BOARD OF FINANCE
MINUTES
DECEMBER 18, 2006
I. CALL TO ORDER – Chairman Tom Harrison called the meeting to order at 7:30 p.m. in the Selectmen’s Chamber, Town Hall. Members present: Margaret Bratton, Jim Speich, Tom Gugliotti and Mike Monts. Cathy Durdan and Bill Hooper were absent.
II. PLEDGE OF ALLEGIANCE – Led by Mike Monts.
III. COMMUNICATION FROM AUDIENCE – None.
IV. MINUTES OF PRECEDING MEETING: November 27, 2006
On a motion made by Mr. Gugliotti, seconded by Mr. Speich, it was voted:
RESOLVED: That the Board of Finance approve the minutes of the November 27th meeting. Messrs. Gugliotti, Speich, Harrison, and Mrs. Bratton voted in favor. Mr. Monts abstained.
V. OLD BUSINESS
06/07-07 – Review and Discussion: Development of Policy on Supplemental
Appropriations from General Fund Undesignated Fund Balance (“Surplus”)
The draft of the Policy Regarding the Use of Surplus was reviewed and discussed. Mr. Monts thought the draft was acceptable and that it expresses the consensus of the Board. He would prefer that it be a guideline about the use of Surplus rather than a policy. Mr. Gugliotti feels the use of the word “policy” might help the Town in regard to the bonding agencies. Discussion yielded the consensus that making a decision calls for the Board of Finance to use its discretion in regard to extraordinary need shown or not before approving or denying a request. A request should not come before the Board of Finance without support from either the Board of Education or Town Council. Mr. Harrison stated that it might give some agency outside the Town a level of comfort that the Board of
Finance members are not going to approve just any request. The Board is trying to discourage requests that are not serious, and that approval should not be made of something that does not meet its own high standards.
On a motion made by Mr. Gugliotti, seconded by Mrs. Bratton, it was voted:
RESOLVED: That the Board of Finance approves the language of the proposed policy regarding the use of Surplus funds as follows:
“1. Any use of surplus should only be considered by the Board of Finance after a showing of substantial support for such use by the requesting authority (including the Town Council and Board of Education). The Board of Finance shall exercise its discretion in finding whether or not there has been the requisite “substantial support” for such request. Demonstration of “substantial support” alone shall not be a sufficient basis to approve such request. The following additional criteria must also be met.
“2. Approval of any request for the use of surplus shall only be given upon a finding by the Board of Finance that such use will meet an extraordinary need or unusual opportunity, which need or opportunity must be timely met. Such need or opportunity must have characteristics demonstrating real and immediate circumstances which compels the extraordinary measure of using surplus. The proponent of such use must demonstrate, and the Board of Finance must find,
that such use will result in a tangible and significant benefit to the Town, which benefit outweighs the extraordinary process of utilizing surplus funds.”
Messrs. Gugliotti, Speich, Harrison, Monts, and Mrs. Bratton voted in favor.
VI. NEW BUSINESS
06/07-09 – Final Fiscal Year Transactions, FY 2005-2006
Town Manager Phil Schenck and Director of Finance Peg Colligan reported that the final fiscal year end transactions for fiscal year 2005-2006 are reconciliations to the audit at year end and are the standard entries requested every year for approval. The transfers are 4% larger in volume from 6/30/05 and the Town’s operating budget parallels the 4% growth. About $3,600 was returned back to the General Fund which experienced positive operating results despite the stressors of utilities and energy costs. The amount of Unreserved Undesignated General Fund Fund Balance increased from $3,557,223 or 6.44% of expenditures at 6/30/05 to $3,984,173 or 6.8% of expenditures as of 6/30/06. The Surplus increased by $426,950.
The supplemental appropriations presented for approval were standard for the most part – police services, FEMA reimbursement, and a return of funds from Avon Volunteer Fire Dept. There were budget amendments to record, are state and federal grants for Thompson Old Farms roadway redesign and for the Old Farms bridge project.
