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HomeMy WebLinkAbout1999-11-23 Board of Selectmen Minutes Board of Selectmen Meeting — ,, November 23, 1999 The meeting convened at 7:35 p.m. in the Selectmen's Meeting Room, 16 Lowell Street, Reading, Massachusetts. Present were Chairman Sally Hoyt, Vice Chairman Matthew Nestor, Secretary George Hines, Selectmen Camille Anthony and Matthew Cummings. Also in attendance were Town Manager Peter Hechenbleikner, Assistant Town Manager Russell Dean, School Superintendent Harry Harutunian, School Committee Chairman Pete Dahl, Finance Director Beth Klepeis,Finance Committee Chairman Carol Grimm, Finance Committee Member Catherine Martin, Town Accountant Richard Foley,Bill Brown. Discussion/Action Items Selectman Matthew Cummings noted that a representative to review legal services should come from Town Meeting. The Moderator should be contacted on this issue. Discuss FY 2001 Budget and Potential Override - The Town Manager reviewed budget information for the Board of Selectmen and noted the following: Projections have been put together based on assumptions -- they are just that -- assumptions. The Finance staffs, Assistant Town Manager and Town Manager prepared the information. The financial staff is present to answer questions. Revenues include property taxes, local revenues and State aid. State aid includes lottery distributions —the estimates are conservative. There are also operating transfers included in the projections. Using these projections, Sale of Real Estate Funds are used up by 2002. The overlay surplus revenue represents a declining portion of the overall tax levy. In FY 1994, there was a successful general operating override. Selectman George Hines asked for an explanation of State aid — it says in FY 2000, we are back to FY 1990 levels. The Town Manager explained the chart which showed that the percentage of the budget paid by State aid increases to the percentage of the municipal budget that it represented. The Town Manager stated this is not a value judgment. FINCOM Chairman Carol Grimm asked if these numbers included the FY 2000 State Aid figures as approved in the State budget passed this week. Town Accountant Richard Foley stated the number was the Senate number—the number finally voted and signed by the Governor. Selectman Matthew Cummings asked if the FY 2001 State Aid number might be $195,000 overstated? The Town Manager suggested $165,000. Selectman Camille Anthony asked if the Chapter 70 numbers were OK. The Town Accountant stated these were the numbers used in this model, and it is based on a projection of a certain dollar amount increase tied to the number of students. We have received correspondence from the State saying that communities should not E expect their State aid to increase as much as it has increased historically. The Town Manager stated the lottery is now uncapped, and distributions from lottery funds are not expected to grow as much as they have over the past 5 years. Board of Selectmen Meeting—November 23, 1999—Page 2 Finance Director Beth Klepeis stated the Chapter 70 numbers in the projections are driven by an increase in per pupil allotment of$75.00 per student. Selectman Camille Anthony asked about the gas tax and whether it was being diverted. She had talked with Geoff Beckwith and we should look at the issue. The Town Accountant stated this has been the number and has not changed for years. The Town Manager stated the money comes out of the Highway Fund line item on the cherry sheet. Each year the Town has to fill out a sheet describing the Highway and Police budgets in order to spend the money. The Town Manager reviewed the expenses. Debt and capital have been taken right from the Capital Improvements Program. State and County assessments are being reduced because of State Legislation providing for"forward funding" of the META.. Employee benefits are modest increases— in the general economy 7 to 11 % increases are not unusual. Unemployment may be off but it isn't a big number. Police/Fire indemnification may increase if we do not change the method of acceptance of Chapter 100 b. Vice Chairman Matthew Nestor asked about the SPED bill in the legislature which would cap SPED at 3 times the per pupil spending, and then 90% after that would be paid by the State. Did we look at the effect? The Town Manager stated this probably wouldn't happen in time for the FY 2001 budget, if at all. School Superintendent Harry Harutunian stated there was $200,000 to $300,000 unanticipated SPED being requested for FY 2001 it's a bit misleading because the adopted budget this year reflects only a 6% increase, but a transfer in the amount of$300,000 will be needed in the spring. What we're hearing on SPED is the bill is not likely to pass. Currently 56 students are educated out of district. Anything above $16,000 per SPED placement would generate a reimbursement under the proposed law. Vice Chairman Matthew Nestor stated $16,000 times 56 kids would give you almost $900,000. The Superintendent stated the per pupil expense was using a melded special and regular education expense, and many kids in the district cost above the $16,000. Vice Chairnlan Matthew Nestor suggested letters of support should be sent by the Board of Selectmen supporting this legislation. Selectman George Hines asked how many SPED students there are. The School Superintendent indicated there are about 800 SPED students total. Vice Chairman Matthew Nestor asked how many of these students would be above the $16,000 threshold? The School Superintendent