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Minutes of Board of Finance Special Meeting, 06/13/2018

AGENDA: Board of Finance Special Meeting

RECEIVED 06/19/2018 2:47pm
Michele R. Grande – Redding Town Clerk

Board of Finance Special Meeting Minutes
Wednesday, June 13, 2018
7:30PM, Town Hall Meeting Room

Present: Dr. Kimberly Yonkers, Chair; Ed Miller; Rob Dean, Ward Mazzucco; Susan Clark; Jamie Barickman

Also present: Steve Gniadek, Finance Director; Julia Pemberton, First Selectwoman; Peg O’Donnell, Selectwoman; Michael Thompson, Selectman; Dr. Tom McMorran, Superintendent; Melinda Irwin, BOE Chair; BOE Members; Pat Moisio, Tax Collector; Members of the Public

The Chair called the meeting to order at 7:35PM.

1. Public Comment

Chair Yonkers asked for a short public comment.

Mary Bailey of Poverty Hollow Road proposed that it is time to come together and trust the elected leaders. She asked that the BOF should support this budget and emphasized that there have been many cuts. First Selectwoman Pemberton commented on her statement.

Rick Ross of High Ridge Road stated that the last BOF meeting set a clear tone. He stated that the BOF promised that surpluses will continue to go to the town fund. He asked the BOF to send a message to the BOE regarding this policy.

Kristin Anstead of Whortleberry Road said she voted yes in every budget. She hoped the budget will pass tonight and that there will be a yes vote.

2. Discussion of year end Legal expense

Chair Yonkers discussed some of the agenda items and her appreciation of all the members of the various boards for their hard work involving the budgets. She stated that the BOF wants a responsible budget, and that the voters want the budget they need and can support.

Chair Yonkers addressed the possibility of splitting the ballot question to address the BOS and BOE budgets separately. This is not possible according to the statutes concerning town budgets. The ballot could include a question addressing why the vote was yes or no e.g. was the budget too high or too low. This would be a fourth ballot. She recommended that this type of question could be included in future ballots but not the current one.

First Selectwoman Pemberton stated that the original legal expenses budget was $200,000. The year-end Legal expenses are going to be over budget by at least $100,000. The internal investigations on the Police Chief have cost $150,000. There is a draft report on the internal investigation of the chief of police. The BOF was presented with a case by case list of all the legal actions throughout the fiscal year. Meadow Ridge and The Redding Country Club are engaged in lawsuits against the Town of Redding concerning the reappraisal of their properties.

First Selectwoman Pemberton proposed a spending freeze for anything that is not related to a salary until July 1st. This will result in a cost savings of $223,000. Roadwork that is bonded will be continue. Crack seal and pothole repair will not occur until July 1st. There is $158,786 for covering legal fees. The year-end estimate is $316,970. The year-end totals for last three years were $170,000, $220,000, and $372,000. First Selectwoman Pemberton asked the board if there were questions.

Chair Yonkers asked for clarification of the spending. First Selectwoman Pemberton and Finance Director Gniadek stated that the legal expense budget is over budget by $116,970. This number does not include the last two weeks of June. This time would consist of charges from Pullman & Comley. Chair Yonkers asked for an estimate of the Pullman & Comley charges. First Selectwoman Pemberton said she can get that information.

Mr. Dean asked that concerning the $200,000 legal budget for this year, did this budget anticipate the internal investigation of Chief Fuchs. First Selectwoman Pemberton answered no, the need for the internal investigation arose after the budget had been set. Finance Director Gniadek clarified that the yearly legal budget is an average. First Selectwoman Pemberton stated that if the internal investigation did not happen this year, the legal budget would be equal to the original estimate or less. She also explained that when reappraisals happen, lawsuits follow.

Mr. Barickman asked First Selectwoman Pemberton if she had an estimate on the cost of a month of legal fees based on her years of experience working with various firms. First Selectwoman Pemberton stated that the BOS pays a municipal rate of $275 per hour for legal fees, which is considerably less than a corporate law firm would charge.

