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HomeMy WebLinkAbout2003-06-25 Finance Committee MinutesCLIVED Finance Committee Meeting T 0 11 CLERK June 25, 2003 r', D l s G MASS. 2003 JUL 31 P 2: 3 8 The meeting convened in the Conference Room, 16 Lowell Street, Reading, Massachusetts at 7:30 p.m. Present were Chairman Catherine Martin, Vice Chairman Richard McDonald, Finance Committee Members Jim Francis, Chuck Robinson, Karen Epstein, Paul Bolger. Bob LeLacheur and Hal Torman arrived late. Also present were the reporter from the Advocate, RMLB Chairman Phil Pacino, RMLB Vice Chairman Bill Hughes, RMLD General Manager Vinnie Cameron, Selectman Camille Anthony, resident Marsie West and Town Manager Peter Hechenbleikner. Approval of Minutes On motion by Robinson seconded by Epstein, the minutes of March 26, 2003 were approved by a vote of 5-0-1, with Bolger abstaining. On motion by McDonald seconded by Francis, the minutes of April 2, 2003 were approved, as amended, by a vote of 5-0-1, with Bolger abstaining. On motion by Francis seconded by McDonald, the minutes of April 23, 2003 were approved by a vote of 5-0-1, with Bolger abstaining. On motion by McDonald seconded by Robinson, the minutes of April 28, 2003 were approved by a vote of 6-0-2. Liaison Reports Karen Epstein reported on the "Community Connection," the fact that the first mailing had gone out, and the Town staff would handle the production in the future. Fundraising will be done to pay for it. Jim Francis noted that the Rules Committee had met although they did not have a quorum. There were four items that they discussed: 1. That the Finance Committee not be appointed by the Finance Committee Appointment Committee but by the Rules Committee. 2. That we use Town Meeting time instead of Roberts Rules of Order. 3. That the Bylaw Committee be required to give a report . on any Articles of interest to them. 4. That we eliminate the possibility of "moving the question." Hal Torman had met with Beth Klepeis, Richard Foley and Harry Harutunian regarding the kindergarten financial controls. There are 86 students enrolled. The financial process is decentralized with the individual school principals responsible. Karen Callan, Principal at Finance Committee Meeting - June 25, 2003 - Page 2 Barrows, is the administrator of the program. Applicants pay a $35 registration fee and $400 per month times 10 months. The monies are paid into the revolving fund and salaries and expenses will be paid out of the revolving fund. The transfer out of the revolving fund will probably be done' only once per year. Copy of the purchase orders will go to Karen Callan. Dick McDonald noted that the Audit Committee had met with the new auditors. They went over the ground rules and the areas likely to be looked at. The focus issue will be on recreation because of the level of turnover in the Administrator's position. The RMLD audit for their next fiscal year will also be done by Melanson Heath. Bob LeLachuer reported on the Stormwater Management Program. The State has not been able to receive the material. Twice the Town has met the deadline for sending it in, and it has been rejected by the State because they are not set up to receive the applications yet. The Stormwater Management Advisory Committee met with the Town Accountant regarding financial options. The likely option would be to add on to the water and sewer billing system and enterprise system for stormwater management with a small charge' per household. That charge would cover some of the existing costs plus set up funding for new mandates. Reorganization of the Finance Committee - The Town Manager asked for nominations for Chairman. On motion by McDonald seconded by Robinson, Jim Francis' name was put forward for the position of Chairman On motion by McDonald seconded by Makin, the Finance Committee voted to close nominations by a vote of 8-0-0. On the vote on the main motion, Jim Francis was appointed as Chairman of the Finance Committee with a term expiring June 30, 2004 by a vote of 7-0-1. Jim Francis took over the Chairmanship. He asked for nominations for Vice Chairman. On motion by McDonald seconded by Torman, Catherine Martin's name was put forward for Vice Chairman On motion by Martin seconded by Robinson, the Finance Committee voted to close nominations by a vote of 8-0-0 On the main motion, Catherine Martin was appointed Vice Chairman of the Finance Committee for a term expiring June 30, 2004 by a vote of 8-0-0. Presentation of RMLD Budget - RMLB Chairman Phil Pacino and RMLD General Manager Vinnie Cameron presented the budget. Vinnie Cameron noted that the FY 2003 Budget was $1.3 million lower than actual FY 2002 expenditures. The major differences were that FY 2002 included a settlement with a former employee in the amount of $500,000, $100,000 charged against inventory, differences in the power supply and establishing a depreciation fund at 3% instead of 5%. He also noted that power supply accounts for 77% of the RMLD budget, operating expenses account for 17%, depreciation 4% and outside services 1%. Highlights in 2003 include a cost of service study which has levelized rates (eliminated seasonal rates) and lowered rates, the RMLD will be looking at other rates during the remainder of the year, residential conservation services were brought "in house," the rate stabilization has been Finance Committee Meeting - June 25, 2003 - Page 3 intentionally lowered from about $13.5 million to about $10.3 million, and the rate stabilization fund has been used in part in 2003 to offset increases in fuel costs due to the war in Iraq. Mr. Cameron noted that there is no formula for the rate stabilization fund. The rate stabilization fund is set up to be used as reserve against unknowns, including decommissioning of nuclear power plants, fuel costs fluctuations, and storms. There are about $4.2 million in outstanding bonds that will be paid off in 2007 or 2008. These were for the Ash Street building and for the North Reading substation. Catherine Martin asked if we can compare our rate stabilization with peers in the industry, and Mr. Cameron reiterated that there is no particular standard. Jim Francis indicated that he has a broad question about whether this is the right number - whether it is too high or too low. He would like to see someone value the risk. Phil Pacino noted that the Light Board has been looking into it for a number of years and has indicated that $10 million seems to be the right amount at this time. The Light Department has a six year plan. Mr. Cameron noted that he has done up a memo to the Light Board on this matter and will make a copy available to the Finance Committee. Paul Bolger asked what the history has been. Mr. Cameron noted that he has prepared a history for the RM LB and will send a copy along to the Finance Committee. Bob LeLacheur asked whether that history also talks about the causes of fluctuation, and Mr. Cameron noted that it does. Mr. Cameron noted that the base rate for electricity has not changed since 1993. Phil Pacino noted that it is the intent of the Light Board to keep it as level as possible. Bob LeLacheur asked whether long-term and short-term power contracts have the ability to protect fluctuations in rates. Mr. Cameron noted that 10 megawatts of the 170 megawatts that they use is in nuclear which is relatively fixed and stable. Another 70 megawatts is in longer term contracts through approximately 2007. He also noted that big customers like low rates but even more, they like stable rates. Bob LeLacheur asked if there are problems with power suppliers, and Mr. Cameron noted that their contracts are very tight and they've had no problems. Jim Francis asked why the Light Department has gotten rid of the seasonal rates. Mr. Cameron noted that the nature of electric use and utilities have changed over the past several years and there is no longer any justification for seasonal rates. Mr. Cameron went over the six year plan with the Finance Committee. There was discussion about the earnings distribution to the Town. This has to come out of the 8%. The remainder of the 8%, plus depreciation, is used for capital improvements for the Light Department. The capital improvement numbers are projected to be around $5 million per year. There is a committee set up to look at the earnings distribution. They have not met in awhile but still exist. Finance Committee Meeting - June 25, 2003 - Page 4 It includes two members of the Board of Selectmen, two members of the Light Board and a member of the CAB. Selectman Camille Anthony expressed surprise that there was such a committee, and Mr. Cameron reminded her that a notice is sent out annually. Catherine Martin asked about the rent expenses, and Mr. Cameron noted the Light Department rents warehouse space and has increased the amount of space that it rents. The Finance Committee thanked the Light Department members for the presentation. Karen Epstein had to leave the meeting at approximately 9:10 p.m., and