indicated about 100 to 130 would be above the threshold. Selectman Matthew Cummings stated that historically action on SPED reform by the legislature has been. The Superintendent stated the recent Blue Ribbon Committee was the closest they had gotten. Selectman Matthew Cummings stated he attended a meeting at Gardner Auditorium with 500 people — there was no lobbying by MMA or Superintendents. Vice Chairman Matthew Nestor stated the State should do more and if this legislation passes, there will no longer be an 8% growth rate in the school budget. School Committee Chairman Peter Dahl stated as more Towns reach the foundation budget and State aid levels off, these issues should be addressed. Probably more Towns will become interested. -- Board of Selectmen Meeting—November 23_,_1999—Page 3 The School Superintendent stated there are three things that drive the 8% increase in the School budget: SPED; increasing enrollment; and State mandates—and none of these are controllable. Selectman George Hines stated that we need to have very specific numbers for an override. He asked the School Superintendent if 8% was a right number? The School Superintendent stated on December 16, 1999, the School Committee will be looking at a budget which contains a 9% increase. Selectman George Hines asked what besides SPED is driving it? The Superintendent answered an allowance for enrollment. There is no money for curriculum initiatives. We have a working number on personnel increases. Selectman George Hines stated we need to know what the increase in personnel have been by category—i.e. teachers, educational assistants, SPED, etc. Vice Chairman Matthew Nestor asked what costs are built in for the MCAS? The Superintendent used language arts as an example. To move initiatives based on the State mandates, it will cost anywhere from $425,000 to $450,000. Vice Chairman Matthew Nestor asked what this was for? The Superintendent stated for textbooks, hardware, software, etc. It is consistent with DOE — there is no staffing in there. School Committee Chairman Peter Dahl stated you will see the need for remediation in High School based on the MCAS scores. Maybe the School Department could work with community colleges to develop non-matriculated classes. He also stated the MCAS tests will generate failures and there will be additional costs associated with that. The School Superintendent stated we are still $1000 below the per pupil State average. This is a melded number. _ The Town Manager reviewed the historic expense sheets. Areas higher than the CPI include: education, library and debt service. Debt service represents only debt service— capital outlay is in the department budgets. Vice Chairman Matthew Nestor asked about the CPI relative to our budgets. The Town Manager went over the budgets relative to the change in the CPI. Benefits are low relative to the CPI. Vice Chairman Matthew Nestor made some observations: Everything is in line with the CPI except for a couple of anomalies. Education is the 800 pound gorilla. If we understand and believe that 8% is a reasonable increase per year for education, then revenues have to grow greater than the CPI. The Town Manager stated that is right, and the property tax is constrained to a 2.5% increases in the levy — it grew less than the CPI for many of the years during the last 10 years. The Town Manager stated that North Reading, for example, is getting 1 million dollars a year in new growth in addition to their proposition 2% constrained growth in property taxes on a smaller budget. Selectman George Hines stated that if the full lottery revenues had come in without being capped, we wouldn't be in this boat. The Town Manager stated it would have helped--perhaps $300,000—$400,000. The Town Manager reviewed the historic change in FTE's (full time equivalent employees). There has been a 3.5% increase in personnel in the Municipal Departments in the last 10 years. More have been added lately in the Public Safety areas, but we're making up for losses from previous years. Vice Chainnan Matthew Nestor stated public safety represents almost the entire increase. The Town Manager stated that he assumes education reform and increasing enrollment account for the school increases. Vice Chairman Matthew Nestor stated he would like a discussion on hiring in the School Department. The Superintendent stated the School Committee redistricted in the Middle Schools — we have added seven teachers at Parker. It is a 50150 to 60/40 break between teachers, Board of Selectmen Meetiniz—November 23, 1999—Page 4 custodians, education assistants, etc. The Board of Selectmen asked for more detailed information on where School Department staff have been added during the past 4 years for which data is available. Selectman Matthew Cummings asked if employee benefits were being paid out of the grants that funded the salaries of school employees. The Town Accountant stated benefits for grant positions in the schools are generally not paid by the grant but are included in Town benefits. The School Superintendent stated of his 520 employees, a good number are Reading residents. Selectman George Hines stated that there doesn't seem to be a correlation between increasing school enrollment and the increase in staff—it appears that many more staff have been hired than is justified by enrollment increases. The Superintendent stated during the years teachers were added at Parker because of redistricting and others were mostly SPED. Selectman George Hines stated when you've looked at the enrollment ratios and how it's