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HomeMy WebLinkAbout1993 02-01 FCA(EEEFCA) AGENDA Brooklyn Center Financial Commission February 1, 1993 City Hall Council Chambers ✓1. Call to Order: 7:00 p.m. -/2. Roll Call. 3. Approval of Minutes: January 4, 1993. f4. Review of Financial Commission Terms. The listing of members and terms sent out with the January 4th Agenda contained one error. Commissioner Kelly's term does not expire until December 31, 1995. A corrected listing is attached. 5. Subcommittee Reports: a. Report of the Capital Spending Policy Subcommittee. (Commissioners Boran and Kelly.) b. Report of the City Council Salary Setting Policy Committee. (Commissioners Escher and Peppin.) • 6. Survey of Severance Policies for Laid Off'Employees. A survey of various cities' severance policies for laid off employees conducted by Geralyn Barone, Personnel Coordinator, is attached. 7. Description'of City Funds Report. At the January 4th meeting, the commission had requested a listing of the City's various Funds and their purposes. That description is attached. 8. Organizational Analysis. Attached is an article on "Benchmarking" as it pertains to the Commission's organizational analysis project. The City Manager will be unable to meet with the Commission this evening because of a special meeting of the City Council. He has asked that his report on organizational analysis be deferred until the Commission's March meeting. • 9. Adjournment: 9:00 p.m. 4► AC IT • MINUTES OF THE PROCEEDINGS OF THE FINANCIAL COMMISSION OF THE CITY OF BROOKLYN CENTER JANUARY 4, 1993 COUNCIL CHAMBERS CITY HALL CALL TO ORDER Chair Donn Escher called the meeting to order at 7:05 p.m. in the Brooklyn Center city hall council chambers. ROLL CALL Present at roll call were Chair Donn Escher, Commissioners Denis Kelly, Gregg Peppin, Vi Kanatz, Ron Christensen, and Pat Boran. Member Boyd was excused from this evening's meeting. Others present: City Manager Gerald Splinter, Finance Director Paul Holmhmd, and, for the latter portion of the meeting, Councilmember Rosene. APPROVAL OF MINUTES - NOVEMBER 9. 1992 There was a motion by Commissioner Kelly and seconded by Commissioner Kanatz to approve the minutes of the November 9, 1992, financial commission as submitted. The motion passed unanimously. TERMS OF COMMISSIONERS Chair Escher requested, and the Commissioners concurred, that the staff review the terms of the commission members, as it appears that a disproportionate number of them are coming up for reappointment in 1993. 1993 ADOPTED BUDGET Chair Escher reported on the city council approval of the 1993 budget at its December 10, 1992, meeting. He requested City Manager Splinter report on the 1993 budget details. City Manager Splinter stated the city council removed from the 1993 budget the parks department capital outlay item for a water tanker street flusher/tanker truck in the amount of $77,700. The council placed $75,000 of this amount in the contingency fund as per financial commission recommendations and placed the remaining $2,700 in city council's professional services budget. He reported the state local government sales tax trust fund will have an excess of revenue. In 1992 the City of Brooklyn Center will receive from that allotment approximately an additional $140,000. The city council allowed the one-time windfall of revenue to enter the 1992 budget, which will then automatically transfer into fund balance as of January 1, 1993, and it designated that amount of money as reserve for possible shortfalls in 1993 local government aids. ELECTION OF CHAIR/APPOINTMENT OF VICE-CHAIR Commissioner Kelly nominated Chair Escher as chair of the Financial Commission for 1993, 1-4-93 _1_ and Commissioner Christensen seconded. Chair Escher was elected chair of the financial commission by unanimous vote. Chair Escher appointed Commissioner Boran as vice-chair. ESTABLISHING 1993 PROJECT PRIORITIES Chair Escher asked the commission to discuss the 1993 project priorities. The city council has requested the financial commission look at the following items or areas: council salary setting policy; capital spending policy; use of the benchmarking concept in phase 11 organizational analysis; 1994 budget; and the severance benefits for laid off personnel policy. After discussion, the commission set up subcommittees for the projects. Commissioners Boran and Kelly will form a subcommittee to report back in February to the commission regarding a capital spending policy. Chair Escher and Commissioner Peppin were appointed as a subcommittee to report back in February on city council salary setting policies. The commission requested City Manager Splinter develop a pilot project within a department or function which could use the concept of benchmarking as being used as a tool in phase H of the commission's project of organizational analysis. Commissioners emphasized the need to choose a number of communities we could benchmark or compare ourselves with in a valid manner. The project should answer a number of questions, one of which is do we have too many layers of management, are there methods which we can measure productivity, compare number of employees, and account for the use of contracting for services. In the area of severance benef=its for laid off employees, the commission asked City Manager Splinter for a survey or review of other public unit and city practices in this area. They further requested a summary report of all the City funds and a description of them. MEETING SCHEDULE After discussion, it was agreed the commission would set a regular schedule of its meetings on the first Monday of each month with additional meetings being called as needed. ADJOURNMENT Chair Escher adjourned the meeting at 9 p.m. • 1-4-93 -2- BROOKLYN CENTER FINANCIAL COMMISSION Appointed 7-13-92 (previously Financial Task Force) Donn Escher, Chairperson Pat Boran 3107 65th Ave. N. 7001 Dallas Road Brooklyn Center, MN 55429 Brooklyn Center, MN 55430 561-4533 520-5048(w) 520-1534(fax) Term expires: 12/31/93 560-4805(h) Term expires: 12/31/95 Denis Kelly 7130 Fremont Ave. N. Brooklyn Center, MN 55430 296-3597(w) 296-4217 (fax) 561-1022(h) Term expires: 12/31/65 Ulyssess Boyd 4807 Azelia Ave. N. Brooklyn Center, MN 55429 537-3215 Term expires: 12/31/93 Viola (Vi) Kanatz 2901 O'Henry Road Brooklyn Center, MN 55430 561-3069 Term expires: 12/31/94 Send items to: Gregg Peppin 6824 Drew Ave. N. Brooklyn Center, MN 55429 296-2585(w) 296-3949(fax) 561-7934(h) Term expires: 12/31/94 Ron Christensen 6101 June Ave. N. Brooklyn Center, MN 55429 533-1930 Term exl)ires: 12/31/93 Council Liaison Dave Rosene City Manager Gerald Splinter Director of Finance Paul Holmlund Assistant Director of Finance Charlie Hansen 0 PRESENTATION OF CAPITAL IMPROVEMENTS FUND POLICY OUTLINE OF POLICY: General /Resolution ~ Similar to a policy, exceptions easy ordinance Similar to a corporate by--law, exceptions difficult Required Review and Approval Holmlund/splinter Hoffman Rosene Finance Commission objective of policy Provide permanent source of funds Provide funding for planned major capital expenditures Provide alternative to external issue of debt (includes interfund loans) Scope of Policy Expenditure Type- (per resolution) Majo:c >$1001000 Permanent Life of 15 years or greater (GAAP) Facility Building and/or improvements (excludes equipment and vehicles) Source of Funds Proceeds on i.sstiance of bonds Interest earnings Excess debt retirement funds txcess special assessment funds Annual minimum contribution??? Authority to spend Dollar Scone Authority $0 to $100,000 Not eligible for funding from this fund (general fund) $100,001 to $200,000 City Council (simple majority) upon recommendation from Finance commission $200,001 to $500,000 City Council (4/5 majority) upon xecon- mendation from Finance Commission and public hearing Over $500,000 Citizen Referc_ndum 1 AA ~cpending .Limitations Annual spending limited to 50% of.A interest earned from $100,001 to $200,000 category. balance of unrestricted capital improvement fund must be at least 250 Asset for which funding is requested must be included in 5 year capital plan for at least two years. Five year capital plan must be approved by City Council at public hearing annually. Interfund Loans: kb r r o r , f, May only be provided to and or funds with future external funding. Must be repaid within ten years at prevailing market interest rates., 0 _ 10-13-92 To: Mayor Paulson & Members of the City Council From: Phil Cohen Re: ESTABLISHING A CAPITAL SPENDING POLICY: Action: Referring this request to the Financial Commission for their consideration and recommendations. Since we now have in place a policy that addresses the general fund operating funds and use of reserves, , the council should consider having a policy that deals with capital spending and use of those reserves. We have had discussions on major expenditure items like the remodeling of the existing city hall, building a new.city hall, senior citizen center, etc. The financing of these improvements will be very costly and would be of major financial significance to the citizens of Brooklyn Center. The methods of financing - if funds are available would be to pay cash for them, or by voter approval issue general obligation bonds, or a combination. In addition any building projects would have to be also estimated for annual cost of operations, which wound fall back on the general fund. With this questions in mind, I felt it would be timely to have the council consider this issue and then refer it to the Financial Commission for their review and recommendations. 0 ET4/~ K N 1210.00 4/24/8 -59 Section 1210 -*Community Investment Fund (added by Ord. . 89 89-553) 1210.00. Fund Created. There is hereby created a separate fund to be designated as the Community Investment Fund. This fund shall be maintained in the official city records and administered by the Treasurer in accordance with the provisions ..of this section. -All surplus moneys in each separate improvement fund in the Improvement Bond Redemption Fund which remain after the costs of each improvement have been fully funded, and which are not transferred to another separate improvement fund, shall be transferred to the Community Investment Fund. In addition, • the following shall be deposited in.this fund: (a) All collections of special assessments and taxes levied for the payment of the costs of an improve- ment which are received after the improvement costs have been fully funded, (b) -Investment earnings generated by the moneys in the Community Investment Fund, and_ (c) Any other moneys appropriated by the Council or donated for the purposes of the fund. The principal of the fund shall consist of all transfers from the Improvement Bond Redemption Fund, subsequent collections of special assessments and taxes, and other moneys appropriated or donated to the fund. In addition, the principal shall be increased annually by an amount equal to ten percent of the investment earnings generated by the fund in the previous year. The remaining investment earnings shall not accrue to the principal and shall forever be treated as investment earnings available for expenditure in accordance with this section. 