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HomeMy WebLinkAbout2017-07-26 Finance Committee MinutesF� 0 x Town of Reading r Meeting Minutes Board - Committee - Commission - Council: Finance Committee Date: 2017-07-26 Time: 7:30 PM 2011 SEP 28 A& 241 Building: Reading Town Hall Location: Conference Room Address: 16 Lowell Street . Session: Purpose: General Business Version: Attendees:. Members - Present: Chair Peter Lydecker, Vice -Chair Paula Perry, Eric Burkhart, David Neshat, Anne Landry, Vanessa Alvarado Members - Not Present: Mark Dockser, Marc Moll, Paul McNeice Others Present: Administrative Assistant Brendan Sweeney, Town Accountant/Finance Director Sharon Angstrom, Treasurer/Assistant Finance Director Endri ,Kume, Town Manager BobLeLacheur Minutes Respectfully Submitted By: Brendan Sweeney Topics of Discussion: The -meeting convened'at 7:30 PM in the Conference Room with the purpose of discussing i the agenda items, including: the Introduction of the new Treasurer/Assistant Finance Director, the'FY 19 Budget Schedule, Surplus Items, Peer.Community Bench marking,.Debt & Capital Policy, Debt Issuance, the Policy on Funding Other Post -Employment Benefits (OPEB), the Mission Statement, & Guiding Principles, and Approving Previous Meeting Minutes. Mr. Lydecker called the meeting to .order at 7:35 PM. Mr. Kume began the meeting by introducing himself to the Finance Committee. He noted how he has lived in Reading for a few years -now and is happy he can find a way to give back to the community in his new role: He. stated how he .is excited to -get to work and is looking forward to working with the Finance Committee. After Mr. Kume's introduction Mr. Lydecker then moved the topic of conversation to a discussion on the FY 19 Budget Schedule. Mr. Neshatquestioned the initial schedule, noting that. most of these meetings usually occur in March. Mr. Lydecker acknowledged that this . was normally the case, however,.they have been pushed earlier this fiscal year_to allow for greater. pre -Town Meeting .budget preparation. Mr. Burkhart noted how the last FINCOM meeting had been primarily driven by discussion and revisions to this FY19 Budget Schedule. Ms. Perry stated that last FINCOM meeting was helpful in that sense as it. allowed FINCOM to understand what the Selectmen's timeframe on the process looks like. Mr. LeLacheur reflected on the Selectmen's timeframe, as well as noting that John. Doherty, Superintendent of Schools, was hoping to add another School Committee budget meeting somewhere in that timeframe. Mr. Lydecker noted that this schedule contains many more meetings than normal, and expressed concern about FINCOM's ability to attain a quorum at all of these meetings. In commenting on the number of meetings Mr. LeLacheur stated that Page 1 1 he expects February FINCOM meetings to be shorter as the bulk of the budget material will be discussed. during the respective December Selectmen and January School .Committee budget meetings. To move the focus to an earlier part of the FY19 Budget Schedule Mr. LeLacheur reminded FINCOM of the need to vote on the Town Articles prior to the November Town Meeting, mentioning that the Library Trustees may need to amend a revolving:fund. Mr.. Neshat then'turned the FINCOM's attention to the February. 14th meeting, stating that the topic of discussion is labeled as "other". Mr. LeLacheur noted that since of the two earlier February meetings one, is dedicated to the schools and the other is dedicated to the town, this third meeting will be dedicated to debt, capital, and any other fiscal matters that would remain after those first two meetings. Mr. Neshat wondered if the FINCOM would be able to cover the town budget discussion in one meeting to which Mr. LeLacheur believes they will be able to, so long as lengthy department head 'presentations1are capped. Mr. Lydecker then tried to move the conversation to the.discussion of surplus items, though )Mr. LeLacheur recommended that FINCOM hold off on this topic until after the procurement policy changes take effect next month. Mr. Lydecker then turned conversation towards the Peer Community Benchmarking . guidelines. Mr. LeLacheur expounded on this by asking to amend. the guidelines to add Concord and.Lexington to the list,of 23 (to be made 25) peer communities. He stated how the Economic Development and Finance departments include those two communities in their departmental peer studies. Ms. Perry inquired about where this list of 23 (to be made 25) communities originally came from.1 Mr. LeLacheur explained that the original list of 23 came from an earlier consulting group that Reading had worked with, the two others being added by a. more recent consulting group. Mr. LeLacheur added that the town has done a lot of peer benchmarking work with this group of 25 that it is a good core group toycontinue to use. If needed, Mr. LeLacheur noted, communities can be shaved off'of either end of the spectrum, however, average data for these 25 communities are all very close to Reading.. (At this point in the meeting, approximately 7:50 PM, Vanessa. Alvarado arrived at the meeting). Mr. LeLacheur then elaborated about the peer community bench marking"workthat the Economic Development department has been working on, specifically the employment numbers. These numbers represent whether a town imports or exports labor (based on the 100% number as a breakeven point). Reading exports workers, as its 2015 employment number was 47.4%, and the average salary of the jobs in Reading (not of the jobs that. Reading residents may hold elsewhere) was on the lower end of the peer communities. Mr. LeLacheuf also noted that there is quite a lot of data in these economic development