teetet  Waynesboro Borough  Strategic Management Planning  Program  Final Presentation  October 28, 2020  PENNSYLVAN ECONOMY LEAGI Information, Insight, Integr    Pennsylvania's leading independent, nonprofit, public policy research organization for  over 80 years  PEL provides technical assistance and consulting to municipalities of all sizes and types throughout the state PEL works to foster good government that provides the most efficient core public services that meet local residen needs at the lowest cost We believe healthy local governments assist in creating a sustainable Pennsylvania economy that can keep and attract residents and businesse  Pennsylvania  Economy  League    Strategic Management Planning Program  Scope of Work  u.  Analyzed Waynesboro's financial history and demographics  Projected revenues and expenditures  Reviewed administration, public safety, public works and labor/collective bargaining  Compiled areas  recommendations for all  ia    Demographics Population 1970 to 2010  Waynesboro population declined from 1970 to 1990 and then experienced growth Franklin County experienced steady growth during same time period  11,000  160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0  10,500  10,000  9,500  9,000  8,500  1970  1980  1990  2000  2010  Waynesboro  -Franklin County    Demographics Population by  Slight growth in proportion of working age population and under age 18  Slight decline in under age 65 population 18to 64 population are primary taxpayers  Age  12,000 10,000 8,000 6,000 4,000 2,000  1,588  1,904  1,689  6,438  5,523  5,707  2,151  2,218  2,542  0  1990  2000  2010  Under 18 18-64 65 & over    Increase in population is the result of natural growth (births greater than deaths) Pattern shows residents leaving borough  Demographics Net Migration  despite population growth  1990 to 1999 9,578 9,614 36  2000 to 2009  2010 to 2017 10,568 10,793 225  1990 to 2017 9,578 10,793 1,215  Total Population (start) Total Population (end) Total Population Change (a)  9,614 10,568 954  Births Deaths  1,448 1,102 346  2,035 1,060 975  1,433 1,021 412  4,916 3,183 1,733  Natural Pop. Change (b)  Net Migration (a minus b)  -310  -21  -187  -518 6    Slight increase in owner-occupled; decline in renter-occupied  Demographics Housing Units  Number of vacant units more than  doubled  3,000 2,500 2,000 1,500 1,000 500 a  2,373  2,177  1,845 1,913  2,051  2,139  405  457  209  1990  2000  2010  Owner Occupied -Renter Occupied Vacant    $200,000 $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000  Demographics Median Home  Value  Waynesboro median home values are lower than both the state and Franklin County as a  whole  $0  1990  2000  2010  Waynesboro $63,000 $85,500 $157,100  Franklin County  $70,500 $97,800 $175,00  - Pennsylvania $69,700 $97,000 $159,30    $60,000  Demographics Median Household  $50,000  Income  $40,000  Same pattern in household income Waynesboro is below both the state and the county as a whole  $30,000  $20,000  $10,000  $0  1990  2000  2010  Waynesboro $22,972 $31,574 $41,155  Franklin County  $28,805 $40,476 $51,035  Pennsylvania $29,069 $40,106 $50,398    10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0  Demographics Poverty Level  8.5 8.1  8.2,  7.8  7.0  Borough's percentage of families in poverty steadily increased from 5 to8 percent  5.7 5.0  5.4  5.2  Franklin County poverty trend was flat to  declining  Borough's poverty rate remains below the state in contrast to other wealth measurements  1990  2000  2010  Waynesboro -Franklin County  Pennsylvania    Population has rebounded after decline from 1970 to 1990; increase  is due to natural growth  Growth in proportion of working age and under age 18; decline in over 65; positive sign for tax base Positive trend of owner-occupied housing just under 50 percent of total and increasing compared to  Demographic Findings and  Tax Base  Implications  renters  Vacancies bear