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February 9, 2011 Minutes Town of Lexington Appropriation Committee February 9, 2011 Place and time: Town Hall, Room 207,730 p.m. Members Present. Richard Neumeier; Joe Pato, Vice Chair; Susan McLeish, Glenn Parker, Chair; John Bartenstein, Vice Chair and Secretary; Alan Levine; Eric Michelson; Robert Cohen; Rob Addelson (non- voting, ex officio) The meeting was called to order at 7:39 p.m. 1. Announcements. Mr. Neumeier brought up the issue of snow removal and referred to a piece in the Globe describing an experiment by the City of Quincy to pay contractors by the inch rather than by the hour, which has resulted in a 10% savings. The Committee discussed briefly whether a similar strategy might be pursued in Lexington, the impact on contractors and the possibility of insurance. Rob Addelson advised that Lexington, like most other communities, uses a combination of town personnel /equipment and outside contractors to help manage costs. 2. Minutes. The Committee discussed how much detail to include in the minutes as well as corrections to be reflected in final approved versions. Minutes of the January 13, 2011 and the February 3, 2011 meetings were approved, subject to minor edits, by a vote of 8 -0 -0. 3. Reserve Fund Transfer. Mr. Addelson presented a request for a transfer of $50,000 from the Reserve Fund to supplement the FY2011 budget for unemployment insurance. He explained that monthly payments from July 2010 through December 2010 have been unexpectedly high, ranging from $24,000 to $40,000, largely due to the departure of several teachers who have not achieved required certifications. A total of $189,302 was paid out during the first six months of 2010, leaving a remaining balance for that line item of only $8,101. It is hoped that the $50,000 requested will be sufficient to carry us through the next two months. Claims activity will be monitored and additional funds will be requested under Article 24 (Amend FY2011 Operating and Enterprise Budgets) at the annual Town Meeting if necessary. Funds transferred from the Reserve Fund are not expected to be replaced. Mr. Bartenstein moved to approve this transfer. Mr. Neumeier seconded the motion. Approved 8 -0 -0. 4. OPEB Liability Funding Policy: Mr. Levine distributed notes entitled "On the Funding of Future Liabilities" and reviewed them with the Committee. His presentation raised the question whether the Town Manager's proposed FY2012 budget may be allocating more resources than is necessary or desirable toward the elimination of unfunded liabilities in the pension fund and for Other Post - Employment Benefits (OPEB), and whether there might be more compelling uses of at least some portion of those funds. In particular, he asked the Committee to consider whether certain long -term capital needs, in particular the preservation and maintenance of buildings and roads, might also be viewed as unfunded or inadequately funded liabilities of the Town, and whether the expenditure of additional resources to address such liabilities might be a more cost - effective use of funds given that capital maintenance work foregone today may be considerably more costly in the future. 1