BOARD OF FINANCE
FEBRUARY 12, 2008
REGULAR MEETING
1. CALL TO ORDER
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, Candace Fitzpatrick, Nicholas Mason, Anita Mielert and Kevin North. Also present were Director of Finance Kevin Kane, Library Director Susan Bullock, Blum Shapiro representative Vanessa Rossito and other interested parties.
2. APPROVE MINUTES
Ms. Mielert made a motion to approve the minutes of the January 15, 2008 Special Meeting. Mr. North seconded the motion.
Mr. Mason made a correction to page 2 noting that the word "not" should be added for clarification. Mr. Henault made a correction to page 1 so as to read "an additional $1 million to the undesignated fund balance".
The motion to approve the minutes as amended passed 5-0 (Ms. Fitzpatrick abstained).
Mr. North made a motion to approve the minutes of the January 15, 2008 Special Joint meeting. Mr. Askham seconded the motion and it passed unanimously.
Ms. Mielert made a motion to approve the minutes of the January 14, 2008 Special Meeting. Mr. Askham seconded the motion and it passed unanimously.
3. JUNE 30, 2007 CAFR
Vanessa Rossito of Blum Shapiro reviewed the Audit Report with the Board members, noting that the auditors had issued an unqualified opinion, which is the highest form of opinion that can be received. The auditors also emphasized Simsbury's early implementation of GASB 45 in their opinion. She noted that, as of June 30, 2007, the Town of Simsbury has total net assets of $85.86 million, $58.6 million of which is invested in capital assets net of related debt. Ms. Rossito also stated that the Town of Simsbury's net assets increased $6.7 million from last year.
The undesignated fund balance was $7.6 million and represented 9.35% of General Fund expenditures, which Ms. Rossito characterized as a healthy fund balance. She also noted the new reporting format that requires showing the original legally adopted budget vs. the finalized actual budget after transfers or appropriations, noting that General Fund revenues were $1.8 million greater and that expenditures were $143,000 less in the final budget and that there were $2.4 million of transfers in that were greater than the budget.
Mr. Kane distributed copies of the Management Letter to the Board members. Ms. Rossito stated that, although there were still issues relative to Board of Education capital assets, a new vendor has been engaged to track capital assets and, hopefully, the comment will go away next year. The other issue had to do with credit balances that exist in property tax receivable balances for 1999 and prior. Mr. Kane stated that the Tax Collector does not think that these balances are due to overpayments, but rather have to do with adjustments that were made to reconcile the Tax Collector's rate book with the Town's accounting system. He has asked the Assistant Finance Director and the Tax Collector to work on cleaning these balances up.
Mr. Askham asked about inconsistencies in following policy regarding uncompensated absences that have been noted recently. Ms. Rossito stated that policy was being followed and any carryover time had to be approved by the First Selectman. She added that it is up to the Boards or the First Selectmen to determine the policies and that there are a number of areas where policies do not currently exist, such as e-mail, use of cell phone or internet use policies. Ms. Fitzpatrick asked if this lack of such policies affect financial health evaluations. Ms. Rossito stated that, as an auditor, they always encourage having many policies, but added that the auditors reviewed uncompensated absences and that the documentation provided was appropriate. Mr. Askham stated that the issue is who sets policy
and when and how you document any changes in policy.
Mr. Mason had concerns regarding internal controls and procedures and asked at what point the auditors would step in and identify any problems. Ms. Rossito stated that the auditors do not concentrate on office procedural policies, but noted that the audit industry is moving towards new risk assessment standards and that they will be required in the future to do more stringent documentation of internal controls and link that documentation to their audit testing. Mr. North felt that, given the purview of the Board of Finance, the members are just seeking some assurance that the audit is comprehensive enough to identify with a reasonable probability instances where practice departs from policy when it might have a fiscal impact.
Mr. Askham stated that there is also a need to test adherence to the controls that have been established and that the Town should entertain hiring someone to perform an internal audit function. Ms. Rossito stated that not many towns have a full-time internal audit function, but some have hired outside consultants to perform specific studies of more sensitive areas. Ms. Fitzpatrick noted that the primary reason that municipalities do not have internal audit functions is that they can not afford them. Mr. Askham thought that there should be some funds budgeted to outsource projects that would enhance the control environment. Mr. Mason concurred.
Ms. Mielert thought that, relative to management issues, the Board might be treading on territory that the Charter gives to the First Selectman. Mr. Henault stated that the Board will have to have future discussions around this issue, but agreed with Ms. Mielert that the First Selectman is the Chief Executive Officer and does have a certain degree of flexibility with respect to policies and procedures.
Ms. Rossito handed out a summary of some new auditing standards, one of which has already been implemented this year (SAS 112) and SAS 114 which will require the audit firm to meet with those charged with governance before the audit commences. She stated that it needs to be determined who those representatives will be and what venue will be involved. She suggested that it would be most appropriate to do this in the summer. The summary also identified the new risk assessment standards that will apply and indicated that the auditors would be out in April or May to do some documentation of the internal controls and to assess risk.
4. REQUEST FROM RESERVES
Mr. Henault referred to a grant from the Hartford Foundation for Public Giving to be used for the Library. Mr. Kane indicated that the Town had secured a grant from the Foundation in the amount of $135,000 over three years. After reviewing the information, he determined that much of it had to do with payroll and it was his recommendation that it go through the General Fund. The amount being used in Year 1 is for computer equipment and furnishings. Once an appropriation is set in the Library budget, the check will be deposited and funds will be disbursed against it. The Board of Selectmen has already approved the grant and the request currently before the Board of Finance is for a supplemental budget appropriation.
