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HomeMy WebLinkAbout2017-10-11 Board of Selectmen Minutes N OFR c Town of Reading y a s Meeting Minutes R y ` ' •.I fl TOWN CLERK Board - Committee - Commission - Council: 2018 mg 14 AN 9: 33 Board of Selectmen Date: 2017-10-11 Time: 7:30 PM Building: Reading Public Library Location: Community Room Address: 64 Middlesex Avenue Session: Purpose: Financial Forum Version: Attendees: Members - Present: John Arena, Barry Berman, Andy Friedmann Members - Not Present: John Halsey, Dan Ensminger Others Present: Town Manager Bob LeLacheur, Administrative Assistant Brendan Sweeney, Town Accountant/Finance Director Sharon Angstrom, Superintendent of Schools John Doherty, Reading Public Schools Director of Finance Gail Dowd, Assistant Town Manager Jean Delios, DPW Director Jeff Zager, Deputy Fire Chief Paul Jackson, Police Chief Mark Segalla, Deputy Police Chief David 'Clark, Assistant DPW Director Jane Kinsella, Human Resources Director Judi Perkins, Human Resource Generalist Sean Donahue, Fire Chief Greg Burns, Library Director Amy Lannon, Director of Facilities Joe Huggins, Assistant Director of Facilities Kevin Cabuzzi, Treasurer/Assistant Finance Director Endri Kume, Reading Chronicle Reporter Al Sylvia, Administrative Services Director Matt Kraunelis, Community Development.Director Julie Mercier, Bob Holmes, Dan Ross, Vince Dixon, Linda Phillips, Richard Coco, Erin Gaffen, Michele Sanphy, Alice Collins, Geoffrey Coram, Jeanne, Boranski, Ashley Quinn, Amy Cole, Kevin Sexton, Eileen Litterio, George Kachen, Chuck Robinson, Finance Committee Chair Peter Lydecker, Vice-Chair Paula Perry, Marc Moll, Eric Burkhart, Paul McNeice, Vanessa Alvarado, Anne Landry Minutes Respectfully Submitted By: Brendan Sweeney Topics of Discussion: The meeting convened at 7:30 in the Community Room of the Reading Public Library with the purpose of conducting the first Financial Forum of the fiscal year. Finance Committee Chair Mr. Lydecker called the meeting to order at 7:35 PM. Mr. Lydecker began the financial forum by issuing his.initial thoughts on the budget process, noting that the need for a Proposition 2 1/2 override will again be.-likely this coming spring to cover various operating expenses, specifically with regards to Public Safety (as was alluded to at the Selectmen's meeting the previous night). Town Accountant/Finance Director Sharon.Angstrom followed Mr. Lydecker's introduction by going further into depth about the budget process and highlighted line items, starting by mapping out the FY19 budget preparation schedule (which is available on the town website). Ms. Angstrom briefly summarized FY17 numbers, both yearly revenues for the " town and expenses, noting the town was $1.66 million under budget for the year. Ms. Page i 1 Angstrom then dove(into an analysis of free cash and reserve numbers for the previous few fiscal years, citing how the town isreversing the trend of increasing amounts of free cash spending each year. Ms. Angstrom's analysis included how free cash is generated and how the town determines which funds to allocate to the reserves. Ms. Angstrom continued by shifting her attention towards the FY18 numbers, noting the areas where revisions are needed to reflect changes since the annual town meeting last spring. Many of these changes reflected positive increases for the town due to revenue generation from excise tax and new growth property tax that is now expected to be greater than originally anticipated. Town Manager Bob LeLacheur then took the podium to further explain the financial status of the town, both present and going forward. He began by explaining the anticipated revenue numbers for the town for both the current fiscal year as well as a few years out. Diving into revenue categorically Mr. LeLacheur noted that state aid is no longer as dependable as it used to be, and the reality of the situation is that state aid numbers will not go up going forward. Moving to the projected accommodated-costs Mr. LeLacheur cited a major factor, health insurance, as rates are likely to increase going forward. The town has done an excellent job to anticipate for and accommodate this going forward, however, and Mr. LeLacheur specifically lauded the work of the unions and insurance companies to find an innovative approach to provide coverage for employees while keeping costs down for the town. In continuing with his analysis of the state of the town in the coming fiscal years Mr. LeLacheur shifted towards the town's capital needs, identifying three immediate heeds of the town for FY18 - Wood End skylight replacements, EMS Simulation Training Equipment, and a Fire/EMS Breathing Apparatus. Mr. LeLacheur did commend Fire