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HomeMy WebLinkAbout2003-09-03 Finance Committee MinutesRE-C'E I VED FINANCIAL FORUM MEETING TOWN CLERK SEPTEMBER 3, 2003 READING, MASS. 2004 JUL - 6 P 4: 4 8 The meeting convened at 7:30 p.m. in the Coolidge Middle School Community Room. Present were FinCom members, James Francis, Paul Bolger, Richard McDonald, Catherine Martin, Charles Robinson, Robert LeLachuer, Hal Torman, Marsie West, Andrew Grimes and Peter Hechenbleilcner, Town Manager. Present from the School Committee was Pat Schettini, Superintendent of Schools, Peter Dahl, John Russo, Carl McFadden, Dennis Richards, Rob Spadafora, John Carpenter and Elaine Webb. Present from the Board of Selectman was Camille Anthony, George Hines, Richard Schubert, Matthew Cummings and Gail Wood. James Francis called the Finance Committee to order. Peter Dahl called the School Committee to order. It was suggested by Bill Brown that the Board of Selectman did not have a notice posted for a meeting. Rick Schubert reviewed the posting and it was determined that the Board of Selectmen did in fact have the appropriate posting. James Francis welcomed everyone to the meeting. The purpose of this meeting was for all of the Boards to come together and discuss three important matters. 1) Review for the High School financing. 2) Brainstorming for Revenues and Expenses 3) State Surplus and what should be done Peter Hechenbleilmer told the members that the town requested a Home Rule bill allowing the Town to bond for the high school project for up to 30 years and this was passed and signed by the Governor. Peter then introduced Beth Klepeis to discuss the spreadsheets comparing "traditional" financing mechanisms to one of the selling bonds now for 30 years. Beth went over the SPA reimbursements for the Reading High School Project. She told the Committee she tallced with Keith Hopsis of Design Partnership and the High School hopes to be open up in 2006 but anything could happen and they might not meet the date. She told the Forum that you couldn't borrow for more than two years in advance and after that you may be fined and subject to problems. By next November the schedule for the school would be more updated. There are a lot of decisions to make. The model that was attached to the agenda shows what we are thinking of and the option to take advantage of the low interest rates. Any schools on the SPA list move slowly. She stated that it will be 10-15 years before SBA reimbursement, and that we only pay interest for seven years on bond anticipation and sell the bonds in 8 years. Beth explained the three scenarios as they were in the packets and the differences between each one, the pro's and the con's to each. In general she said the taxpayer will be better off with level funding. She then asked if there were any questions. Robert LeLacheur asked if the reimbursement would be up to 20 years or up to 30. Beth told him it was up to 18 years.. Peter said SBA doesn't want to pay more than they otherwise would. Paul Bolger asked if there was any chance the SBA would change their mind and reimbursement would stay as it was. Beth said that anything could happen. These are bad financial times and if everything was to go back to the way it was in the 1970's, then yes, maybe. Paul asked if under either program would the reimbursement be the same. Beth said that yes it should be, unless there are more cuts. James Francis asked Beth to explain the pro's and con's of each scenario. Beth stated that Plan A and Plan B are the same except that in Plan B, the reimbursement comes later. James Francis stated that there was a much lower cost per year. Beth stated that if you borrow on Plan A or Plan B you pay less. Beth also stated that everything is an assumption. The question of how the 6% interest rate was arrived at in 2006, Beth said this is a historical figure and we're now at historical low interest rates, and they won't last. Robert LeLacheur asked how long before you borrow do you need to make that decision. Beth stated in the past SBA has always paid what they said they would pay. It was asked will they know? Yes, Beth said she thinks so. Beth said we should look at the rates in November and December to see if the bond rating may change. Robert LeLacheur said there are three pieces, the political side, the financial side and the town (resident) side. He also said there are two choices and you (as a resident) will want to know what you will pay. The certain and the uncertain. Beth said as you get closer to malting a decision on when to sell bonds you'll have better numbers. Peter Dahl said it will be smoothing for the homeowners, having a consistency of a bill. The interest rate risk in uncertain. It was stated the Board of Selectmen and the Treasurer make the decision and that it does not require a Town Meeting vote. George Hines called the Selectman's meeting to order at 8:25 p.m. Questions were taken from the public at this time. Mrs. Linda Phillips stated there were a lot of assumptions made tonight and she also said option C would cost more to homeowners. Beth said depending on the interest rate, one may cost more than the other and the payments would be smoothed out to the taxpayers. Beth also stated you cannot take these figures too literally. In November we will know more on the financials. Mrs. Phillips said these assumptions are upsetting. Mrs. Phillips then read a letter regarding the uncertainties and the assumptions made from a School Committee meeting, she read some quotes she said she had. Peter Dahl stated that it was misrepresented what was said at the school committee meeting. Peter Dahl then read a vote that was taken on July 31St, 2003. Marsie West then asked if they could take a vote to keep on tonight's agenda. James Francis t hen suggested they continue with the meeting. FY 2005 Budget Process The Fincom established a "brainstorming" process in which the School Committee, Library Board, and the Board of Selectman participated. At this time the reports were presented. 