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July 28, 2016, Finance Committee Meeting. Minutes

Finance Committee · Record date 2016-07-28 · Record f22f43e6efb51ccc18

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Town of Canton Finance Committee                    Minutes Voted on: l0/d/I6
                                           Meeting Minutes                           voce: ~-o
                                        Thursday, July 28, 2016


 Members Present:
 Rob Barker, Sepp Bergschneider, Gerald Dorfman, Nichola Gallagher, Dianne Gustafson, Cynthia
 Holcombe, Stephanie Leach, Tim McKenna, Barbara Saint Andre and Cindy Thomas.

 Members Absent:
 All members were present.

 Guests Present:
 Tony Andreotti, Veterans' Agent
 Charles Aspinwall, Town Administrator
 Meg Gannon, School Committee Member
 Janet Maguire, Parks &Recreation Director
 Barry Nectow, School Business Administrator
 Mike Trotta, Public Works Department Superintendent
 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
 7:00 on Thursday, July 28, 2016 in the upper meeting room of the William Armando Recreation Center

 A.       Approval of Agenda

Chair Saint Andre reviewed the items on the agenda which included reorganization of the Finance
Committee, introducing new members to the Finance Committee, addressing various reserve fund
transfer requests and discussing the Auditor's Management Letter, the one-year OPEB update, Annual
Town Meeting and liaison assignments.

B.        Announcements

Welcome of New Finance Committee Members —Chair Saint Andre welcomed Cynthia Holcombe and
Cindy Thomas to the Finance Committee. Cynthia Holcombe has lived in Canton for seven years and
has two children, one in college and one a senior at Canton High School. Cindy Thomas has been a
resident of Canton since 1982 and is a former School Committee member with three children who all
graduated from Canton public schools.

C.       New Business

Elect Chair. Vice Chair and Secreta

Chair Saint Andre explained that while the Finance Committee by-law addresses the election of a
Finance Committee Secretary it was unnecessary at this time given that the Finance Committee has a
recording secretary.

A motion made by Mr. Barker to nominate Ms. Saint Andre as the Chair of the Finance Committee
was seconded by Ms. Gustafson. Vote: 9-0-1. Ms. Saint Andre abstained.

A motion made by Mr. Bergschneider to nominate Mr. Barker as the Vice Chair of the Finance
Committee was seconded by Mr. Dorfman. Vote: 100-0.


Recreation Revolving Fund ~ Increase FY16 Spending Limit from $300,000 to $400,000 — (see
meeting handout) Ms. Maguire stated that she was requesting an increase to the spending limit for the
FY16 Recreation Revolving Fund from $300,000 to $400,000 because to date there had been $286,000
already spent in FY16 from this fund with another $22,000 that had been encumbered. She also stated
that Annual Town Meeting 2016 had established a spending limit of $400,000 for FY17.
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Ms. Maguire stated that some of the additional expenses incurred in FY16 included adding an Assistant
 Director to Parks and Recreation, doubling the number of activities offered from 300 to 600, increasing
 safety through use of cell phones, the addition of weather radios, increased marketing expenses in order
 to compete with private industry, increased payroll due to offering extended camp hours for extended
 care, the addition of a summer concert and the addition of a summer movie night. Revenue for FY16 was
 estimated to be $374,000 as compared to $345,000 in expenses.

  Mr. Murgia stated that this increase was being requested for FY16 because the books had not been
 closed for fiscal 16 and if this fund was allowed to be overspent, the auditors would most likely write the
 Town up for spending in excess of $300,000. Mr. Murgia referred to a state statute (Chapter 44 Section
53 E 1/2) that allowed the spending limit to be increased with the approval of both the Board of Selectmen
(BOS)and Finance Committee (see meeting handout). The BOS had already approved the spending
 limit increase at a meeting two weeks prior to the Finance Committee meeting.

