FINANCIAL PLANNING DIVISION ANALYSIS FY Budget. Bureau of Emergency Communications Commissioner Fritz

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1 DRAFT FINANCIAL PLANNING DIVISION ANALYSIS FY Budget Bureau of Emergency Communications Commissioner Fritz Report Date: March 7, 2011 Analysis by: Yung Ouyang I. Overview Budget Summary Actual Revised Request Base Request Total Percent FY FY FY FY Change Resources Budgeted Beginning Fund Balance $2,307,796 $1,658,142 $3,491,966 $3,491, % Charges for Services 194, , , , % Intergovernmental Revenues 6,361,189 6,624,045 6,570,076 6,548, % Interagency Revenue 0 230, % Bond and Note 29, N/A Fund Transfers - Revenue 11,038,910 10,320,591 12,814,915 12,727, % Miscellaneous Sources 70,791 50,000 50,000 50, % Total Resources $20,002,356 $19,083,289 $23,126,957 $23,018, % Expenditures Personal Services $12,992,144 $14,097,012 $14,184,968 $14,076, % External Materials and Services 347, , , , % Internal Materials and Services 2,776,957 2,535,302 4,059,518 4,059, % Capital Outlay 52, N/A Bond Expenses 153, ,736 1,330,111 1,330, % Fund Transfers - Expense 720, , , , % Contingency/Unappropriated Fund Balance 2,959,385 1,161,360 2,641,966 2,641, % Total Requirements $20,002,356 $19,083,289 $23,126,957 $23,018, % Total Bureau FTE % Percent Change is the change from FY Revised Budget to FY Total Requested Budget. II. Key Issues CAD-Next Operations & Maintenance Costs and the Associated BTS Interagency Agreement Since 2006, BOEC has been in the process of replacing its Northrop Grumman Computer Aided Dispatch (CAD) system with a new Versaterm CAD, and the new system is expected to go-live in April of this year. At $14.5 million, the cost estimate for this project is at an optimal confidence level since it has had extensive planning, engineering, and design and a vendor contract has been secured for implementation. Bureau of Emergency Communications Page 1 of 7 FY Budget Analysis

2 Interagency Agreement Changes As a result of the complexity and support requirements of the new CAD system, the bureau s interagency agreement (IA) with the Bureau of Technology Services (BTS) will be increasing significantly, from $1.7 million in the current fiscal year to $3.1 million in FY , an increase of more than $1.4 million, or almost 87%. However, the increase is about 21% from the FY level, unadjusted for inflation. The budgeted amounts for the IA with BTS in FY were about $2.6 million and were reduced to $1.7 million in FY as costs related to the new CAD system were shifted to the Public Safety Systems Revitalization Project s (PSSRP) budget during the final development phase of the project; $242,853 was re-pointed to PSSRP s budget in support of the CAD-Next system. BOEC redirected $450,000 of the IA decrease to its personal services budget in FY In light of the IA increase in FY , BOEC decided to not proceed with most of its original plans for the savings in FY , and the bureau is simply allowing the funds to drop to balance. Year BTS IA FY Revised* $ 2,578,372 FY Revised $ 1,666,620 FY Preliminary $ 3,110,242 *BOEC s IA with BTS dropped to $2,128,372 during the Spring BMP of FY The post-winter BMP Revised figure is used in this analysis to point out the cumulative savings the bureau realized in the drop in the IA from its highest point in FY to the FY level, which will be mentioned in the Resources Needed section below. If all CAD-related costs are removed from the IAs for FY and the next fiscal year, BOEC s base IA with BTS will actually be decreasing by about $135,000, or about 11%, from $1,184,340 to $1,048,972. The following table shows the components of the IA with BTS, the amounts for this fiscal year, the amounts for FY , the changes, and the percentage change. Service Provided FY Revised FY Estimate Change %-Change 800 MHz Access 27,924 35,166 7,242 26% Radio & Video Equipment 90, ,342 48,475 53% IRNE Data Allocation 28,797 29, % Telecomm Service 49,556 58,795 9,239 19% Business Lines 30,088 28,980 (1,108) -4% Long Distance 1,038 1,035 (3) 0% Cellular Phones 11,413 12,420 1,007 9% Radio & Video Billable 51,875 41,400 (10,475) -20% Telecomm Billable 124, ,900 20,400 16% BTS Corporate Services 117, ,062 (16,492) -14% Enterprise Server 113,684 44,184 (69,500) -61% Corporate Applications 27,984 2,091,621 2,063, % 30,070 28,923 (1,147) -4% Internet Access 15,458 15, % Desktop Support 129, ,473 (11,400) -9% Server Support 172, ,562 (10,182) -6% Data Networks 54,824 56,129 1,305 2% BTS Operations Billable 215,563 - (215,563) -100% Strategic Technology Billable 372,808 - (372,808) -100% Total 1,666,620 3,110,242 1,443,622 87% Bureau of Emergency Communications Page 2 of 7 FY Budget Analysis

