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HomeMy WebLinkAbout2016-06-16 Board of Selectmen Minutes oF . Town of Reading ` Meeting Minutes RECEIVED t� `a 1-OWN UERK rs39=INcoREADING, Mass, Board - Committee - Commission - Council: Board of Selectmen 101b SEP —1 A► 0 ZS , Date: 2016-06-16 Time: 7:05 PM Building: School - Parker Location: Multi-Purpose Room Address: 45 Temple Street Session: Open Session Purpose: Community Listening Session Version: Attendees: Members - Present: Chairman John Halsey, Vice Chairman Kevin Sexton, Secretary Barry Berman and Daniel Ensminger Members - Not Present: John Arena Others Present: Town Manager Bob LeLacheur Minutes Respectfully Submitted By: Secretary Topics of Discussion: Process The Town Manager noted that there will probably be one or two more public meetings. The next important date is August 16 to call for a special election and an override vote. If the Selectmen do call for a special election, there will be a community financial forum on Thursday, September 1. On September 12 there will be a Special Town Meeting, and that night an override will be voted on. The reason that it needs to be voted on that night is because the Selectmen need to formally tell the Town Clerk that there needs to be an election in October. Finances The Town Manager noted that revenues have grown just over 3%. Property tax grew over 3.6% - on average over those three years new growth at 1%... New growth comes from additions, builds new house, or if a vacant lot grows into a new house or business. On average 1% new growth per annum, though lately that number is lower. State aid has grown at a little over 2.7%. Over the next three years: Not using cash reserves shows revenue growth of just over 2%. If we are able to use cash reserves then we get to 2.5%. Spending is just over 3 % - 3.1% for Schools and Town. The reason that this has all worked is that we have lowered our debt spending, and pensions, OPEB, health insurance, and other costs that grow faster than 2.5%. Health insurance premiums paid are just over 5% - but lower than the 8% typical in the market. The Town Manager noted that retirees and employees have taken on more costs of health insurance in order to preserve jobs, but the rates have risen in excess of 3% growth - this is a national problem. Page I 1 Board of Selectmen Minutes - June 16, 2016 image 2 -Eking cash reserves the Town could achieve 2.6% growth, but only .7 % growth without using cash reserves. The Town has been growing the cash reserve account and it creates stability, which contributes to the AAA Bond Rating. Litigation with RMHS has been going on for ten years. He found out over the last month that the remaining construction costs will not be enough to settle the lawsuit, but he could not release the sum expected for settlement. Reviewing revenues against peer communities; generally peers collect more in taxes than Reading does. The real difference is that on average peer communities have revenue from CIP properties. Reading is more reliant on State Aid. The real increase in health care is 64% and State aid has dropped. People think that the taxes in Reading are high. However, compared to our peers, Reading's taxes are low - including the high school debt. If you look at the pure mathematical average we are lower by $500, and under regression we are closer to $700 below. in terms of property taxes against our peers Reading is doing pretty well. How do we spend money compared to peers? None of them are as 'boring" as Reading... Stoneham spends far less on education because they don't have as many students. We spend a little more on general government and a little more on public safety. Why is per pupil spending low? Reading on average has 17.4% of the population enrolled in school. Westford is the high. Running the school is the more expensive part of running the Town. There is state aid to help compensate some of those costs. Reading. is below average per pupil even though we are above average in overall educational spending. Reading has a large student population with a high level of services from the Town and Schools. We are working on some economic development efforts. The Town wants a high level of services but the Town and Schools will have to reduce staffing. An Operating override is a permanent increase in taxes. Right now we have two debt exclusions (Library and RMHS). In eight years those projects will be paid off and taxes will go down. An operating override fixes a permanent gap. There are plenty of people who have lived here a long time who are happy with the level of service. There is also a population that wants a higher level of services. The last override was 13 years ago. Concerns have been raised about the elderly residents' ability to pay. We want to help the elderly age in place. This issue is becoming a challenge in our region because housing is very expensive. We have done some things to help in margins - we have in-law apartments by right - which is way ahead of the curve. And the reason we are ahead of the curve is elderly residents' ability to pay. At a future Town Meeting these three articles will come up for a vote: 1. Accept optional cost of living increases for seniors and surviving spouses. 2. Increase the elderly exemption from $750 to $1000. 3. Lower the interest rate on those who qualify to defer taxes on their homes from 8% to 4% - but if die in that state the taxes rise to 16% - but it will be the problem of the heirs. 