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December 2019 Board Meeting Minutes

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December 2019 Board Meeting Minutes 1866 CLEVELAND PUBLIC LIBRARY Minutes of the Regular Board Meeting December 19, 2019 Trustees Room Louis Stokes Wing 2:30 P.M. Present: Mr. Seifullah, Ms. Rodriguez, Mr. Parker, Mr. Corrigan (arrived 2:53 p.m.) Absent: Ms. Butts, Mr. Hairston, Ms. Washington Because there was no quorum present at the start of the Regular Board Meeting, Ms. Rodriguez stated that any items discussed would be for informational purposes only. After Mr. Corrigan arrived at 2:53 p.m. establishing a quorum, Ms. Rodriguez called the Regular Board meeting to order. Public Comment Ms. Rodriguez acknowledged Seth Hooper, SEIU District 1199, who shared his concerns about the safety and security of Cleveland Public Library staff and patrons after a recent shooting at a branch resulting in death of a patron. Mr. Hooper spoke in detail of various staff complaints filed with EEOC, OSHA, OCR and Library Administration and Board of Trustees. Other topics included but were not limited to: salary increases; reporting and documentation of crimes; security cameras; need for the institution to be more responsive to security concerns; and an appeal to employees to seek Union representation. Ms. Rodriguez thanked Mr. Hooper for his comments. COMMUNICATIONS Director Thomas stated that there were no Communications to be acknowledged. 1867 Presentation: Financial/Budget Overview – Carrie Krenicky, Chief Financial Officer Ms. Krenicky stated that today the Board will consider the final Appropriation for Year 2019 and the Original Appropriation for 2020 and gave a detailed presentation of how the Library ends the year and will begin 2020 focusing on the general fund. Ms. Krenicky’s presentation included a review of the 2019 Amended Certificate of Estimate Resources which shows a balance of $80.5 million in the General Fund and all funds total approximately $186 million. Ms. Krenicky reviewed the General Fund Amended Certificate of Resources and stated that the Certified Operating Revenue is $63.8 million; Property Tax/Rollbacks are approximately 60% and PLF are approximately 37% of our Revenues. Ms. Krenicky reviewed the General Fund – Sixth and Seventh Amendment to the Year 2019 Appropriation and noted the decrease in our General Fund by $643,475.00 in Purchased/Contracted Services, Supplies and Capital Outlay. Ms. Krenicky explained that when appropriating, we strive to adhere to the following Rule of Thumb: 65% towards Salaries/Benefits; 15% towards Library Materials; and 20% towards Other (Purchased/Contracted Services, Supplies, Capital Outlay, Miscellaneous). Even after decreasing, the General Fund – 7th Amendment to the Year 2019 Appropriation - $56.1 million shows 66% towards Salaries/Benefits; 13% towards Library Materials; and 21% towards Other (Purchased/Contracted Services, Supplies, Capital Outlay, Miscellaneous). Ms. Krenicky’s presentation continued with an overview of Certified Revenue, Appropriations and Balances in the General Fund for the Period Ending November 30, 2019 and stated that we anticipate receiving $63.8 million in revenue. The negative indicates that we collected more than what we were certified for. This is why we recertified in December. 1868 Ms. Krenicky reviewed the Certified Revenue, Appropriations and Balances General Fund for the Period Ending November 30, 2019 in regards to appropriations and expenditures. Ms. Krenicky explained that if we closed the year now and assumed that we will receive all of the revenue where we are certified and we are going to expend up to the appropriation, which is the 7th Amendment, our estimated unencumbered balance that we will have starting off with in the new year will be approximately $23.3 million in the general fund. We were certified by the Budget Commission for our Property Tax at $35.2 million. As of July, we were certified by the Ohio Department of Taxation for our Public Library Fund at approximately $23.5 million and will be recertified by the end of the month. The total Estimated Revenue in the General Fund is $83.7 million as we start the calendar year 2020. Ms. Krenicky gave an overview of the following Property Tax challenges: This year (2019), we were originally certified at $36.0 million including rollbacks We actually received $38.4 million –$2.4 million additional revenue HOWEVER, we are not certified for delinquent tax collections and we received $3.4 million in delinquent taxes Which means we actually collected $1.0 million LESS than we were certified That is why our collection rate decreased from 87.89% to 86.27% for 2020 We have a built in delinquency rate – we did not collect $5 million dollars that we would have collected at 100% (if everyone paid their property taxes) The Library’s property taxes were also reduced by $4.7m under various tax abatement agreements entered into