Aldermen, Board of

ENTERPRISE RESOURCE PLANNING (ERP) SYSTEM PRESENTATION SEPTEMBER 13, 2011 A presentation was provided to the Board of Aldermen on Tuesday, September 13, 2011 at 6:30 p.m. in the Aldermanic Chamber. Members of the Board in Attendance: Alderman-at-Large Brian S. McCarthy Alderman-at-Large David W. Deane Alderman-at-Large Barbara Pressly Alderman Kathryn D. Vitale Alderman Arthur T. Craffey, Jr. Alderman Michael J. Tabacsko Alderman Jeffrey T. Cox Alderman Diane Sheehan Alderman-at-Large Mark S. Cookson (6:40 p.m.) Alderman Mary Ann Melizzi-Golja (6:40 p.m.) Members not in Attendance: Alderman-at-Large Ben Clemons Alderman-at-Large Lori Wilshire Alderman Richard LaRose Alderman Paul M. Chasse, Jr. Also in Attendance: Mayor Donnalee Lozeau John Griffin, Chief Financial Officer/Comptroller John Barker, Division Director, IT Division Rosemarie Evans, Accounting/Compliance Manager President McCarthy I will ask Mayor Lozeau to kick off the presentation on the ERP update. Mayor Lozeau Thank you Mr. President. If I could, I would ask the CFO, the City Treasurer, and the Account Manager, Rose Evans, to join us. Mr. Barker is joining us also. What I asked folks to put together tonight for the presentation is an opportunity to give you a little bit of a snapshot where we are headed, and it is particularly telling I think this evening because you are having your first reading on two pieces of legislation that deal directly with ERP and changes that are required because of those systems. Tonight is designed to give you a snapshot. Everything has not yet been completed. You will see it is still a moving process right now. It is a living document, people are testing and still in set- up and things like that, but it will give you just an overview so you will have some sense about the legislation that is coming in. With that, I believe Mr. Griffin is going to lead us off. John Griffin Thank you Mayor. For tonight’s agenda what we would like to do is describe briefly what is included in NGIN and ERP. Mr. Barker will describe that in more detail. We will review the new chart of accounts, ordinance language changes that are needed, warrant revisions, and then field any questions that you may have. Enterprise Resource Planning (ERP) System Presentation 2 9/13/2011 John Barker I thought this was a good opportunity for me to sort of highlight what is the difference between NGIN and ERP because I frequently hear a lot of confusion at times from folks who are unaware of how to slice this. I thought I would take a moment to cover it again. NGIN is a program. In the project management world that means a collection of projects. ERP is all of the financial components, and that is what we are involved in right now. If you look on this diagram to the box that is to the middle of the left, it is the general ledged, the accounts payable, the procurement, payroll, budgeting, all of those components including reporting in contracts, etc. When we come in front of the board or in front of the Finance Committee for procurements around ERP, that is what we are really talking about, but that is not the totality of NGIN; NGIN continues beyond that. Another piece of it is the document management, which in the past we had anticipated would come later, but now we are moving forward a little bit to tie in with our deployment of this new Lawson ERP System, but it is a separate component in and of itself and touches the organization in a number of different ways. Then lastly are the licensing and permitting and code enforcement pieces, which we haven’t really started yet, we need to get past the ERP, which is the most important component. When you hear about NGIN, it is really more than the ERP although right now the procurements, the discussions we are having, the changes we are discussing tonight, those are all around the ERP itself, but the program itself continues beyond that. Thank you. John Griffin Thank you John. With respect to the chart of accounts, we have come to realize that our current chart of accounts will need to change. The primary reason is the ADMINS chart of accounts is non-standard, it has been developed over several decades and it is a perfect opportunity to take another look at that particular chart of accounts. In addition, the account structure between departments, divisions, and the City as a whole is not consistent. We have the opportunity to gain consistency by developing a new chart of accounts. When you don’t have a standardized or consistent chart of accounts the organization wide view of the account structure is really not possible because a department such as the fire department might be using a different set of account numbers in detail than another department. What we tried to do in the creation of a new chart of accounts is gain that lowest level standardization that can be used across all departments. Alderman Sheehan Is that something where it used to be called commodity codes? John Griffin Yes. Alderman Sheehan Weren’t specific commodity codes created to better track what costs were for individual items by department so that it was much easier for the front line to be able to track their budget and make sure it is on budget and follow up? Is there going to be an umbrella system so that they can still do that under the consistent ones? Enterprise Resource Planning (ERP) System Presentation 3 9/13/2011 John Griffin Yes. Rose and Mr. Donovan in the School Department were the architects of the new chart of accounts, and the objective here is to gain consistency at the detail level that you speak of and have things roll up at the department level. Rose if I misspoke, if you wanted to handle that? Rosemarie Evans I think you answered it appropriately. I think too what is important with ERP is you have the various different sub-ledgers of the system that will house detail information. For example, payroll; right now when the budget is presented to you you see a commodity code for each position in the budget. Well that means that account number resides in the chart of accounts. That is quite a bit of accounts, a couple thousand accounts. That information will be housed in the payroll sub-ledgers and will still be presented and available but in a