City of Kansas City Long-Term Financial Plan Project Plan
Project Scope:
PFM will assist the City to develop a five-year long-term financial plan, including establishing a baseline for revenues and expenditures, creating a financial model to use for establishing the “as is” financial position of the City and projecting the impacts from changes to the baseline revenue and expenditure assumptions, providing options for closing any identified fiscal gap, and reporting on the impacts of current and future budget decisions. PFM will, with necessary involvement of City officials and staff, complete project deliverables within a period of 6-8 weeks from project kick-off or as agreed to by PFM and the City. Deliverables are outlined in the
Project Work Plan:
At a conceptual level, PFM views a successful Long-Term Financial Planning process as encompassing three primary phases:
§ Baseline Assessment
o Review of trends: revenues, expenditures, demographics
o Review of tax levels and development incentives
o Review of services and mandates
o Review of debt levels and CIP needs
o Assessment of key budget drivers, risks, and liabilities
o Development of “as-is” multi-year financial model
§ Initiatives Development
o Identification of goals and targets beyond baseline (services, tax policy, other economic/capital investment, reserves)
o Development of gap closing “initiative” options and strategies
§ Long-Term Financial Plan and Report
o Integration of targets and initiatives into balanced framework
o Financial model and communications document
o Implementation plan for initiatives
o Metrics for monitoring progress, inclusive of timeline
In turn, these phases ultimately cycle back for regular (typically annual) updates based on the findings from ongoing implementation and monitoring.
Key Tasks - Assumes Approximately 9-Week Project Period (9/3 - 11/3)
1. Interviews and Information Gathering (Weeks 1-2)
a. Establish Governance Structure
b. Kickoff – Steering Committee and other key stakeholders
c. Data Requests
d. Senior Official and Key Staff Interviews
e. Finalization of Project Work Plan and Metrics for Project Success
f. Agreement on Model Structure and Functionality
Within the framework established above, PFM would use the early stage of the project to establish a structure for project governance, receive key data and other city information, communicate the project goals and process to key stakeholders and convene meetings with City leadership and key staff.
Project governance would, at least, include identifying the City project sponsor, a project manager, and a day-to-day project contact. The project sponsor would be a key city leader who will ultimately “own” the project from the city perspective. The sponsor should be the ultimate champion for the project and the key decider on policy issues associated with the project. The project manager would be the primary point of contact for the PFM project manager in maintaining communication on project direction, progress and issues that require resolution or guidance from city management. The city project contact would provide assistance with scheduling, logistics and other project administrative issues.
From PFM’s perspective, most projects benefit from a broader stakeholder involvement in project governance. A steering committee, which would include the project sponsor, project manager and other senior stakeholders as well as the PFM engagement and project manager, can broaden the buy-in from key city stakeholders and provide a “sounding board” for project approach and policy issues and choices that inevitably arise in the course of a long-term financial planning project. This might include members of council, department heads or other community leaders. This group would meet semi-regularly – perhaps every two or three weeks.
Once the governance structure and preliminary project plan are agreed upon, PFM would organize a kick-off meeting with the Steering Committee, which would introduce the PFM project plan, the PFM team and begin the discussion of the definition of a successful project outcome. PFM would also, as needed, schedule a kick-off with key stakeholders who will be actively involved in the project. These sessions provide an opportunity for the Project Sponsor to communicate the importance of the project and provide an opportunity for buy-in by the Steering Committee and other stakeholders. It also provides a defined starting point for the project, and timelines can be clearly communicated from that specific point in time.
PFM will, at or shortly after the kick-off, make a detailed information request, which will provide the City financial and other documentation that will form the basis of the financial model. This will include budget and accounting data, employee headcount, job classification and salary and benefits data, as well as relevant city reports and other documents.
As part of the information gathering process, PFM will conduct interviews with senior City officials and key staff to gain a better understanding of key challenges, operations and management structures. PFM will also work with City Finance staff to gather the information and assumptions necessary to construct the financial model.
Based on the information gathered to date, PFM and the project sponsor will agree upon a final project work plan, the metrics for success, and the functions and capacity of the financial model.
2. Analysis and Review (weeks 3-6)
a. Specialized Evaluations
i. Development Incentives
ii. Current Services
iii. Unfunded Mandates
iv. Debt levels and CIP
v. Comparative Tax Levels
b. Budget Driver Analysis
i. Workforce costs (wages, benefits, headcount)
ii. Service trends and anticipated changes
iii. Revenue trends, opportunities, and goals
iv. Management and productivity (gap closing) opportunities
c. Reserve analysis and targets
d. Develop Model
The second phase of the project will build upon the understanding gained in phase one. PFM staff will analyze current budget drivers, including current levels of service and revenues, including benchmarking these and other key areas with comparable cities in Missouri and around the nation. PFM will also examine other cost drivers or revenue decisions, including development incentives and debt levels in the context of the City’s capital improvement plan. This analysis will also focus on opportunities to adjust current drivers, such as changes to workforce costs and management and productivity levels.
Based on identified opportunities, PFM will model various scenarios on the revenue and expenditure side to inform City policymakers of the pluses and minuses of various choices. Based on City feedback, PFM will identify these alternatives and provide greater detail on issues surrounding workability, implementation and risks associated with key decisions.
