TOWNSHIP OF LOWER MERION

General Fund FY 2008

Financial Update

Finance Committee Meeting

March 4, 2009
1
 Presentation Overview
 Overviewof 2008 approved
General Fund Budget
 Review2008 revenue budget
performance
 Review2008 expenditure budget
performance
 Reviewearly 2009 financial
performance
2
 Overview of 2008
General Fund (GF) Budget
Township approved 2008 Budget
 $50.9 M in total Revenues

 $53.0 M in total Expenditures

 2008 Budget Gap of $2.1 M

 Hopeful to eliminate $900,000 of Budget Gap

through cost containment, budgetary saving
practices and better revenue performance

3
 General Fund Financial Results (*pre-
audit)
2008 2008 2008
General Fund Budget Estimate *Actual
Beginning Fund Balance (undesignated) $ 10.3 $ 11.2 $ 11.2
Revenues 50.9 50.7 50.6
Expenses 53.0 50.8 50.2
Surplus/ (deficit) (2.1) (0.1) 0.4
Ending Fund Balance (undesignated) $ 8.2 $ 11.1 $ 11.6
Ending FB as a % of Annual Operating Expenditures 15.5% 21.9% 23.1%

 Revenue underperformed budget by

$300,000
 Budgetary savings of $2.8 million
 Eliminated $2.1 million budget gap
 2008 Actual = $400,000 Surplus
4
 2008 Revenue Performance
 Overall revenue collections slightly lower
than 2008 Budget

 Collected $50.6 M of Total Revenue

 $300,000
or about 0.5% lower than
2008 Budget
 $800,000or +1.6% higher compared
to 2007 Actual Revenue (includes
$500,000 of new RET Revenue in
2008)
 Includes unanticipated one-time 5
 2008 Revenue Performance
 Upside revenue performance offsets
difficult year
 Business Tax Collection Program
 One-time Balance Sheet Adjustments

 Receipt of Prior Years Insurance Claims

 Cable TV Franchise Fees

 Zoning and Subdivision Fees

6
 2008 Revenue Performance
Where the money came from:
Other
Departmental Revenue
Earnings 7%
4%
Fines &
Forfeits
3%

Licenses &
Permits
8%
Real Estate Taxes
62%

“Includes Real Estate

Other Taxes Transfer Tax”
16%

7
 2008 Revenue Performance
 Township Business Taxes
 Collected $7.3 M or 18% higher than
budget
 Higher revenues primarily attributed to
Business Tax Collection Program
 Increased $2.0 M or 38% compared to
2007
 Includesone-time revenue for delinquent
business taxes (approximately $1.6 M)

8
 2008 Revenue Performance
 Other Good Revenue Performance
 Realized $500,000 of Balance Sheet
Adjustments (one-time):
 Real estate taxes paid under protest
 Workers compensation reserve
 Construction escrow funds

 Received $150,000 of prior years insurance

claims from bankrupt Reliance Insurance
Company

 Cable TV Franchise Fees outperformed budget

by $90,000 or +10%

9
 2008 Revenue Performance
 Downside Revenue Highlights:
 Real Estate Deed Transfer Tax $1.4 M or
-31% lower than 2008 Budget
 $1.0 M or -24% lower than 2007 Actual

 Investment Income $300,000 or -33%

lower than 2008 Budget
 $500,000 or -46% lower than 2007
Actual

10
 2008 Revenue Performance
 Downside Revenue Highlights
(continued):
 Building Permit Fees $200,000 or -11%
lower than 2008 Budget
 $500,000 or -23% lower than 2007 Actual

 Local Services Taxes $100,000 or -6%

lower than 2008 Budget
 $300,000 or -15% lower than 2007 Actual
 Mandatory $12,000 exemption level in
2008 11
2008 Expenditure Performance
 OverallBudgetary Performance -
Excellent
 2008 Actual Expenses = $50.2 M
 $400,000or +0.8% higher compared
to 2007 Actual Expenses
 2007 Actual Expenses increased +3.6%
over 2006
 Realizedbudgetary savings of $2.8 M
or -5.3% of Total 2008 Budget
 Anticipated$900,000 of budgetary
savings in 2008 Budget 12
 2008 Expenditure Performance
Where the money was spent:

All Other Expenses 21%

Personnel Costs
62%

General Fund Subsidy

to Solid Waste Fund
3%

Debt Service
14%

13
Key Areas of Expenditure Cost Containment
 Controlling Personnel Costs
 Increased service delivery expectations
 Eleven full-time positions less than in 2002
 Fair market based labor agreements

 Controlling Healthcare Costs

 Employee contributions for health care
 Self funded prescription and dental benefits
 Negotiated cost saving measures in our
prescription drug benefits
 New hires at lower cost health care plans
 Incentives for attendance and opt-out health
care
 Employee safety and wellness programs 14
Key Areas of Expenditure Cost Containment
(continued)
 Debt Service Costs
 Refinancing of Debt Portfolio
 Township’s Triple A Bond Rating

