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October 13, 2015, Finance Committee Meeting. Minutes
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Town of Canton Finance Committee Minutes Voted nn: 1 (/19/15
Meeting Minutes voce: 6-0-2
Tuesday, October 13, 2015
Members Present:
Sepp Bergschneider, Jim Casamento, Nichola Gallagher, Dianne Gustafson, Stephanie Leach, Tim
McKenna, Barbara Saint Andre and Jim Sims.
Mr. Bergschneider joined the meeting at 7:30 pm.
Members Absent:
Rob Barker and Jerry Dorfman.
Guests Present:
Bob Golledge, Chair, School Committee
Jen Henderson, Interim School Superintendent
Barry Nectow, School Business Administrator
Jim Murgia, Finance Director
Opening: A meeting of the Canton Finance Committee was called to order by Chair Saint Andre at
7:00 p.m. on Tuesday, October 13, 2015 in the Salah Meeting Room of Town Hall.
A. Approval of Agenda
Chair Saint Andre reviewed the items on the agenda which included a discussion with representatives
from the School Department about the School Department Budget and the SPED budget (Special
Education budget) and a few miscellaneous old business items.
B. Announcements
There would be no members of the Finance Committee attending the ATFC (Associations of Town
Finance Committees) annual meeting on Saturday, October 17`h in Sturbridge.
C. New Business
Chair Saint Andre explained to the School Department representatives that at a meeting in August the
Finance Committee decided to meet with various Town Departments to discuss their budgets in order to
help educate the newer Finance Committee members and that these meetings were being scheduled at a
less hectic time of the year for the Finance Committee.
Discussion —School Department Budget -Chair Saint Andre thanked Bob Golledge, Jen Henderson
and Barry Nectow for being able to attend the Finance Committee meeting. She stated that there were
q uestions that came up at the Annual Town Meeting about the SPED Stabilization Fund and the correct
usage of that fund as well as steps being taken to move forward with the budget process.
The following items were discussed with the School representatives:
• Mr. Golledge introduced Jen Henderson, Interim School Superintendent, and Barry Nectow, School
Business Administrator.
• Mr. Golledge stated that they were prepared to discuss the SPED budget but apologized that due to
vacation they were unprepared to discuss other items at this time.
• The School Committee has moved the preparation of their budget to an earlier timeframe of
approximately 3-4 weeks ahead of last year's schedule in order to alleviate last minute questions by
the Finance Committee during the budget process.
• Last year the School Committee had been addressing the school start time change, class size and
combined classes at the High School. Mr. Golledge reported that the school start time change,
especially with regard to the High School, has gone very well.
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• Class size challenges have been addressed through the work of the Superintendent over the summer
with regard to hiring staff to replace those teachers that have left the system or retired. Unfortunately,
Mr. Golledge reported that the district continues to be challenged with class size and space needs.
• Ms. Gustafson requested from the School Committee a copy of the detailed FY16 School Department
budget since Town Meeting took place. Mr. Murgia suggested the Finance Committee receive a
copy of the Top Line budget report instead of the MUNIS version of the budget.
• Buses - Mr. Golledge reported that buses were not purchased. The School Committee expanded its
contract with the current bus transportation provider by adding six additional buses thereby
eliminating the need to hire additional personnel. Mr. Golledge explained that the School Committee
reduced some of the balances in their revolving funds in order to make it work.
• New Hires — Mr. Sims inquired about receiving a breakdown regarding the 57 new hires for FY16 and
that he was not as concerned with the seven to eight retirements. Mr. Golledge explained that there
were 24 new hires. Ms. Henderson will provide a breakdown of the new hires to the Finance
Committee.
Mr. Golledge gave a brief overview of the SPED budget as follows:
• The School Department has worked over the past several years at keeping students within the
district, however, there are instances in which it is not cost effective to keep the students in district
and are, therefore, sent out-of-district for services.
