Canton, Massachusetts · Saved source text
July 10, 2024, Finance Committee Meeting - Virtual Meeting. Minutes
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Canton Finance Committee Minutes Voted on: 9/25/24 801 Washington Street Vote: 3-0-2 Canton, MA 02021 Meeting Minutes July 10, 2024 Virtual Meeting Finance Committee Members Present: Dan Cole, Emilio Mauro, Maureen Menconi, Kristin Mirliani and Reuki Schutt. Finance Committee Members absent: Dave Clough and Cindy Thomas. Guests Present: Derek Folan, Superintendent, Canton Public Schools Ellen Jones, Recording Secretary Brian Lynch, Asst. Superintendent of Finance & Operations, Canton Public Schools Randy Scollins Ill, Finance Director Call Meeting to Order: Mr. Mauro called the Finance Committee Virtual meeting to order at 7:00 p.m. Review of the Agenda — Mr. Mauro reviewed the agenda which included reorganization of the Finance Committee and the consideration of FY 2024 budget deficits/Reserve Fund transfer requests. Reorganization of the Finance Committee Ms. Schutt recognized that she had not first reached out to Mr. Mauro to see if Mr. Mauro was willing to serve as the Finance Committee Chair. She also commented that he has been serving on the Committee in a leadership role. Ms. Schutt asked Mr. Mauro if he would be willing to accept the nomination to become the Finance Committee Chair. Mr. Mauro stated that he was willing to accept the nomination and thanked the Committee. A motion made by Ms. Schutt to elect Mr. Mauro as the Chair of the Finance Committee was seconded by Ms. Menconi. Roll Call Vote: Ms. Schutt Aye Ms. Mirliani Aye Mr. Cole Aye Mr. Mauro Aye Ms. Menconi Aye Vote: 5-0-0. Mr. Mauro was elected as the Chair of the Finance Committee. Mr. Mauro noted that he had spoken with Ms. Mirliani and that she was willing to serve as the next Finance Committee Vice Chair. A motion made by Ms. Schutt to elect Ms. Mirliani as the Vice Chair of the Finance Committee was seconded by Ms. Menconi. Roll Call Vote: Ms. Schutt Aye Mr. Mauro Aye Mr. Cole Aye Ms. Mirliani Aye Ms. Menconi Aye Vote: 5-0-0. Ms. Mirliani was elected as the Vice Chair of the Finance Committee. FINCOM 20240710 Minutes EM FINAL.docx Page 1 of 6 9/21/24
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FY 2024 — Budget Deficits —- Reserve Fund Transfer Requests $425,000 Reserve Fund Transfer Request — School Department - SPED costs & Associated Transportation Costs ‘ Mr. Folan thanked the Chair and the Finance Committee for their support as well as Brian Lynch and Randy Scollins who have worked closely together to balance the School Department budget. Mr. Folan explained that the Canton School Department has experienced a somewhat significant spike in costs as well as a 14% increase in rates for services. Mr. Folan thanked the Finance Committee on behalf of all the students, staff and families in Town. Mr. Folan turned the discussion over to Mr. Lynch. Mr. Mauro welcomed Mr. Lynch, who had started in his finance and operations role for the schools the previous month. Mr. Lynch explained that in working on closing out FY24 there was a projected shortfall of $425,000 due to increased costs in tuition and transportation costs for Special Education (SPED) students. Mr. Lynch is requesting $425,000 to balance out the budget, so they can close the fiscal year. Projected on the screen was a copy of the School Department’s Reserve Fund Transfer Request for Fiscal Year 2024. Mr. Lynch stated that the School Department has leveraged $3.1 million in the SPED Reserve Fund (FY24 and FY25), $1.3 million in remaining Circuit Breaker Funds, and $650,000 in other Special Revenue Funds, as well as other grant funds. Mr. Lynch and his team have also done some year-end clean-up, which is a typical process every department goes through, particularly the School Department. Cleaning up remaining encumbrances assures correct amounts are held as the department approaches the end of the fiscal year. The net remaining deficit after applying all of these funds to the FY24 budget shortfall is $425,000. Mr. Scollins thanked Mr. Folan and Mr. Lynch for using the funds at their disposal to help balance the budget. Mr. Scollins supports this request. Every year there are departments that experience extraordinary costs and unforeseen costs during the delivery of their services, sometimes causing budgets to have shortfalls, and unfortunately, this year it is the School Department. Mr. Scollins further stated that the Finance Committee discusses every year that some of the costs in the budget are just unpredictable and can change rapidly. Mr. Scollins stated that he is glad the Town has the resources and has done the planning to be able to resolve deficits such as this one. He is also glad that the Town has been committing funds to the SPED Reserve Fund for instances such as this. In addition to Mr. Scollins