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HomeMy WebLinkAboutItem 2b - Citizen's Financial Advisory Committee DATE: February 20, 2018 TO: Honorable Mayor and City Council FROM: Dominic Lazzaretto, City Manager By: Michael Bruckner, Assistant to the City Manager SUBJECT: RESOLUTION NO. 7202 ESTABLISHING A CITIZEN’S FINANCIAL ADVISORY COMMITTEE Recommendation: Adopt SUMMARY At the December 5, 2017, City Council meeting, the City Council requested that the City Manager bring forward a discussion item to review and discuss the creation of an Ad Hoc Citizens’ Committee regarding the City’s long-term financial outlook Information was provided to the City Council at the February 6, 2018, City Council meeting, and, following discussion, staff was directed to prepare a Resolution establishing a Citizen’s Financial Advisory Committee to review the City’s long-range financial forecast and provide recommendations to the City Council for revenue enhancements and cost containment. Therefore, it is recommended that the City Council adopt Resolution No. 7202 establishing a Citizen’s Financial Advisory Committee. DISCUSSION Like most jurisdictions in California, the City of Arcadia is facing increasing fiscal stress due to recent policy changes from CalPERS (“PERS”). In addition to recent efforts to explore revenue enhancements, the City Council has requested that a Citizen’s Financial Advisory Committee be created to explore alternatives regarding the City’s long-term financial outlook. The Resolution outlines the parameters within which the Commission is to function. Specifically, the Resolution states: 1. The Committee shall be comprised of a minimum of five (5) or a maximum of seven (7) Arcadia residents selected at-large; 2. The Committee shall be chartered with reviewing the City’s long-range financial forecast and providing recommendations to the City Council for revenue enhancements and cost containment. Resolution No. 7202 Establishing a Financial Advisory Committee February 20, 2018 Page 2 of 2 3. The Committee shall select a Chairperson and Vice-Chairperson from among its membership; 4. The Committee shall meet for a period of no longer than six (6) months and may conclude its work earlier following a majority vote of the Committee. A final report shall be submitted to the City Council within sixty (60) days of the final meeting of the Committee. Upon conclusion of the sixty (60) day period, the Committee’s term shall expire and the Committee shall no longer be in effect. 5. The City Manager, or his designee, shall assist the Committee and provide background information to the Committee, including input regarding municipal, finance, fund accounting, revenues and expenditures, service delivery, legal limitations, and other related issues. Upon adoption of the Resolution, the City will advertise that is seeking qualified candidates to serve on the Committee. The application period will likely be open for a period of 6 to 8 weeks but may close once a sufficient number of qualified candidates have applied. The nomination process will follow the same guidelines as City Council appointments to the Planning Commission, including an interview by the City Council. Prospective candidates should have experience in finance but it is not necessarily required. FISCAL IMPACT The costs associated with the formation of the Citizen’s Financial Advisory Committee include staff time, supplies, and materials. Depending on when the Committee is able to meet, additional costs for meals may be required. The total costs are expected to be minimal (estimated at $2,500) and there is sufficient funding available in the City Council’s FY 2017-18 operating budget to absorb these costs. RECOMMENDATION It is recommended that the City Council adopt Resolution No. 7202 establishing a Citizen’s Financial Advisory Committee. Attachments: Resolution No. 7202 February 6, 2018, City Council Staff Report DATE: February 6, 2018 TO: Honorable Mayor and City Council FROM: Dominic Lazzaretto, City Manager By: Michael Bruckner, Assistant to the City Manager SUBJECT: DISCUSSION AND DIRECTION REGARDING THE CREATION OF AN AD HOC CITIZENS’ COMMITTEE TO REVIEW THE CITY’S LONG- TERM FINANCIAL OUTLOOK Recommendation: Provide Direction on a Resolution SUMMARY At the December 5, 2017, City Council meeting, Council Member Verlato requested that the City Manager provide a discussion item at an upcoming City Council meeting to review and discuss the creation of an Ad Hoc Citizens’ Committee regarding City long-term financial outlook. This request was concurred by Mayor Amundson and Council Member Beck. Like most jurisdictions in California, the City of Arcadia is facing increasing fiscal stress due to recent policy changes from CalPERS (“PERS”). In addition to recent efforts to explore revenue enhancements, the City Council has requested that an Ad Hoc Citizens’ Committee be created to explore alternatives regarding the City’s long-term financial outlook. Therefore, it is recommended that the City Council provide direction on a Resolution to create and define the nature, scope of