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2013-07-29 - Village Board Committee of the Whole - Agenda Packet Meeting of the Village of Buffalo Grove Fifty Raupp Blvd Buffalo Grove, I L 60089-2100 Board of Trustees Phone:847-459-2500 Committee of the Whole July 29, 2013 at 6:30 PM 1. Welcome 2. Discussion A. Strategic Plan Update [GO TO] B. Five Year Operating Forecast FY 2014-2018 [GO TO] C. Fee and Fine Recommendations [GO TO] D. Tier III Service Evaluation [GO TO] E. 2014 Budget Strategy [GO TO] F. Roles of Trustees [GO TO] 3. Executive Session A. Pending Litigation: Section 2(c)(11)of the Illinois Open Meetings Act B. Collective Bargaining: Section 2(c)(2)of the Illinois Open Meetings Act 4. Adjournment The Village of Buffalo Grove,in compliance with the Americans with Disabilities Act,requests that persons with disabilities, who require certain accommodations to allow them to observe and/or participate in this meeting or have questions about the accessibility of the meeting or facilities, contact the ADA Coordinator at 459-2525 to allow the Village to make reasonable accommodations for those persons. Strategic Plan Update 2-A Overview Deputy Village Manager Jenny Maltas will present a status update on the 2013 goals associated with the Strategic Plan. The Village has already met or will meet the majority of its goals for 2013. Certain deadlines may be extended to better align with the budget process and end-of-year work plan efforts. Attachments Trustee Liaison Staff Contact Jennifer I Maltas, ....M.on.da...........J.u.1.........Y 29, 2013 ............................................................................................................................D.'scuss.'.o.n...._...Ite.m........2._A....................................................................................................................................................... Y, Five Year Operating Forecast FY 2014-2018 2-B Overview The goal of the Five-Year Operating Forecast is to evaluate the Village's ability to meet both short and long term financial obligations. It is important to stress that this forecast is not a budget. It doesn't dictate expenditure decisions, rather it identifies the need to prioritize allocations of Village resources. As a governmental entity, changes in strategy that involve service delivery are slow and methodical. The forecast provides a picture of the Village's fiscal health based on numerous assumptions over the next five years. The Five-Year Financial Forecast is a planning tool and should be considered fluid in its construction. As new significant data or trends emerge the document will be revised,at minimum, on an annual basis. This document should be viewed in conjunction with the annual Village Budget in order to make specific policy and spending recommendations Attachments Five Year Financial Forecast 2014-2018.pdf Trustee Liaison Staff Contact Scott D Anderson, ....M.o�n.d�a...........J.u.1.........Y 29, 2013 ............................................................................................................................D.��s�cu�s�s.�.o.n...._...Ite.m....�....�._�B........................................................................................................................................................ Y, Village of Buffalo Crowe 6' FY 2014-2018 Five Year General Fund Operating Forecast II GROVE Purpose: The goal of the Five-Year Operating Forecast is to evaluate the Village's ability to meet both short and long term financial obligations. Indices of long-term fiscal health include building capital reserve balances, funding capital projects and restoring fund balance reserves to ultimately reach a balance that will cover four and a half months of expenditures (35%). It is important to stress that this forecast is not a budget. It does not dictate expenditure decisions; rather it identifies the need to prioritize allocations of Village resources. As a governmental entity, changes in strategy that involve service delivery are slow and methodical. The forecast provides a picture of the Village's fiscal health based on numerous assumptions over the next five years. The Five-Year Financial Forecast is a planning tool and should be considered fluid in its construction. As new significant data or trends emerge the document will be revised, at minimum, on an annual basis. This document should be viewed in conjunction with the annual Village Budget in order to make specific policy and spending recommendations. Financial Focus and Methodologies: The General Fund is the main operating fund that accounts for the core services provided by the Village including public safety (police & fire), public works, building & zoning, and administration. All major discretionary revenues such as property tax, sales tax, income tax, telecommunication, and utility use tax are accounted for within the General Fund. The forecast reflects final figures for fiscal year 2012. For purposes of the analysis, final audited 2012 expenditures set the baseline for analysis and are inflated or adjusted accordingly. The General Fund is the primary focus of the forecast as it represents about 56 percent of the total Village Budget. The forecast assumes the continuation of current service levels and the costs projected over five years. Revenues are estimated based on anticipated growth patterns and does not consider increases in revenues generated by new fees or increases in fees and charges beyond what is approved by current ordinance. 1 As a part of the development of long-term financial forecasting the Village continually reviews external and internal factors that impact, or may impact, the collection of revenue and the estimation of costs. Evaluating the impact of the national economy (macro) on the local economy (micro) is an important step in the process. The national economy affects both state and local economies, although this impact varies by jurisdiction and may actually have an inverse effect on a community. Some of the economic indicators the Village uses in financial analysis include inflation, employment,housing starts,vehicle sales,interest rates, and manufacturing activity. Inflation - As inflation goes up, the cost of goods sold go up, increasing retail sales tax revenue. As prices rise, so will business income tax receipts. Conversely, the Village will have to pay more for goods and services. The Village uses the Illinois Municipal Price Index (MPI) as an inflation metric. The MPI is an amalgam of price indices based on types and goods purchased by Illinois Municipalities. The MPI is 2.44 percent. The most recent(May 2013) Consumer Price Index is at 1.4 percent. Employment - Retail and vehicle sales tend to have inverse relationships with the unemployment rate. Sales tend to move in the opposite direction of the unemployment rate. Chronic unemployment often spills over into the residential real estate market resulting in lost real estate transfer tax revenue. Housing starts - This indicator provides a sense of the overall demand for housing, which can be indicative of local housing activity. Data maintained by local realtor groups is useful in projecting the future of market recoveries. Vehicle sales - sales and use tax revenues tend to fall with vehicle sales, which are heavily dependent upon both employment and interest rates. However, if increases in new vehicles are expected to reduce the value of used vehicles, the sales and use tax base can actually decline if the depreciation of used vehicles is not equally offset by the value of new vehicles. Interest rates - the interest rate impacts the Village's revenues in several ways. First, investment income will be affected by interest rates. Second, the availability and cost of capital directly affects business expansion and retail purchases. As credit is extended and/or rates are lowered, revolving 2 purchases may increase, thereby increasing development plans and retail sales and, by extension, sales tax and business licenses revenues. Manufacturing activity - If