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HomeMy WebLinkAbout08-27-02 Personnel & Finance Committee import Vizt gontt*z att jinant1 Committ im The August 27, 2002 meeting of the Personnel and Finance Committee was called to order by its Vice-Chairperson, Council Member David Varner at 3:30 p.m. in the Council Informal Meeting Room. Persons in attendance included Council Members Pfeifer, King, Kelly, Varner, Kirsits, Coleman and White;City Controller Rick 011ett, Community Development Director Jon Hunt,Public Works Director Gary Gilot, Building Commissioner Don Fozo, Park Superintendent Phil St. Clair, Fire Chief Luther Taylor, Assistant Fire Chief Rick Switalski, City Engineer Carl Littrell, Mary Ann Myers, Jack Reed and Mikki Dobski Schidler of the Mayor's Office; Gary Libbey of Code Enforcement, Jack Dillon-Director of the Division of Environmental Services, Sam Hensley- Director of the Bureau of Streets and the Bureau of Sewers, Assistant City Attorney Aladean DeRose, Morris Performing Arts Center Executive Director Dennis Andres, Bureau of Water Works Director John Stancati, Director of Budgeting & Financial Reporting Toni Skarbek, Terry Bland of the South Bend Tribune, other news media representatives, and Kathleen Cekanski- Farrand, Council Attorney. Council Member Varner welcomed everyone to the first of several committee meetings which would begin the long and arduous process of reviewing the proposed 2003 Civil City Budget for the City of South Bend. Dr. Varner noted that he would be chairing the Personnel and Finance Committee meetings until the Committee Chairperson, Council Member James Aranwoski, returns from his honeymoon. Budgeting&Financial Reporting Tom Skarbek provided copies of the following documents to the Committee: "The City of South Bend 2003 Budget -Significant Issues/Highlights" and "The City of South Bend 2003 Budget-Summary-Operating Budget(excluding Capital) General Fund (Fund # 101)"(copies attached). 2003 CITY OF SOUTH BEND OPERATING BUDGET (EXCLUDING CAPITAL) 2002 Revenue $54,639,070 2002 Expenditures $53,847,720 2003 Revenue $57,613,964 2003 Expenditures $54,220,893 City Controller Rick 011ett then provided an overview of the proposed 2003 budget. Mr. 011ett thanked the Council for the time that they would be spending in reviewing the proposed budget. He noted that the Mayor was sorry that he would be unable to attend the budget meetings and then provided a letter dated August 24,2002 from Mayor Luecke(copy attached). Mr. 011ett noted that the proposed budget is"balanced and fiscally responsible". He stated that the city is "fiscally sound" and that it has "growing revenues". Balancing the needs int he the new year would"not be the most challenging", but there are many challenges out of our control that are being affected by national, state and local economies. The Mayor plans to emphasize his four(4) themes: "Safe City,Clean City, Smart Growth and Technology"as the city sets its priorities. Mr. 011ett then highlighted eleven(11)items for the 2003 budget: 1. The budget includes all operating&debt service. 2. The maximum 5%property tax levy increase is assumed. Personnel and Finance Committee August 27,2002 Page 2 3. General Fund revenues are expected to increased by$3 million or 5.4%;and the EMS fees are expected to decreased by $247,574 or 10.2% due to the loss of the St. Joseph Medical Center contract&the redistribution of the county contract proceeds between the General Fund and Central Services. 4. Personnel costs will reflect the following: 5.3% average for police(ranging from 4.7% to 5.6%) 2.8% average for fire(ranging from 2.15% to 4.05%) 4% for Teamsters and non-bargaining 5. Police and fire pensions will experience funding shortfalls, despite the catch-up funding received from the State of Indiana in December 2001 and the additional distribution from the Public Deposit Insurance Fund which will cover the city through 2003. 6. Full-time employees have declined by"29.3 FTEs"with Street/Traffic&Lighting down 5; Water Works down 8; Wastewater/Sewage down 4; Solid Waste down 7; Parks down 1; and Century Center down 1. All of these reductions were done by attrition. Police have experienced 2% voluntary resignations and 4% for voluntary resignations and retirements. A handout was provided entitled"Turnover Rates January 1,2001 thru July 31, 2002" (copy attached). 7. Local Roads and Streets (LRS) and the Street Department have had their capital expenditures decreased from$2 million to$1.3 million;and will continue to have less. 8. The Mayor's guidelines were 0 % increase in supplies and 1.5% increase for other services,except for"unusual circumstances". 9. The Self-Insurance Employee Benefit Fund will increase by 13% with $ 8 million in costs anticipated for 2003. 10. The Liability Insurance Reserve Fund is projected to increase by 20%; with property insurance increasing 85% or by $227,000 and workers compensation claims increasing by 25% or by $151,000. 