Finance Committee, May 20, 2019

June 4th, 2019  |  Published in Observer Reports

Members Present: Committee members Sean Malone (chair), Earl Williams, Robert Zimmerman; Citizen members Thomas Cicarella, Linda Lalley, Martin Kolb, Anthony Moore.

Others present:  Chief Administrative Officer Jeri Chaikin, Director of Law William Gruber, Director of Finance Robert Baker, Human Resources Manager Sandra Middleton, Recreation Director Alexandria Nichols, Neighborhood Revitalization Director Kamla Lewis, Director of Information Technology Frank Miozzi, Assistant Finance Director Cheryl Arslanian.

The meeting was called to order by Mr. Malone at 7:30 a.m.

Agenda—Committee actions:Sean Malone presented the minutes of the April 15, 2019 Finance Committee meeting for approval. The minutes were approved without further discussion.

  • Law Director William Gruber presented a request that the Finance Committee recommend to Council a three-year research services contract between the City and West, a Thompson Reuters company, for computerized legal research services (“Westlaw”) for the period June 1, 2019 through May 31, 2022, in the total estimated amount of $44,280. The City has used Lexis/Nexis online research services for many years, however, Lexis was not very responsive to our requests for a proposal for ongoing services. Also, Lexis does not provide all of the online access that the Law Department required. The City will be able to eliminate paper subscriptions by moving to Westlaw.

Earl Williams remarked that the Cleveland Bar Association has the “fastcase” system online and asked if this was an option. Mr. Gruber voiced his opinion that he would not want to use that system. Tom Cicarella remarked that the larger private law firms use The Cleveland Law Library and we should check this out. Mr. Gruber said that he would, Mr. Cicarella shared his telephone contact at the Law Library. Rob Zimmerman also recommended the Cleveland Law Library. He then asked what the City still held in print and recommended we clarify to the City Council that online access was a cost savings. Mr. Gruber stated that since Ohio Codes were now online that the print editions were unnecessary. Sean Malone stated the online and print versions of Westlaw were $54,742 and Mr. Gruber replied the online was sufficient at $44,280. The request was approved.

  • Assistant Finance Director Cheryl Arslanian presented a recommendation that the Finance and Administration Committee approve and recommend to City Council that the City enter into a ‘do not exceed’ contract for $95,000 with Tyler Technologies, Inc. for an Employee Self Service (ESS) time and attendance system, without the requirement of competitive bidding. The City desires to automate the collection of employee time and attendance data as well as the process of scheduling time off. The City utilizes Tyler Technologies “MUNIS” Financial system already, so data integration is built in; two other vendors responded to inquiries, but their systems would require customization in order to be compatible with MUNIS.

Sean Malone asked to be reminded of the criteria for a sole source recommendation. Law Director Gruber replied a sole source may have no competition or have a proprietary service which requires extensive customization. Rob Zimmerman had the same question and asked that Mr. Gruber’s explanation be added to the request before presenting to City Council. Earl Williams wished to know why there was travel expense. Ms. Arslanian explained the vendor would travel for system installation and employee training. Robert Baker remarked that time and attendance for the Fire Department was a 24 hour, 7 day week activity and that mobile access with MUNIS compatibility was valuable. Mr. Malone asked if employees entered their own data. Ms. Arslanian answered that they did enter their own data using mobile GPS for location tracking. Mr. Malone continued by asking why the $87,195 was estimated. Ms. Arslanian answered that travel cost could vary but the budget was $95,000 for a 6-9 month implementation schedule. The recommendation was approved.

  • Human Resources Manager Sandra Middleton presented a request that the Finance and Administration Committee recommend accepting a proposal from Springsted, LLC for the City’s classification and compensation plan study at a cost not to exceed $38,000. The funds for this project are already in the 2019 Human Resources budget. The City last contracted for a classification and compensation plan study in 2004. City services have expanded, departments have been reorganized or abolished, and several position classifications have been restructured since that time. Eleven proposals were received for this study, a review committee reduced the field of companies to four and an interview was held with each of the prospective companies. The review committee unanimously agreed that Springsted was best suited to meet the City’s objectives.

