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HomeMy WebLinkAbout2012-08-08 Finance Committee Minutes Finance Committee Meeting August 8, 2012 The meeting convened at 7:35 p.m. in the Town Hall Conference Room, 16 Lowell Street, Reading, Massachusetts. Present were Chairman David Greenfield, Vice Chairman Barry Berman, FINCOM members Jeanne Borawski, Marie Ferrari, Hal Torman and Assistant Town Manager/Finance Director Bob LeLacheur. Members absent were Mark Dockser and Paula Perry. Karen Herrick arrived 7:45pm. Mr. Greenfield called the meeting to order. Mr. LeLacheur reviewed the proposed FINCOM FY13 meeting calendar. He added that there would be two additional tentative meetings – one to include Chairs & Vice Chairs on September thth 6 and a full Financial Forum on September 10. Each meeting would contain a single agenda item – school space needs. The School Committee is expected to conclude their deliberations on thth the subject by August 27 or August 30. Assessors Karen Herrick joined the meeting. Mr. LeLacheur reviewed developments in the Assessor’s th function since the last update on June 27. Highlights included two signed contracts: (1) the Full Review with Patriot Properties (October 2012 – April 2013) and (2) the Field Review with Finnegan Appraisal (current through September 2012). The latter came in over $30,000 under budget. Also, the Boards of Selectmen in both Reading and Wakefield approved and inter- municipal agreement to share the services of Appraiser Victor Santaniello, who has already begun work in Reading. Lastly, Finance staff in mid-July became aware of a $6,500 invoice for personal property work completed in the spring of 2012 that was not funded or previously known, except by the prior Appraiser and the Board of Assessors. Surplus funds from the Field Review RFP are able to pay for this service. Mr. Greenfield stated that he met with DOR Chief of the Bureau of Local Assessment Marilyn Browne and one of her staff members. He reported that no one model works the best across the state in the assessing function. He expressed concern about a locally elected Board of Assessors with the power to appoint staff. She agreed that this presented a single point of failure but that could be offset by a value placed on the independence of the Board of Assessors. Mr. Berman asked the committee what changes should be made? Ms. Herrick stated that from her past work on the ad hoc Tax Classification Committee as well as her professional Real Estate background that term limits should be encouraged. She said the lack of turnover on the Board caused it to lose focus on current practices and changes in the industry. The committee discussed the need for further changes and if a discussion at Town Meeting would be in order. Mr. Berman asked Mr. LeLacheur to get some Personal Property tax history, and Mr. Greenfield tabled further discussion until FINCOM’s September meeting. FINCOM Organization Mr. Greenfield turned the meeting over to Mr. LeLacheur who opened the floor for nominations for FINCOM Chair. Mr. Berman placed the name of David Greenfield into nomination, and Mr. LeLacheur closed the nominations to a FINCOM 6-0-0 vote when no others appeared. On a motion by Ms. Ferrari seconded by Mr. Torman FINCOM elected Mr. Greenfield as Chair by a vote of 6-0-0. Mr. Greenfield opened the floor for nominations for Vice Chair. Ms. Ferrari placed the name of Barry Berman into nomination, and Mr. Greenfield closed the nominations to a FINCOM 6-0-0 vote when no others appeared. On a motion by Ms. Ferrari seconded by Ms. Herrick FINCOM elected Mr. Berman as Vice Chair by a vote of 6-0-0. On a motion by Ms. Ferrari seconded by Ms. Herrick FINCOM elected Mr. Greenfield and Mr. Berman as representatives to the Audit Committee by a vote of 6-0-0. FINCOM discussed their role as liaisons to Town departments as well as various BCCs. They noted that some relationships (schools, library) are more formal with agendas and minutes as a regular occurrence, and at the other extreme some only require FINCOM attention when there is a specific problem or issue. They asked Mr. LeLacheur to follow up with the Town departments as to what the best relationships should be. Following is a list of current liaisons: BOS – Greenfield; Schools – Berman, Herrick, Torman; RMLD – Dockser; Acc/Fin dept – Greenfield; Audit Comm – Greenfield, Berman; Board of Assessors – Greenfield, Perry; Comm Services – Borawski; Econ Devel – Torman; Public Safety – Borawski, Ferrari; Public Works – Dockser; and Library – Perry. Building Projects Mr. LeLacheur reviewed the status of the Library renovation project. He pointed out a 90-day maximum time frame between a Town Meeting and special election. Mr. Greenfield said that he’d like to get the pulse of Town Meeting in November and then have a special election before the local elections. Mr. Berman pointed out that a special Town Meeting would be cheaper to hold, the focus on one issue would be better, and then it could tie in to the April local