BOARD OF FINANCE
MINUTES
FEBRUARY 27, 2012
I. CALL TO ORDER:
Chairman Harrison called the meeting to order at 7:04 pm at the Avon Town Hall, Selectman’s Chambers. Members present: Chairman Thomas Harrison, Thomas Gugliotti, Catherine Durdan, Margaret Bratton, Dean Hamilton, Brian Stoll and James Speich. There was the presence of a quorum.
II. PLEDGE OF ALLEGIANCE
The Pledge of Allegiance was led by Ms. Bratton.
III. CONFIRMATION OF NOMINATION AND ELECTION THOMAS GUGLIOTTI AS BOARD OF FINANCE VICE CHAIRMAN AND
SECRETARY
On a nomination by Chairman Harrison, seconded by Mr. Hamilton, Mr. Stoll, Mr. Speich, Ms. Bratton and Ms. Durdan, it was voted:
RESOLVED: That the Board of Finance appoints Thomas Gugliotti as Vice Chairman and Secretary.
Messrs. Harrison, Speich, Stoll, Hamilton and Mmes. Bratton and Durdan voted in favor. Mr. Gugliotti abstained.
IV. COMMUNICATION FROM THE AUDIENCE
Mr. Stokesbury mentioned 5 different items to the BOF:
1.) Dr. Donna Nestler-Rusack has officially joined them as Assistant Superintendent.
2.) Software implementation continues to be on track.
3.) The Special Ed outplacement account is running significantly over budget, approximately $300,000, due to new identified needs. Mr. Speich questioned what this budget is used for and Mr. Stokesbury explained it is money spent to place a student into a special education facility. This is something required by the state and is beyond our control. The goal is to identify the special needs and develop an individualized plan for the child and allow them to stay integrated in the regular classroom for part of the day. Mr. Gugliotti questioned how many students are associated with this amount and Mr. Stokesbury responded it is the result of only 1 or 2 unidentified (unplanned) needs. It could be a result of someone going outside the district or a child from another district coming to ours. One child could cost up to $100,000.
Mr. Gugliotti added that taking that into consideration that estimate, this amount must be for roughly 3 children. Mr. Speich questioned if all schools have to do this and Mr. Stokesbury responded yes and added that the choice of outplacement is contingent on the student’s plan and what facilities have the ability to meet their plan. Mr. Stoll questioned if the $300,000 is for the rest of this FY and Mr. Stokesbury responded yes, the projection is to go over by $300,000 in that line item for the 11/12 school year. Mr. Stoll also asked if this is reflected in the FY 12/13 budget. Mr. Stokesbury responded that there is a special outplacement line item but he is unsure if it is in there for next year and assumes no because that student could be removed from the program. Ms. Bratton questioned when they came up with that number and Mr. Stokesbury answered that it was done last December and was just a best guess. Ms. Bratton also questioned if, in the event there are multiple
options on the student’s plan, we are able to choose the less expensive choice. Mr. Stokesbury answered he didn’t know but the idea is to always put the child first. Ms. Bratton followed up to her question wondering if it is the parent’s choice or Avon’s choice as to what plan to put the student on and Mr. Stokesbury answered that it is ultimately the Town’s in cooperation with the individual plan and the parents. Mr. Stokesbury commented that they have 30-35 students involved at some level in out of district education. The funding can be used for daily transportation or other various items.
4.) Mr. Stokesbury added that they are working on a strategic plan and it should be coming out very soon. The BOE continues to meet on a regular basis to discuss the budget. There will be several requests for supplemental appropriations that are now at the Town Council level.
5.) Mr. Stokesbury ended with a cautionary tale, that the Middletown BOE has just found a million dollar discrepancy in their 10/11 budget because of lack of communication.
V. MINUTES OF PRECEDING MEETINGS: January 23, 2012
Re: Section II.-
First Paragraph- Change the seconded motion to Ms. Durdan and add, “Ms. Bratton arrived to the meeting just after the vote but confirmed that she agreed with this decision and voted in favor.”
Second Paragraph- Change last line to, “It would recognize that in the past Tom Gugliotti has in fact acted as the Vice-Chair, acted responsibly and professionally, and filled in during the Chairman’s absence.”
