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Home My WebLink About2012-03-14 Finance Committee PacketI tie 1 own of xeaaing - P mane committee - r Y t s tsuaget Meeting ntLp://www.reaaingrm.gov/rages/Keaaingrviii_fvieeungL,ai/ , r�p,"A- M R Finance Committee - FY13 Budget Meeting Wednesday, March 14, 2012 at 7:30 PM RMLD n j ' � 60V Review Warrant Articles: Printer- Friendly Versio ,� _ r 1A 4 - amend FYI 2-21 Capital Plan f 5 - establish OPEB Trust Fund 6 - amend FYI Budget Google Search 7 - approve FYI 3-22 Capital Plan 8 - approve prior year's bills 9 - dispose surplus property 10 - establish revolving funds 12 - accept gift Friends of Reading Football 13 - FYI Budget 14 - authorize Chapter 90 expenses 15 - authorize debt for Poet's comer sewer repairs C.nty C 4 +L 19 - affordable housing trust fund allocation plan /_..... vi COMMON CAL S. t Town of Reading, Massachusetts 16 Lowell Street, Reading, MA 01867 Website Disclaimer Virtual Towns & Schools Website 1 —4f1 14/10/ ?01? 1.00 Pl 1)KAt"I' MIZ Annual Town lvleeting April L3, ZU1Z WARRANT OUTLINE 03/14/2012 Art. Mover/ Moderator # Article Description Sponsor Comment Notes 1 Election 2 Reports Board of Selectmen I ♦ State of the Town - 3 Instructions Board of Selectmen 4 Amending the Capital Improvement Board of Selectmen FINCOM Program FY 2012 -FY 2021 5 Establishing an OPEB Trust Fund Board of Selectmen FINCOM 6 Amending the FY 2012 Budget Board of Selectmen FINCOM 7 Approving FY 2013 to FY 2022 Board of Selectmen FINCOM Capital Improvement Program 8 Approve Payment of Prior Year's Board of Selectmen FINCOM Bills or9 of Surplus Tangible Board of Selectmen FINCOM Pro e 10 Establishing Revolving Funds Board of Selectmen FINCOM 11 jRescindihg Civil Service — Police Board of Selectmen Bylaw Committee 12 Accepting a gift — Friends of Reading Board of Selectmen FINCOM Football Scholarship 13 FY 2013 ,Bud et IFINCOM FINCOM 14 Authorizing Chapter 90 expenditures I Board of Selectmen IFINCOM 15 Authorizing debt — Sewer Board of Selectmen Indefinitely Postpone repair /replacement — Tennyson, Whittier, Wordsworth, Browning, Tennyson Circle 3/14/2012 1 DRAFT 2012 Annual Town Meeting April 23, 2012 WARRANT OUTLINE 03/14/2012 16 Acceptance of easement from Haven Board of Selectmen Street to "upper' Municipal parking lot, and granting an easement for installation of an ATM in the "upper" Municipal parkine lot. 17 Granting of an Easement for utilities — Board of Selectmen Ivv Street to Belmont Street 18 Resolution calling for an amendment Petition — Lippitt et al to the US Constitution to reverse the effects of the US Supreme Court's Citizens United decision that allows unlimited spending by corporations, unions. and others in our elections 19 (Approval of Affordable HousinglBoard of Selectmen I I FTNCOM Trust Fund Allocation Plan 20 Bylaw pursuant to authority of Board of Selectmen Bylaw Committee Massachusetts General Laws Chapter 6, Section 172 B 1/2, enabling the Police Department to conduct State and Federal Fingerprint Based Criminal History checks for individuals applying for various municipally- issued licenses 21 Amending Reading General Bylaw Petition Calvo -Bacci Bylaw Committee Section 7.2 — providing for appeals et al from Demolition Delav 22 Charter amendment re number of Board of Selectmen Bylaw Committee members and minimum votes for write -in of Town Meeting 23 1 Removal of Town Meeting members 1 Board of Selectmen 3/14/2012 2 3 Finance Committee Report: No report. Bylaw Committee Report: No report. ARTICLE 3 To choose all other necessary Town Officers and Special Committees and determine what instructions shall be given Town Officers and Special Committees, and to see what sum the Town will Vote to appropriate by borrowing or transfer from available funds, or otherwise, for the purpose of funding Town Officers and Special Committees to carry out the instructions given to them, or take any other action with respect thereto. Board of Selectmen Background: This Article appears on the Warrant of all Town Meetings. There are no known Instructional Motions at this time. The Town Moderator requires that all proposed Instructional Motions be submitted to the Town Clerk in advance so that Town Meeting Members may be "warned" as to the subject of an Instructional Motion in advance of the motion being made. Instructional Motions are normally held until the end of all other business at Town Meeting. Finance Committee Report: No report. Bylaw Committee Report: No report. ARTICLE 4 To see if the Town will vote to amend the FY 2012 - FY 2021 Capital Improvements Program as provided for in Section 7 -7 of the Reading Home Rule Charter and as previously amended, or take any other action with respect thereto. Board of Selectmen Background: This Article is included in every Town Meeting Warrant. Town Bylaws prohibits Town Meeting from approving any Capital Expenditure unless the project is included in the Capital Improvements Program (CIP). Bond ratings agencies also want to ensure that changes to a long -term CIP are adequately described. The following changes are proposed to the 2012 -2021 CIP: General Fund FY12 increase by $180,000: ♦ $ 70,000 DPW Bulldozer to replace 1971 Bulldozer (was scheduled for FY14) ♦ $ 50,000 DPW Highway Pickup with added Hot Box equipment replace 1997 vehicle (was in FY15) ♦ $306,000 additional road repairs funded by 40R (replaces $231,000 road repairs) ♦ $ 25,000 additional sidewalk/pedestrian safety funded by 40R (replaces $50,000 sidewalks) ♦ $ 10,000 Town facilities — Town Hall carpet FY13 increase by $420,250: ♦ $100,000 (max) Main St. Fire station floor repairs: 17.5k welding; 2k radar; 4k architect; TBA epoxy) ♦ $135,000 Sidewalk Snow Plow (replaces two smaller sidewalk Plows $78,000 + $66,750 previously proposed) ♦ $280,000 additional road repairs funded by 40R ♦ $ 50,000 additional sidewalk/pedestrian safety funded by 40R FY14 increase by $377,000: ♦ $500,000 Birch Meadow Pavilion (replaces $430,000 Imagination Station) ♦ $ 45,000 Hunt Park playground (swaps with FY15 $45,000 Wood End upper playground) April 23, 2012 Annual Town Meeting 4 Report on the Warrant l.� ♦ $257,000 additional road repairs funded by 40R ♦ $ 50,000 additional sidewalk/pedestrian safety funded by 40R FY15 and beyond: ♦ Several additions, deletions and changes Storm Water Enterprise Fund FY14 decrease by $10,000: ♦ $140,000 Drainage Improvement projects (replaces $150,000 Saugus River Design & Permitting) FY15 and beyond: ♦ Several additions, deletions and changes Water Enterprise Fund FY13 increase by $14,000: ♦ $350,000 Ivy St/Belmont St water main (replaces $276,000 Causeway Road water main) ♦ ($ 60,000) Water conservation program moved to operating budget FY14 decrease by $279,000: ♦ $276,000 Causeway Road water main (replaces $350,000 Ivy St/Belmont St water main) ♦ $120,000 Larch Lane water main (moved up from FY15) ♦ ($ 50,000) Water conservation program moved to operating budget ♦ ($225,000) well abandonment moved out to FY16 ♦ ($ 50,000) well upgrade moved to FY15 and increased to $200,000 FY15 and beyond: ♦ Several additions, deletions and changes Sewer Enterprise Fund FY13 increase by $130,000: ♦ $130,000 "Poet's Cornea' Sewer Main repair FY14 increase by $645,000: ♦ $ 75,000 for Sewer Main projects ♦ $300,000 for West St. Sewer Station repairs ♦ $270,000 for Joseph's Way Sewer Station repairs FY15 and beyond: ♦ Several additions, deletions and changes — note addition of several Sewer Station repairs Finance Committee Report: Bylaw Committee Report: No report. ARTICLE 5 To see if the Town will vote to adopt Massachusetts General Laws Chapter 32B, Section 20 which allows the Town to set up an irrevocable trust for "Other Post Employment Benefits Liabilities" or take any action with respect thereto. Board of Selectmen Background: This article will provide for the establishment of a Trust Fund into which the Town may, from time to time, deposit funds which will eventually fully fund the Town's Other Post Employment Benefits (OPEB) obligation — primarily health insurance for active and retired employees. Accepting Ch 32B sec 20 allows a city, town, district, county or municipal lighting plant to establish a separate fund, to be known as an Other Post Employment Benefits (OPEB) Liability Trust Fund. Funds will be invested and April 23, 2012 Annual Town Meeting 5 Report on the Warrant (D reinvested by the custodian consistent with the prudent investor rule set forth in chapter 203C. This article does not put any money into the trust. It only establishes the trust so that when we want to vote to fund it, there is a mechanism for us to save and invest. What is OPEB? The term OPEB refers to all benefits, other than pensions, that retirees receive. For public employees in Massachusetts, OPEB largely consists of retiree health insurance but also includes life insurance. Only employees that are in the Reading Contributory Retirement system and retire immediately following employment by the town of Reading, are entitled to these benefits after meeting certain eligibility requirements, a vesting period and minimum retirement age. While it is not currently mandatory to fund the OPEB liability, many communities have begun accumulating funds to meet their obligations. Municipalities should be setting aside money to fund the actuarially determined OPEB obligations, payable in the future, that were incurred for active employees during the year. Then, when the employee retires, the trust fund should have accumulated enough money to pay the health insurance for the retiree. As more communities begin to save money in an OPEB Trust, there could eventually be a mandate from the state that funding begin for all communities, similar to what was done in 1988 for funding retirement obligations. Middlesex League Communities — OPEB Funding Strategies Community Amount Description /Notes Funded Arlington $4,200,000 Annually appropriate the difference between $500K and the non contributory pension appropriation; as non contributories decrease, funded amount increases. Raised the retiree contribution for health insurance from 10% - 15% and annually appropriate this difference to OPEB. Formally earmarked Medicare D reimbursement to OPEB. Belmont $600,000 The Town is trying to develop a policy for an annual funding mechanism. Burlington $0 Town Meeting warrant article to propose funding OPEB in January. Considering allocating a set % of free cash annually, building an amount into the operating budget annually, or both options in combination. Lexington $1,900,000 Town earmarked Medicare D revenues over the past several years to the OPEB trust. Melrose $0 City has no funding protocol to date, most likely would need a Prop 2 1/2 override. Reading $0 Town Meeting warrant article to propose funding OPEB in May. Stoneham $0 Town is aggressively funding the pension liability with a projected fully funded date of 2023. Intent is to pay this off and then begin funding OPEB. Plan to set up trust fund soon and potentially add any one time revenues windfall that might be received. Wakefield $50,000 $50K funded from the operating budget in FY12. Town recently joined the GIC and is considering allocating some of the savings achieved to OPEB in future budgets. Watertown $1,075,000 Funds set aside in an OPEB Stabilization Fund (i.e. not a legal OPEB trust fund). Town is on an aggressive funding schedule for pension liability (2022) and intends to reallocate pension funding to OPEB upon fully funded status. Wilmington $100,000 The Town set aside token funds in an account still controlled by the town (i.e. not a legal OPEB trust fund). Considering adding to it this year. Winchester $400,000 Most ecently contributed $250K; set up GASB 45 Task Force Woburn $937,086 The City has set aside the Medicare D reimbursement over the past several years in a reserve still controlled by the City i.e. not a legal OPEB trust fund). Finance Committee Report: Bylaw Committee Report: ARTICLE 6 To see if the Town will vote to amend one or more of the votes taken under Article 28 of the Warrant of the Annual Town Meeting of April 25, 2011 as amended under Article 5 of the Warrant of the Subsequent Town Meeting of November 14, 2011; and to see what sum the Town will vote to appropriate by April 23, 2012 Annual Town Meeting 6 Report on the Warrant borrowing or transfer from available funds, or otherwise, as the result of any such amended votes for the operation of the Town and its government, or take any other action with respect thereto. Board of Selectmen Background: The following budget amendments are proposed for the FY12 budget: General Fund - Wages and Expenses Account Lime Description Decrease Increase B99 Benefits: $110,000 - $500,000 Health Insurance + $500,000 OPEB Trust Fund - $50,000 Unemployment - $35,000 Medicare - $25,000 Worker Comp. Ins. early payment discount C99 Capital $461,000 +$306,000 DPW Roads* + $25,000 DPW curb /sidewalk* *$331,000 + $70,000 DPW replace 1971 Bulldozer before FY14 $130,000 + $50,000 DPW replace 1997 Hwy pickup before FY15 + $10,000 Town Facilities Town Hall carpet E99 Vocational Education $25,000 - $25,000 lower enrollment than anticipated H91 Accounting wages $5,000 + $5,000 overlap for new Town Accountant 191 Finance wages $55,000 - $37,000 Open clerical position not filled - $11,000 Technology position open until filled - $ 7,000 Surplus from combining elections 192 Finance expenses $55,000 + $24,000 Assessors outsourced property inspection + $11,000 Technology required by new library system + $15,000 Technology for Town Hall K91 Community Services wages $13,000 - $ 8,000 Health inspector (now a Melrose employee) - $ 5,000 Various positions due to staff turnover K92 Community Services expenses $23,000 + $ 8,000 Health inspector (Melrose employee) + $15,000 Outsourced services for housing plan M91 Public Works wages $20,000 + $20,000 Overtime caused by storms in the fall of 2011 M92 Public Works expenses $15,000 + $15,000 for variety of expenses related to fall