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BOARD OF SELECTMEN
TUESDAY, APRIL 20, 2004
A Special Meeting of the Monson Board of Selectmen convened at 7:00 p.m. In attendance were James R. Manning, Kathleen C. Norbut and Richard E. Guertin. Also present were the Town Administrator and the Media. Town Counsel was not present at this meeting.
Mr. Manning explained the sole purpose of this meeting is to act on a request from the Finance Committee relating to re-certifying the towns Free Cash.
Ms. Neggers gave some background reasons for doing this at Mr. Manning’s request. Ms. Neggers said this is a very complicated, very technical financial issue, which has occurred. In November of 2002, the Town of Monson issued $18 million worth of permanent bonds for the construction of the high school. When the $18 million in bonds were sold, they earned a bond premium of $811,000.00. A bond premium is earned when a bond is sold at a market price greater than its par value, which is the face value of the bond. The town’s financial advisors at Eastern Bank, Jerry Haley and Tricia Bowen, and Roger Vacco of the Bond Counsel, advised that the bond premium would revert back to the General Fund, in accordance with Mass. General Law, Chapter 40 - Sec. 20. In late May of 2003, the Department of Revenue issued a
bulletin stating effective with the Fiscal ’04 tax rate approval process, additions to the revenue limits for debt exclusion would be restricted to the debt payment minus the bond premium. On June 2nd, Ms. Neggers contacted Senator Brewer and the Mass. Municipal Association to seek relief from the mandate, deciding it was specifically contrary to the provisions of the Mass. General Law Chapter 40 - Sec. 20. In July 2003, the Legislature, as part of the Municipal Relief Act, changed that statute to insert a language to coincide with the Department of Revenues’ interpretation, but said it would begin with Fiscal ’05 tax rate, not Fiscal ’04. In October, another I.G.R. was received from the Department of Revenue, which said it was only a one-year relief. Senator Brewer and Representative Rogeness were again contacted and requested that legislation be amended so that it would be from that point going forward. They both signed a letter together and
asked Governor Romney to file that legislation and he in turn gave it to the Department of Revenue for an opinion. They responded that the decision would stand. On March 25th, Ms. Norbut, Peter Ross of the Finance Committee, Ms. Neggers, Town Counsel Ken Albano, and other professional representatives of the town, our financial advisors, bond counsel and our auditor attended a meeting with Representative Rogeness’ aide, Senator Brewer’s Budget Director, Senator Brewer and the Director of the Bureau of Accounts. Discussed were the timing of this and the retro-activity of it, also the dramatic impact it would have on the Town of Monson. Last Thursday, Ms. Neggers did receive an e-mail from Jeff Cournoyer of Senator Brewer’s Office, indicating the Senator is prepared to file an amendment to the statute that would provide some type of exemption to Monson. Ms. Neggers said she appreciates, and feels the Town appreciates, Senator Brewer and Representative
Rogeness’ support in this matter. This has been discussed at length. Ms. Mahar has come up with an analysis of different options available for the town and the Board of Selectmen.
Ms. Mahar approached the Board of Selectmen with three scenarios’ and handed the Board of Selectmen a handout explaining them. Ms. Mahar explained the first scenario entitled “Recertification”, explaining this is what would happen if recertification does occur. You take $1.2 million of what our Free Cash is, the town has already used $39,000.00. The premium would be $811,600.00, and everything is just taken away from the certified Free Cash figure. After everything is taken away from the school request over school net spending, transportation, etc., it leaves a negative balance of $304,000.00. The town would then need to go back to see just where cuts could be made.
The second scenario, is “business as usual” is funding everyone as requested. This ends with a balance of $55,000.00 in Free Cash. This allows for all departments to be funded as they requested, using town meeting and setting up two stabilization funds for the capital for the town and school buildings and putting $100,000.00 into the Fund Balance Reserve for Debt Service.
The third scenario would level fund departments, so everyone isn’t getting what they requested. The schools would receive net school spending. A little more than the current funding, but less than requested in transportation. This would be approximately 50% of the request with approximately 49% of the funds going into the Fund Balance Reserve for Debt Service. The town would be doing a sound financial plan in acknowledging the fact we have this and we need to utilize for the payment on that bond. This eliminates the capital. This would leave $318,000.00 in Free Cash.
Ms. Mahar went over just what the impact of each of these scenarios would have on the budget in 2005 and 2006. Under the first scenario, recertification for 2005 really gives the town few choices, if any, on what the town can do to plan financially. There would be significant reductions. The school would be at net school spending, and the town would still have to reduce $120,000.00 from all other departments and the transportation requests. For 2006, there would be little or no Free Cash. Severe cuts due to the budget that was created in 2005 and probably would need an over-ride.
In the second scenario for 2005, Ms. Mahar feels this is funding beyond our financial ability to sustain. It would insufficiently fund the Fund Balance Reserve for Debt Service. This would be like spending it all now with no regard for the future planning. For 2006, there would be little or no Free Cash. Severe cuts due to the inability to sustain an even larger budget and there would be a definite need for an override.
