Loading...
HomeMy WebLinkAbout1999 SMART Report t t. : ri 1 F8 2410 0 STATE OF NEW YORK OFFICE OF THE STATE COMPTROLLER - ALBANY,NEW YORK 12236 H.CARL McCALL PATRICIA LAMB McCARTHY STATE COMPTROLLER DEPUTY COMPTROLLER DIVISION OF MUNICIPAL AFFAIRS February 22, 1999 Tel:(5 1 8)474-4037 Fax:(518)486-6479 John Cushman, Comptroller Town of Southold Southold Town Hall PO Box 1179 Southold, NY 11971 Dear Mr. Cushman: Enclosed you will find the$MART report for the Town of Southold. We believe the recommendations included in this report represent sound and practical ideas. I would like to personally thank you for participating in the $MART program. The interest and supportfor this program throughoutthe State has been outstanding. The cooperation of town officials and staff has helped bring this review to a successful conclusion. Because of the success of our joint efforts, we believe the taxpayers and local officials of the Town of Southold will benefit from the recommendations resulting from this review. To continue our partnership, this office will be available to provide technical assistance in implementing the report recommendationsyou choose to implement. If my office can be of further assistance to you or if you have any questions,please feel free to contactMr. Gregory J. D'Alessandro,Chief Examiner of our Hauppauge area office at (516)952-6534. Sincerely, Patricia Lamb Mc arthy Enc. A MESSAGE FROM COMPTROLLER H. CARL McCALL Dear Local Official: The message being sent to local governments all across New York State is "do more with less. " But as you well know, that is not an easy task. Increased demands and dwindling resources have made providing basic government services increasingly difficult. In response to this problem my office has developed $MART (State Comptroller's Municipal Advisory Review Teams). This program is designed to help local governments become more efficient by finding ways to enhance non- property tax revenues and to contain or reduce expenditures while still providing necessary government services. My staff has worked with officials and staff from your local government to review government operations and develop recommendations to find savings and efficiencies.Prudentfiscal management,sound fiscal policy and a commitment to work together has enabled us to serve the taxpayers more effectively by making better use of our limited resources. Toward this end, I look forward to continuing to work with your municipality and all other local governments throughout the state. I hope that the success of this review will encourage you to seek out and implement additional cost savings and revenue enhancements for the benefit of your residents. If my office can be of assistance to you or if you have any questions concerning this review, please feel free to contact Gregory D'Alessandro, Chief Examiner of our local area office for your County at 516-952-6534. Sincerely, C-6f-w� H. Carl McCall TABLE OF CONTENTS Section Page Executive Summary Introduction 1 Purpose and Scope 1 Roles of Participants 2 Summary of Recommendations 2 Prologue Background 6 Goals 6 Roles of Participants 6 Methodology 7 Response from Local Officials 7 Recommendations Payroll and Personal Service Costs Background 8 Opportunity 1 - Offer Employees a Payment in Lieu of Health Insurance Benefits 9 Opportunity 2 - Contributions for Health Insurance 11 Opportunity 3 - Reduce Overtime Costs 12 Opportunity 4 - Overtime Paid to Bay Constables 15 User Fees Background 16 Opportunity 1 - Increase Charges for Garbage Bags 17 Opportunity 2 - Change Yard Waste Tipping Fees 19 Opportunity 3 - Increase Wastewater Fees to a Level Sufficient to Cover Costs 20 Opportunity 4 - Relocation of the Scavenger Waste Facility 23 Opportunity 5 - Review the Efficiency of the Town's Nutrition Program 25 Opportunity 6 - Implement a Fee for Genealogical Research 26 Appendix—Local Officials' Response 28 Town of Southold EXECUTIVE SUMMARY INTRODUCTION Local governments throughout the State continue to face significant fiscal constraints. Increased demands and dwindling resources make providing basic government services increasingly difficult. In response to these challenging times, there is a need to reevaluate operations. Participating in a $MART review is a positive initiative on the part of town officials and will ultimately benefit the taxpayers of the Town of Southold. PURPOSE AND SCOPE The purpose of $MART reviews is to make recommendations so that local officials can consider ways to enhance revenues other than real property taxes and contain or reduce expenditures. Our reviews will also serve as a means of sharing "best practices" with other local governments and identifying and recommending changes to statutes to improve cost effectiveness. Participation in $MART is voluntary and this review was requested by town officials. Members of the Office of the State Comptroller's (OSC) staff worked together with Town of Southold officials and staff in reviewing the following areas: payroll and personal service costs and user fees. In addition, town officials requested that we determine whether fees charged by the town's building department,planning department and town trustees (wetland fees) were appropriate. Our preliminary review disclosed that the fees charged by these departments were comparable to, or greater than, fees charged by other towns in the area. We had also been asked to review whether building fees were sufficient to cover town expenditures relating to the services provided. However, there was insufficient information available for us to perform this review in a timely manner for this report. Town of Southold Page 1 ROLES OF PARTICIPANTS OSC reviewed the previously noted areas and is including in this report recommendations resulting from the review.These recommendations were discussed with management and their input was considered in preparing this report. In making the recommendations we considered the cost./benefit to the town. However, it is the town officials' management responsibility to review these recommendations and implement those which they deem appropriate. The response of local officials to this review is included as an addendum to this report. We commend town officials for availing themselves of the opportunity for a $MART review and thank them for their cooperation. SUMMARY OF RECOMMENDATIONS This report contains recommendations,which if instituted,should provide cost savings or increased revenues. Other recommendations suggest alternate methods of generating certain revenues. Use of these alternate methods will reduce the town's reliance on real property taxes. Estimates of cost savings, increased revenues and alternate revenues are based on current costs and the town's current level of activity. For the convenience of the reader, the recommendations which are more fully addressed in the Recommendations Section of this report are summarized below: Town of Southold Page 2 ESTIMATED SAVINGS/ INCREASED REVENUE OR ALTERNATIVE REVENUE RECOMMENDATIONS 5 Year Annual Aggregate Payroll and Personal Service Costs Opportunity 1 - Offer Employees a Payment in Lieu of Health Insurance Benefits The Town Board should consider initiating an incentive program in which employees $51,630 $258,150 currently receiving health insurance benefits to to paid in full