CITY OF ROCKY RIVER

DECEMBER 11, 2009

Finance Committee

The meeting of the Finance Committee was called to order by the Chairman, Mr. Moran at 8:35 a.m. in the David J. Cook Council Chambers.

Finance Committee Members Present: Mr. Moran, Mr. Furry, Mr. Long, Mr. Mylen

Council members present: Mr. Hunt, Councilman-Elect Schieda

Administration: Mayor Bobst, Mr. Linden, Mr. Thomas, Chief Wagner, Chief Flynn,

Mrs. Calladine, Mr. Harrington

Also present: Judge Fitzsimmons, Judge Hagan, Ms. Comery, Ms. Serrat, Mr. Bracken

Press: Ms. Toth

Mr. Moran commented that he was pleased at the opportunity to review the budget and to work with the Administration for a better understanding of the figures and the process.

He called upon Mayor Bobst who began with an Executive Summary of the 2010 Budget, thanking Mr. Moran for adding clarity to the review process with his development of a questionnaire which serves as a discussion guide. The budget process began at the end of August. The Mayor asked directors to evaluate each program and service, not only in terms of costs, but with regard to how it benefits the residents and strengthens the community. Their aim was to reduce costs without impacting services. She observed that all directors showed flexibility in meeting the challenge to accomplish their goals in other ways and making cuts in ways that were not felt by residents. Budget considerations were integrated into all activities.

The current budget is based upon past practices, future needs and capital projects and is very conservative on revenue projections but considers all possible expenditures. The Administration's priorities:

• •to maintain a high level of City services and safety
• •to invest in infrastructure
• •to limit debt and maintain fund balances with no new borrowing except for zero interest loans when necessary.
• •to levy no additional taxes

• •to maintain the present high bond rating
• •to maintain the work force with a focus on direct service delivery
• •to recruit and retain business
• •to limit administrative overhead
• •focus on revenue opportunities
• •to measure and monitor progress

Meeting these priorities for 2010 will be challenging because of the trimming done in 2009. Across the board, 20% was removed initially, then a line-by-line review resulted in an additional $475,000 reduction.

• •No positions were eliminated, but three full-time employees will not be replaced. The proposed budget will include a 2½ % wage increase negotiated with the five bargaining units and a freeze on part-time employee wages. In addition, part-time hours will continue to be reviewed carefully and continued implementation of overtime reduction plans.



• •There will be no new debt except for zero interest loans for the Valley View sewer project, WWTP improvements and the Hampton Interceptor project.



• •Capital commitments: the Valley View project, Elmwood and the Hampton projects. Plans are to delay capital equipment purchases. Because the City has been diligent in maintaining the strength of its fleet, it will be possible to make only essential replacements this year. Unrestricted gifts (Tab 10) will also be used for equipment purchases.



• •In 2010 the City will continue to work with the community in stormwater management, meeting US EPA regulations and the possibility of fire district consolidation.



• •The City will also continue to seek grants for capital improvements.

Referring to the chart under Tab 4, the Mayor pointed out key issues for the City, noting figures for 2009 are accurate through November and show the current status.

• •In revenue, the personal property and tangible assets tax has been phased out although the City will be reimbursed for the full amount in 2010 and at gradually decreasing rates until 2018 when it will be completely phased out. Revenue exceeded projections.



• •The assessed valuation of property is $691 million, but the City has not yet received the projected figure from the budget analysts. For the 2010 budget, property tax revenue consistent with this year is hoped for with an approximate reduction of 5%.



• •Income tax is 10% below last year's collections and a 3% projected decrease will be used.



• •Estate tax continues to exceed the $1 million projected figure every year, usually reaching $2 million to $4 million, but is unpredictable. For this year, a $1.5 million has been used.

The Mayor then addressed the question of how the City spends its revenue: Public Safety, 34%; Parks & Recreation, 15%; Service and Streets, 10%; Administrative costs, 10%; Sewer, 8%; Debt, 7%, Refuse, 6%, Senior Services 5% and General government, 5%.

