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HomeMy WebLinkAbout2018-08-08 Finance Committee Minutes r Town of Reading r �r"E 1, F 11' 1 r� r1 cps ti, 3 Meeting Minutes RE = 0•�rK 21H OCT -I AM 9: 56 Board - Committee - Commission - Council: Finance Committee Date: 2018-08-08 Time: 7:30 PM Building: Reading Town Hall Location: Conference Room Address: 16 Lowell Street Session: Purpose: General Business Version: Attendees: Members - Present: Acting Chair Paula Perry, New Chair Eric Burkhart, New Vice-Chair Mark Dockser, Karen Herrick, Shawn Brandt, Daniel Dewar, Anne Landry Members - Not Present: Marc Moll, Paul McNeice Others Present: Town Manager Bob LeL.acheur, Finance Director Sharon Angstrom, Administrative Assistant Brendan Sweeney Minutes Respectfully submitted By: Brendan Sweeney Topics of Discussion: Acting Chair Paula Perry called the meeting to order at 7:32 PM. Ms. Perry started the meeting by having all members and staff Introduce themselves and become acquainted with the new members: Shawn Brandt, Karen Herrick, and Daniel Dewar. Ms. Perry then noted that as former Chair Peter Lydecker was no longer on the Finance Committee, she would be acting chair until the Committee reorganized. Mr. LeLacheur recommended that the Committee tackle the reorganization process first. Mr. Dockser suggested that Eric Burkhart should take over the duties of Chair, and Mr. Burkhart noted that he would accept the role if nominated. On a motion by Mr. Dockser. seconded by Ms. Perry, Eric Burkhart was nominated as Chair and confirmed by a 7-0-0 vote. Mr. Burkhart then inquired if Mr. Dockser would serve as Vice-Chair to assist him, and Mr. Dockser said that he would if nominated. On a motion by Mr. Burkhartseconded by Ms. Perry, Mark Dockser was nominated as Vice-Chair and confirmed by a 7-0-0 vote. With the reorganization process now out of the way, the conversation shifted to the liaison assignments. Ms. Perry explained that this is assigning Finance Committee members various departments and committees for them to communicate directly with on their own inner workings as well as the business of the Finance Committee. Ms. Landry noted how last year was unique in that all members of the Finance Committee took a very active Page 1 1 involvement with the Select Board due to the pending override vote, and Ms. Perry noted that it will likely not be that way this year. On that topic, the conversation shifted briefly to the meeting schedule for FY19. Mr. LeLacheur highlighted that the format of four December budget meetings for the Select Board will stay for this year, as well as the three January budget meetings for the School Committee. The only requirement for the Finance Committee budget meetings is that they be completed by mld-March. Mr. LeLacheur noted that there will be one Financial Forum this October, and that It will include a comprehensive benefits overview. Ms. Perry noted that she would like to see the Stabilization Fund vs. Free Cash topic addressed at the Financial Forum as well, and explained to the Committee the difference between the two reserve funds (a stabilization fund needs 2/3 Town Meeting to be appropriated vs. a simple majority of Town Meeting to appropriate Free Cash. Additionally, Free Cash is a misleading name for a reserve fund). The Committee agreed that it should be addressed, although Mr. Brandt noted that it hasn't seemed to be too contentious lately. Mr. Burkhart then steered the conversation back to liaison assignments. Mr. LeLacheur outlined the areas where the Finance Committee needed liaisons due to member turnover, and the roles were divvied up among members to cover all areas of need. Finance Committee policies were next to be addressed, with the draft OPEB (Other Post- Employment Benefits) policy first. Ms. Angstrom noted that the draft polity is how the town currently operates, and that the 5% number put towards paying down the OPEB liability has been around $500,000 recently. She explained that the liability consists of health insurance benefits paid out to retired employees, and that we are ahead of our peers in trying to pay down this liability. When question by Mr. Brandt about the relation of the liability to rising premium costs, Mr. LeLacheur noted that the liability grows proportionately, and that what we're doing currently is keeping the liability from growing rather than completely paying it down. When asked who the target audience of such policies are, Mr. LeLacheur conceded that it is primarily for the bond rating agencies to see