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HomeMy WebLinkAbout2012-02-29 Finance Committee Minutes Finance Committee Meeting February 29, 2012 The meeting convened at 7:30 p.m. in the Conference Room, 16 Lowell Street, Reading, Present were Finance Committee Chair Marsie West, Vice-Chair Massachusetts. David Greenfield, members John Arena, Barry Berman, Jeanne Borawski, Mark Dockser, Marie Ferrari, Paula Perry and Hal Torman ; Town Manager Peter Hechenbleikner, Assistant Town Manager/Finance Director Bob LeLacheur, Community Services Director/Town Planner Jean Delios, Fire Chief Greg Burns and Police Chief Jim Cormier. FY13 Town Manager Budget Overview Mr. Hechenbleikner reviewed a handout in which he described a “blueprint for investment” in Reading. He highlighted a series of recent prudent decisions which have helped build a strong financial foundation. He mentioned that this budget uses less than the full amount of free cash authorized by the FINCOM. In the FY13 budget he highlighted the $500,000+ spent on a comprehensive strategy of community substance abuse and violence prevention; $400,000 on two school modular classrooms; $150,000 on school technology; $1.2 million in road improvements including Chapter 90 funding; $75,000 on pedestrian improvements; establish and begin to fund an OPEB Trust Fund; and bring our property inspections up to date in the assessor’s office. He mentioned several additional items for beyond FY13, and some items that are not yet being addressed. Mr. Greenfield asked about Chapter 90 road funding, and Mr. Hechenbleikner responded that we had estimated $600,000 for next year but that a bond bill needs to first be passed by the Legislature and then signed by the Governor. In any event, these funds are supplemental to those spent by the Town through the General Fund. Mr. Greenfield asked about a proposed new DPW Vehicle Maintenance division and if this would eliminate outsourcing. Mr. Hechenbleikner clarified that he FY13 budget did not make this change, but the longer term plan was to separate this component from the DPW Highway division. Even once that is done, some type of repairs would always need to be outsourced because of the specialized nature of the equipment needed, for example certain repairs made on a ladder truck. Mr. Greenfield asked about the status of Performance Contracting. Mr. LeLacheur replied that Facilities and the vendor had completed the work and were very satisfied with the results. There are much better controls and information available about the working condition of all Town and School buildings. There has been even greater energy savings than were explicitly guaranteed. Mr. LeLacheur reviewed the upcoming FINCOM FY13 Budget Meeting schedule. He also reviewed the current financial status of the Town. Since October the FY13 budget outlook has improved by over $2 million. About $350,000 of this improvement is additional revenues – most of that coming from the Board of Assessors overlay surplus being increased. Expense reductions included $950,000 less directed towards health insurance; $515,000 less in out of district special education net costs (most of that due to an increase in the circuit breaker funding); $225,000 less in energy costs and $84,000 less in vocational education costs. The $2 million improvement allowed a reduction of $500,000 in free cash used; a $420,000 contribution towards OPEB to be funded; over $500,000 to be spent on the substance abuse prevention efforts; $150,000 directed towards School technology and about $600,000 divided up among the Town and School operating budgets. The latter allowed an increase from +2% to +3.6% for the FY13 budgets. FY13 Revenues are now projected up 2.6% (excluding the use of free cash). Free cash before the FY13 budget is at 9.6% of Revenues. Mr. LeLacheur gave an overview of the Town government operating, accommodated and total FY13 budgets. FY13 Community Services Budget Ms. Delios reviewed the FY13 Community Service department budget. She noted that yesterday there was a change to the printed material after a meeting with Melrose concerning the regional health division. An additional $9,000 of costs will be borne by Reading, including a $2,000 increase to wages and a $7,000 increase in expenses. Mr. Hechenbleikner noted that this regionalization effort has been very successful thus far, but as it is only six months old that changes were to be expected. He mentioned the CIC grant application. Mr. Berman asked if there had been any health conflicts yet. He was concerned that one person might have a difficult time if two issues arose simultaneously in the two communities. Ms. Delios replied that the storms in the fall of 2011 affected all three communities