HomeMy WebLinkAbout2016-02-10 Finance Committee PacketR
Town of Reading
= Meeting Posting with Agenda RECEIVED
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Board - Committee - Commission - Council:
Finance Committee -1016 JAN 21 P $ 351
Date: 2016 -02 -10 Time: 7:30 PM
Building: Reading Town Hall Location: Conference Room
Address: 16 Lowell Street
Purpose: General Business
Meeting Called By: Caitlin Saunders on behalf of Mark Dockser
Notices and agendas are to be posted 48 hours in advance of the meetings excluding
Saturdays, Sundays and Legal Holidays. Please keep in mind the Town Clerk's hours of
operation and make necessary arrangements to be sure your posting is made in an
adequate amount of time. A listing of topics that the chair reasonably anticipates will be
discussed at the meeting must be on the agenda.
All Meeting Postings must be submitted In typed format; handwritten notices will not be accepted.
Topics of Discussion:
• Review information for financial forum
• Preparation for budget review meetings
• Minutes
This Agenda has teen prepared In advance and represents a listing of topics the the chair reasonably anticipates will be discussed O
at the meeting. However the agenda does not necessarily Include all matters which may be taken up at this meeting.
Page I 1
FINCOM FY16 Meeting Schedule
(All meetings are shown in bold and begin at 7:30pm held in Town Hall, unless noted)
2015
SeeEen�beF1G -.-:. ancial budget (Pleasant St. Ce to )
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..- . __`"n'""- phi- i "o+ °^- "mktii,g -(al R.41f1.
n222RIt.._ n regular
2016
February 10
regular meeting
March )
Local elections
March 2
FY17 Budget Meetings (Town)
March 9
FY17 Budget Meetings (Town)
March 16
FY17 Budget Meetings (Schools)
March 23
Vote FY17 Budget & Town Meeting Articles
April25(M)- 28(Th) -Mav 2(M) -5(7h) Annual Town Meeting (at R;IdHJ)
June 29
Year-end meeting
0/
Thomas Ryan
To: finance@ci.reading.ma.us
CC: tobus111 @vedzon.net
Subject: finance committee
Finance Committee members:
According to the Reading Home Rule Charter (April 2015) 2.12.1 "The Finance Committee shall submit a written report
to the Town Meeting setting forth Its findings, approvals or disapprovals on all Articles in the Warrant that involve the
expenditure of funds."
In addition, Commonwealth of Massachusetts Division of Loral Services, Section 5.1 regarding the roles and
responsibilities of the Finance Committee as follows: "The primary duties of a finance committee are to advise and
make recommendations to town meeting on the budget and other areas of finance."
Nowhere is there any mention that a finance committee has the authority of the duty to advise its members of how to
contact the taxpayers and advise them on how to recommend and promote an override.
In my opinion at a recent financial forum the Reading Finance Committee overstepped its bounds.
Stick to your job; nothing more.
Thomas J. Ryan
87 Dana Rd. Reading, MA 01867
781944-2544
tTo b u s l ll@verizon.net
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Town of Reading Finance Committee
Subject; Role and Responsibilities
By advocating for an override of Prop 2 1/2 as you did at the September 20, 2016 financial forum the
Finance Committee forgot the role it plays in the Town Meeting process.
Section 2.12.2 of Article 2 of the Town of Reading Home Rule Charter, Section3.3.2.1 of the Bylaws and
Section 5.1 Department of Local services guide lines spell out the Role and Responsibilities of the
committee.
Section 2.12.2 states that in addition to investigative powers their primary role is "The Finance
Committee shall submit a written report to the Town Meeting setting forth its findings , approvals or
disapprovals on all Articles in the Warrant that involve the expenditure of funds ".
Section 5.1 of DLS states in part "finance committees were established so a representative group of
taxpayers could conduct a thorough review of municipal finance questions on behalf of all citizens ".
In advocating for an override the committee in my opinion the committee has lost sight of its role and
responsibilities to all citizens and overstepped that role.
