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Fiscal Year 2013 Budget Discussion

Council Member Fimbres Questions Dated 3/9/12 with Staff Responses in Bold

Will the proposed budget have actual financial numbers and positions, rather than proposals for budgets and allocated number of employees? The FY 2013 Recommended Budget to be submitted to Mayor and Council on April 24 will include actual FY 2011 amounts; the FY 2012 adopted budget and estimated year-end expenditure amounts; and the recommended amount for FY 2013. The authorized number of FTEs will be included for each of the time periods. How many positions, of the 990 listed in the (March 6) memorandum, were vacated for this Fiscal Year through the retirement package offered effective December 31, 2011? The General Fund authorized staffing reduction experienced between FY 2009 and FY 2012 was 900. During calendar year 2012, there were 252 positions vacated through the Tucson Supplement Retirement System End of Service program; 127 positions of which were funded by the General Fund. How many of those positions will be refilled? Of the 127 positions within the General Fund noted above, 96 positions are recommended to be refilled and 31 positions are being deleted. What is the projected savings (salary/benefits) for the refilled positions? The annualized savings to the General Fund is $2.3 million on the 31 deleted positions. Since the amount for a 1% cost of the living adjustment for all City employees was given to be about $2.0 million, what would this be for those employees making $50,000 or less, $60,000 or less and $70,000 or less, be? Employee compensation is governed by the Tucson Code which requires that classifications be assigned to pay grades based on compensable factors. Across-the-board salary adjustments are allowed under the City compensation plan because each pay grade is adjusted to meet the fiscal requirements of the City. When only certain pay grades or certain positions within pay grades are affected by salary adjustments, the basis for compensation is undermined and the validity of the compensation plan is compromised. The relevant Tucson Code provisions are in TC 10-31(1). As a result, a 1% cost of living adjustment is being proposed for all City employees.

Can the review of potential outsourcing of some areas, such as financial management and IT, be explained further in detail, as well as whether the City had considered this in prior budgetary discussions. As noted in the March 6 staff PowerPoint presentation, financial management of investment of City revenues will be outsourced in order to improve security and maximize returns. This will result in the elimination of 1 authorized position in the Finance Department. The outsourcing of IT functions will be considered where it can provide greater efficiencies; these potentialities are still under review. Staff is continually looking at ways in which we can streamline our organization and still provide efficient and effective services to our citizens within our limited resources. Could the assigned fund balance be earmarked or put towards core services, such as road repair? Yes, Mayor and Council could direct that action. What has been the financial savings (cost/staff time) in the reduction of checks being written by the city departments? pCards are designed to save time and cost in the purchase of goods and services for lowvalue, high-volume transactions, thereby simplifying and shortening the purchasing process. Another bonus of using pCards is the elimination of paper being generated and routed through the various approval processes within the city. Using a pCard allows staff to be more productive in areas other than processing paperwork through the payment process. Due to all of these factors and the length of time that the pCard has been available for City usage, it is not feasible to calculate a financial savings. pCards actually create additional work for the Accounts Payable functions because of the different systems used for procurement and accounts payable. This issue would be resolved if procurement was added to the CGI suite of systems. What has been the usage for the City's P-Card program for FY 2012 in comparison with FY 2011 in terms of savings and rebates for the City? # Projected Actual Usage transactions Rebate Rebate FY '11 $25M 38,400 $150,000 $214,000 FY '12* $20.5M* 33,000* $190,000** $334,000**

*Data as of 3/11/12, projected use is $33M during FY 12. **The City projected receipt of $190,000 in total rebate for FY 12, but deposited the annual rebate check of $334,000 into the General Fund this past December. The pCard contract year runs October-November and the single annual rebate check is received within this timeframe.

What did the City take in financially, for other entities being on the P-Card contract? The amount of financial benefit to the City for other agencies utilizing the City's pCard contract is dependent on reaching a higher rebate percentage based on the aggregate activity of all agencies participating under this contract. Had the rebate been based on the City of Tucson pCard activity alone, the rebate received for last year would have been calculated at a rebate percentage of 1.15% instead of 1.17% (which was the higher percentage resulting from the aggregate of all participating agencies). The following is a listing of rebate percentages and rebates earned by the City for the last five years: Rebate Percentage Qualification Level based on payment made within 14 days plus total use by other cooperative agencies, including City of Tucson 0.98% 1.16% 1.16% 1.17% 1.17%

Contract Year Ending 2007 2008 2009 2010 2011

Aggregate Use $15.0M $31.8M $40.0M $43.3M $58.8M

Note: The contract with JPMorgan has recently been amended to include a potentially more lucrative rebate schedule; thereby allowing the City of Tucson to realize a rebate percentage of 1.28% minimum at our current rate of growth by the end of the current contract year, Nov. 2012. Hence, the more cooperative agencies joining the Citys consortium, the higher rebate potential the City will realize. What are the projections for the City's P-Card program for FY 2013? We are projecting $225,000 in rebate for FY 2013 - a conservative estimate because, again, we cannot project our partner agencies pCard utilization and it has somewhat decreased this past year as we suspect their overall spend has decreased. Also, as presented to Mayor and Council in an August 2011 Study Session, a 24-month program expansion is planned for transitioning all expenses under $5,000 to pCard (previously was all under $500). This expansion is anticipated to capture a minimum of $119,000 in additional rebate and 10,000 more payment transactions. How much is this a projected increased over FY 2012? As presented to Mayor and Council in August 2011, a conservative projection of an additional $35,000 in rebate between the fiscal years, $10M more in transitioned expenses, and another 10,000 transactions transitioned from conventional payment techniques. These 24-month projections were predicated on the addition of one FTE being devoted to Program expansion and that individual began work on December 5, 2011.

