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FINANCE COMMITTEE 2017/03/13 Minutes The City of Lake Forest FINANCE COMMITTEE Proceedings of the March 13, 2017 Meeting 5:00 p. m. – Municipal Services, 800 N. Field Dr. I. Call to Order and Roll Call The meeting was called to order at 5:11 p.m. Present: Chairman Pandaleon, Mayor Schoenheider, Aldermen Beidler, Reisenberg, Buschmann and Moreno. Absent: Aldermen Waldek, Newman and Tack. Quorum present. There were approximately 22 present in the audience. Staff present: Robert Kiely, Jr., City Manager; Elizabeth Holleb, Finance Director; Diane Hall, Assistant Finance Director; Pete Siebert, Fire Chief; Karl Walldorf, Police Chief; Cathy Czerniak, Director of Community Development; Sally Swarthout, Director of Parks and Recreation; Mike Thomas, Director of Public Works and DeSha Kalmar, Director of Human Resources. Others present: There were thirteen people in the audience. II. Consideration of Minutes from the Finance Committee Meeting Held on January 17, 2017 Alderman Moreno made a motion to approve the minutes from the Finance Committee meeting held on January 17, 2017. The motion was seconded by Alderman Reisenberg. The motion carried unanimously by voice vote. III. Overview of FY2018 Budget A. Opening Comments by City Manager Mr. Robert Kiely, City Manager explained the night’s meeting would be covering the operating budgets of the City. He reviewed his most pressing concerns regarding the budget, which include the state, pensions and seasonal employees. B. FY17 Monthly Flash Report Ms. Elizabeth Holleb, Finance Director reviewed the February report and noted a comparison to estimates had been added. She stated we have not received an update from the Illinois Municipal League (IML) regarding the Income Tax variance. C. Review of FY18 vs. FY17 Forecast – Revenue and Expenses i. Fund Balance Summary Ms. Holleb reviewed budgeted expenses in FY2017 to estimates in FY2017 and the proposed FY2018 budget. She reviewed larger variances in the Capital and 2008 Bond funds. This was primarily the sale of Laurel avenue proceeds transferring from the Capital Fund to the 2008 Bond fund and the subsequent early bond redemption. She stated supplemental appropriation ordinances would be brought to the Council for approval. She stated the larger budget in the Lake Forest Hospital and Municipal Redevelopment funds In FY18 include transfers to Capital, Golf and Water funds as discussed at the November budget meeting. She stated the Laurel/Western TIF fund is projected to have a negative fund balance in FY2018 primarily due to property tax increments are not scheduled to start. ii. Primary Revenue Assumptions Ms. Holleb reviewed the main revenues assumptions used to develop the FY2018 and future year projections. She explained the Income Tax projections are based on IML information. She stated the IML projections do not include a shortfall in FY2017. The Committee discussed how sales tax, income tax and water revenue estimates are calculated. Finance Committee Meeting Minutes – March 13, 2017 iii. Payroll Projections Ms. Holleb reviewed the City’s largest expenses are payroll and benefits. She stated the projected savings in FY2017 are mainly due to savings from open positions. She reviewed the projected assumptions used in the 10 year forecast and what has been done to reduce costs. The Committee discussed which expenses were under control of the City and what are dictated by the state and union contracts. They discussed performance measures and capital investments that may yield salary savings via productivity enhancements. D. Ten-Year Fund Balance Forecast (General Fund) i. Discussion of State Impacts Ms. Holleb reviewed the Preliminary FY18 budget for the General Fund. She reviewed the 10 year forecast and stated the departments have been operating under a 0% growth in non-personnel controllable expenditures. She stated once the revenues over expenses before CIP go negative, fund balance will start to be reduced. She reviewed the different classifications of fund balance. She reviewed the impact of the state imposing a permanent or a two year freeze on the 10 year forecast. The Committee discussed a list of possible revenues that could be affected if the state eliminates or reduces distributions and a plan of action if that happens. The Committee requested possible scenarios to be developed and provided to residents discussing difficult decisions that will need to be made. The Committee discussed the assumptions used in the development of the FY18 budget. The City will need to work with other taxing bodies if the state moves forward with reducing revenues. The City is Home Rule and has some options to generate additional revenue. ii. “A Thousand Cuts” – Governing Article – No discussion iii. Revenue and Expense Trends – No discussion IV. Operating Department Summaries A. OpenGov Transparency Demonstration Diane Hall, Assistant Finance Director reviewed a tentative schedule for implementing OpenGov on the City’s website. She provided a demonstration of reports that have been developed and are proposed to be included on the website. The Committee requested an additional water report including debt expenses. B. Department Summaries Ms. Holleb stated City staff were present to review any questions based on material included in the packet. She stated salary increases have not been included in the individual