While I feel that the financial forum are useful in the future in my opinion they should be chaired by the
Board of Selectmen and that the Fin Com should be observers so that they can do as the Charter and
DLS suggest and advise Town Meeting their primary role and responsibility.
William C. Brown 28 Martin Rd Reading Ma 01867 781 944 2807
cc: Board of Selectmen
O
LeLacheur, Bob
From:
Mark Dockser <mark dockser@venzon.net>
Sent:
Tuesday, February 09, 2016 3:16 PM
To:
Paul McNeice(w); Paula Perry; Anne Johnson Landry; Craig Merry; David Neshat; Marc Moll;
Peter; Vanessa 1. Alvarado
Cc:
Saunders, Caitlin; LeLacheur, Bob
Subject:
FinComm meeting Wednesday night 7:30 Town Hall -- please confirm
Attachments:
1 -12 -16 Financial Forum Topics .doa; Free Cash and Reserves 12- 15.docx; Compilation of
feedback on Finance Forum Questions - January 2016.docx
Hi folks,
Just a reminder that we are meeting on Wednesday night with a brief agenda in preparation for our March budget
reviews.
2 items to review /discuss:
1) information to share with the town re: financial facts affecting the town— our goal is to use the attached document
( "1 -12 -16 Financial Forum Topics ") which was circulated for the Financial Forum as a basis to create a simple, clear,
factual brief to make available in advance of April town meeting. I also attached a quick note summarizing the notion
of Free Cash and reserves. Lastly, is some feedback that I received regarding the financial fact sheet.
2) discuss open issues regarding FinComm review of Town and School budgets . This process will take place every
Wednesday in March.
Please come prepared to discuss your thoughts on the "financial facts" note as well as to frame questions about either
town or school budgets so that we can submit them to the right people for answers in advance of our budget reviews.
Please also confirm that you are able to make the meeting tomorrow night
Caitlin, can you bring 15 copies of the attachments to the meeting please
Thanks,
Mark
O
January 13, 2016
To: Reading Boards, Committees and Other Volunteers
From: Mark Dockser, Chair, Reading Finance Committee
Subject: January 20, 2016 Financial Forum
Following up from the discussions at our last Financial Forum held in October 2015, both the
Selectmen and FinComm have started discussions about anticipated shortfalls in the town's
operating budget starting with FY'17. We highlighted needs on both the town and school sides
and our inability to offer even level services going forward without new sources of revenue, and
specifically looking at an operating override. It has been and continues to be our belief that the
only long term viable option to provide the level of services that Reading is demanding is an
operating override in the near term and that the taxpayers need to be presented with this option
soon.
FinComm has sponsored a series of meetings focusing on services that the town
desires/requires as well as new sources of revenue. Many of these have been implemented
and have benefited the town already. But as we look at budgeting for FY'17, an activity that is
already in full swing for both Town and Schools, and as we look beyond FY'17, FinComm needs
to offer budget guidance to Town Meeting based on available revenues and its impact on the
financial status of the Town.
In order to frame the discussions for these activities going forward, FinComm suggests that in
early 2016, we develop information for the taxpayers of the town to understand the budget
situation, to discuss what level of services they will be desiring going forward, and to start a
discussion of the options that are available and the recommendations of the town's elected and
appointed officials.
We have started to think about a "presentation" based on roughly 10 -12 key points that can
provide context to taxpayers, present options, and let taxpayers ask questions and make
comments about both our needs and our means to pay for those needs.
Below is a first pass at the list of items that we think could help present the situation and
options. The next financial forum is scheduled for Wednesday January 20, 2016 at 7:30 pm at
the Pleasant Street Center. We are asking that each of the members of the various boards and
committees as well as all interested taxpayers review these in advance of our meeting so that
we can have a very Productive discussion at the forum and beyond as we reach out to the entire
town.
Thank You!
Discussion Topics:
t. What challenges do our current pay scales present to the Schools and the Town?