• The School Department monitors students that are aging out at the maximum age of 22 as well as
new students entering the district, unfortunately this number can be volatile throughout the year as
well as the uncertainty of existing students requiring services during the year.
• Mr. Golledge stated that one of the most significant costs for providing out-of-district services is the
transportation costs. The School Department is also faced with significant costs if a student has to be
placed in an in-residence situation out-of-district, sometimes costing upwards of six figures.
Mr. Golledge responded to questions from the Finance Committee:
• Chair Saint Andre inquired about the Circuit Breaker (the money that the State reimburses the Town
of Canton for special education costs.)
• Mr. Nectow explained that the Circuit Breaker is the state reimbursement program for the Special
Education costs within a school district. Reimbursable items that schools typically use the funds for
are out-of-district tuitions. The Town can also receive reimbursement for in-district students once the
costs reach a certain amount per student. The state foundation budget is a complex calculation per
district that the state believes the Town should be spending per student (for all students). Typically,
the Town of Canton is responsible for the first $44,000 of SPED costs per student. The state
reimburses the Town a percentage of the cost after the $44,000. Each year the $44,000 threshold
increases slightly as the foundation budget increases. Transportation costs are not included in the
reimbursable amount.
• Mr. Nectow reported that the Town spends over $800,000 on transportation costs for in and out-of-
district. Transportation fees cannot be charged to the SPED parents.
• Mr. Nectow stated that for the FY16 budget the Town is being reimbursed at 73% of the costs beyond
$44,000. He gave an example for a student costing $100,000. The first $44,000 would be paid by
the Town leaving a balance of $56,000 of which 73%would be reimbursed by the State. Mr. Nectow
stated that the School Committee budgets conservatively because in some years the 73% has been
as low as 40% (2008).
• Reimbursements are applied for in one fiscal year but are typically not received until the subsequent
fiscal year. The Town receives four reimbursements during the course of a year but are actually for
the prior year's expenses.
• Chair Saint Andre inquired if there were other reimbursement programs that the School Department
applies for. Mr. Nectow stated that there were federal grants available but that the Circuit Breaker
was the only reimbursement.
• Ms. Gustafson inquired as to whether the SPED budget was being used to pay for medical expenses
associated with SPED students that might otherwise be paid for by the student's health insurance or
Medicaid program. Mr. Nectow stated that this was a gray area and that it was a state issue and not
a local issue. The School Department pays for 5-day and sometimes 7-day residential tuitions which
might happen to include medical expenses, which the Town is obligated to pay. The Town does
receive Medicare reimbursements for families that are in the Medicaid program.
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• Mr. Murgia inquired if it was mandated that the Town pay for year round services for a SPED student.
Mr. Nectow responded that there is an agreement among the Team that determines if the student
requires services for 12 months. If this is agreed upon the Town is required to pay for these services.
Mr. Golledge stated that School Committee considers the agreements against the potential cost of
future litigation if an agreement has not been reached.
• Mr. Casamento inquired about the budget numbers for the SPED budget. Mr. Nectow tracks three
budget numbers: private school tuitions, collaborative school tuitions and transportation.
• FY16 SPED budget is approximately $4.7 million with a breakdown of $3.2 million for private tuitions,
$608,000 for collaborative tuitions and transportation of $810,000 for transportation. Mr. Nectow
stated that these three budgets are volatile and can change on a daily basis.
• The in-district SPED budget for FY16 is projected to be approximately $10.7 million which includes
the $4.7 million. The SPED budget represents 27% of the total school budget.
• There are 58 students currently receiving services through private and collaborative schools.
• For future budgeting purposes, Mr. Nectow explained that he uses information based on current
SPED enrollment, works closely with the SPED Director on enrollment changes and budget
conservatively on the Circuit Breaker budget.
• The School Department received $1.2 million this year for last year's Circuit Breaker and is projecting
to receive $1,035,000 for this year's Circuit Breaker.