In the third scenario with no recertification, this gives the town the most choices. The schools would have to operate at net school spending, which gives them $363,000.00 more than they have this year. There is a little more for transportation and level funds all the other town departments. It is a just getting by budget. 2006 would be another year of just getting by with some Free Cash to use.
Ms. Neggers added the town is not faced with any good situations. Ms. Mahar added in 2003, the town used $509,000.00 in Free Cash. In 2004, the town used $609,000.00 with more at the Special Town Meeting and now, in 2005, we are looking to use $435,000.00 plus.
Next, various department heads spoke on behalf of their departments.
Carol Woodbury and Mark Hebert of the School Department approached the Board of Selectmen. Ms. Woodbury gave the Board of Selectmen a written copy of her comments and she read her report into the record regarding the School Department budget. Ms. Woodbury’s report explained the cost facts for the school department budget, the administrative costs, textbooks and supplies, technology, etc. Ms. Woodbury said the total operating budget increase is $547,500.00. The current budget is $183,000.00 over the required net school spending. Ms. Woodbury read a letter from School Committee member Maryellen Baron into the record and also gave the Selectmen a copy. Mr. Hebert did not get a chance to speak, as it was limited to one member per department with a five-minute time limit.
Marshall Harris, Chief of the Fire Department approached the Board of Selectmen and said there aren’t too many options. His department has either been cut or level funded in the past nine years. His operating budget is $45,000.00, just to run the department alone. Mr. Harris feels, for his department, column three is the best choice.
John Morrell, Highway Surveyor, approached the Board of Selectmen. Mr. Morrell said the Highway Department is in the same position as the Fire Department, as they too have been hit pretty hard over the years, being one of the bigger departments. Mr. Morrell added, the smaller departments couldn’t sustain any more hits and survive. Mr. Morrell went over a scenario he created which was close to column three and agreed with Mr. Harris, that column three is best for his department as well. Mr. Morrell went through his budget explaining there are only two places that would allow for any cuts. One is the General Highway and Bridges Account. That is the account that maintains the infrastructure throughout the town. All the roads are maintained with this account. This account isn’t keeping up with the increasing cost
of materials. Mr. Morrell feels this account would really suffer with any additional cuts as over 60% of the town’s roads are in poor condition. The second account that would allow for any budget cuts is the Salary and Wages Account, which is for the staff and himself. In 1979/1980, the Highway Department had eleven full-time workers. It now has seven. Therefore, if personnel were cut, public safety would be jeopardized. Mr. Morrell said the whole key is to cooperation and commitment by the entire town.
Craig Jalbert, Water/Sewer Superintendent approached the Board of Selectmen. Mr. Jalbert said the Water/Sewer Department has a different situation, as they are privately funded. Mr. Jalbert sees what is happening with the other departments and he tries his best to help them out when possible. He has an employee who helps the Highway Department out with snow plowing at night and then reports for work at the Water Department in the morning. Mr. Jalbert agreed the third column looks like the best idea overall. Mr. Jalbert explained the Water/Sewer Department has until October 31st to get another well on line on Bunyan Road or they will be fined by the DEP. Mr. Jalbert said it is very important to his department that the Town Meeting not get postponed.
Judy White, Director of the Council On Aging, approached the Board of Selectmen. Ms. White stated this is the third year in a row the Senior Center is being level funded. Since this is a small department, the cuts hit them very hard. The Senior Center relies on grants and donations, both of which are drying up. Ms. White said her department is under staffed and under paid. They deal with the towns’ neediest and frailest citizens. These people have lived in town for multiple years giving their time, energy and tax money and now deserve these services. The Senior Center also handles the WIC’s (Women, Infants and Children’s Program), Food Stamps and Fuel Assistance. As times get harder, they see more people getting onto these programs. They also see more elder financial abuse, which is a sign of the times.
Nancy Morrell, the Town Clerk approached the Board of Selectmen. Ms. Morrell stated her department is probably the smallest department. 95% of her department is State mandated, so she doesn’t have too many choices as to what she can do with her funds. She will take her cuts if she has to and do the best she can. Ms. Morrell added overrides don’t have too much success and would require a Town meeting vote.
Chief McKenzie, of the Police Department approached the Board of Selectmen. Chief McKenzie said his position is the same as everyone else’s. He will do the best he can to provide the best public safety for the residents of this town. Chief McKenzie added the town department’s work as a team and no one department is any better than another is. Chief McKenzie defers to the wisdom of the Selectmen to make the right choice.
Hope Bodwell, Director of the Library approached the Board of Selectmen. Ms. Bodwell agrees with her fellow department heads and will work to co-operate with whatever is decided. Ms. Bodwell said the library is required by the State to have a MAR, which is a Municipal Appropriated Fund, which the town needs to meet to keep the library accredited. This went up by 1.5% and is now $3,000.00 over last year. The library has a level services budget. The salaries have gone down due to staff changes. If the library does not get certified, they will loose the eligibility to apply for LSTA grants (over the past four years, the library has received $81,000.00 in grants). They also would not be allowed to participate in the Inter-Library Loan System. The library would also loose the State Aid if not accredited, which is $10,000.00.
