The city budget presented to council members at the Finance Committee meeting, Tuesday, Oct. 28, included using $177,129 from the undesignated fund balance to balance the budget.
“It was our feeling that to take $177,000 of that fund balance and apply it to balance the budget was a reasonable thing to do considering all the fiscal constraints you were faced with,” said interim City Administrator Chuck Kell.
He said if funds aren’t used from the fund balance, then more cuts will have to be made to the budget.
Kell described the fund balance as the city’s “rainy day” fund. The fund balance is currently around $1.7 million, and has been generated over a number of years by savings in expenditures by city departments and the decisions of past councils.
“Basically it’s money that was levied in taxes over the years in budgets, that was saved by departments in their operations,” Kell said.
Kell said $1.7 million is a “very good” fund balance. He said most communities aim to have a fund balance that equals 25 percent of its operating costs. He said Clintonville’s was around 46 percent.
“I have absolutely no concern about your financial health with using that,” Kell said.
With the size of Clintonville’s budget, he said the fund balance could be in the $900,000 to $1.1 million range.
With the cuts and use of funds from the fund balance, the city still needed to cut $8,884 from its budget if it wanted to receive funds from the state in 2016 through the Expenditure Restraint Program. Kell said the 2014 budget presented last year went over the limit, so the city won’t receive $89,000 in revenue from the state in 2015.
The committee met for almost three hours when Kell suggested the committee let him meet with department heads to finalize the cuts to get under the limit.
Over the course of the almost three hour meeting, the committee and council members bounced around several topics. The main topics discussed are listed below.
Kell said the budget presented included a major change in employee health insurance. He said the change means the city will provide less assistance to employees to pay for health insurance.
He added that it is common for communities to ask employees to cover more of their health insurance.
“This is a good program that was put in place, but it’s very common to transition back as you move forward,” he said.
The major change in the employee health insurance was included the budget that was presented to the committee a week prior. During that meeting, most of the discussion revolved around searching for a different health insurance carrier.
The change was tweaked from the prior meeting, requiring employees to pay more.
The overall change came under attack at last week’s meeting.
Resident and city employee James Beggs asked if he could address the committee. He asked for verification that the change meant a city employee might have to pay an additional $2,500 out-of-pocket, plus an increased premium.
He was told that was accurate.
He said that was a lot of money, and he would have had to of paid that the last couple of years because his wife has undergone three major surgeries.
“I ask you, where do I get it [extra money]. What do I take away from the rest of my family? What do I tell them I can’t have or have to give up? Is this fair just to balance the budget,” Beggs said. “Is there no other way? This is a very emotional subject and from my discussions with fellow employees today, it got very hot when it was found out that this was going to be brought before you. This is the feeling of the employees.”
Alderman Jim Krause was also against the health insurance change.
“Unless the city could guarantee an increase to offset this cost to them, 44 employees, I would never vote for it in a million years,” Krause said.
Alderman Greg Rose told the committee that the Clintonville School District recently made a similar change to its employee’s health insurance.
“I’m feeling that now as my family is working through much higher deductibles,” Rose said.
Later in the discussion, Finance Committee Chairman Mark Doornink said if the council decides not to make the change to employee health insurance it will have to find around $60,000 in cuts to the presented budget or also pull that amount from the fund balance. That would mean roughly $237,000 from the fund balance.
Kell said the city has worked with its insurance carrier to get the insurance increase down from a 38 percent increase to a 27 percent increase.
He also said the city is still shopping for other plans, and inquired about the state plan. He said the deadline to enroll into the state plan was Oct. 15. The city can apply in April, which he said might be a good idea since the premium is lower than what the city is currently paying, and the deductible it is paying. He did warn that the city may have to pay a penalty to get out of its current health insurance plan in April.
Later in the meeting committee member John Wilson asked if there were other options.
Peggy Johnson, city clerk-treasurer, said the city has applied with every insurance company in the market, and has been denied by one company already. She added that in the past the city has been declined by insurance carriers when it shopped around.
Rose said he was in favor of changing the health insurance plan in the future. He said he wanted city employees to have time to give input to the decision, has well as the city taking the time to research all options.
Even though Kell said he wasn’t concerned about the financial health of the city if it dipped into the fund balance, not all members of the committee agreed.
Doornink said even though the budget presented was technically balanced, it included the transfer of $177,129 from the fund balance. He added that the city has used the fund balance in the past to balance the budget, but not this large of an amount.
“If we do use fund balance, what happens next year? Do we use fund balance again? Where do we stop pulling from savings before we make changes,” Doornink said.
Kell said the most the city has used from fund balance to balance the budget was around $90,000.
