2004-10-21-AC-min - Laserfiche WebLink

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October 21, 2004 Minutes Meeting of the Appropriation Committee October 21, 2004, 7:30 PM Town Office Building, Room 111 The following list of background material and agenda was distributed prior to and at the meeting. BACKGROUND MATERIAL Strawman letter (preliminary list of possible points) re hiring of town manager Draft minutes of Oct. 7, 2004 meeting PH's second version of charge etc. for a BoS committee on health insurance. MINUTES Members present: John Bartenstein, Deborah Brown, Rod Cole, Paul Hamburger, David Kanter, Alan Levine, Eric Michelson, Ron Pawliczek Also present: Sheila English, David Eisenthal Sheila English introduced David Eisenthal who was invited by the Committee to explain how Moody's determines a community's bond rating. Currently, Lexington has a triple A rating but in the most recent review by Moody's in early 2004 Lexington was given this rating with a negative outlook. At the time of this rating Moody's was concerned about the low reserve balances (free cash and fund balances unreserved and undesignated) and the fact that Lexington spent $3.4 million more than recurring revenue sources could support to balance the FY2003 budget. In addition, the June 2003 override failed and the Town took a $1,400,000 pension holiday (deferred payment to the Pension Trust Fund until the future) approved at a special Town Meeting in the Fall of 2003. DE stated that in the upcoming review, Moody's would see as positive the successful passage of an override in June 2004 of over four million dollars for the FY 2005 budget and the appropriation of modest sums to the Stabilization Fund by Town Meeting. It was stated that the Town would be meeting with Moody's in the next few weeks. There was general discussion about what the Town could do to maintain the Aaa rating. SE and DE recommended that the Town 1) reexamine reserve policies, 2) estimate future revenues conservatively, and 3) tighten control of expenditures. The suggestion was made that the total of free cash and Stabilization Fund balance at the end of Town meeting be kept at or above 3% of the budget. That this total was below 2.5% in FY2003 contributed to Moody's putting a negative outlook on the Town's rating.