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Minutes of Board of Finance, 03/26/2013

AGENDA: Board of Finance

RECEIVED 03/27/2013 11:02am
Michele R. Grande – Redding Town Clerk

Minutes

Present: Alvarez (Chairman), DeSalvo, Dolan, Guffey, Mazzucco, Yonkers (7:36 pm)

Also present:   Finance Director Gniadek, Treasurer O’Donnell, Tax Collector Moisio, Selectman Pemberton, nine members of the public, and a representative of the Redding Pilot.

Chairman Alvarez called the March 26, 2013 meeting to order at 7:30 pm.

APPROVAL OF MINUTES

Motion: move that the Redding Board of Finance approve the minutes of the February 25, 2013 and March 15, 2013 meetings as submitted. Mazzucco, DeSalvo. Approved. Mr. DeSalvo abstained from voting on the February 25, 2013 minutes; the March 15, 2013 minutes were unanimously approved.

DISCUSSION OF 2013-14 BUDGETS

  1.   Selectmen’s Budget:  The proposed budget represents a 0.61% increase, $81,907.
  • Revaluation:  the allocation of $20,000 each year for five years to build a reserve for the revaluation process was discussed. This was not included in the proposed budget. Mr. Gniadek stated that there may be a change in legislation to change the revaluation process to every ten years. Mr. Alvarez noted that an allocation could be made at the end of the fiscal year from the Contingency Account.

Dr. Yonkers arrived 7:36 pm during the following discussion

  • Allocation of school police services to Police Department budget:  Mr. Mazzucco asked about the potential of allocating the cost of police department services (Youth Officer and School Resource Officer) to the school budget rather than the Police Dept. budget. Mr. Alvarez stated he had discussions with the Police Chief and other municipalities regarding the topic. The two positions are employees of the Police Department and no other municipalities are treating the expenses as separate. Mr. Alvarez could not support separating the expenditure at this time, but suggested a review the topic after a year of experience. Mr. Mazzucco suggested that the board take a look at all services shared between schools and Town. Mr. Gniadek was asked to list the potential accounts that fall into this category

Motion: move that the Board of Finance, before the next budget cycle, take a more comprehensive look at services shared between the schools and town. Mazzucco, Yonkers. Approved. 5-0-1. Mr. Dolan abstained.

  • Reserve account: Mr. DeSalvo suggested an allocation from the Reserve Account to get the tax increase below 1.0%. Mr. Alvarez stressed the importance of the Reserve Account. Other board members were in agreement with Mr. Alvarez. The recommended size of the Reserve Account is two months, or 17%. The current size of the Reserve Account is approximately 14%.

Motion: move that the Redding Board of Finance approve the Selectmen’s budget for a referendum vote of $13,467,790, representing a 0.61% increase over the current year budget. Mazzucco, DeSalvo. Approved. Unanimous.

  1.   Redding Board of Education: Dr. Gaspar noted that the actual operating budget for the Board of Education was a decrease from current fiscal year of 0.7%. An increase in the Health Insurance Reserve Account to rebuild the balance has resulted in an increase in the overall budget of 0.5%.
  • Declining enrollment & class size:  Mr. Alvarez asked Dr. Gaspar to address the handling of the declining enrollment and the proposed class size. Dr. Gaspar indicated the enrollment decline is being addressed with reductions in staffing. The class size structure is what the administration deems the best allocation of resources at the current time. Enrollment numbers change constantly and the administration can adjust the allocation of resources as needed. There is a flexibility to change the proposed number of sections in each grade. The total enrollment is not expected to change, but the distribution of that enrollment may change. Enrollment numbers for the “special” like physical education, music, art, etc. are different from the class sizes, and are dependent on the type of instruction being delivered, and some reductions have been made in the proposed budget.
  • Special Education costs:  the Special Education budget for next year shows a decrease as some of the students aging out of the school and move on to the high school.
  • Health Insurance Reserve Fund:  Mr. Alvarez questioned why the board was rebuilding the reserve account with a large amount next year when their presentation indicated that the Board of Education wanted to re-establish the reserves over two years.  Mr. Alvarez suggested that consideration be given to establishing the reserve account over two years with a like amount each year rather than put the majority amount in the first year. Dr. Gaspar responded that there have been high medical claims over the past two years, and reductions in the current operating budget have been made this year to meet those needs. The Board would prefer to build the Reserve Account and avoid having to come back to the Town for additional funding. Mr. Alvarez stated the Board of Finance does not object to sharing that risk. If the Board of Education wanted to reduce their budget (Health Insurance Reserve Fund) by $100,000, the Board of Finance would share that risk and would be able to provide additional funds if needed. Dr. Gaspar declined the offer.
  • Curriculum costs:  Dr. Yonkers questioned the increase in curriculum costs. Dr. Gaspar stated that the increase is in response to the changes in unfunded mandates to adopt the Common Core Standards and the Educator Evaluation process. Dr. Yonkers asked that the Board of Education address the issue of professional development activities resulting in having substitute teachers in the classroom instead of the regular teachers, suggesting changes in contract stipulations and scheduling curriculum work during the summer months. Dr. Gaspar responded that the Board has made some changes in the current year by scheduling professional development during scheduled ½ days when the students are not present.
  • Financial information:  Mr. Mazzucco asked if the Board of Education had a board policy or administrative policy on what information is provided to the Board of Finance. He cited the lack budget information available prior to the Budget Hearing and mentioned that, about a year ago, the Board of Finance passed a motion requesting the Board of Education to send members all the information bearing on financial matters when the information is sent to the Board of Education members or posted on their website. Dr. Gaspar responded that the intent of the Board is to provide whatever information is asked for and the monthly budget analysis and health insurance information is presented each month at the board meetings and is on the board’s website. Mr. Mazzucco requested that the financial information sent to board members also be sent to the Board of Finance board members. Dr. Yonkers noted that the information is on the website, and commended the Board of Education for providing that budgetary information in that manner.

