Multi-Year Financial Plan
Fiscal Improvement Plan – Narrative
Fiscal Years 2010/2011-2013/2014
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General Fund Goals:
1) Reduce negative fund balance.
Local Actions:
a) Effective
Budgeting – Per the OSC report dated March 2007,
the “Council aggressively estimated revenues and used overly optimistic
expenditure projections in adopting its budget.” The City of Olean has
made it a priority to remedy this problem. While preparing the 2009/2010
budget, a historical estimation process was used. To estimate revenues
and expenses, we analyzed a straight average of the prior five years, a
weighted average of the past three years, and also took into
consideration any known changes, such as contractual obligations. Also,
due to the outstanding deficit financing, the NYS Comptroller has
reviewed the 2008/09 and 2009/10 budget, and made recommendations on
improvements. The City had to either accept these recommendations, and
modify the budget before adoption, or write a response as to why these
changes where not instituted.
Performance Measures: The City’s goal for each
budget is to expend the exactly the same amount of revenue derived
during the year. We have exceeded our expectations for the past two
years, and the City expects to have unreserved, unappropriated fund
balance1 in all three major funds for the first time in over five years.
By the end of the 2013/2014 budget year, we would like to have
unreserved fund balance, equivalent to 5% of operating expenditures, in
accordance with the City’s Fund Balance Policy. (This does not take into
account the liability derived from the Deficit Financing.)
b) Timely Reporting – Per the OSC report dated
March 2007, “the City Auditor did not maintain timely, sufficient, and
accurate accounting records or provide the Council with periodic
budgetary and cash flow reports.” The OSC report also states “the last
audit report prepared by the City’s independent public accountants was
for the fiscal year ended May 31, 2004, which was issued more than 600
days beyond the fiscal year end.” Since this time, the City Auditor
resigned, and a new Auditor has taken his place. The Council has
received monthly reports for each month since the new Auditor took
office. Also, since the time of OSC report, the City’s independent
public accountants have issued the May 31, 2005; May 31, 2006; May 31,
2007; and May 31, 2008 reports. Work is currently begun on the May 31,
2009 report. By giving the Council timely and necessary information, we
anticipate this will assist us in creating and maintaining a fiscally
sound budget, as well as fulfilling the fiduciary duty of the Council to
oversee the fiscal operations of the City.
Performance Measures: To achieve success in this
local action, the Council will have monthly reports from the City
Auditor no later than 30 days after the end of each month. An annual
audited report, prepared by the City’s independent public accountants,
will be issued no later then six months after the end of each fiscal
year. Also, any additional reporting required will be filed within given
time constraints.
c) Deficit Financing – Once the magnitude of the
finances of the City of Olean were uncovered, it was clear that the City
could not meet current or future cash needs due to the negative fund
balance. The Council agreed to go to the State to ask for special "Home
Rule" Legislation to allow the City to borrow up to $4.3M over ten years
to cover the deficit in the General, Water, and Sewer, and Capital
Funds. The City issued Bond Anticipation Notes in September 2007. Once
the City transfers the debt to Bonds, the "revenue" derived will
eliminate the negative fund balance in all four funds on the fund
financial statements. However, on the Consolidated financial statements,
the City will still show the liability. The City will include the
interest and principle payment into the budget for the next 9 years.
Performance Measures: With each principle payment,
the City will effectively be paying off a portion of the deficit. The
outstanding balance of the BAN or Bonds will be the remaining portion of
the deficit to be repaid. By September 2017, the deficit financing must
be paid off, and the negative fund balance and associated liability will
be eliminated.
2) Expand shared services.
Local Actions:
a) Renegotiate School Resource Officer Program with School System –
The City currently has a contract with the Olean
Schools to provide an officer to the school. The School reimburses the
City 65% of the cost of the officer’s salary and benefits. This contract
is due to expire on 7/1/09. Due to the budget crunch felt by the school
system, they have indicated they will not be able to pay their portion.