4. Home Rule Petition to shift taxes to other taxpayers. Potentially shift a million dollars away from residents that qualify for the elderly circuit breaker. Sudbury has a framework like this. Met with three legislators - who caution that the DOR doesn't like this. The net result there probably will be some seniors who not only don't pay for an override but also see their taxes go down. Page 1 2 Board of Selectmen Minutes - June 16, 2016 - page 3 Peer communities slide with override comparative analysis• Communities that do not split the tax rate tend to be more residential and in some towns the commercial property owners pay a large share. The Town Manager met with Standard and Poors and the credit rating for Reading is AAA - better than the Federal government. Superintendent Doherty reviewed the breakdown of costs between personnel and non- personnel reductions. The district tried to stay away from reductions in the classroom but had to make a cut of $849K in FY16. In FY17 they had to shift that a little bit and made some significant personnel reductions. Elementary level 2 Elementary teachers at Killam were reduced resulting in higher class sizes. Middle school level reduced a .5 teacher. The High School had the most reductions which cut 4.6 classroom teachers, 1 paraeducator, and elimination of freshman advisory classes. Reduction of course sections across all departments except special education and guidance. FY18 will only see a .7 increase in the budget, so that results in a $2M budget shortfall for the School department. How to cut this down? One question raised: could you make non-personnel reductions? In FY17 we already made personnel cuts. Wages are $25.78 million, and expenses $75 million. The non-required expenditures are things like the contracted cleaning services and supplies. There isn't a lot of non-personnel expenses - cuts would translate into personnel cuts. Cuts would eliminate professional development, technology purchases, curriculum materials, classroom supplies but would still leave $1.6M in wages that would need to be cut. How many FTE teachers would that be? The average salary is $55,000 so it would be 30 FTE in teacher reductions. That won't happen, so it would be a combination of teachers, administrative, and support staff reductions. The impact would be higher class sizes at all levels, elimination of programs, and reducing student support using the revenue projections that Town Manager talked about earlier. The Town Manager noted that Department Heads asked for budgets that we cannot afford as part of the budget process to show what is needed. Looking ahead at FY18 - we have more expenses... on the Listen to the Community slide. Wages $17.2 million and expenses are $8.2 million. The Town Manager believes the Town could reduce a couple hundred thousand dollars out of expenses, but would still need to cut an estimated $690K out of wages or roughly 14 full time jobs. The Town could reduce depth and hours... public safety, public works, library (hours), and Town Hall specific services. In Town Hall there is not a lot of repetition or depth. Town Manager reiterated that he is neither for nor against an override, but advocating for getting the real information out there. "We want the community to be informed and vote to have the government they want. We have waited awhile before asking, but now we cannot wait any longer-to ask," said Mr. LeLacheur. What services should be added? What services that are provided should be eliminated? Page 1 3 Board of Selectmen Minutes - June 16, 2016 - page 4 What services do you use that you would be willing to give up? Would you prefer to target fees instead of taxes? What are you concerned about as a resident of Reading? EVERY and ANY question are good questions. The Town Manager ended his presentation and handed the meeting over to the Moderator at 7:43 PM. Question and Answer portion of the meeting: Tom Grant, 15 Northrup Road indicated he is trying to understand prop 2.5. Shouldn't the Town revenues increase 2.5% per year... so why are they projected to fall? The Town Manager responded that 2.5% plus new growth brings it up to 3.6%. New growth is the reason we see it dropping from 3 to 2.6... other areas that are not growing at 2.5% and are not projected at 2.5... It is very hard to have revenues go up much more than 2.5%. A Ridge Road resident asked what drives the expenses? He understands that health insurance is a big piece of that. He also asked if employees will receive raises when wage stagnation is a national issue. The Town Manager responded that on the Town side - that comment has come up in prior meetings - we expect top quartile performance for an average wage but we pay 7% below average. Wages are-growing albeit slowly. Wages have grown somewhere around 2.5% over 13 years... there are some portions of the private sector that 2.5% is high, but plenty of other places that it is low. Looking at our peers - we are asking for top quartile performance but we pay lower than our peers. Superintendent John Doherty responded that we are in the bottom half when compared to peer communities. It is becoming hard to fill some of the more challenging positions. We see staff leaving who are moving on to make $7-$10K more per year in salary and it getting harder to retain quality staff. Amy Malsconow, 66 John St. asked why are we charging our businesses lower taxes than our peer towns? The Town Manager brought up the Peer Community Comparative Analysis slide. Wakefield Is charging double the tax rate to Its businesses. In order to split the rate, these numbers are to illustrate the