Finance Committee

Village of Niles Finance Committee Meeting Council Chambers March 15, 2017 8:00 a.m. Call To Order: Chairman LoVerde called the meeting to order at 8:00 am Roll Call: Assistant Finance Director Nannini called the roll for Committee members: Committee Members Present: Chairman Joe LoVerde, Bob Callero, Al Weel, John Johann and Paul Nielsen Committee Members Absent: none Village Staff Present: Finance Director Jeff Martynowicz, Village Manager Steve Vinezeano, Legal Assistant Kathy Thake, Assistant Finance Director Laurie Nannini and the Department Directors Old Business: None. Approval of Minutes: The regular minutes from the January 18, 2017 Finance Committee meeting were up for approval, motion made and all concurred. Accounts Payable Approval: The approval of the Accounts Payable registers for 2017-1/13, 1/20, 1/27, 2/3, 2/10, 2/17, 2/24 and 3/3 were up for approval, motion made and all concurred. New Business Blue Cross Contract Renewal: Human Resources Director Kathy Barnat presented the Blue Cross contract for the annual renewal. The Village is self-insured for health, dental and life insurance. John Johann asked how the fees for the upcoming year per the contract compare to the prior year. John Herr, our broker from HUB International, responded that the administration fees will increase by 3% which is average. The administration fees have remained fairly flat. Where he has seen increases is with the fees for the stop loss coverage which the Village has at $250,000. They are seeing anywhere between 15 and 25% and this upcoming year they ended up with 12.2%. John stated that they try to keep the fixed costs as low as possible. John Johann asked how long the stop loss coverage has been at $250,000 and has there been any discussion to revise that amount. John Herr stated that the amount has been in place for about 10 years and is fine for a group of the Village’s size. A motion was made to send the contract to the Village Board and all concurred. Annual Abatement Ordinance: Jeff Martynowicz introduced the annual abatement ordinance for 2016. Jeff stated that the amount of debt service for the Village is $2,191,755. The proposed abatement ordinance would abate $1,266,755 of the 2016 tax levy leaving $925,000 to be levied after the ordinance is passed. Chairman Lo Verde requested clarification that the Village is directing the county not to collect the $1,266,755. Jeff responded that this amount would be collected by other revenue sources. A motion was made to send the ordinance to the Village Board and all concurred. FY 2018 Budget Review: Steve Vinezeano opened with some brief comments. He stated that it looks like there will be a surplus this current budget year. There are a number of highlighted items in the FY 2018 budget. The departments have worked very hard to ensure that their budgets are in line with what they expect to spend. The biggest item we 1  have is software. This software will cost close to $1,000,000. This would be a one- time proposed purchase out of fund balance but ultimately at this point it looks like the budget is close to being balanced. Steve then turned to Jeff to continue with the presentation. Jeff thanked the Committee for their patience as this was his first time going through the Village’s budget. He then summarized the budget time line. At this time there is a proposed deficit in the General Fund of $984,000 due to the proposed software purchase. Jeff stated that there are no new taxes or fees in the proposed budget. There has been a significant reduction in overtime in the Fire Department. Right now health insurance claims are trending almost $1,000,000 under budget. Jeff gave an overall summary of expenditure and revenue sources. The local portion of sales tax makes up 33% of total revenue in the FY 2018 budget. This is a 2% increase from the FY 2017 budget. However, sales tax is trending down currently. Jeff will take a look at why this could be happening. Costco sales tax rebate should end in April 2018 which will help the General Fund at that time. Chairman Lo Verde questioned the 2% increase in sales tax in the budget. Bob Callero stated that a 2% increase in sales tax is aggressive. He believes the budget for sales tax should be lowered and then monitored on an ongoing basis. Jeff proceeded to give a brief explanation on other various tax revenue sources in the budget. In the Water Fund, there isn’t a water rate increase factored in the FY 2018 budget although the City of Chicago raised its rate 1.83%. In the Automotive Fund Jeff reported a budgeted amount of $630,000 in Licenses and Permits which makes up .74% of total revenue in the FY 2018 budget. Jeff reported that personnel services represent 47% of the total operating expenditures in the budget. He proceeded to report on the various expenditures by department and fund. Jeff stated that he and Public Services Director Mary Anderson plan on working on a five year capital budget to bring to the Committee for their review by late fall or early winter. He noted that the Village has a very low amount of General Obligation debt with a quick acceleration of payment. He has not seen that in other communities. The actuarial calculated Police and Fire pension contributions will be fully funded through various revenue sources. Bob Callero questioned the amount budgeted for health insurance claims. He stated that although claims have been down recently, historically there have been years with large claims. He directed Jeff to monitor that closely. Jeff stated that he thought the current budgeted amount for the claims is reasonable but will be monitored. John Johann requested that the presentation include budget comparisons to current projections which would be helpful. Chairman Lo Verde agreed. John also mentioned that in years past the budgets included funds taken from reserves for the pension contributions since the pensions were not always fully funded, Chairman Lo Verde questioned how we could have a balanced budget when there is a deficit in the General Fund. Other Business: None. Public Comment: None. Adjournment: Motion to adjourn was made and all concurred at 10:03 am. Prepared by Laurie Nannini on April 6, 2017. Revised by Laurie Nannini on April 20, 2017. 2