BOARD OF FINANCE
MINUTES
SEPTEMBER 26, 2011
I. CALL TO ORDER
Chairman Harrison called the meeting to order at 7:01 p.m. at the Avon Town Hall, Selectman’s Chambers. Members present: Chairman Thomas Harrison, William Hooper, Margaret Bratton, Thomas Gugliotti, James Speich and Brett Eisenlohr. Catherine Durdan was absent.
II. PLEDGE OF ALLEGIANCE
The Pledge of Allegiance was led by Mr. Eisenlohr.
III. COMMUNICATION FROM THE AUDIENCE
There was none.
IV. MINUTES OF PRECEDING MEETINGS: August 22, 2011
The August meeting minutes had 2 minor spelling errors; Peggy Roell is misspelled “Roelle” and in section VI, regarding 11/12-2, the phrase should read, “Mr. Gugliotti questioned the options listed on the memorandum and what the alternative is versus splitting it up”.
On a motion by Mr. Gugliotti, seconded by Mr. Hooper, it was voted:
RESOLVED: That the Board of Finance approves the minutes of August 22, 2011 as amended.
Messrs. Harrison, Gugliotti, Hooper and Mme. Bratton voted in favor. Mr. Speich and Mr. Eisenlohr abstained.
V. OLD BUSINESS
Ms. Bratton mentioned the recent tour of the library construction and questioned if, considering the issue with the Avon High School, they took into consideration meshing the old with the new regarding the heating and cooling systems. Mr. Robertson responded that the library is gaining a new geothermal heating and cooling system. Mr. Bartha responded that the difference between the library and high school is that the library is completely removing the old AC unit and boilers and putting in a whole new unit, not just expanding the current system.
Ms. Bratton commented that she spoke with Superintendent Gary Mala regarding her August meeting inquiry about a forensics audit. Mr. Mala responded that he had done such an audit 6 years ago in another school district. It was a very comprehensive review of financial software, transactions, purchases, etc. It cost about $60,000 and took less than a year but the price and length of time depends on scope of the audit. Mr. Harrison mentioned the handout given by Mr. Hooper.
VI. NEW BUSINESS
11/12-04 BOE Lease/Purchase Request Pursuant to Debt Policy
Mr. Mala presented his request to change the policy regarding how the financing for the acquisition of technology is handled. Up until now the financing for computers has equated to a rental consisting of a four-year period of time followed by the ability to purchase the 4-year-old equipment at fair market value. This year ending in June, the fair market value is in excess of $60,000. Mr. Mala asked for a change in policy to facilitate a dollar buy out after the term of the agreement, which is really like financing as opposed to renting or leasing. This way the school district would be able to maintain the equipment and rotate it to different specifications to fit their need and be able to retain what they’ve paid for over that four-year period of time.
Mr. Gugliotti questioned what the life span of the equipment would be after the 4-year initial period of time. Mr. Mala responded in his experience you could expect 3-5 years out of the equipment at different levels, such as in the elementary school. Mr. Gugliotti was confused as to what exactly Mr. Mala was asking for? He questioned if it was a request for authorization to agree to one of the given proposals, but what would be included in the proposal? What is the equipment, where is it going, etc.? Mr. Mala responded he could not provide an inventory, but it would include somewhere in the vicinity of 300 computers. Mr. Gugliotti questioned what exactly is being asked, whether or not to accept the lease purchase or to approve the acquisition of the equipment, which would require a more
detailed presentation. Mr. Robertson responded that it is more the mechanics of it and that is why it is being presented at this meeting. It is subject to the debt policy; therefore it requires Town Council and Board of Finance approval. Mr. Gugliotti questioned if there was a resolution for that. Mr. Robertson responded that the Town Council approved it as presented. Mr. Gugliotti commented that he feels they are essentially being asked to approve the purchase of 300 computers and there are many unanswered questions such as where are they going to go, what they are replacing, what are they purchasing, etc. Mr. Mala responded that he thought this was just a change in policy, that he did not receive direction to provide such information and had he known it would have been made available. Mr. Harrison responded that he did not read this as a change in policy. Mr. Robertson answered that it is not a change in policy but it is pursuant to
the policy. Mr. Gugliotti questioned if the current status of the equipment is that there are 300 units spread out that are now gone because the lease is terminated. Mr. Mala responded that they are not gone yet because the dollar buyout became an option. Instead of returning the 300 units to just replace with new ones, we keep the same 300. Dell has agreed by putting a hold on this transaction until a conclusion has been made as what to do.
