The City of Rye Experience

1
The City of Rye Experience

• Michael A. Genito, Comptroller
• City of Rye
• 1051 Boston Post Road
• Rye, NY 10580
• TEL [phone]
• FAX [phone]
• E-mail mgenito_at_ryeny.gov
• http//www.ryeny.gov

2
The Discipline of Planning

• What we do on some great future occasion will
  probably depend on what we already are, and what
  we are will be the result of previous years of
  self-discipline.
• - H.P. Liddon

3
City of Rye Financial Forecast

• City Council initiative
• Published July 2003
• Three year forecast (2004 2006)
• Focus on general fund
• Purpose
• Minimize/eliminate surprises
• Improve budget/program planning

4
City of Rye Demographics

• 15,000 population
• Six square miles
• 175 full-time employees
• Seven member finance staff
• Triple A credit rating
• Award-winning financial reports
• Upscale community

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Development Resources

• Finance staff (production)
• Input/advice from other departments
• Desktop applications (Word and Excel)
• Internet
• Media (newspapers, radio, television)
• Professional associations
• OSC, service providers, consultants, etc.

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Finance Staff Concerns

• Misinterpreting forecast as budget
• Misuse/abuse of information in report
• Cost/benefit of producing report
• Challenges to estimates/assumptions
• Reactive vs. proactive response
• Willingness/ability to take action
• Consequences of poor forecasts

7
Sources

• Comprehensive annual financial reports
• Bargaining agreements/contracts
• City departments
• Bureau of Labor Statistics
• Bureau of Economic Analysis
• OSC, GFOA, ICMA, NYCOM, vendors
• Media (newspapers, radio, television)

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Production Tools

• Microsoft Word (narrative portions)
• Microsoft Excel (charts and graphs)
• Adobe Acrobat (merge and portability)
• Microsoft FrontPage (Web publishing)

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Report Format

• Table of Contents
• Introduction
• Disclaimer
• Description of funds included
• Estimates and assumptions
• Conclusion
• Charts and analyses

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Disclaimer

• Accuracy, completeness not guaranteed
• No warranty, expressed or implied
• Assumptions and estimates of CFO
• Disclaim fitness as to use of information
• Not an offer to vendors or employees
• Should not be relied on for personal or business
  financial decisions

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Introduction

• Future is always uncertain
• There are always unknown factors
• Response will affect forecast accuracy
• Change in factors will affect accuracy
• Any reasonable assumption is as good as any other
  reasonable assumption

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Included in Forecast

• Focus on general fund, but also used
• Special revenue funds
• Debt service fund
• Internal service funds
• Enterprise funds
• Capital improvements plan

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Assumptions

• Cost of living
• Current year revenues and expenditures
• Capital expenditures
• Vehicle acquisitions
• Taxable assessed valuations
• Revenues (major and all other)
• Expenditures (by object of expenditure)

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Sample Assumption

• Where a cost of living increase was calculated
  into an estimate, we used the change (2.55) in
  the consumer price index (CPI), not seasonally
  adjusted, for New York-Northern New Jersey-Long
  Island, NY-NJ-CT-PA, all items, 1982-84100, from
  April 2002 (191.8) to April 2003 (196.7). The
  same factor (2.55) was used for all three
  forecast years. The CPI information was obtained
  from the U.S. Department of Labor web site
  http//www.bls.gov on June 9, 2003.

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Sample Chart
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Sample Analysis (abridged)

• Employee benefits include
• Retirement Systems has advised us
• FICA rates are forecast to
• Medical, workers compensation, life insurance,
  and disability rates arebased on general
  information obtained from insurance consultants,
  insurance providers, and media coverage.

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Learning the Hard Way

• Document can be confused with other City
  financial publications
• Forecast can be misconstrued as budget
• Information can be taken out of context
• Estimates and assumptions challenged
• Value of document questioned

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The Good Side

• Long-term effects better understood
• Support finance officers positions
• Promotes sound financial policies
• Moderate effort to develop (KISS)
• Develops nexus between financial trends,
  budgeting and capital planning
• Great early warning system

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Does It Work?

• TAX RATE PER 1,000 T.A.V.
• Year Forecast Actual
• 2004 116.90 113.41
• 2005 131.18 116.80
• 2006 141.88 ?
• Note A decision was made in the 2003 budget to
  fund part of the retirement cost increase from
  fund balance.

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Spirits of the Future

• Are these the shadows of the things that will
  be, or are they the shadows of things that may
  be, onlycourses will foreshadow certain ends, to
  which, if persevered in, they must lead. But if
  the courses be departed from, the ends will
  change.
• - Ebenezer Scrooge