or a charter change
00:42:41
to affirm that.
00:42:42
I know we're meeting with a joint or doing a joint charter commission meeting next Tuesday.
00:42:47
That might be something that should be a priority so that we can actually legally back up these two-year projections, and we should be doing that legislatively.
00:42:56
But in terms of some of the questions that I have,
00:43:00
Can you please actually share what is this estimate, and Councilmember Payne, you brought this up because I do want to see that actuary report.
00:43:09
I think, you know, figuratively, it's been clear that most of our expenses as a city has come from not only liability but liability related to police misconduct.
00:43:22
also our workers compensation claims have been tied to police misconduct.
00:43:26
I think we saw that even in our audit reports from last year that is where we're seeing the most expenses come.
00:43:33
I would love to see if that actuary report backs that.
00:43:35
Do you know if that backs that right now and give kind of a estimate of what those increases have been for those two respective items.
SPEAKER_09
00:43:45
Chair Koski, members of the committee, thank you for the question.
00:43:48
I think it drives at that actuarial report what the breakdown is of those liability amounts.
00:43:54
That's something that I don't have today.
00:43:56
That's something we can think about how best to provide that information.
00:44:00
I'm just not familiar with the contents of the report and just how to best share it out.
00:44:05
But I will say we did publish that information last year based on information that was in the actuarial report.
00:44:10
And we can send you the budget document that we have just on last year.
00:44:16
And the expectation should be that we should be able to provide a similar update this year based on what we were seeing.
00:44:22
And that does have that breakdown of the amounts
00:44:25
and where those amounts are attributable to just to be as transparent as possible.
Robin Wonsley
00:44:29
I'm sorry, Robert.
00:44:30
I'm a little confused.
00:44:31
You mentioned you don't have the report, but you do have figures from the report that we have.
00:44:39
Can you reconcile that?
00:44:40
Yeah, that's a little confusing.
SPEAKER_09
00:44:44
It's something that I don't specifically work on in the budget office.
00:44:49
We just collect that.
SPEAKER_12
00:44:50
Thank you, Robert.
00:44:51
Chair Koski, Council Members, we do have an extra report.
00:44:55
It is in draft form at the moment.
00:44:57
We are tweaking some legal language, but the numbers will not change.
00:45:01
We have released that heavily redacted in the past because it includes case numbers, so that information could be available to you.
00:45:09
Hope to have a final very soon, but definitely have the numbers that we can share with you.
Robin Wonsley
00:45:15
So just further clarification on that.
00:45:17
So there were figures from that report that was used to help shape the 2023 budget that we approved.
00:45:24
But the actual document isn't finalized, so we use figures on a redacted or drafted report?
SPEAKER_12
00:45:32
Council members, let me explain that.
00:45:34
The document itself, all of the numbers are correct.
00:45:40
They are final.
00:45:41
We have one sentence of legal language.
00:45:43
that we are working out.
00:45:45
So the document is technically in draft form, although all of the data is in final form.
00:45:51
It's that one sentence we're working on that has nothing to do with the numbers.
00:45:56
So the numbers in that draft, which will become the numbers in the final
00:45:59
Were used for the budget projections and as Megan talked about they were used for the self-insurance allocation model And ran through that so those numbers are correct again Just one sentence.
00:46:14
We're working on that is a legal sentence nothing to do with the numbers and
Robin Wonsley
00:46:18
Well, I would love to work with our city attorneys to see if we should be able to have access to that document, even in draft form.
00:46:24
This body has received drafted reports before, so if there's a way to get that where charter, you know, required, we should be able to have access to that information.
SPEAKER_12
00:46:35
Absolutely.
00:46:35
We will work with them to provide that in whatever form the attorney's office advises us.
00:46:41
But yes, it is great.
00:46:42
I just wanted you to understand that it's not technically in final, so we would not release it to the public, but it is in draft form at this point.
Robin Wonsley
00:46:49
and can be released of this body then.
00:46:51
Okay, I look forward to getting a copy of that.
SPEAKER_12
00:46:53
And I will work with the attorney's office to make sure we release it in the correct format.
Robin Wonsley
00:46:56
Great.
00:46:57
And then clarifying question around, again, these increases in the liability IT slide and all of that.
00:47:04
These figures do not account for, and I know I'm working with a number of council members again to bring a modified version of this fiscal analysis of our consent decrees, the one that's already been approved, the one that's likely coming soon from the DOJ.
00:47:19
but I know we've mentioned this before Robert 2023 we had some projections in the budget for 2023 around consent decree costs do these figures reflect that like the jumps in IT because I know the MDHR legal settlement does say there's going to be technological costs incurred so I just want to see if that was considered for 2024.