by the town can decide to give up $137,702 $688,510 this benefit and receive a payment from the town instead. Opportunity 2 - Contributions for Health Insurance Payments of a portion of health insurance $2,657 $61,452 premiums by new employees and officials to to opting for family coverage would save the $4,429 $102,422 town money. We note that this practice has been adopted by other towns in eastern Long Island. Opportunity 3 - Reduce Overtime Costs The town should consider reviewing work $39,300 $196,500 schedules and employee benefits in an attempt to reduce overtime costs in the police and public safety departments. Opportunity 4 - Overtime Paid to Bay Constables In order to reduce the number of overtime $4,500 $22,500 hours worked,town officials should consider eliminating the requirement that at least one bay constable be on duty from dawn to dusk during the shellfish harvesting season. Town of Southold Page 3 ESTIMATED SAVINGS/ INCREASED REVENUE OR ALTERNATIVE REVENUE RECOMMENDATIONS 5 Year Annual Aggregate User Fees Opportunity 1 - Increase Charges for Garbage Bags $128,000 $640,000 to to If garbage bag charges were increased, the $335,000 $1,675,000 town could reduce real property tax revenues. Opportunity 2 - Change Yard Waste Tipping Fees If a tipping fee for leaves was implemented $137,288 $686,440 and tipping fees for brush and land clearing to to debris were increased, the town's reliance on $224,482 $1,122,410 the general purpose revenues such as real property taxes could be reduced. Opportunity 3 - Increase Wastewater Fees to a Level Sufficient to Cover Costs Fees charged by the town for wastewater $115,000 $575,000 disposal could be increased to a level sufficient to finance the operations of the scavenger waste facility. Opportunity 4 - Relocation of the Scavenger Waste Facility The Town Board should consider relocating Not Quantified the scavenger waste facility from the site owned by the Village of Greenport to the town's solid waste facility in order to achieve cost savings. Town of Southold Page 4 ESTIMATED SAVINGS/ INCREASED REVENUE OR ALTERNATIVE REVENUE RECOMMENDATIONS 5 Year Annual Aggregate Opportunity 5 - Review the Efficiency of the Town's Nutrition Program The Town Board should cause a review of the Not Quantified efficiency of the town's nutrition program. In addition, an adequate record keeping system should be established to effectively monitor the costs associated with the nutrition program. Opportunity 6 - Implement a Fee for Genealogical Research Financing the town historian's genealogical $900 $4,500 research work performed for out of town residents with a fee for each request would reduce real property taxes and allow the town to charge for such work in a more equitable manner. Cost Savings $98,087 $538,602 to to $185,931 $1,009,542 Increased Revenues $297,968 $1,489,840 to to $562,062 $2,810,310 Alternate Revenues $83,220 $416,100 to to $113,320 $566,600 $479,275 $2,444,542 TOTAL to to $861,313 $4,386,842 Town of Southold Page 5 Date Filed: February 22, 1999 Review No: 98M-303 PROLOGUE BACKGROUND $MART reviews are one of the Office of the State Comptroller's (OSC) partnership programs to help local governments review their operations to look for improvements in how business is conducted. Every dollar of additional non-real property tax revenue or reduced cost has the effect of minimizing the need for additional local property taxes. During these reviews we also worked with local officials to identify proposed amendments to or the elimination of laws and regulations that lead to inefficiencies. Participation in a$MART review is voluntary and was requested by the Town Board adopting a resolution requesting a review. GOALS Working together with local government officials, the goal of $MART reviews is for OSC to present recommendations on ways local governments can enhance revenues other than real property taxes and can contain or reduce expenditures. Consistent with this goal, the objective of this review was to make recommendations for the Town Board's consideration. We considered both legal requirements and internal control concerns in preparing our recommendations. ROLES OF This $MART review has resulted in recommendations, specific PARTICIPANTS to the Town of Southold, which are presented in this report. These recommendations have been discussed with town officials and a draft report was made available for their review. It is the management responsibility of town officials to review the recommendations contained in this report and determine the best method of addressing them. It is also the town officials' responsibility to evaluate the cost/benefit and public policy considerations before implementing any recommendation. This Office will be available to provide technical assistance in implementing the recommendations. Town of Southold Page 6 The $MART review differs in a number of respects from an audit. An audit requires, among other procedures, sufficient testing of transactions to determine the facts and support any conclusions. In a $MART review, OSC staff depends to a great extent on information provided by local officials. Tests are not conducted, except when the information presented is not consistent with other data or facts. The quality of recommendations made depends to some extent on the accuracy and quality of the information provided. $MART reviews are also limited to issues that are likely to result in positive cost/benefit. For these reasons, this report does not represent OSC's opinion on town operations. METHODOLOGY During the conduct of the $MART review, OSC staff met with town officials to identify pertinent records that were needed to perform this review,to identify specific areas to be reviewed,and criteria to be used in evaluating activities. In determining the areas to be reviewed,consideration was given to the Town Board's initial request for participation in $MART. Based on this request, an overview of certain operations was obtained. As a result of this process and discussions with town officials, this review was limited to the following areas: payroll and personal service costs and user fees. OSC worked with the town's staff to review the identified areas. Procedures used in performing this review included interviews with local officials and staff;observation of operations;review of records,documents, controls and procedures; and, comparative analysis with similar entities,when applicable. OSC reviewed the specific areas noted and reported recommendations. Our review of building department fees, planning department fees and wetlands fees resulted in no significant recommendations. $MART review procedures were performed on current operations and were completed on September 11, 1998. RESPONSE FROM A written response from town officials is included in the LOCAL OFFICIALS Appendix to this report. Town officials are encouraged to prepare a plan of action to address the recommendations contained in this report. OSC staff is available to assist in providing additional technical assistance to implement the recommendations. Town of Southold Page 7 RECOMMENDATIONS PAYROLL AND PERSONAL SERVICE COSTS BACKGROUND Total appropriations of all funds and districts in the 1998 budget was $25 million, including approximately $9.7 million for personal services and$1.4 