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COMMITTEE OF THE WHOLE
MARCH 13, 1984
ROLL CALL
Mayor Krause called the meeting to order at 7:30 p.m.
The meeting was cablecast live from the Mount Prospect
Library Conference Room, Present at the meeting were:
Mayor Carolyn Krause, Trustees Ralph Arthur, Gerald
Farley, Leo Floros, Norma Murauskis, George Van Geem
and Theodore Wattenberg. Also present at the meeting
were.: Village Manager Terrance Burghard, Administrative
Assistant to the Village Manager John Bowman, Director
of Finance David Jepson, Director of Public Works Herbert
Weeks, Deputy Director of Public Works Glen Andler and
Village Engineer Chuck Bencic. There were approximately
five persons in the audience.,
Mayor Carolyn, Krause opened the meeting with a general
overview of the 1984-1985 Village Budget, and 'Introduced
to the audience the purpose and structure of the Committee
of the Whole Budget review meetings. The Mayor pointed
out that the Public Works," portion of the Budget compri-ses,
nearly one-third of'the total Village Budget, therefore,
the Public Works Budget would be reviewed exclusively at
this meeting.
III. MINUTES
V_
The Minutes of the Committee of the Whole meeting of
February 28, 1984 were accepted and filed.
IV. 1984-1985 BUDGET HEARING
Village Manager Terrance L. Burghard 'introduced the
Public Works Budget, stating that the Public Works
Department makes up the largest portion of the overall
Village Budget, affecting all Village residents. The
Village Manager pointed out that the increase in the
Public Works Bud -get is primarily attributable to
Lake Michigan water and are planneld expendi-tures
which carry out the policies of the Mayor and the Board,
APO
M
0
Mr. Weeks then presented an overview of each. of the
four divisions of the Public Works Department, including
the Street Div *1 Is ion, Water and Sewer Di v 30- s ion, Park ing
0 0 go
System Division and the Engineering Divisions
Street Division
The Street Division accounts for $1,496,787.00 o f the
Public Works Budget and 'involves the maintenance of
over 120 miles of streets within the Village and the
1 ings and rights of way.
maintenance of all publLc bu*ld*
In the area of Forestry, Mr. Weeks stated that many o f
the Village's trees are matur ing and maintenance and
0 a of public
replacement costs are increasing. In the are
facilities, the largest expen'.diture will be for almew
Woms
e it
roof on, the Village Hall at 'ThPuIAIA I I
c ha e a pf''erfs,.o,!,,i,a,,,1, c,Otputior
Department also proposes to 'pw,r
Ieel p� xrsonne',J!,
with packaged programs to be u,sed 1,)y, o�,f f
hy,dr,,,an v. In
"o
for fleet management word " t n, el t or I,
and other uses. This computer sy,��,t,elm, would also" be, us"Iel,"1(11
as a back, -up unit for the exiL, S' ti, , ng, W"Atet� c0ntr, s, y, s, e- mv.
0
Water and.S.ewer D,Il*vl*lsl*on
M
Mr. Weeks stated that several of the Villape's wells are
4% . 40 0
dry or inoDerative and must be pulled out of service.
Mr. Weeks stated that enerRv costs are escalatinR, as
AM bv the $700,000 budReted electrical costs.
The Vl*llaae, will be stepping up its efforts in the area
of meter replacements, as well as other water system
improvements anticipation of Lake Michigan water.
Mr. Weeks reviewed with the Mayor IMA the MM' the
MMA' aaae e
vrious expenalture clss if ict ions, noting tht thlarg
0 . ON
M 1 0 n captial expenditures is due to the Lake
Mic I nigan water project. Mr. Weeks also pointed out that
ideo equ' t•
'is propose 10 #
new v ipmen d for sewer inspections at
$60oOOOO
Mr. Weeks summarized the Village's Parking System Division,
noting that this division includes parking lot maintenance
M/s well as administration and support. Mr. Weeks stated,
that planned parking lot resurfacings -include the lot at
thMIM Senior Center and the lot at the Public Safety
0 &
MIM
Buildin, ThVillage eee
'is builda rsry
ging in this area,
a 0
for future street resurfacing projects.
