HomeMy WebLinkAbout2012-08-08 Finance Committee PacketThe Town of Reading - Finance Committee
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Agenda
Reorganization
Liaison assignments
Finance Committee
Wednesday, August 8, 2012 at 7:30 PM
Town Hall conference room
Printer - Friendly Version
FY13 Meeting calendar
Assessors update
Building project updates
Library
Killam
Other
OPEB Policy
S &P Ratings criteria revision
Update on year -end closing and contribution to free cash
Minutes 6/5/12 and 6/27/12
Town of Reading, Massachusetts 16 Lowell Street Reading, MA 01867 Website Disclaimer
Virtual Towns & Schools Website
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The Town of Reading - Finance Committee Page 1 of 2
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COMMON CAUS'"I
Finance Committee
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Contact:
Robert W. LeLacheur, Jr. CFA
Cost - cutting Efforts
Assistant Town Manager, Finance
FINCOM Cash Reserves Policy FINCOM Debt/Capital Policy
Director
FY12 Budget
Send email to the FINCOM
Address:
Town Hall
FY08 Budqet
16 Lowell Street
Reading, MA 01867
Phone:
781- 942 -6636
Fax:
781 - 942 -9037
Hours:
Monday 7:30am- 5:30pm
David Greenfield
Tuesday 7:30am- 7:OOpm
2014 (2005)
Wednesday 7:30am- 5:30pm
Vice Chair
Thursday 7:30am- 5:30pm
Vacancy
Friday CLOSED
Meeting Packets
Additional Links:
Meeting Minutes
Current Meeting Schedule
Revenue Ideas
Cost - cutting Efforts
Mission Statement
FINCOM Cash Reserves Policy FINCOM Debt/Capital Policy
FY13 Budget
FY12 Budget
FY11 Budqet
FY10 Budge t
FY09 Budge t
FY08 Budqet
Finance Department
Members
Name
Title
Term Ends (Began)
David Greenfield
Chair
2014 (2005)
Barry Berman
Vice Chair
2014 (2007)
Vacancy
2015
Jeanne Borawski
2015 (2012)
Mark Dockser
2013(2010)
Marie Ferrari
2013 (2011)
Karen Herrick
2015 (2013)
Paula Perry
2014 (2010)
Hal Torman
2013 (2004)
FINANCE COMMITTEE
Term: Three years
Appointing Authority: Finance Committee Appointment Committee
Number of Members: Nine Members to be appointed to no more than three consecutive terms
Meetings: Once a month except during budget season when the committee usually meets once or twice
each week
Authority: Reading Charter Adopted March 24, 1986
Purpose: The Finance Committee shall have all the powers and duties granted to Finance Committees O
under the laws of the Commonwealth, Town Bylaws, Town Meeting vote and other applicable laws. In -)
http:// www. readingma .gov[Pages[ReadingMA_BComm /finance
8/1/2012
TOWN OF READING
Finance Committee Liaisons — as of 6/30/2012
Name /Address/Email Telephone Liaison Assienments
OPEN Public Safety
Schools(3)
David Greenfield ('05 -14), Vice Chair
781- 942 -2072 (H)
Board of Selectmen
192 Woburn Street
617- 662 -7210 (W)
Audit Committee
dereenfield(astatestreet.com
Accounting/Finance
we4greens(@,comcast.net
Barry Berman ('07-'14), Vice Chair
781- 942- 7907(H)
Schools(1)
54 Longview Road
617- 478- 8507(W)
Audit Committee
bcbennan(@,comcast.net
bbenTian(@,firstrepublic.com
firstrepublic.com
Jeanne Borawski(' 12/-'l 5)
617- 723- 5744(H)
Community Services
3 Deer Path Lane
Public Safety
Jeanne borawski(@,hotmail.com
Mark Dockser ('10- 13)
781- 942- 7586(H)
RMLD
I10 Beaver Road
617- 671- 5828(W)
Public Works
mdockser(@,Pmail.com
Marie Ferrari ('I I -13)
781- 944- 2748(H)
20 Crosby Road
m ar i s fe rra r i ave r i zo n. n et
Karen Herrick(' 13 -' 15)
karen herri ck (aremax. net
Paula Perry ('10-'14)
781- 944- 8224(H)
Library
40 Beaver Road
Board of Assessors
p0perry perry(@,comcast.net
Harold S. Torman ('04 -13)
781- 942 -2794 (H)
Public Works
77 Sunnyside Ave
Economic Development
Hal.Torman(a),Iantheus.com
Schools(2)
ADMINISTRATION
Peter Hechenbleikner 942- 9043(W) Town Manager
phechenbleiknerAc i. reading. ma. us
John Doherty 944- 5800(W) Superintendent of Schools
idohertv(t�,readine.kl2.ma.us
Sharon Angstrom
san sg tromnci.readine.ma.us
Mary DeLai
mdelai(a),readine.k 12.ma. us
Bob LeLacheur
blelacheur(a,ci.readin e.ma.us
942- 6604(W) Town Accountant
942- 5800(W) Assistant Superintendent/
Finance & Administration
942- 6636(W) Assistant Town Manager/
942- 9805(H) Finance Director
3
FINCOM FY13 Schedule
(All meetings are Wednesday at 7:30pm in Town Hall, unless noted)
2012
August 8 regular meeting
September 12 regular meeting
September 18 State Primary election
September 25 Warrant closes for November Town Meeting
October 10 Financial Forum (at the Senior Center)
October 17 regular meeting (TM Warrant Articles)
November, 13- 15 -19 -26 Subsequent Town Meeting (begins Tuesday at RMHS)
December 12 regular meeting
2013
January School Committee School budget meetings (7 :30pm at RMHS)
January] 5 -22 Selectmen Town budget meetings (Tuesday 7pm — location TBA)
February 6 regular meeting
February 26 Warrant closes for April Town Meeting
March 6
FYI Budget Meetings
March 13
FYI Budget Meetings
March 20
FYI Budget Meetings
March 27
FYI Budget Meetings
April 2
Local elections
April 22 -25 -29 -May 2 Annual Town Meeting (begins Monday at RMHS)
June 26
Year -end meeting
ON
Town of Reading
16 Lowell Street
Reading, MA 01867 -2685
ASSISTANT TOWN MANAGER/FINANCE DIRECTOR
(781) 942 -6636
FAX: (781) 942 -9037 Email: finance @ci.reading.ma.us
To: Finance Committee
Date: August 1, 2012
Re: Assessors update
At your meeting on August 8�h I will review the following areas listed below:
➢ Inter - Municipal Agreement approved and signed by the Boards of Selectmen in Reading
and Wakefield. Agreement runs until December 2013, with a review in December 2012.
If a full regional agreement is desirable after this period, it will require a vote of Town
Meetings..
➢ New shared Appraiser Victor Santaniello will attend a FINCOM meeting after he drafts a
financial and management plan of how the Assessing function should be run in Reading.
This will be a multi -year plan.
➢ The software conversion has been slowed by some sketch conversion issues. It is now
expected to be completed by August 8`h. This will challenge Finnegan (see below) to
complete the work by September I" however that deadline, while contractual, is not
urgent to meet the DOR time frame.
Aporooriations
Town Meeting
$ 24,000'
FINCOM /BOS
$ 133,400
$ 157,400
Budgets
Actual
Diff.