How have the Schools and Town been able to attract and/or retain employees? In what ways
have the Schools and Town not been able to do so? What has caused certain positions to go
unfilled?
2. Understanding use of Free Cash and its impact on the operating budget.
FinComm believes it is important to share with and explain to residents our financial situation in
terms of the annual operating budget, our capital needs and plans, as well as the reserves that
we maintain.. Reserves are held to fund specific projects as well as to be available for
unanticipated events like heavy snow or litigation and related fees for example. We intend to
include a few paragraphs that explain this, highlighting both the need and the prudence to use
some free cash to support the operating budget as we have done in the last several years, but
that this is not a long term fix for the shortfalls we face in the operating budget.
3. Average tax bill by community chart—taxes vs. assessed value of median home
Reading currently is slightly below the trend line for taxes paid for a single family home when
compared to peer communities.
Taxes Paid vs. Single Family Home Assessed Value:
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Data: Use DOR data from peer Communities north & west of Boston, as defined by independent consultants in
the town's last two Pay & Class studies: exclude Burlington, Danvers, Wilmington and Westborough
because they have larger commercial tax bases (avg 30%+ versus <10%in Reading)
Assumptlon: Assessed values of single family homes (51F) serve as a proxy for services provided by town & schools
SF property taxes represent the cost of receiving those services
Conclusion: Using 2015 data, Reading remained slightly below the trendline in taxes levied for me servies provided
Using 2016 data for Reading, values increased by $35,249 or ♦7.6%
Using estimated 2016 pre Tax Classiczanm data for Reading, taxes increased by $424 or +6.2%
the reason for this large tax increase was the impact of the Ubrary project debt exclusion
It appears that even with the impact of the debt exclusion, Reading will remain below trendline
Study the communities above for those most often cited by residents when discussing what quoUry
and quantity ofsty ki?S they demand
4. Expectation of services in the community.
Over the last 4 years, FinComm has sponsored a series of Financial Forums for residents,
elected and appointed officials, and town department heads to discuss both the services that
they desire as well as to look for opportunities to cut costs as well as enhance revenue. Many
of these suggestions have been implemented by town officials resulting in higher efficiency as
well as improved revenues. This has offered a start, but one that must be expanded.
Reading is at a crossroads regarding the services the community expects and their cost. We
are a community recognized for excellent schools, strong community services and for being well
managed. We are enjoying higher property values and residents that are and want to age in
place. We are also facing challenges in our operating budget that require either higher revenues
to support the services that we offer or cuts in those services.
FinComm believes that it will be critical and helpful to speak with residents to better understand
their needs and desires for services in the future as well as their willingness to pay for those
services.
5. Prop 2 112— Over the years since its enactment, Proposition 2 % has constrained the
growth in spending at the local level as was the original intent. Unfortunately, many changes
have occurred since it was originally approved by voters in 1980.
• On the revenue side, constraints have come from the limitation on increases in property
tax rates, coupled with the decrease in state aid to local cities and towns. In addition,
Reading has a very limited amount of commercial and industrial property which makes
us more reliant on residential property taxes than many of our peer communities.
• On the spending side, costs that are outside the control of the town -- predominately
healthcare, the need to fund pensions, the growing liability for OPEB - other post
employment retirement benefits, as well as funding for Chapter 766 [out -of- district
special education placements] and other state and federally mandated programs –
continue to rise at a higher rate than revenue.
The result is a squeeze on Reading's operating budget, making it more and more difficult to
provide existing services, let alone fund additional services demanded by an aging population.
6. What budget would be required for FY'17 to achieve level services for Town and
Schools? What percentage increase over the FY'l6 budget would be necessary?
7. Details of a potential override
Building from the earlier questions above, if we are to maintain services at a level similar to what
is currently offered or if we are to offer a higher level of services, the Town needs additional
revenue to pay for these services.