Mr. Weeks presented an overview of the Engineering Div i s, 1* on
budget, noting thaMNMt $856,396 or 30.9% of this Division
involves Motor Fuel Tax construction, The Engineering
Division proposes to continue a pavement evaluation g,ram
which will allow the Village to resurface streets before
they become badly deteriorated. Mr. Weeks pointed out
that the pavement evaluation program Mw the,
purchase of a micro -computer to implement this program.i
Mr. Weeks stated that over $1,000,000 has been earmarked
for st 9 reet 'improvement. Some projects will depend on
State and Federal funding. Proposed projects include the
Meier Road/Golf intersection, a bridge at Briarwood
Subdivision, Hill Street Subdivision MMA Prospect Avenue,
resurfacing. The Engineering budget also includes sixi
opticon signal systems at $10,000 eachO Mr. Weeks
MAA for the Board the Village's Sewer Rehab 3L 11 tat ion
Program, which will correct certain deficiencies in the
Sewer System as mandated by the Metropolitan Sanitary
District. Also 10-n the Engineering Division is the
AMM Sidewalk Replacement ProgramS
M
A general discussion ensued as the Trustees raised
questions in each of the four Divisions of the Public
Works Budget. In the Street Division, Trustee Farley
questioned the contracting of grass cutting services,
commenting that the Village should be able to perfor'm
these services at a, lower cost. Mr. Weeks responded by
a to a
pointing out that the grass cutting services are
0 if Is 11
contracted only for certain show-pl leice' areas, and
I*
stated that this is a, pilot program diesi igned to keep
down the level of new hiring and equipment purchases,
Trustee Floros questioned
of over -time and expressed
Mt. Van Geem discussed the
stating that he would like
reports in this area,
the large increases in the area
his concern in this area.
0
issue of capital expenditures,
to see buidget/expense comparison
/ M,
Mr., Floros questioned the p�ropo�sed s,al,ary increas,es, and
0,
of agovertime., Mr Weeks, assured ain ralsed the, i s,s�ue It,
the Mayor and the Board that the propos,ed overtime
expenditures would be, made only 'in emergency situati,ons,
MMnd actual expenditures in thi,s area traditionally have
been under budget. Mr,. Floros, also had, questions re,garaing,
0 01
replair plart,s, for hydrants, whi,ch led to, a general di,sicus,s,ion,
on the Village's, leak detection program. Mr., Van Geem
raised, the is,sue of Lake Michigan water financing and
the discussion turned to water rates, and the Special,
S
01 10 'Mrl. Wattenberg expressedervice Distri,ct asis,e,ssiment,
concern regarding, the estimated water rate inc,rMIM asiAMM
within the Citizens, Utioliti"es water, sy'sit,em and s,ugglAMM ed
that the situation be monitored.,
01
The Board discussed parking, system revenues and expendlotures,
and Village sitaff explained the need to, build a reserve
for future resurfacing, pr,olj�ects�. Trustee Arthur s,ugg,le,stled
001 #01
M/ the Village Board consider raising commuter lot fees,
MMnd would like a, comparision survey of' commuter plarking,
0,
rate fees in the area,
0 0
T'r�u,stee, Farley questioned the prop
gg
osed Opticon sinalin
0 01 - A-
equipment,I suggesting that, certain, intersect, -ions may nQL
require such equipment; e,,g,,,, Council Trail and
Mr. Blur,har�d explained the purpose and usie
MMI
of the Opiticon
system and, emphasized, the need, for consistency in us,e of
Opticon at all intersections of the, Village. Mr., Farley
MM s,tated that the piroploisied allocation for traffi I c
0 41
signals, should not ble ti , ed to a.specific location. The
Mayor commented that the specific location of the new
01
traf'f ic s ignal equipment would be discussie,d at a futi4r,e
0
Board meeting.
The Village Manager reported, that bids were opened for
a, 01
the water reservoir and pumping, station at O"Hare,, witn
the apparent low bi id at $15. 7' mi ion which9,%,' over
Is 0 &
the original e s timates. The Village Manager pointed
0,
out,, howeverf that the overall system is still 10% under
AIM
VI.i ADJOU I RNMENT
The Mayor stated tha,t the fourth and final BudR
.get �evi,�ew
Hear inwould be held on March 27,1 at 7: 30 p am 0 th 6
MMM
L ibrMMM ry Coinf erence Room. The F "ire and Plol 'ice budget"S' Will
'n
g
be heard at thaee
t time. The Committof the Whole
AMMdjourned AMM 9:318 p1m.