Chief Greg Burns for his efforts that secured grant funding to cover a large portion of the Fire/EMS Breathing Apparatus. Looking towards future years Mr. LeLacheur identified other capital projects likely to be forthcoming in the town, including - improved downtown infrastructure, public building security, RMHS athletic facility improvements, Killam school renovations, Community Center renovations, and the move of the DPW Garage to Camp Curtis Guild. With each project Mr. LeLacheur went into detail on how the town planned to fund the project, but conceded that the current Capital Plan simply cannot accommodate the needed level of funding. FINCOM members then began to look through Mr. LeLacheur's line by line analysis and prediction of the current fiscal year's budget/revenues and the projected budget/revenues for years to come. .Ms. Perry identified a few line items that were drastically different from the years before, to which Mr. LeLacheur explained specific circumstances which called for these outliers and how many of them were due to one-time expenditures or fund transfers by the town. Ms. Landry identified how Mr. LeLacheur had anticipated state aid numbers on the low end, to which Mr. LeLacheur confirmed and explained that it is prudent to do so due to the uncertainty of any increase in state aid forthcoming. Ms. Perry asked for clarification on the school operating cost adjustment for FY18 ($300,010) to which Mr. LeLacheur noted the additional support was needed to bolster various special education programs at the schools. Ms. Perry additionally inquired about the RMLD payment numbers, to which Mr. LeLacheur stated that updates will be coming soon on that end, but to assume the 2.5% increase in payment numbers year by year for now. Mr. LeLacheur then clarified his approach to the revised capital projects at the request of FINCOM, highlighting the increase in numbers specifically for the RMHS athletic improvements as compared to what was originally anticipated, bringing the needed funding for improvements up to $6.3 million. Page 1 2 Mr. McNeice asked if Mr. LeLacheur would give clarification on the change in free cash spending trends that he had previously alluded to. Further elaborating on the matter, Mr. LeLacheur referenced the trend numbers to point out that the town had been increasing yearly free cash spending numbers to the point where it hit a peak of $4.49 million used last year (FY17). The town plans to alter this practice and spend less free cash going forward, however, there will always be free cash spending requirements to offset one-time expenditures in any given year, as free cash is meant to do. Mr. LeLacheur emphasized the point that there is a discrepancy with the amount of funding allocated to free cash and the .amount of free cash that is actually used. Ms. Perry further elaborated on Mr. LeLacheur's points and noted how sometimes the free cash numbers can be misleading to.the public. Using various analogies Ms. Perry highlighted the role that free cash plays as a buffer so not as to constrain the annual operating budget. Mr. LeLacheur confirmed this and used the example of unexpected increases in Public Safety overtime wage expenses as a.need that free cash can address. To give more tang ible.scenarios for the use of free cash Mr. LeLacheur highlighted how free cash offsets the unpredictability of snow and ice expenses as well as allows the town to allocate funding to OPEB benefits down the road. Linda Phillips, 42 Willow Street, explained that in her role as a Town Meeting member free cash numbers for the town are always pertinent. She then inquired if the town has a set number that is a target of where the town's free cash levels should be. Mr. LeLacheur responded that our number currently is 7%, which is a good level of funding, but surprisingly when looking to our peer communities their level of free cash funding is around 10%. While still on the topic of free cash Mr. LeLacheur explained that free cash is wisely spent on one-time expenditures as opposed to recurring payments like funding certain aspects of the operating budget. Ms. Perry added that there really is no straight answer as to what.the appropriate level of free cash funding is. Ms. Perry then inquired to the source from which the town's stabilization fund received funding, which Mr. LeLacheur explained had been due to a one-time payment some years ago. Mr. LeLacheur noted that some free cash could potentially be moved into the stabilization fund. Ms. Perry emphasized her support for doing so and iterated her goal of having the town's stabilization fund hit the 5% number, potentially creating a Town Meeting article down the road to do so. Her reasoning behind this