watching; borough has focused on code enforcement Most wealth measurements below  state and county  11    Historical Financial Summary  2017 surplus is result of one-time grant  funds  Deficits in two out of five years  $8,000,000 $6,000,000 $4,000,000 $2,000,000  $0  -$2,000,000  2014  2015  2016  2017  2018  Revenues Expenditures  $4,771,926 $4,837,884 $5,116,966 5,926,250 5,167,977 4,901,925 4,732,464 5,100,411 5,695,288 5,867,976  Surplus/(Deticit, -129,998  105,420  16,555  230,962  -699,999    400,000  Surplus/Deficit and  200,000  Adjusted Surplus/Deficit  -200,000  Removing one-time revenues and expenditures results in: Deficit in 2017 instead ofa surplus Larger deficit in 2018 Adjusted revenue growth is 6 percent Adjusted expenditure growth is 18 percent  -400,000  -600,000  -800,000  -1,000,000  2014 2015 2016 2017 201  Surplus/(Dericiy  Adjusted Surplus/(Deficity    Market VS. Assessed Value  2001 to 2018  $500,000,000 $450,000,000 $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000  Increased 74%  Increased 21%  $0  2001 2003 2005 2007 2009 2011 2013 2015 2017  - Assessed Value  Market Value  14    Taxes are just under half of total revenues Real estate is main revenue source but  Historical Tax Revenue  shows little growth  Largest growth is in EIT  Per capita and mechanical devices taxes  eliminated in 2017  Change 2014t to2018 $  2014 Actual  2015 Actual  2016 Actual  2017 Actual  2018 Actual  %  Real Estate Taxes Real Estate Transfer EarnedIncome Tax Local Services Tax Per Capita and Mech. Dev. Total Tax Revenue  $1,181,995 $1,167,461 $1,206,414 $1,248,662 $1,228,148 46,153 3.9  104,906 837,014 174,249  100,139 867,706 171,447  143,955 892,050 217,408  135,546  137,690 32,784 31.3  891,983 1,010,642 173,628 20.7  163,278  180,422  6,173 3.5  15,021  17,635  17,937  7,232  2,600 -12,421  $2,313,185 $2,324,387 $2,477,765 2,446,701 $2,559,502 246,317 10.6  15    Interfund transfers from sewer and water are largest non-tax revenue source  Historical Non- Tax Revenue  Refuse fees are bulk of historical charges for services; moved to own fund in 2019  2014 Actual  2015 Actual  2016 Actual  2017 Actual  2018 Actual  CHANGE 2014-2018 $  %  Interfund Transfers Charges for Services intergovernmenta. Rev. Other Financing Licenses and Permits Fines and Forfeits interest, Rents Total Non-Tax Rev.  1,112,887 1,129,549 1,234,921 1,367,745 986,089 -126,798 -11.4 1,109,204 1,131,166 1,175,126 1,004,836 1,022,338 -86,866 -7.8  34,130 50,431  35,953 43,666  18,360 796,887 140,043 105,913 310.3 51,508 115,959 281,714 231,283 458.6  91,042 105,466 52,103 8,945  98,998 128,580 49,960 10,328  97,142  6,100  6.7  59,361 8,336  55,039 10,502  66,873 14,770 28.3  14,276  5,331 59.6  2,458,741 2,513,497 2,639,201 3,479,549 2,608,475 149,734  6.1  16    Transfers account for 40 to 45 percent of  Historical Transfers  borough revenue  Transfers offset water and sewer expenditures that are paid from the  General Fund  2014  2015  2016  2017  2018  CHANGE 2014-2018 $  Actual  Actual  Actual  Actual  Actual  Trans from Water Fund Trans from Sewer Fund Street Light Fund Transfer Total Interfund Transfers  $639,574  $641,154  $742,479  $770,501 $634,693 -4,881  473,312  488,395  492,442  577,243 351,396 -121,916 -25.8  0  0  0  20,000  0  0 0.0  $1,112,887 $1,129,549 $1,234,921 $1,367,745 $986,089 -126,798 -11.4  17    Public safety including police and fire is the largest cost center; experienced most growth Police expenditures grew from $1.1 million Fire expenditures grew by around $400,000 Next highest cost centers are employee  Historical  to $1.4 million  Expenditures  benefits and public works  2014 Actual  2015 Actual  2016 Actual  2017 Actual  2018 Actual  CHANGE 2014-2018 $  %  Gen. Government Public Safety Health Public Works Culture & Rec Employee Benefits Transfers Total Expenditures  1,000,883 1,163,067  982,625 1,079,117 1,155,594 154,711  15.5 25.5  1,587,652 1,590,357 1,875,440 1,858,936 