HomeMy WebLinkAboutMinutes 1984Minutes
Budget Policy Committee Keeting
of July 20, 1984
1;erabers Present: Aldermen Y,olson, Korshah, Collens
?;embers Absent: Clone
Staff Present: Bruce Zimmerman
Presiding official: Alderman Nelson
Sum:aary of Action:
Llderman Collens nominated Alderman Welson to serve as chairman of thu newly
reinstated Budget Policy Committee. Alderman Korshak seconded. Motion
carried 3-0.
The Committee chose to meet on the second Wednesday of each month. Feetings
will be held at 7:30 P.M. in the Aldermanic Library.
Members then discussed items to be placed on the Committee's agenda for
future meetings. The Committee agreed that the following issues should be
reviewed by the Committee: (1) the City's policy on reappropriating surplus
and the history of short-term borrowing by Evanston; (2) review of the
City's year-end financial report; (3) the City's borrowing practices; (4) a
review of the current City budget policy; and (5) a review of the quarterly
financial reports prepared by City staff.
There being no other business, the Committee adjourned at 8:30 A.M.
Staff:
Bruce Zimmerman
Minutes
Budget Policy Committee
of August 15, 1984
Members Present: Aldermen Nelson, Korshak and Collens
Members Absent; None
Staff Present: Shonk, Zimmerman
Others: Suzanne Calder, League of Women Voters
Ira Golan, Chamber of Commerce
Presiding Official: Alderman Nelson
Summary of Action:
The minutes of the July 20, 1934 Committee Meeting were approved as
submitted.
8eview of Proposed Axenda
The Committee finalized a list of items to be included as its agenda in
coming months. These items included: (1) Overall review of the City
Financial Audit; (2) Review of fund balances, cash flow projections and fund
balance policy; (3) Review of expenditure and revenue forecasting
procedures; (4) Review of municipal finance techniques and alternatives; (5)
Review of format of City budget, quarterly financial reports, annual audit
and other financial materials; (6) Review of the City's purchasing policies;
(7) Evaluation of the impact of high inflation on budget policy; (8) Review
of parking ticket collection procedures and alternatives; (9) Review of
revenue indexing; and (10) Analysis of feasibility of implementing a 27. Food
and Deverage Tax.
The Committee asked Staff to prepare a memorandum to inform the Council of
the Committee's suggested agenda, and to request that other Council members
suggest additional agenda items for the Committee's consideration.
Review of FinantinS Techniques Outline
The Committee then directed its attention to the outline on financing
techniques prepared by the Finance Director. The Committee first discussed
the fund structure of the City Budget. Enterprise, Special Revenue and
Internal Service funds, along with the General Fund were all defined. Staff
also explained the relationship of the debt service and capital improvement
funds.
The Committee briefly discussed the use of capital fund interest and the
fund balance of other funds and emphasized the need to examine these issues
at length in the future.
Minutes of the Budget Policy Committee
August 15, 1984..............Page Two
Staff identified for the Co=ittee the various revenue categories used in
the General Fund. These included the property tax, otber taxes, licenses
and permits. fines, service charges, grants and reimbursements from other
funds.
The Co=ittee requested that the review of financing techniques be continued
at the next meeting to be held at 7:30 P.M. on September 19, 1984.
The meeting was adjourned at 9:00 P.M.
Staff: Z .
[truce 'Zimmerman
Minutes
Budget Policy Committee Meeting
of September 25, 1984
Members Present: Aldermen Nelson, Korshak, Collens
Members Absent: None
Staff Present: Shonk, Zimmerman
Presiding Official: Alderman Nelson
Summary of Action:
The minutes of the August 15, 1983 Committee Meeting were approved as
submitted.
Proposed Agenda
The Committee asked that the parking ticket and purchasing policy items be
retained on the Committee's agenda. Because the Administration and Public
Works Committee has responsibilities involving these issues, the Budget
Policy Committee decided to review these matters and forward the Committee's
comments to the Administration and Public Works Committee.