was stability as well as the fact that it takes a two-thirds vote at Town Meeting to move money from the stabilization fund as opposed to a simple majority to move free cash. Richard Coco, 4 Fremont Street, asked Mr. LeLacheur if all of these budget numbers were assuming that no Proposition 2 1/2 override will be passed, which Mr. LeLacheur confirmed. Mr. Coco then further noted that the town must be deliberate in informing the citizens of all of this information (this financial forum was a big first step in doing so) and stated how Proposition 2 1/2 overrides hurt senior citizens on fixed incomes. Mr. LeLacheur agreed and noted how the town has been working to address this issue, specifically with the tax exemption program that has been put forth for qualifying senior citizens. Mr. LeLacheur laid out the basics of this program and noted .that the program will be in place regardless of any override vote. Mr. Lydecker brought the topic of the FINCOM reserve fund to attention, which currently sits at $150,000. Mr. LeLacheur noted that this has been the case for about 12 years or so,.and is something for FINCOM to keep in mind. George Kachen, 66 Colburn Road, asked questions about the Proposition 2 1/2 restrictions so as to clarify for others in attendance. Mr. LeLacheur then elaborated, noting that the 2.5% number is the amount the tax levy can increase. If everyone's property tax value increases homogeneously then the 2.5% increase number will be constant for all, the differences in Page 1 3 relative property value increases determines slight differences between individual tax numbers, but that 2.5% number is the general cap for the tax levy increase per year. Mr. McNeice then addressed the free cash revenue number and specifically noted how the regeneration of those funds into the next year does not adequately represent the current budget shortfall that we are experiencing. Mr. Burkhart then asked Ms. Angstrom how confident she felt about the given free cash regeneration numbers. Ms. Angstrom noted that it's hard to know if current trends will hold, but the anticipated $1.1 million number is a good base. Both Ms. Angstrom and Mr. LeLacheur from the town side and Ms. Dowd and Mr. Doherty from the school side noted the role that staffing levels play in the amount of free cash that is able to roll over into the next fiscal year's budget, and that positions are. oftentimes tough to fill due to competition with the private sector, among other factors. They noted that staffing level are, however, in a better position than they were last year. Ms. Landry, in moving back to Mr. Lydecker's point about the FINCOM reserve funds, asked for Mr. LeLacheur to clarify the authority needed to affirmatively execute any fund transfers there, as free cash transfers require a simple majority at Town Meeting and stabilization fund transfers require a two-thirds majority vote at Town Meeting. Mr. LeLacheur noted that five of the nine FINCOM members are required to vote affirmatively for any use of FINCOM reserve funds, and Mr. Lydecker added that if unused these funds will just return to free cash. John Arena, Board of Selectmen Chair, then engaged in a back and forth with FINCOM members about the usefulness of using free cash to bolster the reserves. Mr. Arena noted that taking from free cash to add to FINCOM reserves unnecessarily handcuffs those funds, where FINCOM members acknowledged this, with many hesitant to take funds from free cash that may be needed elsewhere, but noted that it does allow FINCOM flexibility with end of,the year fund transfer requests at a point in time where the Annual Town Meeting has already come and gone. Ms. Alvarado then posed clarification questions to the school district administration about whether or not FINCOM (and the Town Manager/BOS) will be asked for more than expected from the schools, essentially asking if the school will make late request that throw off a previously balanced budget. Mr. LeLacheur interjected that the Town Charter mandates by law that he must present a balanced budget. Superintendent of Schools John Doherty responded.to Ms. Alvarado by noting that he does present a balanced budget to the school committee, which includes many deep cuts, and then the school committee will often vote back in what has been cut which is what creates the unbalanced school budget as a result. Barry Berman, Selectmen, added that the town will balance a budget and then when asking for an override state that the additional funding will cover X,Y, and Z that had been cut from the original budget in order to balance it. Chuck Robinson, Chairman of the School Committee, spoke in continuation of off Mr. Berman's.point and noted that much of this has to do