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HomeMy WebLinkAbout2011-09-08-HATS-min HATS Meeting September 8, 2011 Final Meeting Minutes issued for the Record Members Present Elise Woodward, Chair, Michael Rosenberg, Bedford Selectmen, Doris Cole, Concord Planning Board; Dorothy Steele, Massport; Sharon Williams, Massport Not in attendance: Sara Mattes, Lincoln Selectmen Others present Rob Addelson, Lexington Finance Director, Lynn Salmger, Concord Finance Committee, Michelle Matteo, Bedford Capital Expenditure Committee Chair, Chris Whelan, Concord Town Manager; Tim Higgins, Lincoln Town Administrator; John Kearney, Lincoln Finance Committee; Rick Reed, Bedford Town Manager Ms Woodward opened the meeting at 7.30 p m and welcomed everyone Challenges and Opportunities for Budgeting in FY13: Lexington Finance Director(Mr. Rob Addelson): Lexington begins the budget process collaboratively and early in the fall, with a summit conference series to flesh out overarching policy issues Key financial town institutions include the School Committee, Capital Expenditures Committee, Appropriation Committee, and Community Preservation Committee, who focus on process and have a significant impact on capital budgeting The first scheduled summit is held on 10/5 to walk through a series of financial indicators updated on an annual basis giving a full picture of revenues and expenditures and a sense of the fiscal health of the community. Summits in recent years have included health insurance because of its claim on limited dollars. They also give everyone a chance to review current status, provide a 3-year revenue and expenditure projection and allow the town to see how current spending can impact the longer-term future There are 3 significant elementary school projects to include renovations and reconstruction, some covered by grant funding. The summits help determine when to go to town meeting for funding and to voters as well. There are 3-5 summits per budget year on an as-needed basis. There is also a summit meeting typically in early January to review projected revenue for the upcoming fiscal year and apply a model the town has used to allocate revenue between municipal and school operations. As Lexington approaches FY13, the most significant challenge will be municipal health insurance, in particular as it pertains to the law that governs municipal health insurance and the decision about joining the GIC (which will involve an agreement between management and unions). Lexington has avoided operating overrides for the last 3-4 years, is living within its means, and has put money in the stabilization fund for 6-7 years due to a drawdown of the Reserve Fund in Lexington. Lexington currently has about$8.5m in reserves. Reserves are maintained to provide services during a difficult time such as a recession Lexington plans to operate within its budget for FY13 A large liability is post retirement health benefits The most recent OPEB analysis indicated the 30-year liability is a little over $400m. Lexington pays on a pay-as-you-go basis at about$6m for retiree health insurance. The annual required contribution is $22m a year. A trust has been established and annual contributions over the last 4 fiscal years have been made in the amount of about $450k per year, which is comparable to the level of government reimbursement(Medicare Part D) They had hoped to contribute more but Lexington has moved from full funding to about 88% The operating budget for the General Fund is about $148m and the balance of the Stabilization Fund is about $8 5m HATS September 8,2011 Concord Finance Committee (Lynn Salinger): Concord works collaboratively with Carlisle and is working to define the FY 13 budget. They are currently reviewing a large high school reconstruction project(about$92m) for which design resources have been committed and planning has been started The General Fund budget is about $80m and the schools are about 2/3 of that budget Budget guidelines are set in November on an annual basis, meeting twice with town and school representatives for requirements. The first coordination meeting is held in September with a guidelines kick-off in October. A challenge for Concord is OPEB, with $4m a year as an annual town required contribution. Concord makes good faith efforts but does not annually contribute that amount However, it is entirely covered for their Enterpnse Fund operations A healthy free cash reserve is kept to draw on as needed to make up for shortfalls but there are explicit small stabilization funds for projects Concord's Finance Committee regularly evaluates the optimal level for its free cash reserve, weighing the need for strong reserves in order to qualify for borrowing at lower interest rates against pressure to draw down free cash to allocate to debt stabilization and other needs. Concord is also always looking for ways to monitor the pulse of the community regarding taxpayers'willingness and ability to absorb property tax increases Chair of Bedford Capital Expenditure Committee (Michelle Mateo). The Finance Committee in Bedford is meeting this evening and Michelle was asked to represent Bedford. She explained the Bedford Town Charter provides for a Capital Expenditure Committee (CEC) that has created a central capital program(the Capital Article has been reviewed and does not present a challenge at Town Meeting) Municipal facilities and the school have been a recent focus, especially those worked on 12-13 years ago $70k has been approved for small municipal and school facility projects Bedford needs a longer-term focus on completing and prioritizing projects Infrastructure and physical plant will be