Final 2010 Budget Message from Mr. Gerald J. Richards - Township Manager

**Please download the above file for the complete letter with budget charts**

August 28, 2009
Members of the Meridian Township Board
5151 Marsh Road
Okemos, Michigan 48864-1198

Dear Board Members:
The enclosed budget document outlines a plan for township operations in Fiscal Year
2010. The Charter Township Act requires that the chief executive officer submit a budget
plan 120 days prior to the start of the new fiscal (calendar) year.

We want to acknowledge the work of the elected department heads and the department
directors who continue to find ways to reduce costs without significantly impacting
services. Director of Finance Diana Hasse took the leadership role in working with the
department directors to formulate this financial plan. Additionally, Executive Secretary
Sue Donlon assisted in preparing the budget document.

Introduction
The current economic condition of the nation, our state and the Lansing Region make
this budget process the most challenging our staff has experienced in recent times. In
spite of lower revenues and rising costs, the proposed budget meets the objective of
keeping planned expenditures for 2010 in line with anticipated revenue for the General
Fund.

Financial Impact
The spending plan forecasts that the fund balance of the General Fund will be
$3,706,220 at the end of 2009 and $3,717,220 at the end of 2010. The following chart
shows the recent trend of this key financial indicator. The plan for the remainder of 2009
anticipates paying down the outstanding balance associated with the purchase of the
Meridian Activity Center Building adjacent to the Central Fire Station.

The Unreserved Fund Balance in the General Fund is the primary contingency available
to draw from for unforeseen expenses, opportune property purchases and one-time
capital items. The projected 2010 fund balance of the General Fund will be 21.7% of
expenditures or approximately 2.6 months of operating costs, which complies with
board policy and the recommendations of our auditors. In lean times, there is a strong
temptation to use Fund Balance to keep operations in a status quo position. We
strongly recommend against this short term, band-aid approach to funding government
operations. Instead, we have proposed changes in the way Meridian Township
conducts business without significantly reducing services to the majority of township
residents and businesses.

Revenues – General Fund
State shared revenues have fallen significantly over the last five years due to the drop
in sales tax revenue and state government budget shortfalls. Interest income has fallen
due to lower interest rates, and building permits are lower because of the local
economy. Overall, the General Fund anticipates $671,000 less in revenue next year,
compared to 2009 which is a 3.8% reduction.

Charges for Services are expected to decrease, based on reduction in solid waste
receipts offset by increasing ambulance runs. Fees for most services will remain
unchanged. At the present time, there does not appear to be opportunities to raise
appreciable revenue without voter approval.

Balancing the Budget
Every facet of township operations was reviewed for possible efficiency improvements,
cost savings, lowered personnel costs, consolidation and/or contracting opportunities.
Historically, 75% of the General Fund costs are personnel related and other costs have
been reduced significantly as budgets tightened. A limited amount of additional
revenue and non-personnel cost savings were identified and are listed further into the
summary. During the summer, township employees were sent an e-mail outlining the
opportunity to voluntarily reduce work hours in 2010. Several employees have taken
advantage of the offer, and the savings have been incorporated into the proposed
budget.

Staffing Changes and Personnel Activities
By default, we were left with reducing positions as the primary way to balance the
General Fund Budget. Our challenge was to accomplish this task with the least impact
to services while continuing to address priorities outlined in the Board Policy Manual.
We first looked to eliminate positions which are currently vacant. Next we factored in
those positions where the incumbents have told us they plan on retiring in 2010 and
determined that these positions could remain open or be restructured to part-time.
Internal operations were reviewed and positions identified which can be eliminated and
work dispersed to other remaining positions or technology is available to assist in
streamlining operations. Areas were also identified for contracting out, particularly
where we already contract out similar work. One position in a stand alone operation
was identified for elimination in which the remaining service will be moved and
discontinued in part. Consideration was given to the impact each reduction would have
on services to the general public in contrast to internal services or services to a small
segment of the population.

