CITY OF OLMSTED FALLS
FINANCE COMMITTEE
MINUTES
MARCH20, 2018
6:45 PM
COUNCIL CHAMBERS
Chairman Lori Jones called the meeting to order at 6:38 p.m. Roll call was conducted. Councilmen Paul Stibich, Ed Gorski (arrived at 7:28 p.m.), Denise Nicolay, Terry Duncanand Kyle Miller.
Also Present: Andrew Bemer, Law Director, James Graven, Mayor, and Vic Nogalo, Finance Director.
Budget Discussion
Service Department–Mr. Nogalo stated that he had to cut up the wages into six different parts. When the employees fill out their timesheets each week they indicate what they worked on that day. Mr. Borczuch stated that general fund items include leaf pickup, brush pickup, and anytime we work on the public buildings. The biggest expenses are the leaf and brush pickups.
Mr. Nogalo stated that total full time wages are $499,000; the city pays 1.45% in medicare; OPERS is $69,000; medical insurance $151,000; dental insurance $7,100; vision 1,000; and the life insurance $5,045.00; total wages and benefits for the full time employees is $736,000. The department has three part time employees for a total wages $57,000. Total for both full and part time employees is $793,000. He allocated 40% of the total wages to the general fund the rest have been divided up into all the other funds the departments utilize. Mr. Borczuch indicated that he has not added any additional amounts for wages due to the fact that the union contracts will be negotiated. Ms. Jones indicated that we should not budget for increases until negotiations are completed.
Mr. Borczuch stated that there is a slight different from 2017 to 2018 with full time wages. Ms. Jones asked if there was a reason. Mr. Nogalo stated that he put all the wages under full time which will filter out to part time and full time. As the year moves on the amounts will be posted to either full or part time. Mr. Borczuch stated that he kept the full time wages at a lower amount due to his previous experiences and understanding that he would not be doing as many general funds items as he has done in the past.
Mr. Nogalo stated that the service department has larger expenses that are non-payroll. Mr. Borczuch stated that the miscellaneous supplies covers anything that will do with the general fund. Ms. Jones asked if that was where salt is allocated. Mr. Borczuch stated that there is small percentage but moving forward, after speaking with Mr. Nogalo, salt will not be allocated out of the general fund anymore. Mr. Nogalo stated that the general fund has nothing to do with streets and the department has a street fund which is why he did not allocate any salt to that fund. Mr. Borczuch stated that the general fund percentage was based off of the municipal lots and city hall lot. Mayor Graven stated that Mr. Borczuch had indicated to him that even if there were 20 trucks on the road there would still be some individuals complaining about snow removal.
Mr. Borczuch stated that his total overtime costs last year was $9,700.00 for the entire department. He budgeted $12,000 for this because this was a harsh winter. Mr. Miller asked if the $12,000 would be sufficient. Mr. Borczuch replied that he believes so unless this coming winter begins sooner than anticipated.
Mr. Nogalo stated that he did not allocate any payroll wages to funds 102. Mr. Borczuch indicated that the state highway funds are used for State Route 252. Ms. Jones asked if 102 would be utilized to purchase equipment. Mr. Borczuch stated that in the past he has purchased large trucks which cost $150,000. The capital equipment fund cannot be utilized so the funds utilized the most would be 102 and 103 and half the cost of the truck would be taken for down payments and the rest would be lease payments over the next four or five years which would be paid out of the capital equipment fund. He paid off a lease in January and has a seven year lease for his loader and there are two more payments. The other portion of Fund 103 is used for street construction, maintenance and repairs. Mr. Miller stated that he believes Fund 103 should constantly be getting more money; he believes that no matter what the number is he would argue for more as he believes the number one priority for local government is to keep pushing for infrastructure. Mr. Borczuch stated that realistically just to maintain the department needs $1.2 million a year, we are less than a quarter of that currently. The report he distributed to Council previously shows that we have $58 million worth of roadway and to redo that we would need 100 year lifecycle on a road with what the city receives. There is nothing that lasts that long because there are additives being removed from the concrete and asphalt so nothing lasts as long as it did before. The prices for asphalt have tripled since 2005 and double for concrete. Mr. Miller stated that he does appreciate what Mr. Borczuch does with the limited budget he has and if there is any more throughout the budget that we can squeeze it would be his opinion to put into 103 to help build up.
Mr. Borczuch stated that Fund 104 is a levy and will expire in 2020. Mr. Nogalo stated that the city collects $250,000 each year. Mr. Borczuch indicated that he tries to work on as many roads as he can with the funds he collects. He indicated that last year he budgeted for a frontline plow truck but was pushed off. If the budget is passed he will be looking to replace a 21 year old plow truck. Mr. Miller asked for a typical service life for a plow truck. Mr. Borczuch replied 12 to 15 years. There are some cities that replace them every seven years.
