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HomeMy WebLinkAboutFinance Comm 04/05/2018Finance Committee Meeting Minutes April S. 2018 77''Cen RECEIVED Present: Walter Wilk, Chairman; Scott Feely, Vice -Chairman; Brian Eagle, Clerk; Kath(eAQ"krf I�IIe (QFDE1Gfis; and Michael O'Brien 2819 FEB -b P S 08 Also Present: Kevin Dumas, Town Manager; John Stanbrook, Finance Director and Town A"gkw"I t.esAzinheira, Director of Public Works; and Mary Dalton, Minutes Clerk. MASSACHUSETTS Not Present: Yogen Chemburkar 1. Call the Finance Committee meeting to order and review the agenda Chairman Wilk called the meeting to order at 7:07 pm. 2. Reserve fund transfer request Mr. Stanbrook explained the funds transfer request of $6200 from the Parking Enterprise Reserve Fund to the Parking Enterprise Fund Employee Benefits Pension Assessment. He stated that the town receives one pension amount from the county annually and there was a mistake when calculating this year's amount so the Employee Benefits Pension Assessment Fund will be underfunded until the Town Meeting in May. He further stated that there may be an additional amount of $2000-$2500 request in the future. This amount is requested from the Parking Enterprise reserve fund and not the General Fund and the Finance Committee has the ability to determine what is "extraordinary and unforeseen" items. Mr. Stanbrook also stated that he is working with the actuary and they have come up with a new formula to use so there this will not be a problem going forward. Mr. Eagle asked if this issue was software related and Mr. Stanbrook answered that it was not and that at the end of the year he will have a year's worth of data to use going forward. Motion: To transfer $6200 from the Parking Enterprise Reserve Fund to the Parking Enterprise Fund Employee Benefits Pension Assessment (Feely/Eagle) Passes: 5-0 3. Budget discussion with Kevin Dumas (Town Manager) and John Stanbrook (Finance Director) Mr. Dumas began by reviewing the Budget Summary handout and stated that there was a balanced budget as of tonight in the amount of $96,560,686.00 and that the initial $2.34 million budget shortfall has been eliminated. Mr. Dumas also pointed out some of the budget highlights and stated that the town wanted to get away from reliance on "free cash" to subsidize the general budget therefore there is no "free cash" used in fiscal year 2019 and no staff reductions. He stated that rubbish and recycling costs are about $1.7 million, the original override was $912,000 so the town is subsidizing approximately $850,000 from the general fund for a fee for service. While there was no fee included in the FY 19 budget, Mr. Dumas would like to continue discussions about capturing the subsidized amount with the Finance Committee. Mr. Dumas stated reductions of $200,000 in revenue from local receipts, mainly building inspections, included in 2018 budget were too high for FY2019, so that estimate was not included in 2019 budget. Mr. Dumas addressed a question that Mr. Wilk had asked previously concerning if the Town was maximized on hotel/motel and meals taxes and stated that they had made a $10,000 adjustment to bring this up to 2017 level and also that interest revenue was adjusted upward by $25,000 to meet 2017 level. Mr. Dumas stated that they worked to ensure that all staff were aligned to their specific union contract or exempt classification and that this was completed for all town departments. He continued that the fiscal year 2019 budget includes the introduction of central fleet maintenance division of DPW and all capital items have been moved out of this budget and into free cash in the capital plan. Mr. Dumas noted that moving from SMHG to MITA for health insurance would minimize cost increases from 10-12%down to 5% and also work done on dental insurance moving from Delta Dental with double-digit increase to one with a level -funded rate for two years and an 8% increase the third year while still providing same dental plan as required by union contracts. He continued stating that the planned retirements in public safety will be coming from the compensated absentee trust and it is important to note that the school department reduced their budget by $265,000. Mr. Dumas stated that one area of significant change was moving to a self-insured workers compensation fund that will save $100,000 in this budget. Chairman Wilk asked about actuarial for this and requested it be emailed to him for review by the Committee. Mr. Dumas stated that over the past four years of information that he has access to our maximum liability was just over $200,000 including cost of the salary and claims Finance Committee Meeting Minutes April 5, 2018 Page 1 being paid out versus a $470,000 premium. Mr. Eagle asked