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The city of Athens is considering a hiring freeze to help shore up its budget

By: David Forster
Posted on: Tuesday, March 12, 2024

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ATHENS, Ohio (WOUB) — The city of Athens is considering a hiring freeze because its cash reserves for the year have already dropped below a level that is considered financially sound.

This is largely due to much higher than normal medical expenses last year that required the city to transfer $300,000 out of the general fund last month.

The freeze, if approved by the City Council, will only apply to city departments funded through the general fund. This includes, police, fire, code enforcement and the municipal court.

Departments that would not be affected include parks and recreation and water and sewer.

The freeze as proposed would not prohibit any hiring but instead says vacant positions “should be carefully reviewed prior to filling in order to alleviate any need for a reduction in force.” It would remain in effect through the end of the year.

“I think it’s more of just a caution to look at your positions and whether we need them and to see how it affects the budget,” city Auditor Kathy Hecht explained at Monday’s council meeting.

The city aims to keep a certain amount of cash reserves on hand to cover unexpected expenses throughout the year.

Last year is a good example. The city typically has about four employees each year who experience a serious medical condition resulting in expensive claims, Hecht said. Last year it had eight of those, which depleted the city’s medical fund and resulted in the big general fund transfer last month.

The city can draw its reserves down deeper than what is considered fiscally prudent, but there can be consequences.

For example, the city’s cash reserve policy, and how closely it sticks to this, is one of the things considered in determining what interest rate the city pays when it borrows money to do things like build a new fire station, Hecht said.

As of the end of February, the city’s cash reserves were about $76,600 below the low end of the policy range. The hiring freeze is intended to help prevent drawing this down any further.

The city is currently looking to hire a court administrator and an intern for the code enforcement office. These positions could be affected by the proposed freeze, which the council will likely vote on at its meeting next Monday.

Another possible casualty of the city’s budget situation is funding for the Outdoor Recreation Council of Appalachia, which among other things is developing and managing the Baileys Trail System, a network of mountain bike trails in Athens County.

For the past three years, the city and the county have each contributed $90,000 a year to ORCA to help fund its operations.

This year the county, because of concerns with its own budget, decided not to contribute. The city has already set aside the money for its annual contribution but hasn’t paid ORCA yet.

And now, based on the council’s discussion of ORCA funding at Monday’s meeting, it appears the city may hold onto that money a while longer as a financial cushion.