• Mr. Casamento inquired as to the frequency that the Circuit Breaker budget has come within budget
or over budget. The anticipated amount was slightly under the actual amount. Mr. Nectow has only
gone through one budget year. Any excess funds in the Circuit Breaker revolving fund can be rolled
over to the next year as a cushion for any unanticipated costs for the next year. The current balance
as of June 30, 2015 was $753,000 which included the FY15 fourth quarter payment received on July
3~d
• Mr. Sims inquired as to where the final decision resides for placing a student out-of-district. Mr.
Golledge explained that the School Department staff advocates for keeping the student in-district but
if disagreements arise, extensive legal expenses can incur. While Mr. Golledge would not discuss
specific facilities costs, he did state that if there are situations that require round the clock care, it can
be very costly to the district.
The following was discussed regarding the SPED Stabilization Fund:
• Chair Saint Andre inquired about the most recent Annual Town Meeting in which money was
transferred into the SPED Stabilization fund for one fiscal year and transferred out of the SPED
Stabilization Fund for another fiscal year.
• Chair Saint Andre commented that her understanding was that the original purpose of the SPED
Stabilization Fund was to establish this fund for catastrophic instances, but instead was being used to
access the funds ($75,000 for FY14 and $80,000 for FY15) to balance the budget and was the Town
using this fund for its intended purpose.
• Mr. Golledge spoke on behalf of the School Committee and stated that they did not view this fund as
a fund that would keep building up over time for catastrophic events but viewed it as a source to be
used as a cushion in combination with the Circuit Breaker budget.
• Mr. Nectow explained that the SPED Stabilization Fund accessed at the ATM 2015 was to be used
for FY15 so that more of the Circuit Breaker Revolving Fund could be used for FY16.
• Mr. Murgia explained that the source of funds for transfers into the SPED Stabilization Fund has been
free cash. He also explained that initially when the Stabilization Fund was established, if the School
Department was having a good year budget wise, excess funds would be transferred into this Fund at
the ATM, otherwise any School Department budget surplus would fall out to free cash. The $80,000
transfer from the Stabilization Fund at ATM 2015 increased the operating budget for FY15, allowing
the School Department to roll over a larger amount of Circuit breaker money available in FY15 into
FY16.
• Mr. Bergschneider sought an explanation for the use of Free Cash if it was only going to offset a
balance already existing in the Circuit Breaker Fund. Mr. Golledge's response was that given the
volatility of the Circuit Breaker Revolving Fund and the timing of the budget process, it is difficult to
avoid a shortage during the budget year.
• Ms. Gustafson spoke about the necessity for the SPED Stabilization Fund given that the Circuit
Breaker Revolving Fund currently has a healthy balance.
• Mr. Sims agreed that the SPED Stabilization Fund has become rather impractical given that the only
time funds can be transferred in or out of this fund is by a 2/3 vote at Annual Town Meeting.
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• Mr. Nectow explained that Canton does provide SPED services to students from another school
district if Canton offers a program that meets the other district's student needs. Canton charges a
lesser tuition to the sending community than if that student were sent out-of-district. In some
instances an even swap of SPED students occurs between two districts.
• Mr. Golledge stated that the School Committee would be working on a full-day kindergarten program
for the upcoming budget.
Per Mr. Murgia, the Finance Committee will have to take their final positions with regard to the FY17
budget by the end of March. The Town by-law states that the Finance Committee is supposed to receive
all the budget requests in January (Martin Luther King Day). Capital budgets are due by the end of
December.
• Mr. Golledge stated that the School Committee had settled with all of the School Department unions
but that there was an opener clause for an extra'/z% salary increase that may have to be considered
for year two of the contract. Mr. Sims predicts that the Yz% for year two of the School contracts could
cost as much as $1.5 million, as that reopener clause will trigger every other school union to reopen
negotiations for the compensation in FY17.
