COUNCIL AS A WHOLE COMMITTEE MEETING
MARCH 24, 2015
Council President Mr. D’Ambrosio opened the meeting at 7:00 p.m.
RECOGNITION OF CITY OF EASTLAKE PATROLMAN JOHN McCAULEY ON BEING NAMED 2015 OFFICER OF THE YEAR
Mayor Morley, Council President D’Ambrosio and Police Chief Reik recognized City of Eastlake Patrolman John McCauley on being named 2015 Officer of the Year.
RECOGNITION OF CITY OF EASTLAKE DISPATCHER SHERRY BRZESKI ON BEING NAMED 2015 CIVILIAN EMPLOYEE OF THE YEAR
Mayor Morley, Council President D’Ambrosio and Police Chief Reik recognized City of Eastlake Dispatcher Sherry Brzeski on being named 2015 Civilian Employee of the Year.
PRESENTATION IN MEMORY OF EASTLAKE AUXILIARY POLICEMAN ANDY ALLAN
Police Chief Reik presented a special shadow box to the family in memory of Eastlake Auxiliary Policeman Andy Allan.
REGOGNITION OF EASTLAKE SERVICE DEPARTMENT EMPLOYEE PATRICK CURTIS FOR HIS HEROIC ACTIONS ON MARCH 11, 2015
Mayor Morley and Council President D’Ambrosio recognized Eastlake Service Department employee Patrick Curtis for his heroic actions in saving a child from choking on March 11, 2015.
Members of Council in attendance were Mrs. Quinn-Hopkins, Mr. Licht, Mr. Evers, Ms. DePledge,
Ms. Vaughn and Council President Mr. D’Ambrosio. Mr. Hoefle was absent and excused. Also attending was Council Clerk Mrs. Cendroski.
Those attending from the Administration were Mayor Morley, Law Director Klammer, Finance Director Slocum, Service Director Rubertino, City Engineer Gwydir, Police Chief Reik and Fire Chief Whittington. CBO Menn was absent and excused.
03-24-(01): Recognition: April, 2015 Child Abuse Prevention Month
Mr. D’Ambrosio: This will recognize April, 2015 as Child Abuse Prevention Month. I do not believe anyone has any concerns about this.
There were no questions or objections.
03-24-(02): Re-Appropriations: January 1, 2015 – December 31, 2015
Mr. D’Ambrosio: This is our budget that was discussed over several meetings. Ms. Vaughn?
Ms. Vaughn: We spent three lengthy meetings discussing the budget and we all worked together to come to the conclusion of giving the best service to the people on the limited funds we have. Our Council recommended this and it appears on this evening’s agenda for passage.
Mr. Slocum: As it stands right now we will end the year with about $4,000. It is about as tight as we can make it.
There were no questions or objections.
03-24(03): State Contract: Sodium Chloride/Rock Salt
WPCC Expenditure: Whispair Blower for Aeration System: $47,000
Ms. D’Ambrosio: Ms. Vaughn?
Ms. Vaughn: The State contract for rock salt is a housekeeping matter and was recommended by the Committee as was the WPCC expenditure request for the Whispair Blower for the aeration system. Willoughby approved the item at their last Council meeting.
There was no Legislation Pending.
WPCC Expenditure: Whispair Blower for Aeration System: $47,000
See comments above.
