Finance Committee

Finance Committee Meeting Council Chambers February 19, 2014 8:00 a.m. Call To Order: Meeting opened at 8:00 am Roll Call: Finance Director Neukirch called the roll for Committee members. Committee Members Present: Chairman Joe LoVerde, John Johann, Robert Callero, Village Manager Steve Vinezeano and Finance Director Scot Neukirch Committee Members Absent: None Non Committee Members Present: Asst Finance Director Laurie Nannini, Attorney Joe Annunzio, Asst Village Manager Hadley Skeffington-Vos Approval of Minutes: The minutes from the January 15, 2014 Finance Committee meeting were up for approval, motion made and all concurred. Accounts Payable Approval: The approval of the Accounts Payable registers for 1/10/14, 1/17/14, 1/24/14, 2/7/14 were up for approval, motion made and all concurred. New Business FY 2015 Draft Budget Review: Village Manager Vinezeano and Finance Director Neukirch gave a presentation to the Committee concerning the status of the draft FY 2015 Budget, see attachment 1. The Committee reviewed and discussed the budget timeline, Village cost control/operational efficiency efforts, the General Funds original requests, factors impacting requests, changes made and balancing options. The Automotive Funds and Water Fund were also discussed focusing on the issues each of these Funds is facing concerning capital equipment and infrastructure needs. Summary information was also provided on other funds. Representatives from most of the Village departments attended the meeting and some answered various questions from the Committee in this preliminary meeting. The Committee requested that staff look in to the following:  If the post office can share in the costs of the budgeted parking lot for Civic Center Plaza?  If Niles businesses that benefit from the Free Bus would be willing to contribute to funding the cost of the bus?  How much would a sewer fee generate in revenue and how much would it cost the average resident? RFP for Liability and Workers Compensation Broker: Asst Village Manager Skeffinton-Vos presented the draft RFQ for broker services for workers compensation insurance and liability insurances coverage for the Village. Finance Director Neukirch explained that the process for the insurance renewal doesn’t take place until August, therefore there is plenty of time to make this selection. John Johann asked that staff look in to the following:  Including a request for a fee  If there are any insurance programs that the broker’s business is unable to participate in?  If the broker will agree to put any “pay at risk” in exchange for a commitment for timely submittal of certificates, renewal documents etc to the Village? Calendar 2014 Abatement Ord: Finance Director Neukirch presented the 2014 abatement ordinance. Neukirch briefly explained the abatement process. All but $425,000 of the potential debt levy created by the Village’s general obligation debt is abated by this ordinance. Purchasing Manual Revisions: Attorney Annunzio began the discussion concerning proposed changes to the Village’s purchasing policy. Finance Director Neukirch also provided background information on the various proposed changes during the discussion with the  Committee. The following changes are being recommended by staff and were discussed with the Committee:  The threshold was increased from $5,000-$19,999 for the Mayor’s signature on check requests/requisitions (Chapter 2 – Purchasing Policies)  Any person responsible for approving purchases may delegate his/her approval authority to a designee in the event he/she is out of the office for a period of time – such delegation need not be in writing (Chapter 2 – Purchasing Policies)  The respective department is required to provide documentation justifying the value of any trade in surplus equipment. (Chapter 3 – Disposal of Village Property  All purchases of goods or services exceeding $20,000 to be bid out shall be approved by the Mayor and Board of Trustees (exhibit 3). After receiving bid approval (Chapter 4 – Competitive Bidding, RFP’s and RFQ’s)  Any purchase for goods or services exceeding $20,000 that are not budgeted, must receive prior approval by the Mayor and Board of Trustees (Chapter 4)  Expansion & clarification for the RFP process (Chapter 4)  Expansion & clarification of contract review (Chapter 4) The Committee and staff spent some time discussing the bid/rfp threshold and how the Village tries to make sure that it is being followed with regards to items that there is an opportunity to split in order to keep each purchase under the bid threshold. Neukirch explained that staff reviews and signs off on purchases in advance. The Purchasing department is very diligent in reviewing the purchases and making sure the purchasing policies are being followed, but there is a potential for the process to be circumvented if a director were to split the purchase with enough time in between that would make it difficult for staff to detect. Neukirch will look in to reviewing all the purchases over the bid threshold and see if there is a way to try and reduce or eliminate the potential circumvention of the process. Neukirch did explain that directors are reminded that this is a violation of the purchasing policy and it is their responsibility to follow the Village’s policies. If they are caught, they would be reported to the Village Manager for potential disciplinary action. Other Business: None Public Comment: Louella Preston asked various questions of the Committee primarily dealing with the proposed draft FY 15 budget. Executive Session: Under 5 ILCS 120/2, 21 of the Illinois Open Meetings, the approval of executive session minutes, the Committee went in to executive session at 10:23 am. Return From Executive Session: The Committee returned from executive session at 10:24 am. Adjournment: Motion to adjourn was made and all concurred at 10:24 am. Prepared by Scot Neukirch on 2/19/2014    Budget Timeline  Water Fund  Village cost control/operational efficiency efforts  Automotive  General Fund Fund  Original requests  Factors impacting requests  Changes made during staff meetings  Other Funds  Balancing options  November  Staff began formal planning for upcoming budget year  December-Mid January  Staff entered requests in budget system  January  Finance: Reviewed budget entries Made preliminary inquiries Developed the draft budget  Last week in January  Staff met with the Village Manager, Asst Village Manager and Finance to discuss budget requests General Fund deficit was reduced by almost $7 million during this step  February  Revised the preliminary draft document with changes resulting from departmental meetings.  Meet with Finance Committee on February 19 to discuss the budget.  March/April  Meet with entire Village Board for 3 scheduled workshops to get input and direction from the Board.  March 13, 2014 - (to be confirmed)  March 18, 2014 - (to be confirmed)  March 20, 2014 - (to be confirmed)  Beginning of April  Prepare proposed budget based on Board direction received.  Available for residents to review on website, library and front counter  End of April  Statutorily required Public Hearing for resident comment on the proposed budget as part of the regularly scheduled Board Meeting  May  Village Board votes on appropriation ordinance  Collection of debt owed to the Village  Illinois debt recovery ($80,000)  Water billing delinquency program ($45,000)  Business license revocation process  Purchasing cards  Large payment vendors paid with purchasing card that earns cash back for the Village ($20,000 to $50,000 annually plus a 1 time $20,000 bonus)  Staffing  2013 total payroll was only .6% higher than calendar 2008. ($152,000)  During 2013  IT re-organization  Fitness Center staff reduction  Fire Inspector position realignment  Public Works efficiency study  Sharing costs with other communities  Police Dispatch  Municipal Partnering Initiative (MPI)  Multi community water purchase  Shared Fire services/facilities  Debt cost controls  Refunding existing Village debt to take