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HomeMy WebLinkAbout03/23/2023 FC Minutes FINANCE COMMISSION REGULAR MEETING MINUTES Thursday, March 23, 2023 rd Executive Conference Room – 3Floor, Village Hall Mount Prospect, IL 60056 I.Call toOrder Meeting called to order at 7:02 p.m. Commission members present: Pam Bazan, Yulia Bjekic, Trisha Chokshi, Vince Grochocinski, and William Grossi (by phone due to illness) Commission members absent: Kenneth Arndt and Don Ocwieja Staff present: Director of Finance Amit Thakkar and Assistant to the Village Manager Alexander Bertolucci. II. Approval of Minutes a. Motion by Yulia Bjekic, second by Pam Bazan to approve the minutes of the Finance Commission special meeting of February 22, 2023: Yea: Yulia Bjekic, Pam Bazan, Vince Grochocinski, William Grossi, Trisha Chokshi Nay: None Absent: Kenneth Arndt, Don Ocwieja Motion Passed. III. Citizens to be Heard None IV. Old Business a) Fund Balance Policy Director of Finance Amit Thakkar reviewed the Fund Balance Policy Discussion presentation made at the February Finance Commission meeting. Mr. Thakkar noted that the fund balance totals were updated since February. Mr. Thakkar gave Pension Fund updates by sharing total contributions and losses in investment income which has resulted in a net decrease of $15.4 million for the Mount Prospect Firefighters’ Pension Fund and a net decrease of $16.6 million for the Mount Prospect Police Pension Fund. He noted that every pension fund in the U.S is reporting losses. The total amount the Village will need to fund at the end of the year has increased as interest earnings decrease. In response to questions from the Commission, Mr. Thakkar provided that the reported losses are unrealized losses, and the State now manages the pension fund investments as part of the statewide pension consolidation legislations. Mr. Thakkar made recommendations regarding the Fund Balance Policy and the creation of an Economic Stabilization Fund that was not presented at the February meeting. He stated the Economic Stabilization Fund’s purpose and reviewed the Village’s Contingency Plan for financial challenging events. There was general discussion regarding the Fund Balance Policy changes and the Economic Stabilization Fund that the Commission requested to rename to the Economic Finance Commission Page 1 of 4 03/23/2023 Emergency Fund. Staff and the Finance Commission discussed recent budget surpluses, with 2022 having exceptional revenue totals above budgeted amounts, and how surpluses have been used to abate property tax increases. There was a lengthy discussion on the Economic Emergency Fund:justification for creating the fund, how it is not a “rain day” fund, parameters in limiting use of funds, how it will be funded and requiring approval from the Finance Commission and Village Board prior to using Economic Emergency Funds. Mr. Thakkar responded to questions from the Finance Commission: Increasing fund balance ranges provides budgeting flexibility to address unexpected expenses and strong credit ratings allowing for interest savings on debt issuances. Staff will create the Economic Emergency Fund immediately if the Village Board is supportive of the recommendation at the first quarter budget review. The General Fund’s fund balance is at 57%; it’s able to provide $6.5 million to start the Economic Emergency Fund and be within the 30% to 50% fund balance range. General Fund is relatively stable and not impacted by carry over items to the degree that is experienced by the Community Investment Fund. Staff is proposing allocations totaling $11.3 million of the current $13 million surplus in the General Fund. The Village’s AA+ credit rating is in part because the Village has a Vehicle Replacement Fund; the Vehicle Replacement Fund cannot be used to pay salaries. Internal lease payments may be deferred to the Vehicle Replacement Fund and Computer Replacement Fund. To reduce the Vehicle Replacement Fund balance and funding, assets would need their life/replacement schedule extended then the excess funds may be accessed. 2025 bonds will be for water/sewer capital projects. The Economic Emergency Fund will be capped at maintaining only two months of General Fund operating cash. Finance Commission and Village Board approval will be required to use the Economic Emergency Fund. Motion William Grossi, second by Pam Bazan to support staff’s recommendation to increase the Fund Balance range and how surplus should be used, as stipulated here within: Fund balance should range from 30% to 50% of the annual expenditures with a target fund balance around 40%. When fund balance increases beyond 60%, the surplus should be used to: Abate the property tax levy for pension and debt service levies Fund capital projects Adjust the proposed Economic Emergency Fund to keep up two months worth of operating cash in the fund. When fund balance decreases below 30%, staff will report if the decrease is temporary or permanent. If permanent, staff will be required to report to the Finance Commission and the Village Board if contingency planning should be deployed including the use of the proposed Economic Emergency Fund should be triggered. Finance Commission Page 2 of 4 03/23/2023 Yea: Yulia Bjekic, Pam Bazan, Vince Grochocinski, William Grossi, Trisha Chokshi Nay: Absent: Kenneth Arndt, Don Ocwieja Motion Passed. Motion Yulia Bjekic, second by Vince Grochocinski to support staff’s recommendation to start an Economic Emergency Fund with one month worth of cash ($6,500,000) transferred to this fund from the 2022 surplus, with a funding target of two month worth of operating cash. Yea: Yulia Bjekic, Vince Grochocinski, William Grossi, Trisha Chokshi Nay: Pam Bazan Absent: Kenneth Arndt, Don Ocwieja Motion Passed. V. New Business a) Long-term Contingency Planning (Information shared under Old Business: Fund Balance Policy discussion.) b) Revenue Reallocation Mr. Thakkar stated staff is recommending that fixed or semi-fixed revenue sources should be used to fund operating expenditures while variable revenue sources should be deployed towards funding capital/one-time project costs. He stated based on the current revenue data; the Village should use some portion of state sales tax towards funding capital projects. Currently, the Village is using home-rule sales tax revenue to fund capital projects, while the state sales tax is more suitable for funding capital projects. He shared the current and proposed allocation of revenues to the General Fund, Street Construction Fund, Flood Control Fund, and Capital Investment Fund. Staff would like to have this allocation for the 2024 Budget. Mr. Thakkar responded to questions from the Finance Commission: The proposed reallocation would place more fixed sourced revenues into the General Fund. Staff is still working on the vehicle sticker analysis/update. Motion by Vince Grochocinski, second by Yulia Bjekic to support staff’s proposed reallocation of home-rule sales tax and state sales tax so that fixed or semi-fixed revenues sources fund operating expenditures while variable revenue sources fund capital/one-time project costs. Yea: Yulia Bjekic, Pam Bazan, Vince Grochocinski, William Grossi, Trisha Chokshi Nay: None Absent: Kenneth Arndt, Don Ocwieja Motion Passed. c) Pension Fund Updates (Information shared under Old Business: Fund Balance Policy discussion.) Finance Commission Page 3 of 4 03/23/2023 d)Financial Updates Mr. Thakkar stated the Monthly Financial Report is attached for review. VI. Any Other Business None VII. Chairperson’s Report None VIII.Finance Director’s Report None IX. Next Meeting: FirstQuarter Review –Joint Workshop with Village Board and Finance Commission: th April 25, 6 p.m. X. Adjournment: Motion by Yulia Bjekic, seconded by Pam Bazan to adjourn the meeting. Yea: Yulia Bjekic, Pam Bazan, Vince Grochocinski, William Grossi, Trisha Chokshi Nay: None Absent: Kenneth Arndt, Don Ocwieja Motion Passed. The meeting adjourned at 9:10 p.m. Alexander Bertolucci Assistant to the Village Manager Finance Commission Page 4 of 4 03/23/2023