Mr.Nogalo stated that 10% of the labor costs have been allocated to Fund 108 which is the park and recreation fund. Mr. Borczuch stated that there is 24 acres of park area that is mowed every week. He purchased a new mower last year. The parking lots will need to be resealed and restriped.
Mr. Nogalo stated that the storm sewer maintenance and repair fund 114 collected approximately $70,000 last year. Mr. Borczuch stated that this fund is utilized when working on ditch closures, catch basins, and storm sewer pipes. This fund also accrues money through the Regional Sewer District, he believes the city has collected just under $200,000. The district holds this money for special projects that need to be completed in the city. Mr. Miller asked if the city would have to pay for the project and then request reimbursement. Mr. Borczuch explained that the project would be submitted to NEORSD and upon approval they would forward the funds to the city.
Mr. Nogalo stated that the next fund is the shade tree assessment fund which receives approximately $33,000 each year. He has allocated approximately 3% of the service department’s payroll towards that fund. Mr. Borczuch indicated that this includes trimming of the tree lawn trees and roadside brush trees. He stated that last year they trimmed over 600 trees and removed over 300 trees.
Ms. Jones asked what street lighting is used for. Mr. Nogalo indicated that is also an assessment which covers the utility bills for all the street lights. He stated that this collects $105,000 in through assessments and then distributes the same amount for utility bills.
Mr. Nogalo stated that next fund is the sanitary fund 128 which collects approximately $130,000 to $140,000 each year. Mr. Borczuch indicated this fund it utilized for maintaining of the main lines. He stated that one mile of sanitary sewers is a million dollars to replace and we have 28 miles worth of sanitary sewers in the city. Ms. Jones asked when the Phase V sewers are installed will the county or state pay for those roads. Mr. Borczuch indicated that is part of the whole project. The county has given money towards the project, Cleveland Water is also putting money into the project for the water line program the city adopted a few years ago.
Mr. Borczuch indicated that he will also be purchasing an excavator to use during tree removals in order to prevent as much damage to the area. Mr. Miller asked if he researched the difference between renting and owning. Mr. Borczuch stated that if he uses the equipment as much as he will be using it the purchase would be more cost efficient.
Ms. Jones asked what the $101,000 advance was for in 2017. Mr. Nogalo stated that if you look at 2016 there is a negative but in 2015 it seems that this fund had a transfer of $378,000 to another fund. He does not like this type of accounting with negative numbers and advances. He stated that in 2015 this fund transferred $378,000 to another fund to keep it whole and then in 2016 the money was transferred back. He stated that he is unaware of what the transfer was for and does not know where it was transferred to. He will research and provide those answers to Council.
Mr. Nogalo stated that when this fund advances money to another fund it should be treated as an expense and when it receives the money back it should be recorded as an advance on the revenue side. Mr. Stibich stated that it distorts the operations of the fund.
Mr. Nogalo stated that the city has a lot of funds, there are special assessments on certain streets for improvements.
Mr. Borczuch indicated that fund 301 is the city’s capital improvement fund. Mr. Nogalo stated that is the general fund of capital and everyone tries to obtain some of those limited funds. He stated that 8% of the income tax is deposited into this fund and we are estimating $300,000 for 2018. Another way to finance projects is to use the income tax and issue debt. Mr. Borczuch stated that each year he budgets for a roof top unit and there are 21 units on the roof at a cost of $10,000 each. They have reached their life cycle. The city parking lot also needs to be resealed and restriped. If he can, the city’s portion of the Grand Pacific lot needs to be resealed. In speaking with the Mayor and Chief Rogers we will be implementing a different type of security for this city administration building. We will begin using a fob system, which will be computerized and would allow individuals access to certain areas. If something does happen with the 3rd floor the city will need to control access rather than constantly changes keys. Ms. Jones stated that $61,000 is being transferred out of fund 301. Mr. Nogalo stated that there are a couple of assessments funds that are not collecting enough in assessments to pay the debt. So, the capital improvement fund has to be utilize to offset the payments. This could be due to a miscalculation of future assessments on the properties, he would need to determine when 208 and 209 were created and why there is a shortfall. Ms. Duncan asked if this could be due to the property being owned by the city. Mr. Nogalo replied that he is unsure until he begins researching. Mr. Gorski asked if the funds existed prior to 2014. Mr. Nogalo replied they did and would have to determine when the first payments were collected. He stated that on fund 209 the city will be paying $163,000 in principal in 2018 and $9,031.00 in interest which totals $172,000. The assessments collected over the last couple years is $133,000. In fund 208 there is a $16,000 shortfall. Ms. Duncan stated that the most recent water and sewer was down Columbia Road right by the fire station and service department with significant frontage. Mr. Borczuch stated that the water has been in that area for quite some time.
