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HomeMy WebLinkAboutFINCOM03282013 Town of Mansfield Finance Committee Minutes of March 28, 2013 RECEIVED TOWN CLERKS OFFICE Present: Chairman Walter Wilk; Steve Schoonveld, Vice Chairman; Liz Christo,�rrler 'membes Michael O'Brien, Scott Feely; James Bazinet and Yogen Chemburkar. Others present incIKNisigfilnes, Town Manager, John Stanbrook, Town. Accountant, Brenda Hodges, SuperintendentliaS8*614)Ax t✓ Szella, Finance and Business Manager of Schools; Oliver Kozlowski, Budget Subcommittee Member; Kevin Moran, Budget Subcommittee Member Call to Order: Chairman Wilk called the meeting to order at 7:42 p.m. Walter Wilk thanks the Budget Subcommittee for attending. Walter gives a brief overview of the budget process. The budget process started back in October/November timeframe. The difference between past budgets and the new budget is that both the Town and the School budget are together in one controlled document. Finance Committee feels this is a more effective process rather than looking at three separate budgets. Starting back in October/November we starting meeting with the Schools and different departments as the budget started coming together. One item that the Finance Committee caught early on is a $1.5 million free cash plug,which means that the budget was not really balanced from last year without using the $1.5 million from free cash. This year the Finance Committee has decided that it would be catastrophic to the (own if we tried to pull the$1.5 million out in one shot. Finance Committee agreed to continue with a $1.5 .nillion plug in the budget this year and making it clear that next year we want to get the $1.5 million down to $1 million; year after that down to $500,000 and in three years wean off the plug. We are spending more money than we are putting into the budget every year. Finance Committee has also asked the Schools and the Town to pull out all capital improvements and put them into a CIP budget so they will be funded separately and we made a commitment with the Town Manager and the School to fund those projects with free cash. In the past several years, we have not spent as much on capital project as we should have and we are trying to get back into the process of spending money on road, roofs, buildings, etc. that need to be repaired. The Finance Committee, Town and Schools also talked about not level funding but level Full-Time Equivalents (FTE's). We asked the Schools and Town to do their budget based on the same number of FTE's they had from prior years. We asked them to take the additions they needed, pull them out and work as a group to prioritize those items into from first to last, and if we are able to fund these items with any additional revenue left over, we will fund. At this point we are still off balance by about $650,000 on the budget and we have taken three models based on growth (-2; flat; +2). We are still waiting for the determination of what the State is giving us and tax receipts. Then we will be able to see where the budget falls. John Stanbrook two weeks ago Bill Ross, Brenda Hodges, Ed Vozzella and John Stanbrook met. The last updated was a $3.9 —million deficit. To close the deficit they took out the school mandates and school improvement needs. Page I 1 Finance Committee Meeting March 28,2013 Walter Wilk asks if the school improvement needs additional teachers and mandates driven by the State. John Stanbrook says yes. John Stanbrook has adjusted the State Aid number from -2%to 0%for this year; 7. -will talk about 5 year plan later) $500,000 capital stabilization fund transferred from tax rate; and ,500,000 stabilization fund transferred from tax rate; trying to get deficit down. $400,000 OPED switch from tax rate to pay for with free cash. This is a yearly bill. This is for retiree's pension and it is an operational item that falls into the budget every year. Steve Schoonveld asks what is the annual number is. John Stanbrook says it is more like $1.6 million. Actuary is updating numbers for FY13 and should be available soon. Walter Wilk asks if the $1.6 is the liability for the current employees and does not include paying down any of the deficit. John Stanbrook says yes. Steve Schoonveld asks if it includes the interest costs as well. Steve says that usually the annual cost for any post employment plan is the earned year if credit which is called service cost plus the interest costs on the unrecognized transition obligation. The further we delay funding that, the more costly it will be for us in the long run. Walter Wilk asks Bill Ross if the$400,000 was carried in the budget before. Bill Ross says the current cost for people who are retired or are retiring is included in the departmental budgets. Then we are proposing the put $400,000 into the OPED trust over and above that amount which does not come near funding the unfunded to where future liability that we have, but at least we have some money put aside. Legislature is looking at ways to change the unfunded liability. Bill Ross feels it would be nice to have a way to move money in and out of that trust because he would propose putting all the cost retiree money into that trust and showing the actual amount. There is no way of getting money out of the trust at this point. You can only put it in All costs of retirees on Town and School side are carried as money. Steve Schoonveld says if we have no additional obligation to fund,you would be able to get at the money. We are not funding this year's earned service. Walter Wilk states that we agreed to be at a$1.5 million plug and now we are at a $1.9 million plug. Walter Wilk states that all agreed on a $1.5 million plug early on. Walter Wilk would like the $400,000 put back into the budget. If we do not come up with $2 million in free cash next year, it will be a huge override or layoffs or combination of both. Walter Wilk does not want to leave the Town in that position. John Stanbrook Potential Closing of FY14 Budget Deficit as of 3/15/13 - Fire Gear Breathing Apparatus had a savings and we can transfer money from that article to another CIP for $90,000. State Aid is $408,193. This is just an estimate to get the budget deficit down around ($287,765.00). Potential Free Cash Usage at FY14 Annual Town Budget - $4 million FY12 free cash certified by DOR; ($153,776) 9 year assessor cyclical inspection article; $1.5million free cash usage. from FY14 budget; ($380,000) snow and ice deficit funding; ($4000,000) OPED Trust Fund Transfer; $0 free cash available. By end of April we will know what the snow& ice deficit is. Scott Feely is not happy where we are at this point. However, at least we are recognizing where we fall short. We cannot lose sight of goal. Liz Christo does not like the idea