WILMETTE PARK DISTRICT
Date: January 4, 2012
Place: Mallinckrodt Community Center
Time: 6:30 pm
Commissioners: J. Brault, D. Graham, G. Benz, J. Crowley, M. Murdock, J. Olvany, S. Shelly
Staff: S. Wilson, K. Bingham, J. Bowen, K. Eppelheimer, B. Lambrecht, S. Donoghue, J. Ostrem, T. Juliar, M. Matchen, B. Udany
Visitors: T. Grisamore, J. Huston (TribLocal)
Topics for Discussion:
1) President Brault called the meeting to order at 6:35 pm.
2) Recognition of Visitors
3) 2012 Budget Presentation
4) Old Business
5) New Business
2012 Budget Workshop:
1) President Brault called the meeting to order at 6:35 pm.
2) Recognition of Visitors: Tom Grisamore, John P. Huston (TribLocal).
3) Director Wilson welcomed everyone in attendance to the 2012 Budget Workshop and stated the purpose of the meeting was to review the Proposed Fiscal Year 2012 Budget in consolidated form with the goal of adopting the 2012 Budget and Appropriations Ordinance at the January 9th Park Board meeting. He explained this process rests mostly on Superintendent of Finance Ken Eppelheimer’s shoulders but it has also been a group effort from the other superintendents and their staff. Everyone did a great job in spite of the fact that we were converting to our new financial software which meant they had to work with multiple systems and methods to complete their budgets.
Fiscal Year 2011 Highlights
Director Wilson stated that along with the usual 1,500 children per season in soccer and 2,000 per session in gymnastics, all of the District’s other facilities were busy as well. Many new programs were successful and well received. These programs included the Tiny Aces and Elite Junior classes at the golf course. Also, a slight change made in the way the Aquatics Camp was run in 2011 was very successful and a higher enrollment resulted. Other new programs were the Daddy/Daughter Dance and Breakfast with Santa. An event originally called Pizza with Santa at the CRC in 2010 was changed to Breakfast with Santa in 2011 and was even more successful at the golf course. Facility changes included the expansion of the swimming area at Gillson Park, the addition of a new water feature at the pool, and the conversion and remodeling of the fitness center which allowed for specialty classes such as Yoga and Pilates. In addition, a spin studio and a circuit training studio were created and all of these changes were very well received by our users. Also, with the addition of new boilers at the CRC and the new tot lot at Vattman Park, Fiscal Year 2011 turned out to be a very busy year.
Director Wilson indicated the document included in the budget binder has changed in format from previous years. This was done in an effort to make it a more reader-friendly document. In the past, the binder contained a lot of data and information which was somewhat overwhelming. As a result, staff made an effort to make it more user-friendly this year. However, staff is still receptive to input if the Board wants to put something back into the document for next year.
Budget Manual Review
Director Wilson reviewed some of the changes made to the Park District’s organization chart to make it more comprehensive. He pointed out that the District begins and ends with Wilmette residents and the taxpayers of Wilmette to whom the Board reports. Our attorneys, independent auditors, Treasurer Eppelheimer, and himself report to the Board. On the next line of the organization chart is Superintendent Bingham who is in charge of the CRC and the Lakefront; Superintendent Eppelheimer is in charge of Finance and Personnel; Superintendent Bowen is in charge of the revenue facilities; and Superintendent Lambrecht is in charge of Parks and Planning. Also reporting to Director Wilson is Communications/Marketing Manager Shelagh Donoghue who has a marketing assistant and a graphic designer reporting to her. In addition, Administrative Assistant Judy Ostrem reports to the Director.
He stated the discussion tonight includes a general introduction and discussion about the budget information in a summary format. There are currently 72 full-time staff members which was the same number as in 2011 but three less than in 2010. At the end of any given year the the District prints approximately 1,100 to 1,200 w-2 forms for its full-time, part-time, and seasonal staff.
In order to build the basis for the 2012 budget, the Financial Planning & Policy Committee met to set the uniform budget increases which ranged from utilities to health insurance and salaries to user fees. Highlighting one of the most impactful uniform increases was the user fee increase of 3.5% which became the general rule of thumb. There were some exceptions such as not increasing fees for beach admission fees or tennis courts. However, pool fees were increased 5% and some of the golf fee memberships were also increased up to 5%.