Ms. Fitzpatrick made a motion to transfer $52,475 from reserves for computer equipment and furnishings for the Library pursuant to section 908(c) of the Town Charter. Mr. Mason seconded the motion and it passed unanimously.
5. UPDATE ON PROPOSED BOND ISSUE
Mr. Kane indicated that he is in the process of preparing a $4 million bond issue and noted that, although the letter from the State for the Tariffville project has not yet been received, it is anticipated that it will be received and should be going out for bid shortly.
6. DISCUSSION ON 2008/09 OPERATING BUDGETS AND CAPITAL PROJECTS
Mr. Henault referred to the six-year capital plan draft that Mr. Kane provided to the Board and indicated that he understood that the Board of Selectmen had adopted their operating budget last night at 3.48% and that the Board of Education was having a workshop this evening. Mr. Henault stated that the three possible responses from the Board of Finance to the six-year capital plan will be: 1) to send it back with an indication as to how much money there is to spend; 2) to move it on to Public Hearing as is; or 3) to pick and choose various projects that can go forward (an option he did not favor).
Mr. Askham asked to see an update on debt service and General Fund reserves projections with the effects of these projects taken into account. Mr. North added that one of the tools needed by the Board going forward would be a mill rate worksheet that extends out for six years so that the projected long-term effects of these projects on the mill rate can be seen.
7. NEW ENGLAND STATES MUNICIPAL PERFORMANCE PILOT APPLICATION
Mr. Henault referred to a letter from the First Selectman to the Board asking for a recommendation regarding participation in the New England States Municipal Performance Measurement Pilot Project, indicating that Simsbury has been selected for inclusion in the project. The first contribution for fiscal year 2009 would be $5,200. Mr. Askham gave an overview of the program, indicating that performance measurement was accountability for results and improved performance. The end result of such an undertaking would be better decision-making, performance appraisals and accountability to the citizens. A citizens group would determine which departments to be studied and there would be citizen surveys.
Ms. Mielert asked about how the results of the study would impact budgeting or create cost savings. Mr. Askham stated that it would provide data to compare costs for delivering services between other towns as well as put more emphasis on cost justification. Ms. Fitzpatrick stated that indeed performance-based budgeting helps communities better serve what their citizens value, but thought that it would not, in the end, reduce the budgets. Her concern with this particular program was that, although the Town is being asked to contribute $5,200 initially and would get professional oversight, the program overview states that "due to project budget constraints, responsibility for convening and carrying out much of the citizen input activity will be up to the individual municipalities." She stated that
this program involves pretty sophisticated public policy research and noted that the Town of West Hartford spent approximately $30,000 to do performance-based citizen focus groups and citizen surveys of just their Public Works Department. In short, it is expensive to do it right and $5,200 is not the Town's total exposure on this project. She felt that the Board needed a better actual cost measure of participating in this project as the grant only covered the professional consultant. Ms. Mielert feared it would impose an undue burden on the department heads; Ms. Fitzpatrick concurred that it would involve a huge personnel burden. She also noted that the focus of the program is not to study the bottom line, but rather provide services that relate better to citizens' attitudes about what they should be getting and can sometimes produce odd responses.
It was the Board's consensus to table further discussion until it could obtain a better estimate of the total cost involved before responding to the First Selectman. Mr. Henault asked Ms. Fitzpatrick to query West Hartford for input.
8. LIAISON REPORTS
Airport Study
None.
Public Building Committee
Mr. North and Mr. Mason agreed to continue to serve as liaison representatives for the Public Building Committee, although Mr. North noted that their meeting schedule has migrated to be in direct conflict with Fire District meetings.
9. OTHER BUSINESS
February 20th Meeting
Mr. Mason and Ms. Mielert indicated that they were planning on attending the February 20th meeting regarding the discussion of having a charette on future land use development in Simsbury. Mr. Henault asked that they convey the Board's questions, should a charette be authorized, as to how much it would cost and where those funds will come from. Mr. North stated that he felt that it is important for the Board to suggest that any such group be sensitive to the long-term fiscal impacts that might result from changes in land use because our community is constantly struggling with the fact that only a small portion of our grand list raises taxes from the commercial sector. Ms. Mielert thought that a charette is more aimed at consensus-building rather than zoning changes and thought that the last charette cost around
$25,000-$30,000.
Mr. Henault thought that the primary role of the Board of Finance in this process is knowing the cost, how the cost will be budgeted and the value to be received. Mr. Mason stated that he was concerned about the negative message that is being sent to businesses potentially wishing to invest in this town.
Connecticut Conference of Municipalities
Mr. Henault referred to a Summary of Key Proposals by Governor Rell that he received from the Connecticut Conference of Municipalities, noting key issues such as an increase in the prevailing wage threshold, exclusion of a budget reserve fund of up to 10% in arbitrations, and reference to OPEB. He noted a red flag that the Governor remained silent on the extension of the present rate for the conveyance tax. Mr. North also noted the requirement of a 2/3 majority on unfunded mandates.
New England States Municipal Performance Measurement Pilot Project
Mr. Henault stated that, if some answers can be found prior to the next Board of Selectmen meeting, then the Board could perhaps have a short Special Meeting to discuss this project.
10. ADJOURNMENT
Ms. Fitzpatrick made a motion to adjourn the meeting at 7:55 P.M. Mr. Mason seconded the motion and it passed unanimously.
_________________________________ ___________________________________
Paul Henault, Chairman Debra L. Sweeney, Clerk
| 
