Budgeting Minnesota Chiefs of Police Association C L

Budgeting Minnesota Chiefs of Police Association C. L. E. O. & Command Academy June 10, 2015 Chief Tim Fournier New Hope Police Department (763) 531 -5141 tfournier@ci. new-hope. mn. us

Overview n n n Purposes of budgeting Revenue sources Various types of budgets Steps in the budgeting process Budgeting guidelines A sample template

Definition: Budget A budget is a detailed plan for the acquisition and use of financial and other resources over a specified period of time. It represents a plan for the future expressed in formal quantitative terms

A budget it more than just numbers. . . It is a financial roadmap to the future It’s a plan expressed in financial terms

Budgeting is the process of allocating available resources among competing demands. …a reflection of values. Whose values?

Budget as a Tool: n n n Facilitates Communication Establishes Priorities Determines Programs and Their Contents Exercises Control of Operations Evaluates Performance

Why have budgets? n n n Legally required Accountability Evaluation Planning Information Conflict Resolution

“Fiduciary Responsibility” “Of or relating to holding something in trust for another” Key Feature: Expenditures must not exceed revenues

Specific Forms of Budgets n n n Line-Item Budget Performance Budget Program Budget Zero Based Budget Enterprise “Hybrid”

Line Item n n Each category of activity is documented and receives a funded amount Advantages: Simple to construct; Easy to compare one year to the next Disadvantages: Lines tend to perpetuate themselves from one year to the next Assumes that we begin with last year’s allocation

Performance Budget n n n Instead of focusing on programs…focuses on tasks or activities that staff performs Advantages: Does a good job of depicting unit costs ie. Cost per patrol mile Disadvantages: Emphasis upon quantity, not quality of activity; some things are difficult to measure.

Program Budget n n n Each service program is listed in the budget and then broken down further by listing budget allocations as is done in a line item budget Advantages: Focus is upon services; easy to show priorities Disadvantage: Stakeholders have ownership in programs…can cause conflict it they are unwilling to collaborate

Zero Based Budget n n n A process of budget development in which every program and activity must justify its existence and how it relates to the organization’s mission and goals…everything is on the table. Starting over from scratch. Advantages: Eliminates “We have always done it this way”; Forces innovation and efficiencies. Disadvantage: Very, very time consuming

Enterprise Budget Funds earmarked for a specific service provided by a municipality. Examples would include ambulance services, utility funds, liquor operations. Normally, the money collected is used to maintain that specific program.

In reality…. we use a combination of all these types of budgets. We use a “Hybrid” budget

Two general types of budgets n Annual Operating Budget n n 1 year (municipal) Capital Outlay Budget 5 year + n Tangible things n

Sources of Revenue Taxes (property) n Fees for Service - copies of reports, photos, videos - license related background checks n Fines n Intergovernmental Revenue Sharing n n Local Government Aid (LGA) State Peace Officer Aid Grants

n n n Timeline Fiscal Year (Municipal and State are different) A continual process Often created 6 months before it will begin and 18 months before it will finish

Process n Executive Development n Legislative Consideration (City Council) n Adoption n Execution

2016 Process/Executive n May 22: Bud Wage allocations complete; 5 year CIP updated n June 4: Budget kickoff meeting with city manager and department heads n June 13: Distribution of May financial reports

2016 Process/Legislative (Council) n June 15: Meet with City Council to review the legislative activity in the 2015 session; Request Council input of budget priorities and define 2016 program, projects and priorities. n Aug. 13: Preliminary budget to Council – Staff presents draft department requests n Sept. 7: Council adopts proposed budget and certifies property tax levy to County Auditor for 2016

2016 Process/Adoption n Nov. : County mails notices of proposed property taxes to the owner of each individual parcel of property. n Nov. : City publishes prior and holds hearings on proposed budget.

2016 Process/Execution n Dec/Jan: Hearings complete, Council officially executes adopted budget.

Nuts & Bolts. . . . time to make a budget

First things first…. n n What should we be doing? What are we doing? Should we be shedding services? Should we be adding services?

n n What are our values? What should be our priorities? What threats / opportunities will we be facing in the next year…in years to come? What will be the internal and external expectations?

n Review past expenditures by category Personnel n Commodities n Schools & Conferences n Contractual Services n

n Review expenditures by line Salaries - Regular n Salaries - OT n PERA n Health Insurance n In-service Training n Fuels n

Extrapolate n Are you where you are supposed to be? n Project expenditure to year end n Are there unusual circumstances? n What will you spend next year?