Respectfully submi tted,
TERRANCE, L. BURGHARD
Village Manager
Mount Prospect, Illinoismmmmr n.s
INTEROFFICE MEMORANDUM
TO: Terrance L. Burghard, Village Manager
FROM: David C. Jepson, Director of Finance
DATE: March 22, 1984
SUBJECT: Pension Fund Actuarial Valuation Reports
Illinois Revised Statutes require an annual valuation of the actuarial status
of both the Police Pension Fund and Firemens' Pension Fund. The purpose of
an actuarial valuation is to determine the funds needed for current and future
pension obligations and to provide a basis for establishing current tax levy
requi rements Actuarial services are provided to public pension funds by the
Illinois Department of Insurance, but a municipality also has the option of
hiring an independent actuary.
There are two primary reasons for using an independent actuary rather than
the State of 111inot s: 1) the timeliness of the actuarial report- and 2)
the validity of the information in the report. Based upon past experience, the
State takes appy oxiNiately nine months to complete their work. As an exampl e,
their report, for the N)'scai year enided April 30, 1983 was received in late
February 1984 This i' ears that budget projections for the next fiscaly ear
must be prepar,ed before the reportis received. Normally, an independent
actuary will complete their work in 60 to 90 days.
A greater concern, however, is the investment income assumption used by State
actuaries,, Currently, they use an assumed rate of return of 6-112%r regardless
of the performance of an individual fund. This is a very conservative assumption,
and de,pend I ' I fI
ng upon the size, of a spec�**c fund and its actual return on invest-
1cally di
ment, it could' dran,'iat", 11, t , ort the results of the study. As of Apri 1 30,
s,
1,983 the Firernens' Pe,nsion Fund had $6.8, million in assets and the Police
Pension Fund had $5.6 mi'lTion , with both funds earning in excess of 11% on total
assets.
11
Because of these concerns, the Firemens' Pension Board contracted with A. So
Hansen, Inc. to provide 'an independent actuarial valuation of the Firemens'
Pension Fund. Subsequently, the Village also engaged Hansen to make a study of
the Police Pension Fund. Both of these reports were 'received on March 19, 19840
A. S. Hansen uses the same actuarial cost method, valuation procedures, morta-
lity tables, earnings progression, and retirement age assumptions as the State
of Illinois. Also, they use a conservative 7% assumption for investment income.
However, they do take the actual investment portfolio into consideration in their
calculations. For our pension funds they allowed a credit of the difference
betv�een the 11% we are earning and their yield assumption of 7% times assets,,
Terrance L. Burghard
Page 2
Pension Fund Actuarial Valuation Reports
for a period of five years. The present value of the credit actually allowed
was $1,118,.,701 for the Firemens' Pension Fund and $932,109 for the Police
Pension Fund. This credit is subtracted from the accrued liability for future
pension benefits and does help to reduce our current tax levy requirement.
Attached Schedules 1 and 2 summarize and compare the results of the State
actuarial report and the Hansen report. Following is a brief explanation of
the information in these schedules:
Actuarial Accrued Liability - this comparison shows the
present value (P.V.) of liabilities and assets and the
deficiency or overfunding. It also includes the percent
of liabilities funded as of 4/30/83.
The Firemens' Pension Fund is 97% funded per the State
report and 1351 funded according to the Hansen report.
The Police Pension Fund is 691 funded per the State
report and 81% funded according to the Hansen report.
2. Village Contributions Requirement - this comparison shows
the Village's Contribution based upon the State report,
the Hansen report and what will be actually contributed
for the fiscal year ending 4/30/84,
In the Firemens' Pension Fund, the State calculated a'
contribution requirement of $345.,931 and Hansen $110,194.
$413,350 will be actually provided during the current
budget year.
In the Police Pension Fund, the State calculated a
contribution requirement of $370,027 and Hansen $284,424.
$373,385 will be actually contributed in the current
budget year.