• •The Parks and Recreation program in 1999 was 63% self sustaining; in 2008, 72%; in

2009, 80%. Their goal is to be 85% to 90%. A transfer of $600,000 was made with a predicted carryover of $475,000 to $500,000. Civic Center membership of 5200 is maintained and an 80% renewal rate is expected.

• • In health costs, the Mayor indicated that there are 210 full-time employees, or 530 individuals covered by the City plan. Because last year showed a high claims experience,

the renewal rate has increased 16½ % of which 14% will be paid by employees. There will be no plan changes. The Mayor noted that the dependent audit recently done internally by the City resulted in several individuals being removed from the plan.

• •Fund balances need to be maintained in order to retain the bond rating awarded in 2004, of aa2. That rating was confirmed in 2005 and is important should the City have to borrow.

Mayor Bobst expressed the Administration's concerns:

• •Revenue: vulnerability of revenue sources. One optimistic note is that no changes have been made in the Estate tax, but the Local Government fund is attached to the State's General Fund and there is a potential loss of county, state and federal funds.
• •Compensation: as shown in Tab 10, the City has unfunded liabilities based upon sick leave, succession planning, and severance payments.
• •Interest payments and fees. At one time, interest was a source of income, but it is now less than fees levied by banks.

In response to these concerns, the Mayor said that the City is continuing to seek grants to help defray costs of both large and small projects. Union negotiations were successful and personnel costs were less than last year. Maintenance of vehicles and equipment has helped to carry the City over difficult financial times. Steps are being taken to help residents avoid foreclosure and maintain their individual properties, including the Heritage Home Loan program and the County's storefront renovation program. Thinking ahead has also helped. The Mayor cited Director Linden's purchase of salt while prices were low last summer which enabled the City to avoid shortages and their accompanying high costs.

Chief Wagner of the Police Division came forward to discuss his budget with Finance Chairman Moran. The division consists of 33 sworn officers, 25 school guards, one full-time Animal Control Officer, one licensed social worker, four park guards, and two part-time CSO officers who handle routine tasks to free patrol time. The sworn officers are divided into groups of nine to a shift, seven patrolmen, one sergeant and one lieutenant to cover 24 hours a day every day.

As to his planned expenditures, the Chief said he plans to continue as he has been with no major projects, and a 10% reduction in expenses. The same is true of revenue with the continuation of programs such as POPAS (Police On Patrol Arresting Speeders) and the Marine Patrol grant to help defray the costs of water policing duties. Impound fees have increased since Council's passage of higher fees. He said that although he does not judge the effectiveness of his division by traffic fines collected, he noted that Rocky River consistently collects more fines than cities in the West Shore with larger police divisions. This shows that his officers are active on patrol and conscientiously doing the job. He plans no major improvements until the economy improves. The Division has addressed the overtime situation by not routinely sending officers to court to

testify. Working with the input of the prosecutor, officers go to court only when necessary which helps keep overtime to a minimum, and usually to fill shifts.

The Division will see changes, however, by January of 2011 when five officers who participate in the State Pension Fund's DROP program will retire including one detective, three lieutenants and the chief. The Mayor explained that this will impact every police department in the state and there are suggestions that the State should allow staggered retirements without penalizing individuals. This would give departments some flexibility and prevent a mass exodus of experienced law enforcement officials across the state. Training sufficient numbers of new officers to fill vacancies may also present a major problem. The Mayor noted that this would be an unfunded liability in terms of severance costs (Tab 10) and Civil Service testing process.

Mr. Moran asked about proposed equipment purchases, particularly the $30,000 for computers. Chief Wagner responded that the division will replace three or four older desktop computers. Mobile Data Terminals (MDT) for the cars have become expensive, approximately $5000 each, and two or three are replaced annually. Barring breakdowns, he expects to spend approximately $20,000. Last year two servers were replaced with POPAS funds. He also asked about police overtime which the Chief said was used primarily for court appearances, filling shifts, and SWAT participation.

Mr. Mylen asked about morale. Chief Wagner said that he is pleased to say that, judging from sick time taken and the activity levels of all shifts, that morale is strong. Although issues arise from time to time, officers are happy to be working with the salary and benefits in Rocky River.

