Finance Director: Elyria finances better than projected, but expenditures still rising

ELYRIA — During a meeting of City Council's Strategic Planning Committee on Monday, Finance Director Ted Pileski said that he expects Elyria to carry over more cash into 2026 than he originally anticipated, but he also warned of mounting payroll and health care costs. Pileski gave a general update on the city's finances thus far in 2025, as well as estimates for expenditures and income in 2026. He said he is required to submit those estimates to the Lorain County Budget Commission every July. One major difference between 2026 and prior years that Pileski pointed out was that the year will have 27 pay periods, as opposed to the typical 26 periods, which will cost an extra $1.3 million to the city's general fund compared to 2025. He said 27 pay period years occur every 11 years, with Elyria's last being in 2015. Pileski said he expects Elyria to enter 2026 with much more carryover cash in its general fund than he had originally predicted during 2025 budget talks. General fund money is used to cover most of the city's daily operating costs. "Starting out with the general fund — and keep in mind that these are estimates and I am always very conservative when starting out with revenue — I've got us starting out with $13.2 million at the end of this year, beginning of next year," Pileski said. "Which was better than what I thought when I prepared this document for last year, so we are doing better." In 2024, Pileski predicted that the city would have only between $5 million and $6 million going into 2026, but his latest projections say the city should carry over more than double that. "That being said, if all this holds true, we would only have carryover (of) about $5.3 million in the general fund into 2027," Pileski said. Pileski said there are two major reasons the city was looking at rising spending heading the next two years: payroll increases and higher health care costs for employees. In the past two years, Elyria has provided raises of over 10 percent to its police and fire union employees, and raises of 6, 5 and 4 percent over 2025 and the next two years to employees who are members of the American Federation of State, County and Municipal Employees, or AFSCME. Additionally, the city recently approved a 3 percent raise for its non-union employees, known as Chapter 165 employees, and a 6 percent raise for non-elected employees of the Elyria Municipal Court, who are employees of the court but are paid by the city under Ohio law. Pileski said that payroll increases were outpacing the rise in city revenue from taxes and other sources, but that his revenue estimates were conservative and he was hopeful that the city could outperform them. Much like payroll, Pileski has been warning Council about rises in employee health care costs for several years. Employee health insurance claims are paid out of a separate health insurance fund, not the general fund. "We are just kind of treading water with the employees health insurance fund," Pileski said. "The (city's health insurance) committee did bump up the contribution for both the city and the employees, that was effective I believe May 1 so that is starting to show, but if the health claims keep rising they are we are going to be in trouble with this fund, which we sort of are already." Pileski said that he believed the cost of employee health insurance claims was up 13 percent. Rising health care costs have been common across the country since they jumped more than 10 percent in 2020 during the COVID-19 pandemic. On average, Pileski said, the city is paying roughly $750,000 per month for employee health insurance claims. If the health insurance spending did not level off, Pileski said the city and the health insurance committee, which is made up of a combination of city officials and employees, may need to reevaluate its health insurance plan. The Strategic Planning Committee unanimously approved Pileski to submit his estimates to the county, and Council will vote on the submission during its next regular meeting on July 7. Contact Owen MacMillan at (440) 329-7123 or omacmillan@chroniclet.com.