advantage of lower interest costs  Utilizing the IEPA Loan Program to get lower interest rates on eligible projects  Energy savings  Fitness Center  Water plant  Electric purchase for Village water system/street lights  Insurance costs  Additional training designed to reduce workers comp claims  Wellness program designed to improve our employees overall health  Direct savings provided to residents  Municipal electric aggregation  Flood control cost sharing  Grants  FY 15 Categories Acct Range Requests Payroll Items (2000-2080, 2505-2610, 2999, 3510 & 3515) $19,054,926 Pension Payments (2705, 3520) $6,920,438 Insurance (3230, 3240, 3250, 3275, 3280) $4,262,259 Over Time (2200-2399) $1,626,247 Wellness Transfer 3235 $62,360 Risk Mgmt Transfer 3291 867,099 Admin Exp (3000-3099) $785,205 Contractual Exp (3300-3399) $3,197,179 Auto Fund Transfer 3991 $2,541,300 Conferences & Training (3100-3199) $319,609 Equipment Maint & Materials (3600-3699) $4,727,461 Capital Equipment & Improvments (3800-3899) $11,496,309 $55,860,392  21% Payroll Items 34% Pension Payments Insurance 57% Over Time Wellness Transfer Risk Mgmt Transfer 8% Admin Exp Contractual Exp Auto Fund Transfer 1% Conferences & Training 4% Equipment Maint & Materials Capital Equipment & Improvments 6% 1% 12% 2%0% 3% 8%  2030 Plan  Storm Water Relief Program  Pension Funding  Matrix Study (streets, sewers, watermains, staffing)  Street Light Study  Leaning Tower Study  Multi Modal Plan  Facility Study (Fire 2 & 3 and PW garage)  Environmental Action Plan  Future Water Supplier Study  FY 15 FY 15 Categories Acct Range Requests After Dept Mtgs Changes (2000-2080, 2505-2610, 2999, Payroll Items 3510 & 3515) $19,054,926 $19,172,694 $117,768 Pension Payments (2705, 3520) $6,920,438 $6,933,868 $13,430 Insurance (3230, 3240, 3250, 3275, 3280) $4,262,259 $4,262,259 $0 Over Time (2200-2399) $1,626,247 $1,714,422 $88,175 Wellness Transfer 3235 $62,360 $62,360 $0 Risk Mgmt Transfer 3291 867,099 867,099 $0 Admin Exp (3000-3099) $785,205 $770,965 ($14,240) Contractual Exp (3300-3399) $3,197,179 $3,151,419 ($45,760) Auto Fund Transfer 3991 $2,541,300 $2,541,300 $0 Conferences & Training (3100-3199) $319,609 $271,044 ($48,565) Equipment Maint & Materials (3600-3699) $4,727,461 $4,053,448 ($674,013) Capital Equipment & Improvments (3800-3899) $11,496,309 $5,655,034 ($5,841,275) $55,860,392 $49,455,911 ($6,404,481)  21% Payroll Items 34% Pension Payments Insurance 57% Over Time Wellness Transfer Risk Mgmt Transfer 8% Admin Exp Contractual Exp Auto Fund Transfer 1% Conferences & Training 4% Equipment Maint & Materials Capital Equipment & Improvments 6% 1% 12% 2%0% 3% 8%  11% 8% Payroll Items Pension Payments Insurance 65% 1% 39% Over Time Wellness Transfer 5% Risk Mgmt Transfer Admin Exp Contractual Exp 6% Auto Fund Transfer Conferences & Training Equipment Maint & Materials 2% Capital Equipment & Improvments 2% 0% 3% 9% 14%  Revenues FY 15 Budget over/ Account Description (under) FY 14 Projection Explanation 43,403,433 FY 15 Budget Ph 1 1430 Allotments/reimbursements 233,000 Distribution of assets of $227,000 from the Des Plaines Dispatch Center Misc revenues with difference less Various than +-$50,000 20,182 Total of 65 accounts with variances of less than + or - $50,000. 253,182 Sub Total 0.58% Percentage increase from FY 15 Ph 1 43,656,615 FY 15 Budget Ph 2  -$153,300 moved engineering for municipal parking lots to 1460-3810 Land and -$350,000 reduced side walk improvements for the Multi Modal Plan from $450,000 to $100,000, includes 1430 Streets & Signs 3810 improvements (503,300) only Ballard Rd sidewalk -$10,000 removed replacement of Admin hot water heaters -70,000 transferred Fitness roof repairs to Family Fitness Fund -$10,000 removed replacement of Admin chiller pumps -$10,000 removed replacement of boiler exhaust -$80,000 removed replacement of 2nd floor Admin carpenting -$484,000 transferred structural repairs to Leaning Tower to Touhy Corridor TIF -$7,000 removed Admin caulking of windows & doors -5,000 reduced Police Dept