with timing between the various boards. Mr. Robinson then asked Mr. LeLacheur to illustrate the gap between what a current balanced budget will look like and a budget with the additional override funding. In answering Mr. Robinson, Mr. LeLacheur stated that there is a large gap between where we are currently and where we need to be to maintain a healthy level of services. Unfortunately even if the override is to pass we will not be able to get all the way to that healthy level of services, but we will be able to address some pressing needs for the town. Continuing on the topic of additional funding via override, Mr. LeLacheur noted that when determining the allocation of additional funds it is easy to plan for three or so years in the future but that"it is much tougher to anticipate spreading the revenue out ten or so years in advance. A town must anticipate the ten or so years in advance, however, as frequent override proposal cannot become a commonplace practice. Mr. Coco spoke again to emphasize the tangible impacts that a $1,000 or so increase to a family's tax bill will have, specifically how it hurts retirees. Ms. Perry and Ms. Alvarado Page 14 noted that the FINCOM certainly takes those factors into consideration, and Mr. LeLacheur iterated that the town thoroughly investigated all of the potential options to remedy this and that the senior tax exemption was the best approach. On a motion by Mr. Lydecker, seconded by Mr. Moll the Finance Committee voted on whether to increase the FINCOM IReserves Fund from $150,000 to $250,000. This motion FAILED by a vote of 2-5-0. On a motion by Mr. McNeice, seconded by Mr. Burkhart, the Finance Committee voted to approve the allocation of $1.2 million in free cash revenue to the FY19 .Budget by a vote of 6-1-0. Mr. Lydecker noted that this concluded the Financial Forum portion of the meeting and granted a quick break at 9:40 PM before the FINCOM was to resume the remaining portion of the meeting. Mr. Lydecker resumed the meeting at 9:45 PM. Mr. LeLacheur then explained the articles before the FINCOM relating to the Subsequent -Town Meeting in November. Going into detail Mr. LeLacheur specifically spoke of the Capital Plan amendments and how due to certain litigation the town had to shuffle around various project funding, equaling out in the end, however. Mr. LeLacheur noted that the entire process regarding this is extremely confusing. Mr. Moll inquired about a specific capital project, the Wood End School skylight, and wondered why the urgency to -repair a relatively new building. Mr. LeLacheur explained that the design was poorly constructed and extremely;inefficient, and that with the further costs potentially to be incurred down the road it would be better for the town to address it now. Mr. Moll then put forth the suggestion to the town to possibly explore the potential of sharing large scale capital projects with neighboring communities possessing similar needs. On a motion by Ms. Perry, seconded by Mr.-McNeice, the Finance Committee voted . 7-0-0 to recommend Article 3 to Town Meeting. Mr. LeLacheur focused then on the needed revisions to the FY18 general fund for wages and various expenses. He elaborated on the library maintenance expense due to new technology as well as the shuffling of personnel hours within town hall. On a motion by Ms. Perry, seconded by Ms. Alvarado, the Finance Committee voted 7-0-0 to recommend Article 4 to Town 'Meeting. Mr. LeLacheur advised FINCOM to skip voting on Article 5 as it was not needed at this time. On a motion by Mr. McNeice, seconded by Mr. Moll, the Finance Committee voted 7-0-0 to recommend Article 6 to Town Meeting. On a motion by Ms. Perry, seconded by Mr. McNeice, the Finance Committee voted 7-0-0 to recommend Article 7 to Town Meeting. On a motion by Mr. McNeice, seconded by Ms. Alvarado, the Finance Committee voted to approve the meeting minutes from September 27, 2017 by a vote of 5-0- 2. Mr. LeLacheur then brought to FINCOM's attention the upcoming Pre-Town Meeting meeting and wanted to make sure that at least one FINCOM representative would be able to attend. Ms. Alvarado then mentioned the "Yes for Reading" event taking place next week and inquired if any other FINCOM members were planning on attending. Additionally Ms. Alvarado asked Mr. LeLacheur if FINCOM would have to officially post a meeting with the Page 15 1 purpose of attending the event, to which Mr. LeLacheur responded that he was unsure but that he will double check with Town Counsel. On a motion by Ms. Perry, seconded by Mr. McNeice, the Finance Committee voted 7-0-0 to adiourn the meeting at 10:24 PM. The meeting was adjourned by Mr. Lydecker at 10:24 PM. Respectfully Submitted, Secretary Page 6