11. Four (4) funds will not be balanced: motor vehicle highway (MVH), police & fire pension funds, and the Sewage/Wastewater Fund; with wastewater rates needing to be increased before the end of this year. Mr. 011ett stated that there are"significant risks"ahead since property tax collections may be lower due to the appeals process. Additionally the formula for property tax increases is changing to an "income-based growth rate"rather than the flat 5%. COIT and EDIT will not grow as much as the City projected with COIT being reduced by $656,470 or 9.3%. Health care nationally is increasing between 11-20 % per year. 1998 and 2001 were bad years for the City and so far this year the City is spending at the same rate as 2001. The budget hearings will enable the department heads to give facts, figures, programs and actions to"touch and improve our neighborhoods and lives". Dr. Varner inquired whether the formula would be the same, with Mr. 011ett confirming that it • Personnel and Finance Committee August 27,2002 Page 3 would be. Dr. Varner thanked Mr. 011ett for his overview. Council Member Coleman suggested that the Committee permit a few minutes for the Council to talk with the department heads present and then turn to the first department budget for review. Tom Skarbek provided replacement summary sheets for the Fire Department(General Fund# 101- 0901) and General Fund-Operating Budget Significant Changes From 2002 to 2003, as well as a one-page"City of South bend 2003 Budget-Executive Summary(copies attached) 2003 South Bend Fire Department 2002 Expenditures $16,826,618 General Fund # 101-0901 2003 Expenditures $16,650,996 Total Expenditure Decrease-$175,622 2002 Revenues $14,407,160 Expenditure.Decrease as a%: -1.0% 2003 Revenues $14,437,119 Fire Chief Luther Taylor, Assistant Chief For Services Richard Switalski, Assistant Chief Robert Quinn III, Assistant Chief for EMS Randy Magdalinski and Assistant Chief for Inspections and Fire Prevention Howard Buchanon,II were present to present the 2003 Fire Department budget. Chief Taylor stated that his department has stayed within the Mayor's guidelines of 0% increase for supplies and 1.5% increase for other services. He noted that firefighter salaries will have a base pay increase of 2.8%and that non-bargaining employees are proposed at a 4%increase. $104,000 for a PERF contribution is proposed and a 13% increase insurance. One employee is being reclassified and will be picked up by St. Joseph County. Chief Taylor noted that the overall fire department budget will decrease by 1%due to the additional revenue projected at$176,000. Assistant Chief Switalski stated that the collective bargaining agreement and salary ordinance numbers are included in the 100 accounts. He stressed that the Fire Department is the only department in the City which shows a decrease in liability allowance. He stated that the yearly physicals and the work of the Safety Committee have resulted in reducing on-duty injuries, on- duty accidents and have reduced claims against the city. He highlighted the fact that the Fire Department is below the national average for injuries while performing official duties. $459,00 is the shortfall in the pension account, however he noted that the City received $922,000 for pension relief from the state which was split between 2001 and 2002 Assistant Chief Switalski stated that the contract with St. Joseph Hospital ended in May of this year and that they are currently in a 5-year agreement with the County for EMS services. The County will be billed for actual costs of fuel and repairs, $225,000 for capital is received from St. Joseph County. Chief Taylor stated that he is looking for direction from the Council for upcoming capital expenditures. He proposes to purchases two (2) new pumpers which have an 8-month lead time; and also plan to refurbish one (1) ambulance at a cost of $ 90,000 vs. $145,000. Chief Taylor stated that price increases are anticipated to take place in November. Council Member King noted that St. Joseph Regional Medical Center abolished the entire Cardiac EMS Transport program, which resulted in our contract being terminated. He inquired about services when the ambulance would be refurbished. It was noted that an ambulance which is currently in reserve would be put into service; with the refurbished ambulance being out of service between 4-6 weeks. M 'a Personnel and Finance Committee August 27,2002 Page 4 Council Member Pfeifer inquired about the fire prevention programs which the Fire Department has in our neighborhoods which specifically addresses our aging housing stock. Chief Taylor stated that there is no specific program in place except for the smoke detector program and various educational programs. Council Member Kirsits noted that in some cases the older homes are built better than the newer homes. In response to a question raised by Council Member Pfeifer, Chief Taylor noted that the primary causes of fires