elections. Mr. LeLacheur also reviewed the Killam building project. OPEB Mr. LeLacheur reviewed the DRAFT FINCOM OPEB policy. Mr. Greenfield stated a desire to not decide the matter tonight but to review the merits. Mr. LeLacheur reminded FINCOM that approximately $2 million would be required to defease the actuarial cost of the general fund’s obligation on a thirty-year schedule. He noted the draft policy of 5% of prior year health care premiums was about 25% of this amount. Mr. Greenfield was concerned with any policy that removes flexibility from the budget process, in light of expected trickle-down effects from less spending by the federal government. He stated that reading was positioned as well as possible for what might follow. Ms. Ferrari asked if a 3 to 5% band might instead be considered? Mr. Torman said he thought the discipline of a formal policy was important. Mr. Berman agreed that it had served us very well in capital planning over the past few years of decreased revenue growth. Ms. Borawski noted that the DRAFT policy allowed FINCOM to increase or decrease the amount in any year. This flexibility should address Mr. Greenfield’s concerns about possible impacts from the federal government. Mr. LeLacheur noted that the 5% was set aside in the fall in the early parts of the budget process. In late January, if actual health insurance premiums were higher than forecast in the budget, this 5% would serve as a cushion to fund those premiums. Two years ago last-minute cuts to school and town operating budgets were needed when health insurance came in higher than estimates. If the cushion were not needed, then it would be available to fund OPEB. Mr. LeLacheur briefly reviewed the S&P handout about the growing importance of management in terms of municipal bond ratings. The committee discussed various specific points raised by Ms. Borawski in an email. Mr. LeLacheur noted that the ratings agencies often prefer flexibility in spending plans, as most municipalities do not have the discipline to be fiscally prudent during difficult economic circumstances. Thus the 5% capital policy can be seen in a negative light because it takes away operating revenues. The recent emphasis towards management in ratings criteria is an acknowledgment that communities with fiscal discipline, for example, may well be able to keep up with capital needs during such difficult times without creating other long-term liabilities. Mr. Greenfield said he was concerned that the series of recent operating budget cuts could not be continued indefinitely into the future. He asked to circulate a word document of the OPEB policy to FINCOM for further discussion. He also asked for town staff to survey other communities for OPEB data. Ms. Borawski asked for additional discussion of enterprise fund revenues as part of the next budget process. On a motion by Mr. Greenfield seconded by Mr. Berman, FINCOM approved the minutes th of June 5 as amended by a vote of 5-0-1 (Berman abstaining). On a motion by Ms. Ferrari seconded by Ms. Herrick, FINCOM approved the minutes of th June 27 as amended by a vote of 6-0-0. On motion by Mr. Torman seconded by Mr. Berman the Finance Committee voted to adjourn it’s meeting at 9:20 p.m. by a vote of 6-0-0. Respectfully submitted, Secretary OFRFq�'� Town of Reading W : o 16 Lowell Street moo,. o- Reading, MA 01867-2685 639°INCOR40�P ASSISTANT TOWN MANAGER/FINANCE DIRECTOR (781)942-6636 FAX: (781)942-9037 Email:finance @ci.reading.ma.us To: Finance Committee Date: August 1, 2012 Re: Assessors update At your meeting on August 8th I will review the following areas listed below: ➢ Inter-Municipal Agreement approved and signed by the Boards of Selectmen in Reading and Wakefield. Agreement runs until December 2013, with a review in December 2012. If a full regional agreement is desirable after this period, it will require a vote of Town Meetings. ➢ New shared Appraiser Victor Santaniello will attend a FINCOM meeting after he drafts a financial and management plan of how the Assessing function should be run in Reading. This will be a multi-year plan. ➢ The software conversion has been slowed by some sketch conversion issues. It is now expected to be completed by August 8th. This will challenge Finnegan (see below) to complete the work by September 1st however that deadline, while contractual, is not urgent to meet the DOR time frame. Appropriations Town Meeting $ 24,000 FINCOM/BOS $ 133,400 $ 157,400 Budgets Actual Diff. Personal Property $ $ 6,500 $ (6,500) Full review 3,600x $27 $ 97,200 $ 94,680 $ 2,520 Field review 7,500x $8 $ 60,200 $ 28,700 $31,500 $ 157,400 $ 129,880 $27,520 ➢ Personal Property: in mid-July an invoice for $6,500 was received for FY12 work done. It was authorized by the prior Appraiser and by the Board of Assessors. No funding was in place, and no discussion with Town staff occurred. The exact same thing happened one year earlier when Assessing staff was lectured about the budget process. In FYI surplus Finance funds covered this expense. FY12 was covered