million for health insurance benefits for current and retired officials and employees. Services provided by the town included police protection,solid waste disposal,wastewater disposal, highway (street maintenance and snow removal), and parks and recreation. Other town departments included supervisor, finance, town clerk, assessor,justice court, planning and zoning. The town employed approximately 175 individuals to operate the departments and provide these public services. As part of our $MART review we performed the following preliminary survey procedures related to personal services and payroll processing costs:completed questionnaires after discussion with town personnel; reviewed independent audit reports and corrective action taken;performed analytical procedures of the town's personal service costs including overtime hours and costs; reviewed various payroll documents and employee contracts;surveyed other local towns; and, interviewed town officials and department heads. Information gathered while performing the preliminary survey procedures included the following: ♦ The town contracted with its employees through two collective bargaining agreements. Some of the typical items addressed through the contracts included:work hours,salaries and wages, leave time accruals and use, health insurance coverage, and longevity payments. ♦ Payroll and accounting records were processed by computers in the finance office for all town departments. Town of Southold Page 8 From information gathered during the preliminary survey,and giving consideration to the town's initial request for participation in the $MART program,the objectives of our review of personal services and payroll processing were to determine whether control is maintained over personal service costs and payroll processing costs. We found that the employee collective bargaining agreements included provisions which may make it difficult for management to exercise the control needed to reduce certain types of overtime costs. For instance,staffing requirements in the police department resulting in overtime costs were often directly attributable to employee leave benefits provided in the collective bargaining agreement. Consequently, since the following opportunities for savings may be susceptible to negotiation in union contracts, town management and employees may have to work together in order to achieve cost savings for the town and its taxpayers. As a result of our review, certain conditions came to our attention which, if changed, could result in improvements in efficiencies of operations and cost reductions. Our specific recommendations follow. OPPORTUNITY 1 OFFER EMPLOYEES A PAYMENT IN LIEU OF HEALTH INSURANCE BENEFITS RECOMMENDATION The Town Board should consider initiating an incentive program in which employees currently receiving health insurance benefits paid in full by the town can decide to give up this benefit and receive a payment from the town instead. DISCUSSION Our review of insurance documents disclosed that there were 239 employees and retirees receiving health insurance coverage. We determined that 153 of these individuals received family coverage and did not receive medicare benefits. The expenditures for health insurance coverage for the employees are significant. The current annual premiums charged for the two insurance plans for employees receiving family coverage are $6,044 and $5,903. Town of Southold Page 9 We are aware that certain other local governments offer employees a payment in lieu of health insurance coverage. This type of program has advantages because it would be voluntary on the part of the employees and could result in savings to the town. Such a benefit is generally offered only when there is evidence that an employee may acquire health insurance from another source,such as from a spouse. It is possible that a significant number of town employees that are married may have spouses that are employed and that the spouses have the option of having health insurance coverage. While the health insurance coverage of the spouses may not be as comprehensive as the town's or may be more costly than insurance obtained through the town, incentive payments to some employees may be advantageous to them. Factoring in the number of employees enrolled in each of the two health insurance programs and the premium rates,we determined that the average annual cost to the town for a married employee receiving family health insurance coverage is $5,942. We then determined the impact of offering these employees payments of$1,500, $2,000 and $2,500 in lieu of health insurance coverage. The following schedule is presented to show town savings in the first year from a buy-out program assuming that either ten,fifteen or twenty percent of eligible employees would accept the buy-out program option: Percentage of Employees Electing the Pro ram $1,500 $2,000 $2,500 10% $66,630 $59,130 $51,630 15% $102,166 $90,666 $79,166 20% $137,702 $122,202 $106,702 We recommend that town officials contact the Internal Revenue Service or a tax advisor to determine the potential employee income tax implications of this opportunity. This opportunity for savings may be susceptible to negotiation in union or employee contracts. Town of Southold Page 10 ESTIMATED BENEFITS By offering one of the above noted program options and having an employee participation rate from ten percent to twenty percent, the town could realize annual savings ranging from$51,630 to $137,702 and that the total savings over five years would range from $258,150 to $688,510. OPPORTUNITY 2 CONTRIBUTIONS FOR HEALTH INSURANCE RECOMMENDATION Payments of a portion of health insurance premiums by new employees and officials opting for family coverage would save the town money. We note that this practice has been adopted by other towns in eastern Long Island. DISCUSSION Health insurance is a valuable employee benefit and a significant portion of the premium is financed by the towns. The availability of health insurance at an affordable price is an important consideration for the employee, while providing coverage at a reasonable cost is important to the town. The town provides health insurance coverage to eligible town employees and officials. At the time of our review there were 239 employees, retirees and officials enrolled in the two hospital and medical insurance plans offered by the town. For the fiscal year ended December 31, 1997,health insurance premiums for employees, officials and retirees totaled $1,247,535, the cost of which was entirely paid for by the town. We surveyed the four other towns on eastern Long Island and found that three towns required certain new employees to contribute towards the cost of health insurance premiums. Two towns required employees with family coverage,hired during 1995 and later, to pay a percentage of their health insurance premium. Another town required employees with family coverage to pay a percentage of their health insurance coverage for the first eight years of employment. The other town did not require contributions from its employees. We note that the range of contributions were between 15% and 25% of health insurance premiums for family coverage. We computed a range of savings the town could realize over a five year period, beginning in 1999, if future contracts