Finance Director Thomas added that there are regular grants in addition to those mentioned by Chief Wagner received for Community Diversion and the DARE subsidy. The police efforts also contribute to the Law Enforcement Trust Fund which received the City's portion of the property confiscations when Rocky River personnel participate in an investigation. That amount, still to be received, is more than $80,000.

Mr. Moran then called upon Fire Chief Flynn who indicated that the Fire Division has 29 sworn fire fighters, one temporary full-time member and one administrative assistant. The only change from last year is the temporary member who will eventually replace an injured fire fighter who will be on disability and whose hiring will reduce overtime expenditures.

Mr. Moran, leading the discussion in the absence of Mr. Shepherd, asked about an expenditure for equipment purchases listed at $45,000. Chief Flynn explained that some equipment has a life expectancy, including airpacks which allow fire fighters to breathe when entering a burning building. Some equipment will reach its expiration date in 2010, some in 2011, 2012 and 2013.

Replacement is being made with current state-of-the-art equipment for all fire fighters at the same time. This will take most of the appropriation, but there will be other purchases to keep up with advances in technology which will meet the new standards of care.

• •Mr. Moran asked about the cost of an airpack and mask. Chief Flynn said it was approximately $3500. The Mayor added that the division has applied for an Aid to Fire Fighters grant to help recoup some of the cost.



• •Chief Flynn also mentioned that three grant applications are currently in process: improvements or additions to the firehouse, a new ladder truck (which needed $25,000 in repairs last spring), and fire prevention material. The Chief is hopeful that these will provide additional funds from the Aid to Fire Fighters grant program.

Mr. Moran noted that there is a projection of a $30,000 drop in Fire Division overtime. Chief Flynn explained that members of the Division have helped to reduce overtime caused by a back injury on a squad run. Mr. Moran sent his thanks to the members of that squad, noting that saving of overtime helps insure that jobs are not lost and other cuts necessitated.

Mr. Moran asked about fire hydrant repair. The Chief said that the Division has made a concerted effort to be certain that all City hydrants are functioning, noting that some are not owned by the City but by the property owner, e.g. a development or commercial property. Accidents, however, continue to damage many hydrants and are expensive when the guilty party is not found. Sometimes hydrants are removed and sold for scrap.

Mr. Moran then asked about the expense for centralized dispatch center and why the costs are rising. The Mayor said that number may decrease because of the addition of North Ridgeville as part of the program.

• •Mr. Thomas said that he has not yet received a specific number from Westlake, but will check with them for next year's projection.



• •Asking about planned cost reductions, Chief Flynn responded that he will continue to apply for grants. By 2013, radios will require action and the division has nine or ten mobile radios and 25 hand portables which can cost up to $5000. The Chief is already looking into grants to help meet costs. Surrounding communities also will face the same problem because the FCC has mandated the use of narrow band to maintain present frequencies. This means replacing or reprogramming radios, and the Chief is currently researching other options. He is also searching for grants to help purchase new defibrillators.

Concerning retirements, the Chief indicated that the Fire Division is not in the same position as the Police Division and has only one certain retirement as mentioned before, due to injury, and three other possible retirements from whom he has not heard officially.

Regarding other major fire equipment, Chief Flynn indicated that the ladder truck is from 1993 which experienced a breakdown and required a $25,000 repair. This and its age are why the Chief submitted a grant application for a new truck. The pumpers are in good condition thanks to a 2005 grant. There are three ambulances of which the oldest is a 2003. Fortunately, it is possible to move the box from the truck frame and transfer it to a new frame which save the cost of a new box. Asked by Mr. Mylen about the replacement cost of a new ladder truck, the Chief replied that it would cost $1 million. Asked by the Mayor, the Chief indicated that the last pumper purchased cost $335,000 offset by a grant of $250,000.

• •Finance Director Thomas commented that although this department does not lend itself to revenue generation, revenues have increased with the ambulance billing fee which was changed at the end of 2008. Fees are generated when ambulance calls are made.



• •Mayor Bobst added that the review of fire district consolidation looks at ways to pool resources and save funds, such as training, fire prevention, fire inspection which can be effectively done regionally without necessarily creating a fire district which falls under one governing body or jurisdiction. As that proceeds, the Mayor pledged to report progress to Council on how cost savings can be realized.

