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NOVEMBER 141 1995
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N, 1996 BUDGETIDISCUSSION
Mayor Gerald Fadey provided general opening remarks stating that this is the
second of thr'66'C6mmitte'e of the Whole Budget Hearings leading up to the
eventual approvallofthe 1996 Village Budget.
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Chief Pavlock provided, a general overview of the I Police Department Budget
stating a projected annual increase of 6'.3% is illustrated in the Budget document.
He stated that the increases in the personnel costs are primarily due to the full
cost of the additional OfficeM W
which have been added to the Department over the
last, couple of years. Furthermore, the Department is currently in the process of
testing to establi sh a new Police Officer hiring list. He stated that some of the
more creative programs which have b I een implemented over the previous fiscal
year have shown somesuccess. in exp anding theCommunity Policing effort of the
Department.
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VILLAGE OF MOUNT PROSPECT
FINANCE DEPARTMENT
INTEROFFICE MEMORANDUM
ITO .0 Mayor and Village Board of Trustees
FROM,-* Finance Commission
DATE,,, November 21, 1995
SUBJECT:, 1996 Budget Recommendations
The, Finance Commission met on October 19, November 2, and November 16, 1995 for the purpose
of reviewing and discussing the proposed 1996 Village Budget. The reviews consisted of a
presentation by each departmental or divisional director and his/her appropriate staff along with
questions and discussion by the Finance Commission. At a separate meeting on November 20, 1995,
the Finance Commission reviewed the entire budget to identify areas of concern and to formulate their
recommendations to the Village Board.
The Finance Commission supported the proposed 1996 Budget with one exception. The .ex ception
concerned the $1,000,000 appropriiiated, in 1996 and a second $1,000,000 forecast for 1997 for the
renovation of Village Hall. The basis of the concern was the belief that monies should not be
appropriated until all of the options were thoroughly investigatged. The fbl[lowmig general questions
about the proposed project were expressed by the Finance Commission:
1. Does the Village Hall property have more value as part of a redevelopment project than
as the Village Hall?
2. Has the Village explored the availability of other existing buildings that may be used
as Village Hall? Has the Village consideredthe cost of a new building compared to
remodeling the existing building?
3. Has the Village considered leasing for a Village Hall rather than renovating
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the existing structure or acquiring another location?
4. If the existing building is renovated, will the building meet the Village's needs for the
foreseeable future?
5. Is a complete renovation required or can the project be limited to the major
components, i.e. heating and air conditioning?
6. Is the Village Hall worth a $2 million investment?
Mayor and Village Board of Trustees
Page 2
1996 Budget Recommendations
Because of the number of questions that were raised, the Finance Commission recommends that the
Village thoroughly investigate the various options before funds are included in the budget for the
renovation project. Accordingly, the Finance Commission recommends that the $1,000,000 included
on page 241 (Village Hall Improvement) be reduced to an amount that would cover the necessary
services to provide more definitive information. The recommendation was approved, by an 8 - 1 vote.
A second concern of the Finance Commission is the ever increasing cost of the Village's medical
insurance plan. The Village's overall costs for this program have increased from $4,300 per employee
in the 91/92 fiscal year to an expected $6,350 in 1996. The Finance Commission recommends that
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an mdepend,en,t evaluation be undertaken of the Village's Medical Insurance Plan comparing the
Village's Plan with the plans of other similar municipalities and the private sector. The vote to
support this recommendation was 9 - 0.
During the discussions with several departments, it was noted that the replacement cost of Village
vehicles and equipment is one of the largest expenditures requested. The Finance Commission
recommends that the Village evaluate the criteria used to make decisions for replacing vehicles and
equipment and to document these criteria for various types of vehicles and equipment. The vote for
this recommendation was 9 - 0.
Wtly, the Finance Commission is concerned over the magnitude of infrastructure (streets, sewers,
water system, sidewalks, etc) needs of the Village and the possible funding for these projects. The
Finance Commission recommends that the Village establish a formal five-year Capital Improvement
Program to establish a priority for these projects as well as identifying the possible sources for funding
these projects. The vote for this recommendation was 9 - 0.
In each of the above recommendations, the Finance Commission expressed their desire to assist the
Village Board and the Village Staff in any way they can to help implement these recommendations.
The Finance Commission also expressed their opinion that the Village is well managed and that,
except as mentioned above, the 1996 Budget is a reasonable fiscal plan for the Village for 1996.
Special mention was made of the outstanding work of each Village department and the quality of work
that was done by the Village Manager and the Finance Department in preparing the 1996 Budget.