1,993,240 405,588  15,000 893,171 61,022  10,000 828,227 53,966  10,000 874,071 80,213  5,929  6,976  -8,024 -53.5  995,980 1,143,922 250,751  28.1 -6.0 16.6  202,795  57,382  -3,640  1,246,221 1,103,500 1,220,875 1,500,761 1,453,634 207,412  97,976  -16,654  57,187  51,771  57,228 40,748 -41.6  4,901,925 4,732,464 5,100,411 5,695,288 5,867,976 966,051  19.7 18    Revenues and Expenditures  Per Capita  600.00 500.00 400.00 300.00 200.00 100.00 0.00  2014  2015  2016  2017  2018  Revenues Per Capita  374.63 365.16 378.99 429.91 410.62  Expenditures Per  498.95 420.89 438.26 418.39 467.48  Capita  1    2019 Actual includes sewer and water transfers approximately $300,00 higher than budgeted; increase in transfers meant borough did not have to use admin reserve Revenues include 3 mill General Fund property tax increase in 2019; total millage grew from 25.19 in 2018 to 29.68 including a 1.5 mill new levy for fire  2019  Budget  VS. Actual  2019  2019  Actual  Budget  Revenues*  $6,406,153  $7,202,007  Expenditures  $6,448,648  $7,173,519  Surplus/(Deficit,  -$42,495  -$28,488  20    2019 Millage Comparison  MUNICIPAL  SCHOOL  TOTAL  Waynesboro Borough  29.680  97.518  127.1  Quincy Twp  1.600  97.518  99.118  Washington Twp  6.400  97.518  103.918  MontAlto Borough  9.550  97.518  107.068  21    Four years of deficits since 2014 once  one-time events removed  Borough depleted its fund balance in  2018  Historical  Property taxes show minimal growth Earned Income taxes up 20 percent Second largest revenue is interfund  Findings  2014  transfers  Public safety is the largest cost center 40 percent of total expenditures and accounts for largest growth  through  2019  Limited property tax base growth due to  outdated assessments  Surrounding communities have lower  taxes  2    Baseline Projection Revenue Assumptions  2020 to 2024  Tax rates and fees held at 2020 levels  0.5 percent annual increase in Real Estate Tax revenue based on assessment  increases  Realty Transfer Taxes held at 2020 level  1.5 percent annual growth in Earned Income Tax revenue 0.8 percent annual growth in Local Services Tax revenue  Fees, certain other revenues increased by 0.5 percent to 2 percent annually Transfers from Water and Sewer Funds increased by 3 percent annually Transfer from Sanitation Fund increased by 2.3 percent annually  Other revenues held at 2020 levels  IMPACT OF COVID-19 NOT WELL KNOWN AT THIS TIME  23    Baseline Projection  Expenditure Assumptions  2020 to 2024  Employee position count remains at 2020 budgeted levels Union employee wages and salaries increased at contractual rate through December 2020 and then 2.5 percent annually  Non-union employees increased same as CBA with those eligible to receive performance-Dased step increases every other year  Health insurance increased between 5 percent and 6 percent annually based on Center for Medicare and Medicaid Services' projected annual growth rates for state and local government insurance premium Debt based on debt service schedules with no new debt incurred Other annual expenditure growth rates were based on historical patterr  and/or projected annual inflation rates  USDA CPI Projection for 2020 is 2.25 percent and for 2021-2024is2.3  percent  24    2020 budget includes use of one-time admin reserve funds of $300,000 in order to  Pre-Pandemic Projection Summary  balance  Considerable one-time capital revenues and expenditures are included in the 2020  budget  2020  2021  2022  2023  2024  Projected Projected Projected Projected Projected  Revenues  $7,134,750 $5,344,476 $5,394,370 $5,445,882 $5,459,388  Expenditures  7,134,385 5,505,427 5,662,250 5,919,935 6,053,153  Surplus/(Deficity  $365 -$160,951 -$267,880 -$474,053 -$593,765  25    Methodology developed by University of Pittsburgh, PEL and western PAmunicipal managers estimating percentage loss for each  Pandemic Scenarios  revenue type  Trend for municipal EIT loss in August has been