storms M93 Public Works Snow & Ice - not used M94 Public Works - Street Lights $10,000 April 23, 2012 Annual Town Meeting 7 Report on the Warrant M95 Public Works Rubbish $125,000 N91 Public Safety wages — Overtime in Fire department $95,000 N92 Public Safety expenses $10,000 - $25,000 Fire Ambulance billing (not yet completed) + $15,000 Police traffic light repairs V99 Town Facilities $10,000 + $10,000 for Community Service area — handicap accessibility and customer service Subtotals $348,000 $679,000 Subtotals excluding items in *C99 $348,000 Items in *C99 *$331,000 Net from Operating Transfers and Available Funds None (Free Cash) *From 40R Smart Growth Stabilization Fund $331,000 Finance Committee Report: Bylaw Committee Report: No report. ARTICLE 7 To see if the Town will vote to approve the FY 2013 — FY 2022 Capital Improvements Program as provided for in Section 7 -7 of the Reading Home Rule Charter, or take any other action with respect thereto. Board of Selectmen Background: Please see the Blue Pages in the Appendix of this Warrant Report for the FY 2012 — FY 2021 Capital improvements Program. Finance Committee Report: Bylaw Committee Report: No report. ARTICLE 8 To see if the Town will vote to authorize the payment during Fiscal Year 2012 of bills remaining unpaid for previous fiscal years for goods and services actually rendered to the Town, or take any other action with respect thereto. Board of Selectmen Background: For the Town to pay bills from a prior year requires a special vote of Town Meeting. The following bills from a prior year are due. This will require a 9/10 vote of Town Meeting. ♦ The Engineering Division has a bill from June 2011 for copier maintenance. There was confusion between the parent company and the local office as to who would do the billing and how much it would be. Numerous phone calls to both locations finally produced an invoice for $155 that needs to be paid since the service was provided. ♦ The DPW has a bill in the amount of $78.31 in invoices from last fiscal year for auto parts. April 23, 2012 Annual Town Meeting 8 Report on the Warrant Finance Committee Report: Bylaw Committee Report: No report. ARTICLE 9 To see if the Town will vote to authorize the Board of Selectmen to sell, or exchange, or dispose of, upon such terms and conditions as they may determine, various items of Town tangible property, or take any other action with respect thereto. Board of Selectmen Background: Following is a list of surplus vehicles that are scheduled to be disposed of in FY 2012. Town Meeting approval is required for disposition of tangible property with a value of $5000 or more. It is unlikely that any of these items have a value that exceeds that amount, but to be safe, Town Meeting approval is requested. Disposition could be through trade in, auction, or other sale. ♦ Fire - 1996 Chevrolet 2500 Pickup Truck ♦ DPW - 1961 3" Trashmaster centrifugal pump mounted on a 2 wheel trailer, 12 HP Wisconsin engine (not running) ♦ DPW - 1998 Ford Crown Victoria. ♦ DPW - 10' Baker snow plows fixed angle. ♦ DPW - 1973 John Bean Roto -Mist Hydraulic Sprayer. ♦ DPW - 490 Dynahoe backhoe bucket (30 ") ♦ DPW- Lindsay T40HA- Portable Air Compressor (not running) ♦ DPW - 1970 Brodie 4 Wheel Trailer ♦ DPW - 1987 Haban Sickle Bar Mower Attachment ♦ DPW - 1985 Takeuchi Crawler Excavator ♦ DPW - 1995 Holder 6000 with boom flail and blower ♦ DPW - 1971 Cat 951 B Traxcavator ♦ DPW - 1997 F250 pickup ♦ DPW - 2003 Ford F250 pickup ♦ DPW - 2003 Cat 430D, 5 speed, ♦ Police - 2 Ford Crown Victoria Police Cruisers ♦ School - 1996 Chevrolet K2500 Utility body pick -up truck Town Meeting members may be interested in how we disposed of tangible personal property that was authorized last year. Last year we disposed of the following vehicles: ♦ Ford F250 Pickup (1989) DPW /Parks 136K miles Trade -in $ 600 ♦ Ford Explorer (2000) DPW /Engineering 108K miles Trade -in $ 625 ♦ Ford F350 Pickup (1997) DPW/Water 74K miles Trade -in $ 1000 ♦ Ford F350 Pickup (2006) DPW /Sewer 90K miles Trade -in $ 2000 ♦ Ford F250 Pickup (2001) DPW /Sewer 105 miles Trade -in $ 1000 ♦ Elgin Pelican (John Deere) Sweeper (2005) 2658 hours Trade -in $28,000 ♦ Warco Motor Grader (1952) from FY11 surplus Sold after 2 postings 606 Total $33.831 Finance Committee Report: Bylaw Committee Report: No report. April 23, 2012 Annual Town Meeting Report on the Warrant 0 ARTICLE 10 To see if the Town will vote to authorize revolving funds for certain Town Departments under Massachusetts General Laws, Chapter 44, Section 53E'/z for the fiscal year beginning July 1, 2012 with the receipts, as specified, credited to each fund, the purposes, as listed, for which each fund may be spent, the maximum amount that may be spent from each fund for the fiscal year, and the disposition of the balance of each fund at fiscal year end. Revolving Spending Revenue Allowed Expenditure Limits Year End Account Authority Source Expenses Balance Fees as provided or in Reading Consulting and engineering Conservation General Bylaws services for the review of $25,000 Commission Section 5.7, designs and engineering Available for Consulting Conservation Wetlands work for the protection of expenditure Fees Commission Protection wetlands. next year Legal, oversight and inspection, plan review, Building Plumbing, initial property appraisals Wiring, Gas and and appeals, Community other permits for Services general $200,000 he Oaktree, management, curb Addison-Wesley/ sidewalks and pedestrian Inspection Pearson and safety improvements, Available for Revolving' Town Johnson Woods records archiving and other expenditure Fund Manager developments project related costs. next year Vaccines, materials for screening clinics and clinical supply costs, medical $25,000 Public Health Clinic Fees and equipment and supplies, Available for Clinics and Board of third party immunizations, educational expenditure Services Health reimbursements materials next year Library Library Charges for lost or Acquire Library materials to Available for Materials Director and damaged Library replace lost or damaged $15,000 expenditure Replacement Trustees materials items next year Utilities and all other Available for Mattera Cabin Recreation maintenance and operating $10,000 expenditure Operating dministrator Rental Fees ex enses next year Director of Public Works upon the recommendati on of the Sale of timber; fees Available for Town Forest for use of the Town Planning and Improvements $10,000 expenditure Town Forest Committee Forest to the Town Forest next year or take any other action with respect thereto. Board of Selectmen Background: The revolving funds established in this article are subject to annual renewal by Town Meeting. • Inspections Revolving Fund - Beginning in 2004, Town Meeting approved the Inspections Revolving Funds as a way to deposit building and other permit fees, and to use them directly purposes of plan review, April 23, 2012 Annual Town Meeting 10 Report on the Warrant inspections, legal expenses, initial property value appraisal and appeals, and general management of the Community Services operations related to three developments as well as for the construction of curbs, sidewalks and pedestrian safety improvements. The balance available as of February 29 2012 in this fund is $209,962. There are expected to be little expenditure from these funds for FY 2012, as some of these projects have just been getting started. The balance in the fund is from permit fees from Oaktree, Addison - Wesley /Pearson (now Pulte Homes), and a small amount from Johnson Woods developments. Health Clinic Revolving Fund - The Reading Health Division contracts for third party payments for a number of immunizations. The funds are used to augment the influenza vaccine supply from the State Department of Public Health to insure vaccine for the homebound clients and first responders. The Division also uses these funds for materials for other screening clinics. Clinic client fees are also deposited into this fund to offset vaccine and clinical supply costs. The balance available as of February 29 2012 in this fund is $44,766. In the coming year the State is cutting back on the free flu vaccine to be distributed to cities and towns, and the Town therefore needs to purchase extra doses. The necessary amounts used for clinic vaccine, supplies and staff salaries related to the clinics each year directly from the revolving fund is therefore approximately $35,000. Library Materials Replacement Fund — During the course of a year, the Library recovers funds from patrons who have lost or damaged books or other materials. Previously, those funds went into the Town's General Fund and at the end of the year went into Free Cash. Once this Revolving Fund was adopted (beginning in FY 2010), those funds recovered from patrons for lost or damaged materials were available directly to the Library for expenditure to purchase replacement materials and processing supplies. The balance available as of February 29 2012 in this fund is $2,360 • Mattera Cabin Operating Fund — The log cabin on the Mattera conservation land was purchased several years ago, and was renovated by the Vocational School. Some of the use is revenue generating, and it is anticipated that over time the site will generate enough funding to pay the operating costs of the cabin — primarily utilities. This Article allows those revenues to be used directly for the operating expenses of the cabin. The balance available as of February 29 2012 in this fund is $2,181 Town Forest Revolving Fund was created last year. The purpose is to allow revenues from controlled timber harvesting and permit fees to then be spent by the DPW Director upon the recommendation of the Town Forest Committee, on improvements to the Town Forest, including planning efforts. The Town Forest Committee has had a forest stewardship plan created through a grant, to make recommendations on forest management including controlled timber harvesting. The Committee is in the process of determining how to proceed in beginning this work. In addition, the Town Forest Committee has commissioned a master plan for the Town Forest and adjacent property, and the Master Plan will include recommendations on improvement to the Town Forest. Finally, the Town Forest Committee is beginning to develop policies and regulations on the use of the Town Forest. Since this revolving fund was just created last year, the balance available as of February 29 2012 in this fund is $0 Finance Committee Report: Bylaw Committee Report: No report. ARTICLE 11 To see if the Town will vote to revoke its acceptance of Chapter 468 of the Acts of 1911 which extended the provisions of Civil Service for the Reading Police Department, including the Chief of Police; and further, that this revocation will not affect the Civil Service status of existing personnel in their current positions; or take any other action relating thereto. April 23, 2012 Annual Town Meeting Report on the Warrant 11 Board of Selectmen 0 Background: This article would prospectively remove the members of the Reading Police Department from Civil Service, and would allow the Town to conduct its own hiring, promotional, and disciplinary process and decisions without being subject to the dictates of a State Agency — the Civil Service Commission. The Reading Police Department has been in the state Civil Service system since a Town Meeting vote in 1918. At that time there were no unions representing municipal police departments, and very little state legislation or case law dealing with employee rights or responsibilities. This was the era of the famous (or infamous) Boston Police Strike, and Civil Service was looked at nationally as a means of combating corruption in government. Much has changed since that time almost 100 years ago, including the Civil Service system itself. The Civil Service system (known otherwise as the Department of Human Resources) governs, for agencies coming under their jurisdiction: ♦ Initial hiring ♦ Promotions ♦ Discipline Initial Hiring Hiring good qualified people to provide Town Police services is the most important decision that is made in operating a first class Police Department. Civil Service process The initial hiring process is slow, cumbersome, and does not address local needs. It is a state -wide, one size fits all system. There is no local control. The process begins with a state wide exam. Some communities report that they had no or few candidates take the exam this past year. The exam is given in May of the year, and the exam for a community is good for 2 years. The results of the exam are available in October - 5 months after the exam is given! When a community has a need to hire a Police Officer, they ask Civil Service for a list of candidates, and the list is sent with the number of people who the community may consider restricted to a formula of 2N +1 — or 3 candidates if you are hiring one Police Officer (it could be more candidates if there are tie scores). The candidate list will be based solely on the score of a written exam, with the exception that veterans and dependents of Police Officers killed in the line of duty are automatically placed at the top of the list. Additionally, if there are any Police Officers anywhere in the Commonwealth who have been laid off and have not been hired back, they also go to the top of the list for consideration. Candidates are then interviewed and the Appointing Authority (Town Manager) makes a decision and a conditional offer of employment, pending successful completion of a psychological exam (paid for by the Town), a medical exam (paid for by the Town), and a Physical Abilities test administered by Civil Service. If the Town Manager selects anyone but the highest ranked candidate, he must put in writing why higher ranked (based solely on test scores and /or veteran or other preference) was not selected. This decision is subject to an appeal to the Civil Service Commission by anyone who is aggrieved