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HomeMy WebLinkAbout2024-02-29 Finance Committee Minutes Finance Committee Meeting Minutes of February 29, 2024 Present: Chair Denevan O’Connell, Vice Chair Christine Allen, Eva Pastor, Brianna Stetson, Nancy Sarro, Regina Kean, and Keith Chaney Not Present: Dustin Silk, Ken Gray Present Non-Member: Finance Director Lyne Savage and Town Manager Melissa Rodrigues Mr. O’Connell called the meeting to order at 7:00pm. The open session meeting took place at Town Hall 120 Main St North Andover in the Select Board Room. Public Comment None. Presentation of FY25 Recommended Budget with Town Manager and Finance Director Ms. Rodrigues introduced Kyle Warne as the new North Andover Town Accountant. Ms. Rodrigues presented the Finance Committee with the FY25 Recommended Budget: Revenues ● Revenues for the FY25 Budget total $130,116,575 a 5.02% increase from last fiscal year ○ Not including free cash for reserves and capital ● Property taxes are estimated to grow by 6.4% ● Local receipts are increasing by 1.8% ● Local aid, per our policies and procedures, is level funded New Growth ● Proposition 2½ allows the Town to raise 2.5 percent of the prior years tax levy PLUS any new construction (improvements or new buildings), which is called new growth PLUS any debt exclusions or overrides ● No new large impact projects on horizon ● Anticipate tight budget for next three years FY25 Budget Expenditure Breakdown ● The FY25 Budget includes increases of 4.5% in departmental spending from FY24 (excluding reserves) ○ Municipal Departments: 3.14% ○ Education budget: 5.5% plus funding in reserve for Middle School addition operational costs ● The budget book is going to show a smaller increase for the schools due to some operational and efficiency improvements ● Municipal budget is increasing by $1,314,000 ● School budget is increasing by $3,320,028 Health Insurance ● The Town joined the GIC in 2014. At that time, the Town was self-insured and appropriating $11,091,614 for health insurance. ● In FY25, eleven years later, the recommended health insurance budget is $13,343,911 ● Health insurance breakdown roughly ○ $6.3 million- School employees ○ 2.5 million- Town employees ○ $3.2 million- Retirees Highlights and Changes ● Moved copy machine leases from all municipal budgets to the IT budget ● Fourth year of Finance Committee Reserve funded at $1.5 million ● Salary Reserves for unsettled Collective Bargaining Agreements ● COLA at 2% ● $1,000,000 debt holdover to be transferred to capital stabilization for REC Plex ● As part of DPW’s plan for improvements in service, this budget includes a new Tree Climber. ● Additionally, there is a shared position with Facilities, which is mostly funded by ARPA, and will be a Recycling and Trash/Sustainability Coordinator Highlights and Changes: Facilities ● A shared service that was never fully consolidated, staffed or funded ● Moved building maintenance costs from all non-enterprise budgets to the Facilities budget ● Moved electricity and heating fuel items from School budget to shared services for stability and efficiency Reserves Stabilization Account Balance: $6,143,013 ● FY25 appropriation: $80,255 Capital Stabilization Account Balance: $8,185,278 ● FY25 appropriation: $350,000 ● Proposed to use $4,484,775 OPEB Trust Fund Balance: $6,089,118 ● FY25 appropriation: $75,000 SPED Stabilization Balance: $797,712 Free Cash Certified: $12,104,543 Free Cash Available After Appropriation Other free cash articles: Design of 400 Great Pond Road demolition: $100,000 Stevens Estate: $41,583 (excess revenue received) Capital: $6,685,143 Retirement Payout: $180,000 CPE Revolving Account reimbursement: $338,408 TOTAL FREE CASH LEFT: $4,254,149 Ms. Kean asked if North Andover sets the recycling routes, or if the recycle provider sets it. Ms. Rodrigues stated it was a schedule that was set 25 years ago. Mr. O’Connell asked Ms. Rodrigues about new growth and how North Andover has prepared for it. Ms. Rodrigues explained that expectations have been set that the upcoming year will not see the same growth as well as federal funding will be ending. Mr. O’Connell asked to explain deficit spending more in depth. Ms. Rodrigues explained that after the storm, North Andover declared a state of emergency and were allowed to deficit spend up to $3.6 million and ended up spending $1.5 million. The state did an earmark of $750,000 to offset the $1.5 million spent. Ms. Allen asked if the figure in Facilities listed is the entire increase. Ms. Rodrigues stated there is a transfer of electricity from Schools that is the large figure change from last year. Ms. Allen asked if the school budget will see a decrease to their budget. Ms. Rodrigues stated yes. Ms. Sarro asked for comparison from prior year. Ms. Rodrigues stated she could can go back and look into it. Ms. Kean asked if the janitorial staff will be still included in the School. Ms. Rodrigues stated will it will stay in School budget and building maintenance and electricity will be in the Facilities budget. Ms. Allen asked how many budgets are shared by Town and School. Ms. Rodrigues stated IT, Purchasing, Audit and Facilities. Mr. Chaney asked if a savings is being achieved. Ms. Rodrigues stated it is more about the efficiency than the savings but may see some savings in leasing. Mr. Chaney asked if it can be tracked so that it can be possibly used for bargaining. Vote to accept updated version of the Financial Reserve Policy Ms. Rodrigues went over the changes to the Finance Reserve Policy: • Other Post-Retirement Benefits (OPEB) – a Stabilization Fund established per the provisions of MGL Chapter 40, Section 5B, and a Trust Fund established per the provisions of MGL Chapter 32B, Section 20 shall be utilized to reserve funds to offset the Town’s OPEB liability. 