When going through this budget, it is apparent that over a three-month period several changes can occur. For example, the new Junior Lifeguard camp at the time of the budget was just a concept but now it has taken shape much like the Daddy Daughter Dance did. As a result, you will see the revenue and expense in our actual results moving forward but, as always, budgets are estimates.
When going into detail of how the District is accounting for the budget behind the scenes, one example of this is moving what used to be our Internal Service fund under Corporate and making it a department? instead of a stand-alone fund. Another area we have is marketing and since that department was enhanced, staff centralized those costs within the General Administration fund and then allocated it out along with other Administrative costs so that District staff would not be reluctant to utilize the services of Shelagh’s department. In other words, we are moving away from being centralized and moving toward being decentralized. As a result, Shelagh and her staff will be tracking their time and other expenses very closely in 2012 in order to create an allocation basis for 2013.
Director Wilson stated that the Park District funds chart included in the binder compares the old structure versus the new structure. As a result, the chart will now be much narrower. The Recreation fund always included CRC Operations but now the Lakefront, Pool, Tennis, Golf and Ice funds will also be part of that fund. Formerly, the Corporate fund included just Parks & Planning and then Internal Service had two separate funds – General Admin and Motor Pool. These three areas are now all rolled into Corporate. In addition, Capital Reserve used to be on its own but is now also under the Corporate fund. With the new financial software, staff now has a more flexibility on how the funds are set up and they will still be able to report on any one of these individual areas. However, they will really be departments of an overall fund. Much of this change was driven by revisions in the Governmental Accounting Standards that have moved the District towards this more consolidated model. Superintendent Eppelheimer has worked with the auditors to get clearance on all of these changes and it is now what we will be doing moving forward.
Superintendent Eppelheimer presented a slide show of the different funds and explained that staff tracks revenues and expenses in the Enterprise Funds but they do not have to report on it at a higher level except when talking about fund accounting. He noted that the Recreation fund includes the Lakefront which is Superintendent Bingham’s area of responsibility and the Special Revenue Facilities consisting of Golf, Ice and Pool are Superintendent Bowen’s responsibilities. The General or Corporate Fund includes the special revenue/restricted funds and Parks and Planning. The next Comprehensive Annual Financial Report (CAFR) at the end of next year will be much more streamlined as well.
Superintendent Eppelheimer also reviewed the actual amounts that were included in the 2012 Budget & Appropriations Ordinance which includes the revenue that would come across as bond proceeds, all the expenditures, and all the capital for a net surplus of $969,000. He thanked staff for the great job they did on the budget and how hard they worked putting their numbers into the newer accounting system. President Brault asked Superintendent Eppelheimer to comment on what the difference was between the Budget Statement and the Budget Summary. Superintendent Eppelheimer replied that the Budget Statement is a fund statement for the Budget & Appropriations Ordinance which is made public so that staff can tie back to the funds that we are actually appropriating. Internally, all those carryover projects were appropriated in prior years and should not be re-appropriated but rather there should be some Board action to say whether it is okay to continue these projects.
Superintendent Eppelheimer presented a slide which indicated 61.1% of the District’s revenue comes from user fees which is unique in the recreation area as far as that amount of money from users is concerned for both residents and non-residents. Property Tax revenue brings in 36.1% of the revenues and the rest comes from miscellaneous and bond proceeds??. Property Tax is up slightly this year due to the new bond proceeds and the District will be looking to issue that debt in February and retire them before the end of the year.
On the expense side, the appropriated expenses are driven by staff costs. Wages and benefits make up over 50% of our costs to run the District. The Contractual Services area is also a large portion but not as large as one might think. Materials and Supplies Services represents items such as paper and program supplies, a small amount for Maintenance and Repairs, Capital Expenditures are at 6.1%, and Special Recreation is less than 2% of the total pie chart. In addition, 18% of our budget is in the District’s debt structure. This will decrease as we move forward.
The next slides reviewed were the 2012 Proposed Operating Revenues and Expenditures which indicated the Community Recreation Center (CRC) still represents 50% of our revenue coming in on the operations side. The Ice, Pool, and Tennis areas are all around 7-10% which indicates there is a strong mix of indoor and outdoor revenue that helps support the ongoing capital improvement plan. Next reviewed was the Debt Schedule that details all of the existing debt the District has including seven Park Bonds outstanding from 2002 through 2009A. The debt certificates are also paid out of the Debt Service Fund.