why he only went back four years and Mr. Dumas stated that this was the information that he could easily download. Mr. Dumas continued stating that in 2015 the total exposure was $141,000; 2016 was $218,000; 2017 was $205,000 and at this point in 2018 was only $3150. Chairman Wilk asked what the deductible was and Mr. Dumas stated they will have an excess worker's compensation policy for $250,000 per claim. Chairman Wilk asked if there was an aggregate stop and Mr. Dumas responded it was $4 million. Mr. Dumas stated that there is $240,000 in reserve for claims in addition to the $100,000 in savings and Chairman Wilk wanted to ensure that money was in reserve for any claims. Mr. Dumas recommended that any excess be placed in the reserve fund to cover any catastrophic claim that might occur and wanted to be "ultra conservative" for now. Mr. Dumas continued by stating that additions to the town -wide insurance included cyber liability insurance that covers entire town. Chairman Wilk asked the cost of this and Mr. Dumas stated around $8,000 and the town does not currently have that coverage. Mr. Eagle asked how broad this coverage was and Mr. Dumas stated it covered all town and school departments. Chairman Wilk asked what was covered and how much and Mr. Dumas stated it was comprehensive and would forward the information to the Committee. Mr. DeSantis inquired about the rating of the insurance company and Mr. Dumas said he would check. Chairman Wilk stated he thought this was a good move to add this policy. Mr. Dumas continued to state that the self-insured worker's compensation fund was exclusive of police & fire 111F injured on duty claims. Chairman Wilk asked for further explanation and Mr. Dumas responded that it is a state law that these claims are separate and that the Town has a policy with VFIS Gowrie Group with coverage of $100,000 per claim per individual with a medical deductible of $20,000 with a premium of $42,000 in fiscal year 2018. Mr. Dumas stated that there was an addendum/endorsement to the policy to increase the coverage to $500,000 for an increase to the premium of $9,000. Chairman Wilk inquired if this was both worker's compensation and disability together or was itjust worker's compensation and Mr. Dumas answered it was strictly medical. He stated that unlike worker's compensation, these employees are paid 100% of their salary tax free from either the police department or fire department with an unlimited amount of time until they are able to come back to work in the regular capacity or if special accommodations have to be made forthem to be able to return to work and if they cannot return, it will eventually turn into long-term disability and disability retirement and at that point the position can be filled. Mr. Feely stated it was important that people understand this because the Town currently has people out that are being paid full time and this affects staffing levels with police and fire and that it is unlike the private sector. Mr. Dumas explained that his office works closely witli the insurance company to ensure that these 111F employees are being monitored and reviewed and some cases are complicated with PTSD, back injuries, and it takes a very long time to get these employees back to work. He stated there are two current claims in the police department and one in fire department. Mr. Dumas also confirmed that the 111F policy was calendar year, not fiscal year so it was changed in January 2018. Mr. Dumas stated that one of the challenges he has faced was that the Town's entire reserve fund would have been exhausted if it were in a different time of year in regard to the budget. He continued by suggesting a fall Town Meeting to include more comprehensive zoning packages as well as being able to start some capital projects after the free cash has been certified. Chairman Wilk gave the history of fall Town Meeting and the potential for lack of discipline with budgets and without "hot button" issue it is hard to get a quorum in spring, but even more so in the fall. Mr. Eagle believes it is easier to work toward some purpose in the spring for the Town to get things done and there is nothing preventing a fall meeting in case of an emergency and he is against the concept of fall meeting. Chairman Wilk stated that the financial articles at Town Meeting are usually handled quickly, but the meeting can get bogged down with citizen's petitions and zoning articles. Ms. Aguiar asked if there was a way structure so it would be less burdensome on Town staff and Mr. Dumas suggested that CIP be done in the fall aligned with projected free cash. Chairman Wilk suggested one way would be to have all CIP in the fall along with zoning articles and have finance articles and citizen's petitions in the