1210.05. Purpose of Fund. This fund shall be used solely to pay the capital costs of projects of general benefit to the City of Minnetonka. 1210.10. Expenditure Limitations. _ (a) Expenditures from the fund shall be made solely from accumulated investment earnings until 1993. In 1993 and beyond, expenditures shall be made only from accumulated investment earnings whenever possible. (b) Expenditures may be made from principal, but may not exceed an amount greater than the equivalent of the fund's investment earnings for the prior two consecutive years. If expenditures from principal are made, either they must be structured as a loan to repay the principal, or no further expenditures of any kind may be made from the fund until investment earnings have reest4lished the 338A - 1210.15 principal at an amount equal to that existing before the expenditures plus ten percent of the investment earnings that would have been earned per year if the principal had not been reduced. 1210.15. Funding Preference. Expenditures from the fund for competing projects shall be granted in the following order of preference: (a) First Priority: Projects which can be funded within the amount of-the available investment earnings. (b) Second Priority: Projects principal funds which have principal amount borrowed. using expenditures from the capacity to repay the (c) Third priority: Projects using expenditures from principal funds which have no other reasonable funding source, are non-revenue producing, ..require significant funding, and will provide otherwise unattainable community benefit. 1210.20. Funding Procedure. Expenditures from the fund may be made only after compliance with the following procedure: (a) The project to, be funded must have been included for at least two years in the city's formally-adopted capital improvement program. (b) The City Council must hold a public hearing on whether the proposed project should be funded. Notice specifying the date, time and place of the hearing, the project to be funded, and the amount of funding must be published at least ten days before the hearing in the city's official newspaper. In addition, efforts shall be made to give notice to the community through°other reasonable means, such as newspaper articles, cable television and any city newsletter. The public hearing must be held on two separate days at least 30 days apart. The date and time of the second meeting shall be announced at the first. (c) The City Council must make the following findings which shall be incorporated into an adopted resolution: (1) The project has sufficient community-wide benefit as determined by a review of its intended users, the degree to which it addresses a community-wide need or problem, and its-consistency with other city goals, programs or policies. (2) The project to be funded could not occur but for the use of the Community Investment Fund. (3) The Community Investment Fund is not replacing funding from another previously programmed or available source. (4) The project has been included in at least two - -ft 1210.25 consecutive formally-approved-capital improvement programs. (5) If principal is used, the project has the ability to reasonably repay the funds, and use of the principal does not exceed the equivalent of the last two years' investment earnings from the-Community Investment Fund. (6) An estimate of the ongoing annual operating and maintenance costs has been made and the source(s) for paying such costs identified. (d) If any of the findings in paragraph (c) cannot be made and the project meets the expenditure limitations imposed in Section 1210.10, expenditures may be made from the fund only after the affirmative vote of at least five Council members. 1210.25. Administrative Expenditures. The limitations imposed in the sections above shall not apply to reasonable expenses necessary for the administration of the Community Investment Fund. 1210.30. Amendments. No amendments may be made to Section 1210.10(b) except upon the affirmative vote of at least six members of the Council. No other amendments to Section 1210.may be made except upon the affirmative vote of at least five members of the Council. • • - 33 8C - T S~yC eSrE0 Pa L1, WORKING DRAFT (2/1/'93) POLICY AND PROCEDURE ON MAYOR AND COUNCIL MEMBER TOTAL COMPENSATION 1. NEED FOR POLICY: The Community is entitled to a clearly articulated, written description of the policy and procedure for establishing the total compensation of local elected officials. II. POLICY: 1. Service on the City Council is a civic obligation and an honor. The total compensation of the Mayor and Council Members should, therefore, not encourage candidacies based on monetary rather than public service objectives. However, the compensation of Brooklyn Center elected officials shall be fair and equitable in order to attract qualified candidates for local elective office. 2. The propriety of the compensation levels of the Mayor and Council Members shall be 0 evaluated through comparisons with compensation paid to similar officials within the seven county metropolitan area. 3. The compensation levels of elected officials should be regularly reviewed and adjusted to ensure compliance with the objectives of this policy and to avoid the need for drastic or sudden compensation adjustments. 4. Compensation set pursuant to this policy and procedure shall be deemed to be the total compensation for elected officials of the city with the exception of expense reimbursement which shall be the same as provided all other city employees. • i III. PROCEDURE: 1. The City Manager shall biennially conduct a survey of compensation paid to elected officials of comparably sized municipalities with similarly sized budgets and tax bases in the seven county metropolitan area. Surveys prepared by the Association of Metropolitan Municipalities or the League of Minnesota Cities may be utilized in lieu of the City Manager's survey. 2. The City Manager shall biennially prepare a compensation report that contains an analysis of the survey information. The report shall compute the average amounts paid to Mayors and Council Members; correlate survey results to the current compensation of Brooklyn Center elected City officials; and, discuss possible 1 budgeta "PZ--==="y m impacts of indicated changes. r ~3. The City Manager shall submit the compensation report to the City Council and the Financial Commission prior to June 1, for information pertaining to the applicable calendar year. The Financial Commission shall biennially review the City Manager's compensation report. Prior to July 1, of the same year, the Commission shall recommend to the City Council that the compensation of the Mayor and Council Members either remain the same or be changed to some specified amount in the manner prescribed by law. 5. Consistent with the City Charter, Section 2.07, the Mayor and Council Members may, after conducting public hearings, set their compensation by ordinance. No change in compensation shall be in effect until the January 1, following the next succeeding general election. IV. AUTHORITY: The authority for establishing compensation for the Mayor and Council Members is found in 0 Minnesota Statutes 415.11 and the City of Brooklyn Center Charter, Section 2.07. 2 SvS r itrf ~~1"t 5 -ro -rife WORKING DRAFT (2/1/'93) W%41C -N6pR A f-T POLICY AND PROCEDURE ON MAYOR AND COUNCIL MEMBER SAS TOTAJ. COMPENSATION I. NEED FOR POLICY: The Community is entitled to a clearly articulated, written description of the g~o~~as policy and oxocedure for establishing the salaries total comrensat;nn of local elected officials. II. POLICY: 1. Service on the City Council is a civic obligation and an honor. The shies total COmp_nsatinn of the Mayor and Council Members should, therefore, not encourage candidacies based on monetary rather than public service objectives. jlowever, the comensa ; on of Brooklyn Center eJ Pc-ted official S shall be fair and equitable in order to attract qualified candidates for- local eleglive of. ice. it is in the best c t4~„ az.mun : ty thamt ':i.' ,~4-cc-r" - Zaiidl la le-:; L a zA available fer dlsineent-Svc vc 1~ffid-elected of€lelals should net required subsidd:ze -3- 2. The propriety of the salary compensation levels of the Mayor and Council Members een-bz. aise shall be evaluated through comparisons with salaEles co=e sation paid to similar officials within the seven county metropolitan area. 4- 3, The salami compensation levels of elected officials should be regularly reviewed and adjusted to ensure compliance with the objectives of this policy and to avoid the need for drastic or sudden ehanges compensation adjustments. 4. Compensation set nursuavt to this polin_v end procedt e shall be deemd to be tbe totem compensation or elected officials of the city with the Rvneption of expense reimbursement which shall be the same as provided a._U otbg r city emplovees. • 1 III. PROCEDURE: 1. The City Manager shall - laries a~-ua~ biennially conduct a survey of compensation paid to elected officials of comparably sized municipalities with similarly sized budaet_s and tax bases in the seven county metropolitan area. Surveys prepared by the Association of Metropolitan Municipalities or the League of Minnesota Cities may be utilized in lieu of the City Manager's survey. 2. The City Manager shall annually biennially prepare a pelley compensation report that contains an analysis of the survey information. The report shall compute the average amounts paid to Mayors and Council Members; correlate survey results to the current salaries compensation of Brooklyn Center elected City officials; and, discuss possible budgetary and public perception "Impacts of indicated changes. 3. The City Manager shall submit the peliey compensation report to the City Council and the Financial Commission prior to June 1, for information pertaining is to the P E-& ettg appli cable calendar year. 4. The Financial Commission shall annHal-ly biennially review the City Manager's pelley compensation report eew ee. Prior to July 1, of the same year, the Commission must shall recommend to the City Council that the salaries c_omnensation of the Mayor and Council Members either remain the same or be changed to some specified amount in the manner prescribed by law. 5. Consistent with the City Charter, Section 2.07, the Mayor and Council Members may, after conducting public hearings, set their salaries compensation by ordinance. No change in sees compensation shall be in effect until the January 1, following the next succeeding general election. IV. AUTHORITY: . The authority for establishing salaries gomnensa-ion for the Mayor and Council Members is found in Minnesota State Statutes 415.11 and the City of Brooklyn Center Charter, Section 2.07. 