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Minutes of Board of Finance Special Meeting, 12/17/2018

AGENDA: Board of Finance Special Meeting

RECEIVED 12/19/2018 1:18pm
Michele R. Grande – Redding Town Clerk

BOARD OF FINANCE
SPECIAL MEETING
MONDAY, DECEMBER 17, 2018
6:30PM
REDDING COMMUNITY CENTER

PRESENT:
Dr. Kim Yonkers, Chair; Rob Dean; Susan Clark; Jamie Barickman; Ward Mazzucco; Ed Miller (Absent)

ALSO PRESENT:
Steve Gniadek, Finance Director; Scott Bassett, RSM; Wes Higgins, Treasurer; Members of the BOE; Superintendent of Schools Dr. Tom McMorran; First Selectwoman Julia Pemberton Selectwoman Peg O’Donnell; Selectman Michael Thompson; Members of the Press and Public

Chair Yonkers called the meeting to order at 6:32PM.

1. TO REVIEW FY 2017-2018 CAFR AUDIT REPORT FROM RSM

Mr. Gniadek thanked the BOF and everyone who gave feedback on the CAFR. He said next year he will consider distributing the report in sections to make feedback easier to include and execute.

Mr. Bassett introduced himself and discussed his role at RSM. He explained why the report came out later than expected. This was due to the way in which the OPEB liability is calculated as well as the delay on the State to report certain data.

Mr. Bassett said that the CAFR is a working draft and has not gone through the final review and editing process. He explained the layout of the CAFR and its components. Mr. Bassett stated that RSM will be issuing an unqualified opinion on the CAFR, which means that the financial statements conform to GAAP (Generally Accepted Accounting Principles).

Mr. Bassett said he will highlight the risks that the Town faces.

Mr. Bassett said he was initially concerned about the turnover of staff in the Finance Office. This transition went smoothly.

Mr. Bassett stated that the advance for the Georgetown Sewer Fund has grown. He explained that enterprise funds need to be self-sustaining. He also talked about the BOE Health Insurance Fund and how it has been slowly drained. Chair Yonkers responded that the healthcare system for the schools has changed to a high deductible health plan (HDHP) and that predicting healthcare trends is difficult.

Mr. Bassett said that internal controls are strong and that the town has a healthy Unassigned Fund Balance of 17.46% of next year’s budgeted expenses.

Mr. Bassett discussed how the retirement plans take up a significant portion of the report.

Mr. Bassett said that contingent liabilities from FY 2016-2017 carried into FY 2017-2018. The town is complying with various statutes and GASB standards.

Mr. Bassett said the Fiduciary standard for fiduciary funds/special revenue funds has changed and should be evaluated. He also said the lease standard is changing but should have little impact on the town.

Mr. Mazzucco asked Mr. Bassett to explain how the Georgetown Sewer Fund is labelled. Mr. Bassett said that the advance is non-spendable (and may not be reimbursed). He emphasized that an enterprise fund is supposed to be self-sustaining. Mr. Gniadek said that if loans from the town were to be collected, excess funds would go to the unassigned fund balance.

Chair Yonkers asked two questions to Mr. Bassett. She asked Mr. Bassett to update the figures on the town’s Population size. She also asked about the balance sheet numbers and if these can be corrected. She followed this up by asking if he could make any comments about the schools in the highlights section. Mr. Bassett responded that the first two questions will be addressed. He said that the letter addresses the schools.

Chair Yonkers asked if a section on Non-Major Governmental Funds could be added. Mr. Bassett said this was not required but it could be added.

Mr. Mazzucco asked Mr. Bassett about recommendations for internal controls. Mr. Bassett stated that there weren’t any major internal controls that needed adjustment. He mentioned the internal service fund had an entry and that the adjustments that were made were minor.

MOTION:
Mr. Mazzucco made a motion to approve the CAFR as presented for the year ending June 30, 2018, subject to any minor revisions to the report that the auditors will make. Discussion followed. Ms. Clark seconded the motion. The vote was unanimous, and the motion passed.

MOTION:
Mr. Mazzucco motioned to have a short recess before the BOS and BOE arrived for the second part of the meeting. Mr. Barickman seconded the motion. The vote was unanimous and the motion passed.

