Town of Newbury
Finance Committee Meeting
Wednesday April 9, 2008— 7:00 pm, Town Hall
Meeting Summary
Committee: Bill Cooper, Pete Morse, Dave Newbert, Frank Remley (Chair), and Anna Tenaglia
Ex-Officio: Chuck Kostro, Finance Director
1. Mar. 26, 2008 meeting summary: Summary was approved unanimously with some minor
edits, noted in red in Attachment 1.
.
2. Budget for FY 09: Chuck Kostro updated the committee on the FY 09 revenue and expense
budgets. There were no significant changes from the forecasts presented in the March 26
meeting, which are part of attachment 1.
3. Revenue Dashboard: Attachment 2 shows the most recent revenue performance presented
by Chuck. The most significant shortfall is in Licenses and Permits, which projects to be
running about $240,000 short of estimate for FY08. Penalties and interest are also running
about $85,000 short for the year, largely due to the slow pace of back tax collections. This
should improve with increased pressure from the tax title process, and advertising to
delinquent properties currently underway. Chuck also briefed the Committee on a meeting this
afternoon with the town’s auditing firm. The firm recommended closing three funds, the
Receipt Fund, the Copier Fund and the Dog Fund. The total transferred to the General Fund
will be approximately $51,000.00. This is also consistent with the recommendation in the
FY09 budget to move the expenses of the Animal Control Officer out of the revolving dog
fund and into the budget.
4. Reserve Fund Update: Attachment 3 summarizes the current reserve fund balance. There
were no new transfers requested.
5. Capital and other current Spending Issues: After a brief discussion of various current
issues, the committee had several recommendations:
a. That the Town’s legal counsel should be asked if the library building maintenance
fund can be closed out;
b. That Chuck look into the possibility that electrical and plumbing inspectors no longer
be paid 80% of fees collected, especially with potentially substantial construction in
the future;
c. That the proceeds from a sale of the five-acre beachfront parcel on Plum Island that is
on the warrant for the ATM should be tied to the Capital Fund;
d. That Mike Reilly should be appointed by the BOS to serve as the central coordinator
for any work on PI beach erosion activity.
6. Answers to questions regarding police details: Chuck Kostro had prepared answers to the
various questions posed by the Finance Committee, which are in Attachment 4.
7. Other:
- Funding for legal assistance in back tax collections: Chuck noted that ATM approval
would be needed to use Free Cash to hire a lawyer to assist the Town in the Tax Title process
for delinquent properties
- GASB 45 actuarial forecast (cost/timing): This is in the Finance Department budget for FY
09 and should be completed by December of this year.
- Maintenance of Town Hall
- Other?
8. Next Meeting: April 30, 7:00 pm, Town Hall
ATTACHMENT 1
Town of Newbury
Finance Committee Meeting
Wednesday Mar. 26, 2008— 7:00 pm, Town Hall
Meeting Summary
Committee: Eugene Case, Bill Cooper, Larry Guay, Pete Morse, Dave Newbert, Frank Remley
(Chair), and Anna Tenaglia
Ex-Officio: Chuck Kostro, Finance Director
9. Mar. 12, 2008 meeting summary (posted on website): This meeting summary was
unanimously approved without further comment or edits.
10. Budget for FY 09 (Finance Director)
a. Updated FY 09-revenue forecast: (See attachment 1). Chuck explained that
due to poor collections in February and March, and re-verified rules from the
DOR on what can and cannot be included in the Re-Cap sheet, the FY 09
forecast, our forecasted revenues had dropped to 16,473,515. This is only a
0.3% growth from expected FY 08 final revenues. The difference to be made
up is $222,000. Thus further budget cuts are necessary from the Mar. 12
projection.
b. Updated FY 09-expenditure forecast: (See attachment 2). The current
expenditure forecast must be reduced to match expected revenues. Total
budgeted spending will therefore not exceed $16,473,515. Hardest hit areas
will be:
i. General Government: 8.4% or $100,333 cut overall (Much of it in the
reserve fund, which is cut by $65,000
ii. Regulatory services: 4.2% or $65,25cut (much of it in inspection fees
due to the substantial slow down in building services).
iii. Human Services: 15.1% or $67,191 cut (Most in cut to BOH expenses
of $61,540)
iv. Culture and Recreation: 18% $71,769 cut (Most in Library wages and
expenses, life guards wages due to partial beach closing, and parks)
v. Debt Service: 2.8% or 68,523 cut (mostly in short and long term
interest costs due to falling rates).
