DeKALB ? When officials gave a quarterly financial report in July to the DeKalb City Council, they said the results showed the city was on the road to fiscal recovery.
City revenues were on the rise, Finance Director Laura Pisarcik said. Property taxes came in 3.5 percent above budgeted predictions, and sales and use taxes came in more than 12 percent above expected levels.
Two years ago, those quarterly reports weren?t as positive. A year ago, the city didn?t even have a finance director to present them.
?I was surprised,? said Pisarcik, who was hired in December. ?It?s actually very unusual for a city to not have a finance director.?
The creation of Pisarcik?s position was one of dozens of recommendations in a 184-page report, released in May 2009, by financial consulting firm Executive Partners Inc. The EPI report prompted the city to refinance its debt, reorganize departments and streamline other processes in an effort to save money.
More than two years after the report?s release, city officials said its $60,000 cost has been paid back several times over.
?We have benefited from the [report?s] guidance and what has become the foundations of our strategic thinking,? 2nd Ward Alderman Tom Teresinski said.
?Are we there yet? No,? Finance Advisory Committee chairman Mike Peddle said. ?But we?re in a lot better shape then a lot of other communities.?
Spending money to save money
In spring 2008, the city council was facing two consecutive fiscal years totalling of nearly $1 million in shortfalls. Long-term obligations ? such as pensions, health care and infrastructure replacement ? had become unsustainable.
Sixth Ward Alderman Dave Baker said the information the council was getting often wasn?t helpful.
?What used to happen was we were given balances in the general fund without any way of knowing if they were true,? Baker said.
The council voted 5-2 to spend $60,000 on the EPI report; the city had budgeted $50,000 for it. Former 3rd Ward Alderman Victor Wogen and former 7th Ward Alderman Brent Keller voted against it, with Wogen noting at the Nov. 10, 2008, meeting that it ?is a lot of money for someone to tell us how to spend our money.?
Other officials said it was a necessary expense to get an outsider?s perspective on what the city was doing well and what it could do better.
?No one can say it?s skewed because it?s coming from the city manager and the staff,? City Manager Mark Biernacki said.
Members of the Finance Advisory Committee ? a citizen committee that assists in the city?s budget process ? at the time said the city needed help and the cost was a necessary expenditure.
?There was some controversy about spending $60,000 for the report,? Peddle said. ?Now, even the citizenry comes forward and says, ?Well, EPI said this.? ?
Committee member Gary Peele supported the report and is pleased city officials reference it when discussing fiscal policy.
?It?s not something that was purchased and then sits on the shelf,? Peele said.
But getting to a projected general fund balance of more than $2.5 million meant making sacrifices.
?To achieve long-term financial stability and enhanced outcomes ... the city must, in many areas, ?re-invent itself,?? is how the report put it.
Department heads now contribute more of their salaries to the city?s insurance pool. Twenty employees were laid off in June 2010, and the public works and finance departments were reorganized.
Reducing employees forced the city ?to look at what kind of services can be outsourced and where we can save costs,? Mayor Kris Povlsen said.
The city?s economic development department was outsourced in March to consultant Roger Hopkins for $94,500 for a 15-month contract. The city had budgeted $120,000-$135,000 a year for the economic development director?s position.
The city?s legal department also has been outsourced to Aurora-based Mickey, Wilson, Weiler, Renzi and Andersson. The city budgeted $250,000 a year for that, with the hope that contracted services will cost less than a department that once had a price tag of more than $400,000 annually.
Director of Public Works T. J. Moore, who started in March, said his job has a wider scope of duties compared to previous positions he?s held. The community development and public works departments, for instance, are one office in DeKalb.
?I wouldn?t say it?s unheard of to have them both under one department head, but it?s certainly not common,? Moore said.
The city did add Pisarcik to the payroll. Assistant City Manager Rudy Espiritu used to be the point man for the city?s finances, but Pisarcik was hired to focus on the city?s financial processes.
She has a ?long laundry list? of ideas, such as emailing city utility bills or joining an online network for city contract proposals to increase the number of bidders on projects.
One idea that has been accomplished was establishing a ?lockbox? system where residents drop off utility bills at Castle Bank locations in DeKalb and Sycamore, saving city staff members hours they would have spent processing bills.
The cost of progress
The streamlining came after the layoffs, something city officials and finance committee members said was a difficult, but necessary, decision.
Povlsen acknowledged a certain irony in the layoffs. The report found the city already had the lowest number of city employees per resident than similar-sized towns such as Champaign, Moline and Normal.
?We always have done more with less,? Povlsen said.
The public works department went from 11 building department employees to three, but Moore said that has more to do with the recession reducing the amount of work received.
Doing more with less has been difficult, Police Chief Bill Feithen said. His department lost one secretary in last year?s layoffs, and three officers who retired haven?t been replaced. Before the recession, Feithen said he had eight fewer sworn officers than he wanted. That number is now 11.
?The fallacy out there is the level of service remains the same,? Feithen said.
