March 21, 2023
Finance Department
DATE: March 21, 2023
TO: Mayor Martinez and Members of the City Council
FROM:
Shasa Curl, City Manager
Nickie Mastay, Deputy City Manager, Internal Services
Mubeen Qader, Deputy Director of Finance
Subject:
Sole-Source Contract with GovInvest, Inc. for Financial Software and Consulting Services
FINANCIAL IMPACT: $41,860 has been requested to fund during the FY 2022- 2023 Mid-Year review (01173415-400201)
PREVIOUS COUNCIL
ACTION:
N/A
STATEMENT OF THE
ISSUE:
City staff is requesting City Council authorization to
execute a sole-source contract with GovInvest, Inc. for their software and consulting services related to their Pension Module, OPEB Module, Labor Costing Module
and Financial Forecasting Module.
RECOMMENDED ACTION:
APPROVE a three-year sole-source contract with
GovInvest, Inc., in a total contract amount not-to-exceed $336,400, with a term from March 22, 2022, through
June 30, 2026, for software and consulting services
related to their Pension, OPEB, Labor Costing, and
Financial Forecasting modules – Finance Department
(Nickie Mastay/Mubeen Qader 510-412-2077).
AGENDA
REPORT
March 21, 2023
DISCUSSION:
The GovInvest, Inc. software modules are designed to provide sophisticated, yet user- friendly financial management tools for the public sector. The Pension Module will assist in managing the City’s pension liabilities and help ensure that the City is on track to meet its financial liabilities. The OPEB Module will help to manage our Other Post- Employment Benefits (OPEB) liabilities, ensuring that the City meets its long-term commitments to retirees. The Labor Costing Module will assist in forecasting labor costs under several scenarios. The Financial Forecasting Module will assist with creating accurate, comprehensive financial projections and reports, enabling the City to make informed decisions about the City’s financial future.
City staff has conducted extensive research on the GovInvest, Inc. software and consulting services, including consultation with other cities that have implemented these modules. Based on our findings, City staff believe that these modules will provide significant benefits to the City, including:
Improved management of pension and OPEB liabilities
Better labor costs’ forecasting
Enhanced financial forecasting and planning capabilities Increased efficiency and accuracy of financial reporting Improved transparency and accountability
Additionally, GovInvest’s software and consulting services directly address four recommendations from the State Auditor’s report that the City has agreed with.
Specifically:
State Auditor’s Recommendation
Richmond should include multiple scenarios in its financial projections, including scenarios with potential additional risks, such as economic downturns or recessions, and how the City would continue to fund its operations under those circumstances.
GovInvest, Inc.’s software and consulting services address this recommendation in the following fashion:
Labor Costing Module and Financial Forecasting Module
o GovInvest’s Labor Costing Module will allow the City to create next year’s labor budget with general ledger level detail, forecast costs out for up to 10 years, and use the baseline budget to create scenarios for modeling labor negotiation scenarios to determine cost impacts.
GovInvest’s Financial Forecasting Module expands the City’s labor forecasting capabilities to incorporate labor negotiation scenarios over multiple years. The module will also help the City maintain and develop a dynamic forecast
March 21, 2023
incorporating economic recession and expansions in the City’s revenue and expenditures.
State Auditor’s Recommendation
To ensure that Richmond is able to fund its retirement-related costs, City staff should propose, by June 2023, to the City Council a specific policy regarding funding of its pension trust fund for this purpose. City staff should report to the City Council on the estimated long-term savings from increasing its direct payments to CalPERS as compared to investing the same amounts in its pension trust fund. City staff members should use this information to inform their recommendations related to funding targets for the pension trust fund and should consider recommending that the City Council increase the City’s payments directly to CalPERS.
GovInvest, Inc.’s software and consulting services address this recommendation in the following fashion:
Pension Module and Consulting Services
o Using GovInvest’s Pension Module in tandem with assistance from our consulting team, the City of Richmond can develop a flexible funding policy for the City’s 115 trust, including a detailed breakdown of the estimated long-term savings of investing funds in the 115 trust compared to direct payments to CalPERS
o Engagement includes an annual contribution strategy update, including reassessment of normal cost contributions and CalPERS investment return impact analysis approximately one-year before valuation is delivered.
o Includes educational materials and presentations for City Council and cost/benefit analysis for respective funding strategies.
State Auditor’s Recommendation
To improve the City’s ability to pay OPEB, Richmond should implement, by June 2023, a policy identifying funds, such as surpluses or one-time revenues, that should be contributed to the OPEB trust fund. City staff should then conduct an annual analysis to determine whether any funds available to the City are applicable under the City’s policy and should present a proposal to the City Council to apply those funds to that trust fund.
GovInvest, Inc.’s software and consulting services address this recommendation in the following fashion:
March 21, 2023
OPEB Module and consulting services
GovInvest’s OPEB Module and consulting services will enable the City to develop and present multiple scenarios for funding of the unfunded accrued liabilities.
GovInvest’s modeling capabilities provide projections on the agency’s budget for the next few years based on the updated census data, changes and assumptions, payroll changes, and other changes in the salaries and benefits.
State Auditor’s Recommendation
To mitigate the costs of increasing salaries, the City should perform a workforce analysis by June 2024. Based on the results of the analysis, the City Council should consider eliminating vacant positions that it deems no longer necessary.
Additionally, the City should continue to assess its need for any vacant position before it seeks to fill it.
GovInvest, Inc.’s software and consulting services address this recommendation in the following fashion:
Labor Costing Module
o GovInvest’s Labor costing software can calculate the impact of increasing salaries, including all roll-up costs to determine savings by the reclassification or elimination of vacant positions.
City staff believe that the investment in these modules will pay significant dividends in the long term. The cost of the software and consulting services is reasonable, and the benefits will far outweigh the investment.
DOCUMENTS ATTACHED:
Attachment 1 – GovInvest Standard Contract
Attachment 2 – Sole Source Justification