Board of Finance Minutes 11/20/2012

BOARD OF FINANCE

REGULAR MEETING - 6:00 PM

NOVEMBER 20, 2012

 CALL TO ORDER

 Paul Henault, Chairman, called a regular meeting of the Board of Finance to order at 6:00 P.M. on Tuesday, November 20, 2012 in the Main Meeting Room at the Town Offices, 933 Hopmeadow Street, Simsbury, CT. The following members were also present: Peter Askham, Jeff Blumenthal, Nicholas Mason, and Barbara Petitjean. Also present were Mary Glassman; First Selectmen, Mary Ann Harris; Finance Director, Matthew Curtis; Superintendent of Schools, Burke LaClair; Board of Education Business Manager, Leslie Faraci; Commissions Clerk and other interested parties.

 I. PRESENTATION BY THE CHAIR REGARDING 2012-2013 BUDGET AND PLANNING FOR 2013-2014

 After reviewing the evening’s agenda, Mr. Henault began his presentation by speaking about the Budget Schedule; which is outlined by the New Town Charter and was adopted by the voters in November. Mr. Henault then provided an overview of the new role of the Board of Finance. Next, he spoke about the Financial Indicators, saying there is approximately $8.9MM in the General Fund and the Town of Simsbury has a Moody's Bond Rating of Aaa, the highest a municipality can get.  He then reviewed the outstanding debt service of just over $50.2MM and provided a break-down of that debt.  Mr. Henault then showed a slide illustrating the Expenditures by Budget, which provided the following distribution; Board of Education (72%) Non-Public Schools (1%) Board of Selectmen (20%) and Debt Retirement (7%).  Mr. Henault then showed the current budgets for each of those categories versus the budgets from the prior year. Mr. Henault moved on to the topic of Revenue Sources, which include; Property Taxes, State Aid, Investment Income and Other (conveyance taxes, permitting fees, library fees, rentals, etc.). He stated that total revenues are $88,365,805.  Mr. Henault explained the breakdown of Simsbury’s property tax source including; residential (77.2%), commercial (12.4%) motor vehicle (3.2%) and personal property (7%). He then showed a slide illustrating the Town’s dependance on property tax revenue, which he said, continues to rise. The next slide outlined the large capital projects, approved by voters, in order to show where the debt comes from (Simsbury High School, Sewer Plant Renovation/Expansion, Ethel Walker Land, Tariffville School, Library Expansion, Triangle Land Purchase, Paving Management, SHS Track & Stadium, Simsbury Farms and District Network Infrastructure). Mr. Henault then reviewed how the Mill Rate is calculated, saying our current mill rate is 32.40 mills (31.37 Town + 1.03 Fire). He then provided a history of the mill rate growth over the last 10 years, saying one of the goals of the Board of Finance is to keep the mill rate increases below that of the surrounding towns. 

 Mr. Henault then reviewed the factors taken into consideration by the Board of Finance when planning for the 2013-2014 budgets and then spoke of the fiscal challenges Simsbury faces heading into the 2013-2014 budget season. The poor overall economic condition of Connecticut was discussed, with Mr. Henault saying that Simsbury is in relatively good economic shape, but there is a storm around us the three (3) Boards are trying to manage that storm.  Mr. Henault spoke about the Tax Relief Programs including Elderly and Disabled Tax Credit Program, Veteran's Exemption Program and the Volunteer Fireman & EMT Program. Mr. Henault concluded his presentation by thanking those in attendance, and those watching on SCTV, saying the public's involvement is important. He reminded everyone to watch for important budget dates that are approaching. The floor was then opened up to Public Audience.

 II. PUBLIC AUDIENCE

 Joan Coe, 26 Whitcomb Drive, said she is very disappointed that this meeting was not publicized, which does not encourage input from the taxpayers. She warned of diminishing income from the State and reduced income as a result of the revaluation and issues with The Hartford. Ms. Coe urged the Board to only accept a 0% budget increase. Ms. Coe said the 6-year capital plan should be revisited and revised, with the removal of all non-essential items. She said the Board of Education should also come in with a 0% increase. Ms. Coe urged the Board again to only move forward with a 0% increase. 

