Description: AGENDAHED.JPG

 

 

Item                 5D

 

Meeting Date:  January 14, 2013

 

From:               Jay M. Evans, City Manager

 

Subject:           Resolution adopting the FY 2012-2013 Enterprise Performance Incentive Program and Enterprise Performance Evaluations

 

______________________________________________________________________________

 

Staff Recommendation:

Staff recommends approval of the Resolution adopting the FY 2012-2013 Enterprise Performance Incentive Program and Enterprise Performance Evaluations.

 

Analysis:

On November 22, 2010, the City Commission adopted the Enterprise Performance Incentive Program (EPIP) as the mechanism to tie organizational financial performance to the employee compensation.  For the first time in the City’s history, all employees have a vested interest in the fiscal health of the business unit in which they work.  This is a substantial departure from standard governmental practice where employees are either part of a guaranteed increase (step) program, or they need only be concerned with personal performance through a pure “merit” system.  Now, Leesburg employees in all business units are concerned with the “bottom line”, and are eligible for incentives when justified by fiscal health and performance.

 

Last year, Gas, Stormwater, Communications, and Solid Waste qualified for raises, with the General Fund and Water qualifying for bonuses.  Electric and Wastewater qualified for very small bonuses.

 

The evaluations have been conducted for FY 2012-2013, the results of which are attached hereto.  Also included is a copy of the methodology.  Summarizing the attached results, only Water and Stormwater qualify for raises.  Wastewater, Communications, and Solid Waste qualify for bonuses.  The General Fund and Electric do not qualify for incentives at all.  The Gas Department would qualify for raises, were it not for the policy decisions of the City Commission relative to the FY 2012/13 budget.  The Commission must decide if it wants to hold the Gas Department employees harmless and award raises, or simply award bonuses.

 

EPIP functions as a barometer for each fund’s financial performance.  Whether or not the results that EPIP produces are what one desires, they are based on objective financial data.  Absent a mechanism such as EPIP, all you have are one-size-fits-all or rhetorical solutions for raises and bonuses.  Additionally, EPIP serves to tell the Commission how the funds are performing and shows them the realities of decisions made both at the employee and City Commission level.  If EPIP determines that certain funds cannot afford raises or bonuses, the opportunity is there for the City Commission to ask itself and management what can be done to bolster financial performance such that increases in compensation can be restored.  The City’s ability to attract and retain talented employees, and the quality of services they will provide in the future, are greatly dependent upon it.

 

 

 

 

Options:

1.  Approve the Enterprise Performance Evaluations for the FY 2011-2012 Enterprise Performance Incentive Program (a decision on the Gas Fund raises/bonuses must be made)

2.  Such alternative action as the Commission may deem appropriate

 

 

Fiscal Impact: 

Fund-by-fund analysis and fiscal impact are provided in the attached Enterprise Performance Evaluations.

 

 

 

Submission Date and Time:    1/9/2013 6:17 PM____

 

Department: ______________________

Prepared by:  ______________________                     

Attachments:         Yes____   No ______

Advertised:   ____Not Required ______                     

Dates:   __________________________                     

Attorney Review :       Yes___  No ____

                                                

_________________________________           

Revised 6/10/04

 

Reviewed by: Dept. Head ________

 

Finance  Dept. __________________                                     

                              

Deputy C.M. ___________________                                                                         

Submitted by:

City Manager ___________________

 

Account No. _________________

 

Project No. ___________________

 

WF No. ______________________

 

Budget  ______________________

 

Available _____________________

 

RESOLUTION NO._______________

 

RESOLUTION OF THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA, APPROVING THE FINANCIAL PERFORMANCE EVALUATIONS FOR THE ENTERPRISE PERFORMANCE INCENTIVE PROGRAM FOR FY 2012-2013, AND PROVIDING AN EFFECTIVE DATE.

 

 

 

BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA:

 

1.  THAT the City hereby adopts the FY 2011-2012 Enterprise Performance Incentive Program as outlined in the attached memorandum, inclusive of the attached methodologies and Financial Performance Evaluations.

 

2. THAT the performance incentives provided for by the results of each evaluation be retroactive to October 1, 2012.

 

3. THAT this resolution shall become effective immediately.

 

             

PASSED AND ADOPTED by the City Commission of the City of Leesburg, Florida, at a regular meeting held the _14th____ day of _January___ 2013.

 

 

 

                                                                            __________________________

                                                                             Mayor

 

ATTEST:

 

 

_______________________________

City Clerk

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Enterprise Performance Incentive Program

 

 

The changes in the U.S. economy have required local governments to re-evaluate priorities, business models, service levels, retirement plans, compensation systems, and methods of service delivery.  The City of Leesburg has been a leader in adapting to the “new normal” and the results have been realized in our financial reports and improved bond ratings.  Leesburg is better positioned than many local governments because of our willingness to make difficult but timely changes.  Simply put, we have been responsive and responsible.

