BOARD OF FINANCE
MINUTES
October 25, 2004
I. CALL TO ORDER – The meeting was called to order at 7:30 p.m. in the Selectmen’s Chamber, by Chairman Tom Harrison. Present were members Tom Gugliotti, Mike Monts, Jim Speich and Mark Zacchio. Mr. Hooper and Mrs. Durdan were absent.
II. PLEDGE OF ALLEGIANCE – Mr. Monts led the assemblage.
III. COMMUNICATION FROM AUDIENCE – None.
IV. MINUTES OF PRECEDING MEETING, September 27, 2004
On a motion made by Mr. Gugliotti, seconded by Mr. Monts, it was voted:
RESOLVED: That the Board of Finance approves the minutes of the September 27th meeting, as submitted.
Messrs. Harrison, Gugliotti, Monts, Speich and Zacchio voted in favor.
V. OLD BUSINESS
00/01-11 Review, Discussion and Approval: Restatement,
` Post Retirement Medical Trust Fund.
The Town Manager reported the Governmental Accounting Standards Board (GASB) has issued some Statements requiring disclosure of liabilities associated with post-employee retirement benefits. We actually approved the establishment of a fund (Fund 16) back in 2000/2001. We are now ready to further implement a revision to the description of the Trust Fund. This is actually to amend the Trust Fund or the Fund description that you approved back in 2000/2001 to a new description. Most of these decisions fall under the Town Council, and at their October 7th meeting, the Town Council approved the other parts of this process. Chris Kachmar, from UBS, is here to explain and answer questions on this new requirement. Ms. Colligan, Finance Director for the Town, reported
that we have taken some steps to start this funding, we had an actuarial valuation done; we went out with an RFP for a Pension Advisor and someone to advise us on the next steps to take for the implementation of the Post-Retiree Medical Trust Fund. As a result of that Chris Kachmar is here tonight; he has been involved with this since October of 2003 in a pension advisory capacity.
Mr. Kachmar advised he represents the Prime Asset Consultant group within UBS that focuses on institutional consulting. They have a national practice that has about 22 teams that provide investment advisory services to plan sponsors. The Hartford Team is a 14 person team that has been in operation since 1989 and we advise approximately 6 billion dollars of what we call fiduciary assets for municipalities, corporate, DB and DC plans, endowments, foundations and the like.
At last count we have 21 municipal clients, with approximately 1.3 billion in assets. Some of the towns we work with in addition to Avon are West Hartford, Manchester, Newington, New Britain and a number of others. We render a full suite of consultant services; in the case of institutional pools of money we think of four steps.
1. We work with committees on investment policy statement development and review;
2. building the blueprints of how the money should be invested and monitored;
3. doing formal asset allocation work to help generate alternative mixes of assets and;
4. finding managers.
Mr. Kachmar explained in detail the details of administering the program as required by GASB. He further explained details that a conservative program will grow fairly dramatically in terms of liability and the asset allocation strategy in place will need to support the growth in those liabilities. It is going to look like a traditional pension. In response to a question from the Board of Finance, Mr. Kachmar reported the first year premium for the administrative costs incurred by Security Bank will be about $1,300 and they charge $75.00 a year for account maintenance.
Upon the recommendation of the Town Council the Board of Finance took the following action:
On a motion made by Mr. Gugliotti, seconded by Mr. Zacchio, it was voted:
RESOLVED: That the Board of Finance approve the revisions as explained
by Mr. Kachmar, approved by the Town Council, and defined as “Town of Avon Retiree Medical Benefits Reserve Fund”.
Messrs. Harrison, Gugliotti, Monts, Speich and Zacchio voted in favor.
04/05-04 – FY 04/05 Auditor Selection – Ms. Colligan reported she submitted a memo and a draft RFP for review. She also recommended allowing a month for this review and perhaps at the next meeting we can take action. She is also asking the Town Attorney and the Board of Education and Division of Accounting to review this; we have to meet certain deadlines and the Division will look at the section on the Financial System and update anything needed. The Board agreed with Ms. Colligan’s schedule.
VI. NEW BUSINESS
04/05 – Review and Discussion, Town Professional Services
Agreements – The Chairman had requested this information from the Town Manager; he feels the Board could use some picture of what’s involved. The Town Manager reported there is some duplication of services for the Town and the Board of Ed – the Pension Advisor, the Auditor, the Town Attorney, although the Board of Ed’s payments for the Town Attorney are not included in the amount paid. The Chairman questioned the Policy Memorandum No. 3.1 and the Town Manager reported this was part of the purchasing policy set by the Town Council. Mr.
Schenck reported we haven’t really defined Professional Services because this was asked for with the idea of giving some sense on the feel for what types of services we are contracting for and the process used to obtain those services. These do not include such services as street sweeping, catch basin cleaning, all of that type of thing – supply bids. How these are selected is governed by the purchasing policy; if you go to the policy, you will see that those providing professional, consulting or technical services are essentially exempt from strict dollar amounts. What we take into account in selecting the firms is not only the price, it takes into account experience, references, the principals involved. There is an interviewing process, although in some cases there are very few competitors. The Land Records and Recording system is one in which there are no competitors; over 70 municipalities in the State of Connecticut are using
this particular system. Another one is “special needs recreation program” this is basically diagnostic services that we use for children who have special needs that want to be enrolled in our recreational programs. If you have a child with special needs who wants to be in the summer playground program, they go through a diagnostic evaluation and then we’re required to make a reasonable accommodation to those needs. Services that you will see coming up include sewer facilities planning by Fuss and O’Neill. The Chairman feels this information will be helpful in the budgeting process and asked if any members had any comments or questions. Mr. Gugliotti asked about the 1961 Pension Investment Manager and was advised that is when the Town decided to offer employees a pension benefit. The original agreement with Aetna was signed at that time which stated that upon retirement, the employee was given an annuity and the funds to
pay that annuity would stay with Aetna.
VII. EXECUTIVE SESSION – (Negotiations)
On a motion made by Mr. Speich, seconded by Mr. Gugliotti, it was voted:
RESOLVED: That the Board of Finance go into Executive Session at 8:25 p.m.
Messrs. Harrison, Gugliotti, Monts, Speich and Zacchio voted in favor.
RESOLVED: That the Board of Finance come out of Executive Session at 9:45 p.m.
Messrs. Harrison, Gugliotti, Monts, Speich and Zacchio voted in favor.
VIII. MISCELLANEOUS
The Town Manager reported that he asked Mrs. LaMonica, staff person to the Building Committee, to present an accounting on the Thompson Brook School project. He reported the Gym floor has been the major hold-out issue; he is anticipating the committee will be disbanded in December or January.
IX. OTHER BUSINESS – None.
X. ADJOURN
On a motion made by Mr. Speich, seconded by Mr. Gugliotti, it was voted:
RESOLVED: That the Board of Finance adjourn at 8:45 p.m.
Messrs. Harrison, Gugliotti, Monts, Speich and Zacchio voted in favor.l
Respectfully submitted,
Thomas A. Gugliotti, Secretary
Attest: Elinor Burns, Clerk
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