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CITY OF OLMSTED FALLS

FINANCE COMMITTEE

MINUTES

MARCH 20, 2018

6:45 PM

COUNCIL CHAMBERS

Chairman Lori Jones called the meeting to order at 6:38 p.m. Roll call was conducted. Councilmen Paul Stibich, Ed Gorski (arrived at 7:28 p.m.), Denise Nicolay, Terry Duncan and Kyle Miller.

Also Present: Andrew Bemer, Law Director, James Graven, Mayor, and Vic Nogalo, Finance Director.

Budget Discussion

Service Department – Mr. Nogalo stated that he had to cut up the wages into six different parts. When the employees fill out their timesheets each week they indicate what they worked on that day. Mr. Borczuch stated that general fund items include leaf pickup, brush pickup, and anytime we work on the public buildings. The biggest expenses are the leaf and brush pickups.

Mr. Nogalo stated that total full time wages are $499,000; the city pays 1.45% in medicare; OPERS is $69,000; medical insurance $151,000; dental insurance $7,100; vision 1,000; and the life insurance $5,045.00; total wages and benefits for the full time employees is $736,000. The department has three part time employees for a total wages $57,000. Total for both full and part time employees is $793,000. He allocated 40% of the total wages to the general fund the rest have been divided up into all the other funds the departments utilize. Mr. Borczuch indicated that he has not added any additional amounts for wages due to the fact that the union contracts will be negotiated. Ms. Jones indicated that we should not budget for increases until negotiations are completed.

Mr. Borczuch stated that there is a slight different from 2017 to 2018 with full time wages. Ms. Jones asked if there was a reason. Mr. Nogalo stated that he put all the wages under full time which will filter out to part time and full time. As the year moves on the amounts will be posted to either full or part time. Mr. Borczuch stated that he kept the full time wages at a lower amount due to his previous experiences and understanding that he would not be doing as many general funds items as he has done in the past.

Mr. Nogalo stated that the service department has larger expenses that are non-payroll. Mr. Borczuch stated that the miscellaneous supplies covers anything that will do with the general fund. Ms. Jones asked if that was where salt is allocated. Mr. Borczuch stated that there is small percentage but moving forward, after speaking with Mr. Nogalo, salt will not be allocated out of the general fund anymore. Mr. Nogalo stated that the general fund has nothing to do with streets and the department has a street fund which is why he did not allocate any salt to that fund. Mr. Borczuch stated that the general fund percentage was based off of the municipal lots and city hall lot. Mayor Graven stated that Mr. Borczuch had indicated to him that even if there were 20 trucks on the road there would still be some individuals complaining about snow removal.

Mr. Borczuch stated that his total overtime costs last year was $9,700.00 for the entire department. He budgeted $12,000 for this because this was a harsh winter. Mr. Miller asked if the $12,000 would be sufficient. Mr. Borczuch replied that he believes so unless this coming winter begins sooner than anticipated.

Mr. Nogalo stated that he did not allocate any payroll wages to funds 102. Mr. Borczuch indicated that the state highway funds are used for State Route 252. Ms. Jones asked if 102 would be utilized to purchase equipment. Mr. Borczuch stated that in the past he has purchased large trucks which cost $150,000. The capital equipment fund cannot be utilized so the funds utilized the most would be 102 and 103 and half the cost of the truck would be taken for down payments and the rest would be lease payments over the next four or five years which would be paid out of the capital equipment fund. He paid off a lease in January and has a seven year lease for his loader and there are two more payments. The other portion of Fund 103 is used for street construction, maintenance and repairs. Mr. Miller stated that he believes Fund 103 should constantly be getting more money; he believes that no matter what the number is he would argue for more as he believes the number one priority for local government is to keep pushing for infrastructure. Mr. Borczuch stated that realistically just to maintain the department needs $1.2 million a year, we are less than a quarter of that currently. The report he distributed to Council previously shows that we have $58 million worth of roadway and to redo that we would need 100 year lifecycle on a road with what the city receives. There is nothing that lasts that long because there are additives being removed from the concrete and asphalt so nothing lasts as long as it did before. The prices for asphalt have tripled since 2005 and double for concrete. Mr. Miller stated that he does appreciate what Mr. Borczuch does with the limited budget he has and if there is any more throughout the budget that we can squeeze it would be his opinion to put into 103 to help build up.

Mr. Borczuch stated that Fund 104 is a levy and will expire in 2020. Mr. Nogalo stated that the city collects $250,000 each year. Mr. Borczuch indicated that he tries to work on as many roads as he can with the funds he collects. He indicated that last year he budgeted for a frontline plow truck but was pushed off. If the budget is passed he will be looking to replace a 21 year old plow truck. Mr. Miller asked for a typical service life for a plow truck. Mr. Borczuch replied 12 to 15 years. There are some cities that replace them every seven years.