required all new employees opting for family coverage to contribute toward health insurance premiums. Employee records indicated that on average Town of Southold Page 11 over the past five years the town has hired about eight new full-time employees each year. In addition, employees are more likely to opt for individual insurance coverage when first employed, with many converting to family coverage later on. Therefore, the cumulative savings over a five year period is much greater than the amount saved in the first year. The following schedule is presented to show potential cost savings if new employeesand officialswere requiredto pay 15%,20%and 25% of the premium for family coverage: Estimated Savings in Year Number 15% 20% 25% 1 $2,657 $3,543 $4,429 2 $6,221 $8,295 $10,369 3 $11,578 $15,437 $19,296 4 $16,934 $22,579 $28,224 5 $24,062 32-083 $40,104 Aggregate Savings $61,452 $81,937 JID2 422 This opportunity for savings may be susceptible to negotiation in union or employee contracts. ESTIMATED BENEFITS With a range of employee contributions between 15% and 25% of annual health insurance premiums from new employees with family coverage,first year savings to the town could range between $2,657 and$4,429. The five year estimated savings could aggregate between $61,452 and $102,422. OPPORTUNITY 3 REDUCE OVERTIME COSTS RECOMMENDATION The town should consider reviewing work schedules and employee benefits in an attempt to reduce overtime costs in the police and public safety departments. Town of Southold Page 12 DISCUSSION Police officers and dispatchers in the public safety department incurred fairly significant overtime costs. We feel that town officials should review current practices and procedures to determine if overtime costs could be reduced. Police Department -The overtime costs are partly attributable to the fact that the collective bargaining agreement allows police officers to be frequently off from work because of generous sick, vacation and personal leave. As a result, those police officers that are on duty often have to work overtime. In addition, police officers who are required to make court appearances receive overtime pay at the rate of time and one-half if they have to appear in court during their normal time off. Our review disclosed that during 1997 expenditures for police overtime totaled approximately$295,000, which was approximately 11%of the total payroll of approximately$2.6 million. The overtime costs for court appearances totaled approximately $16,300. We note that there are no easy answers or solutions to these problems, especially given the public safety and staffing requirements. However,if town management and employees work together to study and resolve these overtime issues, progress may be made to reduce overtime costs. For instance, flexible work schedules for those officers who must appear in court may result in the reduction or elimination of the$17,500 in overtime and FICA payments for court appearances. Public Safety Dispatchers - The collective bargaining agreement provides generous sick,vacation,personal and holiday leave time for full-time dispatchers. The public safety dispatch supervisor informed us that the full-time dispatchers that were not on leave had to work additional hours to fill in for the employees using their leave time and this attributes to the overtime costs in the department. As of December 31, 1997,in addition to the dispatch supervisor, the town employed nine full-time dispatchers and seven part-time dispatchers. We were informed that two dispatchers are on duty for each of three daily shifts during a twenty-fourhour day. This results in a total of forty-eight hours per day and 336 hours for the seven day workweek. In order to provide staff for the 336 hours the town needs about 8.5 full-time employees (336 total hours per week divided by 40 hours per week that one staff person would work). Furthermore, staffing hours for the year would total 17,472 (336 hours per week times fifty-two weeks). Town of Southold Page 13 During 1997, part-time dispatchers were paid a total of$45,852 for approximately 5,100 hours in which they had to replace full-time dispatchers that were on leave or assigned to other duties. In addition, full-time dispatchers worked about 1,126 hours of overtime, at a cost to the town of approximately $30,400. This results in an average of more than seventeen additional hours each day by part- time and full-time dispatchers. Although the town employs a large number of part-time dispatchers, the dispatch supervisor indicated that most of the part-timers have a full-time job elsewhere and are not available for all shifts,or on short notice. He stated it is especially difficult to find a part-time replacement for the day shift if a full-time employee telephones in the morning and indicates that he or she is not coming to work. As previously indicated the department requires a minimum of 8.5 full-time employees, without accounting for days off for vacation, sick leave,etc. Thus,the nine full-time dispatchers employed by the town should be enough to maintain adequate staffing levels except for the fact that they are entitled to use a large number of leave time. Seven part-time dispatchers should be sufficient to maintain coverage for leave time taken by full-time dispatchers. The town could require more notice from dispatchers planning to use leave time,which could result in a greater ability to obtain part-time coverage. Flexible scheduling which allowed for more frequent changes in employee shifts could reduce overtime requirements for employees taking leave time. In addition, hiring part-time dispatchers who are available at various times during the week, not just nights and weekends, would reduce the need for overtime. During 1997,if the part-time dispatchers had worked the 1,126 hours of overtime which were earned by the full-time dispatchers,the town could have saved approximately$21,800 in overtime and FICA costs. This is due to the fact that the part-timers in 1997 were earning just under $9 per hour, while the overtime hourly rate paid to full-time employees averaged $27 per hour. ESTIMATED BENEFITS Cost savings resulting from alternatives and innovative means to reduce overtime and FICA costs could total$39,300 for one year and aggregate $196,500 for five years. Town of Southold Page 14 OPPORTUNITY 4 OVERTIME PAID TO BAY CONSTABLES RECOMMENDATION In order to reduce the number of overtime hours worked, town officials should consider eliminating the requirement that at least one bay constable be on duty from dawn to dusk during the shellfish harvesting season. DISCUSSION Bay constables are responsible for enforcing federal, state and town laws regulating fishing,clamming and boating in town waters. This responsibility includes installing and maintaining navigational equipment and rendering assistance and first aid. It also includes inspecting seeding beds and polluted areas for illegal fishing and clamming. They are also responsible for checking harbor and waterway conditions and reporting, to town authorities, erosion and other physical damage. Bay constables also enforce navigation laws regulating the proper use and speed of craft in local waters. The town employs three full time bay constables who each regularly work eight hours a day,five