PRESENTATION BY STATE AUDITOR JAMES B. PYERS, CGFM, CEDP: PERFORMANCE AUDIT
Mr. Pyers: We were created in 1996 for the 21 urban schools and have done several audits at legislative requests, local government requests and fiscally distressed organizations since. We do our audits in accordance with GAO standards. Regarding the types of performance assessments – everyone thinks we come in to eliminate costs and cut people. That is not necessarily true. We do strategic planning, service efforts and accomplishments, performance budgeting, benchmarking against standards and best practices and we also use peer comparisons for our performance audits. We do this by gathering and reviewing background information, collecting client and peer data, conducting interviews with clients and peers, testing reliability of the information which is extremely important, researching leading practices and methodologies, comparing clients to benchmarks, leading practices and peers, holding periodic status meetings with the client to share information and we report on findings and recommendations. In the planning process we identify areas to be examined based on our initial findings, determine the audit scope and timeline, issue a letter of arrangement and notification and identify the peers and solicit their participation. For the scope there are two things we can do in a City – we can do the entire city or take a specific area and can look at a specific department and/or functions. During the field work process we collect and review and analyze resource documents, conduct interviews, identify best practices. The client provides data through interviews and documentation, participates in status updates and we review and provide comments on preliminary report drafts. There are no surprises in our performance audit. The client always knows what is coming. Our reports are comprehensively reviewed by the project team and AOS management and the client is formally requested to report feedback on the drafts. The post audit or exit conference is conducted and the report is publically released. This has to be a collaborative process. We will talk about costs because we have done some preliminary work here. The Mayor and Finance Director shared some time and information with us and we put together some information which they have and can distribute if they wish. The cost for a City of this size would range between $110,000 and $170,000 based on what we have done in other cities around the State. That is for the entire City. If you wanted to go below or to a department or new function we would have to come in with another estimate. After that would be the application – we would do the scheduling and a letter of arrangement. Before we go further with the performance audit the City needs to fill out an application because this is a collaborative process for which we would like a resolution from Council saying – yes, we want to proceed. Having said all that – the application talks about your current financial condition – we know what the current financial condition of the City is – that is no secret. It asks what your organization seeks to accomplish with our performance audit – what are your concerns that should be included in the scope of the work – what strategies has your organization taken to date to streamline operations or shared services – what steps will your organization take to ensure the recommendations made in the performance audit are implemented and if applicable why is your organization requesting LEAF funds. LEAF funds are if you do not have the cash and you are sure you are going to have some savings you can apply for the LEAF fund and pay for the loan with the savings during the audit. You do have to pay that back within a period of one year and you are charged interest. I want you to understand our program.
Mr. Slocum: It is my understanding – just for clarification – this is not a grant – it is a loan that has to be repaid.
Mr. Pyers: In one year. It is not a grant.
Mrs. Quinn-Hopkins: It was my understanding that if you do not find within the study that you can save us more than what it cost that you forgive the balance of the difference – forgive the difference.
Mr. Pyers: I am not sure that is still in the program. That would come during the process. The question was – if we don’t find the savings is the loan or the expense forgiven? I am not sure that is available. Before you get to that step we need to get to this step. We can’t go to that step until we get to this step.
Mr. D’Ambrosio: If we went to the first step and we tried to get the loan forgiven what are the changes the loan would be forgiven? $110,000 – $170,000 is a lot of money.
Mr. Pyers: It is a lot of money. That is why it is very important that everyone is in concert with this.
Mr. D’Ambrosio: I guess what I am asking is what are the chances we would not have to pay that?
Mr. Pyers: I do not know the answer to that until – we have to take this in the logical sequence.
Mrs. Quinn-Hopkins: For example, say it costs us $100,000 but you could only find $25,000 that you would be able to save us – then the balance of $75,000 that it cost us – but it won’t save us – that $75,000 would be forgiven.
Mr. Pyers: During the scope process as we are starting to scope this out and negotiate that if we came to that conclusion that may not be included in the scope and the fees would be reduced.
Mr. Slocum: The other part we have with that is the definition of savings. It is implementable savings versus recommended savings. The Auditor can take a position that if we did all this we would have an “x” amount of savings and we can take the position that it is not implementable and we would still have to pay for it. Correct?
Mr. Pyers: Right. Having said all this there is legislation called HB5 coming through the legislature that may make – may make – don’t know for sure – may make funds available to do performance studies for unique situations. I have not seen how that will be implemented and do not know whether it will pass. But, legislation is out there. If you want to do a performance audit the first thing you need to do is come to an agreement on what you want to do a performance audit on, if you want to do a performance audit, what is the purpose of the audit – that is extremely important, is it to reduce costs, is it to explore better methods of doing something – exactly what is the purpose of the audit.
Mr. D’Ambrosio: What does the first step commit us to?
