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Minutes of Board of Finance Special Meeting, 05/13/2020

AGENDA: Board of Finance Special Meeting

RECEIVED 05/20/2020 3:03pm
Kathleen R. Miserendino - Redding Deputy Town Clerk

BOARD OF FINANCE SPECIAL MEETING
MINUTES
WEDNESDAY, 5/13/2020

7:00PM ZOOM MEETING

Filed subject to approval.

Present:  Dr. Kimberly Yonkers, Chair; Ward Mazzucco, Vice Chair; Jamie Barickman; Rob Dean; Ed Miller; and Jenifer Wyss

Also Present:  Steve Gniadek, Finance Director; Julia Pemberton, First Selectwoman; Peg O’Donnell, Selectwoman; Michael Thompson, Selectman; Chris Parkin, Redding BOE Chair; Cheryl Graziano, Region 9 BOE; Pat Moisio, Tax Collector; Wes Higgins, Treasurer; Members of the Public

Chair Yonkers called the meeting to order at 7:00PM.

1.      Approve Minutes of Meetings held April 1, 8, 16, and 22, 2020

MOTION:
Mr. Mazzucco made a motion to approve the minutes of the BOF meetings held on 4/1/2020, 4/8/2020, 4/16/2020, and 4/22/2020 with the inclusion of the proposed edits provided by Mr. Mazzucco, Mr. Miller, Mr. Dean, and Mr. Barickman. Mr. Miller seconded the motion. Discussion followed concerning these edits.

The comments proposed are below:

4/1/2020 BOF Meeting
In the second paragraph of the third item, Financial Challenges, Mr. Mazzucco asked to change the sentence, “Mr. Higgins said the primary challenge is that that there is no interest…”, to, “Mr. Higgins said the primary challenge is that there is less interest…”.

In the second paragraph of the fourth item, Financial Savings, Mr. Mazzucco asked to change the sentence, “Mr. Parkin, Redding BOE, said…”, to, “Mr. Parkin, Redding BOE Chair, said…”.

In the fifth paragraph of the fifth item, Discussion of Quarterly Tax Billings, Mr. Mazzucco asked to change the sentence, “Mr. Mazzucco asked Ms. Moisio how many taxpayers pay taxes in escrow”, to, “Mr. Mazzucco asked Ms. Moisio how many taxpayers pay taxes through bank escrow”.

In the twelfth paragraph of the eighth item, Schedule and Frequency of Future BOF Meetings, Mr. Mazzucco asked to change the sentence, “Mr. Mazzucco asked Mr. Gniadek about the cost of oil and…”, to, “Mr. Mazzucco asked Mr. Gniadek about the declining cost of oil…”.

In the seventh paragraph of the third item, Financial Challenges, Mr. Miller asked to change the sentence, “Mr. Miller suggested that the priority list of projects for LoCIP funding as soon as possible”, to, “Mr. Miller suggested that the priority list of projects for LoCIP funding be developed and shared with BOF and public as soon as possible”.

4/8/2020 BOF Meeting
In the fourth paragraph of the second item, Executive Orders Update, Mr. Mazzucco asked to change the sentence, “Providing a 90-day grace period…”, to, “The other option is providing a 90-day grace period…”.

In the fifteenth paragraph of the second item, Executive Orders Update, Mr. Mazzucco asked to change the sentence, “Ms. Moisio said the Town met its budget…”, to, “Ms. Moisio said the Town met its’ budget…”.

In the sixth paragraph of the third item, Cash Flow Forecast, Mr. Mazzucco asked to change the sentence, “Mr. Higgins said the Mortgage Service companies may pay their taxes early as…”, to, “Mr. Higgins said the Mortgage Service companies must pay their escrowed taxes on time as…”.

In the fifth paragraph of the fifth item, 2020 Year End Expense and Revenue Forecast, Mr. Mazzucco asked to the change the sentence, “Mr. Gniadek said these are Capital Projects that historically have been funded by BAN (Bond Anticipation Note) or Bond”, to, “Mr. Gniadek said these are Capital Projects that historically have been funded by BAN or Bond Anticipation Note or Bond”.