Respectfully Submitted
Richard A. Bachhuber
Finance Commission Chairman
VILLAGE OF MOUNT PROSPECT
FINANCE DEPARTMENT
INTEROFFICE MEMORANDUM
TO: Michael E. lanonis, Village Manager
FROM: David C. Jepson, FinanceDui=tor
DATE: November 22, 1995
SUBJECT: 1996 Budget Less Interfund Transactions
Trustee Clowes requested a schedule which eliminates interfund transfers or payments from one fund
to another fund which results in a duplication of expenditures in the proposed 1996 "Budget. Interfund
transactions generally occur for the following purposes:
1. An "interfund transfer" is a direct payment from one fund to another fund for the
purpose of financing expenditures in the fund that receives the transfer. A typical
example of an interfund transfer is a transfer of certain monies from a bond proceeds
fund to the related debt service fund to finance the principal and interest payments of
the bond issue. Over the past several years, we have "transferred" interest income in
the bond proceeds fund to the related debt service fund to help pay the first year's debt
service.
A transaction similar to an interfund transfer is a transfer of pension contributions to
the Police and Fire Pension Funds from the General Fund. The only difference is that
the receipt of the transfer is recorded as a contribution rather than a transfer.
2. On certain occasions, one fund will make an expenditure that will be reimbursed from
another fund in a future fiscal year. An example of this type of reimbursement is when
the General Fund provided the "seed" money for the Downtown Redevelopment
Project. If monies become available in the Downtown Redevelopment Fund in the
future, a reimbursement could be made to the General Fund.
3. Another type of reimbursement occurs when an enterprise fund (Water Fund or Parking
Fund) reimburses the General Fund for certain overhead charges. An enterprise fund
is accounted for on a basis that is similar to like businesses in the private sector. As
a result, overhead charges are a proper expense of the enterprise fund, but the result
is a duplication of expenditures in the budget.
4. A payment from an operating fund to an internal service fund is another type of
reimbursement and results in a duplicate expenditure in the budget. An internal service
fund provides a "service" to Village operating departments similar to a service provided
from an independent business. For example, the Police Department pays a medical
insurance premium to the Risk Management Fund (an internal service fund) rather than
Michael
-I-
ichael E. Janonis
Page 2
1996 Budget Less Interfund Transactions
making payments to an insurance company. Because the Village is self-insured, the
Risk Management Fund is like the Village's insurance company. The Risk
Management Fund includes expenditures for claims, excess insurance coverage and
claims administration. As a result the Village has the cost of the "premium" in each
operating department in the budget, but then it also has the costs of the "insurance
company" in the internal service fund. The result is a duplication of expenditures.
The same principle applies in the Vehicle Maintenance Fund and the Vehicle
Replacement Fund.
The attached schedule shows the amounts included in the proposed 1996 Budget by
Fund Groups, i.e. General Fund, Special Revenue Funds, Debt Service Funds, etc.
compared to actual expenditures for 1994/95, along with the annualized percentage
increase. Funds are organized into Fund Groups to identify the purpose for which the
funds were established. Interfund transactions are then subtracted to arrive at the net
totals for the Fund Group, again with the annualized percentage increase.
The increase for the General Fund before the Pension Fund Transfers was 4.96% and
after the transfer is subtracted the increase is 4.47%. The annualized percentage
increase for some Fund Groups is actually higher after the adjustments as indicated for
the Capital Projects Funds (15.03 % before the adjustments and 16.45 % after the
adjustment). The most dramatic change is in the Internal Service Funds which change
from 22.48% higher to just 0.65% higher. The overall 1996 Budget is 8.46% higher
than 1994/95 before the adjustments and 6.99% after the adjustments.
This schedule points out that the actual annual spending increase for all Village Funds
for 1996 over 1994/95 is 6.99%. However, I think. it also shows that there are wide
variations between the Fund Groups, and that it is more relevant to evaluate percentage
changes based on the Fund Group rather than on overall Village totals. My reason for
this statement is because certain of the Fund Groups can change dramatically from one
year to the next based on the purpose of the fund. In a year where there are decreases,
the overall total could show a decrease whereas the operating funds actually show an
increase. Accordingly, I believe comparing the net change in the General Fund or the
Special Revenue Funds provides a more accurate picture in the change from year to
year-
FiTe-JUT171
Enc
VILLAGE OF "MOUNT PROSPECT
1996 BUDGET SUMMARY
Proposed Budget Amounts Less interfund Transactions
General Fund - Budget Amounts
Less: Pension Fund Transfers
General Fund Net Budget
Special Revenue Funds - Budget Amounts
Debt Service Funds - Budget Amounts
Capital Projects Funds - Budget Amounts
Less: General Fund Reimbursement
Transfer to Debt Service Funds
Capital Projects Net Budget
Enterprise Funds - Budget Amounts
Less: General Fund Service Charges
Enterprise Funds Net Budget
Internal Service Funds - Budget Amounts
Less: General Fund Charges
Special Revenue Funds Charges
Enterprise Funds Charges