Under Tax Funding, Superintendent Eppelheimer indicated that the 2011 Tax Levy was passed in early December and Cook County has that on record. He then referred to the slide which indicated the tax rates for the past ten years and includes the impact of the Mallinckrodt Bond issue in 2003. In addition, the lowering of the EAV in 2006, 2010 and 2011 caused increases in tax rates.
In regard to the Participation Statistics Chart, he is amazed at how the District does not only receive a great amount of revenue from fees but also enjoys a large amount of participation from the community which is helped by a high level of non-resident use and outdoor activities. The other side of this is that non-residents generate quite a bit more in revenue percentage-wise. Director Wilson added that another contributing factor which drives non-resident participation is our gymnastics facility which has about 2,000 children per season. He added that overall, non-residents contribute 40% of the budget.
Superintendent Eppelheimer stated the next chart on the Revenue Trend indicated there is a difference of over $3 million between revenues and taxes and the tax levy itself has moved up on a slight slope. These are the bonds that the District issued by referendum for taxing purposes. Otherwise, everything comes off our fee structure.
On the Fund Balances slides, the purpose was to look at where the District might be a year from now and then compare that with our new fund balance policy and the establishment of new targets. Using the new fund balance targets also shows that the extra funds could be used for capital improvements. The restricted funds are slightly below target at the end of 2012 and driven by the amount needed to assure debt interest payments. The way to correct this would be to transfer surplus from the operating funds. Lastly, the capital projects fund balance is lower than target if all of the planned capital is spent. This is also where the debt issuance funds will be placed. Overall, the fund balances could be above target at the end of the 2012.
These targets will move as the expense levels move so they will be recast at certain times. A good time to do that would be during the audit and another time might be in the fall when staff starts to look at debt issuances and the capital plan and possibly do some projections in the fall.
The last slide reflects the 2012 Department Budgets which is what staff will be tracking starting with their individual departments. This would then be the beginning of the new operations reporting model wherein each department has its revenue and expense listed. The Finance and Administration department will control the revenue streams of taxes and also work with Parks and Planning on managing the capital improvement budget. This chart shows total expenses and revenues including the proposed carryover projects.
Superintendent Eppelheimer stated that an objective of the District is to relay how it operates to our residents so that they have an understanding of how everything fits together. We have many great practices and are always concerned about the budgets. In addition, the Board has been very instrumental in setting up guiding parameters. Overall, we should be proud of the way the District is running and we just need to explain that to the public.
President Brault stated he doesn’t know how we got from our budgeted surplus to our actual estimate. In addition, he asked Superintendent Eppelheimer to comment how we rolled $800,000 in cutbacks forward a year. Superintendent Eppelheimer responded that the 2011 budget included bond proceeds which contributed a good part of that surplus. In addition, capital was above the $2 million range when historically we normally handle just over $1 million. He just wanted to inform the Board that the projects were out waiting to be completed.
Commissioner Graham noted that on page 6 of the budget manual, a 2011 budget of $750,000 is listed there and Superintendent Eppelheimer replied that the District budgeted but did not issue these bonds. Commissioner Graham asked if staff was projecting the carryover in 2012 of the $811,000 but he thought we would still be at the estimated surplus of $185,000. Superintendent Eppelheimer replied that the Budget & Appropriations would cut-off at the line above the chart to show the surplus of $969,850.
Commissioner Benz asked for clarification on last year’s carryover of $320,000 for the locker room remodeling. Superintendent Eppelheimer replied that this amount will be part of the $800,000 and added that all of these types of projects take a little time. Some of the bigger projects actually appropriate for one year and staff could then put it out for three years just to make sure the Board knows what projects are coming up.
Commissioner Olvany indicated he was happy to see the revenue trend line for services and the tax levy trend line is sloping nicely. He thinks he has never seen a trend line in the last ten years that has been so smooth and upwardly moving. Superintendent Eppelheimer stated that as the economy “shrinks” people tend to stay home to recreate. For example, people start using local pools and sending their children to local camps which are all good things for park districts. The Wilmette Park District has stable programs and good staff and word gets around such as what has happened at our gymnastics facility. Commissioner Olvany asked if price increases have historically had any impact on the District. Director Wilson replied that we have not seen decreases in participation based on price increases.
