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November 02, 2016, Finance Committee Meeting. Minutes
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Town of Canton Finance Committee Minutes voted on: 12-1z-16
Meeting Minutes vote: 5-0-2
Wednesday, November 2, 2016
Members Present:
Rob Barker, Sepp Bergschneider, Gerald Dorfman, Cynthia Holcombe, Stephanie Leach, Tim McKenna,
Barbara Saint Andre and Cindy Thomas.
Members Absent:
Nichols Gallagher and Dianne Gustafson.
Guests Present:
Jim Murgia, Finance Director
Ellen Jones, Finance Committee Secretary
Opening: A meeting of the Canton Finance Committee was called to order by Chair Saint Andre at
7:06 on Wednesday, November 2, 2016 in the Upper Meeting Room of the Armando Recreation Center.
A. Approval of Agenda
Chair Saint Andre reviewed the items on the agenda.
B. Announcements
The Board of Selectmen would be holding a Canton Communications Forum meeting on November 14,
2016 at 5:30 p.m. at the Canton Public Library in the Community Meeting Room. Mr. Murgia will forward
the agenda to the Finance Committee members.
C. New Business
Discussion —Optimum Level of Reserves — (see meeting handout) Chair Saint Andre stated that it has
been the goal of the Finance Committee to have the Town's reserves be at a level of 15% of expenses.
Chair Saint Andre asked the Finance Committee if it was their goal to maintain the reserves at a level of
15% or to go to a higher level?
According to a Cash Reserves Balances spreadsheet for the past five fiscal years, the Town grew its
cash reserve balances from $8 million in FY2012 to close to $15 million in FY16 or 17.6% as of 7/1/16.
This percentage, however, includes the Assessor's overlay reserve balance of $4.2 million. The Finance
Committee has been invited through Selectman Porter to attend the Board of Selectmen on Tuesday,
November 15 to discuss an optimum level of reserves.
The Committee and the Finance Director cautioned about building up reserves too much and neglecting
the Town's capital needs. Cash reserves should be used for one-time projects. Since Jim Murgia has
been the Finance Director he has not recalled Annual Town Meeting in Canton accessing the stabilization
fund for one-time purchases.
I n response to Mr. Barker's inquiry about the possibility of the Assessor's releasing some of the overlay
back to the Town at Annual Town Meeting, Mr. Murgia thought that it would be unlikely due to two
pending challenges by Verizon. Verizon is challenging their assessed values that are set statewide for all
the cities and towns for personal property taxes. The other issue that Verizon is challenging is with the
City of Boston on its use of the commercial tax rate that is being used to charge Verizon for personal
property taxes. Boston has a split tax rate similar to Canton. Verizon felt as though Boston should be
using a single tax rate (not the residential rate) which would be significantly less than the commercial tax
rate.
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Canton's vulnerability with regard to the Verizon case could mean a potential impact of two to three
million dollars to the Town. If the Appellate Tax Board rules in favor of Verizon, the amount would come
out of the Assessor's overlay reserve but at an 8% interest from the time Verizon paid the Town to the
point in time that the Town would pay this back to Verizon.
Ms. Leach spoke in support of the 14.9% level of reserves that was determined at the end of the most
recent auditor's report for 6/30/15. She also stated that if the level of reserves were to go above the 15%
level for the FY16 financial statements that any excess amount be "earmarked" for OPEB (other post
employment benefits).
Mr. McKenna spoke in favor of the 15% level of reserves of expenses. He also spoke in favor of capping
the total expenses for FY18 at a certain percentage, similar to the decision made by the Finance
Committee during last year's budget review. (Departments last year had requested 6% budget increases,
the Finance Committee recommended 4% increases with a final increase of 5% being agreed upon.)
Ms. Thomas spoke in favor of the 15°/o level of reserves. She also asked that a column be added to the
spreadsheet that would indicate any liabilities such as the Assessor's Overlay Reserve amount. Mr.
M urgia explained that this reserves level is usually the amount that is carried in the audited financial
statements.
The consensus of the Finance Committee was 15% of expenses for an optimum level of reserves. Once
it has been confirmed with the BOS office, the Finance Committee will plan to meet jointly with the Board
of Selectmen on November 15, 2016.
Discussion —Finance Committee By-Law —Proposed Changes — (see meeting handout) Chair Saint
stated that she had made the following changes to the proposed by-law based on discussion at the last
meeting:
• "If any member is absent from five consecutive meetings of the Finance Committee, except in
case of illness, his position shall be deemed to be vacant and the remainder of the unexpired
term shall be filled by appointment of the Moderator as provided herein."
• Section 9 with regard to a quorum had been eliminated.
Ms. Thomas spoke against the "five consecutive meetings" phrase because this could be applied in
instances if a member were on a planned absence such as a 2-week vacation that happened to fall
d uring the busiest time for the Finance Committee meetings when sometimes as many as three meetings
could occur within one week.