by the City of Cleveland That is almost $10 million dollars the Library did not collect this year due to tax abatements and the collection rate 1869 Ms. Krenicky gave an overview of the following Public Library Fund challenges: Certification is based on ODT 7/25/19 Initial Certification. In December 2019, an updated entitlement estimate will be provided. The latest State’s biennium budget (House Bill 166) for fiscal year 2020-2021 temporarily increased the PLF to 1.7% of the GRF The State’s fiscal year ends June 30, 2021 and the PLF percentage will revert to 1.66% as set in law The agreement we have the 9 County Libraries expires December 31, 2021. We are currently receiving the highest percentage (41.1843%); this could change CPL’s Two Primary Revenue Sources (cont’d) Property Tax – Collection Rate History In response to Ms. Rodriguez’ inquiry, Ms. Krenicky stated that Property Tax collection went down from 87.9% in 2019 to 86.27%. Ms. Krenicky gave an overview of the challenges with Property Tax with delinquent taxes. We closed the year in 2019 with $14.6 million outstanding delinquent taxes due to the Library. In 2001 we had just over $6 million; delinquent; and capped in 2015 at $23.81 million. In 2016, the hospital exemptions were removed from our delinquent number ($10.7 million). Property Tax – The County Fiscal Officer’s Estimated Municipal Tax Valuation was reviewed from 2007 to 2020 Ms. Krenicky gave an overview of the PLF/Property Tax (not including rollbacks) History & Projection and noted the following: 1994 PLF $19.9 million 2014 PLF $19.9 million 2019 PLF $23.3 million In 2004 – 1 mill continuous & 5 Year 5.8 mill levies began (a total of 6.8 mills) - $32.4 million collected In 2019 – Increased millage by 2 (8.8) - $35.9 million collected 1870 In 2020 – Same millage (8.8) certified at $32.8 million In summary, in 2004, 6.8 millage received $32.4 million, and in 2020 8.8 mill at $32.8 million. We are currently certified at revenue we received in 2004 which includes the additional 2 mill levy Ms. Krenicky stated that although we are taxing our tax payers, it is difficult to retrieve the funds. Ms. Krenicky reviewed the General Fund -2020 Annual Operating Appropriation which is currently set at $59.97 million: Salaries/Benefits $40.44 million 67.4% Library Materials $ 7.28 million 12% Other $12.2 million 20% Purchased/Contracted Services $9.68 million Supplies $ .96 million Capital Outlay $1.39 million Miscellaneous $ .22 million Ms. Krenicky showed the comparison of where we ended for our final Appropriation for 2017 and the Appropriation going before the Board in 2020 and noted the following: The 2020 Salaries/Benefits projection includes: Approximately, an overall increase of 3.5%, which consists of average increase of the health insurance of 11.4% Over 20 new positions, including (10) SPS Officers and (10) in the branches, along with moving the current part-time SPS Officers to full-time Non-union Salaries/Benefits total = 34% Union Salaries/Benefits total = 66% Ms. Krenicky stated that historically, we have been able to maintain these percentages for Salaries/Benefits. Ms. Krenicky explained that moving forward we need to focus on our Budget Plan: The Budget Plan needs to balance the Facilities Master Plan, the Strategic Plan, and efforts to create a competitive and sustainable Compensation Plan 1871 Our Priority –Innovate for efficient and sustainable operations We must adopt and sustain a balanced budget that reflect the priorities and goals of the strategic direction of the Library Ms. Krenicky continued and stated that if we make the following assumptions: Our revenues remain flat from where are currently certified for 2020, despite the challenges mentioned in the previous slides. And although we are not certified for delinquent tax revenue, we will assume that we will collect $2m annually For expenditures, we assume a general overall 1.5% annual increase from the 2020 appropriation and we allocate 65% to Salaries/Benefits, 13% to Library Materials and 22% to Other (Note the general overall increase from 2019 to 2020 is 6.9%) We issue debt for Phase 2 for $41 million, with debt service payments beginning in 2025, estimating a $2,500,000 annual debt service payment for 30 years Ms. Krenicky showed a chart applying the previous assumptions over the next 9 years. Ms. Krenicky showed a chart comparing Revenues and Expenditures and noted where our expenditures exceeded our revenues. Our General Fund Unencumbered Balance should maintain 2 months of Operating Expenditures. In 2025 we fall below the minimum balance and in 2026 we have a negative fund balance and run out of funds. GFOA recommends, at a minimum, that general-purpose governments, regardless of size, maintain unrestricted fund balance in their general fund of no less than two months of regular general fund operating revenues or regular general fund operating expenditures.
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