Mr. Nogalo stated that 10% of the labor costs have been allocated to Fund 108 which is the park and recreation fund. Mr. Borczuch stated that there is 24 acres of park area that is mowed every week. He purchased a new mower last year. The parking lots will need to be resealed and restriped.

Mr. Nogalo stated that the storm sewer maintenance and repair fund 114 collected approximately $70,000 last year. Mr. Borczuch stated that this fund is utilized when working on ditch closures, catch basins, and storm sewer pipes. This fund also accrues money through the Regional Sewer District, he believes the city has collected just under $200,000. The district holds this money for special projects that need to be completed in the city. Mr. Miller asked if the city would have to pay for the project and then request reimbursement. Mr. Borczuch explained that the project would be submitted to NEORSD and upon approval they would forward the funds to the city.

Mr. Nogalo stated that the next fund is the shade tree assessment fund which receives approximately $33,000 each year. He has allocated approximately 3% of the service department’s payroll towards that fund. Mr. Borczuch indicated that this includes trimming of the tree lawn trees and roadside brush trees. He stated that last year they trimmed over 600 trees and removed over 300 trees.

Ms. Jones asked what street lighting is used for. Mr. Nogalo indicated that is also an assessment which covers the utility bills for all the street lights. He stated that this collects $105,000 in through assessments and then distributes the same amount for utility bills.

Mr. Nogalo stated that next fund is the sanitary fund 128 which collects approximately $130,000 to $140,000 each year. Mr. Borczuch indicated this fund it utilized for maintaining of the main lines. He stated that one mile of sanitary sewers is a million dollars to replace and we have 28 miles worth of sanitary sewers in the city. Ms. Jones asked when the Phase V sewers are installed will the county or state pay for those roads. Mr. Borczuch indicated that is part of the whole project. The county has given money towards the project, Cleveland Water is also putting money into the project for the water line program the city adopted a few years ago.

Mr. Borczuch indicated that he will also be purchasing an excavator to use during tree removals in order to prevent as much damage to the area. Mr. Miller asked if he researched the difference between renting and owning. Mr. Borczuch stated that if he uses the equipment as much as he will be using it the purchase would be more cost efficient.

Ms. Jones asked what the $101,000 advance was for in 2017. Mr. Nogalo stated that if you look at 2016 there is a negative but in 2015 it seems that this fund had a transfer of $378,000 to another fund. He does not like this type of accounting with negative numbers and advances. He stated that in 2015 this fund transferred $378,000 to another fund to keep it whole and then in 2016 the money was transferred back. He stated that he is unaware of what the transfer was for and does not know where it was transferred to. He will research and provide those answers to Council.

Mr. Nogalo stated that when this fund advances money to another fund it should be treated as an expense and when it receives the money back it should be recorded as an advance on the revenue side. Mr. Stibich stated that it distorts the operations of the fund.

Mr. Nogalo stated that the city has a lot of funds, there are special assessments on certain streets for improvements.

Mr. Borczuch indicated that fund 301 is the city’s capital improvement fund. Mr. Nogalo stated that is the general fund of capital and everyone tries to obtain some of those limited funds. He stated that 8% of the income tax is deposited into this fund and we are estimating $300,000 for 2018. Another way to finance projects is to use the income tax and issue debt. Mr. Borczuch stated that each year he budgets for a roof top unit and there are 21 units on the roof at a cost of $10,000 each. They have reached their life cycle. The city parking lot also needs to be resealed and restriped. If he can, the city’s portion of the Grand Pacific lot needs to be resealed. In speaking with the Mayor and Chief Rogers we will be implementing a different type of security for this city administration building. We will begin using a fob system, which will be computerized and would allow individuals access to certain areas. If something does happen with the 3rd floor the city will need to control access rather than constantly changes keys. Ms. Jones stated that $61,000 is being transferred out of fund 301. Mr. Nogalo stated that there are a couple of assessments funds that are not collecting enough in assessments to pay the debt. So, the capital improvement fund has to be utilize to offset the payments. This could be due to a miscalculation of future assessments on the properties, he would need to determine when 208 and 209 were created and why there is a shortfall. Ms. Duncan asked if this could be due to the property being owned by the city. Mr. Nogalo replied that he is unsure until he begins researching. Mr. Gorski asked if the funds existed prior to 2014. Mr. Nogalo replied they did and would have to determine when the first payments were collected. He stated that on fund 209 the city will be paying $163,000 in principal in 2018 and $9,031.00 in interest which totals $172,000. The assessments collected over the last couple years is $133,000. In fund 208 there is a $16,000 shortfall. Ms. Duncan stated that the most recent water and sewer was down Columbia Road right by the fire station and service department with significant frontage. Mr. Borczuch stated that the water has been in that area for quite some time.