To discuss the budget of the Senior Services, Director Carole Calladine participated in the discussion led by Councilman Long and Councilman-elect Schieda.

Director Calladine opened her report, indicating that there are 26 employees at the Senior Center: eight full-time and 18 part-time who are assisted by 150 volunteers who make a huge difference. She pointed out that the budget allocation for this department has been trimmed by 9% and salaries, which make up 59% of the annual budget, were increased in accordance with those in other departments. The other expenditures are for the maintenance of the building and grounds and the transportation program.

Planned revenues for 2010 were listed in her report and included minibus donations, deli lunch, class fees, travel and trips, special events, gift shop, Quill registrations, miscellaneous and property tax. She reviewed the categories, noting this year's revenue and the projected revenues for next year, mentioning the luncheon given for 90+ year old residents which, though expensive, will be continued, and the large number of donations to the Senior Transportation Program.

The Senior Center's mission for 2010 is the continuation of the policy to offer quality senior services in a well-run senior community center with multi-faceted activities and games, lifelong learning, exercise/fitness, health programs, art programs, entertainment, deli lunch program, and social services (outreach, grief groups, BridgeWorks, caregivers support).

Discussing areas of cost savings, Director Calladine pointed out that the Center will not replace the atrium carpet or rejuvenate the landscape of the front memory walk. Revenues will continue to support the costs of running the Center's activities and programs. As in the past, if a program or trip cannot cover its costs, it will not be offered. The unrestricted donation fund will be used to replace a needed computer and two printers. Overnight travel and trips will reflect the economy.

Director Calladine reported that other area centers have either closed, reduced staff, or are

considering reducing their programs. Rocky River's center is well-supported by area seniors and is growing.

• •Mr. Furry confirmed that the travel programs and trips are cost neutral. Mrs. Calladine explained that short trips are developed in-house and must fill a bus to go forward. Longer overnight trips are contracted through an outside company. Cancellations have not been necessary, but the Director acknowledged that proposed trips have not been as ambitious as in past years.



• •Mr. Furry also asked about the Senior Transportation Program. Mrs. Calladine said that the numbers have remained the same, although the people have not. The cars are helpful and have saved wear and tear on the van, provides better mileage and is easier for seniors to use.

Mr. Long asked about overtime which was significantly lower this year and wondered how overtime hours are used. Mrs. Calladine said that last year overtime paid for painting the exterior of the building; this year, through employee cooperation, those hours have been reduced.

Mr. Long also asked about replacement of the van. Mrs. Calladine said the Center hopes to replace the grocery van this year because the cars may have to be replaced next year. Required funds will be taken from the Donations Fund, and the used van would then go to the sign department.

• •The Mayor noted that at the last meeting of the West Shore Council of Governments, it was noted that RTA will be selling or donating some of its Community Circulators. Director Calladine indicated that drivers of that larger vehicle may be required to have a CDL, and the vehicles are very large and would not serve the same purpose as the current van which seats 12 and does not require a CDL. She noted that the regional program in place in this area is used only by North Olmsted. That plan requires City drivers and supervision but does not give the City any control over routes so that drivers will be over the entire area. So far, it has not proved to be more efficient, nor cost effective.

• •She noted that other West Shore suburbs limit the locations for which transportation is available. Rocky River will transport any senior over age 65 anywhere he/she needs to go, including Cleveland Clinic, University Hospitals or Kaiser in Parma.

Next on the agenda was Superintendent Jeffrey Harrington of the Wastewater Treatment Plant. Mr. Furry, following the committee outline, indicated that there are 19 employees all of whom are certified. Mr. Harrington, the superintendent, has 10 years' experience.

Proposed equipment purchases total approximately $116,000 and the list includes maintenance items from $3700 to $24,000.

Planned revenues are estimated to be $2.7 million inclusive of sewer rehabilitation charges.

Major projects for 2010 are asphalt repair ($225,000 of which bid and construction services comprise $33,000) and the Settled Sewage Pump Improvement Project to be completed in 2011 ($760,000 of which $152,000 is for professional services). This project entails sandblasting and coating of the pump intake piping, valve rehabilitation work and installation of wet well slide gates to allow flexibility with maintenance of the pump station. Two other possibilities are the carbon building demolition ($120,000) and replacement of a 1000 kilovolt transformer soon to be 25 years old.

