WILMETTE PARK DISTRICT
Committee of the Whole
Date: December 11, 2013
Location: Mallinckrodt Community Center
Time: 6:30 p.m.
Board Members: B. Abbott, G. Benz, J. Brault, J. Crowley, J. Olvany, S. Shelly and A. Wolfe.
Staff: S. Wilson, K. Bingham, J. Bowen, K. Eppelheimer, B. Lambrecht, C. Heafey, M. Matchen, B. Udany
Visitors: T. Grisamore
1. Call to Order
2. Approval of Minutes – November 12, 2013
3. Communications and Correspondence
4. Recognition of Visitors
5. New Business
1) The meeting was called to order at 6:30 pm by President Crowley
2) The minutes of the November 12, 2013 Committee-of-the-Whole Meeting were approved by general consent.
3) Communications and Correspondence – None
4) Recognition of Visitors – None
5) New Business
a. 2014 Annual Budget – Director Wilson reported that after seven separate meetings in regard to the budget, the final action will take place when the budget is considered by the Board at its January 13, 2014 meeting. This document required work from a lot of people including all of our supervisors, managers, and department heads and their input resulted in a good working document. Basically, this document guides our management of the District on an annual basis. In general, this is the Board’s communication with the community at large that affects almost everyone’s life. Director Wilson added that the Budget and Appropriations Ordinance which is the legal document will go on display for 30 days between now and the January Board meeting.
Director Wilson then listed the topics for discussion which included a general introduction to the budget, a summary of 2013 results and looking forward to 2014. He added that Superintendent Eppelheimer will review additional details related to revenues and expenses, our debt schedule, tax funding, fund balances and department budgets.
Director Wilson presented the organization chart of the Wilmette Park District (the “District”) and stated that at the top of the chart are the Wilmette residents who we primarily serve. The number of full-time staff is currently at 71 as a result of adding our new Paddle Tennis Manager. Looking back at 2013, there was less than optimal weather in 2013 which impacted operations at the pool and beach. It would also have impacted the golf course but it closed in July for the beginning of the renovation project. However, there was excellent enrollment in our sports and camps so the Recreation Department kept the District in a positive position during our closures at the ice rink and the golf course. We also took on three major projects and inherited one more during the year – the Centennial ice plumbing and HVAC replacement project, the Golf Course Master Plan, and the Platform Tennis Facility. On April 18, 2013 the heavy rain caused the roof at Centennial Tennis to collapse and the staff at large did an unbelievable job especially with the unplanned ones. Superintendent Lambrecht and his staff as well as Tennis staff all cooperated to address the situation. In addition to these projects, we also maintained our day-to-day tasks and performed a District-wide review with PDRMA which resulted in a 98.7% rating. The pool facility received a five-star rating as a result of the efforts made by our staff. Finally and foremost, the District took first place for our entry in the annual Wilmette Holiday Parade with Superintendent Bingham acting as the Committee Chair.
Director Wilson stated that in August the Financial Planning & Policy Committee set uniform increases for fees, salaries, and utilities at 2% to 3.5%, although with some exceptions. Staff reduced the non-resident pool fees slightly and we did not increase all of the fees in Tennis. The Golf and Ice revenues will be increasing significantly since they operate for more months with slight fee increases.
In 2014, the capital expenditure plan totals $1.98 million as compared to last year’s expenditure plan of $8.8 million since there will be fewer major projects in 2014 as compared to 2013. For 2014, there is no planned debt issuance as there was in 2013.
A couple of our ongoing capital projects for next year will be concluding the golf course and entering the final design phase of the Lakefront Master Plan. Other capital items include the Centennial’s HVAC system and the addition of new light fixtures on the remaining courts due to their popularity. There were also some West Park parking and ADA issues throughout the Park District.
Director Wilson reported that the District has undertaken a customer service program with an outside consultant. As a result, we will now be developing a training program with the basic tenants of managing our staff in order to provide a more consistent and higher level of customer service at all locations.
Director Wilson concluded by stating staff has continued our trend of debt reduction and that the District’s outstanding debt will be reduced from $24 million to $22 million.
Superintendent Eppelheimer reviewed the District’s accounting structure from our funds to the sub-business units that are all a part of the Recreation Fund. They are as follows: Lakefront, Pool, Tennis, Golf, Ice, Recreation Programs at the CRC, and Paddle Tennis.
Superintendent Eppelheimer reviewed the consolidated budget on page 14 which looks similar to the CAFR. The 2014 Budget provides a surplus of $357,163. The expense totals from a Budget & Appropriations standpoint would then be slightly over $24 million and $23.7 million on the appropriations side.
In regard to our carry-over projects, when staff started to plan for capital the Board had already appropriated the dollars and these are items that we recommend should be completed. So when we include the carryover projects, that takes the expenses up a bit and drops us into a small deficit position. The capital projects are on page 179 and we are currently recommending a carryover in the amount of $597,193.
In regard to the proposed Revenues and Expenses, taxes are at about 35% and user fees are at 65%. Again, the District is in an enviable position since not all park districts have these kinds of voluntary user fees.
