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HomeMy WebLinkAboutIR 7593 INFORMAL REPORT TO CITY(,dUNCIL MEMBERS No. 7593 ` T To the Mayor and Members of the City Council s Subject: REPORT ON MARS i 17! Councilman Matson has requested a report be prepared to include the reasons the City staff recommended acquisition of a new financial/accounting system compared to the actual benefits of the new system and the original costs estimates compared with actual expenditures for MARS. This report responds to this request by identify the limitations of FAMIS, the predecessor to MARS, compared to how these limitations have been addressed in MARS and by comparing the cost-to-date for the MARS installation to the funds originally allocated by the City Council in 1988. FAMIS In October 1977, the City implemented the Financial Management Information System (FAMIS) purchased from and modified by Peat, Marwick & Mitchell. This marked the first time the City had used a fully automated accounting and financial reporting system. The change was dramatic for all involved; the first two years were spent in both learning and refining FAMIS. Concurrent with the installation of FAMIS, the City experienced significant organizational growth, primarily in the areas of grant and capital improvement programs. By the mid-80's this growth, coupled with increased demand for more timely and accessible management reports, had pushed to capacity the demands on FAMIS. Some of the limitations or problems being experienced with FAMIS at the close of the 80's included: 1. One of the initial advantage achieved with FAMIS was the ability to assign a separate fund number to each type of capital improvement project included in a bond sale. However, with a maximum capacity of only 99 funds, FAMIS reached a capacity limitation in 1985 that forced us to "collapse" all years' sales ' n , s for each type of capital improvement project. 2. FAMIS lacked the features to record and reserve bu o ations at the time of origin. The lack of this'pre-encum r it' , , often resulted in many departments maintaini -ate}- manual set of financial records. To illustrate, a department submitting a purchase requisition requiring Council authorization would not see the obligation recorded on FAMIS until 4 to 6 weeks after the requisition date. FAMIS month-end reports would show a higher level of unobligated funds than was truly available. 3. FAMIS did not have a purchasing system module to maintain requisition, purchase order or receipt control. Departmental ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS INFORMAL REPORT TO CITY CWNCIL MEMBERS NO. 7593 March 24, 1992 To the Mayor and Members of the City Council Page 2 of 5 X Subject: REPORT ON MARS ,ors purchasing was a paper-bound system separate from the financial process of maintaining the City's general ledger of revenues and expenditures. As purchasing authority and responsibility became increasingly a function of the various departments, this limitation created both a time-consuming bottleneck for operations and a problem in controlling adherence to the purchasing rules defined in the City's Administration Regulations. 4. FAMIS utilized a centralized, batch-oriented process for accounts payable. The impact of an ever-increasing volume of transactions had resulted in a permanent backlog of invoices. The accompanying time lag to make payment created a contentious environment between vendors and the City and exacerbated a reluctance on the part of many qualified vendors to do business with the City. Additionally, City departments had no knowledge of the status of a payment document after the document left their department; this resulted in all vendor inquiries being referred to Accounts Payable (which further exacerbated the backlog problem). 5. FAMIS provided no on-line inquiry capability for departments outside of Accounting. Other than verbal inquiry to Accounting and occasional interim "special" reports, users had no update on either budget or capital project operations other than that contained in standard monthly reports. Most managers indicated this was insufficient for them to effectively manage, especially in the environment of diminishing resources which began to impact operations near the close of the 80's. . " -; Off tC1 RECORD 6. During its implementation and subsequent year of op FAMIS had become extensively modified to fit the sp co �� environment of the City. This had the unfortunate Se precluding the migration to more efficient and effec6 r the FAMIS software. The City found itself with a 70 s era software system in a computer environment characterized by rapid and dramatic change. (It is an interesting aside that Peak Marwick, the accounting firm that developed and owned FAMIS, declined to respond to the City's formal Request For Proposal for a new accounting system.) For the above and other reasons, the consensus of management was to embark on a needs assessment project to determine if the unmet department requirements (as well as those of finance and data processing) could best be met by a rewriting of FAMIS or the acquisition of a new financial system. ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS INFORMAL REPORT TO CITY GvUNCIL MEMBERS No. 7593 March 24, 1992 'WE'R E' To the Mayor and Members of the City Council Page 3 of 5 Subject: REPORT ON MARS MARS In selecting a new financial system, relatively equal weights were given to software that would accept the FAMIS accounting structure, solve the limitations listed above, and provide for future growth. In respect to the above list: • MARS has the capacity for 9,999 separate funds, each with an individual set of accounts and responsibility centers. • MARS can immediately reserve funding for expenditures during both the requisition and purchase order stages; each department has on-line access to information relating to the availability of funds (this on-line capability includes the level of appropriation, commitment of funds by requisition, encumbrance of funds by purchase order, and expenditure of funds by payment of invoices). • MARS has a fully integrated on-line purchasing system that allows departments to directly enter paperless requisitions and purchase orders. • • MARS has an accounts payable system that matches received purchase order lines, paying on the terms of the purchase order. This feature significantly streamlines the payment process; currently, documents average a 3 day cycle for payment once they reach accounts payable. QfFtM RECORD • MARS has on-line features available that allow each d follow all steps of the financial process. Examples rr 1� .CRY current availability of funds for expenditures, to whe kj for the vendor has cleared his bank, to the inqui individual revenue and expenditure transaction entered against a section or project workphase. • MARS has not received major modifications that preclude the migration to new software releases. Moving to MARS from FAMIS represented a change approximately equivalent to the introduction of FAMIS over its predecessor. Both represented dramatic (traumatic) change for the users. In the case of MARS, there has been a deliberate decentralization of the capability (and responsibility) to make direct financial transactions occur. An intermediate level of paper-to-data-input has ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS INFORMAL REPORT TO CITY CvJNCIL MEMBERS No. 7593 March 24, 1992 'IREo To the Mayor and Members of the City Council Page 4 of 5 x► Subject: REPORT ON MARS +ori been eliminated, causing City employees to learn new skills in order to purchase needed goods and services, and to assimilate budgetary information. In many ways, the move to a system like MARS represents the change in today's business environment that recognizes information as a commodity. Much of the daily activity of staff positions at the City involves the collection, analysis and dissemination of information. Decisions made at all levels within the City are based upon the information and resources available. The City of Fort Worth can be viewed as a large business conglomerate, offering a varied mix of goods and services to a diverse consumer base. Like all other businesses, its finances dictate both the scope and nature of its products. In an economy where the City is experiencing reduced revenues and an eroding tax base, financial information and financial controls become increasingly important. MARS is a vital management tool in its ability both to control the level of expenditures based on approved appropriations and to report on the financial condition of departments and their grant and bond projects. Actual expenditures for MARS as of 9/30/91 total $1,232,440.92 and are broken down as follows: Project Expenditures by Character: Character '01': City employee salaries $188,873.16 Temporary employees 32.924.58 221,797.74 Character '02': Operating supplies 13,841.40 Character '03': ,,�,,,_,........ Contractual services 505,995.14 RECORD Other '03' services 94.971.14 OFTIM 600,966.28 CITY SECRETARY Character '04': FT. WORTH, TEX, Equipment 395,835.50 Total Project Expenditures $1,232,440.92 ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS • v INFORMAL REPORT TO CITY 1.