Applying Business Practices to Local Government

2. Applying Business Practices to Local Government Webinar Presentation by: Dave Boerger & Ginger Juncker – SEMCOG / MAC William Wild, Mayor, Westland, MI Mark Vanderpool, City Mgr., Sterling Heights, MI July 19, 2011

3. Webinar Logistics Audio will be provided either via VOIP through the speakers on your computer or by phone line. For questions, type into the text box on the lower right hand side of your screen. Each will be answered at the end of the webinar. For technical help, call/text Buzz Brown at 248-217-7979 Copies of this presentation will be emailed after the webinar Please compete a webinar evaluation that will be emailed with the presentation. The webinar will be archived on the SEMCOG website

4. Agenda • Brief Overview - SEMCOG’s Latest Regional Forecasts – Dave Boerger, SEMCOG / MAC • Successful Business Practices Applied to Local Government – Ginger Juncker, SEMCOG / MAC • Westland Case Study – William Wild, Mayor • Sterling Heights Case Study – Mark Vanderpool, City Manager • Wrap-up and Q&A – Dave Boerger

5. Webinar Presenters Dave Boerger SEMCOG/MAC Team Virginia L (Ginger) Juncker SEMCOG/MAC Team William Wild Mayor, Westland Mark Vanderpool City Mgr., Sterling Heights

6. What Is MAC? Metropolitan Affairs Coalition Public/private partnership among business, labor and government entities Dedicated to improving Greater Detroit’s quality of life Creating economic opportunity through regional cooperation Stimulate collective action among a variety of public, private, and community partners

7. What Is SEMCOG?Southeast Michigan Council of Governments 159 member local governments 7 counties = 50% of Mi. population Assist local governments deal with issues Plan for common needs Recognize regional opportunities Facilitate cooperation among local governments for mutual benefit. Advocate for changes in public policy

8. Programs and Services

9. Member Services • How to make your community run more efficiently? • Local government restructuring/budgeting assistance • Local government collaboration & shared services • How to make my community greener? • Storm water management • Low impact development • How to make my community more desirable? • Economic development • Combating foreclosures • Walkable/ bikeable/road safety audits • Traffic access management • How to become a better leader? • Universities & outreach workshops • Delegate/Executive Committee member

10. Metro-Area Home Price Indices

11. Commercial Property Indices Q1 2011 Source: CoStar Group

12. Yearly Percent Change in SEV and Taxable Value; with Forecasts, 2011-2013 Southeast Michigan Source: SEMCOG

13. Impact On Municipalities • Property tax collections dropping ~30% • State and Federal funding cuts • Services being curtailed or eliminated • Office hours restricted/furlough days • Pay and benefit concessions • Attrition/early retirements/layoffs • Capital expenditures cut/infrastructure deteriorating • Selective millage and fee increases

14. Successful Business Practices Applied to Local GovernmentGinger Juncker

15. Best Private Sector Strategies • Customer Satisfaction Top Priority • Long Range Planning • Performance to Plan Measured • Disciplined Benchmarking Process • Continuous Improvement/Focus on Speed • Productivity > Personnel Cost Increases • Every Employee Involved/Trained • Restructure Business When Needed

16. 1. Customer Satisfaction Top PriorityService Satisfaction Your City

17. 1. Customer Satisfaction Top PriorityBudgetary Alternatives Collaborate with a Neighboring Community

18. 2. Long Range Business and Financial Plan Typical Community Results

19. 2. Long Range Planning • Provides a 5 year roadmap for your community • Complements your Master Plan with details on fiscal capabilities, environmental sustainability, economic development and collaboration • Useful for the EVIP requirements associated with statutory revenue sharing • Excellent tool for scenario planning and preparing for worst case situations • Include a forecast of legacy costs and means to fund • Engage all critical stakeholders in the process

20. 3. Performance to Plan Measured • Establish quantifiable goals and objectives • Includes both fiscal and operational indicators • Provides a regular progress report about your community • Enhances accountability • Engage all critical stakeholders in the objective setting process • Supports the performance appraisal system

21. 3. Performance to Plan Measured

22. 4. Disciplined Benchmarking Process • Understand how your community stacks up to the best • Comparable metrics for Citizen Satisfaction and Cost per Resident for each service area most critical • Operational benchmarks also available for each service area • Helps focus cost cutting efforts • Incorporate plans to close comparable gaps in subsequent Business/Financial Plans

23. 4. Disciplined Benchmarking Processfrom Munetrix Fiscal Database

24. 4. Disciplined Benchmarking Process – Westland from Munetrix Fiscal Database

25. 4. Disciplined Benchmarking Process – Sterling Heights from Munetrix Fiscal Database

26. 5. Continuous Improvement/Focus on Speed • Map the process • Measure the time to deliver services • Envision a better/faster means to deliver the service • Eliminate roadblocks • Improve time to deliver services 30-50% • Concurrently enhances services satisfaction • Reduces costs by eliminating the non-value added steps • Process Improvement the key enabler

27. 5. Continuous Improvement/Focus on SpeedStarts with Mapping the Process

28. 5. Continuous Improvement/Focus on SpeedKeys to Change Management Success • Have Leadership Presence via a Champion for the initiative – not just a figurehead (must be actively involved). • Receive “buy-in” from local government leadership and reinforce the importance. • Involve end users in approach (solicit and use their input). • Establish task-oriented process change. • Team envisions a better/faster way to perform the work • Assess the business case (cost/benefit, ROI, payback). And most importantly: • Implement & institutionalize the change

29. 6. Productivity > Personnel Cost Increases • Efficiencies more than offset any increases in personnel wage and benefit costs • Staff then recognizes continuous improvement is the means to fund future compensation enhancements • Much easier said than done! • Oakland County has met this goal over 25+ years with diligent cost control, strict personnel policies and on-going efficiency improvements.

