Simsbury, CT - Board of Finance Minutes

These minutes are for informational purposes only. For official minutes, please contact the Town Clerk's Office.

BOARD OF FINANCE

OCTOBER 15, 2002

The Regular Meeting of the Board of Finance was called to order at 6:01 P.M. in the Main Meeting Room of the Simsbury Town Offices. The following members were present: Chairman Paul Henault, Peter Askham, Candace Fitzpatrick, Nicholas Mason and Kevin North. Also present were Finance Director Kevin Kane, Superintendent of Schools Joseph Townsley, Board of Education Business Manager David Holden, Board of Education member Richard Hogan, Director of Public Works Mike Wrabel and other interested parties.

August 20, 2002 Regular Meeting

Mr. North moved to approve of the minutes from the August 20, 2002, Regular Meeting with the recommended change on page five that was suggested by Kevin Kane referring to the correct charter provision number, 908(c) instead of 908(a). The motion was seconded by Ms. Fitzpatrick and passed unanimously.

September 17, 2002 Regular Meeting

Mr. North moved to approve the minutes as amended from the September 17, 2002 Regular Meeting. The motion was seconded by Mr. Askham.

Mr. Wade joined the meeting at 6:03 P.M.

The motion passed with four yes votes. Mr. Henault and Ms. Fitzpatrick abstained.

FINANCIAL REPORTS

Board of Selectmen

Mr. Kane reviewed his memo of October 10, 2002, "Financial Performance Report - Three Months Ended September 30, 2002" (Addendum I). He noted that certain percentage variances with the first quarter of last year are timing issues. He added that it is still very early in the year.

Mr. Kane also discussed his budget worksheet, "Projected Investment Income for Fiscal Year 2002/03". Mr. Henault noted that the projected investment income of $372,741.41 was considerably lower that the nearly $1 million a few years ago.

Simsbury Farms Special Revenue Fund

Mr. Kane went over his summary report (Addendum II) and noted that variances could be due to timing. He added that revenues are one thing, but it is very important that the expenditure budget is met. And if the revenues don't come in, you have to decide how to cut your expenditures. He reiterated that it is still early in the year but added that it is something everyone should have concern over.

Mr. Henault stated that the fluctuation in revenues is understandable, but the expenses continue to seem unable to be in balance to the revenues. Mr. Kane noted that there was a significant increase in insurance and pension costs. Mr. Henault suggested that Mr. Toner present a report at next month's meeting concerning expenses vrs. revenues.

Mr. Mason asked Mr. Kane if it would be possible to add another column on the Simsbury Farms report that shows the year-to-date totals for not only the current year but for the prior year as well. Mr. Kane said that it would.

Mr. North addressed the Board as to the shortfall in interest income and the possibility of being no better off this year than last year in terms of Simsbury Farms. He wondered at what point it would be appropriate for the BOF to direct the various operating departments to find a quarter of a million dollars worth of savings in this year's budgets. He reminded the Board that they have stated they do not wish to tap Reserves. Mr. Askham agreed that nothing should be spent out of Reserves. Mr. North added that they should not wait too long to take action or else the expenses will have already occurred. Ms. Fitzpatrick agreed that Mr. North had a good point and questioned when action should be taken. Mr. Kane noted that there will be another monthly report at the next meeting, and they could discuss it further then.

Board of Education

Mr. Holden reviewed his October 8, 2002, memo, "Financial Report/Quarterly Budget Analysis" (Addendum III) and the attached staffing comparison report which had been prepared at the request of the BOF. In response to questions on enrollment, Dr. Townsley answered that there are about 70 fewer than Dr. Chung's projection and 109 fewer than the BOE's .

Mr. Henault asked what the cost is for health insurance not including the employee contribution (and not lumped together with pension). Mr. Holden said he would get that figure for Mr. Henault.

Ms. Fitzpatrick moved to amend the agenda to discuss Item #6 next. The motion was seconded by Mr. North and carried unanimously.

HIGH SCHOOL MODERNIZATION PROJECT UPDATE

Mr. Henault referred to the lengthy report prepared by O&G Industries, Inc. entitled "Additions and Renovations to Simsbury High School, Design Development Estimate, October 7, 2002" which all members had received in their packets. He asked Mr. North, as liaison to the Public Building Committee, to share his observations.

Mr. North reported that at this point the building would appear to be coming in at significantly less cost than had been previously estimated. He noted, however, that there is a new item under Escalation & Contingency: "Design Contingency" in the amount of $2,270,390. Mr. North encouraged the Board to respond to the Public Building Committee to tell them that the BOF would expect them to work very hard to preserve the savings and direct them to not allow "design creep" to occur.

Mr. Henault stated that he will talk to Dick Ostop, Chairman of the Public Building Committee, on the Design Contingency.

Mr. North moved to amend the agenda to discuss Items #5 and #7 next. The motion was seconded by Ms. Fitzpatrick and carried unanimously.

ENO PROJECT UPDATE

Mr. Wrabel gave an update on the Eno Memorial Hall air conditioning project. He stated that they have spoken to a couple of mechanical contractor consultants, and based on what they heard from them, Town Engineer Richard Sawitzke advertised a Request for Qualifications. They're waiting for those to come in by the end of the month to do a needs assessment and come up with plans and specifications. Mr. Henault questioned whether they were looking at the auditorium alone or also the other rooms. Mr. Wrabel answered that the needs assessment would be for everything, but the primary area is the auditorium. It will be the easiest because of the construction of the building, and it gets incrementally more expensive to extend out to the other areas.

