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June 25, 2002
| SUBJECT: | PROPOSED PROGRAM OUTCOME STATEMENTS, PROGRAM OUTCOME MEASURES, AND WEIGHTING FOR RESTRUCTURED PROGRAMS MANAGED BY THE FINANCE DEPARTMENT |
REPORT IN BRIEF
The Finance Department currently is responsible for seven programs. City staff has restructured these programs to the City's outcome management budget format. Proposed program outcome statements, a total of 41 recommended program outcome measures, and suggested weightings for each measure are described in this report.
City staff has been restructuring operating and support programs to the City’s outcome management system for several years. Through this effort, three components are established for each restructured program:
The outcome management system allows the City Council to review and approve the proposed outcome statement, outcome measures, and outcome weighting for each program as it goes through the restructuring process. This allows the City Council to set service levels for restructured programs, and to allocate the City’s limited resources to operating and support programs.
The restructured program outcome statements and program outcome measures will be used to prepare the approved FY 2002/2003 and 2003/2004 operating budget for programs managed by the Finance Department. The recommended program outcome statements and outcome measures maintain existing service levels.
BACKGROUND
The City’s outcome management system allows both the City Council and staff to comprehensively review the services and programs that we provide to our citizens and customer groups. Through this effort, staff from a specific department work with the Office of the City Manager to examine one or more programs that are being restructured to the outcome management system. This effort requires that staff redefine the overall purpose of the program, identify the fundamental results that the program should produce annually, and prioritize these results. Recommendations in all three areas are made to the City Council, who makes the final policy decisions.
City staff has added three steps to better align the program restructuring process to citizen and customer needs. First, the citizen and customer groups that are served by the restructured programs are identified. Next, citizen/customer expectations and requirements are determined. Third, proposed outcome measures are carefully reviewed to strike balances between customer satisfaction, operational performance, and financial results. This review also balances outcomes that are determined based on citizen/customer perception of program results with objective program results. Results from past Internal Customer Satisfaction Surveys were used in setting baseline results for customer satisfaction outcomes. Listings of customer groups and customer requirements are included for the Council’s information; no formal action is required by the City Council regarding this information.
EXISTING POLICY
In the Legislative Policy Manual, Goal 7.1B Financial Practices: Maintain Sound Financial Practices Which Meet All Applicable Standards and Direct The City's Financial Resources Toward Meeting The City's Long Term Goals, Policy 7.IB.5 Performance Budget System states: "Maintain and refine the Performance Budget System to assure its use for multi-year planning, full-cost accounting, and budget monitoring".
DISCUSSION
The Finance Department manages six existing programs. They are Fiscal Planning and Control, Accounting, Utility Revenue Billing and Collection, Purchasing and Stores, Prepare Resource Allocation Plan, and Financial Reporting. A total of seven programs are being recommended.
Financial Management and Analysis
This program provides research, consulting services to City staff on financial issues, and audit functions. Key services include: providing guidance on proposed City financial actions and strategies, analyzing federal and state legislation for financial implications, conducting audits on selected City revenue sources, and completing internal audits of City programs. The primary customers for these services are the City Council, City Manager, Finance Director, and other departments. Customer requirements include responsiveness, timeliness, and accuracy.
Proposed Program Outcome Statement:
Ensure a secure and strong financial position for the City through fiscal stewardship of City resources and financial expertise in City operations.
Proposed Outcome Measures Weighting
| 1. | City maintains a Standard & Poor's Issuer Credit Rating of AA+. | 5 |
| 2. |
80% of City's annual internal audit plan, as approved by the City Manager, is completed. |
4 |
| 3. |
90% of legislative agenda, identified by the Finance Director as having potential fiscal impacts, is analyzed and the appropriate action is taken. |
4 |
| 4. | Revenue audits shall generate a 200% return on investment. | 3 |
| 5. | The budget/cost ratio is at 1.0. | 5 |
Accounting and Financial Reporting
Department staff will use this program to maintain the City's general ledger and insure the integrity of the automated financial system, to generate periodic and annual financial reports, and to insure the accuracy and timeliness of the audited annual financial reports of the City. Key services include: generating 14 accounting period reports for all City programs and projects, providing financial analysis and special financial reports at the request of City staff, producing annual financial reports, and providing assistance to the City's external audit firm in the completion of the annual independent financial audit. Primary customers include the City Council, City Manager, department directors and program managers, and bond rating agencies. Key customer requirements include timeliness, accuracy, data availability, ease of access to data, and responsiveness.
