Memorandum 16-134 Budget Amendment for Finance Staff Training

Memorandum 16-134

TO:                       Mayor Wythe and Homer City Council            

THROUGH:       Katie Koester, City Manager

FROM:                 John Li, Finance Director

DATE:                  August 3, 2016

SUBJECT:         Ordinance 16-41 Mid-year Budget Amendments: Staff Training

Why we Need training:

Accounting Software is ever-evolving and becoming increasingly complicated each day. We simply cannot fulfill our responsibilities for accounting, auditing, and financial reporting purposes, and will fail to meet the regulatory compliances, if we are not proficient with the Accounting System. Individuals that are expected to perform such responsibilities need to be comfortable with the system. Training is necessary to allow individuals to gain such proficiency.  
The Finance Department was significantly impacted by last year’s budget cuts. The department is down by one FTE (from 7 to 6). The current 6-person staff has a combined 40 plus years of services ranging from 1 year to 17 years with the city. However, the current staff members had no formal in-class training for using the software. The company offers in-class and topic specific training annually. All current accounting and finance staff members in our neighboring city Soldotna, which uses same system as we do, have had off-site in-class training. 
The 2015 middle year budget cut, the lack of cross-training in the past, and the three retirements in 2015 necessitated the much needed reorganization of the functionalities within the department. Four out of the five staff members who are responsible for the key functions - General Ledger, AP, Payroll, Utility billing, and Grant Accounting and Reporting have less than one year of experience to their respective positions.                   

We have the room in 2016 Budget:

Cost Reduction: The process of complete review of all fixed assets and the city’s all insurance policies with AMLJIA brought about an $189,000 savings in annual insurance premium. It will reduce the 2016 General Fund budgeted insurance premium cost by about $61,000.

The Value we will get from various types of training:

On-the-job training may seem to be the most economical way to gain knowledge and proficiency.  It is certainly the most convenient way to implement a routine, and is an ongoing type of training. However, by itself, it is much less efficient in gaining a solid foundation, and much more costly from a long-term perspective. It is good for improvement when the foundation is already there.
On-site (inviting software provider coming in) training is great as part of initial system implementation (no additional cost). It is also the best way to get more people trained at one time. However, it is almost cost prohibitive after the system implementation. We are partnering with Soldotna and Kenai to coordinate an on-site training in the near future.
In-class training is relatively expensive. This is the reason we haven’t budgeted for such training for the past four years. As I explained in the needs-justification section, it has become necessary.