Motion: move that the Redding Board of Finance approve the Board of Education budget for a referendum vote of $21,745,551 representing a 0.5% increase over the current year budget. DeSalvo, Dolan. Approved. 5-1. Mr. Mazzucco voted against the motion.

  1.   Region 9 Board of Education:  Board member Chris Hocker reported the Region 9 Board of Education finalized their budget with an increase of 1.97%. The budget apportionment between Easton and Redding results in an increase of 3.5% for the Redding. The enrollment at the high school is not declining, but will increase over the next few years before experiencing a decline. It was noted that there is a substantial increase in special education funding as students from both Easton and Redding move from the lower schools to the high school.

Legal Notice Approval:  The draft legal notice for the budget approval was reviewed. Mr. Dolan asked Mr. Gniadek to provide a breakdown of the revenue for the various departments.

Motion:  move that the Redding Board of Finance accept the Legal Notice as provided, pending confirmation of information on the Region 9 Board of Education. Mazzucco, DeSalvo. Approved. Unanimous.

TAX COLLECTOR’S REPORT

Tax Collector Moisio reported that as of today, 99.3% of the budget was collected. Currently, 224 parcels are not paid, 115 are the Georgetown project parcels and 109 are residential properties. In addition, she is working with 29 unpaid tax bills from 2010 and 18 from 2009. Mrs. Moisio also reported that there is a bill pending in the legislature that would reduce the delinquent tax interest rate from 18% to 12%. She indicated she did not support this move as the higher interest rate was an added incentive to pay the delinquent taxes.

FINANCE DIRECTOR’S REPORT

Mr. Gniadek reported on the following:

  • BAN refunding: Ban refinancing of $4,281,000 for nine months has been completed at an interest rate of 0.2063%
  • FEMA:  Storm Sandy FEMA reimbursement submittal was $187,000. Mr. Gniadek indicated the reimbursement rate of 75% will result in $140,000 for the Town. The reimbursement includes actual labor costs and the use of equipment (non-cash) expenses. He also noted that the winter storms of February 8 & 9 will also be eligible for FEMA reimbursement. He thanked Lori McHale in his office for her diligence in collection and assembly of reimbursable costs. The Board commended Mr. Gniadek for taking a leadership role in obtaining this reimbursement and continuing to monitor its progress.

TREASURER’S REPORT

Treasurer O’Donnell submitted a written report.. The cash balance in the General Fund was $16,814,928. The cash balance in the Capital Nonrecurring Fund was updated to $910,933, reflecting approved encumbered items.

Ms. O’Donnell is working on a formal request for proposal for banking services with the Finance Director and Tax Collector. Bid documents are lengthy and she is hoping to finalize the package in the next few weeks. The entire bid process typically takes three months. Mrs. O’Donnell reported she is also preparing the first “basket” of CD requests through eCD Market. The request will go out to banks across the country. No CD will exceed $250,000. She plans to put $500,000 into 6-month CDs and see how the process goes before committing more funds. Mr. Mazzucco suggested consideration of 12-month CDs for a greater return on the money. He pointed out that, by investing most town funds in laddered 12-month CDs, the interest generated would be approximately three times the current amount.  Because this would generate tens of thousands of dollars of additional income, Mr. Mazzucco recommended acting on the investments at an early date.

DISCUSSION OF SELF-FUNDED MEDICAL INSURANCE PROGRAM

Dave Mathews of HD Segur, the Town’s insurance agent, provided information for review and a comparison of the self-insured program versus the fully funded insurance program. He explained the reasons for the increase in cost of the fully insured program and how the insurance company determines that rate. The comparison of self-insured versus fully funded insurance show a potential savings of $18,797 for changing to the self-insured program, but there are accompanied risks. To move to a self-insured program, the Town would need to combine coverage with the schools (Easton, Redding and Region 9) pool since the town’s pool is small. The Board of Finance members discussed the risks of going with a self-insured program and determined that the risks were not worth the potential savings.

ADJOURNMENT

Motion: move that the Redding Board of Finance meeting be adjourned. Dolan, Mazzucco. Approved. Unanimous.

The meeting adjourned at 9:15 pm

Respectfully submitted,

Mary Maday, Recording Secretary

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