City Council Meeting Date: June 3, 2025
To: Mayor and City Council
From: Ben Martig, City Administrator
Brenda Angelstad, Finance Director
Title
Consider Resolution Amending Budget for 2024 and 2025 related to Northfield Hospitals + Clinics (NH+C) recreation donations.
Body
Action Requested:
The Northfield City Council is being asked to consider a resolution to approve a budget amendment for 2024 and 2025 related to Northfield Hospitals + Clinics (NH+C) recreation donations.
Note: Approval requires a supermajority (5/7) votes from the City Council.
Summary Report:
The City Council is being asked to approve an amendment to the 2024 and 2025 budget related to recreation contributions from the Northfield Hospitals + Clinics (NH+C) that will not be received.
The City and NH+C have had an agreement where the NH+C would contribute to community health or youth initiative or both. The previous agreement ran through 2022. City staff and NH+C staff have been working on an updated agreement since 2023.
With the financial hardships that the medical field has experienced in recent years, NH+C have decided they will be unable to offer their planned contributions for 2023, 2024 and 2025. The intent had been to agree to pay this amount even late into 2024. So, this was an unforeseen change in the processing that had been discussed previously. However, continued financial challenges lead to the determination in early 2025 to not continue for this time period.
The following is a reference to the “Northfield City + Hospital Playbook: best practices to guide an enduring and effective partnership” that has been adopted by the City Council and Hospital Board as it relates to the contribution (highlighted in yellow):
Financial Contribution from Hospital to City
Gifts need to comply with restrictions in the City Charter, City Ordinance and any other laws, or compliance rules, and are subject to the operational financial health of the medical center in any given year. For many years, NH+C has made contributions to the community that align with the medical center’s public health mission. Those contributions have generally fallen into three categories:
1. Routine philanthropic gifts: These gifts are based on a budget established by the Board of Directors and facilitated by NH+C’s Board’s Community Relations Committee. The committee establishes criteria and awards.
2. Special community gifts: From time to time, a request may come forward that is outside the scope of the routine gifts process and budget. The NH+C’s Board’s Community Relations Committee receives, vets, and makes recommendations regarding such requests to the NH+C Board of Directors.
3. City of Northfield gifts: The NH+C has a long tradition of making an annual contribution to the City of Northfield for activities that support community health or youth, or both. Provided there is financial ability, the intention is to continue a gift each year in a standard and predictable manner. The targeted use may change from time to time but there is a commitment from the medical center to make an annual gift that strengthens the tie to the City and the health of the community.
This funding has been also used to offset expenses with the recreational agreement between the City and the school district. That contract is expiring this year will have an upcoming agenda item to consider a new three year contract.
There has been discussion with the Council in recent years to remove the hospital contributions from the general fund to the park capital fund to create more predictability within the primary operating fund of the City. Staff will be presenting more details of these policy options during the upcoming budget process. Additionally, members of the City, NH+C and City/Hospital Governance Committee will continue to discuss the possibility of a new agreement and continued contributions in future years.
Alternative Options:
Council can choose not to approve the proposed budget amendment, but staff do not advise this as they have received confirmation recently of the inability to provide a contribution this year. So, the accounting would match the actual financial reality. With the 2024 audit close to completion, an updated budget amendment is recommended so the 2024 adjustments can be included with the final audit.
Financial Impacts:
$139,023 was budgeted each year for 2024 and 2025. For 2024 the City still will have a favorable variance of general fund revenues to expenses. This will be presented within the audit in June.
Table 1. Funding NH+C to City and City to NPS for School Recreation Agreement.
|
Year |
NH+C Funding ($) |
School Recreation Agreement ($) |
|
2012 |
105,000.00 |
106,312.50 |
|
2013 |
0 |
108,970.50 |
|
2014 |
107,625.00 |
111,695.00 |
|
2015 |
110,315.00 |
114,487.00 |
|
2016 |
110,315.00 |
118,797.50 |
|
2017 |
113,072.00 |
123,520.50 |
|
2018 |
115,900.00 |
127,226.00 |
|
2019 |
118,797.00 |
131,042.50 |
|
2020 |
122,361.00 |
134,973.50 |
|
2021 |
126,032.00 |
139,022.50 |
|
2022 |
129,813.00 |
143,193.00 |
|
2023 |
0 |
147,309.00 |
|
2024 |
0 |
151,733.50 |
|
2025 |
0 |
77,079.00 (half payment) due for contract extension |
Tentative Timelines:
The resolution would go into effect immediately. The updated accounting would be reflected in the 2024 audit and the budget amendment for 2025 will be made.