2 • (EEEFCP) 1. NEED FOR POLICY WORKING DRAFT POLICY ON MAYOR AND COUNCILMEMBER SALARIES The Community is entitled to a clearly articulated, written description of the process for establishing the salaries of local elected officials. II. POLICY 1. Service on the City Council is a civic obligation and an honor. The salaries of the Mayor and Councilmembers should therefore not encourage candidacies based on monetary rather than public service objectives. • 2. It is in the best interest of the community that excellent candidates seek and be available for local elected offices. Salaries should not operate as a disincentive and elected officials should not be required to subsidize participation in public service. 3. The propriety of the salary levels of the Mayor and Councilmembers can be also evaluated through comparisons with salaries paid to similar officials within the seven county metropolitan area. 4. The salary levels of elected officials should be regularly reviewed and adjusted to ensure compliance with the objectives of this policy and to avoid the need for drastic or sudden changes. • III. PROCEDURE 1. The City Manager shall annually conduct a survey of salaries paid to elected officials of comparably sized municipalities in the seven county metropolitan -1- area. Surveys prepared by the Association of Metropolitan Municipalities or the League of Minnesota Cities may be utilized in lieu of the City Manager's survey. 2. The City Manager shall annually prepare a policy report that contains an analysis of the survey information. The report shall compute the average amounts paid to Mayors and Councilmembers, correlate survey results to the current salaries of Brooklyn Center elected City officials, and discuss possible budgetary impacts of indicated changes. 3. The City Manager shall submit the policy report to the City Council and the Financial Commission prior to June 1 for information pertaining to the previous calendar year. 4. The Financial Commission shall annually review the City Manager's policy report on salaries. Prior to July 1 of the same year, the Commission must recommend to the City Council that the salaries of the mayor and Council- members either remain the same or be changed to some specified amount in the manner prescribed by law. 5. Consistent with the City Charter, Section 2.07, the Mayor and Councilmembers may, after conducting public hearings, set salaries by ordinance. No change in salaries shall be in effect until the January 1 following the next succeeding general municipal election. IV. AUTHORITY The authority for establishing salaries for the Mayor and Councilmembers is found in Minnesota State Statutes 415.11 and the City of Brooklyn Center Charter, Section 2.07. -2- • • MEMORANDUM TO: Paul Holmlund, Director of Finance r FROM: Geralyn R. Barone, Personnel Coordinator 7 DATE: November 2, 1992 SUBJECT: Guidelines for Setting Salaries of Elected Officials You had asked me to contact the Minnesota State Compensation Council (SCC) to determine if there are any guidelines for setting salaries of elected state officials. I spoke with Janet Lund (297-3697) of the SCC, and she said there is no written policy in Minnesota to address this issue. Ms. Lund said usually they compare to salaries in other states and in other parts of Minnesota. She added the last few years there has been a freeze on elected officials salaries, so even if a policy had been in place, it would not have mattered. Ms. Lund noted some states tie increases to adjustments in compensation packages negotiated by the unions. If you need additional information related to this, please let me know. 0 MEMORANDUM TO: Gerald G. Splinter, City Manager FROM: Geralyn R. Barone, Personnel Coordinator DATE: October 15, 1992 SUBJECT: City Council Salary Review Process I have conducted a survey of area municipalities to determine what process is used in reviewing and setting salaries of the mayor and city council members. Most cities do not have any sort of written policy, but many do have a regular review schedule. The survey results are as follows: ANNUAL REVIEW Maplewood Richfield Fridley Plymouth* New Brighton* REVIEW EVERY T WO YEARS Crystal Robbinsdale Woodbury Burnsville Mounds View New Hope Golden Valley St. Anthony VARIES OR SPORADICALLY Maple Grove Bloomington Ramsey Roseville Apple Valley-. Eden Prairie Columbia Heights Brooklyn Park Hopkins *New Brighton and Plymouth incorporate their council salary review into the annual budget preparation process. Most of the cities either use the Association of Metropolitan Municipalities (AMM) elected officials salary survey or conduct phone surveys to determine what rates to set. Some tie any increase into the amount of salary increases received by city employees. A few use the Consumer Price Index (CPI) as a guideline for adjustments. Robbinsdale utilizes a salary review committee made up of one representative from each council advisory commission. 0 If you need any additional information, please let me know. N.apVeuiood ORDINANCE NO. 654 AN ORDINANCE AMENDING THE MAPLEWOOD CODE PERTAINING TO COMPENSATION FOR FlILTED OFFICIALS Section 1. Section 2-23 is hereby amended as follows: ($6,600,00) per year, payable in monthly installments effective January 1, 1990, and thereafter the Mayor's salary and the salary of each Councilmember shull be adjusted annually based on a change in the cost of living. Such adjustment shall be based on the cost-of-living index published by the Department of Labor. Such adjustment becomes effective and automatic on the first of January of the year for which it is made. Section 2--23 Compensation. Pursuant to Section 415.11(1) of Minnesota Statutes, the salary of the Mayor is hereby established at Seven Thousand Five Hundred Dollars ($7,500.00) per year, payable in monthly installments and the salary of each member of the Council is established at Six Thousand Six Hundred Dollars Section 2. This Ordinance shall take effect upon its passage and publication. Passed by the City Council of the City of Maplewood, Minnesota, on the. 30th day of October, 1989. Ayes - 5 Nays - 0 May or ATTEST : A ~ v f City clerk DIJloiviSdQl-e Robbinsdale City Code 205.01 (Rev. 1991) 0-:11 Section 205 - Salaries of Elected Officials 205.01. Council salaries. Subdivision 1. Mavor. The salary of the mayor is $6,600 per annum. 205_03. Councilmembers. The salary of each member of the council is $5,280 per annum. 205.05. Monthly payments. The salary of the mayor and councilmembers is payable once monthly. 205.07. Council salary committee. A committee composed of the chairperzons of the charter commission, planning commission, liquor commission, parks and recreation commission, and human relations commission, must convene no later than the first full week of June in years of a municipal election in which one or more members of the city council are elected, for the purpose of reviewing the salaries of the mayor and council. At their first meeting, the committee must name one of its members as chairperson. Members of the council may not serve on the committee. If the chairperson of a commission is ineligible or.unwilling to serve on the committee, the commission may designate another member of the commission to serve on the committee. A majority of the members is necessary to conduct business. The committee must recommend no later than August 1 of the same year to the council that the salaries of the mayor and council members either remain the same or be changed to some specified amount in the manner prescribed by law.- 205.09. Workers' comoensation. Pursuant to Minnesota Statutes, chapter 176, the elected officials of the city, the Robbinsdale Economic Development Aut::ority (REDA), and those municipal officers appointed for a regular term of office are included in the coverage of the Minnesota Workers' compensation Act. (Amended, Ord. No. 91-15, sec. 1) 10; 16/ 92 09 : 17 t I. FAX 61:2 S95 4404 (;try O B-N I LLE ~ * / ~)Uf n3V_J L_~_ ~7 0 01 POLICY NUMBER- 1.160 MAYOR AND COUNCILMEMBER SALARIES NEED FOR POLICY The Community is entitled to a clearly articulated, written de- scription of the process for establishing the salaries-of local elected officials. II. POLICY 1. Service on the City Council is a civic obligation and an honor. The salaries of the Mayor and Councilmembers should therefore not encourage candidacies based on monetary rather than public service objectives; 2. It is in the best interest of the community that excellent candidates seek and be available for local elected offices. Salaries should not operate as a disincentive and elected officials should not be required to subsidize participation in public service. 2*-' nw=aiex__- , y ' docket axj:)-_~Q 3. The propriety of the salary levels of the Mayor and Council- members can be evaluated through comparisons with salaries paid to similar officials within the seven county metro- politan area; 4. The salary levels of elected officials should be regularly reviewed and adjusted to ensure compliance with the objec- tives -of this policy and to avoid the need for drastic or sudden changes. III. PROCEDURE 1. The City Manager shall annually conduct a survey of salaries paid to elected officials of comparably sized municipalities in the seven county metropolitan area. Surveys prepared by the Association of Metropolitan municipalities or the League of Minnesota Cities may be utilized in lieu of the City Manager's survey. 2. The City Manager shall annually prepare a Policy Report that contains an analysis of the survey information. The report shall compute the average amounts paid to Mayors and Council- members; correlate survey results to the current salaries of Burnsville elected officials; and, discuss possible budgetary impacts of indicated changes. r Post-It- brand fax transmittal memo 7671 B of pages To , IFrom~ t u Dept. ll P ono N / 41M a. IFax N Zl( n~I ~t IFtxN C~ Lf l ~~/~I 1 { ` ( ?C E.12 895 4404 10/16/92 09:1 FAX 612 895 4404 CITY OF B-VILLE X002 POLICY NUMBER 1.160 PAGE TWO 3. The Mayor and City Council shall annually review the Citv Manager's Policy Report on salaries and, if appropriate to the purposes of this policy, may direct staff to prepare all necessary ordinances and to provide for any required public hearing. 4. The Mayor and City Council shall conduct two public hearings on any proposed ordinance that would change the salary levels of local elected officials. 5. Consistent with state law, no change in salary shall be implemented until after the next succeeding municipal election. IV. RESPONSIBILITY It shall be the responsibility of the City Manager' to annually. survey the salaries paid elected officials in comparable 'metro- politan area municipalities and to present those findings to the City Council. V. AUTHORITY City Council Policy Setting; Minnesota State Statutes 415.11. Submitted by U. Reviewed by Connie Morrison. Mayor 0 Date 9/13/84 Date 9/13/84 OWCI-7, ~ ~cPj7- c-r (1ZSciv _ SG eAIW 5 P ~KP FCuGY -c - 15~►cTl c t~ ~1 ~Hcn~G tijc. MOO nr05' WOV Try, CKus~S~l~9rvK - 7P~ ' 30 ~ %Cwt~±w~,-__~v+•,r•, ~,,,F,~ T'om' l ~ 1~~... ~tr~tr,~ - s33-YlQ -26 -4-E MOO" a~n q.1-7-MO A - cI --1Vb. 11 K41, KAA ee 4 7 _ N - Wan,e t YtS - t week 5A14r l fc,* em. 