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September 19, 2022, Finance Committee Meeting - virtual meeting. Minutes

Finance Committee · Record date 2022-09-19 · Record ff4e505aea1b83ed7c

Saved text from 5 source pages. Transcription and OCR may contain errors; verify figures and wording against the original. Retrieved 2026-10-15.

Canton Finance Committee                    Minutes Voted on: 1/25/23
                                             801 Washington Street                     Vote: 6-0-2
                                               Canton, MA 02021


                                                Meeting Minutes
                                               September 19, 2022



Finance Committee Members Present: Dave Clough, Dan Cole, Karen Foley, Emilio Mauro, Tim McKenna, and
Cindy Thomas.

Finance Committee Members Absent: Tom Emery and Reuki Schutt.

Guests Present:
Paul Gargano, Partner, Roselli, Clark & Associates, CPA
Ellen Jones, Finance Committee Recording Secretary
Tony Roselli, Partner, Roselli, Clark & Associates, CPA
Randy Scollins, Finance Director

Call Meeting to Order: Chair Thomas called the virtual meeting to order at 7:00 p.m.

Auditor’s Report FY21 – Audit Exit Conference – Roselli, Clark & Associates – Mr. Scollins introduced Tony
Roselli and Paul Gargano, both partners of Roselli, Clark & Associates. Mr. Scollins screen shared a PowerPoint
presentation regarding the Audit Exit Conference. Mr. Roselli led the presentation and explained for the new
committee members some of the basics of and audit along with other information regarding the audit as follows:

       The auditors follow the Yellow Book established by Generally Accepted Government Accounting Standards
        (GAGAS). The auditors review receipts, payrolls and disbursements. The start of the FY22 audit will be
        delayed a bit and is expected to start on October 24.
       The audit requires risk assessments in cash handling areas. Some of these assessments are suggested by
        the Town.
       Single audits are performed for towns like Canton that receive greater than $750,000 of federal financial
        assistance. The auditors will also perform single audits with regards to funds the Town will receive or has
        received through the Coronavirus Aid, Relief and Economic Security Act (CARES) and American Rescue
        Plan Act (ARPA).
       Because Canton follows all the accounting standards, the auditors issued a clean opinion as opposed to a
        qualified opinion.
       The Statement of Auditing Standards #115 (SAS #115) – The auditors determined Canton did not have any
        material weaknesses.
       Canton’s reserve balances (well over $20 million) is continuing on an upward trend, approximately 3-4% and
        is enough to keep its AAA bond rating. Revenues beat the forecasted revenue by $4 million. Expenses
        beat the budgeted amount by $1.3 million. Approximately $5.3 million has been added to the fund balance.
       Canton’s unfunded liability for pension is $38.4 million, a decrease of $6 million over the prior year. Canton
        is 70% funded which in Mr. Roselli’s opinion is a very good place for Canton to be in.
       Canton’s Other Post Employment Benefits (OPEB) unfunded liability is $86.9 million or an increase of $4
        million over the prior year. The increase was due to discount rates being reduced. Norfolk County
        Retirement System (NCRS) has predicted that it will be fully funded by 2030. Once NCRS is fully funded
        Canton’s yearly assessment will drop by $6-7 million annually. Mr. Scollins is suggesting that the annual
        savings be redirected to the Town’s OPEB fund.
       With regard to ARPA, Canton has been awarded $7 million of which $2.5 million is awarded directly to the
        Town to be spent on any municipal purpose with $4.5 million being awarded but passed through NCRS to
        spend on specific categories. The auditor’s suggested that the Town appoint an ARPA specialist to assist
        the Town with the cumbersome process and to also help with maximizing the ARPA grant. The Town will
        be able to use some of the ARPA funds for the cost of hiring an ARPA specialist.
       Mr. Scollins stated that prior to Norfolk County Commissioner’s hiring their consultant to manage the ARPA
        funds, the County had a decision to make. They could have passed the funds through to the Town, thereby
        eliminating the "headache and heartache” but instead they decided to to go along with their decision to
        retain the $137 million to Norfolk County. If they had made the smarter decision to pass through the funds
        to the towns, taking off the funds that the County needed, they could have eliminated any issues but now all
        the towns are “suffering” the consequences, meaning all the towns in Norfolk County are going through a


