AGENDA #2c(1)

BUDGET WORKING PAPER

TO: W. Calvin Horton, Town Manger

FROM: Jim Baker, Finance Director

SUBJECT: Possible Cuts in the Finance Department’s Proposed Budget

For 2000-2001

DATE: May 17, 2000

The recommended operating portion of the budget for the Finance Department for 2000 -2001 is $332,516. This amount is $28,836 or 8.7% more than the original base operating budget for 1999-2000 of $303,680 (made up of the original budget amount in the Finance Department budget of $297,946 and a $5,734 transfer originally included in the1999-2000 Non-departmental budget for computer charges). The increase over the base budget is made up of the following two additions:

· Addition of $20,000 resulting from a required renegotiation of contracts for telephone and data connection lines necessary to support the Town’s local and wide-area computer networks. (For the past several years, we enjoyed very low prices based on previous contracts that will expire this year. Renegotiation of these contracts has resulted in about a $20,000 increase, but one that is essential to be able to continue and improve our computer network operations.)

· Addition of $8,796 in computer use charges (lease purchase payments) for computer replacements in the Finance Department. (Reducing this amount would require adjustments to the plan approved by the Council last year for replacing desktops computers every three years.)

Excluding these two items, the proposed base operating budget for 2000-2001 is equal to the original base operating budget for 1999-2000 of $303,680.

Options for reductions to the base 1999-2000 operating budget:

To reduce the operating portion of the Finance Department’s recommended budget of $332,516 to the level of the prior year base operating budget of $303,680 would require a reduction of $28,836 for 2000-2001. Two alternatives for achieving this reduction follow. Of the two, the first alternative is preferable.

ALTERNATIVE I

POSTPONES A NETWORK SYSTEMS IMPROVEMENT PACKAGE

ITEM	COST	EXPLANATION
Equipment
Town Hall server Public Works server	3,925	Reduces the capacity/speed of a replacement server. The reduction reduces the reliability of network services.
Network switches	6,175	Postpones planned improvement in outlying departments’ access speed to central server information.
Total Equipment	10,100
System Software
Windows 2000 upgrades	5,235	Postpones implementation of centralized computer management which would reduce the need for on-site maintenance at remote department locations.
Firewall software	13,500	Postpones planned enhancement of firewall security and improvements in the flexibility and reliability of remote access to the Town network.
Total System Software	18,735
TOTAL REDUCTIONS	28,836

ALTERNATIVE I SUMMARY

Budget Line	Manager’s Recommended Budget 00-01	Alternative I Reduction Amount	Revised Recommended Budget 00-01
Equipment	28,175	10,100	18,075
System Software	24,909	18,735	6,174
TOTALS	53,084	28,835	24,249

ALTERNATIVE II

POSTPONES PLANNED IMPROVEMENT TO WIDE-AREA NETWORK

(Retains existing ISDN capability, at an increased cost of approximately $15,000 due to Bell South contract renewal requirements.)

ITEM	COST	EXPLANATION
Equipment
Network switches	6,175	Postpones planned improvement in outlying departments’ access speed to central server information.
System Software
Firewall software	13,500	Postpones planned enhancement of firewall security and improvements in the flexibility and reliability of remote access to the Town network.
Telephone
Data lines	9,160	Postpones planned improvement data line speed which would provide much greater efficiency in communications between departments.
TOTAL REDUCTIONS	28,835

ALTERNATIVE II SUMMARY

Budget Line	Manager’s Recommended Budget 00-01	Alternative II Reduction Amount	Revised Recommended Budget 00-01
Equipment	28,175	6,175	22,000
System Software	24,909	13,500	11,409
Telephone	20,000	9,160	10,840
TOTALS	73,084	28,835	44,249

Options for an additional 2% reduction to the base operating budget:

To reduce the Manager’s Recommended Budget of $332,516 to the level of 2% less than the prior year base operating budget of $303,680 would require an additional cut of $6,075 for a total reduction of $34,910 for 2000-2001. This total reduction could be accomplished by eliminating one server replacement of $6,075 in addition to the $28,835 in reductions in either Alternative I or Alternative II as shown below:

ITEM	COST	EXPLANATION
Equipment
Town hall server	6,075	Postpones the replacement of a server. The reduction reduces the reliability of network services.
Total Alternative I or Alternative II reductions	28,835
TOTAL REDUCTIONS	34,910