different manner. Alderman Sheehan I am more concerned with purchasing than payroll. Payroll is an animal onto itself and a person is a person is a person, but when you are using say you buy a drum of something and you use half for this and half for that and you can charge it to each different commodity code, will that functionality be able to be re-created with this? Rosemarie Evans Yes; sand, salt, different commodities yes. Alderman Sheehan Okay. Thank you. Mayor Lozeau Mr. Chairman, it might be helpful to keep a list of some of your questions and ask them at the end. At the end we have a slide that says questions because some might be answered as we move through. Alderman Sheehan Sure. Mayor Lozeau It might be helpful. John Griffin Thank you. With regard to the new structure, we had the opportunity to align our new chart of accounts with the Government Finance Officers Association (GFOA), which is referred to as the Blue Book. The particular characterization of it is Government Accounting, Auditing and Financial Reporting (GAAFR). This is kind of the guidebook to best practices chart of account development. The other thing we look at is compliance with governmental financial reporting standards necessary for state and local governments, consistency with the State of New Hampshire uniform chart of accounts for municipalities. Enterprise Resource Planning (ERP) System Presentation 4 9/13/2011 As you may know, we have to supply, on an annual basis, MS forms that are pretty intense when you don’t have a chart of accounts that dovetail the proper values and dollar amounts into those accounts. We are looking forward to that. Finally, we have taken the opportunity to reduce a number of accounts for efficient reporting and accounting. As Ms. Evans has indicated, we have literally thousands of disparit account numbers that we tried to take a critical look at and not lose anything, not lose any transparency in reporting, but take a look at the different account numbers that we have. With respect to the classifications and Ms. Evans will be handing out a document for your review, all of the revenue accounts begin with the number 4 and all expense accounts begin with the number 5 through 8. This handout that you will be receiving groups the revenue accounts by the classification that is appropriate for those revenues. President McCarthy The record should reflect that Alderman Cookson and Alderman Melizzi-Golja arrived during the presentation. John Griffin The handout that was just distributed, as I mentioned, the 4 series is revenue; Tax Revenue 41, License and Permits 42, Intergovernmental Revenue 43, and there will be different accounts underneath each one of these series capturing each and every revenue account that we currently have. On the second page, which begins with the expense series categorizes the things into Salaries and Wages, Employee Benefits, Professional and Technical Services, Property Services, and describes under each category the typical expenses that would be charged to those different areas. Moving on to the third page, as I mentioned, the first digit is a 5 through 8. These would be the other series that would be included in the chart of accounts capturing all of the types of expenses that the City, as an organization, both City and school would have before them. With respect to the chart of accounts, it was built on the backbone of common account structure, which will be used by all divisions. For example, copying expenses would have a single account number and it can be used by each and every division in the City so if one was to inquire how much we spend on copying supplies and things of that nature, we would be able to get that number. It is a little bit more difficult, as I mentioned at the beginning, to do that when you have different account numbers used within the divisions or departments that don’t allow for that consistency or reporting. With regard to the chart of accounts, as Mayor Lozeau indicated, it can change, it can be expanded, and it will evolve while maintaining the same account structure. Ms. Evans and Mr. Donovan have put together growth potential within their chart of accounts to add accounts that are important for clarity, transparency, etc. Now as we have discussed, there are several account that we currently use and we probably have some of them memorized. Prior to go live we will have a mapping of the old account number to the new account number so if one wanted to analyze the complete spend of the City and wanted to see which account goes into what category that can be done. Over the years, ordinances and resolutions built ADMINS chart of account references into law, and that made sense because we had a system of accounting, chart of accounts, that had been in existence for a while. The good news is there are not a lot of ordinances that need to change. References should be changed because of the new chart of accounts. Your first reading tonight is O-11-86. That makes changes to replace old account number references within the respective accounting categories of the new chart of accounts. In particular, Ordinance 5-145 is known as the preparation of the combined annual municipal Enterprise Resource Planning (ERP) System Presentation 5 9/13/2011 budget and the use of Northeast Consumer Price Index-Urban. The other one that called out specific accounting categories and numbers was ordinance 50-35, which is a self-insurance fund. Additional changes may become necessary as we move forward with implementation. Most likely not respect to account numbers, but maybe with how things are calculated, but it is too early at this point to have those before you for consideration. The Warrant revisions, again before you tonight for first reading; the critical issue with any ERP system is it is designed to centralize and automate the scheduling and processing of payables as a best practices for financial and operational benefits and efficiencies. I want to just add something in there; as Ms. Evans indicated, the Lawson Suite of Financials applications are modular. There is a general ledger, there is accounts payable, there is procurement, there is projects and activities; they can track things more effectively and efficiently