Personal Property
$ -
$
6,500
$ (6,500)
Full review 3,600 x $27
_ $ 97,200
$
94,680
$ 2,520
Field review 7,500x $8
$ 60,200
$
28,700
$ 31,500
$ 157,400
$
129,880
$ 27,520
➢ Personal Property: in mid -July an invoice for $6,500 was received for FYI work done.
It was authorized by the prior Appraiser and by the Board of Assessors. No funding was
in place, and no discussion with Town staff occurred. The exact same thing happened one
year earlier when Assessing staff was lectured about the budget process. In FYI I surplus
Finance funds covered this expense. FYI was covered by surplus in the two inspections
listed below. If there was not a surplus this would have required Town Meeting vote to
pay a prior year's bill.
➢ Full review: Previous: March 2012 BOA RFP for 3,600 parcels awarded to Patriot
Properties. Work to commence fall 2012 through April 2013.
➢ Field review: June 2012 Finance RFP awarded to Finnegan Appraisal. Test runs begun,
awaiting final data from Patriot for live runs. Work to be completed early fall 2012.
C
LeLacheur, Bob
From:
Sullivan, Patricia
Sent:
Monday, July 16, 2012 8:54 AM
To:
LeLacheur, Bob
Cc:
Angstrom, Sharon; LaPointe, Gail
Subject:
FW: Question from Town Manager- Here is Brian /RRC response to my question.
Hi Bob and Sharon,
Below is the copy of letter from Brian. As noted, there was no "formal" Contract from Brian!
Pat
Pat Sullivan, MAA
Assistant Appraiser
Reading Town Hall
16 Lowell Street
Reading, MA 01867 -2601
Main: 781- 942 -9027
Fax: 781 -942 -9037
E -mail: psullivanreici.readina.ma.us
web: www.readindma.goy
Town Hall Hours: MONDAY, WEDNESDAY & THURSDAY: 7:30 am to 5:30 pm; TUESDAY: 7:30 am to 7:00 pm; and
CLOSED FRIDAYS.
Please let us know how we are doing - fill out our brief customer service survey at:
htto.Areadinpma- survey. viftualtownhall. net lresultslsidlccc2f035993bd3cO
If link does not work please "cut" and "paste" into your browser.
When writing or responding, please remember that the secretary of State's Office has determined that email is a public
record.
NAConsider the environment before printing this e-mail.
From: Brian Pelletier [mailto:brian @rrcpp.com]
Sent: Friday, July 13, 2012 2:23 PM
To: Sullivan, Patricia
Subject: RE: Question from Town Manager
Hi Pat,
I have the same info which you have. I was going to forward these emails to you, until I saw that you forwarded them to
me.
We have never (in any year) received a "letter of acceptance" from the Town. Based on discussions with Bill, I verbally
thought that everything was approved.
Please give me a call on Monday to discuss. I will be in all day.
Thanks,
Brian
Brian J. Pelletier, President
Real Estate Research Consultants, Inc.
1538 Turnpike Street
North Andover. MA 01845
Tel # (978) 681 -1991
Cell # (978) 886 -3240
Fax (978) 681 -1995
Email: brian(a)rrcpp.com
From: Sullivan, Patricia [ mailto :psullivan @ci. reading. ma. us]
Sent: Thursday, July 12, 2012 2:06 PM
To: brian @rrcpp.com
Subject: FW: Question from Town Manager
Hi Brian,
I was wondering if you could help me. (See emails at the end of this one!)
Bill Boatwright left the Town of Reading at the end of March. We just got your bill and I was wondering if you have a
"letter of acceptance" from the Town of Reading. (This is for the FY2013 recollection right ?) Somehow I was under the
impression that everything was approved for RRC to do the Personal Property recollection for FY2013. Please help me as
I cannot seem to find any kind of "proof' that we had accepted your proposal. The assistant town manager is questioning
this bill.
I know we got the "Proposal" for the recollection..... but I am having trouble finding the "contract "? Was there one?
I know Bill had also requested a quote for the REVAL year of FY2014. (Also in email below.) Did you ever give that to
him? I do not seem to find that either. Thanks in advance for your help!
FYI -We are closed on Friday and they told me you were on the road. I will get anything you send tomorrow (Friday) on
Monday!!
Sincerely,
Pat Sullivan
Pat Sullivan, MAA
Assistant Appraiser
Reading Town Hall
16 Lowell Street
Reading, MA 01867-2601
Main: 781- 942 -9027
Fax 781 - 942 -9037
E -mail: osullieanr%ci.readine.ma.us
web: www.readinema.eoc
Town Hall Hours: MONDAY, WEDNESDAY & THURSDAY: 7:30 am to 5:30 pm; TUESDAY: 7:30 am to 7:00 pm; and
CLOSED FRIDAYS.
Please let us know how we are doing - fill out our brief customer service survey at: _
htto: / /readinema- survey. virt ualtownhall. nedresults /sid/ccc21035993bd3c0
If link does not work please "cut" and "paste" into your browser.
When writing or responding, please remember that the secretary of State's Office has determined that email is a public
record.
AConsider the environment before printing this e-maiil.
0
From: Brian Pelletier [ma Ito: brianCclrrcpp.com]
Sent: Tuesday, December 20, 2011 10:00 AM
To: Boatwright, Bill
Subject: RE: Question from Town Manager
Hi Bill,
Attached is our letter of quotation for the Fiscal 2013 personal property maintenance.
In answer to the Town Managers' question, theoretically the answer is yes.
To undertake the maintenance services each year allows the Town to identify all accounts and value them in a timely
manner, thereby identifying the new growth immediately, rather than wait until the revaluation year.
You could elect, in the revaluation year, to update price tables and depreciation, without the actual listing of accounts,
thereby saving the Town some money. Under this scenario, we would still list and revalue all new accounts as well as
select existing accounts. To proceed in this manner, rather than recollect all accounts, does save the Town money, but it
creates a situation of a new growth opportunity cost lost, as we will not be identifying the new personalty at the existing
locations.
Given the scope of the growth to be realized through a full revaluation, the most cost effective way by far for the Town
to proceed, would be a full revaluation followed by two maintenance years, such as we are currently looking to do.
Should you have any questions, or if you wish to discuss this matter in greater detail, please feel free to call me at your
earliest convenience.
Thanks,
Brian
Brian J. Pelletier, President
Real Estate Research Consultants, Inc.
1538 Turnpike Street
North Andover, MA 01845
Tel # (978) 681 -1991
Cell # (978) 886 -3240
Fax (978) 681 -1995
Email: briana rcpp.com
From: Boatwright, Bill [ mailto: bboatwrightCalci. reading. ma. usl
Sent: Monday, December 19, 20114:40 PM
To: brian(c4rcop.com
Subject: Question from Town Manager
Hello Brian,
We are busy at the FY 2013 budget. The town manager asked if the revaluation fee for personal property would be
reduced, if the town also engaged RRC during the interim years.
Thanks.
Bill
0
OF R
Town of Reading
m a 16 Lowell Street
Reading, MA 01867 -2685
6`I9. INCOPPO�P .
ASSISTANT TOWN MANAGERXINANCE DIRECTOR
(781) 942 -6636
FAX: (781) 942 -9037 Email: finance @ci.reading.ma.us
To: Finance Committee
Date: June 27, 2012
Re: Assessors update
At your meeting on June 27`n I will review the following areas listed below. The Board of
Assessors and staff will attend and may also have material or topics to cover.