Mr. Pyers: Nothing. It commits you to being interested in pursuing this further. Then we would sit down and start to write a letter of arrangement. That is when the contract portion between the City and the State would come in.
Mr. D’Ambrosio: Have there been other cities that have had their amount forgiven?
Mr. Pyers: I think there has been and I also think there have been cities that may not have had their amounts forgiven.
Mr. D’Ambrosio: We would have to know that as a no brainer – that it would be forgiven. Obviously we do not have the money to pay. We have $4,000 left over at the end of this year.
Mr. Pyers: This is why you may want to consider watching HB5. Whether that will pass or not I don’t know.
Mr. D’Ambrosio: Where is HB5 in committee?
Mr. Pyers: It has had its 5th reading in committee – it is moving along.
Mayor Morley: From our end with what we discussed in the last two or three meetings we have had – there was some misinterpretation that this was free. And I hope tonight that has been cleared up – that this is not a free process.
Mr. Pyers: This may not be a free process. And, additionally, we worked to try to figure where we were going with this and we could not come up with a conclusive this is the best thing for the City to do. That is why we are here saying if we are going to make this a collaborative process we all need to be together on what we want to accomplish and how we want to accomplish it. Does that make sense?
Mr. D’Ambrosio: Yes. I know you met with the Mayor and Mr. Slocum and I have not yet talked to them in depth on this – from what you have seen is there implementable revenue generators or savings that we have?
Mr. Pyers: We did not go into that level of detail. We were trying to determine if there was something really big out there.
Mr. D’Ambrosio: Did you see anything?
Mr. Pyers: No.
Mayor Morley: What we did discuss was – as Mr. Slocum stated – implementable things. We told him things that are off the table. We cannot talk about any of the Unions. We can’t talk about health care. We can’t talk about the pensions. Everyone in this room is aware of all the cuts we have made. But, we had some people who wanted us to go through this procedure and we are doing it. What we are trying to show now is that this is not our best way to go. We had this discussion about filling out this application and giving it back to them. They cannot give me a number and I will not send something to Council without knowing what it will cost. It could be $100,000 – $170,000 and we do not have $100,000 – $170,000. If they came to any of our meetings and said they thought they could implement something – Mr. Slocum gave them all our employees we have left and they put it on their spread sheet – they are looking for guidance from us. We have made every cut – we have no cuts to make. It is about revenue. It is not about expenses.
Mr. Pyers: If you want to do a revenue study that could be part of a performance audit. That will not generate savings. It may lead you to say – oh, we need to generate revenue.
Mr. D’Ambrosio: Yes, we have tried to do that ten times.
Ms. Vaughn: I was in on the discussions and it was very clear at that point in time that one of our major problems is our inability to raise revenue from the residents. You did not want to buy the stadium so that took that off the table. We are cognizant of the fact that the apathy of the City has cost us increases in revenue.
Mr. Pyers: Yes.
Mr. Slocum: Does the Auditor of State have any very specific items they feel this City can have audited that could result in significant savings to this City? I have heard nothing in all of our meetings. Not to come back and say you need to increase property taxes or income tax because we already know that. I am saying things that we have not considered.
Mr. Pyers: If you take wages and compensation off the table my experience has been that is about 80% of costs.
Mr. Slocum: And the fact that we are in the fifth year of no raises to our employees there is not a lot of room that we have. We have done – and I have been forthright with you all along.
Mr. Pyers: We have had a great working relationship.
Mr. Slocum: I just do not see where there are areas – I bring my own expertise to this too as a CPA and a Certified Fraud Examiner and 20 years experience in industry. We have cut and done things – I don’t think there is anything else out there other than revenue increases at this time. I cannot look at the Fire Chief or the Police Chief and say we are going to come up with some great ideas to streamline their operations. Their operations have been streamlined already – they have been gutted. Let’s not call it streamlined.
Mayor Morley: We had this talk with the Captains today. Our debt is $1.4 million for 2015. No one will come here and right us a check for $16 million to pay off the stadium. We have been open to our residents that we cannot get out of debt with the stadium. If we had $1.4 million you would not be standing there – I may not be sitting in this chair but until we get some sort of revenue fund this is where we are at. I will continue to say revenue because the expenses – we have no more expenses to cut.