point, while the average home would go up $100, while the average business would go up $2000, and then those costs will go to Reading residents. The communities that charge more don't make more money, but they allocate the burden differently. Colleen O'Shaunessy, Walnut Street asked a new growth question: There are new condos on 128 and maybe they pay $2-$3K in property taxes each. How is that chunk of money not improving the budget? The Town Manager responded it did. It was part of new growth over several years. We had $900K in new growth, usual new growth it is $500K. Looking forward we don't have any projects in the pipeline like that. Our Assessors know how much value has been involved. That growth is reflected in the math. Ann Landry, Precinct 5 and a member of the Finance Committee asked what additional financial pressures were related to the elevated lead levels found in a few school buildings recently? The Town Manager responded that we have worked with our schools, most problems are low cost items, some may be more long terms - like August instead of June - Repairs will come out of the water budget - it is a water enterprise fund issue. If the water rate goes up it would be maybe 2 cents of that increase. Mr. Brown, resident on Forest Street and Member of Town Meeting remarked on the projected new growth. He noted that most of the value is in the land, not the home. If the new home is built on an older lot where the previous value was $450K that is now $900K.. Page 1 4 Board of Selectmen Minutes - June 16, 2016 - page 5 that additional $450K is the new growth. Have to have hundreds and hundreds of these additions or new builds in Town to really notice. It is not going to make the number go from $500K to $1M. Towns with more new growth have big projects - such as Market Street in Lynnfield or the Pulte project. A resident asked if there is a fixed ratio about how we allocate between schools and towns. The Town Manager responded that the truth is that we have a fairly regimented budget process. Accommodated Costs are a philosophy that we pay those costs right off the top - snow and ice, out of district special education, etc. Once you take fixed costs away it is a traditional split. Typically 1/3 to the Town and 2/3 of the budget to the School Department. When we first added a School Resource Officer, both sides wanted it - a Police Officer was put into accommodated costs in the first year. The default is that if you are adding something you are subtracting something. An Emerald Drive resident asked what determines the amount of state aid we receive. The Town Manager responded that the state has certain revenues, project a 4+0/b increase in revenue. State aid is done by the Governor in January, then the House proposes a figure and then the Senate gets together and then they all agree on a number. He read this morning of a $750M reduction. Beacon Hill totally determines that. There are no guarantees that we will get it. Thomas J. Ryan, 87 Daniel Road noted that he doesn't care what other communities spend money on, but he cares what we do in Reading. But every single year since Prop 2.5% we have gone up. The Town Manager explained that the Selectmen may vote to hold an override and that Town leadership wants to listen to the community and ensure that the town is well informed before voters need to make a choice. It needs to go up 3% a year... the problem is that some of our costs are going up more than 3% and that leaves less for schools and so forth. At the local level 2.5% is a very small increase relative to where things are today, especially with health insurance. A School Street resident asked how much of the operating expenses of the library are increasing? The Town Manager responded that right now there are not any more operational budget increases requested in this budget. One consultant said that over five years the library may want to add three positions. However, with financial problems hours will likely be cut at the library. A resident asked for an explanation about the school department slides. Confusion about the difference between a Level Services budget, which continues the same staffing and programming levels as the previous year, and a Level Funded budget, which is the same amount of money allocated to the budget from one year to the next. The Superintendent responded that a level service budget reflects increases in wages (though collective bargaining agreements - steps and lanes). A level services budget increases on the same amount of services. The Superintendent noted that the current budget does not provide level services, as each year we are cutting more and more. An average increase is 3.1%, but that isn't enough to maintain the services being delivered. A resident from 11 Jerry Road - Wants us to open up the books so we can see it. He wants to see where the money is going. The Town Manager responded that if he is asking for budget information there is more than you could ever want on the website. Look at the budget on the front page and there is more information you could ever want. The Superintendent said the same with the School Department budget. In addition, our expenses are audited every year and that is public information. Page 1 5 Board of Selectmen Minutes - June 16, 2016 - page 6 Leah Barton, a resident from Thomas Drive asked about the High School litigation. The Town Manager couldn't comment noting that it is in litigation. The construction fund is about $750K and the final settlement will be more than that, and that is the most he could