by the decision. Problems with Civil Service The hiring process under Civil Service is very cumbersome and time consuming. To take 5 months to certify a test in these days is ridiculous — SAT's are graded instantaneously. The only criteria that the Town may consider are the test score, background check, and an interview. For the Town to ask for a list of minorities or women to diversify the employment of the Police Department requires a written admission on the part of the Town of past discrimination. At times, the Town has made a decision not to fill a position because none of the candidates available for selection met the needs of the Town. Proposed system If Town Meeting approves this article, then the Town will be able to develop its own hiring system, as the Town does for all other employees of the Town including DPW, non - union, School employees, RMLD employees etc. There are a number of other communities in the Boston metropolitan area that do not have Civil Service, and the Town would consider conducting periodic joint examinations for entry level Police officers. Other non -Civil Service Communities are able to advertise and recruit candidates, including minorities and women. An exam would be conducted, and experience in other communities shows that an exam given on a Saturday can be graded and certified the following Tuesday, and interviews of selected candidates can begin immediately. The cost of the examination is borne by the candidates. The Town may then interview any number of candidates, and the test scores would be considered as one of a number of criteria that can be used in selecting what candidate to interview. The Town can also consider things like education, work background, and other normal hiring criteria. Under this process, hiring will be able to be conducted expeditiously, and there should never be a circumstance where a position is left vacant (at April 23, 2012 Annual Town Meeting 12 Report on the Warrant 9 considerable expense because the workload will then have to be picked up on overtime) because none of the candidates are qualified. Promotions Promotion of the best candidates to fill leadership positions in the Police Department is critical to carrying out the mission of the Department. Pending Town Meeting approval of this Article, the Town has negotiated with the 2 unions representing Police Patrol Officers and Police Superior Officers, language that outlines the process of promoting to the ranks of Sergeant and Lieutenant. Civil Service process Similar to the initial hiring process, the promotional process is slow, cumbersome, and does not address local needs. It is a state -wide, one size fits all system. There is no local control. The process begins with a state wide exam. The exam is given in October of the year, and the exam for a community is good for 2 years. The results of the exam are available in May of the following year — 6 months after the exam is given! When a community has a need to promote, they take the requisite number of names from the top of the list of candidates, restricted to a formula of 2N +1 — or 3 candidates if you are promoting one Sergeant or Lieutenant (it could be more candidates if there are tie scores). The candidate list will be based solely on the score on a written exam. Candidates are then interviewed and the Appointing Authority (Town Manager) makes a decision. If the Town Manager selects anyone but the highest ranked candidate, he must put in writing why a higher ranked (based solely on test scores) candidate was not selected. This decision is subject to an appeal to the Civil Service Commission by anyone who is aggrieved by the decision. Problems with Civil Service The promotional process under Civil Service is very cumbersome and time consuming. To take 6 months to certify a test in these days is ridiculous — SAT's are graded instantaneously. At times, the Town has made a decision not to fill a position because none of the candidates available for selection met the needs of the Town. Proposed system If Town Meeting approves this article, then the Town has developed its own promotional system, as the Town does for all other employees of the Town. This system is embodied in the 2 union contracts which have been approved subject to Town Meeting approving this article. In addition to alternatives to traditional testing (including conducting an Assessment Center) the Town may consider additional criteria to determine the most qualified candidate for a position. These include: Job related experience; Performance evaluation in his /her present position (including contributions to the department); Supervisory evaluation of the employee's promotion potential; Score on promotional exam; Sick leave record; Formal education; Training and education through career development; Disciplinary record; Philosophical agreement with the Town's and department's vision and goals and police work; and Work ethic and initiative. Part of the cost of the promotional examination process is borne by the candidates, as is the case currently under Civil Service. Following the examination or Assessment Center, the Town may then conduct interviews of all candidates and may consider the other criteria listed above in making a selection. Promotions may then be handled expeditiously, and there should never be a circumstance where a position is vacant for any length of time (at considerable expense because the workload will then have to be picked up on overtime). In the past the Town has made a decision not to fill a position because none of the candidates available for selection met the needs of the Town. Discipline The involvement of Civil Service in the disciplinary process of Police Officers of any rank is seldom used in Reading. Contractually, an Officer who is subject to discipline and chooses to appeal their discipline has to choose to either utilize the process under Civil Service, or utilize the process under the Collective Bargaining Agreement — they cannot process an appeal under both. Nobody in the Police Department can remember the last time a disciplinary action on the local level was appealed to Civil Service. The few times that a disciplinary action has been appealed, it has gone through the grievance and arbitration procedure contained in the Collective Bargaining Agreements. The grievance and arbitration process is less expensive, quicker, and less subject to the arbitrary decisions of the Civil service Commission. Other Questions /Issues ♦ What is the status of current employees vis -a -vis Civil Service? As long as a current employee retains their current rank, they will still be covered by Civil service. A Police patrol Officer who is currently an employee as of July 1, 2012, will remain under Civil Service as long as they are employed as a Police April 23, 2012 Annual Town Meeting 13 Report on the Warrant i3 Patrol Officer. However, if that employee is promoted to the rank of Sergeant, the employee as a Sergeant will no longer be covered by Civil Service ♦ What happens to Police Patrol Officers who have recently taken the Civil Service Exam for promotion to Sergeant? The Town has agreed that those officers who have taken and passed the recent (October 2012) Civil Service exam for promotion to Sergeant will be considered on an equal footing with those who pass the Town exam for the position to be given next fall. The new Sergeant's position will not be under Civil Service. Finance Committee Report: Bylaw Committee Report: ARTICLE 12 To see if the Town will vote to accept a gift to establish the Friends of Reading Football Scholarship Fund to be administered by the Town of Reading Commissioner of Trust Funds in accordance with the wishes of the donors, or take any other action with respect thereto. Board of Selectmen Background: This article requests that the Town establish the Friends of Reading Football Scholarship Fund to be administered by the Town of Reading Commissioner of Trust Funds in the initial amount of $5,000.00. Any subsequent gifts to the Friends of Reading Football Scholarship Fund and interest earned shall be added to the principal of the Fund and distributed equally on an annual basis as outlined below. The Friends of Reading Football is a duly organized 501.c.3 charitable organization as recognized by the Internal Revenue Service and is designated as a non - profit entity by the Commonwealth of Massachusetts, Office of the Attorney General. Furthermore, the Friends of Reading Football is in- compliance with the Administrative Services Procedures required by the Reading Superintendent of Schools. The principal balance of the Friends of Reading Football Scholarship shall be expended for the purpose of awarding two annual scholarships to Reading Memorial High School Seniors who have been members in good standing for at least two years in the football program, one of which must be the applicant's senior year. The first scholarships will be awarded in June of 2012. Two annual awards of $250 each, plus accrued interest, will be granted each year. A roster of at least three, and not more than five, qualified applicants will be nominated by the Reading Memorial High School varsity football coaching staff. A list of selected nominees will be referred to the Reading Memorial High School Assistant Principals who will make two final selections from the list of nominees. The criteria for selection of the recipient s of the scholarships shall include the following: 1. The students shall be seniors who have been members of the Reading Memorial High School Varsity football program in good standing for at least two years, of which one year must be the student's senior year; 2. The students shall have a record of demonstrated leadership and good moral character; 3. The students shall have a record of good academic performance; 4. The student shall submit a written statement to the Head Varsity Coach expressing their interest and eligibility for the scholarship. The scholarship shall be awarded annually during the Reading Memorial High School commencement or awards ceremony. Finance Committee Report: Bylaw Committee Report: No report. April 23, 2012 Annual Town Meeting 14 Report on the Warrant 6) ARTICLE 13 To see if the Town will vote to determine how much money the Town will appropriate by borrowing, or from the tax levy, or transfer from available funds, or otherwise, for the operation of the Town and its government for Fiscal Year 2013 - beginning July 1, 2012, or take any other action with respect thereto. Finance Committee Background: Please see the yellow pages in the Appendix of this Warrant Report for the FY 2013 Budget. Finance Committee Report: Bylaw Committee Report: No report. ARTICLE 14 To see what sum the Town will vote to appropriate by borrowing, whether in anticipation of reimbursement from the State under Chapter 44, Section 6, Massachusetts General Laws, or pursuant to any other enabling authority or from the tax levy, or transfer from available funds, or otherwise, for highway projects in accordance with Chapter 90, Massachusetts General Laws, or take any other action with respect thereto. Board of Selectmen Background: The purpose of this Article is to make Chapter 90 funds for road improvements available to the Town for expenditure. The Article authorizes expenditures upon receipt of the grant. The FY 2013 Chapter 90 allocation is anticipated to be $ . The FY 2012 amount appropriated was $597,663 . The expectation is that the State will formally release the amount of funding prior to the April 23 Annual Town Meeting. Finance Committee Report: Bylaw Committee Report: No report. ARTICLE 15 To see what sum the Town will raise by borrowing pursuant to G.L. Chapter 44, §7(1) or transfer from available funds, or otherwise, and appropriate for the purpose of making improvements to the Whittier Road, Tennyson Road, Tennyson Circle, Wadsworth Road and Browning Terrace area surface drains, sewers and sewerage systems, including the costs of engineering services, plans, documents, cost estimates, bidding services and all related expenses incidental thereto and necessary in connection therewith, said sum to be spent under the direction of the Town Manager; and to see if the Town will authorize the Town Manager, the Board of Selectmen, or any other agency of the Town to apply for a grant or grants to be used to defray all or any part of said sewer construction and /or reconstruction and related matters; and to see if the Town will vote to authorize the Town Manager to enter into any or all agreements as may be necessary to carry out the purposes of this Article; and to see if the Town will authorize the Town Manager, the Board of Selectmen, or any other agency of the Town to apply for a non - interest bearing loan from the Massachusetts Water Resources Authority, and to authorize the Treasurer - Collector, with the approval of the Board of Selectmen, to borrow pursuant to said loan, or take any other action with respect thereto. Board of Selectmen April 23, 2012 Annual Town Meeting 15 Report on the Warrant 0 Background: This Article will be Indefinitely Postponed. During the recent Inflow and Infiltration study and subsequent video inspection it was determined that the Whittier Road and Tennyson Road area sewer system has numerous structural deficiencies, substantial inflow and infiltration and a cross connection with the drainage system. Based on the extent of the sewer main's deteriorated condition, portions of the sewer system in this area must be replaced and re- habilitated to eliminate inflow and infiltration; correct structural deficiencies; eliminate cross connections to the drainage system; restore the flow capabilities of the sewer system and provide a subsurface drainage system for the elimination of illicit discharges. The project will require the replacement of approximately 600 linear feet of sewer main; perform sewer main spot repairs, manhole replacement; testing and sealing of sewer mains and manholes; the