by surplus in the two inspections listed below. If there was not a surplus this would have required Town Meeting vote to pay a prior year's bill. ➢ Full review: Previous: March 2012 BOA RFP for 3,600 parcels awarded to Patriot Properties. Work to commence fall 2012 through April 2013. ➢ Field review: June 2012 Finance RFP awarded to Finnegan Appraisal. Test runs begun, awaiting final data from Patriot for live runs. Work to be completed early fall 2012. July 24, 2012— Killam School update The MSBA has taken no action on our Statement of Interest. When I spoke to them two weeks ago,they told me that they would not be taking up an FY2012 Statement of Interests again until their October and November meetings. That will be our last opportunity to have our FY12 SOI reviewed. If we are not invited into the capital pipeline at that point,we will have to decide if we want to resubmit the SOI for FY13 or start again with a different SOI that addresses our pre-K / K expansion goals. If Fincom members are interested,there will be continued discussion on the PreK/ K programming and space study on August 27th and potentially another meeting added prior to August 271H Mary C. DeLai Assistant Superintendent, Finance&Administration 781-670-2880 July 30, 2012—year end update All receivables, real estate, personal property, motor vehicle,water, sewer, storm water, ambulance and other general billing were reconciled with the collector on July 1. Bills continue to be paid through July 20 so the close cannot start until all transactions are posted. Many of the Finance Committee members might remember that we don't predict what free cash will be this soon.The Town Accountant is just beginning to prepare all of the spreadsheets and analysis required for free cash calculation.This process takes several weeks and is not usually complete until the first week of September. With a new Town Accountant, that timeframe may need to be extended. Gail LaPointe Town Accountant 781 942 6604 July 24, 2012— Killam School update The MSBA has taken no action on our Statement of Interest. When I spoke to them two weeks ago,they told me that they would not be taking up an FY2012 Statement of Interests again until their October and November meetings. That will be our last opportunity to have our FY12 SOI reviewed. If we are not invited into the capital pipeline at that point,we will have to decide if we want to resubmit the SOI for FY13 or start again with a different SOI that addresses our pre-K / K expansion goals. If Fincom members are interested,there will be continued discussion on the PreK/ K programming and space study on August 27th and potentially another meeting added prior to August 271H Mary C. DeLai Assistant Superintendent, Finance&Administration 781-670-2880 July 30, 2012—year end update All receivables, real estate, personal property, motor vehicle,water, sewer, storm water, ambulance and other general billing were reconciled with the collector on July 1. Bills continue to be paid through July 20 so the close cannot start until all transactions are posted. Many of the Finance Committee members might remember that we don't predict what free cash will be this soon.The Town Accountant is just beginning to prepare all of the spreadsheets and analysis required for free cash calculation.This process takes several weeks and is not usually complete until the first week of September. With a new Town Accountant, that timeframe may need to be extended. Gail LaPointe Town Accountant 781 942 6604 July 24, 2012— Killam School update The MSBA has taken no action on our Statement of Interest. When I spoke to them two weeks ago,they told me that they would not be taking up an FY2012 Statement of Interests again until their October and November meetings. That will be our last opportunity to have our FY12 SOI reviewed. If we are not invited into the capital pipeline at that point,we will have to decide if we want to resubmit the SOI for FY13 or start again with a different SOI that addresses our pre-K / K expansion goals. If Fincom members are interested,there will be continued discussion on the PreK/ K programming and space study on August 27th and potentially another meeting added prior to August 271H Mary C. DeLai Assistant Superintendent, Finance&Administration 781-670-2880 July 30, 2012—year end update All receivables, real estate, personal property, motor vehicle,water, sewer, storm water, ambulance and other general billing were reconciled with the collector on July 1. Bills continue to be paid through July 20 so the close cannot start until all transactions are posted. Many of the Finance Committee members might remember that we don't predict what free cash will be this soon.The Town Accountant is just beginning to prepare all of the spreadsheets and analysis required for free cash calculation.This process takes several weeks and is not usually complete until the first week of September. With a new Town Accountant, that timeframe may need to be extended. Gail LaPointe Town Accountant 781 942 6604