 

Dedication to organizational performance at the employee level is pervasive in the private sector.  Corporate compensation systems are frequently tied to organizational performance, giving each and every employee a stake in company’s success or failure.  This also motivates employees to provide top-quality service in order to ensure future sales.  The more satisfied the customer, the more business for the company, and the more secure the employee’s financial future.

 

Government, on the other hand, has been slow to adopt many of corporate America’s successful practices.  The claim has always been that “government is different,” “government doesn’t exist to make a profit” and “that won’t work here.”  Frequently it is time itself that proves these notions wrong, with defined-benefit pension plans being a perfect example.  Corporate America realized many years ago that these plans were not sustainable, but governments are just now coming to that conclusion themselves.  Organizational performance is proving to be a similar issue, in that local government can no longer sustain a business model that ignores economic realities and rewards employees without regard to the success or failure of the organization.  It is time to change.

 

Giving government employees a stake in the performance of the organization should be part of the new way government operates.  Performance is not defined as simply the bottom line, but also the impact the organization has had on the customer (the ratepayer or taxpayer).  Shouldn’t government employees care about rate increases or increases in taxes?  Shouldn’t they care about the financial health of the organization?   Shouldn’t they care about both the short-term and long-term consequences of staffing, benefit levels, debt levels, life-cycle costs, changes in revenues, expenditures, and so forth?  Should we be surprised at an unsatisfactory outcome when our system provides no incentive to the front-line employee to care about the overall performance of the organization?  It can be different.

 

The Leesburg Enterprise Performance Incentive Program will increase interest in and responsiveness to Leesburg’s success as an organization.  This is a departure from the traditional model wherein Leesburg has granted across-the-board merit increases (subject to the employee’s personal performance evaluation) to all business units equally.  For the purpose of this explanation, the business units (or “funds”) such as the General Fund, Water, Wastewater, Electric, Gas, Stormwater, etc. will all be referred to as “enterprises.” 

 

To begin, the ability of an employee to receive a merit bonus or a raise will be tied to the performance of the enterprise in which they work.  Enterprise performance will be evaluated utilizing adopted methodologies (“Enterprise Financial Performance Tests,” attached hereto).   The methodologies are empirical enough to evaluate the enterprise’s financial health from the past fiscal year, current fiscal year, and the projected fiscal year by way of analysis using the fiscal year end unaudited financials.  The process is flexible enough to allow the Commission to consider anomalies that may have affected financial performance, known threats to future performance, or other conditions that could affect the desirability of providing financial incentives in a given year.  Increases in taxes or utility rates are factors that could negatively impact the incentives, ensuring the customer is the top priority in the program.

 

Under the Enterprise Performance Incentive Program, each enterprise will be subjected to a Financial Performance Test.  The results of this test will determine eligibility for incentives (bonuses or raises) for the employees in that enterprise, and will also determine the amount of funding available for the incentive.  The amount of funding available is a function of financial performance, but would be limited to no more than 7% of payroll.  This amount would be known as the Potential Bonus/Raise, or “PBR”.  Depending on performance, the PBR will be distributed either as bonuses or raises.  Raises will be given only if the performance appears (as demonstrated in the analysis) to be sustainable.  Questionable sustainability will result in one-time bonuses only.  This will help to combat the adverse impact of recurring expenses when sustainability is not assured.

 

For those departments that have not adopted a Skill-Based Pay plan (only Electric has), the incentive will be split into a 4% Enterprise Performance Incentive effective October 1st  (employee must have received “meets expectations” on their previous fiscal year evaluation) and up to 2% would be used as a Personal Performance Evaluation Merit Incentive.  The Personal Performance Evaluations will be conducted on the employee’s employment anniversary date, and the employee will have to “exceed expectations” on their evaluation to be eligible for this incentive.  Sustainability, as demonstrated in the Financial Performance Test, will determine whether the incentives are distributed as bonuses or raises. 

 

For those departments utilizing a Skill-Based Pay plan (again, only Electric has one so far), the incentives are not distributed in the above format, but instead become the financial reward for progress through the Skill-Based Pay plan.  Sustainability still determines the method of distribution (bonus vs. raise), and the entire amount of the PBR is available for use.  Timing is also October 1st . 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Utilities Financial Performance Evaluation

 

 

 

 

1)       There has been no base rate increase in the current fiscal year (BPCA and indexed increases excluded)

a.     If no base rate increase, proceed to #2.

b.     If yes, City Commission to evaluate the cause of the rate increase to see if bonuses or raises should be withheld or limited.