➢ RFP update — needed to be split into two components
➢ RFP from March 2012 — contract signed with Patriot today. Final cost not to exceed
$92,000 at a rate of $26.30 /parcel. Previous transfer request allowed for a slightly higher
cost of $27 /parcel and a total of $97,200 based on 3,600 parcels
➢ Second RFP issued as quickly as possible in conformance with procurement laws. Due
date is 9:00am on Monday July 2 "d. At least four interested parties have asked for the
RFP, and it has also been posted online at the MAAO website. On Monday the non -price
proposals of each submittal will be reviewed to determine if minimum qualifications are
met. A formal evaluation of each bid will be made as stipulated in the RFP. For those
proposals that meet the minimum requirements the price proposal will be opened. The
price and formal evaluation will be combined and a winning bidder will be identified.
Contract negotiations will begin and conclude as soon as possible so the work may
commence immediately. The remaining budget of $64,400 should easily cover the
expected cost of the inspecting 7,172 parcels in a drive -by field review. Any surplus will
be retained until both projects are compete, which is expected to be April 2013.
➢ Steve Maio (Wakefield Town Administrator), Peter Hechenbleikner and I met on May
18`n I subsequently drafted and agreement between the two Towns to share the services
of the Wakefield Director of Assessing (Victor Santaniello). Town Counsels for both
communities have reviewed and made suggested changes. Wakefield reports that the
draft agreement will be ready to review in detail early next week. The next steps would
be approval by the Boards of Selectmen in Reading on July 10`n and in Wakefield on July
16`n, with the agreement to begin shortly after that.
➢ The software conversion has seen good progress. Assessing staff reports that sketches did
not translate well but the rest of the data is generally in good shape. The Town and Patriot
Properties are working together to clean up the converted data.
IN
Library Construction Project — State Funding Update
• June 2010
"The Massachusetts Board of Library Commissioners announces the 2010 -2011
application grant round of the Massachusetts Public Library Construction Program.
Funding for library construction was authorized by Governor Deval Patrick and the
Legislature in the General Governmental Bonds Bill in 2008. "
htto: / /mblc.state. ma. us /grants /wrist rtretion/inclea. phn
• January 2011
Reading Public Library filed a Construction Grant Application to Massachusetts Board of
Library Commissioners to renovate and expand the library. Total project cost is $11.7
million.
• June 2011
The Massachusetts Board of Library Commissioners awarded grants to eight libraries and
gave them six months to secure local approval for matching funding and placed 15
libraries on a ranked wait list. Reading was #2 on the Wait List.
• August 2012
• Reading is now #1 on the Wait List. Reading's grant award amount is $5.1 million.
• The Massachusetts Board of Library Commissioners request for capital funding for
library construction to the Governor's Office for Administration & Finance for FY 13 is
$20 million.
• If Governor's Office for Administration & Finance releases $20 million for public library
construction early in FY 13, then Reading will receive its grant in FY13 when we
secure local funding for the balance of the project. (Reading's local funding balance is
approximately $7 million)
• If Governor's Office for Administration & Finance releases only $12 million for FYI 3,
(as they've proposed) then Reading will have to wait until FY2014 for its grant to be
awarded.
Prepared by Ruth Urell for Reading Public Library Trustees/Town Manager - revised 8/7/12
64 MIDDLESEX AVENUE READING, MA 01867 TELEPHONE 781- 944 -0840 WWW.READINGPL.ORG
M
Award List
(Updated Aug 2012 ru)
G1�h1'`tunt{7�$
wLG�tn�Q
Get
Municipality
Athol
Everett
Granby
South Hadley
West Springfield
West Tisbury
Library
Athol Public Library
Shute Memorial Library
Granby Free Public Library
South Hadley Public Library
West Springfield Public Library
West Tisbury Free Public Library
Award
$4,572,147
$2,236,491
$2,603,663
$4,841,312
$6,276,143
$2,982,544
0 b
Waiting List (in rank order)
(Updated Aug 2012 ru)
w
Rank Municipality
Library
Award
1
Reading
Reading Public Library
$5,105,114
2
Belmont
Belmont Public Library
$7,597,928
3
Edgartown
Edgartown Free Public Library
$5,002,139
4
Salisbury
Salisbury Public Library
$3,856,187
5
Framingham
Framingham Public Library - McAuliffe Branch $4,186,560
6
Scituate
Scituate Town Library
$4,985,480
7
Shrewsbury
Shrewsbury Free Public Library
$7,959,989
8
Acushnet
Russell Memorial Library
$3,189,536
9
Webster
Chester C. Corbin Public Library
$5,366,489
10
Sandwich
Sandwich Public Library
$6,683,197
11
Woburn
Woburn Public Library
$9,906,275
12
Eastham
Eastham Public Library
$4,331,923
13
Hopkinton
Hopkinton Public Library
$4,533,580
14
Boston
Boston Public Library - East Boston Branch
$7,255,988
TOTAL $79,960,385
ry
G
July 24, 2012 — Killam School update
The MSBA has taken no action on our Statement of Interest. When I spoke to them two weeks
ago, they told me that they would not be taking up an FY2012 Statement of Interests again until
their October and November meetings. That will be our last opportunity to have our FY12 SCI
reviewed. If we are not invited into the capital pipeline at that point, we will have to decide if
we want to resubmit the SCI for FY13 or start again with a different SOI that addresses our pre -K
/ K expansion goals. If Fincom members are interested, there will be continued discussion on
the PreK / K programming and space study on August 27`h and potentially another meeting
added prior to August 27`"
Mary C. DeLai
Assistant Superintendent, Finance & Administration
781- 670 -2880
9
DRAFT
Policy on Funding Other Post Employment Benefits (OPEB)
Finance Committee
June 2012
The Finance Committee ( FINCOM) of the Town of Reading hereby establishes
and adopts a Policy establishing a minimum target for annual OPEB funding in
both the General and Enterprise funds (as defined below). Further, the FINCOM
recognizes that circumstances may occur which would require the FINCOM to raise or
lower this minimum from time to time.
The FINCOM recognizes that the financial health of the Town of Reading is of
paramount importance to its residents who receive essential services; to its
bondholders who provide funding for long -term Town projects; to its vendors who
provide services and equipment to the Town; and to its current and retired employees.
This Policy on OPEB funding is designed to protect the community from a) the near -
term budget impact of a sudden change in law that would require such funding; and b)
the longer -term need to reduce a large liability.
Health Insurance Premiums are defined as the best estimate from the Town's
financial staff by early November of the cost of the Town's share of employee and
retiree premiums for the following fiscal year.
General Fund OPEB contribution: Not less than 5% of the estimated premium costs
for employees and retirees covered by the general fund will be set aside in the
following fiscal year as a preliminary OPEB contribution. It is expected that the
estimate will be improved by mid - February when final premium rates are released. The
preliminary OPEB contribution may be then adjusted higher or lower when final
premium rates vary from the initial estimate. This policy will help cushion the budget,
process from any late adverse impacts of changes to health insurance premiums.
Enterprise Funds OPEB contribution: These funds are expected to fully fund the
OPEB liability annually, according to an actuarial schedule agreed to by the Town's
financial staff, and a funding term not to exceed thirty years.
6
The Town of Reading - Policy on Cash Reserves Page 1 of 1
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Policy on Cash Reserves
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Finance Committee
December 2006
The Finance Committee ( FINCOM) of the Town of Reading hereby establishes
and adopts a Policy establishing a minimum target for cash reserves of 5% of
Net Available Revenue (as defined below). Further, the FINCOM recognizes that
circumstances may occur which would require the FINCOM to raise or lower this
minimum from time to time.