 Dr. Michael Rinaldi, 32 Pinnacle Mountain Road, addressed the Board with some questions, the first few pertaining to the pension funds. Dr. Rinaldi said he would like these questions discussed at future meetings. (1) How underfunded are the plans? (2) If the pension plans were to be completely funded, what would be the cost to taxpayers. (3) What are the Board’s recommendations as to the design to these plans? Dr. Rinaldi said his next question is regarding the Board of Education. (1) Does the Board of Finance agree with a Board of Education that institutes programs funded through Grants that then later must be picked up by taxpayer funds after State money has dried up? (i.e.; 8th period day at the High School & all-day kindergarten). 

 Mr. Henault said a study is currently being conducted, working with investment advisors and actuaries, to find out exactly how much we need in order to have a very viable pension plan. Mr. Henault also told Dr. Rinaldi they would get back to him with more complete answers to those questions.  

 Mr. John Hampton, Deputy First Selectmen, and next State Representative, said he plans to work closely and collaboratively with the Board of Finance as the Town faces some serious challenges in order to provide Simsbury with a strong voice at the State Capitol. 

 III. APPROVE MINUTES - October 16, 2012 – Regular Meeting

 Ms. Petitjean made a motion to approve the minutes of the October 16, 2012 Regular Meeting as presented. The motion was seconded by Mr. Blumenthal and was unanimously passed.

 When discussing the minutes, Mr. Askham asked Ms. Harris about the fund balance amount of $10,700,00 (p.2, ¶1 within the October 16, 2012 minutes) and Ms. Harris explained where that number came from, saying it was an error. 

 IV. 2013 MEETING CALENDAR – APPROVE

 Mr. Henault said even if these are adopted, there may be one reason or another to alter the dates. 

Ms. Glassman said there is a meeting scheduled for March 26th, which is Passover, so she wanted to make them aware of that conflict. It was proposed and agreed upon to move that meeting to Monday, March 25th, 2012, 5:30PM. Other times and dates of future meetings were discussed. 

 Mr. Mason made a motion to accept the 2013 Meeting Calendar, as amended. Mr. Blumenthal seconded the motion, which was unanimously approved. 

 V. 2012 FINAL TRANSFER

 Ms. Harris explained that they need to close-out these items in order to become balanced for the audit. It was discussed that it was simply bad entries that caused this error.

 Mr. Mason made a motion to approve the Fiscal Year 2012 Budget Transfers as outlined in Ms. Harris’ memo dated November 16, 2012.  Mr. Blumenthal seconded the motion, which was unanimously approved. 

 VI. DISCUSSION OF CHARTER CHANGES

 Mr. Henault said this discussion is for informational purposes and that the primary change is regarding the pension issue (p.32) that references the Board of Finance supervising and maintaining the pension funds (see below for actual text).

 “The Board of Finance shall supervise and maintain the town pension and other post employment benefit funds in accordance with rules and regulations contained in agreements between the Town employees and the Town of Simsbury and or the Board of Education regarding pension and other post employment benefits. The Board of Finance acting as a prudent fiduciary, shall, after consultation with the Board of Education and Board of Selectmen, ensure the pension funds are prudently invested and shall also supervise and maintain the Retiree Benefit Fund established pursuant to the town code of ordinances and designate the annual contribution to be made to insure said Pension and Post employment funds.”

 Mr. Henault said the Pension Subcommittee recently met with the financial advisor and discussed some of his recommendations. The Subcommittee also adopted an investment policy statement that is subject to clarification of the roles and responsibilities of the Board of Finance. 

 Mr. Mason said initially he was opposed to this language (p.32), but at this point, his concern is how this will work, as there is no mention of a Pension Committee in this document. He expressed his concern with the process, saying he does not see the investment manager reporting to the Board Of Finance on a regular basis, and they need to look at this more carefully if they are going to adhere to this language. Mr. Henault said as a result of the new language, there are additional responsibilities on the Board.