2)       Fund must have positive financial performance

a.     As demonstrated in prior year audited financials

b.     As demonstrated through unaudited FYE financials

3)       Fund must be compliant with the Cash Reserve Requirement

4)       Fund must make required dividend contribution to General Fund

5)       Fund must pass the City Manager / Finance Director evaluation of known financial anomalies and future threats, as well as scrutiny of capital spending to ensure infrastructure and equipment are being properly funded.  Narrative analysis and findings to be provided.

6)       If unrestricted cash is greater than 150% of the cash reserve requirement, the amount over 150% is eligible for distribution as bonuses or raises; maximum is limited to 7% of payroll; this amount is referred to as the Potential Bonus/Raise, or “PBR”

7)       If unrestricted cash is less than 150% of the cash reserve requirement, then the prior year contribution to unrestricted cash will be used to calculate the PBR.  Up to 10% of the prior year contribution to unrestricted cash is eligible for bonuses or raises; maximum is limited to 7% of payroll; this amount will be the “PBR”.  1, 2

8)       If PBR < 5% of payroll, then PBR is distributed as bonuses

9)       If PBR > 5% of payroll, then PBR is distributed as raises (bonuses for topped-out employees).

10)  Anticipated financial performance must accommodate amount of PBR

 

 

1                    If unrestricted cash was lowered in the past year due to Special Transfers, the amount of the special transfer will be added to the amount of unrestricted cash for the purpose of these calculations

 

2                    If unrestricted cash was lowered due to expenditures for additional customer connections (service expansion generating additional revenue), the amount of the projected annual revenue may be added to the contribution to unrestricted cash for the purpose of this calculation.  This is designed to prevent penalizing employees for proper service expansion.

 

 

Enterprise Performance Incentive Program

General Fund Financial Performance Evaluation

 

1)       There has been no increase in the ad valorem millage rate

a.     If no millage rate increase, proceed to #2.

b.     If yes, City Commission to evaluate the cause of the rate increase to determine if the performance incentive should be withheld or reduced.

2)       Fund must have positive financial performance

a.        As demonstrated in prior year audited financials

b.     As demonstrated through unaudited FYE financials

3)       Fund must be compliant with the Cash Reserve Requirement

4)       Fund must pass City Manager / Finance Director evaluation of known financial anomalies and future threats, as well as scrutiny of capital spending, to ensure infrastructure and equipment are being properly funded.  Analysis narrative and findings to be provided.

5)       If unrestricted cash is greater than 150% of cash reserve requirement, the amount over the requirement is eligible for distribution as bonuses or raises; maximum is limited to 7% of payroll; this amount is referred to as the Potential Bonus/Raise, or “PBR”

6)       If unrestricted cash is less than 150% of the cash reserve requirement, then the prior year contribution to unrestricted cash will be used to calculate the PBR.  Up to 10% of the prior year contribution to unrestricted cash is eligible for bonuses or raises; maximum is limited to 7% of payroll; this amount will be the “PBR”. 1

7)       If PBR < 5% of payroll, then PBR is distributed as bonuses

8)       If PBR > 5% of payroll, then PBR is distributed as raises (bonuses for topped-out employees)

9)       Anticipated future financial performance must accommodate PBR

10)  The impact of cost-allocation on the financial health of the utilities must be evaluated and reported.  PBR cost allocation from General Fund cannot cause non-compliance with financial policies in the utilities.

 

1  If the amount of unrestricted cash was lowered in the past year due to Special Transfers, the amount of the special transfer will be added to the amount of unrestricted cash for the purpose of these calculations.

 

 

 

 

 

 

 

FY 2011-2012 Performance Evaluation – General Fund

 

Performance Evaluation – General Fund

 

Metrics:

Reserve Policy Required Balance                                                                                     $ 4,492,520

Cash on hand as of September 2012 (UNAUDITED)                                                          7,858,251

150% of Required Cash Reserve                                                                                          6,738,780

Over (Under) 150% Cash Threshold                                                                                     1,119,471

Change in Unrestricted Cash from 2010 to 2011                                                              1,346,132

Change in Unrestricted Cash from 2011 to September 2012                                         (534,656)

10% of Change in 2011-12 Unrestricted Cash                                                                      (53,466)

2012 Budgeted Payroll                                                                                                       20,468,966

7% of payroll                                                                                                                           1,432,828

5% of payroll                                                                                                                           1,023,448

Change in Cash expressed as percent of payroll 2010 to 2011                                          6.58%

Change in Cash Percent of payroll 2011 to 2012                                                                         (2.61%)

Net income for 2010-2011                                                                                                   1,419,385

Unaudited net income for 2011-2012                                                                                  265,115

 

Pay performance checklist

 

1.       There was no millage rate increase in FY 2011-2012.

2.       Fund balance did have a positive balance for the unaudited FY 2011-2012, net income is $265,115 and the audited FY 2010-11 net income is $1,419,385.  The positive net income balance was primarily due to the transfer from closing out the Magnolia Townhomes Fund, which transferred approximately $310k to the general fund at 9/30/12.  Without the transfer, the general fund would have had a deficit balance at 9/30/12

