Yesterday’s financial workshop was the first step in 2011 township budget discussions. This was a public meeting and agenda for the meeting was as follows:
2010 year-to-date revenue/expense review and end-of-year projection
Budget Advisory Working Group implementation update
Five-Year Capital Plan (2011 – 2015)
Public input about priorities for 2011 budget
Unfortunately I was unable to attend the meeting but I understand that it there was a successful open exchange of township financial information between the supervisors, staff and residents. Knowing the importance of this finance workshop, I asked a couple of friends to provide notes/remarks/comments. Because I did not attend the workshop, I do not feel comfortable combining the comments of the 2 individuals in to one document . . . therefore, I am providing both sets of comments from Resident #1 Notes and Resident #2. I appreciate the effort these 2 individuals expended on writing these notes and thank them both! This is important financial information and I hope that you will take the time to read their notes thoroughly.
Resident #1 Notes:
I attended the Financial Workshop held on Saturday at the Township building. In attendance were all 7 Supervisors, the full complement of Township managers (Mimi Gleason, Tim Klarich(the new Finance Director), Police Chief Chambers, Tom Scott, Steve Norcini, and Steve Burgo) and 25-30 citizens. The Township provided a set of handouts, with substantial detail, that hopefully will be available on the Township website. I’ll try to hit the high points, as the meeting lasted 2 1/2 hours. There were several main topics discussed:
1. 2010 YTD review and end-of-year projection (Tim Klarich): The General Fund is projected to finish the year with a small surplus. On the revenue side, Real Estate and Transfer Taxes are right on target, while licenses and permits are well above budget (building and Aqua America projects). Unfavorable to budget are the Local Service Tax ($52/worker) and Investment Earnings, which is much lower than had been budgeted ($16,700 projected vs. $131,000 budget). On the expense side, the largest variance was employee benefits projected at $169,700 less than budget – several expense categories were $30-50,000 unfavorable to budget – specifically mentioned were supplies which were impacted by additional road salt of $60,000. Mimi did comment that they had budgeted for a lean year and expense control was a priority.
There was also a review of the Sewer Utility Fund and the Valley Creek Fund (my understanding is that this is the “regional sewer authority”, of which Tredyffrin is the steward). Sewer fees are right on target, but again, Investment Earnings fell significantly short of budget. There were large transfers between our Sewer Utility and Valley Creek, which, frankly, I did not fully grasp. This created an unfavorable deficit for the Sewer Fund and a larger favorable surplus for Valley Creek. Finally, the discussion revealed that the expenses for streetlights and traffic signals within the Sewer Fund is about $600k annually.
As for reserves, the total of cash and investments are $50mm+, $17mm of which are unrestricted. The breakdown of bonds issued is $21mm for the Township and an additional $7mm in Municipal Authorities (presumably Sewer?).
JD raised the good point that municipal financial statements are difficult to follow and that more traditional corporate-style financial statements (income statement, balance sheet, cash flow statement) would be helpful in decision-making, especially for the Supervisors. Sounded like Tim may work toward adding those type of reports.
2. BAWG update (Mimi Gleason): A handout was provided listing all of the roughly 130 individual BAWG recommendations. Next to each was listed its status – a large number of recommendations have been completed and it was noted when, some have been considered and will not be implemented, and a number (maybe 1/3 of the recommendations) which either have not been completed or will be considered in the future. During this section, in response to a citizen’s question, Chief Chambers gave an update of his Department’s work this year and indicated that they have been able to maintain their service level and the public’s safety very well, even in the face of the budget cuts and higher call volume. While there was relatively little other discussion of individual recommendations, in my opinion, the thoroughness and scope of BAWG’s work and the progress made so far is impressive.
3. Five-Year Capital Plan (Mimi Gleason): The review of the twenty planned capital projects was divided by category – Economic Development, Infrastructure Upgrades, Quality of Life Improvements, and Property Upgrades. The total cost of these projects is more than $102,000,000 – about $57mm in the next 5 years and the balance beyond 5 years. These projects will be financed with a combination of capital reserves, bonds, Sewer Funds, and grants.
By far, the biggest items are the Paoli Transportation Center ($40 million) and the Route 252 Bridge Replacement in Paoli ($25 million), followed by a new Paoli Library ($7mm), where the $1/year lease on the current building expires in 2016. Of note, some of the sewer projects are included under the Economic Development category, as an expansion of the current system is required for redevelopment in some areas.