 Mr. Henault continued, saying while he thinks the investment policy was well written, but he is concerned with the language regarding the assignment of responsibilities (p.2). Mr. Henault said the Pension Subcommittee could actually be the Board of Finance and explained the reasons why he feels that way. Mr. Askham mentioned he would like to be get a better idea on the Board of Finance’s influence on specific financial decisions regarding these funds. Mr. Blumenthal said considering the Board of Finance has fiduciary responsibly they need to be very comfortable with regards to a subcommittee's decision making or it should be an advisory role for the Board of Finance’s decision making.  The relationship with the pension subcommittee was discussed further. Mr. Henault said moving forward, Chris from FIA needs to be at the meetings on a quarterly basis in order to provide a status report. Ms. Glassman said the Pension Subcommittee is in place until 2013, so there is time to discuss the form it will take in the future. Mr. Mason spoke about the necessary skill sets required when making the decisions related to managing the pension funds.  Ms. Petitjean said in order for the Board of Finance to do their job, as it has changed per the revised Charter, they need to be more involved and informed to ensure they make educated decisions. She said she is uncomfortable moving forward, as they need to make sure they are not working separately from the Subcommittee.  Mr. Blumenthal said he thinks the Board members are equipped to make the necessary decisions, as long as the experts are providing their recommendations and the Board does its due diligence in asking all of the appropriate questions. Mr. Mason said he thinks they need to rely on professional advice because it is a quite complex topic. Mr. Mason clarified that the Pension Subcommittee has temporarily adopted this policy and it will stay in place until it is clarified otherwise by the Board of Finance or the Pension Subcommittee. Ms. Petitjean said, at a minimum, they need to be notified of all Pension Subcommittee meetings.  Ms. Glassman said this revised policy really reflects what is currently being done, but it needs to be validated by all of the Boards.  Mr. Henault wanted to reassure everyone that they have been continuing to follow the recommendations of our paid professionals/advisors and these policies have not been ignored, there has been very close attention being paid to them.  Ms. Petitjean reiterated that she thinks, with the new charter responsibility, they need to take a more active role with the Pension Subcommittee. 

 VII. REPORTS - PENSION SUBCOMMITTEE – IPS

 This topic was discussed under the previous agenda item.

 VIII. UPDATE & POLICIES & PROCEDURES

 Mr. Henault did not have anything to report on the assignment at this point. No one else had additional comments. 

 IX. CORRESPONDENCE

 Mr. Henault did not have any correspondence to report, but did want to take a moment to address  the Undesignated Fund Balance.

 Ms. Petitjean made a motion to amend the agenda in order to allow discussion regarding the topic of Fund Balance. The motion was seconded by Mr. Blumenthal and was unanimously passed.

 Ms. Harris said she is not comfortable speaking about a topic this evening. But, Ms. Harris said, she did provide the Board with numbers from her computer system. Mr. Henault reported a General Fund Balance of $8,912,976.21. Ms. Harris then said the FEMA money came in yesterday. Mr. Askham asked when the anticipate the preliminary draft from the audit. Ms. Harris said it will be shortly. The balance of the General Fund Balance was discussed further.

 Ms. Petitjean made a motion to amend the agenda in order to allow discussion regarding the Open Action Items List. The motion was seconded by Mr. Mason and was unanimously passed.

 Ms. Petitjean asked to put the following topics on the Open Action Items List. 1) High School Project close-out 2) cash flow regarding CIP Plan and 3) General Fund balance follow-up. 

 Mr. Blumenthal moved to adjourn the Regular Meeting of the Board of Finance at 7:35PM. The motion was seconded by Ms. Petitjean and passed unanimously.

 Respectfully submitted,

__________________            ________________________

Paul Henault, Chairman           Leslie U. Faraci, Commissions Clerk