SUMMARY MINUTES OF A BUDGET WORK SESSION
OF THE CHAPEL HILL TOWN COUNCIL
THURSDAY, MAY 12, 2005 AT 4:00 P.M.
Mayor Kevin Foy called the meeting to order at 4:00 p.m.
Council members present were Sally Greene, Ed Harrison, Cam Hill, Mark Kleinschmidt, Bill Strom, Jim Ward and Edith Wiggins.
Council Member Dorothy Verkerk was absent, excused.
Staff members present were Town Manager Cal Horton, Deputy Town Manager Florentine Miller, Assistant Town Manager Bruce Heflin, Town Attorney Ralph Karpinos, Town Information Officer Catherine Lazorko, Parks and Recreation Director Kathryn Spatz, Police Chief Gregg Jarvies, Finance Director Kay Johnson, Housing Director Tina Vaughn, Library Director Kathy Thompson, Information Technology Director Bob Avery, Engineering Director George Small, Public Works Director Bill Letteri, Fire Chief Dan Jones, Inspections Director Lance Norris, Human Resources Director Pam Eastwood, Planning Director Roger Waldon, and Town Clerk Sabrina Oliver.
Support staff present were Network/Telecommunications Analyst Arek Kempinski, Internal Services Superintendent Bill Terry, Fire Administrative Officer Susanna Williams, Assistant Human Resources Director Anissa Graham-Davis, Senior Planner Phil Hervey, Principal Long Range Planner Gordon Sutherland, Senior Development Coordinator J.B. Culpepper, Transportation Planner David Bonk, Assistant Finance Director Jeanne Erwin, Assistant Transportation Director Kurt Neufang, Transportation Administrative Analyst Jeffrey Freer, and Human Resources Specialist Camelia Brooks.
Mayor Foy noted that this was a work session for the purpose of discussing the recommended budget, and to consider the report from the Citizens Budget Subcommittee and from MAXIMUS, the Town’s budget consultant. Mayor Foy stated the Council had heard the highlights of the budget, and asked the Manager if he had anything to add.
Manager’s Introduction
Mr. Horton said we had been in touch with our group medical provider and progress had been made. He said he believed we had saved about 2 ½ tenths to 3 tenths of a cent in those negotiations, but we would have a firmer number in just a few moments when Finance Director Kay Johnson completed her calculations. Mr. Horton said he believed that the Subcommittee was correct in judging there would be some savings in benefit arrangements. He said they have been working with employees to explain some possibilities for that, and identified some things including having a deductible for inpatient hospitalization that would make a difference in the cost. Mr. Horton said instead of having an 11 percent increase, we have been able to negotiate it down to a 4.9 percent increase.
Mr. Horton said we are prepared to discuss any issue in which the Council had an interest. One large dollar item the Council had not had an opportunity to discuss in detail, he said, was the Capital Improvements Program (CIP) and we are prepared to discuss that as well. Mr. Horton said we also had not had an opportunity to discuss recently the issue of pay recommendations prepared by the Human Resources staff. He said the Council did receive information along with the Citizen Budget Subcommittee, and would be would be pleased to discuss that as well as any other issue.
Council Comments and Questions
Mayor Foy said the reserve for pay adjustments was noted at $746,000. He asked if that was 3.78 percent. Mr. Horton said the proposal was for an average of 3.78 percent, which would provide a step increase for employees in the lower half of the pay range. For employees who are above the job rate, he said, they would receive an average of 3.78 percent, but the exact rate would depend on the performance rating of the employee.
Mayor Foy said he was not sure that the Council could discuss the Manager’s report, the Citizen’s Budget Subcommittee report, and the MAXIMUS report in isolation. He stated they were all interconnected, and suggested we proceed by looking at the Manager’s recommended budget but feel free to refer to other reports as a way of testing some of the assumptions. The Council agreed by consensus.
Council Member Strom said he believed they needed to discuss the CIP, and said there were a few recommendations in the Subcommittee’s report that he wanted to have some highlight and conversation about. He asked if the Manager might explain some of the interplay between those recommendations and the Manager’s recommended budget.
Lapsed Salary/Vacant Positions/Fund Balance
Council Member Strom said there was an issue of lapsed salary and Fund Balance noted in the Subcommittee’s report. He said that report noted that the last budget they had examined had 28 unfilled but funded positions, and their recommendation was to reduce the budget by $700,000. Strom said they had arrived at that figure by taking half of those unfilled but funded positions. He said there was also some discussion about pushing the Fund Balance to 11 percent, down from 12 percent, noting that he understood that we would not know exactly where the Fund Balance would be until we have a final budget.
Mayor Foy said then as an example, Council Member Strom was suggesting we take that $700,000 and put it in Fund Balance. Council Member Strom replied it could be that or a similar figure. Mayor Foy asked it that was reasonable logic. Mr. Horton responded that first of all, he did not believe there were 28 positions unfilled, noting he did not know where that information was obtained from.
Council Member Strom said the Subcommittee’s report said the number was between 3 percent and 5 percent. In concept, he said, we have positions we are budgeting money for but remain unfilled. Mr. Horton said he did not believe that was true, adding there were only two he knew of that were both in the Public Works Department and had intentionally been held vacant. He said the Police Department had one that was unbudgeted, and therefore was vacant. Mr. Horton said there were positions during the course of a year that were vacant due to turnover, and what happened in those instances was that the funds preserved through that lapsed salary was dedicated to the rollover balance used each year for the upcoming budget. Mr. Horton said lapsed salary was not expended without the direct approval of both himself and the Finance Director. If we budget those dollars now, they would not be available for rollover.
Mayor Foy said what the Manager was saying was that if we have an unfilled but funded position, the department could not spend the money on anything but that position. But, he said, if that position remained open, that money came back into the $800,000 rollover for the next year. Mr. Horton replied that was correct. Mayor Foy said he believed the point Council Member Strom was making was that the money could be put into the Fund Balance and then pulled out.
Ms. Johnson said there was more than one way to budget for vacant positions. She said in Durham, they budget for vacant positions only in the larger departments, which were Public Works, Fire and Police, whereas our largest department was Transportation. She said in terms of using this for budgeting purposes the smaller the department the less reasonable it became, because it was so difficult to predict turnover. For example, Ms. Johnson said, in Durham’s Police Department there were a number of civilian positions which allowed them to feel comfortable budgeting for lapsed salary within those positions.
Mayor Foy asked what Durham did with those funds. Mr. Horton responded they deduct it, and it was not put into the budget in the first place.
Council Member Strom said he was suggesting we increase our Fund Balance but use the average unfilled position rate for the last few years to reduce program budgets. Using the Transportation Department as an example, Ms. Johnson explained that if a vacancy occurred among bus drivers, we cannot cancel the route but must pay overtime to other employees in order to continue to provide service. She said that would result in lapsed salary being used to continue to provide service. Ms. Johnson said the same holds true in other departments.
Ms. Johnson said when she looked at what might be reasonable given the salary savings overall, she determined that our current method of using Appropriated Fund Balance but not spending it worked well and did not know of a better way to do it. She said the Manager had the choice any time a position was vacant to leave it vacant or fill it, but the only way to achieve additional savings would be to hold vacant positions vacant for longer periods.
Council Member Strom said this year when we started the budget process we had the $800,000 for the rollover, and asked how much more we had been able to identify. Ms. Johnson responded $715,000. Mr. Horton said their first objective was to identify the $800,000, then began work to identify as much as possible in other ways. He said with help from department heads and a higher than anticipated sales tax revenue, the total rollover was $1.5 million.
Council Member Strom said the Manager was recommending a 12 percent Fund Balance. Mr. Horton responded yes, noting we would be at 11.4 percent according to the recommended budget. Ms. Johnson noted that as adjustments were made to the budget, that figure could go up or down.
