7b supp
ITEM NO: 7b_Supp_1___ DATE OF MEETING: Sept 22, 2015 Revised 9/17/2015 Corporate 2016 Budget Briefing September 22, 2015 Corporate Re-Org Budget Adjustments Transferred Office of Social Responsibility and Tourism to Economic Development Division. Transferred Capital Development to Corporate. Formed Office of Strategic Initiatives (OSI). Transferred CPO from Capital Development to OSI. Transferred CPI/LEAN team from Aviation to OSI. Transferred Health & Safety to HR&D. Budget adjustments are made for prior years to ensure apple-to-apple comparison for the re-org changes. 2 2016 Corporate Budget Overview Continued focus on managing Corporate cost growth & Strategic Priorities Overall increase of 3.6% vs. 2015 baseline budget. The 3.6% increase includes $2.2M new budget additions for 2016. Net reduction of 6.3 FTEs Key Expense Drivers: New positions added in mid year of 2015. Baseline payroll increases in 2016. New outside service contracts in 2016. Payroll and new budget request increases partially offset by more charges to capital in Capital Development group. Corporate expenses are allocated to the three operating divisions and to the Northwest Seaport Alliance per service agreements. Moderate increase in the 2016 budget reflects a conservative budget approach . 3 2016 Corporate Budget Summary Description Amount % Notes 2015 Approved Budget 97,051 Less: One-Time Items (585) -0.6% Mainly for Seaport Alliance contingency Less: Net Budget Transfers 319 0.3% Due to Re-org Less: Budget Adjustments 815 0.8% For approved new FTEs 2015 Baseline Budget 97,599 0.6% 2016 Preliminary Budget 101,097 2015 Baseline Budget 97,599 Total Increase from Baseline 3,498 3.6% Less: 2016 New Budget Requests (2,215) -2.3% Increase from Baseline 1,284 1.3% 2016 Preliminary Budget 101,097 2015 Approved Budget 97,051 Increase from 2015 Approved Budget 4,047 4.2% Propose a moderate 3.6% budget increase from the baseline for 2016. 4 2016 New Budget Additions No. Dept Description Amount 1 Commission Office Policy Assistant & Graduate Intern 120,000 2 Risk Management Increase in Liability Broker Services 20,000 3 Public Affairs Strategic Communication and Community Outreach 105,500 4 HR&D Talent Management Consulting Services 50,000 5 HR&D Health and Safety Contracted Services 34,500 6 HR&D LinkedIn Position Advertising 23,000 7 HR&D ePerformance System Training 16,390 8 ICT New System Support and Security Awareness Training 56,000 9 ICT PCI Audit Increase 46,000 10 Internal Audit Hosting the Assoc. Of Airport Internal Auditors in Seattle 50,000 11 Office Strategic Initiatives Add 2 CPI Program Managers 151,601 12 Office Strategic Initiatives Lean Consulting Firm Engagement 1,200,000 13 Office Strategic Initiatives Japan Study Mission 41,600 14 Office Strategic Initiatives Consultant for Purchasing Transformation 300,000 15 Police Police Traffic Support Specialist (5 FTEs) 0 TOTAL 2,214,591 The 2016 new budget additions support the Port's strategic goals and initiatives. 5 2016 Corporate Budget By Department 2014 2015 2015 2016 '16-'15 Bud Chg '16-'15 Fcst Chg (in $ 000's) Actual Budget Forecast Budget $ % $ % REVENUES Total Operating Revenues 419 340 340 345 5 1.5% 5 1.5% EXPENSES Executive 1,710 1,798 1,798 1,569 -229 -12.8% -229 -12.8% Commission 1,353 1,545 1,440 1,590 46 3.0% 151 10.5% Legal 3,731 3,156 3,195 3,321 165 5.2% 127 4.0% Risk Management 3,051 3,249 3,244 3,449 199 6.1% 204 6.3% Public Affairs 4,639 4,956 5,707 5,380 423 8.5% -327 -5.7% Human Resources & Development 6,422 7,148 6,642 7,634 486 6.8% 991 14.9% Labor Relations 823 1,024 1,024 1,126 102 10.0% 102 10.0% Information & Communications Tech. 20,458 21,435 21,285 22,054 619 2.9% 769 3.6% Finance & Budget 1,803 1,713 1,708 1,802 89 5.2% 93 5.5% Accounting & Financial Reporting 6,039 7,350 7,057 7,570 220 3.0% 513 7.3% Internal Audit 1,372 1,552 1,459 1,620 67 4.3% 160 11.0% Office of Stretegic Initiatives 2,821 3,119 4,002 5,359 2,240 71.8% 1,357 33.9% Contingency 410 1,050 1,050 500 -550 -52.4% -550 -52.4% Police 22,231 22,879 22,789 23,587 708 3.1% 798 3.5% Capital Development 11,913 15,075 11,640 14,538 -538 -3.6% 2,898 24.9% Total Operating Expenses 88,776 97,051 94,040 101,097 4,047 4.2% 7,057 7.5% Department budgets have been adjusted to reflect the re-org and budget transfers. 