Planning Beyond Your Next Budget to Assure Long Term Viability & Avoid Deficit Spending

1. Planning Beyond Your Next Budget to Assure Long Term Viability & Avoid Deficit Spending Webinar Presentation by: Dave Boerger – SEMCOG Rob Maleszyk – Warren Gerry McCallum – Orchard Lake Buzz Brown – SEMCOG/Munetrix March 12, 2013

2. Agenda • Introductions & Overview – Dave Boerger, SEMCOG • Long Term Planning/Multi-year Budgeting - Dave Boerger • Best Practices & Case Studies: • Rob Malesczk – Controller – Warren • Gerry McCallum Director of City Services – Orchard Lake • Tools and Techniques – Buzz Brown – SEMCOG/Munetrix • Q&A/Wrap-up - Dave Boerger

3. Webinar Logistics • To ensure an audio connection to the Webinar, registrants should call-in using the phone number and access code below. • Call-in number: 1-408-600-3600 • Access code: 664 035 638 • For questions, type into the text or chat boxes on the lower right hand side of your screen. Each will be answered at the end of the webinar • For technical help, call Buzz Brown at 248-217-7979

4. Webinar Logistics(cont’d) Copies of this presentation will be emailed after the Webinar Use the embedded hyperlinks to access on-line information Please compete a webinar evaluation that will be emailed with the presentation The webinar will be archived on the SEMCOG website at this link, which will be emailed with the evaluation.

5. Who Is SEMCOG? 160 Member Local Governments7 Counties = 50% of Michigan’s Population Assist local governments deal with issues Plan for common needs Recognize regional opportunities. Facilitate cooperation among local governments for mutual benefit. Advocate for changes in public policy

6. Programs and Services

7. Local Government Revenues are dropping faster than costs

8. Fiscal Best Practices • Lead, engage & communicate openly with stakeholders • Consent on fiscal & operational assumptions & targets • Have a long range financial plan/multi-year budget • Measure performance, compare to others and set goals • Publish/update your fiscal data on-line

9. Fiscal Best Practices (cont’d) • Reduce expenses and address unfunded legacy costs • Collaborate with neighboring communities • Develop contingency plans & alternative scenarios • Regularly report fiscal results/keep stakeholders updated • Recognize successes and address issues in a timely manner

10. Taxable Value Trends and Forecast • The average local government in • SE Michigan will experience a 26% drop • in Taxable Values from the peak before bottoming out in 2014 with a • small increase projected for 2015

11. Tax Revenue Decline- % of Communities by Region

12. Metro-Area Home Price Indices Source: S&P Case-Shiller

13. CoStar Commercial Repeat-Sales Indices Q4 2012 Source: CoStar Group

14. Yearly Percent Change in SEV and Taxable Value; with Preliminary Forecasts, 2013-2015Southeast Michigan Source: SEMCOG

15. Fiscal Distress Recovery

16. Creating a Long Range Financial Plan/Multi-Year Budget • Engage & communicate openly with stakeholders • Consent on assumptions & targets, esp. revenues • Variance against current budget & YTD actuals • Perform a comparable community gap analysis • Include a long range capital improvement plan

17. Creating a Long Range Financial Plan/Multi-Year Budget (cont’d) • Integrate performance goals & metrics • Ideally integrate into a multi-year budget • Link plan to Dashboard/Citizens Guide • Establish targeted action plans w/ dates & resp. • Develop contingency plans & alternative scenarios

18. Creating a Long Range Financial Plan/Multi-Year Budget (cont’d) • Implement stringent cost control measures • Regularly report results to plan/budget • Amend plan/budget as needed • Recognize accomplishments/address issues • Involve stakeholders continuously • Establish targeted action plans w/ dates & resp.

19. Best Practices & Case Studies:Rob MaleszykController - Warren

20. Budget Planning Goals • Model known scenarios into Munetrix – 3 years • Verify how current assumptions impacted Fiscal Health using state indicator factors & KPIs • Conduct “what-if” budget assumptions into the system to see what impacts they had • Engage City Council to clearly show the impact their decisions or “no-decisions” would have.

22. Warren’s Budget History & Forecast

23. Budget Planning Outcomes • Clearly showed that expense reductions alone would not get us to where we needed. • 2 Millage increases were needed and City Council was armed with the data to show the need • City council voted to pursue the millage initiatives • The Public supported the increases since they desired the levels of service and had the data necessary to make an informed decision.

24. Budget Planning Next Steps • No time to rest – now the new PPT impacts need to be modeled into the system to update City Council and our Customers (residents) what will happen when we lose those tax revenues. • This changes the complexity of what we, “Thought we knew” from last year’s workshops. • We will have the necessary data to “Tell or sell our story” to residents, employees, labor unions, investors or state legislators.

25. Live DEMOModeling PPT Impacts

26. Best Practices & Case Studies:Gerry McCallumDirector of City Services – Orchard Lake

27. Multi-Year Budgeting http://www.gfoa.org/index.php?option=com_content&task=view&id=1279&Itemid=566

28. Orchard Lake Multi-Year Budget Process • Finance Committee develops assumptions • Council approves assumptions • Assumptions used to generate multi-year budget • Public hearing on proposed budget • Council approves multi-year budget • Staff reports on progress to budget quarterly • Staff recommends and Council approves amendments as needed

29. Assumption Setting

30. Auto-generation of Various Scenarios/Alt. Plans

31. Auto-generation of Multi-Year Budget

32. Auto-generation of F65 Data & Munetrix Upload

33. Live DEMO Modeling Orchard Lake Assumptions

34. Wrap-up & Final ThoughtsDave Boerger • Communities can be proactive in avoiding deficit spending by planning ahead with long range financial plans or multi-year budgets • Use your Citizen’s Guide and Dashboard to promote Economic Development by showcasing a vibrant, fiscally responsible organization to potential investors. Leverage your schools as well. • Leverage SEMCOG & Munetrix on-line resources or Solicit Help from SEMCOG’s consulting team at no cost to member local governments

35. Sampling of Our Services • Shared service assistance • Privatization help • Court consolidation • Department consolidation • Munetrix fiscal information • AgileGov searchable database • Millage vote readiness assessment • Webinar training on timely topics • Citizen Guide/Dashboard development • Citizen surveys w/ Cobalt • Comparable benchmark analysis • Budget assistance • Performance measurement • Fiscal assessment process • Energy efficiencies • Presentation to elected officials/staff • Taxable value forecasts • Financial plan development

36. Q&AWebinar Evaluation • Type your questions into the text box on the right hand side of your screen • Complete and return a webinar evaluation that will be emailed along with this presentation shortly after the webinar • The webinar will be archived on the SEMCOG website at this link within the week

37. For additional information or assistance, contact: Dave Boerger, SEMCOG 248-875-7120 boerger@semcog.org www.semcog.org Buzz Brown, Munetrix 248-217-7979 buzz@munetrix.com www.munetrix.com