The recess began at 7:10PM.

The meeting re-adjourned at 7:28PM.

2. TO APPROVE MINUTES OF MEETING HELD ON NOVEMBER 26, 2018

Chair Yonkers tabled this agenda item for the next BOF meeting.

3. JOINT MEETING WITH BOARD OF SELECTMEN AND BOARD OF EDUCATION TO DISCUSS 2019-2020 BUDGET

Chair Yonkers asked the BOE to begin their presentation.

BOE Chair Irwin called the meeting to order at 7:30PM.

BOE Chair Irwin suggested that public comment should happen.

MOTION:
Chair Yonkers invited a motion to open the floor to public comment. Mr. Barickman made a motion to open the floor to public. Ms. Clark seconded the motion. The vote was unanimous and the motion passed.

4. PUBLIC COMMENT

Chair Yonkers opened the floor to public comment.

Sarah O’Dell, 214 Black Rock Turnpike, urged the Board to make sure enrichment is added back into the budgets for RES. She said that enrichment is missed. She also asked the member of the BOF to consider putting their email addresses on the town website. She said that the BOE and the BOS have all their member’s addresses on the website.

Doug Crites-Moore, 149 Gallows Hill Road, asked the BOF about putting their emails on the website. Ms. Clark responded to Mr. Crites-Moore by saying that the reason that only Chair Yonkers’ email is available is because every member of the BOF must be informed when a question is asked. Mr. Dean stated that the members of the BOF must speak as a unit and not individually. Mr. Crites-Moore asked if he should direct his questions to the head of the boards or to individuals. Mr. Dean stated that email complicates how public officials communicate. Mr. Mazzucco added that public meetings are the best way for the public to be heard and for information to be a part of the public record.

Sarah O’Dell, 214 Black Rock Turnpike, said that it seems that the BOE and the BOS have solved the issue of emailing, and asked the BOF to discuss with those boards how they solved it.

William Brown, 64 Lonetown Road, thanked the boards for their service. He expressed his concern about funding for school programs and the police department. He asked the boards how information will be distributed now that the Redding Pilot is nonexistent. First Selectwoman Pemberton said that the News Times and Susan Winters’ Hello Redding have taken up some of the roles that the Redding Pilot had covered. Chair Yonkers said that it is important to the BOF that accurate financial data are distributed and that the board speaks as a unified entity with regard to financial data and policy. Mr. Dean stated that there is no longer a default, neutral option for information distribution. Mr. Moran said that Channel 79 is a great resource.

Chair Yonkers asked Dr. McMorran to present.

5. JOINT MEETING WITH BOARD OF SELECTMEN AND BOARD OF EDUCATION TO DISCUSS 2019-2020 BUDGET

Superintendent Dr. McMorran said that Special Education is an unfunded mandate.

Dr. McMorran discussed the budget drivers for this year. Human resource costs are the major driver of any school budget. Special Education has increased the ways in which disability is identified, and this has expanded the role of special education. A new transportation contract was signed. The adoption of Next-Generation Science Standards (NGSS) means more curriculum development. Enrollment has declined and will level off for a short period of time.

The budget for this year is intended to maintain class sizes and program offerings. The implementation of NGSS is also a priority.

The per-pupil cost has increased from approximately $14k in 2006 to $25K in 2018. The reduction of staff during this period happened due to lower enrollment.

Dr. McMorran discussed the costs associated with special education. He emphasized that implementing various Special Education services in-house saves money.

Teacher contracts are a major driver of cost increases. Annual salary increases are responsible for approximately 50% of the budget increase. A Reduction of staff or an increase in class sizes would offset these salary increases.

Central Office costs 2.90% of Redding’s budget. This is lower than many of the DRG A schools.

General Instruction cost 42.97% of this year’s budget. Special Education cost 27.08%, operations cost 19.44%, administration 9.11%, academics 1.26%, and extra-curricular activities 0.13%.

In 2007-2008, there were 118 full-time educators. Currently, there are 98 full-time educators.

In 2007-2008, there were 79 support staff. Now, there are 86 support staff.

There are a variety of ways to decrease the budget: Line-by-line decreases, 16-year salary ladders instead of 12-year ladders, HDHP savings.