a Village has a large manufacturing sector, the ISM (Institute of Supply Management Index) becomes a significant factor in revenue analysis and forecasting. Manufacturers respond to the demand for their products by increasing production, building up inventories to meet the demand. The increased production often requires new workers which lowers unemployment figures and can stimulate the local economy. Overview of Fiscal Year 2013: Over the last five years, the Village has moved though three distinct financial cycles in responding to the economic downturn. The strategy in the FY 2009-2010 Budgets was to protect public services/programs and staffing levels through deficit spending drawing upon prior period fund balance. FY 2011-2012 strategies involved reducing staffing though attrition leveraging an employer sponsored retirement incentive program and creating a Tier II compensation program to lower starting wages. Those actions plus reduced capital project spending and a continued moratorium on capital reserve funding successfully eliminated budget deficits. Beginning in FY 2013 and continuing through the next five years is a continued effort to control personnel costs, appropriately fund all capital reserves and increase the resources allocated to infrastructure maintenance. A wholesale review of all the services that the Village offers will be monetized in order to better evaluate what the future of service delivery will look like. Other strategies include ensuring that all fees are levied at market rates and revenue collection is as efficient as possible. Factors that are to be considered moving into the next five year update include; • Impact of the real estate market. Traditional sales activities are slowly rebounding as a market bottom has appeared to be reached. The impact of declining property values in tandem with incorrect assumptions that property taxes will move in similar fashion is making it difficult to grow the tax levy to support general operations. 3 • State of Illinois budget crisis. The delay in income tax distributions to the Village has crated a backlog of receivables owed the Village totaling $.8 million. Another concern is discussion with the various bond rating houses that all taxing bodies debt ratings should be rated no higher than the state's rating. • Health Care Cost and the Patient Protection Affordable Care Act. The future financial impact of the new bill and increasing health care costs. The Village is currently on track to attain "Cadillac Tax"status in 2016. • Commercial/Retail Development. The economy's impact on existing sales tax generators as well as development or redevelopment of Dundee, Milwaukee Road corridors and Lake Cook Corridors. • Infrastructure. Prior year's deferral of capital spending and funding has impacted roads, sidewalks and bike paths, the water system and Village facilities. The Village Board has taken the initial steps to addressing street maintenance through the issuance of$6 million in bonds in FY 2012. Forecast Assumptions: The following is forecasted revenues and expenditures for the next five years. Including the column on the far right is an inflation index (if warranted). 4 General Fund Revenues-Projected 2014 2015 2016 2017 2018 Growth Property Taxes,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, $ 12,003,778 $ 12,183,835 $ 12,366,592 $ 12,552,091 $ 12,740,372 1.015 92 Income&Use Taxes $ 4,698,264 $ 4,7 ,229 $ 4,888,074 $ 4,985,835 $ 5,085 552 1.02 State Sales Tax $ 4,536,144 $ 4,626,867 $ 4,719,404 $ 4,813,792 $ 4,910 068 1.02 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ,,,,,, Home Rule Sales Tax $ 3,302,593 $ 3,368,6415 $ 3,436,018 $ 3,504,738 $ 3,574 833 1.02 Real Estate Transfer Tax $ 559,032 $ 575,803 $ 593,077 $ 610,869 $ 629195 1.03 Telecommunications Excise Tax $ 1,982,650 $ 1,982,650 $ 1,982,650 $ 1,982,650 $ 1,982 650 1.00 Prepared Food and Beverage Tax $ 719,000 $ 733,380 $ 748,048 $ 763,009 $ 778,269 1.02 Utility Tax-Electric Service $ 1,626,900 $ 1,626,900 $ 1,626,900 $ 1,626,900 $ 1,626 900 1.00 Utility Tax-Natural Gas Therms $ 920,294 $ 920,294 $ 920,294 $ 920,294 $ 920,294 1.00 Licenses $ 278,150 $ 278,150 $ 278,150 $ 278,150 $ 278150 1.00 Building Revenue&Fees $ 586,000 $ 597,720 $ 609,674 $ 621,868 $ 634,305 1.02 Intergovernmental Revenue-Local $ 268,430 $ 273,799 $ 279,275 $ 284,860 $ 290,5517 1.02 Investment Revenue $ 78,000 $ 78,195 $ 78,586 $ 78,979 $ 79,769 0.0025 Fines&Fees-Police&Fire $ 1,304,993 $ 1,331,093 $ 1,357,715 $ 1,384,869 $ 1,412 566 1.02 Operating Transfers $ 765,000 $ 765,000 $ 765,000 $ 765,000 $ 765,000 1.00 Miscellaneous Revenue $ 1,297,700 $ 1,297,700 $ 1,297,700 $ 1,297,700 $ 1,297,700 1.00 Total Revenues-Projected $ 34,926,928 $ 35,432,259 $ 35,947,156 $ 36,471,605 $ 37,006,181 Annual Increase 2.7% 1.4% 1.5% 1.5% 1.5% General Fund Expenditures-Projected 2014 2015 2016 2017 2018 Personal Services,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, $ 19,200,000 $ 19,584,000 $ 19,975,680 $ 20,375,194 $ 20,782 697 1.02 Personal Benefits $ 4,350,000 $ 4,217,500 $ 4,428,375 $ 4,649,794 $ 4,882 283 1.05 Operating Expenses $ 1,953,662 $ 2,000,550 $ 2,048,563 $ 2,097,729 $ 2,148 074 1.024 Insurance $ 1,000,000 $ 1,040,000 $ 1,081,600 $ 1,124,864 $ 1,169 859 1.04 Legal Services $ 289,650 $ 295,4413 $ 301,352 $ 307,379 $ 313 5216 1.02 Commodities $ 487,745 $ 499,451 $ 511,438 $ 523,712 $ 536,281 1.024 Maintenance&Repairs $ 1,680,068 $ 1,720,390 $ 1,761,679 $ 1,803,959 $ 1,847 254 1.024 Capital Outlay $ 434,916 $ 445,354 $ 456,042 $ 466,987 $ 478195 1.024 Operating Transfers $ 4,221,086 $ 4,284,402 $ 4,348,668 $ 4,413,898 $ 4,480 107 1.015 All Other Expenses $ 450,064 $ 460,866 $ 471,926 $ 483,253 $ 494,851 1.024 ........ ......... ......... ......... Total Operating Expenditures- $ 34,067,191 $ 34,547,955 $ 35,385,324 $ 36,161,905 $ 37,003,270 Projected OperatingSurplus/(Deficit) $ 859,737 $ 884,304 $ 561,833 $ 224,836 $ 26,947) General Fund Transfers-Projected 2014 2015 2016 2017 2018 Capital Reserve Vehicles $ 800,000 $ 800,000 $ 800,000 $ 800,000 $ 800,000 200 000 2 Capital Reserve-Facilities $ $ 00,000 $ 200,000 $ 200,000 $ 200 000 .... Capital Reserve-Technology $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 Motor Fuel Tax $ 660,519 $ 673,729 $ 687,204 $,,,,,,,,,,,,,,,,,,,,,700,948,,,,, $,,,,,,,,,,, ,,,,,,,,,,,,,,,,,,,,,714 967 �,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, I 0, 5,000 Capital Improvement,,,Plan $ 546,012 $ 152,6433 $ 159 355 $ 166,87722 $ 17.1 Golf Enterprise Subsidy $ 150,000 $ 10 878 Total Transfers-Projected $ 2,456,531 $ 2,026,372 $ 2,021,559 J $ 2,017,820 $ 2,011,845 ).... T o t a I Fun d S u r p I us De f i c i t .... .... $(1,15 9 6,7 9 .. .... .... ., .... a $(2,138,791) .. .. .. The presentation of the forecast has been modified in this year's report to better align operating revenues and operating expenditures. By doing so, a more accurate assessment of both short term 5 and long term financial sustainability can be measured. Short term sustainability is attained if operating revenues are covering operating (or day-to-day) expenditures. In four of the five years the operating revenues offset operating expenditures. In 2018, operating expenditures will exceed operating revenues by$126,947. Long term sustainability is measured through the Village's ability to invest in infrastructure including funding reserves for vehicles, buildings, equipment, technology, streets (though Motor Fuel Tax), and projects in the Capital Improvement Plan. Commitments to long term capital programs are identified under "General Fund Transfers - Projected". Included in the spending category are subsidy transfers to the golf enterprise. These transfers eliminate anticipated negative cash positions at both courses by the end of the year.After including these transfers, the total fund deficit at the end of FY 2014 is estimated to be nearly $1.6 million. That deficit grows to just over $2.1 million by the end of the five year projection. One of the financial indices the bond rating houses (S&P and