Council Member Strom asked if the next time we talk about this, he would like an answer to the question on page 7 of the Subcommittee’s report that suggested that a more accurate target amount for lapsed salary might be determined by averaging the last three years of average position vacancy or averaging the average percentage of lapsed salary against the total salary budget. Ms. Johnson said that a response to that would be provided, but noted that the lapsed salary number had decreased dramatically over each of the last three years.
Mayor Foy said part of the effort in the Police Department would be to put more money in to fill those eight positions that had been vacant. He said that also on page 7 of the Subcommittee’s report was a recommendation to lower the Fund Balance to 11 percent, although one member opposed that and wanted it left at 12 percent. Mayor Foy said the Manager’s recommended budget was recommending $5.3 million, but 12 percent would be about $5.6 million. He said to bring it up to 12 percent, another $300,000 would have to go to Fund Balance, and it was worth considering trying to keep it at 12 percent.
Mayor Foy said things happen during the year and we sometimes have to draw on Fund Balance. He added that putting it at 12 percent would allow the Town to keep its AAA Bond rating, and we do not want to jeopardize that. Mayor Foy suggested the Council consider increasing the Fund Balance by $300,000.
Council Member Kleinschmidt said we might consider lowering the total budget figure, which would mean that 12 percent was a smaller figure. Mayor Foy responded he did not know how we could lower the budget. Council Member Kleinschmidt said by cutting it, stating that if the total budget was lower, then the projected tax rate increase and the $300,000 figure to keep Fund Balance at 12 percent would lower as well.
Town Assets
Council Member Strom stated that on pages 13 through 15 was a list of underutilized assets, and said he believed the principal that emerged from that report was that we were underutilizing our Town assets. He said the Old Library Building and the Old Municipal Building should play a part as revenue generators or program uses for the Town. He asked the Manager to begin to study that so that the Council could have options to consider to achieve revenues from those assets or use them for Town departments.
Mayor Foy said the point was that the Council had said they did not want to sell those assets, but they had indicated they may want to have them generate market rate revenues or to use them for Town operations. He said they knew the Manager would soon be asking the Council for more space. Mayor Foy said he agreed that needed to be analyzed.
Council Member Harrison echoed that, noting it would take some time to get renters in place in order to generate revenues. He said that it was difficult to get a new public building, and he did not like to see public buildings underutilized in any form.
Mayor pro tem Wiggins asked the Manager how long he believed it would take him to bring back a list of options on how to generate revenue from those two Town buildings, adding “hopefully after December.” Mr. Horton replied it would depend on the priority the Council placed on it. He said the biggest challenge for the Old Library building was the zoning, which did not permit office uses or traditional office uses. Mr. Horton said he was not certain Planners would agree that any other type of zoning could be put in place that would not amount to “spot zoning.” He said that the Library building was in the middle of a residential area that was zoned Residential-2 (R-2), and its use as a museum was permitted because you could have public service facilities or cultural facilities in an R-2 zone. Mr. Horton said as to the Old Municipal Building, the biggest impediment there was its current use by the Interfaith Council (IFC), and if the Council wanted to urge them to move out to other quarters they would need a deadline to do that. He said that would be more of a community process than it was an analytical process, adding they could bring the Council a list of options sometime this fall.
Mayor Foy said he believed an analytical process would help move the community because the IFC had been looking at other options, but to the extent that we have other pressures on us it might be helpful for the IFC to know and for the Chapel Hill Museum to know that we were looking at these things. He said that citizens needed to know that as the Town grows, so does the need for public facilities. Mayor Foy said at the Council’s request, space at the new Town Operations Center had been reduced due to cost. And, he said, we own space that others are using. Mayor Foy said that was a policy choice that needed to be made publicly so that citizens understood it.
Council Member Strom added that in addition, we were leasing space for the Stormwater Utility at present and that was not cheap. He said he believed that was costing the Town $40,000, noting it was a significant amount. Mr. Horton said he believed it would be necessary to lease even more space by this time next year due to the changes in technology and equipment and the people who worked in that area.
Council Member Ward said hearing that, he believed the Council needed to put that on a prompt time frame so that discussion could take place. He said he had a hard time justifying why we would allow a Town-owned building to be used with no revenue generated from it and at the same time pay market rate to lease space within a few blocks of it.
Council Member Ward said the Manager had mentioned the Old Library could not be used as Town office space due to the zoning. He asked if the Stormwater Utility could be moved to that building. Mr. Horton replied it may be possible, since that Utility could be determined to be a public service facility which was allowed in the R-2 zoning.
Council Member Ward said then it would appear we could get rid of that $40,000 cost for leasing, at least in many citizens’ minds, by moving that Utility into the Old Library. Mr. Horton said that years ago when the Council was considering whether or not to lease the Old Library to the Museum, one of the issues debated was whether or not it should be reserved for Town uses. Obviously, he said, the decision at that time was to allow it to be leased. Mr. Horton said his original recommendation was to move the Parks and Recreation Department into that building, which now occupied a metal building that was once a garage.
Mayor Foy said part of the CIP budget included funds to repair the roof of the Old Library building. He said the more you look at this, with expenses for upkeep and the lease of other office space, the more it pointed to the fact that we needed to make better use of these underutilized Town assets. Mayor Foy said in the case of the Old Post Office/Court Building, it was an underutilized asset but needed to remain a Post Office and a Court House as well.
Council Member Greene noted that several years ago when she served on the Planning Board, the Old Library was on schedule for roof repair. She asked if it had been repaired, and now needed additional repair. Mr. Horton replied that the roof was repaired several years ago, but we were still paying for it today, adding it was bundled with other roofing repairs and financed.
Yard Waste Collection
Regarding yard waste collection, Mayor Foy noted the Subcommittee had recommended changing that service. Mr. Horton said the Council had received a report on yard waste at its April 27 work session.
Council Member Strom said he had asked for a report on the vegetative debris to be available for tonight’s meeting, and noted that he believed the staff made a clear and compelling argument in that report for leaving things as they are.
Mayor Foy agreed, noting that staff report showed the volume of collections as well as employee issues that were not necessarily tracked by the assumptions that the Subcommittee made. Mr. Horton said there probably were communities that were tracked in a way that the Subcommittee suggested, it just did not correspond with the pattern in our community.
Pay Adjustments
Mayor Foy said pay adjustments were stated in the recommended budget at about $746,000 for a 3.78 percent pay raise, which was equivalent to a one-step pay raise, with those above the mid-point of the pay scale averaging a slightly different rate. Human Resources Director Pam Eastwood stated that a one-step raise for employees below job rate, or mid-point on their pay grade, was 3.78 percent. For those above the job rate, she said, they would receive an average of 3.78 percent, but the exact rate would depend on the performance rating of the employee.
Ms. Eastwood said that more than half of Town employees fell in the bottom half of the pay range, even though the average employee service time for an employee was nine years. She commented it was intended when the pay plan was put into place that an employee would reach the job rate in about five years. Ms. Eastwood said that had not been happening because the Council had not found it possible to fund a step each year. She said that approval for anything less than a step, or 3.78 percent, resulted in the employee receiving that amount but remaining on the same step. Ms. Eastwood said the value of that step went up in value in terms of dollars, but the employee had not moved toward the job rate of their pay range.
Ms. Eastwood said because of that, they were recommending a full step raise in order to move employees to the next step. She said this would help to reduce the number of employees below the job rate in their pay ranges.
Mayor Foy asked what was the pay increase last year? Ms. Eastwood replied it was 3.78 percent, and the year prior to that it was 3 percent. Mayor Foy said that because of the way we implement pay adjustments they take effect in October. He said that meant that each year we had to budget for the unfunded portion. Ms. Eastwood said we had to budget for the full annual cost in the following year. Mayor Foy said that equaled about $200,000, so from the Council’s perspective there was roughly $746,000 dollars in the recommended budget for pay adjustments plus $210,000 to fund what they had approved last year. Mr. Horton noted that $210,000 was accounted for in the General Fund.
Council Member Greene stated the Council had to do that. Mayor Foy said yes, it was committed and was funded this year.