Mr. Nogalo stated that the revenue source for fund 313 is 2% of income tax generating approximately $60,000 and Mr. Borczuch uses these fund for equipment purchases on a lease to own basis. Mr. Borczuch stated that he uses this fund for the lease to own payment on the front end loader. If he leases to purchase a new truck the city will not make a payment until next as it takes 9 to 10 months to build the truck. He stretches the life cycle of each piece of equipment.
Mr. Nogalo stated that fund 315 has had a negative balance of $2,096.21 and has had no activity. There should be no negative balances in any funds.
Mr. Nogalo stated that fund 317 has a balance of $421,000. Mr. Borczuch indicated that these funds are for the underpass on Columbia Road, the hillside maintenance, any work that is needed. Last year funds were utilized for the “City of Olmsted Falls” sign on the underpass. At this point maintenance for the hillside is approximately $9,000 to $11,000. He stated that once the bridge reaches its 10 year lifecycle we may need the bridge sandblasted and repainted. He stated that unfortunately the city owns the bridge. Mr. Miller stated that it would also be the city’s responsibility to replace. Mr. Borczuch replied yes. He stated that the city has multiple culverts and bridges that it owns because they are under the 10 foot span of the county restrictions, anything over 10 foot span is the county’s maintenance but anything under 10 foot is the cities.
Mr. Nogalo stated that there is an assessment and debt fund; oneis water line construction and the other is collector sewers. There were someloan adjustments and they started at $2,059,000.00 for the sewer portion and $656,000 for the water line portions and was a project that began before 1999. Mr Borczuch stated that this could be a water line replacement with Phase II which was in 1997 or 1998. Mr. Nogalo stated that this will end in 2019 our final debt payment will be January of 2019.
Mr. Borczuch stated that in the 301 we allocated $45,000 for a new roof for the old service building. Mayor Graven indicated that a discussion is needed regarding attempting to sell that property. Ms. Duncan stated that there was a previous attempt to sell the property.
Mr. Nogalo indicated that he researched back to 2010 regarding funds balances. He stated that you can see from the information distributed that the fund balance has been declining from $2 million down to what we are projecting for this year at $120,000. Hopefully we will not end the year at $120,000. He stated that the general fund cannot go into the negative. Mayor Graven stated that in the next three years he would like the revenue and expenses to look similar to 2013. Mr. Nogalo stated that this will take time. The Mayor has already made changes. He stated that in July the city passes a tax budget and you estimate all of the funds. Last July it was stated that the city would begin 2018 with $1,955,000 and he does not believe that there was a $1,955,000 since 2014. He is puzzled why the tax budget would show that the general fund balance beginning 2018 at $1,955,000. Again, in July we will pass another tax budget that will be given to Council and we will project 2019 and believes that the beginning balance will be $120,000. He stated that the year ended with $680,000 versus the $1.9 million. Again, this is an initial sketch of the following year’s budget and the main purpose is to let the county know that we want to use all of our property tax mills. He stated that we have to take seriously on projecting what next year’s budget will be in revenues and expenditures. He stated that the revenues were estimated correctly. If you review 2013 and 2014 years those numbers were estimated low, so these figures go from one extreme to another. He stated that the tax budget we present later this year for 2019 will approximate how we end 2018.
Police Department – Mr. Nogalo stated that not all the wages are in the report as there is a special fund and during the year he moves a portion of the wages to this fund. He stated that the law enforcement payroll is $1 million and $575,000 was full time. We broke down part time and overtime in the budget. The remaining amount of the wages goes into the police levy fund (107) which holds approximately $240,000 for wages. This levy is passed by the residents every five years.
Chief Rogers indicated that he has made some cuts in the department. The $116,950 is a budget of 5,000 hours, obviously this number is not the total amount of money that is spent on part time employees as we do pay into their pension funds. From his perspective there are a couple of important factors, the first is he has cut part time hours to a point where its approximately $10,000 per month just in wages which comes to approximately $120,000 for 2018. Mr. Nogalo stated that for benefits there is about 15% added to that number. Chief Rogers stated that he made sure to have a number of shifts per month he could live with knowing that there will be lean months and months were they will be needed more often. For example, June, July and August. He knows that in July part timers will have more than 36 shifts but he budgeted for 52 per month and is saving 18 shifts on lean months. Mayor Graven stated that we want to keep the city safe and after the cuts that were implemented we have the same amount of cars out as the township which is 2 ½ square miles bigger and have 1 ½ times the population. Chief Rogers stated that he wants to assure Council that we have a sufficient police force out on the roads on a daily basis. The full time wages are higher than 2017 due to the fact that we hired two more full time officers at the end of 2017, which helps cut the part time wages. The vast majority of his budget is payroll as with other departments.