cover
TO: Mayor Thomas J. Weisner
FROM: Brian W. Caputo, Ph.D., C.P.A.
Chief Financial Officer/City Treasurer
DATE: May 16, 2016
SUBJECT:
An Ordinance Amending the Annual Budget for the Fiscal Year Beginning January 1, 2015 and Ending December 31, 2015 (Amendment #2 for the 2015 Fiscal Year).
PURPOSE:
To obtain the City Council’s approval of a proposed amendment to the 2015 City Budget.
BACKGROUND:
Pursuant to 65 ILCS 5/8-2-9.1 through 9.10, the City of Aurora operates under the budget system of government finance. The City Council adopted the 2015 budget on December 9, 2014 through the passage of Ordinance No. O14-070.
While the city attempts to anticipate all potential expenditures for a fiscal year when that year’s budget is developed, circumstances occasionally arise that require expenditures that were not contemplated in the original financial plan. 65 ILCS 5/8-2-9.6 permits a municipality operating under the budget system to amend its annual budget by a two third’s vote of its governing body.
The City Council approved one previous amendment to the 2015 City Budget on July 28, 2015.
DISCUSSION:
The attached, proposed ordinance, including its Exhibit A, would provide for certain changes in the 2015 City Budget. Below is an explanation for each change. The item numbers discussed below correspond to the item numbers assigned to each change detailed in Exhibit A.
Items 1 and 21: Transfer from the General Fund to the Hotel-Motel Tax Fund (Offsetting Revenue and Expenditure Increases of $300,000). These items provide for establishment of the Hotel-Motel Tax Fund to segregate resources for tourism promotion purposes. The amount of the transfer represents hotel-motel taxes that were not spent for tourism purposes at the end of 2014.
Items 2 and 28: Transfer from the Library Capital Projects & Technology Fund to the 2012A GO Bond Project Fund (Offsetting Revenue and Expenditure Increases of $400,000). These items provide resources for library system improvements recorded as expenditures in the 2012A GO Bond Project Fund.
Items 3, 32, and 33: Elimination of All Budgetary Provisions in 2015 GO Bond Project Fund. These items serve to eliminate all budgetary provisions in the 2015 GO Bond Project Fund. This fund was established to record the revenues and expenditures associated with the proceeds of bonds that were to be issued to finance the procurement of the public administration portion of the enterprise resource platform (ERP). The administration decided to defer the public administration portion of the ERP project. Consequently, the related bonds were not issued in 2015. The city’s external auditors have recommended that the original budgetary provisions for the 2015 GO Bond Project Fund be reversed so as to enhance the clarity of the city’s 2015 financial statements.
Items 4 and 35: Debt Service Fund (Offsetting Revenue and Expenditure Increases of $77,000,000). These items adjust for the issuance of the city’s 2015A and 2015C General Obligation Refunding Bonds.
Items 5 and 36: Water & Sewer Fund (Offsetting Revenue and Expenditure Increases of $28,400,000). These items adjust for the issuance of the city’s 2015B Water Revenue Refunding Bonds.
Items 6 and 40: Transfer from the Employee Health Insurance Fund to the Property and Casualty Insurance Fund ($400,000). These items provide resources to the Property and Casualty Insurance Fund to cover the costs of general liability claims that were greater than expected.
Items 7 and 20: Transfer from the General Fund to the Employee Compensated Benefits Fund ($650,000). These items provide resources to the Employee Compensated Benefits Fund to cover the accrued costs of severance and sick leave that were greater than expected.
Items 8 and 41: Transfer from the Employee Health Insurance Fund to the Employee Compensated Benefits Fund ($1,050,000). These items provide resources to the Employee Compensated Benefits Fund to cover the accrued costs of severance and sick leave that were greater than expected
Item 9: Election Commission Operating Costs, General Fund (Expenditure Increase of $500,000). This item provides for the payment of the city’s required contribution to the Aurora Election Commission that was greater than initially expected for the year. Originally, the commission hoped to receive a grant for the amount concerned to purchase election equipment. However, in the end, the grant was not received and it was necessary for the city to make a larger contribution to support the commission’s budget. Any amounts paid by the city in excess of expenditures actually incurred by the commission will effectively serve to reduce the city’s contribution to the commission in 2017.
