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Minutes - 03/23/2009 - Committee of the Whole (2)MINUTES OF THE MARCH 23, 2009 COMMITTEE OF THE • WHOLE MEETING OF THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF OAK BROOK APPROVED AS WRITTEN BY VILLAGE BOARD ON APRIL 28, 2009. 1. CALL TO ORDER: The Committee of the Whole Meeting of the Village Board of Trustees was called to order by President Craig in the Samuel E. Dean Board Room of the Butler Government Center at p.m. 2. ROLL CALL: ROLL CALL Village Clerk Charlotte Pruss called the roll with the following persons PRESENT: President John W. Craig, Trustees James Carson, Jeffrey J. Kennedy, Kathryn F. Manofsky, Moin Saiyed, Robert G. Sanford and Gerald Wolin. ABSENT: None. IN ATTENDANCE: David Niemeyer, Village Manager; Blaine Wing, Assistant Village Manager; Mark Sterk, Village Attorney; Robert L. Kallien, Jr., Director of Community Development; Dale L. Durfey, Jr., Village Engineer; Sharon Dangles, Acting Finance Director; Thomas McEllin, Acting Fire • Chief, Bruce F. Kapff, Director of Information Services & Purchasing; Margaret Klinkow Hartmann, Library Director; Michael Hullihan, Public Works Director; Thomas Sheahan, Chief of Police and Trey VanDyke, Sports Core Director. 3. BUDGET DISCUSSION Village Manager David Niemeyer provided an overview to residents and trustees to digest. Time will be allowed for resident input. No formal action was being taken until the April 14, 2009 meeting. As early as May, 2008 he directed Department Directors to prepare the 2009 budget with a one to one and half million dollars revenue loss. In addition, the budget included $350,000 for pension fund increases based on spring 2008 stock market declines, $233,000 increase in liability insurance, double digit water rate increases from Chicago, and funds for the Gypsy moth/ash borer problem. In June 2008 staff began brainstorming to consider new revenue and expense reduction issues and over the next four months staff prepared reduced budgets. Some of those responses included: COMMITTEE -OF- THE -WHOLE Minutes Page 1 of 8 MARCH 23, 2009 • Reorganized Village departments, including combining building /fire inspections, put IT under Assistant Village Manager and purchasing under finance, and placed Golf Director in charge of entire sports core. • Implemented early retirement program that 8 employees took advantage of 5 FTE positions left vacant in 2009 budget in addition to 1 FTE position left vacant in 2008. • Department Director level positions reduced from 10 to 8. • Reduced a number of other line items including travel and training, materials, overtime, sports core subsidies • Increased employee share of health insurance share. • Eliminated general fund contribution to equipment replacement fund which is fully funded until 2013. • Deferred replacement of some vehicles. • Deferred several capital projects. • Refinancing installment contract this summer /fall. o 1 /o increase in telecommunications tax. In December of 2009 the Budget was adopted. He added that municipalities were now addressing issues arising from the current economy, but felt that Oak Brook was one of the first to recognize trends and began taking action in the summer of 2008. The Budget that was adopted included: • Total general fund budget included expenditures of 20,674,865 compared to revenues of $20,501,150. It was decided to use $173,000 in reserves to fund the gypsy moth/ash borer removal program. • Oak Brook was one on the first communities to make significant budget adjustments due to the on -going recession. • With the recession deepening beyond what staff planned for in summer 2008, staff pledged to closely monitor revenues and expenditures in early 2009 and make adjustments to the budget as necessary. He added that budgets are monitored all the time, but particularly this year staff has been monitoring the budget closely. Some current early 2009 trends include: COMMITTEE -OF -THE -WHOLE Minutes Page 2 of 8 MARCH 23, 2009 • Cost of pension funds higher than budget due to significant stock market decline in late 2008. • Police and fire pensions are significantly affected this year. • The cost of appropriately funding these 2 pension funds for 2009 range from $181,000 to $400,000 over budget depending on what assumptions used. • Sales tax revenues for general fund (the Village's operating fund) approximately $276,000 under budget to date. • This is based on sales tax revenues generated in October, November and December 2008. • Projections based on only a few months of sales tax data are tricky. As an example, our February 2009 sales tax revenues (November receipts) was $95,000 more than what we collected in February 2008. However, the March 2009 revenues were $245,000 less than March 2008. Based on these early trends, we will be asking the Board to consider nearly $1.2 million in budget reductions to the 2009 general fund budget. Departments have been working on these proposed reductions since early February in case the pension and sales tax numbers were not meeting budget targets. He highlighted some of the proposed 2009 Budget reductions: • All departments - tuition reimbursement program ended for the remainder of year, no more out of state travel paid by the Village, non -union employees will all be taking 3 furlough days, other misc. cuts. This would result in a savings of $133,000. • Managers /clerks office - eliminate 1 full time position and 1 part time intern, eliminate all Taste of Oak Brook subsidies, eliminate 