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February 25, 2003MINUTES /BOARD OF FINANCE MEETING
TUESDAY, FEBRUARY 25, 2003
A meeting of the Board of Finance was held on Tuesday, February 25, 2003 at the Lower Conference Room at Town Hall at 7:30 p.m.
Members Present: Marty Heiser, Chairman
Bernard Dzielinski, Norman Craig, Joseph Savino, and Andrew Bodner
Town Officials: Jay Wahlberg, Controller
Invited Guests: Linda Bunyan, Chairman, BOE; Frank D’Angelo, BOE; Dr. Wallace, Supt. of Schools; Dr. Keating.
A G E N D A
· Approval of prior meeting’s minutes
· Executive Session on Bennett’s Pond – 1st Selectman – (Cancelled)
· March 1, 2003 bond issue discussion
· Board of Education – Current year budget update
· Tax Collector & Treasurer Reports
· Controller’s Report
o Financial Review
o Transfers
o Report on open items
· Open CIP projects
· Status on RFP bond attorney-bond advisor
· BOS discussion on McKeon loan
· Town Purchasing policy
· Budget status update
· Fiscal Year 2004 Town budget book
· New Business
· Communications & Correspondence
· Adjournment
Mr. Heiser opened the meeting at 7:30 and announced to the people in attendance that this was a regularly scheduled meeting of the Board of Finance.
· Approval of prior meeting’s minutes
A motion was made by Mr. Bodner and seconded by Mr. Craig to approve the minutes of the January 7, 2003 meeting after changing “it is” to “could be” at the bottom of page 3 under Financial Review. Vote, all in favor, unanimous. Motion carries.
Mr. Heiser asked if the BOARD OF FINANCE had received an answer from the BOS regarding the senior tax credit and Marty Carr said the credit had been approved and no response was anticipated.
· March 1, 2003 bond issue discussion
Mr. Wahlberg reported that the Town did very well on the twenty-year issue of $38,600,000.00, getting it at an interest cost of 3.927%. Mr. Bodner noted that we issued it at a premium of $941,000.00 and asked what costs were associated with the transaction. Mr. Wahlberg said he did not have all the costs available yet, but he predicts between $40,000 and $50,000. Mr. Bodner asked what the underwriting discount was. Mr. Savino pointed out numbers indicating $63,900.00 had been spent and noted that the BOS did not issue an RFP as the Board Of Finance had requested and now the budget of $90,000.00 has been overspent even with some of the components missing, including the bond attorney.
Mr. Wahlberg said he had asked the bond attorney two things: 1) to see if there is an existing engagement letter; and 2) why does he wait until the last minute to bill. The attorney’s responses were: 1) that he would try to find one but doubted he would because he’s been working for the Town since the 1980’s; and 2) because a lot of his fees are incorporated in the bond issue itself and that’s why they end load it.
Mr. Savino asked what will he pay them with and Mr. Wahlberg responded “transfers”. Mr. Savino expressed his continued angst over the fact that there was no retainer agreement and no estimate that the Board Of Finance had asked for more than three months ago. Mr. Heiser noted that the Minutes of the January Board Of Finance meeting reported an apparent willingness on the part of the BOS to defer to the Board Of Finance on the RFP issue. Mr. Wahlberg indicated that he hadn’t enough time to issue the RFP and Mr. Savino noted that the Board Of Finance started this in July and used “outrage” to describe his response to the lack of action.
Mrs. Dzielinski asked why the Town went for three bond ratings and Mr. Wahlberg said the Town used to go for one and never got the triple A rating. The third rating came into play the year the Town received the triple A rating. Mr. Dzielinski said he never realized the cost of obtaining the ratings was so high. Mr. Savino noted that Moodys is currently being investigated. Mr. Craig asked how often the BOS called bond counsel for advise and Mr. Wahlberg said they use him quite freely, particularly with Bennett’s Pond. Mr. Craig again asked Mr. Wahlberg to break down all the legal fees by project and by attorney.
· Tax Collector & Treasurer Reports
Tax Collector’s Report
ACTUAL % COLLECTED vs.
CATEGORY BUDGET COLLECTED BUDGETED
CURRENT TAXES $ 72,615,895.00 $ 54,217,709.00 74.6%
SUPPLEMENTAL MOTOR VEHICLE $ 725,000.00 $ 564,772.00 77.9%
PRIOR YEAR COLLECTIONS $ 725,000.00 $ 269,343.00 37.2%
INTEREST & LIEN FEES $ 350,000.00 $ 120,206.00 34.3%
AS OF JANUARY 31, 2003 $ 55,172,030.00
Mr. Dzielinski said he had spoken with Town Tax Collector Mary Foyt and said she expressed disappointment with January collections, but noted that people had until February 3rd to pay, so February’s collections should be higher. The supplemental motor vehicle is giving her trouble.