thanked the Finance Committee for all of their hard work and indicated that she had enjoyed working with them for the last three years she was on the Finance Committee: Personal circumstances prevent here from seeking an additional term. From the School Department, Chairman Pete Dahl, Rob Spadafaro and Carl McFadden were present. Pete Dahl presented Pat Schettini, the new Superintendent of Schools, who will be starting on July 21, 2003. Status of FEMA Reimbursement - The Town Manager reviewed the status of a number of items. FEMA reimbursement in the amount of $97,241.84 has been received. He commended the Fire Chief on the hard work in. putting this together along with other staff who prepared the materials. Status of State Budget - The Town Manager reviewed the State budget and indicated that it looks like State aid to the Town of Reading will be approximately $600,000 greater than anticipated when the Town budget was put together. The Governor has until Monday, June 30th, to veto any sections of the budget. Status of Billing for Override Amount - The Town Manager reviewed the billing for the override amount and commented that a flyer had gone out with the bills. The Town will need to decide whether or not, if the State budget is approved with more money than anticipated, it will tax to the maximum permitted under Prop 21/2, whether it will spend the additional monies or whether it will set up a stabilization fund. This is a decision that will be made by the Board of Selectmen, hopefully, following a review at a Financial Forum in September. Status of SBA Reimbursement List - The Town Manager reviewed the SBA reimbursement list. This is an outside section of the budget. He pointed out a letter from Representative Brad Jones to Governor Mitt Romney expressing in the strongest terms the need not to veto that section of the budget. Special Act re: 30 Year Bonding for RMHS - The Town Manager also reviewed the status of the 30 year bonding bill. This is House Bill 3900, and has been engrossed by the House. It will go through the same process in the Senate and no opposition is expected. The Town Manager commended the hard work by the Finance Director, Town Accountant, Bond Counsel, and our financial advisor in getting this process put together. Finance Committee Meeting - June 25, 2003 - Page 5. Selectman Camille Anthony addressed the Finance Committee on a suggestion to have a small group consisting of a couple of members of the Finance Committee, School Committee and Board of Selectmen meet during the Sumner to look at and brainstorm on options to address our future financial situation. This could include regional options, .long range financial forecast, labor contracts, etc. Bob LeLacheur expressed concern about doing this kind of work as a subcommittee. He prefers to see it done as the entire body of the Finance Committee. Following additional discussion, on motion by LeLacheur seconded by Martin, the Finance Committee voted to participate in a long-term strategic financial planning process with representatives from the Board of Selectmen, School Committee, Finance Committee and Library Board, and staff with representation from the Boards, Committees and Commissions being less than a quorum of each of those bodies. The motion was approved by a vote of 7-0-0. Pete Dahl from the School Committee indicated that they are not meeting until late July, but they would be very interested in participating in this process. Approval of Reserve Fund Transfers - The Town Manager reviewed the proposed reserve fund transfers totaling $42,500. On motion by Martin seconded Torman, the Finance Committee voted to approve the 1 reserve fund transfers as follows: 01-206 - Town Building Maintenance, $12,000 01-121- Fire Salaries, $10,300 01-303 - DPW Vehicle Maintenance & Highway, $12,000 01-206 - Town Building Maintenance - Fire Station Air Conditioning, $4,000 01-541- Elder Human Services Salaries - $4,200 The motion was approved by a vote of 7-0-0. On motion by Martin seconded by Torman, the Finance Committee voted to approve the first payment to Melanson Heath for the audit in the amount of $5,000 by a vote of 7-0-0. The Town Manager reviewed the contents of the packets with regard to specific items of correspondence. The Finance Committee decided to meet on July 30th and August 27th On motion by McDonald seconded by Martin, the Finance Committee voted to adjourn their meeting of June 25, 2003 at 10:20 p.m. on a vote of 7-0-0. Respectfully submitted, ecr tary