S-1113 - 04/12/2005 - BUDGET - Ordinances Supporting DocumentsItem 7.H•
AGENDA ITEM
Regular Board of Trustees Meeting
of
April 12, 2005
SUBJECT: Transfers Among Budget Line Items
FROM: Darrell Langlois, Finance Director
BUDGET SOURCE/BUDGET IMPACT:
RECOMMENDED MOTION: I move that the Village Board approve the attached
ordinance authorizing transfers among budget line items for the year ended December 31,
2004.
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.
Recommendation:
Now that all of the year -end accounting adjustments have been made, several budget accounts,
categories, and programs have been determined to have ended 2004 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:
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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 2.002, 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 are 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 new requirement reduces
the value of these administrative transfers required under option# 1. After consultation with the
Village's auditors, in Budget Year 2003 and thereafter only program -to- program transfers and
additional fund appropriations will be 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 %. 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
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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 following is a brief explanation of the causes of program transfers that exceed $25,000:
Program 121- Legal: The Village Board has already discussed and reviewed the Ad Hoc Audit
Committee report as to the causes of the budget variances associated with this program.
Program 132 -Human Resources: Costs associated with the defense of four PEDA/PSEBA cases
are the primary causes of this budget variance.
Program 621 - Police Field Services: During preparation of the 2004 budget a total of 52 full time
positions were budgeted in the Police Department with 35 positions being budgeted in this
program. At the end of 2004, there were 51 positions filled in the Police Department with 39
full -time employees being charged to this program. The variance of 4 employees in this
program is due to permanently reassigning one Crime Prevention Officer position from Program
635 and the remainder of the variance is due to delays in making permanent assignments of the
Deputy Police Chief, Accreditation Manager, Support Services Lieutenant and one Detective
position. In total the Police Department is one position under authorized strength.
Also in this Program there was a variance of $40,300 due to the final payment on the IVAC
MDT/Video System carrying over to 2004 when for budget purposes it was assumed it would be
completed in 2003.
Program 831 -Golf Club General Operations: The variance in cost of sales is due primarily to an
increase in merchandise sales, which were $32,668 over budget.
Fund Appropriation Amendments
In addition to the program -to- program transfers, the following two Fund appropriation
amendments are recommended:
General Corporate Fund: For the last several years there has been significant class action
litigation regarding the constitutionality of the Infrastructure Maintenance Fee, which was
imposed by the Village at the rate of 1% and collected between 1998 -2001. Settlement of the
litigation in the amount of $126,490.34 was authorized by the Village Board and paid out in
February, 2005.
Although payment for this settlement occurred in 2005, the accounting treatment for this
transaction requires recognition of this expense in 2004 since it relates to accounting periods
prior to January 1, 2005. Since the likelihood of the outcome and the amount of the settlement
could not have been determined when the 2004 Budget was being prepared in the fall of 2003, no
amount was included in the 2004 Budget, Thus, it is necessary to increase the total fund
appropriation to provide funding for this expense in 2004.
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Self- Insurance Fund: In late 2003, the Village experienced significant problems with timely
claims paying by its third party administrator. This ultimately resulted in the Village changing
the vendor for the service in March, 2004. The delays in claims paying caused a significant
number of claims that should have been paid in 2003 being carried over to 2004.
In addition to this timing variance, the Village has experienced a significant increase in the
number of large claims. During this plan year alone, three separate claims have exceeded the
Village's stop -loss deductible of $75,000 (one claim of this significance would be normal), and
several other large claims exceeding $50,000 have been noted. These two factors required a
fund appropriation of $470,540 in order to fund claims for 2004
Please feel free to contact me if you should have any comments or questions.
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7 Provisions of Title 13 (Zoning Regulations) of the Village Code of the Village of Oak
Brook Relative to Lot Area Requirement, Sign Height, Interior Parking Lot Landscaping
and Off - Street Parking Regulations and 7 0 An Ordinance Granting Special Uses to
Oak Brook Promenade for Outdoor Dining Areas Adjacent to Up to Three Restaurants to
the next Village Board meeting of April 26, 2005 ROLL CALL VOTE.
Ayes 5 - Trustees Aktipis, Craig, Korin, Yusuf and Zannis
Nays 0 - None
Absent. 1 - Trustee Caleel Motion carried
Trustee Zannis requested Agenda Item 7 A 1) Kubiesa, Spiroff, Gosslear & Acker, P C
— Legal Services — February, 2005 be removed from the Consent Agenda for further
discussion
Motion by Trustee Aktipis, seconded by Trustee Yusuf, to approve the Consent Agenda
and authorize expenditures as amended ROLL CALL VOTE.
Ayes 5 - Trustees Aktipis, Craig, Korin, Yusuf and Zannis
Nays 0 -None
Absent: 1 - Trustee Caleel Motion carried
A Accounts Payable for Period Ending April 8, 2005 - $319,367 19
B Approval of Payroll for Pay Period Ending March 31, 2005 - $538,434.63
C Community Development Referrals
D Authorization to Seek Bids or Proposals or Negotiate Contracts.
1) Health Benefits Consultant
E. Authorization to Hire, Promote or Reassign Duties of Village Employees
1) Part-time Document Imaging Clerk
F Budget Adjustments
G Police Chief Employment Agreement
H An Ordinance Authorizing Transfers Among Budget Line Items
I U S Conference of Mayors — 2005 Annual Dues
8 ITEMS REMOVED FROM CONSENT AGENDA
7 A.1) Kubiesa, Spiroff, Gosselar & Acker, P C — Legal Services — February, 2005
Trustee Zannis indicated that it had been requested that the format of the bills would
include initials as to who worked on the specific task. The corrected bills will be sent to
the Board in the Friday packet.
Motion by Trustee Zannis, seconded by Trustee Korin, to approve the bill as presented.
Ayes 5 - Trustees Aktipis, Craig, Korin, Yusuf and Zannis
Nays. 0 - None.
Absent 1 - Trustee Caleel Motion carried.
9 BOARD & COMMISSION RECOMMENDATIONS - None presented
VILLAGE OF OAK BROOK Minutes Page 5 of 15 April 12, 2005
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