of committing to spending so much free cash next year. Liz is not (omfortable with borrowing from the future. Page 12 Finance Committee Meeting March 28,2013 Steve Schoonveld states that this is the most free cash/deficit spending that we have ever done in the last 5 or 6 years. It is not a plan for the future. It looks similar to last year's deal. Ed Vozzella Level of service budget at $43.8 million revisited special education budget needs to be revised to add an additional $313,000 to cover special education expenses; utilities was reduced by $80,000; more retirements than expected and have a savings of $455,000; kindergarten revolver is adding two full-day classes which will be charging tuition and add income to about$150,000. Total FY14 projected surplus deficit is ($900,000) including priority list. Liz Christo comments that due to less enrollment 4th grade class sizes will reduce to 23 children with out adding teachers. Brenda Hodges has had very low out-of-district students (in Mansfield 27-29 students compared to 50 in other towns). The State is saying they want us to keep special education students in house. It costs the schools $35,000 to assist a child in district vs. $200,000 out of district. The increase is because more students need assistants and we can add teachers which can assist with more than one student. Steve Schoonveld says the entire school budget is $51.5 million. Scott Feely states that we would never be able to meet the needs of every special needs student. He suggests adding teachers and try to avoid out of district costs. Not only are we going to get lower class size but we can actually achieve a real savings not sending out of district. Brenda Hodges says if we can build programs, then we may be able to bring some students back to Mansfield schools. Brenda Hodges says the schools priority list is mostly based on special need students and/or higher risk students. $313,000 is committed to students going out of district. Steve asks how they are absorbing costs for FY13. Brenda Hodges uses a circuit breaker account that they keep around $500,000 and this accounts helps them not have to come back to the table and ask for more money. John Stanbrook says the priority list for Town and School is $585,000. 1-11 is in the budget as of now and 12-15 are not in the budget. Closed capital projects are going to fund other capital projects and the project needs to be an active project. Liz Christo asks if priorities for the Town have been pulled out of the document that shows general fund budget. Bill Ross says no. There is about $400,000 if you take items 1-11 that are in town budget and it is important to note that 2 of those are unanimous form both Town and School which is the need for a Human Resource Director. This person would be shared between Town and School. Town and School of this size need a Human Resource Director. Page I 3 Finance Committee Meeting March 28,2013 John Stanbrook presents the CIP DPW design facility still on CIP list. Finance Committee is concerned that spending $900,000 on a DPW facility study with out a formal build project behind it would not be financially wise. Bill Ross has the same concern. Dave Young, former MBC Committee member and engineer, has said there have been many problems with design/build. Lee Azinheira is going to a seminar soon on construction manager at risk style. Bill Ross says this is an item that we need to wait and look at alternative way to do it and also prepare the community for this. This will need to be debt exclusion and something we need to do as one project. Walter Wilk suggests putting together a multi-year plan for road and use a$5-$10 million bond. Bill Ross says there is a limit to the amount of road work we can do each year due to manpower available to do work. Bill Ross says the Town has substantial debt we are paying out of general budget now as well as the debt exclusion items. As that gets paid down, we have been replacing it with new debt and keeping it at a level amount. Walter Wilk want to do a recap to make sure everyone is on the same page. We are off by $287,765 and off by $313,000. OPED needs to be put back in the budget. This is a yearly expense and we still have not received the State Aid numbers. Steve Schoonveld feels we need to honor the fact that CIP needs to be used for capital projects and not for operating projects. -Brenda Hodges anticipates and additional $900,000 from Chapter 70. Hopefully by mid April she will have a setter handle on the amount of money allotted from State. Schools are having their budget hearing on April 23, 2013 with School Committee. FY12 Chapter 90 allotment was$742,000. Brenda Hodges suggests talking more about capital projects. She would prefer (for example)to only do the high school phone system and use the rest of the money for staff. Bill Ross met with Standard & Poor and they were very impressed with the progress of the financials. They were impressed with the quality of the people and the community. He expects to see an improvement with bond rating. Standard & Poor would like to have Mansfield implement town-wide policies. ititZa:24kaiiiIIW*(*tiftNtegiti 't°:= Steve makes presentation of information that citizen's need to be informed of at Town Meeting. These numbers come from John Stanbrook. FY14 actual deficit$(6.0M); cash basis FY 13 deficit $(2.2M) vs. FY 14 deficit $(1.3M); increase 69.2%; use of free cash; free cash certified FY 09 $602,216; FY 10 $1,915,814; FY 11 $2,205,282; FY 12 $4,053,228; margin of revenue 5.38%. We are plugging the hole of$1.9M. The hole is digging deeper every year. Finance committee said they want to hold onto the plug of$1.5M. Forecast- best estimate slide is presented. Forecast—aggressive is presented. ("nance Committee is trying to figure out what we can fund and how we can do it. Page 14 Finance Committee Meeting March 28,2013 Bill Ross said we got a lot of money from health insurance and that was one-time money revenue. This year we will be lucky if we make $2.2M. Bill Ross has always seen unappropriated funds used in the next wear's expenditures. Warrant Articles The warrant is agenda for Town Meeting. The agenda does not include numbers. Motions for the Town Meeting include numbers and those numbers could change up until the morning of Town Meeting. This is not what we want to happen but it can. Bill Ross says he has avoided putting numbers into the warrant because you lose flexibility. Motions are what we need to craft because once adopted, it is in stone. Motion to Adjourn at 10pm (FeelySchoonveld)Approved Roll call vote: Christo aye, O'Brien aye, Feely aye, Chemburkar aye; Bazinet aye; Schoonveld aye; Chairman Wilk aye. Y7(/64 (14/"/ Signat a of Clerk Date of pprov Page I 5 Finance Committee Meeting March 28,2013