�oUNCIL MEMBERS No. 7593 March 24, 1992 > To the Mayor and Members of the City Council Page 5 of 5 Subject: REPORT ON MARS The following attachments include the original budget proposed for MARS as presented to and approved by the Audit Committee (at that time made up of Council Members Garrison, Gilley and Lancaster), the subsequent M&C's approved by the Council, and the general policies approved as goals for MARS. 0 6 LL e - &U� David Ivory City Manager DI:tm Attachments rtC�ll RECORD Y SECRETARY . WORTH, TEX. APPROVED BY CITY COUNCIL, MAR 24 1992 city Secretary of the city of Fort WAAbs 210" ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS ` ATTACHMENT 1 4 4. . CA"y of Fort Worthas Mayor and Council Communication DATE NE RERNCE SUBJECT: TRANSFER OF FUNDS FROM CAPITAL PAGE u BE PROJECT RESERVE FUND TO ESTABLISH 1 8/30/88 G-7704 PROJECT FOR THE FINANCIAL MANAGEMENT ' °'-- ,`s SYSTEM - `�„ - ,�RECOMMENDATION ' �• ;• = _. It is recommended that City Council authorize the transfer of $1,200,000.00 !``` ` from Capital Projects Reserve Fund•10 Project No. 010001-00 Unspecified 500000-00, Newa Financial System Project::-,: p r :f 1" DISCUSSION i = The Finance Department will use these funds to purchase and implement the new : financial management system, anticipated costs are as follows: i" Software $ 320,000 Hardware 408,400 _, . :'' r:..;;,. :• • Support 471,600 #` - _ :,:-•- Total - $1,200,000 Y A detailed budget of these projected costs will be developed for presentation to the City Council Audit Committee prior to obligating any additional funds `1 for Hardware and Support costs. Purchase of the system software is included as a purchasing item on today's council agenda. FINANCING r,.• " Sufficient funds are available in the Capital Projects Reserve Fund 10, .4r010001-00, Unspecified to transfer "to Project No. 500000-00, New Financial = �14 `System Project in Fund 10, Capital Projects Reserve which has been established to account for the new financial system purchase, installation ' • costs, and support. The cash balance in Capital Projects Reserve Fund, ' - unspecified project will be $2,976,262.00 after the transfer. m/6 O(f ICtAI RECORDI SECRETARY r fCUYWORTH, TEX. : F SUBMITTED FOR IML CITY MANAGER'S DISPOSITION BY COUNCIL: PROCESSED BY OFFICE 8Y: I APPROVED nAyid4" Ivory k ORIGINATING [ OTHER (DESCRIBE) �:�:•; h DEPARTMENT HEAD: CITY SECRETARY FOR ADDITIONAL INFORMATION d CONTACT: T_ Nnpppr R151; DATE ATTACHMENT 2 TO: Rod Bremby DATE: October 19, 1988 • FROM: Judson Bailiff • SUBJECT: !TARS Budget When the City Council appropriated $1,200,000 for the•MARS project, they were presented with costs by only the three major categories with the understanding that before any funds were spent, beyond the software purchase, a more detailed budget would be presented to the Audit Committee. The information they received was as follows: Software-----------------$ 320,000 Hardware----------------- 408,400 Support---=-------------- 471,000 Total------------------;1,200,000 Since the more detailed budget that goes to the Audit Committee must first be approved by the City Manager, I am submitting this information to you for discussion with the Manager and formation of the final budget he wants submitted to the Audit Committee. As you know, the software budget is the exact amount of the purchase from MSA, so there is no further budget definition of this amount. The $408,400 for hardware is the amount requested by J.A. Marshall, and I suggest that you get a detailed breakdown of this amount from him. The $471,000 support budget has been further defined by the MARS team and is as follows: Specific training and implementation of modules to be implemented in 88-89-------- $132,000 Specific training and implementation of modules to be implemented in 89-90-------- 50,000 Salary of a System Manager for 18 months--- 64,125 Temporary staffing for 2 programmer/analysts ,�... � to supplement Information Services--------- 171, RECpRD Temporary staffing to supplement Finance/ rim Accountingpersonnel---------------------- 30,0 �l Contingency-------------------------------- 24'415 S��R ;471,6 0 Specific training and implementation of modules to be implemented in 88-89 In addition to the assistance included with the basic purchase of software, specific training is required in the structure and use of the different software modules. In order to take advantage of MSA's training schedule in Dallas and avoid additional travel costs or delay in the MARS schedule, some members of the Core Team have already participated in this necessary training. We now have negotiated a proposed contract for this training, plus additional training, at an amount of $132,000. It is imperative that we get an M&C before Council within the next few weeks if we are to continue with the present training.