LEGISLATIVE, FINANCE AND ADMINISTRATION COMMITTEE

The Legislative, Finance, and Administration Committee meeting was held on January 28, 2008 at 6:02 p.m. with Chairman Slavin presiding. Members present were Mr. McGlumphy, Mr. Salters, Dr. Jones, and Mr. Shevock. Other members of Council present were Mr. Leary, Mrs. Russell, Mr. McGiffin, Mr. Ruane, and Council President Williams.

AGENDA ADDITIONS/DELETIONS

Mr. Salters moved for approval of the agenda, seconded by Mr. McGlumphy and unanimously carried.

Results and Recommendations from Request for Proposals - Pay for Performance Consultant

Members were advised that the PFP sub-committee (consisting of Councilmen McGlumphy and Salters, City Manager, Mr. DePrima, and Human Resources Director, Mr. Szyjka) interviewed those consultants who submitted proposals for the Review and Evaluation of the Pay for Performance (PFP) Evaluation System. As a result, it was determined that the Management Advisory Group was the most qualified to complete the outlined evaluation of the PFP System, at a cost of $34,965, and that the final report be submitted by March 31, 2008.

Members were provided with the proposal submitted by the Management Advisory Group. Mr. DePrima reminded members that although the costs for this review and evaluation was not budgeted for, it was supported by City Council during the budget hearings. The funds for the review and evaluation would come from savings gained by reducing the PFP increases recommended by the City Manager. The final adjustments would be completed as part of the Mid-year Review.

Staff recommended approval to hire Management Advisory Group, at a cost of $34,965, to conduct a Review and Evaluation of the PFP Evaluation System.

Noting that there is no funding source for this expense and concerns regarding the economy, as well as the hiring of an outside firm, Mr. McGlumphy relayed reluctance in supporting this request at this time. He suggested that this request be tabled until there is a better understanding of funding availability due to revenue projections. He was also recently advised that the State of Delaware has resources for setting of salaries, explaining the understanding that the proposal is inclusive of other evaluations. He requested that members of Council be provided with copies of these reports, as follows: 1) “Delaware 2014 Occupation and Industry Projections”; 2) “Delaware Wages 2006 Report”; and 3) “Delaware Annual Economic Report 2006".

Concurring, Mr. DePrima suggested that this request be considered during the mid-year review, feeling that staff may have the ability to identify a source for funding. He advised members that the only drawback would be that the review and evaluation would not be accomplished in time for this year’s evaluation period.

Mr. Salters noted that there is an expected savings of funds that will be realized as a result of the review and evaluation and suggested that members move forward with the request at this time.

Mr. McGlumphy moved to recommend tabling the request to hire Management Advisory Group to conduct a Review and Evaluation of the PFP Evaluation System until the Mid-Year Review, seconded by Dr. Jones and carried with Mr. Salters voting no.

Revenue Forecast Model - FY 2009

Mrs. Tieman, Senior City Administrator, presented and reviewed the Fiscal Year 2009 Revenue Forecasting Model Projections, as well as a comparison of the forecast model projections to the latest projections of Department Heads and the Finance Director (Expert Forecast). She explained that the Fiscal Year 2009 Forecasting Model Projections are performed using regression analysis and trend forecasting. For most projections, regression equations have been estimated using ten years of available data. The number of years is less where data are not available.

Mrs. Tieman advised members that forecasting should be used in conjunction with expert opinions when developing revenue projections for budgets. The forecasting model uses several variables, including Kent County Population, US Housing Starts, US Gross Domestic Product, Kent County Civilian Labor Force, US Unemployment, and Construction Values for Dover. Data for these variables is obtained from the Delaware Population Consortium and the Livingston Survey used by the Philadelphia Federal Reserve. She noted that the forecasting file consists of 25 spreadsheets and that the first spreadsheet includes key variables used to forecast revenues. The second spreadsheet computes the forecasts for construction values from three (3) different equations and requires a manual entry for the actual prediction. Construction is the key variable to many of the forecast projections. The next 22 sheets compute forecast values for 22 revenue items including one (1) for total General Fund revenue. The general revenue forecast is a separate forecast, not the sum of the 20 other forecasts; therefore, the general revenue forecast may be different from the forecast obtained by adding the forecasts of the component revenue sources.

Mrs. Tieman indicated that for eight (8) revenue categories, the previous fiscal year revenue is required (for FY 2009, the latest FY 2008 revenue estimate is used). The eight (8) revenue categories are:

                        - Business Licenses                            - Rental Dwelling Permits

                        - Trash Revenue                                 - Property Taxes

                        - Water Fees                                       - Sewer Fees

                        - Fuel/Waste-Water Adjust                - General Fund Total Revenue

Mrs. Tieman noted that for several other revenue categories, there was no statistical basis to choose among two (2) or more estimating equations. In these cases, two (2) or more estimates appear on the respective forecast sheet. Over time, one (1) estimate may prove to be superior to the other(s). The items with two (2) or more forecasts are:

                        - Recreation Revenue                         - Penalties – Taxes

                        - Rental Dwelling Permits                  - Chancery Court Fees

                        - Trash Revenue                                 - Water Fees

                        - Trash Fee Rebate                             - Sewer Fees

                        - Property Taxes                                 - Fuel/Waste-Water Adjust

There was no further action taken on this matter.

Mr. Slavin advised members that he has scheduled Special Committee Meetings to be held on the first Monday of each month to be dedicated to the 2005 Charter Review Committee Recommendations until its completion. He noted that the next committee meeting will be held on February 4, 2008 at 4:30 p.m. for the discussion of the 1988 Consent Decree with the City Solicitor.

Mr. Shevock moved for adjournment, seconded by Mr. McGlumphy and unanimously carried.

Meeting Adjourned at 6:28 P.M.

                                                                                    Respectfully submitted,

                                                                                    Timothy A. Slavin

                                                                                    Chairman

TAS/TM/jg

S:ClerksOfficeAgendas&MinutesCommittee-Minutes20081-28-2008 LF&A.wpd