DeKalb Times

Dekalb County Finance Committee met Feb. 5.

Here is the minutes provided by the committee:

The Finance Committee of the DeKalb County Board met on Wednesday, February 5, 2020, in the Administration Building’s Conference Room East. Chairman Bagby called the meeting to order at 7:00 p.m. Those Members present were Mr. Scott Campbell, Mr. Steve Faivre, Mr. John Frieders, Ms. Dianne Leifheit, Mr. Jerry Osland, Ms. Sandra Polanco, and Chairman Tim Bagby. A quorum was established with all seven Members present.

Others present included Gary Hanson, Pete Stefan, Jim Scheffers, and Greg Millburg.

APPROVAL OF THE AGENDA

It was moved by Mr. Frieders, seconded by Mr. Osland and it was carried unanimously by voice vote to approve the agenda as presented.

APPROVAL OF THE MINUTES

It was moved by Mr. Campbell, seconded by Mr. Faivre and it was carried unanimously to approve the minutes of the November 6, 2019 Finance Committee Meeting.

PUBLIC COMMENTS

There were no public comments.

PROPERTY TAX SALE RESOLUTIONS

County Administrator Gary Hanson presented two Resolutions in connection with delinquent property taxes. The first Resolution was for the sale of a Trustee parcel in Genoa and the other was for a cancellation of the Certificate of Purchase on a mobile home that is located in the Edgebrook Mobile Home Park in Sycamore. He shared that the Treasurer was looking for approval for the tax sales to get these properties back on the tax rolls.

It was moved by Mr. Faivre, seconded by Mr. Campbell and approved unanimously to forward both Resolution to the full County Board recommending their approval.

ANNUAL TAX ABATEMENT RESOLUTIONS

DeKalb County Finance Director Pete Stefan presented and explained the annual Tax Abatement Resolution for the Courthouse Expansion/Jail Expansion Planning bond issue and the Jail Expansion Construction bond issue. This will be the tenth annual abatement for the Courthouse Expansion/Jail Expansion Planning bonds and the third annual abatement for the Jail Expansion Construction bonds. He added that these two abatement Resolution need to be passed to prevent the County Clerk from extending the taxes for these two bond issues since they will be repaid with non-property tax revenue sources (i.e. sales tax sharing revenue with the City of DeKalb and landfill revenue).

It was moved by Ms. Leifheit, seconded by Ms. Polanco and it was approved unanimously to forward both annual Tax Abatement Resolutions for the Courthouse Expansion/Jail Expansion Planning bond issue and the Jail Expansion Construction bond issue to the full County Board recommending their approval.

MOODY’S ISSUER COMMENT REPORT

Mr. Stefan shared that Moody’s Investor Service recently issued its annual Issuer Comment Report on DeKalb County. The Committee received and reviewed an except from the report which provided a good indication of what the County’s credit rating might be when they issue the Nursing Home Expansion bonds. DeKalb County’s current rating is Aa1 which is one notch below Aaa which is the highest quality and lowest credit risk. In general, they have some favorable comments about the County but do point to net pension liability as an area they’ll be keeping an eye on in the future.

The Committee spent a little extra time reviewing the County’s IMRF and SLEP unfunded net position amounts. IMRF is currently 88% funded and SLEP is 81% funded.

CONTRACT EXTENSIONS

Facilities Management Office Director Jim Scheffers shared that he had two contracts that he would like permission to extend for three years each. The contracts with Rush Power Systems LLC for generator maintenance and with Citywide Building Maintenance Inc. for cleaning/janitorial services will be expiring soon and he would like to extend those contracts based on both company’s performance history with the County.

Mr. Scheffers shared that Citywide is proposing is to raise their rate 3% (current = $82,379 to $84,850) and hold that new rate for the next three years. Mr. Scheffers added that Citywide does a really good job and he has been very pleased with them and that is why he is requesting the contract be extended. He also answered that this rate is cheaper than doing the cleaning in-house, which was asked by Mr. Campbell.

It was moved by Mr. Osland, seconded by Mr. Faivre and it was approved unanimously to allow for the three-year extension of the Citywide Building Maintenance Inc. contract.

Mr. Scheffers additionally explained that Rush Power Systems LLC performs all of the County’s generator preventative maintenances. This contract provides generator maintenance to:

Group 1 – Courthouse, Public Safety Building (includes 911 generator), Administration/Legislative Buildings [$7,550]

Group 2 – Community Outreach Building [$1,925]

Group 3 – Health Department [$1,950]

Group 4 – Digital Radio Towers [$3,800]

Group 5 – Jail Expansion (2 large generators) [$7,800]

Mr. Scheffers added that if this contract were to be extended for the next three years, Rush Power has agreed to hold their prices at the current rate. These prices include Rush to come out twice a year to not only doing preventative maintenance but also automatic transfer switch maintenance, oil analysis, coolant analysis, and annual 2-hour load testing.

