Given the state of the economy and the unprecedented challenges we all must endure during these challenging times, this information is dedicated to providing you with a status report of the steps taken by your Village Council and Village staff to methodically and prudently plan for the continued delivery of necessary Village services.
Focus on Expense Reductions Yields Savings
The Village Council and staff take the concept of financial stewardship very seriously and I’d like to take this opportunity to let you know about the hard work being done throughout the Village organization to reduce expenses in light of declining revenues and rising costs. Initially, it is important to note that since 2007, the Village has reduced expenses in the General Fund, the Village’s primary operating fund, by $2.9 million. (See Table 1 Below)
|General Fund||Expenses||FY 07 to FY 09|
|Total Expenses||Expense Reduction|
|FY 07 actual||$42.7 million|
|FY 08 actual||$42.2 million||($.5 million)|
|FY 09 estimate||$39.8 million||($2.4 million)|
Furthermore, the Village is expected to spend $2.4 million less in both personnel and non-personnel expenses in FY09 than in FY08 . (See Table 2 Below)
|FY 09 General Fund Expense||Reductions|
|Vehicle Fleet Expenses||$ 210,000|
|Contractual Services Expenses||$ 360,000|
|Other Operating Expenses||$ 770,000|
|Total Expense Reduction||$2,400,000|
Similar to many private sector companies, the Village implemented a hiring freeze in April 2008 and since that time 18 positions remain unfilled. A voluntary separation program was implemented and resulted in eight retirements last month. That amounts to a total of 26 fewer positions in FY09 . In fact, the Village had more employees working in 1996 than presently; approximately 6 more. Additionally, early in the year, a voluntary furlough day program was implemented whereby staff members could commit to any number of unpaid days off. Pay increases were also eliminated for many employees. Because the Village is a service organization, personnel is the largest expenditure in our operating budget. Accordingly, and as noted above, Staff and Council have committed to doing more with less and will continue in that spirit going forward.
Staff and Council have also looked at equipment and other assets to try to achieve savings. For example, 11 vehicles were eliminated from the Village fleet, which in conjunction with operational efficiencies, has resulted in a savings of $210,000. This savings is attributable to the “right-sizing” of the fleet and innovative approaches to fleet maintenance that have lowered costs, which include the use of alternative fuels and an anti-idling policy to reduce fuel consumption.
Solutions for addressing current and future revenue shortfalls brought by the recession have been at the forefront of recent long range financial planning discussions. Since May, there have been six sessions devoted to the development of a Long Range Financial Plan that will be used as a guide for financial decision making, budget preparations and Strategic Plan updates for the next three to five years.
More Work to be Done
All of these cost savings steps aside, the Village is still faced with closing a projected $4.5 million gap in the 2010 General Fund, as well as the continued erosion of sales tax and other revenue in subsequent years. A three-year plan featuring a balanced mix of expense reductions and revenue enhancements is being considered. The strategic concepts being discussed include:
- Implementing operating efficiencies to provide existing services at or near current levels, but at reduced costs.
- Enhancements to the Village’s revenue base.
- Reduce/eliminate Village Services.
- Reduce/eliminate Village funding programs.
- Reduce/eliminate Village events.
- Increase/enhance property tax revenue.
- Increase/enhance other revenue sources including increasing existing revenue sources and introducing new revenue sources.
In sum, the Council and staff are looking at this challenge from every angle and nothing is off the table or taboo. I think you’ll agree that if applied in a coordinated and equitable manner, these strategies offer a well balanced approach to address the current and future financial needs of the Village, while still assuring that essential Village core services are delivered in an efficient manner.
The Village Council and staff continue to monitor expenses and look for innovative ways to reduce costs, including looking at novel service consolidation opportunities with other governing partners. I encourage everyone to visit the Village website at www.downers.us to find out more about the Village’s significant expense reduction activities and the very productive Long Range Financial Planning Process undertaken thus far. Your participation at the 2010 Budget Workshop on Saturday, October 3, 2009 at Fire Station 2 is also warmly welcomed.
Mayor Ron Sandack