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Minutes of Board of Finance, 07/22/2019

AGENDA: Board of Finance

RECEIVED 07/25/2019 2:56pm
Michele R. Grande – Redding Town Clerk

BOARD OF FINANCE REGULAR MEETING
MONDAY, JULY 22, 2019
7:30PM
TOWN HALL HEARING ROOM

Filed subject to approval.

Present:
Dr. Kimberly Yonkers, Chair; Susan Clark; Jamie Barickman; Ward Mazzucco; Rob Dean; Ed Miller (7:31PM)

Also Present:
Steve Gniadek, Finance Director; Wes Higgins, Treasurer; Peg O’Donnell, Selectwoman; Members of the public

Chair Yonkers called the meeting to order at 7:30PM.
1. TO APPROVE THE MINUTES OF THE BOF MEETING HELD ON MONDAY, JUNE 24, 2019

MOTION:

Mr. Mazzucco made a motion to approve the minutes of the BOF meeting held on Monday, June 24, 2019. Mr. Dean seconded the motion. There were four yes votes (Yonkers, Mazzucco, Dean, and Barickman), one abstention (Clark), and one absent (Miller). The motion carried.

2. PUBLIC COMMENT
Laura Hoeing, Umpawaug Road, said the condition of the road is a concern to a variety of residents. Mr. Mazzucco asked if the First Selectwoman suggested that there would be funds for road work. Ms. Hoeing said that this was a possibility.

Mr. Mazzucco asked Mr. Gniadek if there are funds in the current fiscal year to work on this project. Mr. Gniadek said that there was around $500K leftover from a bond but that has already been allocated for roadwork.

Mr. Mazzucco asked about Mr. Gniadek about other avenues of funding. Mr. Gniadek said that TAR money and BANs could be used. He said the financing of any road project would be a BOF decision.

Mr. Mazzucco asked Ms. O’Donnell about the BOS. Ms. O’Donnell said the BOS has discussed this and that it will cost around $400,000 to fix the potholes on Umpawaug Road. She said the drainage costs increase the expense of the project. She said the BOS will make a decision at the next BOS meeting about this.

Ms. Hoeing said this is her third appeal for assistance on Umpawaug Road. She said that this item would be on the BOF agenda.
Claudio Rodrigo, 32 Umpawaug Road, said that going from 229 Umpawaug Road south to Route 107 is where repairs need to be made.

Mr. Dean said that Umpawaug Road was completely rebuilt 15 years ago when the underground high-tension line was installed. He said Umpawaug Road is one of the younger roads in Redding.

Chair Yonkers will table this discussion. She said that the BOF determines the funding mechanism but does not decide whether or not fund.

Mr. Gniadek said that funding this project would require a town meeting and vote.

Ms. O’Donnell said that the cost of the project was just obtained today and the next BOS meeting is next month.

Mr. Dean thanked the residents for bringing this concern to a wider audience.

Sandy Martin, 3 Fox Run Road, said that First Selectwoman Pemberton said it would be discussed in an email. Chair Yonkers said it is common for the BOS to notify the BOF about upcoming topics. She said this is different from the BOF responding to a formal vote by the BOS.

Peter Bonfanti, Umpawaug Road, said this was discussed for 45 minutes at the last BOS. He said the expectation was that there would be a vote at the BOF meeting. Mr. Mazzucco asked Ms. O’Donnell if there would be a vote at the next BOS meeting. Ms. O’Donnell said this can be expected.
Chair Yonkers commented that the discussion is going well beyond public comment.

MOTION:
Mr. Mazzucco made a motion to add the Umpawaug Road Repair Project to the BOF meeting agenda. Mr. Miller seconded the motion. The vote was unanimous, and the motion carried.

Mr. Mazzucco asked Mr. Gniadek to reiterate funding mechanisms. Mr. Gniadek said that BAN is an option. He said $150,000 in the operating budget can be depleted, but a short-term BAN to long-term bond is the most common method used.

Mr. Gniadek said that the communications project and the station road bridge projects are already planned for this year. He said that BAN is the only realistic option.