3.       Fund is compliant with Cash reserve requirement.

4.       The fund must pass close scrutiny from the City Manager and Finance Director to evaluate future resource requirements.  Some of which are predictability of recurring revenues, reliance on cost recovery through allocations and dividends from the various utilities, deferred capital projects, capital purchases, and renewal and replacement.  Additionally, the City needs to gain control of escalating pension costs which react negatively to the economy and market conditions.  Policies have yet to be developed to establish funding for governmental infrastructure and renewal and replacement.  Currently there is no funding in place and reliance has been placed predominantly upon Fund Balance and Special Transfers.  Debt service associated with the pay back of the loan for Magnolia Townhomes will begin in FY 2012-2013 totaling $979,000 with the final payment being made in FY 2016-2017.  There is continuing concern in regard to the property valuations of the respective CRA’s which currently have debt service and the potential for obligatory funding from the General Fund through the Covenant to Budget and Appropriate.  To date other post employment benefits (OPEB) have not been funded.  The General Fund also has exposure through the Covenant to Budget and Appropriate to the Highway 441/27 Bond Issue.  Additionally, the City Commission utilized $568K in one-time funding from the Workman’s Compensation Fund to balance the 2012-2013 General Fund budget, as well as a Special Transfer from Gas to fund capital projects totaling $430,000.   Together, those two numbers will constitute a $998K hole in next year’s budget – independent of any other changes.  Therefore, sustainability is an issue and the recommendation would be no raise or bonus.

5.       Unrestricted cash of $7,858,251 is greater than 150% of the cash reserve requirement of $6,738,780 by $1,119,471.  The amount over the requirement, less FY 11-12 rollovers of $564,000, is $555,471.  This amount is 5.43% of payroll.

6.       Unrestricted cash is greater than 150% of the cash reserve requirement therefore; the current year contribution to restricted cash will be used.

7.       Due to the decrease of the 10% change in 2011-12 unrestricted cash, this eliminates the “Potential Bonus or Raise”, or “PBR”.

8.       There is no PBR.

9.       There is no PBR.

10.    There is no PBR.

11.    Based upon the best information available at this time, the financial performance of this fund cannot support a “Potential Bonus or Raise”, or “PBR”.

 

Bottom Line:

The fund does not qualify for raises or bonuses.

 

Performance Evaluation - Electric

Metrics:

Reserve Policy Required Balance                                                                                     $  9,545,114

Cash on hand as of September 2012 (UNAUDITED)                                                          11,146,587

150% of Required Cash Reserve                                                                                          14,317,671

Over (Under) 150% Cash Threshold                                                                                    (3,171,084)

Change in Unrestricted Cash from 2010 to 2011                                                                  315,777

Change in Unrestricted Cash from 2011 to September 2012                                       (1,412,202)

10% of Change in 2011-12 Unrestricted Cash                                                                     (141,220)

2012 Budgeted Payroll                                                                                                           4,060,316

7% of payroll                                                                                                                                284,222

5% of payroll                                                                                                                                203,016

Change in Cash expressed as percent of payroll 2010 to 2011                                             7.78%

Change in Cash Percent of payroll 2011 to 2012                                                                  (34.78%)

Net income for 2010-2011                                                                                                    3,579,698

Unaudited net income for 2011-2012                                                                                 1,392,342

 

 

Pay performance checklist

 

1.       There was a 1% base rate increase in FY 2011-2012 (BPCA and CPI excluded); however, that increase was not attributed to Electric Fund performance but rather was a direct subsidy to the General Fund.

2.       Fund has positive performance for two years.  The unaudited FY 2011-2012 net income is $1,392,342 and the audited FY 2010-11 net income is $3,579,698.

3.       Fund is compliant with cash reserve requirement; however, unrestricted cash is less than 150% of the reserve balance by $3,171,084.               

4.       The dividend payment to the General Fund was paid in FY 2010-2011 and 2011-2012.

5.       The contribution to renewal and replacement funds is $1,000,000 per year.  The current balance of $2,843,901 is adequate to cover projected R&R expenditures of $1,886,131 reflected in the 2012-13 capital plan.  Finance is working with the Electric Department to determine the timing and capital requirements of future years.  The City’s cash on hand of $11,146,587 included $3.2 million of grant proceeds, which was received in December 2012.  The additional $3.2 million help the electric fund be in compliance with the cash reserve compliance. 

6.       Unrestricted cash is less than 150% of the reserve requirement. 

7.       Unrestricted cash is less than 150% of the cash reserve requirement.  Due to negative change in 2011-12 unrestricted cash, this eliminates is the “Potential Bonus or Raise”, or “PBR”.