• Capital plan — Ms. Gustafson spoke about the importance of the Capital Planning Committee and
liaisons receiving the School Committee's capital requests especially with regard to long-term
planning for not only cash capital requests but also for debt/bonding requests.
• Mr. Golledge stated that if the School Committee is unable to secure a significant portion of the Paul
Revere Heritage building space, the School Committee would be coming to the Finance Committee
and the Town for an additional school. He also stated that some of the sub-committees for the Paul
Revere Heritage building space are indicating to the School Committee that they should look
elsewhere for space.
• Two Finance Committee members recalled that during the High School renovation project, the
Massachusetts School Building Authority(MSBA)stated that for purposes of the high school
renovation, the Rodman Building (aka Building A) was not to be considered or renovated as part of
the high school. It is unclear if the language by the MSBA did or did not intend for Building A to be
used for non-high school classrooms.
Chair Saint Andre thanked Mr. Golledge, Ms. Henderson and Mr. Nectow for attending the Finance
Committee meeting.
D. Other Business/Open Issues
U pdate on $350 000 Reserve Fund Transfer to the Water Enterprise Fund for Rebecca Road
Mr. Murgia provided the following update:
• The bids for the Rebecca Road water main replacement project came in on Friday, October 2.
• Eight bids were received ranging from a low base bid of $199,664 to a high bid of $319,075.
• The low bidder, D'Amico, was awarded the project.
• The $199,664 bid did not include costs for the repaving of the area, the engineering fees or the police
detail costs. Because the work is scheduled to be completed late in the season, a decision was
made by the DPW Superintendent to go with just the base bid and repave the area in the spring at an
estimated cost of $60,000 with the DPW subcontracting the paving portion through the bidding
process in the spring.
• Police details are estimated to be $15,000.
• Mr. Trotta agreed that the $350,000 budget would be sufficient to cover the $200,000 for the base
contract, $75,000 for engineering fees, $60,000 for paving and $15,000 for police details for a total of
$350,000.
• The final cost for the project will not be known until the spring of 2016 but the total estimate is still
$350,000.
• Mr. Casamento advocated for waiting to vote the $60,000 for paving until later in the project and to
revote or approve only the $290,000 for the project now, thereby leaving a higher balance of
$210,000 in the Reserve Fund for any unforeseen projects.
201 x.10.13 FINCOM MINUTES Page 4 of 7 10/17/2015Source page 5
• Chair Saint Andre did not see the need to revote the $350,000 Reserve Fund transfer. Per Mr.
M urgia, the Reserve Fund will be reduced from $500,000 to $150,000 based on the $350,000 transfer
approved by the Finance Committee and the Board of Selectmen.
• If any portion of the $350,000 is not spent, the unused portion along with the rest of the $350,000 will
be transferred at Annual Town Meeting from the Water Enterprise Retained Earnings fund back to the
Reserve Fund.
Employee Benefits Costs —Per Employee —Follow up information to Discussion with HR
(See meeting handout) Mr. Murgia provided a worksheet with estimated benefits costs per employee.
Mr. Casamento had asked at the last Finance Committee the employee benefits cost for a new employee.
Mr. Murgia estimates that an employee with an annual salary of $50,000 per year would cost
approximately $20,000. These figures are based on the total number of benefits-eligible employees
divided by the annual cost of the plans. Not all employees elect benefits and those that do elect benefits,
not all employees elect the most expensive PPO family plan. School administrators, such as Ms.
Henderson and Mr. Nectow, as well as teachers have their retirement paid for by the state through the
Massachusetts Teachers Retirement System (MTRS).
Ms. Gustafson stated that the Town is actually spending approximately $15,000 per year but that the
actual liability is $20,000 when the OPEB liability is figured into the total.
November Finance Committee Meeting with DPW and Capital Planning Committee —
Chair Saint Andre stated that she has reached out to Mike Trotta, DPW Superintendent, and Gene
Manning, Capital Planning Committee Chair, to set up a meeting for November. Questions have been
forwarded to these individuals but Chair Saint Andre requested that if members have additional questions
to please forward them to her as soon as possible.