The FINCOM recognizes that the financial health of the Town of Reading is of
paramount importance to its residents who receive essential services; to its
bondholders who provide funding for long -term Town projects; to its vendors who
provide services and equipment to the Town; and to its current and retired
employees. This Policy on Cash Reserves is designed to protect the community from
sudden and unexpected changes in revenues or expenses.
Funds in excess of the current Cash Reserves Policy may be:
Added to reserves. This will increase the financial cushion against any sudden
and unexpected changes in revenues or expenses.
Added to the Capital Improvement Program. This investment will reduce future
maintenance and repair costs.
Added to the funding of any long term liability. This will reduce the need for
future contributions towards the pension fund or other post - employment benefit
costs.
Used for one -time expenses for community priorities.
Used to supplement the current fiscal year budget, including the opportunity to
reduce property taxes or other fees for the Town's residents.
Cash Reserves are defined as the sum total of free cash, uncommitted Stabilization
Funds, and the FINCOM Reserve Fund. Other reserves (such as Sale of Real Estate
funds, committed Stabilization Funds and overlay reserves) are excluded from the
5% minimum requirement, though these funds may be considered if circumstances
require higher reserves.
Net Available Revenue is defined as all general fund revenues, excluding any
MSBA reimbursements made inside the tax levy, or any revenues collected outside
the tax levy.
The most recent set of certified financial statements will typically be used to calculate
both Cash Reserves and Net Available Revenue. The FINCOM may use the best
estimates from the Town's financial staff at other times.
Town of Reading, Massachusetts 16 Lowell Street, Reading, MA 01867 Website Disclaimer
Virtual Towns & Schools Website
http:// www .readingma.gov/Pages/ReadingMA _Finance /cashreservespolicy
8/1/2012 F
The Town of Reading - Debt & Capital Policy Page 1 of 1
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Debt & Capital Policy
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Finance Committee
December 2006
The Finance Committee ( FINCOM) of the Town of Reading hereby establishes
and adopts a Debt & Capital Policy that a minimum of 5% of Net Available
Revenue ('NAR' - as defined below) shall be devoted to construct and replace the
capital plant of the community, both as debt repayment and annual payments as part
of the budget for capital items.
The FINCOM recognizes that a prudent Capital Improvement Program (CIP) will
serve to avoid excessive maintenance and repair costs, and reduce the need for
sudden and unexpected capital expenses that may have an adverse impact on the
Town's operating budgets.
The FINCOM also recognizes that from time to time additional capital expenses over
this 5% minimum will be beneficial for the long term financial health of the Town.
These additional expenses may be funded either by use of excess Reserves (as
described in the FINCOM Cash Reserves Policy), from the general fund (by way of a
budget increase above this 5% minimum Policy), or through other methods outside
of the tax levy.
The FINCOM encourages a prudent use of debt so as to spread out the cost of large
capital assets over a period of time that should not exceed the expected useful life of
the asset. If debt service of any new capital project is expected to exceed 0.25% of
NAR in any single year, the project should instead be brought forward as debt or
capital excluded from the tax levy.
The Capital Improvement Program will be a minimum of five years of projected
capital projects that reflect the prioritized needs of the Town, subject to the
anticipated funding provided by this Policy. This CIP will be presented at least twice
each year to the FINCOM by the Town's financial staff, in advance of both the
Annual and Subsequent Town Meetings.
Net Available Revenue is defined as all general fund revenues, excluding any
MSBA reimbursements or revenues collected outside the tax levy.
The most recent set of certified financial statements will typically be used to calculate
Net Available Revenue. The FINCOM may use the best estimates from the Town's
financial staff at other times.
Town of Reading, Massachusetts 16 Lowell Street, Reading. MA 01867 Website Disclaimer
Virtual Towns & Schools Website
http:// www .readingma.gov /Pages/ReadingMA Finance /debtpolicy
8/1/2012
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Primary Credit Analyst:
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Secondary Contact:
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approach for assigning credit ratings in U.S. public finance (see "USPF Criteria: State Ratings Methodology," published
Jan. 3, 2011; and "USPF Criteria: GO Debt," published Oct. 12, 2006, on RatingsDirect on the Global Credit Portal). We
have also developed representative ranges for key ratios that factor into our analysis of tax- backed credit quality (see
"USPF Criteria: Key General Obligation Ratio Credit Ranges — Analysis Vs. Reality" published April 2, 2008). Although
these ratios are the foundation of the quantitative measures Standard & Poor's uses when assigning a credit rating,
Standard & Poor's also relies on qualitative factors to inform our credit analysis. In 2006, Standard & Poor's released its
Financial Management Assessment, which offers a more transparent assessment of a government's financial practices,
as an integral part of our credit rating process (see "Financial Management Assessment," published June 27, 2006).
Our view of management factors, administrative characteristics, and other structural issues facing a government entity
may be an overriding factor in a rating outcome.
We view management as contributing significantly to many of the individual credit ratios, which can positively affect
ratings in a number of ways. On the whole, state and local governments have made many improvements to budget
structure, reserve policies, and debt management during prior periods of budget stress. Whether these practices are
developed as part of a comprehensive risk management plan or individually, they have, in our view, generally
enhanced government's ability to manage through downturns and have contributed to credit stability over time.
Conversely, we believe that the lack of strong management can be a significant factor in a weak credit profile. In our
opinion, while the economy remains a key factor in assigning a rating level, our view of management and the
institutional framework is usually one of the deciding factors in fine - tuning the rating.
Our view of a government entity's management and administrative characteristics, along with other structural
issues it faces, can move a rating up or down more significantly and swiftly than any other element of a credit
review.
• We've observed some distinct commonalities in the management practices of highly rated U.S. public finance
issuers over the years.
• Proactive budget and liability planning, strong liquidity management, and the establishment of reserves are
among the factors the strongest issuers share.
When assessing management, Standard & Poor's analyzes the political and fiscal framework that governs it, as well as
the day -to -day management procedures and policies. There could be a strong management team in place, but if there
is political instability or lack of political will to make difficult decisions, we have found that management could be
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ineffective in many cases. Standard & Poor's also focuses on the "whole of government." Our view of oversight and
management controls covering the disparate operations of a government with a focus on accountability at each
department or function is critical to strong credit ratings.
The following "Top 10" list of management characteristics associated with Standard & Poor's highly rated issuers is
generally applicable to state and local governments as well as to other enterprise operations of government such as
water, sewer, or solid waste. The relative importance of these factors may vary from issuer to issuer. Our view of
credibility is an important part of a rating review process and management assessment. Every government has
challenges, but we believe that identifying problems or issues and detailing how these will be addressed establish
credibility and greater transparency in the rating process.
Top 10 List
1. Focus on structural balance
In our view, a structurally balanced budget is an essential characteristic of highly rated credits. There are many views
of what constitutes a balanced budget. For some governments, a budget is balanced if current revenues plus available
reserves match or exceed current expenditures. From Standard & Poor's standpoint, a budget is balanced if recurring
revenues match recurring expenditures. In evaluating whether or not a budget is balanced, we analyze the underlying
revenue and expenditure assumptions. We might not have a positive view of a budget that relies on optimistic revenue
assumptions relative to the current economic environment to meet recurring expenditures. We consider recurring
expenditures all of those that are typically incurred year after year and are required as part of a government's normal
ongoing operations. This includes salaries, debt service, and pension payments among others. Consistent with our
analysis of revenues, expenditure assumptions that rely on debt restructuring for budgetary savings, deferral of
ongoing expenditures, and saving assumptions that have significant implementation risks could also color our view of
whether a budget is balanced or not.