studies and all of that data is available on the website. Also there will be an Economic Development Forum on October 4th to discuss these findings and future plans more in depth. Mr. LeLacheur and Mr. Neshat then began to discuss assessed values of certain buildings in . town and how those numbers, as well as residential vs. commercial property numbers for Reading, affect the low employment numbers. Mr. Neshat asked if these peer benchmark communities will be used for school comparisons. as well. Mr. LeLacheur stated that although there may be some deviations, by and large these same communities will be used in benchmark studies throughout. the various town departments and the schools. Mr.,CeLacheur. did add, although, that there is always room for more in-depth comparisons with regards to specific matters, such as tailored aspects of a certain department (ex: Fire). Mr. Neshat then inquired about what specific.data is referenced in these comparisons: Mr. LeLacheur stated that he did not have it with him at the moment but could look it up, then posed the question to FINCOM of what variables would be perceived as most important. The.collective response was: revenue numbers, tax rates, population numbers, property Page 1 2 values, household incomes, assessed building values, and form of government. Mr. LeLacheur then interjected a clarification point that much of this data was not shared directly with him, and that much of the work was relying on the consulting groups. Mr. Neshat elaborated on his original inquiry, stating that if we need to narrow benchmarking down to a .few communities we should know the data that goes into comparisons,so we can tailor a more in -depth --comparison appropriately. Mr. LeLacheur then added that geography was also weighed as a factor, yet there were still some similar -communities in the South Shore and Metro West that were included as peer benchmark communities. In the end Ms. Perry reaffirmed that Mr. LeLacheur's original explanation behind this data .is to urge FINCOM to include Concord and Lexington in further peer•benchmarking community studies. Mr. LeLacheur also stated a warning that.municipal data will look different than that of the private sector, as a way to clear up confusion. Ms. Alvarado, to reference the previous topic, asked about the January 30th Board of Selectmen meeting that had ,earlier been included in the FY 19 Budget Schedule. Mr. LeLacheur noted that the necessity for that meeting was still being discussed among the Board of Selectmen and he will. be sure to bring it up at their next meeting. Mr. LeLacheur made the point that a while back Reading held a meeting with selectmen from other towns, one of whom was a prior resident of Reading. That specific selectman commented on how much improved the Reading budget process•is from when he was there, as at one point it took,place throughout numerous Town Meeting nights: Ms. Angstrom then moved to the next topic of updating the Debt &.Capital policy. She noted how the additional wording was included to provide guidance on debt issuing action, an example being the section encouraging refunding when, able. She did state, however; that not much needed to be changed. Ms., Perry wondered if this were to be one collective recommended change, and Ms. Angstrom noted that there are a, few separate changes but that they are all related. Specifically one consistent theme.of the changes was the removal of.the term "Net Available Revenue" and replacing it with just "Revenue.". Originally the Net Available Revenue term was important as certain debt could be excluded when paying MSBA reimbursements, however, payments are now lump -sum and thus the term is no longer needed. Mr. LeLacheur then talked about the wording that. encourages issuing debt for the shortest practical term in order to minimize interest costs. Mr. LeLacheur believes interest payments are a waste of town funds. Obviously certain major projects have to be financed by debt, such as the new library. However, other smaller capital purchases, such as a new fire truck, should be bought with cash if able. This policy is not meant to be ironclad, as different capital improvements/purchases may require a different approach, however, as .a general rule of thumb the town is better off thinking: do I want to go -to the taxpayer for this? Ms. Perry brought up the topic of capital exclusion. Mr. LeLacheur noted that some communities do, and clarified that capital exclusion. is asking the taxpayer to pay extra to cover the cost of a capital improvement/purchase. He noted that we could shift our approach and use capital expenditures for all major capital purchases; however, he'd rather use what is within. the tax levy to cover all that we are able.to. Mr. Neshat had some further clarification questions with regards to the $50,000 number dictating action on refinancing debt. Ms. Angstrom explained that the number sets the magnitude of the debt and thus ensures that the town is not wasting its time in refinancing a small debt amount. Mr. LeLacheur then brought up the Draft Policy on Funding Other Post -Employment Benefits (OPEB)., Mr. Lydecker quickly pointed to the "funding term not to exceed thirty years" ` terminology. Ms. Angstrom noted that the number is a guideline, rather than a definitive funding period: -Mr. Lydecker followed that up by asking where the OPEB contributions go. Ms. Angstrom explained that the money is put aside in a trust fund with the definitive purpose of paying for OPEB contributions. This means that the funds can be invested in a state -retirement fund to get larger returns, -and also clarifies that the town cannot use that Page 1 3 money for anything other than OPEB