Simsbury, CT - Board of Finance

The Regular Meeting of the Board of Finance was called to order at 6:00 P.M. in the Main Meeting Room of the Simsbury Town Offices. The following members were present: Paul Henault, Peter Askham, Nicholas Mason, Anita Mielert and Kevin North. Also present were Board of Education Business Manager David Holden and Assistant Director of Finance John Wilcox.

Mr. Henault referred to a memorandum from Mr. Wilcox entitled "Financial Performance Report - Three Months Ended September 30, 2007" (Addendum I). Mr. Wilcox stated that revenues are at the same level as this time last year and that the largest decrease was in "Intergovernmental Revenue". The decrease consists of $45,000 that was received last year in connection with the elderly property tax credit and a Homeland Security emergency check for damage due to a thunderstorm in the amount of $37,000. Mr. Wilcox explained that intergovernmental revenues usually consist of one-time reimbursements and usually come in January. Ms. Mielert noted that there were also decreases in funding for other categories, such as PILOT payments and Town Aide to Roads; Mr. Wilcox indicated that these amounts would not be known until the actual check is received from the State.

Mr. Henault referred to a memorandum from Mr. Holden entitled "Financial Report/Quarterly Budget Analysis" (Addendum II). Mr. Holden stated that State revenues are as projected and that there are two more tuition-paying students than were originally projected. He noted that three insurance accounts currently have projected surpluses and a dues account and two maintenance accounts that are currently in a deficit position. The variance in the Membership Dues account is due to the Board's post-budget decision to participate in CABE. The variance in the Trim/Removal of Trees account is due to a substantial amount of tree removal that had to be done at Central School as a byproduct of the PTO's playground project as limbs that were hanging over some of the new equipment needed to be trimmed and a large number of dead hemlocks that had to be addressed as a safety issue. The variance in the Maintenance of Buildings account was due to repairs that were required on the Latimer Lane School and Tootin' Hills School roofs, which are over twenty years old.

Mr. Holden stated that expenses associated with the $627,000 that was budgeted for instructional technology have been isolated into the 1200 series accounts ("New Instructional Equipment") and that approximately $450,000 of that amount has been encumbered to date. Projectors and interactive white boards have been in installed in grades 4-6 throughout the district and in Social Studies and Science at Henry James. The high school was addressed largely through the addition and renovation project and the second phase will be to complete Henry James other than Science or Social Studies. Professional development for teachers associated with the installations has been ongoing since the summer.

Ms. Mielert asked how the increases in certified/non certified staff compare to student population increases and if it any decreases in staffing could be expected as the student population declines. Mr. Holden replied that the student population increased from approximately 4,000 in the 1990's to 5,000, representing a 25% increase, while at the same time certified staff increased from 370 to 415, representing a 12% increase. Ms. Mielert asked how much of this increase was due to mandated programs. Mr. Holden replied that he did not have a definite number, but stated that special education programs have increased dramatically over the past fifteen years, resulting in a major increase in paraprofessional staffing. He thought that, as the student population begins to decline, there should be a corresponding decrease in certified teaching staff, but could not speak to any of the programs currently being considered by the Board of Education that might require additional staffing, such as world languages at an earlier age and increased pre-school programs. Mr. North noted that it appears that, while the overall student population grew by 25%, the special education population increased by over 25%.

Mr. Henault asked the Board members to review a draft of proposed meeting dates for 2008 for approval at the Board's next meeting. He suggested that January 2009 be included on the schedule per Mr. Mason's suggestions in prior years. Mr. North stated that he would be unable to make the March 18, 2008 meeting.

Mr. Mason thought that there should be a 3-board meeting prior to the January 15th regular meeting. Mr. Henault stated that he would like to post a Public Hearing on January 14th. Mr. Holden stated that he will be presenting his range of projections in terms of budget increases given the known information that he has to both the Board of Education and the Board of Finance in mid-December. Ms. Mielert stated that, since this is the only Board without significant personnel changes due to the recent election, it would perhaps be helpful to have a three-board meeting with all the new personnel. Mr. Holden thought that a three-board meeting could feasibly be held at 6:00-7:30 in the BOE Conference Room prior to their January meeting. Ms. Mielert noted that it might be necessary to post a Special Meeting due to statutory filing requirements. Mr. Henault noted that he also might have issues with the March meeting dates as well. He asked Board members to e-mail him with any scheduling conflicts.

Mr. Henault stated that he has asked Mr. Kane to present in draft form what he has been working on with the auditors with respect to the Audit Report. Mr. North asked that Mr. Kane forward the Letter of Transmittal, Management's Discussion and Analysis and Notes to the Financial Statements to the Board members as soon as they are drafted. Mr. Mason noted that there is a fair amount of activity relative to the OPEB funding on page 30.