Moodys) cite as the reason for the current AAA bond rating is the low level of debt. To continue as a budget strategy avoiding funding capital and infrastructure programs will result in a change in fiscal philosophy from a government geared towards a pay-as-you-go capital asset financing to one of debt financing. A commitment to funding capital will require either a significant revenue enhancement, a reduction in services, or a combination of both. The impact of doing nothing has severe consequences on the Village's reserves. General Fund Reserves: The General Fund Fund Balance Reserve Policy sets forth a minimum unassigned reserve level of 25 percent of the subsequent year's budget (less pension and capital funding transfers). Within the adopted Strategic Priorities in the FY 2013 Budget is a goal of reestablishing a 35 percent threshold by the end of FY 2016. It is important to maintain a strong reserve level for several reasons, (1) it provides more time to react and respond to revenue threats created by economic turbulence, (2) it helps to better withstand any unfunded legislative mandates that will create additional expenditure obligations without a corresponding revenue source, and (3) to fund unforeseen infrastructure/capital asset 6 costs. Spending down of prior period reserve balances allows the Village time to reallocate resources within the budget and restructure service levels to react to the situation. After drawing down on the balance to respond to emergency conditions, it is important to rebuild those reserves in order to remain flexible to respond to the next threat. The following chart provides a history of fund balance reserves and includes estimates for the current fiscal year and the five forecasted years; Projected Fund Balance $25,000,000 Al / Phase 1 0 $20,000,000 r r Phase 2 j $15,000,000 ------ Phase 3 $10,000,000 boo a $5,000,000 s i i $0 ..... ............ ............ ............ ............ ............ ............ ........... ....... 99- 00- 01- 02- 03- 04- 05- 06- 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 00 01 02 03 04 05 06 07 est pro pro pro pro. pro. IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII Unassigned Fund Balance Policy Fund Balance Requirement The red line on the graph represents the fund balance policy minimum of 25 percent less pension and capital transfers. In FY 2016 the policy minimum is adjusted to 35 percent to be consistent with Village Strategic Priorities. As discussed earlier in the report, the first phase of the Village's response to the economic downturn beginning in 2007 was to draw on$5.3 million in reserves to fund deficit spending. Phase 2 eliminated the use of reserves through combined efforts to reduce employee costs through attrition utilizing a Voluntary Separation Incentive (VSI) and deferring capital and reserve funding. Phase 3 reinstitutes capital reserve funding and capital spending. The effect on the graph is two divergent lines on the chart as the fund balance requirement is moving in the opposite direction as 7 the forecasted fund balance. The budget strategies employed over the last three years helped to stabilize the General Fund. Over the next five years it is programmed into the forecast that capital reserve funding will be reintroduced. The first step was including a $0.4 million transfer in the FY 2013 Budget. Revenue Review: Approximately 85 percent of all General Fund revenue is generated from seven revenue sources including property tax, combined sales tax including prepared food and beverage, income and use tax,telecommunications tax, utility (natural gas&electricity) use tax and real estate transfer tax. Almost half of the Village's major revenue sources are elastic. Elastic revenues are those sources that tend to fluctuate with the economy. A balance between elastic and inelastic revenue is desired as a hedge against market volatility. General Fund revenues considered to be elastic include: sales and use taxes, income taxes, telecommunications tax, real estate transfer tax, building revenue and fees, and investment income. The property tax is an example of a non-elastic source of revenue as collections are stable and predictable. The following is a summary of significant Village revenue sources. • Property Tax Growth in the corporate property tax levy is tied to the Municipal Cost Index(MCI). The MCI is an amalgam of several key inflationary indices including the Producer Price Index (PPI), Employment Cost Index (ECI), and the Consumer Price Index -Urban (CPI-U). The MCI weights the indices accordingly based on how a typical municipality spends its resources. The Police and Firefighter Pension Funds levies are calculated by an independent actuary. The pension levies are pass-through revenues that will have a corresponding expenditure. A continuing concern is growth, or lack thereof, in the property tax base. Tax year 2010 produced the first drop (6.47 percent) in assessed valuation since 1974. Tax year 2011 and 2012 continued the decline at 6.18 percent and 5.87 percent, respectively. Because the Village levies dollars, a uniform change across all property classifications has no financial impact to tax payers. This dynamic has not materialized as commercial/industrial properties have been more successful contesting and decreasing their property values. Any aggregate decrease that exceeds the county average decrease results in a greater share of 8 the tax burden shifted to residential properties. In application, the last two years of levy increases of 0.0 and 1.4 percent have not equated to corresponding property tax rates as some residents are seeing double digit increases due to the reallocation of the tax burden. Listed below is a history of equalized assessed valuations since 2003. Equalized Assessed Valuation y „»> 2,000,000,000 rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr......rrrrrrrrry »»»»»»»r JJJ , ll� r 1,800,000,000 .... 1,600,000,000 1,400,000,000 J 1,200,000,000 1,000,000,000 800,000,000 600,000,000 400,000,000 — 200,000,000 p 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 "' Cook County Total EAV Lake Couty Future ability to bridge General Fund deficits with increases in property tax will be challenging as the corporate levy must compete for tax dollars with pension levies. In 2003, levies for pensions accounted for 32.1 percent of the tax extension. In the most recent tax year (2012), pensions represent 40.4 percent of property tax as illustrated below. The corporate levy, which funds core General Fund services, has been stagnant. The increase in 2007 was due to the elimination of the Village Vehicle Sticker Program.Those revenues were shifted to the property tax with a net revenue grow of zero. 9 Components of Tax Levy 16,000,000 14,000,000 12,000,000 Debt Service 10,000,000 .. -- ,.,� ';� �- ��r�l °ir .. � '' Fire Pension 8,000,000 Police Pension 6,000,000 IMRF/FICA 4,000,000 — — Corporate 2,000,000 p 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 • Sales Tax Inflation sets the growth baseline for both the base (2% increase) and home rule sales taxes (2%increase). Combined, this is the second largest revenue source for the Village. The base sales tax revenue is directly related to the dollar value of sales made within the Village limits. Home rule sales tax applies to the same transactions as the base sales tax except in the following transactions, food for human consumption off the premises where sold (groceries), prescription and non-prescription medicines and tangible personal property that is titled with an agency of the State of Illinois. The assumption for the five year analysis is that the retail mix will remain substantially similar to what is present today. The forecast applied to both base and home rule sales tax produces the following; Base Sales Tax History $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $p 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 est. pro. 10 Home Rule Sales Tax History $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 — $500,000 $p 