Mr. Nogalo stated that the revenue source for fund 313 is 2% of income tax generating approximately $60,000 and Mr. Borczuch uses these fund for equipment purchases on a lease to own basis. Mr. Borczuch stated that he uses this fund for the lease to own payment on the front end loader. If he leases to purchase a new truck the city will not make a payment until next as it takes 9 to 10 months to build the truck. He stretches the life cycle of each piece of equipment.

Mr. Nogalo stated that fund 315 has had a negative balance of $2,096.21 and has had no activity. There should be no negative balances in any funds.

Mr. Nogalo stated that fund 317 has a balance of $421,000. Mr. Borczuch indicated that these funds are for the underpass on Columbia Road, the hillside maintenance, any work that is needed. Last year funds were utilized for the “City of Olmsted Falls” sign on the underpass. At this point maintenance for the hillside is approximately $9,000 to $11,000. He stated that once the bridge reaches its 10 year lifecycle we may need the bridge sandblasted and repainted. He stated that unfortunately the city owns the bridge. Mr. Miller stated that it would also be the city’s responsibility to replace. Mr. Borczuch replied yes. He stated that the city has multiple culverts and bridges that it owns because they are under the 10 foot span of the county restrictions, anything over 10 foot span is the county’s maintenance but anything under 10 foot is the cities.

Mr. Nogalo stated that there is an assessment and debt fund; one is water line construction and the other is collector sewers. There were some loan adjustments and they started at $2,059,000.00 for the sewer portion and $656,000 for the water line portions and was a project that began before 1999. Mr Borczuch stated that this could be a water line replacement with Phase II which was in 1997 or 1998. Mr. Nogalo stated that this will end in 2019 our final debt payment will be January of 2019.

Mr. Borczuch stated that in the 301 we allocated $45,000 for a new roof for the old service building. Mayor Graven indicated that a discussion is needed regarding attempting to sell that property. Ms. Duncan stated that there was a previous attempt to sell the property.

Mr. Nogalo indicated that he researched back to 2010 regarding funds balances. He stated that you can see from the information distributed that the fund balance has been declining from $2 million down to what we are projecting for this year at $120,000. Hopefully we will not end the year at $120,000. He stated that the general fund cannot go into the negative. Mayor Graven stated that in the next three years he would like the revenue and expenses to look similar to 2013. Mr. Nogalo stated that this will take time. The Mayor has already made changes. He stated that in July the city passes a tax budget and you estimate all of the funds. Last July it was stated that the city would begin 2018 with $1,955,000 and he does not believe that there was a $1,955,000 since 2014. He is puzzled why the tax budget would show that the general fund balance beginning 2018 at $1,955,000. Again, in July we will pass another tax budget that will be given to Council and we will project 2019 and believes that the beginning balance will be $120,000. He stated that the year ended with $680,000 versus the $1.9 million. Again, this is an initial sketch of the following year’s budget and the main purpose is to let the county know that we want to use all of our property tax mills. He stated that we have to take seriously on projecting what next year’s budget will be in revenues and expenditures. He stated that the revenues were estimated correctly. If you review 2013 and 2014 years those numbers were estimated low, so these figures go from one extreme to another. He stated that the tax budget we present later this year for 2019 will approximate how we end 2018.

Police Department – Mr. Nogalo stated that not all the wages are in the report as there is a special fund and during the year he moves a portion of the wages to this fund. He stated that the law enforcement payroll is $1 million and $575,000 was full time. We broke down part time and overtime in the budget. The remaining amount of the wages goes into the police levy fund (107) which holds approximately $240,000 for wages. This levy is passed by the residents every five years.

Chief Rogers indicated that he has made some cuts in the department. The $116,950 is a budget of 5,000 hours, obviously this number is not the total amount of money that is spent on part time employees as we do pay into their pension funds. From his perspective there are a couple of important factors, the first is he has cut part time hours to a point where its approximately $10,000 per month just in wages which comes to approximately $120,000 for 2018. Mr. Nogalo stated that for benefits there is about 15% added to that number. Chief Rogers stated that he made sure to have a number of shifts per month he could live with knowing that there will be lean months and months were they will be needed more often. For example, June, July and August. He knows that in July part timers will have more than 36 shifts but he budgeted for 52 per month and is saving 18 shifts on lean months. Mayor Graven stated that we want to keep the city safe and after the cuts that were implemented we have the same amount of cars out as the township which is 2 ½ square miles bigger and have 1 ½ times the population. Chief Rogers stated that he wants to assure Council that we have a sufficient police force out on the roads on a daily basis. The full time wages are higher than 2017 due to the fact that we hired two more full time officers at the end of 2017, which helps cut the part time wages. The vast majority of his budget is payroll as with other departments.