Chair Yonkers asked First Selectwoman Pemberton about cost savings and what that means to services. First Selectwoman Pemberton stated that things like liming or buying pencils will be put off. She anticipates savings through the audit the BOF approved. Finance Director Gniadek reminded the BOF that there is only two weeks left in June. He also explained that if the BOS budget remains at the approved amount of approximately $14,700,000, the individual departments can vary in their spending.

Mr. Dean stated that being realistic is important and legal fees will vary. The Town should be prepared to address these costs because contingency budgets cannot be predicted with certainty.

Chair Yonkers stated that First Selectwoman Pemberton has been handling a difficult situation and there is only so much she can do to anticipate these costs.

3. Update on Selectmen’s Budget

First Selectwoman Pemberton discussed the $70,000 (-0.50%) budget reduction proposed by the BOF for the BOS. She stated that instead of reducing by $70,000, or -0.50%, the BOS budget has been reduced by $40,000 (-0.37%). The reason for this reduction is to use the savings, $30,000, to fully fund the legal account. She stated the board’s support in the past. She anticipates a far less litigious year. The Mark Twain Library and the Park and Recreation department were discussed. Any cuts to Topstone Park’s hours, the Mark Twain Library, and Concerts on the Green were avoided.

First Selectwoman Pemberton stated that the Land-Use Coordinator, Jo-an Brooks, retired. The planning and zoning commissions funding will be consolidated. Amy Pardee is the Zoning Enforcement and Wetlands Officer and may take on the role of Land-Use Coordinator. Some of the money that went to the salary of the Land-Use Coordinator will go towards a part-time land use consultant. There may be sharing with Easton for these services as well. This is the primary source of savings in the BOS budget for this round.

Chair Yonkers stated that last year’s budget was $14,753,515 and the reduction for this year is 0.37%, equaling $54,754. $14,698,761 is this year’s budget. First Selectwoman Pemberton stated that when one removes the debt service from the budget, the total BOS budget is $12,700,000, which provides services to 3500 households.

Mr. Dean stated that the BOS budget has not increased its budget in real dollars in years. He is concerned about the loss of the full-time Land-Use Coordinator position. First Selectwoman Pemberton stated that the resources are there to maintain the work of the Land-Use Coordinator. Mr. Dean stated that if resources are tight, zoning will win over planning.

Chair Yonkers stated she will entertain a motion concerning the BOS budget.

Mr. Mazzucco made a motion to recommend approval to the voters a BOS budget of $14,698,761, which is a 0.37% decrease from last year’s budget. Ms. Clark seconded the motion. Mr. Barickman discussed segmenting the vote and the opportunity to revisit the vote. He discussed the proportional cuts related to the budgets, and how voting on a budget before hearing both may limit the board’s abilities. Chair Yonkers stated that this is always how the votes are done. There were five yes votes (Yonkers, Mazzucco, Clark, Dean, and Miller) and 1 abstention (Barickman). The motion passed.

4. Update on Board of Education Budget

BOE Chair Melinda Irwin discussed the process of setting the BOE budget. There were three ways the vote could have proceeded. The first option was that the majority voted on a reduction below $101,000. The second option would have been a $101,000 reduction with cuts to programs. The third option was a $101,000 reduction with some cuts coming from the Healthcare Reserve Fund. The third option is how the BOE proceeded. The vote was not unanimous or partisan. Chair Irwin considered this a risky decision but less risky than cutting programs.

Chair Yonkers said that, though the BOF may have indicated previously a willingness to “backstop” shortfalls in health insurance for the BOE, she is not inclined to follow that policy unless the shortfall was not preventable and truly unanticipated. Chair Yonkers also expressed her concern over the way the budget was decided. She wanted to make sure the BOE was proposing a budget it supports and not one they feel the BOF requires. Chair Irwin responded by discussing the increases in Special Education and Healthcare and how a $70,000 cut to Healthcare Reserve Fund seemed reasonable. The BOE moving to a high-deductible health plan may result in cost savings.

