HomeMy WebLinkAboutAd Hoc Budget Committee Minutes August 1, 2008_201402060848043317
Town of Nantucket
Ad Hoc Budget Committee Meeting
Minutes – Ad Hoc Budget Committee Meeting August 1st, 2008
Present: Ms. Libby Gibson, Ms. Jenny Garneau, Ms. Susan Genthner, Mr. James Kelly,
Mr. Michael Kopko, Ms. Irene Larivee, Mr. Matthew Mulcahy, Robert Pellicone Ed. D.,
and Ms. Patricia Roggeveen,
Absent: Mr. Glenn Field and Ms. Connie Voges
Also present: Mr. Brian Chadwick, Mr. Malachy Rice, Mr. Whiting Willauer, and Mr.
Craig Abernathy
1. Call to Order:
Ms. Roggeveen called the meeting to order.
2. Fiscal Year 2010 Budget Timeline:
Ms. Gibson stated that she is working on the FY 2010 budget timeline. At this
point in the process she would like to invite comments on the timeline used last year.
She asked all parties to share their likes and dislikes as well as their ideas about what
items in the timeline should be adjusted. Ms. Gibson detailed the milestones of the FY
2009 schedule as follows: September ‐ budget instructions go out, October – budget
requests are due back, November ‐ budgets are compiled by Town Administration and
Finance, December – Board of Selectmen (BOS) and School Committee review and
provide recommendations; and in January the budgets are presented to the Finance
Committee.
Ms. Genthner highlighted changes in the School budget planning process. This
year the School has accelerated their budget planning schedule to fall more in line with
the schedule used by the Town. Ms. Roggeveen stated that last year the School’s
budget forecast came in late. She asked that this year the Committee be given as much
advance information as possible. She felt this would facilitate the budget forecasting
process.
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August 1st, 2008 Page 2 of 8
Ms. Gibson stated that the Board of Selectmen will be given an initial forecast for
the FY 2010 budget on August 13th, 2008. The information presented will include
revenue projections, expense projections, and some of the background information for
the forecast. At that time, the Selectmen will be able to begin formulating a policy
approach to the budget forecasting process. She reminded the Committee that some
items, such as free cash, might not be known until later in the process. However, she
stated that free cash has traditionally been used for capital and not for ongoing
expenses.
Mr. Kelly asked if the reallocation of resources to focus on the 2008 Audit would
affect the budget development process. Ms. Gibson made a request for patience during
the budget planning process. She stated that Ms. Larivee will be allocating some of her
time to the audit, and thus will not be working on budget planning full‐time. Ms. Gibson
pointed to a more consistent approach and format that will allow the Finance
Committee to see information in a clearly presented manner.
Mr. Kelly commended the School for the involvement of all of its constituents in
the budget planning process. However, he stated that he felt that many of their ideas
go left out of the process due to the fact that everyone was so far behind last year. Ms.
Genthner said that normally the School does lag behind other departments in the
budget development timeline, but this year the School has brought their schedule in line
with the schedule used by the Town.
Ms. Garneau asked if the School would be presented with document templates
for submitting information to the Committee, and Ms. Larivee said she has templates for
all of the information, and that she will be providing templates to the School and
Enterprise Funds.
Mr. Mulcahy commented that he felt the timeline used last year worked well for
the Finance Committee. He then asked Ms. Roggeveen about forecast numbers due in
December. Ms. Roggeveen stated that she expects to see a continued decrease in
revenue. The Committee must constantly check the expectations of different
departments against the realities of the budget. She stated that gathering and sharing
information in the budget process and incorporating that information into projections
will reduce the chances of disappointment.
3. Five Year Forecast
Ms. Larivee stated that the Town’s FY 2009 Revenue Budget will not be final until
the State certifies the Town’s Tax Recap. Once revenue is certified, the Town will be
able to provide a refined revenue projection for FY 2010. This certification usually
occurs in October or November.
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Ms. Larivee directed members to the revenue & expense forecast concerning
new growth. She stated that she had obtained the new growth estimate from Deborah
Dilworth, the Town’s Assessor. This revenue forecast shows that new growth is
estimated to be approximately $958,000. Ms. Larivee characterized this as a
conservative projection by the Assessor. She also stated that based upon a decline in
applications for building permits, local revenue has fallen thirty‐five percent during the
three year period from 2005 to 2008. She stated that although local revenue had been
reduced to $12.5 million in FY 2008 early year end indicators show it will be short by
$1.2 million. Ms. Larivee added that for FY 2008 “budgetary turn‐backs” were sufficient
to cover the revenue shortfall. (Note: The term “budgetary turn‐back” refers to unused
funds returned by departments at the end of the fiscal year.)