Mr. Hooper questioned if the plan is to pay the $60,000. Mr. Mala responded no, that they will pay a dollar per machine for the existing equipment that was originally scheduled to go back, plus make a payment of around $60,000, which is already in the regular operating budget, to acquire new additional equipment.
Mr. Gugliotti questioned if we are paying one dollar for each unit, equaling $300.00, and will own the equipment for another 3-5 years, what is the other $60,000 proposals mentioned within this request. Mr. Mala responded that it would be for new equipment that is approved as a part of the operating budget. Mr. Hooper questioned why Dell changed their mind from $60,000 to a dollar buy out and if we have to stick with Dell. Mr. Mala responded that the equipment technically still belongs to Dell because we have just been renting them from Dell and that Dell doesn’t want them back because now this equipment is old to them. Mr. Gugliotti questioned if, regardless of the current 300 machines, is there an option to purchase the new equipment from somewhere else and how many new units could we get. Mr. Mala responded that yes we can purchase elsewhere and that the amount of machines would all depend on what kinds of units are purchased; they would purchase as much equipment as the
budget would allow. Mr. Gugliotti asked if this would create more options for technology in the high schools and Mr. Mala responded it would be for all schools. Mr. Harrison questioned what the new lease would be like and Mr. Mala responded it would be a four-year, dollar buy out, if approved. Mr. Gugliotti clarified by saying the only way to take advantage of the dollar buy out is to change the policy and the current contract with Dell, which needs to go to a vote. The BOF must also take a vote to allow the acquisition of $60,000 worth of new equipment.
On a motion by Mr. Gugliotti, seconded by Mr. Hooper, it was voted:
RESOLVED: That the Board of Finance approve the Board of Education to take the existing lease for 300 computer units, which would originally require $60,000 to keep return, and authorizes the BOE to do what is necessary to pay a one dollar per unit charge, approximately $300.00, to own those units.
Messrs. Harrison, Eisenlohr, Speich, Hooper and Mme. Bratton voted in favor.
On a motion by Mr. Speich, seconded by Ms. Bratton, it was voted:
RESOLVED: That the Board of Finance recommend the approval of the new technology acquisition with a one dollar buyout at the end of the lease.
Messrs. Harrison, Eisenlohr, Speich, Hooper and Mme. Bratton voted in favor.
11/12-05 Review and Discussion: FY 12/13 Budget Process
Mr. Robertson brought to the attention of the board the handout regarding the budget process, adding that the idea behind this is to budget to the gross amount instead of the net amount. He continued by noting there has been discussion about this with the auditors and it is considered to be the way to go. It provides full disclosure by giving the community 100% in anticipated spending. There are a few items to discuss that go with this topic. First, there is a brief draft policy that was prepared along the lines of Use of Surplus Policy the Board approved a few years ago; the Board has this as a handout.
Second, at the last Town Council meeting there was discussion about including an advisory question on the ballot. It is used in many other communities. The question now is should we include it? The Board of Finance would have to approve this no later than the budget workshop before the referendum. There is plenty of time but the Board should start thinking about it now.
Third, the Town Council is looking for 2 volunteers to serve as members on a subcommittee. During the last years budget process there were 2 issues with health insurance. There was a decrease from 8.25% to 2.4% and also the increasing of the stop loss coverage from $100,000 to $120,000, per consultant’s recommendation. The health insurance consultant suggested a subcommittee of Board of Finance members, Board of Education members, Town Council and staff to: A.) review the mechanics and budgeting of health insurance, B.) the appropriate level of stop loss coverage, and C.) to get out and ahead of it early on in the process. Mr. Robertson mentioned it will not take a lot of time and should be just a couple of meetings.
Mr. Speich requested an example of, within the budget, when you would use net versus gross. Mr. Robertson referred to the spreadsheet handout and responded that this will give a sense of specific areas where there has been suggestion to budget gross versus net. The bottom line is to show the impact of budgeting gross. Looking at the FY 12, column a and column c is what Board of Education budget would look like if it were budgeted gross as opposed to net.