3. Report Preparation (Weeks 7-9)
a. Preliminary Draft Plan to Steering Committee
b. Edits, Revisions, Graphic Enhancements
c. Communications Plan Developed for Release
d. Final Plan Released
Based on city feedback and analysis from the first two phases of the project, PFM will prepare a report that provides a draft plan with gap closing and other initiatives to the steering committee. Based on their feedback, PFM will make edits and revisions to the plan, as well as preparing necessary charts, graphs and other graphics for communication of the final plan and recommendations. PFM would also work with the City to develop a communication plan to clearly articulate the findings and recommendations from the plan, as well as participate as needed in the actual communication of the final plan to City stakeholders and citizens.
4. Implementation Support (Post-Project; Optional)
a. Development of Ongoing Monitoring and Reporting Framework
b. Knowledge Transfer for Long-Term Financial Planning Model (Training, Manual Development)
c. Assistance With Specific , Identified gap Closing Initiatives
Although outside the scope of the project, PFM will be willing to discuss areas where its continued involvement would benefit the City and its progress in achieving the outcomes identified in the Long-Term Financial Plan.
The timeline envisioned is aggressive, and will require strong collaboration and cooperation for successful and timely delivery. Accordingly, as further outlined below, PFM will work with key City staff, as appropriate, to create a regular reporting process during the duration of the project to ensure that issues that pose a risk to timely project development and completion are addressed and resolved and that all parties are aware of project progress, both at the task and deliverable level.
City Involvement
PFM is focused exclusively on the public sector, and has broad experience teaming efficiently and effectively with municipal professionals. All of the senior members of our team are seasoned, former government leaders, who bring a “user perspective” to our work. We understand the structure and challenges of governments, and require no on-the-job training to orient ourselves to the context of a public sector agency. Our experience not only provides us credibility with line City staff, but also leads us to focus quickly on “actionable” opportunities for positive organizational change.
Accordingly, PFM and Valdés are strongly committed to understanding and gaining buy-in from those who will carry our recommendations forward (or not) when our project engagement is complete. We value internal insights and input tremendously, while also respecting the importance of working efficiently to minimize administrative burdens.
Key strategies for such efforts are proposed to include:
· Active coordination with a senior-level Project Steering Committee to provide ongoing direction and feedback to best target our work and “reality test” working concepts;
o Given the accelerated timeframe for this project, we recommend a standing weekly meeting/call. During some weeks, such meetings may not be required, however, the regular availability of a senior-level forum will be important for ensuring that the project remains on target and on track.
o As part of this effort, PFM proposes to provide weekly interim status reports and updates for the key project sponsors as the project progresses.
· Designation of a primary Project Liaison to centralize data requests, scheduling, and other logistics so as to minimize the disruption of day-to-day operations that can arise from consultant reviews;
o PFM anticipates that this assignment to be an approximately half-time commitment for the duration of the project
Other key City financial and operational managers and officials should also anticipate periodic interview sessions and data analysis demands beyond formal Steering Committee sessions. The extent of such requirements will vary by function, but key budget/finance managers will likely dedicate approximately 5-10 hours per week to this effort to drive toward completion by the target.
Project Team
As noted in our proposal, PFM is committed to provided an experienced, senior team for this project. It will include:
Engagement Director: Jeanne Vanda, Managing Director
Engagement Manager: Michael Nadol, Managing Director
Project Manager: Randall Bauer, Director
Michael and/or Jeanne will be responsible for ensuring that the necessary resources are available to meet the needs of the City. At least one will be available for all Steering Committee meetings and as necessary throughout the project. Randall will be directly reponsible for the day-to-day conduct of the project. He will be in regular communication with the City Project Manager, will provide written project updates as agreed upon, and will have literally daily involvement with the project. Both Michael and Randall will also have significant responsibility for key subject matters within the project, particularly workforce, development incentives and revenue issues.
Subject Matter Experts: Robert Bobb, Director; Tionna Pooler, Senior Managing Consultant; Virginia Rutledge, Senior Managing Consultant; Jillian Barrick Jones, Senior Managing Consultant; Robert Winthrop, Senior Managing Consultant; Marco Listrom, Managing Principal, Valdes & Moreno
As noted in the PFM presentation, PFM forms flexible work teams to handle various aspects of its projects. PFM will utilize these senior resources, all of whom are project managers, to match their areas of expertise with specific project needs. They will take the lead on the broad key subject matters that will make up the multi-year financial plan – whether it be financial policies and practices (Virginia Rutledge or Nickie Whitaker), revenue policy and practices (Robert Winthrop or Randall Bauer), financial modeling (Jillian Barrick Jones or Tionna Pooler), debt policy (Tionna Pooler or Marco Nistrom), workforce (Michael Nadol or Robert Bobb), or public safety (Robert Bobb or Robert Winthrop).
Additional Professional Staff: LaDawna Reynolds, Eric Traub, Ashali Singham.
PFM’s professional staff will provide day-to-day quantitative analysis and support for the senior members of the team, in developing and maintaining the financial model, analyzing data from comparable cities, organizing and analyzing data and reports and assisting with key project tasks. PFM’s professionals are experienced – generally with government experience or advanced degrees – and bring specialized skills and training in areas like financial modeling.
Project Deliverables:
Phase One:
§ Schedule and hold Project Kick-off
§ Submit City data request
§ Finalize and submit project work plan and metrics for project success
Phase Two:
§ Working financial model for analysis of baseline and intiative development
§ Submit draft findings, initiatives and costing methodologies
§ Schedule and hold stakeholder briefing on draft findings and initiatives
Phase Three:
§ Final report
§ Communications plan
§ Schedule and hold final briefings and roll-out for plan