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 est. Pro • Income Tax The Illinois Income Tax is imposed on every individual, corporation, trust, and estate earning or receiving income. The tax is calculated by multiplying net income by a flat rate. The current rate is 5 percent of net income. The rate is set to revert to 3.75 percent from January 1, 2015 to December 31, 2024. The rate will then reduce to 3.25 percent starting on January 1, 2025. The formula for distribution for local governments was 10 percent of the revenue, allocated on a per capita basis, when the rate was 3 percent. When the state rate increased to 5 percent, the increase was not included in the distribution making the effective per capital distribution to municipalities equal to 6 percent. The Village's unemployment rate as of May 2013 is 7.6 percent, Cook County is 9.3, Lake County is 8.7 percent, and the State of Illinois is 9.2 percent. Revenues generated by income and use taxes are approaching the peak set in FY 2008. The growth in revenue is due to improving corporate earnings, some recovery in employment, and tax changes to increase total net income. The forecast accounts for 2 percent growth each year through the duration of the forecast.The chart below shows the performance of the revenue since FY 2004. 11 Income & Use Tax Revenue History $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 ,,.., $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 est. pro. • Prepared Food and Beverage Tax This tax (1%) is levied on the purchase of prepared food for immediate consumption and the sale of liquor. Similar to sales tax, inflationary growth is the central driver of revenue increases with five year increases projected at 2 percent annually. There are 112 businesses that charge and remit this tax to the Village. • Telecommunications Tax This tax levied at 6 percent on all types of telecommunications except for digital subscriber lines (DSL) purchased, used, or sold by a provider of internet service (effective July 1, 2008). The exemption of DSL service has made a significant impact on collections. Recent legislation has also mandated that data packages no longer be bundled with all other telecommunications billing for the sake of taxation. Those services have been exempted. The forecast calls for no growth in this revenue over the five year plan. • Utility Use Tax (Natural Gas&Electricity) Natural gas and electricity charges are based on consumption and will fluctuate with seasonal demands. The Village is charging the highest statutory rate. No growth is projected over the next five years. Any new growth will be predicated on adding or expanding houses or buildings. 12 • Real Estate Transfer Tax Real estate transfer tax is collected at the rate of$3 per $1,000 of sales consideration. This revenue reached a peak in 2005 at $1.3 million. Since 2005, collections have dropped 60 percent as a result of the collapse of the housing market. From a local perspective it appears that the market has reached a bottom as more traditional sales are being transacted in the Village. It is expected that some growth will occur (3%per year over the next five). Real Estate Transfer Tax 1,400,000 1,200,000 ,;,,, 1,000,000 800,000 600,000 400,000 200,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 est. pro. Expenditure Review: The average annual increase in expenditures over the next five years is 1.7 percent. In each of the next five years, wages and benefits account for about 62 percent of all expenditures. The next largest expenditure account group is for operating transfers (11 percent). For FY 2014 the distribution of General Fund expenditures is shown in the table below. 13 FY 2014 Expenditure Distribution 0 " Personal Services 30� 1 Personal Benefits 11W Operating Expenses Insurance Maintenance& Repairs Capital Outlay 5% Operating Transfers 3% All Other Expenses 5% Capital Project/Reserve Motor Fuel Tax • Personal Services Wages are anticipated to increase by a factor of 2 percent each year. The wage forecast anticipates the general wage increase awards plus possible merit adjustments, where appropriate, offset by lower entry salaries under a new pay grade system (Tier 11). The Tier 11 pay grade lowers all starting salaries for employees hired after 1/1/2011 by approximately 10%. The five year forecast will likely need several iterations to reflect new data as the impact of retirements, the effect of any service realignments, and any hiring decisions become more evident. In order to balance the last three budgets, much of the effort has been focused on reducing employees through the Voluntary Separation Incentive. In FY 2013, there are a total of 224 full time employees. Over the last four years full time staffing has decreased by 7.4 percent or 18 positions. • Personal Benefits The largest single expenditure within Personal Benefits is for group medical and life insurance. Effective for FY 2012, the Village has committed to three years with the Intergovernmental Professional Benefits Cooperative (IPBC) to help stabilize medical costs through risk pooling and provide for a mechanism to help establish positive cash flow and rebuild reserves.The forecast calls for 5 percent growth each year in premium expenses. 14 Over the five year projection, the employees' contribution is set to cap at 15 percent of the premium in FY 2016. Continued efforts will be made to maintain costs.A renewed emphasis on wellness programs and evaluating data will be critical in the next few years to help stabilize experience. Staff will be actively working with the IPBC to manage tax implications of the Patient Protection and Affordability Care Act. The Village's plan will be subject to the `Cadillac Tax' in FY 2016 whereby any premium expenses that exceed the mandated threshold will be subject to a 40 percent tax. • Insurance Within the Insurance category is the premium paid to the Intergovernmental Risk Management Pool (IRMA) for general liability and workers' compensation coverage. Continuing with past practice, the Village has selected a higher deductible ($50,000) to provide a credit against our annual premium. Prior period reserves have also been used to lower the annual payment. The forecast assumes growth of 4 percent. • Commodities The single largest expenditure within the Commodity account group is for purchase of salt for the snow and ice control program. The forecast calls for increases of 2.4 percent per annum. Staff continues to seek innovative ways to reduce commodity costs, such as bulk electric procurement, and utilizing centralized purchasing to leverage the Village's buying power. • Maintenance&Repair- Facilities Expenditure growth in this account group is estimated to be 2.4 percent per year. Included in these expenditures are costs related to the maintenance and repair of sidewalks and bike paths,street patching, street lights,building facilities, and parkway trees. In this forecast, an amount has been included ($200,000) to begin funding a reserve for facility repairs. In order to avoid issuing debt for repairing Village buildings,a reserve needs to be established. Case in point, the Village has over $1 million in roofs that are in various states of disrepair. There are no funds currently set aside for those improvements. 