30. 6. Productivity > Personnel Cost IncreasesOakland County Personnel Cost Reductions

31. 7. Every Employee Involved/Trained • Every employee must proactively participate in the improvement process • Functional and cross functional teams are critical • Teams must be structured, empowered & trained to drive change • Team goals and quantifiable metrics key to accountability and success • Recognition and nominal reward system encouraged

32. 8. Restructure Business When Needed • Restructuring local government is generally required when revenues drop 30% • Implement services cuts in selective areas • Collaborate and partner with other entities to reduce cost • Reduce expenses to match revenues • Pursue a 2-3 year restructuring plan • Provide steadfast leadership

33. 8. Restructure Business When NeededSteadfast Leadership Characteristics Effective Ineffective • Hidden agenda • Ineffective management • NIH - not invented here • Razor approach/across- the-board cuts • Stops/starts • Poor fiscal skills • Fragmented board • Denial • Stakeholder input solicited • Full disclosure/transparency • Willingness to collaborate • Performance measurement • Benchmark gaps identified • Cultural change • Financial planning • Dynamic leadership • Communicate - communicate

34. Westland CaseStudiesMayorWilliam R. WIld

35. Westland Fiscal Fundamentals • $54 million 2011-12 budget • down $6 million since 2007 • Assessed values have dropped 29% since 2008 • Staff reduced from 409 to 285 since 2007 • Police Department – 29 • Fire Department – 17 • Other - 88 • Admin staff reduced by 20% since 2009 • 5 Year plan model used in all financial planning

36. WestlandFiscal Fundamentals • Early retirements offered to all unions with 67 taking advantage in exchange for concessions. i.e. 2 year pay freeze, pension reform, lower wages for new hires, lower cost benefits, and elimination of longevity pay bonus • City moved to self insurance health care • Privatized Assessing, Building and Budget Departments and Animal Control Services – saving over $2.25 million in 5 years • Monthly budget dashboards given to Department heads, Quarterly budget dashboards given to City Council.

37. Westland Revenue Sources • Commodities from Recycling program - $209,000 in 2 years • Clothing/Textile recycling – estimated at $35,000 per year • Vacant Home registration ordinance - estimated at $105,000 per year • Entertainment permits in conjunction with Liquor license process – estimated at $39,000 per year • Leveraging assets – pending HUD refinance of city owned senior high rise for potential $8 million to be allocated to capital improvement fund • Adjusted water rates to positively effect City’s bond rating • Street lighting assessment adjusted for the first time in 20 years resulting in no subsidy from general fund

38. Westland Sustainability • Introduction of Mission: Green initiative in 2008 • Creation of Sustainability Plan • First Recipient of SEMCOG’s “Sustainable Community Recognition Program” • Partnering with DTE Energy for no cost energy savings program for all residents • Launched in 2009, most successful recycling program in state incentivizing residents to participate • 80% participation rate • Revenue since inception = $209,000 + $475,000 in Savings since inception = $684,000 total positive affect • Diverted over 23 million pounds from landfill to recycling • Initiated recycling in all city buildings – paper, glass, cardboard, batteries, toner cartridges, others

39. WestlandSustainability

40. Westland Livability As in any business the goal is to attract and retain customers, for us its residents and visitors • Tattan Park Renovations • Remediation of Central City Park • Passport to a Healthy City • Walkable Westland = 5 yr plan to make Westland 100% walkable, bikeable and jogable, currently at 75%. • Shop and Dine Marketing - branding Westland as the premier shop and dine destination in Wayne County

41. Westland Collaboration • Shared services with Canton, Inkster, Garden City and Wayne-Westland Schools • GIS services, water resources, dispatch, crossing guards, mutual aid, fire training, parks and recreation services • Member of Central Wayne County Sanitation Authority and Nankin Transit Authority • Partnered with Habitat for Humanity to assist in blighted home renovations • With Schoolcraft College, established training assistance for aspiring entrepreneurs • Working with local businesses to post available jobs – Westland Works

42. Westland Collaboration www.cityofwestland.com/employment

43. Westland Best Practices • Department heads tasked with implementing cost savings measures, controls and efficiencies • Personnel Department better managed Workers Comp cases and has resulted in over $400,000 savings in two years • Fast Track Team established to streamline development and permitting process • Local Preference Ordinance implemented to put money back into the community and retain businesses • Estimated that the City puts $1 million back into the local economy each year • Implemented goals/action plans for department heads • Conduct year end performance evaluations on all city employees • Training and Development implemented for entire City • Customer service, conflict resolution, leadership training and department specific training

44. Westland Best Practices

45. Sterling Heights CaseStudiesCity Manager Mark Vanderpool

46. Sterling Heights Fiscal Fundamentals • $135m 2011-12 budget – down 5% YOY • Assessed values have dropped 29.5% since 2008 • Maintaining AAA bond rating • Objectives, performance measurement & benchmarking applied for every department and integrated in budget • Extensive business partnerships – auto plants, business incubator & entrepreneurial initiative • Budget policies established and adhered to • Technology & innovation drive efficiencies

47. Sterling Heights Fiscal Fundamentals

48. Sterling HeightsPerformance Management • Performance objectives established for all service areas and departments • Supported with operational measurements • Benchmarking used extensively to drive efficiencies • Performance indicators kept up to date and reviewed regularly • Diligent focus on continuous improvement

49. Sterling HeightsPerformance Objectives

50. Sterling HeightsBenchmarking