Mr. Pellicone asked Ms. Larivee if the deficits were being assumed in the budget
planning process. Ms. Larivee said that currently the Town’s model uses an increase in
salaries at the rate of five percent. Using this model, the Town will have a projected
budgetary deficit of $6.2 million by 2014. She stated that the goal of the Town was to
look at salaries and slow the rate of growth. Mr. Pellicone asked why employees could
not be held to a three percent increase, and Ms. Larivee responded that three percent
was not realistic, as the current trends are five or six percent increases.
Ms. Garneau asked if the Town was projecting a five percent increase due to
contractual obligations. Ms. Larivee stated that all of the contracts that have been
ratified thus far have come in below the five percent figure. However, some contracts
are still being negotiated. Mr. Kelly asked if the assumptions used in the planning
process were approved by the Board of Selectmen, or were they administrative
assumptions. Ms. Larivee responded that the assumptions being used are
administrative. Ms. Gibson added that these assumptions are realistic for the purposes
of discussion.
Mr. Pellicone stated that the Town is “setting itself up” by using planning
forecasts that incorporate five percent increases in salaries. Ms. Larivee agreed, stating
that five percent salaries cannot be sustained. Mr. Kelly stated he believes that when
assumptions are made about revenue the same assumptions should be applied to
salaries. Mr. Kelly went on to add that he was concerned about listing five percent as a
goal on a Town document. Ms. Roggeveen stated that she believed it was necessary
information for the purpose of providing insight to the Committee. She added that
none of the documents are endorsed documents; they are added as an opportunity to
provide warning of potential problems in the future.
Mr. Mulcahy asked if it wouldn’t be better to use a higher estimate for salary
increases rather than use a lower estimate and come up short. Ms. Larivee responded
that the Town has to deliver a balanced budget. Mr. Kelly said that not all of the Town’s
labor contracts have been negotiated. He also pointed out that the Town could look at
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August 1st, 2008 Page 4 of 8
items such as hiring freezes and overtime reduction in order to allow the Town to have
adequate finances to meet its contractual obligations.
Mr. Kopko reminded the Committee that a five percent increase was significantly
less than the increases approved in the past. He added that he believed the Town was
gradually stepping its way toward creating realistic ideas in regard to salary increases.
Ms. Roggeveen added that looking at salaries was only one way to approach reducing
costs. She stated that it may be necessary for the Town to look at ways to reduce the
services it offers when funding for those budgets is no longer available.
Dr. Pellicone asked why the documents did not show an allowance for increases
in the costs of utilities. Ms. Larivee replied that increases in utility costs have been
accounted for under operating expenses. Operating expenses are traditionally
increased by two percent each year to account for utility, gasoline increases, etc.
Mr. Kelly asked when each department would be given budget assumptions to
work from in developing their budget projections. Ms. Gibson answered that the Board
of Selectmen will meet and consider input put forth by the Ad Hoc Budget Committee.
After the data from that meeting is digested and organized, information will go out to
each department in September. Town Administration and the Finance Department will
meet with each department to explain the information and the documentation
requirements for any increases and/or changes to the departmental budgets.
Mr. Kelly again asserted his belief that it was incorrect to continue with salary
increases of five percent. Ms. Gibson responded that for Fiscal Years 2009, 2010, and
2011 an assumption of a five percent salary increase was used due to a directive by the
board. She added that going forward with fiscal years beyond 2011 would be the time
to address changing the five percent assumption.
Ms. Roggeveen pointed to some of the efforts made by the Board of Selectmen
in addressing salary increases. She stated that the Board provided direction to the
negotiation team about what could be done and then the Board demonstrated its ability
to take action. Mr. Kopko stated that the next contract negotiation process will be
different; adding that over the years progress has been made in addressing what was
once considered an untouchable issue.
Mr. Mulcahy again stated his preference for a five percent assumption. He
added that it would be difficult to cut the five percent number from a contract
standpoint without cutting services. Mr. Kopko stated that even if the Town manages to
keep salary increases below five percent it will be necessary to cut services, implement
hiring freezes, reduce or reallocate staff, and bar the use of overtime.
4. Discuss Fiscal Year 2010 Development:
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Ms. Larivee began this part of the discussion by introducing two types of budgets
(Level Funded and Maintenance budgets). In the past the Town used level funded
budgets. These budgets receive funding based upon the amount they received in the
previous year. Ms. Larivee proposed that the Town move to a maintenance budget.
The goal of a maintenance budget is to support the level of service being provided
today. Ms. Larivee stated that this would allow the Finance Department and Town
Administration to look at the Town’s finances as a whole and reallocate resources where
they are needed.
Mr. Kopko asked how a transition from a level funded budget to a maintenance
budget would impact the various departments of the Town. Ms. Gibson replied that it
would require some education. She added that this type of budget would help achieve
the Town’s goals of looking at what services the Town is providing and determine their
level of effectiveness. Ms. Gibson went on to state that this type of budget would put
the Town in a better position to identify the places where cuts can be made in order to
meet financial goals. Ms. Garneau stated that the School is already using this type of
budget.
