HomeMy WebLinkAbout2011-03-23 Finance Committee Minutes OFIRFgO't
Finance Committee Meeting
b;os Ewa
March 23, 2011 111,
s.WCO Conference Room, Reading Municipal Light
Department
The meeting convened at 7:00 PM in the Conference Room at RMLD.
FINCOM Members Present: Chair Marsie West, Vice Chair David Greenfield, Hal Torman, Mark
Dockser, Bryan Walsh, Kevin Leyne and Paula Perry.
Members Absent: Francis Fardy and Barry Berman.
Also Present: Town Manager Peter Hechenbleikner, Assistant Town Manager/Finance Director Bob
LeLacheur, Town Accountant Gail LaPointe, John Doherty Superintendent of Schools, Human Resources
Administrator (Schools) Elizabeth Conway, Chuck Robinson (School Committee), Human Resources
Administrator Carol Roberts, DPW Director Jeff Zager, DPW Business Administrator Jane Kinsella, Board
of Selectmen Camille Anthony and Ben Tafoya, Town Engineer George Zambouras, Water Treatment Plant
Supervisor Peter Tassi, DPW Cemetery Supervisor Bob Keating, Recreation Administrator John Feudo,
Town Meeting member John Arena, Kara Deyermenjian (Reading Patch) and recording secretary Abby
McCabe.
There being a quorum the FINCOM meeting was called to order at 7:05 PM.
Benefits:
The Town Accountant, Ms. LaPointe, presented a few common myths related to retirement and elaborated
on each. Ms. LaPointe explained that only the municipal employees who work more than 1,690 hours per
year are in the retirement system. State law requires that recently hired municipal employees must contribute
9% of their pay into the retirement system and additional 2% for employees earning over $30,000. Mr.
LeLacheur pointed out that this percentage has increased over time and is likely to go up in the future
because the current rate was set in 1996. Municipal employees in the retirement system do not also receive
social security according to Massachusetts law, unless they qualified from other employment. An employee
hired today will very likely contribute enough to the pension fund to pay for the pension received—the
ongoing pension issues are because the Town was not required to fully fund projected retirement costs for
nearly fifty years.
Ms. LaPointe reviewed the average pay received by Reading retirees. The average Town of Reading
retirement pension paid was $22,224 in 2009. The majority of Reading retirement system retirees (41%)
received between $12,000 - $30,000, 38% percent receive less than $12,000 and the largest pay between
$50,000 - $85,000 only accounts for 4% of retirees. Reading retirees are not living on"easy street" as is
commonly believed. These figures do not include teachers because they are part of the Massachusetts
Teachers Retirement System. To be eligible for retirement you must be older than 55 with a minimum of 10
years of service or be any age with a minimum of 20 years of service. However, the benefits are based on a
combination of your age and service. The Town Accountant also reviewed the system costs for active
members and the savings accumulated for active members and retirees.
Ms. Conway explained the eligibility criteria for the Massachusetts Teachers Retirement System. The four
criteria are the position, certification, contract and status. The contract for the position must specifically state
that the employee is in Mass Teachers Retirement system. State law defines teachers to also include school
social worker, adjustment counselor, psychologist, principal or assistant principal, superintendent or assistant
superintendent. The retirement benefits are based on age on retirement date, years of creditable serve, and
average of your highest 3 consecutive years salary. Ms. LaPointe reviewed other post employment benefits
(OPEB) and recent retirement system reforms and proposed changes.
1
Ms. Roberts reviewed the health insurance benefit—by state law it must be offered to employees, spouses
and their family as well as retirees— as long as a minimum of 1,040 hours worked per year (less for school
employees). Reading pays 71% of the premium costs, and the employees and retirees pay 29%. The Town
share is a low relative to other MA communities. A survey by the Stoneham Board of Selectmen found that
Reading's percentage of the budget for health insurance is actually below average at 10% while the average
is 12.6% and some communities are much higher (20% of Peabody's budget). If Reading were paying 12.6%
out—that would be an additional $1.9 million per year. The State Group Insurance Commission (GIC) does
not necessarily save money. Reading recently researched all options and found that a new"GIS-like"
program offered the cheapest option for Reading and in the first year the Town has spent $600,000 less in
premiums than had been budgeted. Ms. Roberts further detailed the applicable state laws (Mass General Law
Chapter 32B). Employees are eligible for life insurance policies and disability insurance is available only to
some MTA but not for Town employees. Dental insurance is available but the Town doesn't contribute to the
premiums.
Public Works:
Two major changes are seen in the FY12 Public Works budget. One seasonal parks and forestry position is
eliminated and one FTE engineer position is shifted from the general fund into the Storm Water enterprise
fund. As a result of eliminating the seasonal parks position the town will need to adopt a carry-in carry-out
policy at the public parks. The shifting of the engineer position into the Storm Water Enterprise fund is
necessary because phase I of the NPDES (National Pollutant Discharge Elimination System) is very time
consuming and more support is needed to meet the requirements of phase II. The snow and ice budget is also
increased in the FY12 budget. Professional development is decreased in the DPW administration budget.
Funding for snow and ice was discussed by the Committee. A FINCOM member asked if development of the
Addison Wesley site would add to the Town's expenses and the Town Manager responded that no Town
expenses are associated with this and the Town has negotiated payments towards sewer and water.
Enterprise Funds:
The storm water enterprise fund was set up to conduct storm water activities and federal regulations continue
to bring new expenses to the Town. A new street sweeper may be added to the FYI budget as opposed to
the FY12 budget because it is available now at a better price but this will require a budget amendment by
Town Meeting. The Town currently has one street sweeper and rents another.
Two major Storm Water capital improvements are planned (the Saugus River and Aberjona Rivers). The $40
annual charge for a single family home is realistic for this budget but may change once the work the large-
scale river drainage work has started.
Debt & Capital:
Road construction is a priority and the West Street reconstruction has been moved to the FYI budget. There
are no significant changes in the FY12 Town's debt services but this will change beginning in FY13 because
of the new cemetery garage and the DPW cold storage building. The library renovation is estimated to be
$12 million with a $7 million contribution from the Town—but that is proposed as debt-exclusion, so it will
not need to be funded by the general fund under Prop 2-1/2.
Mr. LeLacheur informed the FINCOM that the Town also just learned of an additional 3 students enrolled at
the Minuteman vocational school when the budget had only assumed one student. The Town may also
receive reimbursement for the two blizzards which would go into free cash.
Monday's and Wednesday's FINCOM meetings will start at 7:00 PM at RMLD on Monday and at Town
Hall on Wednesday. The Committee will be voting on the budget on Monday and the Warrant articles on
2
Wednesday. If FINCOM has any different suggestions for next week's budget meetings please send them to
Mr. LeLacheur in advance so he can prepare material in advance.
Mr. Arena asked if the FYI forecasts would be available for Town Meeting members and a couple
FINCOM members felt this would be important as well.
On a motion by Mr. Walsh, seconded by Mr. Dockser, FINCOM voted 7-0-0 to adiourn at 9:55 PM.
Respectfully submitted,
Recording Secretary
3