spring, but was concerned about what would draw people to the meeting in the fall. He said he is concerned about not being able to have a meeting, but still having business that needed to be handled. Mr. Eagle asked what the cost was to run town meeting. Mr. Feely stated that a lot of time was being spent on the meeting and asked why it wouldn't work rather than trying to make it work and suggested communication needed to be improved. He further asked what could be done to increase participation. Mr. Eagle responded that he had not heard a good reason yet to have a regularly scheduled fall town meeting. Mr. Feely responded that in the fall the town actually knows what free cash is available. Chairman Wilk says that budget has to be voted on by June 30th. Mr. Stanbrook stated that final numbers from State are not received until late summer. Mr. Feely stated that some things would be better to handle in the fall because there was more accurate information available. Chairman Wilk stated that the Town has not run a deficit Finance Committee Meeting Minutes April 5, 2018 Page 2 in the last seven years and the meeting was held in May to get as close to the correct information from the State as possible and this discussion could be continued at another meeting. Chairman Wilk asked about stabilization being pushed to a fall town meeting and Mr. Dumas responded that it was back in for May due to adjustment to CIP and that the new financial software was being pushed to fall town meeting for further due diligence. He stated that it is estimated to cost between $500,000-$600,000 and he would get information needed in order to present it to the CIP Committee. . Chairman Wilk asked about the OPEP liability and Mr. Stanbrook confirmed it was the same at $400,000 as previously and that the fifth year step-up in 2020 might be higher. Mr. Dumas stated he and Mr. Stanbrook worked closely with town departments to understand their budget requests and line item justifications, meeting with each department head and division leaders. Mr. Dumas stated that while the town was continuing to grow, staffing levels had not increased and the highway division for example is below staffing levels and struggle with the general workload and sewer lines are not being maintained. He continued that the fiscal year 2019 budget proposes the addition of two laborers to the crew to maintain sewer lines and 90% of cost of these employees would be covered by the sewer fund and ten percent paid for by general fund with only a net increase of $10,000 to the general fund. This allocation could be adjusted based on the town's needs. Mr. Eagle asked about the fluctuation between the funds and Mr. Dumas stated it would never be a 0% contribution from sewer, as the sewers would always need maintenance. Mr. Dumas continued by saying the Town does not currently have a "FOG" (fats, oils, and greases) program that helps with long term liability of what is in the sewer mains. Ms. Aguiar asks about the possibility of public education and if that might help with prolonging the life of the sewer lines and Mr. Dumas answered affirmatively. Mr. DeSantis asks if there were any towns that did not allow for flushing grease down sewer lines and Mr. Dumas responded no. Chairman Wilk stated that restaurants are regulated. Mr. Dumas stated that as part of the future FOG programs there would be quarterly unannounced inspections and if there is a "super contributor" they could be assessed a surcharge. Chairman Wilk stated that staffing levels at DPW are not even back to years ago although population has increased. Mr. Feely stated that as we are pursuing more development we will be adding to the problem possibility and Mr. DeSantis stated hopefully that as we grow hopefully we will have the revenue to address it. Mr. Eagle asked if each department would have three to five year plan like police and fire and Mr. Dumas stated yes but it has not been implemented yet. Chairman Wilk confirmed that these plans are fluid, but thinking strategically and tactically for future planning. Mr. Dumas stated that fleet maintenance has not been done to the level it should be for the large-scale vehicles and fire apparatus so proposed is a central fleet division in DPW in fiscal year 2019. Chairman Wilk stated that the town paid approximately $70,000 in an emergency payment for repairs above and beyond what was budgeted because of inspection failure. Mr. Dumas stated there was an additional position in the budget to provide in-house service and this person would be certified to do many of the repairs that are currently being out -sourced. Mr. Dumas further stated that the Fire Department's five year plan will be implemented with one position added in January 2019. Mr. Dumas continued stating that