 A motion made by Mr. Barker to approve an increase to the Recreation Revolving Fund FY16
 spending limit from $300,000 to $400,000 was seconded by Mr. Bergschneider. Vote: 10-0-0.


 Reserve Fund Transfer Request FY16 —Veterans' Services - $16,000 — (see meeting handout)
 M r. Andreotti presented an FY16 Reserve Fund Transfer Request for $16,000 to cover ordinary benefits
 and insurance that had exceeded the veterans' budget. The State reimburses the Town for 75% of these
 expenses. Also causing his budget to be overspent was additional salary paid to a part-time employee as
 well as rent paid to the Canton Housing Authority that had not been budgeted. Mr. Andreotti reminded
 the Finance Committee that he has never asked for a capital request and that all of his capital projects
 such as the veterans' park have been funded out of the Veterans donations fund.

 A motion made by Mr. Barker to approve a transfer of $16,000 from the Reserve Fund to the
 Veterans' Services budget for FY16 was seconded by Mr. Bergschneider. Vote: 10-0-0.


 Reserve Fund Transfer Request FY16 —School Department - $65,000 — (see meeting handout)
 M r. Nectow and Ms. Gannon presented an FY16 Reserve Fund Transfer Request for $65,000 for the
 purpose of covering the costs of an Architect and a Project Manager for a feasibility study of the Hansen
 roof replacement project. The feasibility study would be the 2"d stage of three stages. The $65,000
would eventually be included in the overall cost of the project and would be reimbursed by the MSBA
(Massachusetts School Building Authority). The approximate reimbursement rate from the MSBA could
 be similar to the 45.15°/o received for the Hansen and Galvin window replacement project. If Canton is
denied in the next phase of the project, a portion of the $65,000 would be reimbursed 40-45% by the
MSBA. Mr. Nectow stated that there is a very low denial rate in the Accelerated Program.

The roof repair project is in the School Departments FY18 capital plan. Mr. Nectow stated that
$1.2 million is being carried in the Capital Planning Committee(CPC) plan for the roof replacement
project. He anticipates an approximately 40% reimbursement rate. If the $65,000 were not approved the
project would still be completed under the CPC plan.

A motion made by Mr. Barker to approve a transfer of $65,000 from the Reserve Fund to the
School Department budget for FY16 was seconded by Mr. Bergschneider, Vote: 10-0-0.


Reserve Fund Transfer Request FY16 —Snow &Ice Removal - $168,000 — (see meeting handout)
Mr. Trotta presented information for an FY16 Reserve Fund Transfer Request for $168,000 to cover a
deficit in the Snow and Ice Removal budget. This deficit was primarily caused by the purchase of salt for
the winter. Because the new salt shed has a larger capacity than the old salt shed, more salt was
purchased for the fiscal 2016 winter and the increased price of salt per ton.

Mr. Trotta provided information regarding the snow removal:
   • The winter was an average winter.
   • The DPW plowed seven times and sanded 12 times.
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Salt costs increased from $47 per ton in FY14 to $63 per ton in FY15 and to $66 per ton in FY16.
      ~~   The new salt shed holds approximately 3,000 tons.
           Approximately 4-5,000 tons are needed for a normal winter.

  A motion made by Mr. Barker to approve a transfer of $168,000 from the Reserve Fund to the
  Snow &Ice Removal budget for FY16 was seconded by Mr. Bergschneider. Vote: 10-0-0.


 Reserve Fund Transfer Request FY16 —Trash Collection - $36,000 — (see meeting handout)
 Mr. Trotta presented an FY16 Reserve Fund Transfer Request for $36,000 to cover costs not included in
 the Trash Collection budget. The Town had agreed to collect trash from two condominium complexes on
 Pine Street that had not been in the original Republic contract and had not been budgeted for. The yard
 waste facility on Pine Street was expanded to 12 months causing a $15,000 shortfall for the contract
 costs which had not been budgeted.