At 2014 and 2105 Town Meetings, recent meetings of the Selectmen, meetings of the Finance
Committee, and at recent Financial Forums, discussion of a proposed operating override has
been an important topic of discussion.
FinComm believes it is critical to review both short term and long terms needs if the town is to
propose an override. Questions of how large of an override, when it should be proposed, how
long of a period should it cover our anticipated needs for, and are there any specific capital
needs that should be included in the proposal all need to be discussed thoroughly and in a
timely manner.
8. Other options for raising sustainable revenue to support operating budgets
In earlier Financial Forums, the attendees looked for other ways to FlII the revenue gap and
many ideas were put forth such as increases in user fees. But even if they were all able to be
implemented, they would do little to offset the increases in expenditures and additional services
that are being demanded of the town. The additional revenue demands are of a magnitude
such that the small stopgap solutions will not be able to make up the shortfall.
9. Absent an influx of new revenue to support level services, what budget cuts can
and will be proposed in the budgets for the Schools and the Town?
The School and Town budgets are being presented to the School Committee and Board of
Selectman now for comment, review and then voting.
10. Longterm town plans— economic development, capital, other
Town and school officials and volunteers have been very actively translating their long term
vision for the Town of Reading into a long term plan for our town. These plans require support
of townspeople in the form of time and as tax revenue. What are the operating as well as
capital budget implications to support the long term plan?
11. Importance of good schools to sustain and grow property values
There is a direct correlation between school performance and maintaining growth in property
values. In a 2013 Realtor.com survey of 1,000 home buyers, they found that found that half of
the home - buying population is willing to pay more than their intended budget to get into the right
school district, and more than half would give up other amenities. One out of five of those
surveyed said they would pay between six and ten percent more for a home — and one out of
ten people surveyed said they'd go even higher, paying up to 20 percent more for a home with
access to good schools.
12. What is the best way to get more people in the community aware and involved in this
discussion of the need for additional funds to support the operating budget vs. cuts in
services that will be required. This document/presentation is one of the ways we discussed.
How do we get this out to the community?
In order to raise community awareness, we need to reach the community groups affected by our
services -- schools, elder services, fire and safety, library, and maintenance of town roads and
facilities among others. Need to brainstorm on how to share the information and proposals.
,O
Free Cash and Reserves, and their Impact on our Annual Budget
The town maintains cash balances in so called "free cash" and stabilization funds
that are designed to cover unexpected costs (e.g. excess plowing expenses,
unsafe walls, etc.) and in some cases, for "one -time cost" town priority
projects. Fin Comm policy has been to hold a minimum of 5% of the annual
budget in these funds, though we are considering recommending a higher
minimum threshold. Having a strong reserve is prudent financial policy, and it
also reassures bond rating agencies of our strong financial controls in the town
for which we have been obtaining extremely low interest rates for our bond
offerings.
These funds are not all "surplus" that has no strings attached to them ... because
town government wants to assure that we do projects appropriately, in some
cases projects planned for one fiscal year are delayed into later fiscal years. This
can create an artificial short term increase in these reserve funds.
The current level of services that Reading residents enjoy requires that we
supplement our estimated annual revenues with funds that are regenerated from
town activities as well as using between $1 -2MM of so called "free cash ". Our
regeneration in the past few years has been stronger than anticipated, with the
result that our current balance of these reserve funds, including for delayed
projects, is approximately 9% of the budget.
The use of a measured amount of these funds to support the operating budget
has been a practice that Fin Comm has recommended and Town Meeting has
approved over the last several years. However, this is reviewed very carefully
because any operating budget increase means that it needs to be funded in all
future years as well.
1. What challenges do our current pay scales present to the Schools and Town?
• How many staff have left because of this issue?
• How many instances were we not able to hire someone because of this issue?
• If not addressed, what is the projected impact over the course of the next year — staff
leaving and not hired due to pay scale issues?
• Is this purely a pay -scale issue, or are "working conditions" notable and part of this
conversation?