Council Member Hill said then if we approve the $746,000 for the coming year, we were committing ourselves to another $210,000 or more for next year. Mr. Horton said that was correct.
Mayor Foy asked if the $746,000 was in the base budget. Mr. Horton replied it was not, it was listed as a priority addition.
Mayor Foy said the Citizen’s Subcommittee recommended increasing the budget by $250,000 for pay adjustments, approximately 1.5 percent excluding Police officers. Other ideas offered, he said, were a one time bonus rather than a salary increase, a mid-year increase to base pay which he said had been tried in the past but was not popular.
Mr. Horton noted that they look carefully at pay recommendations provided by other organizations in our market area. He said this year during our review, we had identified some areas that were more out of line that others, and wanted to have Ms. Eastwood speak briefly about what those area were and what our proposals are. Mr. Horton said there were also a couple of policy changes that they recommended.
Ms. Eastwood noted that the agenda item prepared provided some detail on the Manager’s recommendations. She said on page 4, there was a chart showing recommended adjustments, and just below that was a chart for special adjustments. Ms. Eastwood said the special adjustments were what the Manager just spoke about regarding comparisons to other organizations and what we had found to be out of line with those organizations.
Ms. Eastwood said regarding Police officers, she had performed some in-depth analysis of those positions and at what point on the pay scale officers tended to leave, what their salary was at that point, and what jobs they went to when they left. On that basis, she said, the group they believed needed special adjustment was the Police Officer II positions. Ms. Eastwood said they were not new hires, had been employed for at least one year, and may stay as long as seven years because there was a career progression in place that had some time requirements as well as performance requirements that had to be met before they would move up to Police Officer III.
Ms. Eastwood said when looking at those positions, those employees were primarily on Step 2 of the pay range, in the bottom half of the bottom half of the pay range to which they were assigned. She said their range was in the market area for their jobs, but their average pay for real people was below the real pay for police officers at the same level of responsibility in other organizations. Ms. Eastwood said therefore they recommend that Police Officer II’s be approved for an additional step increase to move them forward in their pay range, and remain eligible for the pay increase approved for all employees of the Town.
Mayor Foy asked it that was the same as a pay reclassification. Ms. Eastwood replied no, she would term it as a within-range pay adjustment because the range did not change and the grade did not change. She said both of those things happen in a reclassification. Mayor Foy said if approved that would mean Police Officer II’s would move up one step, then move up another step if the Council approved a step increase for all employees. Ms. Eastwood replied that was correct.
Mayor Foy asked where that dollar figure was in the recommended budget. Mr. Horton replied it was part of the $746,000.
Ms. Eastwood continued, noting the next group was the Command staff within the Fire Department. She stated that group had not been surveyed for several years, and when they were surveyed this year, from Battalion Chief through the Fire Chief, we found that we were low in the market, in come cases 15 percent to 20 percent lower than our market organizations. Ms. Eastwood said that indicated a significant disparity, reminding the Council we were comparing only averages.
Ms. Eastwood said those jobs needed to be competitive, because they could not always be filled from within. She said at the current salary rate, they were not competitive so their recommendation was to restore that market competitiveness for potential turnover or retention. Ms. Eastwood said when we get to 20 percent or so below the market average, it was easy for other organizations to “pick off” our best employees.
Ms. Eastwood said the next group in which a disparity was uncovered was the Engineering Technicians, of which we have a small group of three. She said as the Stormwater Facility program was developed and the complexity of Engineering positions increased, those employees had taken on a stronger, broader role with more complex duties. Ms. Eastwood said their positions had not been studied for a number of years, and the survey indicated their salaries were 15 percent below the market average. Again, she said it was becoming easier for other organizations to recruit our best employees by offering modest pay increases. Ms. Eastwood said the recommended adjustment should be sufficient to move those three positions back into a competitive range.
Ms. Eastwood said the total amount of all recommendations was included in the $746,000 currently listed as a priority addition to the Manager’s recommended budget.
Council Member Harrison asked if that was located in what was labeled “Potential Cost of Competitive Employee Pay Adjustments” or was it someplace else in the material. Ms. Eastwood said that was correct.
Council Member Strom asked if the Finance Director had the number calculated that was discussed at the beginning of the meeting regarding health insurance cost savings. Mr. Horton replied the savings was three-tenths of a cent. Council Member Strom said then it was about $170,000. Ms. Johnson replied it was $164,010.
Mr. Horton noted that with the three-tenths of a cent savings, the calculated tax rate increase stood at 3.67 cents.
Mayor Foy said regarding the policy recommendations proposed by the Manager, a good argument had been made for eliminating the probationary increase to new employees, and instead to award a one-time amount on the completion of probation. There were no objections from the Council, so Mayor Foy asked the Manager to bring that recommendation forward into the budget. Mr. Horton said that would be brought before the Council in the form of a resolution when they considered all of the budget issues.
Council Member Ward expressed his sentiment that he did not want his comments to be misconstrued as indicating a dissatisfaction of the quality of work or the appropriateness of pay increases for Town employees. However, he said in this budget atmosphere a full step increase was more than the Town should put forward at this time. Council Member Ward said while he had no concrete number in mind, he hoped to initiate a conversation with Council members as to what number would be appropriate.
Council Member Ward said he fully supported the recommendations for special adjustments in the three departments described by Ms. Eastwood. He said he wanted those to be fully funded. Council Member Ward said he would be coming forward with a different figure for pay adjustments, and hoped the Council would support him.
Mayor Foy said there was $112,000 in special adjustments in annualized costs, and Council Member Ward was supporting that but would not support the 3.78 percent adjustment for all employees, which was a $1.2 million in annualized costs. Council Member Ward responded that was correct.
Council Member Ward said the $200,000 for the twelve-month versus the nine-month pay adjustment was in the $746,000. Mr. Horton said it was in the base budget. Council Member Ward said then the $746,000 figure was funding only the next fiscal year. Mr. Horton said it was the recommended additional cost for the next fiscal year. Council Member Ward said that would provide the special adjustments plus an average of 3.78 percent pay increase. Mr. Horton responded that was correct.
Mayor Foy said if you look at the chart on page 4, the 12-month cost was $1.3 million for the recommended pay, but the nine month cost was $998,000. He said that meant that next year there would be $400,000 in the base budget they would be committed to. Mayor Foy pointed out that with what the Council had done last year, that figure was $210,000.
Council Member Greene said she was still not clear regarding the special adjustments of $95,495 versus the special adjustments of $109,040 at the top of the page. Mayor Foy responded that was the annualized cost for 12 months from the General Fund. Mr. Horton noted that the chart was mislabeled, and thanked Council Member Greene for pointing that out. He said the chart where it said cost for 12 months was actually supposed to be for nine months.
Council Member Hill said he agreed with Council Member Ward that the special adjustments made sense and supported that, but that the overall step increase should be considered at a lower number. He said that one of the things the Citizen’s Subcommittee had said was that employee turnover was low which to some degree may mean we were being too generous. Council Member Hill said something less than 3.78 percent needed to be considered.
Mayor pro tem Wiggins said she thought there was two parts to the salary recommendations, the step and then the overall salary increase for all employees. Mr. Horton said in a sense that was correct, that the recommendations were in two parts. He said the two parts were simply a different approach depending on where employees were in the pay range. Mr. Horton said for employees below the job rate, or the mid-point of their range, would get 3.78 percent if their performance was adequate. For employees that were at or above the job rate, he said, those employees together would get an average of 3.78 percent. Mr. Horton said employees who exceeded expectations would receive a little more than employees who met expectations, and employees who were considered outstanding would get a little more than those that exceeded expectations. So, he said, it would depend on their actual performance ratings as to how much they would receive.
Mayor pro tem Wiggins asked Mr. Horton to reiterate what he had said about the step increase. Mr. Horton said the step increase would be 3.78 percent for those at or below the job rate, so if they were now on step 2 they would move to step 3. He said he would expect that most of our employees would be eligible to move because the Town’s process identified early on employees who were poor performers.