On the Expense side, we are obviously driven by employee services through salaries and wages and employee benefits. Debt service is coming along at about 14% and our capital expenditures are only about 25% with total Revenues at $24 million and total Expenditures at $23 million.
The debt schedule on page 180 contains all outstanding debt and includes both interest and principal. The source of these issues was a referendum for capital improvements and the two debt certificates will come out of Operations. The most recent issue of debt certificates was for the construction of the golf course.
Included in the binder was a separate exhibit from BMO Capital that answered the question of what our debt capacity may look like if retirement was kept flat. These numbers just provide an idea of what kind of pass-through we have based on a referendum scenario discussed by the Financial Planning & Policy Committee.
Director Wilson pointed out the amount the District could issue, which is tax supported before going to referendum, is a set dollar amount based on the outstanding debt incurred back in1992 when the law changed. If we go beyond this when doing major projects, then we would need to look at a referendum.
Tax funding was briefly covered at the November Committee-of-the-Whole meeting along with the tax levy and at the last Board meeting we had the public hearing for the tax levy. Recapping in this budget is $8.4 million and the question asked at the Board meeting was that the County would take this number and put 2% on it for loss and costs. This results in the tax extension which could be as high as a 1.4% increase. We also still represent less than 6.5% of a Wilmette homeowner’s tax bill.
Actual participant trends from RecTrac indicated that 30% of our participants are non-residents and 70% are residents. This number is up a bit because of closing some facilities that previously had participants. Director Wilson indicated that non-residents carry about 40% of the revenue.
There was a comment made that we have revenues going up but expenses are going up faster so those two lines may eventually cross. A chart was presented that showed our revenue trend is higher than our trend line of expense.
Commissioner Brault asked what expenses are not included in this representation. Superintendent Eppelheimer stated that debt service and capital were excluded but that expenses for retirement, insurance and other operations were included. The main message is that we are on the right track. Director Wilson commented that it is really the trend that we focus on.
Commissioner Benz commented that this is a new piece of information as we were concerned that our long-term projection indicated we would never find a position wherein we would be able to cover all of our operating costs with revenue. We were very concerned that we were seeing a failing business over the next 20 years. This would then put additional pressure on taxes. The current trend is, in fact, not the case.
Commissioner Brault stated that this all began in the Financial Planning & Policy Committee when we were looking at tennis where the utilization of the tennis facility had gone down significantly – court bookings are half of what they were 10 years ago. So we created an analysis to ask what the margin is for the District if we get higher growth in IMRF and health care costs. Costs may be growing and these are going up faster than our user fees are growing. This shows that our historic pricing models are working to continue with a positive operating margin. Commissioner Brault indicated that this was a powerful argument if the District goes for a referendum.
Superintendent Eppelheimer discussed the projected fund balances. He stated we started the year with a $7.9 million fund balance. For the 2013 budget, it was targeted at $4 million. Projected shows we are at $4.5 million but that includes moving that carryover as a cash issue. With this in mind, we continue with $3 million in capital for a rainy day issue.
Commissioner Wolfe asked how operating fund balances can get so high at $3 million. Superintendent Eppelheimer commented that it is like retained earnings in a company – years of surpluses where they manage it and a reasonable capital plan of $1 to $2.5 million per year with fees, etc. President Crowley commented that the deficit spending made the funds so low that we tried to build it back up but then we have all this cash so we decided we should spend some of it on capital improvements.
Commissioner Olvany commented we passed these target numbers last year but we did not use a dollar amount and instead used these periods instead because it’s a seasonal business and you want to maintain that. This is something the rating agencies pay attention to which will allow us to continue to be a Aaa rated agency. If you build your structure with fees and taxes and have enough to throw off from the bottom to take on capital improvements, you should make sure facilities are at the level that people expect and that is a nice balance. As a result, you are then only doing a referendum for the big stuff.
Superintendent Eppelheimer continued with a chart of the fund balances and stated that generally we want to stay close to $4 million. He added that the overall fund balances are still good.
On page 18 there is a top end view of each of the Departments. Again the legal document is the Budget and Appropriations Ordinance.
Commissioner Wolf asked how we compare to other park districts in the area. Director Wilson commented that financially we have a healthy set of reserves and most of the north shore districts are fairly healthy. When you look at fund balances, Glenview, Highland Park, and Northbrook maintain almost 20% of their expenditures in their fund balance but we are closer to 25%. The last time he did a comprehensive look was years ago when we were by far the smallest amount in the fund balance compared to districts who are about the same size around us. As a District, we manage a lot closer but what we have is the revenue from the user fees which is much higher than other comparable districts. This is why you see that we do not have to depend on those tax dollars as much. It is the people using the programs that keep it consistent.
President Crowley commented that the budget was a nice document.
Adjournment – With no further business to discuss, the Committee of the Whole adjourned at 7:46 p.m.
Minutes taken by Ken Eppelheimer.
MINUTES APPROVED ON JANUARY 13, 2014.