repair and installation of approximately 2600 feet of subsurface drainage systems and appurtenances at an estimated cost of $250,000. The remaining unexpended $120,000 of funds approved under Article 9 of the Warrant at the November 9, 2009 Subsequent Town Meeting will be allocated towards this project, leaving $130,000 in additional funds which are included int the FY 2013 Capital Plan and Budget. wCOMM6 W� SCVOM Finance Committee Report: No report. Bylaw Committee Report: No report. ARTICLE 16 To see if the Town will vote to authorize the Board of Selectmen to grant an easement to Northern Bank and Trust for placement of an ATM machine in the Town owned parking area between Woburn Street and Haven Street in accordance with a plan titled "ATM Kiosk Easement Exhibit Plan ", dated Feb, 24, 2012 prepared by Allen & Major Associates, Inc.; and, further, to see if the Town will vote to authorize the Board of Selectmen to acquire an easement for driveway purposes between Haven Street and the parking area from Northern Bank and Trust in accordance with a plan titled "Access Easement Exhibit Plan ", dated Feb, 24, 2012 prepared by Allen & Major Associates, Inc.; or take any other action related thereto. April 23, 2012 Annual Town Meeting 16 Report on the Warrant r rr l b Board of Selectmen Background: The CPDC is considering site plan approval for the renovations to the MF Charles building. This project has been long awaited since the building was sold about 5 years ago. One of the opportunities which present itself is the establishment of 2 way access from Haven Street, an improvement to the circulation to the municipal parking lot which has been envisioned in the Master Plan and parking studies for a number of years. This is a unique one time opportunity to establish that access as part of the planning approval for his project. The renovation of the MF Charles building will include a new bank — the owner of the building also owns Northern Bank and Trust. In lieu of the drive through window that has existed along the driveway on the side of the MF Charles building for years, the owner is willing to give the Town an easement over the entire driveway, and in exchange the bank would receive an access easement over the municipal parking lot and for the ATM kiosk. The plan below shows both easements. This can be accomplished with no loss of parking, and with full use of the municipal parking lot (the bank drive -up kiosk has a "bypass" lane for through traffic. An added benefit to the project will be site lighting and some much needed landscaping within the municipal lot. Finance Committee Report: No report. Bylaw Committee Report: No report. ,D.,IIN, .4R.,YAT..OMG m M91VNM Sao. ax Rnall .awl Lw.�ot ME CWMM W6D*4 WE DEVELOPMENT 6 RENOVATIONS n: wn ziaD i..wic w�wsr IDISH W _ I I April 23, 2012 Annual Town Meeting 17 Report on the Warrant I ARTICLE 17 To see if the Town will vote to authorize the Board of Selectmen, upon approval of the Conservation Commission, to obtain a utility easement for the construction, maintenance, repair and operation of utilities over, across and upon a certain portion of land in the Town of Reading held by it for conservation purposes pursuant to a plan entitled "Belmont Street to Ivy Street Utility Easement" prepared by the Department of Public Works Engineering Division and dated March 5, 2012; and, further, to see if the Town will authorize, empower and direct the Selectmen and the Conservation Commission, to execute, acknowledge and deliver in the name and on behalf of said Town such deeds or other instruments as may be necessary or proper in connection therewith, such deeds or other instruments to be in such form and upon such terms as the Selectmen may deem proper; and, further, that the Town authorize the Selectmen and Conservation Commission to petition the General Court to adopt such legislation as may be necessary to carry out the purpose of this vote, or take any other action with respect thereto. Board of Selectmen Background: Over the past several years the Town has continuously made strides to upgrade and rehabilitate the Town's water distribution system as recommended in the 2001 study, performed by Weston and Sampson Engineering. These upgrades help to address poor fire flows, water quality and pressure loss due to undersized or deteriorated mains. In the study the Libby Avenue area was found to have deficient fire flows, providing only 20% of the recommend fire flows. The installation of a new water main connecting the end of Ivy Street to Belmont Street will eliminate a major dead end in the water distribution system; and improve fire flows and water quality to the area. The proposed 8" water main looping Ivy Street to Belmont Street will be cement lined ductile iron pipe approximately 850 feet in length. Approximately 700 feet of the proposed water main will be installed through Town property paralleling the current sewer main which was installed in 1976. The property through which the easement is needed consists of 2 parcels that were taken by the Town for conservation purposes in 1972 and 1974. During a deed research of the Town owned land it was determined that no rights have been reserved for a utility easement. The purpose of this article is to authorize the Selectman to create a thirty (30) foot wide utility easement to permit the proper installation, maintenance and repair of the Town's utilities over conservation controlled Town owned land. The Article will further authorize the Town to request the General Court to adopt legislation as may be necessary to carry out the authorization of the easement. April 23, 2012 Annual Town Meeting 18 Report on the Warrant 0 PROPOSED 8' WATER MAMI } ��.• ` ViafTV EASEMENT r V, ... EMSTWO C SEWER MAW A - f -• E%ISTBiG ZD FOOT SEYYEREASEMEHi•:" •.. n ^3 (f7 BELMONT STREET TO IVY STREET` IVOR UTILITY EASEMENT -- 1 inch= 100 feet r:a Finance Committee Report: No report. Bylaw Committee Report: No report. ARTICLE 18 To see if the Town will adopt the following resolution: We, the voters at the 2012 Annual Town Meeting of the Town of Reading, affirm our belief that the First Amendment to the United States Constitution was designed to protect the free speech rights of people, not corporations. The United States Supreme Court's 2010 decision in Citizens United v. Federal Election Commission overturned longstanding precedent prohibiting corporations and unions from spending their general treasury funds in public elections. We believe that the ruling created a serious and direct threat to our democracy and the conduct of free and fair elections, by permitting corporations and others to drown out the voices of ordinary persons. Already we have seen our political process flooded with newly unleashed corporate and other money, resulting in historically unprecedented campaign expenditures. The people of the United States have previously used the Constitutional Amendment process to correct decisions of the United States Supreme Court that invade or invalidate democratic institutions, including elections. NOW, THEREFORE, BE IT RESOLVED THAT WE, THE VOTERS AT THE 2012 ANNUAL TOWN MEETING OF THE TOWN OF READING, CALL UPON THE UNITED STATES CONGRESS TO PASS AND SEND TO THE STATES FOR RATIFICATION A CONSTITUTIONAL AMENDMENT TO RESTORE THE FIRST AMENDMENT AND FAIR ELECTIONS TO THE PEOPLE, AND FURTHER, WE CALL UPON THE MASSACHUSETTS GENERAL COURT TO PASS ONE OR MORE RESOLUTIONS ASKING FOR THOSE ACTIONS. April 23, 2012 Annual Town Meeting 19 Report on the Warrant 109 The Town Clerk of the Town of Reading shall send a copy of this resolution to the state and federal representatives and senators serving the Town of Reading, and to the Governor of the Commonwealth of Massachusetts and the President of the United States, and take any other appropriate action relative thereto. Or take any other action with respect thereto By Petition John Lippitt et al Background: A little more than two years ago, the U.S. Supreme Court made a precedent- breaking decision. In a five -to -four vote on a case called Citizens United v. Federal Election Commission (Citizens United for short), the court ruled that corporations and unions have the same rights to freedom of speech as U.S. citizens under the Bill of Rights. The court expanded on previous rulings that said that spending money to deliver a political message counts as speech. It held, for the first time, that corporations have the right to spend unlimited corporate funds to support or oppose candidates for elected office. This overturned the 1907 law banning corporate contributions signed by President Theodore Roosevelt, who said, "All contributions by corporations to any political committee or for any political purpose should be forbidden by law." WHAT DOES THIS TOWN MEETING RESOLUTION DO? The resolution presented here to Town Meeting states that: • Free speech rights belong to people not corporations or other organizations, and • Unlimited spending by corporations and others in our elections presents a real danger to our democracy because corporations and others with wealth can drown out the voices and interests of all of us ordinary citizens. This resolution calls: • On Congress to pass an amendment to our Constitution to clearly establish that money is not the same as speech, and that human beings, not corporations, are entitled to constitutional rights such as free speech, and On our State Legislature to pass a resolution supporting a Constitutional amendment. Such a resolution, Senate Bill 772, is being considered by the Legislature. It had a hearing on February 28th and a committee vote is expected to have occurred by March 21. WHO ELSE SUPPORTS OVERTURNING CITIZENS UNITED? Fifteen cities or towns in Massachusetts, including Boston, and hundreds of communities across the United States have passed similar resolutions calling for a Constitutional amendment to overturn Citizens United, including Los Angeles, New York, and the 55 VT towns that passed resolutions on March 6. At least two state legislatures (HI & NM) have passed such resolutions and a number of state legislatures are considering them. Citizens all across the country have concluded that unlimited campaign spending by corporations and wealthy individuals means that our elections will not be a fair fight. Democracy's foundation, government of, by, and for the People, is undermined by the influence of money on elections and government. decision- making. If, as Citizens United asserts, money equals speech, then those with more money have louder voices and those with no money have no voice. This flies in the face of the principles of our democracy and the Constitution that our founders wrote. Over 200 groups have formed a loose coalition working to overturn Citizens United, including Move to Amend, Common Cause, the National Lawyers Guild, the Unitarian Universalist Association, and Veterans for Peace. The Montana Supreme Court upheld the state's 1912 law limiting corporate spending in campaigns, despite a April 23, 2012 Annual Town Meeting 20 Report on the Warrant 2-� lower court ruling that Citizens United had invalidated the law in question. The 2nd U.S. Circuit Court of Appeals similarly upheld a New York City law that places limits on political contributions. WHY IS OVERTURNING THE CITIZENS UNITED DECISION SO IMPORTANT? With the 2012 election season underway, the consequences of the Citizens United decision are becoming clearer by the day. Some wealthy individuals and corporations are already contributing millions of dollars to Super PACs, which have already spent over $40 million in the Republican presidential primaries. The amount spent to date is a drop in the bucket compared to the hundreds of millions of dollars that these Super PACs have stated they will raise and spend during the entire 2012 election period. The unleashing of corporate funds has dramatically expanded possible election spending and, therefore, concerns that elected officials will be more responsive to contributors and their money than to constituents. The Open Secrets project at the Center for Responsive Politics calculated that even before Citizens United roughly 72% ($3.4 billion) of all campaign contributions in 2007 -2010 came from the business sector (individuals and organizations), with labor contributing 4% ($172 million), ideological groups 7% ($308 million), and others 17 %. Now we can expect even greater business sector dominance. Finance Committee Report: No report. Bylaw Committee Report: No report. ARTICLE 19 To see if the Town will vote to approve an Affordable Housing Trust Fund Allocation Plan pursuant to Chapter 140 of the Acts of 2001 entitled "AN ACT AUTHORIZING THE TOWN OF READING TO ESTABLISH AN AFFORDABLE HOUSING TRUST FUND ", or take any other action with respect thereto. Board of Selectmen Background: The purpose of this Article is to approve an Affordable Housing Allocation Plan approved by the Board of Selectmen Chapter 140 of the Acts of 2001 authorized the Town of Reading to establish an Affordable Housing Trust Fund (AHTF). ♦ "The Town of Reading may establish a separate fund to be known as the Affordable Housing Trust Fund for the purpose of creating or preserving affordable housing ... for the purpose of creating, maintaining or operating affordable housing." ♦ The AHTF may "develop new or rehabilitate existing dwelling units for purchase or rental by low and moderate income housing purchasers or tenants;" ♦ "Expenditures shall follow an allocation plan submitted by the Board of Selectmen annually to Town Meeting at the Annual Town Meeting, and approved by Town Meeting." ♦ "all expenditures from the fund, ... shall be in accordance with the allocation plan and approved by a majority vote of the full combined memberships of the Board of Selectmen and the Reading Housing Authority." The purpose of the Affordable Housing Allocation Plan is to provide a framework for the Town to expend funds on affordable housing. The current balance is $ 259,077. Funds