payments. Mr. LeLacheur noted that although our current OPEB funding system is better than most, it is not a great situation. Mr. Lydecker then asked if possible to use a specific year as a target date rather than a length of time, to which Ms. Angstrom noted that it is possible, but that one'should be cautious not to cripple the funding timeline when looking for an exact date. The Mission Statement and Guiding Principles were then brought up by Mr. LeLacheur. He noted how they were both adopted by FINCOM some ten or so years ago, and iterated how it is'. important for FINCOM to have some sort of guiding values for the community to reference. Mr. Neshat asked if there is anything in, particular that needs to be changed to which Mr. LeLacheur did not think so, however, he did note perhaps it would be prudent to include a clarification piece on the RMLD. The conversation then shifted to potential topics to be discussed at future meetings. Mr. LeLacheur stated that he would bring more peer community data to the next meeting, as well as bring up the surplus items discussion. As far as the school revolving funds go, which had been brought up as a potential topic at last meeting, Mr. LeLacheur felt it best to wait until after the first financial forum for that discussion. At said financial forum Mr. LeLacheur feels there won't be a whole lot to say, and it will mostly consist of early budget guidance. Ms. Perry noted she wants FINCOM to have a discussion about allocated overtime funds, FTEs, and staffing levels, this of course being a follow up from last meeting where the fire department was granted reserve fund transfers to cover overtime expenses. Mr. LeLacheur said the department heads should be ready to discuss this, additionally he pointed out the importance of looking at the. big picture with these numbers to be sure that they are interpreted in proper context. For the departments of particular concern (police and fire) Mr. LeLacheur iterated that we must understand the process is different than hiring teachers, there is significant prep work and training that goes on between the time of the hire and the actual start date. Additionally he stated that there will always be some inevitable vacancies. Mr. LeLacheur noted that he wants to find a way to create a formula to pinpoint the mathematical overtime number for each department given normal circumstances. Obviously such an occurrence would be rare given the inevitability of unforeseen circumstances skewing the variables, but Mr. LeLacheur stated that it would be good to have that number to build off of. Ms. Perry inquired about contract status for the unions, and Mr. LeLacheur noted that they are primarily one year contracts given the uncertainty of the revenue available at this time Mr. LeLacheur additionally stated that contract details are public information and that he hopes to look into the peer communities data on this matter for comparison. Mr. Neshat then asked Ms. Angstrom about the ability to do month to month budget vs. actual numbers updates. Ms. Angstrom noted how this would be difficult, as revenues are steady but expenses can vary and oftentimes lag. For example the first month of the new fiscal year is always difficult as expenses that inevitably lag are reported, from the previous fiscal year. Mr. LeLacheur noted how this is still an improvement over the town's old accounting system, as previously it was tough to know expenses and thus somewhat random spending was common at the end of the fiscal year. Now we have purchase orders and requisitions in place to plan for expenses even before they are officially accounted for, creating the ability to anticipate the budget vs. actual numbers status near the end of the fiscal year. Mr. LeLacheur also noted. that with the bigger expenditures, such as the DPW rubbish collection system, the town plays better safe than sorry when allocating funds, and allocates more than historically necessary.' What was made clear by Mr. LeLacheur is that due to the fact that we only have one town accountant in Reading the sheer volume of the town's bills makes efficiency 'a difficult task. As FINCOM liaison assignments were referenced again as a continuation of that topic discussion during the last meeting Mr. LeLacheur took the time to explain to the FINCOM members the level of responsibility required behind each of the liaison roles and the frequency of meetings for some as compared to others. Page 14 Ms. Alvarado then inquired further about the details of the planned October 4th Economic Development Forum., Mr. LeLacheur confirmed October 4th as the date of the forum, and elaborated how economic development will play a vital role in creating revenue for the town going forward. It will be limited, however, by the fact that Reading does not have a lot of commercial land to build on. One major project going forward will be the old post office, which has been slated to be re -developed into apartments. Mr. Lydecker brought to FINCOM's attention a notice for the Annual Association of Town Finance Committees Meeting taking place on October 21St at Tri County Regional Vocational School in Franklin. On a motion by Ms. Perry, seconded by Ms. Alvarado, the Finance Committee voted to approve the meeting minutes from ]une 28, 2017 by a vote of 5-0-1 Mr. LeLacheur then clarified that the Selectmen and School Committee budget.meetings taking place in December and January will be held consistently beginning at 7PM, in a few varying locations. On a motion by Ms. Perry, seconded by Mr. Neshat, the. Finance Committee voted 6-0-0 to adiourn the meeting at 9:29 PM. The meeting was adjourned by Mr. Lydecker at 9:29 PM. Respectfully Submitted, Secretary Page 1 5 ` u M