Mr. Pyers: The Auditor of State would be more than happy to assist you in doing a performance audit. If you decide not to do a performance audit the Auditor of State will still be happy to have the community do what it can do to solve its financial problems.
Mr. D’Ambrosio: We appreciate you coming. We just had some different information – the cost was different – we heard different numbers – we heard it was free – we heard there were grants and we had to hear it from you.
Mr. Pyers: That is why I wanted to be up front and get it out on the table. We have had other cities say – really, that much?
Mr. D’Ambrosio: Exactly, that is the position we are in.
Ms. DePledge: I know you have gone off your presentation but we really wanted to focus in on certain things. Several years ago in early 2,000 this City went through fiscal emergency. The State came in and we made massive cuts across the board. We have never really recovered from that. My question to you is when the State came in as part of the fiscal emergency and we made all those cuts – would there be really anything different that they would find. We have been living bare bones for 10 years knowing all along that things would get worse and worse and worse and trying to do our best to keep our heads above water. What is different about your process than what we went through 10-12 years ago? It sounds the same.
Mr. Pyers: Well, if you went through a performance audit?
Ms. DePledge: Isn’t it a performance audit? They issued a report with all the cuts we had to make.
Mr. Pyers: There is a difference with being on fiscal emergency because at that time you operated under an advisory commission that has certain authority.
Ms. DePledge: We are well aware of that authority.
Mr. Pyers: We make recommendations. As it stands right now we cannot do a performance audit if you are in fiscal emergency because the Auditor of State is the one who declares you in fiscal emergency.
Ms. DePledge: When you go into fiscal emergency the State comes in – don’t they look at the same things you look at?
Mr. Pyers: They look at it a little differently but it is the same general thought process.
Mayor Morley: I looked at the report from when we were in fiscal emergency. It is in there – it says go to your people and ask for a tax increase and to cut the wages. Everything that was asked for back then they did – it said go to your people and cut people. It is basically the same. I understand what you are saying but when you go into fiscal emergency the State tells you what to do. I am not taking the easy way out. We talked about this before we made the cuts. It would have been easy for me for us to go into fiscal emergency and let the State be the bad guy and say eliminate 15 people and go to the ballot. The Administration chose not to do that. We are taking the high ground and will continue to do so. We will stay on track with the budget you will hopefully pass this evening and do the things we have to do.
Mr. Pyers: Do not hesitate to call the Auditor of State’s office if you see we can be of assistance. That is what we are here for.
Ms. DePledge: With all due respect we would love to call and we would probably love your assistance and insights but we have $4,000 to pay you. That is the bottom line. I don’t think anyone at the State will come in and work for $4,000 and help. That is our bottom line – that is where we are. That is the answer to our citizens – which we cannot afford to take an interest loan. Because our Moody’s rating has gone down I guess the interest rate would be even higher. We are really hurting. I think what I would like to ask is for you to go back to Columbus and talk to the legislators, the Governor – can you give us back our Local Government Funds – that is what I would like. That crushed us. That is what we need. We need our citizen’s tax payer dollars back because they kept them.
Mr. Pyers: I respect what you say but we are from the Auditor and not the legislature.
Ms. DePledge: You can bend a few ears down there and let them know what is happening to these smaller communities.
Mayor Morley: We did tell Senator Yuko and Senator Eckland.
Mr. Pyers: I think that may be part of HB5 – not the money.
Ms. DePledge: Not to give us our money back.
Mr. Pyers: Right. But, to see what else can be done in the communities.
Ms. DePledge: We are not the only ones. There are two other communities around here – Maple Heights and East Cleveland – they are in a world of hurt. We are one step behind them and we know it and we have been knowing it for years and have been trying to do everything we can to keep our head above water.
Mr. Pyers: Councilperson Vaughn shared with me this evening a list of cities and their ratings. I have personally been in several of those cities as a performance auditor for one reason or the other. It is what it is. You are not the only city.