have been accumulated over the years as funds secured for the purpose by the CPDC, and funds deposited in one instance when an existing affordable unit was no longer able to be kept affordable after efforts were made to do so. There are no Town generated funds in the AHTF. The only expenditure to date from the AHTF is an amount of $200,000 for Oaktree development to provide an additional 3 affordable housing units. That sum is in escrow and by the fall of 2012 we will know whether any or all of it has been utilized. Pending that information, the Board of Selectmen has indicated that it may ask to transfer funds from the 40R payments to the Affordable Housing Trust Fund., April 23, 2012 Annual Town Meeting 21 Report on the Warrant The Affordable hosing Allocation Plan approved in 2011 is as follows: Affordable Housing Allocation Plan May 5, 2011 Pursuant to Article 24 of the 2011 Annual Town Meeting, an Affordable Housing Trust Fund Allocation Plan for the Fiscal Year 2012 in accordance with the provisions of Chapter 140 of the Acts of 2001 is as follows: Available Balance — Unrestricted Funds: Available Balance — Restricted Funds $458,017.68 $ 0 Unrestricted funds shall be used for the following purposes: 99% for constructing affordable housing (including loan and grant programs); or for maintaining and improving affordability of existing housing stock; or for the purchase of existing housing stock to add it to or maintain it as a part of the existing affordable housing inventory 1 % for administration of the Affordable Housing Trust Fund ARTICLE 20 To see if the Town will vote to add section 5.4 to the Town of Reading General Bylaw as follows 5.4 Criminal History Check Authorization 5.4.1 Fingerprint Based Criminal History checks The Police Department shall, as authorized by Massachusetts General Laws Chapter 6, Section 172 B 1/2, conduct State and Federal Fingerprint Based Criminal History checks for individuals applying for the following licenses: • Hawking and Peddling or other Door -to- Door Salespeople, (Police Chief) • Manager of Alcoholic Beverage License (Board of Selectmen) • Owner or Operator of Public Conveyance (Board of Selectmen) • Dealer of Second -hand Articles (Board of Selectmen) • Hackney Drivers, (Board of Selectmen) • Ice Cream Truck Vendors (Board of Health) 5.4.1.1 Notification At the time of fingerprinting, the Police Department shall notify the individual fingerprinted that the fingerprints will be used to check the individual's criminal history records. The Police Chief shall periodically check with the Executive Office of Public Safety and Security ( "EOPSS ") which has issued an Informational Bulletin which explains the requirements for town by- laws and the procedures for obtaining criminal history information, to see if there have been any updates to be sure the Town remains in compliance. 5.4.1.2 State and national criminal records background checks Upon receipt of the fingerprints and the appropriate fee, the Police Department shall transmit the fingerprints it has obtained pursuant to this by -law to the Identification Section of the Massachusetts State Police, the Massachusetts Department of Criminal Justice Information Services (DCJIS), and /or the Federal Bureau of Investigation (FBI) or the successors of such agencies as may be necessary for the purpose of conducting fingerprint -based state and national criminal records background checks of license applicants specified in this by -law. 5.4.1.3 Authorization to conduct fingerprint -based state and national criminal record background checks The Town authorizes the Massachusetts State Police, the Massachusetts Department of Criminal Justice Information Systems (DCJIS), and the Federal Bureau of Investigation (FBI), and their successors, as may be applicable, to conduct fingerprint -based state and national criminal record background checks, including of FBI records, consistent with this by -law. The Town authorizes the Police Department to receive and utilize State and FBI records in connection with April 23, 2012 Annual Town Meeting 22 Report on the Warrant (aD Finance Committee Meeting March 7, 2012 The meeting convened at 7:30 p.m. at the Reading Municipal Light Department, 230 Ash Street, Reading, Massachusetts. Present were FinCom members David Greenfield, Barry Berman, Hal Torman, Marie Ferrari, Jeanne Borawski, Mark Dockser, and Paula Perry, Town Manager Peter Hechenbleikner, Assistant Town Manager/Finance Director Bob LeLacheur, Police Chief James Cormier, Fire Chief Greg Burns, Public Works Director Jeff Zager, Community Services Director Jean Delios, Library Director Ruth Urell, DPW Business Administrator Jane Kinsella, Office Manager Paula Schena and the following list of interested persons: Bill Brown, Library Trustees Vicky Yablonsky and Cherrie Dubois. Reorganization — David Greenfield noted that the Committee needed to reorganize due to Marsie West being elected to the Light Board and John Arena being elected as a Selectman. Ferrari moved and Torman seconded to place the name of David Greenfield into nomination as Chairman of the Finance Committee The motion was approved by a vote of 5 -0 -1 with Greenfield abstaining and David Greenfield was appointed Chairman Torman moved and Dockser seconded to place the name of Barry Berman into nomination as Vice Chairman of the Finance Committee. The motion was approved by a vote of 6 -0 -0 and Barry Berman was appointed Vice Chairman. FY13 Town Manager's Budget The Town Manager noted that the Town did a bond sale today to refinance debt and it is good news for the Town. Bob LeLacheur noted that we save $4.4 million in interest and we eliminate $130,000 off of debt service. The Town's outstanding debt has gone from $53 million to $40 million. We are no longer dealing with the MSBA and that greatly simplifies our work. The Town Manager noted that the reduction for the schools will be effective in 2014. The Finance Committee congratulated Bob LeLacheur and suggested that the Town Manager do a press release with this very good news. Library — Library Director Ruth Urell and Library Trustees Vicky Yablonsky and Cherrie Dubois were present. Ruth Urell noted that the FY13 budget restores to the FYI I levels. It includes a 2% COLA, a new operating system for Noble, the book budget is increased 20 %, and she is asking for $7,161 in additional items as listed on page 2 of her handout. The Town Manager noted that the big issue with the Library is the facility. We are next in line for funding and once we receive notification we need a Town Meeting for $7 million. Barry Berman asked if this budget keeps Sunday hours and asked if we lend through Kindle. Ruth Urell noted this budget does include Sunday hours and noted that the Library residents can borrow content and devices and they will be holding classes. Barry Berman asked what the cost of E version is versus a hardcopy and Ruth Urell indicated she did not know because we buy as a consortium plus we get some free. 23 Finance Committee Meeting — March 7, 2012 — page 2 Bob LeLacheur noted that $15K has been added to the FY12 budget to cover new PC's and monitors to join the operating system. Fire Department — Fire Chief Greg Burns noted that he applied for storm reimbursement in the amount of approximately $20,700 for Irene and $41,000 for the October storm. He hopes to see the money in several months, but the Fire and DPW budgets will have to be amended if we don't recover the money before July 1, 2012. David Greenfield asked how likely we are to get reimbursed and Chief Burns noted sometimes the figures change but it is very likely we will get reimbursed. Chief Burns noted the Fire budget retains current staffing; covers contract increases and COLA. The overtime budget has been increased to a more realistic level. ALS license fees, equipment supplies for medications and syringes and software licenses are also included in the budget. David Greenfield asked what the drivers are behind the overtime. Chief Burns noted that the FY12 overtime budget is short approximately $95,000. He has had a fire fighter out with a knee injury, a fire fighter out with a cardiac issue, one out with a shoulder injury, another with a wrist injury and yet another with a knee injury. He noted that the concurring injuries are more costly especially around vacation time. Chief Burns also noted that he is down one Fire Fighter due to a retirement. He needs to hire and train a new Fire Fighter and the academy is 13 weeks long. Chief Burns showed a chart of overtime comparison with Metro Fire communities and noted that Reading ranks the 4`h lowest out of 10 communities. Paula Perry asked if a Fire Fighter is out if they draw on their salary. The Town Manager noted that the Fire and Police are covered by indemnification that pays their medical bills but the salary is paid out of the Department budget. If it is a career ending disability, then they try to get the employee to retire. Non work related injuries use sick time which accumulates with no limit. Paula Perry asked if that was typical and the Town Manager indicated it is for municipalities because the employees are not eligible for social security disability and there is also no state disability program. Mark Dockser noted that there was discussion last year about additional staffing versus overtime and he asked if that was the same. Chief Burns indicated he could not guarantee a significant savings if he hired additional fire fighters. Barry Berman asked if there was a consortium of floaters to use and Chief Burns indicated he was not aware of any. David Greenfield noted that might be worth a discussion but the Town Manager noted that the only problem could be that our Fire Fighters are paramedics and EMT's and the other towns do not have paramedics and EMT's. The Town of Reading has brilliant ideas, but the surrounding towns don't think so. Marie Ferrari asked how consistent the overtime budget has been over the past four years and Bob LeLacheur noted that is the only item in the budget that could be underfunded. Chief Burns noted that for ALS requires each paramedic to have 60 hours of training each year. The cities of Woburn, Stoneham, etc. don't have that expense. Chief Burns noted that the cost of a Finance Committee Meeting — March 7 2012 — page 3 contracting out ambulance billing is approximately $18,000 which is the same as what we bring in doing it ourselves. Police Department — Chief Cormier noted that his department is working with the schools and RCASA to deal with community priorities. The Town is currently in negotiations with the Police Unions and close to settling. The Town Manager noted that the major area of negotiations is to remove the entire department from Civil Service. The Town Manager noted that no civil service decision has been upheld when it was appealed and gone to court. Barry Berman asked if there would be ramification from the state for leaving civil service and the Town Manager indicated there is not and more and more communities are leaving civil service. The Town Manager noted that many towns are waiting to see our results. Chief Cormier noted the budget includes a 2% COLA. The salary line has increased 9% to absorb the RCASA staff because the grant ends in September. There will also be an additional officer. Overtime has been increased by 12.3% to try to right size this line because it is always underfunded. Money has been added for uniforms and academy for new officers. The Crown Victoria is being discontinued so a lot of equipment will need to be changed because we won't be able to swap out equipment anymore. Traffic control repair is being moved to DPW because Engineering is more understanding of how the new traffic signals work. Chief Cormier noted that they are changing the rotation of scheduling and it will be easier to monitor. The officers need stability in their life. Overtime this year is approximately $250,000 which is lower than last year. David Greenfield asked how much the detail overtime is and Chief Cormier indicated it is $500,000 but they have been working with DPW and Engineering to help save by having DPW close streets off instead of paying for a detail. Unfortunately, we no longer have the Community Policing Grant which helped offset some of the detail work and paid for RAD classes. Mark Dockser asked if there are any private grants available and the Town Manager noted that the RCASA applies for smaller grants. Chief Cormier noted that they received a grant for compliance checks and will explore any grant that is available. Barry Berman asked if there will be a need for more staff when new developments come online. The Town Manager indicated there probably will in Public Safety, Fire and School departments. Two modular classrooms were funded for all day kindergarten. He anticipates coming back in the fall for an additional police officer. Barry Berman asked if there are any numbers for a ratio and Chief Cormier noted that the standard is 2 officers per 1000 residents which would equal 48 officers. Reading has approximately 1.34 officers per 1000 residents equaling 42 officers. Dispatch — Chief Cormier noted that the budget includes a 2% COLA, the state grant has been reduced; the cost for the software license has been moved to the Finance Technology line. There is a small professional development expense — the state is now requiring dispatch certification, but our Dispatchers have already been certified. We are still pursuing regional dispatch but won't participate unless there is a benefit for Reading. zs Finance Committee Meeting — March 7, 2012 — page 4 Department of Public Works — Public Works Director Jeff Zager noted that the budget abides by the negotiated contracts and 2% COLA. It restores a seasonal Parks position. It took weeks to clean up the Town after Irene and the Halloween storms and he hopes to get reimbursed for that. Equipment repair is level funded. A hot box was purchased last year and is working great. The