Mayor pro tem Wiggins asked if the amount the Manager was recommending would be higher or lower if the recommendation was for a set percent for all employees regardless of where they were on the pay scale, which would be a cost of living and not attached to merit pay. Mr. Horton said if we were going to grant a cost of living adjustment he would still recommend that it be within the range as described here. Mayor pro tem Wiggins said then the amount of money would remain the same. Mr. Horton responded that was correct.
Council Member Kleinschmidt said in the Budget Message, the amount reserved for pay adjustments was $746,000, and asked where that number was in the budget itself. Mr. Horton responded that the numbers did not exactly correspond, but the difference was marginal and would have no essential effect.
Ms. Johnson said the reason for the difference was the way in which the vehicle maintenance fund was shown, noting that increases in pay for employees paid from that fund show up as operations rather than salaries.
Council Member Kleinschmidt asked if that meant the total number we were actually considering was $747,000 in the General Fund. Mr. Horton responded that was correct. Council Member Kleinschmidt said that would mean more than an average of 3.78 percent for all employees. Ms. Eastwood explained that the figure included the special pay adjustments as well. Council Member Kleinschmidt said if employees received a 3.78 percent increase, that figure would be about $660,000. Ms. Eastwood said that was correct, if the special pay adjustments were not included.
Council Member Ward proposed that the Manager reduce the employee pay increase by 1 cent on the tax rate with the instruction that the special adjustments be left fully funded. He said doing that would reduce the total of $1.28 million for pay increases by more than $500,000, or the equivalent of 1 cent on the tax rate.
Council Member Ward explained that on page 4 of the memorandum, a one step pay increase of 3.78 percent totaled $1.28 million for all funds. Mr. Horton said that would be for the full year. Council Member Ward said his request was to reduce that figure by 1 cent on the tax rate which would be over $500,000. Mr. Horton responded that the amount included in the recommended budget was slightly under $1 million, and included the Parking, Housing, Transportation and General Funds. So, he said, if the suggestion was to cut one cent off the tax rate out of the $998,000, then it would all have to come from the General Fund and Transportation Fund.
Council Member Ward asked what the $1.28 million figure represented. Mr. Horton responded that was the full year for all funds.
Council Member Kleinschmidt stated that $998,000 also included the special adjustments suggested by the Manager.
Council Member Ward asked why it wasn’t paid for 12 months. Mayor Foy responded because it did not go into effect until October. Council Member Ward said was that because we chose not to. Mayor Ward said that was correct. Mr. Horton said another reason was because we could not go through the performance evaluation process fast enough. Council Member Ward said then it was not just a way to save money, it was also an operational decision. Mr. Horton replied that was correct.
Council Member Ward said then what we were talking about was $998,000 in all funds. Mr. Horton said yes, but that number also included funds that were not affected by the tax rate. Stormwater Fund does not have a tax rate associated with it, nor the Parking Fund or the Housing Fund. He said the only two funds that had tax rates associated with it were the General Fund and the Transportation Fund. Mr. Horton said if you cut $530,000 from the $998,000, which was one cent on the tax rate, it would be substantial.
Council Member Ward asked if we could get a figure of what a 2.5 percent increase would be. Mr. Horton said that number would not be calculated now, but could be provided at a later time. Ms. Eastwood reminded the Council that anything below a 3.78 percent increase would only move the ranges, and employees would remain on the same step. She said the value of the step would increase, but employees would not advance through the pay range.
Council Member Ward said it would provide a salary increase for employees, and asked what the down size was. Mr. Horton said it would put us back in the same situation we had several years ago, which was compression within the salary ranges in the lower end of the pay scale. Ms. Eastwood said it meant that senior employees and new hires would get closer and closer together in pay.
Council Member Ward asked if we could make it a full step increase for fewer people. Mr. Horton said we could do that by taking “x” percentage and saying only a certain portion of employees would receive that.
Mayor Foy asked where the 3.78 percent came from as the distance between steps in the pay plan. Mr. Horton responded it was a relic of the process that the Council when through five or six years ago, and had no particular logic to it. He said some organizations had 4 or 5 percent between steps, some had 3.5 percent. Mr. Horton said you could make whatever you wished, noting one possibility would be to create a pay system that had only 2.5 percent between steps, then you could grant a 2.5 percent increase and still move employees through the steps.
Mayor Foy said if there were 2.5 percent between steps, you could grant a 3 percent pay adjustment, which meant you would move employees one step and increase the pay within the range. Mr. Horton said yes, it would increase the range by ½ percent.
Mayor Foy said it seemed to him that one of the problems was that we were bound up in a step increase each year of 3.78 percent, and if we did not grant that then we created compression. He said it was not possible to do 3.78 percent every year especially with the environment we had faced the last several years. Mr. Horton asked if the Council would want to see a pay plan that showed what 2.5 percent between ranges would look like. Mayor Foy said he believed it would be helpful.
Council Member Ward said he would be interested in seeing what 2 percent between ranges would look like. He said he did not know what the negative side to that would be, but it had been his experience on the Council that the system was designed to take these relatively giant steps that we could not always do. Council Member Ward said maybe we should change our stride. Mr. Horton said the real difficult was that if you make the step too small it was not a reward in any way. He said that 2.5 percent was about the smallest he had seen. Council Member Ward said to come over to the “other part of Town” [referring to the University]. Mr. Horton said with all due respect to that other part of Town, he believed the Council’s practice had been much better and had allowed them to retain a much stronger work force.
Council Member Kleinschmidt said regarding the Police Officer II special adjustments the figure of $54,171 for 38 employees, was that the equivalent of increasing them all by an additional 3.78 percent. Ms. Eastwood said that was correct. Council Member Kleinschmidt said then if you take the $54,171 and divide it by 38 that would be the amount of additional salary increase that was recommended. Ms. Eastwood said it should equal the same amount for everyone who was on step two. Council Member Kleinschmidt said if you take that amount and divided it by 52, for the 52 weeks in a year, it amounts to an extra $27.41 a week before taxes were deducted. He said that did not seem like a “huge” step to him. Council Member Kleinschmidt said that would hardly pay for a meal at McDonald’s for a family.
Council Member Kleinschmidt said it amounted to $1,425 a year, or $27.41 a week, which amounted to an extra movie a week. He said that was not a giant step, and he did not see a pay increase of 3.78 percent as “enormous.” Council Member Kleinschmidt said he believed it would be a shame to bring it down to 2.5 percent and he would not support it. He said he supported the Manager’s recommendation, and believed the Council could find the necessary funds.
Council Member Kleinschmidt said we had the tax rate increase down to 3.67 cents, and would like to find another 7/10’s of a cent somewhere. He said he did not think he wanted to take it from personnel.
Mayor Foy said when the Manager said he would show the Council what a 2.5 percent increase would look like, did he mean a pay plan with 2.5 percent between steps. Mr. Horton replied it would mean 2.5 percent steps, which would mean it would take more steps to get an employee from the entry level to the job rate. He noted it would seem to some employees that they would never get to that point.
Mayor Foy said he would still like to see what that 2.5 percent looked like, noting he did not like the idea of being tied into an automatic 3.78 percent. He said if the Council wanted to keep the 3.78 percent between steps that was fine, but that should be the Council’s decision. Mayor Foy said it they don’t do it people would be unhappy, noting they had granted it last year but granted 3 percent the year before. He said if we created problems by granting a 3 percent increase then something was wrong with the pay plan, and we needed the leeway to make changes. Mayor Foy said there had been times in the past when pay raises were more than 3.78 percent, so it had to be able to go both ways.
Capital Improvements Program
Mayor Foy said in the Budget Message under Optional Capital Improvements, those additions total roughly $1.4 million. He said he believed they should be discussed.