'I' C3) staA Lp vD d ~ iz0 ~ (Ily ~a~l--~~.~rr------~37 n L ZLiJ~- _/ho.< - ~o-~., (FFFPC21) CITY Of BROOKLYN CENTER 1993 EMPLOYEE POSITION AND CLASSIFICATION PLAN SEVERANCE BENEFITS FOR LAID OFF EMPLOYEES PROGRAM SCHEDULE L SEVERANCE BENEFITS FOR LAID OFF EMPLOYEES PROGRAM Due to severe budget constraints, the City Council has found it necessary in some budget years to reduce the number of City employees through lay offs. To recognize the hardship of such lay offs, the City Council has determined it is in the best interest of the City of Brooklyn Center to offer some severance benefits to certain employees. Therefore, the City Council has determined to offer the Severance Benefits for Laid Off Employees Program with the following provisions: 1. Employees qualified for severance benefits are those who are employed in a full- time capacity as a benefits-earning employee with the City of Brooklyn Center at the time of lay off and will not be reemployed by the City in another full-time position. Employees participate in this program on a voluntary basis. 2. At the City's expense, qualified employees may, at their choosing, participate in an outplacement service at a cost not to exceed $2,000 or within six months of lay off, whichever is reached first. Outplacement services consist of a career assessment, resume development, cover letter writing assistance, interviewing skills, networking, and developing job resources, all of which are provided by a professionally qualified outplacement service. 3. The qualified employees will be allowed to continue health and life insurance coverage held at the time of lay off pursuant to COBRA law. The City will pay the portion of the premium costs for which other City employees are eligible for a period of three months after the lay off date or earlier if other coverage is provided by another employer. 4. In addition to any other severance pay to which the qualified employee is entitled, severance pay equal to two (2) weeks salary shall be paid to qualified employees who have been employed by the City less than ten (10) years; and severance pay equal to four (4) weeks salary shall be paid to qualified employees who have been employed full-time by the City for ten (10) or more years. 5. The City Manager is authorized to administer the Severance Benefits for Laid Off Employees Program and to fund this program from the City of Brooklyn Center's Employees' Retirement Fund until such funds are depleted, at which time the program will be funded from the General Fund. 6. In the event that the City discontinues providing group health insurance coverage for active employees or in the event that the City discontinue this program, all benefits provided for in provision three (3) above paid for by the City will also be discontinued. -24- N City of Brooklyn Center, Minnesota GENERAL FUND The City of Brooklyn Center Home Rule Charter provides in section 7.11 that "there shall be maintained in the City Treasury a classification of Funds which shall provide for a General Fund for the payment of such expenses of the City as the Council may deem proper, and such other funds as may be required by statute, ordinance or resolution". The General Fund was established to account for all revenues and expenditures which are not required to be accounted for in other funds. It has more diverse revenue sources than other funds. These revenue sources include property taxes, licenses, permits, fines and forfeits, intergovernmental, service charges, rents, and investment earnings. The Fund's resources finance a wide range of functions, including the current operations of general government, public safety, public works, health and welfare, recreation, and non-departmental expenditures. This Fund utilizes the modified accrual basis of accounting. Revenues are recognized in the accounting period in which they become available and measurable. Expenditures are recognized in the accounting period in which the related liability is incurred. The audited fund balance as of December 31, 1991 was $5,108,575. This is $827,955 less than the amount recommended by the City's adequate fund balance formula. • 1 City of Brooklyn Center, Minnesota 40 SPECIAL REVENUE FUNDS The Special Revenue Funds are established to account for revenues derived from taxes and/or other specific revenue sources. These resources are usually restricted by statute, City Charter or ordinance to finance specific city functions or activities. This fund type utilizes the modified accrual basis of accounting. Revenues are recognized in the accounting period in which they become available and measurable. Expenditures are recognized in the accounting period in which the related liability is incurred. Earle Brown Farm Tax Increment Financina District: This fund has the authority to collect tax increments which are used for the historic restoration of the Earle Brown Farm and for debt service payments of bonds which also issued for that purpose. The audited fund balance as of December 31, 1991 was a negative $2,441,219. This balance is the result of past financing of the construction and operation of the Earle Brown Heritage Center. Present uses of these funds include transfers to the Earle Brown Heritage Center to cover operating deficits and transfers to debt service funds to make the principal and interest payments on the Tax Increment Bonds of 1985 and 1992-. The operating subsidies of the Heritage Center need to be discontinued because this District only has enough resources for the debt service payments. Diseased Tree Removal Fund: This Fund was established to account for the collection of resources and expenditure of these resources for diseased tree control. Costs are reimbursed by private property owners, or the City, depending upon where the tree was located. The audited fund balance as of December 31, 1991 was $21,449. A sufficient fund balance must be maintained to finance the cost of trees which are removed from private property and special assessed to the homeowner. These special assessments are repaid over periods of three or five years. The current fund balance is adequate for this purpose. Communitv Development Block Grant Fund: The Fund was established to account for funds received under Title I of the Housing and Community Development Act of 1974. Transfers are made from this Fund to the Economic Development Authority Fund where accounting for project costs takes place. The fund has a zero fund balance since no expenditures are made from this fund and transfers to other funds are only made after the reimbursement is received from Hennepin County. City of Brooklyn Center, Minnesota 0 DEBT SERVICE FUNDS The Debt Service Funds were established to account for the payment (from taxes and other resources) of interest and principal on long- term general obligation debt. This fund type utilizes the modified accrual basis of accounting. Revenues are recognized in the accounting period in which they become available and measurable. Expenditures are recognized in the accounting period in which the principal and interest are due. The City's Debt Service funds included in this section are: Certificates of Indebtedness Debt Service Fund: This Fund accounts for the property taxes raised to pay the principal and interest on certificates of indebtedness sold to finance the purchase of capital equipment in the General Fund. There is a zero fund balance because the amount needed for the current year principal and interest payments is taken from the tax settlements and the General Fund carries any taxes receivable. General Obligation State Aid Street Bonds Debt Service: This Fund accounts for payment of principal and interest on bonds issued in 1991 to finance a comprehensive improvement and upgrading 69th Avenue North as a state aid route. There is a zero fund balance because the amount needed for the current year principal and interest payments is transferred in from the Municipal State Aid Construction Fund. Park Bonds of 1980 Debt Service Fund: This Fund was established to account for the accumulation of resources for payment of principal and interest on general obligation bonds authorized by the electorate in 1980 to finance the improvement and equipping of parks, park lands and related public recreational facilities. These improvements include neighborhood parks, Central Park, Palmer Nature Center, Shingle Creek Trailway and the Arboretum. The audited fund balance as of December 31, 1991 was $486,205. The final debt service payment on this issue will be made on February 1, 1993. Any surplus funds remaining after that time will be transferred to the Certificates of Indebtedness Debt Service Fund. General Obligation Tax Increment Bonds of 1983 Fund: This Fund accounts for the accumulation of resources for payment of principal and interest on general obligation bonds issued in 1983 to finance purchase of land and installation of utilities for housing for the elderly. The audited fund balance as of December 311 1991 was $802,309. The final debt service payment on this issue was made on February 1, 1992. Surplus funds remaining at that time were transferred to the General Obligation Tax Increment Bonds of 1985 Debt Service Fund. • Debt Service Funds. continued General Obliaation Tax Increment Bonds of 1985 Fund: This Fund was established to account for the accumulation of resources for payment of principal and interest on general obligation bonds issued in 1985 to finance the purchase and redevelopment of the historic Earle Brown Farm in Brooklyn Center. • The audited fund balance as of December 31, 1991 was $504,575. Primary revenue for this fund is a transfer from the Earle Brown Tax Increment District. Sufficient funds are transferred at the end of each year to meet the next year's principal and interest payments. This is necessary because the first and larger P & I payment is due on February 1 but the first property tax settlement isn't received until July. General Obliaation Tax Increment Bonds of 1991 Fund: This Fund was established to account for the accumulation of resources for payment of principal and interest on general obligation bonds issued in 1991 to reimburse the Earle Brown Tax Increment District for the cost of restoration of the historic Earle Brown Farm in Brooklyn Center. The audited fund balance as of December 31, 1991 was $614,269. Primary revenue for this fund is a transfer from the Earle Brown Tax Increment District. Sufficient funds are transferred at the end of each year to meet the next year's principal and interest payments. This is necessary because the first and larger P & I payment is due on February 1 but the first property tax settlement isn't received until July. Improvement Bond Funds: This fund accounts for the collection of special assessments for the payment of principal and interest on general obligation bonds of 1976. Final debt service payments on these bonds were made in 