8.       There is no PBR.

9.       There is no PBR.

10.    Based upon the best information available at this time, the financial performance of this fund cannot support a “Potential Bonus or Raise”, or “PBR”.

 

Bottom Line:

The fund does not qualify for raises or bonuses.

 

Performance Evaluation - Gas

Metrics:

Reserve Policy Required Balance                                                                                     $   1,203,621

Cash on hand as of September 2012 (UNAUDITED)                                                            8,932,255

150% of Required Cash Reserve                                                                                            1,805,432

Over (Under) 150% Cash Threshold                                                                                      7,126,823

Change in Unrestricted Cash from 2010 to 2011                                                               1,157,281

Change in Unrestricted Cash from 2011 to September 2012                                          1,632,800

10% of Change in 2011-12 Unrestricted Cash                                                                        163,280

2012 Budgeted Payroll                                                                                                           1,315,388

7% of payroll                                                                                                                                  92,077

5% of payroll                                                                                                                                  65,769

Change in Cash expressed as percent of payroll 2010 to 2011                                          87.98%

Change in Cash Percent of payroll 2011 to 2012                                                                 124.13%

Net income for 2010-2011                                                                                                    1,265,424

Unaudited net income for 2011-2012                                                                                 1,206,855

 

Pay performance checklist

 

1.       There was a 1% base rate increase in FY 2011-2012 (CPI excluded); however, that increase was not attributed to Gas Fund performance but rather was a direct subsidy to the General Fund.

2.       Fund has positive performance for two years.  The unaudited FY 2011-2012 net income is $1,206,855 and the audited FY 2010-11 net income is $1,265,424.

3.       Fund is compliant with cash reserve requirement.            

4.       The dividend payment to the General Fund was paid in FY 2010-2011 and 2011-2012.

5.       The Gas utility is adequately funded to meet its capital requirements and the funding of capital projects.  The amount of unrestricted cash was not adversely impacted by special transfers.  However, FY 12-13 includes considerable increases in both operating and special project transfers.  The Gas Dept. is now covering Magnolia Townhomes debt service of $967K, plus $430,800 for General Fund capital projects and an increase in the operating transfer of $147K (up to the 10% maximum allowed by policy).  These actions will nearly eliminate future margin in the Gas Department.

6.       Unrestricted cash is greater than 150% of the cash threshold of $1,805,432 by $7,126,823.  The amount over 150% is limited to 7% of payroll which is $92,077.

7.       Unrestricted cash is greater than 150% of the cash reserve requirement.

8.       If PBR is less than 5% of payroll, then PBR is distributed as bonuses.  PBR is 7%.

9.       The PBR of $92,077 is > 5% of payroll, or $65,769, and so the amount may be distributed as raises (topped-out employees will receive a one-time bonus).

10.    The fund has enjoyed increases in unrestricted cash of $1,157,281 and $1,632,800 in 2010-2011 and 2011-2012 respectively.  However, due to policy decisions of the City Commission (see #5 above), financial performance of the Gas Fund is expected to become marginal in future years.

 

Bottom Line:

The intent of EPIP was to hold employees harmless from policy decisions made by the City Commission that are outside of their control.  Profound changes were made for the FY 12-13 budget that will greatly impact future financial performance for the Gas Fund.  Although the fund itself will continue strong performance with regard to revenues versus actual expenditures, transfers out of the fund will deplete excess margin in the future, compromising the ability to pay for increased salaries.

 

The fund would qualify for raises were it not for the reality of the new transfers.  The City Commission must decide if the future needs of the General Fund supercede the need for performance incentives in the Gas Fund.  An alternative to raises would be to award bonuses only, inclusive of a 4% enterprise performance bonus payable immediately and “up to” a 2% bonus based on the individual employee’s annual performance evaluation.

 

Performance Evaluation - Water

Metrics:

Reserve Policy Required Balance                                                                                     $ 1,759,098 

Cash on hand as of September 2012 (UNAUDITED)                                                           4,662,281

150% of Required Cash Reserve                                                                                           2,638,647

Over (Under) 150% Cash Threshold                                                                                     2,023,634

Change in Unrestricted Cash from 2010 to 2011                                                              1,207,958

Change in Unrestricted Cash from 2011 to September 2012                                             824,659

10% of Change in 2011-12 Unrestricted Cash                                                                          82,466

2012 Budgeted Payroll                                                                                                           1,516,768

7% of payroll                                                                                                                                106,174

5% of payroll                                                                                                                                  75,838

Change in Cash expressed as percent of payroll 2010 to 2011                                          79.64%

Change in Cash Percent of payroll 2011 to 2012                                                                   54.37%

Net Income for 2010-2011                                                                                                        88,538

Unaudited net income for 2011-2012                                                                                   245,195

 

Pay performance checklist

 

1.    There was a 1% base rate increase in FY 2011-2012 (BPCA and CPI excluded); however, that increase was not attributed to Water Fund performance but rather was a direct subsidy to the General Fund.