1) Andrew Grimes gave his report on Statistical Analysis. Andrew stated he looked at revenue and expenditures over a 10 year period. The obvious trends were the revenue. State funding had a 140% increase during the good times. The state handed out and the town spent. Also stated was property taxes and excise taxes were big revenues. Under the expenditures - debt service and education stands out. Employee benefits in a five year period went up over 10%. In the average tax bill, there was a significant increase. 2) Paul Bolger gave his report on Resource Utilization. Paul talked about the Mission Statement. Paul talked about the possibility of using the schools facilities. Naming rights for the new High School. Other towns have raised a lot of money doing this. The hospital trust fund is there to build a new hospital - is there a possibility of a Public Health Clinic in a portion of the high school? meet with the trustees? Paul stated that RMLD is a big asset, and there may be a need to evaluate it again. Someone with experience should be involved. The Town Forest - park programs should be used to generate income. 3) Chuck Robinson gave his report on Reading Taxpayer Survey. Chuck said we should reach out to the community and see how they would like to see the revenue used. He stated there may 5-6 questions - keep it simple. Maybe this can go out with the town census. We are open to suggestions. A question of what resources would be used to do the survey. 4) James Francis gave his report on Additional Initiatives being undertaken by the FinCom. James talked about volunteerism, and how it could be done more efficiently, maybe using a database to keep track. James talked about Economic Development, the possibility of developing properties around town, i.e., Frugal Fannies, Addison Wesley, Camp Curtis etc. Also discussed was the public safety dispatch system and could it be sold to other towns. The employee pensions, three volunteers to look into this and ways to improve upon it. The RMLD payment should be evaluated - how is it calculated. Regarding the five year forecast, need to look ahead and make some changes. R. Schubert wanted to acknowledge the efforts of the various Boards and the creative process that was used it was great and thank you very much. Peter Hechenbleikner went over the process of doing budget forecasts, and their inaccuracy over time because of the difficulty of knowing what assumptions to make. Camille Anthony asked for some idea of the numbers. She said last year they sat around, no discussion. She would like to be proactive and make assumptions and a plan. She suggested a scenario of assumption of labor costs and to find out what the knowns are and have a starting point. George Hines suggested that staff recommend assumptions and the Financial Forum review them and, discuss and refine them. Peter Dahl discussed the unfunded mandates - state funded, money for programs, special education takes up most of the increase in fields for the schools. Peter stated we are the only state that has the Special Needs requirements that we have. It was discussed about the North Shore Consortium purchasing the collaborative. Pat said he just became aware of this. Peter discussed that in October they will have assumptions and more broad numbers. Dennis Richards said that the lists were great, what is the next step in the process. James Francis said they should meet again and tally about the five year plan. Make some decisions quickly and rate some ideas. Richards suggested that we should measure our activities by the following criteria: 1) Likelihood of success - good or bad idea - go to other committees. 2) High financial return - short term repayment. 3) Effort and time - to invest or not Review Status of FY 2004 Revenues and Expenses ( Richard Foley went over updated revenue projections for FY 2004 A) Updated revenue projects FY2004, property tax - new growth projected close to 200,000. Intergovernmental revenue turned over to the town by the state. Operating transfers available. Used to find annual operating fiord in May 2003. Peter Hechenbleikner discussed the vocational school district, property casualty insurance, debt service, rubbish, compost center. These totals are more than budgeted. They will be dealt with this fall. Concerns re: Building maintenance - contractor cancelled. Fire Expenses - fire chief concerned Health Insurance - renewals should come in lower Snow & ice removal - depends on winter James Francis asked about police and fire department overtime. Peter said that overtime for the summer will be over soon. It was discussed re: police details? Who pays? That would depend on who calls the detail in. Review Options for Additional Available Revenues 1) Spend what is there. 2) Reduce property tax 3) Establish a stabilization fund 4) Combination of above The tax rate will be set after the Subsequent Town Meeting. Peter Dahl stated that at the Town Meeting the town can set up stabilization Fund. Peter said the goal is to set aside reserves for next year. Beth Klepeis stated it makes financial sense to have stabilization fund to use as savings account. Richard Shubert questioned the bond rating, which scenario puts us in better standing. Beth answered that they look at all our expenses, and last year they noted the lack of a stabilization fund. James Francis suggested the Boards break into small groups and have discussion. Discussion was held for about 15 minutes. George Hines stated the Selectman would like to put a Stabilization Fund on the Town Warrant. The school committee was sure yet. ( Discussion was had on next financial form. Schedule Peter Hechenbleikner outlined the schedule dates in the packets. The next Fincom meeting is September 17, 2003., The next Financial Forum is scheduled for October 9, 2003. Richard McDonald moved to adjourn the meeting at 10:35 p.m. James Francis seconded, all in favor. Rob Spadafora moved to adjourn the meeting at 10:35 p.m.. Carl McFadden seconded, all in favor. Gail Wood moved to adjourn the meeting at 10:35 p.m. Matthew Cummings seconded, all in favor. es e tfu y u muted S retary