Treasurer’s Report
Interest
Investments as of January 31, 2003 Amount Invested Rate
First Union $ 4,620,363.59 0.0177
Fleet Bank $ 468,757.60 0.0145
MBIA - Bond Fund $ 714,348.41 0.0134
MBIA - General Fund $ 748,084.11 0.0134
Ridgefield Bank $ 9,734,458.57 0.0182
STIF $ 1,260,947.76 0.0144
Union Savings Bank $ 373,395.20 0.0166
Union Savings CD $ 8,544,627.81 0.0200
$ 26,464,983.05
Year-to-Date Interest Earned:
Fleet Bank $ 75,794.84
First Union $ 100,117.62
MBIA $ 12,311.35
Ridgefield Bank $ 197,515.30
STIF $ 11,023.42
Union Savings Bank $ 192,464.19
$ 589,226.72
The money from the recent bond issue will be received next week. Mr. Dzielinski said he would like to have Town Treasurer, Marilyn Kiernan to the next Board Of Finance meeting in March to discuss the investments and the return on same. The short fall in interest under what was planned on in the budget looks to be about $200,000.00 to $300,000.00.
· Controller’s Report
o Financial Review
Mr. Wahlberg reported there was no money from the State on the manufacturers exemption. He thinks the State has a cash problem and will not issue any checks before April 15, 2003. At that time the Town will receive only half of what it expects, which is $300,000.00 less. Mr. Bodner asked if the Town needed to adjust its spending to avoid running a deficit. Mr. Wahlberg said no, that he anticipated under spending and increased revenue in some areas would make up for lost revenues. In particular he noted that Parks & Rec had an outstanding January, bringing in close to $300,000.00, with another increase expected in February. He also expects the Tax Collector to come in over budget again, and the Town Clerk is having a good year with conveyance taxes. (already at 81% of budgeted revenues). Mr. Wahlberg said he felt the issue was not critical at this time and should be discussed at the March meeting.
Mr. Savino asked Mr. Wahlberg about State education money. Mr. Wahlberg said the Town lowered its estimate when the State gave out warning signals and now he believes the Town will actually receive more than estimated. Mr. Heiser asked: “do we see any gray clouds?” Mr. Wahlberg responded, “yes” there are some revenue ups and downs and snow removal costs are troublesome with the Highway Department $80,000.00 over budget.
Mr. Dzielinski noted that the golf course was at 49.8% of its revenue figure. ($623,000.00 this year as opposed to $742,000.00 last year)
o Transfers
#200309
WHEREAS, the Police Department has experienced a strong demand in its police special services during the fiscal year.
WHEREAS, said revenues have an expense component that bares the same correlation in costs.
THEREFORE, the Police Department is requesting an increase in expense appropriation with a corresponding increase in the revenue estimate based on future and past activity.
INCREASE:
10401-51020 SPECIAL DUTY $91,000
INCREASE:
10903-44230 POLICE SPECIAL SERVICES $91,000
Mr. Wahlberg said this is telling us that revenue was estimated too low. The police are making money and that’s a good thing.
A motion was made by Mr. Dzielinski and seconded by Mr. Craig to approve Transfer #200309. Vote, all in favor, unanimous. Motion carries.
#200308
WHEREAS, the Town Tree Warden has experienced two major storms in this fiscal year that required substantial clean-up.
WHEREAS, the current operating budget did not address extraordinary events. The storm damage costs incurred amounted to $18,512.00.
THEREFORE, the Tree Warden is requesting an appropriation from general contingency in the amount of $18,512.00 to cover the costs associated with said storm damage.
INCREASE:
10370-52130 TREE CARE $15,000.00
DECREASE:
10890-59101 GENERAL CONTINGENCY $15,000.00
Mr. Heiser asked what the total amount in general contingency was, and Mr. Savino responded that it was only $100,000.00 now and “we have serious overruns in certain places”. Mr. Wahlberg said the $18,512.00 has been spent. Mr. Dzielinski. noted the BOS cuts the tree warden’s budget every year. Mr. Heiser observed that the tree warden does have pictures of “squashed Jeep Cherokees” which he always finds compelling.
A motion was made by Mr. Dzielinski and seconded by Mr. Craig to approve a $15,000.00 transfer rather than the $18,512.00 requested. Voting in favor: Mr. Heiser, Mr. Dzielinski, Mr. Craig, and Mr. Bodner. Voting in opposition: Mr. Savino. Motion carries.
o Report on open items
· Open CIP projects
· Status on RFP bond attorney-bond advisor
See previous discussion under bond issue discussion.
· BOS discussion on McKeon loan
Mr. Savino brought up the $153,000.00 loan for the purchase of the McKeon Farm I property that he maintains was an illegal transfer in violation of the Town Charter, and which, rightfully, should have been put before the Ridgefield voters in a referendum. There is now a $153,000.00 loan on the balance sheet; it does not belong on the balance sheet. Mr. Savino suggested that there be a separate line item this May to pay for the McKeon I loan and let the public decide if it wants to vote for it. If it is voted down, take the money out of the BOS’s budget. Mr. Dzielinski said he would like to read what the BOS said about the issue and asked Mr. Wahlberg to get the BOS’s meeting minutes.