days a week. We were informed that at least one bay constable is required to be on duty every day from 8:00 AM to 4:00 PM. The collective bargaining agreement provides for overtime to be paid for any time worked in excess of the regular eight hour day. These overtime hours are paid at a rate of 1.5 times the normal rate of salary. The agreement also provides that employees recalled to work after their normal work day shall receive a minimum of four hours compensation at their regular salary scale. During 1997, overtime paid to the bay constables totaled $15,643, which represented about 12.7%of their regular salaries which totaled $123,307. Most of the overtime was earned because they had to return to work because of storms, boating accidents and other situations beyond the control of the town. However, $4,359 of the $15,643 represented overtime payments with respect to hours worked during sunrise to sunset in patrolling shellfish areas during the period January through April and October through December. The senior bay constable informed us that the town trustees require patrols of shellfish areas from sunrise to sunset during the shellfish harvest season. When two men are on duty it is not a problem because one constable's shift can cover the period from sunrise on and the second constable's shift can cover the period until sunset. However, when only one constable is on duty because another constable is either on vacation or using sick leave,the constable that is on duty must work the full period from sunrise to sunset,thus incurring overtime costs. Town of Southold Page 15 We contacted the president of the town trustees who agreed that there was no need to have the bay constables on patrol every day from sunrise to sunset during the shellfish season. He stated that there are over twenty inlets and other waterways where shellfish harvesting occurs. All of these areas cannot be patrolled at the same time by one or two individuals. A spot check of each of the areas during the hours between sunrise and sunset,over the course of a week,would provide sufficient coverage to deter illegal shellfish harvesting. ESTIMATED BENEFITS The Town Board could annually reduce overtime and FICA costs by approximately$4,500 by eliminating the requirement that at least one bay constable be on duty between the hours of sunrise and sunset during the shellfish harvest season. Over a five year period,the town could realize overtime and FICA savings of approximately $22,500. USER FEES BACKGROUND During 1997 and 1998 approximately 69% of the appropriations of all town funds and districts of approximately $25 million was financed with real property taxes. One way to reduce the town's reliance on general purpose revenues such as real property taxes, is through implementation of user fees. During 1997 and 1998 approximately 10% of the $25 million was financed with user fees such as garbage disposal charges, building inspector fees, aging participant income, wastewater disposal fees, planning board fees and recreation fees. In determining the areas to be reviewed, consideration was given to the town's initial request for participation in $MART and the supervisor's additional request at the time of our statement of understanding meeting. Based on these requests, an overview of certain operations was obtained through survey,inquiry,comparative analysis, and observation and review of certain records and reports. Based on the results of the planning phase, our review of user fees included the following objectives as they pertained to solid waste, wastewater disposal, recreation department, building department, planning department,programs for the aging,and the town historian: ♦ Determine whether fees charged are comparable to other towns on the eastern end of Long Island. Town of Southold Page 16 + Determine whether revenues and expenditures are at appropriate levels. + Determine whether cash flow may be enhanced. + Determine whether a current municipal function can be funded through user charges rather than general purpose revenue sources. + Determine whether the efficiency of certain operations may be enhanced. As a result of our review of these user fees objectives, certain conditions came to our attention which, if changed, could result in revenue enhancements or alternative methods of generating revenues. Our specific recommendations follow. OPPORTUNITY 1 INCREASE CHARGES FOR GARBAGE BAGS RECOMMENDATION If garbage bag charges were increased, the town could reduce real property tax revenues. DISCUSSION Town residents must dispose of their household garbage by means of special"Town of Southold"garbage bags. These bags are sold by the town to retailers at wholesale prices. The retailers subsequently sell the bags to town residents at retail prices. The town also sells bags directly to the public at the retail price. Approximately 90% of the bags are sold by the town to retailers at the wholesale prices. The garbage bags come in four sizes: ten gallon (mini), fifteen gallon (small), 30 gallon(medium) and 40 gallon (large). Prior to 1997 garbage bags were sold at the following wholesale prices: $.68 for small ($.75 retail), $1.35 for medium ($1.50 retail) and$2.03 for large ($2.25 retail). Mini garbage bags were not sold until 1997. On January 1, 1997 the town reduced the wholesale and retail prices by 20% or more to the following levels: $.54 for small bags($.60 retail),$1.04 for medium bags($1.15 retail)and$1.58 for large bags ($1.75 retail). Mini garbage bags sell for$.36 wholesale ($.40 retail). Revenues from the sale of garbage bags decreased approximately 13%, from $524,631 in 1996 to $458,252 in 1997. Town of Southold Page 17 Garbage disposed of by means of the special town garbage bags is a component of municipal solid waste, one of the five types of solid waste currently accepted at the town's solid waste facility. Each of the five types of solid waste incurs a different level of expenditure, depending upon how the materials have to be handled, and whether the materials have to be transported elsewhere. According to the town's solid waste coordinator, municipal solid waste accounted for 44% of the facility's expenditures in 1997, or $943,554. However, revenues from the sale of garbage bags,and tipping fees for the other components of municipal solid waste, amounted to only $682,533. Municipal solid waste is comprised of three elements: household waste,commercial garbage and rubbish. The town currently charges $90 for each ton of commercial garbage and refuse received at the solid waste facility, which is comparable to the fees charged by the other eastern Long Island towns which still accept solid waste. However,the charges for garbage bags used to dispose of household garbage are significantly less than the amounts charged by the two other towns in the area which utilize town issued garbage bags. One town charges $1 for a thirteen gallon bag and $2 for a thirty- three gallon bag,while another town charges$.75 for a twelve gallon bag, $1.50 for a twenty-four gallon bag and $3 for a thirty-eight gallon bag. The average of the two towns is about$.07 per gallon for each garbage bag. The Town of Southold currently charges slightly less than$.04 per gallon at the wholesale level and slightly more than $.04 per gallon at the retail level. By reinstating