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HomeMy WebLinkAbout01/25/1996 FC MinutesM 111 FINANCE COMMISSION Minutes of the Meeting January 25, 1996 Call to Order rJUN, 3 19°`" The meeting was called to order at 7:00 p.m. Those present included Chairman Richard Bachhuber, Commission Members John Engel, Newt Hallman, Jim Morrison, Tom Pekras and Ann Smilanic. Also present were Glen Andler, Public Works Director, Sean Dorsey, Deputy Public Works Director, Jim Guenther, Superintendent of Vehicles, David Jepson, Finance Director and Carol Widmer, Assistant Finance Director. Finance Commission members Joe Etchingham, Vince Grochocinski and Frank Wolfinger were absent. Vehicle Replacement Criteria Public Works Director Glen Andler introduced Sean Dorsey, Deputy Public Works Director and Jim Guenther, Vehicle Superintendent, to the members of the Finance Commission. Mr. Andler thanked the members of the Finance Commission for the opportunity to review the Public Works Department's policy on vehicle replacement. Mr. Andler explained that each vehicle in the Public Works Department is assigned an estimated service life when it is purchased and a lease payment based on that life expectancy is established. The yearly lease payments are paid to the Vehicle Replacement Fund in order to have adequate funds available to purchase a replacement vehicle when the useful life of the vehicle is determined through a life -cycle costing system which calculates the cost of ownership and maintenance throughout the useful life of the vehicle. Life cycle costing attempts to assign value to factors such as equipment availability, service, resale value and downtime. In addition, the department utilizes computer software to record all labor, materials, and other operating costs associated with that vehicle during its working life. When these factors are combined and analyzed, the optimum economic replacement time for vehicle replacement can be identified. The final decision as to whether to replace the vehicle is based on whether the funds have been accumulated in the vehicle replacement fund, whether the vehicle has reached its optimum economic replacement point and whether the operating environment supports replacing the replacing the vehicle. In response to questions regarding the lease payment assigned each vehicle, Mr. Jepson explained that the figure is computed on straight line depreciation plus a 5 % inflation factor. There were also several questions regarding the types of specialized equipment used by the department and how the vehicle maintenance department modifies the vehicles to meet the specific needs of the department. Budget Format Finance Director David Jepson discussed the 1996 Budget of $48,575,600. Mr. Jepson focused on the summary information rather than on the detail within each departmental budget. The graphic on page 1 of the Budget Summaries section has been modified. Village Administration, Public Safety and Public Works have been combined into the Village Operating Budget which for 1996 totals $32,018,480. This budget provides the resources for the majority of the day to day operations of the Village. The General Fund which is part of the Operating Budget has planned expenditures for 1996 of $21,741,9$5. This represents a 4.96% increase on an annualized basis over 1994/95 actual budget totals. The proposed Water Fund Budget of $7,082,585 is also included in the Operating Budget. That budget includes some $900,000 in planned water system improvements. These improvements include storage tank renovation project, booster pump replacements, and sewer and water main repair and replacement. The Capital Improvements Program budget includes a provision of $5.58 million in public improvements including flood control projects, street resurfacing and reconstruction and $1.5 million in Capital equipment acquisition and replacement. The total budget for 1996 is $7,254,620. The obligations for principal and interest payments on outstanding debt are established when the debt is issued. For 1996, $3,434,510 has been budgeted for debt service. The Village commitment for pensions for 1996 is $1,893,570 and $3,974,420 has been budgeted in the Internal Services Budget. The Internal Services Budget includes the Vehicle Maintenance Fund and the Risk Management Fund. The various operating departments provide the revenue for these two funds. In the discussion that followed, several members of the Finance Commission expressed concern over the continuing increase in medical insurance costs. Mr. Jepson explained that the Village is putting together a five-year plan to address the issue of health insurance. Information will be made available to the Finance Commission as plans develop. Salaries for union personnel were discussed. Mr. Jepson explained that the Public Works union contract will be negotiated this spring. The contract expires on July 1, 1996. The Police and Fire contracts are scheduled to expire May 1, 1997. IV Other Business Mr. Jepson read a letter of resignation from Commission Member Frank Wolfinger. Mr. Wolfinger expressed regret that due to his move to another community he will no longer be able to serve on the Finance Commission. Mr. Wolfinger went on to say that he enjoyed the opportunity to serve as a member of the commission and that he found the experience to be very rewarding. V Adjournment The meeting was adjourned at 9:35 p.m. The next meeting will be held on February 29, 1996. Respectfully submitted Carol L. Widmer, Assistant Finance Director