 Reduced Costs for Risk Management Programs

 Member of regional municipal risk-sharing
trust
 Excellent claims experience; safety programs
 Performance dividends ($200,000 in 2008)
 Stable and declining insurance premiums

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 Key Areas of Expenditure Cost
Containment
(continued)
 Electricity Costs for Traffic and Street Lights;
Buildings

 Reorganization Within Township Departments

 Utilizing Cooperative Purchasing Programs

 Police Equipment Purchases With Drug

Forfeiture Funds

 Contracting Services From the Private Sector

 Reducing Consulting Costs Through Use of Staff

(in-house) 16
 2008 Expenditure Performance
2008 Budget Expenditure Savings
 Salaries, Wages and Other Compensation
($800,000 or -3%)
 Higher rate of vacant positions not filled
 Lower utilization rate of overtime

 Employee Fringe Benefits ($500,000 or -6%)

 Higher rate of vacant positions not filled
 Good Workers Compensation experience and
stable insurance premiums

17
 2008 Expenditure Performance
2008 Budget Expenditure Savings
 GeneralFund Subsidy to Solid Waste
Fund ($500,000 or -15%)
 Good overall revenue performance in Solid
Waste Fund
 Decreasing amounts of residential trash
collected – resulting in less disposal costs

 Property
and Liability Insurance
($200,000 or -32%)
 Performance dividends and rate
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stabilization
 2008 Expenditure Performance
2008 Budget Expenditure Savings
 Materials and Supplies ($200,000 or -20%)
 Professional Technical Services ($100,000 or
-7%)
 Electricity Costs ($70,000 or -4%)
 All Other Expenditure Categories ($300,000 or
-5%)

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 2008 Expenditure Performance
 2008 Budget savings significantly higher than
any year since 2003
 Historical GF Budgetary Savings:
 2008 = $2.8 M (5.3 % of 08 Budget)
 2007 = $1.7 M (3.3 % of 07 Budget)
 2006 = $800,000 (1.6 % of 06 Budget)
 2005 = $1.2 M (2.6 % of 05 Budget)
 2004 = $1.2 M (2.8 % of 04 Budget)
 2003 = $700,000 (1.7 % of 03 Budget)

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 2009 Financial Outlook
Year-To-Date at 2/28/09

 Still
early in the year for most
revenue categories
 Overall
revenue collections flat
compared to same time period in
2008
 Township Real Estate Taxes mailed
Jan 30th
 Monitoring real estate assessment
appeal filings
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 2009 Financial Outlook
Year-To-Date Revenue Trends at 2/28/09

2009 YTD Revenue Trends Compared to 2008 Trend Notes

Real Estate Tax  Up +14%
Real Estate Deed Transfer Tax  Down -37%
Business Privilege and Mercantile Tax  Tax Returns Due April 15th
Local Services Tax (LST)  Q1/ 09 Tax Returns Due April 30th
Building and Plumbing Permit Fees  Down -36%
Security Alarm Registration Fee  Up +4%
Zoning and Subdivision Fees  Down -12%

 Other Noteworthy Trends:

 Township has 20,000 residential properties of which 5 have
defaulted on mortgages in 2009

22
 2009 Financial Outlook
Year-To-Date at 2/28/09

 Overall2009 Expenditures – no
surprises YTD, except for storm
related costs
 Township spent $500,000 in storm
related costs as of March 3rd (7 storm
events)
 Used 100% of road salt 2009 Budget –
may require budget overrun
 Cuts into anticipated budgetary savings
23
 2009 Financial Outlook
Year-To-Date at 2/28/09

 Experiencing personnel vacancies –

anticipate 09 budgetary savings in
personnel costs
 Continueto monitor Employee
Healthcare costs
 Anticipate retrospective refund in 2009
from Personal Choice Healthcare Plan
 Evaluating other employee Healthcare
Insurance options
24
 2009 Financial Outlook
Year-To-Date at 2/28/09

 Significant
debt service savings
anticipated
 2009 refinancing anticipated expected
to produce savings in the range of $1.0
M
 Evaluating 2009 New Money
 Long-rangefinancial forecast estimated $10
M of New Money in 2009 to fund the Capital
Improvement Program
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 2009 Financial Outlook
Year-To-Date at 2/28/09
 Lower tipping fees (price charged to
dispose of Township trash) in 2009 and
probable again in 2010
 Township residential trash volumes trending
downward
 Anticipate 2009 budgetary savings for refuse
disposal costs
 Demand for recycled paper dropped
significantly in Q1 2009
 Township currently receives $25/ton as
compared to $125/ton in 2008 (Q4)
 Anticipate significant reduction of recycled
paper revenue in 2009 as compared to 2008

26
 2009 Financial Outlook
Year-To-Date at 2/28/09

 Continued cost containment

implementation and monitoring of
expenditures
 Scheduled semi-annual update of
Five-Year Financial Forecast by mid-
year
 Hopeful to accomplish sooner due to
fiscal situation
 Too early to assume major changes to
prior financial forecast (Oct 2008) 27
End of Presentation

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