work, composition, deliverables, and staff support for an Ad Hoc Citizen’s Committee. Specifically, it is recommended that: 1. The Committee be comprised of five (5) Arcadia residents selected at-large; 2. The nomination process should follow the same guidelines as City Council appointments to the Planning Commission, including an interview by the City Council; 3. Candidates should have experience in finance but it is not necessarily required; Ad Hoc Citizens’ Committee on Finances February 6, 2018 Page 2 of 5 4. The Committee shall have a six (6) month mandate, meeting about twice per month for four months, then developing and providing the City Council with a summary of findings and conclusions within 60 days of its final meeting; and, 5. The Committee shall be chartered with reviewing the City’s long-range financial forecast and provide recommendations to the City Council for revenue enhancements and cost containment. BACKGROUND Over the years, City of Arcadia has taken several steps to manage costs without sacrificing the quality of services. On August 4, 1998, the City Council, by Resolution, created a Citizen’s Financial Advisory Committee, whose charter was to provide input on: 1. The City’s current financial policies; 2. Reserve funds, included purpose and balances; 3. The City’s investment policy; and 4. The cost allocation program. The Committee was not to make recommendations on policy issues or seek public input on programs, policies, and procedures that are within the power of the City Council. Any changes to the adopted scope of work required the approval of the City Council. Further, the Committee was required to provide a report to the City Council summarizing their activities, recommendations, and supporting conclusions. The report was to be submitted to the City Council no later than ninety (90) calendar days following the first meeting of the Committee. The Committee’s charter had a sunset provision terminating the Committee thirty (30) days after submittal of the final report. The Mayor, or his designee, served as an ex-officio member of the Committee, and the City Manager, along with staff he assigned, served on the Committee as ex-officio members as well. The Committee was compromised of five (5) members from the community. The final report was delivered to the City Council November 9, 1998, and contained various recommendations, most of which were adopted by the City Council. In addition to the Citizen’s Financial Advisory Committee, the City has also taken several steps to control costs, including pension and benefit reforms in 2011, budgetary adjustments, competitive bidding practices, and efficiencies through innovation over time. Even with these practical and ongoing approaches to effective municipal management, the long-term fiscal outlook for the City is daunting. Due to recent policy changes from PERS, the City is facing a $2 million per year increase in payments to PERS beginning in FY 2018-19 and continuing through at least FY 2024-25. As a result of these increases, the City is faced with two options: 1) Reduce services and expenses Ad Hoc Citizens’ Committee on Finances February 6, 2018 Page 3 of 5 by an additional $2 million per year in order to offset increasing costs, and/or 2) Seek additional revenue enhancements. Given the scale of the cost impacts to the City, the City Council has recommended that revenue enhancement through a voter approved sales tax measure be presented to Arcadia voters at the upcoming general election in April 2020. In addition, at its meeting on December 5, 2017, the City Council requested that the City Manager return with a discussion item to create an Ad Hoc Citizens’ Committee to review and make recommendations regarding the City’s long-term financial outlook. An Ad Hoc Committee is generally understood to be an independent committee of citizens formed by the City Council to investigate a specific and important governmental issue. Members of the Committee are typically selected based on their expertise or special knowledge of the subject matter, or because they are stakeholders in the outcome. If the matter to be studied involves diversity of views, representatives of those different viewpoints are typically sought out. DISCUSSION An Ad Hoc Committee allows for the City Council to engage stakeholders in the process of becoming informed about an important issue, to benefit and learn from authoritative sources on the matter of interest, and, ultimately, to receive an independent and informed report, and/or recommendation, that can be used as the basis for developing local legislation, projects, programs, and services. As discussed above, the City Council has expressed an interest in using the Ad Hoc Committee process to engage the community in conversation regarding the City’s long-term financial outlook and to provide recommendations. In forming the Committee, the City Council may be very specific, assigning the Committee with specific tasks and asking for specific outcomes (e.g. a report or recommendation with a specified time frame). Alternatively, the City Council may outline the issues and concerns