A government's ability to maintain or quickly return to structural balance during a period of economic weakness can
lead us to affirm or raise an issuer credit rating. The opposite is also true. Reliance primarily on one -time measures
without the appropriate re- alignment of revenues and expenditures could cause us to lower the ratings.
2. Strong liquidity management
An additional credit quality factor is management's ability to manage its cash flow and identify potential issues,
internal or external, that could lead to a liquidity crunch. Potential for inadequate liquidity serves as a bellwether to the
risk of immediate and potentially severe credit deterioration, particularly for those with significant budget
misalignments and issuers of certain types of variable -rate debt, in our view. Ultimately, the possibility of having
insufficient money to meet debt obligations is at the heart of our credit analysis. In the few instances where state or
local governments may encounter genuine credit distress, it is likely accompanied and possibly exacerbated by
problems with liquidity. Access to additional sources of internal or external liquidity and a plan on how, when, and in
what amounts to access these, are a credit positive. However, just having access to additional liquidity, either through
pooled cash or loans from other funds, is not enough. The absence of clear accountability as to where the cash is
coming from or when it will be paid back could create uncertainty about the sustainability of the cash flow and the
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potential implications of reallocating the cash from one use to the other.
In addition, some obligors' debt profiles include liquidity risk exposure tied to variable -rate demand obligations,
alternative financing products, and other debt instruments. Under some of these structures, the potential for
accelerated repayment causing sudden and significant demands on an issuer's liquidity could have credit implications
(see "The Appeal Of Alternative Financing Is Not Without Risk For Municipal Issuers,' May 17, 2011). We have found
that management teams of highly rated credits are able to limit, mitigate, or develop a careful plan to manage the
potential exposure to these liquidity demands.
3. Regular economic and revenue updates to identify shortfalls early
In our experience, having a formal mechanism to monitor economic trends and revenue performance at regular
intervals is a key feature of stable financial performance. This is particularly true in the case of states, which we have
observed tend to exhibit revenue declines during economic downturns because they rely on personal income tax, sales
tax, corporate income tax, and other economically sensitive sources. We believe that evaluating historical performance
of certain revenues is important to this analysis because each government will have different leading or lagging
economic indicators that signal potential revenue variance issues based on its economic structure. The earlier revenue
weakness is identified in the fiscal year, the more effective, in our view, the budget balancing response can be. We
think it is important to monitor upside growth as well. In our opinion, it is also important to understand a surge in
revenues to determine if the trend is an aberration or something that is likely to sustain.
4. An established rainy day /budget stabilization reserve
A formalized financial reserve policy is a consistent feature of most of Standard & Poor's highly rated credits. For some
governments, such a policy has been standard operating procedure for decades. Others focused attention on this as a
risk management tool following the recessions of the early 1990s, 2001, and especially the Great Recession when the
country experienced sustained revenue weakness that required severe budget reduction measures. In our view,
reserves provide financial flexibility to react to budget shortfalls or other unforeseen circumstances in a timely manner.
No one level or type of reserve is considered optimal from Standard & Poor's perspective. We have seen many
different types of reserves factor into an improved government credit profile. In our view, some important factors
government officials generally consider when establishing a reserve are:
• The government's cash flow /operating requirements;
• The historical volatility of revenues and expenditures through economic cycles;
• Susceptibility to natural disaster events;
• Whether the fund will be a legal requirement or an informal policy;
• Whether formal policies are established outlining under what circumstances reserves can be drawn down; and
• Whether there will be a mechanism to rebuild reserves once they are used.
In our view, the use of budget stabilization reserves is not in and of itself a credit weakness. The reserves are in place
to be used. However, we believe that a balanced approach to using reserves is important in most cases, because full
depletion of reserves in one year without any other budget adjustments creates a structural budget gap in the following
year if economic trends continue to be weak. As they've done in the past, state and local governments are
re- examining their fund balance reserve policies to determine their adequacy and, in many cases, have adjusted their
funding targets. ,
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5. Prioritized spending plans and established contingency plans for operating budgets
We have found that contingency planning is an ongoing exercise for most highly rated governments. Prioritized
spending and contingency plans have always been important risk management tools that allow state and local
governments to adjust to changes in the economic and revenue environment. In our analysis, we consider whether a
government has contingency plans and options to address changing economic conditions, intergovernmental fund
shifts, and budget imbalance when it occurs. This would include an analysis of the following:
• What part of the budget is discretionary;
• What spending areas can be legally or practically reduced;
• The time frame necessary to achieve reductions of various programs;
• Where revenue flexibility exists; and
• An analysis of revenue under varying economic and policy scenarios.
6. Strong long -term and contingent liability management
In our view, recognition and management of long -term and contingent liabilities are characteristics of highly rated
credits. We continue to incorporate governmental liability management into our rating analysis, as we have for
decades, with an emphasis on how liabilities are managed over time (see "Contingent Liquidity Risks In U.S. Public
Finance Instruments: Methodology And Assumptions," March 5, 2012). In particular, Standard & Poor's views pension
and other postemployment benefit obligations as long -term liabilities (see "The Decline In U.S. States' Pension Funding
Decelerates, But Reform And Reporting Issues Loom Large," June 21, 2012; and "The OPEB Burden Varies Widely
Among U.S. States," published Sept. 22, 2011). While the funding schedule for pension and OPEB can be more flexible
than that for a fixed -debt repayment, it can also be more volatile and may cause fiscal stress if not managed, in our
opinion. The size of the unfunded liabilities and the annual costs associated with funding them, relative to the budget,
are important credit factors in our review of state and local governments. Currently, pension systems are undergoing
the most significant level of reform in decades, which we view as a credit positive and highlights the importance of
managing these liabilities. We will continue to differentiate credits where these long -term liabilities are large and
growing, contributions are less than required, and there has been limited action on reform initiatives.
Non - essential areas of government operations and services that may fall out of the traditional general fund focus could
also result in contingent liabilities and create budget pressures, if not properly managed. Stadiums, convention centers,
and health care entities, as well as various other enterprise operations, could also cause funding challenges at the local
level, even when there is no clear guarantee or legal responsibility for the government to provide funding. At the state
level, we believe that local government fiscal difficulties can increase and become a funding and policy challenge for
the state.
7. A multiyear financial plan in place that considers the affordability of actions or plans before they
are part of the annual budget
In our analysis, we consider whether this plan is comprehensive. During a sustained economic recovery, we see
program enhancements and tax reductions as typical. We believe that pension funds that performed at record levels
provided incentive to expand or enhance benefits. Elected officials will be ultimately responsible for the decisions
necessary to restore out -year budget balance. In our view, even when there is legal authority to raise taxes, there may
not be a practical ability to do so because it can be politically unpopular. Having detailed information on costs
associated with various policy decisions can provide greater transparency to the budget process, in our view. We
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consider multiyear planning as an important part of this process. Standard & Poor's realizes that the out -years of a
multiyear plan are subject to significant change. They provide a model to evaluate how various budget initiatives affect
out -year revenues, spending, and reserve levels. These plans will often have out -year gaps projected, which we believe
allows governments to work out, in advance, the optimal method of restoring fiscal balance.
