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October 17, 2019, Finance Committee Meeting. Minutes

Finance Committee · Record date 2019-10-17 · Record 76e0c6259a77687065

Saved text from 7 source pages. Transcription and OCR may contain errors; verify figures and wording against the original. Retrieved 2026-10-15.

Meeting of the Canton Finance Committee                    Minutes voted on: 1/23/2020
                                                Meeting Minutes                                Vote: 8-0-1
                                          Thursday, October 17, 2019


Finance Committee Members Present: Wai Wong
Christos Arsoniadis, Rob Barker, David Clough, Dan Cole, Emilio Mauro, Tim McKenna, Cindy Thomas and Wai
Wong.

Finance Committee Members Absent: Barbara Saint Andre.

Guests Present:
Kathy Butters, Town Accountant
James Murgia, Finance Director
Randy Scollins, Finance Director effective 1/1/20
Ellen Jones, Finance Committee Secretary

Opening: A meeting of the Canton Finance Committee was called to order by Chairman McKenna at 7:02 p.m. on
Thursday, October 17, 2019 in the Upstairs Meeting Room of the Armando Recreation Center.

A.       Approval of Agenda

Chairman McKenna acknowledged the agenda.

B.       Announcements

Chairman McKenna turned the meeting over to Mr. Murgia. Mr. Murgia welcomed his replacement, Randy
Scollins, effective January 1, 2020. He stated that Mr. Scollins would be working with him over the next couple of
m onths to familiarize himself before stepping into the role of Finance Director/Treasurer/Collector.

M r. Scollins humored the Committee by noting that he was not a violent person but appeared before them with an
i njury to his eye and that he had recently suffered from a minor accident while cleaning his gutters. Mr. Scollins
stated that he was happy to be with the Town of Canton and was grateful to Jim for modifying and accelerating the
budget schedule to allow for a smoother transition period. Mr. Scollins stated that he had been with the Town of
Foxborough for the past 15 years as the Finance Director/Town Accountant and had also served on Foxborough's
Finance Committee 26 years ago and is very familiar with the hard work of the volunteers. Mr. Scollins has been
i mpressed with the transparency of information, the fact that the meetings are televised, the quality of the
warrant and the budget preparation. Chairman McKenna welcomed Mr. Scollins to the Town.

M r. McKenna thanked Mr. Murgia for his many years of service. Mr. Murgia thanked the current and prior
members of the Finance Committee since becoming the Finance Director in 2001. He recognized the hours and
dedication that the Finance Committee members have spent on the mission of the Committee and thanked them
for their positive influence on voters of the Town by explaining complex issues to the residents.

Chairman McKenna introduced a new member of the Finance Committee, David Clough. Mr. Clough stated that he
had served on the Capital Planning Committee prior to joining the Finance Committee and has been a Canton
resident for 4% years with a wife and two children. He is looking forward to helping out and working with the
Committee to make sure Canton's Finances remain sound. Mr. Clough thanked and congratulated Mr. Murgia for
his 26 years of service to the Town and wished him well in his retirement.




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C.       New Business


FY21 Budset Timeline Discussion — Mr. Murgia reviewed the budget timeline which covers two budget processes —
capital and operating. He also reviewed some of the key dates as follows:
    • October 28, 2019 —The Finance Director's office to receive FY21 and 5-year capital plans from
         departments, boards and committees by this date.
    • October 17, 2019 —The Finance Director's office sent the operating budget worksheets to departments.
         Operating budget requests are due back to Finance by December 2.
    • In November departments are scheduled to explain their FY21 capital requests to the Town Administrator
         and Finance Director. Later in December departments will then explain their FY21 capital requests to the
         Board of Selectmen.
    • December 31, 2019 —Capital plans would be sent to the Capital Planning Committee.
    • December 31, 2019 —Department's operating budget requests would be sent to the Finance Committee.

I n response to Mr. Barker's question about the timing of the Finance Committee receiving the budget requests not
u ntil late January, Mr. Murgia responded that the by-law states that budget requests are supposed to be
submitted to the Finance Committee by the third Monday in January which would be around Martin Luther King
Day, or January 20.