Re: Section VI.-
Second Paragraph- In the first Sentence change statement to, “…including what it says in the Town Charter.” Also add to statement- “After the BOF public hearing(s) and consultation with the BOE and the TC, the BOF makes revisions and essentially they are the mediators.” Change statement to, “At the conclusion of the annual budget meeting the BOF adjourns the meeting.” Add to statement, “If the number of voters is less than 9% of the electors the budget is deemed approved regardless of the vote.” Change statement to, “…and then the BOF, after consultation with the BOE and the TC, determines what the new budget will be…”
Re: Section VII.-
Second Paragraph- Change statement to, “As a result, this is where the $362,500 comes in; they were planning a full boiler replacement…” Change statement to, “Mr. Robertson answered yes because the funding source has a lot in common with the initial funding source, it is a CIP project.”
Seventh Paragraph- Change statement to, “Mr. Stokesbury added that because Roaring Brook was built over time the rooftops units have different characteristics, small and large.”
Re: 11/12-16
First Paragraph- Change statement to, “The reason for that is because there are two sources of funding, one is the …”
Re: VIII.
Section A- First Paragraph- Change statement to, “Other local revenues vary from year to year because larger components could be made up of miscellaneous revenues, which we received a lot of in FY 10/11.”
On a motion by Mr. Stoll, seconded by Ms. Bratton, it was voted:
RESOLVED: That the Board of Finance approve the minutes of January 23, 2012 as amended.
Messrs. Harrison, Gugliotti, Speich, Stoll, Hamilton and Mmes. Bratton and Durdan voted in favor.
VI. OLD BUSINESS
11/12-05 Review and Discussion: FY 12/13 Budget Process
Mr. Harrison commented that the budget presentations, which he hopes will be done in 15-20 minute increments, are done with PowerPoint Presentations. He then asked Ms. Colligan if she would email the BOF, specifically the newest members, copies of FY’s 10/11 and 09/10 BOF budget slide shows as an example. The BOF members can then have an opportunity to refresh their recollections and Mr. Stoll and Mr. Hamilton can have an opportunity to see what was done. Mr. Harrison would also like topics that should or shouldn’t be mentioned or new ideas for slides to be emailed to him. Mr. Stoll commented that would be great because he would like to understand the process better and how the budget is presented. Also, with the gross and net accounting the number and percentage changes can appear different based on the
perspective taken on it. Mr. Stoll also wondered, in the vote itself, does it just approve the budget in this amount and how is the movement raised that the voters actually vote on? Mr. Gugliotti responded that it is a struggle in helping voters understand the difference between gross and net. It will be their job to make people understand when they do their presentation. Mr. Stoll also questioned what happens when it gets to the ballot and people see the difference in numbers. Mr. Harrison answered that the way the ballot works is, after the public hearing and conferring with the other Boards and the workshops, the BOF works to adopt a recommended budget. It will be a total number of all five of the elements that are in the budget; the two operating budgets, the CIP, the Debt Service and the Sewers. Sewers are not funded out of the property tax but they are still part of the budget. The total number comes up at the workshop. They have the opportunity to change the numbers by
taking X% from the BOE or the TC. If after the workshops the BOF decides to reduce the budget, the BOF decides how much from either the TC or the BOE. Then the TC has the discretion to take it as they see fit from within their operating budget and/or their CIP and the BOE can take it from anywhere, details of where to get it from do not have to come right away. Mr. Harrison questioned Mr. Stokesbury if the BOE’s decision is done at the BOE’s first general meeting following the workshops and he responded that it is discussed throughout the budget process so that once the budget has been voted on they are ready to move forward. Ms. Bratton questioned if the TC makes their adjustments at the workshop and Mr. Harrison responded yes and added the BOE decides where the decrease is coming from at a later date. Mr. Stokesbury added that, in summary, after different approaches, the BOE would not be prepared to address a multifaceted challenge at the workshop.