8. A formal debt management policy in place to evaluate future debt profile
In the past decade, many states and local governments have developed debt affordability guidelines or models, which
we regard as a positive development. This affordability analysis generally includes a systematic review of existing and
proposed debt, and how they will affect a government's future financial profile. In many cases, these policies address
exposure to variable -rate debt, swaps, and other contingent liabilities. They can also include criteria for when
refunding bonds are allowed, amortization periods, and what types of projects can be funded through debt issuance.
The affordability measures are typically tied to a government's revenues or expenditures, debt per capita, and debt per
capita as a percent of either gross state product (states) or market value (local governments). The impact of these
policies on a long -term credit rating will depend on our view of how the government establishes and uses the policies,
and the track record in adhering to the affordability parameters established in the policies, especially during economic
downturns. We believe the process enhances the capital budgeting and related policy decisions regarding debt
issuance and amortization. In our view, these policies have moderated leverage at the state and local level.
9. A pay -as- you -go financing strategy as part of the operating and capital budget
In our opinion, pay -as- you -go financing can be a sound financing policy. Not only does it lower debt service costs, but
it also provides operating budget flexibility when the economy or revenue growth slows. We see the use of
pay -as- you -go financing as a more significant funding option when tax revenue growth is uncertain, given the fact that
pay -as- you -go financing may provide additional budget flexibility in an uncertain revenue environment. Depending on
the government's overall balance -sheet profile, we believe that the government can achieve a better match between
nonrecurring revenues and nonrecurring expenditures if it uses this type of financing.
10. A well- defined and coordinated economic development strategy
In addition to historical economic trends, we consider each government's economic development initiatives and future
growth prospects as they are likely to affect future revenue - generating capacity. Effective economic development
programs typically take a long time to implement. We believe that the question for many state and local governments
now is not whether there should be a formal economic development program, but rather how significant a resource
commitment should be dedicated to running these programs and offering incentives. These are government policy
decisions involving cost benefit analysis that are generally outside the credit rating process. However, if these
economic development programs and strategies create employment, enhance diversification, and generate solid
income growth, they could have a positive effect on a government credit rating over the long term. To the extent that
there is a net revenue benefit to a government, this could also be a positive credit factor. We have seen economic
development programs expand in the past 20 years with strategies increasingly becoming regional in nature, with a
more coordinated approach between state and local governments.
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1
July 30, 2012 —year end update
All receivables, real estate, personal property, motor vehicle, water, sewer, storm water,
ambulance and other general billing were reconciled with the collector on July 1. Bills continue
to be paid through July 20 so the close cannot start until all transactions are posted. Many of
the Finance Committee members might remember that we don't predict what free cash will be
this soon. The Town Accountant is just beginning to prepare all of the spreadsheets and analysis
required for free cash calculation. This process takes several weeks and is not usually complete
until the first week of September. With a new Town Accountant, that timeframe may need to
be extended.
Gail LaPointe
Town Accountant
781 942 6604
LeLacheur, Bob
From: Jeanne Borawski <jeanne_borawski @hotmail.com>
Sent: Monday, August 06, 2012 10:31 PM
To: LeLacheur, Bob
Cc: dgreenfield @statestreet.com
Subject: Enterprise funds, debt, and such
Hi Bob,
Thank you for so graciously offering to answer my questions. I'm hoping this isn't the email that will make you regret it
Full disclosure: I expect that I've made many mistakes in the following. I just want to explain my line of thought so you
can help me see any errors I might be making. So, here goes:
I've been trying to educate myself about the Water, Sewer, and Storm Water Enterprise Funds. Is there any way you
could describe them to me? It appears that they are merely a list of expenses in terms of budget (wages, benefits,
capital, debt). Why are they considered outside of the general fund? Are there revenue streams in these funds I'm not
seeing?
My more general question: I'm trying to get a handle on the town's overall debt. From the last Town Warrant, it appears
that the 2013 General Fund Net Included Debt was $2,279,765 and Net Debt Exclusion was $2,043,982. So, the town's
total general fund debt is $4,323,745 (which would be about 5.6% of NAR ... I'm using $77,510,976 as my 2013 NAR
number).
If we add the 2013 Water Ent. Fund Debt ($1,326,051) Sewer Ent. Fund Debt ($115,800), and Storm Water Ent. Fund
Debt. ($0), the total Town Debt Service for 2013 would be $5,765,598 (or 7.4% NAR). Again, if there are revenue
streams in these funds, I see why I shouldn't add their debt them to General Fund Debt.
All of this gets me back to number 8 on the S&P presentation you sent us. I know we have a policy of spending a
minimum 5% of NAR on capital and debt (which makes perfect sense to me). However, as I read number 8 in the S &P
presentation, aren't they more describing having a policy on the upper limit of debt a government will take on? They
claim they believe that "these policies have moderated leverage at the state and local level." S &P says that, 'The
affordability measures are typically tied to a government's revenues or expenditures, debt per capita, and debt per capita
as a percent of ... market value." Wouldn't that suggest a cap as opposed to a minimum?
Final question (if you're still with me). Do we ever compare our FinCom policies to other communities? I imagine we'd
compare quite favorably, but I'd still like to know how our policies stack up and learn what other communities
(particularly ones with excellent bond ratings) are doing.
Thanks as always for helping me get up to speed,
Jeanne
PS - Dave, I'll happily stop copying you on these emails, but I thought it appropriate to let the chair know the kinds of
questions I'm asking. I expect (and dearly hope) that I'll be educated enough about the town budget soon and won't
have to send these emails.
im
Finance Committee Meeting
June 5, 2012
For ease of archiving, the order that items appear in these minutes reflects the order in
which the items appeared on the agenda for that meeting, and are not necessarily the
order in which any item was taken up by the Board.
The meeting convened at 7:00 p.m. in the Selectmen's Meeting Room, 16 Lowell Street,
Reading, Massachusetts. Present were Chairman Stephen Goldy, Vice Chairman Ben
Tafoya, Secretary Richard Schubert, Selectmen John Arena and James Bonazoli,
Town Manager Peter Hechenbleikner, Assistant Town Manager /Finance Director Bob
LeLacheur, Office Manager Paula Schena, Finance Committee members David
Greenfield, Paula Perry, Jeanne Borawski, Hal Torman and Mark Dockser; Assessors
Ralph Colorusso, Fred McGrane, and Robert Quinn; and the following list of interested
parties: Bob Nordstrand, Bob Quinn, Pat Sullivan, Michael Cashins and Kevin Douglas.
Joint Meeting with the Finance Committee re: Funding of Assessor's Re- Inspections —
Finance Committee members David Greenfield, Paula Perry, Jeanne Borawski, Hal
Torman and Mark Dockser were present. FinCom Chairman David Greenfield called the
Finance Committee to order. Assessors Ralph Colorusso, Fred McGrane and Robert
Quinn were present.
The Town Manager indicated that he is asking the Board of Selectmen and Finance
Committee to approve a substantial amount of money to make the transition from
CAMA.
Bob LeLacheur noted that between May 1 and July 15 the Selectmen and Finance
Committee can vote to transfer a maximum of 3% from the department's budget that the
transfer is coming from. He noted that that a full review is $97,200 a field review is
$60,000 and $24,000 was funded. The request is for $133,400. The Department of
Revenue is now requiring a full field review so the expense went from $72,000 to
$157,000.