reviewed to obtain data on buildings, mechanical systems, life cycles, and sewer pump stations, to determine a timeline and funding level for these projects. Bedford residents can then be polled to see what the consensus is for the projects proposed. Bedford Town Manager (Rick Reed) The Capital budget in FY12 was about$1 5m and included $lm of tax levy funded appropriations and a $500k bond for a water and sewer project Bedford is trying to determine if an annual appropriation of$1.5m is enough to meet long-term infrastructure needs. Bedford is currently in the RFP stage for secure capital asset management software and although this will not be ready for this year's capital budgeting process it will assist in making intelligent choices with an adequate amount of capital funding (for example,using a base level appropriation requirement instead of bonding or using a pay as you go tax levy situation as well as paying interest costs over the long run) $71 2m was appropriated for the Operating Budget this past year. A big area of focus is health insurance as state legislation passed recently to allow towns to evaluate health care matters and negotiate for additional cost savings. There will be a change in Bedford's refuse collection—moving from unlimited collection to a standard carton with a charge for extra trash. This is being changed to enhance cost savings for the town and encourage more town-wide recycling OPEB is also a priority Bedford has a trust fund created 12 years ago with $2 2m set aside already $150k was appropriated for the upcoming year but Bedford is examining different scenarios to assist in determining the amount to contribute each year. The current unfunded liability is about $71m. Bedford is developing a Fiscal Planning and Coordinating Committee to consist of 2 Selectmen, 2 School Committee members, 2 Finance Committee members, and someone from the Capital Expenditures Committee, in order to discuss needs of the overall town organization to include ways to fund OPEB A focus will be roads and maintenance, no current town funded building projects, and a vehicle equipment program to replace equipment as needed(replacement costs are about $300-700k per year and will be managed through the DPW department). The Stabilization Fund is roughly $1.5m but was $3m just before economic downturn. There is 2 HATS September 8,2011 uncertainty as to whether this will need to be tapped in FY13. School Committee is working toward keeping salaries stable and as collective bargaining agreements are going well there is no need for an override Mr Reed discussed the current tax rate as Bedford is in a classification system, with businesses being taxed at a higher rate,which can create a problem if business is slow They are also looking at projects that will provide a return on investment Concord Town Manager (Chris Whelan): Mr. Whelan summarized some funds for Concord. These include sewer, water and electric enterprises which depreciate their expenses with funds set aside to reinvest The schools are a general fund expense so if an investment was made savings would accrue to the school budget to use resources more effectively Enterprises in Concord do contribute to a portion of salaries, are fully accounted for and provide support for the General Fund Capital planning has an annual 5% set aside in the operating budget for debt support. This amounts to about $2.5m/year for school buildings, land acquisition, and major capital investments. In addition, 2.5- 3% is set aside for capital equipment replacement to include police cruisers and computers. There have been debt exclusions for major things in particular schools and operating overrides There were 6 successful years of operating overrides for both the town and school operations and now there have been 4 years without overrides on the operating side There is a goal for no overrides this year There were a few difficult years. Last year the town operating budget increased about 4.5%but in the 2 preceding years it was less than 1% for the two-year period. There were salary increases granted during that period and as a result some positions were lost through attrition. With the 4.5% budget increase some things were restored and Concord is looking at a 3 5% increase in FY13, which will allow them to return to the budget of a few years ago Concord is in good shape in terms of infrastructure and facilities. They had hoped to fully fund OPEB but that has been delayed and is almost 90% funded. The legislation change allowing towns to make some changes in health insurance will provide some savings that may be applied to OPEB. Lincoln Town Administrator (Tim Higgins): Mr. Higgins has been in Lincoln for 17 years and he believes there is a good consensus process and superb communication between the Finance Committee, Selectmen and other town leadership teams Lincoln's has practiced transparency by bringing issues to the table early on, which has created an environment of trust and a high voter understanding and approval rating for the expenses needed in the town(including debt exclusions, and overrides which have been avoided on the operating side for 4 years now). Lincoln has also maintained appropriate service levels despite economic trends They have healthy reserves as a town with no operating budget pressures Capital is a focus as Lincoln has been underinvested in the past 5-10 years for large projects There is a lot of communication with the town regarding the tax implications of investing in large projects or the consequences of a lack of investment. 