Items 10, 11, 13, and 14: Salaries, Overtime, and Other Compensation Costs, Accounting Division, Finance Department, General Fund (Expenditure Increases Totaling $77,000). These items provide for the payment of wage increases for AFSCME Local 3298 employees. Also, provisions are included to cover costs associated with preparing 25 special payrolls to timely issue retro paychecks in early 2015 for the city’s employees in collective bargaining units whose contracts settled near the end of 2014. Additionally, year-end payouts for unused benefit time were higher than expected.
Items 12, 15, 17, and 19: Salaries/Full-Time/Prior Year Retro, Various Departments, General Fund (Expenditure Increases Totaling $2,153,000). These items provide for the payment of retroactive pay increases related to the settlement of collective bargaining agreements.
Item 16: Salaries/Overtime, Fire Department, General Fund (Expenditure Increase of $765,000). This item provides for overtime costs that were greater than expected. The higher costs are generally attributable to having more firefighters in paramedic school and on sick leave. Also, more firefighters submitted their compensatory time for pay.
Item 18: Salaries/Overtime, Police Department, General Fund (Expenditure Increase of $1,000,000). This item provides for overtime costs that were greater than expected. Increases in the number of officers taking sick leave and officers in training generated requirements for scheduling other officers to work so as to cover shifts.
Item 22: Redevelopment Incentive, Midwest Management, Hotel-Motel Tax Fund (Expenditure Increase of $250,000). This item provides for the payment of a portion of a redevelopment incentive for Midwest Management authorized by the adoption of Resolution No. R15-280.
Item 23: Bell Gale Industrial Park, TIF District #4 Fund (Expenditure Increase of $2,500). This item provides for the payment of redevelopment costs for the Bell Gale project. The developer qualified for reimbursement under Resolution No. R12-239. Adequate fund balance was available in the fund to cover the costs.
Item 24: Expendable Tools/Equipment, Equitable Sharing-Justice Fund (Expenditure Increase of $70,000). This item provides for the payment of costs for expendable tools and equipment to support law enforcement activities that were not initially budgeted for the year. Until 2015, these costs were paid through the Federal Asset Forfeiture Fund. However, the external auditors recommended that the city segregate the forfeited funds associated with U.S. Department of Justice programs from programs under the jurisdiction of the U.S. Department of the Treasury. To implement the auditors’ recommendation, the city created the Equitable Sharing-Justice Fund after 2015 began.
Item 25: Expendable Tools/Equipment, Equitable Sharing-Treasury Fund (Expenditure Increase of $1,000). This item provides for the payment of costs for expendable tools and equipment to support law enforcement activities that were not initially budgeted for the year. Until 2015, these costs were paid through the Federal Asset Forfeiture Fund. However, the external auditors recommended that the city segregate the forfeited funds associated with U.S. Department of Treasury programs from programs under the jurisdiction of the U.S. Department of the Justice. To implement the auditors’ recommendation, the city created the Equitable Sharing-Treasury Fund after 2015 began.
Item 26: Building & Grounds, SSA #27 (Concord Valley) Fund (Expenditure Increase of $4,000). This item provides for the payment of costs associated with maintaining common areas in the Concord Valley subdivision that were greater than expected during the year. Adequate fund balance was available in the fund to cover the costs.
Item 27: Building & Grounds, SSA #44 (Blackberry Trail) Fund (Expenditure Increase of $6,000). This item provides for the payment of costs associated with maintaining common areas in the Blackberry Trail subdivision that were greater than expected during the year. Adequate fund balance was available in the fund to cover the costs.
Items 29 and 30: Library Facility and Parking Lot Improvements, Library Capital Projects & Technology Fund (Expenditure Increases Totaling $900,000). These items provide for the payment of costs included in the overall program of library system improvements, but were not supported by bond proceeds or a State of Illinois library construction grant.
Item 31: Library Facility Improvements, 2012A General Obligation Bond Project Fund (Expenditure Increase of $1,900,000). This item provides for the payment of costs included in the overall program of library system improvements that were supported by bond proceeds and a State of Illinois library construction grant. These were the final expenses to be recorded in the bond fund to permit its closure.
