Simsbury, CT - Board of Finance

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

Mr. Hogan referred to the BOE budget booklet which the BOF members had received the week before. He reviewed the process leading to the budget being adopted. He stated that the things which drove the budget this year were collective bargaining agreements, pension contributions, insurance increases and Special Education. He added that, in order to get the budget down to 4.25%, a number of items were cut including eleven teaching positions.

Mr. Askham asked how many teachers would be retiring. Mr. Holden answered that they have nine known retirements and five additional which have been projected as of June 30^th. Mr. Hogan added that there is a good chance there will be layoffs of a number of teachers. Dr. Townsley stated that there are net 12.4 fewer positions for next year. He added that next year the paraprofessionals (non-certified positions) are increasing in Special Ed. Mr. Holden stated that there will be a small net reduction in the overall staff.

Mr. Askham noted a significant increase in the pension number. Mr. Henault stated that if the average of the investment return continues to go down, they have to make sure the contribution is there. In response to Mr. Askham's question, Mr. Holden stated that he does not see the trend for the whole benefit area changing from the forecast they've already seen.

Mr. Holden stated that he locked in at $.81 per gallon for fuel oil this year. He added that they want to lock in a firm price as quickly as they can for next year. He stated that they will have to budget in the years ahead for the increased utility costs at the high school given the additional square footage.

Ms. Fitzpatrick asked how many magnet school students Simsbury has. Dr. Townsley answered that they have 25 next year who will be at the University of Hartford, and they are scheduled to have eight at the School of Performing Arts and eight at the Math and Technology School at Trinity. He stated that Simsbury participates currently in only three magnet schools. Mr. Holden added that the 25/8/8 numbers are what the BOE voted on in terms of the maximum numbers that they would send.

Mr. Askham told the BOE members that he appreciates their effort in meeting the BOF's cap. Mr. Hogan stated that the administration did a great job. He also thanked the members of the Budget and Finance Sub-committee who went over the budget line item by line item over four and five nights.

Mr. Mason asked how often the BOE has Dr. Chung do his study. Dr. Townsley stated that it's about every three to four years. He noted that they have two other sources for their projections: 1.) The State of Connecticut provides an annual projection for Simsbury by grade level, not by school. 2.) They pay a fee to NESDEC, a firm in the Boston area, to do projections for Simsbury by grade, by school.

Mr. Mason asked about the increase for "Tuition-Other Than Public Schools". Mr. Holden stated that this is one of the areas that has been most volatile historically. As the students are assigned, the known dollars are encumbered. Dr. Townsley added that it is not only volatile in terms of the actual numbers, it's also each child's expense associated with the program.

Mr. North commended the BOE for a terrific presentation of the budget materials. He added that the documentation is excellent and quite easy to understand. Mr. North further commented that the benefits, health insurance and pension in particular, are presenting such a challenge this year and are likely to present a substantial challenge in the coming years.

In response to Mr. Henault's query, Mr. Holden stated that the BOE's total request from CNR is $504,000 which is within the limit that the BOF and the Director of Finance established. He handed out a breakdown of expenses leading to the $504,000 (Addendum I).

Mr. Holden handed out his "2002-03 School Bus Inventory" (Addendum II). Mr. Henault began a discussion on the policy of purchasing buses. The policy was instituted in order to smooth out the purchases over the years by purchasing three buses per year. He stated that no buses were purchased last year due to budget constraints and that again this year no buses are scheduled to be purchased. Mr. Hogan stated that the BOE typically likes to keep the buses for at least 10 years and that there were no 10-year old buses last year nor are there any this year. Dr. Townsley stated that 10 years is just a guideline and that some of the buses could be operated for more than 10 years. He wondered if, during the course of this year, the BOF might consider an additional appropriation of $150,000 for three buses. Mr. Hogan stated that as they go through the budget year they may find that money will be left over at the end of the year, and they could dedicate the funds for that purpose.

Mr. Henault asked what the plans were for the CNR equipment purchases for $243,150. Mr. Holden stated that it runs the whole gamut, including band equipment, rigging in the high school auditorium, an offset press at the middle school and replacing classroom furniture which is over 30 years old.

Mr. North reported on the status of the high school project. He stated that the project appears to be on schedule, and it is within budget. He gave an overview of the cost issues associated with the project. He added that everybody appears very confident that they will be able to smoothly work on the project in all its various phases through the three years and still carry on smoothly with the educational mission that is going to be taking place during those three years.

Mr. North produced two hand-outs for the members of the Board containing the returns from various asset classes. He stated that this is one more piece of evidence that would suggest that it would be prudent for the BOF over some period of time to move down the actuarial assumed rate of return on the pension contributions from its current 8% to as low as 7%. He recommended that the members think about an implementation schedule which might involve changing the assumed investment rate of return by 25 basis points a year over a period of 3 or 4 years until it gets down to the 7%.

Mr. Mason stated that he had gone to the previous week's Pension Committee meeting. He stated that there was discussion as to whether the Pension Committee has the authority to dictate the return rate that Mr. North talked about. The discussion centered on the fact that the Pension Committee is essentially advisory in nature and should continue to maintain that role. Mr. Mason recommended that the BOF have discussions with the BOS in trying to decide how they should proceed in the future. Mr. Henault suggested that when the BOF discusses this matter with the BOS, the BOE should be included.

Mr. Askham suggested setting up an ad hoc committee with someone from the BOF, BOS, BOE and the Pension Committee to try to come up with some consensus. Mr. Henault added that they should perhaps have some workshops over the summer on it.

Mr. Henault stated that he would like to have a Special Meeting after the April 1, 2003 Public Hearing that will allow the BOF the flexibility to take action on the Operating Budgets, either to move them on to referendum or to send them back to the Boards.