overall budget has increased 1% across the board. There is some money for professional development training to get people ready to step up when retirements take place. There have been 25 personnel actions over the past 3 years. Snow and ice has been increased to get to the average. Bob LeLacheur noted that he wants to budget approximately 75% of the average. Jeff Zager noted that recycling has been a huge success and there are four or five communities who are mimicking our program. David Greenfield asked about gas prices. Bob LeLacheur noted that they budgeted $3.75 per gallon and are paying around $3.18 right now so it will probably end up being a wash. It is a three year contract and we pay a certain percentage over the delivery price. David Greenfield noted that other states use other means for details i.e. flagmen and would like to see that happen in Reading. Hal Torman asked if the street sign program is complete and Jeff Zager noted it is but now the state is coming up with new regulations for other signs such as stop signs. The Town Manager noted that we received $50,000 from Pulte to design the Hopkins Street intersection. The state will pay for the construction and we pay for the design. Debt and Capital — Bob LeLacheur noted the projected revenues are $77.12 million. Excluding debt leaves us with net available revenue of $73.87 million. The target for capital us $1.29 million and the capital funding is $1.87 million. David Greenfield asked how much is added due to the refinancing and Bob LeLacheur indicated he added $120,000. Bob LeLacheur noted that the CIP requests and funding is pretty even. Our facilities are in great shape and we're running out of capital projects. Road improvements is an area that needs money. We will probably add a new bulldozer and fire floor replacement to the CIP. David Greenfield asked about the technology wireless access in the capital plan. Bob LeLacheur noted that the Superintendent wants to do large scale projects that are one time expenses. The Town Manager noted there are two technology pools for schools — replace equipment on a regular basis and building projects. Bill Brown noted that the cemetery building is in deplorable shape and they need a new building. Bob LeLacheur noted there is $100,000 in FY13 for design and debt in FY14 and FY15. The Town Manager noted that the location has been narrowed down to two and now we need to do the design and make a decision. Barry Berman asked how much debt service there is now and how much with the Library and Killam projects added in. Bob LeLacheur indicated approximately $40 million now and the projects will add about $1 million - $1.50 million/year. 02--`1 Finance Committee Meeting — March 7, 2012 — page 5 Enterprise Fund — Bob LeLacheur recommended maintaining the $40 residential. Wages are up due to overtime. The design work for the Saugus and Aberjona Rivers will begin in FYI 5. The Town Manager noted that the rivers are drainage ditches and haven't had any maintenance. The banks are eroding and affecting the abutting properties. Studies are being done now. Bob LeLacheur noted that the water retirement went from $27,000 to $73,000 with an additional $47,000 for water OPEB. We will be paying water treatment plant debt up to FY2016. Also, he suggests a statement on water reserves. The Town Manager noted that should be a Selectmen policy because they set the rates. Bob LeLacheur noted the sewer budget increased 7% due mostly to capital. A series of sewer stations need rehab and the MWRA says to expect an 8% increase from FY 14 and beyond. Debt Refinancing — S & P's Rating Report Bob LeLacheur noted that page I 1 of the handout had the write up from Standard and Poor's on our bond rating. They were impressed with our budget and like our policies. Board of Health Public Hearing on March 15`h The Town Manager noted that the Board of Health is having a hearing on standardization of policies and fees. The Bylaws require the Finance Committee to be notified. No action is necessary. The hearing is March 15 . Minutes A motion by Torman seconded by Dockser to approve the minutes of February 29, 2012 as amended was approved by a vote of 7 -0 -0. A motion by Dockser seconded by Ferrari to adiourn the meeting at 10:50 p.m. was approved by a vote of 7 -0-0. Respectfully submitted, Secretary 0 The 10 -Point Test of Financial Condition: Toward an Easy- to-Use Assessment Tool for Smaller Cities An evolving method for assessing the financial condition of a smaller city uses data from GFOA's Financial Indicators Database for comparing a city's key ratios with those of hundreds of similar size cities across the nation. Athorough financial- condition assess- ment that involves a large number of factors and related indicators can be very time consuming for a municipality. As a result, analysis of financial condition may not be a regular part of financial manage- ment. When these comprehensive financial - condition assessments are conducted, the large amounts of data involved can make it difficult to communicate the results to a city's management, governing board and citizenry. This article describes a short test of financial condition that municipal finance officers can conduct for cities with popula- tions under 100,000. Called the 10 -Point Test, the exercise suggested in this article allows finance officers to compare 10 key financial ratios for their city to similar ratios calculated for 750 smaller cities across the nation. The 10 -Point Test in- cludes a scoring procedure by which a municipal finance officer can grade his /her city and provide some evidence of the city's financial condition. The test was developed because of 1) the need for a quick and effective financial- condition assessment tool and 2) the improved availability of comparative city data pro- vided by the Financial Indicators Database published in 1992 by the Government Finance Officers Association (GFOA).' The 10 -Point Test of financial condition provides a concise and easy -to -use vehicle for the communication of financial condi- tion to a city government's constituents. It is based on 10 ratios, listed in Exhibit 1, that are considered useful for assessing four basic financial factors for a city: revenues (ratios 1 -3), expenditures (ratio 4), operating position (ratios 5 -7) and debt structure (ratios 8 -10).1 The test consists of three steps, which will be described in detail in this article: 1) calculation of 10 key financial ratios based on data con- tained in the city's current annual financial report, 2) comparison of the city's ratios to ratios of similar -sized cities reported in this article and 3) grading the city's finan- cial condition based on the comparisons in step 2. A city has a limited ability to interpret its financial condition other than through comparisons with similar -sized cities. The GFOA's Financial Indicators Database, therefore, is valuable as a source of data for determining the 10 key ratios for cities across the nation. The database contains FY89, FY90 and FY91 financial data for all cities that were awarded the GFOA's Certificate of Achievement for Excellence in Financial Reporting in those fiscal years. All of the data have been presented in con- formity with generally accepted accounting principles (GAAP) and most of the data have been subjected to independent audit. In using these data, however, one must recognize that the cities receiving this award do not represent a random sample of the nation's cities. Without financial information such as ratios, informed decisions about financial condition are not possible. Even with financial information, the assessment of By Ken W. Brown financial condition usually remains subjec- tive. While city finance officers, city managers and governing board members may reach conclusions about their city's financial condition, their conclusions may be based on a few key indicators of their choice. On the other hand, some may ob- tain a perception of the city's financial condition and not able to identify the basis for that perception. The 10 -Point Test, however, attempts to provide an objective scoring technique to help bring closure to financial- condition decisions. Step 1: Calculation of Ratios The first step of the test consists of calculating the 10 ratios for one's city, us- ing the definitions in Exhibit 1. All data required for the ratios usually are available in the city's comprehensive annual finan- cial report and current general purpose financial statements. A financial - condition worksheet that can be used to summarize the city's ratios and determine the city's financial - condition score is provided in Exhibit 2. After the city's ratios are calculated, they are entered in section B on the worksheet. Sections C and D are to be completed in accordance with instructions presented in step 3. Step 2: City Comparisons Using the definitions in Exhibit 1, the author calculated the FY89 ratios for all DECEMBER 1993 • GovERNMENT FINANCE REVIEW 21 Exhibit 1 TEN KEY RATIOS OF FINANCIAL CONDITION 750 cities in the Financial Indicators Database with a population of 100,000 or less.' Because of economies of scale and other differing characteristics between large and small cities, comparative ratio analysis will be more meaningful if ratio comparisons are made for similar -sized cities. To aid in that analysis, the ratios of the 750 cities were partitioned into four population groups: 1) cities between 50,000 and 100,000, 2) cities between 30,000 and 50,000, 3) cities between 15,000 and 30,000, and 4) cities under 15,000. Exhibit 3 shows the ratios, reported in quartiles, for the cities in each of these population categories. A quartile contains 25 percent of the cities in a given population group. Thus, in Exhibit 3, quartile 1 shows the ratios of that 25 percent of the cities in a particular population group which have the worst ratios; the 25 percent of the cities with the next best ratios are placed in quartile 2; and those with better ratios are included in quartile 3 or 4, according to their rank. As 22 DECEMBER 1993 • GOVERNMENT FINANCE REVIEW shown in Exhibit 3, the ratio of total revenues to population (ratio 1) for cities in the 50,000 to 100,000 population group was $714 or more for the cities in quartile 1. For quartile 2 cities, the ratios ranged between $714 and $532. Quartile 3 cities had ratios ranging from $532 to $429, and quartile 4 cities had the best ratios amounting to $429 or less. Providing the ratios in quartiles enables finance officers to make definitive statements about the relationship of their city's ratio to the ranges of ratios for the database cities. For example, if a city with a population between 50,000 and 100,000 has a ratio of total revenues to population that is $500, its ratio is in quartile 3 (see Exhibit 3); thus, the finance officer can say that his /her city's ratio is better than 50 percent of the cities in the Financial Indicators Database and that his /her city is in a favorable position among this group of the nation's cities. As Exhibit 3 shows, some ratios are favorable if they are low, while other ratios are favorable if they are high. For six of the 10 ratios (i.e., ratios 1, 3, 4, S, 9, 10), low values are favorable. The other four ratios (i.e., ratios 2, 5, 6, 7) are favorable only if they have high values. This fact can be observed in either quartiles 1 or 4 where the ranges are described as more than or less than a given value. The generally accepted interpretations of favorable ratios are listed below. Ratio 1: A low ratio suggests a greater ability to acquire additional revenue. Ratio 2: A high ratio suggests the city is not reliant on external governmental organizations. Ratio 3: A low ratio suggests the city does not have to rely on operating transfers to finance general government operations in the general fund. Ratio 4: A low ratio suggests the infrastructure is being maintained adequately. Ratio 5: A high ratio suggests the city experienced a positive interperiod equity. Ratio Clarification of Ratio Components 1. Total revenues Total revenues is the total revenues for all governmental funds. Population 2. Total general fund revenues from own sources Total general fund revenues from own sources is the difference between total Total general fund revenues general fund revenues and amounts classified in the general fund as intergovernmental revenues. 3. General fund sources from other funds General fund sources from other funds is general fund operating transfers in. Total general fund sources Total general fund sources is the total of general fund revenues and operating transfers in. 4. Operating expenditures Operating expenditures is the total expenditures for the general, special Total expenditures revenues and debt service funds. Total expenditures is the total expenditures for all governmental funds. 5. Total revenues Total revenues is the total revenues for all governmental funds. Total Total expenditures expenditures is the total expenditures for all governmental funds. 6. Unreserved general fund balance Unreserved general fund balance is the total of both unreserved designated Total general fund revenues and unreserved undesignated fund balance for the general fund. 7. Total general fund cash and investments (The components are self -explanatory). Total general fund liabilities a. Total general fund liabilities_ (The components are self- explanatory). Total general fund revenues'-. 9. Direct long -term debt Direct debt is general obligation debt to be repaid from property tax revenues. Population 10. Debt service Debt service is the total expenditures in the debt service fund. Total revenues Total revenues is the total revenues of all governmental funds. 