6 2016 Corporate Budget By Expense Type 2014 2015 2016 '16-'15 Bud Chg ($ in 000's) Actual Budget Budget $ % Payroll Expenses Total Payroll Expenses 91,113 100,841 104,439 3,598 3.6% Non-Payroll Expenses Equipment Expense 1,911 2,412 1,776 (636) -26.4% Supplies & Stock 1,338 1,351 865 (486) -36.0% Outside Services 17,526 19,620 26,020 6,400 32.6% Travel & Other Employee Expense 2,136 2,935 3,004 69 2.4% Promotional Expense 282 254 315 61 24.1% Telecommunications 648 752 664 (88) -11.7% Insurance Expense 2,237 2,350 2,506 156 6.6% Contingencies 410 1,050 500 (550) -52.4% Other 810 955 933 (22) -2.3% Total Non-Payroll Expenses 27,298 31,680 36,585 4,905 15.5% Charges to Cap/Govt/Envrs Proj (29,635) (35,471) (39,927) (4,456) -12.6% TOTAL 88,776 97,051 101,097 4,047 4.2% Payroll Expenses and Outside Services are the major drivers for increase in the proposed 2016 budget. 7 2016 Corporate FTEs Summary FTEs 2015 Approved Budget 750.7 Changes in 2015: Mid-Year Approvals 5.2 Eliminated -2.0 Transfer -8.0 2015 Baseline 745.9 2016 Budget Changes: Eliminated -11.0 Proposed New FTEs 9.5 Change in FTEs for 2016 -1.5 Proposed FTEs for 2016 744.4 Net Change from 2015 Budget -6.3 A net reduction of 6.3 FTEs in 2016 compared to 2015 approved budget. 8 Additional Budget Request Office of Strategic Initiatives has requested $4.0M funding for an outside consultant service on Purchasing Transformation. The contract will be broken into two phases. Phase I is the Assessment of Current State and Opportunity Analysis ($300K is already in the proposed budget). Phase II is the Implementation. The cost of Phase II is $3.7M. We will only proceed with Phase II if there is a powerful business case (providing the Port with a significant return on this expense). Request for the Commission approval to add it to the proposed budget. Request for additional $3.7M for the Purchasing Transformation consultant contract . 9 Capital Development September 22, 2015 Priority Capital Development Goals Deliver projects to operating division customers on time, within budget, meeting agreed scope, and with minimal and mutually-agreed impacts on operations. Support divisions beyond projects: including budget plan development; business planning; asset management and reporting; community outreach; negotiations; and technical support and assistance. Be prepared for emergencies. Develop the talent, capabilities, motivation and well-being of Capital Development employees. Keep Port staff and contractor personnel working safely. 11 CD Budget Comparisons 2015 YE 2014 Actual 2015 Budget Forecast 2016 Budget FTE 230.05 260.1 232.85 250.8 Total Salaries & Benefits $ 28,741,962 $ 33,080,535 30,483,034 $ 33,225,034 On-site consultants $ 5,085,948 $ 6,307,400 5,739,400 $ 10,382,013 Small Works Constr Contracts $ 1,105,734 $1,796,400 1,551,400 $ 2,056,171 Total Before Capital Charges (+ Int. Trfs) $ 37,505,047 $ 45,008,215 39,822,853 $ 49,042,510 Sal/Wage to Capital $ (14,407,044) $ (16,141,021) (17,163,049) $ (16,712,137) Dept Exp Chg'd to Capital $ 23,566 0 2,102 0 Capital Projects OH $ (6,294,278) $ (7,484,380) (6,927,398) $ (8,850,207) On-site consultants to Capital $ (4,914,048) $ (6,307,400) (4,094,456) $ (8,942,540) Total Charges to Capital $ (25,591,805) $ (29,932,801) (28,182,801) $ (34,504,884) Total Operating Expense $ 11,913,241 $ 15,075,413 11,640,052 $ 14,537,626 12 CD 2016 Operating Budget 2014 2015 2015 2016 ($ in 