than we have ever had the ability before. We have actually used our current general ledger as a combination general ledger, cost accounting module, payment module, etc., and it has served us well over the last thirty years. These particular new applications currently the best practice is to again to modulize. The payments that we now know require Finance Committee approval to process are certain types of accounts and claims, and I will get into the magnitude of that in a second. For the City to automate its payables and realize the benefits that I am going to explain on the next few pages, we request that the Board of Aldermen review and adopt the proposed languages. Those language changes have been a combination of review from the Accounting Office, Treasurer’s office; Information Technology, Legal, etc. so really put a lot of time and thought in to the development of the particular language that is proposed in O-11- 85. The benefits of O-11-85; Leverages efficiencies and processing of payments. Very important. Right now, as we know there is a warrant schedule where payments are either on the warrant or they are not anywhere, they are waiting to be input into an automated system. With the new system, the whole processing is more streamlined because the day-to-day activity would be receiving invoices in the payables department, processing systematically, using the intelligence and the power and the capabilities of the software system. That is basically the major point that we wanted to get across tonight. The others are more, as I will go through them, they are more examples and other things that we can leverage. Right now it is very difficult to negotiate improved payments terms with a vendor where you are not sure how that would work practically. As I mention, it is either on the warrant or off so if you have a vendor that said I will provide the City terms of 2/10 that 32% if you pay it in ten days or the net 30, it would be very difficult. It would be manually intensive. It would take the payables staff that is probably working very hard to get a warrant processed, and Rose can speak to that more effectively, very difficult to do. For example, as by way of illustration, an early payment discount of the several items that we put before the Finance Committee for their consideration to include salt, sand, waster water chemicals, those values of those contracts are a million dollars. If we were able to, once we finalize the price, work with those vendors to secure better payment terms, and it could be a discount or it could be we will pay you in 60 days or 90 days, it doesn’t have to be a discount, cash flow is cash flow, but 2% of a million dollars is $20,000, which is important for the City if we can realize that. Not through any more work than just using the system to its maximum capability. With respect to improvement of cash flow and maximizing interest income, we all recognize that interest income has taken a hit over the last several years with interest rates being at historic lows. But very important that when you have a manual intensive system it is not only the fact that you are paying timely, you may be paying too early because you are afraid of misplacing the invoice, not processing it, so if you think about even in our personal lives we probably have a stack of bills we pay timely and we might do that Enterprise Resource Planning (ERP) System Presentation 6 9/13/2011 at the end of the month or the beginning of the month. So this is a case where we are trying to automate and use the horsepower of the system to improve cash flow. The next level of application to this is called a cash management system. Several organizations have those, but this is a must have for any cash management system. With regard to paying early or late, it prevents the possibility of late payment fees because you literally put in on the vendor record that allows the checks to be cut, the payment terms whether they are net 30 or a payment date or what have you. It allows that flexibility. Then the new ERP system AP Warrant Report that we will distribute shortly provides greater clarity and transparency to the Finance Committee. With regard to other benefits; reduces clerical work and error determining timing and processing of payment. Very unsettling to have a bunch of folks possibly concerned about the timing of an invoice and they are worried about did I pay it timely or did I find it, have to contact the division director, etc., etc. so systematic processing and view of what is in the queue is important, and that is one of the benefits of this system. With regard to the warrant report itself, it has been primarily a Finance Committee review tool, very important tool where approximately 80% of the warrant expenditures, and I’m going to throw a few numbers our there, $250 million goes through the warrant process on an annual basis and $50 million of it or 20% is what we are discussing with the accounts payable checks. Ordinance 5-131 has been in place for several years and it allows exceptions to a hold on certain items such as payroll, taxes, pension contributions, debt payments, insurance, and health benefits. Those amounts, the expectation on the part of the recipient of the payments is that you have to pay them when they are due or timely in terms of employees and other benefit providers that we have and certainly debt payments. We look at the Treasurer’s office, my office, and the Mayor still having the responsibility to certify all expenditures and the Finance Committee still has the responsibility for review. Also why we are confident this will work is we have policies and procedures that we have had for several years on payment, payment authorization, ordering of supplies, receipt of supplies. These particular modules both procurement and payables they provide more internal controls than we could ever have with the current system meaning if an invoice doesn’t come in and it is not matched to a P.O., it can’t be paid because there are certain checks and balances that are included in the software. In addition, highly unlikely that…it is impossible for the same invoice, if coded properly, to a P.O. to be paid twice. Those are the important aspects of the system that