Rob Zimmerman remarked on the wide disparity between the 12 quotes and that Springsted was in the middle. Ms. Middleton replied there were many added components to the solution and that the smaller companies could not compete due to the customization they required. Tom Cicarella asked if the City has a perception we are having trouble finding good people. Ms. Middleton replied we are not having trouble finding good people, but that we have to offer them a higher starting salary than the “entry” level on our classification system due to the competitive pressures in the job market; this speaks to the need of updating our classification and compensation documents. Mr. Cicarella continued by asking if we did not know what the market demands. Ms. Middletion answered that we did know our competitive position via surveys. Linda Lalley wished to clarify if Mr. Cicarella was referring to salaries or the contract quote. He replied he was referring to salaries. Ms. Middleton added that the department did know what the market demanded and could perform this task, but did not have the staff available to do so. Chief Administrative Officer Jeri Chaikin added that an outside firm brings subjectivity to the process that sets employees at ease; there would be no management bias. She continued that outside candidates may place different values on benefits than existing employees or management. Earl Williams wished to know how this might affect our bargaining units. Ms. Middleton answered that bargaining unit employees commonly enjoyed more benefits than non-bargaining employees. Marty Kolb remarked that 15 years had passed and the City now had fewer employees, the recruiting process was more competitive, and employee equity was more difficult to maintain; it was past time to do this. Mr. Malone wished to know the budget impact. Ms. Middleton replied that the base pay would be affected but that employees were being paid competitively today. Jeri Chaikin replied that the updated plan would be presented to City Council for approval. The request was approved.

  • Recreation Director Alexandria Nichols presented a request that the Finance and Administration Committee recommend to City Council an increase to ice rink fees. These fees would go into effect fall 2019. The rationale behind the fee review was to ensure cost recovery through users fees because expenses increase annually. Prior to the last change in 2013, fees had been the same since 2008 and before that fees were updated annually. Data was compiled from several area rinks, both private and public, to see how Shaker fees compared to other rinks and includes admission, program fees, and facility rentals fees.

Sean Malone remarked about the lack of profitability of the skating rink. Earl Williams asked if any other rinks in the local area were profitable. Ms. Nichols replied that several rinks had gone bankrupt over the years, Winterhurst is owned by Lakewood and run by a private company, Strongsville is private, and some rinks get sponsorships to defray costs, but she did not know if they are profitable. Anthony Moore asked if we are considering sponsorships, this is an avenue we should pursue. Ms. Nichols replied that we were not but could explore; was he considering signage? Mr. Moore replied that signage or other revenue sources should be pursued, doing nothing was not responsible. Tom Cicarella recommended raising the hockey rates substantially and asking the team to find sponsorship; the primary users should be expected to support the rink. Mr. Malone agreed the hockey fee should be revisited. Linda Lalley asked if there was a breakdown of resident versus non-resident revenue. Ms. Nichols replied there was not a breakdown of non-resident use; non-resident hockey was tracked, but not figure skating or open skating. Ms. Lalley wanted to know if the rink depended on non-resident skating. Earl Williams remarked that the rink was a significant capital commitment and had recently replaced a compressor. Robert Baker added the water compressor was a great expense and he was concerned about other expensive equipment, particularly as the rink is most times empty. Ms. Nichols confirmed the rink is used early mornings for hockey practice, early evening for figure/open skating and weekend nights for hockey; probably much less than 50%, yet the ice equipment has to run 100%. Mr. Cicarella commented that private rinks hosted tournaments and shows which increase ice usage; we need to make the rink pay for itself. Ms. Nichols shared that Shaker Schools athletic teams do not pay for rink usage. Anthony Moore suggested that this was an appropriate time to perform a full analysis of Thornton Park; not just the rink, but the pool, tennis, everything. Ms. Nichols replied an analysis of the rink cost was just completed; the rink is 50 years old but still sound and probably usable for 10 more years without more capital. Mr. Moore replied we need analysis of revenue and expense, not just capital. The request was approved.

