Due to an unforeseen spike in Illinois Municipal Retirement Fund rates, the General Fund will take a $50,000 hit in next fiscal year’s proposed budget, Effingham City Council members learned Tuesday.

    Commissioners reviewed the budget after a public hearing and City Administrator Jim Arndt gave the council an update on how the proposed budget will be modified before it’s considered for approval at the next council meeting.

    Arndt knew an increase in IMRF was coming, but he didn’t expect a jump of nearly 7 percentage points. Beginning Jan. 1, rates will increase from 13.71 percent to 20.36 percent per employee payroll.

    In other words, out of every dollar the city pays employees who participate in IMRF, 20 cents will go to the retirement fund, Arndt said.

    The spike is going to be a major hit for the General Fund, considered one of the most important city funds that’s also kept the leanest. The approximate $50,000 hit will cause projects or purchases to be pared down to balance the proposed budget, Arndt said.

    However, the hit may not be as hard on the fund as expected after carryover balances are figured in, Arndt said, adding he was calculating conservatively.

    “It’s easier to delete expenses than increase revenues,” Arndt said, adding the increase will begin Jan. 1, with another expected jump in 2014. What that percentage will be is still unknown.

    When Arndt proposed the budget, he used current IMRF figures so the numbers wouldn’t have to be changed more than once. He expected an increase of about 2 percent, or a total of about 15 percent.

    “I did 13.71 percent because it’s a guessing game. But it’s a lot higher at 20 percent,” Arndt said.

    In addition, a $100,000 adjustment also will be made to the General Fund to make up for an increase in health insurance rates. To balance the fund, Arndt plans to reduce the amount of designated reserves for the purchase of a new fire engine. The reserves total will go down from $183,000 to $83,000.

    After changes are made to the 2012-13 budget, it will be brought back to the council for consideration at the next meeting.

    Commissioners also discussed next fiscal year’s appointment ordinance and the five-year capital improvements plan. The appointment ordinance is based on a 2 percent salary increase, which was set according to job classification.

    Those documents also will be considered for approval at the next meeting.

    In other news, the board:

    • Approved the 2012-13 health insurance renewal. The current health plan is administered by the Health Alliance Medical Plans with the new policy year beginning May 1 through April 30, 2013. The city requested its current renewal quote, additional re-insurance quotes and fully-insured quotes from Health Alliance and Weis Insurance Agency. The Labor Management Healthcare Committee recommends the Health Alliance/Summit Companion renewal quote with a maximum plan liability of approximately $2,400,000, which represents a 7 percent increase from the previous plan year.

    • Accepted a bid for chlorination equipment for the excess flow treatment facility. New equipment is required for the wastewater treatment plant because the current equipment is dated and unsafe. City employees are unable to properly monitor chlorination levels during storm events. Low bidder was Brooks & Associates for approximately $38,000 with payment to be made from the sewer fund.

    • Approved change order No. 3 for rehabilitation of the Mulberry Brick Sewer Rehabilitation project to balance planned quantities with how much was actually used in the field. The result is a decrease in the contract for approximately $96,000.

    • Discussed a resolution for resurfacing North Fourth Street that will appropriate motor-fuel tax funds for $375,000.

    • Discussed authorizing execution of a preliminary and engineering construction agreement with Milano & Grunloh Engineers for the North Fourth Street Resurfacing project.

    • Approved and discussed change orders for new and existing clearwells at the water treatment plant. Change orders Nos. 10 and 11 were approved to install temporary columns and support beams for $16,000 and replace hatches for $18,000 in the existing clearwell. The installation of two flowmeters will be considered for approval at the next meeting.

    • Discussed vacating an easement along the east line of Lot 10 of Network Centre Subdivision for the Heartland Dental Expansion Project. The lot is south of the existing Heartland building.

    • Discussed an ordinance vacating alleys presently used by the adjoining owners of Fifth Third Bank for the Helen Matthes Library project. The alleys are not needed for public access to any other parcels.

    • Discussed a resolution accepting water main improvements and releasing the bond for water main and street improvements in Evergreen Pointe Subdivision. The bond for the street improvements will be released upon written acceptance of the street by Douglas Township.

    • Discussed a resolution accepting the 2012-13 fiscal year water treatment plant chemical quotes for approximately $209,000. However, there are additional minor chemical purchases throughout the year.

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