Ms. Gibson stated that at some point the Ad Hoc Budget Committee will need
some policy direction form the Board of Selectmen. She asked that the matter be
presented to the Board at its meeting on August 13th, 2008. She noted that after that
there is not much time to get documents and meetings together before budget planning
has moved into more advanced stages.
Mr. Mulcahy asked if a maintenance budget would affect Fire Department
overtime. He stated that he believed the department used level funding to move a large
amount of funding from year to year. Ms. Larivee stated that a maintenance budget
would allow the Town to look at trends and appropriate the funds for overtime for
amounts consistent with past years. She added that this would allocate the necessary
funding at the beginning of the budgetary process rather than covering budgetary
shortfalls late in the fiscal year.
Mr. Kopko asked Ms. Larivee if the net effect of changing budget styles would
result in an increase or decrease in the total amount budgeted. Ms. Larivee replied that
when creating the FY2009 budget, she reviewed this type of budgeting with Town
operating expenses. The projected net affect would have resulted in a decrease in the
total operating expense.
Ms. Roggeveen asked if the Committee should expect to look at the same
information presented to the Board of Selectmen at their meeting on August 13th. Ms.
Gibson stated that much of the information would be the same, but the Board would be
provided with more detail. Ms. Gibson also suggested that the Board begin discussing
how it will approach reductions in revenue and the options available to agencies
experiencing reductions in revenue. Ms. Gibson advised that she believes there will be
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August 1st, 2008 Page 6 of 8
more time than normal allocated to the budget process this year, as services may need
to be reduced, cut or modified in the form of contracting out.
At the end of the meeting, it was decided that the Town should make a
submission to the Board of Selectmen on August 13th, 2008. This submission would be
a policy request to the Board of Selectmen asking for formal approval for a transition
to a maintenance budget model.
5. Discuss Fiscal Year 2010 Budget Presentation:
Using last year’s budget process as an example, Ms. Larivee spoke about the
need for consistent terminology. In particular, she highlighted confusion in the terms
Municipal, Town and School budgets. She added that when percentages for different
budgets were being quoted to the press they were often misstated due to confusing
terminology. Ms. Gibson agreed and stated that it will be necessary for all members to
use the same terminology.
Ms. Larivee continued speaking about consistency in relation to Budget Books.
She recommended that this year each department (Town, School, and Enterprise Funds)
present a consistent format including documentation of revenue & expense budgets,
organizational charts, and a personnel spreadsheets. Documentation samples were
provided to the committee. She also recommended that the revenue & expense
budgets provide two years of actual data, the current budget, the proposed budget, the
dollar change and percentage change year over year.
Mr. Kelly asked why the documents do not include the salary and operating
expense actuals for the first six months of operations. He stated that in business you
look at what you are currently spending. Mr. Rice stated that in municipal finance
encumbrances hamper the ability to get an accurate picture of current finances. Ms.
Larivee and Ms. Gibson stated that it would be possible to provide Mr. Kelly with a six
month “snapshot.” Ms. Larivee stated that she begins running reports on salaries in the
twenty‐eighth week, but it would also be possible to provide current salary expenditures
to Mr. Kelly.
6. New Business:
Mr. Kopko asked Dr. Pellicone how the School’s capital planning process works.
Dr. Pellicone stated that he met with the administrative team on Wednesday, July 30th,
2008. He stated that this meeting was to determine what capital needs should be
addressed. The school committee will have to approve the proposed capital items on
August 7th, 2008. The approved items will be submitted to the Town on August 15th,
2008. Dr. Pellicone stated that the added the items that were not approved in FY 2008
to the FY 2010 capital request. Mr. Kopko asked if the school has a long term plan for
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August 1st, 2008 Page 7 of 8
capital issues. Ms. Garneau replied that the school uses a ten year model for capital
planning. Mr. Kopko asked if any fuel tank replacement costs were included in future
capital plans. Dr. Pellicone responded that cost for replacement of two fuel tanks was
included in the capital plan. Mr. Kopko asked if the Committee would be able to see the
School’s capital plan. Ms. Gibson said that she will provide the capital plan in
September, after compiling data submitted on August 15th, 2008.
7. Old Business:
None.
8. Date of Next Meeting:
Ms. Garneau requested the next meeting be in the afternoon sometime after
August 15th. This would provide Ms. Genthner with a better opportunity to attend the
meeting. The date of the next meeting was set at Monday, August 18th, 2008 at 3:00
PM.
Prepared by Craig Abernathy
Minutes – Audit Committee
August 1st, 2008 Page 8 of 8