Council Member Strom said regarding the Community Center, he believed we had not yet spent last year’s allocation for the Community Center which was about $166,000. He said an additional $224,000 was recommended for the next budget year. Council Member Strom said it did not appear to him that we would be in a position to spend that money in this next budget year. Mr. Heflin said it would be close, noting we were about to sign a contract with a designer. He said they would have a design in perhaps eight or nine months, and that would allow them to bid the project and begin work in the next fiscal year. Mr. Heflin said it did assume that we move forward on schedule with the bidding process and design.
Council Member Strom said that would mean that the funds were just sitting somewhere. Mr. Heflin said those funds would cover the initial design costs.
Mayor Foy asked Council Member Strom where those numbers appeared in the recommended budget. Council Member Strom responded he was referring to line 47 on page 244. He said his point was that things would have to be moving promptly in order to spend the $224,000, and recommended removing that amount from the CIP.
Mayor Foy asked for an explanation of the reappropriation column, stating he believed it meant moneys that were being carried forward because they were unspent. Mr. Heflin replied that was correct. Mayor Foy asked then why wasn’t the $166,000 shown on page 244 if it was unspent. Ms. Johnson said it was because those dollars were planned to be encumbered prior to June 30, therefore it would not be reappropriated in the next fiscal year. Mr. Heflin added they expected to be under contract within the next few weeks which would encumber that money.
Mayor Foy said the $166,00 would most likely be encumbered, and Council Member Strom was saying he did not believe we would be moving at a pace that would allow the $224,000 to be encumbered or expended in the next fiscal year, so wanted it removed from the CIP.
Council Member Strom stated he was his was looking down the road, and believed the Council had done well by looking at extended budget review. He said we had gone from what was a 10 cent tax increase down to 3.5 to 4 cents, and he believed we should cut what we can and hold on to those dollars. Council Member Strom said he wanted to continue with the Community Center and supported it, but believed we should push the tax increase down as much as possible.
Mayor Foy said in other words, Council Member Strom was saying to defer that expense. Council Member Strom said he was saying defer the $224,000, and then to take a close look at the entire CIP budget with a critical eye. Mr. Horton said he believed that was a good point, since it was his guess with that the Town Operations Center moving forward and the time it would take to get the Library project started, that we would have to have that $224,000 next fiscal year for construction. Mr. Horton said that certainly would need the $166,000.
Mayor Foy said there were four other “big ticket” items listed, the Police Department generator, the Town Hall generator, the Town Hall telephone system, and the Town Hall heating and ventilating system. He noted that something had happened today to the air conditioning system in Town Hall. Mr. Horton responded that the system was “falling apart” and needed to be replaced, and he had no doubt about that.
Mayor Foy asked if what was listed was the full cost for replacement. Mr. Heflin responded that amount was for replacement of the “guts” of the machinery itself, and had proposed to the Council’s Committee on Sustainability, Environment and Energy (SEE) to fund the cost for a management system out of Energy Bank funds which would make it operate more efficiently.
Mayor Foy said he wanted to begin looking at how all of these things fit into our long-term plans. Mr. Horton said the fund Mr. Heflin was speaking about was on page 242, line 18 of the recommended budget.
Council Member Strom asked why aren’t we putting some of these items together and financing them, especially the HVAC system, the phone system, and the generators. Ms. Johnson replied we had talked about things that were important to our bond rating agency, and one of those things was Fund Balance. She noted that another indicator they look at was debt service ratio to total budget. Ms. Johnson said that because we were moving forward with the new Town Operations Center, we had moved to a higher range than ever before. She said that bond rating agencies understand that this was temporary and would be paid down, so when she looked at the CIP we could not afford to debt finance things that we might ordinarily finance because it would move the ratio up too high.
Mr. Horton commented that we had gone through a bond review process with Moody’s and Standard and Poor, noting that Moody’s affirmed out AAA rating but Standard and Poor did not, primarily because of our debt service ratio. He said that right now, we were at our maximum for debt.
Mayor Foy said it seemed like we had a huge capacity for debt as far as the Local Government Commission was concerned. Mr. Horton said under the law, we were allowed to have up to 8 percent in debt, but no one had been approved to get that high. He said if you get your debt ratio too high, your bond rating goes down and your cost of interest goes up. Mr. Horton said we had taken on all the debt we could for the foreseeable future.
Council Member Harrison said there was a column reappropriated to the 2005-2006 budget, and did not understand just what that column meant, and was particularly curious about #36 on page 244 for $100,000 for sidewalks and bicycle facilities. He asked if that $100,000 was money not spent in 2004-2005 and part of the $172,000 allocated that year, and, why wasn’t it shown in future years as being spent. Mr. Heflin said it was the amount that we believe we will have left over after projects are completed. Mr. Horton commented those funds were already allocated for the construction plan. Mr. Horton said we had spent $72,000 and expected to spend the other $100,000 during the next fiscal year. Council Member Harrison said that was the facilities construction plan adopted several months ago. Mr. Horton said that was correct.
Council Member Harrison commented that would mean that money was not part of the deliberation since it was already allocated. Mr. Horton responded that it was his practice to show all of the funds available for the Council to redistribute as it wishes. Council Member Harrison commented he did not want it spent on anything other than what it was allocated for.
Mayor pro tem Wiggins said regarding the Town Hall generator, it was listed in the budget last year at $29,000. She said it now appeared in the recommended budget at $70,000. Mr. Heflin said we had originally wanted to obtain a generator that was large enough to power all of Town Hall and all of its systems with uninterruptible conditions. We have had to downsize and then downsize again to a different design, he said, and what we were working with now was an even more downsized design which would only power essential services on one side of the building for the Information Technology Department and the phone system. Mr. Heflin said they believe the additional $70,000 would allow some power to be supplied to other areas of that side of the building so that employees would be able to work there.
Mayor pro tem Wiggins said they would need the $29,000 plus the $70,000 to be what was necessary. Mr. Heflin said that was correct.
Mayor pro tem Wiggins said that even that amount would not allow heat of the entire work space. Mr. Horton replied we believe we could provide service to the first floor area. Mr. Heflin said the engineers were still working on that. Mayor pro tem Wiggins said does that mean that employees would be assigned to work on the first floor as space allowed. Mr. Horton said yes, but other employees would work from home or work in other buildings if heat or air conditioning were available. He said it was essential to have at least minimum staffing at Town Hall under the most extreme conditions, but as the Council knows sometimes conditions become so bad that it was not humane to have staff in the building.
Mr. Horton said it was necessary to have at least one area of the building with heat or air conditioning, noting that the phone system and the computers would not operate if it became too hot in the building. He said we had also found that we were dependent on email as a communication device, and hoped that the Council would look favorable on this request.
Mayor pro tem Wiggins reiterated that they would need the $29,000 plus the $70,000 to provide service to one area of the Town Hall. Mr. Horton said that was correct. Mayor pro tem Wiggins asked if the person who answered the incoming calls be moved into that part of the building when necessary. Mr. Horton said yes, they could.
Mayor Foy said looking at line 3 and 4 on page 242, it appeared the Council had appropriated $42,000 last year to the Police Department and Town Hall generator. He asked if the thinking then was that they would be financed. Mr. Horton said some of those funds were for engineering costs. Mr. Heflin said once we realized we could not afford the generator that was designed, we had to use of the funds for engineering costs.
Mayor Foy said on page 243, in the “total” column is showed $225,000 and $70,000, but does not show that $42,000 already spent, and asked why. Mr. Heflin said it only shows the “new money” dollar amounts, not what had already been expended in previous years. Mayor Foy said they money had already been spent. Mr. Heflin said if not, it was encumbered. Mr. Horton said the point was that those funds were gone, and we needed the $225,000 and the $70,000 in order to get the system going.
Council Member Hill asked how many years it would take before we could take on any more debt for things such as this. Ms. Johnson said the amount of debt service we had in 2005-2006 was exactly what we have now, and the year after that it would go up slightly. The year after, it would begin to come down. Council Member Hill said that it could be more years before we could take on more debt. Ms. Johnson said that was if the budget stayed the same. If the budget was larger, there was a possibility of borrowing, but not this year.