Mr. Dean discussed searching for a health plan and the information that informs this decision. Chair Irwin explained that the Healthcare Reserve Fund is an emergency fund and that it is there to account for unpredictability in healthcare cuts. She also said making cuts to this was risky but cutting programs was riskier.

Mr. Mazzucco asked about pre-payment of the early retirement expense and how funds appropriated for this year are being used to fund an obligation that normally would be paid for the following year. Chair Irwin responded by saying the cost was $15,000. She referred to teacher contracts. Mr. Mazzucco expressed his concern that pre-paying this money takes funds away from the Healthcare Reserve Fund, possibly jeopardizing that system. Chair Irwin does not know what the surplus will be this year but stated it potentially could be $250,000, or a little over 1%. This number is not determined until July. All this surplus, minus the $15,000 for early retirement expenses, will go to the Healthcare Reserve Fund.

Mr. Dean stated that the BOE does not always spend its entire budget and that surpluses carry over into the next year. He wanted to see the Healthcare Reserve Fund preserved but he acknowledged that surpluses are a source of security in the budget. Chair Irwin responded by saying that cutting a program means it will be harder to bring it back in the future, but healthcare is variable and it could be a good year. Mr. Dean brought up the actuarial model. Chair Irwin opened up comment to the BOE.

A BOE member stated that last year’s healthcare budget was $1,900,000. That year, the $400,000 surplus was applied to the healthcare reserve fund. The BOE decided this year’s surplus will also be applied to the Healthcare Reserve Fund. If the surplus is $200,000 and $100,000 is applied to the Healthcare Reserve Fund, it will be a third of what the insurance agent recommends for a Healthcare Reserve Fund. The money will cover one month of expenses as opposed to three months. This change helps bring the BOE toward the budget reduction of $101,000.

Chair Yonkers stated that if the BOE can defend this budget as responsible, the BOF can vote on it. Chair Irwin stated the BOE budget for healthcare was reduced from $2,500,000 to $2,400,000 roughly. She said that this cut was the least awful option. One BOE member discussed why she voted no. The vote to approve the budget by the BOE was 4 yes votes and 3 no votes.

Chair Yonkers stated the numbers for the BOE budget, which is $21,129,679. She asked the BOE if this budget is lower than prior budgets. Chair Irwin stated that this budget is lower than the 2011 budget, and this is not accounting for inflation.

Chair Yonkers discussed how the cost per pupil is an interesting metric due to Redding’s size. She asked the BOE if fast-tracking regionalization of services with Easton has been considered. Chair Irwin answered that regionalization is already present in ER9. She did not know why there is not more movement towards regionalization. Mr. Miller answered by discussing the difficulties of regionalization and the legal process for this. Mr. Dean responded by discussing mutual purchasing arrangements. Chair Irwin brought up having more joint meetings for the boards.

Superintendent McMorran discussed the complexities of regionalization and different BOEs and the differing teacher contracts. He gave specific examples of collaborative purchasing, like Easton and Redding sharing a speech pathologist or bulk purchasing. He also discussed what the surplus would be and to not focus on the two years where surpluses were anomalous. He stated that the BOE is trying to budget to a 99% expenditure, not the old model of 97%. Mr. Dean interjected that the surplus is being discussed because the BOF is trying to figure out how rational it is.

Chair Yonkers reminded the board that it is not their purview to make recommendations to the BOE about a single item on their budget. Instead, the BOF needs to know the BOE budget is defensible. Chair Irwin stated that it is defensible. Mr. Miller commended the BOE on their work and collaboration.