in broad detail but allow the Committee itself to determine its scope of work, work products, and schedule for completion. The City Council may take applications and make appointments the same way it handles other appointments to Boards and Committees or each Council Member could nominate members for consideration. The City Council could also choose to have equal representation from each district or appoint members to the Committee on an at-large basis. Members of the Committee should generally be Arcadia residents; however, the City Council may decide to include business owners and independent experts to participate in the process. The number of Committee-members empaneled is also a discussion point. Finally, the staff support of the Committee also needs to be specified. The Committee may operate entirely independent of City staff, perhaps only requesting staff to report on matters as requested, or the City Council could request that staff be assigned to provide administrative support and expertise to assist the Committee in its work. Further, as an Ad Hoc Citizens’ Committee on Finances February 6, 2018 Page 4 of 5 ad hoc legislative body created by the City Council, the Committee will not be subject to the noticing and public meeting requirements of the Ralph M. Brown Act; however, it is important to solicit broad public participation in the process. Given that it is not expected a tax measure would not be sought until the 2020 general municipal election, the City has more than two years to review all of its financial options. Forming an Ad Hoc citizens committee to assist in that process and would not interfere with normal operations in the City. Based on the available options, it is recommended that: 1. The Committee be comprised of five (5) Arcadia residents selected at-large. This is large enough to provide for a variety of viewpoints without becoming ungainly; 2. The nomination process should follow the same guidelines as City Council appointments to Boards & Commissions. Specifically, it would be recommended that the City Council use the same format that is used for Planning Commission appointments; meaning, a call for applications will be circulated and the City Council will have the option to interview candidates before making appointments; 3. Candidates should have experience in finance but it is not necessarily required; 4. The Committee shall have a six (6) month mandate. It is expected that the committee would meeting about twice per month for four (4) months, then developing and providing the City Council with a summary of findings and conclusions within 60 days of its final meeting; and, 5. The Committee shall be chartered with reviewing the City’s long-range financial forecast and provide recommendations to the City Council for revenue enhancements and cost containment. Key City staff, appointed at the discretion of and by the City Manager, would serve as advisory and ex-officio members of the Committee, providing background information and facilitation of the Committee. The Committee as suggested in the framework above would have broad authority to explore a wide range of City revenue alternatives and expense areas, including service levels and programming in the community. The Committee would not have any authority to adopt any changes or recommendations; that would be left to the City Council and City Manager to implement as they deem appropriate. It is not recommended that any City Council Members be appointed to the Committee, but this is certainly an option. If the City Council desires, up to two members may be chosen to participate. Ad Hoc Citizens’ Committee on Finances February 6, 2018 Page 5 of 5 FISCAL IMPACT The costs associated with the formation of an Ad Hoc Citizens Committee include staff time, supplies, and materials. Depending on when the Committee is able to meet, additional costs for meals may be required. The overall mission and scope of work will dictate the overall costs; however, the total costs are expected to be minimal and there is sufficient funding available in the City Council’s FY 2017-18 operating budget to absorb these costs. RECOMMENDATION It is recommended the City Council provide direction on a Resolution to create and define the nature, scope of work, composition, deliverables, and staff support of an Ad Hoc Citizen’s Committee. It is further recommended that: 1. The Committee be comprised of five (5) Arcadia residents selected at-large; 2. The nomination process should follow the same guidelines as City Council appointments to the Planning Commission, including an interview by the City Council; 3. Candidates should have experience in finance but it is not necessarily required; 4. The Committee shall have a six (6) month mandate, meeting about twice per month for four (4) months, then developing and providing the City Council with a summary of findings and conclusions within 60 days of its final meeting; and, 5. The Committee shall be chartered with reviewing the City’s long-range financial forecast and provide recommendations to the City Council for revenue enhancements and cost containment.