Department directors were consulted and we reached a consensus on the following
personnel changes to balance the proposed 2010 General Fund Budget:
1. Reduce a Bookkeeper Position from Accounting and Budgeting Department
2. Reduce a Network Administrator Position from the Information Technology
Department
3. Reduce a Records Clerk II Position from the Clerk’s Office
4. Eliminate the Transfer Station Attendant Position from the Public Works Dept.
5. Eliminate the Custodian Position from the Public Works Dept.
6. Eliminate the vacant Director of Assessing position
7. Keep vacant an Assessing clerical position for part of the year (expected
retirement)
8. Eliminate the vacant Senior Planner Position in the Dept. of Community Planning
& Development
9. Eliminate the Fire Marshal position in the Fire Dept. (expected retirement) and
rehire incumbent as a part-time Administrative Assistant with no benefits
10. Keep vacant an unfilled Firefighter/EMS Position
11. Keep vacant a Firefighter/EMS Position for part of the year (expected retirement)
12. Keep vacant an unfilled Police Sergeant Position
13. Reduce a Police Records Clerk Position to part-time for part of the year
(expected retirement)

For the first time since 1994, positions will be eliminated by other than attrition and
result in layoffs. Our Human Services Department will be gearing up to provide
outplacement services to assist impacted employees as they transition back into the job
market.

Meridian Township is very fortunate to have a great staff of dedicated employees who
provide highly rated services to our residents. Every employee will be impacted in
some way by the changes being proposed in the 2010 Budget.

Other Cost Saving & Cost Avoidance Changes
During the budget process, the following actions were identified as either supplementing
the personnel changes listed previously or reducing expenses in the 2010 General Fund

Budget and are included in the proposed budget:
1. Hire a full-time township attorney in lieu of contracting for legal services
2. Reduce the number of vehicles in the Motor Pool
3. Contract for reduced janitorial service to township office buildings
4. Close Central Fire Station and relocate staff to remaining stations
5. Close Lake Drive Transfer Station Refuse Disposal operation and relocate
recycling stations to the township Service Center Property on Gaylord C. Smith
Drive.
6. Eliminate Fourth of July Celebration
7. Eliminate summer recreation programs at Towar and Central School
neighborhoods
8. Keep pay ranges for Non-union positions at 2008 levels and all union contracts
open for renewal budgeted at 2009 levels for 2010
9. Pay off remaining debt on Meridian Activity Center in 2009 from Fund Balance
10. Take over permitting and inspection services for plumbing, electrical and
mechanical installations by contracting with qualified inspectors to share permit
revenue

Trends and Assumptions
A. Technology plays an important role in reducing the number of full time positions.
New police and fire records management software and mobile data units streamline
reporting requirements and improve productivity. Our digital phone system and computer
network allows data and information to be transferred easily between departments and
office locations. Advanced information technology systems have been integrated into our
fleet of ambulances to facilitate medical information transfer with the hospitals.

B. Reducing Vehicles – As positions are eliminated, opportunities to reduce our
vehicle fleet are pursued. Generally, the oldest comparable vehicle is taken out of the
fleet and the vehicle associated with the position is re-assigned if it has remaining service
life.

C. Legal Services – Our recommendation for providing legal services through an inhouse
attorney is strictly a financial consideration, as our current legal advisors (The
Hubbard Law Firm) have provided us excellent service throughout our 10 year
relationship. Having an in-house legal counsel will provide easier access by staff and
may speed up drafting of ordinance amendments. Savings are based on previous
budgets and discussions with other municipal attorney offices. A reasonably experienced
attorney will be hired for the routine legal matters which arise and more specialized legal
counsel would be available to assist our in-house attorney for more complicated legal
issues. Traffic code prosecution services and minor retail fraud prosecutions will continue
to be provided by a local law firm governed by a separate contract Our in-house counsel
is also expected to handle the routine labor matters.

D. Inflation & Interest Rates - We have assumed inflation for operating expenses
would be negligible and that interest rates would begin to rise for projecting investment
income.

E. Energy & Resource Conservation – Township staff is expecting to receive
federal energy conservation block grant funds for projects to reduce consumption. A
portion of the funding will be used to set up a revolving loan fund that will provide a
sustainable source of revenue for energy-saving and water-saving measures.

Road Repair Millage
Funding for repairing our local road system will come from the millage passed in 2008
and pre-millage level funding from the Road Commission and the General Fund. Fund
Balance supplemented the first year of the program, but is not budgeted for 2010.

Economic Development
In the past, Meridian Township has had the luxury of having investment in the
community occur with minimal intervention/promotion by township officials. More
recently, township officials have become much more involved in organizing and
promoting business initiatives. The Assistant Township Manager serves as the
Executive Director of the Okemos DDA and participates on the Meridian Asset
Resource Center (MARC) initiatives. New initiatives will be limited due to budget
constraints in 2010.