     •   The Revenue Forecasting Committee (RFC) is scheduled to meet in late January after the Governor's
         budget has been released. Mr. Murgia explained that the RFC is facilitated by the Finance Director but
         that his position does not necessarily serve as the Chairman of the RFC. The members that serve on the
         RFC are typically the finance Director, Finance Committee Chair, Finance Committee Vice-Chair, Town
         Accountant, Town Administrator, Building Commissioner, Assessing Director, School Superintendent and
         School Business Manager. School Committee members and Board of Selectmen officials attend the RFC
         m eeting but do not have voting privileges. The group of employees that serve on the RFC are those
         i ndividuals that are closely familiar with the revenue because of their day-to-day operations associated
         with their positions. Elected officials do not serve on the RFC.
     •   After the RFC has met and voted the FY21 revenue, the Finance Committee would plan to meet in early
         February to consider general revenues voted by the RFC to determine target budgets for the municipal
         and school department.
     •   Prior to March 15 the Capital Planning Committee will present their FY21 capital recommendations to the
         Finance Committee.
     •   March 19 —The Finance Committee is scheduled to vote on the capital requests earlier than the operating
         budgets. This is to allow time for Town Counsel to review motions if borrowing is involved.
     •   April 6 is the deadline date for the warrant to go to the printer so that the warrant is in the hands of the
         voters by April 27.
     •   May 11 is the first night of Town Meeting.

One unknown factor in the budget process is the School Master Study on all the buildings. The Town has been
waiting for the Massachusetts School Building Authority's decision on updates to the Galvin Middle School. The
Finance Director was uncertain if this would affect this year's Town Meeting. Ms. Thomas suggested that it is
always a good idea for the Finance Committee to check in mid-year with the School Committee to determine how
the special education budget is doing and the status of circuit breaker funding.

Annual Town Meeting(ATM)2020 Timeline — Mr. Murgia informed the Committee that the Selectmen had
recently approved at their BOS meeting the ATM timeline. Some of the key dates are as follows:
    • December 26 —Warrant opens for articles to be submitted.
    • December 31 —Capital spending plan provided to CPC per by-law.
    • January 10 —Warrant closes for all articles to be considered at ATM.
    • January 15 to March 13 —Planning Board holds hearings on zoning articles.




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•    January 20 —Operating budget estimates sent to Finance Committee (3`d Monday of January). Mr. Murgia
         stated that he plans to send the budget requests to the Finance Committee by December 31.
    •    February 5 — BOS-approved warrant is sent to the Finance Committee.
    •    March 3 — BOS votes their recommendations on warrant articles.
    •    March 4 — BOS provides their recommendations regarding warrant articles to the Finance Committee.
    •    March 13 —Capital Planning Committee submits their recommendations to the Finance Committee (the
         by-law states by March 15 which falls on a Sunday this year).
    •    March 20 -Finance Committee draft motions to Town Counsel.
    •    April 6 —Warrant is sent to the printer. There is a one or two-day leeway with this date.

Capital Process - In response to Mr. Cole's inquiry if the Capital Planning Committee (CPC) is given target numbers,
M r. Murgia stated that the CPC is provided with the amount of cash capital available for five years and the amount
of debt that the Town can borrow for FY21 thru FY25. These amounts are determined by Mr. Murgia by using a
basic policy of keeping capital spending at or around 5% of revenues. There is currently no by-law or policy in
place that states this but the tradition has been to spend about 5% of revenues on capital. The debt amount
available tends to be the amount the Finance Director determines as debt paid off each year (inside the levy debt);
therefore, the debt is not growing but being maintained. The Finance Director determined that the Board of
Selectmen and the School Committee have $750,000 each of cash capital. At the time of the meeting the Finance
Director reported that the School Superintendent had reduced her capital requests from approximately $1.7
million to $804,000 with the understanding that further reduction will need to be done. Once the requests are
received from the municipal side the Finance Director will summarize those but he guarantees that the
department requests will exceed $750,000.