on the lower end of the pandemic scenario but impacts are still not well known  2020 Medium Impact  2020 Projected 7,134,750  2020 Low Impact  2020 High Impact  Total Revenues  7,134,750 7,134,750 7,134,750 -123,403 -330,173 -557,946 7,011,347 6,804,576 6,576,804  Est Revenue Loss Net Revenue  0  7,134,750  Expenditures  7,134,385  7,134,385 7,134,385 7,134,385 -123,038 -329,809 -557,581  Surplus/(Deficit)  365    Methodology based on the lag inherit in the various revenue types and assumption that employment gradually returns to pre-COVID-19  Pandemic Scenarios  levels  Question of 2021 property tax impact remains 2021 Liquid fuels reimbursement from state  expected to be lower  2021 Medium Impact  2021 Low Impact  2021 High Impact 5,344,47  2021 Projected  Total Revenues  5,344,476  5,344,476 5,344,476  Est Revenue Loss Net Revenue  0  -30,025 -117,378 5,314,451 5,227,099  -211,028 5,133,448  5,344,476  Expenditures  5,505,427 -160,951  5,505,427 5,505,427 -190,976 -278,329  5,505,427 -371,97  Surplus/(Deficit)  27    Revenue:  Real Estate Taxes  Consider lowering the collection rate  assumptions  Review delinquent taxes at year en For those not paid by escrow, consider casn flow impact from the later payment cycle  COVID 19  Consider a millage increase  Impact  Earned Income Tax  2021 Budget  EIT for 2021 may need to be reduced kept at 2020 levels depending on the amount received in November 2020; decrease has been around 3 percent Consider 2021 budget adjustment to 2020 revenue steady or decrease by 1  Considerations  percent    Expenditures  Payroll is biggest expense  Consider essential staffing levels Delay discretionary and/or capital  COVIID 19  purchases  Impact  Budget Development  2021 Budget  Consider developing two "budgets" Normal operating budget for adoption Contingency budget that plans only for vital  Considerations  and necessary services    Projected Tax Revenues  Property tax growth is projected to be  relatively flat  Largest growth is anticipated in EIT  Change 2020-2024 $  2020 Projected  2021 Projected  2022 Projected  2023 Projected  2024 Projected  %  Real Property Taxes Earned Income Tax Local Service Tax Real Estate Transfer Tax Total Tax Revenue  $1,531,270 $1,538,676 $1,546,119 $1,553,600 $1,561,118 29,848 1.9  965,000 172,000 130,000  979,475 173,376 130,000  994,167 174,763 130,000  1,009,080 176,161 130,000  1,024,216 59,216 6.1  177,570 130,000  5,570 3.2  0 0.0  $2,800,270 $2,821,527 $2,845,049 $2,868,841 $2,892,904 92,635 3.3  30    Interfund transfers are the largest non-tax revenue source and second largest General Fund revenue after taxes at 33 percent of total revenues Intergovernmental revenues and other financing decline from 2020 mostly due to various one-time  Projected Non- Tax Revenues  revenues  2020 Projected  2021  2022  2023  2024  Projected Projected Projected Projected  Interfund Transfers Charges for Services Intergovernmental Revenues Other Financing Licenses and Permits Fines and Forfeits  $1,963,142 $1,695,838 $1,744,924 $1,795,442 $1,847,433  254,234 936,115 911,700 192,748 57,195 19,346  254,434 14,602 286,700 194,211 57,751 19,414  254,638 14,573 261,700 195,691 58,312 19,482  254,846 14,545 236,700 197,189 58,880 19,551  255,058 14,517 171,700 198,704 59,452 19,620  Interest, Rents and Royalties Total Non-Tax Revenue  $4,334,480 $2,522,949 $2,549,321 $2,577,151 $2,566,484  31    Personnel is 80 percent of General Fund costs Personnel is projected to increase over $700,000 or Salaries expected to rise by 15.3 percent; health insurance anticipated to grow 25 percent Personnel currently compensated below market rate  Personnel and Non-Personnel Expenditures  17.7 percent by 2024  for the area  2020  2021  2022  2023  2024  Projected  Projected  Projected  Projected  Projected  Personnel  $4,156,207  $4,327,963  $4,505,706  $4,693,759  $4,886,781  Non-Personne!  