FOR INFORMATION, CONTACT:
Jesse Lightle, Township Administrator, 433-0152
Jacqueline Curl, Public Information Manager, 433-0152

February 25, 2008

CITY & TOWNSHIP FINANCIAL STUDY IS PRESENTED

Findings from a financial study of Centerville and Washington Township governments were presented to the public at a Monday, February 25, meeting hosted by the Washington Township Board of Trustees.

The report by Wade Steen of Steen & Company included a balance sheet of city and township assets and liabilities and supplements a study by the University of Toledo that the city and township commissioned together.

“The trustees were concerned that the University of Toledo report was too narrow in scope as it did not evaluate the financial standing of each entity. We are committed to providing our residents with full, comprehensive information relevant to our finances,” said Trustee President Joyce Young in her opening remarks. She added: “We’d like to thank the City of Centerville for their cooperation as Wade Steen prepared this report.”

Wade Steen is a former deputy state auditor and president of the Ohio Government Finance Officers Association (GFOA). Steen, who also serves as an elected city council member for Upper Arlington, Ohio, provided key findings in three main areas.

Assets and Liabilities

• The city has substantially more debt than the township, approximately $17.5 million compared to $2.1 million.
• The township’s equity position is approximately $9 million more than that of the city as of December 31, 2006. The study places the township’s estimated equity at about $42 million and the city’s at about $33 million.
• The Montgomery County Auditor values the jointly purchased and township-purchased land holdings at approximately $19.9 million, an appreciation of $9.7 million that was not incorporated into the comparison of assets and liabilities.
• Both have sizeable cash and investment balances of about $19 million each and sizeable inventories of capital assets – about $24 million for the township and $28 million for the city.

“If the governments were to combine, a remedy must be developed to balance the $9 million difference in overall equity, as well as the $9.7 million appreciation in land holdings,” the Steen & Company study reports.

The study values Yankee Trace Golf Course at more than $35,000 per acre or approximately $8 million, the value established by the Montgomery County Auditor. The study references the market value of five other Ohio golf courses at $10,844 to $30,518 per acre.

Personnel and Human Resource Costs

Using data from four peer communities – Dublin, Hilliard, Kettering and Upper Arlington – the study compared per capita spending, per employee spending, and the number of full-time equivalent employees per 1,000 residents.

The study did not find evidence of an “economy of scale” to be gained through merger, nor did the data lead to a conclusion that staffing efficiency or reductions would occur due to increased size. “It can be concluded that as a government’s budget or expenditures increase, it also adds staff at a comparable rate,” the study states.

Peer communities were identified based on recommendations by the city and township. The peer group represents the governments most similar to the city and township if they were to merge. Shared services, housing stock, population and economic base were among the factors considered. Findings included:

• Both the township and the city have fewer full-time equivalent employees (FTEs) per 1,000 residents compared to the peer group. Washington Township has 7.39 full-time equivalent employees per 1,000 residents and the city has 7.99, while the peer group averaged 9.71. When Dublin was removed from the group, the average was 7.67 full-time equivalents.
• Both the township and city have lower per capita spending than the peer communities. The peer group’s average per capita spending was $1,236, compared to the city at $923 and the township at $675. Removing Dublin, the city with the highest spending, lowers the peer group’s average to $974 per capita, still higher than Centerville or Washington Township expenditures.
• Both the township and the city spend less per full-time employee than the overall average of $131,564 for the peer group. The township’s per employee spending is about $40,000 below the average and the city’s is about $16,000 below.
• Kettering , the nearest city to the township’s border, reported per capita spending that was higher than the city or township, and a higher number of full-time equivalent employees per 1,000 residents than the city or township. Its spending per full-time employee was $21,000 higher than the township’s, but slightly lower than the city’s spending.

Potential Income Tax Revenue

• Additional income tax revenue from merging the city and township was estimated at approximately $1 to $3 million. The “conservative” estimate does not reflect potential income from business activities, rentals, agriculture, etc.
• There are many challenges to estimating income tax revenue. Some residents of unincorporated Washington Township don’t pay income tax; some pay to a municipality at a rate the same or higher than Centerville’s 1.75 percent; and others may pay tax to a municipality at a rate lower than Centerville’s tax. Other factors include people who work within Washington Township, but who reside in another area who are not subject to municipal income tax and businesses located within the township that would become subject to a tax on net profits in the event of merger.
• The best estimate of potential income tax revenue would be to conduct a survey of residents and businesses in unincorporated Washington Township.

The financial study meeting originally was planned as a joint meeting where city and township officials could review both the Steen & Company Study and the University of Toledo Study. City and township officials agreed in January 2007 to conduct a joint financial study that would determine if potential cost savings could result from combining any functions of the two local governments. At that meeting, trustees expressed their interest in developing a financial balance sheet and it was decided that if either entity wanted more information over and beyond the agreed upon scope, the entity could contract individually for the work, Young said. As a result, trustees authorized a second study through Steen & Company.

“Each study has the potential to provide us with valuable information and both studies are needed in order for our residents to make a full and informed evaluation of city and township finances,” Young said.

Wade Steen is a certified public accountant and a long-time member of the GFOA Education Committee. The report was prepared with assistance from an engagement team with backgrounds in public administration, law, accounting and income tax administration.

Residents can see streaming video of Wade Steen’s presentation, and other financial updates, by clicking on the “Financial Studies” link located on Washington Township’s website at: www.washingtontwp.org.