15 • Operating Transfers Within this account group are property transfers to the Police and Firefighter Pension Funds or tax revenues accounted for within the General Fund (pass-through). There is no General Fund tax abatement programmed for the next five years. Over the next five years it is estimated that operating revenues will exceed operating expenditures by$2.4 million. • General Fund Transfers Included in the transfers are $5.5 million for vehicles, technology, and building reserves over the next five years. $3.4 million is allocated for transfer to the Motor Fuel Tax Fund to supplement state funding for road repairs. There is an estimated equity transfer to the Golf Enterprise of$400,000 over five years. The following transfers have been made over the last seven years, Fiscal Year Subsidy 2012 269,500 2011 352,000 2010 268,000 2009 400,000 2008 775,000 2007 205,141 2006 258,601 Nearly $2.6 million in equity transfers have been made to the golf courses since 2006. The intent of an Enterprise Fund is to cover its expenditures with user fees. Given the extent of the subsidy,that is not occurring. The Five Year Financial Forecast calls for a cumulative five year deficit of$8.1 million, inclusive of capital reserve transfers, over the review period. Given the state of the economy including stagnant revenues and growing infrastructure needs, this deficit is not unexpected. Future funding strategies will need to address shortfalls on either or both sides of the ledger. On the expenditure side, there is little ability to reduce significant operating costs that are not wage and benefit driven. Those efforts have taken place over the last four years. To better manage day-to-day costs and leverage purchasing, the Village reassigned an employee as the Purchasing Manager to focus on 16 purchasing efficiencies. Those savings will materialize over the next several years as contracts lapse and are renegotiated through competitive bidding. While efforts will continue to focus on how to deliver the same high level of services at lower unit costs, staff recognizes that revenues will also need to be reviewed. Every opportunity to grow the sales tax base should be considered. Staff must ensure that every revenue is reviewed for adequacy (fees), efficiency (collections), and efficacy (diversified). New revenue sources will be researched, discussed, and if warranted, presented to the Village Board for consideration as part of annual fee and fine comparisons. This report will be used as a guide for the development of the FY 2014 Budget and will help shape the discussion about how the Village can adapt to the current and future financial landscape. Staff seeks further input from the Village Board on the operating forecast. 17 Fee and Fine Recommendations 2-C Overview One of the goals listed in the strategic plan was to complete a comprehensive fee and fine study. As such, Village Manager's Office Summer Intern, Rodrigo Lopez, put together a comprehensive spreadsheet that included all of the Village's fees and fines and surveyed 15 municipalities. The municipalities surveyed were Arlington Heights, Elk Grove, Palatine, Gurnee, Niles, Rolling Meadows, Wheeling, Mount Prospect, Morton Grove, Glenview, Northbrook, Vernon Hills, Mundelein, Highland Park, and Wilmette. The goal of the survey was to evaluate where the Village's fees and fines fall with respect to other communities and to identify fees and fines that the Village may want to consider adding to the fee and fine schedule. Staff s recommendation is for our fees and fines to be in line with other communities. The exception will be in cases where the fine is meant to address a specific issue within the Village. With that goal in mind, attached is a list of fees and fines staff has identified to be increased, implemented, or eliminated based on the survey. Attachments Trustee Liaison Staff Contact Jennifer I Maltas, ....M.on.da...........J.u.1.........Y 29, 2013 ............................................................................................................................D.'scuss.'.o.n...._...Ite.m........2._C........................................................................................................................................................ Y, V�� L,ILL A CI', F" BIJFFA IILX)) ('hl )i MEMORANDUM TO: Village President& Board of Trustees FROM: Jennifer Maltas, Deputy Village Manager DATE: July 29, 2013 RE: Fee and Fine Recommendations Introduction One of the goals listed in the strategic plan was to complete a comprehensive fee and fine study. As such, Village Manager's Office Summer Intern, Rodrigo Lopez, put together a comprehensive spreadsheet that included all of the Village's fees and fines and surveyed 15 municipalities. The municipalities surveyed were Arlington Heights, Elk Grove, Palatine, Gurnee, Niles, Rolling Meadows, Wheeling, Mount Prospect, Morton Grove, Glenview, Northbrook, Vernon Hills, Mundelein, Highland Park, and Wilmette. The goal of the survey was to evaluate where the Village's fees and fines fall with respect to other communities and to identify fees and fines that the Village may want to consider adding to the fee and fine schedule. Staff's recommendation is for our fees and fines to be in line with other communities. The exception will be in cases where the fine is meant to address a specific issue within the Village. With that goal in mind, attached is a document that reviews the fees and fines staff has identified to be increased, implemented, or eliminated based on the survey. Fees not listed in the schedule are not recommended to be changed at this time. Below is an overview of the changes. Highlights False Alarm Fees Staff completed an analysis of police false alarms that occurred in the last year in order to determine how many repeat offenders there are on an annual basis. The false alarm fee is intended to incentivize property owners to test, maintain, and fix their alarm systems so that emergency responders are not spending their time responding to non-emergency calls. The analysis revealed that a majority of the repeat offenders occur between the second and fourth false alarm (see Figure 1 on page 2 of this memo). For that reason, staff is proposing to escalate the fees associated with false alarms more quickly in order to assist in curbing that behavior. As such, our initial fees are higher than the average of our comparable communities, but level off as the number of violations increase. Though the fee schedule applies to both police and fire false alarms, repeat false alarms for fire are far less common due to the testing requirements associated with the systems. That said, fire false alarms are proposed for inclusion in the new fee schedule (approximately 90+percentage of buildings have only 1 false alarm a year). The "free" fine for the first alarm is proposed to remain in place for police and fire false alarms. - 1 - 397 rrff, Police False Alarms, 1� (7/1/12 to 6/30/ 013) 100 8 of 1% 36 INN % 22 010 — — — — — 4 IN iwoIN 1 1 2 3 4 5 6 4 8 9 10 1.1 13 14 16 18 26 #of FalseAlarms Figure 1 Commercial Solicitor Permit Currently the Village issues, but does not charge for, solicitor permits. There are two types of permits that are issued—for-profit and not-for-profit permits. By federal law, the Village can not charge a fee associated with not-for-profit permits. However, the Village can charge a permit fee to for-profit solicitors. In addition to the staff time associated with processing the permit in the Finance Department, the Police Department completes a background check for each person who will be soliciting in the Village. For that reason, staff is recommending a general permit fee of $50 (which includes one solicitor and background check) with a $15 fee for each additional person that is added to the permit in order to cover costs of the background check. Parking Violations Through staff research, it was discovered that most communities step up parking fees more quickly than what is in the Village's current schedule. A majority of communities will double the fine if it is not paid on the initial due date and add an additional fee if the fine is not paid after a delinquent notice is sent. Staff is recommending that the Village take the same approach. Our current schedule lists $20 (initial fee), $25 (if not paid on time), and $45 (if not paid by the due date listed on the delinquent notice). If the fine is not paid after the due date on the delinquent notice, the ticket goes to a collection agency. The proposed schedule is $25/$50/$75. Animal Violations When compared to neighboring communities the Village's animal violation fines are low. In addition to increasing the fine association with animal violations, staff is proposing a tiered schedule for animal violations in order to address