Mayor Foy asked if the Post Office capital repairs on line 23 was done. Mr. Heflin said that was for roof replacement that was under contract and would be done this year.
Mayor Foy said it looked like the $224,000 for the Community Center could be deferred, and asked about the generators. Mr. Horton said that the agenda item prepared for the April work session would be helpful, noting it contained projects in what they considered to be priority order as requested by the Council. He said that agenda item would give the Council a summary of their recommendations, and if the CIP were to be cut he would recommend that the Council begin at the number 17 position and work their way up.
Mayor Foy said number 17 was the building condition assessment program. Mr. Horton said that was an important item, but we know enough about what was wrong and needed repair that it could be postponed for a year if necessary. Ms. Johnson noted that item 17 had already been removed from the recommended budget. Mr. Horton said that was correct, so the Council should start with item 16.
Council Member Kleinschmidt said it we were talking about big ticket items that was a large one at the bottom of the list for the HVAC system. He said if we defer the Community Center capital repairs of $224,000, we need only cut an additional $147,000 to get the tax rate increase down to 3 cents, and that HVAC system was more than that.
Council Member Strom said having served on the SEE Committee he was surprised that number 14 was the Town Hall HVAC system. He recommended delaying the generators and the phone system until we were at the point that we could finance them. Council Member Strom said that would get us a reduction of about $500,000 in the CIP budget, when you add in the Community Center funds begin deferred.
Council Member Kleinschmidt said that would include deferring the Police generator. Council Member Strom said yes, adding he was convinced that the HVAC in Town Hall was about to fail. Council Member Kleinschmidt said it was interesting they were listed as priority 14. Mr. Heflin said they had put the priority list together with the item of listing as first priority things that would preserve assets that were maintenance related, and then progress to things that were in the worst condition, such as the phone system and the HVAC system. He said all of these were judgment calls, and everything on the list was worthwhile. Mr. Heflin said some of the other things, like asphalt repair and capital maintenance to other buildings were things we believed were important.
Mr. Heflin said that today, the HVAC system in Town Hall seemed to be very important as it had failed to operate properly. He said in general not having the generator would mean not being able to operate some of our systems at all.
Mayor Foy proposed to the Manager that the Council wanted to cut $500,000 from the CIP budget, and to take it from the Community Center, the Police generator, the Town Hall generator, the Town Hall telephone system and Town Hall HVAC system. Then, he said, the Manager could decide where and how much to take from those projects. Mr. Horton said he would take the $224,000 from the Community Center and remove the HVAC system, then leave the rest. Mayor Foy suggested we have the Manager do that. There was no objection from the Council.
Mr. Horton said the danger we run in doing that might mean that fairly expensive repairs may need to be done to the HVAC system, which may require coming to the Council in mid-year for additional funds.
Contributions to Other Agencies
Mayor Foy said it was important to point out that on page four of the Subcommittee’s report, the Council did consider those items, which were commercial trash, fee adjustments, building maintenance merger, and fleet management. In addition, he said, we had now talked about most of the other items the Subcommittee had come up with, but there were also recommendations regarding contributions to agencies.
Mayor Foy said he believed the Subcommittee had made a good point that these requests should come through the Human Services Advisory Board (HSAB), and the Council should be clear that next year all requests should come through that Board.
Council Member Kleinschmidt said those items listed separately should be lumped together with those normally considered by the HSAB, with the funds included together for distribution by that Board. Mayor Foy said we get requests outside the process, and he believed we needed to make a policy decision. He said one policy decision had already been made and some agencies were exempt, which he said was okay. But, Mayor Foy said, we needed to be clear which agencies were exempt and that all other groups needed to go through the process.
Mayor Foy said when we get special requests from groups that did not go through the process and we had told everyone else that they must go through the process, it put the Council in an awkward position. He stated that encouraged others to go outside the process and he wanted to make sure we were clear on our policy. Council Member Kleinschmidt said he believed the Mayor was correct.
Mayor pro tem Wiggins said that was why she had asked the Manager several weeks ago for that list, so that when we made our decision we would have the history of why some agencies are exempted from the HSAB process. She commented that there was a history as to why they were exempted, and there were a couple that had already been eliminated from the budget so she believed it was working. Mayor pro tem Wiggins said it was important to remember that the HSAB set priorities for distributions, such as for women and children, and some of these will never set their criteria.
Mayor Foy said as an example the Manager’s statement said that it was their understanding that the Council made two contributions in the budget last year that were intended as one-time contributions. He said those had now come forward for funding again. Mayor Foy said he believed if we do not set a policy and enforce it, then even more agencies would request funding outside of the HSAB process. He said if he were working for a non-profit, he would most likely want to bypass the HSAB process and go straight to the Council to get the money he wanted.
Mayor pro tem Wiggins said her only point was that we needed to have the history of some of these requests before making a decision. Mr. Horton apologized for not having that history ready prior to this meeting. He said as an illustration, there were two items under Service to Seniors, the Friends of the Chapel Hill Senior Center and Joint Orange-Chatham Community Action Agency, where the Council considered whether or not their request should have to be resubmitted and reconsidered each year, or whether they would need to come directly to the Council to have their request considered as part of the base budget. Mr. Horton said in both cases the Council at that time had considered these services to be fundamental and therefore were of value and appropriate to come directly before the Council. He said because the dollars were so substantial, that they should not be considered as part of the HSAB fund. So, Mr. Horton said, Mayor pro tem Wiggins was correct that the history of these should be considered.
Mayor pro tem Wiggins said about the $46,700 listed. Mr. Horton noted that was a joint agreement with Orange County, noting that at one time we had a staff person who provided services to seniors, but the Council had wisely concluded it was better to have those services funded and managed through one source for the entire County.
Council Member Kleinschmidt said that perhaps this would compel a different charge to the HSAB, and maybe we should look to have that board function differently if we were to give them responsibility for all of these agencies, especially where we have prior and long-standing commitments and there are strong policy decisions to continue the commitments. He said as an example, we could ask them to endorse the policy each year but give the Board an opportunity to say why it should be changed one way or another. Again, Council Member Kleinschmidt reiterated we would endorse the allocation of the sum, but we should decide whether that allocation goes up or down. He said he believed the HSAB was being underutilized.
Council Member Kleinschmidt said he was dismayed by some public comments about how the HSAB did its work. He noted that the members of the HSAB relieve the Town operations from having to do that work and do it in a much more efficiently way then we can and often in a way that was more effective at solving problems.
Council Member Kleinschmidt said he continued to support the work of the HSAB, the allocation small grants to local non-profits, and perhaps looking at amending the charge of the HSAB to accommodate the other services. Mr. Horton commented that one of the ideas prompted by the Subcommittee was that was that any arts-related request that came to the Council should be reviewed by the Chapel Hill Public Arts Commission. He said the Subcommittee did not recommend that, but we had put it forward for the Council’s consideration.
Mayor Foy asked how we would do that, as a policy. Mr. Horton responded we could put forward a resolution for the Council’s consideration and would do that at the time the Council considered adoption of the budget if they wished.
Council Member Greene asked had that happened recently. Mayor Foy said we had never done that, and he knew of only one request that had. He said if others did come forward, they could be vetted through the Arts Commission. Council Member Greene said she had wondered if it was a problem. Mr. Horton responded there was no particular problem.
Mr. Horton said that technology issues were important to discuss, because they would be coming to the Council with budget action items regarding expenditures that needed to be made this year. Mayor Foy said he believed we needed to discuss some of the other options that addressed the HSAB, Parks and Recreation, the Arts Commission, and some other issues.