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laborious process to obtain funds along with restrictions for spending. Mr. Scollins stated that he is
         extremely disappointed with the County’s decision. Norfolk County, Plymouth County, Barnstable County
         and Bristol County are all voicing the same opinion on their funds not being passed through directly to the
         Towns. Mr. Roselli stated that he has to remain neutral with regard to the decisions by the various counties.
        NCRS is one of only four counties within the state that continue to operate under the old system as an active
         county versus a stagnant county, with the county having the control over the release of ARPA grant funds.
         Mr. Roselli will follow up and send Mr. Scollins a list of ARPA specialists that could assist the Town with the
         ARPA process. Unfortunately, the specialists are paid at an hourly rate which could be quite expensive for
         the Town. The Town of Boxboro uses KP Law Firm for assistance with the ARPA process with the benefit
         being the expertise of lawyers assisting and interpreting the ARPA process. Canton would not be able to
         utilize Clifton, Larson, Allen LLP (CLA) because this firm is already working for Norfolk County
         Commissioners assisting with their ARPA process.
        Mr. Scollins reported that Canton was randomly selected by the state’s Executive Office of Administration
         and Finance to undergo a sub-recipient audit of the Town’s CARES expenses, which has been successfully
         completed.

    Mr. Gargano led the discussion with regard to the Management Letter for the year ended June 30, 2021 and the
    previously reported items they have highlighted in their past audits. Below are some of those highlights:

            The Tailings process for the return of stale checks to rightful owners was advertised in the Canton
             Citizen by the Town. The final step in the process is for the Town to work with the banks to remove
             these checks from their outstanding check listing.
            The auditors noted in a prior management letter that the Fire special detail activity is accounted for
             manually. The MUNIS system which will better automate and track the detail activity is expected to be
             operational for FY23.
            With regard to employment contracts the Auditors noted that the Town has made all non-School
             personal contract language consistent with the Town’s AEA union contract language. The next step the
             auditors have recommended is for the Town to amend the School personal contract language and
             consider consolidating the number of personal contracts issued in the future.

The plan for the auditors is to visit with the Finance Committee sometime in January/late January to discuss the initial
results of the FY22 audit.

General Fund’s Fiscal 2022 Operating Results – Randy Scollins

Mr. Scollins provided the Committee with the good news that the Town of Canton ended Fiscal 2022 with great
General Fund Operating Results. The following are some of the highlights of that presentation:

        The FY22 budgeted deficit of $3,162,927 was due to cash reserves and late arriving excess State Aid.
        The FY22 revenues came in ahead of expenditures by $1.89 million. Compared to the budgeted deficit of
         $3.16 million the total operating surplus was $5.05 better than plan.
        Turn backs for FY22 amounted to $1,277,611 which is an indication that departments are doing a great job
         of managing their budgets.
        The estimated free cash reserve (to be submitted to the Department of Revenue for final DOR
         certification/approval) is estimated to be approximately $8.9 million as of June 30, 2022. The Town would
         be able to maintain its AAA rating even if it was to use $6 million of this free cash reserve.
        The total estimated cash reserves for the Town is $23,479,484 which represents 20.29% of fiscal 2023’s
         budget well above the usual target of 15% of budget.


Enterprise Funds’ Fiscal 2022 Operating Results – Randy Scollins

Mr. Scollins shared on the meeting screen a chart showing the Enterprise Funds’ operating budget for FY 2022. The
following are the highlights from the discussion:

        Water revenues were down $771,926 from the budgeted water revenue for FY 2022 and slightly down from
         the prior year. Mr. Scollins had a discussion with Pat Cawley, the Water and Sewer Administrator, who
         reported to him that the summer of 2021 was a very wet summer having an effect on the irrigation revenue.
         Even though the $771,926 water revenue was down, the Town’s MWRA actual assessment was $618,863
         less than the amount budgeted for FY 2022. With a few other favorable expense budgets the Town netted
         out Fiscal 2022 with a surplus of $245,336. Mr. Scollins stated that not having the $771,926 revenue only
         keeps the Town further away from reaching its goal of having reserves at 50% of the operating budget so
         the Town can have a better mix of debt and cash for capital projects. Currently the Town is at 15% instead
         of 50% of reserves. Mr. Scollins does not see water rate relief or a flattening of the rates if the Town is
         going to meet its goals.