a written guideline to our financial operations as a town, as well as an appeal to the auditors. Mr. Dockser noted that he feels a set dollar amount may be more effective than a percentage, but in this case Mr. LeLacheur stated that the percentage works because it sets the floor of what the town has to pay in an annual OPEB contribution, preventing inaction from the town with regards to the liability. There were a few changes in wording on the draft OPEB policy to clarify language based on the discussion above. On a motion by Ms Perry seconded by Mr. Brandt the OPEB Policy was adopted by the Committee as amended by a 7-0-0 vote. Ms. Angstrom then brought up the draft Debt & Capital policy, another request of the bond rating agencies. Much of the ensuing discussion focused on the wording of the fourth paragraph, which sets guidelines for when to fund a capital project through debt outside of the tax levy. Mr. LeLacheur noted that this is a complicated and contentious topic, and recommended including some sort of cost figure to Illustrate a standard for when projects should be funded. Working off of last fiscal year's budget numbers, he noted that a $250,000 annual debt payment number is likely too constricting, where a $500,000 number would be on the high.end. Mr. Dockser recommended focusing on the cost of the project, rather than the cost of the annual debt payment, to determine whether or not a project should be funded within the levy. Revisions were made in the policy to reflect this. On a motion by Mr. Dockser. seconded by Ms. Herrick. the Debt &Capital Policy was adopted by the Committee as amended by a 7-0-0 vote. Next was the topic of FINCOM reserves, a fund that currently sits at $150,000. It had been noted in the past that this number was too low to make an impact if necessary, and should be adjusted. The role of the FINCOM reserves was explained, and that it is a way for Page 1 2 FINCOM to cover last-second budget transfers between April Town Meeting and the start of the new fiscal year, without having to call an additional special town meeting. Although all members agreed that the fund should be increased, they were also in agreement that Issues of magnitude requiring a large budget transfer should invoke a special town meeting to ensure the full participation of the public on the matter. Mr. LeLacheur noted that he will budget $200,000 for the FINCOM reserves in the coming fiscal year, and the committee voted to affirm this. On a motion by Ms Perryseconded by Mr. Dockser. the Finance Committee recommended that the FINCOM reserve account be increased to $200.000 by a 7- 0-0 vote. The conversation then moved to Ms. Perry's earlier point about the Stabilization Fund. In addition, Ms. Perry feels that as the reserve funding is discussed so too should the town discuss spending for needs based on town priorities, such as security improvements. The Committee agreed, and on the topic of the Stabilization Fund Mr. LeLacheur recommended perhaps targeting the minimum 5% reserve number for the Stabilization Fund, keeping reserves above the 5% number in Free Cash or other reserve funds. The Committee agreed that this would be a topic better discussed in detail at the next Financial Forum and, per Mr. Dockser's request, Mr. LeLacheur stated that he will bring peer community data for comparison. On a motion by Mr. Dockser seconded by Ms Herrick the Committee voted to approve the minutes from Aurll 11 2018 by a vote of 7-0-0. On a motion by Ms Perry, seconded by Mr. Dockser, the Committee voted to approve the minutes from April 23. 2018 by a vote of 7-0-0. Ms. Perry then inquired if there has ever been a "FINCOM handbook"for new members, and Mr. LeLacheur noted that there used to be one. He added that most of the necessary material is now on the website, however. He did highlight a written budget process overview that he had put together a few years ago, and offered to provide that to committee members. Ms. Landry felt it may be a good idea for the town to take advantage of the next financial forum to say "thank you"to the citizens for passing the override, while additionally noting the avenues available for tax relief. Mr. LeLacheur agreed but highlighted that for the Senior Tax Exemption program the application deadline is in August, so those interested need to apply as soon as possible. On - motion by Ms Perry seconded by Mr. Brandt the Committee voted to adiourn the meetina at 9:35 PM, Mr. Burkhart adjourned the meeting at 9:35 PM. Respectfully submitted, Secretary Page 1 3