S-1421 - 03/24/2015 - BUDGET - Ordinances Supporting Documents ITEM 7.13. 1)
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AGENDA ITEM
Regular Board of Trustees Meeting
of
March 24, 2015
SUBJECT: Transfers Among Budget Line Items
FROM: Sharon Dangles, Assistant Village Manager/Finance Director
BUDGET SOURCEBUDGET IMPACT: Effects Numerous Budget Programs
RECOMMENDED MOTION: I move that the Village Board approve Ordinance S-1421,
"An Ordinance Authorizing Transfers Among Budget Line Items" for the year ended
December 31, 2014.
Background/History:
During the course of a year, there are numerous situations that may arise that cause an account,
program, or even a fund to exceed its budget. When this occurs, State statutes provide that the
corporate authorities may make transfers from "one corporate object or purpose to another
corporate object or purpose". Additionally, statutes provide that the corporate authorities may
delegate authority to heads of municipal departments to "delete, add to, change, or create sub-
classes within object classes budgeted previously to the department with the approval of the
budget officer or executive officer of the municipality". The Village has defined a corporate
object or purpose to be an individual program or fund. Sub-classes within object classes have
been defined as accounts and categories within a budget program.
Now that all of the year-end accounting adjustments have been made, several budget accounts,
categories, and programs have been determined to have ended 2014 over budget. The Village
Board's policy on Finance, Taxation, and Budget, prepared based on the previously mentioned
statutes, outlines the following procedures for budget administration and how these variances are
to be addressed:
1. That the Budget Officer, with the approval of the Village Manager, may authorize
transfers of budgeted funds between accounts or between account categories within a
single budget program_
2. That any transfer of budgeted funds from one budget program to another shall be
subject to approval by the Board of Trustees upon the recommendation of the Village
Manager.
3. That any transfer from contingency shall be subject to approval by the Board of
Trustees upon the recommendation of the Village Manager.
4. That any increase in the total appropriation within any fund shall be subject to
approval by the Board of Trustees upon the recommendation of the Village Manager.
In order to make as few changes to the originally adopted budget as possible, formal budgetary
control has been established at the category level, i.e. personnel, materials and supplies,
operation and contractual, and capital. For example, if staff turnover created a need for
overtime, this may lead to the overtime account going over budget. However, this would likely
be offset by an underbudget salary account. By not doing budget transfers for these types of
situations we preserve the original budget as the basis for evaluating our actual performance
versus expected performance.
Through Budget Year 2002, staff approved an extensive listing of budget transfers
administratively due to budget variances in account categories within a single budget program as
provided for under Procedure #1. In practice, these transfers were only reflected in the Village's
audit report-our accounting records were never adjusted for any budget transfers in order to
maintain proper original budget/actual comparison data. With the new reporting requirements
associated with GASB Statement #34, the Village is now required to publish original budget
amounts in addition to revised budget amounts in its audit report. This requirement reduces the
value of these administrative transfers required under option #l. After consultation with the
Village's auditors, in Budget Year 2003 and thereafter only program-to-program transfers and
additional fund appropriations are recorded. These transfers are required since this is the level of
legal control where budget compliance is measured.
In addition to the budget transfers required under the Village's Financial Policy ordinance,
during 2004 the Village Board began requiring budget transfers during the year when an
individual line item account exceeded budget by more than 10%. This policy was revised in
October, 2006 by eliminating the 10% threshold and instead requiring line item transfers when
an account exceeds its budget by $2,500 in a material and supply, operation and contractual or
capital account (6000 to 9000 account series) or $10,000 in a personnel series account (5000
account series). Many of these transfers have already been approved by the Village Board and
have been posted to the accounting system; thus, these transfers are not reflected here.
Please note that all transfers are only for the amounts necessary to offset the individual program
budget variances, and in most cases the transfer is done only to the individual line item that has
the largest variance. In most cases it is several accounts that would cause a program to exceed
its budget. Also, in some cases the variance in a particular line item may be greater than the
amount of the transfer, with offsets found in other line items within the budget program. After
these transfers are made, numerous line-items and categories will remain over budget; however,
each program in total will be within budget.