Mr. Stibich stated that the police department is listed under law enforcement as well as other funds. Mr. Nogalo stated that outside the general fund the 107 fund is used for wages. Chief Rogers stated that this has been done for several years as this fund is earmarked per ordinance. These monies have to be spent on certain items within the department and as a city we have chosen over the last several years to put these funds into payroll. Mr. Stibich stated that there is some funds in 116 for pensions. Mr. Nogalo stated that there is a state law that our inside millage if you have a police and fire department .3 mills will always be allocated towards police pension. He stated that the police pension generates approximately $57,000, the pension for full time officers is approximately $140,000. The general fund would then transfer $85,000 to this fund in order to cover the police and fire pensions. He stated that PERS employee contribution is 10% and the city matches that with 14%. Police officers contribute 12% to their fund for ever $1,000 of pay and the city puts in 19% for every $1,000 of pay. Mr. Stibich asked if the part time costs would be lower. Chief Rogers indicated that they would be. Last year the part time officers worked 9800 hours and he has budgeted 5000 hours for this year.

Mr. Stibich asked what would be included under professional services. Chief Rogers indicated that last year almost $30,000 was used for fleet maintenance, not fuel. Mr. Stibich stated that in 2015 and 2016 these increased by $20,000. Chief Rogers stated that a big part of that is the department stopped purchasing cruisers and believes the costs will get worse. Mr. Stibich asked which shop did the city’s repairs. Chief Rogers stated that he takes the cruisers to Hannicks. For simpler, issues, like wipers, lights, etc., the vehicles are taken to Columbia/Cook Sunoco. He stated that currently the truck is at the Dodge dealership due to extensive work needed. He stated that if you remove the vehicle just purchased in 2017, the newest vehicle driven is 2013, we have 2011 and 2010’s. We keep putting money into them to keep them on the roads. Mr. Nogalo stated that if the city does purchase newer vehicles there will be an impact on the maintenance as well as insurance as the insurance companies do not want to see aging fleets. Chief Rogers stated that newer vehicles are safer for officers as well, which is why there such an expense in maintenance on the older vehicles. He stated that also included under professional services are copier fees, car washes, pre-employment physicals, and radio fees, which will be moved and paid for out of intergovernmental fund. He stated that after speaking with Mr. Nogalo, anything that is being paid to another government agency should not be listed under miscellaneous professional services it should come from intergovernmental. Mr. Nogalo stated that additional accounts will be added for departments, for example, service department should have an account for salt as that is a significant expenditure.

Mr. Nogalo stated that the next biggest expense is dispatch. Chief Rogers stated that he would like to point out that this expense comes from the general fund as there is no levy. However, it only reflects in the police department budget even though they are used for fire and service. Mr. Stibich stated that in 2017 there were wages of $31,000. Chief Rogers indicated that these wages are due to when the police clerk was part time. The clerk is now full time and her salary has been included under his full time wage categories.

Chief Rogers stated that his hope is to utilize the police trust fund for computers. Mr. Nogalo stated that he has to research the ORC and determine what this fund can specifically be used for.

Mr. Nogalo stated that the biggest challenge is replacing vehicles and will try to incorporate a schedule of replacement into the budget.

Fire Department – Mr. Nogalo stated that $450,000 of the department’s wages are taken from the general fund and placed into fire levy fund 105, which was passed by the residents for the general operations of the fire department. Mayor Graven stated that in full disclosure Chief Gluss requested an assistant chief and was informed that would not take place as there is no money for an additional employee.

Chief Gluss stated that his department has a fire equipment fund which helps offset his purchases from the general fund. He budgeted approximately $15,000 to $30,000 for maintenance on the fire engine and truck due to the fact that the maintenance previously was somewhat laxed and does not anticipate that reoccurring.

Chief Gluss stated that part time wages are $268,750 which is an average of 12,500 hours a year. When he put the wages together he completed a five year model in order to average. He stated that he has one individual who pays into PERS due to the fact that he has been on the department for an extensive period of time. Before 1992 part time firefighters paid into PERS.