In Transfers and Fund Balance Designations the Finance Dept. requested approval to fund a 27th payroll; the next time it will be needed will be in 2012-2013. There was also a request for an operating transfer to fund the Town’s Compensated Absences Debt Services Fund for funding future payout of accumulated vacation and sick time to retired/terminated employees. There is also a transfer to set up a new designation for capital asset replacement as well as funding for the Medical Claims Fund to maintain a 10% reserve equity. The last designation was to segregate state restricted revenues for the purpose of purchasing open space. They have remained in the Capital Projects Fund, but will be tracked and recorded separately.
Responding to a question from Chairman Harrison about the increase in surplus, Mrs. Colligan stated that the increase was due to a combination of increased revenues and of favorable operations. Revenues for recording and conveyance received was at 159% collected; building structures and equipment revenues were at 133%. Charges for police services increased greatly due to private duty requests from construction projects and some CL&P work due to weather related problems. There was a drop in rental income as Towpath School is no longer occupied but other local revenues were ahead, as well as unbudgeted rental income from the Sprint cell phone tower.
Mr. Speich asked if the Town had been reimbursed for any of the $48,000 cost of the July 29, 2005 accident on Avon Mountain Road. Mr. Schenck stated that there had been so many claims and that the Council cautioned that funds should go to victims and their families first.
Included in the reporting and discussion was the statement that the Town has negotiated a lower health insurance rate. The consultants now feel there should be a 20% reserve rather than 10%. They are also concerned with IT security.
On a motion made by Mr. Harrison, seconded by Mr. Gugliotti, it was voted:
RESOLVED: That the Board of Finance approve the fiscal year end transactions, transfers, encumbrances, designations, and supplemental appropriations as outlined in the booklet submitted to us tonight and described in the November 30, 2006 memorandum from Margaret Colligan to Philip Schenck.
Messrs. Harrison, Gugliotti, Speich, Monts and Mrs. Bratton voted in favor.
VII. MISCELLANEOUS
As she had arrived to the meeting late and missed approval of the previous meeting’s minutes, Mrs. Bratton asked about items she felt were unclear. After some discussion, it was agreed that the tape would be reviewed and some of the questioned sentences might be rewritten in order to clarify Mrs. Bratton’s intent in her remarks. The proposed change is in italics:
“Mrs. Bratton would like to explore whether there is a way, after spending off cycle, to replenish the used funds in the next budget. The concern is in regard to monies spent for an item that normally would be budgeted for later; however, it was deemed necessary or advantageous to spend those monies “early”. A Surplus is built by under expenditures and over revenue and it builds over time. If depleted, the fastest way to rebuild a surplus is to budget for it which means to tax for it. Mr. Gugliotti spoke about the nature of a surplus fund being a “rainy day fund”; it is used for emergency or extraordinary needs. Mr. Gugliotti does not believe it would be right to tax in order to put back the funds used out of Surplus.
Currently the Town has 5.4% and Moody’s likes to see AAA towns such as Avon have 10%. There may be additional ways to rebuild the Surplus, i.e. through insurance payments, the monies from the auction of equipment, etc. Members discussed the idea of limiting a department’s next year’s operating budget by the amount taken out of Surplus. The sense is that the policy must be flexible and there must be solid justifications for a request to be granted. The recommendations of the subcommittee will be circulated and voted on at the next meeting.”
VIII. OTHER BUSINESS
IX. ADJOURN
On a motion by Mr. Gugliotti, seconded by Mr. Speich, it was voted:
RESOLVED: That the Board of Finance adjourn at 9:10 p.m.
Messrs. Harrison, Speich, Gugliotti, Monts, and Mrs. Bratton voted in favor.
Respectfully submitted,
Thomas A. Gugliotti, Secretary
Attest: Susan Burdsall, Clerk
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