say. A Hancock Street resident asked whether the increase in revenue that will come with the override would give us status quo or would that increase the level of services? The Town Manager said that is one of the philosophical questions for the community. The School Department needs $2M and Town needs $1M to fund a level service budget in FY18. If you want to sustain it, you need it a little higher so you can bank it. Then, do you want increased services? The driving need for an override is to maintain level services. Linda Phillips, Town Meeting member, asked how will paying off our building projects affect our taxes? The Town Manager responded that the High School and small parts of two other schools and the library will go away in eight years. About $400 of the average household tax bill will go down by that much if nothing changes. Ms. Phillips noted that she feels the School Department budget it's always a concern. Three or four years ago it was $5M more to provide services for the same number of students. She said government social security isn't increasing, but the cost of living has increased. Pensions that the Town and Schools get are way better than the private sector. Then the Town's costs for health insurance go up every year. She asked how many employees actually use that and how many have spouses could get health insurance through their provider? The Town Manager responded that employees pay 29% of health insurance premiums, however employees in peer communities average 24%. If we do nothing else... the employees are paying $1M more in Reading than other towns. In terms of the number of people who are taking health insurance, the Town Manager didn't offer a number but noted that in the last three years the town has offered a payment to employees that opted out of the town's plan. The town has saved $500K annually by using spousal options. In terms of the health insurance product it is Blue Cross Blue Shield through MIIA. Some neighboring communities have joined GIC. Broadly the appeal of the GIC was marketing but not financial and members didn't save as much money. The GIC doesn't look attractive - as the state legislature was subsidizing the GIC. If we are going to pay health insurance for state employees, and if that organization runs on an equal playing field, we are concerned that if the legislature backed away from that support, then costs would rise. What is a Level Services Budget? The Town Manager noted that if the population is 24,000, then we need 24 Police Officers. A level service is how much demand in the community to maintain the services commensurate with demand. If a 4% growth in population need a 4% growth in public safety. Superintendent John Doherty noted that a lot has changed in education in 17 years: technology needs, special education costs (which is why building more in-district programs - to reduce out of district placements - has driven Special Ed staffing in district up). Reading pays in the bottom half of our comparable communities. If we don't pay competitive salaries then we lose competitive teachers. We try to make the working conditions as best as we can. Ms. Phillips noted that Special Ed is a number that concerns her. The number going out is the same as 17 years ago, IEPs are level, so she is not sure what really explains the difference. The school is virtually at a standstill. The percentage of the students going out has increased, and the severity of the needs has increased - social/emotional and students with autism. Page 1 6 Board of Selectmen Minutes - June 16, 2016 - page 7 The Town Manager pointed to unfunded mandates - that the legislature also passes laws and rules that cost more money but funding doesn't increase. A new law may cost the town $50K but the town won't receive additional funding to cover the cost. The amount of unfunded mandates has soared. Something as simple as public records - public information for instance. It costs money to produce public records - but we didn't get any more money to do that work. A Woburn Street resident noted that a rubbish collection fee could raise $1M. What other fees and sources of revenue have been considered? The Town Manager responded under state law the Town may only charge the cost of a service. Selectmen are comfortable being below average, trying not to gouge people with fees. The only deal is the $25 deal for parking and composting center... non-Reading residents pay $800+ per year. As an example, three years ago ambulance fees increased. We don't want to gouge people, we now collect $800K+ in ambulance fees - but again a philosophical question for the community. Students and families pay fees for athletics, drama, etc. The fee has to reflect the costs of the service. Resident Bill Brown noted that he continually hears that we are going to lose teachers... in 1916 they said the same thing. A resident noted that she heard that 65 teachers have resigned. Is that true? She has seen some really good teachers leaving. Superintendent Doherty responded that the number of teachers resigning has increased a little bit. Average is 25-30 teachers that leave annually for a variety of reasons. This generation of staff is a more transient generation. One teacher left to go teach environmental classes in Colorado. We have teachers that are leaving to go out of state or go to neighboring communities. We have seen an uptick in the number of teachers that are leaving. The Town Manager noted that people can earn more money in the private sector. We have seen more turnover or lack of ability