Cost savings will be realized in the lower price of chemicals after the 2009 spike in prices. The recently completed Strength and Flow Study determined that Rocky River's share of expenses, previously 29.4% has decreased to just over 25%.

A major change for 2010 will be the expiration of the NPDES permit on July 31, 2010. Mr. Harrington will begin the renewal process in January, and it may entail reducing phosphorus levels or meeting other EPA requirements. In the six-year Capital Plan, the $4.6 million OPW (Ohio Public Works) project in 2013 will include digester building and upgrade, thickener drive replacement, various HVAC replacements and other areas which will need upgrading.

Another change which could be mandated by the EPA concerns the disposal of sewage sludge. Currently it is sent to Yaworsky farms which is the most cost effective at about $14.65 per ton. The WWTP has only four or five days' storage on the premises and it is possible that during the winter months the EPA will require that sludge be sent to the landfill instead of to the farm at twice the cost.

Mr. Furry noted that he has a copy of the budget prepared for the WWTP Management Committee which is detailed and has been approved by them.

Mr. Harrington discussed future trends and ideas in the treatment of wastewater including screening to 3/8", removing all plastics and non-biodegradables. Also possible is the elimination of the beneficial use of sludge. Some is concerned with nutrient runoff and new rules will restrict four months of winter farmland application. Mr. Harrington said that tighter regulation of treatment plants may be to combat commercial runoff from fertilization and construction which is not controllable.

Regarding capital projects, Mr. Harrington said that these address the aging plant. The permit requires a properly maintained and operated plant. If failures should occur which cause violations, the EPA would be very critical and heavy fines could be incurred if the property is not well-maintained. If the plant is properly maintained, there is some latitude if failures occur. Maintenance projects, then, will protect the cities which jointly own and use the plant.

• •Mayor Bobst noted that ARA funds have been received for the filter building floor repair several months ago and the Elmwood Project. Mr. Harrington recently discovered that additional ARA funds are available for existing projects and must be disbursed by February. At the WWTP, the funds are moderate, but for the Elmwood Project additional funds could be very helpful.



• •Mr. Mylen asked if any questions were raised at the meeting of the WWTP Management Committee or if there are issues in other cities that would be of interest to Council. Mr. Harrington said there were no outstanding questions from the Committee. Right-of-way and easement issues were discussed as well as future sewer pipe work within the plant. The URS studies (I & I and Modeling) are also being discussed. In the community, the US EPA is currently looking at issues in Bay Village.

Mr. Linden praised Mr. Harrington whom he called a valuable employee who lives and breathes the WWTP, and the City is fortunate to have him as a tremendous asset. The Mayor agreed, saying that he has done everything needed in ways that are above and beyond the call of duty, particularly in working with the EPA.

Court representatives, Judge Donna Congeni Fitzsimmons, Judge Brian Hagan, Magistrate Kelly Serrat, Clerk of Courts Deborah Comery and Computer consultant Michael Bracken came forward to discuss their budgets with Mr. Mylen.

Judge Fitzsimmons came forward to present a brief overview, noting that the Court budget encompasses both the judges' and the clerk's budgets. She reported that expenses were under budget and the year will be ended without deficit. The only increase in next year's budget is the 2.5% pay increase to employees which mirrors that of the City's employees. Economically, it has been a difficult year; case numbers are down and she said that she, Judge Hagan and the magistrates do everything possible to collect monies owed.

In good news, she reported that the Court now has had two years' experience with a single court cost system which removes a threat generated by a Supreme Court ruling which could adversely impact the former court costs and collection system. Now a single court cost is levied on each case, not on separate offenses. This has been successful and the budget has remained stable.

Additionally, in 2009, the Court sustained a loss because the traditional 40% of all magistrates' salaries and both bailiffs' salaries which were paid by the County was withdrawn. The Court has been able to absorb those costs and remain within the budget.