Public Works
The Public Works and Engineering Department is split for accounting purposes into a
Water Fund and a Sewer Fund in order to differentiate expenses as recommended by the
utility rate study completed in 2001. The rate model developed for the study was used to
determine recommended utility rates for 2010. The water charge is recommended to
remain at $2.70 per 1,000 gallons and the sewer charge was raised to $2.80 from $2.70.
The quarterly billing charge of $4.13 will not change.

With the connection to the Lansing Board of Water and Light supplying a maximum of
two million gallons per day of drinking water to the south end of the township and the
jointly owned plant with the City of East Lansing supplying the remainder of the township,
ample drinking water is available throughout the system.

Weather conditions have historically had a significant impact on the volume of wastewater
originating from the township. The wet weather this spring resulted in daily treatment
volume increasing to 4.70 million gallons per day (MGD) in the 12 months ending June
30, 2009, from 4.28 MGD in the previous period. The township has a contract with the
City of East Lansing for a maximum of 5 MGD. Design was completed and construction
is ready to start on a new North Interceptor Bypass and Lift Station which will reduce the
load on the Main Lift Station during large scale rain events and spring thaws.

Capital Improvements – All Funds
Work on the Okemos Road Enhancement Grant Project is expected to resume this Fall
and be completed in 2010. Funds were budgeted for local street preservation and
maintenance activities with the anticipation that the Ingham County Road Commission will
provide the same level of matching money as in 2009. Including road repair millage
funds, approximately $650,000 will be available from all sources in 2010 to fix roads.
The Motor Pool will continue to replace vehicles as needed on a township-wide basis.
Police and EMS/Fire vehicles are given the highest priority for maintenance and
replacement. In addition, three vehicles were reduced from the fleet which provided
opportunities to reuse older vehicles instead of purchasing new. Computerization of
vehicle records and fuel dispensing will aid continuing efforts to reduce the fleet by
evaluating each vehicle’s usage and operating costs. Payments to the Motor Pool include
sufficient funds to purchase replacements when needed.

No major park development projects are included in the General Fund. The Park Millage
Fund plans include Legg Park bridge replacement and trail improvements ($50,000) and
staff has submitted grant applications for projects at Towner Road Park and North
Meridian Road Park. Matching funds of $225,000 are included in the budget in the event
the grants are approved. Phased programs to update and replace existing park
amenities will continue.

A significant portion of the Pedestrian/Bicycle Pathway Millage Budget is designated for
constructing additional pathway sections. Specific areas will be identified as estimates
and permits are obtained. The Cable TV Budget identifies several areas where
equipment and technology will be upgraded.

Water Fund projects include three water main replacement projects in the Wardcliff
Neighborhood. In addition, a water meter replacement program will be initiated. The
major Sewer Fund improvements proposed are continuation of lining sections of
deteriorated sewer pipe. Construction of the Northwest Interceptor Bypass including lift
station and over 6,000 feet of force main will start in 2009 and finish in 2010.

Policy Governance
Policy Governance, as developed by John Carver, provides a process whereby a
governing body delegates the day-to-day operations to the CEO for the purpose of
concentrating on achieving its identified Ends Statements. As this relates to Meridian
Township government, the Township Manager is responsible for using the available
resources to make progress toward the Ends Statements in addition to the
management of daily operations. The Policy Manual includes Executive Limitations,
which require monitoring reports to verify compliance.

All purchases over $5,000 are listed for the purpose of gaining approval, as required by
Board Policy. Wages for union positions are authorized by board-approved collective
bargaining agreements, and proposed salary schedules for all non-union positions
(excluding the manager) are budgeted and included for approval as part of the 2010
budget. These will remain unchanged for the second consecutive year. Salaries for
elected Board members will remain unchanged for the second consecutive year as
approved by the Elected Officers Compensation Commission earlier this year.
Board goals will be addressed either by expenditures, staff focus or a combination of
time and financial resources. In 2010, staff will continue to identify baseline and
benchmarking information for use in monitoring progress on Board goals and
department initiatives.

We are confident that the proposed changes will be implemented with all due
consideration and sensitivity to those who will be impacted the most and that our
employees can be counted on to make the necessary work place adjustments called for
by the current economic conditions.

Sincerely,

Gerald J. Richards - Township Manager
Diana Hasse - Director of Finance