been increasing, it doesn't jive. The Superintendent stated there are no new administrative positions — it's classroom and classroom support. Selectman George Hines stated that for the average taxpayer looking at the numbers here and considering support, for these expenditures the ratio doesn't seem to justify it. The School Superintendent stated the redistricting of Parker caused hiring of new teachers. We expected Coolidge not to increase. SPED has caused much of the increase in hiring. The vast majority of new positions are due to redistricting and SPED. When you have an Ed Assistant, it's $12,500 to be with one child all year. Things are being discovered today that no one knew about years ago. Selectman Camille Anthony asked if Ed Assistants being used in SPED for the inclusion model? The Superintendent stated it costs $35,000 to transport a child to Landmark. There are incremental steps on SPED. Eventually it moves to an out of district placement. Two kids transportation alone costs $22,000 per year and the parents do it. Vice Chairman Matthew Nestor stated he would want to see a list of the 77 positions, and stated he would venture to guess people wouldn't mind seeing teachers. The Superintendent will put it together. Selectman Matthew Cummings asked the Town Manager to explain the bump in the FY 2000 to FY 2001 capital. The Town Manager stated he has included in FY 2001 the capital projects that were deferred in FY 2000 in order to make the budget balance. Selectman Camille Anthony asked if the DPW maintenance bay was included? The Town Manager stated it was -- a$30,000 item in the capital program to do the study and determine if we needed to add to the DPW garage for a maintenance bay, or whether there are other options. Selectman Camille Anthony stated the FINCOM was going to do a detailed review of the Capital Improvements Program this year and wondered whether it was done. The Town Manager stated an early draft had gone to FINCOM and it was being reviewed. Selectman Matthew Cummings asked if the FY 2000 Worker's Comp was a one-time blip? The Town Manager stated we are not funding unknowns. Selectman Matthew Cummings asked about the 12% increase in Social Security. The Town Manager stated when employees who have been with us prior to 1986 retire and are replaced the new employees and the Town pay Medicare tax. Eventually it should reflect a savings in the group health insurance line item but not in our lifetime. Board of Selectmen Meeting—November 23, 1999—Page 5 The Town Manager stated there was a contributory retirement schedule showing a 2.4% increase over 26 years. We looked at alternate scenarios in outlying years but it makes good financial sense to keep funding the system at a reasonable level of increase per year and avoiding large increases in the out years. The enrollment impact on the budget was discussed. The Town Manager stated there has been a 10% increase in enrollment over the last 5 years. The Chapter 70 increase per pupil of$75.00 per is the amount of increase we have included in the revenue projections. The Town Manager reviewed causes of the budget problem: Constrained revenues, enrollment increases, and 30 million dollars in capital projects that the Town has funded not through debt exclusion but have funded inside the 2%property tax cap. Selectman Camille Anthony stated we have been assuming 8% increases in school expenditures. Do we really anticipate 8% increases every year? The School Superintendent stated he didn't see the mandates diminishing. The overburden and foundation aid were the result of three years of decreases in the early 90's. We're still falling behind the State average per pupil. We have become leaner with money. We are focusing on education reform and special education. Selectman Camille Anthony stated there is an intrinsic problem here. 8% increases in education plus 4% increases in municipal appropriations plus debt is an ongoing problem. There is no way to fund the schools and Town Government with this scenario. The Town Manager stated he wanted to review the options. There are options to reduce expenses or raise revenues. The Town Manager reviewed the draft options. Selectman Matthew Cummings asked if the school projections included the bump up in costs for the new school. - The School Superintendent stated what was presented to Town Meeting was administrative costs. The tradeoff was to have two Assistant Principals in two schools. For example, you could take nurses and other positions and spread them out over more than one school. Psychologists, art, music teachers will go with students to the new school. Selectman Matthew Cummings stated there will still be a one year bump. The School Superintendent stated you build it in over a period of years. No new staff at the Middle schools, a couple at the High School, put the emphasis on the elementary schools. Coolidge probably won't see new staff for a couple of years. School Committee Chairman Peter Dahl stated the answer is it's built into the 8%. Selectman Camille Anthony stated in order to facilitate an increase in the elementary school budget, you would have to cut somewhere else. The School Superintendent stated they would re-allocate. FINCOM Chairman Carol Grimm stated the FINCOM reviewed the new school on-line costs and it showed a$157,000 cost. Teacher costs were offset by decreases in buses. The Town Manager stated the projected shortfall for FY 2001 is close to 2 million. In an override situation, you may request that much and "bank" any money you didn't need to apply it - to the