It was moved by Mr. Faivre, seconded by Mr. Campbell and it was approved unanimously to allow for the three-year extension of the Rush Power Systems LLC contract.

REQUEST TO FILL VACANT POSITIONS

There was a request in the Facilities Management Office to fill one vacancy but involves multiple positions due to the domino effect of filling one vacant position with an internal promotion which then creates another vacancy in the promoted employee’s pervious position, and so on. Mr. Scheffers shared that he moved a Worker 3 up to the Supervisor Position when the Supervisor retired. He would like to move one of his Worker 2’s up into that Worker 3 position, which then would open up the vacancy in a Worker 2 position that he is requesting permission to be able to go out and advertise and hire for.

Mr. Hanson noted that according to the Board Rules, Mr. Scheffers would need Committee permission to fill a vacancy but Administrator allowed Mr. Scheffers to fill is Supervisor position with an existing Worker because he was short-staffed to begin with and needed someone in that role, especially during snow removal season.

It was moved by Mr. Osland, seconded by Mr. Campbell and was approved unanimously by the Committee to allow Mr. Scheffers to advertise and hire a Worker 2 in the Facilities Management Office.

Another request to fill a position was made by Mr. Stefan for the Assistant Finance Director position. Mr. Stefan explained that the previous Assistant Finance Director just left the position to transfer over to the Health Department. This will be the fourth person in this position in the past seven years. Mr. Stefan proposed a couple of options to the Committee.

The first option, Option A: Status Quo, would be Mr. Stefan requesting of the Committee to allow him to fill the position with a starting pay range of $65,603 to $72,155, which the top of the range being $98,384. The County’s Policy would allow him to hire someone about 10% above the minimum range which Mr. Stefan shared he believes would be someone without much experience and it would take a couple years a least to get the individual up to speed on everything.

Mr. Stefan shared that he has another option that he personally thinks is a much better one but definitely a very creative way to finance this. Option B: Increase the Pay Based on Experience (Savings of $227,000 over 7 years). Option B was laid out as follows:

1. Fill the position with a starting pay at up to the top of the salary range of $98,384, based on experience in local government finance.

2. Offer an annual incentive bonus of $2,000 per successfully completed component, of one of two special certifications, either for the four Certified Public Accountant (CPA) exams or for the five Certified Professional Finance Officer (CPFO) exams.

3. Individual’s years in local government finance are recognized for accruing paid time off.

4. Pete Stefan retires as Finance Director no later than December 31, 2021.

5. Pete Stefan is hired back for not more than 19 hours per week on average at normal hourly rate (999 hours maximum per year).

6. Pete Stefan agrees to donate at least 21 hours of work per week on average.

7. Items 5 & 6 & 7 are in exchange for maintaining benefits at a full-time level (i.e. health/dental/life insurance, deferred compensation, paid time off, etc.), plus being allowed to work from home 50% of the time, with the stipulation that the Finance Director must be on- site for required meetings, such as County Board and Finance Committee.

Mr. Stefan additionally reviewed and Executive Summary that illustrated the cost saving of $227,000 over 7 years if they were to go with Option B.

Mr. Campbell questioned the need for a CPA to hold this position. He also questioned if it was legal for an individual to donate hours to an organization and if so, it seems certainly unusual but he thanked Mr. Stefan for even suggesting doing something like this.

Ms. Leifheit noted that the current range stood out to her because the top of that range is what some current Elected Officials are making or close to making. Mr. Hanson wanted the Committee to keep in mind that even though they have those ranges, basically they don’t allow individuals to move through them because all they receive is a cola increase each year. He also added that this would be a professional job that you would be recruiting for in a broader market, where Elected Officials are individuals who have to run for office to win, so it is quite different.

The Committee discussed this possible option further and had many questions.

Mr. Campbell shared, absolutely not related to Mr. Stefan at all, he is very uncomfortable with writing policy for an individual. He noted he would be comfortable with maxing the range out to get someone in the position that has experience and that could possible move into the position of Director one day but he would be uncomfortable with saying down a couple years down the line they are going to make this deal with this certain individual and try to put that down on paper and get that approved.