Internal Service Net Budget
Pension Funds - Budget Amounts
All Funds
Totals - 1996 Budget Amounts
Totals - Interfund Transactions
1996 Net Budget Totals
$4295662523
$4825692165 8.46%
Annualized
1994/95
1996
Percentage
Actual
Budget
Increase
$203,080,700
$215,740,550
4.96%
(549, 655)(7533,500)
$193,5315,045
$203,9875,050
4.47%
$451109,737
$45,3693,770
3.80%
$23,935,205
$374345,510
10.21%
$4,042,136
$5,0541,500
15.03%
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(1043,300)
(2062000)
(621,500)
$33,8362136
$428872700
16.45%
$6,2629558
$7,2231595
9.21%
. (2872500)
(306v000)
$53,9751,058
$63,9179595
9.46%
$3,544,059
$43,8717720
22.48%
(2;,449;350)
(31,3763,100)
(53,300)
(20,200)
(4691,850)
(8491,100)_
$ 6191,559
$ 5263,320
0.65%
$1,592,128
$198743,520
10.64%
$4295662523
$4825692165 8.46%
(32967,655)
(53,471.,700)
$38,5982868
$43.,097,465 6.99%
I CO to QLdu
The meeting was called to order at 7:05 p.m. Commission Members present included Chairman
Richard Bachhuber, and Commission Members Joe Etchingham, Newt Hallman, Jim Morrison and
Ann Smilanic. Also present were Village Manager Michael lanonis, Finance Director David
Jepson, Assistant Finance Director Carol Widmer, Public Works Director Glen Andler, and Deputy
Public Works Director Sean Dorsey. Commission member Tom Pekras and one resident arrived
at 7:25 p.m. Commission members John Engel, Vince Grochocinski and Frank Wolfinger were
absent.
The minutes of November 2, 1995 were accepted as presented.
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Public Works Director Glen Andler presented the proposed 1996 Public Works Department budget
of $14,947,335. As he began his remarks, Mr. Andler mentioned several noteworthy accomplish-
ments of the Department that were achieved in 1995. During the year the Forestry Division
received the Tree City USA Award for the 11th consecutive year as well as national accreditation
from the Society of Municipal Arboxists. Mount Prospect is one of only eight cities *in the country
to receive this accreditation. Also, a total of 13.3 miles of Village roads were totally reconstructed
or resurfaced and the first phase of a three-phase project to replace all of the water ms in the
Lake Briarwood area was completed.
The Public Works Department consists of five divisions: Streets, Forestry, Engineering, Water and
Sewer, and Vehicle Maintenance. In the Streets Division the 1996 proposed funding of $1,708,575
represents no significant changes. Projects such as inlet cleaning, storm sewer repairs, pavement
marldmg and crack filling will continue at the same level as prior years.
TheForestry Division has a 1996 proposed budget of $829,035. Included in the budget is $7,500
for a continuation of the Tree Hazard Identification Program. This program has proven very
injury successful M* detectina decaying trees and limbs and removing them before they cause miury or
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damage. In conjunction with the tree hazard identification program, the Division is requesting
$15,000 for contractual tree removal services i
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Jepson briefly reviewed the non -departmental budgets beginning with Community and Civic
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Services. The proposed 1996 Budget of $181,120 includes $47,600 for Community groups, $76,200
for the 4th of July and Civic Events and $57,320 for Holiday Decorations.
The Capital Improvement Projects proposed budget for 1996 is $7,254,620 and includes Village
improvements, flood control projects, motor equipment replacement and other construction projects.
Many of these projects and purchases were discussed during departmental presentations.
In 1996 the total amount budgeted for debt service is $3,434,510. Mr. Jepson explained that the
Village pays for the outstanding debt in five ways: property tax, 1/4 home rule sales tax for flood
projects, 1/40 home rule sales tax for street repairs, water revenues and special service areas.
The pension fund portion of the budget reflects pension and disability payments that are made from
three Village admini-stered pension plans. They are the Police and Fire Pension Funds and payments
to three retired firefighters who were members of the Forest River Fire Protection District when the
Village took over the District in 1970.
Under 'insurance and contingencies, casualty and property 'insurance is budgeted at $610,050. This
represents a decreaw of $101,694 from 1994/95 to 1996. However, the Medical Insurance Program
is expected to increase from $1,952,059 in 1994/95 to $2,448,,900 in 1996, an -increase of 15.3%.
Mr. Jepson noted that the increase in medical *insurance costs continues to be an area of great
concern.
The members of the Finance
Commission discussed how to address the significant issues in the
proposed 1996 budget. The consensus of the members was to address longer term issues as well
as the current budget. Some of the issues identified were medical insurance costs., the proposed
renovation of Village Hall, a long-term solution to funding capital improvements and a Plan to
formalize the decision-maldng process in determining when to replace vehicles and other equipment.
It was decided that another meeting would be held on Monday, November 20 in order to allow all
Coranfission members an opportunity to make recommendations on the budget and the larger issues
facing the Village.
The meeting was adjourned at 9:40 p.m. The next meeting will be held at 7:30 p.m. on Monday,
November 20, 1995.
Respectfully submitted
Carol L. Widmer, Assistant Finance Director
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