3 BTS Operations Billable has been reduced to zero due to project support no longer being needed, while the vertical staff costs under Strategic Technology Billable will be included as a part of the large increase in Corporate Applications, which contain all the costs for the support of BOEC s infrastructure utilizing the new CAD system. CAD-Next Support Costs For FY , the Versaterm CAD technology support costs total $2,061,270, not including costs paid to the vendor which will be discussed further below. The following table lists the components of the support costs and their associated amounts and compares them with what the costs would be if BOEC continued to use the old Northrop Grumman system: Expense Category Northrop Grumman Versaterm Difference Support Personnel Service Costs $ 751,572 $ 1,009,615 $ 258,043 7x24x365 Labor Costs - Premium Pay & Overtime $ 2,000 $ 245,830 $ 243,830 External Materials & Services* $ 50,650 $ 195,000 $ 144,350 Data Storage Costs $ 8,210 $ 24,629 $ 16,419 Indirect Costs $ 332,721 $ 516,491 $ 183,770 General Fund Overhead (3.5%) $ 40,080 $ 69,705 $ 29,625 Total $ 1,185,233 $ 2,061,270 $ 876,037 *Does not include vendor support costs paid to Northrop Grumman or Versaterm which are discussed below. The increase from what the support costs would be if BOEC continued to use the old system to what they will be using the new Versaterm system amounts to $876,037. This includes an increase of $258,043 in personnel costs due to the addition of 2.38 FTE for Oracle, AIX, and geofile maintenance support. Moreover, BOEC would like to have 24 hours a day, seven days a week, 365 days a year support for the new system until it knows that such support is not needed, and the premium on-call pay and the overtime backup pay for this level of support amounts to $245,830. BOEC and BTS agreed that this 24x7x365 support can be decreased mid-year after BOEC has had months of experience with the new system and then concludes that decreased support is warranted. Costs for repair and maintenance services for the various servers and databases will be increasing by $136,350. Other External Materials & Services costs for education and travel amount to $8,000, whereas for the old system, these costs are not present. Finally, data storage costs will be increasing by $16,419, and indirect costs and General Fund Overhead will be increasing by $213,395. Resources Needed PSSRP and BTS are paying for the support of the new CAD system in FY , including costs that will be incurred from go-live in April to the end of the fiscal year. For FY , BOEC has indicated that if it does not return unspent FY and FY funds to the various user jurisdictions, including Portland, the bureau will have enough funds to support the $1.4 million IA increase, but the bureau would need additional resources in the years after. The bureau s year-end projections produced for the Winter BMP show that it may end the current fiscal year with a fund balance of almost $3.6 million in the operations portion of the Emergency Communications Fund. The FY beginning fund balance consists of cumulative unspent monies from FY that have not been refunded to the various user jurisdictions and projected unspent funds from FY Adding to the beginning balance all of the bureau s various revenues totaling $19.5 million and subtracting all of its non-contingency expenditures totaling $20.4 million, which include the BTS IA, BOEC would have about $2.7 million left in contingency for cash flow purposes in FY This contingency cushion is necessary, as Bureau of Emergency Communications Page 3 of 7 FY Budget Analysis

4 revenues from the non-portland user jurisdictions and the State of Oregon do not come in evenly throughout the year. Thus, the bureau will have about $850,000 from fund balance to finance the IA increase one-time in FY To pay for the rest of the $1.4 million increase, the bureau will be utilizing ongoing funds of about $600,000, which are part of the savings from the more than $900,000 decrease in the BTS IA between FY and FY The rest of the savings will be utilized to pay for increases in IAs with other City entities, primarily with OMF Facilities, as well as increases in General Fund Overhead charges. As the $850,000 from fund balance that the bureau will be using to fund the IA increase in FY is a one-time resource, BOEC will need an additional $850,000 ongoing beginning the year after, i.e., FY However, starting in FY , the bureau will need even more resources than $850,000 ongoing to support the new CAD system because it will also need to pay the vendor of the new system for support costs. Versaterm Vendor Support Costs Starting in FY , there will be costs for the support of the new CAD system from Versaterm, the vendor, for maintenance and license usage. These are paid for through FY from PSSRP s budget via the development contract but will need to be covered by BOEC in FY and beyond. The FY costs are $489,439, and the figure is projected to grow each year by 4% for inflation, so the estimated cost for FY is $509,017. In contrast, BOEC is currently paying $43,152 a year to Northrop Grumman for support of the old system. Thus, assuming that the cost of support from Northrop Grumman would remain at $43,152 in FY if BOEC were to continue using the old CAD system, BOEC will need an additional $465,865 beginning in FY for vendor support costs since it is migrating to the new Versaterm system. Adding the vendor support costs of $465,865 to the $850,000 needed to pay for the BTS IA increase means that BOEC will need an additional $1,315,865 ongoing to support the new CAD system beginning in FY Since the population of the City of Portland comprises about 80% of the whole of Multnomah County s, the City is responsible for paying for 80% of the additional ongoing costs, amounting to $1,052,692 per year, while the other jurisdictions all together are responsible for the remaining 20%, or about $263,173 per year. Recommendations Financial Planning has several recommendations regarding the increase in support costs due to the adoption of the new Versaterm CAD system. 1. First, considering that the capital costs of $14.5 million for the new system were completely borne by the City of Portland, with no support from the other jurisdictions, Financial Planning recommends that Council adopt a resolution stating its intent to ask the other jurisdictions to pay their fair share of the additional support costs, which amount to about 20% of the total costs. 2. Secondly, Financial Planning recommends that Council weigh the various options of how the City of Portland s share of the costs can be funded. For example, should BOEC look for efficiencies within its budget to pay for a share of the cost increase, or should Council provide some or all of the additional resources needed? If efficiencies are used to partially offset the increased costs, 20% of these savings would necessarily be credited to the other jurisdictions. Bureau of Emergency Communications Page 4 of 7 FY Budget Analysis