1991. The fund was closed and remaining surplus was transferred to the Refunding bonds of 1987 Fund. Refundina Bonds of 1987 Fund: This fund was established to account for the collection of special assessments for the payment of principal and interest on general obligation bonds. The bonds were sold during 1987 to refund Improvement Bonds of 1982. The audited fund balance as of December 31, 1991 was $1,227,520. Bonds outstanding as of December 31, 1991 were $530,000. The excess funds are the result of special assessment prepayments, high interest earnings during the 1980s, and the transfer from the Bonds of 1976. • • City of Brooklyn Center, Minnesota CAPITAL PROJECTS FUNDS The Capital Projects Funds are established to account for all resources used for the construction or acquisition of capital facilities by the City except those financed by Enterprise Funds. Construction activity can increase or decrease drastically from one year to the next. By separating these construction projects in their own funds, we avoid distorting year to year comparisons in the other operating funds. This fund type utilizes the modified accrual basis of accounting. Revenues are recognized in the accounting period in which they become available and measurable. Expenditures are recognized in the accounting period in which the related liability is incurred. The City's Capital Projects Funds included in this section are: Capital Improvements Fund: This Fund was established in 1968 to provide funds, and to account for the expenditure of such funds, for major capital outlays including, but not be limited to, construction or acquisition of major permanent facilities having a relatively long life; and/or to reduce debt incurred for capital outlays. The financing sources of the Fund include ad valorem taxation, transfers from other Funds, issuance of bonds, federal and state grants, and investment earnings. The audited fund balance as of December 31, 1991 was $6,936,183. Of this, $1,336,895 was reserved for loans to other funds and is therefore not currently available, and $223,951 was appropriated by past City Council action for the cable TV settlement. The remainder of $5,375,337 is available. Municinal State Aid for Construction Fund: This Fund was established to account for the state allotment of gasoline tax collections used for transportation related construction projects. The audited fund balance as of December 31, 1991 was $6,313,687. Of this, $593,069 was reserved for loans to other funds and is therefore not currently available, $2,062,073 is bond proceeds which are committed to the 69th Avenue project, and $918,700 is surpluses from past M.S.A. projects which is limited to use as local share on future M.S.A. Projects. The remainder of $2,739,845 is available for road construction projects related to the State Aid Street system. 0 Canital Proiects Funds. continued Special Assessment Construction Fund: This Fund was established to account for the resources and expenditures required for the acquisition and construction of capital facilities or improvements financed wholly or in part by special assessments levied against benefitted properties. The audited fund balance as of December 31, 1991 was a negative $1,458,920. This is the result of governmental accounting rules which don't allow us to recognize special assessments as revenue until they have been collected. If these assessments could be recognized, the fund balance would be near zero. Since this fund is to be reimbursed for all projects by either special assessments or transfers from other funds, it doesn't need a significant fund balance. Housina and Redevelopment Fund (H.R.A.): This fund has authority to levy an ad valorem property tax for the purpose of conducting housing and redevelopment projects. These projects are now done in the E . D. A. Fund. The fund has a zero fund balance since no expenditures are made from it and all tax proceeds are transferred to E.D.A. upon their receipt. Economic Development Authoritv Fund: This Fund was established to account for the Economic Development Authority (E.D.A.) of Brooklyn Center. The E.D.A. carries out activities which previously were done by the H.R.A., plus it has authority to operate an enterprise. The Earle Brown Heritage Center operates under this authority and a is statement of its operations can be found in the enterprise fund section of this report. The E.D.A. also does redevelopment and housing projects, funded by transfers from the C.D.B.G. and H.R.A. funds. A property tax will be levied directly for the E.D.A. for the first time in 1993. The audited fund balance as of December 31, 1991 was $1,989,915. Of this, $1,000,000 is reserved by City Council action in a Dedicated Housing Account, the principal of which is not to be touched, and the interest earnings expended only on housing programs. The remaining $989,915 is available for operations. 0 City of Brooklyn Center, Minnesota 0 ENTERPRISE FUNDS The Enterprise Funds were established to account for the financing of self supporting activities of the City which render services on a user charge basis to the general public. Revenues and expenses in these Funds are recognized on the accrual basis of accounting. Revenues are recognized in the accounting period in which they are earned and become objectively measurable. Expenses are recognized in the period incurred, if objectively measurable. Equity is these funds is described by the term Retained Earnings rather than the term Fund Balance which was used in the governmental type funds. Because there are often large inventories and fixed assets in enterprise funds, they need correspondingly large retained earnings. These assets are needed for operations and can't be converted to cash without going out of business. The City's Enterprise Funds included in this section are: Municipal Liauor Fund: This Fund accounts for the operations of the City's three municipal off-sale liquor stores. The audited retained earnings as of December 31, 1991 was $310,336. Golf Course Fund: This fund accounts for operations of Centerbrook Golf Course, a 9 hole, par 3 course owned by the City. The audited retained earnings as of December 31, 1991 was a negative $10,946. The course experienced losses during its first two years of operations but has recorded profits since then. Earle Brown Heritage Center: This fund accounts for the operation of a pioneer farmstead which has been historically preserved and restored as a modern multipurpose facility. Its convention center can host conferences, trade shows, and concerts seating 1,000 people in either banquet or theater style. The "Inn On The Farm" is a bed and breakfast with eleven rooms available to complement convention activities or be rented individually. Several of the barns have been restored as unique office settings which have found a niche in the market. The audited retained earnings as of December 31, 1991 was $19. The center is operating at a loss and just enough of an operating subsidy is being transferred in from the Earle Brown Tax Increment District to cover the loss. 9 Enterprise Funds. continued Recvclina and Refuse Fund: This fund accounts for the operation of a state mandated recycling program. Expansion into refuse collection will take place only when there is a clear advantage to be achieved by it. The audited retained earnings as of December 31, 1991 was $72,530. Water Utilities Fund: This Fund accounts for the provision of water to customers. Administration, wells, water storage, and distribution are included. The audited retained earnings as of December 31, 1991 was $8,123,416. Of this, $3,700,000 is reserved by past City Council action for future expansion of the water system to meet Federal safe water standards. Sanitarv Sewer Fund: This Fund accounts for the collection and pumping of sanitary sewage through a system of sewer lines and lift stations. Sewage is treated by the Metropolitan Waste Control Commission whose fees represent about 75% of this fund's expenses. The audited retained earnings as of December 31, 1991 was $2,892,227. Of this, $300,000 is reserved by past City Council action for future expansion of the sanitary sewer system. Storm Drainage Fund: This Fund accounts for the operations and improvements of the storm water drainage system. It incorporates not only the storm sewer system, but also water structures such as holding ponds and facilities to improve water quality. Fees are based upon the amount of water running off a property and vary with both size and absorption characteristics of the parcel. The audited retained earnings as of December 31, 1991 was $194,006. 0 City of Brooklyn Center, Minnesota 0 INTERNAL SERVICE FUNDS Internal Service Funds are used to account, on a cost reimbursement basis, for the financing of goods or services provided by one department to other departments of the City. Revenues and expenses in these funds are recognized on the accrual basis of accounting. Revenues are recognized in the accounting period in which they are earned and become measurable. Expenditures are recognized in the accounting period in which they are incurred. Public Emplovees Retirement Fund: This fund provides certain health care insurance benefits for City employees who retire before age 65. Substantially all of the City's full time employees may be eligible for those benefits from the time they qualify for an unreduced PERA pension until they reach age 65 or become eligible for medicare. Currently investment earnings are sufficient to provide benefits. In the event that future costs would exceed earnings, other funds would be charged for the costs associated with their employees. The City Council in 1992 also directed that this fund be charged for severance benefits to employees who have been laid off. The audited retained earnings as of December 31, 1991 was $764,319. • 9 MEMORANDUM TO: Brooklyn Center Financial Commission Members FROM: Gerald G. Splinter, City Manager 5~?/ DATE: January 29, 1993 SUBJECT: COUNCIL INPUT-ORGANIZATIONAL ANALYSIS I recently asked the city council to submit to me questions or issues they believe the financial commission should address as a part of their upcoming organizational analysis work. The following are questions I have accumulated to date from members of the city council, and I understand there will be more to come. 1. Is there any potential to consolidate departments and save money. 2. Is there money to be saved by buying leased or demonstrator-type equipment rather than purchasing new equipment. 3. Are there any services which can be done more effectively or economically by combining with other communities or other agencies. 4. Evaluate the potential for contracting out City services (privatization). 5. Evaluate repair of vehicles to extend their life rather than purchasing new. 6. Evaluate the cost of running the community center and analyze the question whether or not we are pricing ourselves out of the market. 1050 Commonwealth Avenue on. M assachuwu% 0?