2.    Fund has positive performance for two years.  The unaudited FY 2011-2012 net income is $245,195 and the audited FY 2010-11 net income is $88,538.

3.    Fund is compliant with cash reserve requirement.

4.    The dividend payment to the General Fund was paid in FY 2010-2011 and 2011-2012.

5.    The Water Utility has a balance of $2,122,872 in renewal and replacement at year end which is expected to be adequate to fund capital requirements of $701,050 in the Fiscal Year 2012-13 budget.

6.       Unrestricted cash is greater than 150% of the cash reserve requirement of $2,638,647 by $2,023,634.  The amount over 150% is limited to 7% of payroll which is $106,174.

7.       Unrestricted cash is greater than 150% of the cash reserve requirement.

8.       If PBR is less than 5% of payroll, then PBR is distributed as bonuses.  PBR is 7%.

9.       The PBR of $106,174 is > 5% of payroll, or $75,838.

10.    The fund has had changes in unrestricted cash of $1,207,958 and $2,023,634 in 2010-2011 and 2011-2012 respectively.  Based upon the best information available at this time, the financial performance of this fund is expected to remain stable and can support a “Potential Bonus or Raise”, or “PBR”. 

 

 

Bottom Line:

The fund qualifies for raises, which will be distributed as 4% enterprise performance incentive and “up to” 2% for those employees that exceed expectations.  The 2% will be distributed within FY 12-13 concurrent with the completion of each employee’s annual evaluation.

 

Performance Evaluation - Wastewater

Metrics:

Reserve Policy Required Balance                                                                                     $     2,449,909

Cash on hand as of September 2012 (UNAUDITED)                                                               2,769,327

150% of Required Cash Reserve                                                                                               3,674,864

Over (Under) 150% Cash Threshold                                                                                           (905,536)

Change in Unrestricted Cash from 2010 to 2011                                                                     150,478

Change in Unrestricted Cash from 2011 to September 2012                                                  56,980

10% of Change in 2011-12 Unrestricted Cash                                                                               5,698

2012 Budgeted Payroll                                                                                                              2,453,306

7% of payroll                                                                                                                                   171,731

5% of payroll                                                                                                                                   122,665

Change in Cash expressed as percent of payroll 2010 to 2011                                                6.13%

Change in Cash Percent of payroll 2011 to 2012                                                                        2.32%

Net income for 2010-2011                                                                                                      1,088,041

Unaudited net income for 2011-2012                                                                                      419,852

 

Pay performance checklist

 

1.       There was a 1% base rate increase in FY 2011-2012 (BPCA and CPI excluded); however, that increase was not attributed to Wastewater Fund performance but rather was a direct subsidy to the General Fund.

2.       Fund has positive performance for two years.  The unaudited FY 2011-2012 net income is $419,852 and the                audited FY 2010-11 net income is $1,088,048.

3.       Fund is compliant with cash reserve requirement.

4.       The dividend payment to the General Fund was paid in FY 2010-2011 and 2011-2012.

5.       The Wastewater Utility has a balance of $3,662,632 in renewal and replacement at year end, which is expected to be adequate to fund capital requirements of $847,600 in the Fiscal Year 2012-13 budget.

6.       Unrestricted cash is less than 150% of the reserve requirement. 

7.       Unrestricted cash is less than 150% of the cash reserve requirement.  The fund changed $56,980, which entitles the fund to a bonus of $5,698. 

8.       There is no PBR.

9.       There is no PBR.

10.    Based upon the best information available at this time, the financial performance of this fund cannot support a “Potential Bonus or Raise”, or “PBR”.

 

Bottom Line:

The relatively small increase in unrestricted cash qualifies the fund for a very small bonus of .23%, which totals $5,698.

 

Performance Evaluation - Communications

Metrics:

Reserve Policy Required Balance                                                                                     $      361,640

Cash on hand as of September 2012 (UNAUDITED)                                                               945,927

150% of Required Cash Reserve                                                                                                542,460

Over (Under) 150% Cash Threshold                                                                                          403,467

Change in Unrestricted Cash from 2010 to 2011                                                                     87,267

Change in Unrestricted Cash from 2011 to September 2012                                              146,617

10% of Change in 2011-12 Unrestricted Cash                                                                           14,662

2012 Budgeted Payroll                                                                                                               340,247

7% of payroll                                                                                                                                   23,817

5% of payroll                                                                                                                                   17,012

Change in Cash expressed as percent of payroll 2010 to 2011                                              25.65%

Change in Cash Percent of payroll 2011 to 2012                                                                      43.09%

Net income for 2010-2011                                                                                                        208,389

Unaudited net income for 2011-2012                                                                                     436,641

 

 

 

Pay performance checklist

 

1.       There was no base rate increase in FY 2011-2012 (CPI excluded).

2.       Fund has positive performance for two years.  The unaudited FY 2011-2012 net income is $436,641 and the audited FY 2010-11 net income is $208,389.