Ms. Bodwell said she looks to the Board of Selectmen to do the right thing and is in total co-operation with all the department heads.
Dot Jenkins, of the Collectors Office approached the Board of Selectmen. Ms. Jenkins said she feels an override would be a last ditch effort that no one wants to see and she would not support an override. Ms. Jenkins said every aspect should be tried first and every compromise possible and coordination of efforts made with every department, before an override.
Chris Carlin, Chairman of the Finance Committee approached the Board of Selectmen. Mr. Carlin said the Finance Committee still recommends re-certifying Free Cash and remove the $811,000.00. Mr. Carlin said the town is setting precedence to fund an operating budget with borrowed money.
Mr. Guertin said he worries about, if you look at the re-certifying recommendation, the town would be $304,000.00 in the hole. With net school spending, the rest of the town departments would have to cut approximately $121,000.00 and we would go into the FY “06 year with little or no Free Cash. It would be what we could generate, which with all probability, wouldn’t be a whole lot. Mr. Guertin therefore feels we haven’t given the town any options on that scenario. The middle scenario, Mr. Guertin doesn’t feel as though we could go with because it says just keep doing what we are doing, and we can’t keep doing what we are doing. The third scenario, is where he would cast his vote, as it is a compromise. It puts some of the money aside and gives the town some flexibility going into FY ’06
and it would give the town a year or so to wean off.
Ms. Norbut said she is also looking toward the third scenario and is also not in favor of using the stabilization fund. Ms. Norbut feels it is not good to use borrowed money to fund operational costs and that the town is in a very unique situation. Ms. Norbut thanked Ms. Neggers, Pete Ross and Ken Albano for going to the State House with her to present a very rational argument that the rules had changed after the fact. Ms. Norbut said she feels the re-certification is too drastic. Ms. Norbut said she is looking toward the third column, 400 K into reserve, net school spending plus 25% more that what the school requested, the Council on Aging position, one EMT and Free Cash of $241,522.00.
Ms. Neggers explained some funding must be in place for dire emergencies that arise in town and that the issue at hand is sustainability. It is equal to taking out a loan for a down payment on a home when you know you can’t afford the mortgage, and by using too many reserves when you know you’re not going to be replenishing them. Mr. Morrell added, the town needs a commitment from each town department or it is not going to work.
Ms. Norbut asked Ms. Woodbury and Mr. Hebert, leaning toward the third scenario, would that be something the School Committee would consider going back into a discussion and voting to bring in a net school spending with a figure lower than $183,000.00? Ms. Norbut said this is critical. Mr. Hebert said if it comes up at the next School Committee meeting, then they would address it.
A roll call vote for co-operation from the department heads was taken as follows:
Roll Call Vote: School:
Fire Department – yes
Highway Department – yes
Water/Sewer Department – yes
Town Collector – yes
Council on Aging – yes
Town Clerk – yes
Town Treasurer – yes
Police Department – yes
Monson Free Library – yes
Mr. Manning said the Board of Selectmen are essentially waiting to see if the School Committee will revisit their budget.
Ms. Norbut made a motion to defer the decision until the Board of Selectmen have further information regarding the School’s decision and information on the budget. Mr. Guertin seconded the motion. However, after a discussion and rethinking the motion, Ms. Neggers added the Finance Committee has two meetings before the Annual Town Meeting and they need to put a budget together. Mr. Guertin said he wasn’t so sure why the Selectmen were waiting for the School Committee when there is really only one option the Town can go with. Ms. Norbut said going with the third scenario is very much contingent upon co-operation from all the town departments. Mr. Manning said he didn’t think waiting was going to change anything. Ms. Norbut voted aye, Mr. Guertin voted nay and Mr. Manning voted nay. The motion was DEFEATED.
Mr. Harrison asked if the Board of Selectmen voted for scenario one, would this be a final vote and submitted to the Department of Revenue immediately, or could it be revisited? And also, if the board of Selectmen vote for scenario three do they then have the flexibility to revisit that decision after the School Committee’s vote on Tuesday? The answer was yes. Ms. Neggers said she would have to ask the Town Accountant to create a new balance sheet, netting the bond premium, putting it into the fund balance, send it to the Department of Revenue and they would have a turnaround in about 48 hours.
Ms. Norbut made a motion to not re-certify the Free Cash and to move forward in the third scenario, establish a Fund Reserve for Debt Service with an allocation of $400,000.00. Mr. Guertin seconded and it was so VOTED.
At 8:30 p.m., Ms. Norbut made a motion to adjourn the meeting. Mr. Guertin seconded and it was so VOTED.
Respectfully Submitted,
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Richard E. Guertin, Clerk
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