Metro East Sun

City of O'Fallon Finance & Administration Committee met Oct. 28

Here are the minutes provided by the committee:

Minutes of a regular meeting of the Finance and Administration Committee of the City of O’Fallon, held at City Hall, 255 South Lincoln, O’Fallon, Illinois as well as on Zoom, a video/audio conferencing platform on October 28, 2024

CALL TO ORDER: 5:30 pm

ROLL CALL: COMMITTEE MEMBERS: PRESENT: Lotz, Campbell, Fohne, Smallheer, Blackburn, Chair- Parchman Arrived at 5:49pm:

NON-COMMITTEE ALDERMEN: PRESENT: Rosenberg, Carney, Vorce, Muyleart, Hudson, Van Hook, Albrecht, Roach

Approval Minutes from July 22, 2024 Motion Campbell, Second Smallheer. All Ayes

Items Requiring Council Action:

2.1 Motion to approve the Budget to Actual Report as of September 30, 2024: Director of Finance provided the Budget to Actual Report for the period May 1- September 30, 2024 in Board Docs. Senior Accountant, Robin Costello explained that this is the same report that has been provided for several years but is now an action item for City Council approval. This is due to a recent audit by the Illinois Department of Human Services. Although the Budget to Actual Report has been reviewed regularly at the Finance and Administration Committee, IDHS requires formal approval of the report and notation in the council meeting minutes.

Motion to approve: Campbell, Second Smallheer All Ayes

2.2 Motion to Approve a Resolution authorizing the Mayor to sign an Illinois Municipal League Risk Management Association (IMLRMA) Intergovernmental Cooperation Contract for Property, Liability, and Workers' Compensation –Assistant City Administrator reported that the City issued an RFP for Property, Liability, and Workers' Compensation insurance on July 25, 2022. Four bids were received and three were considered. The City requested additional quotes to conduct a comparable study for desired coverages and like-to-like deductibles. ICRMT, the City's current insurance provider at that time, bid at $857,146.00. CIRMA & IPRF bid at $909,322.00. IMLRMA bid at $672,838.51 for plan years 2023 and 2024, each.

A renewal quote was provided to the City of O'Fallon from IMLRMA for coverage effective January 1, 2025 - December 31, 2025 for a cost of $674,309.99. An increase of $1,471.48, or 0.2% Year over Year. With this excellent renewal quote, that remains well under the amounts quoted in the previous RFP, staff supports renewal with IMLRMA for coverage in 2025. Staff clarified that a comprehensive review to compare all lines of coverage was completed. The coverage provided by IMLRMA will adequately protect the City's assets in the event of any situation, disaster, or catastrophe.

Motion to approve: Blackburn, Second Fohne All Ayes

Other Business:

3.0 Capital Improvement Plan (CIP) Presentation- Assistant City Administrator provided a general introduction to the Capital Improvement Plan as well as a presentation on IT projects. IT Director, Dan Gentry presented the IT projects. Staff also provided the link to the proposed CIP. https://infinite-data.knack.com/city-of-ofallon-cip#introduction/introduction2/

3.2 Discussion of the preliminary proposal of the 2024 property tax levy: The Director of Finance explained that the annual Tax Levy must be filed with St. Clair County by the last Tuesday in December. The rate-setting EAV is the base for the next year’s estimate as provided by the county which is currently estimated to be $891,062,756. The current disabled veteran's exemption totals $151,720,030, which represents a 18% increase from the previous year. Disabled Vet exemptions now represent approximately 17% of our residential EAV. The county has estimated a 1.1211% multiplier for O’Fallon Township and a 1.1181% multiplier for Caseyville Township, an average of 1.1196% thereby increasing the EAV by approximately $9,976,339. Due to the number of petitions that again could be filed with the Board of Review to review property assessments, the projected EAV was reduced by $2,000,000. Therefore, our preliminary estimated rate setting EAV for the 2024 Tax Levy is $899,039,095, which is currently less than 2023 Final Rate Setting EAV of 907,164,742. These are preliminary numbers, and staff expects the EAV to increase.

The City is requesting an increase in all of the funds compared to last year's request with the exception of IMRF. Since there is still a small surplus in the IMRF fund, the amount requested for this year's levy is reduced by $50,000. The total amount requested is $5,927,000. The City’s levy is used only for Public Safety (EMS and Fire) and Pensions. It is not used for General Fund or Parks. The Library Board has not given a formal request but have indicated it could be a 4.98% increase, which is reflected on this worksheet but is subject to change. Based on our preliminary calculation of the estimated EAV, the requested rate is 0.8163 compared to last year's certified rate of 0.7738. Please note that the tax levy is based on dollar amount, not by rate. Therefore, if the estimated EAV is even higher than projected, the tax levy rate will be lower, and if the EAV is lower, the tax levy rate will be higher. Since these are preliminary numbers and are constantly changing, staff anticipate the EAV will definitely be higher than this current projection. The worksheet which was included in Boardocs represents the preliminary proposal.

Staff also provided information regarding the Disabled Veteran Tax Exemption Relief program implemented by the State. In the FY 24 State Budget, $15M was approved and allocated to reimburse the three counties that were affected most by the disable vet exemption- Rock Island, Lake and St.Clair. This was touted as a 5-year pilot program with the first year distribution representing 50% of the calculated lost revenue and then 90% of the lost revenue for the next 4 years with a maximum distribution of $15M between those counties. The City of O’Fallon did receive the first year’s allocation of $272,848 which was put in the capital reserves in the current FY25 budget.