the charges for garbage bags which were in effect prior to 1997,the average price of bags would increase by approximately 28%. If sales remained constant at 1997 levels, revenues would increase approximately$128,000 from$458,252 to $586,252. If the town decided to use the average rate of$.07 per gallon of garbage bag size charged by the other two towns,the average price of bags could be expected to increase by approximately 73%. Revenues would increase approximately $335,000 from $458,252 to $793,252. ESTIMATED BENEFITS The annual range of increased revenues of $128,000 to $335,000 would aggregate between $640,000 and$1,675,000 over a five year period. This revenue increase should result in a significant reduction in real property taxes and would be a means to collect revenues on a more equitable basis (based on usage). Town of Southold Page 18 OPPORTUNITY 2 CHANGE YARD WASTE TIPPING FEES RECOMMENDATION If a tipping fee for leaves was implemented and tipping fees for brush and land clearing debris were increased, the town's reliance on the general purpose revenues such as real property taxes could be reduced. DISCUSSION Five types of solid waste are currently accepted at the town's solid waste facility: municipal solid waste, construction and demolition debris,recyclables,yard waste and household hazardous waste. Each type of solid waste incurs a different level of expenditure depending upon how the materials have to be handled,and whether the materials have to be transported elsewhere. According to the town's solid waste coordinator, yard waste accounted for 15% of the facilities expenditures in 1997,or$321,666. However,in 1997,revenues from yard waste tipping fees amounted to only $119,358. Yard waste is comprised of four elements:grass,brush,land clearing and leaves. The town currently charges $70 for each ton of grass received at the solid waste facility and$40 per ton for both brush and land clearing. However, no tipping fee is charged for leaves. In addition, no charge is levied for brush disposed of by the town's highway department, other government agencies, or homeowners during the spring and fall clean up periods. The spring and fall clean up periods total four weeks each year. The town received$95,320 in tipping fees from the disposal of 5,120 tons of brush, $14,616 from the disposal of 406 tons of land clearing debris and $9,422 from the disposal of 136 tons of grass. The town did not charge a fee for the disposal of 2,921 tons of leaves. The revenues from these items did not fully reconcile to the per ton charges of$40 and $70 because of the free disposal policy for certain of the items. Our study found that the other towns on eastern Long Island which still accept yard waste at their facilities charge significantly more for yard waste, other than grass,than the Town of Southold. The other towns,on average,charge somewhat more than$60 per ton for brush and land clearing debris and somewhat less than $60 per ton for leaves while the Town of Southold charges$40 per ton for brush and does not charge for leaves. Town of Southold Page 19 In order to provide the town with several choices, we calculated the anticipated revenue increases under four options. All options include the current town policy of charging a tipping fee of$70 per ton for grass and allowing the highway department and other government agencies to dump brush and leaves for free. Options in the first two columns reflect an increase to $60 per ton for brush, land clearing debris and leaves (comparable to the rates set by other towns in the area). The option in the first column retains the free brush and leaves disposal period for homeowners, while the option in the second column does not. The options in the third and fourth columns reflect a price increase to $70 per ton for brush, land clearing debris and leaves so that all yard waste would be charged at the same rate. The option in the third column retains the free brush and leaves disposal period for homeowners, while the option in the fourth column does not. The following table is presented to show anticipated revenues resulting from these increases in fees: $60/Ton* $60/Ton* $70/Ton $70/Ton With Free Without Free With Free Without Free Disposal Disposal Disposal Disposal Anticipated Revenue at New Rate $256,646 $296,066 $297,850 $343,840 Less: 1997 Revenue $119,358 $119,358 $119,358 $119,358 Increase in Revenue $jE.,288 176 708 178 492 $224,482 * As indicated above the town would continue to charge $70 per ton for grass disposal. ESTIMATED BENEFITS Town officials could increase revenues by $137,288 to $224,482 annually through the implementation of a tipping fee for leaves and by increasing the tipping fees for brush and land clearing debris. At this level,over a five year period revenue could aggregate $686,440 to $1,122,410. OPPORTUNITY 3 INCREASE WASTEWATER FEES TO A LEVEL SUFFICIENT TO COVER COSTS RECOMMENDATION Fees charged by the town for wastewater disposal could be increased to a level sufficient to finance the operations of the scavenger waste facility. Town of Southold Page 20 DISCUSSION During 1997, the town operated a scavenger waste facility and charged$.04 per gallon for wastewater received from vendors. This is not a sewage treatment plant, but rather a holding facility maintained for the benefit of a limited number of vendors. Periodically, a contractor removes the wastewater for transportation to an approved disposal location in another part of the county. During 1997, the town was charged $.05 per gallon for such transportation and disposal and these expenditures totaled $135,889. During 1997, expenditures for all operations at the waste facility, including the transportation and disposal totaled $252,957 and exceeded revenues by $108,766. The actual revenues of$144,191 included real property taxes of$6,618. We note that in the three prior years real property taxes ranged from $171,013 to $278,377. Even though contractual costs for the transportation and disposal of wastewater in 1997 was $.05 per gallon, the town charged vendors only$.04 per gallon to dispose of wastewater at the town's scavenger waste facility. This, plus the additional costs associated with the operation of the facility resulted in a significant operating deficit of $108,766 in 1997. During 1997, total revenues of $144,191 consisted of wastewater disposal charges, intergovernmental charges, interest earnings and real property taxes of $87,350, $28,800, $21,423 and $6,618, respectively. The intergovernmental charges of$28,800 were from fees imposed on a neighboring town,which allows vendors operating in that town to dispose of wastewater at Southold's scavenger waste facility at the current fee per gallon rate.Wastewater disposal charges were approximately 60% of total revenues in 1997. In March 1998, the Town Board adopted a resolution increasing the wastewater disposal charge of$.04 per gallon to $.07 per gallon. As a result, during the first six months of 1998, the scavenger waste district's operating deficit was only $27,785. One reason for the decrease in the operating deficit was a significant drop in the amount of wastewater disposed of at the facility. The gallons of wastewater collected at the facility in the first six months of 1998 was 390,950 gallons less than the gallons collected in the