He stated that he has a significant amount of overtime built into the contract. Contractually they average around 250 hours of station fill, there is 30 hours of Con Ed. and 100 hours that is split up for flushing hydrants. Mayor Graven asked if the $74,000 the lowest we could have budgeted. Chief Gluss stated that he came up close to $100,000. He stated if you look at the 2016 and 2017 actual expenses overtime was $100,000. The department has classifications for overtime, one is non-benefit. We have benefit overtime which is allotted by the contract and then there is overtime not allotted by the contract. He took overtime from almost 550 hours down to 200 and we will never eliminate that. An example of non-benefit overtime includes if at 6:30 a.m. someone calls off sick he has to pay overtime for a couple hours so a part timer could come in. There are rare occasions when we have an open shift and no one will fill it then we offer it as overtime. He has been able to significantly cut that over the past year. Mr. Miller asked if all cities had similar sections in their contract for guaranteed overtime. Chief Gluss replied no. His department has officer in charge pay which came about because there is a cap on longevity at $1,300 and at the time when they negotiated the Mayor had stated that if you wanted to make more money you had to earn it. So, in lieu of taking the cap off of longevity they gave officer in charge pay. Officer in charge pay is one hour of overtime per 12 hours that they are in charge. So, when he is there during the day the firemen do not get officer in charge pay, but from 7:00 p.m. to 7:00 a.m. they would get one hour and on Saturdays and Sundays they would get two. The same holds true with what we call benefit fill which started at 50% then dropped to 30% and is currently at 40%. If someone takes the day off we split it into 12’s; so 40% of his time goes to full time overtime and 60% goes to part time. This was negotiated years ago when we used to have two man shifts but now we have three man shifts. The police had the same thing in their contract but has been reduced to 64 max a year. Mr. Miller stated that when he sees these numbers he sees another fire fighter that could be hired rather than paying over time. Chief Gluss stated unfortunately since it is contractual if we were to hire someone it would actually increase the costs. Historically, we have had two administrators and five firefighters, currently we have one administrator and six firefighters. When the past administration replaced him with a full time fire fighter they actually increased the overtime budget because the assistant chief did not work overtime. So instead of having five in the union you now have six.

Chief Gluss stated that uniforms and clothing is contractual, full time firemen receive $300 cash and $600 PO and part timers get $300. He stated that educational and training $3,500 is contractual as each full time person gets $500 allotment to take any classes they want and the other $3,500 is for part time. Since we do not have different pay grades for part time and he has part timers on the dive team, fire investigation that is where the money goes for the continued education. He stated that he increased the supplies in order to budget half a computer purchase each year. We have a copier lease which is cheaper than what we were paying for the copier at the fire station and we now have color.

Chief Gluss stated that his other big expense is wireless communication. We have two iPads that are cellular as well as two cell phones. Unfortunately one of each sit idle but are needed in case a second squad call comes in. Mr. Nogalo stated that $8,000 intergovernmental funds are for the Southwest Emergency and $9,700 is for Cleveland Water for fire hydrants. Chief Gluss stated that SERT is the Southwest Emergency Response Team and similar to police SEB. SERT includes 19 communities as we are all too small to have arson investigators, hazmat techs, dive, etc. So, the 19 communities come together and we have one regional team and is 15% of your staffing has to be part of one of the teams. He stated that he and Mr. Kimbro are on the fire investigation team, one part timer and one full timer are on dive.

Mr. Nogalo stated that fund 105 is where the $450,000 for payroll comes from and total fire payroll is $873,000. Chief Gluss stated that he has spoken with the finance director and will be working to clean up the fire equipment fund. The fund itself brings in $125,000 per year, approximately, and we leased the ladder and the lease payment was $75,000; in his opinion he would rather save the money in order not to lease. He came to Council last year as he had 28 SCBA bottles that were out of DOT spec and was able to purchase 10. His goal is to purchase three in the next coming years rather than purchasing a large quantity all at one time. He stated that Chief Potts was able to get over $1 million in grants and every one received a new turn out gear with that grant. Unfortunately we have come to the 10 year mark and the gear is to be replaced every 10 years. He will try to replace three sets of gear every year as opposed to all 10 in one year. He has $15,000 for professional service and maintenance which is used basically for the trucks maintenance, the cots, monitors calibrated, pumps tested, ladders tested, SCBA’s tested, and these are mandatory inspections.

Mr. Stibich asked what the professional miscellaneous services covered. Chief Gluss stated that he reviewed previous years and one year there was an expense of $22,000 for the tower repair, and is unsure of the XP Tower rent covered. He stated that the tower was out of service last year due to the fact that two bolts become dislodged and the wiring was frayed and had to be sent back to Pennsylvania. This type of repair should not happen again.

Chief Gluss stated that there is a FEMA fund 136 and he has asked Mr. Nogalo to look into this fund. For over a year, he had asked Mr. Presley to look into it to no avail. There is $24,000 in the fund and from his understanding this is a grant we received in 2014 and the monies are still sitting in the fund. These monies would help him purchase equipment. We received a BWC grant for $15,000 to put in diesel exhaust removal but the total cost of the project is $31,000, so we will receive half the costs of the project from BWC, if the grant is accepted. Mr. Nogalo stated that in 2014 the city received a grant in the amount of $377,000 but only had expenses of $302,000. In his experiences with FEMA you incur the expenses, they review the expenses, and reimburse those expenses. The following year there was $80,000 more in expenses which leaves a balance of $24,000. Chief Gluss stated that he believes this grant was from the radio purchases because 2014 is the year when the city changed over to centralized dispatch. Mr. Stibich stated that a FEMA grant would be justified by specific expenditures but may have not been transferred to the proper fund. Mr. Nogalo stated that this was during the transition of 2013 to 2014. Mr. Stibich stated that we need to determine what fund these monies belong in. Mr. Nogalo stated that he does not understand what a FEMA grant would have to do with dispatch. Chief Gluss stated that the city received an $800,000 grant to move dispatch to Strongsville and received a FEMA assistance to firefighters grant. Ms. Duncan stated that this is what the city used to offset a lot of the city’s costs for buying into the Strongsville dispatch remodel.