in South Bend are accidental, stoves being unattended, children, and smoking. Council Member White inquired whether the department would have adequate supplies in light of the 0% guideline given in this area. Assistant Chief Switalski stated that in light of the fact that fuel was budgeted at $ 1.75 per gallon in the 2002 budget, the excess in this account is what is being used for additional increases in the supply area. Council Member White asked how the Chief envisions the South Bend Fire Department. Chief Taylor stated that he sees the firefighters as providing quality services to the private sector. They are striving to be the # 1 fire department in the State of Indiana who provide the highest level of services possible. Council Member Pfeifer inquired about language programs. Assistant Chief Magdalinski noted that twelve (12) firefighters completed the basic level Spanish class and that five (5) firefighters completed the Level II Spanish Class. The problem appears that the firefighters do not use the language enough. He added that one firefighter is a former teacher who has a degree in Spanish. Assistant Chief Buchanon added that he started one of the courses and found it difficult, and further noted that learning about Hispanic customs was extremely helpful. Council Member Pfeifer suggested that some mandatory education in this area should take place for all firefighters and police officers. She noted that she would support increasing the training budget in order that the City pay attention to our population. Assistant Chief Switalski added that those firefighters who have taken Spanish are assigned to Fire Station#4,which serves the population with the highest number of Hispanic residents. The Council Attorney inquired about the computer systems in the various fire stations, noting that this was an area of concern during wage negotiations. Assistant Chief Switalski noted that there have been some improvements especially with regard to primary recall, however there are also glitches in the system. In response to the Council Attorney's question on new programs implemented since 9/11, Chief Taylor noted that one of the primary improvements is the development of a Resource Directory where the various fire services have grown together much better than before. Common communications and all clear commands have also been improved. There may also be more funds available which are related to Homeland Security. Assistant Chief Magdalinski added that the State of Indiana will be receiving $4 million related to dealing with weapons of mass destruction. The State is further scheduled to receive an additional $ 60 million which will be directed to fire departments, police departments and EMS for disaster training, education and monitoring. This funding will be through the US Department of Justice. Updates to the Council on this funding and program implementation were requested. Personnel and Finance Committee August 27,2002 Page 5 Council Member Pfeifer inquired how many women are on the Fire Department. It was noted that there are now three (3) women, all of whom are cross-trained for EMS and front -line fire suppression services. 2003 Emergency Medical Services (EMS) 2002 Expenditures $ 736,967 Fund #288 2003 Expenditures $ 540,315 Revenue Increase $342,500 35.6% 2002 Revenues $ 961,500 Revenue Over Expenditures $763,685 2003 Revenues $ 1,304,000 Assistant Chief Switalski stated that they are budget known costs to pay for lease payments, collection fees, and transfers to the General Fund. With the mandatory assignments which will take place in light of the ordinance recently passed by the Common Council, revenues will increase as a result of this by$ 1.3 million. In response to a question raised by Dr. Varner, it was noted that EMS has a 78%collection rate for services, while the national rate in this area is between 60-65 %. He noted that EMS keeps accounts open for three(3) years and attempts to work with residents on monthly payments. After three(3) years, the State Board of Accounts directs them to write off any remaining balances. The Council Attorney inquired about burn-out of paramedics, since that has been an ongoing problem both here and nationally . Assistant Chief Magdalinski stated that that is a difficult question which is plaguing almost all EMS departments. South Bend has implemented EMT-I which is a six (6) month school vs. the eighteen (18) month school for other training. They are looking at requiring being an Advanced EMT-I in a three (3) year period. These individuals are assigned to ALS Engine Companies. Assistant Chief Magdalinski stressed that they are emphasizing better patient care through the proposed certification programs. Additional EMS equipment is being added to Fire Pumpers for Advanced Life Support (ALS) care. These programs are gaining interest from the younger firefighters. An additional $ 50,000 in equipment is needed, if fully implemented. These recommended programs