In the fifth paragraph of the fifth item, 2020 Year End Expense and Revenue Forecast, Mr. Mazzucco asked to remove this sentence, “He said that projects have been currently funded by the Unassigned Fund Balance these are being paid by the Capital accounts the Town has.”

In the fourteenth paragraph of the fifth item, 2020 Year End Expense and Revenue Forecast, Mr. Mazzucco asked to change the sentence, “Mr. Reiss said in April he provides the Boards with…”, to, “Mr. Reiss said in April he provides the Boards of Education with…”.

In the nineteenth paragraph of the fifth item, 2020 Year End Expense and Revenue Forecast, Mr. Mazzucco asked to change the sentence, “He said it should be clear to Central Office where savings…”, to, “He said it should be clear to Central Office the categories in which savings…”.

In the twenty-first paragraph of the fifth item, 2020 Year End Expense and Revenue Forecast, Mr. Mazzucco asked to change the sentence, “Mr. Dean said the experience of self-insurance is finally meeting predictions that were made in the past may be coming…”, to, “Mr. Dean said the experience of self-insurance is finally meeting predictions that were made in the past and may be coming…”.

In the nineteenth paragraph of the second item. Executive Orders Update, Mr. Dean asked to change the sentence, “Mr. Dean said the economy is in a self-imposed state of decline”, to, “Mr. Dean said the economy is in a self-imposed state of suspension”.

In the twenty-first paragraph of the fifth item, 2020 Year End Expense and Revenue Forecast, Mr. Dean asked to change the sentence, “Mr. Dean said the experience of self-insurance is finally meeting predictions that were made in the past may be coming to fruition”, to, “Mr. Dean said the experience of self-insurance is showing evidence of the risks of volatility that were made in the past”.

4/16/2020 BOF Meeting
In the second paragraph of the second item, Bond VS. BAN, Mr. Mazzucco asked to change the sentence, “It generally lasts for a one-year period and is considered short-term borrowing”, to, “It generally lasts for a one-year period or less and is considered short-term borrowing”.

In the second paragraph of the second item, Bond VS. BAN, Mr. Mazzucco asked to change the sentence, “Historically, the Town of Redding accumulates enough BAN’s to be rolled into one large bond which lasts 20 years”, to, “Historically, the Town of Redding accumulates enough BAN’s to be rolled into one large bond which typically lasts 20 years”.

In the fifteenth paragraph of the second item, Bond VS BAN, Mr. Mazzucco asked to change the sentence, “Mr. Higgins said the Town should do term financing”, to, “Mr. Higgins said the Town should do long term financing”.

In the ninth paragraph of the fourth item, Budget Presentations (Public Comment After Each), Mr. Mazzucco asked to change the sentence, “Mr. Gniadek said most salaries increases”, to, “Mr. Gniadek said most salary increases”.

In the tenth paragraph of the fourth item, Budget Presentations (Public Comment After Each), Mr. Mazzucco asked for clarification on the sentence, “FS Pemberton said 30% of Redding residents are living paycheck to paycheck”. The percentage stated was 30%.

4/22/2020 BOF Meeting
In the eleventh paragraph of the second item, Cash Flow Scenarios, Mr. Mazzucco asked to change the sentence, “Ms. Moisio said that is a complicated legal matter”, to, “Ms. Moisio said that is a complicated legal matter, so that lien probably cannot be sold”.

In the twelfth paragraph of the second item, Cash Flow Scenarios, Mr. Mazzucco asked to change the sentence, “Ms. Moisio 32 of 95 towns”, to, “Ms. Moisio said 32 of 95 towns”.

In the ninth paragraph of the third item, Tax Anticipation Note (TAN), Mr. Mazzucco asked to change the sentence, “The TAN is not a form of credit but a short-term borrowing option”, to, “The TAN is not a form of credit but a short-term borrowing option against expected tax collections”.