On a motion by Mr. Harrison, seconded by Ms. Bratton, it was voted:
RESOLVED: That the Board of Finance adopt as a policy the following language, “Beginning with the Fiscal Year 2012/2013 budget requests, the Board of Finance requires that the Town Council and the Board of Education budget “gross” for all expenditures and all sources of revenue, subject only to such exceptions on a limited basis as may be deemed necessary and appropriate and agreed upon by the Town and Board of Education Finance staffs, subject to Board of Finance approval.”
Messrs. Harrison, Gugliotti, Eisenlohr, Speich, Hooper and Mme. Bratton voted in favor.
Mr. Harrison commented that the topic of an advisory question has been discussed informally before but may be impractical. Mr. Gugliotti commented it is good this does not have to be resolved tonight because he feels an advisory question may not necessarily answer why the budget failed and Mr. Harrison added there are problems with it if not everyone answers the advisory question. It was noted everyone should take it into consideration and it would be brought up in future meetings.
Mr. Harrison asked the Board of Finance if there was anyone who would like to be a part of the subcommittee. Mr. Gugliotti responded he would but has some time restrictions. Ms. Durdan will be asked at the next meeting.
VII. TOWN MANAGER’S REPORT
A. Monthly Financial Report Summary
Ms. Colligan presented the financial summary stating that the month of July does not have a lot of data to report yet. In terms of collection, the Town is doing well and August/September numbers have improved and are ahead of 10/11. Building permits for FY 11/12 are behind FY 10/11 to date. Intergovernmental historically does not see any money in the first couple months. We are receiving State estimates and Ms. Colligan will be presenting to Mr. Robertson an update for FY 11/12. The State has issued some FY 12/13 estimates at the same time to use for budget projections. The Town is running in line with the budget for Charges for Services, and Other Local Revenues did not receive much in collections during the first quarter. Expenditures are running in line with the budget, capital
projects, etc. It’s very hard to judge in the first month of the FY.
B. FY 10/11 Year End Status
Mr. Robertson mentioned a couple of things coming up with the capital budget. They will be going to market to temporarily finance the Library in the amount of 7 million on 10/20/11. Last time the Town went to market the interest rate was about 1.58% and there was a premium of about $77,000.This is one area where the poor economy helps.
Mr. Robertson also mentioned we successfully made it through Hurricane Irene with only a small amount of damage due to a pipe burst on the border of Simsbury. It will come out of the Sewer Fund but that is something that in the next couple of meetings the Board will be asked to approve a supplemental appropriation. Mr. Gugliotti asked if there was any governmental assistance. Mr. Robertson answered they hope so and they will be trying for such assistance. He also mentioned that the auditors will be coming in to begin the audit process, they are now on a year-to-year basis and this would be the time to consider changing firms if deemed necessary. Mr. Gugliotti requested Mr. Robertson provide an ad hoc list of accounting firms, concerned that there are not many doing audit services anymore. Mr. Robertson commented that is correct, there are not many out there. Mr. Harrison questioned when we would need to decide this and Ms. Colligan responded in the spring.
Mr. Robertson also brought attention to a final handout, “Avon Public School, Status of Revolving Account”, about a third of the way down, account #14130- “Tuition/SP.ED (Reimb SPED SVCS), the balance of $551,196.18 should be $326,721. Mr. Gugliotti questioned if this was in response to the computer software purchase and Mr. Robertson answered yes.
VIII. OTHER BUSINESS
There was no other business.
IX. EXECUTIVE SESSION
On a motion by Mr. Gugliotti, seconded by Mr. Harrison, it was voted:
RESOLVED: That the Board of Finance go into Executive Session at 8:01p.m.
Messrs. Harrison, Gugliotti, Eisenlohr, Speich, Hooper and Mme. Bratton voted in favor.
On a motion by Mr. Gugliotti, seconded by Mr. Harrison, it was voted:
RESOLVED: That the Board of Finance come out of Executive Session at 8:23 p.m.
Messrs. Harrison, Gugliotti, Eisenlohr, Speich, Hooper and Mme. Bratton voted in favor.
X. ADJOURN
On a motion by Mr. Harrison, seconded by Mr. Eisenlohr, it was voted:
RESOLVED: That the Board of Finance adjourn at 8:24 p.m.
Messrs. Harrison, Gugliotti, Eisenlohr, Speich, Hooper and Mme. Bratton voted in favor.
Respectfully Submitted,
Thomas A. Gugliotti, Secretary
Attest: Amber Lansing, Clerk
| 