_' 15 Wle, phone e 61712-32-x(180 EDITORIAL ADVISORY BOARD Thomas Atwood Founder & Chairman Object Design, Inc. Professor Soren Bisgaard Center for Quahn' and Productivity Inrprorement University of Wisconsin -Madison John Carter Principal Product Development Consulting Kenneth Crow President DRM Associates F.E. DeVol Manaeer, (retiredl Technical Planning and Support NCR Corporation Saadv Munro Presidenr Munro & Associates Robert J. OsterhoR Xerox Corporation Senior Examiner aleolm Baldrige Tonal Quality Award ony Poletto DFA Specialist Xerox Corporation Professor Friedrich Prinz Director. DFM Lab Carnegie Mellon University Ray Reicbenbach Operations Manager IBM Art Schneiderman Vice President Quality & Productivity Improvement Analog Devices Shin Taguchi Director American Supplier Institute Dr. Emory Zimmers CIM Lab Lehigh University 0 January 11, 1993 Mr.Gerald G. Splinter City Manager 6301 Shingle Creek Parkway Brooklyn Center, MN 55430 Dear Mr. Splinter: Thank you for your letter requesting information on competitive benchmarking and performance measurements. I have a "good news bad news" response. First, the good news: A) We have recently published a guidebook on benchmarking that can aid you and your benchmarking team, a brochure describing the guide is enclosed. B) We maintain The Benchmarking Network Service which is used by organizations seeking benchmarking partners, a brief description and form is enclosed. Now, for the bad news: Our focus and all of our information is manufacturing oriented. We do not have specific public sector information. However, benchmarking techniques will be identical for public and private sector teams, and issues of importance will be similar for both. Thus the Executive Benchmarking Guidebook can serve as an excellent resource. Also, it is possible that members of the Benchmarking Network are involved in community quality efforts and can provide you with information- and/or benchmarking partners. Two other avenues of possible information are: The World Center for Community Excellence, Erie, PA (814)456-9223, and Mark Braun, Personnel Research Associate, Boston University, 25 Buick St., Boston, MA 02215. Mr. Braun is a former student of mine who is involved in the community quality movement. Sincerely, Charles Atkinson Vice President, Operations enclosures . A Benchmarking Network Service is being formed by Management Roundtable to help U.S. manufacturing organizations find partners to compare and share information about manufacturing and management practices. This is a non-obligatory service; Management Roundtable is coordinating this database to support its customers' interests in benchmarking. A directory of participants will be compiled from the information received; prior to it's publication, you may call us for benchmarking partner recommendations. Management Roundtable has also created a listing of benchmarking consultants. If you are interested in this resource, please call us. ❑ YES, please enter my name into the Benchmarking Network Service database. I understand that this information will be used to help this service locate potential partners for its clients. • Company Contact Title Address City Phone Industry Company Size Sales Volume State Zip FAX: Signature We'd like to benchmark the following: We're very good in this area: • • Benchmarking Network Service • c/o Management Roundtable, Inc. • • 1050 Commonwealth Avenue • Boston, MA 02215 • Phone: (617)232-8080 • • FAX (617)232-0879 • • Features: How to get started, choose the team, choose partners, identify the topics best suited for benchmarking ❖ How to set targets, create baselines, analyze data ❖ How to conduct a site visit How to apply findings ❖ Case examples, metrics, illustrations, tables, sample worksheets ❖ Dozens of fully reproducible master sheets ❖ Definition of terms, list of resources ❖ Example correspondence to prospective partners ❖ Complete set of tools to create your own action plan ❖ Designed for use by the entire team 'The truly excellent companies use benchmarking as a catalyst and enabler of change Managers begin with a business need, identify precisely what needs to be benchmarked, target the company that is best-in-class, conduct the benchmarking visit, and then incorporate their findings directly into the planning process."' Harvard Business Review Nov7Dee 1991 aL' Published by The Management Roundtable, Inc. t t G411AILWIlliff4l 1. Before You Start Benchmarking--A Brief History Definitions Benchmarking In A Nutshell Your Benefits and Paybacks Your Partner's Benefits BenchnuAdng Solutions To Common Business Problems Benchmarking And Continuous Improvement How Long Does A Benchmarking Study Take? Benchmarking Teams Don't Worry, Benchmarking Is Fun! 2. Getting Started Applications Sensitive Issues What Is Benchmarked? Metrics And Partners A Quick Overview Before Starting Preparing To Start Finding The User And Getting Commitment 3. Selecting Team Members How Groups Work Consensus Effective Teams Requirements For Team Members Broad Issues Handled Team Tasks Typical Team Size Guidelines For Choosing Team Members Selecting The Team 4. Selecting Topics Approaches To Topic Selection Overview-Selecting Topics Analyzing Your Company Topic Meeting The Structured Method Typical Questions Choosing Metrics What Are Metrics Used For? What Are Metrics? Defining The Terms Of Each Metric Metric Applications Characteristics Of A Good Metric Triangulation Caution! An Example Of Typical Metrics Summary 6. Surveys Survey Or Interview? Surveys Mail Surveys How Many People To Contact 7. Interviews 12. Setting Up Visits By Referral Selection Site Visit By Referral Preparation Contacting Referrals Interviews Setting Up Site Visits By Survey Consolidation 13. The Site Visit Interview Structure Data-Collection Techniques For Benchmarking Planning Final Comment: The Golden Rule Preparation Pre-Visit Meeting 8. Phone The Benchmarking Visit Phones And Benchmarking Post-Visit Meeting Script 12. Following The Visit Vocal Skills Telephone Skills Completing The Benchmarking Results You Can Expect Continuing Relationships Continuous Improvement Tactics 9. Presentations Appendix 1: What Are Your Objectives? A Sample Of Best Companies Organizing A Presentation Appendix 2: Developing A Presentation Techniques for Data Presentation Presentation Technique Visuals Preparing For Difficult Questions 10. Baselining Baseline Objectives Baseline Program Plan Baseline Team Data Collection Baseline Report Baseline Workshop 11. Choosing Candidates Finding Candidates Considerations For Choosing Partners Preparation Identifying Benchmarking Candidates By Referral Identifying Prospects By Survey List Of Candidates i ::cam c ,r` - ~ aa?~-~ , ~y l W M I w Mw........ r• ~~+..im s.rs . 0 • Over 250 pages in a handsome 3-ring binder-includes charts, matrices, data collection, references, definitions and ratios. • May be used in "modules," with each chapter as a stand-alone unit. Bpnchmarking is a means of establishing how much improvement is necessary to reach world-class levels ofperformancc It is the continuous process of measuring products, services, and practices against the toughest competitor or those companies recognized as industry leaders " David Kearns, CEO, Xerox • By reading and following the steps described in the Guidebook, you will learn: 1. How to conduct a complete benchmark study. How this will enable your organization to improve its performance in areas most essential to competitiveness. 2. How to quantify processes, operations, and strategies. How to, set targets that are realistic- yet ambitious enough to encourage breakthrough thinking. 3. Why benchmarking is not imitation, as is sometimes thought, but rather a means to achieving innovation. 4 To identify the specific criteria your organization should benchmark. How to choose the benchmarking team and team leader. How to run team meetings and maximize the outcome. G Who the most suitable benchmark partners are likely to be. How to approach them, follow up with them, and share information with them. How to obtain access to best-in-class companies. 7. What topics to discuss. What topics to avoid. How to protect sensitive information. 8. How to understand and apply metrics. Why "good" metrics can lead to new, successful practices while other metrics are a waste of time. How to tell the difference. o~ 11. The "etiquette" of a site visit. What role do you play? How to ensure that both parties come away with valuable leaming and the foundation for an ongoing relationship. 12. How to develop an action plan based on benchmarking results. 13. How to implement best practices and the continuation of self- assessment and improvement. 9. When to use surveys. How to create them. How to conduct interviews. 10. What data you need to develop an effective strategy. How to collect and analyze data. About data reduction techniques. How to create a baseline. lr 14 14 How to use benchmarking to achieve and maintain world- class levels of performance. 15. What your expectations should realistically be. How much time, expense and effort should you invest? What is the ideal scope of your benchmarking activity? • includes packet of fully reproducible masters and templates for conducting your own benchmark studies. AVOW 1 Charles E. Bosomworth is principal and founder of Technical Management, a consulting group specializing in new product development. He has pioneered the concept of concurrency in product development for over twenty five years. His depth experience in R&D, marketing, manufacturing, and quality with both functional management and program management r bilities provide him a unique insight into the conflicting forces of new product development. Before founding Technical Management in 1982, Mr. Bosomworth had management responsibility for a wide range of techni. cal areas including audio, RF, microwave, thin film, thick film, optical and automation. He has been engaged in the consumer, aerospace/defense, and industrial industries. Among the companies he has consulted to are Data Card, Bose, Keithley, MKS, Optical Filter Corp., Radar Technology, and LEL. Mr. Bosomworth was also Director of Quality Assurance and Reliability at Varian Associates. Mr. Bosomworth received his BS in Physics from Adelphi University. Mr. Bosomworth is the former Director of the Science and Engineering Group of the Boston Computer Society and has been an invited speaker at numerous professional meetings. Management Roundtable (MRT) was established in 1980 to provide information, research, and problem-solving opportunities necessary to manufacturing competitiveness. The focus of MRT activities is on the combined use of technology and management practices to achieve overall business success. Management Roundtable's bi-annual conference on Competitive Benchmarking and Performance Measurements has become the leading forum on this topic for manufacturing firms. Additionally, MRT conducts annual benchmarking surveys of product development practices and maintains a liaison service to match companies with prospective benchmark partners. Other executive reports, videotapes, newsletters and conferences offered by Management Roundtable provide unbiased inform. tion on topics such as Concurrent Engineering, Manufacturing Leadership, Design for Manufacturability, Product Data Manage- ment, Time-Based Competition, Rapid Prototyping, and more. I ~ ~ r The Executive Benchmarking Guidebook This 250+ page, looseleaf--bound volume is available at a special introductory price of $295 ($395 after November 25, 1992). Additional copies are available at $100 each. Please call 800/338-2223 for information on special corporate training rates or for ordering more than ten copies. 