Saving money has become a priority so that the Court can stay within its budget for 2010:

• •Judge Fitzsimmons cited the case of costs for translations and mental health evaluations. Researching the law, they ascertained that it can be paid for by the defendant in the case unless he is indigent.
• •An agreement with the Parma Court has resulted in savings when there is a recusal. Formerly, a judge was brought in at additional cost, but now these cases are sent to the Parma Court, and Rocky River accepts their recusal cases.
• •College and post-graduate students, interns and two law clerks are employed and provide great service to the Court without cost because of work/study or intern programs.
• •Computer programs contribute to communication with attorneys, defendants, etc. without postage.
• •The treatment for most indigent defendants who need alcoholism or drug dependency treatment can be paid for with County funds under the Cuyahoga County Jail Reduction system.

Mr. Mylen reviewed the City's responsibility to the Court finances by explaining that if the Court spends more than the amount of their revenue, all the cities which comprise the Court district are responsible for the shortfall. If the Court's revenue exceeds its expenses, the City of Rocky River keeps the surplus. Both the judges and the Clerk's office reiterated their commitment to the City not to be a burden and not only to keep within their income, but to cover the costs they generate for utilities, custodial services, etc., about $75,000.

Judge Fitzsimmons congratulated Director Thomas who has kept all Finance Directors apprised of the Court's finances so that there are no surprises at the end of the year. Although a deficit is never anticipated, if it were to occur, the other cities would be up-to-date.

Clerk Deborah Comery came forward to discuss the Clerk's budget, noting that the only significant change is in the full-time and part-time salaries. This year the Employees' Handbook was revised and in conversation with the Law Director, the Court was made aware that having two part-time employees who work full-time hours was not proper. As of January 1, the two individuals who work full-time hours will be full-time employees. This accounts for the changes in the totals for full-time and part-time as the employees moved from one category to the other.

Mrs. Comery also noted that the e-filing process, delayed by some server issues, is scheduled to begin this year. This should result in quicker processes within the Court and savings may result in the use of e-mail as opposed to postage costs.

Mr. Furry asked about costs for health benefits. Mrs. Comery responded that the two full-time employees are now eligible for health benefits.

Mr. Mylen asked about the number of employees. Mrs. Comery said that there are 53 full and part-time paid employees. She said they have tried to keep the numbers reasonable for the volume handled.

Mr. Mylen asked Mrs. Comery to describe to Council changes in the state's fee schedule. She explained that the Clerks' Association is becoming concerned that the State is using courts to collect taxes. For example, the State halved the budget of the Public Defenders which they pay in conjunction with the County. The legislature then assessed the funds as court costs which are collected through the municipal courts. There is a bill which would allow those collections to be paid to the municipal courts which could then use them to pay the public defenders directly. Mrs. Comery said that the amount with the caseload in 2009 and the potential for 2010, funds which are sent to the Ohio Public Defenders Office amounted to $500,000. Instead, they are forced to collect these monies which greatly increases the costs of a court appearance.

Mr. Mylen asked about the volume of court cases. Mrs. Comery said that in 1996 there were about 15,000 per year. In 2002, the volume crested at over 35,000; over the past few years, there have been between 25,000 and 28,000. At this time last year there were 27,600; this year, 25,700, or about 1800 fewer which makes a great difference in court costs collected. She said that everyone at the Court is concerned and determined that they will not be a burden to the City.

Finance Director Thomas acknowledged that the Court is conscientious about managing the financial activity that flows through, aware of the volume and the effect that it has on court cost collections. Mr. Thomas also reported that there was also a meeting this year concerning the bond issue that was used to construct the courthouse for which there are court costs which service that debt. Since the costs were collected before the building was completed, the fund has accumulated a good balance. They are considering calling some of the debt and paying it off early. It may occur as early as 2011-2012.

Mr. Moran thanked members of the Finance Committee and other Council members. He acknowledged economies made by staff members, and noted that today's presentations and interviews were very helpful. He added that two more directors, Mr. Patterson and Mr. Winterich, will be present at 6:30 p.m. on Monday prior to the Legislative Meeting.

There was no further discussion from members of Council, and the meeting was adjourned at 11:27 a.m.

_______________________________ _______________________________

James W. Moran, Chairman Misao Kurokawa

Finance Committee Clerk of Council