M r. Barker inquired about the past practice of borrowing debt capacity from future years in order to meet the
requests in the present fiscal year. Mr. Murgia stated that if the revenues are being projected higher than
anticipated and if capital requests have dropped to a percentage lower than 5%, such as 4% of operating budgets,
then capital requests could be supplemented through the use of free cash. Mr. Murgia used as an example the use
of $500,000 of free cash for the Randolph/Washington Street intersection, thereby bringing up the percentage of
spending used for capital projects.

Process used to Establish Operating Budget Targets — Mr. Murgia had prepared a 3-page meeting document with
a sample of the process used to establish budget target numbers; unfortunately at the time of the meeting the
handout was not available. Some Committee members were able to access the document through their phones.
Some of the highlights of the discussion are as follows:
    • A spreadsheet was used as an example with a detailed step by step process of how the estimates are
        determined.
    • General revenues are estimated, state aid increases or decreases are determined, the increase or
        decrease to the ambulance fund is determined (through information provided by the Fire Chief), fixed
        costs are estimated (health insurance, debt service, retirement costs, trash etc.) and state and county
        charges are estimated (based on the Governor's estimate).
    • Cash capital for the next fiscal year is determined.
    • Current year ATM voted municipal and school operating budgets are used in the formula. The school
        share is determined as a percentage by dividing the current year ATM-voted school budget by the total
        budget. The example used determined the school share as 66.7%. The municipal share is again
        determined as a percentage by dividing the current year ATM-voted municipal budget by the total
        budget. The example determined the municipal share to be 33.3%. These percentages are examples and
        can shift slightly from year to year.
    • "New money" is determined by deducting from the general revenue all of the obligations as follows:
                  General Revenues:
                            Deduct increase for education state aid
                            Deduct increase for general government state aid
                            Deduct increase for regular ambulance transfer



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Deduct school operating budget for current year
                            Deduct municipal operating budget for current year
                            Deduct fixed costs estimated for budget year
                            Deduct state &county charges estimate for budget year
                            Deduct school &municipal cash capital allocated for budget year
                   End result is the "New Money" for the next fiscal budget year.

                  I n the example "new money" is multiplied by 66.7% and is allocated to the school budget and
                  "new money" multiplied by 33.3% is allocated to the municipal departments budget.

                  Added back in are three set asides originally deducted —the increased education state aid for the
                  school department, the increased general government state aid for the municipal departments
                  and the increased ambulance transfer for the municipal departments.

                  The final result is the target budget numbers for the school budget and the municipal budget.

M r. Murgia stated that there is no Town by-law in place for determining the target budget numbers but that this is
the process that has been in place to fairly allocate money to the school budget and fairly allocate money to the
m unicipal budget. This process also helps in balancing the budget with budgets being driven by the revenue. He
further stated that it is the goal of the RFC to conservatively, not ultra-conservatively, estimate revenues whereby
the Town will end up with surplus revenue at the end of the fiscal year.

Ms. Scollins explained that Foxborough strived for $2 million of revenue surplus every year, generated as free cash,
to be then used as a funding source for cash capital projects two years in the future.

M r. Murgia explained that prior to his appointment as the Finance Director there was always the use of free cash
reserves to fund the operating budget, such as the release of $500,000 from the Assessor's overlay fund and the
use of approximately $1 million of free cash. Mr. Murgia has always advocated for not using free cash for any
operating expenses, even though legally Towns are allowed to do this.