000's) '16-'15 Bud Chg '16-'15 Fcst Chg Actual Budget Forecast Budget AVPMG 1,361 4,583 2,630 4,543 -40 -0.9% 1,913 72.7% ENG 4,364 5,637 4,717 5,913 276 4.9% 1,196 25.4% PCS 4,437 3,609 3,181 2,862 -747 -20.7% -319 -10.0% SPM 1,356 828 696 789 -39 -4.7% 93 13.4% CDD Admin 394 419 416 430 11 2.6% 14 3.4% Total 11,913 15,075 11,640 14,538 -537 -3.6% 2,898 24.9% 13 CD 2016 Expense Projects Division Impact Projects Aviation $10,041,176 Construction Logistics Expansion South Satellite Renovations 2015 Airfield Facilities EXP-Vert Conv MTEE Maintenance On-Airport Obstruction S. 160th GT Lot TI Work: 2015 RCF Landside SR 518 TI Work: 2015 AV Terminal RAC Remediation TI Work: NorthSTAR Domestic Piping Branch Replacement Air Cargo Road Safety Improvements NSAT NERA Northeast Redevelopment Feeder Taps 101 Baggage Handling CTE Freight Elevators Sewer work at Radisson site ADR Tenant Projects AV small jobs Standby Power Generation Facility AV O&M Mezzanine to Ticketing Stair plus Capital Projects with Expense Sprinkler/Exiting Study Components ST South Link Maritime $255,085 T-5 Crane Sales FT Net Sheds P91 E. Cruise Maintenance Dredging FT Net Shed Code Compliance Argo Yard Roadway - Element III Gate SBM Fuel Dock Alaskan Way Viaduct MT small jobs Quest Hut MT O&M Economic $7,351 P69 Concrete Dock Inspection ED small jobs ED O&M Development NWSA $612,052 T-46 Paving Surplus Cranes Removal T-5 Dredging T-5 Crane Demolition T-18 Maintenance Dredging T-18 Crane Demolition T-18 Asset Condition Assessment T-25 Asset Condition Assessment Total CD $10,915,664 AVPMG $7,812,170 ENG $1,419,283 PCS $1,515,000 SPM $169,211 14 Corporate 2016 Capital Budget September 22, 2015 Enterprise, Corporate and CDD Capital Budget Overview 2016-2020 Five Year Capital Plan* 2016 2017 2018 2019 2020 Totals Commission Authorized Projects 1,604 - - - - 1,604 Projects Pending Authorization 3,325 75 - - - 3,400 Pending Future Authorization - 4,425 4,500 4,500 4,500 17,925 Small Capital 3,514 4,186 4,207 3,807 3,730 19,444 Totals 8,443 8,686 8,707 8,307 8,230 42,373 *Excludes ICT Projects Budgeted in Divisions and and ICT Portions of PMG Led Projects 16 Enterprise, Corporate and CDD Commission Authorized/Underway 2016-2020 Five Year Capital Plan 2016 2017 2018 2019 2020 Totals Commission Authorized Projects Maximo Enhancements & Upgrades U 800 - - - - 800 Peoplesoft HCM 9.2 Upgrade U 100 - - - - 100 Contractor Data System Replacement U 242 - - - - 242 Expense Project Authorization Tracking N 182 - - - - 182 Performance Management System N 280 - - - - 280 Totals 1,604 - - - - 1,604 N = New System or Function U = System Upgrades or Replacements 17 Enterprise, Corporate and CDD Pending Authorization 2016-2020 Five Year Capital Plan* 2016 2017 2018 2019 2020 Totals Projects Pending Authorization PMIS Replacement U 500 - - - - 500 POS Website Redevelopment U 425 75 - - - 500 Data Center Failover N 1,000 - - - - 1,000 PeopleSoft Business Unit N 1,400 - - - - 1,400 Totals 3,325 75 - - - 3,400 *Excludes ICT Projects Budgeted in Divisions N = New System or Function U = System Upgrades or Replacements 18 Enterprise, Corporate and CDD Small Capital and Future Authorization: ICT Allowance 2016-2020 Small Capital 2016 2017 2018 2019 2020 Totals Technology Infrastructure 1,500 1,500 1,500 1,500 1,500 7,500 Technology Business Applications 1,000 1,000 1,000 1,000 1,000 5,000 Enterprise GIS Small Capital 250 250 250 250 250 1,250 Corporate Small Capital 200 200 200 200 200 1,000 Corporate Fleet Replacement 253 350 360 378 385 1,726 CDD Small Capital 146 125 80 25 85 461 CDD Fleet Replacement 165 761 817 454 310 2,507 Total Small Capital 3,514 4,186 4,207 3,807 3,730 19,444 Future Authorization: ICT Allowance ICT Allowance - 4,425 4,500 4,500 4,500 17,925 Combined Totals 3,514 8,611 8,707 8,307 8,230 37,369 19
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