The City is in the middle of negotiating terms that are mutually
beneficial to the School and the City.
b) Continue / Expand sharing of Equipment – The
City of Olean, Cattaraugus County, and other neighboring communities
currently share equipment, and labor, so that no municipality is
required to rent or purchase pieces of equipment that may only be used
once or twice a year. For example, the City lends out the use of our Vac-Con,
and the laborers that know how to use it, in exchange for use equipment
we do not own. We intend to continue this arrangement, and strive to
expand whenever possible.
3) Level tax base throughout the City.
Local Actions:
a) Reassessment:
The City of Olean had not had an assessment of all
properties since 1961. This made our tax base bias. The City contracted
a firm to reevaluate all properties within the city. We will be using
these values for the 2010/2011 budget year. Although we do not
anticipate receiving any additional revenue from this process, we will
level the playing field, as all properties will be assessed to the same
standard. To keep the assessment up to date we anticipate receiving
grant funding of $5/property in fiscal year 2010/11 through 2014/15.
Performance Measures: Receive grant funding, and
keep assessments up to date.
4) Evaluate Buying Cycle of Equipment:
Local Actions:
a) Create Vehicle Repairs / Replacement Plan – The City currently
has several pieces of equipment well beyond their scheduled useful life.
It is expensive to repair this equipment, and even more costly to
replace it. The City plans to create a policy to dictate whether a piece
of equipment should be repaired, or if the cost outweighs the benefit,
and the repair cost should be saved and put toward replacing the vehicle
or equipment.
Performance Measure: The City will institute and
follow this policy by the end of fiscal year 2010.
b) Mass Purchasing: The City currently makes
purchases without input or discussion with other local municipalities.
If we could work together, and purchase in greater quantities, we may be
able to reduce costs for all involved.
Performance Measure: The Mayor or Council Members
will reach out to other local municipalities by the end of fiscal year
2010 to see if a centralized purchasing could be instituted.
5) Create Capital Plan
Local Actions:
a) Collaboration to
create Capital Plan: The City had started the
process of creating a Capital Plan in 2004, however, with the lack of
funding, and the unwillingness to raise funds through borrowing or
taxing, the plan was quickly forgotten. On page 21 of report 2007M-6,
the OSC report states, “Capital planning is an essential and fundamental
component of a local government’s budgetary process.” This report and
each subsequent report has indicated the City’s lack of a plan.
Performance Measure: Council Members, Department
Heads, and the Mayor will collaborate to complete the plan by the end of
Fiscal Year 2010. This completed plan will include projects to be
completed, timelines for completion, estimated funds necessary for the
projects, and identify funding sources for the project.
Water and Sewer Funds Goals:
1) Increase efficiency of Water and Sewer Meters.
Local Actions:
a) Replace
Water/Sewer Meters: The City of Olean had a
Comprehensive Energy Audit prepared to identify projects the City could
undertake to improve efficiencies and reduce costs. The audit identified
several areas where the City could become more efficient, one area that
we have discussed at length is the replacement of water/sewer meters.
Currently, many of our meters are old, with corrosion on the inside that
causes them to “run slow”, and therefore, under estimates water usage.
We have started to replace these meters with new electronic read meters.
In addition to a more accurate read on usage, these meters will transmit
readings directly to our Water/Sewer Department, and therefore eliminate
the need to have a worker go to the homes to do individual readings. We
will increase our revenues, because the usage will go up with the new
meters. We will also reduce the manpower needed each month to read
meters.
Performance Measures: If the Council agrees to
move forward with the project, we would like to have all the new meters
installed during the by the end of summer 2009. This project will cost
approximately $3,200,000, but the anticipated increased revenue will be
approximately $650,000/year. The increased revenue will pay for the
meters over the course of the following 5 years.
1: 2008/2009 audit is not complete, and year-end adjustments have not yet been made. Any figures for the 2008/09 year are based on the third quarter projections made at 2/28/09. Expected completion date of audit is 11/1/08. Any statements regarding 2008/2009 figures are unaudited and unadjusted.