General Fund's Fiscal 2019 Operating Results — Mr. Murgia stated that 2019 was a great year for the Town of
Canton. The Town was prepared and expected to have as much as a $3.6 million deficit due to items to be spent
were not covered by revenue but covered by cash reserves. Fortunately the budget year ended with a positive
n umber of $136,446. The revenues amounted to approximately $98 million and the expenses amounted to $97.9
million. The reason for the better results was due to the RFC doing a great job with their estimates.
    • Local receipts (specifically motor vehicle receipts) came in approximately $900,000 more than budgeted.
    • Interest income came in at $462,953 as compared to $80,000 budgeted.
    • Miscellaneous revenue came in at $536,624 as compared to $50,000 due to one-time funds received such
         as a $275,000 settlement with Canton Holdings regarding the Reservoir Dam as well as $127,000 received
         when the CHARMS collaborative closed. Insurance proceeds of $100,000 were identified in a fund that
         was no longer needed which was then transferred to the General Fund.
    • Budget turn backs of approximately $800,000(budgets that were not fully spent) also contributed to the
         budget surplus. Of those turn backs, Building and Zoning turned back $42,730; Public Works turned back
         $53,289; Parks and Recreation turned back $51,473 and the Fire Department turned back $39,585. The
         Parks &Recreation turn back was due to the Paul Revere Heritage landscaping budget not having been
         spent. The Veterans Department also turned back $51,549 as well. Debt Service ended the year with a
         budget surplus of $81,477. The Finance Committee Reserve Fund ended FY19 with a balance of $216,000
         as well. Town Insurance turned back $70,000.

Status of Cash Reserves -The year ended with the reserves (free cash, stabilization and Assessors surplus overlay
reserve) having grown to approximately $16.4 million which is 16.4% of budget. The General Fund's free cash
reserve is estimated to be $5.5 as of the end of the fiscal year, the Stabilization Fund (made up of the Stabilization




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Fund and the Solar Stabilization Fund) at $8,490,281 and the Assessor's Surplus Overlay Reserve at $2,459,492.
The Town tries to maintain a reserves balance of 15% of budget in order to keep its AAA bond rating. The
Stabilization Fund grows when Town Meeting appropriates funding. Mr. Murgia reiterated that one-time capital
projects are a good use of free cash.

Enterprise Funds' Fiscal 2019 Operating Results —The Water Enterprise Fund budget deficit was expected to have
been $864,000 but the actual deficit was better than expected at $387,000. This was due to higher revenues
received (approximately $350,000). The water retained earnings (or water free cash) at the end of the fiscal year is
estimated to be $1.4 million which is 18% of expenses.

The Sewer Enterprise Fund ended the year with a surplus of $211,811 which was better than the expected deficit
of $200,000. This surplus was due to higher revenues.

Even though the rink was closed for the fiscal year, the Rink Enterprise Fund ended Fiscal 2019 with a surplus of
$67,958 due to interest income. The Rink Budget for Fiscal 2020 is being budgeted for $70,000 in anticipation of
the Rink being opened in Fiscal 2020. The estimated free cash for the Rink is approximately $77,000 at the end of
Fiscal 2019. Mr. Murgia advised the Finance Committee to be aware that the rink revenue could be affected by
the opening of new rinks in the area. In response to Mr. Cole's inquiry about the encumbrance items on the
balance sheet not being booked under the Liabilities category for the Enterprise Funds, Mr. Murgia stated that it
represents purchases made in Fiscal 2019 or carried forward. The state requires the municipality to record it not
as an expense but as an encumbrance. Once purchased it is booked as an expense.

M r. Murgia stated that the Water &Sewer Rate Committee had met earlier on October 17 to discuss the rates but
would have to meet again in the spring to review consumption and readdress the rates. The Enterprise Funds are
supposed to be self-supporting.

M r. Mauro asked if there was feasibility as to the rink being used year round for other uses other than skating
which might create a "niche" to rent to other organizations. Mr. Murgia did not believe that the rink lease
precluded the Town from operating it year round.

Current Fiscal Year —General Fund's Operating Results as of September 30, 2019 — Mr. Murgia thanked the Town
Accountant for closing out the month of September in order to have the reports ready for the Finance Committee
October 17 meeting. The deficit of $7.4 million in the first quarter of Fiscal 2020 as compared to last year's deficit
of $6.8 million in the first quarter is due primarily to a one-time payment of $5.6 million for the Norfolk County
Retirement annual assessment. The Town saves approximately 2% or $105,000 by making the payment in full in
J uly rather than in two installments in July and January.