allows for this last billet; high level of confidence that this would still be in place. In addition to that, the City has external auditors that review our books. They look at our policies and procedures, they do testing. We don’t have a qualified opinion. We’re fortunate. We’ve got a very good opinion. In addition to that the City had done a great job with its prior administration and the finance team and the Mayor, but the award we just received our 6th consecutive award for excellence for our Comprehensive Annual Financial Report, which again would give us a level of comfort that things are working in the right direction with payments. Ms. Evans is going to pass out…this is a little bit difficult to read, but what we would like to show on this particular slide is a before and a possible warrant scenario. Just to put some perspective on what we are looking at here, on the left hand side is the current warrant view and this is one page of what could be 150- page warrant so the objective here was to take one page of the warrant and map it to the new format. As you most likely know, the critical components of any warrant submittal is the account number to which the expenditure is charged, the vendor to whom the payment is made, the amount of the payment, and the Enterprise Resource Planning (ERP) System Presentation 7 9/13/2011 check number that is referred to in our ADMIN system is a REG number. That is actually the check number. The orientation is that it is sorted by account number so for example voucher #24 and #25 on the top left hand side of this particular worksheet you will see two account numbers that are the exact same and a total so it totals by account number, it doesn’t even total by department. But all of the information that is required pursuant to ordinance 5-131 is included. With regard to the new orientation, we will have a few added features. One is that the top of the report will have the payments issued between one date and another date, the check number will be clearly spelled out, and the vendor to whom we paid will be associated with that check number. Underneath the particular vendor that we paid, we will have the account number and the department reference. To the right hand column it will have the amount that was paid. If we skip down to the Carparts of Nashua, you will see that we paid a total of $1,866 to Carparts of Nashua and that particular vendor was used by our Police Department, Edgewood Cemetery, Parks & Recreation, etc. The orientation here is that it is by check number as opposed to account number on the left hand side. We also will put the capability in of the fiscal year, but that is less important during the year than at the beginning of the ensuing year, but the fiscal year reference would also be available by utilizing the capabilities of the system. With that, we would like to field any questions you may have. Alderman Deane Do we have a cash flow problem? John Griffin No. Alderman Deane How will the commodity code interdepartmental transfers be viewed through this process? Say account, the 531-78007 account doesn’t have enough money in it to cover these costs, what sort of document are we…are we still going to receive a transfer report? That will be still received? Mayor Lozeau Yes. Alderman Deane And is there any way to show, although you have consolidated this into one check, the balance within those five digit lines, that can’t be placed in this warrant? Mayor Lozeau It will be in the monthly financials, will give you a better snapshot of that. Rosemarie Evans Correct because you’ve got encumbrances that are ongoing and coming through the system… Enterprise Resource Planning (ERP) System Presentation 8 9/13/2011 Alderman Deane Even to this day the City is still spending last year’s money correct? Rosemarie Evans We are almost done. The auditors are coming Monday so… Alderman Deane Well it is September. Is this working draft that you handed out, is this a boilerplate from somewhere else? Rosemarie Evans No. Alderman Deane So this is special to Nashua? Rosemarie Evans Well it takes into account I think, as CFO Griffin mentioned, the GFOA recommended structure categories, groupings. Alderman Deane So you have your two digit series and then your category title, that is the highlighted, and then your pod that is within the category title/ Rosemarie Evans Correct. Alderman Deane So why did we start with 41? Rosemarie Evans Well we decided that our revenue accounts would start with a 41. We followed the…actually Alderman Deane those numbers are referenced in the State Uniform Chart of Accounts. That is why we started with 41. Alderman Deane So we are kind of boilerplating what they have done… Rosemarie Evans We are boilerplating State reporting requirements and also trying to take into account what our CAFR reporting requirements are as well as divisional reporting requirements. Enterprise Resource Planning (ERP) System Presentation 9 9/13/2011 Alderman Deane So is there anything that is down to like 10, 20, or 30? Is that going to be available within the program to utilize down the road if need be? Rosemarie Evans What do you mean 10, 20, or 30? Alderman Deane Well you started at 41… Rosemarie Evans Oh okay I’m sorry… Alderman Deane …you have 11 and 21 and 31 or something like that? Rosemarie Evans I don’t want to get too technical, but yes those are balance sheet accounts for your assets, your liabilities, and your fund balances. Your asset accounts typically will start with a 1, your liabilities will start with a 2, your fund balance accounts start with a 3, your revenues start with a 4 and your expenses a 5 through 8. Alderman Deane The transfer report, what is that going to look like? What are the changes with that? Rosemarie Evans I don’t know yet, we are still in implementation mode Alderman Deane, but there is functionality to do budget transfers and functionality to get data out of the Lawson ERP System. Alderman Deane What sort of program will the warrant be on? Rosemarie Evans Program? Alderman Deane Well it is new software right? Rosemarie Evans I think what is important to note about our current warrant process is that the City truly does not have an accounts payable system. Literally what is housed