750 cities in the Financial Indicators Database with a population of 100,000 or less.' Because of economies of scale and other differing characteristics between large and small cities, comparative ratio analysis will be more meaningful if ratio comparisons are made for similar -sized cities. To aid in that analysis, the ratios of the 750 cities were partitioned into four population groups: 1) cities between 50,000 and 100,000, 2) cities between 30,000 and 50,000, 3) cities between 15,000 and 30,000, and 4) cities under 15,000. Exhibit 3 shows the ratios, reported in quartiles, for the cities in each of these population categories. A quartile contains 25 percent of the cities in a given population group. Thus, in Exhibit 3, quartile 1 shows the ratios of that 25 percent of the cities in a particular population group which have the worst ratios; the 25 percent of the cities with the next best ratios are placed in quartile 2; and those with better ratios are included in quartile 3 or 4, according to their rank. As 22 DECEMBER 1993 • GOVERNMENT FINANCE REVIEW shown in Exhibit 3, the ratio of total revenues to population (ratio 1) for cities in the 50,000 to 100,000 population group was $714 or more for the cities in quartile 1. For quartile 2 cities, the ratios ranged between $714 and $532. Quartile 3 cities had ratios ranging from $532 to $429, and quartile 4 cities had the best ratios amounting to $429 or less. Providing the ratios in quartiles enables finance officers to make definitive statements about the relationship of their city's ratio to the ranges of ratios for the database cities. For example, if a city with a population between 50,000 and 100,000 has a ratio of total revenues to population that is $500, its ratio is in quartile 3 (see Exhibit 3); thus, the finance officer can say that his /her city's ratio is better than 50 percent of the cities in the Financial Indicators Database and that his /her city is in a favorable position among this group of the nation's cities. As Exhibit 3 shows, some ratios are favorable if they are low, while other ratios are favorable if they are high. For six of the 10 ratios (i.e., ratios 1, 3, 4, S, 9, 10), low values are favorable. The other four ratios (i.e., ratios 2, 5, 6, 7) are favorable only if they have high values. This fact can be observed in either quartiles 1 or 4 where the ranges are described as more than or less than a given value. The generally accepted interpretations of favorable ratios are listed below. Ratio 1: A low ratio suggests a greater ability to acquire additional revenue. Ratio 2: A high ratio suggests the city is not reliant on external governmental organizations. Ratio 3: A low ratio suggests the city does not have to rely on operating transfers to finance general government operations in the general fund. Ratio 4: A low ratio suggests the infrastructure is being maintained adequately. Ratio 5: A high ratio suggests the city experienced a positive interperiod equity. ExhibE 2 FINANCIAL CONDITION WORKSHEET Your city'sfinanciat condition score Ratio 6: A high ratio suggests the presence of resources that can be used to overcome a temporary shortfall of revenues. Ratio 7: A high ratio suggests sufficient cash with which to pay short -term obligations. Ratio 8: A low ratio suggests short -term obligations can be easily serviced by the normal flow of annual revenues. Ratio 9: A low ratio suggests the city has the ability to repay its general long -term debt. Ratio 10: A low ratio suggests the city is able to pay its debt service requirements when due. Before proceeding to the next step, one should refer to the pan of Exhibit 3 that relates to the population of his /her city and identify the quartile in which each of the city's ratios falls. This comparison will be used to help determine the overall financial condition of the city in step 3 Step 3: Grading City Condition The 10 -Point Test's scoring technique is arbitrary and based on certain assumptions about the importance of 10 ratios. As a result, some users of this methodology may prefer to complete the analysis with the ratio comparisons in step 2 and forego the grading process suggested in step 3. To obtain the 10 -Point Test's grading of a city's financial condition, one should complete the worksheet (Exhibit2) that contains the ratios computed for his /her city. Section C of the worksheet assigns points to each of the ratios according to the quartile in which the city's ratio falls; it can be completed by circling the quartiles in which each ratio falls. Each quartile is assigned a score that ranges from —1 to + 2. This scale is designed to allow only cities with ratios above the 50th percentile (quartile 3 or above) to obtain a positive overall score. A city with all of its ratios in quartile 3 would be above the 50th percentile among all cities and would receive an overall score of 10 points under the 10 -Point Test. A city with all ratios in quartile 2 (25th to 50th percentile) would receive an overall score of 0, whereas a city with all ratios in quartile 1 (less than 25th percentile) would receive a negative overall score of —10 points. To determine the city's overall score, one should transfer the circled points for each ratio in section C to the DECEMBER 1993 • GOVERNMENT FINANCE REVIEW 23 (A) Ratio (8) Your City's Ratio (C) Points AsaWsed to Each Quartile (Circle the quartile in which your city's redo falls) Quartile 1 Quartile 2 Quartile 3 Quartile 4 (0 to 25 (26 to 60 (50 to 75 (75 to 100 percentile) percentile) percentile) percentile) (D) City's Score (Enter your sane circled on the left) 1. ` Total revenues Population 1 —1- 0 +1- +2 2. Total general fund revenues from own sources Total general fund revenues 2 —1 0 +1 +2 3. ; General kind sources from Other funds Total general fund sources 3 —1 0 +1 +2 4. Operating expenditures Total expenditures 4 —1 0 +1 +2 5. Total revenues Total expenditures 5 —1 0 +1 +2 6. mraifund bake -Unreserved Total general fund revenues 6 _ —1 0 +1 +2 7. Total general fund cash and investments Total general fund liabilities 7 —1 0 +1 +2 8. Total general frond liabilities Total general fund revenues 8 —1 0 +t +2 9. Mect long -term debt Population 9- —1 0 +1 +2 10. Debt service Total revenues 10 —1 0 +1 +2 Your city'sfinanciat condition score Ratio 6: A high ratio suggests the presence of resources that can be used to overcome a temporary shortfall of revenues. Ratio 7: A high ratio suggests sufficient cash with which to pay short -term obligations. Ratio 8: A low ratio suggests short -term obligations can be easily serviced by the normal flow of annual revenues. Ratio 9: A low ratio suggests the city has the ability to repay its general long -term debt. Ratio 10: A low ratio suggests the city is able to pay its debt service requirements when due. Before proceeding to the next step, one should refer to the pan of Exhibit 3 that relates to the population of his /her city and identify the quartile in which each of the city's ratios falls. This comparison will be used to help determine the overall financial condition of the city in step 3 Step 3: Grading City Condition The 10 -Point Test's scoring technique is arbitrary and based on certain assumptions about the importance of 10 ratios. As a result, some users of this methodology may prefer to complete the analysis with the ratio comparisons in step 2 and forego the grading process suggested in step 3. To obtain the 10 -Point Test's grading of a city's financial condition, one should complete the worksheet (Exhibit2) that contains the ratios computed for his /her city. Section C of the worksheet assigns points to each of the ratios according to the quartile in which the city's ratio falls; it can be completed by circling the quartiles in which each ratio falls. Each quartile is assigned a score that ranges from —1 to + 2. This scale is designed to allow only cities with ratios above the 50th percentile (quartile 3 or above) to obtain a positive overall score. A city with all of its ratios in quartile 3 would be above the 50th percentile among all cities and would receive an overall score of 10 points under the 10 -Point Test. A city with all ratios in quartile 2 (25th to 50th percentile) would receive an overall score of 0, whereas a city with all ratios in quartile 1 (less than 25th percentile) would receive a negative overall score of —10 points. To determine the city's overall score, one should transfer the circled points for each ratio in section C to the DECEMBER 1993 • GOVERNMENT FINANCE REVIEW 23 1. 2. 3. Exhibit 8 FYI 989 OUARTILE RANGES FOR 750 CRIES FROM THE FINANCIAL INDICATORS DATABASE Population 50,000- 100.000 (lot ctdee) Population 80,001M,: KI (187 cities) Ratio ouartile ch artile 1 2 3 4 1 2 3 4 0-25% 25-50% 50-75% 75 -100% 0.25% 25-50% 50-75% 75.100% (Wor" (%) (WOW) (ate) Total reverwes Population Total general fund reverxies Total tevenues General fund sources from other funds Total general fund sources 4. Operating expenditures Total expenditures 5. Total revenues Total expend0ures 6. unreserved general fund balance Total general fund revenues 7 Total general fund cash and Investrnents Total general fund liabilities 8. Total general fund liabilities Total general fund revenues 9. Direct long -term debt Population 10. Debt service Total revenues $714 or $714 to $532 to $429 or more $532 $429 less 802% or 802% to 87.7% to 96.8% or lase 87.7% 96.8% mote 7285% or 7285% to 2.083% to 0.003% or more 2.083% 0.003% less $831 or $831 to $493 to $399 or more $493 $399 less 77.5% or 77.5% to 87A% 10 96.4% or less 87A% 96A% more 8.598% or 8.598% to 2A38% to 0.001 % Or more 2.438% 0.001% less 95.8% or 95.8% to 88.9% to 81.6% or 94A% or 94.4% to 8&5% to 77A% or mane 88.9% 81.6% less InOre 88.5% 77A% less 0.878 or 0.878 to 0.964 to 1.038 or OA64 or 0.864 to 0.952 to 1.034 or lees 0.964 1.038 more less 0.952 1.034 more 0.086 or 0.086 to 0.180 to 03M or 0.133 or 0.133 to 0211 to 0338 or less 0.180 0.300 more less 0211 0.338 more 0.622 or 0.622 to 1.539 to 3.372 or 0.916 or 0.916 to 1.909 to 3.525 or less 1.599 3372 coons less 1.909 3.525 store 0254 or 0254 to 0.101 to 0.069 or 0.193 or 11193 ffi 0.099 lo 0013 or more 0.101 0.069 law more OD99 0.063 less $413 or $413 to $201 to $21 or $416 or $416 to $141 to $15 or more $201 $21 less more $141 $15 less 0.134 or 0.134 to 0.074 to 0.041 or 0.146 or 0.146 to 0.080 la OA26 or more 0.074 0.041 less more 0.060 0.025 less NOTES: Each quartile represents 25 peroent of the cities In the populailon group. The dollar m1be reported repnsertt 1989 dollars Inflated to 1992 dollars usf V ft growth In the htcrklpai Cost Infix. corresponding blanks in section D and then sum the column. Exhibit 4 shows a worksheet completed for a city with a population between 30,000 and 50,000. This Midwestern city reported one ratio in quartile 4 (better than 75 percent of the other cities), five ratios in quartile 3, two ratios in quartile 2 and two ratios in quartile 1. Because a majority of its ratios were better than 50 percent of the other cities, the city obtained a positive score of 5. The remaining task for the city in Exhibit 4, and for finance officers using the worksheet, is to interpret the final score. Because little is known about the relative importance of the municipal finance ratios, the scoring technique of the 24 DECEMBER 1993 • GOVERNMENT FINANCE REVIEW 10 -Point Test assumes that each of the 10 ratios has equal importance in the assessment of financial condition. A city with a majority of its ratios above the 50th percentile would be in better financial condition than a city with a majority of its ratios below the 50th percentile. Cities in better financial condition will have favorable values in most of the 10 ratios. The following grading scale suggested by the author nets the favorable and unfavorable ratios to obtain an overall "grade" for a city relative to the cities in the database. To determine a city's financial condition relative to the condi- tion of the database cities, its overall score determined in the Exhibit 2 worksheet is compared with the grading scale. Overall Grade Relative to Overall Score Database Cities 10 or more Among the best 5 to 9 Better than most 1 to 4 About average 0 to -4 Worse than most - 5 or less Among the worst The database cities do not provide a random sample of all the nation's cities. Thus, the grading scale includes only relative interpretations (i.e., better or worse) instead of absolute terns, such as good or bad financial condition. While it can be said that a city with a low score from the 10 -Point Test is in poorer condition than most of the database cities, the city may not be in poor financial (eontlnwd) Population 15,00030,000 (213 cities) Population less than 15,000 (206 cities) condition. Even so, a city receiving negative scores might do well to engage in a more comprehensive study of its financial condition. The interpretations suggested in the above scoring technique are based on the auchoes assumption that all 10 ratios have equal importance. Since certain ratios are probably more important than others, a city's overall grade could be biased where unfavorable bur important ratios are outnumbered by favorable but less important ratios. Publications of financial ratios, however, such as the International Ciry/County Management Association's book, Evaluating Financial Condition: A Handbook for Local Government, do not highlight some ratios as being more important than others. Thus, until additional research is conducted and more is known about the relative importance of ratios, the suggested scoring technique is a reasonable first stage in the development of a more refined financial- condition test. Because of the uncertainty about ratio importance, it would be appropriate for finance officers completing the 10 -Point Test to modify the scoring technique to reflect the finance officer's perceptions of the most and least important indicators. For example, the finance officer of the Midwestern city whose ratios are depicted in Exhibit 4 mighr feel that two of the ratios depicting operating position (i.e., ratio 5 -total revenues to total expendi- tures -and ratio 6- unreserved general fund balance to total general fund revenues) are more important to the assessment of