What is the usage of the P-Card by the departments? Is there a spreadsheet or statistics on this? The most recent spend/use statistics for the 2nd quarter of FY 2012 (October-December) and for Jan. 12 and Feb. 12 by department is attached separately (Excel worksheet file with 3 tabs). Are there potential refinancing of other bonds issued, that the Mayor and Council may consider in 2013 and if so, is there a projected savings for these? The Finance Department, in conjunction with the City's financial advisor, routinely analyzes General Obligation, Street & Highway, Water bonds and Certificates of Participation for potential refunding that result in debt service savings depending on market conditions and callable maturities. How much has the photo enforcement program generated financially for the City of Tucson? The dollar amount of photo citations issued between 7/1/2011 3/6/2012 is $1,378,817; the State receives $398,225 and the City receives $980,592. The vendor, American Traffic Solutions, is paid from the Citys portion. How much has cost recovery measures, such as the Pawn Shop Fee and the Impoundment fees of vehicles brought in for the City of Tucson? FY 2012 (July 1 February 29) $285,306 $682,534

FY 2010 Pawn Broker 2nd Hand Dealer Tax Impound Fee Began FY 2011 $1,576,910

FY 2011 $284,946 $1,375,944

How much has the City generated from their current vehicle impoundment program - in terms of the numbers of vehicles and fees collected? In Fiscal Year 2011, Tucson Police Department impounded 7,204 vehicles and took in $1.4 million. How much have the bus wraps for the Sun Tran buses brought in for revenue? As of March 2012, Sun Tran has signed contracts for a total of $177,675 in FY 2012. In addition to bus wrap revenue, this figure includes revenues from one contract for advertisement on the rear of the bus.

What have been the operations funding and the capital improvement funding for Sun Tran operations for the current FY and the previous FY? The operations funding for Sun Tran for FY 2011 was $52.3M and for FY 2012 (projected) is $55.8M. The capital improvement funding for Sun Tran for FY 2011 was $12.9M and for FY 2012 (projected) is $2.6M. These totals include all funding sources including the General Fund transfer. Can the reasoning for why Sun Van buses have a specific life span of four years, be explained in further detail? The standards for the useful life of Federal Transit Administration (FTA)-funded rolling stock are defined by the FTA and are based on size and duty (heavy-duty, medium, light duty, or other light duty vehicles). Based on this criteria (i.e., size and duty), Sun Van vehicles have been replaced using the standard of other light duty vehicles, which have a useful life of four years or 100,000 miles. Sun Van bus replacement purchases could be deferred. Deferring replacement will initially save capital costs but that savings will be offset somewhat with higher maintenance costs and increased vehicle down time. Every effort is made to optimize the impacts of engine and transmission failures on costs and ability to provide consistent (and ADA mandated) services to Sun Van clients. Per Sun Vans last bus replacement, the average age and mileage for the 27 vehicles that were disposed of was five years and 144,245 miles which has provided the best balance between capital costs, vehicle maintenance, and consistent reliability. Could the Sun Van buses be extended for two more years and if so, what is the potential savings? Deferring replacement will initially save capital costs but that savings will be offset somewhat with higher maintenance costs and increased vehicle down time. Keeping the vehicles for 2 additional years would increase operational costs by about $1.3 million in comparison to approximately $60,000 for the proposed one year extension. This is due to the possibility of having to replace expensive components (e.g., engines, transmissions) the longer replacement is delayed. Every effort is made to optimize the impacts of engine and transmission failures on costs and ability to provide consistent (and ADA mandated) services to Sun Van clients. Contracted vehicle maintenance (both fixed and variable rates) will increase significantly. There would also be the need for more upholstery repairs, alignments and belt replacements.

How long has the Sun Tran buses been extended for, in the way of a time frame? Per the Federal Transit Authority (FTA), the useful life is 12 years. Currently, out of 240 coaches, the extensions are: 1994 series 6 additional years beyond useful life (11 vehicles) 1996 series - 3 additional years beyond useful life (19 vehicles) 1997 series - 3 additional years beyond useful life (25 vehicles) How much do the City departments budget currently for consultants or consulting services, and how much have they proposed for Fiscal Year 2013? In the FY 2013 Recommended Budget, approximately $5.2 million will be proposed for consultants (object 212) with the majority being expended by the Water Department. General Fund: City Manager Human Resources Non-Departmental Tucson Fire Parks & Recreation Federal Funds: Housing & Community Development Other Funds: Tucson Water Fleet Services Mass Transit

65,830 40,000 23,610 8,000 24,170

5,000

4,364,780 18,550 642,840

How much was spent on vehicle (truck/auto) purchase in FY 2012 and is this being budgeted as well, for the upcoming Between July 1, 2011 and March 1, 2012 the following departments have purchased trucks: Environmental Services Tucson Water Utility General Services $ 657,283.56 $ 83,367.50 $ 4,849.30

For Recommended FY 2013, departments will be including the following budget amounts (with restricted General Fund, internal service and enterprise funds) for the purchase of vehicles: Police Department Fire Department General Services Environmental Services Tucson Water Utility $ 93,070 $ 54,000 $ 85,000 $ 5,157,000 $ 699,630

The institution of both vehicle and equipment replacement funding was noted in the March 6th Study Session FY 2013 Budget Update and Discussion powerpoint as a long-term budget strategy. This would address public safety vehicle replacements which are currently regarded as unmet capital needs.

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