SEWER TREATMENT PLANT UPDATE

Mr. Wrabel handed out a memo from him to Mr. Henault dated October 14, 2002 (Addendum IV). He stated that the consultant, Earthtech, has started the project and has expended $62,050 to date. He added that a Preliminary Design Report is due by the end of November. Mr. Wrabel stated that the project goes before the State Bond Commission on the 25th. He added that Mr. Herlihy and Mr. Heagney have been contacted. He also believed that Mr. Vincent has spoken with Phil Schenck and Bill Smith to get their representatives involved in speaking to OPM to express how important this project is to the towns and to the environment.

FISCAL YEAR 2003/04 BUDGET PLANNING

Mr. Henault reflected in that the BOF usually uses the October meeting as a chance to start getting ideas on how they might want to approach the budget season and consider what suggestions or guidance they might want to give the other two Boards.

Mr. Askham expressed the need for caution with the Pension Fund because the economy is still in a slump. He strongly urged the BOF members to listen to what the Financial Advisors have to say to them at next week's Special Meeting.

Mr. North cautioned that the Town's average rate of spending increase over the past three years in particular has been very high. He added that the Grand List needs to grow but that there has not been much economic activity in town. He stated that he firmly believes that we have to return to a spending level that looks much more like the average over the past seven years which is 4.5%. He noted that people on Social Security are going to get a COLA increase of only 1.4% this year. He added that he does not believe that the Town can continue to increase tax rates or place burdens on the citizens without doing long term damage to the fabric of the town. It needs to be a place where seniors can afford to live and where young people can come and live while also being a place where educational excellence is maintained. But at these kinds of mill rates, we will destroy the residential fabric of the town in time, and we will make ourselves increasingly unattractive to the very commercial Grand List growth that we are trying to achieve. He stated that he would be in favor of seeing a much tighter overall budget increase come in this year vrs. last year.

Mr. Henault stated that he asked Mr. Kane to do a ten-year comparison of the increase of the BOS and BOE budgets. The BOE budget has increased 5.05% on a median basis, and the BOS's has increased 3.4%. The mill rate over the past seven years has increased 4.53% with the low year being 1.74% and the high year, last year, being 7.71%. He stated that those kinds of increases are just not sustainable especially given some of the economic factors in addition to the fact that the high school modernization project will have to be absorbed as it moves forward. In respect to the Sewer Treatment Plant, he pointed out that even though that's a user base, the current users are going to see an increase in their cost as well as a charge for future users because when there's no future users, the current users have to absorb that cost. He added that although that's a self-funded operation, it's still something that has to be looked at.

Mr. Hogan commented that the Budget and Finance Sub-Committee is going to be very active again in the budget season this year. They will be meeting shortly.

Mr. North stated that last year's BOE budget was rationalized as effectively a maintenance budget that was largely driven by enrollment increases, but the enrollment increases don't appear to have materialized. He asked if last year's error would lower the amount of the starting point for this year's budget. Dr. Townsley stated that that's not how it's done because the per pupil cost is based on the year prior to that. He agreed that enrollment didn't go up and that they didn't hire as many teachers as expected, but the Special Ed needs offset that.

Mr. Henault noted that the past couple of years have been fairly contentious. He asked Dr. Townsley how that can be avoided this year. He further asked, from a budgeting standpoint would they prefer the BOF give them a number to work with. Dr. Townsley responded that the Superintendent doesn't have a budget. He is charged by the BOE to bring back annually a cost estimate for the programs and services they want to offer next year. He added that if the BOF gives the BOE a guideline or a budget, unless the BOE gives him a cap, he's going to bring back a way to maintain the current services for next year. He said that it doesn't make a lot of difference to him because he doesn't have a budget and he doesn't approve a budget. He added that he can't speak for the BOE in terms of what direction the BOF should go.

Mr. Askham asked if there has been any more done about having a consultant come in to take a look for cost savings. Mr. Hogan replied that they've found that there really isn't anybody out there that has any expertise in looking at education budgets or that has good credentials and can really help. Dr. Townsley added that they put out a call to NEASC, which is every New England state that has a school system, to see if there was someone out there they've ever used or could recommend. One name came in, but the person had no experience doing this. They did the same thing within the State of Connecticut, specifically every Superintendent and every Board. They also sent a letter to the auditor asking if they knew someone. Mr. Askham stated that he has been trying to find a couple names and he has someone in Texas whose credentials he has to check.

Mr. North commented on caps vrs. guidelines. He stated that, if not this year, perhaps in some point in the not too distant future the BOF should very seriously consider a formula policy for resolving this annual dilemma. Mr. North offered a budget increase formula which would be the three-year average of CPI (or some other independent index) plus Grand List growth. He stated that it would tend to keep things in balance.

Mr. Henault reminded the Board that there will be a Special meeting on October 24th with the Town's Financial Advisor, and they will talk about Capital, Operating Budgets and the impact on the bond rating.

SELF INSURANCE FUND

Ms. Fitzpatrick moved to table this item until the next meeting. The motion was seconded by Mr. Wade and passed unanimously.

Ms. Fitzpatrick moved to adjourn the meeting at 7:35 P.M. The motion was seconded by Mr. Wade and carried unanimously.

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Paul W. Henault, Chairman Roxanne Farrell, Clerk