Editorial comment: At the meeting, I commented that the Paoli Transportation Center was not under the Quality of Life Improvement category, as I am not at all sure that it will improve, not diminish, the quality of life for Tredyffrin residents. Further, understanding that the vast majority of the funding for some of these projects will come from state or federal grants, I urged the Supervisors to be equally vigilant in spending grant money, as at the end of the day, it does come from our federal and state taxes – evaluate these projects as if we are paying the entire bill. I also questioned the Township tax revenue opportunity compared to the incremental Township costs for maintaining the infrastructure, police presence, etc. -understanding that this project is many years from completion, there wasn’t much clarity to the response. As you might be able to tell, I’m not all that thrilled about the PTC – can’t wait for Paoli to be like 69th Street or Norristown.
4. Public input about priorities for 2011 budget: Open forum for public comment. In response to a question about returning the fire funding to 2009 levels, JD and Bob Lamina updated on the joint T/E Emergency Services Board – it sounds like a positive step, they have had a presentation from Berwyn Fire and a Paoli presentation is scheduled – my impression was that the Township funding will be restored. One citizen urged that the “Officer Friendly” program in the schools be restored. Dariel Jamieson urged that the streetlight and traffic signals be removed from the Sewer Fund and be included in the 2011 Township budget.
All in all, a very constructive session. A great deal of information was offered, the citizens had opportunity to learn and ask questions, and there was none of the animus that has sometimes been present at BOS meetings.
The following notes were provided by another resident who attended yesterday’s finance workshop.
Resident #2 Notes:
The meeting covered a lot of ground in 2 1/2 hours. All supervisors, Mimi Gleason, Tom Scott, Steve Burgo, Steve Norcini, and Chief Chambers were all in attendance.
I. 2010 Year-to-date Review of revenues and expenses
First on the agenda, new Finance Director Tim Klarich reviewed a 7-page summary of revenues and expenses up to 8/31/2010, with projections for the final months of the year.
He reported that:
- The Township Is set to end the year with a projected operating surplus of $175,400.
- Real estate taxes collected as of 8/31/2010 are 98% of budget.
- Transfer tax receipts are $200,000 ahead of last year’s but still about $500,000 unfavorable to budget so far.
- Large transfer tax collection to date is $177,000 with $211,000 projected by year-end. This total – $388,000 – has been budgeted to be transferred to the reserve fund at year-end.
- Local services tax collections are projected to be $82,500 below budget. Why off? Is the collections rate lower, or has the number of employees paying the LST dropped more than anticipated?
- Spending for salaries, insurance, supplies and professional services went over budget this year.
- Employee benefits were less than budgeted by $169,700- due to employee changes in plan options.
Supervisors made comments and asked numerous questions:
- Bob Lamina asked that more effort be made to keep supply and professional service within budget in 2011
- John Di Buonaventuro questioned the accuracy of a projected $395,000 surplus in the sewer fund revenue. Though the Township received a 1-time unexpected refund of $667,800, it has a projected operating deficit of $201,100.
- Mimi explained that streetlight expenses are included in the sewer fund, including $140,000 for a new traffic light and $600,000 for maintenance of street lights.
- Phil Donahue asked why salary expense was more than budgeted. Mimi explained the $38,500 difference was due to overtime for “unanticipated weather events”. FEMA has agreed to reimburse $85-90,000 for storm-related expenses but has not yet done so.
- Phil also asked about real estate tax collections, projected to be $61,700 below budget. Mimi explained that current R.E. taxes were on budget but that past year taxes due and penalties were below budget.
- Bob Lamina thought the $600,000 in transfer tax projected for the final quarter of 22010 was too optimistic.
- Mimi commented that “we will not need to tap our reserve fund if we end the year as projected.
- The year-end position: $17 million in unrestricted funds.
- Investment returns were budgeted for $131,000 but are now forecast to be only $16,600. Why the big discrepancy? The twp. kept its money in “safe, secure investments” that virtually earned nothing. However, the Township is restricted in how these funds can be invested.
- Did the Township budget incorrectly? According to Tim Klarich, no one could have anticipated the drop in returns at the time the budget was prepared last year.
II. BAWG Review – presented by Mimi Gleason
The township has implemented more than half of the BAWG recommendations.
- HR changes – personnel evaluations are being done though budget constraints prevent merit pay from being awarded.
- The township has been more diligent in its tax collections; it hired a consultant to look for businesses that are not in compliance re the LST.
- There will be more efficient tax collections system by mid 2011. The Twp. Is still using an older system and needs to update software.
- Bob Lamina suggested organizing a “purchasing summit” with area townships and school districts. Mimi replied that TT is already a member of several co-ops e.g. they buy salt at a discount.
