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2004-11-08 - Finance Committee - Minutes Board or Commission: ❑ Finance Committee Document Type: ❑A e g nda 0 Minutes Meeting ate: 11/08/2004 Type of Meeting: ❑ Regular Meeting The Village of Buffalo Grove Finance Committee convened on Monday,November 8,2004 at the Village Hall, Lower Level Conference Room. Those in attendance were:Elliott Hartstein Jeff Braiman,DeAnn Glover,Jeff Berman, Chuck Johnson,Bruce Kahn and Steve Trilling. From staff:Bill Balling,Bill Brimm Ghida Neukirch, Scott Anderson and Art Malinowski. The following matters were reviewed: SERVICE REDESIGN INITIATIVE—STATUS REPORT: Bill reviewed his memorandum dated 4/4/04 regarding efforts put forth by the Village to further translate the Service Redesign Initiative(SRI)into action.Discussed was the approach the Village is taking to address its current labor costs and its focus upon reducing the labor force either through outright attrition or the replacement of fulltime positions with lower cost part-time personnel where appropriate. Successes in the police and fire departments,and OVM were mentioned as examples of down or right sizing.Department Directors have been challenged to innovative the work processes and empower employees through multi-tasking and personnel development.Bill discussed the importance of performance measurement within the context of the SRI and reviewed the data collected and its relevance to the Village's operations stressing that the Village compares very favorably to the two iconic communities in nearly every level of service delivery as graphically demonstrated. The continued culture of deconstruction will continue to be advanced and it will be imperative that all departments focus upon those activities/services that parallel the core mission of the Village. The SRI will again play a role in the development of next year's Capital Improvement Plan as those projects identified as having a direct impact upon the residents will be given greater weight and consideration.The final point of discussion reviewed some revenue diversification initiatives embarked upon during the 2004-2005 fiscal year and the impact those initiative will have going forward in the next(05-06)budget year. OVERVIEW—CALENDAR 2004 PROERTY TAX LEVY ORDINANCE: As a precursor to discussions about the 2004 tax levy,WRB and WEB provided an overview of the status of the undesignated and unreserved corporate fund balance as posted in the FY 2003-2004 audit. They explained that the growth of the fund balance occurred during the years (1994-2001)of high growth/development and the offline revenue generated by CDW. A graphic illustration depicted the ascent of the balance to its highest level in 2001 followed by a sharp decline starting in 2002. WEB provided an explanation of the fund balance on both an accrual and cash basis and stated that given the budget assumption made in the development of the 04/05 budget that an additional draw of$2.7 million will be made this year. The fund balance policy was revisited and the minimum threshold of 35%of the operating budget was reviewed. Given the rate of fund balance expended for tax abatement ($1.4 million this year)and transfers for capital projects,the Village would be perilously close to dropping below the policy minimum within the next few years.Discussion transpired as to the policy levels set by other communities(data to be gathered for future dissemination)and the ramifications of violating our minimum fund balance level. WEB explained that not only would the Village be putting itself in a vicarious financial position in light of an unstable economy but,it could potential result in an adverse opinion by external bond rating agencies as significant negative change in financial condition. WRB introduced another graphic illustration showing the Villages relative position in terms of property tax rates (2003)as measured against comparable communities.At a rate of.65 per$100 EAV,the Village had the 5th lowest rate of twelve communities. Three of the communities with better(lower)rates have centralized shopping malls or large retail presences.One community boosts the country's largest industrial park. The remaining community is well-situated with a vast amount of high-end development. The following comments were made after the initial presentation: -the Board is not concerned with tax rates,rather its the actual dollar amounts extended that the residents pay that they are concerned about. The levy has doubled over the last ten years. -the only way to control the budget is to focus on expenditures. There must be greater cuts.Look to eliminate programs or activities that will be transparent to the resident and not alter core services. -Look into scaling down the CIP to an absolute minimum and reassess capital funding for new equipment. Are all of the vehicles really necessary? -Review staffing levels and consider the elimination of some non-essential positions. Where possible,outsource. It is not the intention of the board to raise taxes as a sole means of avoiding downsizing. -Assess whether all the accrediting programs and certifications are worth the time,effort,and money the Village expends. The Committee decided that the best approach to sustainability of both current service levels and a healthy fund balance is to compromise on the tax levy. It was agreed that the net levy could be raised$.05 or.06 to slow the fund balance draw for debt service obligations as long as staff goes back their respective budgets and makes more cuts in operating expenditures and continues to make progress in staff reductions and health insurance modifications. Given the net levy increase,the estimated annual draw on the fund balance would be about$300,000 allowing the current excess balance to be expended over the next ten years. FY 2004-2005 PERFORMANCE—SIX MONTHS ENDED OCTOBER 31,2004 WEB reviewed the numbers and stated that the formal report will be presented to the Board on 11/15/04. FY 2005 GOLF BUDGET DEVELOPMENT No discussion. FY 2005-2006 BUDGET DEVELOPMENT No discussion. FY 2005-2006 CAPITAL IMPROVEMENT PLAN WHB stated that the compilation of the report is underway. Similar to the previous submittals,next year's projects will be reviewed in light if the SRI and only those projects that are obligated by contract,debt funding,or by designated revenue(NIFT)will be automatically advanced forward. The remaining projects will need to be thoroughly reviewed as to its measurable impact on service levels. There was a question pertaining to how the Village determines the street maintenance schedule(to be provided)and why Highland Grove Drive is not on the current rotation of repairs given its pavement condition. OLD BUSINESS WRB discussed the Duman Center and the difficulty of owning the property. It is a bad risk given the tax structure that would need to be put in place with a need for operating subsidies and long-term leases for paying tenants. Land and Lakes property acquisitions was discussed. It appears that the park district would prefer an outdoor location as opposed to the Duman Center. Staff should look into obtaining the phase I environmental study for Land and Lakes. AAM provided an overview of progress made with Peter Wright,the Village's benefit consultant.He summarized his 10/20/04 memorandum and explained the avenues currently being taken to restructure the current plan. AAM also briefed the Committee of the upcoming meeting with Mr. Wright and representatives of the IPBC. It was suggested that AAM may want to consider talking with Gurnee about their experiences after leaving IPBC. OTHER WRB discussed the intention of Progressive Management to institute winter hours at the Wild Goose Cafe. The restaurant will no longer be open during weekdays for either lunch or dinner. The atrium will be marketed for special events during the week. The restaurant will be open for dinner on the weekends. The board was agreeable to the modifications. Issues involving James Development were discussed. The meeting was adjourned at 9:35 pm.