first six months of 1997, a 35%decrease. As a result, there was a corresponding decrease in the cost of transporting the wastewater. In addition, although the gallons of wastewater collected decreased significantly,the revenues collected decreased only $800. The decrease in the gallons of wastewater disposed of at the facility was reportedly due to the vendors using other sites outside the town which charge lower fees. Town of Southold Page 21 The town signed an agreement with a new vendor, effective July 1, 1998, which increased the transportation and disposal charges to $.0589 per gallon. Despite the fact that this represented an increase in the rate the town would pay for disposal and transportation of the waste, on July 8, 1998 the Town Board reduced the rate that was charged to vendors for disposing the waste from $.07 per gallon to $.06 per gallon. The new rates were not in effect long enough for us to determine the long-term impact of these rate changes.However,we note that during July 1998, 325,650 gallons of wastewater were disposed of at the facility which was almost double the gallons disposed of in July 1997. In order to more completely finance the operation of the scavenger waste facility,the town should significantly increase the rate of$.06 per gallon. If the rate is significantly increased, there would be a decrease in the amount of wastewater collected. In order to offset this decrease, we estimate that the town would have to further increase their charge for wastewater disposal to approximately$.13 per gallon. An analysis should be performed periodically to determine whether the new rate generates sufficient revenues, which when combined with other revenues (other government charges and interest and earnings), are sufficient to finance the expenditures associated with the operation of the scavenger waste facility. If the town decides to close the current facility and relocate the wastewater operation to the town's solid waste facility (see opportunity entitled "Relocation of the Scavenger Waste Facility"), overall costs would decrease and the town would not need to increase disposal fees as much as indicated above. ESTIMATED BENEFITS If the town raised the wastewater disposal charge to $.13 per gallon, it could provide additional revenues of approximately $115,000 per year and$575,000 over five years. This savings would enable to the town to eliminate the levying of real property taxes to help finance this operation and would enable the town to use a portion of the fund balance at December 31, 1998 of $358,000 to help finance the potential construction of a new facility on town property. Town of Southold Page 22 OPPORTUNITY 4 RELOCATION OF THE SCAVENGER WASTE FACILITY RECOMMENDATION The Town Board should consider relocating the scavenger waste facility from the site owned by the Village of Greenport to the town's solid waste facility in order to achieve cost savings. DISCUSSION The town operates a scavenger waste facility located in the Village of Greenport at a site which previously functioned as a sewage treatment plant. The facility, which is owned by the Village of Greenport, serves local vendors by temporarily holding wastewater. Periodically,the town pays a contractor to remove the wastewater for transportation to a treatment facility located in another part of the county. Most of the scavenger waste facility expenditures relate to the contractual costs associated with the disposal of the wastewater and for personal services for two town employees. In addition, there are costs for maintaining a large building, as well as an annual lease payment of$6,000 made to the village. The town could reduce certain costs by relocating the scavenger waste facility to a site on the grounds of the town owned solid waste facility. Overtime costs, which totaled $3,777 in 1997, could be reduced or eliminated because the town's solid waste facility is open Sunday and several hours longer Monday through Saturday than the village owned facility. Thus, additional costs would not have to be incurred for emergency re-openings on Sundays, or emergency extended hours Monday through Saturday. Furthermore,1997 expenditures totaling $6,521 for various utilities at the village owned site would be reduced because the town would be paying only those costs associated with two holding tanks,not the entire building the town currently has to operate. Expenditures at the village owned building for maintenance and repairs and trailer rental, totaling$3,603 and $4,641,respectively in 1997,would most likely be eliminated. With the exception of overtime, expenditures for personal services would not be reduced, because the town has no intention of terminating the services of the two employees currently working at the facility. These individuals would be transferred to the new work site. In addition, costs relating to the transportation and disposal of Town of Southold Page 23 the wastewaterwould remain the same. Other costs such as materials and supplies required to maintain and operate the existing tanks would probably remain the same. The current lease agreement with the village was entered into during 1983 for a twenty year period, with an option to renew at the expiration date in the year 2003. A 1995 memorandum from the town to the village indicated that the village was seeking an annual $20,000 payment in lieu of taxes from the town for the scavenger waste facility. Thus,if the lease is renewed,there is a clear indication that payments to the village would increase significantly. Because _ of the costs associated with the operation of the facility at its current location, and the expected higher costs of operation after the year 2003, we believe the town should consider closing the current scavenger waste facility and constructing a new facility on town property. There are costs associated with the termination of the existing facility, regardless of when the facility is closed. We note that the town does not intend to maintain the existing facility indefinitely. If the Town Board decides to close the existing scavenger waste facility in the near future, we believe that consideration be given to constructing a holding tank on the grounds of the town's solid waste facility. The town would need to construct a concrete tank with a holding capacity of approximately 55,000 gallons,and an aeration system to minimize odor. A local engineering firm with experience in this area has estimated that the cost to construct such a facility would range between $150,000 and $175,000. The lease agreement provides that annual payments continue to be made to the village until June 2003, whether the town continues its operation at the site or not. In addition, the village may compel the town to remove any buildings and other improvements to the site not later than six months after the termination of the lease,and restore the leased premises to their condition at the commencement of the lease. Although the costs associated with the construction of the new holding tanks and the restoration of the existing waste facility site are significant, these costs will have to be incurred by the town eventually. We believe the town should consider incurring these costs now by relocating the scavenger waste facility, while at the same time eliminating the unnecessary