SPEAKER_09
00:47:40
Chair Koski, members of the committee, these figures here do not reflect any new decisions that have been made around the consent decree.
00:47:48
Last year there was a reserve that was implemented, understanding we were going to have an independent auditor, that was going to be assigned.
00:47:55
That was the only cost that we knew about.
00:47:57
So what we are seeing here with this presentation is not delving into any new additional costs that are going to be incurred.
Robin Wonsley
00:48:04
So, wow, great time for that fiscal analysis.
00:48:08
And then lastly, just thinking of going to Councilmember Goodman's point again, so that we can make sure we do have a way to analyze metrics of success.
00:48:19
with our departments and seeing if we're doing programs that's not effective, that's not working, figuring out how to, you know, bring those resources back into the general fund and maybe sunset those programs.
00:48:31
That is fine.
00:48:31
It's okay to admit when things that we're trying to do in good intention, if it's not working, that's fine.
00:48:36
Let's move on to the next.
00:48:38
But one crucial component that will be helpful towards that, and I think this gets at your point too, Chair Koski, is we need to fully fund a performance management department.
00:48:48
it's very clear we need staff who's going to assess those metrics, set those metrics, work with our department heads and staff to have that ongoing assessment and then be able to provide that information to us to provide it to you all in budget but since we're the ones who ultimately have to approve the budget it would be good for us to know that proactively and ahead of time before August 15th or in December
00:49:14
so that we can make those tweaks and actually allow for that innovative program that working class people want to see the city move forward with.
00:49:22
So I will note that in policy decisions, this performance management department will be crucial or division in helping us get to that point.
00:49:32
But that's all I had.
00:49:33
I look forward to the follow-up information that our budget folks will be getting us in light of what you presented today.
Emily Koski
00:49:42
Thank you, Council Member Walensky.
00:49:43
And just to add on that, with the performance management piece of it, I know this year, and maybe Robert you can speak to this a little bit, we're not in a position to be able to have this full, robust performance management information to us this fall, but we are working on
00:50:05
Chair Koski, members of the Budget Committee, thank you for the question.
SPEAKER_09
00:50:20
One of the things we try
00:50:35
frameworks that they set up with the performance management and innovation team a year or so ago and incorporate that into their budget proposals and their budget work including their objectives and their metrics and just generally encouraging departments to bring that information forward as part of this process.
00:50:52
So there are elements I think of what we are talking about that are being incorporated into the budget process and of course that relies on having our process I think planned out and making sure that we are integrating that work going forward and we were
00:51:06
in discussions very recently around what our plan is for continuing to integrate that work into this decision-making process for the coming year as well to continue to just build that out.
00:51:18
I don't have an update on that at that time, and it's not necessarily for me to provide that update, but it's something that's on everybody's radar.
Emily Koski
00:51:28
Thank you.
00:51:28
And I see Council Member Wonsley.
Robin Wonsley
00:51:30
Yeah.
00:51:31
Thank you, Chair Cossack.
00:51:32
Just a follow-up on that, too.
00:51:34
From my understanding, because I had conversations with you about performance management piece, from my understanding, OPI was going to be the lead in championing that.
00:51:42
Unfortunately, and this actually relates to personnel costs, and what I'm hoping will be unveiled in that pogo presentation is while we're creating positions that are reclassifying positions with pay increases,
00:51:54
we're also seeing an exodus of employees leaving the city too.
00:51:58
And as Council Member Payne noted, what are our departments doing with those positions?
00:52:04
Should we be revisiting them?
00:52:05
Seeing if those are ways in which we could be conserving dollars as we did with government restructure to fund important priorities.
00:52:12
But that said, one of the sad realities of that is one of the lead staffers who was doing performance management work or trying to move that work forward is leaving next month.
00:52:23
So it would be good to know who in OPI, if that's going to be the main primary staff force behind performance management.
00:52:31
That's something to consider if you're trying to move forward with a baby pilot in the fall of sorts.
00:52:37
Who will be leading this work?
00:52:39
Because it was OPI that seemed to be well positioned and had the expertise and have been doing this work around analyzing.
00:52:47
outcomes and metrics and standardizing that.
00:52:50
So that's a sad reality as we move into this, even though this is something that should have been done way before then.
00:52:56
But that I did want to highlight.
00:52:58
We're losing a phenomenal staff member who was trying to move this work forward.
00:53:03
So it feels uncertain what's the pathway forward on this, if you're saying in the fall, but I trust that you know how to carry this forward and will let us know how to support you.