dangerous animals. Many communities charge different fees for an animal owner's first, second, and third violation. Currently, if an owner - 2 - receives two violations for their animal they are assessed the same fine ($20). Under the proposed schedule, an owner will be charged an increased amount for each violation (up to $100). Animal Licensing Through a review of county vaccination and utility billing records, staff has identified a total of over 1,500 animals in the Village of Buffalo Grove that are not currently licensed. Finance Department staff will be stepping up its enforcement of annual licensing in the next license cycle to license these animals. Though no fee increase is proposed, staff expects these efforts to generate $15,000 annually. Administrative Bail Fee According to State of Illinois law, municipalities can charge an administrative bail fee of$20 in order to recapture some costs associated with processing an arrestee. The fee would only apply to arrestees who are processed and released on bail at the police station and does not apply to those who are transferred to the county jail. Chief Casstevens will be recommending this fee for implementation (under the state statute) at the August 19 Board meeting. Administrative Tow Fee Chief Casstevens has recommended additions to the types of offenses the Village can charge the administrative tow fee. This memo was sent under separate cover and is also attached to this memo. Amended Plan Fee/Permit Cancellation Fee Staff is recommending two fees to recover costs associated with staff time to review plans. The first is the amended plan fee ($50). Staff regularly reviews various versions of plans related to the same project. Staff has found that people will submit plans just to get them in, but then continue to send in various amended plans as the process moves on. The amended plan fee is intended both to cover the costs of staff time associated with multiple reviews, but also to incentivize permit applicants to submit complete and final plans with their permit application. Additionally, staff is recommending a permit cancellation fee ($50). In short, this fee is intended to cover plan review time associated with permits that come in and then are subsequently cancelled. This fee amount will be deducted from the refund provided to the applicant. No Valid Alarm Permit Staff is proposing a fee ($20) for those who do not get their alarm permit on an annual basis. This fee is intended to incentivize property owners to purchase their permit on an annual basis. Other Fees and Fines The remaining fees and fines listed in the attached schedule are relatively straight forward and intended to either clarify fees that are currently charged (ex. modifications to existing duct work and RPZ installation replacement), make fees consistent throughout the code (ex. residential zoning variations) or place the fee in line with comparable communities (ex. driveway permits and trespass violations). Conclusion Should you have any questions about the attached, please feel free to contact me. Staff from all departments will be available at Committee of the Whole to answer any questions about the proposed fee and fine changes. - 3 - 2013 FEE FINE RECOMMENDATIONS lie 'IIJJ»J 1/////ofiaD J J / /J / Commercial Solicitor Permit License Fee -$50, Per Solicitor- VBG does not charge for a Commercial -$0 $15 $45.00 Soliciting License (for profit door-to- door solicitation). VBG's fees are below average. The Illegal Dumping/Burning- $50/$55/$75 $60.00 Village typically issues warnings and $20/$25/$45 does not have much activity in this area. 1 warning last year. VBG's fees are below average. The Weeds &Grass Violations- Village typically issues warnings first $20/$50/$70 $50/$55/$75 $55.00 prior to issuing a ticket. 2 tickets issued last year. VBG does not have a specified fine for Trespass Violation -$0 $60/$65/$85 $60.00 Trespassing, historically staff gives warnings. 2 warnings last year. Admin. Bail Fee -$0 $20.00 (as allowed by state law) $20.00 We do not currently charge this fee. Admin Tow Fee See Chief Casstevens memo for more (DUI Impound Fee) -$500 $500.00 $500.00 information. Parking Violation Currently $25/$50/$75 $25/$48/$67 Parking fines in most communities $20/$25/$45 double if not paid on time. Animal Violations- 1st violation -$50/$55/$75 Many communities step up the fines $20/$25/$45 (for each 2nd violation -$75/$80/$100 $51/$81/$95 after the first violation to ensure the offense) 3rd violation -$100/$105/$125 issue is taken care of due to problems with dangerous animals. Fingerprint/Background Resident-$20 The Village currently does not charge a Check by Public Request- $20.00 Nonresident-$25 fee.$0 2013 FEE FINE RECOMMENDATIONS 'IIJJ»J 1/////ofiaD J J / /J / Records Check for Visa N/A- not found in other Based on Tier 3 services costing, this Immigration -$0 $15.00 codes amount will recoup our costs associated with providing this service. No Valid Alarm Permit-$0 $20/$45/$45 $50/$75/$100 Based on False Alarm Report and Fine Survey,VBG is below avg. False Alarms within 1 year First -$0 First -$0 First -$13 Second-$0 Second-$75 Second-$18 Third-$75 Third-$125 Third-$75 Fourth-$75 Fourth-$175 Fourth-$75 Fifth-$75 Fifth-$200 Fifth-$112 Sixth-$100 Sixth-$200 Sixth-$128 See fee and fine memo for more Seventh-$100 Seventh-$200 Seventh-$138 detail. Eighth-$100 Eighth-$200 Eighth-$141 Ninth-$100 Ninth-$200 Ninth-$158 Tenth-$150 Tenth-$250 Tenth-$184 Eleventh-$150 Eleventh-$250 Eleventh-$223 Twelfth-$150 Twelfth-$250 Twelfth-$261 Thirteenth-$200 Thirteenth-$250 Thirteenth-$264 Direct contract costs have increased to Storm and Sanitary Sewer —$1.50/foot, plus costs of Television Inspections- $2.50/foot N/A administration which could involve $1/foot several hours of staff time in the field and during office review of tapes. 2013 FEE FINE RECOMMENDATIONS 'IIJJ»J 1/////ofiaD J J / /J / Driveway&Apron Review- VBG fees are below average. The $25 $50.00 $50.00 current fee does not cover staff time. An administrative fee of$50.00 and any plan review fees will be Permit Cancellation Fee-$0 $50.00 N/A deducted from the refunded amount. This applies to all permits including those with a cost of less than $50.00. Any revisions to plans that have been issued will require an Amended Plans -$0 $50.00 N/A Amendment Form and be charged plan review fees of$50 per type of review. Currently charging this fee; Modifications to Existing $50.00 N/A however, it is not spelled out Duct Work- $0 clearly in the code. RPZ Installation/ $50.00 N/A Currently charging this fee under Replacement- $0 plumbing. Clarification to the code. Fences: First 100 Lineal 0 First 10 lineal ft.=$35 Each Ft.=$20 Each Addt' 100 a ea lineal 5 $5 $35.00 VBG's fees are below average. Lineal Ft.= $5 Currently there is a different fee for primary structure and non Residential Zoning $125.00 N/A primary structure, the proposal is Variations - $75.00 to make the fees the same as the workload for both types of variances is the same. $2,OOO.00 Initial Escrow Deposit for Recoverable $250.00 to $1,500.00 initial Petitions for some approvals do not deposits would be allowed require an extensive review, so Costs for Petitions N/A based on staff projection of recoverable costs are often less than Pertaining to Titles 14, 16 Village costs. $2,000.00 and 17 2013 FEE FINE RECOMMENDATIONS 'IIJJ»J 1/////ofiaD J J / /J / Spitting-$20/$25/$55 NSA Outdated fine that is not used. No Village Sticker- $20/$25/$45 .IIL.IIIIIIIIIII"� "III"IIIIIC. Fine-$50 VBG does not require village stickers. oLrc Buffalo Grove Police Department Inter-Office Memo, , = To: Chief Casstevens From: Sergeant Eisenmenger& Deputy Chief Husak Cc: Commander Reed Date: July 23rd, 2013 Re: Vehicle Seizure and Impoundment Program Update In May, 2004 the Village of Buffalo Grove established an ordinance to enhance our community's stance on impaired driving enforcement. This ordinance acknowledged our zero tolerance approach to driving while impaired by empowering the police to administratively seize vehicles