Mr. Miller asked if other road projects could be reprioritized. Mr. Gniadek said that those projects are already being worked on.

Mr. Dean said that the roads in Redding were gradually widened without improving the base. He said this causes a variety of projects.

Mr. Gniadek explained how the road plan operates. He said that the four year road plan is in its’ fifth year. He said the original allocation for the road plan was $6.4 million but this money has been expended. He said the upcoming communications upgrade of $2.5 million as well as the Stepney Bridge project for $500K means there are many capital projects happening this fiscal year. He said that Locip money can be used for the Stepney Bridge project but doesn’t have to be utilized.

Mr. Mazzucco said that the timetable would follow this pattern: BOS vote, BOF financing recommendation, town meeting, and vote.

Mr. Dean said Umpawaug Road is a case study in the life cycle of a town road.
Sandra Martin, 3 Fox Run Road, said the no-thru trucks rule should be enforced. Mr. Mazzucco said that is a police issue.

3. TAX COLLECTOR’S REPORT
Ms. Moisio was not present. She sent an email to update the BOF. Chair Yonkers read the email.

Fiscal year 2018-2019’s budget called for a collection of $47,072,658. Collections totaled $48,245,701. This is $1,173,043 over budget.

Fiscal year 2019-2020’s budget collections are coming in smoothly. $14,500,000 has come in as of Monday, July 22, 2019.

4. FINANCE DIRECTOR’S REPORT
Mr. Gniadek reported last month that expenses will be favorable by approximately $200,000 and revenue will exceed the budget by over $1,000,000. He said these amounts will be added to the Unassigned Fund Balance.

Mr. Gniadek updated these numbers. He said there is an additional $50,000 in revenue from tax collections and an additional $75,000 savings from expenses. He said the total Unassigned Fund Balance addition is estimated at $1,325,000.

Mr. Miller asked if the money automatically goes into the Unassigned Fund Balance. Mr. Gniadek said this is correct. Mr. Miller asked if the unspent funds could be moved from one account to another account. Mr. Gniadek said the Town of Redding does not do this.

Ms. Clark asked where the $1,325,000 in the Unassigned Fund Balance is coming from. Mr. Gniadek said that the vast majority of this money is coming from tax collections.

Mr. Gniadek reached out to other municipal finance directors about multi-year operating budgets. He shared Newtown’s budget spreadsheet with the BOF.

Ms. Clark said that projections based primarily on inflation makes multi-year budgeting irrelevant. Projections have to be thoughtful and relevant.

Chair Yonkers said that Wilton focuses on long-term capital projects. Mr. Gniadek said that functional budgeting versus department budgeting is better for long-term planning.

Mr. Dean said that the town is a public entity that must report to every single voter. Mr. Dean said the tax bill should not be a surprise to voters.

Mr. Miller said the BOF should do the most basic task of looking at inflation.

Mr. Dean said the functional budgeting removes the school vs. anti-school bias. Mr. Gniadek said that the BOE needs to participate with the BOF and BOS on this.

Mr. Barickman said that long-term planning gives transparency and visibility to capital projects.

Chair Yonkers asked Mr. Gniadek and Mr. Higgins about taking up the long-term planning project. Mr. Higgins said that the long-term group looks more at the short-term capital needs. He said the BOF should look backwards to see what the spending has actually been, year to year, to estimate what future spending would be necessary.

Mr. Dean said that skills need to be developed to do this work. He said these skills are history, projection, and planning.

Chair Yonkers asked if the data is available to be analyzed for historical analysis. Mr. Dean said that he has the data. Mr. Dean said the current CAFR format for this financial data should be applied for the past 30 years of budgets.

Discussion followed about what should happen.

Chair Yonkers asked how to get a spreadsheet that is accurate and deep. Mr. Gniadek said a small working group of himself, Scott Reiss, Wes Higgins, Jamie Barickman, and someone else would develop the format before any numbers are applied.