to hire. We have positions that are unfilled, because we cannot hire at the posted salary. The. next generation doesn't work at Town Hall. As we see turn over it will be difficult to retain employees. Overtime, is not very interesting for some employees because they wanted time off. We know that money and wages are not the attraction for the job, but it has to be reasonable. Mark Docksor, a member of the Finance Committee, asked what are some new services that we might have some interest in? There are some things that we haven't thought of. We do have a big problem with opiods and drug abuse so maybe another school resource officer. More residents are aging in place, they want to stay in the town, and need more in the town. A resident noted he wouldn't prefer fees instead of taxes... ie a trash fee would be charged the same for a low income family so it is a non-progressive fee. Those that generate the most pay the most, but generally it isn't progressive. A resident asked about networking structures, the cost of technology broadly, and what are we paying to outside providers.. The Town Manager responded that we have software licenses, all the infrastructure, we have a staff that does it all. We are a lean organization ... we have vendors that want to see us. For certain costs it is effective. A resident asked about the dividend the Town receives from hosting RMLD. The Town Manager responded that is set by a very long term agreement with 10 year renewals. Figures are based on a regional Consumer Price Index but CPI is a poor measure of inflation. Nancy Powell asked if the construction projects have been paid for and how is it in the budget? The.Town Manager responded that West Street is 90% State work. The bulk of the bigger construction projects, including the hiring of police detail officers, is paid by the Page 1 7 Board of Selectmen Minutes - June 16 2016 - page 8 State. He noted that we do way more than other communities. He wants to charge tolls to non-residents. We are a huge cut through community and that wears and tears our roads. Communities near us are about the same. By policy the FINCOM wants to pay 5% of revenue on maintenance. Take debt to cover big projects. It is a lot easier to cut capital than cut teachers or police officers. There should be a certain level of maintenance or it would cost more money. A resident asked if the Birch Meadow project money going back into the budget? The Town Manager responded for FY 17 the budget is in place for about $100,000 that we will need to spend, but in future years there is $120,000 that won't be spent to service that debt. But in years 2-10 it is worth $120,000. And I expect the Recreation Committee to bring the whole project back. Peter Brown, Forest Street noted that there has been 30 years of budget discussions, and he thinks this Town is really well run and well managed. He thinks we get a lot of value for our money and the fundamental problem that we face, Is are we going to be able to accept a $2.5M cut in our operation budget? What is that going to do our school system? Really, it is the bread and butter of the Town. Everyone benefits from the school system being as good as it is." When he refinanced he was surprised at the value of his house given its condition. He said that if you spend $300-$500 more (for an override), you will get it back when you sell it. "My house is not in good shape, the value of the house is going to be way higher spending $300-400-500 dollars per year to keep the community in a high value. You're going to get it back and you're going to get it back in a big way." Frank Wiggins asked if there are any strategies to try to raise more income from corporate or business revenues? The Town Manager responded absolutely a very strong yes. No vacant land. Have to put to better use your existing commercial land. Landfill helped the budget for two years, only. Burlington - only 62% residential, but they still have a lot of land to develop and it probably won't be houses. We need to ask for money more often than communities with more industrial property. A Resident noted that We have the opportunity now to plan ahead. How much can the local government control development in Town? He raised the issue of the 40B project downtown. The Town Manager responded that the Town has virtually, no say in it. If a developer wants to buy private property and develop it, that is theirs. The Senate passed zoning changes and reminds the Towns that they have zero control over land - the State is driving affordable housing. Reading doesn't decide how many nail salons and how many bagel stores. The market decides that, you decide that. The Lynnfield lifestyle mall was originally proposed for Reading, and it moved next door. By and large Reading doesn't have a choice over land use like that. All new housing, somehow, means more children in the district. A resident asked when do you decide which roads get paved every year? The Town Manager responded that the decision on what roads to pave is an interesting one. Do we have to do water or sewer work? What about National Grid... MWRA? So work to coordinate such that all those infrastructure elements are aligned. Otherwise, every road in Town has a paving condition, we don't fix just the worst roads, then you would slowly decrease the quality of all the roads. It is really an art to combine the best, worst and average roads and actually let the town be drivable. It's been a challenge with some non-Reading projects that didn't know w coming. e pectfully sub it ed, ecr Page 8