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    Sewer revenues exceed the revenue budgeted for FY 2022 by $203,405. The expenses were only $1,790
         more than budgeted but the sewer budget still had an overall surplus of $201,615. This surplus helped to
         put the sewer reserves at 45% of the operating budget with the target being 50% of operating budget. Mr.
         Scollins reported that the Water and Sewer Rate and Policy Committee recommended that the Town taper
         off on any sewer rate increases for the future.

        Rink revenues were $24,261 less than budgeted for but expenses were less so the Rink Enterprise Fund
         ended the fiscal year with a surplus of $32,008. Due to the efforts of the Town Accountant, FEMA is
         supposed to be sending the Town a check for about $750,000 related to the rink collapse. These funds will
         go directly into the Rink Enterprise Fund. There is no target number for Rink reserves and the rink will stand
         on its own. There is no major capital project anticipated in the future for the rink. There is also $110,000 of
         debt service per year the Town is carrying on the rink for the $2 million that the Town had to borrow on the
         total $11 million for the rink repair project. A good portion of the Rink salaries was absorbed by the
         Recreation Department. With the transition in the Recreation Director position items went “under the radar”
         with salaries being charged to the Recreation Department budget instead of the Rink budget. This coming
         season those employee expenses will be correctly charged to the Rink budget. Mr. Clough recommended
         adding advertisements to the Rink boards to generate additional revenue. Mr. Scollins stated the Town’s
         rink is leased from the Department of Conservation and Recreation (DCR.) While the DCR does not forbid
         advertisements on the rink boards they would have some input and control over the advertisements.
         Mr. Scollins will follow up with the Recreation Director about advertising at the rink.

FY24 Budget Milestone Calendar (draft) – Randy Scollins

Mr. Scollins reported that a draft of the FY24 Budget Milestone Calendar was sent out to all departments, boards and
committees with the FY 2024 Capital Budget Memo. Capital Requests from departments are due to the Finance
Department by November 7, 2022. The Finance Committee’s Recommendations to the Voters will have to be in the
voters hands by April 24. The first night of Annual Town Meeting is scheduled for May 8.

Update on Canton Community Preservation Committee Plans for FY 2024

Because of transitions with regard to being without administrative support, the Canton Community Preservation
Committee (CCPC) may or may not be in a good position to be accepting grant round applications for FY 2024. The
CCPC will be taking this up at their next meeting. Mr. Scollins clarified for the Finance Committee that there will be a
CPA article for ATM 2024 with three motions that will address the following necessary items: 1) the 10% of CPA
revenues that will have to be voted into each of three “buckets” under the CPA, 2) the funds for the CPA
Administrator’s salary will have to be voted, and 3) the funds for the debt service payment for the Paul Revere land
will have to be voted. Mr. Scollins will keep the Committee updated with any further CPA information.

Current Financial Climate and Potential Implications for the Town including Borrowing – Mr. Scollins reported
the following:

        The Town is seeing overages on projects due to price increases. Mr. Scollins stated that this was discussed
         at the most recent Department Head meeting. His suggestion is to have a general contingency budget for
         capital projects. This contingency fund could be voted by either the Finance Committee and/or the Capital
         Planning Committee so that projects don’t languish and get completed on time. He does not recommend
         deducting the general contingency from the current capital allocation plan but instead have it as an addition
         to the allocation plan as an inflation factor. He leaves the decision of the general contingency up to the
         policymakers. Excess reserves may be a good funding source for the general contingency. Any remaining
         funds on the contingency line item at the end of the year would go into free cash. Mr. Scollins noted that
         there is some flexibility with regard to cash capital projects i.e. that if an item on the list comes in at less than
         budgeted, those funds are available for another project item on the list.