· Town Purchasing policy
Mr. Wahlberg said he had passed out information regarding what the Town has bid out so far, saying it was basically capital projects that have gone over $5,000.00. Mr. Savino noted that the Town side of the budget was 70% salaries ($13M out of $22M); the BOE side was 85% salaries. Mr. Savino said he wants to see competitive bids, and best purchasing practices. “We can’t look the taxpayers in the eye and say if they are getting a good deal.” We are not using best procurement policies. “If it’s not salary, we should be bidding it every year.”
Mr. Wahlberg said the Town uses competitive bidding for fuel oil. “We don’t competitively bid when we need to have something fixed on a building like when a furnace goes out because it’s usually an emergency. Mr. Wahlberg voiced his confidence in Jerry Gay’s ability. Mr. Savino said he wants each department head to show the competitive bids. Jerry should come in with a plan showing what he is doing to save money. Mr. Wahlberg said the town managers do not have any control over that.
· Budget status update
The BOS will be meeting next week for the entire week to discuss the budget, trying for a 5% increase. Mr. Wahlberg said the interest and principal payments on the debt service are coming in at $500,000.00 less than anticipated, which all falls down to mill rate. He observed that interest payout next year is less than this year. Principal is way up, interest is less. We had to pay down principal on some bond anticipation notes.
Mr. Dzielinski noted that the $4,250,000.00 check from the State for the Bennett’s Pond property has been deposited and that it cleared.
· Fiscal Year 2004 Town budget book
Mr. Wahlberg gave each Board Of Finance member the fiscal year 2004 Town budget book for review. Mr. Savino called the Board Of Finance’s attention to the Town labor contracts which have a bigger health package and to a proposed two-year 19% overall Town budget increase. If the Town keeps this year’s increase to 5% the two-year increase will be 14%.
Mr. Savino said there should be a request for labor negotiations. The Town deals with four unions: 1) police; 2) fire; 3) teamsters; and 4) clerical. The BOE deals with four or five unions. The health insurance costs are high. The percentage of health insurance costs paid by employees has to be examined. Mr. Wahlberg said the Town employs approximately180 people and the average salary is about $43,000.00.
· Board of Education – Current year budget update
Mrs. Bunyan reported the BOE’s budget concerns for the current fiscal year noting that it has encountered unanticipated expenditures which have necessitated the transfer of funds to cover obligations. She said that in the next several weeks the BOE might have to come to the BOARD OF FINANCE for additional funds in order to avoid an illegal deficit position. The BOE presented the following list of unanticipated expenses:
2.8 Contingency Teaching Staff $ 162,400.00
Special Ed Tuition (Out of District) $ 162,000.00
Employee Benefits $ 90,530.00
Special Ed Para Professionals $ 88,680.00
Transportation $ 30,000.00
Energy-Heating $ 22,250.00
Legal Fees $ 10,000.00
Replace FES Fuel Pump for Burner $ 8,990.00
Replace FES Water Pump $ 8,500.00
VPES Boiler Repair $ 6,000.00
~ $ 589,350.00
The BOE said it has funded these unforeseen expenditures by reducing educational supplies, books and equipment, reducing athletics and other student activities, reducing technology and significantly reducing curriculum and instructional improvement, i.e. fewer curriculum writing revisions and less training for staff. As of today, (2/25/03) the BOE projects a $198,158.00 shortfall.
Mr. Dzielinski asked if the BOE had thought of reducing extra-curricular activities in the schools as a means to reduce the use of heat and electricity. The response from Dr. Wallace and Mrs. Bunyan was negative. Mr. Dzielinski said he would like to see some initiative toward reducing the cost of electricity and Dr. Wallace asked what he meant. Mr. Bodner responded, “turn the lights out”.
Mr. Dzielinski. said that any increase in the BOE budget would have to go to a Town meeting for approval.
Mrs. Bunyan asked the BOF to define the time frame needed to request and obtain additional funds. Mr. Dzielinski said he would like the BOE to come to the BOF March 19, 2003 with its forecast and request any additional funds for this fiscal year.
· New Business
Agenda items for the March 19th meeting: 1) Board of Education; 2) Mr. Wahlberg’s forecast; 3) capital improvements; 4) BOS minutes on McKeon resolution; 5) discussion with the Town Treasurer; 6) breakdown of legal costs by project and attorney. Mr. Craig suggested inviting department heads to a meeting to discuss their budgets. He said he has a problem with buying a new fire engine when the current engine only needs a bushing and a new gasket to put it into A1 condition. Mr. Dzielinski agreed that the BOF should “drill down” on the capital program.
· Communications & Correspondence
· Adjournment
A motion was made by Mr. Bodner and seconded by Mr. Dzielinski to adjourn the meeting at 10:00 p.m. Vote, all in favor, unanimous. Motion carries.
Respectfully submitted,
Karen Rodgers
Recording Secretary
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