next fiscal year. Selectman Camille Anthony asked how much free cash was being used per year in the projections? The Town Manager stated $550,000 per year and then $50,00 increases per year Board of Selectmen Meeting—November 23 1999—Page 6 after that. Predicting free cash is essentially predicting where you are wrong on revenues and expenses. Vice Chairman Matthew Nestor asked if a 10% increase in State aid plus an override of 2.5 million would bring us out for five years? Selectman Matthew Cummings stated most of the State aid was overburden aid, and it has disappeared now that we have reached the foundation budget. Vice Chairman Matthew Nestor asked how much was overburden aid? The Finance Director stated she thought it was roughly $500,000. The Town Manager stated that if the override passes and revenues come in higher than expected, you bank the additional taxing capacity that you don't need initially. Vice Chairman Matthew Nestor stated we're $1,000 per pupil below the State average. Selectman Matthew Cummings stated our per capita income is high so the overburden aid turns out lower. The Superintendent stated he believes there will be no formula for next year. He thinks there are 26 different variables. A committee on a State wide level will be appointed to look at the issue. Selectman George Hines asked if we could run the override projections out five years? He stated that one scenario is you get what you need this year. The second scenario is this year's budget— the FY 2001 budget—plus the implementation of the Peat Marwick report. This would be done with the caveat the Building Maintenance budget would be maintained and not cut back. Selectman Camille Anthony stated we need to deal with a two year projection on an override. We need two years of revenue projections. The Town Manager asked if the Board was interested in alternate revenue scenarios? Selectman George Hines stated he was on some things. As a Depot user, he wouldn't mind paying a fee. Room rentals are done mainly for non-profits. Selectman Matthew Cummings asked if resistance has been built in to projections of raising revenues form depot parking stickers? There will be attrition on a fee. The Town Manager stated we would lose some — about 20%. Selectman Camille Anthony stated room rentals were an issue. Rooms take more wear and tear — the School Department charges down at the Field House. The Superintendent stated everyone pays for the custodian. They raised the rate on room rentals and people got angry. Vice Chairman Matthew Nestor stated we need to go through the list— even with building rental and the depot sticker fee, that gets you to $100,000. Maybe in the analyses, we can add $100,000 to the revenues. There are three scenarios: (1) 1.9 million, (2) a number to get us out 2 years and (3) a number to get us out 3 years. Selectman Matthew Cummings stated that the revenue figures were good figures to use unless we change the way we do business. Selectman Camille Anthony stated we should look at cuts and reductions in budgets, and she looks to the Town Manager for suggestions. The Town Manager stated the Selectmen should look at the numbers and we'll have a more focused discussion. Selectman Camille Anthony asked if there is a debt exclusion override on the High School, should Killam be included? We should do a complete school package. The Town Manager stated this is not so much a school issue but a financing issue. Selectman Camille Anthony asked if we could get projections on how the High School project would impact the tax rate? The Town Manager answered yes. Board of Selectmen Meeting—November 23, 1999—Page 7 Chairman Sally Hoyt stated she has a great deal of concern—she isn't sure about the ballot—you can't tell which way it's going to go. If people feel it's a necessity — bite the bullet and do it. We have an operating deficit. How much more time on Corporex? The Town Manager stated we are working on some numbers with Corporex and that the lease extension expires December 1, 1999, give or take a couple of days. On December Tt, we'll have more information. It will be a month before we know what we're dealing with. Chairman Sally Hoyt stated she wants to consider the alternatives before going for an override. We should wait for the Corporex deal. The Town Manager stated the development of the landfill will have no impact on the FY 2001 budget. Selectman Matthew Cummings asked what is the timeframe for the Board to decide on an override? The Town Manager stated December 14th and 21 st are meeting dates. There will probably be special sessions to review the budget. The Town Manager stated the Town/State Election is March 7th. The Town Meeting Warrant closes on February 1, 2000. Selectman Camille Anthony stated we should have budget meetings the next 2 or 3 weeks.. Selectman George Hines stated before we get off this topic, he was hoping for feedback from the School Committee and Finance Committee on whether they would support a Proposition 2 %2 override. School Committee Chairman Peter Dahl stated the School Committee hasn't taken a position. If the override dealt with potentially larger classes and the possibility of reducing faculty, then an override is the solution. It tooka long time to get where we are from the early 90's. We have to at least move forward. There are pressures to fund other things outside regular day instruction. The Superintendent highlighted the concern the School Committee had that an operations override may detract from the High School project. Selectman Matthew Cummings stated his method