3. Present Value of Accumulated Benefits as of 4/30/83 -
this section compares the level of funded benefits with
private sector pension funding requirements. Simply
stated, it compares accumulated benefits as of a given
date with assets available at that date. If the pl ans
would have terminated as of 4/30/83, the Firemens'
Pension Fund would have been funded at a 2161 1 evel and
Police at 111%. This information is included in the
Hansen report but not in the State report.
The differences on the attached schedules point out the significance of using
relevant assumptions in actuarial valuations. In my opinion,, the Hansen
approach is much more realistic for the Village of Mount Prospect. Nevertheless,
10
Terrance urghard
Page 3
Pension Fund Actuarial Valuation Reports
0
even by State of Illinois standards, our pension funds are in excellent
financial condition.
The informat'l-on 'in the actuarial reports, covers the fiscal •year that ends
'In, order to es,timate ou'r budget requirements, for 1984/85, we need
4/30/84#
to, add a factor for salary increases to the recommended cont-ribution require -
If' We, Use a 63% factor to cover both step increases and salary increases,
we would come up with the following amounts:
1983/84 ,
1984/85
Recommended
6%- Estimated
Rnuiremen'tAdded
. .
. .. ..... ecu cement
Police Pension Fund:
State Recommendation $37,03027 $222202 $3922229
Hansen Recommendation $28,14,426 $172066 $301,,492
1984/85 Budget $3473000
Firemens' Pension Fund:
V
State Recommendation $3455931 $203756 $3663687
Hansen Recommendation $1105194 $ 6,612 $116 806
1984/85 Budget $3153050
A s inted out earl 1
p o 1.11
er 1.984/85 budgi t amounts were estimated prior to the
recelpt of e'itfier report. They are Wth less than the State recommended
requirement but are higher than the am,ounts recommended by Hansen. I believe
we should go with the 1984/85 bW
amounts as proposed., but that we should
ask, A., S., Hansen, Inc. for proposal's to make actuarial -studies of both funds
for the fiscal year ending 4/30/84. This would give us two years of indepen-
dent d'ata and it would bei availab e prior to the start of the 1985/86 budget
process,
C/Larry Pairitz
Ron Pavlock
'k FIREMENS' PENSION FUVD-
1 - Actuarial Accrued Liability:
P. V. of P. V. of P. V. of
Accrued Assets Deficiency or Percent
Liabilitv Provided iOverfundinq) Funded
...... . .. . .. . .. .... . . ................
State Report $7,0572363 $69821,019 $ 2365343 97%
Hansen Report $5,049,886 $69821,019 $(1.,771,133) 135%
2. Village Contributions Requirement, 5/1/83 - 4/30/84:
Normal
Unfunded
Costs
Liability
Total
State Report $3283874
$ 17s057
$3453931
Hansen Report $2455495
$(135,301)
$1105194
Actual
$4132350
3. Present Value of Accumulated Benefits at 4/30/83:
P. V. of Accrued Benefits $391592,331
Actuarial Value of Assets $62821,019
Funded Ratio 2169
.LIICUU 1 4::: L
POLICE PENS 1CAH FUND
1. Actuarial Accrued Liability:
P. V, -of Pe VO Of P. V. of
Accrued Assets Deficiency or Percent
Liabilitv Proided Funded
. ......... v
............. . . . . ............. . . . ....... . ..... . ......... Overfundin
State Report $831852261 $5,16833315 $225019946 69%
Hansen Report $73,0469754 $5,6833315 $193632439 81%
2. Village Contributions Requirement. 5/1/83 - 4/30/84-0
Normal
Unfunded
Costs
Li a bi I
- — — -------
Total
State Report $1899461$1805566
$3701,027
Hansen -.Report $180,268
$1045156
$2845424
Actual - , M
qw,
$3732385
3w Present Value of Accumulated Benefits at 4/30/83:
P. V. of Accrued Benefits $5,1342001
Actuarial Value of Assets $526832315
Funded Ratio 111%
1984--85 PROGRAM OF SERVICES
DEBT SERVICE
T SERVIC
SPECIAL SERVICE Anv.ri ovrvw
$363,183 40%
DEBT
PROGRAM TOTALS
,AL OBLIGATION
1�
'-'25 60%
DEBT
9,OURCE
SERVICE
OF FUNDS
02ZAJIM&4�-- I I
1984�85 PROGRAM OF SERVICES
PENSIONS
I e -w 1 70
S $2,832,700
IREMEN'S PENSIOISC
0113179300
PENSIONS
PROGRAM, TOTALS
071LOYEE PENSIONS
73 100 9%
OLICE PENSIONS
m
. i I �242,300 44%
15500,01
IN
PENSIONS
SOURCE OF FUNDS
•• i
latNtliHL I.M.R.F. POLICE FIREMEN'S
FUND PENSION PENSION
FIRE DEPARTMENT
EXPENDITURE CLASSIFICATION
$21
rr-r%0TIMAL USIA 10RACTIAL COMMODITIES
SERVICES SERVICES
% i :2 l
A FUN:4
■
k * I
SERVICES
37%
FIRE
W-V=wl S!