Mr. Gugliotti commented that everyone should remember that once they email something it can be viewed by anyone, it technically becomes public information. Mr. Harrison referred to the Freedom of Information Act request they received a few years ago that if emails come through the Town information line they are forwarded to them but if they don’t go through the Town line they may need to produce them along with the responses. Mr. Gugliotti commented that that can be tricky when they each email each other because what if those emails are deleted on a regular basis and what are the conditions if someone deletes email on a regular basis? Mr. Harrison stated that it would be good to confirm all of this information and requested that Mr. Robertson find out this information. Mr. Robertson responded that he has experience
with FOI issues in other communities and would provide information.
Mr. Harrison requested that potential ideas for slides, etc. should be held off until the next meeting. Mr. Stokesbury commented that the BOE also had a FOI request a few years back and they would be happy to provide information they have about that. He also mentioned that they have one email that is a main email where all emails are saved. Ms. Durdan commented that she had mentioned to Ms. Roell that she would rather them not give out their personal emails. Ms. Bratton commented that she agreed they should have a Town email. Mr. Harrison added that until we know more about this we should hold off on emails. Longer term, we should look into having a single server for our email. Mr. Gugliotti commented that he would rather not have to look at an additional email. Mr. Stoll added that this information should also be
provided for the BOE and the TC as they may have the same issues and concerns.
VII. NEW BUSINESS
11/12-18 CAFR Presentation by Blum, Shapiro & Company, P.C.
Ms. Vanessa Rossitto, one of the partner’s from Blum, Shapiro & Company, P.C., presented to the BOF the CAFR, the Comprehensive Annual Financial Report. Page one of the CAFR is the most important part, the Independent Auditor’s Report. It is the audit opinion that the Town of Avon has achieved following the audit. At this time the Town has received an “unqualified” or “clean” opinion, the highest form of an opinion you can receive. It also just shows that everything is stated correctly based on Government Auditing Standards Board.
Pages 3-13 cover the Management’s Discussion and Analysis and it is basically the story behind the numbers. Ms. Colligan has written this and explains why the numbers are the way they are and how items could have decreased or increased.
Pages 14 and 15 are the full accrual basis financial statements of the Town. This is the additional layer that was added 10 years ago. All funds and accounts are aggregated together and then it’s on a full accrual basis. Adding to the General Fund numbers and Special Revenue fund numbers, etc. Capital Assets, which are depreciated, and also adding debt of the Town (bonds, bond anticipation notes, etc.) On a full accrual basis the Town has a total net assets $123,673,393.00, an increase from the prior year by about 5.4 million dollars. Mr. Harrison questioned if the noncurrent liabilities on this page are part of the bond debt and Ms. Rossitto responded yes.
Page 16 includes the non-accrual basis financial statements. These are the major funds of the Town, the General Fund and the CIFA Fund. The rest of the funds of the Town are aggregated into another column, the Nonmajor Governmental Funds because they are smaller in nature so they are not presented individually here. Mr. Harrison questioned what CIFA stands for and Ms. Rossitto replied it is basically the Capital Projects Fund (Capital Improvement Fund Account) and Ms. Colligan added it contains Fund 2, which includes debt related projects. Ms. Rossitto continued to add that a new government standard was adopted this year which is shown in the middle of page 16 with 5 new categories of fund balance. These are; non- spendable (something in non-spendable form like inventory or pre-paid expenses), restricted (restricted by a
third party by a grant or a BAN), committed (by the highest level of decision making authority by opening a fund), assigned (used for encumbrances- won’t see this term anymore. Funds from this years budget to replace funds in last years budget will be in the assigned category) and unassigned (the old unreserved/undesignated). (the surplus)
The General Fund has a little more than 6 million dollars in the unassigned account (8.53% in General Fund revenues). The total General Fund balance increased from the prior year of 6.2 million to a little more than 8 million, an increase of 1.7 million dollars. Mr. Gugliotti questioned where the old fashioned “surplus” would be and Ms. Rossitto responded it is in the unassigned.
Ms. Rossitto directed everyone to page 42, which includes a new table they are required to present that shows the various parts of the Fund Balance. Looking in the General Fund category you can see that the non-spendable category is for inventory of $133,000 and the assigned category (encumbrances and general government obligations). This is the amount that the Town had set aside to prepay OPEB that was in a separate special revenue fund. Another part of this accounting standard says when you are transferring funds as a reserve the GASB will not count that as a separate fund so it has to be consolidated with the General Fund.