is reducing the level of expenditure, and he thinks there is a sentiment on the Board of Selectmen to do that. School Committee Chairman Peter Dahl stated we want to maintain what we are doing. We want to make progress in different areas. We hesitate to move backwards. Vice Chairman Matthew_ Nestor stated he was concerned about expenditures. The School Superintendent stated it was important to note how the Committee felt on this issue. Vice Chairman Matthew Nestor stated we are trying to square a circle. School Committee Chairman Peter Dahl stated we see the override coming at us. Chairman Sally Hoyt stated the voters didn't forget from last time. Vice Chairman Matthew Nestor stated the School Committee will have to decide whether they want to cut or support an override. We're painted into a corner. He doesn't want the School Committee to say they don't support cuts but also don't support the override option. School Committee Chairman Peter Dahl stated the picture has become clearer the last couple of months. The School Superintendent stated the forum may be with the three boards, or the Board of Selectmen makes the determination with seeking support from the other boards. Selectman George Hines stated his understanding was there would be dialogue among the three boards this evening. The Town Manager stated invitations were extended, but the Board of Selectmen had not requested that this be a joint meeting with the FIVCOM and the School Committee.. Board of Selectmen Meeting—November 23, 1999—Paue 8 FINCOM Chairman Carol Grimm stated this was not a financial forum meeting. The FINCOM was flexible last year. We knew we couldn't do those things again to balance the budget. Without an override, the budget process will be painful. We would have to cut positions. A trash fee would helps but doesn't get you there—we will have to lay people off. Selectman Matthew Cummings stated it is going to be a combination of overrides and cuts. He doesn't want to end up at loggerheads. FINCOM Chairman Carol Grimm stated no one was laid off last year. The School Superintendent stated the School Department has a constituency that is very large. There is an expectation that the School Committee will get as much as they can. Once the bottom line is given, the administration takes that direction and the budget is adjusted. If these things don't make the recommended budget, then the constituency doesn't feel listened to. The budget illustrates that concerns are heard. Selectman Matthew Cummings stated he understands the pressure we're under but the process requires a common budget. School Committee Chairman Peter Dahl stated we have to deal with mandates, enrollment, etc. We need to provide what we can. Enrollment is increasing. The Town Manager stated the issues are different on the municipal side but just as compelling. We have the Library, public safety, etc. to provide. Vice Chairman Matthew Nestor stated that when you look at an increase of 8% per year for schools, you run the risk of the voters saying no. There is danger built into the assumption that an override will pass. School Committee Chairman Peter Dahl stated the School Committee will build a budget considering Town finances. Chairman Sally Hoyt stated we all have to live within a budget and that's the bottom line. The Town Manager noted a tour of RMLD on the 4th of December. Selectman Camille Anthony noted the Audit Committee was meeting on December 2°d. We could meet December Ist, 8th or 91h, if necessary. Selectman George Hines stated the Board of Selectmen are the only ones empowered to put the question on the ballot but they don't want to make the decision in a vacuum. The School Superintendent stated his budget presentations begin on December 16th. The School Committee would finish deliberations on February 1st. Selectman George Hines stated we need more than 5 weeks to sell an override. The School Superintendent stated the Reading School Committee cannot go through a 25 million dollar budget in this period. Selectman George Hines stated in that instance we should plan on a budget with no override. The Town Manager stated the Local Election would be March 21St' if the decision is made not to combine the Local Election with the Presidential Primary but this would require the expenditure of $9,000 more. February 1St is the deadline to close the Warrant for the Town Election/ Presidential Primary Election. School Committee Chairman Peter Dahl stated if the School Committee looks at every expense, the budget is not going to be done in 3 nights. The School Superintendent asked if an approved School Committee budget was needed? The Town Manager mentioned 1993 where a similar Board of Selectmen Meeting—November 23 1999—Page 9 circumstance existed the budget was done quickly. The Finance Director stated it crystallized in _ January of 1993. The Town Manager stated he usually had an adopted school budget by January 20th The date of December 1st was set for the Board of Selectmen presentation of the detailed municipal budget. The Town Manager stated we will evolve scenarios by this date. The School Superintendent asked if there was a date that the Manager needed a number by. Selectman George Hines stated the Selectmen would deliberate on December 1st to develop a timeline on an override decision. The Board of Selectmen will meet on an as needed basis. On motion by Anthony seconded by Nestor, the Board of Selectmen voted to adjourn their meeting of November 23, 1999 at 10:20 p.m. The motion was approved by a vote of 5-0-0. Respectfully submitted Secretaa