Current Fiscal Year —Enterprise Funds' Operating Results as of September 30, 2019 — Mr. Murgia expressed
concern about the water revenue for the first quarter. The deficit for the first quarter was $1.4 million as
compared to last year's first quarter deficit of $720,000. This higher deficit could be due to lower irrigation
revenue and higher MWRA assessments. Outdoor water decreased but the good news is this may not be a trend
carrying into the next quarter.

#131 Finance Committee -Fiscal 2021 Operating Budget Worksheet — Mr. Murgia stated the Finance Committee
could give the authority to Chairman McKenna to submit the budget worksheet by the deadline. The Finance
Committee budget was overspent in FY19 because of the extra cost for printing and mailing the Special Town
Meeting recommendations/warrant in December 2018.

A motion made by Mr. Barker to recommend the FY21 Finance Committee budget request be increased by
adding $1,000 to the printing/mailing warrant line item for a total budget increase from $11,500 to $12,500 was
seconded by Ms. Thomas. Vote: 8-0-0.




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#132 Reserve Fund —Fiscal 2021 Fixed Cost Budget Worksheet — Mr. Murgia stated that the Finance Committee
had increased the Reserve Fund from $500,000 to $700,000 last year to account for any unforeseen Trash
expenditures. The Town did not want to increase the Fixed Costs Trash budget by $200,000 at ATM 2019 for FY20
because the Town did not want to give the appearance that they were in support of the ongoing trash contract
dispute with Republic. Republic is claiming that they have incurred higher than anticipated recycling costs under
the contract because of the manner in which China is accepting recycled goods. If the Reserve Fund budget was
lowered to $500,000 it would free up $200,000 for municipal and school operating budgets.

A motion made by Ms. Thomas to recommend the FY21 Reserve Fund budget request be $700,000 was
seconded by Mr. Barker. Vote: 8-0-0.

D.       Old Business

M r. Wong volunteered to be the Liaison to the Fire Department.

There would be no members attending the Association of Town Finance Committees annual meeting this year.

There was no comment from the public at the meeting.

E.       Approval of Minutes

The minutes for the March 7, 2019 meeting were not voted on.

A motion made by Mr. Barker to approve the minutes for December 12, 2018 as written was seconded by
Mr. Wong. Vote: 7-0-1. Mr. Clough abstained.

A motion made by Ms. Thomas to approve the minutes for May 13, 2019, as written was seconded by
M r. Wong. Vote: 7-0-1. Mr. Clough abstained.

A motion made by Ms. Thomas to approve the minutes for July 25, 2019 as written was seconded by
Mr. Barker. Vote: 7-0-1. Mr. Clough abstained.

F.       Next Meeting Date:

The next Finance Committee meeting date would take place after the end of calendar year 2019. The Committee
was in agreement that unless something came up before the end of December that there was no need to hold a
m eeting before the end of the year.

Adjournment: A motion made by Ms. Thomas to adjourn the meeting at 8:57 p.m. was seconded by
M r. Mauro. Vote: 8-0-0.

Minutes reviewed by: Cindy Thomas




Tim McKenna
Chairman, Caries Finance Committee




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Canton Finance Committee Meeting
                                          Thursday, October 17, 2019

Please note: Some meeting documents may be found on the Town's website under the Posted Minutes section
(Laser Fiche.

Agenda for October 17, 2019. (1 page).

Fiscal 2021 Budget Timeline, prepared by James Murgia, Finance Director (2 pages).

Annual Town Meeting 2020 Timeline prepared by the BOS office (3 pages).

Process Used to Establish Operating Budget Targets, prepared by James Murgia, Finance Director (3 pages).

#131 Finance Committee Department Budget Request for FY21(1 page).

#132 Reserve Fund Fixed Cost Budget Request for FY21(1 page).

General Fund's Fiscal 2019 Operating Results (10 pages).

Enterprise Funds' Fiscal 2019 Operating Results (3 pages).

General Fund's Operating Results as of September 30, 2019(8 pages).

Enterprise Funds' Operating Results as of September 30, 2019(2 pages).




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