in ADMINS is a vendor name, a vendor address, their Enterprise Resource Planning (ERP) System Presentation 10 9/13/2011 taxpayer ID number, and maybe a phone number. There are no payment terms; there is no contact information, there is nothing. What goes into ADMINS has to come out of ADMINS. It is not a payable system. It can’t tell you when bills are due and when you need to pay them. Lawson is a fully functional accounts payable system. Alderman Deane If I get the warrant and I want to Control F and put in a name like Carparts of American or whatever, I will still be able to do that? Rosemarie Evans Control F? Alderman Deane Yeah, to go and seek through the document looking for that. Rosemarie Evans Yes. Alderman Deane I will be able to do that? Rosemarie Evans Yes. Alderman Deane What is the timeline on getting this launched? When do anticipate launching this? I keep hearing December. Mayor Lozeau Well, what I said at the Finance meeting was that we were hopeful for December, but we didn’t have a firm date yet. John do you want to add to that? John Barker We’re still looking at all of the details around the date of the go live launch. There are so many different aspects that have to go into that and align. We want to set that date once and not over and over again because of obvious impact to everybody including the Board of Aldermen. We are still determining what can be a feasible successful date that we can have all of those pieces in place. Alderman Deane Other than commodity code changes, what other policy that has been adopted by this board do you anticipate bringing in for perhaps change? Enterprise Resource Planning (ERP) System Presentation 11 9/13/2011 John Griffin They are going to be minimal. We don’t want to preclude coming in with potential changes that affect the way business would be transacted. With respect to the warrant and the other two ordinances that called out specific account group categories, we’re not sure of what other changes would come in. As we mentioned, we are still designing the system and we want to make sure that when we design that system that it is in accordance with the ordinances of the City. It is still an evolving process. Mayor Lozeau As we were working on this component it was clear that it conflicted with existing ordinances, and so that was the point of bringing it in giving you an idea or seeing what we were talking about. Nashua is very different so some of our ordinances might not be something that the companies working with us have seen before in other communities that they have worked in. It is kind of an ongoing process. Alderman Deane Is there a sense of urgency to have all of this legislation passed when this isn’t going to be launched perhaps for another 3 months or so? Is it stopping any of the forward progress of… John Barker May I answer that John? John Griffin Sure. John Barker It prevents us from properly configuring the system. First off we want the board to have enough time to do its proper due diligence around the changes. The Mayor didn’t want, and I think appropriately, to give it to you at the last minute or what might be perceived as an insufficient time. The second is that we have to design around these changes so if you’re not providing those approvals that is basically hindering us from moving forward on these kinds of configuration changes. Alderman Deane When this legislation gets referred to committee, is somebody going to attend the meeting to go through this… Mayor Lozeau Yes. Alderman Deane …because I think this is an awful lot. I would like to spend some time looking at this myself. I don’t know what my colleagues, what their opinion is. Somebody will be here? Enterprise Resource Planning (ERP) System Presentation 12 9/13/2011 Mayor Lozeau Alderman Deane, I think the CFO is looking at me to find out if I’m going to respond to that question so yes I will have some of our staff here depending on what is taken up that night. That is why I invited them here tonight, I wanted the full board to have the benefit of understanding what we were talking about specifically, why it was necessary, bring it in as soon as we could so that the process can take place. I anticipate that happening. In addition, things that we didn’t talk about tonight include changes to our fiscal ’13 budget where you are going to see budget format changes, and it is our plan to come in in January and start having discussions with the Budget Committee to talk about what you can expect to see in that budget coming forward because I don’t want you to be faced with the meetings and the discussions surrounding the new budget at the same time that you are trying to catch up and understand what the formatting means and how to identify it. Our goal is to provide these opportunities for this kind of discussion and questions to be answered. Alderman Deane Well we have normally got the budget in May right? So we have four months to try to go through. I guess considering a very large learning curve, and there are going to be some new folks here so it is going to be a new learning curve for them outside of a new learning curve for other folks. Thank you. Alderman Sheehan Thank you. Kind of just touching back, I wanted to hear an example if the question I was asking applied to, we will use the example you gave with copy charges; that you were going to have one code. Each department probably budgets for that, how are they going to be able to tell theirs from another department within a budget? John Griffin At the lowest level, which is very important, is the account number. Right now it is going to be five digits. It dovetails to the account classifications we passed out so if it is 56001, copy paper, that would be consistent across every department in the City. The next level up is called an accounting unit grouping where when somebody is interested in seeing their individual department; total of expenditures, budget, actual, remaining balance, that is how it will be. In a reporting basis, that is how it will be captured. President McCarthy I think there may be a fundamental discussion point here, which is the budget will still be broken out at its highest level by department… John Griffin Yes. President McCarthy …it is