2. Understanding use of Free Cash and its impact on the operating budget
• What is Reading's level of free cash vs. peer communities?
• What is Reading's level vs. recommended levels? Has the recommended level changed
recently? If so, why?
• Illustrate the link to our bond rating and its importance. What's the impact of each level
of downgrade in rating?
3. Average tax bill by community chart
• How does Reading's property tax RATE compare to peer communities?
This graphic surprised me, and I'm guessing it will surprise many Reading residents who
perceive our taxes as high.
• How do Reading's services provided compare to peer communities? I think Bob
got at this in his presentation, but the focus there was on a specific service's %
of budget vs per capita income. Is there an easy way to boil that down into a
single graphic or summary that illustrates the level of service provided in
Reading vs. peers?
• I guess my key questions here are: Is our level of services comparable with
peers with a similar average tax bill? Or do we enjoy a higher level of services
due to efficient /effective spending? Alternatively, what services to residents of
Concord /Lexington /Belmont /Winchester enjoy that Reading residents don't?
4. Expectation of services in the community
•
What are some examples of suggestions that have been implemented to cut costs or
enhance revenues? What has been the impact?
S. Prop 2 K
• How much has state aid decreased over the last several years? $ and %of budget.
• Might be helpful to graphically illustrate how much of the town's budget is
"uncontrollable" (health care, pension funding, etc) so that the impact of rising costs
here can better be seen.
• How is the population of Reading aging? If this is an important factor, perhaps helpful
to illustrate current demographics and projected over next few years. What is
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anticipated impact on services?
6. What budget would be required for FY'17 to achieve level services for Town and Schools.
• I struggle a bit with the concept of level services, specifically with how this impacts the
question of what the desired budget should be (I understand the general definition of
level services and the fact that it is as much art as science, but perhaps some
explanation here would be helpful as well). For example, the FY17 budget is $X short of
services level to FY16. But the FY16 budget was also $Y short of services level to FY15.
Should we understand this to mean that to get back to level service, we need $X +$Y?
What if FY15 was below FY14 level service?
• Would be helpful to quantify gaps to level service for both School and Town, and where
possible describe what the gap means beyond dollars (e.g., staffing, programs, etc)
7. Details of a potential override — no comments to add here
g. Other options for raising sustainable revenue to support operating budgets
• Perhaps a graphic would be helpful to illustrate the small portion that other revenue
options represent, and how raising them would not make a significant impact
9. Absent an influx of new revenue to support level services, what budget cuts can and will be
proposed in the budgets for the Schools and the Town?
• As I understand it, the Schools have made several "cuts" over the past few years, and
are now to the point of having to reduce staffing. Is it the same story on the Town side?
10. Longterm town plans
• Believe this needs to be a part of the overall story. We are in the situation we're in
because of several factors, including Prop 2 1/2, the residential /commercial composition
of the town, etc. If an override targets getting us through the next, say, 10 years, how
does that align with timelines for long -term development plans? And is the goal of
those plans to alleviate some of the current issues?
11. Importance of good schools to sustain and grow property values
• What is Reading's property growth vs. peers over the past several years?
• Does this align with school performance improvement vs. peers (which it should if
directly correlated ?). Not sure of the ease of quantifying this...
12. What is the best way to get more people in the community aware....
• Develop a clear and concise story that is understood and communicated by all
advocates
• Part of the story is that this is a revenue problem, not a spending problem. On the
spending side, it appears as if both Town and Schools have made many efforts to make
�3
cuts or to spend more efficiently /effectively. What are 5 -6 examples of these efforts for
each Town and Schools? E.g., restructuring departments, regionalizing services, etc.
Believe specific examples would help overcome the notion that the issue is more
spending - related.
If no override, what will be the impact on the average resident. I think the impact is
being felt in some ways already on the Schools side, but this would only be felt by
parents of school kids. Not sure the impact on the Town side is being felt yet? Or if it is,
not as broadly? When we do feel the impact, what will it look like?
(D\