Working Document
Committee of the Whole
March 25, 2014
Introduction
The 5-Year Budget is a working document.
It is frequently being fine-tuned to take more details
into account and updated as assumptions change.
It is based on the Fiscal Year 2014 Budget.
It takes into account 5 years of historical data.
It is shaped by the input of Departments & Offices. It accommodates future plans & commitments.
Revenue Assumptions & Sources
The property tax levy will remain frozen. Sales Tax revenue will increase 2% per year.
Income Tax revenue will increase 2%, 2%, 2.5%, 2.5%
and 2.0% for years 2014 – 2018 respectively.
Departments and Offices provided projections for
revenue associated with their Department or Office based on their knowledge of trends.
Utilized Illinois Department of Revenue Forecasts. Return on Investment is estimated at 0.5%.
Expense Assumptions
Expense related to debt service is based on debt service
schedules.
Election expense will be “smoothed out” by reserving
in years during which there is only one election half of the funds needed for years in which there is a second election.
Includes 9.75% reduction in health care cost in fiscal
Other Assumptions
Capital will be funded according to amount of excess
revenue over expenditures in the previous year.
The increase in non-payroll expenditures is limited to
the lessor of a maximum increase of 2% per year or to the adjustment required to breakeven.
Excess FICA Fund Balance
The FICA Fund balance is equivalent to more than 1
year’s worth of FICA expense.
Only 7 months of FICA expense is required to be on
hand at the beginning of year for cash flow purposes.
The excess FICA fund balance will be drawn down over
the next 10 years by drawing down 10% per year of the excess to help fund the increase in FICA expense
500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 2014 2015 2016 2017 2018
FICA Fund Balance
Beg Year Balance 7 month's Expense
Excess IMRF Fund Balance
The IMRF Fund balance is equivalent to more than 1
year’s worth of IMRF expense.
Only 7 months of IMRF expense is required to be on
hand at the beginning of year for cash flow purposes.
The excess IMRF fund balance will be drawn down
over the next 10 years by drawing down 10% per year of the excess to help fund the increase in IMRF expense resulting from payroll increases.
1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 2014 2015 2016 2017 2018
IMRF Fund Balance
Beg Year Balance 7 month's Expense
Current Scenario
Payroll increases in general will be limited to 2%, 2%,
2.5%, 2.5% and 2% for years 2014 - 2018.
There are additional increases (such as merit and step
increases) specific to the collective bargaining agreements currently under consideration.
If we are not able to cut costs or enhance revenues, and
if non-payroll expense remains flat, we will encounter a $176,000 deficit in 2017 and a $993,000 deficit in
Current Scenario (Cont.)
In order to avoid these deficits, this scenario requires
that all non-payroll expenditures be cut by 0.90% each
year or that revenue be increased by $250,000 each
Property Tax Freeze Protection Fund
Given the potential of facing a $993,000 deficit in year
2018 if we are unable to cut costs or enhance revenue during these next 5 years, I am proposing that we set aside $1,000,000 in a “Property Tax Freeze Protection” Fund.
This Fund will act as an insurance policy to ensure that
we will have enough to fund operations through 2018 without increasing the property tax levy.
Like all insurance policies, we should not plan on
Excess Revenue Over Expenditures
Greater than budgeted revenues and less than
budgeted expenditures have resulted in excess revenue over expenditures in Fiscal Year 2013 of $9.7 million:
$1.9 million of less than budgeted expenditures $3.0 million Income Tax Revenue
$1.5 million Sheriff Board & Care Reimbursements $1.4 million Sales Tax Revenue
$1.2 million Probation Salary Reimbursements $0.6 million Revenue Stamp Fees
Proposed Allocation of Excess
Revenue Over Expenditures
$1.0 million to Property Tax Freeze Protection Fund $2.0 million to Emergency Reserve Fund
$1.6 million to Health Insurance Fund $1.5 million to IMRF Fund
$3.6 million to Capital Fund
--- $9.7 million total allocation
Property Tax Freeze Protection Fund
The Property Tax Freeze Protection Fund would be a
new fund.
The ultimate benefit of such a fund will be to avoid a
property tax increase for as long as possible.
Funds would be used to supplement revenue in lieu of
a property tax increase.
The $1.0 million initially reserved will function as an
“insurance policy” to ensure that there will be enough to fund operations through 2018 without a property tax increase.
Emergency Reserve Fund
The Emergency Reserve Fund would be a new fund. Between fiscal years 2008 and 2009, Other Tax
Revenue (such as sales tax and income tax) declined $3,000,000 as a result of the “Great Recession”.
The Emergency Reserve Fund is intended to reserve
funds that can be drawn upon to supplement revenue in the event of such a severe economic event, or to
fund an emergency expenditure that exceeds the capacity of the General Fund contingency.
0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Major Other Tax Revenue
Revenue Shortfall Compared to 2014 Budget Actual Revenue Excess Projected Revenue Compared to Budget Budgeted Revenue
Actual
Projected
Emergency Reserve Fund (Cont.)
It is proposed that use of the fund be restricted to
declines in General Fund Other Tax Revenue that
exceeds the total budget for General Fund Other Tax Revenue by 1% ($200,000 for FY14), and/or
that use of the fund be restricted to emergency
expenditures in excess of 10% of the General Fund Contingency ($112,500 for FY14).
Health Insurance Fund Allocation
The $1.6 million allocation to the Health Insurance
Fund will establish the reserve required for self-funding.
This amount is derived from an actuarial calculation
provided by Blue Cross & Blue Shield.
Since we are budgeting claims expense according to
our average claims experience, the purpose of the
reserve is to provide a source of funding for those years in which our claims expense may exceed the average.
IMRF Fund Allocation
The $1.5 million allocated to the IMFR Fund would be
reserved for an additional payment to the IMRF fund at the end of Fiscal Year 2014.
This additional payment would reduce our unfunded
pension liability, thereby lowering our required monthly payment in future years.
Our unfunded pension liability as of 12/31/2012 less the
Capital Fund Allocation
The $3.6 million allocated to the Capital Fund will
insure that we will have enough to fund all of the capital repairs and maintenance that are currently identified for years 2014 through 2018.
The schedule of capital repairs & maintenance is
constantly being updated and therefore should be considered a work in progress.
Recap of Proposed Allocation of
Excess Revenue Over Expenditures
$1.0 million to Property Tax Relief Fund $2.0 million to Emergency Reserve Fund $1.6 million to Health Insurance Fund $1.5 million to IMRF Fund
$3.6 million to Capital Fund
--- $9.7 million total allocation
General Fund 2014 Budget Facts
Total expense budget = $80,614,632
Total salary & wage budget = $47,328,000
Total Property Tax Revenue budget = $33,013,000 Total Other Tax Revenue budget = $20,523,000
General Fund Budget Factors
0.5% change in salary expense = $265,000
0.5% change in health insurance expense = $43,000 0.5% change in dental insurance expense = $2,000 0.5% change in other expenses = $92,000
