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Urgent Message About the City of Elyria Finances

January 25, 2013 — Dear Citizens of Elyria,

I am writing to share with you some very important information regarding the status of City of Elyria finances. As you may know, we are forced to make $1.7 million in reductions in the 2013 budget as a result of the repeal of the Estate Tax and a decline in the Local Government Fund through the State of Ohio. We must look ahead and take cautious action, as we know that we will have the renewal of the .5 percent Temporary Income Tax on the ballot in November that replaces $30 million in our General Fund over the next five years. In addition, the stimulus money the city is currently receiving to support our safety forces will also expire in the next two years.

All that being said - the City of Elyria clearly has a need to exercise frugality at every level and find new ways to operate as efficiently and effectively as possible. The Voluntary Performance Audit that I requested from the State Auditor is almost complete and those findings will help us all make the best possible collective decisions for service delivery in our city.

The good news I am about to share needs to be received with both optimism and caution. A few weeks ago I was contacted by the State of Ohio Commerce Department Unclaimed Funds Department. The Supervisor indicated to me that the City of Elyria may have some unclaimed funds in its account from a 2001 settlement. Apparently, in the late 1990s the City had purchased employee life insurance from Anthem for full-time employees. When the company converted from a mutual insurance company in 2001 to a stock insurance company, eligible policy holders - including the City of Elyria - received a fixed component of shares as well as a variable component of shares through a process called demutualization. In 2004, Anthem merged with Wellpoint - forming Wellpoint Incorporated.

The legal requirement of notifying the City probably took place, either by Anthem Inc. or Wellpoint Inc., however the City did not respond for a number of reasons that are unclear. The mail may have been addressed to the former City Hall address at 328 Broad Street and never forwarded, or it may have been addressed to a former Mayor and mistaken for personal health information and returned or discarded. The City's funds were held by Wellpoint Inc. for ten years and then transferred in 2012 to the State of Ohio Commerce Department Unclaimed Funds account. The supervisor was looking through the account and called me when he saw the size of the award.

After many conversations and completing an application process I was informed last Thursday that the City of Elyria has $3,410, 805.65 in unclaimed funds that will be forwarded to the City on January 28, 2013. Of that amount, $3,369,559.29 was from the Anthem demutualization process and the rest was from various miscellaneous funds. Yes, you read this right; I just said nearly $3.5 million dollars... Obviously, this is good news. However, we have to remember this is a one-time windfall of funds that will not be available in future budget cycles. The responsible thing to do is use one-time revenues to support one-time expenditure items such as, but not limited to, retiring debt, replacing equipment, making capital improvements, or short-term projects under a twelve-month duration.

Knowing that we will be receiving these funds, I have asked City Council to consider adopting a One-Time Revenue Policy to help frame the discussion about how to best use these funds. I am also very concerned about the potential negative impact this news may have on our ability to pass our expiring income tax in November of this year. While nearly $3.5 million sounds like a lot of money, it only represents a very small percentage of our overall General Fund budget. The receipt of these funds does not eliminate our need for the renewal income tax and it also does not eliminate our need to make reductions in this year's budget. The income tax renewal will generate $30 million over five years and is critical to the basic operation of the city. Although called "temporary", these funds have become a required, permanent funding source. We cannot depend on a one-time windfall to balance the General Fund budget now or in the future. We must plan ahead and stay the course to insure our future financial stability.

Thank you in advance for your consideration of this information. Please know the City of Elyria is working very hard to make use your precious taxpayer dollars as efficiently and effectively as possible. I am open to your thoughts, questions, concerns and suggestions regarding this or related topics. Please feel free to contact me directly at (440) 326-1402.

Sincerely,

Holly C. Brinda
Mayor

To check the account for your own unclaimed funds go to www.unclaimedfundstreasurehunt.ohio.gov or call the Division free at (877) 644-6823.