Mr. Gugliotti commented that the GASB (Governmental Accounting Standard Board) is important to know of but it is not the BOF’s job to completely understand these requirements. That is why we have our Town administrators, Mr. Robertson and Ms. Colligan.
Ms. Rossitto directed the BOF to page 20. This page includes the General Fund budgetary basis summarized. Column 1 is the original adopted budget, column 2 is final budget after changes, column 3 is the actual budget and column 4 includes the variances. Ms. Rossitto clarified that in the presentation numbers in parenthesis are “unfavorable” so items without parenthesis are actually negative.
Page 60 has each category expanded to see the detail of property taxes, intergovernmental, etc. Mr. Gugliotti commented that these numbers show that the Town is being run very well.
Ms. Rossitto referred back to the CIFA Fund and directed everyone to return to page 16. There is a negative fund balance of $75,000 in that fund because there is short-term debt issued in this fund. Once it is converted to long-term debt it will erase the deficit. Mr. Stoll questioned why the fund balance on 16 doesn’t match the balance on page 20. Ms. Rossitto answered that there are 3 different basis of accounting. On page 16 it is the modified accrual basis of accounting, which does not record receivables that are seen 60 days after year-end, those are deferred. On page 20 it is the budgetary basis of accounting and here encumbrances are recorded as expenditures.
Within the notes, on page 54, there is a detailed mention of Storm Alfred.
Blum Shapiro will be submitting a Federal and State Audit because Avon receives both federal and state assistance, making it a requirement to complete both. The State and the Federal government each give them a different formula to audit various programs such as grants.
11/12-19 Response to Audit comments and Recommendations to Management
Ms. Rossitto commented that there are three levels of comments. The first being the most severe, a material weakness, and then a significant deficiency. If they had found either of those than it would be reported in the Federal and State audit. This was not found but there were some controlled deficiencies found and they had some recommendations. These recommendations were made available in a formal letter to the BOF. The four recommendations are:
- BOE Expenditure and Cash Reconciliation Process- “We recommend that the Town and the Board of Education work together to continue to improve and streamline the process to avoid any future errors.”
Mr. Stoll commented that he would rather hear how the BOE is going to resolve this rather than just “they will comply”, as it states on the memo. Mr. Stokesbury responded that with the new software system in place they will be able to really tighten up their budget. Ms. Colligan added that it would be difficult for Mr. Spang to respond with more detail as he has just come on board and it will be easier when the financial system upgrade is complete.
- General Review Procedures and Segregation of Duties- “We recommend that the Board of Education Business Manager, or designee, review payroll regularly in some detail.”
Mr. Gugliotti commented that he noticed the reference to the elimination of an administrative position and wondered if they should consider filling that position or working around it. Mr. Stoll added that he envisions Blum Shapiro coming back next year with this same recommendation. Ms. Colligan added that there is another full time position in the accounting office but it is not a degree position leaving the Town Accountant feeling as though they cannot pass down certain duties. They are also implementing a brand new accounting system, which will help. Over the next 6-9 months hopefully there will be some positive changes.
- Undocumented Review-“We recommend that the Town and Board of Education personnel ensure that each review, and any other procedure performed, is documented by a signature or the initials of the reviewer and the date the review was performed.”
There is basically good internal control but someone else should review the work. Being able to track that would be helpful. Mr. Gugliotti questioned how this is affected by the electronics that are used now. Mr. Rossitto responded that she’s not sure how it would work electronically but just having a paper trail would work as well.
- Disaster Recovery- “Because the lack of a formal plan could leave the Town open to interrupted operations in the case of a disaster, we recommend that the Town formalize and implement its disaster recovery plan as quickly as possible.”
Mr. Speich questioned what is a Disaster Recovery Plan. Mr. Gugliotti added that it is a computer program and Ms. Rossitto responded that it is a computer program that protects all the data if something happens such as a power outage. Ms. Colligan commented that the reason the plan was delayed is because they were working on their virtual server system. Ms. Bratton questioned what would happen if the whole state were hit. Ms. Colligan responded that information is also stored off site and the company we use is responsible for many business back ups including doctor’s offices. Ms. Colligan finished up by adding it was a very good audit and with trying to address the prior years audit issue they were able to get the audit completed within 6 months and file on time.. The audit team was great.