due to recent school security issues, the school department has worked to include an additional school resource officer paid for out of the school department budget. Mr. Dumas stated that the current budget has an HR Director position and he proposes hiring an HR Generalist at a lesser rate and believes that it is liability for the Town for personnel issues especially for self-insured worker's compensation, the new pregnancy policy and other HR duties. Mr. Dumas continued by stating that there is a need for a new position within DPW for an Assistant Town Engineer position with seventy percent funding coming from water enterprise fund and thirty percent from sewer enterprise fund with funding allocation shifting. Chairman Wilk opened the floor for questions and Mr. DeSantis asked if the State was doing anything to fund the safety issues at the schools and Mr. Dumas answered no. Chairman Wilk stated that the state was already pulling back funds that they had committed to. Mr. Eagle asked about positions paid by grant money and Mr. Dumas stated that there is an ongoing grant specifically for the Council on Aging and confirmed that they were able to shift the four part time positions to the grant. Chairman Wilk asked how much was being allocated to CIP road work this year and Mr. Dumas responded $3.4 million of which $2 million is for the general road work. Chairman Wilk asked that since interest rates where probably going to go up had there been any consideration to take more bond this year. Mr. Feely clarified that we were taking $1.4 million forthe underpass with the state providing $1.6 with a total of $5 million. Mr. Stanbrook stated that the $2 million was part of a five year plan for the roads and fiscal year 2019 is the fifth year. Finance Committee Meeting Minutes April 5, 2018 Page 3 Mr. Azinheira states that the estimate for utilities for the new DPW building is $55,000 based on square footage. He also provided information from a technical memo that there are also benefits to storing vehicles inside buildings v. outside with significant savings. Mr. Azinheira said parking enterprise is going to propose $1.00 increase for resident parking to BOS and passing on convenience fees to both residents and non-residents. Chairman Wilk asked Mr. Stanbrook about the license fees for Mr. Clemmey and Mr. Turner private parking lots and Mr. Stanbrook stated those fees went to the general fund, not parking enterprise and that it was not a substantial amount of money. Chairman Wilk asked why that money would not go to the parking enterprise fund and Mr. Stanbrook clarified that the police detail, parking fees, fines and investment income go into the parking enterprise fund. Chairman Wilk requested information about the amount Mr. Clemmey and Mr. Turner are charged for their permit and number of spaces in the lots and would like to review this information at a future meeting to ensure their fees are equitable with what the residents are asked to pay. Mr. Eagle stated that if parking fees are increased people parking there will not see the value. Ms. Aguiar asked if it were easier to issue tickets now that there are more payment options. Mr. Azinheira stated that fine revenue had decreased since the fine amount increased and Chairman Wilk stated that fines were used to produce revenue or modify behavior. Mr. Azinheira stated that these lots have been treated as temporary parking lots for years, but they can crack seal the lots. He also stated that they are looking at significant projects such as getting Route 106 redone and new traffic signals at Winthrop Street and further stated that a consultant has been hired to develop at ten percent concept plan for the rail crossing at North Main Street and Curry intersection and that MA DOT has also hired consultant because the rail yard would have to be reconfigured. Mr. Feely stated that what the residents see day-to-day is important and Chairman Wilk stated that crack sealing, cleaning up, etc. should be completed and Mr. Azinheira stated that new signage would also be necessary if the fees increase. Mr. Azinheira stated that a mailer will be coming out in the next few months reminding residents about procedures at Waste Management expense. Mr. Eagle asked if the extra day added at the Mansfield Green on Tuesday if anyone had looked to see if it is being utilized or not. Mr. Azinheira responded that the additional day has been received positively. Chairman Wilk requested usage numbers for the Mansfield Green. Chairman Wilk asked about motor vehicle excise tax and Mr. Stanbrook responded that it is down approximately $70,000 based on preliminary March receipts and Town Manager wanted to take $40,000 out of budget to reTlect this. Chairman Wilk confirmed that the building permits