Commissioner Graham indicated that on page 16 under 2012 Proposed, there is a carryover of $811,000 but there was no carryover for the 2011 budget. Superintendent Eppelheimer stated that this was to make sure that the Board was aware of these projects being funded in 2012. Sometimes there are projects that because of time do not get done and we do not get invoiced until sometime the following year. What the Board has done is to authorize staff to do these projects. It’s almost below the line because at any point in time some districts carry deferred projects and then defer them forever. In this case, these are projects that will come to the Board and it is a tight list. When an item is listed in the prior appropriations ordinance, it has already been appropriated and therefore may be re-appropriated through a single action.
Commissioner Olvany asked why the contractual number was so different. Superintendent Eppelheimer replied he attempted to re-state all of the expenses in the newer format. This year staff will be budgeting down to those individual “buckets” in which they belong. Contractual services represent when we contract a program out, when we collect the money, and when we pay them; for example, the use of referees.
President Brault asked about the allocation of overhead and how that has changed from previous years. Superintendent Eppelheimer replied that in regard to the accounting, staff was using the transfer of overhead into other areas and counting it as revenue. Everything is being moved down below the Operations line so that when we do a consolidation that number should always be zero since we are moving the funds from one center to another fund. Also, Superintendent Lambrecht tracked all of the usage in the Motor Pool fund during 2011 and a quick cut was done to readjust the allocation for Parks & Planning.
Director Wilson stated that Administration is based on each individual operation’s percentage of operating expenditures. For example, if the CRC is at 25% of the operating expenditures of the District, General Administration moves off 25% to the CRC. And this has not changed. In 2012, we are going to track the marketing side and begin allocating that out too.
Commissioner Benz asked if Director Wilson was suggesting that expenses for the bond proceeds exceeded the $280,000 by $1.1 million. Superintendent Eppelheimer replied that they did not. He explained the total revenues of $2,982,000 plus the revenue of $280,000 on the bottom will be what is included in the Budget & Appropriations as far as the budgeted amount is concerned which is $23,262,000. For expenses one must go to the operating line of $20,950,000 and then add the capital which comes to $22,292,000. This would be how much we are appropriating. Director Wilson further explained that the $1.3 million has nothing to do with bond proceeds but they are capital expenditures. Superintendent Eppelheimer added that operating surplus is what we want to focus our attention.
Commissioner Benz also pointed out the totals on page 19 do not match the totals on page 14 and was concerned if an auditor or resident would notice that. Superintendent Eppelheimer replied that when looking at the total on the far column on page 14 at $969,000 and then take the carryover out on page 11, the number will return to $158,000. The chart on page 14 does not include the carryover but the revenue number up above the $23,262,000 amount is the same. The expenses for operations at $22,292,000 including capital are also the same in the Budget & Appropriations Ordinance and staff will be tracking those numbers. There are carryovers almost every year so they are put on a separate line and tracked differently so we know where we stand. Afterwards, this could become an amount that is deferred if the District couldn’t afford the expenditure.
Commissioner Shelly asked that out of that carryover of $811,000 does that include the golf course and did we not budget for the 6th green at the golf course. Director Wilson replied that the big numbers were for our primary projects such as the tot lot at Wheeler Park for over $100,000, renovation of the tennis locker rooms for $300,000, and then concrete work at West Park for over $200,000. When adding all those together, that totals about $600,000 of the $800,000. In regard to the 6th green, it was not a carryover since we decided to just not pursue the reconstruction.
President Brault asked about the recreation program line item for Cultural Arts on page 22. Director Wilson explained that unfortunately the Commissioners did not receive the corrected page 22. Superintendent Eppelheimer stated that this expense was supposed to be $335,000 and he apologizes for the mistake. Director Wilson added that the new bottom line is $22,000. Superintendent Bingham stated that the new “bottom bottom” line on the projected net surplus is $29,019 out of the CRC and Superintendent Eppelheimer added that this does not change the budget. The operating line alone went from $5.1 million to $5.5 million with a projection of $5.7 million. Superintendent Bingham stated a large portion of that is from Early Childhood registration and that she already has her projections for the 2012-2013 school year.
President Brault asked two questions from Commissioner Murdock who was unable to attend the meeting. Page 25 indicates that pool user fees are down for next year even though our charges for the pool are up so would that mean we expect less usage in 2012. Director Wilson replied that was not the case and it is fairly close to what we experienced last year. It was a pretty weak year weather-wise in 2009 and the last two years were pretty good. Staff used that number has an average this year so that is why it went down a bit.