The Committee discussed the feasibility of implementing a review of the
budgets and programs of individual departments during times other than the
Council's Budget Worksessions. It was decided that consideration of a
departmental review process should be added as an item on the Committee's
agenda.
Committee members also expressed interest in considering a system whereby
more information on the City's budget policy, budget and budget process is
shared with the public, The Committee agreed to add this issue to their
agenda.
Review of Financing Techniques Outline
The Committee resumed its review of financing techniques by discussing
revenue sources that have been considered in the past, but are not currently
used. These revenues included the gasoline tax, hospital bed tat, tuition
tax, garbage service fees and parking meter advertising fees.
The Finance Director and Committee then discussed the use of Tax
Anticipation Notes and the issue of fund balance. The Finance Director
explained that the City's fund balance had reached the level where the
borrowing of Tax Anticipation Notes was not required for cash flow purposes
in the current year. It was also explained that the City would need to
evaluate its cash flow position each year to determine whether the borrowing
of Tax Anticipation Notes is needed.
Minutes of the Budget Policy Committee
September 25. 1984........... Page 1
The Committee also discussed the reappropriation of fund balance policy
recently adopted by the City Council. The Finance Director explained that
the FY1985-86 Budget may include some reappropriation of fund balance.
The application of the City's Budget Policy to debt service was also
discussed. It was emphasized that the principal amount of general
obligation debt to be paid through real property taxes cannot exceed
$50,000,000 under the current budget policy and that beginning in FY1985-86
the annual growth in the debt service property tax levy would be limited to
the CPI limitation used by the City Council. The Finance Director stated
that the general obligation debt levy is considerably below the $50,000,000
ceiling.
The Committee finished its review of financing techniques by briefly
reviewing various means of financing long-term debt.
Review of Financial Audit
The Committee began its review of the FY1983-84 Financial Report with the
Finance Director highlighting some of the footnotes and explanations offered
in the front of the report.
The Committee primarily focused on the change in property tax accounting and
its impact on the reporting of fund balance. The Finance Director explained
that the City previously reported its property tax revenue on the full
accrual basis, but beginning in FY1983-84 such reporting was made on a
modified accrual basis. Modified accrual accounting requires that the City
report only those revenues which are measurable and also available within
two months of the and of the fiscal year. This change in reporting greatly
reduced the amount of fund balance reported since property tax revenues
received after two months following the end of the year could no longer be
included.
The Finance Director explained that fund balances reported on the modified
accrual basis are different from cash balances due to the inclusion of
accounts receivable and accounts payable in the modified accrual figure.
The Committee also briefly examined the decrease in 1983 equalized assessed
valuation from the 1982 amount. This decrease was primarily due to the
decrease in the equalizer and the increase in he homeowners' and senior
citizens' exemptions.
The Committee adjourned at 9:50 P.M. with its next meeting scheduled for
7:30 P.M. on November 14, 1984.
Staff:
Minutes
Budget Policy Committee Meeting
of November 20, 1984
Members Present: Aldermen Nelson, xorshak, Collens
Members Absent: None
Staff Present: Joel Asprooth, Robert Shonk, Bruce Zimmerman
Presiding Official: Alderman Nelson
Summary of action:
The minutes of the September 25, 1984 meeting were approved as submitted.
Pension Policy
Chairman Nelson asked staff to summarize current issues related to the
Committee's consideration of pension funding. City Manager Asprooth
explained that the City Council has taken three actions related to
pensions. (1) The Council authorized the City Manager to transfer $750,000
from the Capital Improvement Fund to the Police and Fire Pension Funds. (2)
The Council directed staff to hire immediately an actuary to determine the
exact funding required for the Police and Fire Pension Funds. (3) The
Council referred to the Budget Policy Committee consideration of
establishing a policy for increased funding of the Police and Fire Pension
Funds.
Mr. Asprooth suggested that the Committee attempt to complete its
consideration of the reference in time for any change in pension funding
policy to be included in the FY1985-86 Approved Budget.