are an outgrowth of the Study Committee and have not been formalized. He added that there are currently six(6) individuals in the paramedic class at Elkhart General. It was also noted that the"Interfund Transfer to General Fund"has not been reviewed since the 4th Unit was put into service, and that at some time in the future there should be discussions with the Council on this topic. In response to a question from Dr. Varner, it was noted that the current contract with St. Joseph County began in 1997. Fire Pension Fund (Fund # 701) 2002 Revenue $ 3,926,607 2003 Revenue $ 3,890,377 2002 Expenditures $ 3,907,270 2003 Expenditures $ 4,250,351 Assistant Chief Switalski provided a handout entitled "South Bend Firefighters Pension Fund Proposed 2003 Budget"(copy attached). He noted that the amounts are based on the firefighter lst Personnel and Finance Committee August 27, 2002 Page 6 Class rank. The State of Indiana should send$460,000 for pension relief to the city The Fire Department projects that ten(10) firefighters would retire next year;however he noted that there are forty-six(46) firefighters eligible to retire today which would cost$1,097,000. In response to a question from Dr. Varner, Tom Skarbek noted that in 2001, the City received "double pension relief payments" from the state in an effort to catch up in this area. They have invested some of this money which has resulted in some interest being earned. The funds are in fairly good shape for next year. Dr. Varner noted that each wage negotiations, the Council is advised that for every dollar added to the base of a 1st Class Firefighter it will cost x amount of dollars. He asked that the Controller's Office and/or the Fire Department prepare for the Council a clear explanation on how this is calculated so that everyone has a clear understanding of the cost. He added that all pension relief also be part of the explanation. He requested that this information be provided in writing within the next two(2) weeks. Police Pension Fund (Fund # 702) 2002 Revenue $ 4,361,277 2003 Revenue $ 3,889,051 2002 Expenditures $ 4,314,035 2003 Expenditures $ 4,522,453 Paul Niezgodski of the South Bend Police Department provided a handout entitled "South bend Police Pension Budget 2003" (copy attached). He stated that they are projected ten (10) police officers to retire in 2003; however sixty-two (62) officers are eligible to retire. The State of Indiana is starting a new "Drop Program" which he and Assistant Chief Switalski then briefly explained. They provided a handout entitled "Draft Explanation Materials for the Deferred Retirement Option Plan (DROP)-Indiana Municipal Police and Fire Pensions 2002 Senate Enrolled Act 60" (copy attached). The initial side effects of this program is that the City would have to budget for it. It becomes effective in 2003. At the request of Dr. Varner, the DROP program was summarized. If a firefighter or police officer has twenty (20) years of service and has reached the age of 52, he or she may enter the DROP program. One can be in the DROP program a minimum of twelve (12) months, or a maximum of thirty-six (36) months. When one enters the pension benefits and pension rate is frozen at that time. One would then take the number of months in the DROP program and then receive a lump sum payment, roll over, or installments. The trial program will be in place between 2003-2007, after which the state law will be reviewed. Sixty-six (66) are eligible to enter the DROP program. Florida has had a similar program in place. The amount needed to budget for DROP can be permitted above the fixed or frozen tax levy. In 2004, there will be a new line item in the budget for DROP. In the Fire Department, all firefighters eligible received the handouts. Dr. Varner suggested that the State Legislature should consider putting a cap on the eligibility in any one year for those wishing to participate. It was noted that in 1968, the state law changed the eligibility for retirement from 25 years to 20 years. In 2006, thirty-six (36) firefighters would be eligible for the program. Dr. Varner thanked all representives from the South Bend Fire Department and Police Department _y Personnel and Finance Committee August 27, 2002 Page 7 for their presentations and information. Morris Performing Arts Center 2002 Expenditures $687,871 (General Fund # 101-0404) 2003 Expenditures $800,443 2002 Revenues $320,727 2003 Revenues $373,372 Executive Director Dennis Andres, Linda Doshi and Marika Hegedus joined the Committee meeting for the presentation. Mr. Andres noted that in 2001 the event goal was 110. In 2002, the event goal was 120, and to date they have had 134 events. They should be close to$400,00 in revenues by the end of this year. He then provided handouts to the Committee. Increases in the 2003 are for liability coverage,cleaning and telephone. In response to a question from Council Member White, Mr. Andres noted that much of the maintenance cost