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HomeMy WebLinkAboutFCMeetingMinutes_02.27.03 APPROVED FINANCE COMMITTEE MINUTES February 27,2003 ATTENDANCE: The following members were present: Jack Watkins,Chairman,Bernice Fink,Vice Chairman, Paul Stewart,Keith Mitchell,Mark Nichols,Melinda Coppa,Paula Porten and Mike Batsimm. Chuck Benevento, Finance Director,was also present. Four members of the North Andover Fire Department and a resident attended. CALL TO ORDER: Jack Watkins,Chairman,called the meeting to order at 7:00 pm. APPROVAL OF THE MINUTES: `B"MOVED to approve the Minutes of February 6,2003 with minor revisions. Mark Nichols seconded the motion and it passed unanimously. After a short discussion,the Finance Committee agreed to hold the Minutes of the February 13 meeting so that members can make revisions. OLD BUSINESS: FinCom Committee Resort Paul Stewart began discussions on the Book Assignments and Schedule. He noted that the FinCom has not received the School Department Budget revisions,but they should be ready by the next FinCom meeting. Paul noted the specific deadlines of the Warrant Book Schedule and emphasized the great amount of work to do. `B"asked Chuck Benevento how the Governor's Budget will affect the Town Budget.Chuck said before any comparisons are made, there would have to be clarification of certain line items in the Governor's Budget. He added that the Town is slated for a 10.5%cut in state aid,which is pretty close to the Town Manager's Budget of 10%decreases. Paul stated that the only urgency to the Warrant Book Timeline is the FinCom notes because decisions must be made about content. "B"suggested that FinCom notes be in general terms rather than very specific terms. Paul asked the group to pay close attention to the extra workshops scheduled on days other than Thursday. He finished by saying the first draft of the Warrant is due by March 27 because the Public Hearing on Budget and CIP is scheduled that day. Jack distributed a spreadsheet comparing the Governor's State Aid FY04 Budget vs.Manager's Recommended Budget vs.FY03 Actual. He noted that the Manager's Recommended Budget FY04 is not far from the Governor's Budget(approximately 9%decrease in state aid). Jack emphasized that the document is just a snapshot of the numbers. Chuck noted that the Governor's Budget is just the first step in the process and that the finished product will not look like the current one. Selectmen Approved General Fund Budget FY04 Jack then began discussions on what should be accomplished at this meeting. He said that the Selectmen voted to move the Manager's Recommended Budget to the Finance Committee rather than debate it and make policy decisions. Jack said if it is a policy issue,the FinCom is not a policy making board. He then recommended the FinCom write a list of policy issues that are of concern and forward it to the Selectmen. Budget Policy Issues Jack heard from a couple of FinCom members their concern for Public Safety. Melinda began the discussion by noting that the residents voted for an override for the second ambulance and that they have spoken. Paul stated that there is no way that the Town can earmark override proceeds revenues. It was stated Medicare sets rates for ambulance fees then the Town has a choice of going below,average or above. The insurance carrier is billed first, and then the individual is billed for the balance. Mark Nichols noted that the loss in revenues from the ambulance services outweighs the costs of running the ambulance. Keith Mitchell made the point that when the Town passes an override at a certain amount;the expenses for the service continue to go up while the revenue source may stay the same. This creates a problem in budgets that are set five or six years down the road. Mark said that a comparison of costs vs.revenues would give the FinCom information needed to make a decision. Chuck Benevento said the Board of Selectmen raised the ambulance fees by 30%. Jack asked how the FinCom could agree on handling the second ambulance;issue. Paula would like to recommend establishing an Enterprise Fund for ambulance revenues so the monies would not go into the General Fund. "B"noted that the current capital fund for replacement costs is for one ambulance;therefore,there needs to be another for the second ambulance. Keith made a MOTION that the Finance Committee recommends that the Board of Selectmen re-examine the budget to add$125,000 to the Fire Department(personnel,ambulance)and reduce another line item accordingly. Mark seconded the MOTION and it passed unanimously. Jack continued discussions on Public Safety by noting the Police Department budget would like to add four officers at a cost of$200,000. The Department has been paying overtime to compensate for four officers out on leave this year. Chuck noted the Police Department receives several grants each year that fund DARE programs,equipment, etc. He said FY04 grant funds would most certainly decrease. Paul emphasized that the Police are the very first high priority because if you're not safe you're not able to do anything else. Keith noted that he had seen the study and said that the police don't patrol outside of the Common after 7:00 pm. Jack made a MOTION that the Finance Committee recommends that the Board of Selectmen re-examine the budget to add$200,000 for the Police Department and reduce another line item accordingly with the proviso that if any additional funds should come to the Town earmarked for Public Safety that$200,000 is reduced by that money. Paula seconded and the vote passed unanimously. "B"then began discussions on the Chapter 90 funds that are in the Capital Budget for the Historical Center. She questioned whether those funds could be used for DPW roadwork.Chuck noted that the DPW is not equipped to repair roads,just fix potholes etc. He said the money is in the Capital