2 consulting contracts, freeze pay of Manager for first 2 years of employment, email newsletter, eliminate microfilming. This would result in a total savings of $115,000. • Library - Reduce library hours, eliminate 3 part-time positions, don't fill full - time position of retiring employee, (all effective June 1 st). Also reduce book purchases, other misc. cuts. This would result in a total savings of $97,190 • Fire Department — not filling 2 vacant firefighter /paramedic positions, reduce overtime, other misc. cuts. This would result in a total savings of $166,000. • Public Works Department - eliminate leaf pick up program, pay for gypsy moth with Cy Pres money, seek other funds for ash borer removal (Stimulus bill), COMMITTEE -OF- THE -WHOLE Minutes Page 3 of 8 MARCH 23, 2009 • reduce arborist utilization, reduce janitorial services, eliminate plants /watering iservice, and eliminate AT &T water monitoring lines. This would result in a total Savings of $262,440. • Police - Don't fill 1 vacant community service officer position, 1 full -time and 1 part-time telecom operator position. Also defer vehicle purchase, eliminate 1 take home vehicle, and reduce equipment purchases. This would result in a total savings of $199,518. • Community Development - $28,690 in miscellaneous cuts. • Finance - Reduce Health Self insurance contribution from general fund by $200,000 - currently funded at historically high levels, 3 months vacancy of Finance Director - $30,000. • While the Village's current funding challenges are focused on the general fund, we did ask other departments funded by other revenues to reduce their budgets. • Sports Core - Miscellaneous cuts to golf course, also clubhouse will review staffing by July 1 depending on booking levels. • Engineering (funded by infrastructure sales tax) will also make small cuts. • • The total cuts of these 2 departments are $86,450. Due to the recession, the electric utility tax increase ($170,000 in budgeted revenues) will be deferred until 2010. Also, it is estimated that there will be unemployment and severance costs of $60,000 for employees whose positions are being eliminated. Also, $95,000 in new revenue is proposed to be added to the budget from increased soccer revenues, selling a reserve fire engine, and leasing of the Villages water towers to cell tower companies. The total of the new budget reductions to the general fund are $1,188,838. $60,000 is added to the general fund for unemployment and severance costs. Net revenues to the general fund decrease by $80,000, other funds increase by $5,000. Overall, the net addition to the general fund balance from these changes are projected to be $1,048,838. He suggested other alternatives that the Board could consider: • Strategy 1: Increase fund balance position of general fund in 2009 beyond $1.048 million in changes outlined. • Consider other cuts suggested by Village staff - laying off contract firefighters, eliminate mosquito abatement program. COMMITTEE -OF- THE -WHOLE Minutes Page 4 of 8 MARCH 23, 2009 • • Consider other cuts not suggested. • Approve electric utility tax increase this year. • Consider "out of the box" revenue ideas, such as leasing advertising space on Village water towers. • Further reduce general fund contribution to the health self insurance fund. • Strategy 2: Phase in cuts or reduce number of cuts. • Wait to see if sales tax revenues improve. As an example, a final decision on the leaf pick up program could be deferred until the end of May after 2 more months of sales tax are received. The filling of vacancies in police and fire could also be reevaluated depending on sales tax data. Employee furlough days for non management employees could also be phased in, and 1 of the 3 days eliminated if sales tax numbers improve. • Use reserves - Village policy states that we make every effort to maintain 6 months fund balance in the general fund, though 4 times this decade Boards have adopted budgets with less than 6 months reserve. The reductions made last fall and the ones we are making now are significant. Overall staffing would now be approximately 15 FTE's less than it was in 2007, including 9 positions in the public safety departments. However, not all of the cuts being made may not be sustainable for the long -term, such as selling equipment, deferring of hiring firefighter /paramedics (contract issues) and other positions, and eliminating transfers to equipment and health insurance funds. Therefore, he suggested that the Village focus on additional cost - cutting measures that can be thoroughly analyzed and implemented in future years. Essentially, this would be Phase 3 of cutting general fund expenses following cuts we made last year and these proposed cuts. Some of the things we are already looking at include: • Outsourcing where appropriate and cost effective. On tomorrows agenda is a proposal to seek RFP's for having a private restaurateur operate the B & T Clubhouse as other governments have done. • Consolidation of services. One example of a service which most municipalities in Chicago no longer do is dispatching of police and fire calls. Village staff is currently looking at a number of options for joining with other municipalities in providing dispatching service that could save the Village money. • Liability and health insurance - the Village is looking at getting quotes from COMMITTEE -OF- THE -WHOLE Minutes Page 5 of 8 MARCH 23, 2009 • alternative liability insurance carriers. We might save money, but need to ranalyze