financial condition than the other eight ratios. To reflect this increased importance, the city's score for ratios 5 and 6 could be multiplied by two as a way to indicate that the two ratios are more important than the others. While this modification would cause the Midwestern city's score to increase from + 5 to + 8, its overall score could have been lowered had the two important ratios been unfavorable. Despite the limitations just discussed, the comparisons of a city's ratios with those of the cities in the Financial Indicators Database provide new information about a city's relative financial condition that has not been available previously. The author, who is interested in further research and study of the best indicators of municipal financial condition, would like to obtain any feedback from finance officers and other analysts who complete the 10 -Point Test regarding their experiences with and /or impressions of the test. The 10 -Point Test is intended to provide a conversation piece around which finance officers and others can discuss and develop better financial - condition assessment tools. Additional improvements in the test can be made in the near future because of the recent release of GFOA's Financial Indicators Database for FY90 and FY91. This provides the opportunity to integrate trend analysis into subsequent versions of the test. The test could be improved also with the development of a method for incorporating the financial condition of proprietary funds activities into the 10 -Point Test. Financial- condition assessment of businesslike enterprises, however, requires techniques that are unique to each industry. Even so, a finance officer should determine the financial condition of these enterprises and consider this assessment with the results of the 10 -Point Test. Conclusion Because of the difficult environment in which all the nation's cities now operate, finance officers need to assess their city's financial condition on a continuing basis. The test described in this article provides a quick and effective tool for officials of smaller cities to assess their city's financial condition without the use of analytical techniques that are costly, time - consuming DECEMBER 1993 • GOVERNMENT FINANCE REVIEW 25 tl uartlle Quertlle 1 2 3 4 1 2 3 4 0,25% 25-50% 50-73% 75- 100% 0-25% 25450% 50-75% 75 -100% (worst) (Best) (worst) (Best) 3886 or $866 to $481 to $328 or $736 or $736 to $465 to $368 or more $481 $326 less more $465 $368 less 77.7% or 77.7% to 88.6% to 98.3% or 76.4% or 76.4% to 892% to 96.7% or less 88.6% 98.3% more less 89.2% 96.7% more 5.987% or 5.987% to 1.157% to 0.001 % or 8.089% or 8.089% to 1270% to 0.001 % or more 1.157% 110011% less more 1270% 0.001% less 97.9% or 97.9% to 81.1 % to 81.9% or 99.0% or 99.0% to 922% to 80.3% or more 91.1% 81.9% less more 922% 80.3% less 0.876 or 0876 to 0.954 to 1.034 or 0.868 or 0.868 to 0.962 to 1.038 or less 0.954 1.034 more less 0.962 1.038 more 0.104 or 0.104 to 0218 to 0.386 or 0.173 or 0.173 to 0278 to 0.444 or less 0.218 0.386 more less 0.278 0.444 more 0819 or 0819 to 1.865 to 4.719 or 1.162 or 1.162 to 2.522 to 5.761 or less 111165 4.719 more less 2.522 5.761 more 0208 or 0.208 to 0.104 to 0.061 or 0.189 or 0.189 to 0.102 to 0.057 or more 0.104 0.061 less more 0.102 0.057 less $326 or $326 to $133 to $8 or $329 or $329 to $87 to $1 or more $133 $8 less more $87 $1 less 0.133 or 0.133 to 0.063 to 0.011 or 0.105 or 0.105 to 0.039 to 0.001 or more 0.063 0 .011 less more 0.039 0.001 less condition. Even so, a city receiving negative scores might do well to engage in a more comprehensive study of its financial condition. The interpretations suggested in the above scoring technique are based on the auchoes assumption that all 10 ratios have equal importance. Since certain ratios are probably more important than others, a city's overall grade could be biased where unfavorable bur important ratios are outnumbered by favorable but less important ratios. Publications of financial ratios, however, such as the International Ciry/County Management Association's book, Evaluating Financial Condition: A Handbook for Local Government, do not highlight some ratios as being more important than others. Thus, until additional research is conducted and more is known about the relative importance of ratios, the suggested scoring technique is a reasonable first stage in the development of a more refined financial- condition test. Because of the uncertainty about ratio importance, it would be appropriate for finance officers completing the 10 -Point Test to modify the scoring technique to reflect the finance officer's perceptions of the most and least important indicators. For example, the finance officer of the Midwestern city whose ratios are depicted in Exhibit 4 mighr feel that two of the ratios depicting operating position (i.e., ratio 5 -total revenues to total expendi- tures -and ratio 6- unreserved general fund balance to total general fund revenues) are more important to the assessment of financial condition than the other eight ratios. To reflect this increased importance, the city's score for ratios 5 and 6 could be multiplied by two as a way to indicate that the two ratios are more important than the others. While this modification would cause the Midwestern city's score to increase from + 5 to + 8, its overall score could have been lowered had the two important ratios been unfavorable. Despite the limitations just discussed, the comparisons of a city's ratios with those of the cities in the Financial Indicators Database provide new information about a city's relative financial condition that has not been available previously. The author, who is interested in further research and study of the best indicators of municipal financial condition, would like to obtain any feedback from finance officers and other analysts who complete the 10 -Point Test regarding their experiences with and /or impressions of the test. The 10 -Point Test is intended to provide a conversation piece around which finance officers and others can discuss and develop better financial - condition assessment tools. Additional improvements in the test can be made in the near future because of the recent release of GFOA's Financial Indicators Database for FY90 and FY91. This provides the opportunity to integrate trend analysis into subsequent versions of the test. The test could be improved also with the development of a method for incorporating the financial condition of proprietary funds activities into the 10 -Point Test. Financial- condition assessment of businesslike enterprises, however, requires techniques that are unique to each industry. Even so, a finance officer should determine the financial condition of these enterprises and consider this assessment with the results of the 10 -Point Test. Conclusion Because of the difficult environment in which all the nation's cities now operate, finance officers need to assess their city's financial condition on a continuing basis. The test described in this article provides a quick and effective tool for officials of smaller cities to assess their city's financial condition without the use of analytical techniques that are costly, time - consuming DECEMBER 1993 • GOVERNMENT FINANCE REVIEW 25 Exhibit 4 SAMPLE FINANCIAL CONDITION WORKSHEET COMPLETED BY A C11Y WITH A POPULATION BETWEEN 30,000 AND 50,000 or so complex that final assessments become difficult if not impossible. While more comprehensive tests are available, the strength of the 10 -Point Test lies in the extensive set of ratios that were determined for cities from the Financial Indicators Database. Tests such as the one suggested here provide a case for continued and expanded exchange of financial information by cities so that they can make better - informed judgments about the state of their financial affairs. ❑ NOTES 'For a description of the contents and products of the Financial Indicators Database, see "Using the Financial 26 DECEMBER 1993 • GOVERNMENT FINANCE REVIEW Indicators Database for Policy Analysis," in this issue and "A New Data Source for Comparative Analysis," in the February 1992 issue of Government Finance Review. rExcept for the third ratio, the ratios used in this article were adapted from the 36 indicators included in the International CitylCounry Management Association's Evaluating Financial Condition. A Handbook for Local Government, written by S.M. Groves and M.G. Valente in 1986. Ratio 3, which tests a city's reliance on proprietary funds transfers to finance general government operations, was developed by the author specifically for the 10-Point Test. Ratio selection, definitions and interpretations of the ratios were aided by a discussion of financial condition assessment contained in Governmental and Nonprofit Accounting, forthcoming edition) written by Leon Hay and Earl Wilson. 3FY89 data are used because data for only that fiscal year were available in the database when the author began preparation of this article. KEN W. BROWN, Ph.D., C.P.A., is associate professor of accounting at Southwest Missouri State University and a member of GFOA's Special Review Committee. The author wishes to acknowledge the contributions of Dr. Earl Wilson of the University of Missouri and Dr. Leon Hay of the University of Arkansas to the development of this article. The author invites readers to contact him to discuss their experiences using the 10•Point Test and their views on its further development; write to him at Southwest Missouri State University, Department of Accounting, 901 South National Avenue, Springfield, MO 6S804; telephone 4171836-5414; fax 4171836 -6337. (A) (B) (C) (C) Points Assigned to Each Quartile City's (Curie the ywarttie In which your city's ratio falls) Score Ratio Your Quartile 1 Quartile 2 Quartile 3 Quartile 4 (Ether your City's Ratio (0 to 25 (25 to 50 (50 to 75 (75 to 100 score Circled Percentile) percentile) percentile) percentile) on the left) 1. Total revenues POPLAR n 1. —1 0 +1 +2 2. Teal general fund revenues from own sourt"s g�q�• % Total general fund revenues 2 —, 0 +, +2 3. General fund sources from other funds �.d�e Total general fund sources 3 0 +1 +2 4. Operating expenditures �•Sr% / Total expenditures 4 —1 0 +1 +2 5. Total revenues 04 + Z Total expenditures 5 —1 0 +1 +2 6. Unreserved general hind balance ur� ' Total gentsl fund revenues 6 ♦ —1 0 +1 +2 7. Total general fund cash and fnvestrrlerft �' r `2" Total general fund IiabNitles 7- —1 0 +1 +2 8. Total general fund liabilities 'rs% Total general fund revenues 8 —1 0 +1 +2 9. Direct long.lem, debt p Population 9 1 j0 +1 +2 10. Debt service ' �3 ,�r� Total revenues i 0 ( —, J 0 + 1 +2 Your city's financial condition sure: or so complex that final assessments become difficult if not impossible. While more comprehensive tests are available, the strength of the 10 -Point Test lies in the extensive set of ratios that were determined for cities from the Financial Indicators Database. Tests such as the one suggested here provide a case for continued and expanded exchange of financial information by cities so that they can make better - informed judgments about the state of their financial affairs. ❑ NOTES 'For a description of the contents and products of the Financial Indicators Database, see "Using the Financial 26 DECEMBER 1993 • GOVERNMENT FINANCE REVIEW Indicators Database for Policy Analysis," in this issue and "A New Data Source for Comparative Analysis," in the February 1992 issue of Government Finance Review. rExcept for the third ratio, the ratios used in this article were adapted from the 36 indicators included in the International CitylCounry Management Association's Evaluating Financial Condition. A Handbook for Local Government, written by S.M. Groves and M.G. Valente in 1986. Ratio 3, which tests a city's reliance on proprietary funds transfers to finance general government operations, was developed by the author specifically for the 10-Point Test. Ratio selection, definitions and interpretations of the ratios were aided by a discussion of financial condition assessment contained in Governmental and Nonprofit Accounting, forthcoming edition) written by Leon Hay and Earl Wilson. 3FY89 data are used because data for only that fiscal year were available in the database when the author began preparation of this article. KEN W. BROWN, Ph.D., C.P.A., is associate professor of accounting at Southwest Missouri State University and a member of GFOA's Special Review Committee. The author wishes to acknowledge the contributions of Dr. Earl Wilson of the University of Missouri and Dr. Leon Hay of the University of Arkansas to the development of this article. The author invites readers to contact him to discuss their experiences using the 10•Point Test and their views on its further development; write to him at Southwest Missouri State University, Department of Accounting, 901 South National Avenue, Springfield, MO 6S804; telephone 4171836-5414; fax 4171836 -6337. February 29th ATown Hall Overview — Peter & Bob Community Services (pages 48 -56) - Jean Town Administration (pages 33 -35) - Peter Accounting & Finance (pages 36-47) - Bob Employee Benefits (pages 10 -13 & 14 -17) - Bob March 7th (a_RMLD Library (pages 57 -61) - Ruth Fire & EMS (pages 62 -65) - Greg Police & Dispatch (pages 66 -73) - Jim Public Works (pages 74 -87) - Jeff Capital & Debt (pages 10 -13 & 18 -30) - Bob Enterprise Funds (pages 88 -113) — Bob March 14th (ED-RMLD Review Warrant — Pete Articles: 4 —amend FY12 -21 Capital Plan 5 — establish OPEB Trust Fund 6 —amend FY12 Budget 7 — approve FY13 -22 Capital Plan 8 — approve prior year's bills 9 — dispose surplus property 10 — establish revolving funds 12 — accept gift Friends of Reading Football 13 — FY13 Budget 14 — authorize Chapter 90 expenses 15 — authorize debt for Poet's corner sewer repairs 19 — affordable housing trust fund allocation plan March 21stAIRMLD Schools & Facilities — John March 28th A-Town Hall Vote FY13 Budget Vote FY13 Warrant