 A Finance Committee member suggested that the DPW offer a Hazardous Waste Collection day two
 times per year instead of only one time per year.

 A motion made by Mr. Barker to approve a transfer of $36,000 from the Reserve Fund to the Trash
 Collection budget for FY16 was seconded by Ms. Gallagher. Vote: 10-0-0.


 Reserve Fund Transfer Request FY16 —Town Insurance $26,000 — (see meeting handout)
 Mr. Murgia stated that the workers compensation expenses portion of the Town Insurance budget
 exceeded the amount budgeted for FY16 and was therefore requesting an FY16 Reserve Fund transfer
 request for $26,000. The premium for the workers compensation insurance exceeded the amount that
 had been budgeted. He further stated that the workers compensation budget is audited every year with a
 review of the payments to vendors.

 With regard to the Town' auto fleet, there may have been an increased number of vehicles on the road.
 As vehicles are purchased by the Town the older vehicles are sometimes continued in service instead of
 being traded in. A Finance Committee member suggested that perhaps department budgets should be
 charged with the continued cost of insuring these excess vehicles.

 With regard to property insurance, Mr. Murgia stated that the cost of property insurance could be affected
 due to the Rink insurance payments received. Mr. Aspinwall will check with the insurance agent with
 regard to insurance premium costs when putting together the budget for FY18.

The contingencies budget line item has a $53,000 cushion which had been built into the insurance budget
by the former Town Administrator most likely for the unanticipated insurance premium costs while putting
the budget together for the upcoming fiscal year. Claims deductibles are paid out of the contingencies
budget.

A motion made by Mr. Barker to approve a transfer of $26,000 from the Reserve Fund to the Town
Insurance Expenditures budget for FY16 was seconded by Mr. McKenna. Vote: 10-0-0.


Management Letter — FY15 &Single Audit Report — (see meeting handout) Mr. Murgia stated that the
auditors will be meeting with the BOS in the near future to discuss the FY15 Management Letter and
Single Audit Report. The Auditors could be scheduled to attend a Finance Committee meeting sometime
in September or October to go over some items in the Management Letter. He further stated that the
Single Audit Report is required because the Town receives greater than $500,000 in federal grants.

OPEB (Other Post Employment Benefits) One Year Update — (see meeting handout)
Mr. Murgia stated that a more detailed OPEB study had been done for fiscal 2015 and this update report
was done so that the information could be used in preparation of the financial statements. The unfunded
liability is $95 million which is an increase from the $92 million estimated in fiscal 2015. Another detailed
study will be done for fiscal 2017.


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The GASB (Government Accounting Standards Board) is changing the rules for these studies. The next
  study under these new rules is scheduled for fiscal 2018. Every two years an OPEB study must be done.
  The OPEB trust fund has approximately $2 million of assets which is approximately 2%funded as
  compared to some communities that are 0%funded. The ARC (Annual Required Contribution) to OPEB
  for fiscal 2016 is $5 million but the Town's actual contribution is approximately $4 million which equates to
  about 70% of the ARC. The bond rating agencies view a higher percentage of contribution rate of the
  ARC as favorable.

  Mr. Murgia further explained that at Annual Town Meeting the Town contributed in fiscal 2016 $750,000
 (74%) which is a decrease from the 87%funded for fiscal 2015. For fiscal 2017 the Town contributed
 $770,000. In order to meet the 100% ARC the Town would have to contribute an additional $1 million to
 achieve the 100% ARC. The Town is not required to make the Annual Required Contribution but the
 Town would fall behind if it did not contribute something. The Town is required per state requirements to
 contribute to the pension plans and is doing so to fund 100% of the ARC.

  M r. Murgia stated that cities and towns along with the MMA (Massachusetts Municipal Association) are
  pushing for OPEB reform legislation to provide relief for municipalities.