- The Twp. Is looking to combine service contracts with other municipalities; however, according to Steve Norcini, some areas like paving do not provide the same savings opportunities bc of timing differences
- Coordinating purchasing with other entities will “take several years to fully get in place.”
- TT belongs to a number of professional organizations and municipal groups; cost-sharing is discussed regularly.
- Changes take more time bc of reduced staff and restricted overtime. Staff workload is high, and in some cases, extremely high.
- Chief Chambers reported that there were 3000 more police calls in 2009 than in 2008; from July 2009 to July 29, 2010 there has been an additional increase of 4,600 calls over the 12-month period before.
- Budget cuts eliminated the DARE and Officer Friendly programs; this allowed two more officers to be put on the street full time.
- Police overtime is not entirely predictable. Chairman Lamina assured residents that there was no restriction on OT when needed by PD.
- Property crimes and domestic disturbance calls up. In other areas, crimes are down over years past.
III. Five-Year Capital Plan (Mimi Gleason)
- An important consideration: How many projects can the Township handle and manage well given limited personnel. The Twp. may need to hire consultants and/or contractors.
- Projects are categorized as 1) Providing economic development, 2) Infrastructure Upgrades, 3) Quality of Life Improvements, and 4)Property Upgrades
- $4,606,355 is forecast to be spent on capital projects in 2010. (Only 1.3 million was spent in 2009).
- $10,226,500 is scheduled for capital projects in 2011 including:
– $437,500 for a feasibility study for widening of Rte 252, and design for reconstruction of the bridge in future years; to be funded by bonds and grants
– $505,000 for planning and design for Paoli transportation center
– $1,500,000 to upgrade Wilson Rd sewer pump station
– $308,000 to increase capacity of sewer line in Berwyn area
– $4,200,000 for Sewer treatment plant upgrade
– $600,000 for 4 miles of road resurfacing in twp.
– $120,000 for street light upgrade to LED
– $100,000 for storm water management improvements at Trout Creek
– $150,000 for storm sewer replacements/drainage improvements
– $120,000 to replace lining of sewer pipes in Valley Creek and twp sewer system
– $2,000,000 for Tredyffrin Library renovations including new roof and HVAC
– $186,000 to complete HVAC controls and ductwork in TWP Building
- Primary source of funding for capital projects:
– Capital Reserve Fund
– Bond funds
Supervisor DiBuonaventuro asked that township reporting change to reflect standard accounting practices i.e. provide monthly profit & loss statement, balance sheet and cash flow statement. Reporting for capital spending should show depreciation schedule, gain/loss on sale of asset etc.
- Note: the lease of the Paoli Library expires in 2016. Plans for a new library are preliminary; $7,000,000 is budgeted from 2013 – 2015. A capital campaign will be organized to raise at least half of the funds.
- Willistown will share in costs; currently they account for 22% of library usage.
IV. Community comments
Ernie Falcone asked that libraries be opened 7 days a week if transfer tax revenue increased.
- Mike Heaberg questioned planned spending for Paoli Redevelopment project. JD noted that much of it would come from state and federal sources. Bob Lamina expressed his view that the project would be a net gain for Paoli and the township.
- Bill Schwarze asked why street lights and traffic lights are carried in the sewer fund and not the general fund. No one answered. In the past, it has been “That’s the way we’ve always done it.”
- Paving miles are not expensed from taxes; spending is equal to the liquid fuels reimbursement from the state since those funds have declined in recent years, fewer miles are being paved annually. However, Steve Norcini believes nothing essential has been put off. The Twp uses guidelines to decide where to pave: FHWA guidelines, the number of potholes a road has, and its traffic volume. Paving work is supervision- intensive and requires frequent inspections – seen as another limiting factor.
- Radnor Fire Co, President Jim Kelly requested that the Twp. contribute $50,000 toward the purchase of an $875,000 ladder truck. Bob Lamina acknowledged that the Township had never contributed to Radnor FD’s capital needs in the past but would consider the request in preparing the 2011 budget..
- Margaret VanNaerrson requested the reinstatement of the Officer Friendly program. Bob Lamina suggested that TESD would be asked to reimburse the Twp for any use of police time (estimated $20,000, according to Chambers).
- Mike Heaberg urged the township to continue implementing the BAWG suggestions for more expense reductions. He suggested the need for a 5-year strategic plan.
- Laurie Elliott asked that fire funding be restored at least to the 2009 levels.
- Barbara Morose suggested that the fire companies be funded from direct private contributions; she reported she had personally increased hers and asked that others do the same.