1. The aggregate target funding level (TFL) for these Funds shall be an amount equivalent to 5% of the OPEB unfunded actuarial liability. 2.Annually $75,000 shall be deposited and per person costs for new positions shall be charged to cost center. a. An amount equal to no less than 1% of the OPEB unfunded actuarial liability shall be transferred to the Stabilization Fund from the Town’s Health Insurance Trust Fund at the time that the Stabilization Fund is established. Annually, an amount equal to a minimum of 2.5% of the aggregate Fund balance of these Funds shall be appropriated to either Fund from the operating budget or Free Cash or both. b. From time to time the Town shall analyze the balance in the Health Insurance Trust Fund to determine if additional funds can be transferred into the OPEB Funds. 2. In order to replenish the Funds if used, in the year immediately following any draw down, the Town shall formulate a plan to restore the Funds to the previously identified TFL. Said funding shall come from Free Cash. • Special Education Stabilization Fund – to provide stability in the delivery of public education that could otherwise be adversely impacted by costs associated with special education which were unforeseen at the time the annual fiscal appropriation was adopted by an Annual Town Meeting, the Town will establish a Stabilization Fund per the provisions of MGL Chapter 40, Section 5B. For the purpose of this policy unforeseen costs are those for which neither experience nor reasonable judgment or planning could have anticipated. 1. The target funding ceiling (TFC) for this Fund shall be $750,000 and the target funding floor (TFF) shall be $100,000. • 2. The school department can request a transfer from this Fund in an amount not to exceed $250,000 in any one fiscal year if the following conditions are met: • a. Eligible costs are limited to out of district placements and transportation costs associated with out of district placements. • b. The costs were unforeseen prior to the adoption by Town Meeting of the school department budget in the fiscal year the funds are being requested. • c. The School Committee, Finance Committee, and Select Board each by majority vote affirm that the costs were unforeseen and paying said costs from the appropriated school department budget would adversely impact the delivery of education in North Andover. • 3. In order to ensure that the Fund is not depleted, and that proper financial planning is undertaken to reduce the likelihood of future unforeseen costs, the aggregate amount of transfers from the Fund in any two consecutive fiscal years is $400,000. The Town shall formulate a plan to restore the Fund to the identified TFC when the balance of the Fund drops below the TFF. Said funding shall come from Free Cash or other Reserves. • 4.Prior to use of the fund, every effort should be made to fund such deficits in the operating budget, including but not limited to the use of reserve transfers. • Note: Transfers from this Fund will require action at a Special Town Meeting. Ms. Kean asked if there will be a deficit this year. Ms. Rodrigues stated there is an anticipation that schools will have deficits this year and will not use the Special Education Stabilization Fund, but possibly to offset teachers contracts this fund may be used. Ms. Rodrigues suggested to eliminate the Special Education Stabilization Fund and rather use the Financial Committee Reserve fund. Ms. Sarro asked if the Special Education Realization fund gets funded every year. Ms. Rodrigues stated no, it used to get funded, but does not currently. MOTION: Ms. Kean made a MOTION, seconded by Ms. Allen to amend the language in the Financial reserve Policy to state: (2) Under OPEB, Annually $75,000 shall be deposited and $6,000 per person per year costs for 10 years for new positions shall be charged to cost center. (3) Under Special Education Stabilization Fund, in order to ensure that the Fund is not depleted, and that proper financial planning is undertaken to reduce the likelihood of future unforeseen costs, the aggregate amount of transfers from the Fund in any two consecutive fiscal years shall not exceed $400,000. Motion approved 7-0. Discussion of Finance Committee Letter Mr. O’Connell stated all members will take the same sections as last year. Ms. Pastor asked for the members’ assignments from the previous year. Ms. Stetson asked for the Word version of last year’s letter. Approval of Minutes from July 12, 2023 and February 12, 2024 MOTION: Ms. Kean made a MOTION, seconded by Ms. Pastor, to approve the minutes of July 12, 2023 as written. Motion approved 6-0-1. MOTION: Ms. Kean made a MOTION, seconded by Ms. Allen, to approve the minutes of February 12, 2024 as written. Motion approved 7-0. ADJOURNMENT MOTION: Ms. Kean made a MOTION, seconded by Ms. Allen, to adjourn the Finance Committee meeting at 8:17PM. Motion approved 7-0. Respectfully submitted, Jillian A. Brothers Executive Assistant Documents used at meeting: Town Manager’s FY25 Recommended Budget Finance Committee Letter Finance Reserve Policy Minutes