Council Member Greene said regarding the Housing Department’s request for a way to find $62,000 through shifting some funds to the General Fund, noting that as the liaison to that Board it was far from a frivolous request. She said the Housing Department was at a “bare bones” level and were having to cut personnel. Council Member Greene said they may be forced to cut into their ordinary maintenance budget, and she would not like to see that happen since maintenance was critical to our housing stock. She said there were funds that we would not be receiving from the federal government this year which was distressing,
Mayor Foy agreed, saying we knew that would happen this year and it could potentially get worse. Mr. Horton said it will most likely get even worse.
Mayor pro tem Wiggins said if the items Council Member Greene spoke about were eligible for Community Development funds? Ms. Berndt responded that the general rule in Community Development was that it could not be used for operational costs of general government, so she did not believe this type of general support would be eligible for Community Development funds. She said the focus was more on capital improvements rather than general operational costs.
Council Member Harrison asked if that would be the first such appropriation from the General Fund we have had to do? Mr. Horton said we were already making a substantial contribution to the Housing Fund from the General Fund, noting he expected the cost of landscaping services provided by the Public Works Department was $130,000 to $150,000.
Council Member Harrison said we had not ever been asked for General Fund contributions for such things as these, such as Stormwater fees. Mr. Horton said that was correct.
Council Member Greene said this suggestion came from the search for creative ways to find the necessary funds. Council Member Harrison said he had wanted to confirm that we do spend General Fund money in this way. Mr. Horton commented that we spend General Fund money on Public Works landscape maintenance operations for all of the housing developments.
Mayor pro tem Wiggins said if we don’t identify a way to find $62,000, would the public housing rents have to be increased. Mr. Horton said we were not able to raise the rents.
Council Member Greene said if we don’t find the $62,000 needed, then ordinary maintenance just would not get done, which would endanger the housing stock. Mr. Horton said we would take a portion of it from Fund Balance and find ways to reduce costs in every element possible.
Mayor Foy asked the Manager to clarify the Fund Balance he was speaking of. Mr. Horton replied there was a Fund Balance in the Housing Department, and Housing and Urban Development (HUD) decided what the minimum level would be, and that level had to be maintained. He said they were very close to the minimum level now, and Housing Director Tina Vaughn had worked hard to find ways to manage these reductions and had done an exceptional job.
Ms. Vaughn stated that HUD required that they maintain 20 percent of their total operating expenses, and based on their current operating budget they had to maintain a minimum level of 20 percent of $350,000. At present, she said we were slightly under that amount due to some unexpected costs. Ms. Vaughn said we still have not heard from HUD what our actual funding level will be for 2005-2006, and the budget was based on receiving less than what was received in 2004-2005. She said we now believe the funding will be even less than what we had originally estimated, which means that we will have to use more of the Fund Balance to cover costs.
Mr. Horton said rather than taking money away from maintenance and direct services to residents, the first place he would look at would be at administrative costs. He said he knew Ms. Vaughn had already looked at that and made reductions, but it may be better to look harder at administration, vehicles, computers, furniture and things of that nature rather than cutting costs that directly benefit residents. Mr. Horton said we could wait and see what the final federal funding was and let us bring a recommendation forward then.
Council Member Greene asked if we would get that final figure before we adopt the budget. Mr. Horton said most likely the Council would be asked to make an adjustment after adoption. He said that would give the Council the flexibility of keeping the question open in a reasonable way, and because the total sum of money was not large it would be possible to come back and make adjustments. Ms. Vaughn noted that it may well be as late as November or December before we know what the total funding level would be.
Council Member Strom agreed with Mr. Horton’s approach, noting it was unfortunate we had to deal with this.
Council Member Strom noted he was supportive of the Interfaith Council’s (IFC) request for $20,000 which was not on the list, and was supportive of the work of the Chapel Hill Public Arts Commission (CHPAC). He said he understood the additional $25,000 requested by the CHPAC was to produce a contextural arts master plan which he believed was important to get done.
Mayor Foy said those should be considered separately. He asked the Council if there was support for the IFC’s request for $20,000. There were no objections, and Mayor Foy asked the Manager to include that amount in the budget. Mayor Foy said the CHPAC had requested an additional $25,000, and asked if there was support for that. There were no objections, and Mayor Foy asked the Manager to include that in the budget as well.
Mayor Foy said the HSAB had requested an additional $19,000, and asked if there was support for that. There were no objections, and Mayor Foy asked the Manager to also include that in the budget.
Council Member Greene said she was supportive of the request for $10,000 from the Arts Center, and if we did not support it at that level that we could support it at some other level. She said when they seek other funding, it was helpful if they could show that they received funding from their local governments.
Mayor Foy asked what funding the Arts Center received from Carrboro and Orange County. Council Member Greene responded that it was at least that much, but she did not have the exact figures.
Mayor Foy asked if there was support for $10,000 for the Arts Center.
Council Member Harrison said the question about what the Arts Center received from other local governments was a question he wanted asked of a lot of other organizations. He said we seem to be paying the “full freight” for some programs that benefit many people outside of Chapel Hill, although this was not one of them.
Mayor Foy said he believed the CHPAC would be the right group to provide the Council with the context of this request. He said we should keep in mind the Council had given the Arts Center $200,000 to buy their building, and that should not be forgotten.
Council Member Strom said the Arts Center had articulated how extensively Chapel Hill residents used the Arts Center’s resources, and it was nice to see them doing and to reap the benefits of our contributions to them.
Mayor Foy said the Council was supportive of the Arts Center’s request for $10,000, and asked the Manager to include that in the budget.
Mayor Foy asked if the list of priority additions were included in the base budget. Mr. Horton responded they were included in the recommended budget.
Council Member Harrison noted the request from the Bicycle and Pedestrian Advisory Board for staff resources to help in implementation of the Action Plan. He said the Action Plan was very important and because of the staff changes the Planning Department was undergoing a reorganization and redistribution of work. Council Member Harrison asked if there was some way to fund an intern other than with the General Fund to assist the Bicycle and Pedestrian Advisory Board with the Action Plan. Mr. Horton said he was not aware of any resources not already being used, but we could try to redirect the work of one of our current interns but that would mean that work on something else would have to end.
Council Member Kleinschmidt asked if the Town would accept the help of unpaid interns. Mr. Horton said we always welcomed unpaid interns, and usually have one or two each semester. Council Member Kleinschmidt stated in his profession he hired unpaid interns and generally had up to 100 applicants. Mr. Horton responded it was harder to find interns with transportation skills.
Technology Issues
Mr. Horton noted materials were included in tonight’s packet of materials, as well as previous agenda working papers on this topic.
Information Technology (IT) Director Bob Avery provided background information regarding technology-related issues:
· 500+ computers, including desk tops and laptops
· 6 telephone systems
· 15 locations
· 14 departmental databases
· 6 IT staff members with the sixth one added this year, supplemented by a staff member at the Police Department and the Public Library.
Mr. Avery provided the IT System Management Approach:
· Minimal staffing
· Optimize hardware and software purchase, through:
o uniformity
o dependability
o remote monitoring and management, reducing dependability on a vehicle
o readily available vendor support
Mr. Avery noted a number of emerging IT issues:
· Enterprise information model
· Budget concerns
· Town Operations Center
· New technology and ideas
Mr. Avery noted one of the issues they would like to address was the idea of imbedding mobile laptop computers in Fire Department vehicles to give them access to geographic information and other information at the scene of an emergency.
Mr. Avery said the Technology Committee had looked at a number of these issues and had made two separate proposals, one a Strategic Plan and the other Cost Savings Measures. Regarding Geographic Information Systems (GIS), the Technology Committee recommended the following:
· Addition of an analyst position to handle GIS in the IT Department
· Software to convert information to a useable format for the Web
· Training to allow other departments access to information
· Expand use and access to the GIS system to all departments
Mr. Avery said the web site was another area that the Technology Committee had studied and had recommended steps to follow:
· Upgrade the web site to make it more functional and provide a better presence.
· Develop a comprehensive plan to incorporate a number of objectives.