Mr. Stefan shared that if hiring at the max of the range was an option, he would certainly take that without going forward with Option B and freezing his pension and donating is time in the future.

Mr. Campbell added that the County is in good financial shape and he believe tax payers respect that, so to have a very strong Assistant, especially if the Director is coming up on retirement, make a whole lot of sense and a better business idea to him.

Mr. Osland wanted to understand that Mr. Campbell is okay with the numbers but the deal that Mr. Stefan is proposing is questionable.

Mr. Campbell clarified that he thinks the Committee should allow for the hiring of an Assistant Finance Director at the maximum range of the salary to get someone strong into the position with the intentional idea that they may become the next Finance Director and, in a year, when Mr. Stefan is getting closer to where this Option B would be coming into play, they revisit the idea as a Committee again.

Mr. Stefan added that the “three-year deal, 2021 partial retirement” was specifically brought out to fund this concept. If the Committee is asking when he truly plans to retire, it would be year 7 because of healthcare. Mr. Stefan stated that he through this Option out to the Committee because if a Department is asking for more money, they need to find a way to fund it, and this Option B was his way of coming up with the money.

Ms. Polanco expressed that her concern was they are trying to outline an employment contract that basically goes to 7 years and he worry is that do not have the ability to do something like that. She understood that the proposed option was to fund the position but she would be more comfortable if they only focused on just the salary increase of the Assistant position and not anything further on how to fund it in the next 2-7 years. She would also suggest if Option B were a viable option that an employment lawyer would need to take a look and see if that would be even something the County could do.

After further discussions, Mr. Osland moved to forward a Resolution to the full County Board in order to allow Mr. Stefan to recruit for a new Assistant Finance Director by hiring to the maximum of the existing pay range ($98,384), as well as to add a stipend for professional certifications. Mr. Campbell seconded the motion and it was approved unanimously.

UPDATE ON ACTUARIAL STUDY

Mr. Stefan reviewed that a few months ago, the Committee authorized an actuarial analysis of the reserve levels in the Tort & Liability Fund to determine whether the County’s $6.5 million fund balance was a reasonable amount to be carrying as reserves. Since that time, Mr. Stefan has reached out and engaged, for $6,000, Madison Consulting Group to perform that study. That report is scheduled to be available at the Committee’s March meeting.

PURCHASING POLICY UPDATE

Mr. Hanson provided an update on the Purchasing Policy that was reviewed by the Committee previously and that was forwarded to them by the Ad Hoc Rules Committee. He expressed his thoughts on segregating the procedural components from the policy components.

Mr. Hanson shared his revised six-page document with the Committee and suggested that this current document would be incorporated and utilized as procedures that the Finance Office would use while working with Departments who are purchasing something.

His reasoning for believing this document belongs more in a procedure manual than a policy is because he kept going back to the first sentence in the County’s current policy, which is the crux of what the Board does. “It is the policy of the County Board to procure services, materials, equipment, and supplies essential to the delivery of governmental services through the use of an open process and truly competitive practices, and to award contracts to qualified vendors who provide the best value for the desired contracts.”

Mr. Faivre moved to incorporate the proposed six-page document into the Finance Office’s procedures for purchasing as well as report back to the Ad Hoc Rules Committee that this is the appropriate action for the document they forwarded to the Committee. Mr. Osland seconded the motion and it was approved unanimously.

CLAIMS REVIEW

Mr. Stefan highlighted the significant expenditures included in the January Claims List including any items that were unusual from either a dollar amount perspective or due to the nature of the expenditure.

ANALYSIS OF OPERATIONAL EFFICIENCIES

Chairman Bagby shared that one of the things that he has noticed in the past budget books is that there is an awful amount of line items that have the exact same amount from year to year to year. He questioned if there has been any analysis over a three-year period, or any, to see what percentage of some of those line items were actually really being used and whether there aren’t some way that they can gain some additional room in the budget by taking a look at those areas.

He wondered if an analysis could be done in order to possibly reset some of those line item amounts and realize some savings in doing so. He added that he thought they could start with the Departments that report to the Finance Committee.

Mr. Hanson noted that on the flip side, he believes doing something like this would encourage Department to spend more of the money because if they don’t use it, they will essentially lose it. Right now, the amount Departments request is a good faith estimate and if they can save money, great, but they also don’t get the money taken away from them if they don’t use it. The benefit of that is the reaming funds go into the fund balance at the end of the year.

ADJOURNMENT

It was moved by Ms. Leifheit, seconded by Ms. Polanco, and it was carried unanimously to adjourn the meeting at 8:57 p.m.