supporting this transfer request, the Select Board voted at their meeting on July 9, 2024 to support this request as well. Mr. Mauro concurred with Mr. Scollins’ comments that SPED costs are unpredictable and that he is glad the Town is in the position to have these funds available and able to “accept this shock” to the budget. Because budget projections are made in May for the following fiscal year, it is often hard to predict budgets for the following year. Mr. Mauro inquired as to how fast the circuit breaker fund would recharge and would it be an issue for the upcoming fiscal year. Mr. Lynch explained that the Town receives quarterly Circuit Breaker payments associated with the prior fiscal year and that the School Department will be entering the next fiscal year (FY25) with a small amount in their Circuit Breaker account with the expectation that the School Department will receive those quarterly payments throughout FY25. The Student Services team is finalizing their application with the state to get a better idea of the amount that they will receive over FY25. Mr. Lynch stated that the usual procedure with regard to Circuit Breaker funds is that a Town should have a balance of one year on the books and be using the amount from two years ago to supplement the budget. Two scenarios were projected on the Q3 School Operating exhibit for projected FY25: one with $0 used from the SPED Reserve Fund and the other scenario utilizing $1.6 million from the SPED Reserve Fund. Mr. Lynch expressed appreciation if the SPED Reserve Fund were to be replenished at either the Special Town Meeting in November or the Annual Town Meeting in May. Mr. Lynch further stated that as he is preparing the FY25 budget, he is mindful that it is up to the will of the Town Meeting voters to replenish these funds. Mr. Mauro inquired if there was a way to reduce transportation costs and does the School Department have a means to offer in-house transportation or is it something the Town should mitigate. Mr. Lynch stated that transportation costs associated with special education are unregulated allowing providers to vary their trip costs and the seat-per-student costs, which can lead to unpredictability. The School Department plans to consolidate all of their out-of-district transportation needs by utilizing one vendor with the thinking that they might/hope to receive preferential pricing and routing. There have been ongoing communications with the vendor. Mr. Folan stated that the yellow buses used for transportation are negotiated under a separate contract. Vans are used ordinarily, some are used for wheelchairs. Prices used to be a set amount for pick up by family but now the prices are costed out per student or per seat. For homeless transportation, they are looking at in-district transportation. Some transportation is based on Individual Education Plans (IEPs) which require specialized vans. Costs are significant. There are some transportation and tuition costs that can range from $100,000 to $400,000 per student. FINCOM 20240710 Minutes EM FINAL.docx Page 2 of 6 9/21/24
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Ms. Schutt voiced her concern about the $11 million deficit and how the budget got so far in the deficit without any knowledge or advanced notice. (The $11 million did not include offsets that were identified in lines 72-76 on the spreadsheet.) She was also concerned that these projections were only through 4/30/24 and wondered about the uncertainty of what other expenses there could be up to the end of the FY24. Mr. Lynch explained that he has been working for several weeks on encumbrances (for salaries, IT expenses etc.) and he is confident that this deficit is good through the year end and would not grow. Ms. Schutt asked that in the future there should be better communication of budget issues that might occur. Ms. Schutt spoke in support of keeping students within the district when possible to keep the out-of-district costs down. Mr. Cole asked what happened to the Special Education budget. Mr. Lynch stated that Mr. Clough had reached out to him via email to get clarity on where in the SPED budget were the deficits. The number of students requiring special education services grew 14% from 58 students to 66 students, also requiring changes to IEPs. Two students are on mandatory 40-day assessments, which also come with a cost. When the FY24 budget was developed the increases were not anticipated. Out of district transportation has been overspent by $1.975 million. Instruction at private schools was overspent by $106,000, Collaborative Instruction was overspent by about $100,000 and other private schools was overspent by an additional $124,000. Mr. Lynch stated that transportation costs all around the state were increased. The transportation costs for Canton were approximately three times higher than