Proposed Program Outcome Statement:
Proposed Outcome Measures Weighting
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75% of City management and staff rate financial system reports and query tools as satisfactory. | 4 |
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The City's annual financial report receives an unqualified audit opinion. | 5 |
|
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Management Letter comments are resolved by March 31 of the following year. | 3 |
|
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The accounting records are closed each accounting period within 10 business days 90% of the time. | 4 |
|
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90% of City management and staff rate the quality of services provided by the Accounting Division as satisfactory. | 4 |
|
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The Budget/Cost ratio is at 1.0. | 5 |
Utility Business Management
Through this program, Finance department staff read water meters, resolve questions or concerns raised by customers, and complete invoicing and collections. Key services include meter reading, customer service on water/sewer and refuse accounts, water/sewer and refuse utility management, and utility billing and collections. Customers include Sunnyvale ratepayers, other City departments, the City Council and the City Manager. Customer requirements are timely billing, accurate billing, prompt and courteous response to service requests, cost of service based rates, and effective financial services delivery.
Proposed Program Outcome Statement
Provide customer service and financial management to enable the provision of the highest quality utility services (water, sewer, and refuse) at the lowest rates necessary to maintain the viability of the enterprise funds.
Proposed Program Outcome Measures Weighting
1.
|
A collection rate equal to the average of the previous three years is achieved. | 5 |
| 2. |
99.5% of the total number of meters read are read correctly the first time. |
4 |
| 3. |
The charge for utility services in Sunnyvale is 98% of charges for comparable services in similar local cities. |
5 |
| 4. |
Customer calls, including queue time, are answered within an average of 0.75 minutes. |
5 |
| 5. |
Customer Service Representatives receive an overall provision of service standard rating of 95%. |
4 |
| 6. | The budget/cost ratio is at 1.0. | 5 |
Procurement Management
This program manages the City's purchasing services. Key services include issuing formal and informal bids for goods and services, issuing bids required for public works projects, managing the purchasing card program, supplier relationship and payment processing, and consulting services to City staff members. Program customers include the City Manager and Finance Director, City employees, and key suppliers to the City. Customer requirements include timeliness, cost effective purchasing services, timely payments, compliance, and high quality customer service.
Proposed Program Outcome Statement
Purchase, or facilitate the purchase of, goods and services of appropriate quality at the best possible price to support City operations.
Proposed Program Outcome Measures Weighting
| 1. | Formal bid procurement cycle time is equal to the average of the previous three (3) years. | 5 |
| 2. | Informal bid procurement cycle time is equal to the average of the previous three (3) years. | 5 |
| 3. | Public works projects procurement cycle time is equal to the average of the previous three (3) years. | 5 |
| 4. | Annual cost savings directly attributed to purchasing staff is equal to the previous (3) year average. | 4 |
| 5. | Supplier payments are accurate 95% of the time. | 4 |
| 6. | Supplier payments are made within City standard payment terms 90% of the time. | 3 |
| 7. | Purchases and payments are made in compliance with all applicable | 5 |
| 8. | An overall internal customer satisfaction rating of 85% is achieved. | 4 |
| 9. | The budget/cost ratio is at 1.0. | 5 |
Budget Management
This program prepares the City Manager's recommended budget annually for City Council consideration and adoption, and monitors program and project budgets during the fiscal year. Key services include developing the two-year operating budget, the two-year projects budget, revenue projections, the 10-year Resource Allocation Plan, and a 20-year long term financial plan for each City fund, budget training for City employees, budget monitoring, and budget analysis for City departments. Primary customers are the City Council and City Manager, City departments, and program managers. Customer requirements include timeliness, accuracy, and service quality.