Mr. Nogalo stated that there is not a lot of good descriptions for 2014 but in 2016 and 2017 there are specific details. He will go back to 2013 and 2014 to determine what the FEMA monies were for. He cannot move any monies until he knows the reasons behind the expenses.

All other City Departments – Mr. Nogalo stated that Council’s budget include part time wages for the members and the full time wages are for Ms. Mancini. He put her entire payroll into Council’s budget, but, will not end that way. Ms. Mancini wears numerous hats and her payroll is allocated into various funds. He believes that her final wage total, like last year, will end up around $41,000. He stated that Council does not have many non-payroll expenditures. The miscellaneous professional services would include codification of the ordinances.

Mr. Nogalo stated that Mayor’s Court has a slight change to the payroll as the magistrates were added rather than through accounts payable.

He stated that the Mayor’s salary is not all the Mayor as we still had the first pay in 2018 to the former Mayor and covers the vacation amounts.

He stated that he has a lot of ideas for the finance department and could probably save $15,000 or $20,000 in non-personnel expenditures starting with EMS collections. There is a specific bank account which is a lock box. This lock box gets approximately 20 checks a month, we pay $550.00 for this account. When he met with Great Lakes, who handles the EMS billing, they indicated that the payments could be received by them which eliminates the need for the lock box. By eliminating the lock box the city would save approximately $6,000 per year as there is no need for the box. He stated that the Medicare payments are electronically sent so there is no need for this lock box. The lock box will be eliminated as soon as possible. He stated that the city pays $1,700 for the accounting software as well as a maintenance fee of $3,000. He stated that the State of Ohio has a great accounting system at a cost of $3,000 and you will receive a computer every two years along with a printer. He will look at a more updated version of the current system but if need be will move to the State of Ohio system. The State of Ohio cost would be a cost of $3,000 compared to an over $20,000 cost.

Mr. Nogalo stated that the city currently still writes checks for payroll. We are going to look into utilizing a payroll agency which could save the city money and would be more time efficient. One thing he has noticed is that Mr. DeSan still has to go into the bank to move funds from the general account to the general account each time he does payroll. He would like to electronically pay the utilities through ACH, all amounts will be reported to Council. He believes that the city could also use a credit card with cash back. He will need to discuss these changes with Council due to the fact that within the Charter it states any checks written must be signed by the Council president, there is no language regarding ACH payments. He stated that the finance budget is $400,000 and he would like to get those figures own to 2013 levels. He stated that he would like to have the paystubs online rather than paper stubs. Ms. Nicolay stated that she likes his ideas.

Mr. Nogalo stated that the law department budget includes the law director and assistant law director. The big number is the legal services, when he discussed the issue with Mr. Bemer he indicated to keep the number the same as last year, for outside legal services. Ms. Jones indicated that there are no part time wages. Mr. Nogalo stated that the figure includes Mr. Bemer and Mr. Dolan. We also had the one payroll this year for the former law director and assistant.

Mayor Graven asked Mr. Nogalo to explain the 13 payments for health insurance this year. Mr. Nogalo stated that the health care carrier was changed and historically the invoice for January is received in December, this did not happen. Therefore the city only made 11 health care payments in 2017, not done by the previous administration it was due to the change in carriers. Therefore, we due to the fact that we only made 11 payments last year this year we will make 13, which is included in the budget. We are looking at making a change in the health care brokers. Mayor Graven indicated that he will interview different brokers in an attempt to save expenses. Mr. Nogalo stated that 1/3 of the employees joined the HSA plan and the others are premium based, this does not make sense, either you have everyone be in an HSA or premium. When the city pays almost $25,000 for family coverage for the employee that’s a pretty significant amount. For example, in Walton Hills for a full family coverage in health care the cost is approximately $16,000 with an employee contribution of 20%. Mr. Stibich asked if this was the policy cost or the city’s share. Mr. Nogalo stated that this is the city’s share of the HSA plus $4,000 was placed in a bank account for the employee. Mayor Graven stated that for those on the HSA plan the city pays the full cost plus the $4,000. We will look into eliminating this plan.

Mr. Nogalo stated that included in the governmental services we will have some for the Board of Elections due to the runoff election. He stated that when the county forwards our property tax collections the fee for this election will be taken. The same as the withholding for the county health system, Board of Health.

The city’s insurance is also in this budget item which is approximately $130,000. He stated that based on certain circumstances these premiums increase. Mr. Stibich asked which budget line includes these costs. Mr. Nogalo replied miscellaneous professional services.