Dr. McMorran said that there will be difficult decisions made concerning the budget.

Chair Yonkers asked how early retirement was defined. Dr. McMorran said early retirement applies to any teacher who could continue teaching but retires due to financial incentives.

Mr. Dean stated that the projected decline in enrollment over the next 5 years is more likely a two-year decline. He also stated that Personnel cost is the most important factor in the budget. He stated the reinforcing nature of well-funded schools and that if the schools do not invest in themselves, the town becomes less of a desirable real estate market. This hurts the schools in the long run.

Ms. Clark asked Dr. McMorran about structural change like combining schools or changing transportation arrangements. Dr. McMorran said that these ideas have been considered but their implementation is difficult.

Chair Yonkers asked about billable medical services for Special Education. For example, Birth to Three is a state mandated service and it is provided to any eligible child. However, if a family has insurance, it will bill insurance. If there is no available insurance, the service is provided without charge. There are services that the school charges that may be billable services and perhaps changes to the law could be sought if there is a law that disallows insurance billing. Dr. McMorran discussed burden of proof responsibility. Dr. McMorran suggested lobbying state legislators to reduce the reimbursement rate for special education costs from 4.5 times the cost per pupil to 3.5 times the cost per pupil.

Mr. Barickman asked Dr. McMorran about regionalization of special education. Dr. McMorran was concerned about staffing in his office to pursue this. Mr. Barickman suggested that there are many members of the town who could help implement these ideas.

Mr. Dean stated that budget shaving is worrisome and that the personnel costs must be addressed.

Chair Yonkers asked for the Board of Selectmen to address the BOF.

First Selectwoman Pemberton produced a one-page document for this meeting. She discussed the budget workshop for Town on Friday, January 11th. She encouraged the public to attend.

First Selectwoman Pemberton identified that the key budget drivers for the Town are salaries and personnel costs. No new employees are being added to the Police Department or the Highway Department.

First Selectwoman Pemberton said tree trimming is a driver for this year’s budget. Dying ash trees are a liability, and they need to be cut down. 900 trees have been tagged for removal. Each tree costs approximately $500 to remove. The BOS is asking for $150,000 for tree trimming.

First Selectwoman Pemberton said that legal expenses can be reduced by $50,000. She said personnel changes in the Police Department and Finance Department resulted in savings. The Debt Service will remain stable and eventually will reduce, freeing up money in future budgets.

The library is asking for an additional $29,000.

The Town is proposing the addition of a facilities manager to consolidate the operations and maintenance of Town buildings. Along with this, building maintenance projects of $130,000 are being asked for. There are a variety of projects that need to be addressed.

The Radio system upgrade for the Town was proposed. The cost of the project would be $1.3 million.

First Selectwoman Pemberton discussed the four-year road plan. The Town will need to finance $3 million.

The Station Road Bridge estimate of $750,000 was discussed. By using an alternate method of replacement, this estimate could be reduced to $400,000.

Mr. Barickman asked if this estimate is around 6 to 6.5% increase. First Selectwoman Pemberton said that if everything makes it into the budget, this number is accurate. Mr. Barickman asked the boards to present their proposed numbers early on so that discussions can happen earlier.

Chair Irwin said that Tuesday, January 8th is the first regular BOE meeting of 2019, and Wednesday, January 9th is a BOE budget meeting. Thursday, January 3rd is a BOE public comment meeting.

Mr. D’Agostino was asked to speak. He said that a $567,228 increase at Region 9 is due to enrollment in Easton decreasing. The share of the Region 9 budget is proportional, and this means that if Redding has a higher proportion of students, the burden shifts. He also discussed various capital projects that need to be addressed.

Mr. Barickman asked about how the High School Budget is allocated between Redding and Easton. Mr. D’Agostino said that the budgeting is statutory.

Chair Yonkers said that the Boards should think about the reduction of debt service in 2020-2021 and that this should be considered when the boards put forward requests for large capital items.

6. PUBLIC COMMENT

Chair Yonkers opened the floor to public comment.

Unknown member of the public asked the boards to provide support for Dr. McMorran.

Wes Higgins thanked Dr. McMorran about his presentation and the data he provided.

Chair Yonkers adjourned the meeting at 9:28PM.

Submitted by,
Zachary Smith

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