budgeted for. Ms. Mirliani also had some concerns about the SPED budget in that it was $2.5 million actually overspent as compared to the $11 million deficit. Mr. Lynch confirmed that there are other cost centers within the School budget that are overspent in FY24. Some budgets were not projected correctly. Mr. Scollins explained that a majority of the School budget is funded through the general fund operating budget but that millions come from offsets. Last year the School budget was funded just under $6.6 million from offsets, which is a normal amount. The difference between the offsets prior to the 4/30/24 projection is the difference between $6.6 million and $11 million, which is a difference of about $4.7 million, not an $11 million deficit. Ms. Mirliani asked if the Town was using SPED Reserve Fund money appropriated in May 2024 to use in the next fiscal year to pay for this year’s general fund overspending. Mr. Scollins clarified that Ms. Mirliani’s question was how much of the $4.7 million deficit was SPED and how much was unanticipated transportation costs. Mr. Lynch explained that approximately $2.5 million was for SPED and the remainder was for areas “sprinkled” throughout the 1,300 lines of the School operating budget, such as salaries or material costs related to SPED. Mr. Scollins explained that if the budgetary cleanup was applied to the $4.7 million it would be down to $3.5 million, as the true deficit as compared to what was planned/typical. Ms. Mirliani inquired further as to where the overruns were that were not driven by SPED. Ms. Mirliani also had concerns about the use of SPED Reserve Account for the FY25 budget on non-SPED overruns and that it will be essential that it is fixed at the Special Town Meeting this fall. She urged that it be treated as a true reserve fund for special education and not as an account that is regularly depleting especially for non-SPED overruns. Mr. Mauro referred to FY25 and how it was budgeted in May 2024, how off might that be based on the baseline that it was based on plus the increase for FY25. Mr. Scollins referred to Line 78 (Budget Balancing Offsets), which has been $6.5 million with this year being $10.7 million but this is inflated and includes budgetary clean-ups of $1.225 million which brings it down to about $9.5 million. The end column in the exhibit, line 78 the reliance upon offsets is really about $7.6 million but yielding approximately a $200,000 surplus bringing the reliance on offsets to about $7.4 million, which is about $900,000 higher compared to what is normally expected. The $1.6 million is expected in SPED reserves as opposed to the traditional $800,000 or $1 million. Mr. Scollins has every expectation that a warrant article will be put forward, as has been done every year, to replenish the SPED Reserve Fund, which should balance the budget through FY25. Mr. Mauro concluded that FY25 is in decent shape with those add ons in the projection, provided there are no additional “shocks” to the budget. With regard to monitoring the finances, this would be part of the auditing process to see the issues more incrementally instead of “sticker shock”, which is harder to absorb. He stated that the Finance Committee understands that school education is a volatile dynamic thing but if the Committee has more reports on the progression of this and more explanations it makes it easier for the public to understand how this is working. Ms. Schutt stated that all the Finance Committee members could agree that there really is no alternative but that she did not want to send a message to any department that you could have this large of an overrun and come at the final hour seeking funds. Mr. Scollins stated that it has been his practice in 20 years of overall experience as a municipal Finance Director that departments should not come throughout the year seeking funds for relief for budget issues raised but rather the departments should try to resolve them within their budget first. He encourages every department to minimize without compromising services, as long as the timing is at the end of the year to clean up any deficits. Mr. Scollins asks departments that if they have a budget issue that they let him know as soon as possible, so that he can put them on his “budget challenges list” so he can monitor expenses. FINCOM 20240710 Minutes EM FINAL.docx Page 3 of 6 9/21/24