75-80% of the town budget is for wages and they are currently helping town residents understand how the process works for town government jobs, which has been a challenge as most residents are in the private sector which has a different process Lincoln decided not to join the GIC but went with MIA and achieved savings there In the past, there was a focus on contribution rate as a cost control measure but they are shifting to a focus on plan design with an approach to negotiations In 2007, the first OPEB study showed the 30 year liability to be about$68m. Lincoln worked to cut this liability by about a 1/3. Lincoln created a trust fund and made modest investments so the fund is now about $lm. An annual contribution amount, if made, would be about $3m. A challenge is to fund this without raising taxes (which would be raised about 15%to fully fund this) and managing this without cutting operations and service levels There was a discussion of the model Wellesley is using, allowing the community to be aggressive in funding OPEB, which takes advantage of a drop in debt service and the tax impact as a result of that, shifting the tax money into a 10-year override targeted toward funding the OPEB liability. 3 HATS September 8,2011 Lincoln Finance Committee (John Kearney): Lincoln uses their fund available analysis process and sets their guideline in mid-October with four different budget agencies (town, schools, library and Lincoln-Sudbury) There are 2 budget workshops, one in December and one in January The Town has benefited from the new construction of the Groves (with no overrides) and has set tax revenues aside in the stabilization fund. Pensions and insurance are always evaluated and the budget passed at town meeting is typically higher than the assessment. Any excess from what is approved at town meeting is put into a stabilization fund(around $100-200k), which can help with upcoming school or town projects There is an excess of free cash and Lincoln is conservative in revenue numbers for local receipts, which is highly underestimated but is about 10% of the general fund Lincoln does not have a specific stabilization fund but takes a reserve against free cash of about 3% of the annual budget. Lincoln is contributing as much as they can afford to OPEB annually, with the hopes to increase it each year, and even with their small contribution of$150-250k are in the highest percentile of compliance. Lincoln is doing work with the Capital Planning Committee (not a bylaw committee) to get them more involved in the process, with a budget of around$450k Mr Higgins mentioned Lincoln implemented the State-of-the-Town meeting, which provides discussion early in the town budget process. This creates a feedback loop to shape Town meeting and a final budget The Committee and guests discussed surveying town residents regarding projects to obtain feedback regarding how the Town is doing. Ms Woodward asked everyone for observations or ideas regarding longer-term multi-year planning designed to level the tax rate in anticipation of extraordinary expenses For example, Concord's upcoming $92m school project will provide a tax increase. As Concord is mostly residential this could create a burden to the residents/taxpayers. Individual town input is summarized as follows: Lexington: There is a list of projects excluded from proposition 2 1/2 that can receive debt exclusions They look to set aside some amounts each year or replace debt exclusions, which distributes the burden over many years CPC funds have also worked to offset capital projects when they can. They look to maximize growth and keep debt exclusions level. They developed municipal building and school building envelope funds to assist with unanticipated expenditures that could arise and this helps finance deferred maintenance. Bedford A challenge is to generate more revenue or keep need levels down They have used savings on projects to pay off the cost of acquiring the project For example, the streetlight replacement project provided savings on electricity costs that paid for the project. Lincoln: Operating budgets have been stable but capital projects can raise taxes. In Lincoln, residents have been appreciative that the town is mindful through the decision making process Updates On 9/26 there will be a public dedication for the new trails network the Port Authority agreed would be part of the Jordan Conservation Land. Minutes Ms. Mauger moved to approve the May 26, 2011, minutes. Mr. Rosenberg seconded the motion. Vote: Approved 3-0-0. 4 HATS September 8,2011 Mr. Rosenberg moved to approve the July 28, 2011, minutes. Ms. Mauger seconded the Motion. There was a discussion about the minutes Ms Steele had comments and edits and Ms Woodward will circulate them for review The Motion was retracted by Mr Rosenberg and Ms Mauger and will be taken up again in October Future meeting dates/topics: The next meetings are scheduled for October 27, 2011 and December 8, 2011 (a combined November/December meeting) Future topics may include History of HATS, Hanscom Area Traffic Study, Streamline Air Charter, AFB change of command, legislator visit, Cable TV and CC TV (Ms. Cole is in charge of researching how to have transparency with town government and how to publicize more.) The Committee discussed dispersal of topics between future meetings, invitations to be made and agendas to be created. Mr. Rosenberg will contact Senator Fargo and Mike Murphy. Ms Mauger will contact Senator Donnelly and Representatives Kaufman and Stanley Ms Woodward will contact Cory Atkins Hanscom invitation will be drafted for October The TV conversation can be set for January. Adjourn: Ms. Mauger moved to adjourn. Mr. Rosenberg seconded the motion. Approved 3-0-0. The meeting was adjourned at 9:12 pm. 5