City workers get pay hike

By

News

December 13, 2011 - 12:00 AM

Money matters again weighed heavily on Iola City Council members’ minds as they discussed potential cost of living raises for employees, a special audit of the city’s finances and year-end budget transfers.
The pay raises — an across-the-board 3.6-percent pay increase for all hourly employees — coincide with the 3.6-percent Consumer Price Index hike for 2012. The CPI is used by the federal government to determine whether Social Security benefits increase from one year to the next.
The cost of living adjustment was approved after council members learned that wages actually have decreased each year since 2009 and were projected to be even lower by the end of 2012, even though individual employees’ salaries have increased through annual evaluations or promotions.
The 3.6 hike will cost the city about $142,000 — about $50,000 under what the city had budgeted — according to figures provided by Assistant City Administrator Corey Schinstock and Councilman Kendall Callahan. The pair studied salary trends over the past 10 years.
The study noted a significant decrease in overtime paid since 2007, coupled with a slow-but-steady downsizing of the city’s work force. Today, Iola has 101 paid employees. That number stood at 120 a decade ago.
The council weighed two other options before unanimously approving the 3.6 percent increase.
Councilman Ken Rowe proposed a 2.5 percent increase, a proposal that gathered no other support.
Likewise, Callahan suggested a 2 percent increase at the start of the year, then a lump sum payment equal to another 2 percent if salaries stayed at or below projections by the end of the year.
In the end, council members opted for 3.6 percent now. Councilman Steve French also said employees could face a larger withholding of their salaries committed to the Kansas Public Employee Retirement System, if legislation is approved in Topeka.
Councilman Joel Wicoff, likewise, noted that a 3.6 percent hike would boost employee morale.
Approval was unanimous.
 
COUNCIL members also approved a number of year-end budget transfers from the city’s electric and gas utility reserves to shore up the city’s special parks and recreation, water and stores funds.
The combined transfers will increase the city’s budget authority by $292,000.
To get to that figure, council members approved a combined transfer of $1,308,750 from the electric and gas into other funds, while holding back $1,016,250 that had been allocated into equipment reserve funds.
A special budget hearing will be held during the council’s Dec. 27 meeting, necessary before the transfers are approved.

THE COUNCIL also delayed once again a decision on whether to fund a more intensive study of specific city funds, which has been proposed by some councilmen since former City Administrator Judy Brigham was dismissed in August.
Council members have said that errors in the budget preparation for 2012 played a role in Brigham’s firing, about three weeks before she was scheduled to retire.
On Monday, council members visited with Bryan Nyp, an accountant with Lowenthall, Webb and Odermann, P.A., of Lawrence, which has handled the city’s annual audits since 2008.
Their audit for 2010 noted “significant deficiencies” in the city’s cash funds, including a dependency on transfers from electric and natural gas funds. Some of the funds had negative balances, even though the city had sufficient funding to cover those losses in other reserves.
The city for years has relied on utility fund transfers to supplement Iola’s general fund as a means to keep its property tax rates low. In addition, former commissioners were hesitant to raise utility rates — in particular for water — which has resulted in net losses over the past four years. A rate hike was approved by the current council earlier this year.
The negative fund balances played a role in a downgrading in Iola’s credit rating by Standard & Poor’s, which could result in higher interest rates if the city refinances about $7 million in remaining debt used to construct Iola’s new water plant about six years ago. The hope is refinancing will result in lower interest rates over the remaining 14 years, although the city may have to purchase bond insurance to secure a lower interest rate. The bond insurance was pegged by City Administrator Carl Slaugh at about $97,000.
Callahan pressed Nyp on whether it was the auditor’s responsibility to point out that the negative balances could affect the city’s S&P rating.
Nyp replied that it was not, although he noted the city had the right to revise its budget information after it became clear some balances were coming up short. Where the transfers would come from would be the responsibility of a financial adviser, not an auditor, he said.
“We’re not allowed to make management decisions,” Nyp said. Instead, his responsibility lies only in looking at the city’s year-end budget balances.
Nyp also noted that an auditor could detect signs of fraud, but that potential would be limited if fraud occurred outside the city’s books. He also was skeptical that a special audit would uncover signs of fraud “unless more information became available.”
City Administrator Carl Slaugh also asked Nyp whether the city still had a chance to go back and change year-end fund balances for 2010 by approving retroactive transfers from the electric and natural gas funds, thus negating some of the deficiencies cited in the audit, and ultimately changing Iola’s S&P rating.
“Anything’s possible,” Nyp said.

THE DISCUSSION sparked another round of debate about the necessity of a special audit.
Wicoff repeated earlier comments that such a study would be a waste of taxpayer dollars, while Callahan remained adamant that further examination of the city’s funds is necessary.
A motion to table the special audit discussions for two weeks passed 5-3, with Wicoff, Don Becker and Scott Stewart opposed.

Related
October 24, 2017
November 24, 2015
February 20, 2013
November 12, 2011