just the level at which what is now the two digit and five digit and four digit commodity codes are will change somewhat within there, but as far as the budget is concerned it will look much the same as it does today, it will just have different numbers in front of the lines… Enterprise Resource Planning (ERP) System Presentation 13 9/13/2011 John Griffin That is correct. President McCarthy …what is changing is in the warrant we will see an individual payment to a specific individual or vendor, which is then broken down with what all of the expenses were that lead to that, but we will see all of the expenses to one vendor grouped in one place rather than as individual checks or transfers based on every individual warrant items from the departments. Correct? John Griffin Yes. Alderman Sheehan So is department the lowest level they will be able to go or if they were saying having a sub-split say between projects and trying to say this needs to go to the Federal grant money and this one …will that still be able to be tracked? Okay. That’s my main concern is functionality for the end employee to be able to do their job and be able to track whether or not they are staying on budget. John Griffin Right. The other thing to note on that, great question, is that the individuals that are responsible for the accounting of the grants have been intimately involved in the development of the configuration of that particular module. There is a grants module. Ms. Evans has been intimately involved in that as well from the standpoint of the tie-in with the general ledger… Alderman Sheehan Okay. John Griffin …the hope is with modularity of system the report writing on the back end is much more intuitive and apparent… Alderman Sheehan Good. John Griffin …I learned a lot my first year and Ms. Evans she did a great job with regard to putting together things that are tremendously labor intensive; the reporting to the State and the reporting in the CAFR, the annual audit, very busy time. There is nobody better than Ms. Evans to figure out how to take the capabilities of this particular application and make her and her colleague’s lives easier with regard to the reporting on the back end. Excel spreadsheets are a great tool, but if you have the capability resident within the module in the application it just makes life much easier and it can grow and expand as our needs expand. Enterprise Resource Planning (ERP) System Presentation 14 9/13/2011 Alderman Sheehan Yes, okay. This is just some of the roadblocks I had run into switching over to SAP and other things in a professional career and just some of the things that you wanted to make sure that were done on the front end, and it sounds like you are addressing that so good. Thank you. Alderman Cookson Thank you. Within the presentation there was a slide, I believe Director Barker was addressing, I believe it was around slide 4, it talked about the different components of NGIN including ERP, the document management and the licensing and permitting. I know that ERP is first and foremost that is what we are attempting to have launched. Do we have estimated timelines for the document management and the licensing and permitting and specifically I am interested in I guess what we are calling code enforcement, and if code enforcement also includes police ticketing. Is that what code enforcement is or is code enforcement …so two questions; what are the potential timelines for document management and licensing and permitting and then what aspect of this addresses the police ticketing? John Barker The document management was actually accelerated because it tied into the Lawson system in a way we hadn’t anticipated at first when we put together the NGIN plan. It was actually approved by the Finance Committee at its last meeting so that acquisition is going on now. It has its own individual two phases; one is pieces in Lawson that support the invoices, copies of invoices, copies of P.O.s, etc. any kinds of historical documents around a financial record, that will be in as part of this ERP implementation. The second phase of that will be deploying a lot of the other value adds of things such as automated workflows around approvals that have documents attached to them, etc. things that ERP really doesn’t touch on, but that we would like to see improved and streamlined. That is a longer process. In reality what is happening is the vendor will teach us how to do that and then we will have a portfolio of things to address and IT will work its way through that. You will see that document management really evolving over a much longer period. In regards to the ticketing, those are essentially a receivable function. Right now ADMINS does the receiving around the ticketing. We already have a piece of software that controls the handhelds that the police officers use, but they come back into the office and everything feeds into ADMINS and ADMINS says I will decide how to bill it, I will decide how to track it. As part of ERP, we will replace that because it has to be off ADMINS. We will be buying something specific to parking tickets to handle the receivables on that similar to a lot of other unique receivables such as the scale house has a receivables component, parking passes and the like have a receivables component. For many of them what we are doing is taking our existing applications that we have bought and piggybacking off of their receivables components and tying them into Lawson. Those things really have to happen as past of this larger ERP project. The licensing and permitting you are seeing here is really more around the Public Health permitting, inspections, and the like, the Community Development building permits and things like that, City Clerk permits and licenses, etc., integrating all of those in a coherent way and then tying them in. Since they all involve money, tying them into the backbone that ERP will have become at that point. Alderman Cookson Thank you. I just have a follow-up, please. Thank you. I understand the receivable aspect of it. This past summer has been a very heated discussion at least within these Chambers about the downtown parking district and the effect of being able to track a ticket or being able to track an