totaling $570,000 from 2017 were taken out and that the land auctioned off was not included. Mr. Stanbrook stated that there is a second tier of property that could be ready to auction off in fiscal year 2019 and explained the fluidity of the foreclosure process and the income cannot be budgeted because of this fluidity. Mr. DeSantis asked what payment in lieu of taxes and Mr. Stanbrook responded that it was the payment made by the Electric Department and the Mansfield Housing Authority. Ms. Aguiar asked about increase in property taxes paid in 2018 and if it was in advance of tax reforms and Mr. Stanbrook responded that he had not looked at March numbers yet. Mr. Stanbrook referred to the town's Financial Policy handout where there were five financial policies were adopted - 1. "Free cash" should be three to five percent of Articles I and II and fiscal year 2017 free cash was only 2.85%, but should meet goal for fiscal year 2018; 2. Reserve fund policy of 1% of non -debt expenditures of general fund and sewer, parking, water, and airport; 3. Stabilization fund goal of 5% of Articles I and 11; 4. Capital stabilization goal not met (over 5% of stabilization); and 5. Reduce long-term debt goal has been met. Mr. Stanbrook states that this is the closest to meeting all of the goal and he further stated that part of the goals is that "free cash" should be used for only five items: snow and ice, unpaid bills, capital improvement, stabilization and reduce long-term debt costs. Mr. DeSantis asked if there were any areas where the Town should be borrowing now in anticipation of interest rates increasing. Chairman Wilt stated they had looked at restructuring debt a few years ago. Mr. Stanbrook said that there is a robust borrowing schedule for fiscal year 2019. Mr. Feely said that we would be borrowing for capital projects in fiscal year 2019. Chairman Wilt asked if there were any questions for Mr. Stanbrook and there were none. Chairman Wilt asked what the biggest long-term risk factor was and Mr. Stanbrook replied revenue without additional growth opportunity and revenue is 1.76%. Chairman Wilk stated that the town starts next year "in the hole" an estimated $700,000-$900,000 and Mr. Stanbrook replied that the Article 1 budget shows growth at .81% and Article 2 the schools at 2.8%. Mr. Eagle requested copies of all the documents Mr. Stanbrook used during his presentation. Finance Committee Meeting Minutes April 5, 2018 Page 4 4. Next steps in budget evaluation and Town Meeting preparation Chairman Wilk stated Finance Committee will meet April 12, 2018 with the Board of Selectmen and School Department and Mr. Feely will present on CIP. The Finance Committee will also comment on some Articles in the Warrant and when all the numbers are solidified, the FinCom will go over the Warrant. He also stated that the Committee will look at the marijuana articles and any other articles that are financial related and there may be some people who present to Committee about financial articles. Chairman Wilk confirmed that the Committee only opines on articles with financial implications. Mr. Eagle stated that there may be some zoning request changes and paper bag ban article that may be brought to the Committee. Chairman Wilk stated that if there were any citizens who had fiscal articles should try to come before the Finance Committee at the April 12, 2018 meeting. 5. Committee Updates Mr. Feely stated that CIP has passed at $1.7 million plan and will give a more detailed presentation to the Finance Committee at April 26, 2018 meeting. Mr. DeSantis had no report from Audit Committee and Mr. Eagle stated there were no changes for School Committee. Chairman Wilk stated that DPW/Safety Complex foundations were in as stated by Mr. Azinheira and he added that the Downtown Committee has not met yet. He further stated that the Town Manager wanted to form a committee with two members from the Finance Committee and other committees and more information to come later. 6. Items not known within 48 hours None 7. Audience Q&A There were no questions from the audience. Committee Member Comments Mr. Feely stated he would like to have MMAS come present in June. Mr. DeSantis had no questions. Mr. Eagle stated he was looking forward to the parking information and Ms. Aguiar stated the Committee should also look at what peer towns charge their Finance Committee with. Mr. O'Brian had no comments. 8. Adjourn Motion: To adjourn the Finance Committee Meeting of April 5, 2018 at 9:OO13M. (DeSantis/Eagle) Passes 6:0 Finance Co tee erk Signature Minutes Clerk Signature Minutes Prepared by Mary Dalton Materials Reserve Fund Transfer Request — Parking Enterprise fund General Fund Budget documents Date Date Finance Committee Meeting Minutes April 5, 2018 Page 5