3.       Fund is compliant with cash reserve requirement.            

4.       Fund will be making a dividend payment to the General Fund for the first time in FY 12-13.

5.       The Communications utility requires close review due to their debt service and capital requirements related their network infrastructure.  With this in mind, close scrutiny is required before implementing any increases in operating costs.  The Communications utility currently has $394,223 available in renewal and replacement cash, which is expected to be adequate to fund capital renewal and replacement costs of $193,100 included in the fiscal year 2012-13 budget.

6.       Unrestricted cash is greater than 150% of the cash threshold of $542,460 by $403,467.  The amount over 150% is limited to 7% of payroll which is $23,817.

7.       Unrestricted cash is greater than 150% of the cash reserve requirement.

8.       If PBR is less than 5% of payroll, then PBR is distributed as bonuses.  PBR is 7%.

9.       The PBR of $23,817 is > 5% of payroll, or $17,012, and so the amount may be distributed as raises (topped-out employees will receive a one-time bonus).

10.    The fund has enjoyed increases in unrestricted cash of $87,267 and $146,617 in 2010-2011 and 2011-2012 respectively.  Based upon the best information available at this time, the financial performance of this fund is expected to remain stable and can support a “Potential Bonus or Raise”, or “PBR”.

 

Bottom Line:

Unrestricted cash is healthy in the fund.  However, 10% of the FY 11-12 change in unrestricted cash was less than 5% of payroll, which is the determinate for sustainability of raises.  Thus, the fund qualifies for bonuses, which will be distributed as 4% enterprise performance bonus and “up to” 2% for those employees that exceed expectations.  The 2% will be distributed within FY 12-13 concurrent with the completion of each employee’s annual evaluation.

 

Performance Evaluation – Solid Waste

Metrics:

Reserve Policy Required Balance                                                                                     $    904,448

Cash on hand as of September 2012 (UNAUDITED)                                                          1,720,033

150% of Required Cash Reserve                                                                                          1,356,672

Over (Under) 150% Cash Threshold                                                                                        363,361

Change in Unrestricted Cash from 2010 to 2011                                                                 279,376

Change in Unrestricted Cash from 2011 to September 2012                                            231,649

10% of Change in 2011-12 Unrestricted Cash                                                                         23,165

2012 Budgeted Payroll                                                                                                              949,127

7% of payroll                                                                                                                                  66,439

5% of payroll                                                                                                                                  47,456

Change in Cash expressed as percent of payroll 2010 to 2011                                          29.44%

Change in Cash Percent of payroll 2011 to 2012                                                                   24.41%

Net income for 2010-2011                                                                                                       410,413

Unaudited net income for 2011-2012                                                                                    436,707

 

Pay performance checklist

 

1.       There was a 1% base rate increase in FY 2011-2012 (BPCA and CPI excluded); however, that increase was not attributed to Solid Waste Fund performance but rather was a direct subsidy to the General Fund.

2.       Fund has positive performance for two years.  The unaudited FY 2011-2012 net income is $436,707 and the audited FY 2010-11 net income is $410,413.

3.       Fund is compliant with cash reserve requirement.

4.       The dividend payment to the General Fund was paid in FY 2010-2011 and 2011-2012.

5.       The utility is adequately funded to meet the needs of renewal and replacement requirements at this time.

6.       Unrestricted cash is greater than 150% of the cash threshold of $1,356,672 by $363,361.  The amount over 150% is limited to 7% of payroll which is $66,439.

7.       Unrestricted cash is greater than 150% of the cash reserve requirement.

8.       If PBR is less than 5% of payroll, then PBR is distributed as bonuses.  PBR is 7%.

9.       The PBR of $66,439 is > 5% of payroll, or $43,678, and so the amount may be distributed as raises (topped-out employees will receive a one-time bonus).

10.    The fund has enjoyed increases in unrestricted cash of $279,376 and $231,649 in 2010-2011 and 2011-2012 respectively.  Based upon the best information available at this time, the financial performance of this fund is expected to remain stable and can support a “Potential Bonus or Raise”, or “PBR”.

 

Bottom Line:

Unrestricted cash is healthy in the fund.  However, 10% of the FY 11-12 change in unrestricted cash was less than 5% of payroll, which is the determinate for sustainability of raises.  Thus, the fund qualifies for bonuses, which will be distributed as 4% enterprise performance bonus and “up to” 2% for those employees that exceed expectations.  The 2% will be distributed within FY 12-13 concurrent with the completion of each employee’s annual evaluation.