11/12-20 Appoint auditor: FY 11/12 through FY 13/14
On a motion by Mr. Gugliotti, seconded by Ms. Durdan, it was voted:
RESOLVED: That the Board of Finance appoint Blum, Shapiro & Company, P.C. to serve as the Town’s auditor’s through FY 13/14 according to the document provided by Blum, Shapiro & Company, P.C.
Messrs. Harrison, Gugliotti, Speich, Stoll, Hamilton and Mmes. Bratton and Durdan voted in favor.
11/12-21 Supplemental Appropriation: Consulting Services, Avon Center Master Plan, $12,750
On a motion by Mr. Stoll, seconded by Mr. Hamilton, it was voted:
RESOLVED: that the Board of Finance hereby amends the FY 11/12 Budget by increasing: REVENUES General Fund, Other Local Revenues, Refunds & Reimbursements Account #01-0360-43612 in the amount of $12,750.00: APPROPRIATIONS General Fund, Planning, Service & Consultants, Account #01-7101-52184 in the amount of $12,750.00 for the purpose of recording funding received from Ensign Bickford Realty Corporation for consulting services by Milone & MacBroom for Avon Center Master Plan.
Messrs. Harrison, Gugliotti, Speich, Stoll, Hamilton and Mmes. Bratton and Durdan voted in favor.
11/12-22 Supplemental Appropriation: DPW Trailers, $10,000
This is a request that the TC approved to purchase two trailers for the PW department. This purchase is funded through the proceeds from the sale of used equipment. Equipment is periodically sold and the proceeds are deposited to this account and may be used for the purchase of equipment subject to the approval of the TC and the BOF.
On a motion by Ms. Bratton, seconded by Ms. Durdan, it was voted:
RESOLVED: that the Board of Finance hereby amends the FY 11/12 Budget by increasing: REVENUES General Fund, Other Local Revenues, Sale of Property, Account #01-0360-43911 in the amount of $10,000 and increasing APPROPRIATIONS General Fund, Roadways, Equipment, Account #01-3101-52194 in the amount of $10,000 for the purpose of purchasing two, replacement Public Works trailers.
Messrs. Harrison, Gugliotti, Speich, Stoll, Hamilton and Mmes. Bratton and Durdan voted in favor.
VIII. TOWN MANAGER'S REPORT
- Monthly Financial Report Summary
Ms. Colligan presented the report for the period ending December 31. PW has received FEMA information on Storm Irene and we should start seeing revenues from that. All other funds are in good shape. Mr. Speich questioned if taxes were paid in January and why it is so low. Ms. Colligan answered it is because the report only goes through December (2011) and unfortunately by the time the report is presented at the meeting it is almost 2 months old. She added there was a very good collections in January though.
Mr. Robertson added that the incoming FEMA money is one of the large outstanding receivables, over 2 million. Of 7 applications we’ve received payment on 5. There are 2 outstanding supplemental appropriations. Both are storm Alfred related including additional costs to the High School as they were open for 11 days straight to serve as the shelter. The other request is for $163,000 from the BOE. It is for a combination of items including new computer hardware.
The other item in respect to the BOE operating budget is the terminology that will arise with the gross compared to the net cost. Although it looks as though there is a 7.99% increase, it is actually a 2.92% increase when it is in the gross.
IX. OTHER BUSINESS
There was no other business.
X. EXECUTIVE SESSION
The Board did not find an Executive Session was necessary.
XI. ADJOURN
On a motion by Mr. Gugliotti, seconded by Mr. Harrison, it was voted:
RESOLVED: That the Board of Finance adjourns at 9:00 p.m.
Messrs. Harrison, Gugliotti, Speich, Stoll, Hamilton and Mmes. Bratton and Durdan voted in favor.
Respectfully Submitted,
Thomas A. Gugliotti, Vice Chairman /Secretary
Attest: Amber Lansing, Clerk
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