in DUI incidents and in driving with a suspended or revoked license due to a DUI conviction. This administrative penalty is leveled at the owner of the vehicle and requires a fee of $500.00 be paid to the Village. The removal of these dangerous drivers helps increase the safety of all other motorists. A residual benefit is the revenue received which directly assists the Village and its mission. The administration of the program is handled by the Blue Team (Night Shift) Sergeants and the Patrol Operations Sergeant. The Blue Team Sergeants review the documentation, send legal notice to the registered owner of the vehicle via certified mail and schedule any administrative hearings that are requested. The Operations Sergeant deposits funds collected to the Village and produces the annual report. In 2012, a new law was created to codify procedures for impounding and seizing vehicles in Illinois (625 ILCS 5111-208.7 Administrative fees and procedures for impounding vehicles for specified violations). Table 2 shows that a majority of twenty four police departments that were recently surveyed follow the State statute regarding administrative fee and procedures. Table 2 Dept's that Dept's that Dept's that Dept's that Dept's that follow BG's follow State charge $500 charge less charge more Total Dept's Ord. Law impound fee than $500 than $500 surveyed 5 19 18 4 0 24 Source:ILCS&email survey of area police departments Current state law specifically allows for vehicle seizure and impoundment with reasonable administrative fees in cases of DUI and violations of the following offenses when a vehicle is used in the commission of the offense: Cannabis Control Act, Controlled Substances Act, Unlawful Use of a Weapon, Retail Theft, all suspended/revoked offenses (except emissions & unpaid parking/moving tickets), no valid drivers license, failure to appear warrants for DUI or driving on suspended/revoked/no valid drivers license. The statute also allows municipalities to pass an ordinance to seize vehicles for misdemeanor or felony offenses not specifically mentioned above where a vehicle is used in commission of the offense. 1 A review of 2012 arrest data indicates that we would likely add approximately 230 vehicle seizures to the 114 vehicles towed if we expanded our local ordinance to follow the specific offenses mentioned in the statute. This could result in as much as $115,000.00 additional revenue to the Village, however, it should be noted that adding additional seizures could also lead to more vehicles being abandoned, reducing the actual dollars received by the Village. Offense 2012 arrests Possession of more than 10 grams' of Cannabis and 0 Pbsses ion cif Controlled Substance No Valid Drivers License 75 Suspended or Revoked Drivers License 115 Failure to Appear Warrants 10 Total 230 Both towing firms that service Buffalo Grove (Hillside and Ernie's Towing) have indicated that the increase in tows would not be a burden on their operations. Increasing the number of administrative tows would increase the time spent by assisting officers waiting for tow trucks to arrive on scene. This would increase their dedicated time, but we do not feel this would create a significant burden on public safety. Additional time would also be spent on working with tow companies in processing required paperwork for abandoned vehicles with the Illinois Secretary of the State. Additional seizures may also result in additional requests for administrative hearings. The costs associated with these hearings have been negligible thus far. Since the current program is centered on DUI-related violations, it is logical that the Blue Team (night shift) Sergeants assist in the administration of the program. The other shift sergeants do involve themselves in limited ways by receiving payment for impounded vehicles. If the program were to expand, all shift sergeants would be tasked with more involvement in all aspects of the program. It would remain to be seen what supervisors should take the lead on mailing the notices and scheduling hearings. As noted in the chart above, adding suspended and revoked driving arrests to the ordinance would substantially increase the number of vehicles that are currently being towed. If we were to expand our local ordinance, we recommend following 625 ILCS 5/11-208.7 (Administrative fees and procedures for impounding vehicles for specified violations) which provides that vehicles shall not be subjected to seizure or impoundment if the suspension is for an unpaid citation (parking or moving) or due to failure to comply with emission testing. Recommendation: Data indicates that revenue from this program has decreased substantially in recent years; primarily as a result of a decrease in the amount of DUI arrests. Expanding the Buffalo Grove Administrative Tow Ordinance would discourage unlawful activity when using a motor vehicle, would remove additional dangerous drivers from the roadway, and would provide additional revenue for the Village. Respectfully, Sergeant Scott Eisenmenger Deputy Chief Steve Husak Patrol Operations/Training Coordinator Field Operations Division 2 Tier III Service Evaluation 2-D Overview As part of the Strategic Plan, staff was tasked with evaluating core and non-core services. The service model was further divided into three subcategories: 1) Tier I services -those which are statutory in nature or a part of the organization's core mission, 2) Tier II services -those services that are closely aligned with Tier I services and considered a part of the Village's basic service model, and 3) Tier III services - services that are above and beyond the core mission and considered ancillary services. Staff has quantified the Tier III services and further collected and analyzed the costs associated with each service. The resulting information provides a basis for evaluating the efficacy of services, determining the allocation of resources to those services and the value added for each service. As shown in the attached data, the value per impacted unit (essentially the cost per subscriber) varies widely across the Tier III services. Based on this information, staff will recommend fee restructuring for certain services and elimination of others. Further, the format developed by staff establishes a baseline for evaluating future services to be provided by the Village. Attachments Tier III Services Analysis 07-19-13.pdf Tier III Services Cost Spreadsheetpdf Trustee Liaison Staff Contact Jennifer I Maltas, ....M.on.da...........J.u.1.........Y 29, 2013 ............................................................................................................................D.'scuss.'.o.n...._...Ite.m........2._D........................................................................................................................................................ Y, V IL,IILAC IIIr� � 11➢�` � �o L�' 1 I➢�`I➢�`%,IIL43 C':If�a � MEMORANDUM TO: Village President& Board of Trustees FROM: Jennifer Maltas, Deputy Village Manager DATE: July 19, 2013 RE: Tier 3 Services Costing Memo Introduction At the April 29, 2013 Committee of the Whole meeting, staff presented to the Village Board a listing of all the services that the Village offers and placed those services into three tiers. The tiers were designed to rank programs from tier 1 — core to the mission to tier 3 — value added services the Village provides. The Village Board agreed with the methodology and placement of the services at the meeting. Since that time, staff has evaluated all of the tier 3 services and put together the attached document that shows the true cost of the tier 3 services. The document is meant to assist the Village Board not only in understanding the costs of the program, but assist the Village Board in making value judgments regarding services that may need to be cut or scaled back based on budget conditions. Methodology The following definitions were provided to staff and used to develop the costs for the tier 3 services: • Direct Costs — Direct costs are defined to be any