 

Performance Evaluation – Stormwater

Metrics:

Reserve Policy Required Balance                                                                                     $     387,000

Cash on hand as of September 2012 (UNAUDITED)                                                           1,614,268

150% of Required Cash Reserve                                                                                              580,500

Over (Under) 150% Cash Threshold                                                                                    1,033,768

Change in Unrestricted Cash from 2010 to 2011                                                                 376,442

Change in Unrestricted Cash from 2011 to September 2012                                          (384,844)

10% of Change in 2011-12 Unrestricted Cash                                                                       (38,484)

2012 Budgeted Payroll                                                                                                             216,816

7% of payroll                                                                                                                                 15,177

5% of payroll                                                                                                                                 10,841

Change in Cash expressed as percent of payroll 2010 to 2011                                          173.62%

Change in Cash Percent of payroll 2011 to 2012                                                                 (177.50%)

Net income for 2010-2011                                                                                                       239,871

Unaudited net income for 2011-2012                                                                                    474,800

 

Pay performance checklist

 

1.       There was no base rate increase in FY 2011-2012.

2.       Fund has positive performance for two years.  The unaudited FY 2011-2012 net income is $474,800 and the audited FY 2010-11 net income is $239,871.

3.       Fund is compliant with cash reserve requirement.

4.       There is no dividend payment to the General Fund.

5.       This fund is setup to accumulate cash and then transfer the cash to the capital project fund.  The nature of this fund is to accumulate cash reserves and spend the cash reserves down through the capital projects.  This is the reason for the 10% decrease in the 2011-12 unrestricted cash.  The fund is operating as intended. The utility is adequately funded to meet the needs of renewal and replacement requirements at this time.

6.       Unrestricted cash is greater than 150% of the cash threshold of $577,875 by $1,414,688.  The amount over 150% is limited to 7% of payroll which is $11,108.

7.       Due to the decrease of the 10% change in 2011-12 unrestricted cash, this eliminates is the “Potential Bonus or Raise”, or “PBR”.

8.       There is no PBR.

9.       There is no PBR.

10.    There is no PBR.

11.    Based upon the best information available at this time, the financial performance of this fund cannot support a “Potential Bonus or Raise”, or “PBR”.

 

Bottom Line:

The Stormwater Fund is unique.  The intent of the fund is to build cash reserves and then spend them on stormwater improvement projects.  This will yield years of positive cash flow and negative cash flow, all part of the natural cycle of the fund.  Cash-on-hand declined in FY 11-12 due to projects, but is not indicative of poor financial performance.  Hence, the fund should not be limited to bonuses only, but should qualify for raises.  Said raises will be distributed as a 4% enterprise performance incentive and “up to” 2% for those employees that exceed expectations.  The 2% will be distributed within FY 12-13 concurrent with the completion of each employee’s annual evaluation.

 

Performance Evaluation – Building Permits

Metrics:

Reserve Policy Required Balance                                                                                     $       89,125

Cash on hand as of September 2012 (UNAUDITED)                                                            (206,911)

150% of Required Cash Reserve                                                                                             133,688

Over (Under) 150% Cash Threshold                                                                                      (340,599)

Change in Unrestricted Cash from 2010 to 2011                                                                    -0-

Change in Unrestricted Cash from 2011 to September 2012                                               -0-

10% of Change in 2011-12 Unrestricted Cash                                                                         -0-

2012 Budgeted Payroll                                                                                                             345,173

7% of payroll                                                                                                                                 24,162

5% of payroll                                                                                                                                 17,259

Change in Cash expressed as percent of payroll 2010 to 2011                                                  0%

Change in Cash Percent of payroll 2011 to 2012                                                                          0%

Net income for2010-2011                                                                                                       (67,174)

Unaudited net loss for 2011-2012                                                                                          (94,033)

 

 

Pay performance checklist

 

1.       There was no base rate increase in FY 2011-2012.

2.       Fund has not had positive performance for two years.  The unaudited FY 2011-2012 net loss is $94,033 and the audited FY 2010-11 net loss is $647,174.

3.       Fund is not compliant with the cash reserve requirement.              

4.       There is no dividend payment to the General Fund.  

5.       The cash reserve requirement has not been met according to the terms of the cash reserve policy. Raises and bonuses are not sustainable.

6.       Unrestricted cash is less than 150% of the cash reserve requirement. 

7.       Unrestricted cash is less than 150% of the cash reserve requirement. 

8.       There is no PBR.

9.       There is no PBR.

10.    Based upon the best information available at this time, the financial performance of this fund cannot support a “Potential Bonus or Raise”, or “PBR”.

 

Bottom Line:

The City Commission has tied the Building Permits Fund to the General Fund for the purpose of determining raises or bonuses since expenditures exceed revenues in a slow growth economy.  The fund does not qualify for raises or bonuses.