5 3. In regards to funding the IA in FY , Financial Planning recommends that Council make a formal decision as to whether or not the bureau should be allowed to keep unspent General Fund dollars from FY , and General Fund dollars from the current fiscal year that may potentially be unspent by year-end, in order to fund the IA increase next year. 4. Finally, after Council has decided on exactly how much of the increased costs should be funded by new ongoing resources, Financial Planning recommends that Council adopt a Budget Note directing that the amount be added to the City Economist s financial forecast. Bureau of Emergency Communications Page 5 of 7 FY Budget Analysis

6 III. Decision Package Analysis & Recommendations Reduction Packages Requested Cut - Overtime/EC_01, ($108,553), Bureau Priority #1 In response to the Mayor s directive to public safety bureaus to submit budget reductions totaling 0.75% of their budgets, BOEC has proposed cutting its overtime budget by $108,553, with $87,265 coming from the City of Portland, and $21,288 coming from all the other user jurisdictions. The bureau notes that implementation of the new Computer Aided Dispatch (CAD) system may require additional overtime and it is possible that the reduction in overtime funding could result in longer wait times for calls to be answered during peak call volume periods. Financial Planning believes that BOEC should be able to take the reduction and still provide services comparable to how the bureau has previously operated. The new CAD system is set to golive in April, prior to the start of the next fiscal year, and the bureau should already have several months of experience using it by July, the start of the fiscal year. Training existing staff on the new system, which may require them to utilize overtime, should be completed during the current fiscal year. Furthermore, BOEC plans two normal recruitments for new call-taker and dispatch trainees during the next fiscal year, one in the fall and one in the spring, with the objective of hiring at least nine positions in each recruitment. The goal of the bureau is to maintain a minimum of 102 certified staff. Hiring of new trainees was suspended due to the implementation of the new CAD system, and the bureau has relied on staff working overtime to compensate for the reduced level of staffing. The addition of additional staff should reduce overtime usage. Financial Planning believes that BOEC should be able to pay for the new recruits. Adding the salary and benefits costs of these new recruitments to the bureau s FY year-end projected spending on personal services yields a figure that is not significantly different from its Requested Budget for personal services that includes the reduction in overtime. The bureau notes that there are currently savings from seven vacant positions, and normal attrition should result in even more savings in personal services that will ensure sufficient funding into the next fiscal year. FPD Recommendation: ($108,553) one-time V. Performance and Accountability Program Summaries and Key Performance Measures BOEC has only one program, Operations, and has listed it on the template. Financial Planning noted that the bureau had not provided a description of the program and has informed BOEC of the omission. The bureau listed three measures, two workload and one efficiency measure. These are adequate in providing a high level depiction of the work of the bureau. Baseline Template BOEC s Baseline Template provides a good overview of the bureau and the significant issues that it faces, including the large increase in its IA with BTS due to the adoption of the new CAD system. The only change that Financial Planning requested BOEC to make was adding a short textual description to the single performance measure graphed in the Performance Dashboard. In addition, Bureau of Emergency Communications Page 6 of 7 FY Budget Analysis

7 Financial Planning asked the bureau to ensure that its financial figures on the template match up with those in the recently completed Comprehensive Annual Financial Report. Service Improvement BOEC s FY improvement goals for developing customer service competencies with all staff continue to be: Focus on quality awareness in handling the receipt of calls and dispatching emergency services; and Focus on effective and responsive operational supervision. In regards to the first goal, BOEC has implemented a quality awareness program aimed at improving its efficiency and quality of call handling and resource dispatching which should help mitigate customer service complaints. To achieve the second goal, the bureau continues to conduct timely and thorough supervisor evaluations that clearly define expectations and measures for achieving results and transitions those results directly into the improved performance of call-takers and dispatchers. In its Customer Service Improvement Status Report, BOEC indicates that it does not conduct any community surveys regarding customer service but relies on Citywide surveying efforts such as the 20 th Annual Community Survey, the results of which issued in November of That survey showed that 80% of residents felt positively about services, which compares favorably to past surveys. Concerning workforce development, BOEC mentions how it has partnered with the Office of Neighborhood Involvement to listen to the public and discover ways to make accessing services easier for them. In addition, the bureau notes how its supervisors have taken an active role in assessing professionalism for operational employees on a monthly basis. Bureau of Emergency Communications Page 7 of 7 FY Budget Analysis