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2005-02-14 - Finance Committee - Minutes Board or Commission: ❑ Finance Committee Document Type: ❑A e g nda 0 Minutes Meeting ate: 02/14/2005 Type of Meeting: ❑ Regular Meeting The Village of Buffalo Grove Finance Committee convened on Monday,February 14,2005,at the Village Hall lower level conference room. Those in attendance were:Elliott Hartstein,Jeff Braiman,Jeff Berman,Bruce Kahn, Steve Trilling,Brian Rubin,and Joe Tenerelli.From staff:Bill Balling,Bill Brimm Art Malinowski,and Scott Anderson. The following matters were discussed. HEALTH INSURANCE PROJECT Art introduced the Village's benefits consultant,Peter Wright,to summarize the progress made to date on the redesign of the current health benefit package.Peter discussed the use of focus groups to bring affected employees up to speed on the current condition and climate of the insurance market.Overall,participants were cognizant of the fact the change is needed and that the Village can not alone sustain the expense growth for the current plan. Modifications to the plan to reduce the Village's exposure included;increasing prescription co-pays,co-pays for physician coverage and emergency care,and increases to out of pocket limits and deductibles. Changes to enhance the plan included improvements in physician coverage,wellness,and lifetime maximums. A matrix of all the proposed changes and the corresponding costs/savings to the Village was provided to all in attendance. The net reduction to the village as a result of the revised plan would be around 6%. Peter explained that the challenge in reviewing the current plan within the context of the Village's membership in the IPBC is trying make an apples-to-apples assessment of our rates within the cooperative,versus other members, and the evaluation of those rates against the outside market. Within the pool,the demographics of the membership and the experience will drive the rate. As each participant in the pool has different variables,an effective comparison is difficult at best. Comparisons made to the outside market are made difficult by trying to match identical plan structures,equity balances,and factoring for the likely"low ball"introductory rates of another carrier. Staff was directed to make further modifications to the plan so that realized savings next year would be 10%. In light of the current economic conditions,it was questioned why the plan would be enhanced at all.Bill Brimm explained that the Village is attempting to ramp up the costs peacefully so as to maintain the spirit of the fire union agreement requirement of"substantially similar"benefits and not jeopardize positions within the pending interest arbitration case.Bill related that the Village is taking a multiyear approach in the evaluation of the health benefit plan and may move towards the concept of health savings accounts. Given those comments,it was recommended that the RFP be created with enough flexibility to price not only the proposed changes but,to allow for alternative bidding utilizing higher co-pays and deductibles.There was some concern about the timeline and the Village Board not having to make a decision `under the gun'.Bill Brimm explained that the Village could not solicit quotes any earlier than intended due to the volatility of the market. Carriers would either refuse to provide a bid or would inflate the bid to be cautious as rates have not yet materialized. Action does not need to be taken with IPBC until May 2,2005,and perhaps even later if more time is required to review bids. Staff was encouraged to seek an authorization to solicit quotes from the insurance market on the proposed changes in the health plan during the Board Meeting of 02/28/05. REVIEW OF FY 2005-2006 BUDGET ASSUMPTIONS Bill Balling provided an overview of certain budget assumptions and an initial overview.Bill Brimm explained that the net budget growth within the Corporate Fund,exclusive of Personal Services and Group Health Insurance is about$2.7 million or 9.72%. Of that amount the dissolution of the TIF district with its related final payments comprises over$3 million. There is a net reduction absent those expenditures.From a village-wide perspective,the only real growth,budget to budget,relates to pension obligations and the annual street maintenance program. There was some discussion about the condition of several streets including Highland Grove and Willow Parkway and the plans related to the rehabilitation of those two streets. Ball Balling commented that this year there was another layer of budget oversight provided by the Assistant Village Managers prior to submission of the final product and that staff was to be commended for controlling expenditures. As they relate to the development of the budget and an attempt to further control the cost of the Village's largest expenditure the following were discussed: PROPOSED EARLY RETIREMENT INCENTIVE PROGRAM Bill Balling introduced this program as a means of reducing the workforce,or at minimum,realize a short term budget saving over the next year or two. The Village is looking for authorization to offer up to 15 employees a $15,000 retirement incentive to help offset a portion of post-retirement health costs. A limited window of opportunity would be made available to any pension-eligible employee(age 55 IMRF—age 50 Police&Fire Pension)who would like to participate. The caveat is that the Department Director must ensure that the vacancies will not cause a service disruption and that the cost of the incentive is captured two-fold($30,000)through either the outright elimination of the position,reclassifying the position to part-time or,if either is not possible,the position must remain vacant until$30,000 in wages and benefits has been recovered . As a part of the incentive,all eligible employees will receive a prorated bonus upon their retirement. Senior Staff identified in the meeting will not be eligible for the incentive. The Board approved of this incentive. BENEFIT IMPROVEMENT PROGRAM FOR PART-TIME STAFF Ghida's memorandum to Bill Balling regarding an increase in the vacation benefit for part-time employees was discussed. The modified plan would increase those employees with a tenure of 6— 10 years by adding 2 additional days off of work, 11-14 years would get 3 additional days,and 15+years would receive an additional 4 days. The Board accepted this benefit improvement. FY 2005-2006 STAFFING RECOMMENDATION Bill Balling related Director Boysen's recommendation to replace the vacancy created by Ray Rigsby's retirement with the promotion of both Rick Kuhl and Dave Haisma to Superintendents.Rick will oversee operations and Dave will oversee the water utility. The base salary for both will be increased by 5 full steps.Neither one will receive an automobile allowance. The Board authorized these promotions. Bill also discussed the continued effort of staff to look for opportunities to downsize the organization.For FY 05-06,two positions within Public Works have been identified as potential for elimination if the employees were to elect to take the retirement incentive. Three positions(Finance/OVM/Police)will be reclassified to part-time positions during the next budget year. The Board did authorize both the replacement of the Communications Manager with a part-time Management Assistant,and severance pay for the Communication Manager. PROPERTY/HOME RULE SALES TAX POLICIES Bill Balling discussed the need for future consideration of an increase in the property tax levy of about$.06. The Village's current revenue profile was reviewed and absent any major shift in retail presence within the municipality, neither the service profile offered to residents will be able to be sustained nor an adequate fund balance.Bill Brimm indicated that even with a six cent increase,the Village will rank on the lower half of the comparable communities in term of tax rate. Staff was asked to add Deerfield and Arlington Heights into the tax rate graph. Raised in tandem with the property tax levy was a discussion of the recent increase in the home rule sales tax .5%. Upon the passage of the increase,the Board requested a review of the increase after 24 months. Although scheduled to be heard in December 2005, staff wanted to reiterate that one-half of that increase is used to supplement MFT funding for the annual road maintenance program.Even with that new infusion of cash,the current road program is forecast to operate at a deficit.Bill indicated that the Village is very reliant upon that increase in revenue and there is no foreseeable replacement. Given the tenuous positions of the Telecommunications Tax and the Cable Franchise Fee,it may not be prudent to reduce any current sources of revenue. DEPLOYMENT OF CROSSING GUARDS Bill Balling introduced Ghida's memorandum suggesting that the Village eliminate 4 of the current 10 crossing guard locations. There is limited activity at those locations(< 10 children per day)and the costs would be borne by the school district if they chose to redeploy a guard. Total savings would$37,200. The Board elected to maintain current levels(10) The meeting adjourned at 9:35 pm.