        With regard to borrowing, Mr. Scollins stated that he would typically go out to borrow annually sometime in
         April or May. This fiscal year he plans to go out to borrow in January because of interest rate hikes. Mr.
         Scollins would not go out to borrow earlier than January. When the Town pays its first half of debt service
         six months after the borrowing, the Town would make a payment after July 1 and would thus have a budget
         for the payment. Mr. Scollins has seen 3-4% interest rates for communities with similar borrowing profiles
         as Canton.

Meeting Schedule for the Finance Committee – Chair Thomas would reach out to the Committee members not
present at the meeting to see if they have a preference for meeting on Monday or Wednesday. The Committee will
have the option to continue meeting virtually thru March 2023.




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Establishing a Finance Sub-Committee to review Elected Officials Compensation – Status Update

Ms. Thomas recommended that the Sub-Committee gather information and meet during the fall so that the Finance
Committee will be able to make a recommendation, if needed, at the Annual Town Meeting in May. The Sub-
Committee will:

    1)   Gather historical/background information on how Canton’s elected officials compensation got to where it is
         today.

    2)   Gather comparison information from other surrounding Towns with regard to the amount of stipend/salary
         and how are they structured and paid and policies and procedures including eligibility for health insurance.

    3)   Receive input from elected officials through hearings or listening sessions.

Chair Thomas recommended the Sub-Committee be made of 2-3 members from the Finance Committee. Mr. Clough
and Mr. Mauro volunteered to be on the Sub-Committee.

Finance Committee Member Recruitment – Currently there is one vacancy on the Finance Committee. Starting in
late December there will be two vacancies as Mr. Emery has work and personal commitments and will, therefore, be
stepping down from the Committee. Chair Thomas suggested another ad/letter to the editor in the Canton Citizen.
Ms. Foley suggested a posting on the Everything Canton Facebook page. Mr. Mauro suggested promoting the
vacancies at Town events and putting a message on the Canton Cable TV (CCTV) message board.

Approval of Minutes – A motion made by Mr. Mauro to approve the July 13, 2022, minutes as amended was
seconded by Ms. Foley.

Roll Call Vote:

         Mr. Cole          Aye                Mr. Emery         Aye
         Ms. Foley         Aye                Mr. Clough        Aye
         Mr. McKenna       Aye                Ms. Thomas        Aye

The motion to approve the July 13, 2022 minutes passed 6-0-0.

Miscellaneous – Mr. Clough inquired if the red “X” on St. Gerard’s indicated it was condemned or structurally
unsafe. Chair Thomas stated that she thought the red “X” is to indicate that firefighters do not need to enter the
building.

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

A motion made by Mr. McKenna to adjourn the meeting at 8:36 p.m. was seconded by Mr. Mauro.

Roll Call Vote:

         Mr. Mauro         Aye                Mr. Cole          Aye
         Mr. Clough        Aye                Ms. Foley         Aye
         Ms. Thomas        Aye                Mr. McKenna       Aye

The motion to adjourn the meeting at 8:36 p.m. passed 6-0-0.

Minutes reviewed by: Dave Clough

Respectfully submitted,




Cindy Thomas
Chair, Canton Finance Committee




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Canton Finance Committee Meeting
                                              Meeting Documents
                                              September 19, 2022


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

Agenda for September 19, 2022 (1 page).

Town of Canton – Audit Exit Conference – Roselli, Clark & Associates dated September 19, 2022 (10 pages).

General Fund’s Fiscal 2022 Operating Results - Memorandum from Randy Scollins to Select Board dated
September 19, 2022 (11 pages).

Enterprise Funds’ Fiscal Operating Results – Memorandum from Randy Scollins to Select Board dated
September 13, 2022 (4 pages).

Draft FY 2024 Budget Milestone Calendar dated September 13, 2022 (1 page).




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