 Ms. Gustafson suggested that as new positions are added to the Town the OPEB costs should be figured
 in as well. Mr. Murgia stated that every time a new benefits-eligible position is being added to the budget
 that $5,000 should be set aside out of the new revenue to account for OPEB. Ms. Gustafson further
 suggested that a "look back" at the amount added to the previous year's municipal or School Department
 budgets be the basis for looking at how many positions had been added and what amount needs to be
 carried for these additional OPEB costs.

 The Committee members discussed the benefits of having information at the start of setting the budget
 for the next fiscal year with regard to the current number of employees, anticipated retirement counts,
 estimated new hire count and benefit costs.


 D.      Other BusinesslOpen Issues

 Review of Annual Town Meeting 2016 —Chair Saint Andre stated that she had received comments and
 complaints about the Consent Agenda and the last minute changes made to it up to the night of Town
 Meeting. A possible solution would be to place many articles in the Consent Agenda that appears in the
 Finance Committee Recommendations to the Voters and then remove articles from it at Town Meeting.

Ms. Gustafson spoke against the inclusion of so many articles in the Consent Agenda and stated that if
articles were deemed to be so non-controversial that take mere seconds to approve at Town Meeting,
then exclude them from the Consent Agenda. She further stated that the Consent Agenda was too
confusing and caused dissention among voters.

Chair Saint Andre added that the by-law states that the "presumed" Moderator recommends the Consent
Agenda after consulting with the Finance Committee, BOS and School Committee. This presents a
problem in that the Moderator is elected at Town Meeting, unlike other communities that elect a
Moderator on the ballot.


Finance Committee By-Law Change -Chair Saint Andre informed the Finance Committee that she will
be proposing changes to the Finance Committee By-Law and will circulate these changes prior to the
next meeting. One of her suggestions is to decrease the number of members for the Finance Committee
from 12 members to nine members.


Liaison Assignments -Chair Saint Andre asked the members to send her an email if they have a
special interest in being the liaison to a particular department. She stated that the role of the liaison was
to either discuss in person or by telephone a department's budget requests or changes for the upcoming
fiscal year.


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~:.     Approval of Minutes

  A motion made by Mr. McKenna to approve the minutes as written for May 9, 2016 was seconded
  by Mr. Barker. Vote: 8-0-2.


  F.      Next Meeting Date: The next meeting date would be determined at a later date.

  Adjournment: A motion made by Mr. Barker to adjourn the meeting at 8:37 p.m. was seconded by
  Mr. Bergschneider. Vote: 10-0-0.

  Minutes reviewed by: Rob Barker

  Respectfully submitted,
  ,r
   ~~      ~,


 Barba Saint Andre
 Chair, Canton Finance Committee




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Town of Canton
                          Finance Committee Meeting -Thursday, July 28, 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).

 Email from Jim Murgia to Jen Kemalian dated 6/22/16 regarding Increasing the Recreation Revolving
 Fund from $300,000 to $400,000 and Chapter 44 Section 53 E'/2 (3 pages).

 Fiscal 2016 Reserve Fund Transfers (Municipal)-Revised -Summary Sheet
 provided by Jim Murgia, dated 7125/16,(1 page).

 Reserve Fund Transfer Request FY16 -Veteran's Services - $16,000(2 pages).

 Reserve Fund Transfer Request FY16 -School Department - $65,000 (28 pages).

 Reserve Fund Transfer Request FY16 -Snow &Ice Removal - $168,000(2 pages).

 Reserve Fund Transfer Request FY16 -Revised -Trash Collection - $36,000(2 pages).

 Reserve Fund Transfer Request FY16 -Town Insurance - $26,000(2 pages).

 Management Letter - FY15(8 pages).

 Single Audit Report Pursuant to OMB Circular A-133 June 30, 2015(13 pages).

 OPEB (Other Post Employment Benefits) Reporting in Accordance with GASB45 FY16
(6 pages).

 Finance Committee Liaison List (Draft)(1 page).




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