Seventh Ward Alderwoman Monica O?Leary said the city?s decreased police and fire ranks may have helped the budget, but it does not address the public?s desire for enhanced safety.
?It?s hard to say [if things are better overall] because two or three years ago, the city had more employees. And then they were laid off,? she said, noting she hasn?t fully absorbed all the report?s recommendations since being elected in April.
Biernacki said the hope is to get a new police station built on West Lincoln Highway so public safety is the first area addressed as the city recovers.
How to pay for the new police station is one suggestion from the EPI report the city hasn?t followed. It recommended no major capital projects until the city?s finances were better managed. Once that happened, the report specifically advised against using short-term revenues for projects, such as a sales or hotel tax or water surcharges.
While the report did recommend increases to the city?s utility rates to eliminate deficits, as well as additional fees for ambulance services ? which the council approved in August ? it said DeKalb was ?overly reliant on sales tax and other economically sensitive revenues.?
The report recommended raising property taxes, but council members instead raised the city?s gas tax by 1.5 cents per gallon to pay for the new police station and canceled a scheduled water-rate increase to make it ?revenue neutral? to residents.
?I felt that was a more equitable way to share the burden,? 3rd Ward Alderwoman Kristen Lash said, because it meant travelers who also might use police services ? an example being a car accident ? can share some of the costs.
Fifth Ward Alderman Ron Naylor voted against the gas-tax increase, saying he disagreed with the correlation between gas taxes ? which normally go to the city?s roads fund ? and police services.
?That was somewhat contradictory to what the report recommended,? Naylor said.
Peele said the report was written at a time when property taxes might have been a more viable option. Peele and Teresinski said the city?s current property tax rate, coupled with the diminished value of property, meant it made sense to look at other options.
?Obviously, when you buy something ? and that?s what we did, we bought a report ? the user has the right to use it as they deem fit,? Peele said.
Peddle said any increase in taxes is a painful process for city officials, but he said the gas tax increase was a good way to spread the burden among the broadest selection of people.
?I think it probably would have been a mistake to try and do it exclusively through property taxes,? Peddle said. ?There?s so much police activity that is really not tied to the property tax per se.?
Making progress
The EPI report also recommended enhanced communication among the city, residents and Northern Illinois University. Biernacki said the city has been utilizing its website to post documents ? including agendas and minutes from current and past meetings ? online, as well as developing a section for citizen commissions and boards.
Povlsen also said he meets regularly with NIU President John Peters to discuss concerns that affect the city and university.
?President Peters knows, as the university goes, so goes the city, and vice versa,? Povlsen said.
Peters said university staff members have met several times in the past two years with DeKalb and Sycamore officials, as well as DeKalb County Board members, to discuss ways to address gun and drug issues around campus. Plans are in place to meet more frequently in the future, he said.
?If we?re going to reach 30,000 [enrollment], the community and NIU have to be in sync,? Peters said. ?Historically, it?s been great, and we?re continuing to enhance it.?
Peters said if the surrounding cities have nothing to offer students, they won?t come to NIU.
?Students live in this community for four, five years. They need to take pride in it,? Peters said. ?I?m optimistic we will do a lot together.?
Povlsen said the Safe/Quality Housing Task Force has helped foster discussions about one of the city?s most immediate concerns ? neighborhood safety.
Povlsen said the city?s meetings with NIU have helped focus on improving the Greek Row neighborhood; a recent survey found a majority of students don?t feel safe in that area. City officials and the task force hope to install better lighting for the neighborhood and other safety-enhancing features.
There are still long-term goals city officials hope to achieve, such as a general fund surplus of at least 25 percent of the fund?s annual expenditures and increased business investment downtown and near DeKalb Taylor Municipal Airport.
In the near future, city officials hope to cut costs in post-retirement health care and workers? compensation costs. Espiritu said the city is in the process of buying into an insurance consortium with other municipalities to better manage those concerns.
The city insures itself for workers? compensation claims, and Povlsen has said under that system the city could be one expensive lawsuit away from being back in financial calamity. Espiritu said the city could save $700,000 a year joining a consortium, but it needs $1 million to join.
While some of the council?s newest members said they hadn?t fully absorbed EPI?s recommendations, most aldermen agreed DeKalb is in a better fiscal standing than it was two years ago. And the report?s guidance has helped that happen, said the ones who supported it in 2008.
?We?ve accomplished more in the last few years than in the past 20,? Baker said.
? Daily Chronicle reporter Nicole Weskerna contributed to this report.
Some recommendations from the EPI report
? Hire a finance director
? Refinance the city?s debt
? Find ways to outsource existing services
? Reorganize or reassign personnel and department heads
? Hire staffing in needed areas as revenue allows
? Maintain open lines of communications with citizens and Northern Illinois University
? Look into cost savings in health insurance, retirement plans and workers? compensation insurance.
Source: EPI report. The full EPI report can be found in the Downloads section at www.cityofdekalb.com. It is under the finance heading and is called ?Financial Consultant Report (May 2009).?
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