Mr. Miller made a motion to approve and recommend to the voters a BOE budget of $21,164,679, which is $35,000 less of a reduction than the $101,944 recommendation by the BOF (and $35,000 than the BOE is requesting). Mr. Barickman seconded. Mr. Mazzucco stated his concern about the budget presented by the BOE and Mr. Miller’s proposal. He discussed how the last two votes occurred. He noted the increase that is still present in the budget and advocated a no vote. Mr. Miller discussed the cuts that are present in this budget and what this means to potential residents looking at Redding. There was also discussion about responsibly responding the the prior two failed votes. There were 2 yes votes (Miller and Barickman) and 4 no votes (Yonkers, Mazzucco, Clark, and Dean). The motion did not pass.

Chair Yonkers asked Chair Irwin about enrollment. Chair Irwin stated that there will be 38 less students for the upcoming school year. These students are spread across nine grades. This enrollment means there is one or less students in each classroom. Enrollment driven cuts have been made based on one less student per class or four less per grade. Mr. Miller brought up average class sizes. Average class sizes are between 20.4 and 20.6 according to the BOE, and this is a 15 year high according to the Redding Pilot.

Mr. Dean discussed the reality of living in Redding and how education is an expensive operation. He explained the consequences of making cuts to schools and how this affects real estate. Mr. Dean recommended that the BOE needs to allow input so that the voters can be sure of what the budget requires. He brought up the vote and how some voters believe there is unnecessary funding in the budget.

Chair Yonkers asked Chair Irwin about Special Education spending. Chair Irwin discussed the complexities of Special Education and how this led to an increase of $600,000 for this year.

Mr. Barickman made a motion to recommend the BOE proposed budget $21,129,679, which represents a 1.82% increase over the 2017-2018 budget. This is a $430,000 reduction from the May 8th referendum. Mr. Miller seconded the motion. Mr. Mazzucco discussed the facts that the BOS is still lower than last year but that the BOE budget is about $377,000 higher than last year, despite declining enrollment. Mr. Barickman discussed the proportional cuts towards general education services which follow enrollment declines. Mr. Dean stated that the Healthcare Reserve Fund decision is a prudent effort. There were 5 yes votes (Yonkers, Barickman, Miller, Clark, and Dean) and 1 no vote (Mazzucco). The motion passed.

5. BOF Approval of Budget for Referendum

Mr. Barickman made a motion to propose a referendum for the town budget of $35,828,440, a 0.9% increase over the 2017-2018 budget. Mr. Miller seconded. Mr. Dean asked what the average tax increase will be for this budget. Chair Yonkers asked if the Region 9 budget needs to be factored into this budget due to it being approved. First Selectwoman Pemberton said the Board can vote on these without the Region 9 budget. There were 5 yes votes (Yonkers, Barickman, Miller, Clark, and Dean) and 1 no vote (Mazzucco). The motion passes.

Mr. Dean discussed that the total budget increase, including Region 9, is 2.06% compared to 2017-2018. Redding taxpayers will have to pay 2.34% more in taxes on average compared to the 2017-2018 taxes.

6. Other Business

Chair Yonkers stated there is a long-term planning committee meeting tomorrow, Thursday, June 14.

First Selectwoman Pemberton stated the BOS will meet after this meeting to set a date for the referendum.

7. Public Comment

Elaine Kokoska of Gallows Hill Road asked what the cost per student will be for this budget. Chair Irwin answered that it will probably be the same. She also asked about the bonds that have to be paid in two to three years. Chair Yonkers answered this, explaining that the boards had been planning for this and have smoothed out the costs of these bonds over several years.

Chris Fahan of Cross Highway discussed the desire for a fundamental change in the way the town runs its finances.

First Selectwoman Pemberton discussed the average home assessment and the average tax bill in relation to this. The average residential assessment is $404,120 and the average tax bill is $12,851 at a mill rate of 31.8. Mr. Dean responded to this explaining the increase in the mill rate and the decrease in the basis resulting in a tax reduction.

Chair Yonkers adjourned the meeting at 9:05 PM.

Submitted by,
Zachary Smith

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