offense; whether it is a 1st, 2nd, Enterprise Resource Planning (ERP) System Presentation 15 9/13/2011 3rd, or 4th offense. Is that functionality built in as well or is this just a receivables aspect that is going to be built in initially, that is piggybacking? John Barker The advanced parking component has a lot of flexibility to it. I can’t really answer whether it will give all of those pieces you said, but I know that it gives a significantly greater level of functionality around both the amounts of money charged at different points, how you report on the different tickets that might be recurring individuals who are repeat offenders and the like. There is a lot of functionality there and we know that is important to folks. But I’m just not familiar enough yet because we haven’t gotten into it, to know whether it can do all of the things you want. Alderman Cookson It is something down the road, it is not something immediate, it is not something that is going to be within this first launch? John Barker I think that we would be looking at that and things like the solid waste components probably within a year after go live. Alderman Cookson Thank you. President McCarthy Are there other questions? Thank you. The presentation concluded at 7:17 p.m.  NGIN Project BOARD OF ALDERMEN ERP BRIEFING City of Nashua September 13, 2011  AGENDA • What’s included in NGiN – NGiN & ERP • New Chart of Accounts (COA) • NRO Language Changes That Are Needed • Warrant Revisions • Questions? 2 WHAT’S INCLUDED IN NGiN?  NEW CHART OF ACCOUNTS (COA) Why the existing COA had to change. • ADMINS COA is non-standard • Account structure between Departments, Divisions and City as a whole is not consistent • Organization-wide view of the account structure is not possible 4  NEW CHART OF ACCOUNTS (COA) (Cont’d) New COA Structure: • Aligns with the Government Finance Officers Association (GFOA) “Blue Book” standards (also called the Governmental Accounting, Auditing and Financial Reporting (GAAFR) • Complies with governmental financial reporting standards necessary for State and Local Governments • Is consistent with the State of New Hampshire uniform chart of accounts for municipalities • Reduces the number of accounts for efficient reporting and accounting 5  NEW CHART OF ACCOUNTS (COA) What’s Different? • Accounting classifications are more logical • All revenue accounts begin with a “4” • All expense accounts begin with a “5” through “8” (see Accounting Classification Document being distributed) • New COA was built on the backbone of common account structure which will be used by all Divisions • COA can change and will evolve while maintaining the same account structure • Prior to “GO LIVE” we will be providing a tool to identify how to map the old account numbers to new account numbers 6  NRO LANGUAGE CHANGES NEEDED • Over the years, Ordinances and Resolutions built ADMINS COA references into the law. These references should be changed because of the new Chart of Accounts. • Before you tonight is O-11-86, which will make changes to replace old account number references with the respective Accounting Categories of the new COA. • Ordinance 5-145-Preparation of the combined annual municipal budget and the use of Northeast Consumer Price Index-Urban • Ordinance 50-35-Self-insurance fund • Additional changes may become necessary as we move forward with implementation. 7  WARRANT REVISIONS O-11-85 before you tonight revises NRO 5-131 • Issue - ERP Systems are designed to centralize and automate the scheduling and processing of payables as a “best practice” for financial and operational benefits and efficiencies. Currently, payments require Finance Committee approval to process payments for certain types of accounts and claims. • For the City to automate its payables and realize those benefits, we request the BOA review and adopt proposed language changes in O-11-85. 8  WARRANT REVISIONS • Benefits of O-11-85: • Leverages efficiencies in processing and payments • City can negotiate improved payment terms for vendor discounts and reduced pricing • For example: if an early payment discount had been possible on certain commodity purchases in 2011 such as road salt, sand, and waste water chemicals totaling $1,000,000, a potential savings of 2% would equal $20,000. • City can improve cash flow and maximize interest income • Prevents the possibility of late payment fees • NEW ERP system AP Warrant Report provides greater clarity and transparency to the Finance Committee 9  WARRANT REVISIONS (Cont’d) Benefits of O-11-85: (Cont’d) • Reduces clerical work and error determining timing and processing of payments. • This is not new - the Warrant Report is already primarily a Finance Committee review tool. Approximately 80% of City warrant expenditures have always been prepared under Subsection C of NRO 5-131 (such as payroll, taxes, pension contributions, debt payments, insurance, and health benefits, etc). • The Treasurer, CFO and Mayor still have responsibility to certify all expenditures and the Finance Committee still has the responsibility for review. 10 SAMPLE WARRANT REVISIONS (Cont’d)  Thank You Questions 12 City of Nashua Chart of Accounts Account Classifications Working Draft All revenue accounts in Lawson begin with a "4". All expense accounts in Lawson begin with a "5" through "8". Revenue 41 Series Tax Revenue Property Tax Other Taxes Interest and Penalties on Taxes 42 Series License and Permits Business Licenses and Permits Motor Vehicle Permits Building Permits Other Licenses and Permits 43 Series Intergovernmental Revenue Federal Direct Revenue Federal Indirect Revenue Revenue from the State of NH Revenue from Local Governments 44 Series Charges for Services Income from Departments User Fees Tuition Fees Transportation Fees 45 Series Miscellaneous Revenue Sale of Property Earnings on Investments Rents of Property Fines and Forfeitures Insurance Reimbursements Contributions Other Miscellaneous Revenue 48 Series Other Financing Sources Proceeds from Notes and Bonds 49 Series Interfund Transfers In Transfers from Other Funds Page 1 of 3 Expenses: 51 Series Salaries and Wages Amounts paid to both permanent and temporary City employees, including personnel substituting for those in permanent positions. This category includes gross salaries for personal services rendered while on the payroll of the City. 52 Series Employee Benefits Amounts paid by the City on behalf of employees, these amounts are not included in gross salaries but are in addition to that amount. Some examples are health premiums, dental premiums, life insurance premiums, retirement, FICA/Medicare, etc. 53 Series Professional and Technical Services Services provided to the City that by their nature can be performed only by persons or firms with specialized skills and knowledge. The primary reason for the purchase is the service provided. Examples are architects, engineers, auditors, medical services, lawyers and consultants. 