Storm water Management — Upcoming Meeting — Mr. Murgia provided a brief summary to the
members about new storm water management requirements. He stated that a meeting would be taking
place on Monday, October 19th to discuss the impact that the costly storm water management
requirements may have on the Town. This meeting will focus on how other communities are
i mplementing these fees and if there could be any delays for implementing these requirements. Mr.
M urgia stated that the implementation of the storm water management plan could not be paid for within
Prop. 2'/z and could be paid for by either an override or an additional fee (tax) to the taxpayer. This would
not require Town Meeting approval and could be implemented by a vote of the Board of Selectmen. Mr.
M urgia also stated that recent legislation was approved that Towns could implement a "surcharge" to
ratepayers, very similar to the CPA (Community Preservation Act) surcharge. One option is that Annual
Town Meeting could approve a tax surcharge through a ballot vote, or the other option would be for the
Board of Selectmen to assess a fee.
Finance Committee members have been invited to this meeting. If a quorum of Finance Committee
members plans to attend the meeting they should let Jim Murgia or Ellen Jones know so a meeting could
be posted.
Public Comment —There were no public comments made at the meeting.
Liaisons —Board of Health - Ms. Gallagher gave a liaison report about a recent meeting with Mr. John
Ciccotelli, the Board of Health Director. She reported that there was a Health Fair coming up and that the
Harvard School of Public Health has been in contact with the Board of Health regarding emergency
preparedness drills. There is also a medical reserve corp. that residents involved in the medical field may
volunteer for.
Meeting Comment Correction — Mr. Sims corrected a statement made in an 11-page handout at the
prior Finance Committee meeting regarding disability/life insurance reimbursement employees received.
It had been stated at the prior meeting that AFSCME employees could be reimbursed up to $600.00 per
year benefit. Mr. Sims corrected himself and stated that this applied to the AEA union. Mr. Sims
encouraged members to review the approximately $1.2 million additional perks and benefits that
employees receive under the various union and personal contracts.
2015.10.13 F(NCOM M[NUTES Page 5 of 7 10/17/201 ~Source page 6
Fiscal 2016 Budgets —Comparison —School % of Budget vs. Municipal % of Budget — (See meeting handout.) Mr. Murgia provided a summary of how Canton's budget is divided between the School and Municipal budgets and how this percentage compares with 11 other communities. Currently, Canton's School % of budget is 67%with the Municipal % of budget at approximately 33%. Mr. Murgia stated that Canton's % of budget for the School is more than the 12-town average. Mr. Sims suggested that a third column showing the fixed costs budget would be useful as well. E. Approval of Minutes A motion made by Mr. Sims to approve the minutes for September 28, 2015 as written was seconded by Mr. McKenna. Vote: 7-0-1. Mr. Bergschneider abstained from the vote. F. Next Meeting Date: The next Finance Committee meeting for November would be determined at a later date. Adjournment: A motion made by Mr. Bergschneider to adjourn the meeting at 8:38 p.m. was seconded by Ms. Gallagher. Vote: 8-0-0. Minutes reviewed by: Jim Sims R pectfully submitted, J far a S 'int Andre Char, Canton Finance Committee 2015.10.13 FINCOM MINUTES Page 6 of 7 10/17/2015
Source page 7
Town of Canton
Finance Committee Meeting —Tuesday, October 13, 2015
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).
FY16 Budgets —Comparison of School %versus Municipal % -prepared by Jim Murgia, Finance
Director, dated October 9, 2015.
Estimated Benefits Costs —prepared by Jim Murgia, Finance Directed, dated October 9, 2015.
Draft minutes for Finance Committee meeting of September 28, 2015(6 pages).
2015.10.13 FINCOM M[NUTES Page 7 of 7 10/17/2015