FINANCE COMMITTEE MEETING February 14, 2013

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1 FINANCE COMMITTEE MEETING Chairman Graham called the meeting of the Finance Committee to order at 8:30 AM in the COG Forum Room. Members present: Messrs. Graham, Kirsten, Mascolo, Wise; Ms. Shoemaker Others present: Messrs. Bernier, CATA; Brumbaugh, College Township Manager; Dunlap, Borough Assistant Manager; Endresen, Ferguson Township Director of Finance; Kausch, CRPA Planner; Long, College Township Finance Director; May, CRPA Director; Schneider, CRCA Director; Steff, COG Executive Director; Viglione, COG Finance Officer; Woodhead, Parks and Rec Director; Zilla, CRPA Planner; Mses. Alloway, Library Director; Fragola, CATA; Marks, CATA; Simin, State College Borough Finance; Vanderkolk, CDT; Wyatt, Patton Township Finance Director; Cook, Recording Secretary CITIZEN COMMENTS There were no citizen comments offered. APPROVAL OF MINUTES Motion was made by Mr. Mascolo and seconded by Ms. Shoemaker to approve the minutes of the January 8, 2013 Finance Committee meeting as presented. Vote in favor was unanimous. 2013/2014 CATA BUDGET Ms. Fragola stated that CATA projects an increased budget due to service to four new apartment complexes. She indicated that the Governor s proposed budget for state transportation funding would result in a decrease in state operating funds for transit and an increase in the minimum required local match percentage. She shared that CATA is again asking the municipalities to contribute 5% of CATA s budget toward the local match to secure federal and state funding. She noted that 5% was slightly more than the minimum local match requirement, but that level of contribution will help stabilize future increases in the local match, as would be the case if the Governor s current proposal is approved. In response to a question from Mr. Kirsten, Ms. Fragola explained that the exterior bus advertising program is on track to bring in $85,000 in revenue for She noted that revenue received from advertising could not supplement the local match. In response to a question from Mr. Graham, Mr. Bernier indicated that the apartment complex pass program has been restructured so that all costs are being recovered. He explained that increasing the cost of the passes may result in a loss of revenue as it could deter apartment complex managers from participating in the program or they may contract with a private operator. Ms. Fragola added that revenue from the apartment complexes is projected to increase 22% over last year. In response to a question from Mr. Wise, Ms. Fragola stated that the total municipal contribution for this year is $485,964 and based on next year s projection the contribution will total $510,262.

2 Page 2 of 5 STATE COLLEGE BOROUGH WITHDRAWAL FROM CODES Mr. Steff presented a PowerPoint slideshow that summarizes the draft COG Response to State College Borough s Request to Withdrawal from the CRCA report that will be submitted to Borough Council on February 28, Highlights from the presentation include: Mr. Steff stated that Centre Region residents benefit from a strong code program which has resulted in the following: Only one loss of human life due to fire. Only one structural failure which was a parking garage built prior to the establishment of the CRCA. A good ISO rating which equates to low property insurance rates for home owners. The ability to maintain an almost all-volunteer fire company which saves money to tax payers. Mr. Steff listed the five main areas of concern to the Borough which include fragmentation; duplication and redundancy; level of services; and governance and accountability. He then outlined the models COG has developed as options for the Borough: Model A The Borough establishes a separate code agency. Model B COG identifies solutions to the concerns of Borough Council. Model C The Borough is responsible for rental housing inspection and the CRCA remains responsible for the fire safety and new construction programs. Model D Transfer the administration of the 1,200 residential homes converted to rental properties to the Borough and through a contract the CRCA remains responsible for the fire safety and new construction programs. Model E CRCA would provide ordinance enforcement services, as desired by the Borough, to the 1,200 residential homes converted to rental properties. Mr. Steff shared the following potential regional impacts of the Borough s total withdrawal from the CRCA program: Rental housing permit fees may increase from $30 to $70. No impact was predicted for the New Construction program. Fire permit fees may increase 85%. Possible increased municipal contributions toward COG s overhead budget. An increase in the Centre Region s ISO rating and therefore a possible increase in property insurance rates. Decreased convenience for contractors and apartment owners who do business in both the Borough and the Townships. Fewer staffing option to distribute workloads during vacations, illness or in the event an Existing Structures employee leaves service.

