ACMA Summer Conference Innovative Strategies for Service Delivery

1. ACMA Summer ConferenceInnovative Strategies for Service Delivery Michael Townsend, Deputy County Manager/CFO, Coconino County Andrew Bertelsen, Budget Manager, Coconino County

2. What Are the County’s Critical Financial Challenges? • Our Reality - Revenues Are Capped • Property Taxes (Proposition 101) • Sales Taxes (Legislative Allocation) • Workforce Issues Impacting Program Costs and Service Delivery • High Vacancy & Turnover Rates • Costs are Significant • Compensation is Not Competitive • Shrinking Labor Pool • Higher Cost of Living

3. Steps to Securing the County’s Financial Future • Develop and Utilize a Ten-Year Financial Plan that Includes a Revenue & Expenditure Planning • Previously Used a Five-Year Forecast • Align Expenditures with Revenue Types • Process Previously Driven by Expenditures Only • Match Characteristics of Sources and Uses “Annual Budgeting is not Financial Planning”

4. Steps to Securing the County’s Financial Future • Manage & Control Expenditures • Revenues are Largely Beyond County Control • Anticipate Long-Term Consequences • Institute a Competitive Pay Plan • Retains Our #1 Asset – Our People

5. Budgeting vs. Financial Planning • Budgeting is Annual, Short-Term • Planning is Long-Term • Budgeting is Reactive • Planning is Strategic • Short-Term Budgeting Increases Risk • Long-Term Planning Reduces Risk

6. Revenue Projections Revenue Growth Assumptions: • Long-Term: Actual Revenue Growth Trend • Short-Term: Recession Revenue Growth Trend • Previously Long & Short-Term Were the Same • New Technique: Higher Confidence of Attainability

8. Aligning and Allocating Focus On: • Aligning Expenditures to Available Revenues • Types and Sources (Risk Correlation) • Base On-Going vs. One-Time • Prioritize Key Expenditures Areas -- County-Wide Mission Critical Areas • Personnel • Operational Infrastructure Quality Service Requires Quality People

9. MANDATES Wages & Benefits Core Operations Other (one-time) R&R (IT & Facilities) Small FMP & CIP Operations (one-time) CIP & FMP funding LEGALLY REQUIRED Recurring Base Growth Recurring Base Growth Incremental Growth and One-Time Revenues Temporary Revenues Budget Prioritization &Alignment with Revenue Types

11. Apply Revenue Projection Approach to All Funds • Approach Would be Applied to All Funds • Revenue Growth %’s Would Differ, but • Apply Same Process Recession and Long-term Growth, plus • Aligning Expenditures with Revenue Type and Amounts • Prioritize Expenditures:

12. Potential Revenue Generation Options • Secondary Property Taxes • General Obligation Bonds • Major Capital Projects • Voter Approval Required • Special Sales Taxes • Open Space and Parks • Bed Tax -- Not Currently Available • Would Require Legislation

13. Non-local Revenues(Not Subject to Expenditure Limitation) • Non-Local Revenues Are: • State and Federal Grants • Investment Revenues • Bond Proceeds

14. Budget Process Changes • Focus on Mission Critical Areas • Personnel • Operational Infrastructure • Focus on Core Departmental Services • Sustaining Core Services • Expanded or New Programs Need Either • New Revenues (long-term) OR • Re-Allocated Existing Funding

15. Financial Planning During the Budget Process • Consistent Performance Measurement reporting • Accountability system for prior year increments • 10-Year Financial Planning Process • Aligning Expenditures with Revenues by type

16. Summary • Long-term Financial Planning Versus Short-Term Budget • Align Expenditures and Revenues by Type • Increase Forecast Confidence • Reduce Future Risks • Facilitate Better Decisions Making