  • Director of Neighborhood Revitalization Kamla Lewis presented a request that the Finance and Administration Committee recommend City Council approve an application from Yvonne Smith and Victor Mullen, 3689 Winchell Road, to acquire the city owned vacant lot adjacent to their home in order to use it as a side lot. The City adopted a Side Lot Program in May 2008 to make City owned vacant lots available to the adjacent neighbors. The goal of the program was to encourage neighbors to acquire these lots and make capital improvements to the property that would increase tax value, such as construction of a house addition or garage, landscaping, etc.

Rob Zimmerman appreciated the history on the vacant lot program and wondered why the activity had slowed, should it be promoted? Ms. Lewis volunteered that the previous City administration had a “caretaker” philosophy rather than promotion; one idea is to set a fixed price for consolidation and market to the community associations, until now the adjacent neighbor effectively gets a “free” side yard. Tom Cicarella asked if other people could buy lots for new construction. Ms. Lewis replied that the cost of new construction was not competitive with the existing housing stock; the City had approached Habitat for Humanity to build housing units, but they asked the City to help with fundraising as their priority is refurbishment, not new construction. Mr. Cicarella asked how we prevented “flipping” of these vacant lots. Ms. Lewis answered that the requirement for consolidation of the two adjacent property deeds precluded the sale of the vacant lot by itself. Marty Kolb asked if consolidation changed the property tax appraisal. Ms. Lewis answered that it could technically change the appraisal, due to the increase in acreage, but in actuality the county had very seldom reappraised higher values for the consolidated property. Sean Malone wished to know if tax abatement was still available in Moreland. Ms. Lewis confirmed that Moreland taxes were still abated for 10 years. Mr. Malone asked if these 15 vacant lot sales were monitored to confirm the consolidation proposal was implemented. Ms. Lewis replied that they were monitored and only one lot was not maintained. The request was approved.

  • Director of Finance Robert Baker presented a request that the Finance and Administration Committee recommend City Council adopt the 2020 Tax Budget on May 28, 2019 and transmit to the Cuyahoga County Budget Commission no later than July 20, 2019. The Ohio Revised Code requires that Ohio city councils adopt a tax budget for the next fiscal year no later than July 15th of the current year and that the adopted tax budget be submitted to the County Budget Commission no later than July 20th. The primary purpose of the tax budget is to demonstrate the City’s need to levy property taxes for the coming fiscal year. The request was approved.
  • Director of Finance Robert Baker presented a review of General Fund revenue and expenditure actual results versus budget through March 31, 2019 (1Q2019), with comparisons to the same period 2018. Revenue includes both income and real estate taxes. 1Q2019 revenue was $13,928,264 or $272,386 less than 2018. The County believes that the real estate tax deficit is result of early payments of 2017 real estate taxes received in January 2018 to avoid adverse effects of the new federal income tax on deductions for local taxes. The income tax deficit is the result of the lower December 2018 RITA tax collections we received in January 2019. RITA monthly collections are now $179,388 ahead of 2018 after the May Advance, which is encouraging. However, there is still a question of whether income tax receipts will again fall off in the fourth quarter, as in 4Q2018, which were $893,649 below 4Q2017. City Council has approved the Public Works Department employees’ contract, but the money is not in the 2019 budget, the question is, “Will revenue continue ahead of budget the remainder of the year, or will we have a shortfall of income tax in 4Q2019?”

Marty Kolb asked if the Public Works wage increase will be the only unbudgeted expense in 2019. Mr. Baker answered that the Police Department and Fire Department contracts expired in 2018 and, if settled, any wage increase will be retroactive to January 1, 2019. Linda Lalley asked why “personal services” under Police and Fire Department budgets are down. Mr. Baker replied that headcount was below budget.

Sean Malone asked if there was any other new business, there was none. Mr. Malone adjourned the meeting at 9:18 am.

Frank Goforth, observer

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