Mayor Graven indicated that he unfortunately had to let some employees go and the unemployment was budgeted. Mr. Stibich asked if the city was self-insured. Mr. Nogalo replied no, in the private sector you pay a percentage of payroll but in municipal governments you do not pay any insurance, so whatever the individual is paid the city is billed. We estimated $74,000. Mayor Graven stated that if these individuals obtain employment that number would decrease and all did file for unemployment.

Mr. Nogalo stated that the city does not pay for street lights as there is a special assessment fund for those expenses.

Mr. Nogalo stated that he budgeted Mr. Sheehy payroll only under the engineering costs. But, he does bill the city for projects he completes. The biggest expenditure for Mr. Sheehy is for the Phase V project and that is a six figure amount.

Mr. Nogalo stated that the economic development fund has a budget of $5,100 and we have also budgeted for a part time person for summer help.

Ms. Jones asked if the insurance costs were that high. Mr. Nogalo stated that this coverage is for the employee and spouse and covers medical, dental, vision and life insurance. Mayor Graven stated that the city pays approximately half a million total in insurance coverages. Mr. Nogalo stated that if you take all the health care, medical, dental, vision and life insurance last year’s costs were $425,000 and this year those costs are $550,000. One of the reasons is the 13 payments versus 11 and is approximately $80,000 or $90,000. There has been an increase as family coverage is now $25,000. Mayor Graven indicated that he will attempt to bring those costs down next year. Mr. Nogalo stated that he is unsure as to Fedeli’s costs as their broker fees are included within the premiums. He stated that the county plan does not have broker fees. Mr. Stibich stated that pensions and 401K’s brokers are required to disclose those costs. Ms. Jones stated that our smaller financial institutions have a consortium to save money. Mayor Graven indicated that he and Mr. Nogalo will be discussing those possibilities. Ms. Duncan stated that the city used to belong to the county program but their fees where increased dramatically, because their costs were low and they lost money.

Mr. Nogalo stated that last year’s payroll was $3.2 million and this year is $3.1 million. We have some run on payroll expenditures from last year. We have reduced the payroll by $100,000 but that is offset by the health care costs. He did not budget outside of non-payroll. There is about $1.5 million budgeted for Phase V. He stated that the fire and service departments are good with their equipment but it is police that is a concern as we have to make sure that those vehicles are replaced timely.

Mr. Nogalo stated that there is also a specific railroad fund with $400,000 and he needs to determine if that is restricted for specific items.

Mayor Graven stated that there is not a lot of funds for any salary increases which will need to be discussed during negotiations. He would love to give all the employees raises each year but in reality we cannot. Once we begin negotiations all the figures will be given to the unions.

Ms. Duncan stated that she would like to know the capital outlay has been $540,000; $450,000 then $2 million which she believes was for the service department; $779,000 then increases to $1.5 million. Mr. Nogalo stated that the $1.5 million is for the Phase V project. He stated that the city will receive grants and monies from other governmental entities but this is a $12 million dollar project. He stated that Mr. Sheehy has indicated that in the end of the city’s costs could be less than a million. He stated that Chagrin Valley is a value to the city as they do obtain grants.

Mayor Graven stated that last week a meeting was held regarding Mill Street and Mr. Sheehy was in attendance at that meeting. He believes that the city will save another $36,000 based on this meeting. The residents and business owners who live in the area are all against this project. He asked that anyone in favor of this project raise their hands and not one single person did, so he discovered that 100% of the business owners and residents are against this project. He stated that he will sponsor the legislation to cancel the project; we are here to serve the public as public servants. The legislation can run three readings in order for Council to complete their due diligence. He stated that the residents and business owners in attendance at the meeting indicated to him that they were not notified of this project. Mr. Gorski asked if there is a way that this grant could be repurposed or was this grant specifically for this project. Mayor Graven asked if we could choose parts of the plan to move forward but Mr. Sheehy replied no. The biggest opposition was making Mill Street one way and this is the main part of the project because the so called experts indicated that a one way street would be safer, but, again the residents disagreed. He is not an expert on one way streets versus two way but the county indicated that changing to one way would make it safer.

Mr. Stibich stated that the residents he received feedback from indicated that this change would take away the ambiance of Grand Pacific Junction, they like it “old timey.” The way the street is now gives exposure to those store fronts and ease of deliveries, deliveries would be difficult as a one way street with parking on both sides. Mayor Graven stated that even though parking spots would be added business owners did not want all those spots in front of their buildings.

Mr. Miller would like to make sure that letters are sent out making sure residents and business owners are aware the project will be cancelled. Mayor Graven indicated that a letter was sent to all the business owners and the residents living in the area to inform them of the meeting that was held. Mr. Miller indicated that he would like to the residents and business owners to be aware that the city is reevaluating the project and would like to make sure we are getting full buy in from the residents. Some do not attend meetings because they assume nothing will get done or that there are other options. Ms. Duncan stated that there were a lot of people in the business district who were not in favor of this project.