whether we are getting similar coverages and not just short term premium savings. • We are also discussing further changes and employee cost sharing for health insurance premiums. • Other additional cost cutting - we will continue to look at what other communities are doing to rightsize their organization as well improve use of technology in the organization to make all staff more efficient. • Staff will focus first on long term cost reductions that could have a positive or at least neutral or minimal effect on Oak Brook residents and services. • The Village employees should not bear the brunt of all the budget cuts. Oak Brook is able to provide excellent services with a relatively lean staff because of the caliber of people employed by the Village. Even during tough economic times, we continue to compete with other communities for high caliber employees and we need to make sure departments are properly staffed and appropriately compensated compared to the market. Several Village employees have volunteered to take on work provided by outside consultants to save money, as well as take additional furlough days and pay freezes. The cuts we are proposing now, the cuts made in last year's budget, and the proposed • additional reductions we are seekin g in future budgets are necessary even if the economy rebounds quickly. Sales tax revenues will probably not return to previous levels anytime soon. We face more competition from other municipalities, erosion of sales tax to the internet, and the ever present possibility of the State changing the formula on how sales tax is distributed. Despite our current budget challenges, we remain in excellent financial shape because of our large tax base and large general fund reserves, especially compared to most communities in the Chicago area. The upcoming strategic plan the new Village Board will develop should give staff and residents direction on what our financial priorities should be for the next 5 -10 years so we can maintain and improve our financial position. Manager Niemeyer and staff were looking for input on these budget changes at tonight's meeting and tomorrow's Board meeting. He asked the Board to decide whether some of the proposed cuts, such as the leaf pick -up program, should wait until May when further information on sales tax trends is received. He suggested formally adopting changes to budget and approve police and fire pension amounts at the April 14, 2009 budget meeting. He added that management has already begun to meet with staff and develop plan to implement personnel changes beginning this week. President Craig asked for resident input. is COMMITTEE -OF- THE -WHOLE Minutes Page 6 of 8 MARCH 23, 2009 Resident Al Knuth addressed the Board regarding the budget. He recommended no • salary increases be made. Resident William Lindeman addressed the Board regarding the six month reserve. He felt that the hard rule made budget issues more difficult. He felt that the current economy was certainly a time to use some of those funds. He also felt that the pension fund issues did not need to be dealt with immediately. He added that it was unfair to provide for union employees and not for non -union employees. He also addressed the importance of education and adequate equipment. He also addressed the issue of Home Rule indicating that it could be of help to the Village by allowing current revenues to be used in differently and that it could be monitored to be sure that it was not misused. President Craig asked for Board input. Trustee Kennedy acknowledged the early efforts of staff to reduce the budget and the ongoing monitoring of the budget. He recommended waiting approximately two more months to get better revenue figures before taking additional drastic action because he felt the economy was beginning to turn around. The items he felt that should be held off on were furloughing employees, cuts in the communications staff and reducing contract paramedics. Other concerns he had for reductions were in the gypsy moth issues, the Hay study and the Commercial Revitalization Consultants. Trustee Saiyed commended Village Manager Niemeyer and Assistant Village Manager is Wing on their leadership. He would like to see the future bring in more diversified revenue sources. Trustee Wolin agreed with most of the changes, but felt that around the beginning of April would help show the revenue trends and if it was better news some of the items could be held off temporarily. Otherwise he felt that most of the items suggested would need to take place. He agreed with a possibility of leasing water towers for advertisement revenues. Trustee Sanford reiterated that the budget was a plan and had continuing monitoring and adj ustments. Trustee Carson did not feel that the economy was really turning around yet and he felt it was necessary to move forward to implement the changes with the intent to review in two months. Trustee Manofsky felt that the Board should give the latitude to the Village Manager to do what they feel needed to be done. Manager Niemeyer thanked the Board for the latitude to determine which items were necessary to implement now and work toward other options in the future. COMMITTEE -OF- THE -WHOLE Minutes Page 7 of 8 MARCH 23, 2009 0 0 4. ADJOURNMENT: Motion by Trustee Kennedy, seconded by Trustee Wolin, to adjourn the Committee -of- the -Whole Meeting at 8:40 p.m. VOICE VOTE: Motion carried. ATTEST: Charlotte K. Pruss Village Clerk is COMMITTEE -OF- THE -WHOLE Minutes Page 8 of 8 MARCH 23, 2009