54 Series Property Services Services purchased to operate, repair, maintain and rent property owned or used by the City. These services are contracted and not performed by City employees. Some examples are: Utilities, disposal services, snow plowing, custodial, grounds maintenance. Repair and maintenance services to include the upkeep of buildings and equipment maintenance agreements. Rental of land and buildings, rental of equipment and vehicles, construction services. 55 Series Other Purchased Services Services rendered by organizations or vendors of the City (separate from professional and technical services or property services). Some examples are: Telecommunications, advertising, printing and binding, dues and memberships, travel, conferences and seminars, laundry and cleaning services, payments to Human Service Agencies. 59 Series Insurances and Claims Liability and General Insurance Policy costs. Risk Management Claims and Health Claims. Page 2 of 3 Expenses - (continued): 61 Series Supplies and Materials Expenditures for consumable items. Some examples are: General Supplies, vehicle supplies, equipment supplies, building and grounds supplies, fuel, office supplies, books and periodicals, etc. 64 Series Non Capital Equipment < $15,000 Expenditures for new vehicles and equipment or replacement vehicles and equipment which does not meet the City capitalization threshold of $15K. 68 Series Other Expenses Expenditures for Contingencies, Overlay and Indirect Cost reimbursements. 71 Series Equipment & Vehicles Expenditures for acquiring equipment and vehicles. 75 Series Debt Service Principal and Interest payments on notes and Bonds, capital leases and issuance costs for new debt. 81 Series Capital Projects/Improvements Expenditures for acquiring capital assets which meet the City capitalization threshold of $15K. Examples are: Land, Land improvements, buildings, equipment, etc. 89 Series Other Financing Uses Interfund Transfers to other Funds. Page 3 of 3  REPORT WARRANT CITY OF NASHUA CITY OF NASHUA, NEW HAMPSHIRE ACCOUNTS PAYABLE WARRANT REPORT TREASURY WARRANT WARRANT # 24 now displays the Full Payment WARRANT # 24 Check # Clearly Identified PAYMENTS ISSUED 06/15/11 - 6/30/11 Period the Warrant Covers. 6/30/2011 VOU# ACCOUNT# VENDOR NAME AMOUNT FY REG# CHECK# - 186016 6/30/2011 NH BRAGG & SONS INC Account# Dept Description Amount FY 24 308-83064 ENTERPRISE RENT A CAR-NASHUA-MAIN ST 350.00 186,018 553-46045 STREET DEPARTMENT 2,597.20 2011 25 308-83064 ENTERPRISE RENT A CAR-NASHUA-MAIN ST 103.82 186,018 $3,524.02 TOTAL 453.82 CHECK# - 186018 6/30/11 ENTERPRISE RENT A CAR-NASHUA-MAIN ST 31117-78007 BEST FORD 55.90 186,021 Account # Dept Description Amount FY TOTAL 55.90 308-83064 SRF - INSURANCE 350.00 2011 308-83064 SRF - INSURANCE 103.82 2011 $453.82 26 312-78007 CARPARTS OF NASHUA 224.93 186,020 CHECK# - 186019 6/30/11 CHEM-DRY OF FOUR SEASONS 27 312-78007 CARPARTS OF NASHUA 3.77 186,020 Invoice # Date Account # Dept Description Amount FY 28 312-78007 CARPARTS OF NASHUA 20.61 186,020 11596 5/19/11 531-75023 POLICE DEPARTMENT 340.86 2011 TOTAL 249.31 $340.86 Payment information conslidated by vendor 30 331-78007 CARPARTS OF NASHUA 22.44 186,020 CHECK# - 186020 6/30/11 CARPARTS OF NASHUA TOTAL 521.06 Account # Dept Description Amount FY 312-78007 SRF - FINANCIAL SERVICES 224.93 2011 31 531-75023 CHEM-DRY OF FOUR SEASONS 340.86 186,019 312-78007 SRF - FINANCIAL SERVICES 3.77 2011 TOTAL 340.86 531-78007 POLICE DEPARTMENT -83.68 2011 331-78007 SRF - POLICE DEPARTMENT 22.44 2011 32 531-78007 BEST FORD 241.26 186,021 531-78007 POLICE DEPARTMENT 39.77 2011 33 531-78007 BEST FORD 48.30 186,021 531-78007 POLICE DEPARTMENT 109.50 2011 TOTAL 289.56 531-78007 POLICE DEPARTMENT 57.14 2011 531-78007 POLICE DEPARTMENT 8.57 2011 34 531-78007 CARPARTS OF NASHUA -83.68 186,020 312-78007 SRF - FINANCIAL SERVICES 20.61 2011 35 531-78007 CARPARTS OF NASHUA 39.77 186,020 531-78007 POLICE DEPARTMENT 342.75 2011 36 531-78007 CARPARTS OF NASHUA 109.50 186,020 531-78007 POLICE DEPARTMENT 537.31 2011 37 531-78007 CARPARTS OF NASHUA 57.14 186,020 531-78007 POLICE DEPARTMENT 11.06 2011 38 531-78007 CARPARTS OF NASHUA 8.57 186,020 531-78007 POLICE DEPARTMENT 305.75 2011 39 531-78007 CARPARTS OF NASHUA 342.75 186,020 531-78007 POLICE DEPARTMENT 21.46 2011 40 531-78007 CARPARTS OF NASHUA 537.31 186,020 561-78007 EDGEWOOD CEMETERY 87.81 2011 41 531-78007 CARPARTS OF NASHUA 11.06 186,020 552-78100 PARKS AND RECREATION 2.69 2011 42 531-78007 CARPARTS OF NASHUA 305.75 186,020 552-75175 PARKS AND RECREATION 120.78 2011 43 531-78007 CARPARTS OF NASHUA 21.46 186,020 552-78100 PARKS AND RECREATION 16.29 2011 44 531-78007 CARPARTS OF NASHUA 13.45 186,020 552-78100 PARKS AND RECREATION 4.20 2011 TOTAL 1,363.08 531-78007 POLICE DEPARTMENT 13.45 2011 $1,866.60 45 552-75175 CARPARTS OF NASHUA 120.78 186,020 CHECK# - 186021 6/30/11 BEST FORD TOTAL 120.78 Account # Dept Description Amount FY 531-78007 POLICE DEPARTMENT 241.26 2011 46 552-78100 CARPARTS OF NASHUA 2.69 186,020 531-78007 POLICE DEPARTMENT 48.30 2011 47 552-78100 CARPARTS OF NASHUA 16.29 186,020 3117-78007 DRIVER'S EDUCATION 55.90 2011 48 552-78100 CARPARTS OF NASHUA 4.20 186,020 581-78007 SCHOOL DEPARTMENT 55.90 2011 TOTAL 23.18 The requesting Department is now Clearly $401.36 Identified. 49 553-46045 NH BRAGG & SONS INC 2,597.20 186,016 warrant now displays the total TOTAL 2,597.20 consolidated payment by vendor 50 561-78007 CARPARTS OF NASHUA 87.81 186,020 TOTAL 87.81 51 575-57010 MV COMMUNICATIONS INC 12.00 186,017 TOTAL 12.00