Mr. Avery said that last fall they had recognized the budget issues they were facing, and had “thrown their name in a hat” in a context for technology funds. He said out of 130 entries from towns and counties across the country, Chapel Hill was chosen to receive funding of about $40,000 in services to basically reinvent the Town’s web site. Mr. Avery said their plan was to have the new web site operational by August 1 with new and advanced features at no cost to the Town.
Mr. Avery said there were many things that needed to be done to make information accessible to the public in an appropriate manner, which goes beyond a straightforward update. In the area of infrastructure, Mr. Avery noted there were several things ongoing:
· Financial reporting
· Town Operations Center planning and budgeting
· Analysis of security issues
· Computer replacement program
· Software costs
Mr. Avery noted the last two, computer replacement program and software costs, were of current significance. Regarding the computer replacement program, he noted that the:
· Manager’s Recommended Budget reduces the program cost
· Revised model will reflect reduced cost and computer technology changes anticipated over the next two years, although the exact schedule had not been formulated as yet.
Regarding open source software, Mr. Avery noted that a pilot project was planned for the coming year.
Mayor Foy asked how a pilot project would work. Mr. Avery replied that one way would be to pick a department, put the open source software onto their system and see where it went. He said they had looked at putting Linux software on Town department systems, and discovered it was not an easy process. Mr. Avery displayed a slide that showed that most Town departments had software currently in place that would not be consistent with Linux software. He noted that was due primarily to the Town’s financial system, MUNIS, which operates only in windows.
Mr. Avery noted there were advantages to open source software such as servers, because you did not have to pay for a lot of license fees which allowed you to provide a lot of information to a lot of people
Regarding capital IT needs which had already been discussed, he noted the following:
· Emergency power capability
o Police Station
o Town Hall
· Telephone systems
o Town Operations Center
o Town Hall
Mr. Avery said he wanted to go back to the computer replacement program, noting there was an item on the agenda several weeks ago regarding the annual computer purchase and lost financial approval for that. He said that item was removed for discussion. Mr. Avery said they had discussed moving forward with a reduced model for next year, but recommended that we go ahead with our purchases scheduled for this year. He said that was because we had made no provisions for anything else, such as replacement parts or warranty extensions for the equipment we have.
Mr. Avery said we would be better off to go ahead with this year’s purchase and then to look at some extended process for the future. He said one idea had been not to purchase computers for two years, get rid of the financing model, and we would be in a better position. Mr. Avery said his response was that we were not prepared for that, noting it may be something we could be prepared for in the next few years but would not recommend it now. He recommended we go forward with the purchases already planned for this year and then look at a reduced model for the future.
Council Member Kleinschmidt asked about purchasing just half of the computers now. He said it was hard to imagine that all of those scheduled for replacement this year would fail, or even a quarter of them. Council Member Kleinschmidt said if only half were replaced, that half would serve as replacement parts for the rest. Mr. Avery said the majority of the computers scheduled for replacement this year were in the Police Department. He said many of those were using an older version of Windows, and by replacing them we would be moving them towards the same software used by the rest of the Town departments. Mr. Avery said they of course could work around that, but it made the maintenance a lot more difficult.
Council Member Kleinschmidt clarified that no one had recommended that the Police Department computers should not be replaced.
Mayor Foy said the request was that the Council approve the recommended loan request for the computer fund for this year, with the net of both the $20,000 reduction of equipment purchases in the current year and $42,000 in the next few years consistent with the Technology Committee’s Cost Reduction recommendation.
Council Member Strom said he supported the recommendation, noting the Technology Committee was very active and he was optimistic that this program would continue to develop and do well over the next several years. He asked if the telephone system which the Council was putting up $100,000 for would be discussed with the Technology Committee, or did they already know what they intended to purchase. Mr. Avery said it had been discussed with them and would be discussed again. He said that one of their recommendations was that we use a voice-over style system but no particular model had been chosen.
Council Member Kleinschmidt congratulated Mr. Avery on winning the contest for the web site overhaul. He said there were questions about this, such as what kind of position would that put us in two years from now with our web service being centered in Kansas. Council Member Kleinschmidt said with our goal of making our web interface more community friendly and allow citizens to better interaction with the Town, would that eventually put us in a hole that would cost us even more than $40,000 to get out of. Mr. Avery said there were several issues associated with that, the first one being where was the data located. He said in the past it had been in Virginia and was now in Cary. Mr. Avery said until we have a Town Hall generator we had to use an external site to support our data.
Mr. Avery said it was necessary to build an enterprise model for how we wanted the web site to evolve and that would take time. He said the idea was that while this web site would go forward in the next two years, we would take that time to build a model for how we wanted to evolve which we put us in a position to move from that model two years from now to a future model.
Council Member Kleinschmidt said he had heard complaints about the Town’s website over the last several years, and asked who would actually decide what was put on that site and who would decide if it was actually something we wanted to put on the face of Chapel Hill. Mr. Avery responded it was essentially a staff project, and that they would guide how it looked and what data went into it. He said the Town Information Officer, his staff, and other departmental members would be involved in the process as well.
Council Member Greene said the company we would be working with had a template they used, so we basically know what the new site would look like. Mr. Avery said there would be certain navigation systems that would be the same, but we would make it look unique to us to the extent possible.
Council Member Greene said if we decide in two years that we don’t want to continue with this company, how difficult would it be to get the data back, either technically or legally. Mr. Avery said technically the data belonged to us, and we would maintain a duplicate of it. Council Member Greene said she was talking about the actual formatting and the way it was on their computers. Mr. Avery said the functionality of how the website worked would belong to the company, so if we chose not to continue with them we would have to evolve it to something similar or something that was a sufficient match. He said we would always redesign it to a different variation. Mr. Avery commented that most websites reinvent themselves with some degree of frequency.
Council Member Greene said then it was a stumbling block but not a great one. Mr. Avery said he did not see it as a great stumbling block, but it was an issue they would pay attention to as they move forward so there would be no surprises.
Council Member Kleinschmidt said if we have the new website up by August 1, when was the bulk of the work that the Town had to do going to happen. Mr. Avery responded that there were certain milestones in place to meet the targeted date. He added that the liaison between the Town and the company would be continual.
Council Member Kleinschmidt said he would ask that the Council’s Communication Committee be kept apprised of the work by scheduling period reports to the Committee and to the Council. Mr. Avery replied we would be pleased to do that.
Council Member Ward said that over the life of our current website, how have we been able to log the issues that citizens have brought forward. He asked how that would be incorporated into the redesign. Mr. Avery said issues brought forth by citizens were logged in three different ways, by email messages, word of mouth comments from staff and others, and simply through feedback from people who have provided information for posting on the website. He said all of those comments would be kept in mind as we move forward.
Council Member Harrison said besides connecting this to the Council’s Communication Committee, were we intending at the staff level to manage a set of opinions so that they go to the company along with Council comments and the Technology Committee’s viewpoint in a useful way. Mr. Avery responded that we have on staff a web developer who was very skilled and knowledge in all aspects of web development, so he believed we would be able to keep all of those thoughts in mind.
Council Member Harrison said he believed it would be useful to have a feedback section on the website so that citizens could communicate what they did or did not like about the site. Mr. Horton replied that was one of the defects with the current website. Council Member Harrison said there were departments that he could not get to on the website to get what he needed, and often had to go through the Manager’s Office. Mr. Horton said one thing we were looking for was ease of navigation throughout the website.
Mayor Foy noted that the budget public forum was scheduled for Wednesday, May 18. Mr. Horton noted that as of now, the tax rate increase stood at about 2.9 cents. Mayor Foy said at that May 18 meeting we would hear from citizens, and at some point we need to determine if another work session would be necessary to look at the revised budget or if something else needed to happen. He asked the Manager if it would be appropriate to make a decision about whether or not to have an additional work session after the May 18 hearing. The Manager replied yes.
Council Member Ward asked what the status was of the potential additions to the Transportation Department’s base budget, noting there were seven items listed. Mr. Horton responded they were in the recommended budget.
The meeting adjourned at 6:33 p.m.