0 YES! Please send me _ copy(ies) of THE EXECUTIVE BENCHMARKING GUIDEBOOK at the special introductory price of $295 for the first copy and $100 for each additional copy. Multiple copies must be sent to one shipping destination and require an additional $20 total for UPS shipping. Outside US and Canada, please add $50 for shipping and handling. Overnight delivery is available at additional charge. In Massachusetts, please add 5% sales tax to all orders. Ship to: (no P. 0. boxes, please) Name Title Company Address Mail Stop City/State/Zip Phone Fax Bill to. ❑ Payment Enclosed, Amount $ Bill My Company, PO# ❑ Bill My Credit Card ❑ American Express ❑ VISA ❑ Master Card ❑ Diner's Club Card # Expires Signature Make checks payable in U.S. funds to CAD/CIM Management Roundtable, Inc. Books will be shipped upon receipt of payment. If not satisfied, please return within 21 days for a full refund. For faster service call 800/338-2223 (inside MA 617/232-8080) or FAX 617/232-0879 • CODE: 3 A V Best Practices: Executive Briefing on Benchmarking and Performance Metrics 0 by Peter Marks for Management Roundtable • Peter Marks Managing Director, Design Insight 336 Village Lane P.O. Box 37 Los Gatos, CA 95031 Peter Marks is the Managing Director of Design Insight. Known for his expertise in computer aided design, manufacturing, and information technology, he has helped more than one hundred companies in the U.S., Europe and Pacific Rim to improve their competitive positions. Prior to Mr. Marks' present position, he has had experience in every discipline from product planning and design to manufacturing engineering, quality assurance and operations. Mr. Marks earned his B.S. and M.S. degrees with highest honors from the University • of Cincinnati. • page 2 Executive Briefing on Benchmarking e • • ® Peter Marks, DESIGN INSIGHT, 1992. Benchmarking is a discipline of "good study habits" aimed at improving your competitive position. The two main kinds of benchmarking are product benchmarking and process benchmarking, though we can also benchmark company culture, manufacturing infrastructure, and national policy. Benchmarking means learning best practices, not in an academic setting, but by studying outstanding practitioners. Who is involved? Benchmarking should be done by a team of people who can and will implement the results. It is not a staff activity. Your benchmarking team will have greatest success working peer-to-peer with benchmarking partners. What is the goal? Benchmarking may be aimed at several levels; most commonly of competitive products and equivalent processes. The objective is not to learn benchmarking, or even conduct the study; but to learn and apply best practices. Aim to make a difference. One common pitfall: selecting benchmarking topics and partners that are convenient; rather than critical to your success. Another common pitfall: getting so wrapped up in the process and the "official" way to do things, that implementation lags. When should we begin? Benchmarking can begin when you have the nucleus of a committed team. Management support and education courses can help seed the process. Recognize that benchmarking is not a quick fix. Team members will need to spend several hours per week over months; to make a difference. Executive Briefing on Benchmarking Tutorial Notes O Peter Marts, Design Insight page 3 Where is benchmarking done? Benchmarking starts in your own facility. You need to understand your own products and processes first. Then, information from other companies comes by researching (on paper) and then visiting (in person) their facilities. Recognize that preparation is required to prior to site visits. Without adequate preparation, teams get a fraction of the benefits. Why should we study best-of-class practitioners? Every company can benefit from taking the blinders off, questioning assumptions, and learning how other successful companies conduct their business. Four specific learning objectives you can meet through benchmarking are: 1) Motivation for change - Sometimes the only way to shake a complacent culture (POW!) is to show that better products and processes are possible. For many companies, this will be the highest payback in benchmarking. 2) Best practices and "how to" ideas - Benchmarking the best of directly comparable products or processes usually reveals immediately useful (HOW to) ideas. 3) Stimulus for innovation and improvement- Benchmarking analogous products and processes can stimulate thinking (WOW!). What might a manufacturing service company learn from Walt Disney World? While the products and processes may not be the same, innovation can be inspired by thoughtful comparison with other companies. 4) Metrics, quantitative goals - Teams need goals to track and motivate improvement. How are we doing NOW? The idea of scribing a "bench mark" is to set a standard, proven feasible in practice, against which we measure our work. A benchmark is like a world record in the high jump - a tangible goal we hope to approach and then surpass. I suggest the four ow's, POW!, HOW?, WOW! and NOW, as a shortcut to keep these four learning objectives in mind. Your specific goals will guide your choice of benchmarking topics, partners, study methods, and actions. • • Executive Briefing on Benchmarking Tutorial Notes 0 Peter Marks, fksign Insight page 4 HOw is benchmarking conducted? This is a longer-than-a-paragraph story; the focus of our tutorial. e ❑ About one third of the work is to get your team up and running; and learn some useful methods for analyzing your own and partner's operations. Depending upon the focus, these tools might include Fish-bone Diagrams, Pareto charts, Gantt charts, Quality Function Deployment, Product $APPEALS, Voice of the Customer, Design of Experiments, and others. Start with simple tools and concentrate on building an effective team. ❑ Another one third of the work is to understand your own products and processes - and select a focus for external benchmarking that will make a big difference. Avoid the temptation to short circuit this step. Think of this step as "prospecting" to find high payback areas to benchmark and improve. A special focus of our tutorial will be learning tools, like the $APPEALS method, to set your program up for success. ❑ The next third is to prepare for and conduct the external benchmarking - studies. Significant effort is required here; and is relatively well covered in resources such as Robert Camp's Benchmarking book (Quality Press, 1989). • Many teams worry about finding appropriate partners. Interest in benchmarking is making it easier to find good partners; through conferences, courses, and databases. These include the CASA/SME's Autofact Conference sessions on benchmarking; AME's (Association for Manufacturing Excellence) on-site conference programs, the emerging APQC (American Productivity and Quality Center) benchmarking clearinghouse, and the Management Roundtable's (Boston) benchmarking conferences. See the References, attached, for more sources. Perhaps the most overlooked step in external benchmarking is planning to get the most from a site visit; knowing what to look for, how to ask questions, and how to divide up the work. ❑ The fourth third - yes, benchmarking seems to require 133% effort - is to capture the lessons learned and put them to work. Fortunately, the people involved from the beginning (Who are now able to apply best practices during the normal course of their work - and will soon reap the rewards. • How much is good enough? Good metrics (measures of performance) aim best intentions toward best results. Most companies have at least partially-flawed measurement systems. They measure and motivate the wrong things. Our old labor-based costing systems and today's move toward activity-based costing is one example. Teams must very carefully select right measures. It often pays to enlist the help of at least one enlightened metrics expert on the team. Executive Bring on Benchmarking Tutorial Notes 0 Peter Marks. Design Insight 4 I F page 5 r HiStory. Mention benchmarking - and companies like Cadillac, Harley-Davidson, i Motorola, and especially Xerox - come to mind. These companies came back from declining market shares; by learning the lessons of product and process improvement. They credit benchmarking as a tool that motivated change - and helped show the way. My first exposure to the term "benchmarking" was visiting Japan at the invitation of the Japan Management Association in 1982 - and meeting with Yotaro Kobayashi, the impressive head of Fuji Xerox, and the man who taught Xerox benchmarking. Yet, the search for best practices has a much longer history, back to the craft guilds, with apprentices learning best practices from master craftsmen. So, what about the recent enthusiasm for benchmarking? Is it a passing fad? Or, is it here to stay? Many have jumped on a benchmarking bandwagon that will not endure. Still, a disciplined effort to learn and apply best practices has been the key to manufacturing success for decades in the U.S., Japan, German worldwide. This will endure. Think of benchmarking as a deeply ingrained habit - a continual search for best practices. As for the hoopla about benchmarking, leverage it to good effect. It helps gain management commitment, makes it easier to find willing benchmarking partners, and enlivens teamwork. or May best practices be with you! • • Executive Briefing on Benchmarking Tutorial Notes 0 Pear Marks, Design Insight page 6 M Selected Resources 0 To see your products through your customers' eyes: Defining Great Products, Peter Marks, available from Management Roundtable (800-338-2223), 1991. The best way to begin benchmarking is often see your products through the customers' eyes, to understand their competitive purchase decision, and "reverse engineer" your sucess factors. Customer priorities should determine your product and process priorities. To get a baseline for your own processes: Benchmarking Product Development Practices, John Carter, also available from Management Roundtable (above telephone), 1990-1992. A baseline survey of product development practices. Consider, also, information on simple and direct approaches to process mapping; such as Digital Equipment's AAT or Hewlett Packard's Return Map. Copies of ISO 9040 or Baldrige Award criteria may be useful (though, possibly a time sink for most teams). To get a baseline on your own organization and culture: Strategies of the Best in Qass, Peter Marks, Design Insight (408-395-4001), 1992. Twelve best practices identified in a study of 30 manufacturing companies with top market share, top quality ratings, and top profits. Consider, also, Corporate Culture and Performance, John Kotter and James Heskett, The Free Press, 1992, for background reading. For an overview of some useful tools for teams: A wide variety of useful publications are available, especially from ASQC Quality Press, the HE (Industrial Engineers), the Productivity Press, and SME. See, for example, Kaoru Ishikawa's book on Quality Tools (Productivity Press). Your human resource or training department may have useful resources on team- building and profiling team member strengths and personality types. For an overview of benchmarking methods: The original book in the field is, Benchmarking, Robert Camp, ASQC Quality Press, Milwaukee, 1989. Also, check the special January 1992, "Future View," and March 1992, "Benchmarking World-Class Manufacturing," issues of Manufacturing Engineering magazine (SME, Dearborn, MI, 313-271-1500). Management Roundtable (617-232-8080) also publishes the Executive Benchmarking Guidebook. Note: the above material is covered in the Design Insight Benchmarking Course. • Executive Briefing on Benchmarking Tutorial Notes 0 Peter Marts, Design Insight page 7 Y Fifteen sources for potential partners: • Remember that benchmarking means value given for value received; like swapping trading cards. You are not stealing information, but trading it. The reception you receive to an invitation, "let's benchmark," will hinge on your partners's evaluation of what-do-I-and-we-get-for-spending-some-time-with-these-people. Here are 15 sources for potential partners: 1) Consider your personal contacts first. You and your team have thousands of colleagues, business cards, professional and trade association contacts. Ask your friends. A personal contact, at least a friend-of-a-friend-of-a-friend reference, is the best introduction to a prospective partner. 2) Start a clip file of sources on best practices. Business Week, The Economist, Forbes, Fortune, and the Wall Street Journal are good sources. Don't forget industry-specific sources (e.g., Aviation Week and Space Technology or Machine Design), interest-specific sources (Computer Aided Engineering, Managing Automation), and association newsletters (e.g. IEEE Publications, Association for Manufacturing Excellence, and SME's Manufacturing Engineering). 3) Get involved in local associations. Focused associations such as AME, the Center for Quality Leadership or IAEPD, the International Association of Electronic Product Developers (Westport, CT), may be active in your area. Widen your contacts, with an eye to benchmarking. Or, bring a benchmarking tutorial in-house. 4) Attend a benchmarking conference and meet a hundred or more like-minded individuals who want to benchmark. (Management Roundtable offers 2-3 programs per year. 5) Make contacts through professional associations, like SME in Dearborn, MI; trade associations, like AEA, the American Electronics Association; or AMT, the Association for Manufacturing Technology (formerly, NMTBA, National Machine Tool Builders Association). Search for specific associations and contacts in the Encyclopedia of Associations, updated yearly, Gale Research Company, Detroit, MI 48226-4094. 6) Scan the Encyclopedia of Business Information Sources, Gale Research Company, 835 Penobscot Building, Detroit, MI 48226-4094. This is a good guide to information sources. Another Gale publication, the Market Share Reporter, 1991 and 1992 editions, is a good source to pinpoint top companies, products, and service organizations. 0 Executive Briefing on Benehmarking Tutorial Notes C Peter Marks, Design Insight page 8 t r 7) Use a local, business, or university library and get to know a business librarian. Most would be an invaluable asset to your benchmarking team. In addition to the sources in the Gale Encyclopedia, above, there are thousands of special reports, resources, directories, market reports, and databases. Several offer sufficient depth to supplement on-site visits. Consider, also, association libraries. such as The Society of Manufacturing Engineers in Dearborn, Michigan. 8) Search for best practice companies, their locations, and specific contacts using directories. There are even several directories of directories! The best known sources on companies include Dun & Bradstreet (your accounting department may subscribe to a D&B service) and Standard & Poor's Register of Corporations, Directors, and Executives (New York: 212-208-8000). You might want to call for a fax copy of individual company reports from D&B Express Service (800-879-1362) at about $60 each. Another useful resource, more product-oriented, is the Thomas Register. Your company probably has a copy of both the S&P and Thomas Registers; in accounting, purchasing, or a company library. Most libraries also have copies. Finally, various Who's Who directories may be useful in making specific contacts. 9) Buy a copy of one or more company references for keep-to-ourselves use in teams. These sources are may not be comprehensive; but they stimulate team thinking. Affordable (about $25 each) and recommended sources are: - Hoover's Handbook of American Business 1992. - Hoover's Handbook of World Business 1992. - Access Japan '92. Access Nippon, Inc., Tokyo. The Hoover's Handbooks are good to stimulate thinking along the line, "what could we learn from company?" They also include a rough overall company grade; of some value in considering partners. All three of the above sources are available from The Reference Press, Inc., Austin, TX (tel: 512-454-7778). Another recommended source is: - Everybody's Business (A Field Guide to 400 Leading Co's in America) This source is edited by Milton Moskowitz et al; and published by Doubleday Currency (1990). 10) Consider innovative small companies as a source of best practices. Annual directories of "best" small companies are published by Inc. Magazine, Electronic Business, and many others. Local business contacts (Chamber of Commerce, etc.) may pinpoint excellent small companies with leadership in one or more processes. • Executive Briefing on Benchmarking Tutorial Notes 0 Peter Marks, Design Insight page 9 4 11) Visit a good bookstore. You'll find at least 20 books in the typical business - • section; based on best practices at specific companies; from "searching for excellence," to describing "101 companies that profit from customer care." You may find a source that covers your specific industry (e.g., The Machine That Changed the World for automakers or Managing Quality for the room air conditioning industry). A few such books have served as rallying points for teams and their improvement efforts. 12) Tap your company contacts with market research firms (e.g., Advanced Manufacturing Research in Cambridge, MA; ClMdata in Ann Arbor, MI; Datapro in Delran, NJ; Dataquest in San Jose, Frost & Sullivan in NYC; Gartner Group in Stamford, CT; Harbor Research in Boston, MA; International Data Corporation in Framingham, MA; the Yankee Group in Boston, MA and many others). Also consider financial and market researchers (major investment firms like PruBache, smaller newsletters, and venture capitalists). Consider, also, a call to educational resources, like Management Roundtable in Boston, MA and also listed in several places, above. 13) Check for company contacts with consortia like MCC in Austin, TX or NCMS, the National Center for Manufacturing Sciences in Ann Arbor, MI; plus government-related information sources. One is M77AC - the Manufacturing Technology Information Analysis Center at IIT Research Institute, Chicago, IL (800-421-0486). MTIAC tracks Manufacturing Research Centers throughout the U.S. (such as 177, in Ann Arbor, MI and the Iacocca Institute at Lehigh University, Bethlehem, PA). APQC in Houston, TX (713-685-4666) is starting a benchmarking clearinghouse; with first year membership costs ranging from a couple thousand to $50,000 up, depending upon company size. Most Japanese and European consortia also have some provision for international participation. 14) Ask your equipment and service vendors if they know best practice companies. System integrators like EDS and computer companies like IBM or Digital Equipment often have excellent contacts. Listings of top systems integrators have been compiled annually by Systems Integration magazine (Cahners Publications), the former Computer Systems News (CMP Publications), and Managing Automation (Thomas Publishing Company). Similar lists exist for almost any process from mail room equipment to quality control instrumentation. Also, ask competent consultants known through team members or your personal network. 14) Consider an on-line data service. CompuServe includes " IQuest, an on-line database search tool for nonlibrarians. It links to DIALOG Information Services (Palo Alto: 415-858-2700, 800-334-2564; about 350 databases), BRS Information Technologies (McLean, VA: 703-442-0900, 800-289-4277) and a dozen other business information vendors. CompuServe and other services (MCI, Prodigy, etc.) also provide access to company information databases like Standard & Poors Executive Briefing on Benchmarking Tutorial Notes 0 Peter Marks, Design Insight page 10 Online and Dun & Bradstreet. Be advised to have an idea of what you want and how to get it - before going online. Access charges add up quickly. 15) Consider other electronic-access information resources. A variety of CD-ROMs list businesses throughout the U.S.; starting around $100 up to $1000's. You may have contacts through Internet or through Forums or User Groups. Compiled & ® copyright Peter Marks, DESIGN INSIGHT, 408-395-4001, Los Gatos, CA. Permission is granted for any benchmarking team to copy this document in its entirety. • Executive Briefing on Benchtnarking Tutorial Notes 0 Peter Marrs, Design Insight page 11 ABOUT THE SPONSOR Management Roundtable, Inc. (MRT) was established in 1980 to provide information, research and problem-solving opportunities nec- essary to manufacturing competitiveness. The focus of MRT activities is on the combined use of technology and management practices to achieve overall business success. MRT publishes executive reports, videotape series and other mate- rials which offer unbiased decision-making information regarding a wide range of engineering and manufacturing innovations. Management Roundtable, Inc. also sponsors conferences on a number of engineering and manufacturing topics, including annual events on Design for Manufacturability, Concurrent Engineering, Manufacturing Leadership, Competitive Benchmarking, CIM Data- base Management, and Desktop Manufacturing. Management Roundtable ■ 1050 Commonwealth Avenue Suite 301 ■ Boston, Massachusetts 02215 ■ 6171232-8080 8001338-2223 ■ faerimde 6171232-0879