Emily Koski
00:53:17
All right, thank you.
00:53:18
Councilmember Rainville.
Michael Rainville
00:53:20
Thank you, Madam Chair.
00:53:22
Recently, the Park Board has requested $16 million to the budget ongoing, as well as the Minneapolis Public and Housing Authority.
00:53:31
What type of impact will that have?
00:53:34
I know we won't know that until the mayor and the BET do their job, but would that be a 1% increase in taxes, one and a half?
00:53:45
Do you have any idea?
SPEAKER_09
00:53:47
Chair Koski, members of the committee, thank you for the question.
00:53:50
I don't have that answer prepared off the top of my head, but that would be a relatively easy one to follow up on.
00:53:57
Thank you.
Emily Koski
00:53:58
Okay, so to clarify, you'll follow up with that.
00:54:01
Okay, thank you.
00:54:02
I'm not seeing anybody else in queue.
00:54:04
I do have several questions that kind of relate to the entire presentation.
00:54:11
But first one I have was, and it relates to a few questions that were brought up about personnel and positions, but when we approve new departmental positions outside of the budget process,
00:54:22
what are the ways
SPEAKER_09
00:54:36
Members of the Committee, the question is, what is the impact of adding new positions outside of the budget process?
00:54:42
It's a great question and it's something that we think about all the time in the Budget Office because we do have policies and we have, my understanding is also charter and ordinance requirements about how these positions get added.
00:54:54
I'd like to separate the HR-related component that requires some of these sign-offs and approvals from the budgetary component because we typically focus just on the budgetary component.
00:55:03
If a position wasn't in the
00:55:05
annual budget that was approved by council in December, but is added during the year, the onus is placed on the department to figure out how to cover the cost of that position going forward.
00:55:18
That department might opt to come back later in the year and say we need additional resources to cover that position.
00:55:23
That's typically a question that we ask whenever we see that kind of thing happening, but I think the key takeaway is no additional budget is necessarily added for that position.
00:55:33
those who know the budget process know that those positions do eventually get kind of swept into a workforce plan for that department and therefore can potentially be just added in automatically because it's now it's part of the roster and we grab the whole roster and we say okay these are your positions and you know we we add the budget for that but the budget office also does provide a backstop for that and does that review and analysis so whenever we see an additional position popping up
00:55:58
or we see positions being reclassified and we see cost differentials between those positions, we have additional questions for departments on how those costs are going to be covered.
00:56:08
So again, I'm really just speaking to the cost portion of this conversation, how we make sure, how we do a lot of work to make sure that we're not adding costs when new positions are coming in right off the bat.
00:56:20
It's not a council approval of a new position without additional resolutions for ongoing funding.
00:56:26
basically permission for a department to use its own resources within its base budget in order to fund that position.
Emily Koski
00:56:34
OK, and so then the second question I think you've heard.
00:56:37
I just want to make sure I'm clear that is it automatically added to the current service level for the following year?
00:56:42
Can you just help make sure how does that run through then if they were to add a position?
SPEAKER_09
00:56:49
Yes, Chair Koski, members of the committee, is that position then added to the current service level for the following year?
00:56:54
The answer is no, not necessarily.
00:56:59
So if we see that additional position showing up in that workforce plan, the budget office circles back and one question that we often ask departments is how are you planning on covering this additional position that was added because you don't automatically get to expand your workforce plan.
00:57:13
We don't automatically assign budget for that.
00:57:16
and so we'll engage in a conversation with the department and a typical conversation could be, you know, do you have contractual dollars that you're planning on reducing in order to cover the cost of this position so that we can add it to the plan because we don't have permission in the budget office to just increase people's budget beyond what is permitted in our financial policies.
Emily Koski
00:57:37
Okay, thank you.
00:57:38
I have a couple other questions here.
00:57:40
One is regarding the internal service charges that are inflated based on anticipated overhead costs.
00:57:47
So how do our internal service charges compare to other industry standards relating to internal service charges and who decides how these service charges are established?
SPEAKER_09
00:58:00
Chair Koski, members of the Budget Committee, we have some finance policy around this that essentially articulates, you know,
00:58:07
For things like our IT costs where we have software license agreements that are going to be inflated and the departments depend on, we have the ability to add on inflationary adjustments for those licenses so that we can continue to pay for Salesforce or our IBM
00:58:25
Licenses, what have you.
00:58:27
And so we rely on industry benchmarks, for example, inflationary indexes to analyze how much these licenses are growing so then we can say, okay, this seems like a reasonable amount.