Mr. Klammer: This is not so much a Law Department issue but I have to assume there are a lot of cities where it is a revenue related issue. On the outside looking in what they tried to do with the levy there are a lot of people who look at the Governor and think – well, the Governor balanced his budget without raising taxes why can’t you? For those of us who understand the process understand those are not apples to apples. We suffer the loss because we lost the Local Government Funds that he used in part to balance his budget. What are you seeing these communities do to communicate to their residents around that issue so they understand they are not apples to apples. Just because the Governor said he balanced the budget without raising taxes it does not mean it works for us? How are you seeing them message this issue?
Mr. Pyers: Recently I have not seen a city message that issue. That does not mean they are not but the audits we have been informed with where there were some structural situations within the government we were called in to look at a specific department – a utility department but you do not have utilities – that went a long way to solving several situations.
Mr. Klammer: But there would be a revenue component to that too.
Mr. Pyers: We have looked at other cities that had structural problems – maybe lack of adequate information to manage the city. Things like that. That is one of the things why we try in advance to understand the city so we don’t step out there into one of those situations where there are not adequate records for us to do a performance audit. We did not find that here. There are adequate records. I don’t know if there is adequate staff time to provide the information. We may have to step in and do a lot of information gathering ourselves because I don’t know that you are overstaffed or have the staff freedom.
Chief Whittington: I think what the Law Director is saying is that we are all working very diligently to fill the gap with our residents. For me to try to manage a safety department along with Chief Reik and Service Director Rubertino to some extent we do reach out to you. I am not sure your performance audit would tell us anything we do not already know. In my Department I have reduced 40% of my staff and that is well above what I am comfortable with. We are reaching out to you and saying maybe your performance audit is not right for us but we need help in this Community because this Community is faltering. With what the Law Director is saying what I want to hear from you is what can we do on the other side to help with this revenue thing.
Mr. Pyers: I do not mean to overplay HB5 nor do I want to underplay the situation you are in. Last night we were at a different meeting – a different client – and had a State Rep come up and say they were trying to do something for the smaller communities. I am sure he was talking about HB5. I do not know exactly what that means because we were not in the position to go into a lengthy conversation about it.
Chief Whittington: This is not an elected official comment – with House Bills there is always partisan politics that goes along with it – I am just a guy who is struggling to keep what I need to get done. For me I am very tired. I have been in this City for a long time and have been a Fire Chief for 8 years. I am tired – I am tired of moving backwards and I am at the point of looking to you as a State official to say – this Community is failing and we will end up being a statistic. I think for me the State would not want that to happen to this Community and that the Auditor would not want us to continue to move backwards because we represent the State as a whole. I am trying to add onto what the Law Director was saying – the message we are looking to put out to our people is the reason we are here is not because we feel everyone is overpaid or over staffed. There are a lot of issues in this Community that relate strictly to revenue generation. I am not sure what Council or the Mayor will do with the performance audit but for me I don’t think you can come to me and ask me to give anything else up. I do not provide basic service – I provide minimum service. The people in this Community deserve better than that. My people deserve better than that. I think a Community like this – comparing it to Maple Heights or East Cleveland – we need to find a way to say to them that we need their support and we need to find a way to do that – that is what we are looking for.
Mr. Pyers: You hit on another reason why some of our clients hire us. That is the communication process – the validation process – that says here is someone independent.
Chief Whittington: You said the key word – hiring. I would rather see us hire a consulting firm to pass a levy in this City. Kirtland just did that – they needed to get a levy passed and hired a consulting firm to come in and get the levy passed. The key word was “hire.” Councilwoman DePledge mentioned the $4,000 which is probably not enough for you. All we need to have is one good flood in this City and that $4,000 is gone. I am most certainly not trying to kill the messenger.
Mr. Klammer: I think it is funny that the same people who hate government are insisting that another agency audit the government. To me I cannot believe we find ourselves in that position in 2015. This distrust for government has killed everything good that elected Council people and Mayors are trying.
There were no further questions or comments.
Mr. D’Ambrosio: Mr. Pyers, thank you very much.
The meeting was adjourned at 7:54 p.m.