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Ms. Schutt suspects that the School Department may have a problem in FY25 with their SPED budget but that the Finance Committee could hear from them regularly about any overruns existing in FY25. Mr. Scollins stated that because the School Department has bottom line autonomy he expects the School Department to utilize Special Revenue Funds and offsetting accounts to balance their budget at year end. The impact to the Finance Committee’s FY24 Reserve Fund balance of $600,000 with $425,000 being approved for the School Department and the $16,000 being approved for the Town Clerk would be about $159,000 that would fall out into free cash. The $600,000 would be budgeted again for FY25 per the ATM vote in May 2024. Ms. Mirliani inquired about the Finance Committee Reserve being used to fund additional funds towards the Police Audit. Mr. Scollins said that that would be an issue for a different reason in that a Reserve Fund Transfer Requests has to meet one of two criteria: it has to be extraordinary or unforeseen. Based on the scope developed for the Police Audit Mr. Scollins does not see this expense as an unforeseen or extraordinary expense and would not qualify for a Reserve Fund Transfer. Mr. Mauro also noted that if there was a need for more funds for the police audit, the November STM would be a time that the Police Audit Committee could request such funds from Town Meeting. A motion made by Ms. Schutt to approve a transfer of $425,000 from the Finance Committee Reserve Fund to the School Committee budget was seconded by Ms. Mirliani. Roll Call Vote: Ms. Schutt Aye Ms. Mirliani Aye Mr. Cole Aye Mr. Mauro Aye Ms. Menconi Aye Vote: 5-0-0. Mr. Mauro stated that the Finance Committee will look forward to hearing from the School Department going forward and he noted the importance of state aid. $12,000 Reserve Fund Transfer Request — Elections & Registrars Because Town Clerk, Ms. Kenney, was unable to attend the meeting Mr. Scollins spoke on her behalf. The Elections and Registrars Overtime budget was overspent by $5,027 and the Police Details budget was overspent by $5,228. The need for additional overtime hours and police details was caused by the unanticipated Special Town Meeting in November 2023 and having to expand from six to seven precincts in FY 2023, which also caused postage to exceed the budget by $3,665. The budgets for FY25 have been increased in these budget line items. A motion made by Ms. Schutt to approve a $12,000 transfer from the Finance Committee Reserve Fund to the Elections and Registrars budget was seconded by Ms. Mirliani. Roll Call Vote: Ms. Schutt Aye Ms. Mirliani Aye Mr. Cole Aye Mr. Mauro Aye Ms. Menconi Aye Vote: 5-0-0. $4,000 Reserve Fund Transfer Request — Town Clerk The Overtime budget for the Town Clerk’s budget was overspent by $4,960. An unanticipated Special Town Meeting in November 2023 and the increase from six to seven precincts caused the need for additional hours. A motion made by Ms. Schutt to approve a $4,000 transfer from the Finance Committee Reserve Fund to the Town Clerk’s budget was seconded by Ms. Mirliani. Roll Call Vote: Ms. Schutt Aye Ms. Mirliani Aye Mr. Cole Aye Mr. Mauro Aye Ms. Menconi Aye Vote: 5-0-0. FINCOM 20240710 Minutes EM FINAL.docx Page 4 of 6 9/21/24
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Meeting Minutes The May 13, 2024, meeting minutes were not ready for approval and would be approved at a future meeting. Next Meeting Mr. Scollins stated that unless something unanticipated comes up, the next meeting will be sometime in early to mid- September to discuss the Special Town Meeting scheduled for November 18, 2024. Because the Massachusetts School Building Authority (MSBA) requires a unique town meeting of its own for the vote regarding the Galvin Middle School rebuild, there will be a Special Town Meeting within the Special Town Meeting to bring other unrelated articles before the Town Meeting in November. Mr. Scollins will provide a summary of the FY24 operating budgets once the Town Accountant has closed the books. Meeting Adjournment: A motion made by Ms. Schutt to adjourn the meeting at approximately 8:30 p.m. was seconded by Ms. Menconi. Roll Call Vote: Ms. Schutt Aye Ms. Mirliani Aye Mr. Cole Aye Mr. Mauro Aye Ms. Menconi Aye Vote: 5-0-0. Minutes reviewed by: Mr. Mauro Respectfully submitted, Envbir €. Maus, / Emilio E. Mauro, Jr. Chair, Canton Finance Committee FINCOM 20240710 Minutes EM FINAL.docx Page 5 of 6 9/21/24
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Finance Committee Meeting Documents July 10, 2024 Please note: Some meeting documents may be found on the Town’s website under the Posted Minutes section (Laser Fiche). Agenda — July 10, 2024. Memorandum from Randy Scollins, Finance Director to Canton Select Board and Finance Committee, dated July 5, 2024 regarding FYE 2024 FINCOM Reserve Fund Transfer Requests (4 pages). Email from Randy Scollins to Laurie Bogue, Charles Doody and Ellen Jones re Reserve Fund Transfer Requests, dated July 5, 2024 (1 page) and School Department Operating Budget Summary and Expense FY23-FY25 as of 4/29/24 (1 page). Email from David Clough to Brian Lynch, copied to the Finance Committee, dated July 10, 2024, regarding Special Education Costs. FINCOM 20240710 Minutes EM FINAL.docx Page 6 of 6 9/21/24