• Section 8 — Mr. Murgia stated that the deadline date of the "third Monday in January" for which
departments would submit budget requests for the ensuing fiscal year was not a suitable date
since the Martin Luther King Jr. holiday was on the third Monday in January and since the School
Department usually meets the 1S` and 3~d Thursday of the month.
A motion made by Mr. Dorman to change the language in Section 8 of the proposed Finance
Committee By-laws for which the departments had to submit their budget requests for the
ensuing fiscal year from "the third Monday in January" to "the third Friday in January" was
seconded by Ms. Holcombe. Vote: 6-0-1. Chair Saint Andre abstained from the vote.
Chair Saint Andre stated that she would have a final version of the by-law for the next Finance Committee
meeting so that the BOS could place the by-law on the ATM warrant.
Operating Results as of September 30, 2016 — (see meeting handout) Mr. Murgia reported to the
Committee that for the first quarter of FY17 the total actual revenues were 26.8% of the budgeted amount
and that the total actual operating expenses were 30.6°/o of the budgeted operating expenses. The fixed
costs 38.3% of budgeted amount was high due to a one-time pension assessment payment of $4.4
million made to Norfolk County Retirement System. He also stated that second quarter results would
provide a better understanding if there are any budget problems.
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Annual Town Meeting Timeline (see meeting handout) Mr. Murgia reviewed for the Committee some of
the important dates with regard to the Annual Town Meeting Timeline:
• December 20, 2016 —ATM warrant is opened.
• January 6, 2017 —ATM warrant is closed.
• February 8, 2017 —ATM warrant is sent to the Finance Committee.
• March 1, 2017 —Capital Planning Committee submits recommendations to Finance Committee.
• March 17, 2017 —Finance Committee draft motions to Town Counsel.
• April 3, 2017 —Final ATM warrant with Finance Committee recommendations and motions to the
printer.
Fiscal 2018 Budget Timeline — (see meeting handout) Mr. Murgia reviewed for the Finance Committee
the budget timeline. For FY18 260 days were used to budget for the payroll projections. On January 20,
2017 the Finance Director would send to the Finance Committee the FY18 operating budgets requested
by the School Department.
D. Other Business/Open Issues
ATFC (Association of Town Finance Committee) Annual Meeting — Mr. Murgia, Ms. Leach, Ms.
Holcombe and Ms. Thomas attended the ATFC in Devens and found it very informative. Ms. Leach
commented that a representative from the Town of Arlington had stated that they have an unwritten rule
that Finance Committee meetings adjourn no later than 10:00 p.m. since decisions that are made in the
late hour of the evening may not always be the most appropriate. Ms. Leach also commented that a
discussion at the meeting involved Towns identifying new sources of revenue, such as a hotel, that could
be identified as a new revenue source for building up OPEB reserves.
Potential FY17 Budget Issue —Town ClerklElections — Mr. Murgia received information from Mr.
Aspinwall who had been contacted by Town Clerk Tracy Kenny with regard to a potential FY17 budget
shortfall due to extended voting hours offered by the Town. Mr. Murgia stated that this budget issue
could be handled through either a Reserve Fund Transfer Request or a budget supplement at the May
Annual Town Meeting.
E. Approval of Minutes
A motion made by Mr. Barker to approve the minutes as written for October 4, 2016 was seconded
by Mr. McKenna. Vote: 5-0-2.
F. Next Meeting Date: Once confirmed with the BOS office the next meeting date would be a joint
meeting with the BOS on Tuesday, November 15, 2016.
Adjournment: A motion made by Mr. McKenna to adjourn the meeting at 8:30 p.m. was seconded
by Ms. Leach. Vote: 8-0-0.
Minutes reviewed by: Jerry Dorfman
Respectfully submitted,
j \
~~ ~,
Barb ra Saint Andre
Chair, Canton Finance Committee
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Town of Canton
Finance Committee Meeting —Wednesday, November 2, 2016
List of Meeting Handouts
Please note: These meeting handouts may also be found on the Town's website under the Posted
Minutes section (Laser Fiche).
Agenda (1 page).
Cash Reserve Balances, provided by Jim Murgia, dated 11/2/16 (1 page).
Notification of Free Cash Approval -from Division of Local Services, dated 10/20/16 (5 pages).
Finance Committee By-Law —Draft(3 pages).
Operating Results as of September 30, 2016 provided by Jim Murgia (8 pages).
Summary of Revenues and Expenditures, dated 10/23/15 (for comparison to Operating Results as of
9/30/16)(1 pages).
Annual Town Meeting 2017 Timeline, May 8, 2017 (dated 10/11/16)(3 pages).
Fiscal 2018 Budget Timeline (2 pages).
Association of Town Finance Committees Annual Meeting, dated 10/15/16, PowerPoint presentation
at meeting (26 pages).
Finance Committee Liaison List (Draft)(1 page).
Draft of Finance Committee Minutes for October 4, 2016(4 pages).
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