Fred McGrane noted that the Town Manager's three year plan was $24,000 each year for
three years. The Board of Assessors solicited bids and two come in at approximately
$162,000. In realty only inspection of 3600 is actually needed. Patriot will amend the
dollar amount and be paid for only those houses entered. The DOR requires a full field
review to ensure that the data conversion is correct.
The Town Manager noted that all inspections need to be done by the end of April.
Stephen Goldy asked how long Patriot has been involved and Fred McGrane indicated
the conversion was started about two years ago but we put them off.
The Town Manager noted that the $72,000 estimate is now $97,200 and time is another
variance so funding cannot be pushed into FY14. He met with the DOR last week and
Finance Committee Minutes — June 5, 2012 — page 2
they informed us that the conversion cannot be done the same year as the revaluation and
this is nothing new. The Town Manager noted that assessment is 70% of our revenue and
he wants to make sure its done right.
Richard Schubert asked what guarantee there was that the work can be done in time and
Bob LeLacheur noted that it takes 6 — 8 weeks for a full field review.
David Greenfield noted that the DOR is requiring a full review by April and he asked if
that is subjective. The Town Manager indicated the DOR indicated this is for a smooth
process. David Greenfield indicated he wants the Board of Assessors to meet with the
Finance Committee at the end of June.
Paula Perry asked if staff will be doing the inspections and Bob LeLacheur noted that this
amount of money assumes they are not. Paula Perry asked why we are converting from
CAMA and Fred McGrane noted that CAMA is not supported and Patriot is much better.
He also noted that the Board knew nothing about needing a field review. The Town
Manager indicated that was not correct.
Jeanne Borawski asked where the money was coming from and Bob LeLacheur indicated
40K from unemployment and 18K from workers comp. Hal Torman asked if we should
do a reserve fund transfer and Bob LeLacheur indicated that half of the reserve fund is
spoken for and the Finance Committee will hear about that at their next meeting.
James Bonazoli noted that the errors and delays are unbelievable and he is offended that
the Assessors don't know where the numbers are coming from. He asked if
regionalization was possible. The Town Manager noted that he recommended last year to
make the Board of Assessors appointed. Bob Nordstrand was opposed to this at Town
Meeting so out of respect to Mr. Nordstrand he didn't push the matter. The fact is the
assessment function is not functional. There is staff turnover, poor staff moral, poor
relationship with the state, a complete lack of communication and the Board lacks faith in
staffs' capabilities.
Bob Nordstrand noted that it is wrong to appoint and not elect. He noted he came to the
Finance Committee and Board of Selectmen and pleaded to keep the part time person.
The problem is with lack of personnel. He noted that the Board of Assessors relies on the
senior appraiser.
A motion by Tafoya seconded by Bonazoli that the Board of Selectmen vote
pursuant to MGL Chapter 44 Section 33B to approve the transfer in FY 2012 of
$133,400 from line item B99 Benefits, to Line item I92 Finance Expenses was
approved by a vote of 5 -0 -0.
A motion by Perry seconded by Dockser that the Finance Committee vote pursuant
to MGL Chapter 44 Section 33B to approve the transfer in FY 2012 of $133,400
from line item B99 Benefits, to Line item I92 Finance Expenses was approved by a
vote of 5 -0 -0.
0
Finance Committee Minutes — June 5. 2012 — naee 3
The Town Manager noted he will try to get a contract with Patriot immediately.
The Finance Committee adjourned their meeting at 9:40 p.m.
Respectfully submitted,
Secretary
Finance Committee Meeting
June 27, 2012
The meeting convened at 7:35 p.m. in the Town Hall Conference Room, 16 Lowell Street,
Reading, Massachusetts. Present were Chairman David Greenfield, Vice Chairman Barry
Berman, FINCOM members Jeanne Borawski, Marie Ferrari, Paula Perry, and Hal Torman,
Assistant Town Manager/Finance Director Bob LeLacheur, Fire Chief Greg Bums and Tom
Ryan. At 7:50pm the board of Assessors and staff joined the meeting, including Chair Fred
McGrane, Vice Chair Ralph Colorusso, member Robert Quinn, Bob Nordstrand and Interim
Appraiser Pat Sullivan. Karen Herrick joined the meeting at 8:45pm.
Mr. Greenfield called the meeting to order
Reserve Fund Transfer Requests
Mr. LeLacheur reviewed three FINCOM Reserve Fund transfer requests. The fund has a balance
of $116,000 and that will be reduced to $74,000 if all requests are approved:
1. Police OT $25,000
2. Police expenses $2,000
3. Fire OT $15,000
On June 11, 2012 Police Chief Cormier and Town Manager Hechenbleikner reviewed the first
two items which were supported by the committee, though the vote was tabled until this
meeting. —Mr. Greenfield stated that this Police OT was necessary, unlike some of the Police
details in his view. He said if there were no other questions then FINCOM would hear from the
Fire Chief. Mr. CiFee..a„u stated A.s this o,a:,.e OT was o . make some of the Police
details, and said if there were no oiher questions then FINGON4 watild hear 4-ofn !he Fire Gh
Fire Chief Burns described that in FYI I the department at this time of year was at $406,000 of
OT and finished the year at $421,000. This year in FYI the current cost has been $367,000 and
he is projecting a final figure of $393,000. He described the significant and serious injuries that
the department had seen in FY12, and mentioned that four were incurred on the job and three
were incurred off the job.
Ms. Perry asked if the firefighter had a workout program, and if there were any financial
incentives in place? Chief Bums said that a group of firefighters did work out regularly in front
of the Main Street station early in the morning, but there was no direct financial incentive to do
so. Ms. Perry asked if the local YMCA facilities would be available, and Chief Burns mentioned
that they had received some core - strengthening equipment from the YMCA in the past. Ms.
Ferrari noted that shoulder injuries were a long recovery, and Chief Burns agreed because
firefighters needed to be at full strength in order to work. Mr. Berman asked if the handout
showed hours of work missed, or of OT caused. Chief Burns said it was hours of work missed
and that an exact calculation of OT would be difficult. He described how the second injury in a
group of eleven firefighters causes OT. He described the new Microsystems software that will
produce more in depth financial reports as part of the time management function. He will be able
to more accurately track OT expenses going forward. He reminded FINCOM that his 45`h
firefighter is a floater assigned to the first long -term absence in a group of eleven. He said that
aside from the Chief and the Administrative Assistant everyone else is counted as shift strength
0
in the department. Mr. LeLacheur reminded FINCOM of the analysis that showed a 45`h
firefighter paid for the cost by reducing OT, but that additional firefighters could not guarantee
that result.
Mr. Berman asked if there were a sort of minor leagues for firefighters, to be used in the event of
long -term illness or injury. Is there an ability to borrow firefighters from other Towns? Chief
Burns said that would require a partner and he thought that would be difficult to accomplish. Mr.
Berman said that maybe Reading should start such a program. Mr. Greenfield said that would be
be aq good topic for a future FINCOM meeting. Ms. Borawski asked what the process was for an
injured firefighter. Chief Burns said that first the employee fills out a form and the immediate
supervisor is in charge of the process — including sending the employee to a local hospital for
evaluation if needed. If the employee misses more than three consecutive shifts (eg day- night-
day) then a Doctor's note is required.
On a motion by Ms. Perry seconded by Ms. Borawski to approve the three transfer
requests as presented in the total amount of $42,000 to the three accounts shown, FINCOM
voted 6 -0 -0.
OPEB
Mr. LeLacheur noted that he drafted a possible FINCOM policy about OPEB based on the FYI
budget process and comments he heard from FINCOM members. He also attached existing
FINCOM policies on cash reserves and debt/capital and asked that those be reviewed. Mr.