and the Health Director worked out of the Reading Emergency Operations Center and was in touch with staff in all three communities. Mr. Hechenbleikner said there had been some improvements made to the inspections process. Ms. Delios noted that there had been an improvement to the grant applications capability. Mr. Hechenbleikner said that for example the Health Director had recently spent a few days working on a Mass in Motion grant for Reading. Mr. Arena asked if grant applications as a regional organization were viewed more favorably, and Mr. Hechenbleikner replied that it was sufficient, for example a recent LEED grant that the four communities associated with RMLD received. Board of Assessors members Ralph Colorusso (Chair), Bob Nordstrand (Vice Chair) and Fred McGrane (Secretary) joined the meeting. Ms. Delios said there had been and are ongoing efforts to regionalize other Community Services functions. Some hurdles such as unions in other communities have stalled those efforts. She mentioned that the new Conservation Administrator has been very well received in Reading and that the feedback from the community on customer service has been excellent. Mr. Hechenbleikner mentioned that CONSCOM had been in front of the Board of Selectmen the previous night. The Selectmen agreed to remove an Article from April 2011 Town Meeting that would have abolished local conservation bylaws, and since then CONSCOM has sought community input via a survey on their operations, and subsequently sought to repair several areas that were highlighted as needing change. CONSCOM indicated that they would finish their process and procedure review before June 30, 2012. Ms. Delios indicated that Community Services supported nine regulatory Boards and she emphasized that the volunteers on all of these Boards had stepped up in light of staff reductions made in the FY12 budget. She appreciated the efforts and good work by all of these Boards. While regulations drive much of the work, Reading was trying to simplify and clarify as much as possible. For example, there is now a one-page handout that explains the Sign bylaw; minor site plan review now cuts down on Board involvement – Cupcake City was the first applicant that went through that new process. The demolition delay bylaw had been reduced to six months with no adverse results thus far; the aquifer protection district had changes that clarified and made the process more user-friendly. She has been working with many developers first-hand, bringing them through the various processes in order to facilitate economic development. Mr. Berman stated that those efforts should not be part of her position, but they were appreciated by the community. Mr. Arena spoke about the permits process. Mr. Dockser asked if the 23 hours/week were sufficient for the Conservation Administrator. Mr. Hechenbleikner said that it did. These extra hours allowed for site inspection in preparation for a CONSCOM visit. This subsequent visit was simplified and shorter in duration. FY13 Assessor’s Budget Mr. LeLacheur reviewed the Assessors budget in light of the fact the entire Board of Assessors was present. He noted the agreement to provide three consecutive years (FY12-FY14) of $24,000 to outsource property inspections. This would catch up a backlog in time for the next revaluation, and allow current staff to spend more time in the office working on a conversion to the new Patriot CAMA system. Ms. Perry asked the Board if they were still concerned about the quality of data when this work was outsourced. Mr. Colorusso indicated that while the Board still did have that concern that he agreed with this as the best solution. An outsourced firm could bring in the required resources to do the inspections, whereas an in-house position was limited in the hours they would be available. Mr. McGrane pointed out that only in the past 2 or 3 months did the Board realize that they were behind in the inspections process. He appreciated that the Board had dropped that situation suddenly on the lap of the Town and appreciated the creative solution to the problem. Mr. Arena asked if Patriot would cover all classes of property, and Mr. Nordstrand indicated that it did. Mr. Colorusso said that he expected multiple people from the outsourcing to be present inspecting in the Town. Mr. Berman asked if $20/inspection was sufficient funding, and Mr. Colorusso indicated that it was. A residential inspection was only 10-15 minutes, and the requirement was that an effort was made to inspect but that residents had the right to deny access to the property. Mr. Hechenbleikner said that this outsourcing would be accomplished via a public bidding process. Mr. Nordstrand said he expected the inspections