Mr. Gorski stated that this project falls within his ward and he has received significant number of phone calls and emails from a number of people expressing their concerns about the project. He stated that this project was implemented as part of the previous administration’s master plan. Mayor Graven stated that the application for the grant was submitted sometime in 2016. Mr. Gorski stated that he believes this was slatted as one of the projects the previous administration wanted to do. Mayor Graven stated that he believes this did have something to do with the county’s master plan but Mr. Haviland would probably have more information.

Mayor Graven stated that he will be reviewing Safebuilt and discuss the possibility of hiring a part time building administrator in order for the city to keep more of the funds. Mr. Nogalo stated that 80% of the permit fees is given to Safebuilt.

Mr. Nogalo stated that the city needs to find more revenues without taxing the residents. He stated that RITA handles the city’s tax collections. He stated that RITA collects for 280 cities and we are able to access their system. He stated that one issue is that you need to review periodically the business parcels in order to make sure whoever the property owner and business owners are go into the RITA files. The review is to ensure that RITA knows about the businesses. He has seen many times that RITA did not know everyone. You do have to review periodically to make sure they are informed, especially building owners who rent commercially. He will begin that process and see if we can increase revenues. Mr. Stibich stated that he believes RITA is tied into the IRS to obtain that information. Mr. Nogalo stated that they do but only on individuals. For example, there could be a business that has locations in several cities and as long as they are filing with RITA they do not know that parts of the business is in Olmsted Falls. He reiterated that you do need to “checkup” on them and does not believe anyone has been checking. Our building department does send them information anytime a contractor registers in the city but we need to follow up more in order to make sure property owners are filing a return.

Ms. Duncan stated that we are at a million dollars with debt service but that will be reduced to $600,000 in 2018. Mr. Nogalo stated that we have notes that rollover. He still does not understand why we issued a bond then purchased ourselves. An example of buying your own bond would be a special assessment for street improvements because the property owners cannot pay the $50,000 for each property, so you issue a bond with interest. The property owners would then pay the city, not only the principal but interest, and you buy your own bond. This did not make any sense and he just does not understand as there was no purpose. We also had to pay Squires $6,000 to create the bond. This year we will pay principal and interest to ourselves. Ms. Duncan stated that this was to pay for the roof. Mr. Nogalo replied yes. We initially paid for it but also issued out debt, we should have sent the debt out as someone would have bought it and then we would have $500,000, then we would pay off the debt. We purchased our own and in essence it was exercise in futility.

Ms. Duncan stated that the $590,000 is due to the city still paying off the renovation of the administration building. Mr. Nogalo replied yes. We will pay principal and interest on that. Ms. Duncan asked if the $590,000 is being reduced. Mr. Nogalo stated that in January of 2019 a couple of loans will come off which will create an opportunity for the city to incur more debt. In 2019 the city will see an increase in property tax because the county will complete property valuations; not all our mills are applicable but we will get some, but it will not be our savor.

Mr. Stibich indicated that Mr. Nogalo has completed a very thorough job. He has never seen the budget completed like this before.

Mr. Nogalo stated that Council will receive accurate detailed reports for the cash balances each month.

Mayor Graven stated that his goal is to get back to the way the finances looked in 2010 through 2013. We want the expenditures to be less than the revenues but unfortunately in the last few years expenditures exceeded the revenues, but this will take time. Mr. Miller stated that all of Council wants that as well. In order for us to be in the exact same position that we are in right now next year we will have to flip this by about $380,000 in 9 months. Mr. Nogalo replied or at least start the trend in a different way. The two big gorillas in the room are police and fire and having a Mayor who has been involved in negotiations will help. Mayor Graven stated that he will inform them that there is no money for raises. He will have to be tough during negotiations. Mr. Miller stated that even without raises it keeps the city in the exact same position. Ms. Jones stated that 250 hours of overtime. Mayor Graven stated that in his 30 years in the fire department he never received guaranteed overtime. Ms. Duncan stated that she is assuming that someone is pushing a pencil and calculator that knows that if you give them “X” amount of raise but you will not receive mandatory overtime there has to be a sweet spot there somewhere. Mr. Miller asked if negotiations would begin this year. Mayor Graven stated that once the budget is completed negotiations will begin.

Mr. Nogalo stated that what the city will see over the next 20 or 30 years is more consolidations. He stated that Walton Hills does not have a fire department that is contracted out; Parma Heights are in the same situation, their police and fire departments cost $4 million it would be natural for them to join with Parma. Ms. Duncan stated that she does not understand why the Township and the City have not already done that.

ADJOURNMENT

Mr. Miller moved to adjourn; Ms. Nicolay seconded. Poll: 7 ayes; 0 nays. Motion carried.

The meeting adjourned at 9:24 p.m.

Lori Jones, Chairman Finance Committee Angela Mancini, Clerk of Council

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