3 Page 3 of 5 In response to a question from Mr. Steff, Mr. Dunlap believed that if the Borough started their own rental housing program the permit fees would be similar to those of the COG s. In response to a question from Mr. Kirsten, Mr. Schneider indicated that if the Borough withdrawals from the code software agreement, Tyler Technologies would charge a penalty fee of $18,500 and would then reduce the contract amount. He noted that CRCA would pay that penalty fee. Mr. Dunlap explained that Tyler Technologies gave a credit to the CRCA s contract for the Borough s existing purchase of Tyler software. After a lengthy discussion regarding the predicted financial impacts of the Borough s withdrawal, the group decided that too many variables exist to accurately project the changes in the COG budget as a whole. The projected fiscal implications to the permits fees should be considered a worst-case scenario. COG FINANCIAL MEASURES Mr. Viglione presented a PowerPoint slideshow that details the revenues and expenses for COG s seven largest funds which are Administration, Library Operating, Planning, Fire Operating, Codes New Construction and Regional Parks. Highlights from Mr. Viglione s slideshow include: Administration 77% of Administration s expenditures are related to salaries and benefits. Increases in municipal contributions are due to the hiring of a Finance Officer position in 2009 and the costs associated with upgrading the Staff Assistant position to full-time. Library Operating 58% of the Library s expenditures are related to salaries and benefits. Revenue from fundraising has more than doubled since Municipal contributions increase by an average of 3.5% annually. Planning 78% of Planning s expenditures are related to salaries and benefits. Municipal contributions increased in 2013 as there were no staff vacancies. The county contribution has significantly decreased as a percentage of the overall Planning budget over the past 10 years.

4 Page 4 of 5 Fire Operating 28% of Fire Operating s expenditures are related to salaries and benefits as there are only three paid employees in the fire company. Building maintenance accounts for 30% of the total budget. Parks Operating 71% of Parks Operating s expenditures are related to salaries and benefits. The Parks Operating budget has increased the most of all the COG funds due to additional maintenance staff salaries as new parks and other facilities have been added to the regional maintenance system. Codes New Construction 68% of New Construction s expenditures are related to salaries and benefits. Funding through building permit fees accounts for 96.5% of all revenues. Regional Parks Development of the regional parks will begin in 2013 and in preparation for the projects, municipal contributions toward this fund have increased in the past two years. Loan renegotiations will result in a savings of $20,000 per year in years 2014 and 2015 and approximately $100,000 in annual savings in years Mr. Viglione also reported on the Pools Capital fund stating that 89% of this budget accounts for debt service obligations and the remaining 11% for improvements to the Park Forest Pool including the installation of a UV filter system. He also noted that the 2013 debt service obligation is $446,624 which is significantly reduced from the original projection of more than $550,000. Comments on the presentation included the following: COG should reinstate the practice of the Finance Committee meeting individually with each agency director in preparation for Program Plan production in May. The Finance Committee should set a maximum percentage increase in municipal contributions less personnel costs for the COG s annual budget. The Program Plan should include more financial data such as forecasting the budget for several years ahead and also recapping year-end actuals from several years prior. The Detailed Budget should include the next year s budget to be approved and a projection for the following year s budget.

5 Page 5 of 5 In closing, Mr. Steff stated that for COG services the average annual per capita cost is $65. Through the Refuse and Recycling program, COG saves each Centre Region resident $120 per year. He felt that the COG is a good investment of tax payer money. CRCA STAFF The Finance Committee offered no objections to Mr. Schneider exploring the option of hiring temporary help to alleviate the workload and improve the inspection wait time for commercial and multi-family housing construction. VOUCHER REPORTS Motion was made by Mr. Wise and seconded by Ms. Shoemaker to approve the December 2012 COG voucher reports. Vote in favor was unanimous. ADJOURNMENT There being no further business, the meeting of the Finance Committee was adjourned at 10:45 AM. Respectfully submitted, Margaret Cook Recording Secretary

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