Mr. Henault referred to Mr. Kane's memo dated November 9, 2007 entitled "2008/09 Debt Service Budget/Proposed 2008 Bond Issue" (Addendum III) as well as a notice from Moody's Investors Service regarding the April 3, 2007 $9.8 million bond issue for the library, Ethel Walker land purchase, the high school auditorium, and floor and window replacements (Addendum IV), noting that the Moody's opinion giving the Aa1 rating reflects the Town's solid financial performance with fund balance levels that are expected to diminish, but remain adequate as the Town uses reserves for land purchase. He thought the areas of note are the mention of reserves and Moody's note with respect to OPEB. He felt that the Board of Finance deserves a great deal of credit for pushing the OPEB issue, especially amidst the objection of at least one Board of Selectmen member as well as comments that it was "irresponsible" to do so.

Mr. North stated that he and Mr. Askham have noted that all the cities with the highest ranked credit ratings are in the early stages or more advanced stages of adopting OPEB funding and that having a favorable bond rating in more adverse environments will be very important to the Town going forward. On a cautionary note for policy purposes, he added that Moody's has also noted that the Town's ability to grow its grand list is limited and that the Town's reserves are currently below the median for Aa1-rated municipalities. Therefore, he felt that the Board must remain very mindful of replenishing the undesignated fund balance as it is drawn down for various capital projects. Mr. North stated that, should an extraordinary capital expense come along that strains the limit of the debt policy and simultaneously overwhelms the ability to fund out of the undesignated fund balance, then the expense goes straight to the taxpayer in the form of a tax increase. He also noted that the Board has discussed, but never officially adopted, a fund balance policy.

Mr. Holden stated that, in reference to Mr. Kane's note in his memo relative to the audits of BOE projects, the Tootin' Hills project was audited this summer and, as a result, $89,000 more than was originally anticipated was received in reimbursements. He also noted that the Henry James project is currently being audited.

Mr. Henault noted that the Board had received in their packet a memorandum from Mr. Kane relative to the projected mill rate worksheet as well as the proposed six-year capital plan to be used primarily for discussion purposes at this point. He stated that the mill rate projection involves certain estimates and assumptions and that, as the Board moves forward with its meetings, the spreadsheet will be used in connection with a projector. Mr. Henault stated that he would like to see the property tax credits broken out as to elderly tax relief, volunteer firemen/ambulance, veterans, etc.

Mr. Mason asked that Mr. Kane take a look at the McLean settlement amount as it was his understanding that, with an increase in the assessment and an increase in the percentage of their payment, the amount would be going up and not down. Ms. Mielert asked about the status of revaluation and it was thought that there is currently a statistical revaluation going on and that a physical revaluation will not be happening for another five years.

Relative to capital, Mr. Henault stated that the 7% debt guideline has already been exceeded in that the voters have authorized the library project, the Ethel Walker land purchase, and the Tariffville School renovation. He thought that the Board needs to evaluate was has been done over the last few years and what the direct impact will be on tax increases. He stated that he is inclined to ask both the Board of Education and Board of Selectmen to delay any capital projects this year. He noted that there is a new First Selectman who has spoken about strategic planning and that there is a new chairman on the Board of Education.

Mr. North concurred, but thought that there is an additional element in that there have been discussions in the past year relative to a large capital expenditures, such as those related to the Meadowood settlement, etc., and that these items should be included in this plan. He said that, if capital expenditures are on the radar, then they should be included on the capital expenditures list and made part of the priority setting and that to exclude them would be irresponsible.

Mr. Holden reminded the Board that some of the education projects that have State construction grant reimbursement now require approval prior to submission so that there is another year before actual spending begins (i.e., a 2008/09 approval will not have a financial impact until 2009/10).

Mr. Mason provided the Board with an analysis that was prepared by the Tax Collector documenting various taxpayers whose last year's tax bill was less than $5.00. The list consisted of 64 taxpayers whose tax bills rendered a total of $167.46 to the Town and Mr. Mason felt that the collection expenses associated with the collection of these amounts did not make good economic sense. Mr. Mason suggested that a resolution be made to suggest that the Board of Selectmen pass an ordinance similar to those of many other towns to eliminate some of these small property tax bills. Mr. Askham suggested that the Tax Collector make a recommendation to the Board, along with a detail as to what other towns do. Mr. Mason also thought that there should be a policy regarding refunds of less than $5.00 as well.

Mr. Henault stated that he had received a letter from Rich Sawitzke, Town Engineer, requesting a volunteer from the Board of Finance to sit on the Advisory Committee for the Airport Feasibility Study. It is expected that there will be five meetings throughout the duration of the six-month study. Mr. Henault asked the Board members to consider volunteering.