is passed on, however with the increase number of events there are additional expenses incurred. In response to a question from Council Member King, Mr. Andres noted that when tickets are purchased by telephone there is a $2.00 surcharge added to the each ticket, and that 50% of the tickets sold are by telephone. There is a charge 3.6% on credit card sales which cost 2.6% with the extra 1% going to the city. For co-promoted events there are not reduced rates. For internet orders there is a $3.00 charge, all of which goes to the Morris. The Broadway Theatre League does not receive any of this charge for internet sales. These are all examples of new money for the Morris. Mr. Andres added that despite being innovative and creative, the Morris will never break even. Dr. Varner suggested that a $1.00 ticket tax per seat be again considered in an effort toward reaching a break-even point. Mr. Andres stated that he attended the International Association of Managers Conference which had over 3,000 people in attendance. Promoters are resisting putting too much on the ticket price. Erie, PA has a facility which seats 2,700 compared to the Morris which seats 2,500. Mr. Andres suggested that we be very careful before added additional costs noting that the threshold in South Bend. He also noted that state law prohibits that city funds cannot be used for promotion in this area. Dr. Varner proposed that creative ways be considered in the future. Mr. Andres noted that once the Palais Royale is up and running for at least a year, that the climate would be better to look into other methods. Council Member King requested that Mr. Andres track numbers with regard to co-promotions, etc.so that there would be a basis of discussion next year in this area to which Mr. Andres agreed. Tom Skarbek stated that a new fund would have to be created if the City would ever co-promote such events, similar to an enterprise fund. Palais Royale Ballroom 2002 Expenditures $ 257,649 General Fund # 101-0405 2003 Expenditures $ 279,284 2002 Revenues $ 80, 392 2003 Revenues $271,743 Mr. Andres noted that there is no history in which to project true financial figures, however he is Personnel and Finance Committee August 27,2002 Page 8 very excited about this new endeavor. They will be working with Masterpiece Creations for food more high-end food services. They have prepared a business plan aimed at making a profit. New Years Eve will be at$300 per couple and will be a special evening. Mr. Andres suggested that the Council tour the facility in the near future. He further noted that there are no comparisons to the Palais Royale in the region. Rental would be $1,400 and per plate costs would range between $25-$40.00. In response to other rentals, Mr. Andres stated that there are discussions taking place, but nothing has gotten off the ground. Dr. Varner thanked Mr. Andres and the other representatives for their presentation. There being no further business to come before the Committee, Dr. Varner adjourned the meeting at 5:45 p.m. Respectfully submitted, Council Member David Varner, Vice-Chairperson Personnel and Finance Committee KCF:kmf Attachments z--z -a L City of South Bend 2003 Budget-Executive Summary • Fiscally responsible balanced budget-Proactive cost containment • Able to fully fund essential services with less severe measures than many other governmental entities • 2003 Revenues expected to increase by 5.4%or$3 million • EMS fees expected to decline by$250,000 due to loss of St.Joe Med Center contract and reallocation of county contract • General fund expenditures increased by 0.7% 0%increase for supplies 1.5%increase for other services • Significant insurance increases-(2003 Total Cost: $8 million) Self insurance projected to increase by 13%(2001 worst year ever) Liability reserve fund projected to increase by 20% Property insurance - increase- 85% Workers comp 25%increase • Fair compensation for employees Note: City pensions, unlike 401 k's, are guaranteed and have costs assumed by the city • Personnel increases: 5.3%-Police 2.8%-Firefighters 4.0%-Teamsters • Personnel cost reductions due to attrition: 29 net full-time positions eliminated Streets/Traffic &Lighting 5 Water Works 8 Wastewater/Sewers 4 Solid Waste 7 Parks 6 Century Center 1 Police 1 Econ. Dev. 1 (4 positions added: Moths, Palais,Legal, Communications Center)-!r4. • Along with cities throughout Indiana and due to past Fire &Police pension laws, South Bend will continue to be faced with funding short falls for Fire&Police pensions. Impact expected in 2004/2005 and beyond. • Waste water fund has operating deficit and needs rate increase • EDIT& COIT revenues expected to be lower than past years due to impact from recession • Balancing 2004/2005 will be much more difficult due to overall economic issues,reduction in available federal&state funds, escalating medical,pension, &liability costs, court- ordered changes in property tax reassessment and tax restructuring.