In the second paragraph of the fourth item, Cash Flow Scenarios (Continued), Mr. Mazzucco asked to change the sentence, “Mr. Higgins said when the Town’s bond deal closes,” to, “Mr. Higgins said when the Town’s 15 year $5 million bond deal closes”.

In the third paragraph of the fourth item, Cash Flow Scenarios (Continued), Mr. Mazzucco asked to add the sentence, “It was recognition of a delinquent account rather than the conscious loan of funds”.

In the sixth paragraph of the fourth item, Cash Flow Scenarios (Continued), Mr. Mazzucco asked to change the sentence, “Mr. Barickman said when the bond money comes in July, can the Town borrow off of the Bond to fund operating expenses”, to, “Mr. Barickman said when the bond money comes in July, can the Town borrow off of the Bond to fund operating expenses?”.

In the eighth paragraph of the fourth item, Cash Flow Scenarios (Continued), Mr. Mazzucco asked to change the sentence, “Chair Yonkers, to become part…”, to, “Chair of the Board of Finance, to become part…”.

In the twelfth paragraph of the fourth item, Cash Flow Scenarios (Continued), Mr. Mazzucco asked to change the sentence, “Mr. Mazzucco said a $20m request may negatively…”, to, “Mr. Mazzucco said a $20m request, for example, may negatively…”.

In the thirteenth paragraph of the fourth item, Cash Flow Scenarios (Continued), Mr. Mazzucco asked to change the sentence, “Mr. Higgins said he used a 60%…”, to, “Mr. Higgins stated he used a 60%…”.

In the twenty-fifth paragraph of the fourth item, Cash Flow Scenarios (Continued), Mr. Mazzucco asked to change the sentence, “Mr. Mazzucco made a motion to…”, to, “Mr. Mazzucco amended his motion to…”.

In the twenty-fifth paragraph of the fourth item, Cash Flow Scenarios (Continued), Mr. Mazzucco asked to change the sentence, “Mr. Mazzucco made the amendment to change…”, to, “Mr. Mazzucco made the further amendment to change…”.

In the fifth paragraph of the seventh item, Other Business, Mr. Mazzucco asked to change the sentence, “FS Pemberton said the Town is getting a legal opinion on the executive order concerning the schools and layoffs”, to, “FS Pemberton said the Town is getting a legal opinion on the executive order concerning the schools and layoffs for the next fiscal year”.

In the third paragraph of the sixth item, Budget 2020-2021 Discussion and Possible Action, Mr. Miller asked to change the sentence, “Mr. Miller said the reserve should not be looked utilized for FY 2020-2021”, to, “Mr. Miller said the reserve should not be used as part of our development of the FY 2020-2021 budget, and instead we should monitor the crisis as the year progresses to determine if the reserve needs to be utilized”.

In the ninth paragraph of the third item, Tax Anticipation Note (TAN), Mr. Dean asked to change the sentence, “The TAN is not a form of credit but a short term borrowing option”, to, “The TAN meets this standard because it is fully secured and is contained within the current fiscal year”.

In the second paragraph of the fourth item, Cash Flow Scenarios (Continued), Mr. Barickman stated that the 15-year proposal was not agreed upon by all BOF members. He said the proposal is still being discussed.

Mr. Barickman said the minutes of the April 8th, 2020 BOF meeting, specifically the second item, Executive Orders Update, mistakenly stated that residents would be required to submit an affidavit to receive the reduced interest penalty for a late tax payment. Discussion followed concerning this statement and how minutes are corrected and captured.

MOTION: 
Mr. Mazzucco amended his prior motion to include an abbreviation for the April 8, 2020 BOF meeting concerning Executive Order 7S. This abbreviation states that the BOF discussed Executive Order 7S and how it applies to Tax Relief for Residents. Mr. Miller seconded the motion. The vote was unanimous, and the motion carried.

2.      Public Comment – Website and ZOOM
Chair Yonkers read the 7th and 8th editions of public comment.

See below for the link:

Public Comments on Budget

3.      BOE 2020-21 Budget
Chair Yonkers opened the floor to the Redding BOE.

Chair Parkin said the projected unspent funds for FY 2020 has increased from $450k to $600k.