costs that would be eliminated if the program was cut. Staff associated with the service would be reassigned to other services. These costs are primarily over-time, membership dues, supplies, and service contracts. • Revenues — Revenues are defined as any income that is generated by the program. Revenues are primarily fees associated with providing the service, service agreements with other agencies, or grants the Village has obtained to provide the service. • Salaried Staff Time in Hours (Yearly) — Salaried staff time shows the number of hours by position in a year that an employee spends on the service during the course of their normal work day. Over-time hours are not included in these figures. • Salaried Staff Time in Dollars (Yearly) — The dollar figure in this category represents the cost of the salaried staff time spent on the service. In order to arrive at this figure, the number of hours spent on the service was multiplied by the employee's hourly rate. An additional 45 percent was added on to the figure to account for benefits such as health insurance,pension, and taxes that the Village expends on behalf of the employee. - 1 - • Total Annual Costs (Net)— This value shows the total annual costs for the service. This number is derived by adding the direct costs and salaried staff time in dollars and then subtracting revenue associated with the service. • Participants or Units Impacted— This number represents the number of people that are impacted by the service (where that number is more straight forward) or the number of times the service was provided in the year. By way of example, for the BG Park District Background Checks, the value in this column is 200. That number represents the number of background checks completed for the Park District. Another example would be Safety Town where the value is 300. That number represents the number of students that participate in Safety Town. For the K-9 program, the number 31 represents the number of searches completed by the K-9 in Buffalo Grove. For any service that impacts all residents the population was used. As an example, for landscaping or tree planting, there is really no adequate way to determine the real impact of the service so the population of Buffalo Grove was used for these types of services. • Direct Cost Per Unit or Participant Impacted — This number is derived by taking the direct cost of the service, subtracted by any revenues received from the service, and that number is divided by the number of participants or units impacted. This number is intended to show the reader the cost of the service, per unit impacted, as it relates to direct costs only. This number does not take into account any salaried staff time spent on the program. • Total Cost Per Unit or Participant Impacted — This number is derived by dividing the total annual costs (net) by the number of participants or units impacted. This number includes salaried staff time and is intended to give the reader a more true account of how much the service costs the Village per unit impacted. Other Factors to Keep In Mind All programs listed in the attached documents are paid for out of the general fund. On the whole, the numbers represented in this spreadsheet relate to how the services performed in calendar year 2012 with a few exceptions. The accreditation program costs are divided by the number of years between each accreditation year. Additionally, the golf course subsidies represent a five year average in order to smooth out costs over time. Finally, the staff time associated with the services (with the exception of Public Works) are staff s best guess as to how much salaried time is spent on the services. Public Works keeps detailed records of all the services they provide and the time spent on those services. Remaining departments do not have this type of system in place. Items such as over-time and direct costs are very easy to determine; however, estimating the exact time an employee spends on a service over the course of a year is not. 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L L t N L V aJ Cl) O O o O O co a)L a) L ° Co U U U O N- a U c M Lco 0 Sri o 0 0 o O O I' aJ � O cM O O ER ER co C-i Qa � (f3 EiJ l68 l68 O O O O O O O 0 M O O � O O 06 ,u O O O U*) O O _ � EiJ EiJ EiJ (f3 (f3 N LL 2 Q p N rn � m E coi E x�a 3 a E coi m = E a i _ `m m � Q Q O a w rn rn rn rn rn rn rn O 5 = __ _ __ _ __ _ __ _ __ a= = = = = = =i ai ai ai ai ai ai CL ees o _ e o o u o u O an � e� O co Fa o 0 0 u v v v m o E v v v � � O co M ide N aA COO O � 7 E9 E9 COO O ems, co Il- N 7 I� Cn CO V o 0 V O O o O O ° r o 0 U L ac � rn Co c ra c c L � O O O � o 0 0 0 0. r _ N � O co u CT O E9 a7 U C lC � C � O > PL a ti U F ol � N O C I� lC � J M a7 a7 a7 C C C fl- � a7 a7 a7 � C C C O- Highest it ct Cost Per Unit Impacted Service Cost Per Unit 1 K-9 program $1,216.72 Crossing Guard Program $355.53 2 Critical Incident Stress $274.12 3 Management Program Block Party Program $94.12 4 Bike Rodeo $60.87 5 Citizen's Fire Academy $50.00 6 Specialty Sign Production (Non- $46.99 7 Regulatory) Drainage Problem Investigation $25.45 8 9 Leads Online $17.50 10 Bike Patrol $16.92 Highest Total Costr Unit impacted iiiiiiiiiiiiiiiiiiiiiillillillillillillilliillillillillillillillillillilillillillillillillillillilliillillillillillillilliillillilillillillillillillilillillillillillillillillilliillillillillillillilliillillilillillillillillillilillillillillillillillillilliillillillillillillilliillillilillillillillillillilillillillillillillillillilliillillillillillillilliillillilillillillillillillilillillillillillillillillilliillillillillillillilliillillilillillillillillillilillillillillillillillillilliillillillillillillilliillillilillillillillillillilillillillillillillillillilliillillillillillillilliillillilillillillillillillilillillillillillillillillilliillillillillillillilliillillilillillillillillillililI Service Cost Per Unit 1 K-9 Program $5,880.83 2 Police College Internship Program $2,198.49 3 Chicago Auto Show Traffic Safety Booth $2,075.47 4 Drainage Problem Investigations $1,015.57 5 Critical Incident Stress Management Program $625.78 6 Block Party Program $554.81 7 Business Liasion Officer Program $382.97 8 Citizen's Fire Academy $365.59 9 lCrossing Guard Program $363.03 10 ICare Trak Program $310.81 Highest Total Net Cost Services Service Net Cost 1 In Service Trainina Pro ram $460,595.59 2 Landscape Maintenance $456,138.75 3 Desk Officers $353,336.50 4 Golf Course - Arboretum $279,800.00 5 NEMERT Training $237,794.37 Technology Project 6 Management $192,769.53 7 BG Days $182,485.81 8 K-9 Program $182,305.83 E9 Golf Course - Buffalo Grove $151,123.00 10 MEG $135,503.77 Breakrvic Service Cost Per Unit 1 Special Details $63.42 School Resource Officer 2 Program $6.53 3 Liquor Compliance Checks ($0.22) Alarm User Permit 4 Program/False Alarms $24.37 Other Licensing (Chauffer, 5 Vending, Swimming Pool) $19.21 6 Animal Licensing $1.93 7 Administrative Tow (DUI) $1.01 Overweight Truck Permit 8 Program $0.02 2014 Budget Strategy 2-E Overview Staff will present the primary strategies to balance the 2014 budget, as well as next steps to maintain structural balance in future years. Attachments Trustee Liaison Staff Contact Dane C Bragg, ....M.o�n.d�a...........J.u.1.........Y 29, 2013 ............................................................................................................................D.��s�cu�s�s.�.o.n...._...Ite.m....�....�._��........................................................................................................................................................ Y, Roles of Trustees 2-F Attachments Trustee Liaison Staff Contact President Braiman ....M.o�n.d�a...........J.u.1.........Y 29, 2013 ............................................................................................................................D.��s�cu�s�s.�.o.n...._...Ite.m....�....�._��......................................................................................................................................................... Y,