Scan the environment n n n What is happening with your region’s economic health? What is happening with your city’s/county’s economic health? What are the finance people providing as a guideline? What are the goals of the City Council? What will your needs be within the org?

Ask for input n n n From supervisors and line employees From your boss From finance people From other stakeholders (city divisions) Do your home work…what are other organizations in your area doing, asking for, addressing? “Windows of Opportunity”

Go to it. . . n Line Items in appropriate categories? n What don’t you have control over? n n Capital Outlay n Develop replacement schedules 5 -10 years out Life expectancy of equipment? n Justification sheets n Trade-in values n Consider other departments…build alliances n

Present it. . . n n n n Cover Letter Budget Summary ( by category) Line Item (by line) Line Item Notes Capital Outlay Justifications Capital Outlay Replacement Schedules

New Hope Police Department General Fund n Public Purpose: Provide a wide range of law enforcement services that include 911 response, emergency medical assistance, traffic enforcement, assistance in resolving community issues, criminal investigation, maintaining peace and order, crime prevention at various community services, and problem resolution. The functional programs include Response Services, K-9 Unit, Investigation, School Resource Officers, Drug Task Force officer, Community Services, Staff and Services (Records and Jail), SWAT Team members, Field Training Officer, Community Service Officers, and Administration.

Goals for the 2015 Budget n n n Continue providing effective and efficient services in all functional programs. Continue effective delivery of Community Service programs and operations that support those programs, including the creation of a full-time Crime Prevention Analyst position. Continue training less experienced officers, identify officers capable of increased responsibilities, and keep all staff current with new trends and developments. Continue working closely with the schools, addressing issues and maintaining safe educational environments. Continue to develop skills of command level positions and new first line supervisors. Begin utilization of a full-time traffic car for more targeted enforcement of traffic laws and inter-jurisdictional traffic projects providing for more widespread awareness of traffic issues. The position will also provide a positive data/revenue stream which will self-sustain the position and associated costs.

Line Item Notes Explains what each line item is / dollar increase or decrease / reason for decrease or increase / why additional or less funding is requested in the budget proposal

Line Item Notes Light Bar for Marked Squad (1) The life expectancy of emergency light bars that are mounted on the roof of a marked squad car are between seven and nine years. This light bar will replace one that will be 8 years old in 2012. This light bar will be the same as those that we replaced in 2011 it will be an LED light bar that means decreased maintenance, brighter light, and lower profile which decreases wind drag and should have a corresponding positive impact on gas mileage. 2011 Allocation: 2012 Request: $7, 960 $1, 695

Capital Outlays Capital Outlay by Category n prioritized 1 -3

Capital Outlay Notes…Explain the need Capital outlays are funded with revenues or certificates of indebtedness Notes explain why capital outlays are needed, whether the equipment is additional or replacement, what will happen to old equipment, EST tradein/auction values, etc.

Replacement Schedules n n What are the items you will be replacing? Balanced or spiked expenditures? Life expectancies? How far out?

A Special Fiscal Planning Tool Capital Improvement Plan (CIP) A CIP is your best guess as to major expenditures facing your department and the other municipal departments in years to come. It is not a budget…it is a long range capital expenditure plan.

Capital Outlay (CIP) for 2015 includes the following items: n Replacement of (17) squad mobile data terminals (MDC); $82, 000. n Replacement of (1) laser radar (LIDAR) unit; $3, 400. n Replacement of (2) squad radar units at end of life cycle and no warranty $4, 800. n n Overall, CIP costs are slightly higher but still below the five year average. An additional hand held laser radar unit for traffic car will be purchased using seized vehicle funds.

Other Concerns n n n n Packaging Forming of alliances Conditioning the environment Buy in Communicating Tracking expenditures Contingency

n n n Transfer of funds Spending of funds Spend it or lose it Building in a cushion? ? The audit What will get you into trouble?

Remember… n n n Budgeting is a continual process It’s your “best guess” “Full disclosure” It isn’t just the $6, 000 that you can’t account for that will get you in trouble…it’s the $600 or any amount…Follow procedures and document!!! The bottom line in any business, public or private, is fiscal Budget allocation is built upon trust

Don’t take this stuff too seriously…

Questions