departments in the General Fund, but will be added for final approval of the FY18 budget. C. FY18 Budget Issues i. Update on Shared Fire Services Held for executive session ii. Police Personnel Restructuring and Activity Trends Mr. Karl Walldorf, Police Chief reviewed staffing changes made at the Police Department, which include replacing two open Community Service Officers (CSO) positions with four part time CSO’s. The part time staff will be hired from the Police Finance Committee Meeting Minutes – March 13, 2017 Explorer Program and is expected to save between $20,000 and $30,000 in FY2018. He reviewed crime statistics in Lake Forest and neighboring communities. iii. Seasonal Employees Mr. Mike Thomas, Public Works Director reviewed the current seasonal program and the history of seasonal employees. He stated previously the City employed seasonal’s for eleven months, which was seen as too much like full time employment. He reviewed changes the City has made to address this problem, which has led to training employees and then they do not come back. He reviewed possible solutions, which includes additional hourly wages, contract out or partner with other municipalities or park districts having the same problem. Alderman Newman entered the meeting at 7:54 He stated all industries are having the same problem. iv. Request for Financial Support/Friends of LFPR Rick Amos of Friends of Lake Forest Parks and Recreation reviewed events the foundation has held to generate funds to assist the City. He stated the events are a way to bring the community together and the foundation was requesting funding and in-kind services totaling approximately $72,000. The Committee discussed the re-location of the Oktoberfest to Market Square. Merchants in Market Square need to contribute also to the events to help bring additional business into their establishments. V. Other Funds A. Water Fund i. Five-Year Fund Balance Forecast Ms. Holleb reviewed the capital transfer from operating funds. She stated a bond issued is projected in FY18 to fund the water plant improvement project, which is set to begin in FY18. She stated water revenues are based on a five year rolling average, with any unusual year’s removed. She stated a $750,000 transfer from the Lake Forest Hospital and Laurel Avenue redevelopment funds is budgeted in FY18 to offset the new debt issue. She stated the projected debt service expenses do not include the water plant debt issue. The Committee reviewed the fund balance target, which is higher to account for fluctuations in weather. B. Parks and Recreation Fund Balance Forecast i. Five-Year Fund Balance Forecast Ms. Holleb stated additional years are included in the packet. She reviewed the different categories included in the schedule. She stated the fund balance target is based on 25% of all the Parks and Recreation funds. The Committee discussed how fees are set. A property tax freeze would significantly affect the Parks and Recreation fund. C. Golf Fund i. Five-Year Fund Balance Forecast Ms. Holleb reviewed the Golf Fund five-year forecast and stated additional years are included in the packet. She reviewed the required transfers from the Parks and Recreation Fund, which include a loan for the proposed capital improvements. She stated the Parks and Recreation Fund will need to offset any negative fund balance. Finance Committee Meeting Minutes – March 13, 2017 The Committee discussed the proposed improvements detailed in November and the decision to scale back for only needed improvements. They discussed the closing of Highland Park golf course in 2017 for improvements and possible additional rounds this will generate. They discussed private funds will be needed to complete the other necessary improvements. ii. Deerpath Golf Course Year in Review and FY18 Outlook Mr. Mike Williams and Vince Jaurez of Kemper Sports reviewed the downward trend of golf sales and the number of golf courses in the area. They reviewed the FY17 reduced revenues and the causes. They reviewed survey results from 2015 and 2016 to show much improved reviews. Mr. Jaurez reviewed 2017 projected improvements and the effect the improvements will have on projected revenue and impact on holes available for play. He reviewed estimated costs for the locker room and patio and the justifications behind the improvements. VI. Other Matters A. Look Back Audit Reports i. Leak Detection Program Cards were handed out showing volume of water used for leaks. B. FY2018 Capital Improvement Program (CIP) Revisions – No discussion C. Emergency Telephone Fund Five Year Fund Balance Forecast – No discussion D. Comprehensive Plan Updates This will be discussed in FY2018. With updates to the strategic plan, this would be a good time to update. E. South Beach Access Road Study Update – No discussion F. Park Master Plan Update – No discussion VII. Opportunity for the Public to Address the Finance Committee: None VIII. Adjourn into Executive Session The Committee convened into executive session at 9:45 p.m. to discuss Personnel, Cable TV Consortium and Fire Shared Services. IX. Executive Session The Finance Committee reconvened into regular session at 10:38 p.m. X. Adjournment There being no further business, Alderman Beidler moved, seconded by Alderman Reisenberg, to adjourn the meeting at 10:38 p.m. The motion carried unanimously by voice vote. Respectfully Submitted, Diane Hall Assistant Finance Director