Mr. Shank reviewed a handout on the available growth in the debt Service
Fund net levy which would be available for transfer to the pensions, should
the Council choose such an approach. Based on current estimates regarding
the Consumer Price Index, interest rates and the sale of future G.O. Bonds
for capital improvements, Mr. Shonk estimated that the following amounts
would be available in the net debt service levy for transfer to pensions:
1985-86: $52,260; 1986-87: $154,938; 1987-88: $324.108; and 1988-89:
$682,205.
Mr. Shonk also explained that the actuary will provide the City with two
pieces of information: (1) a calculation of the amount of the 1985 pension
levy required to meet the state funding mandate based on the actuary's plan;
and (2) a calculation of the amount of unfunded liability as of February 29,
1984. Mr. Shonk stated that a draft of the actuary's report will arrive in
late November or early December.
Mr. Asprooth explained that there were two reasons for the Council's
previous action to transfer $750.000 from the Capital Improvement Fund to
_
Minutes of the Budget Policy Committee Meeting
November 20, 1984......... Page Two
the pensions. He explained that the concern of the Police Pension Board to
reduce unfunded liability was very strong. Mr. Asprooth also explained that
a change in financial reporting requirements resulted in the showing of
unfunded liability as a long-term debt. It was felt that this change in
reporting could have a negative impact on the City's bond rating unless
action was taken to reduce the unfunded liability.
Alderman Nelson stated that the use of available growth in the Debt Service
Fund levy was a reasonable approe,ch, and suggested the Committee withhold
Its final decision on pension funding until after the actuary's report is
received.
Alderman Collens questioned whether Cie City's Budget Policy could be
revised to segregate pensions under q separate levy growth limit from other
City funds. She suggested that the City could allow the pension levy to
grow at a higher percent of the CPI than the rest of the levy if such an
approach was used.
Mr. Nelson stated that he opposed such a separate policy because it creates
a special exemption to the overall City levy limit.
Alderman Korshak stated that the pension funding policy should have two
characteristics: (1) the policy should be defensible as being consistent
with other funding policies; and (2) it should be flexible enough through
time to respond to unexpected financial conditions.
Mr. Korshak then asked whether the report of the private actuary is required
to lend credence to the City's funding policy. Mr. Asprooth responded that
the actuary's estimate of unfunded liability would be lower than the State's
estimate, but would still show the City as having a significant amount of
unfunded liability.
Alderman Collens asked Whether the City had options for leveraging an
Increased amount of Debt Service Fund levy for transfer to the pensions. It
was explained that IRS rulings on arbitrage and the Federal Government's
tightening of tax exempt bonds would limit such options.
The Committee then stated its general consensus that the use of available
growth in the Debt Service Fund levy represented a viable approach, and that
a final decision should be made following receipt of the actuary's report.
The Committee scheduled a meeting for December 13, 1984 to finalize its
recommendation on pension funding.
Committee Axenda
Alderman Korshak suggested that Committee members prioritize items on the
Committee's agenda. Mr. Nelson asked that Committee members come to the
next meeting with the items ranked on the basis of high, medium and low
priority.
Minutes of the Budget Policy Committee Meeting
November 20, 1984......... Page Three
Financial Audit
Mr. Shonk was then asked to continue his presentation on the 1983-84
Financial Report. Mr. Shonk and the Committee proceeded to review and
discuss the introductory notes section of the report.
In response to a question from Alderman Korshak, the Committee and staff
discussed the feasibility of the City underwriting its own bonds and selling
the bonds to the community. Local community involvement and reduced
underwriting costs were cited as advantages to this approach. The question
of whether enough residents would be willing to buy the bonds was identified
as a concern. The Committee agreed that such an approach did have some
merit, but chose to take no action on the approach at this time.
The Committee then proceeded to discuss introductory notes on cash
management, bond ratings, capital projects and enterprise funds.
There being no further business, the Committee adjourned at 9:50 P.M.
Staff:
f ,