HomeMy WebLinkAbout07/25/1996 FC MinutesFINANCE COMNIISSION
Minutes of the Meeting
July 25, 1996
Call to Order
The meeting was called to order at 7:00 p.m. Those present included Chairman Richard Bachhuber,
Commission Members John Engel, Vince Grochocinski, Newt Hallman, John Korn, Jim Morrison,
Tom Pekras and Ann Smilanic. Also present were Finance Director Brian Caputo, and Assistant
Finance Director Carol Widmer. Commission member Joe Etchingham was absent.
II Approval of Minutes
The minutes of the January 25, February 29, and May 16, 1996 meetings were approved as
presented.
III 1996 Mid -Year Financial Review and 1997 Financial Forecast
Finance Director Brian Caputo presented the Village's mid -year financial review. Mr. Caputo
directed the members of the Finance Commission to Schedule I of his July 18 memo to the Village
Manager. This schedule contains information on the revenues and expenditures of the General Fund
and the projected variances of each when the 1996 Budget is compared to the 1996 estimate.
Mr. Caputo discussed several significant variations in revenue estimates. These included projected
positive variances in other taxes, licenses, permits, and fees, intergovernmental revenue and fines
and forfeits. Because these revenues are expected to significantly exceed projections, it has been
determined that it will not be necessary to deposit Home Rule Sales Tax revenues of $300,000 into
the General Fund. Instead, it has been recommended that those monies be deposited into the Capital
Improvement Fund.
In his discussion of expenditures, Mr. Caputo noted that total projected departmental expenditures
with the exception of the Manager's Office are not expected to exceed the budgeted amounts. The
negative budget variance in the Manager's Office is due to unanticipated legal fees.
In the 1996 Budget revenues were expected to exceed expenditures by almost $400,000. However,
the estimated 1996 surplus is now expected to be $691,000, an increase of $291,000. This will
enable the Village to begin 1997 in a very strong financial position.
Mr. Caputo discussed the Village's fund balances. The target fund balance for the General Fund
has been 15% of expenditures for many years. However, based on the 1996 estimated revenues and
expenditures, the anticipated surplus in fund balance will increase to approximately 19%. Mr.
Caputo stated that a 25% fund balance would be helpful to the Village in the future and could be
looked at favorably by the rating agencies.
The members of the Finance Commission asked if raising the level of the fund balance would
improve the bond rating. Mr. Caputo stated that a 25% fund balance is not a guarantee of an
improved bond rating. Rather, fund balances are just one factor the rating agencies look at when
evaluating a Village's overall financial position.
Ann Smilanic voiced the opinion that present taxpayers should not provide money for future projects
and improvements. She stated that in her opinion if revenues go down the expenditures should go
down rather than using additional fund balance reserves to cover the shortfall.
Mr. Caputo briefly reviewed the General Fund 1997 Forecast Budget. In his discussion of revenues
for 1997 Mr. Caputo noted that while property taxes in the General Fund show an increase of 5.6%
due to increasing requirements for the Police and Fire Pension Funds as well as for corporate
purposes, in total the Village tax levy will be held to approximately 4%. A projected increase of
17% in fines and forfeits revenues reflects an upward trend in collections while the projected 9.3%
in Other Taxes can mainly be attributed to utility tax collections.
Expenditures in the 1997 Forecast Budget indicate a 6% increase in the Police Department budget.
One of the initiatives in that departmental budget is the addition of a community service officer.
The Community Development Department projected increase of $94,750 over the 1996 budget of
$1,128,210 reflects the addition of an environmental health inspector. The projected 6.1 % increase
in the Human Services Department includes a provision for the enhancement of the Social Work
Intern Program.
Mr. Caputo noted that Schedule 3 "Available Fund Balances" demonstrates the Village's strong
financial position. The estimated 1996 Capital Improvement fund balance of $2,410,215 includes
$1 million which has been put aside for possible Village Hall improvements and the Flood Control
Construction Funds estimated 1996 Fund Balance reflects the See Gwun/Milburn construction
project which has been deferred until 1998.
Schedules 4 through 8 reflect the Village's debt capacity and the speed in which the Village will be
able to retire its debt.
For 1997 there are several new initiatives being proposed. These include:
Acceleration of the Street Reconstruction Program including a bond issue of $2.5
million in 1997.
2. Creation of a Computer Replacement Fund to fund the replacement of computer
hardware and software.
3. Creation of a merit pay pool which will provide for cash incentives for non-union
personnel separate from cost -of -living increases.
4. Continuation of the management training which started in 1996. This training will
focus on team building and managerial development.
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The topic of a merit pay pool prompted much discussion. Mr. Caputo, in response to several
questions, stated the plan called for a lump -sum payment for outstanding performers. This payment
will not be added to the employee's salary base.
IV Adjournment
The meeting was adjourned at 9:15 p.m. The next meeting will be held at 7:00 p.m. on August 29,
1996.
CLW/sm
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Respectfully submitted
Carol L. Widmer, Assistant Finance Director