When the state passed their FY 25 budget, this $15M was not included and staff are awaiting to see if it will be added once the legislators reconvene. Since at this time staff are unsure if there will be a reimbursement form the State next year, staff is hesitant to decrease the levy amount requested for the FY 24 levy request. If the City were to reduce the amount now, should the state NOT include in the current budget, the City would then have to “make up” that amount the following tax levy year which would then put the amount of request over the 5% which would then require a Truth in Taxation hearing. Therefore, staff’s recommendation is to propose the levy amount calculated as they normally do, which in the current proposal would be a 4.19% increase for City and 4.98% from the library, with a combined increase of 4.49%

The county will distribute the FINAL tax extensions that must be approved which is normally by the end of March. By this time, staff will know if the State has added this allocation back into the budget. IF they do, the City can then ABATE the amount differential requested for the City portion and then distribute from the City’s reserve the amount each fund had requested above the previous year’s levy.

The tax levy proposal will be presented again at the next Finance and Administration Committee meeting on November 27 and staff will have updated EAV estimates.

Comments were made by a resident regarding the disabled vet exemption program.

3.3 Update on City/School District Collaboration Working Group Meeting- Ald. Jessica Lotz provided a summary of the meeting held between the City and the School Districts. She emphasized that the purpose of the group is to share information and determining opportunities for collaboration on future projects. This group will continue to meet on a quarterly basis.

3.4 Update on Resident Assistance Task Force Available Funds- Sr. Accountant Robin Costello provided an update on the funds remaining as of 10/17/24 for FY 25:

Water Assistance Program- $21,725 remaining FY 25 budget amount $25,000

Ameren Electric Assistance Program- $33,408 FY 25 budget amount $65,000

Staff also mentioned that the County's LIHEAP program is now open for residential assistance, so our agencies are also providing information to residents in need for that program as well.

3.5 Update on Municipal Aggregation Program-Director of Finance discussed the new MunicipalAggregation contract. The City renewed their municipal electricity aggregation program with their previous supplier Homefield Energy. The City’s primary goal is to protect the residents from the continued volatility in electric supply rates. The aggregation program was voted on and passed by the residents of O’Fallon in November 2012 by referendum of the electors. The referendum stated:

Shall the City of O’Fallon, IL, have the authority to arrange for the supply of electricity for its residential and small commercial retail customers who have not opted out of such program? This is why it is an OPT OUT program.

Since February 2023, the City’s residents and small businesses participating in the municipal electricity aggregation program have been receiving rates of $0.1220 from their current supplier, Constellation New Energy. The new contract will be with Homefield Energy, a locally based company that previously supplied the City. The new rate will be $0.09054, which equates to a $0.03146 savings per kilowatt hour (kWh) used from the current program rate. The savings for an average account using 800 kwh will amount to over $25.00 of monthly savings for those accounts currently participating in the aggregation program.

Unlike the previous contracts for the aggregation program, the City secured the new rate for a short period of time due to the uncertainty in the energy market. The new shorter program will commence on the December 2024 meter read date and will continue through the May 2025 meter read date. This new 6-month program rate is a fully fixed rate and will not change during that timeframe. A new follow-on rate will be negotiated with suppliers prior to the expiration in May 2025.

Ameren’s current non summer rate from October 1 to May 31, 2025, is posted to be $0.0809 which is approximately 10% lower; however, the Ameren rate can change throughout the period and is scheduled for an annual change in January 2025, which in the past several years has been an increase. Our consultants notified us recently that Ameren filed paperwork with the ICC to raise the TS Rider portion of the supply rate roughly 20% on January 1, 2025, which roughly equates to an additional $.004164 and would put their price to compare (PTC) rate at or near $.085064 before any additional line item increases prior to January 2025. This will put Ameren's price to compare rate very close to the new aggregation program rate. Although the new municipal aggregation rate might still be a bit higher, the program provides protection against future higher rates as well as stability. Residents participating in the program since its inception have had only 7 rate changes since 2013, while Ameren has had 30 rate changes.

Although this program is designed to protect our residents from the volatility in the energy market and provide insurance against large increases in rates as we experienced in 2021 and 2022, it also provides the ability to OPT OUT of the program at any time without penalty if the account holder desires. An opt out letter was mailed to all eligible residents within the City starting October 11, 2024. If the account holder desires to continue participating in the program, then they DO NOTHING with the opt out notice and they will be automatically enrolled. If the account holder chooses not to participate in the program, there are several ways to do this: simply return the opt out notice by mail, call the new Supplier (Homefield Energy) at (866)694-1262, or go to the website referenced in the letter. If you have questions about the program, you may call Homefield Energy direct at (866)694-1262 or call with any questions to Good Energy’s direct line to speak to Vicki Browning at (844)686-4244.

In addition to the opt out letter from Homefield Energy, each account holder may receive a notice from Ameren that their current supplier contract with Constellation New Energy is expiring, and that you must make a new choice in suppliers. Don’t be alarmed with the letter, as it is part of the process required by the State of Illinois. Again, the opt out letter remedies any letter received from Ameren. If residents and small businesses wish to continue participating in the program, they simply do nothing. They will be automatically enrolled when the program transitions to the new supplier in December 2024. Lastly, Ameren will also send a letter confirming you have chosen Homefield Energy as your new supplier, providing another opportunity to decline enrollment. Unless account holders actively opt out of the program, they are automatically enrolled.

3.6 Quarterly Investment Report as of 9/30/24- Info Only

3.7 Treasurer’s Report as of 8/31/24- Info Only

3.8 Administration Committee Reports- Info OnlyMotion to Adjourn: Parchman Second Campbell All Ayes

https://go.boarddocs.com/il/ofallon/Board.nsf/files/DAKPSB65F2B4/$file/241028FAMinutes.pdf