Program Transfers
The General Corporate Fund ended the year with a decrease in fund balance of approximately
$285,000. The total revenues were $22 million with total expenditures of $22.2 million. The
2014 Budget proposed utilizing $1.2 million of reserves and the Village only used $285,000.
During the year, the Village had some large unbudgeted expenditures. The Village paid
$275,000 in litigation settlements and an additional $350,000 in fire pension contributions while
still not having to utilize much of its reserves. Please note in some cases "over budget" does not
mean that money was over spent. There are numerous situations that occur during the year that
may cause a particular line item to go over the annual budget. The following is a brief
explanation of the causes of program transfers that exceed $10,000:
Program 121-Le-Legal: Account 121-76310 (Village Attorney) is over budget in total by $62,750
due to settling cases and pending litigation. The Fire Full Time Salaries budgeted amount of
$62,750 was used to offset these legal expenses. Account 121-76350 (Litigation Settlement) is
over budget in total by $275,000 due to settlement of PSEBA cases.
Program 131-General Management: Salaries Full Time is over budget by $32,940 due to final
accrued time payouts for Village Manager and Assistant Village Manager. Contract Services
was over budget by $22,165 for the Interim Assistant Village Manager.
Program 132-Human Resources: Account 132-50000 (Salaries Full Time) is over budget by
$11,255 due to a mid-year transfer of funds to another account. Contract Services in the
Transportation program was used to offset it.
Program 134-Risk Management: Account 134-70100 (Risk Management) is over budget by
$26,545 due to higher than expected deductibles.
Program 321-Building & Grounds: Account 321-5150!0 (Health Insurance) is over budget by
$11,000 due to Public Works switching to Local 150 Health Insurance program. Account 321-
71300 (Electric) is over budget by $13,100 due to more usage based on the colder, longer
months. Salaries Full Time, Maintenance Grounds and Rentals were used to offset these
expenses.
Program 621-Police Field Services: Account 621-51200 (Police Pension) is over budget by
$41,510 from actuarial calculations approved by the Board. Account 621-50100 (Salaries Part
Time) is over budget by $13,000. Part Time employees are used to accommodate operational
reoccurring costs such as special events for the Taste, Half Marathon, McDonalds Shareholders,
etc. They are also held over frequently on last minute calls, traffic crashes and assist with the
mass taxi cab inspection days.
Program 700-Fire Rescue & EMS Operations: Account 700-51300 (Fire Pension) is over
budget by $471,465 from actuarial calculations and an additional contribution of $350,000
approved by the Board.
Program 362 — Streets & Traffic Maintenance: Maintenance Service Traffic Control (Account
362-71500) is over budget by $10,150 due to an increase in maintenance costs. This was offset
by Maintenance Grounds.
Program 363 — Snow Removal: Chemicals (Account 363-61800) is over budget by $31,200.
Due to weather conditions this year, it caused the line item to go over budget.
Program 364-Maintenance Storm Sewer: Account 364-71900 (Maintenance Storm Sewer) is
over budget by $10,300 due to an increase in costs during the year. Account 364-90800
(Drainage Improvements) is over budget by $152,000 due to the drainage project at the Sport
Core facility. These costs were offset by Maintenance Grounds and supplies.
Program 351-Water Operations: Account 351-65000 (General Equipment) is over budget by
$132,275 due to replacement of meters and MTU devices. Account 351-73450 (Hauling
Services) is over budget by $10,960. Account 351-74300 (DWC Operational and Maintenance)
costs increased by $245,000 to pay for higher than expected water usage.
Program 812 — Swimming_Operations: Maintenance Services is over budget by $21,500 due to
pool repairs. Therefore, a reclassification from the Structural Improvements line item is needed.
Program 815 — Polo: During the year, the actual expenses were categorized in the appropriate
line items as we continued to streamline the polo operations. Rentals were over budget by
$16,135 and Contract Services was over budget by $40,000.