costs associated with the maintenance of a sewer treatment plant building which is utilized solely as a holding facility for wastewater. Town of Southold Page 24 ESTIMATED BENEFITS Town officials should study, evaluate and discuss the costs and benefits of relocating the scavenger waste facility at a new site. The exact savings would be dependent upon the date the existing facility is closed and when the new facility will be constructed. OPPORTUNITY 5 REVIEW THE EFFICIENCY OF THE TOWN'S NUTRITION PROGRAM RECOMMENDATION The Town Board should cause a review of the efficiency of the town's nutrition program. In addition, an adequate record keeping system should be established to effectively monitor the costs associated with the nutrition program. DISCUSSION Information provided to us by the director of senior services showed that approximately $352,000 was expended in 1997 for the town's nutrition program. The 1998 budget has appropriations of approximately $412,000, or an increase of about 17%. However, these amounts are only approximations because we were not provided with the actual expenditures of any of the senior services programs. When we asked for the total nutrition program expenditures for 1997, we were only provided with a schedule indicating that the nutrition program accounted for about 66% of the total expenditures for all senior services programs. There were no records presented to us showing the total expenditures and a breakdown of the costs associated with the nutrition program. During 1997 the town's nutrition program expended $351,976 for 54,623 meals resulting in a cost of$6.44 per meal for preparation, serving facilities and transportation. We note that costs allocated to the program included transporting approximately 63% of the meals to senior citizens' residences. The total expenditures of$351,976 were financed with real property taxes,county and federal grants and contributions from recipients of the program of$155,397, $120,175 and $76,404, respectively. The real property taxes represented approximately 44% of the total revenue. The town suggests a contribution of$2 for each meal served and our review disclosed that approximately 22% of the revenues were from senior citizen participants. One option the town could take to reduce the real property taxes required to maintain the nutrition program would be to increase the suggested donation for each meal. However,this may not be a viable Town of Southold Page 25 or equitable solution as numerous senior citizens are on a limited and fixed income. A better solution would be to review the efficiency of the nutrition program in an effort to determine where cost savings could occur. This review could determine why expenditures were expected to increase so significantly between 1997 and 1998, and why such a large amount of real property tax revenues are required to support the nutrition program. An adequate record keeping system is also needed to determine the composition of the costs associated with the nutrition program. ESTIMATED BENEFITS The estimated cost savings to the town of conducting an efficiency examination was not determined by us due to the lack of records and time constraints of our review. Furthermore, we believe that maintaining an adequate record keeping system to effectively monitor nutrition program expenditures will help result in improved operations. OPPORTUNITY 6 IMPLEMENT A FEE FOR GENEALOGICAL RESEARCH RECOMMENDATION Financing the town historian's genealogical research work performed for out of town residents with a fee for each request would reduce real property taxes and allow the town to charge for such work in a more equitable manner. DISCUSSION The Town of Southold employs a historian who provides both town residents and out of town residents historical information regarding the town and its inhabitants. Because the historian's work is funded by real property taxes, town residents are subsidizing the work the historian provides to out of town residents. Furthermore,out of town residents are receiving the town historian's services but are not being charged. Because of the inequities with the current method of funding the work of the town historian,the town should consider partially financing the historian's salary by charging out of town customers a fee for using certain of the historian's services. The town historian informed us that those requests which come predominantly from individuals who do not reside in the Town of Southold are for genealogical research. These requests are very time consuming and are growing in volume every year. Requests for other types of information received from out of town individuals are not as common and do not involve as much research work. Town of Southold Page 26 The town historian received fifty-seven genealogical research requests in 1997 which represented a sharp increase over the forty requests in 1996 and thirty-six in 1995. The historian indicated that slightly more than 75%of such requests come from individuals who do not reside in the Town of Southold. On average, each genealogical research project takes one and one-half hours. The most equitable practice would be to charge a fee for the service and the fee should be based on the amount of time the historian takes to do each project. However, in order to reduce the amount of time spent in record keeping, and to provide customers with a cost they would be aware of at the time of the request, a flat fee would be the best method to use. Based upon the historian's annual salary of $11,500 for 1998 and the 700 hours worked each year(two days each week for seven hours each day,less four days vacation each year),we determined that the hourly rate is approximately $16. If each genealogical research project consumes one and one-half hours of time,an equitable average fee would be $24 for each request from an out of town customer. ESTIMATED BENEFITS Town officials could increase revenues by $900 annually through implementation of a fee to defray the cost of the town historian's time spent on genealogical research for out of town customers. At this level, over a five year period revenue would aggregate $4,500. Town of Southold Page 27 APPENDIX LOCAL OFFICIALS' RESPONSE The local officials response to this $mart Review can be found on the following page. Town of Southold Page 28 ��g�ff0��►�o JEAN W. COCHRAN �0 Town Hall, 53095 Main Road SUPERVISOR = Gy� P.O. Box 1179 C2 Southold,New York 11971 COD Z Fax(516) 765-1823 Oy �� Telephone (516) 765-1889 OFFICE OF THE SUPERVISOR TOWN OF SOUTHOLD February 4, 1999 Office of the State Comptroller A.E. Smith State Office Building Albany, NY 12236 Dear Comptroller McCall: On behalf of the Town Board of the Town of Southold, thank you for your assistance provided through the $MART program. The Town Board will investigate the $MART findings further in an effort to contain property taxes and reduce expenditures while maintaining essential government services. After the Town Board completes its review, we will endeavor to implement those recommendations made under the $MART program where practicable. Finally, we look forward to working with your office so that together we may continue to serve the taxpayers more efficiently by making use of our limited resources. Very truly yours, Jean W. Cochran Supervisor