The second question from Commissioner Murdock pertains to the overhead allocation and that it appears it is going down at Golf but it feels like we actually did more work at Golf. Superintendent Eppelheimer agreed but stated that it is not a part of Motor Pool. Superintendent Bowen added that he was instructed to remove about $81,000 out of revenue to make it a flat budget and that a $63,000 surplus is coming directly from the reduction of overhead. President Brault asked if a request by proxy could be to zero out our surplus deficit and have our capital reserve transfers reflect the difference. Superintendent Eppelheimer stated the question is really would golf operations be zeroed out at the bottom line and the $62,000 be moved back up. Superintendent Bowen indicated we would add the $63,000 and the $71,000 together to make the transfer and then subtract the $82,000 from the $71,000.
Commissioner Graham asked if the Parks & Planning crew were ever brought out to work on the golf course. Director Wilson replied that they have not since Superintendent Lambrecht and his seasonal employees handle the landscaping throughout the Village. Commissioner Benz stated that we need to be careful of where our surpluses and deficits are because we are establishing a new procedure that will be need to be consistent before any “tweaking the budget”.
Commissioner Benz pointed out some of the comments in the narrative. For example, the last sentence on page 1 in the first paragraph states “The Commissioners established a goal of creating a continuous lakefront park stretching north from the new harbor basin.” He wanted to make sure that everyone agrees with this statement. Superintendent Eppelheimer stated that this was what the original Park District was commissioned to do. Commissioner Benz agreed and he hopes to be able to quote this liberally in the coming years. Director Wilson stated that was fine but it should always be attributed to the 1908 Park Board.
In addition, at the end of the third paragraph on page 3 there is mention of our successful summer programs and our safe aquatic season. His concern is that this document will be going out to the public and it sounds like we are ignoring the drowning that occurred last summer near the unguarded overlook area. Commissioner Crowley disagreed and stated that the unfortunately incident was not a part of the District’s aquatics program and Commissioner Benz replied that was not what he was suggesting. Commissioner Olvany stated he noticed that sentence as well but his reaction was that yes, the tragedy occurred, but not as part of the aquatics season. Commissioner Benz stated he feels the statement should be removed from the document due for public relations concerns. However, Commissioner Crowley disagreed. After further discussion, no action was taken.
Commissioner Benz noted that on page 6, the fourth paragraph, there is a sentence about State law and that transfers cannot exceed 10% of the total amount appropriated by item. Superintendent Eppelheimer indicated it is not quite that restraining. Director Wilson added that it is not a line item but rather a consolidated line item. Superintendent Eppelheimer stated that there is a 10% difference between what we budget and the appropriations which gives us the latitude to spend those funds outside of what we budgeted without having to go through another process including another public hearing. We have already increased the appropriations side by 10%.
Commissioner Benz noted on page 12 there is mention of differential guidelines of 25% between residents and non-residents but in fact that guideline is just within the 25%. Superintendent Eppelheimer replied that this percentage is just a guideline and a starting point. Commissioner Olvany stated he did not really understand the 25% differential nor the 140% on market conditions. He asked if that meant it is 40% higher in programs. Commissioner Shelly asked what is that 140% referred to in pricing. Superintendent Bingham replied that the percentages are 15% for resident and non-resident dog beach passes and the 25% is for classes.
Commissioner Benz noted that on Page 16 there is a sentence indicating the District has exclusions of about $800 million and he noted that the word “million” should be removed. He also summarized that at last year’s budget meeting when he was a candidate for the Park District, the material was more cumbersome and confusing. This year however, the information is so much clearer and is more logical although it will take him a couple of seasons for him to thoroughly understand everything.
President Brault indicated that ultimately we are going to approve the Budget & Appropriations Ordinance at the January Board meeting and in past years the actual budget was attached to this binder. However, the line-item budget was excluded this year. Director Wilson stated that once we have our new financial system consultant in-house next week, we will do the data entry and provide everyone with detailed budgets.
Superintendent Eppelheimer stated that at the January Board meeting, there will be two public hearings. The first hearing will be on the Budget & Appropriations Ordinance and the second hearing will be for the BINA (Bond Information Notification Act) which indicates to the public that the District is issuing $280,000 in bonds to be used for capital purposes.
4) Old Business: None
5) New Business: None
6) There being no further business, the meeting was adjourned at 7:30 pm.
Minutes taken by J. Ostrem.
MINUTES APPROVED ON FEBRUARY 13, 2012.