00:58:41
What we have done in years past is also ask, invite our IT department to go forward with any changes that appear to be above and beyond that amount so that they can transparently come to council and say, okay, we have a number of
00:58:53
contract increases.
00:58:54
This is a large amount.
00:58:55
Our finance department has determined that this is not within their ability to just add this to the budget as an inflationary thing, and then IT engages in a conversation with the mayor's office and council about how best to secure additional funding for those contracts.
00:59:09
And we have a change item from last year that we can forward, I think, that captures some of that conversation.
Emily Koski
00:59:17
Thank you.
00:59:18
And then last question, how do our current service level budget allocations are spending and revenues compared to other comparable local governments current service level budgets as well?
SPEAKER_09
00:59:32
Chair Koski, members of the committee, I do not have a direct answer for you on that one.
00:59:36
It's a terrific question.
Emily Koski
00:59:37
Okay, if you can follow add that to your follow up list.
00:59:40
Thank you.
00:59:42
All right, I see Council Vice President Palmisano.
Linea Palmisano
00:59:46
Thank you, Madam Chair.
00:59:47
In terms of these shared costs, in particular about things like rent and through property and finance services, could you expand a little bit on how that fluctuates over time?
00:59:58
It looks like on these very small graphs that it should stay pretty even, but we all know that the maintenance needs on some of our aging buildings
01:00:09
City owned buildings is going up and the needs are getting pretty dire for employee safety and welfare and can you help us understand a little bit more why the rent piece actually looks like it shrinks next year?
SPEAKER_09
01:00:25
Yes, Chair Koski, members of the committee, that's a great question and we've called this out a little bit in our presentation but I can expound on it a little bit more.
01:00:34
Our rent costs for things like maintenance of our buildings, our energy costs, janitorial costs, do typically increase over time.
01:00:42
We do see the effects of inflation on those costs.
01:00:44
The salaries go up with new contract settlements.
01:00:47
So those core costs go up.
01:00:49
What you see in 2023 and in 2024 are largely stable costs.
01:00:54
And then in 2024, sorry, in 2023 budget and the 2024 plan, those first two columns, costs are largely stable.
01:01:02
In the 2024 budget,
01:01:04
that we're showing here, those costs go down.
01:01:06
That's largely due to an accounting treatment, and it's kind of, it throws off our numbers a little bit, but as Megan kind of talked through, we are taking off our city hall rent out of the property services budget, and that was a five to six million dollar amount that is made payable to the Municipal Building Commission.
01:01:23
That's being taken off of that amount.
01:01:25
If that amount had been included in here, we would have seen a slight increase in our overall property services budget.
01:01:32
Some of these changes that we see in these internal cost allocations are also due to decisions that were made as we recovered from the pandemic to utilize cash balances in some of the funds.
01:01:43
So we were able to make a couple of one time recommendations to utilize cash balances instead of charging out these costs as well.
Linea Palmisano
01:01:53
So if I may, some of those fixes, I understand now the differential in taking off the NBC rent, but some of those kinds of fixes for maintenance seem like they're one time and others would certainly be ongoing, getting to a different standard of service on some of our own properties and buildings and facilities.
01:02:17
it doesn't seem like this ever increases the way that other inflationary needs increase and is there a plan for that or should I be waiting for the property and finance services presentation a little bit later on to hear what they plan to do about that?
SPEAKER_09
01:02:33
Chair Koski, members of the committee, it's a great question.
01:02:36
I don't have a direct answer right now.
01:02:38
Certainly the property services division presentation is an excellent
01:02:41
a place to ask that question.
01:02:43
They do have a dedicated amount within their budget for these maintenance costs and have been tracking that very, very closely.
01:02:50
One of the challenges that I can say that they encountered during the pandemic was just getting work out the door, for lack of a better term, and they've put into place a plan to really accelerate that work, even this year.
01:03:07
so just as some additional background that department will be coming forward later on this year.
Linea Palmisano
01:03:13
I appreciate that.
01:03:14
I also want to just flag for my colleagues that one of the big things that we
01:03:18
agreed to as part of the MDHR settlement agreement would be a training facility for our police department.
01:03:25
And that would be, I'm not sure exactly where that fits in here, but it would be a dramatic increase to what we do currently, which is to use a very old school building in North Minneapolis at 4200 DuPont.
01:03:39
And that will take a fair amount of investment going forward.
01:03:43
So thank you.
Emily Koski
01:03:48
All right, I am not seeing any further questions or discussion.
01:03:54
So I will direct the clerk to file this report.
01:03:59
So see no further business before us and without objection, I declare this meeting adjourned.
01:04:03
Thank you so much for being here.
SPEAKER_11
01:04:05
Thank you.