irrigation repairs -$12,500 reduced Police Dept painting request -10,000 removed Police Dept sealing of garage floor -$8,000 replaced Police Dept electric heater -$10,000 removed for PW repairs to explosion room -$20,000 removed PW painting of common area -$25,000 replace PW overhead door -$20,000 removed 7735-45 Milwaukee resurfacing of parking lot Land and $153,300 transferred in from 1430-3810 1460 PW Building 3810 improvements (628,200) Capital -$2,510,500 postponed various street resurfacing projects improvement -$1,914,000 transferred various street resurfacing projects to the MFT Fund 1430 Streets & Signs 3840 prjct (4,804,500) -$500,000 removed salt dome  GENERAL FUND (10000) SUMMARY Dollar Change 2015 2014 2013 15 Bud vs 14 Proj vs Budget Projected Actual 14 Proj 13 Actual REVENUES 43,656,615 42,065,392 41,734,483 1,591,223 330,909 EXPENSES 49,455,911 41,049,464 40,221,518 8,406,447 827,946 REVENUES MINUS EXPENSES (5,799,296) 1,015,928 1,512,965 TRANSFER TO CIVIC CENTER TIF 0 (678,102) TRANSER TO FITNESS (223,429) (2,779,921) TRANSFER TO WATER FUND 0 (300,000) TRANSFER TO SEIZURE FUNDS (200,000) 0 OPENING FUND BALANCE 29,544,950 32,287,046 30,774,081 ENDING FUND BALANCE 23,322,226 29,544,950 32,287,046 RESERVED FUND BALANCE (3,744,652) (9,543,948) (9,345,896) UNRESTRICTED FUND BALANCE 19,577,574 20,001,002 22,941,150 19,401,348Cash and Investments  Combination of the following:  Additional budget request reductions  Utilization of reserves  Increases to revenues Dept Acct Amount Description Street resurfacing projects postponed until after Matrix recommended comprehensive pavement evaluation study completed and funding plan 1430 3840 2,173,005 discussed. Phase in these street light replacements over multiple years? Some other 1440 3610 1,320,000 funding plan? Spacing of lights? 1460 3810 766,500 Patch and postpone Civic Center parking lot resurfacing 1430 3810 150,000 Ballard sidewalk, Multi Modal Plan Replacement of Cityview software. Plan and research replacement with IT 1720 3085 150,000 during FY 15. Street sweeping contracting. Postpone until staff reductions take place and 1430 3610 125,000 Village just purchased a new sweeper. Dept Acct Amount Description 1440 3810 100,000 Milwaukee Ave street light holiday decorations 1460 3810 75,000 Enclose administration parking lot 1430 3620 55,000 Snow plowing software. Postpone until new management reviews the process 1620 3390 48,295 Village subsidy of life line program (96,000 cost-47,705 revenue) New street light testing. Postpone until after we can address the current street 1440 3610 45,000 lights that need to be replaced. 1540 3370 40,000 Reduce Façade Program Way finding signs postponed until wayfinding study is completed. Budgeted for 1430 3620 12,000 in 1540-3370 5,104,800  2005 2006 2007 2008 2009 2010 2011 2012 2013 Total 22,017,001 22,501,343 26,119,176 26,534,680 25,905,177 27,212,304 27,983,503 30,774,081 32,287,048 General Fund Unrestricted 19,204,174 20,102,553 23,632,685 24,729,989 24,031,492 24,942,837 26,085,205 22,146,471 22,941,152 Street & Bridge 1,233,001 1,316,469 883,178 685,967 673,261 755,890 793,888 828,816 874,690 Capital Projects (248,389) (130,597) 563,157 576,668 420,098 79,588 59,798 48,494 49,267 Waste Agency 455,883 543,834 693,239 813,247 838,906 900,997 429,435 184,662 39,508 Debt Service 68,181 558,852 79,949 80,409 75,247 75,522 75,163 76,464 76,868 Automotive (unrestricted) 1,416,965 2,068,356 2,673,918 2,522,714 2,559,869 1,796,458 1,667,186 1,751,046 1,334,791 Risk Management (unrestricted) 1,058,909 (40,341) 112,862 265,108 (381,840) (39,833) (336,226) (248,748) 283,311 Other Funds 3,984,550 4,316,573 5,006,303 4,944,113 4,185,541 3,568,622 2,689,244 2,640,734 2,658,435 Grand Total 23,188,724 24,419,126 28,638,988 29,674,102 28,217,033 28,511,459 28,774,449 24,787,205 25,599,587 General Fund (Unrestricted) Other Funds 6,000,000 30,000,000 25,000,000 5,000,000 20,000,000 4,000,000 15,000,000 3,000,000 10,000,000 2,000,000 5,000,000 1,000,000 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2005 2006 2007 2008 2009 2010 2011 2012 2013  Increase Home Rule Sales Tax .25% (1.25% to 1.50%)  Additional $2.5 million (20% increase)  Majority of sales tax is collected from non residents  About 20% of communities in Illinois that have a Home Rule Sales Tax have a rate higher than 1.25%  To be effective July 1, ordinance must be approved and filed with Dept of Rev by April 1. To be effective January 1, ordinance must be approved and filed with the Dept of Rev by October 1.  