Cleveland Heights, Ohio is facing a complex budget situation as the acting finance director departs. Mayor Kahlil Seren and City Council are working to align on the 2025 budget, which currently shows a $900,000 deficit between revenues and expenditures. Along with a temporary finance director appointment this week, a comprehensive capital budget is still needed.

Navigating Cleveland Heights' 2025 Budgetary Crossroads

Finance Director's Departure and Its Impact

With the departure of Acting Finance Director Tara Schuster last week, the city's finance department is in disarray. Mayor Seren informed council that a temporary finance director will be onboarding as early as Tuesday (Dec. 3), but it will take time for this person to get up to speed. The loss of these leaders is a significant setback, as Posch pointed out, leaving the city in a regrettable situation.This disruption comes at a time when the city is already grappling with a budget deficit and various capital questions. The absence of a stable finance leadership makes it even more challenging to make informed decisions and move forward with the budget process.

2025 Budget Deficit and Reserve Status

As of Monday (Dec. 2), the proposed overall budget for 2025 is running at a $900,000 deficit. However, Mayor Seren assured council that the city is well above the Government Finance Officers Association's (GFOA) recommended reserve. With over $20 million unencumbered in the General Fund, there is still a buffer, but the need to address the deficit remains.Seren emphasized that the city should avoid passing a temporary budget for the first three months of next year to avoid uncertainty for department directors and confusion among residents. The majority of the deficit spending in 2025 will be due to dramatic personnel shifts resulting from new police and firefighter contracts approved this year.

Capital Budget and ARPA Allocation

Without a comprehensive 2025 capital plan presented yet, council is faced with the challenge of approving a budget. One of Councilman Jim Posch's questions calls for significant clarification on a statement in the Mayor's Budget Book. There is also concern that council will be asked to approve further expenditures in an already non-balanced budget.The city's $38 million American Rescue Plan Act (ARPA) allocation is a significant source of capital spending, but any remaining funds need to be encumbered by the end of the year and fully spent in 2026. Council members have questions about how this allocation will be managed and accounted for in the budget.In addition, at a special meeting scheduled for Dec. 9, council will revisit a proposed ordinance to purchase five 2025 Ford hybrid police utility vehicles. There are also discussions about potentially including five more cruisers in the 2025 budget. Meanwhile, the administration plans to remove a $1 million line item for a new fire truck next year and re-establish the request in the 2026 capital budget.

Personnel Shifts and Cost-of-Living Adjustments

The new police and firefighter contracts approved this year add up to 8 percent salary increases in the first year. Along with negotiating a new contract for Laborers' Local 860 in the Public Works Department, the administration has factored in a potential 3 percent cost-of-living adjustment (COLA) for non-union employees. These personnel shifts will have a significant impact on the budget and require careful management.Seren acknowledged the uncertainty surrounding the Local 860 contract and the difficulty in making reliable forecasts. However, the city must find a way to digest these changes and ensure the budget remains balanced.In conclusion, Cleveland Heights is facing a complex set of challenges in its 2025 budget. The departure of the finance director, the need for a comprehensive capital budget, and the management of various funds and contracts all require careful attention and decision-making. Council and the administration are working to address these issues and move the city forward.