of commercial property would continue to be done only by Town staff and that this outsourcing would be for residential property only. FY13 Town Administration Budget Mr. Hechenbleikner reviewed the FY13 Town Administration budget. He pointed out the only increase in expenses was for the document storage effort. Ms. Perry asked if the Town has going to have that available for an historical documents, and Mr. Hechenbleikner answered that on a selective basis it would. For example, meeting minutes had been scanned in back to 1986 when the Charter was instituted. He reviewed examples of how quickly information could now be retrieved. Mr. LeLacheur added that there would be a public web-access component to document storage within the next year. Mr. Hechenbleikner also cited the example of union contract negotiations where final documents as well as staff notes for discussion in progress were all scanned in, and very useful for the arbitration process. For example he recently found a 1993 document in less than 15 minutes. Mr. Dockser asked about postage, and Mr. Hechenbleikner said that despite the Town’s efforts to become as electronic as possible that there were still requirements to publish in the local newspapers and send out physical mail under many circumstances. Mr. Arena asked about P+C claims, and Mr. Hechenbleikner said that the Town carried high-deductible policies. A quarterly Safety Committee meeting reviewed the details, and the Town was a very active participant in the MIIA Rewards program. FY13 Accounting Budget Mr. LeLacheur reviewed the Accounting budget briefly and there were no questions or discussion. FY13 Finance Budget Mr. LeLacheur reviewed the Finance budget. There is a proposed reduction of 0.5 FTE in a clerical position due to the combination of a collector’s position with one in water and sewer. This change was brought about by a retirement in the water and sewer divisions. Three significant changes to expenses occur in FY13: a) the previously mentioned $24,000 outsourcing of inspections for the Assessors; b) a new $21,500 software license that now covers both Fire and Police that was previously in the Dispatch budget; c) $17,060 additional costs due to expecting three elections next year instead of the two that were budgeted for in FY12. Expenses are generally level funded with those three exceptions. He reviewed the amount of annual software license costs that are now something that must be funded each year in full unless the need for the software goes away. Several FINCOM members suggested a public presentation on technology as these new systems are introduced. Mr. LeLacheur suggested that November 2012 Town Meeting might be a good venue for that. He also mentioned that there is still a surplus in the Technology authorization from Town Meeting five years ago. Mr. Hechenbleikner mentioned that the FINCOM Reserve fund has remained at $150,000 for many years. FINCOM members agreed that as long as the fund was replenished at Town Meetings during the year that it did not need to increase. FY13 Benefits Budget Mr. LeLacheur stated that Benefits were up 3.8% in FY13, but if the contribution to OPEB were excluded then they were up only 0.5%. Pensions are funded at +3.5% per the local Retirement Board with a longer term funding target of +2.5% annually. The OPEB $420,000 contribution is set at 5% of the budgeted general fund health insurance premium budget. If this discipline is followed each year, this amount may serve as a last minute cushion against under-budgeted expenses. As recently as last year both the Town and Schools had to reduce their next-year budgets in late January. The FY13 Health insurance premium renewal rate is 0%. Unemployment expenses are reduced. Mr. LeLacheur reviewed a Health Insurance Myths presentation. Premiums have increased at less than 3% annually for the past seven years due to several plan design changes negotiated with the unions. Enrollment of about 2% annually has added to these costs. The 5% total is not extreme compared to other organizations, but it is contrasted with a 2% annual revenue increase over this same time period. FINCOM reviewed a handout from RMLD General Manager Vin Cameron. The handout showed that when considering the New England market for RECS, RMLD has a 1.25% share of the market. Various FINCOM members stated their opinion about the REC issue, which the majority had concluded did not rise to a level where FINCOM should be involved as a Committee. On a motion by Mr. Greenfield seconded by Mr. Dockser FINCOM voted 9-0 to approve the Minutes of February 8, 2012 as amended. On a motion by Mr. Torman seconded by Mr. Greenfield FINCOM voted 9-0 to adjourn at 10:00pm. Respectfully Submitted, Secretary