The Redding BOE made the decision to allocate funds to its Health Insurance Reserve at the end of FY 2020 in such amount to increase that reserve balance to $500k. $500k is roughly the equivalent of two months of claims. The specific amount to allocate will depend on claims in May and June of 2020.

The current estimated allocation for the Health Insurance Reserve is $250k. This means there would be a return to the Town of Redding of $350k of the unspent funds for FY 2020.

Conversations have begun with the four collective bargaining groups concerning contracts.

Chair Yonkers asked Mr. Parkin about the Cost of Living Adjustment for FY 2021. Mr. Parkin reached out to all four collective bargaining agreements (Custodians, Certified Staff, Non-Certified Staff, and Administration).

Chair Yonkers asked Mr. Parkin what the Cost of Living Adjustment for FY 2021 for each collective bargaining group is. Mr. Parkin said he would need to look at the individual contracts to determine that.

Mr. Dean said the allocation of the unspent funds from FY 2020 towards the Health Insurance Reserve was responsible.

Chair Yonkers opened the floor to the BOF to discuss the FY 2020-2021 BOE budget.

Chair Yonkers asked Mr. Gniadek to explain what a Memorandum of Understanding (MOU) is.

Mr. Gniadek said a MOU (Memo of Understanding) is a written agreement between two parties, signed off by both parties, stating certain items that were agreed upon by both sides.

Chair Parkin said in 2010, the CT State Legislature passed a statute that permitted the establishment of a non-lapsing account. This is a mechanism that allows a Board of Finance to deposit up to 2% of a Board of Education’s unspent funds from a given year into an account that carries over year-to-year. Deposits are made with the Board of Finance’s permission.  The money deposited into this account is spent on educational expenses with the Board of Education’s permission. An MOU creates boundaries to what is defined as educational expenses.

Discussion followed concerning MOUs, surpluses, and non-lapsing accounts.

Chair Yonkers asked the BOF to discuss the Redding BOE budget.

Mr. Dean said the proposed increase by the Redding BOE is 2.29%. He wants to accept the Redding BOE budget and use some of unspent funds from FY 2020 to offset taxes in FY 2021.

Discussion followed concerning the Draft Mill Rate for FY 2021 spreadsheet.

Chair Yonkers asked Ms. Moisio about the Tax Collection Rate for FY 2021. Ms. Moisio said she’s confident that a 98% collection rate will be adequate for FY 2021. Discussion followed concerning tax collection rates and liquidity.

Chair Yonkers said with a tax collection rate of 98% for FY 2021 and an application of $610k of unspent funds from FY 2020 to the FY 2021 budget will result in no tax increase for residents. Discussion followed.

MOTION:
Mr. Mazzucco made a motion to pass a Redding BOE budget of $20,964,075 which is a 5% cut from the FY 2020 budget. Ms. Wyss seconded the motion. Discussion followed. There were two yes votes (Mazzucco and Wyss) and four no votes (Yonkers, Dean, Miller, and Barickman). The motion did not carry.

MOTION:
Mr. Dean made a motion to adopt a BOE budget, $22,523,079 which is a 2.29% increase from the FY 2020 budget. Mr. Barickman seconded the motion. There were four yes votes (Dean, Barickman, Miller, and Yonkers) and two no votes (Mazzucco and Wyss). The motion carried.

4.      2020-21 Total Budget discussion and possible action
This item was not discussed.

5.      DRAFT Mill Rate Sheet
This item was not discussed.

6.      Other Business
Discussion followed about next steps concerning the budgets. The BOF needs to have the authorization of the BOS to adopt a draft budget. Once this is given, the BOF can adopt a draft budget and mill rate.

Chair Yonkers proposed a special BOF meeting next Wednesday, 5/20/2020 at 7:00PM to make this decision.

7.      Public Comment
Chair Yonkers opened the floor to Public Comment.

Amy Arnold said the BOS budget did not come under the same scrutiny that the BOE budget did.

Chair Yonkers adjourned the meeting at 9:21PM.

Submitted by,
Zachary Smith

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