Items 37 and 38: General Liability Claims, Property & Casualty Insurance Fund (Expenditure Increases Totaling $1,625,000). These items provide for the payment of costs associated with general liability claims incurred by the Fire Department and the Police Department that were greater than expected during the year. In addition to some money on hand in the Property and Casualty Insurance Fund, the interfund transfer reflected in items 6 and 39 provided the resources needed to pay the additional costs.
Item 39: HMO Costs, Employee Health Insurance Fund (Expenditure Increase of $450,000). This item provides for the payment of HMO costs for current city employees and their families that were higher than expected.
Item 42: Final Pay, Employee Compensated Benefits Fund (Expenditure Increase of $1,900,000). This item provides the accrued costs of severance and sick leave that were higher than expected. The settlement of various collective bargaining agreements contributed significantly to the increase. In addition to some money on hand in the Employee Compensated Benefits Fund, the interfund transfers reflected in items 7, 8, 20, and 40 provided the resources needed to pay the additional costs.
Item 43: Indemnity/PPO Costs, Retiree Health Insurance Trust Fund (Expenditure Increase of $300,000). This item provides for the payment of indemnity medical costs for retired city employees and their families that were higher than expected.
If the proposed budget amendment is approved, budgeted expenditures in the 2015 budget will increase from $421,998,852 to $539,877,352. The additional budgetary provisions associated with the debt refundings are the most significant factors contributing to the overall increase.
IMPACT STATEMENT:
Not applicable.
RECOMMENDATIONS:
That the City Council adopt the attached, proposed ordinance that would effect Amendment #2 to the 2015 City Budget.
cc: Alderman O’Connor, Chairman
Alderman Mervine
Alderman Bohman
Alderman Mesiacos, Alternate
CITY OF AURORA, ILLINOIS
ORDINANCE NO. _________
DATE OF PASSAGE ________________
title
An Ordinance Amending the Annual Budget for the Fiscal Year Beginning January 1, 2015 and Ending December 31, 2015 (Amendment #2 for the 2015 Fiscal Year.
body
WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, the City Council approved Ordinance No. O99-96 on November 9, 1999 adopting the budget system of finance for the City in lieu of the appropriation system in accordance with 65 ILCS 5/8-2-9.1 et. seq. and Code Section 2-312(a); and
WHEREAS, the City Council approved Ordinance No. O14-070 on December 9, 2014 adopting an annual budget for the City of Aurora for the fiscal year beginning January 1, 2015 and ending December 31, 2015; and
WHEREAS, the City Council approved Ordinance No. O15-043 on July 28, 2015 adopting an amendment to the annual budget for the fiscal year beginning January 1, 2015 and ending December 31, 2015; and
WHEREAS, the City of Aurora deems that it is necessary to incur certain expenditures during its 2015 fiscal year that were unanticipated at the time the annual budget for 2015 was adopted but are necessary so as to ensure the protection of the public health, safety, morals, and welfare; and
WHEREAS, the City of Aurora, in an exercise of its home rule powers, desires to amend its annual budget for the fiscal year beginning January 1, 2015 and ending December 31, 2015 so as to provide for the incurrence of said expenditures that were unanticipated at the time the annual budget was adopted; and
WHEREAS, adequate monies are available in the City treasury to pay said unanticipated expenditures.
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Aurora, Illinois, as follows:
SECTION 1: That the annual budget of the City of Aurora for the fiscal year beginning January 1, 2015 and ending December 31, 2015 is amended as shown in the attached Exhibit A.
SECTION 2: That this ordinance shall be in full force and effect, and shall be controlling upon its passage and approval.
SECTION 3: That all ordinances or parts of ordinances thereof in conflict herewith are hereby repealed to the extent of any such conflict.
SECTION 4: That any Section or provision of this ordinance that is construed to be invalid or void shall not affect the remaining Sections or provisions, which shall remain in full force and effect thereafter.
PRESENTED to the City Council of the City of Aurora, Illinois, on the 7th day of June, 2016.
FILED for inspection on the 7th day of June, 2016.
PASSED by the City Council of the City of Aurora, Illinois, this 14th day of June, 2016.
AYES _____ NAYS _____ ABSENT _____
APPROVED AND SIGNED by the Mayor of the City of Aurora, Illinois, this 14th day of June, 2016.
______________________________
Mayor
ATTEST:
______________________________
City Clerk