Proposed Program Outcome Statement
Ensure that the City has a sound fiscal plan to meet current and future service demands that is in accordance with adopted City policies.
Proposed Program Outcome Measures Weighting
| 1. | The City receives the annual Distinguished Budget Award from the Government Finance Officer's Association by achieving a rating of "proficient" in the four rating areas (policy documents, financial plan, operations guide, and communications device.) |
3 |
| 2. | The Resource Allocation Plan is submitted to City Council by the City Manager's established due date. | 5 |
| 3. | An internal customer satisfaction rating of 85% is achieved. | 4 |
| 4. | The budget/cost ratio is at 1.0. | 5 |
Treasury/Cash Management
This program provides billing and collection services to meet the City's fiduciary responsibility for managing cash transactions, and investment management of the City's portfolio. Key services include issuing invoices for City supplied services, receiving revenues, managing banking relationships, and management of the investment portfolio. Primary customers include the City Council, the Finance Director, other City departments and program managers. Secondary customers include rating agencies and banking institutions. Customer requirements include timeliness, accuracy, and service delivery.
Proposed Program Outcome Statement
Enrich our community by the prudent and sound management of the public's money so that adequate financial resources are maintained to meet the City's long-term financial needs.
Proposed Program Outcome Measures Weighting
| 1. | The average yield of the City's investment portfolio meets the average yield of a Treasury Security with a similar average life. |
5 |
| 2. | A collection rate on Accounts Receivable equal to the average of the previous three (3) is achieved. | 5 |
| 3. |
Verify banking analysis bills received from the bank for compliance with the contract and submit list of billings corrections to the Bank within 30 days of receipt. |
3 |
| 4. |
Customer satisfaction rating for accounts receivable services is at 85%. |
4 |
| 5. | The budget/cost ratio is at 1.0. | 5 |
Compensation Management
This program provides payroll and compensation services. Key services include processing 26 payrolls annually based on data and information provided by the Human Resources Department, reporting payroll and compensation data to regulatory agencies, and fiscal analysis on compensation issues as required. Customers include the City Manager and Finance Director, City employees, and outside regulatory agencies. Customer requirements include timeliness, accuracy, and compliance with state and federal requirements.
Proposed Program Outcome Statement
Provide accurate and timely payroll services and compensation management in support of City operations.
Proposed Program Outcome Measures Weighting
| 1. | A customer satisfaction rating of 95% relative to payroll services is achieved. | 4 |
| 2. |
Payroll checks/direct deposit statements are made available to employees by the close of business day on scheduled paydays. |
5 |
| 3. | Payroll errors are corrected by the following pay period 90% of the time. | 4 |
| 4. | Payroll disbursements are processed in accordance with all applicable regulatory requirements 95% of the time. | 5 |
| 5. |
Compensation based analyses, and primary options for City for City response, are generated within 30 days of receipt. |
4 |
| 6. |
The budget/cost ratio is 1.0. |
4 |
Detailed worksheets will be prepared for each outcome measure, describing how actual results achieved will be determined, and how and where data will be collected. Traditionally, the City Council reviews the proposed programs twice during the restructuring process. Restructured programs are first presented to describe the program outcome statements, outcome measures, and proposed weighting for the measures, and to collect Council feedback. The proposed restructured programs, with any revisions as required, are then presented at a following City Council meeting for final review and approval. The City Council has approved a recommendation by City staff to consolidate this approach into review and approval at one City Council meeting. City staff is using this consolidated approach for these restructured programs.
FISCAL IMPACT
The proposed program restructures will be reflected in the final approved FY 2002/2003 and 2003/2004 operating budget.
PUBLIC CONTACT
Public contact was made through posting of the Council agenda in public places, on the City’s web page, and the publication of the general business/public hearing items in the San Jose Mercury News.
ALTERNATIVES
RECOMMENDATION
City staff recommends Alternative #1 as described above.
Prepared by:
Charles J. Schwabe
Deputy City Manager
Prepared by:
Mary Bradley
Director, Finance Department
Approved by:
Robert S. LaSala
City Manager
Attachments
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