2,478,742  1,065,709  1,043,266  1,111,341  1,049,947  Transfers  485,000  70,805  72,329  73,885  75,475  Debt Service  14,435  40,950  40,950  40,950  40,950  Total Expenditures  $7,134,385  $5,505,427  $5,662,250  $5,919,935  $6,053,153  32    2021 Projected $5.5 Million Total  Projected 2021 Departmental Expenditures  Transfers 1%  2021 shown because 2020 public works budget includes one-time capital projects funded by grants and loans that skew actual costs  General Governme nt 22%  Employee Benefits 26%  Public Works 10%  Public Safety 39%  Cultural & Recreation 2%    Highest expenditures in personnel but wages remain below market for area Stagnate tax base struggles to pay for  services  Financial  Highest cost center is public safety reflecting borough's robust services of full-time, paid police and full-time fire  Findings  drivers  and  Potential revenue loss from COVID-19  remains unknown  Challenges  Transfers from water and sewer funds are critical to Borough operations Pooled account prevents Borough from needing a Tax Anticipation Note  3    Administrative Review  Some financial accounting practices unduly distort true General Fund costs in relation to the Water and Sewer funds  Strong institutional knowledge, good working relationship with Waynesboro Borough. Authority and proactive approach to code enforcement.  Need more proactive approach to day-to-day financial operations including access to financial system now under third-party management and stronger purchase order policy  3    Public Works Review  iimt  Robust day-to-day public works operations are carried out by several departments and encompass sewer and water functions.  Largest issue is a lack of capital  Borough has made steps in this direction by completing an internal road ranking. project. Comparative review should be extended to other needs such as equipment and facilities.  planning  36    Public Safety Review  Police  20 full-time officers in 24/7 department  Proactive drug enforcement in response to opioids  No-cost mutual aid to neighbors including overnight to Washingt  Township  Outdated facilities  Regionalization talks stalled  Fire  Five full-time drivers; volunteer chiet/firetighters  Fire protection agreements with Quincy and Washington  Townships  Unclear if agreements cover costs  37    Plan  Plan for revenue losses associated with the  COVID-19 pandemic  Seek a comprehensive study through STMP Phase II to review options for providing public  Seek  safety services.  Immediate  Approach Franklin County about conducting a  Approach  reassessment  Recommendations  property  Eliminate Eliminate interfund transfers and complete a  cost allocation study  Ensure provisions of the intergovernmental Washington Townships are followed  Ensure fire services agreements with Quincy and    Short-Term and Long-Term Financial  Recommenendations  Improve  Improve financial management through transition to modified accrual accounting  Add  Add management discussion and analysis to annual audit  Develop  Develop multi-year Capital Improvement Plan and Budget  Consider  Consider home rule for tax flexibility  Update  Update all license, permit and service fees  Seek  Seek to control health care costs    Short-Term and Long-Term Operational  Recommendations  Seek  Seek technology upgrades including an enhanced purchase order system, and code enforcement and work order/fleet management software  Develop a new Comprenensive Plan focusing on residential community development to grow tax base - parks, streetscapes, etc.  Develop  Draft  Draft a rental registration and vacant property registration ordinance  Continue with attempts at shared service agreements and intergovemmental cooperation; be mindful that such agreements do not place additional costs on  Continue  borough residents    Finalize draft STMP report  Recommendations indicate timeline and implementation  responsibility  Next Steps  and Questions  Work with DCED  representative on STMP Phase Il funding  Questions?  41