MOTION:
Mr. Mazzucco made a motion to appoint a committee of members of the BOF (Dean, Yonkers, and Barickman), Steve Gniadek, Wes Higgins, and a member of Central Office to evaluate the format of multi-year budgets and report back to the BOF their findings. Mr. Miller seconded the motion. The vote was unanimous, and the motion passed.

Mr. Mazzucco asked how the BOE and Central Office be contacted. Mr. Barickman volunteered to reach out.

5. TREASURER’S REPORT
Mr. Higgins addressed the BOF. He said in the month of June, $74,000 in interest income was earned. He said for the year, the interest income earned is over $425,000.

Mr. Higgins said the current cash-on-hand is $4.3M.

6. INVESTMENT POLICY DRAFT REVIEW
Mr. Higgins shared the investment policy draft from 6/25/2019 with the BOF. He said the policy has broad descriptions and does not include specific instructions.

Mr. Mazzucco asked who is in charge of minimizing operational risk for the Town of Redding. Mr. Higgins said that the treasurer is statutorily responsible for the knowledge of where the Town’s money is held. He said that Webster Bank handles cash and Munis handles the accounting. He said many transactions are not initiated by the Treasurer. He said the Treasurer functions as an administrator of the variety of transactions the Town engages in.

Mr. Gniadek said that the auditors that work with the Town help to make sure the proper controls are in place. Mr. Mazzucco said that the auditors are not involved with technological risk.

Mr. Miller asked how employees are trained on operational risk. Mr. Higgins said there isn’t an explicit treasurer’s manual that explains how to manage operational risk. He said the BOF should be concerned that there are proper controls in place.

Mr. Gniadek said the purchasing policy affects every employee in the town. He said it was introduced 10 years ago and has carried to this day. He said payroll processing is a good example of outside controls.

Mr. Mazzucco brought up the City of Baltimore and cybersecurity. Discussion followed about the Town of Redding’s security.

Mr. Miller asked about credit risk and the requirement to buy highest rated securities. Mr. Higgins said there isn’t a benefit to the Town to take credit risk.

Mr. Higgins discussed the prudent man rule.

Mr. Higgins said that the treasurer money has float money until the bills are paid. He said the cash and accounting balances are not the same. He said liabilities that are funded are a zero-loss strategy.

MOTION:
Mr. Mazzucco made a motion to approve the investment policy draft dated 6/25/2019. Chair Yonkers seconded the motion. Chair Yonkers asked Mr. Higgins about treasurer procedures. She said there should be a stipulation about who reviews the policy.

MOTION:

Mr. Mazzucco made a motion to amend the prior motion to include an edit to the investment policy that clarifies that the BOF reviews the policy. Chair Yonkers seconded the motion. The vote was unanimous, and the motion carried.
Chair Yonkers asked Mr. Higgins about the Fairfield plan. Mr. Higgins elaborated.

7. REPORTS FROM INDIVIDUAL BOARD MEMBERS AS ASSIGNED
Mr. Mazzucco said Chair Yonkers was going to talk to the BOE.

Chair Yonkers said she reached out to the BOE, Scott Reiss, and Dr. Tom McMorran about budget overage. Chair Yonkers read an email.

Scott Reiss said in the email that $275,000 will be favorable in expenses. He said the BOE wants this money contributed to the Health Insurance Reserve. This will result in no net unexpended funds.

Mr. Mazzucco asked Chair Yonkers about asking the BOE about the budget process. Chair Yonkers said that Mr. Barickman would be the person to do this.

Mr. Mazzucco said issues arose during the budget process and that there is never adequate opportunity for the BOE/BOF/BOS to address structural issues. Chair Yonkers said this is something that would be included in long-term planning.

Discussion followed.

Ms. Clark suggested to the BOF that an education consultant facilitates a half-day workshop on education with the BOE, BOS, Planning Commission, and BOF.

8. CORRESPONDENCE AND ADMINISTRATIVE MATTERS
There was no correspondence and administrative matters to discuss.

9. PUBLIC COMMENT
Chair Yonkers opened the floor to public comment. No members of the public commented.

Chair Yonkers adjourned the meeting at 9:20PM.