Minutes 03/21/2005 - Laserfiche WebLink

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March 21. 2005 The total increase in City funding for the Schools is $5 million, from $31 million in FY05 to $36 million in FY06- an increase of 16 percent. The $5 million increase will provide total teacher salary increases of 8.5 to 9 percent. The $5 million increase is more than double the $2.2 million increase in City funding for the Schools in FY05. The significance of the City's funding effort can be measured in other ways as well: . The percent of total local tax revenue (exclusive of utility taxes) in the City's budget has grown from 28.5 to 30 percent. . The percent of the City's total new money dedicated to Schools is 39 percent. The CIP includes funding of $2.1 million for the new Park View Elementary School, with construction scheduled to begin in the FY06 fiscal year. The CIP also includes $500,000 for renovations to Highland-Biltmore Elementary School, $500,000 for Churchland High School air quality improvements, and $3.6 million for major renovations at various schools, including roof, boiler and HVAC improvements. PROGRESS ON FINANCIAL STRATEGIES The City's national financial advisers, Public Finance Management (PFM), in 2003 recommended a number of significant financial management policies in order to restructure and improve the City's financial condition. These policies, and their results, are closely monitored by bond rating agencies (Moody's, Standard & Poor, and Fitch). Each year Portsmouth's fiscal health is reviewed and compared in detail with other local governments for purposes of determining the City's bond rating. We are currently rated AA- (double A minus). While our rating is currently "investment grade," it is not as advantageous as some of our neighbors. In addition, the City has been on a "bond rating watch" the last two years for a possible downgrade of its rating. Our commitment to and performance within strict financial policies has allowed us to navigate successfully through these troubled waters. The first of these policies is to achieve an unreserved and undesignated General Fund balance target of 12.5 percent of General Fund revenues in order to maintain strong cash reserves for the City and to ultimately eliminate the need for short-term borrowing to meet financial obligations. Effective June 30, 2004, the City had reached 10.4 percent. Another financial standard calls for the City to develop a Capital Improvement Program on a prioritized basis, and to use CIP funding to fulfill these established priorities. The City has recently completed a five-year financial forecast to serve as the basis for financing capital projects. Other CIP principles guiding the City are: maintain debt affordability; give priority to public safety and education projects; address ongoing maintenance and replacement needs; give priority to projects supporting private development; and schedule funding in the year to be spent. The City is using these principles to guide its capital budgeting. One of the largest concerns of PFM, the bond rating agencies and the City's financial staff involves the two Portsmouth retirement systems which were "closed out" several years ago. These two systems have about $101 million in unfunded liabilities. On the one hand, the benefits associated with former City employees under these systems represent "promises" for their retirements, which are underway, while these systems' liabilities are ongoing and continuing for the City in a "catch up" mode. The recommendations contained in this budget continue to fund these systems on a sound actuarial basis. We are continuing to implement modest phased rate increases in our water, sewer and stormwater systems. Planned rate increases included in the FY06 budget are an increase from $3.00 per 1,000 gallons to $3.15 per 1,000 gallons in residential water rates, from $2.27 per 1.000 gallons to $2.42 per 1,000 gallons in residential sewer rates, and from $4.00 per ERU to $4.50 per ERU in stormwater rates. These rate increases enable us to continue to upgrade the infrastructure supporting those utilities. We are also redirecting public utility funds to neighborhood infrastructure needs in the FY06 budget by reducing the amount of those funds directed to the General Fund.