Program 821 — Clubhouse Food & Beverage Operations: Account 821-50500 (Commissions) is
over budget by $11,385 due to the number of events booked.
Program 823 — Golf Food & Beverage: Part-time salaries is over budget by $12,865 due to the
employee working off season to assist with food&beverage operations.
Program 831-Golf Club General Operations: Account 831-63000 (Cost of sales) is over budget
by $28,000 due to an increase in purchases. This was offset by the Equipment Replacement
account.
Program 834- Golf Course Maintenance: Account 834-50300 (Salaries Overtime) is over budget
by $15,000 due to an increase in hours.
Program 133 — Self Insurance: Account 133-70300 (Specific Premium) was over budget by
$82,000. These premiums are for specific stop-loss reinsurance for the Village's self-insured
health and dental plan. Account 133-70400 (PPO Premium) was over budget by $26,400. These
expenses were both offset by Health Claims.
Program 341 — Garage: Account 341-71600 (Maintenance Vehicles) was over budget by
$15,000 due to higher than expected repairs.
Program 342 — Equipment Replacement: Account 342-65000 (General Equipment) was over
budget by $14,300 due to lighting on public safety vehicles.
Budget Amendments
During 2014, there were some occurrences that caused the actual expenditures to exceed the
budgeted expenditures. The Hotel/Motel Tax Fund, account 171-76830 is over budget by
$85,060 due to splitting of costs for Pedestrian Access Projects B, C, and G between budget year
2014 and 2015. As the projects did not start until later in the year, the amount of construction
progress was likely to be insignificant. The actual construction progress of the contractor,
Copenhaver, was considerable. The over expenditure of $85,059 was thus an acceleration of
costs which were budgeted for 2015.
Account 283-80700 (Debt Principal) in the Tax Increment Financing Fund is over budget by
$20,000 due to a higher than expected principal payment on the note. Repayment of the note is
limited to the availability of pledged taxes.
Please feel free to contact me if you should have any comments or questions.
ORDINANCE 2015-BU-EX-S-1421
AN ORDINANCE AUTHORIZING TRANSFERS
AMONG BUDGET LINE ITEMS
WHEREAS, the Village Manager has recommended certain transfers among budget line items in
the Annual Budget Ordinance passed for the fiscal year beginning January 1, 2014 and ending December
31, 2014 and certain transfers of sums of money in said Budget Ordinance from one object or purpose to
another object or purpose; and
WHEREAS, the Village President and Board of Trustees concur with and approve of the Village
Manager's recommendations.
NOW, THEREFORE, BE IT ORDAINED BY THE PRESIDENT AND BOARD OF TRUSTEES OF
THE VILLAGE OF OAK BROOK, DU PAGE AND COOK COUNTIES, ILLINOIS that the following
transfers are hereby authorized:
Section 1: The recitals above are hereby incorporated into and made a part of this ordinance.
Section 2: In the attached schedule, attached as "Exhibit A", the amounts shown in the column
titled "Transferred From" represent unexpended balances. The total of said amounts are hereby
transferred to the various items specified in the "Transferred To" column immediately opposite the items
specified in the"Transferred From" column.
Section 3: The Promenade TIF Fund budget is amended by increasing the amount in account
283-80700, "Debt Principal", by $20,000, which increase shall be funded by this Fund's fund balance.
Section 4: The Hotel/Motel Tax Fund budget is amended by increasing the amount in account
171-76830, "2% Beautification and Projects", by $85,060, which increase shall be funded by this Fund's
fund balance.
Section 5: This ordinance shall be in full force and effect from and after its passage and approval
as required by law.
Section 6: All ordinances or parts thereof in conflict with the provisions of this ordinance be and
the same are hereby repealed to the extent of such conflict.
APPROVED THIS 24th day of March, 2015.
Gopal G. Lalmalani
Village President
PASSED THIS 24th day of March, 2015.
Ayes:
Nays:
Absent:
Ordinance 2015-BU-EX1-S-1421
Authorizing Transfers Among Budget
Line Items Page 2 of 2
ATTEST:
Charlotte K. Pruss
Village Clerk