$959,567
34%
FIRE DEPARTMENT
PROGRAM TOTALS
$235,168
8%
COMMUNICATIONS
$2 1460
1 %
ADMINISTRATION
& SUPPORT
$209,611
7%
fE ENFORCEMENT
$3285100
2 laft-4
I Ao
•
-4 20 Mai M641 UL01 g --o
EMERGENCY MEDICAL SERVICE RESPONSES 2400
NUMBER OF PEOPLE TRANSPORTED 1836
FIRE RESPONSES 574
OPERATIONS MAINTENANCE FUNCTION
A
EQUIPMENT 'MAINTENANCE
VEHICLE MAINTENANCE
A 1 10 0
fi OPERATIONS FIRE PREVENTION FUNCTION
9MOKE DETECTOR INSTALLATION AND TESTIN�f
PUBLIC FIRE SAFETY EDUCATION
JrA
I
Alk
lab*
Aft� -AlL
MUTUAL AID BOX ALARM SYSTEM
illilliq�
41 111111
CPR AND 1ST AID TRAINING
INVALID IDENTIFICATION
FIRE TRAINING
1
la -Jun �11
1983
NUMBER OF INSPECTIONS
6N 10 DISCIPLINE AREAS 5688
OTHER FUNCTIONS
PLAN REVIEW
FIRE INVESTIGATIONS
PUBLIC FIRE SAFETY EDUCATION
OCCUPANCY PERMITS
MAINTENANCE OF RECORDS
MICROFILM OF RECORDS
PUBLIC SAFETY & PROTECTION 1984�85 PROGRAM OF SERVICEt,
POLICE DEPARTM
$256975609
l2nO% 1
'11E DEPARTMEN
$2,7955725
12s7%
CENTRAL DISPATCH
SERVICE
$z,543000
lmo%
STAFFING AND COST COMPARISONS FOR FIRE AND BUILDING DEPARTMENTS AS OF FISCAL YEAR 1983-84
Ji
f The budget figure for Mount Prospect includes expense's far Vehicle Maintenance
and equipment purchase. In the cases of the comparison community budgets,
these costs are located in other areas in their respective budgets.
page 2
ARLINGTON
DES
ELK
MOUNT
SCHAUMBURG
SKOKIE
WAUKEGAN
HEIGHTS
PLAINER
GROVE
PROSPECT W�_ wicw
�w �.wfflw � -MEW
imw w
-LAT ION
711000
551000
29,000
52,600
5231 300
60,200
701P000
NO,a OF
82
83
87
64
103
118
80
FIREMAN
NC. OF
9
12
10
11
15
21
13
CIVILIANS
PARAMEDICS
YES
YES
YES
YES
YES
YES
YES
COMBINED WITH
NO
NO
NO
YES
NO
N 0
NO
BUILDING DEPARTMENT
FIRE DEPT,
$3,161,639
$3,088,788
$29978,119
$21705,995
$3,389,166
$3, 825, 214
$3,961,980
BUDGET 1983-84
BLDG* DEPT*
$2519543
$305,624
$357,335
$384,166
$514,500
$392,494
BUDGET 1983-84
TOTAL BUDGET'
$3, 413, 182
$3939430 412
$323352454
$25705,1995
$32773,332
$424391*714
$4235411478
Ji
f The budget figure for Mount Prospect includes expense's far Vehicle Maintenance
and equipment purchase. In the cases of the comparison community budgets,
these costs are located in other areas in their respective budgets.
page 2