Sales tax volume increase is budgeted at 2.5%.  Each ½% increase generates $137,000.  Increase local Motor Fuel Tax  Non residents help to support  Niles is at 2.5 cents per gallon  Rolling meadows 3 cents, Mt Prospect 4 cents, Des Plaines 4 cents, Park Ridge 4 cents  Each ½ cent generates $75,000  Electricity Tax Increase  Estimated $300,000  Staff is investigating the options with this  It appears Niles’ rate is much lower than other communities  Red Light Cameras  Estimated $500,000 to $1 million  Safety issue  Would not be received in FY 15  Don’t abate the property tax associated with new debt service issues  Garbage Fee or Have Groot Bill Residents Directly  Video Gaming  $330,000 estimated  WATER FUND (50000) SUMMARY Dollar Change 2015 2014 2013 15 Bud vs 14 Proj vs Budget Budget Projected Actual 14 Proj 13 Actual REVENUES 16,946,106 15,038,711 15,017,117 13,182,818 1,928,990 1,834,298 EXPENSES 15,749,820 16,694,083 13,582,514 12,395,831 2,167,306 1,186,683 REVENUES MINUS EXPENSES 1,196,286 (1,655,372) 1,434,602 786,987 TRANSFER FROM GENERAL FUND 300,000 OPENING NET POSITION 26,197,633 24,463,031 24,463,031 23,676,044 ENDING NET POSITION 27,393,920 22,807,659 26,197,633 24,463,031 INVESTED IN CAP ASSETS (Net of depr) (17,272,057) UNRESTRICTED NET POSITION 7,190,974 CASH & INVESTMENTS 5,573,399 5,305,793 8,060,612 9,786,177  Includes a 15% water rate increase  Chicago passed a 15% increase as of 1/1/2014 and has another 15% increase scheduled for 1/1/2015  The Water Fund’s liquidity is diminishing as it converts cash to assets  Matrix Study suggests accelerating watermain replacement to 1.5% to 2% per year  PW calculated 2% as approximately $7 million per year  Plan for funding this large watermain replacement plan needs to be developed and discussed with Village Board  Future infrastructure costs associated with Storm Water Program and switching water supplier need to be considered also  AUTOMOTIVE FUND (61000) SUMMARY Dollar Change 2015 2014 2013 15 Bud vs 14 Proj vs Budget Budget Projected Actual 14 Proj 13 Actual REVENUES 4,634,847 4,115,367 4,001,680 3,533,659 633,167 468,021 EXPENSES 3,966,203 4,674,051 3,956,869 3,888,184 9,335 68,685 REVENUES MINUS EXPENSES 668,644 (558,684) 44,811 (354,526) OPENING NET POSITION 2,486,342 2,441,531 2,441,531 2,796,057 ENDING NET POSITION 3,154,986 1,882,847 2,486,342 2,441,531 INVESTED IN CAP ASSETS (Net of depr) (1,106,740) UNRESTRICTED NET POSITION 1,334,791 CASH & INVESTMENTS 155,846 460,793 637,181 1,428,213  Liquidity of the fund is diminishing  Requiring larger contributions each year to keep up with capital equipment replacement costs (p. 137)  Need to develop a formal capital equipment replacement plan and develop a funding strategy  Develop a fuel reduction strategy  2 new TIF funds  Milwaukee TIF Fund (p.184)  Touhy Corridor TIF Fund (p. 182)  4 new seizure funds  DUI Fund (p. 214)  Drug Asset Forfeiture Fund (p. 217)  Federal Equitable Share Fund (p. 220)  Article 36 Asset Forfeiture Fund (p. 223)  Pension Funds (p. 189-196)  Actuarial recommended contribution level (p. 191 & 195)  Risk Management (p. 240)  A couple good years in a row have restored the fund balance  Reduced contributions from other funds by $450,000 (p. 242)  Motor Fuel Tax Fund (p. 197)  Transferred $2 million of street resurfacing projects from the General Fund  2nd year of transferring street resurfacing projects is drawing down the MFT’s available reserves  Family Fitness (p. 149)  Subsidy of $223,000 from the General Fund to support operations in FY 15  