Budget because outside firms do the construction work. Jack then began a discussion on the use of BANS(Bond Anticipation Notes)to shift the commencement of bonding debt from this year to next year. The shift would free up$600,000. Paul noted that the focus must be on both FY04 and FY05 because it is all too easy to shove things into FY05. If expenses are level funded in FY05,the budget will be down$600,000 taking into consideration the current Governor's Budget. It was noted that the Governor's Budget could change if there is a lot of pressure from the Town's state representatives. Chuck said there is some talk that NESWC trash fees could decrease in FY04 and possibly FY05 due to renegotiations with the plant. This would increase revenues. The group decided to pass on this issue until more information is available. Jack and Paul agreed that whatever level of services funded in FY04,should carry over to FY05. Keith noted that there is a potential for revenues from the airport depending on what is built. The Town will get the revenues from taxes,but probably not until FY07. Jack asked if the consensus from the FinCom was to fund level services in FY04 to FY05. Rather than vote on this issue,the group decided to wait until all the figures are in. The discussion began on the Sanitarian position in the Health Department. Jack said the request would be to ask the Health Department to financially justify the position of Sanitarian. Paul added that it means detail of expenses (salary,overhead,benefits, etc.)and expected revenues. The next item on the agenda was the reduction of the Finance Committee Reserve Fund from$4$0,000 to$200,000. Keith said this brings up concerns on how the Town budgets Snow&lee. He noted that the FinCom Reserve increased years ago to fund any extraordinary costs; so,instead of increasing the Snow&Ice line item,the FinCom Reserve increased to make up the difference. The issue is the money has to come from somewhere,so if the FinCom Reserve decreases to$200,000 the difference has to be made up by the department. Keith suggested the group waits until the next meeting when Steve Dawe is present. Practical/Financial Issues Paul noted that the need to what the Revolving Fund and Stabilization Fund and what available funds are there. Chuck said that the FinCom received the report showing balances of these funds as of December 31,2002. Paul then stated that if the FinCom talks about the high priorities,there has to be some low priorities. For an example, cutting services to the public(Library,Senior Center,Town Hall)would be a low priority in comparison to the high priority of Firemen and Police. He also noted that many programs such as Youth Services could be reduced. Keith added that the group has to look at the budget busters such as the School Department and health insurance. Additionally,the Financial Task Force was correct in saying the Town is in trouble because the revenues cannot keep up with expenses.`B"noted that the School Department has suggested using the"Community Activity"fund to pay for the central office lease. Jack stated that the funds for the potential reimbursement to Edgewood in case they prevailed in litigation against the Town are available. The group agreed they need the total figures from all the overlays,free cash,revolving funds,one-time money,etc. Chuck said he would instruct the accounting department to forward a summary of these funds. 2 Financial Director's Comments "B"asked Chuck about the volunteers who receive tax abatements for work within the Town. Chuck noted thatthe funds for this program would come from the overlay budget and would begin in the next fiscal budget. Chuck then began his presentation as follows: Water Fund Salaries are up 2.5%due to an increase in staffing. Expenses are up 8%due to buying supplies for filters,chemicals and sand, etc. The Debt Service is increasing 14.8%and the indirect costs are going down 11%. The total budget is increasing 8.7%. Last year the Selectmen used$580,000 of retained earnings to offset the budget. There will not be that level of earnings in next year's budget. The bottom line is the rates will increase by 15-16%using the two-tier rate. The first tier is at$2.70 and the second$4.26. Sewer Fund Salaries are increasing by 23%due to the increase in staffing by the position of mechanic at$40,547. This person will maintain the lift station. Expenses are decreasing by 17%. Debt Service is increasing 25%and the Greater Lawrence Sanitary District charge increase of 3%. There is an 11.6%total increase in the budget. In FY03, $981,000 was expended from the reserve fund. This year,the recommended spending amount is$100,000. The rates for FY04 will go up as much as 50%depending on reserves,etc. Capital projects such as the sewer extension program is budgeted at$1.62M and one 4X4 vehicle at$26,000. The average usage for water and sewer,based on the average usage of 30 cubic feet,will show an increase of 35%combined. Stevens Estate There is no change in personnel in FY04. In FY02,a deficit was listed at$81,402,but they spent$170,959 on capital projects. Operations wise,they had a surplus. The FY04 budget shows an operating loss of about$64,677. There are no capital projects budgeted in FY04 because they have the appropriated funds from FY03 to finish water lines. Jack then presented a plaque to Chuck for his patience and dedication in his dealings with the Finance Committee. It read as follows: CHARLESBENEVENTO In sincere appreciation for your dedicated service to the Town of North Andover Finance Committee as Finance Director and Host of"Chuck's Chat" November 13,2000—February 28,2003 Presented by the North Andover Finance Committee February 2003 ADJOURNMENT Mike Batsimm MOVED to adjourn the meeting at 9:25 pm. Melinda seconded and the vote passed unanimously. The next Finance Committee Meeting is set for Thursday,March 6. 3