Greenfield suggested that the existing policies and potential new policies be reviewed at a
meeting this summer.
Assessors Update
Mr. LeLacheur reviewed a handout that described activity since the June 5`h meeting with the
Board of Selectmen. The RFP for inspections needed to be divided into two pieces and a new
one issued for the Field Review that was needed for the software conversion. Mr. McGrane
reminded FINCOM that the DOR required a 100% sample. Mr. LeLacheur said the conversion
was going well with some data quality issues that were being corrected by Patriot Properties. Ms.
Sullivan said the sketches had not translated well in all cases, but the raw property data was in
good shape. Mr. Colorusso said that the DOR had a mandated timeline they must adhere to. He
said the key relationship was the DOR field agent and the Reading Senior Appraiser. He said that
recent valuation trends in Reading did not easily fir into the DOR model which had slowed down
the relationship.
Mr. McGrane said that the previous Senior Appraiser was strong technically but not a good fit
especially because of his lack of MA experience. Mr. Greenfield asked if a step was missed in
the hiring process that the MA experience was important. He asked why there wasn't better
communication with the DOR on this software conversion situation. Mr. McGrane agreed that a
step was missed. Mr. Greenfield asked if the Board of Assessors should have done things
differently, and Mr. McGrane said that in retrospect it should have instead of relying on staff so
heavily. Ms. Perry asked if the Board met with other vendors. Mr. Colorusso said that they had
met with other vendors but there was a delay in signing the software contract with Patriot. Mr.
Nordstrand said that staff knew of the DOR inspection requirements all along. Mr. LeLacheur
disagreed because notes from the Board in May 2012 indicate that staff believed a 2 -5% sample
was required instead of a full field review. He indicated that he had extensive recent
conversations with Patriot Properties and had evidence that showed that staff disagreed that the
full field review was needed. Mr. Colorusso cited the Board's inexperience with software
conversions.
Mr. Berman asked if the Senior Appraiser was hired by the Board, and Mr. McGrane said yes.
Mr. Berman wondered if there was a better approach to this that would include more overview to
the situation, since the Town Manager had no authority over this staff. Mr. McGrane indicated
that the Board recognized this problem and that is why they agreed to reach out to Wakefield to
share the services of their Senior Appraiser Victor Santaniello. Mr. Greenfield asked if this
person had sufficient MA experience and other qualifications. Mr. McGrane indicated that he
did, and also had a strong relationship with the DOR and Patriot Properties. Mr. Greenfield asked
the Board how they would keep track of the proper pace of work and the progress needed for the
upcoming 6 -18 months. Mr. McGrane indicated that Pat Sullivan is very helpful to the Board in
that role. Ms. Sullivan mentioned that she would continue to attend MA DOR workshops. Mr.
McGrane pointed out that the Board had educational requirements, and Mr. Colorusso added that
they had to pass exams. Mr. Greenfield asked how to prevent the problems that had arisen the
next time a material event or change (such as a software conversion) faced the Board. He asked
if the Board planned to make any process changes, especially to keep current. He indicated his
unhappiness with the fact the Senior Appraiser was a single point of failure with no adequate
alternative in place when things went wrong. Mr. McGrane agreed that they had experienced a
significant failure with recent senior staff and that the Board took responsibility for that fact. He
said that the notion of regionalization as a sort of `Plan B' grew in importance as the magnitude
of these recent problems had come to light. Mr. Greenfield said it was the job of the Board to
keep track of the work being done by their staff since they were hired independently. He spoke to
the public and stated that while there has been process and communication flaws that the current
valuations were accurate and there were no indications of any problems in that area. Mr.
Colorusso agreed that recent staff turnover was troubling and that if better wages had been paid
then this turnover could have been avoided. Mr. Nordstrand reminded FINCOM about cutting
the data collection position and harming the morale of the staff. Mr. Colorusso said longer term
that staffing had never been an issue before.
Mr. Berman said that converting to the Patriot system should be a better recruiting tool and the
Board agreed. Mr. McGrane said that he was pleased that the Town emphasized regionalization
was not only meant to save money but to better share resources. Mr. LeLacheur gave an example
of a few communities getting together to hire and share a commercial expert that no one
community could afford, and Mr. Nordstrand agreed that would be a very good benefit. Mr.
LeLacheur reminded FINCOM that the two RFPs for property inspections replaced the need for
that staff work and therefore the reduction in FTEs by sharing a Senior Appraiser should not be a
problem in the next eighteen months. He said this was a good time for all parties involved to
review the arrangement with Wakefield in order to improve it or abandon it if it doesn't work
out. He said that it is imperative for all involved to give feedback in order to give the
arrangement the best chance of succeeding.
Ms. Perry asked what the cycles of work are in the Assessor's office. Ms. Sullivan handed out
several pages that went through a typical fiscal year and spelled out the responsibilities. Mr.
Colorusso added the fact that every three years there was a revaluation, and every nine years
there was a re- inspection requirement. Ms. Sullivan said that the annual tasks were very similar,
but the DOR provided more scrutiny in those years mentioned above. She stated that Reading
has until recently been on a 6 -year re- inspection pace in order to better capture value. She said
that staff turnover had hampered that progress. Mr. Colorusso said that the 9 -year cycle was
designed to capture improvements made inside a home, but that in the meanwhile staff visited
every home sold in a given year, visited homes that had pulled permits, and visited homes that
filed for abatements as allowed by the homeowner. Ms. Perry said that in the past FINCOM has
requested better data to back up these claims. Mr. Colorusso reminded FINCOM about staffing
cuts and turnover, and Mr. LeLacheur stated that as of last January the Board had agreed at the
budget meetings that they were only 300 -400 parcels behind in the 9 -year cycle.
Mr. Greenfield thanked the Board of Assessors and their staff for a good presentation, and said
that FINCOM is now better tuned in to their work and process. He said the liaison Ms. Perry
would be attending their meetings on a regular basis, about once per month.
Mr. LeLacheur suggested the following dates for future meetings after a discussion by FINCOM:
August 8`h; September 12`h; October 10`h (Financial Forum). Mr. Greenfield said that in August
FINCOM would re- organize and change liaison assignments as needed. He introduced Karen
Herrick who would begin a term on FINCOM on July 1, 2012. He asked that staff put on the
next agenda how FY12 closed out financially and an update on the State's FY13 budget.
On a motion by Mr. Greenfield seconded by Ms. Perry, FINCOM approved the minutes of
March 21" by a vote of 6 -0 -0.
On a motion by Ms. Perry seconded by Mr. Torman, FINCOM approved the minutes of
April 11` by a vote of 6 -0 -0.
FINCOM and Mr. LeLacheur discussed the June 11`h minutes, which consisted of a session in
the Superintendent's office and then one as part of the School Committee meeting. It was agreed
to use the portion of the School Committee minutes that covered the Space study only.
On a motion by Ms. Perry seconded by Mr. Greenfield, FINCOM approved the minutes of
June 11` as amended by a vote of 6 -0 -0.
Mr. Greenfield indicated a desire to revisit the Revenue and Expense cutting spreadsheets and
asked that they be update for the August FINCOM meeting.
On motion by Ms. Perry seconded by Ms. Ferrari the Finance Committee voted to adjourn
it's meeting at 10:10 p.m. by a vote of 6 -0 -0.
Respectfully submitted,
c
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