Later in the meeting committee member Bill Zienert said each committee member and eventually each council member has to decide if they are comfortable taking money from the fund balance.
Alderwoman Mary-Beth Kuester said it has to be a council decision, not just a committee decision to use fund balance funds. She added that citizens need to be able to voice their opinion at the budget hearing.
Rose said it would not be irresponsible to tap into the fund balance “to save the headaches to our employees.”
Zienert said he was against the fund balance transfer and asked what plan B is if the fund balance transfer doesn’t take place.
Kell said it would probably take staff cuts to balance the budget if fund balance isn’t used.
Zienert said the city has a rolling structural deficit of $100,000.
“We’re setting ourselves up for a structural deficit and I’m generally uncomfortable with that. I think it’s shortsighted,” Zienert said.
Committee member and acting Mayor Jeannie Schley said if fund balance isn’t used, the total would equal three employees.
“I don’t know what three employees you would cut,” Schley said.
Kuester said she doesn’t see a solution that doesn’t include funds from the fund balance.
When Doornink asked what the consensus was regarding the fund balance transfer, Rose said he was in favor of it because of the healthy amount of funds in it. He said the negative short-term impact was not worth just leaving the money in the fund balance.
“It’s not short sighted to use it for good reason,” Rose said.
Schley, Dunlavy, Kuester, and Krause agreed with Rose.
Doornink and Zienert said the fund balance shouldn’t be used to balance the budget.
“I think it’s a terrible precedent,” Zienert said. “… We’ll be right back here next year, wondering how to get the money, looking at the fund balance.”
Zienert added, “It’s tempting to look at the fund balance. I’m not saying we shouldn’t ever touch it. But to this level, is frankly irresponsible.
Shortly after Zienert’s comments, Kuester asked him what his cuts would be.
Zienert offered his solution.
“You need to look at salaries and positions. I don’t pretend to know which ones, but I do understand budgets,” Zienert said.
He said a city can’t run on a structural deficit because it kicks the problem into the future.
“It’s time for us to start getting serious about it and stop talking about flowers, and start talking about how we’re going to run a city. There are any number of cities and municipalities around the state who are our size who manage to keep their citizens safe, to pick up garbage, to do all sorts of services and they’re not taking out of their fund balances to $177,000. There are ways to do it besides the one we have talked about today,’ Zienert said.
Wilson said it is not wise to keep taking money out of savings to balance a budget.
Closing the city’s outdoor swimming pool, as well as the Rec Center was discussed.
Kell said the swimming pool has about a $60,000 expense in the budget and brings in around $10,000 in revenue. The city would see around a $50,000 in savings if it were closed.
Kell said the Rec Center is about a $30,000 expense in the budget.
“It’s my opinion that all these big issues, whether it’s the pool, the Rec Center, I believe the council should have started those discussions and had the staff involved in those discussions, probably starting last spring or right after last year’s budget if that’s where you were headed,” Kell said.
He added that there are many issues involved with closing them and the council doesn’t know what the costs will be to the community. He said it would be tough for the council to make those decisions in the short amount of time it has to pass a budget. He did acknowledge that closing the swimming pool would be the easiest.
The swimming pool has been requiring more maintenance recently, but Kell said Parks Director, Justin Mc Auly said he could get the pool through one more year.
Kuester suggested closing the pool this year rather than try get it through another summer.
“That seems like a simple one to me,” Kuester said.
Doornink said he wasn’t in favor of closing the pool if there isn’t a plan in place for the future of the pool.
Rose agreed with Doornink. He said the city needs to keep its options open regarding recreational activities.
Krause said he doesn’t know of any other community that has an outdoor pool as well as an indoor pool. He said the city shouldn’t be paying to maintain an outdoor pool that is falling apart.
“I say shut it down. Shut it down once and for all,” Krause said. “… I don’t think the taxpayers deserve to pay for such an elephant like that.”
When the pool discussion came up again, Alderwoman Gloria Dunlavy said she was not in favor of closing the outdoor pool because it’s been a staple of Clintonville forever.
Kuester brought up the idea of council members donating their salary back to the city. She also suggested the mayor donate her salary back to the city.
Later in the meeting Rath made a motion to cut in half the pay each council member receives. He said since the council is asking the staff to make sacrifices the council also needs to make sacrifices.
The motion passed the committee level by a 3-2 vote. Those voting to cut council wages included Doornink, Zienert and Rath. Those voting against cutting council wages included Schley and Wilson.
During the discussion Kuester and Rose expressed concerns about cutting council wages. They are not voting members of the Finance Committee.
There will be a budget hearing on Nov. 18.