Cuts in general operations are being driven by a 4.55%, or $328,313 increase
in the TRSD assessment.
c. Strategic issues/resolutions: Members of the Library Board were present,
including Katherine Dullea to appeal the Library cuts in three areas:
i. The cut in this year’s public building maintenance budget due to excess
expenses for the Yellow school has left the Library short of enough
funds to finish the year. The estimate is for an approximate $6,300
shortfall. It was determined that this was not the Library’s fault. It was
proposed to transfer $10,000 from remaining reserves to cover
excess bldg maintenance costs, but earmarked specifically and
solely to cover maintenance and operating costs for the Library
during the remainder of FY 08. The motion was made by Bill
Cooper, seconded by Gene Case, and approved by unanimous
vote of the Committee.
ii. The cut of $20,000 in wage expense for FY 09 was appealed, as it
would impede the potential hiring of a new Director, now in the
interview process. After much discussion, it was proposed that the
Library be able to shift up to $20,00 from its expense budget, which we
would try to make up before Town meeting. It was also suggested that
delaying the hire until September might reduce this figure. Katherine
Dullea agreed to look into this possibility, although concerned about the
impact of the delay on candidate’s acceptance. (NB It was also noted
from data presented by the library that their FY 08 Wage expense line
item might be up to $25,000 under budget by June 30.)
iii. There are current Building repair needs. However, the Library
representatives said that some $14,000 left in the Building Fund might
be sufficient to cover at least the most immediate needs. However, he
pointed out that one side of the Library badly needed re-staining.
11. Reserve Fund Transfers: Chuck summarized the current Reserve fund balance and
potential transfers expected (See attachment 3). He stated that the Legal expense line
item was nearly depleted, and projected that it would likely run over budget by
$25,000 through the end of FY 07. However, he requested that we consider
transferring $13,000 now, and more later, if needed to cover additional legal costs. A
motion was made by Gene Case to transfer $13,000 from the Reserve Account
(Acct. No. 100-132-5780-000) to the Legal Expense account (Acct No. 100-151-
5300-000), seconded by Pete Morse and the transfer was approved
unanimously.
a. Chuck commented that the Snow and Ice Deficit are currently estimated a
$133,000 and the Reserve fund may have to cover this in part by June.
However, no request was made at this point. There is only $67,660 remaining
in the Reserve account after the above transfers.
12. Executive session (Legal Issue):
a. (SEPARATE SUMMARY).
13. Other:
- Funding for legal assistance in back tax collections: Chuck announced that a second
proposal was expected from a Boston firms that would hold most of its fee until collections
were made. He explained that this would work better for Newbury with respect to cash flow,
and require very little upfront funding.
- Annual Report statement from Finance Committee: Initial comments were made about
the draft distributed to the Committee that it probably should be written in a third person
context. Dave Newbert felt the Capital Planning Committee report should be part of the finance
committee report at the ATM. He noted that the Capital Planning Committee was probably not
ready the present a Capital Investment Plan, so a general statement to accomplish that in FY 09
would suffice.
- Prior transfer of $11,610 to cover police details: Pete Morse pointed out that there
were a number of detailed questions from the last meeting about this transfer that
haven’t been answered. Chuck Kostro responded that it was on his shoulders to talk
with Lt. John Lucey or others to get answers.
14. Next Meeting: Wednesday, April 9, 7:00 pm Town Hall.
REVENUES
2008
Estimated
3/25/08 2009
Estimated
3/25/08
Amount
Change
3/25/08 %
Change
3/12/08 2009
Estimated
3/12/08
Amount
Change
3/12/08 %
Change
Difference
3/12 vs 3/25
Prior year Levy 10,452,523 10,857,156 404,633 3.9% 10,857,156 404,633 3.9% (0)
+ 2.5% of prior year 261,313 271,429 10,116 3.9% 271,429 10,116 3.9% (0)
new growth 143,320 103,090 (40,230) -28.1% 159,890 16,570 11.6% (56,800)
Override to Prop 2 1/2 0 0 0 - 0 - 0.0% -
Subtotal 10,857,156 11,231,675 374,519 3.4% 11,288,475 431,319 4.0% (56,800)
Debt Exclusion 1,293,388 1,202,010 (91,378) -7.1% 1,250,000 (43,388) -3.4% (47,990)
Maximum Allowable Levy 12,147,477 12,433,685 286,208 2.4% 12,538,475 387,931 3.2% (101,723)
Cherry Sheet 844,325 863,751 19,426 2.3% 865,000 20,675 2.4% (1,249)
School Building Authority Payments 658,214 658,214 0 0.0% 658,214 - 0.0% -
State Aid 1,502,539 1,521,965 19,426 1.3% 1,523,214 20,675 1.4% (1,249)
Motor Vehicle Excise 943,326 895,000 (48,326) -5.1% 905,000 (38,326) -4.1% (10,000)
Other Excise 13,260 17,000 3,740 28.2% 17,300 4,040 30.5% (300)
Penalties & Interest 195,000 130,000 (65,000) -33.3% 175,000 (20,000) -10.3% (45,000)
Payment in Lieu of Taxes 96,294 96,000 (294) -0.3% 96,250 (44) 0.0% (250)
Fees 60,000 230,000 170,000 283.3% 175,000 115,000 191.7% 55,000
Licenses and Permits 463,000 255,000 (208,000) -44.9% 315,000 (148,000) -32.0% (60,000)
Special Assessments (Betterments) 655,968 659,865 3,897 0.6% 688,173 32,204 4.9% (28,307)
Fines and Forfeitures 145,000 135,000 (10,000) -6.9% 140,000 (5,000) -3.4% (5,000)
Investment Income 75,000 75,000 0 0.0% 85,000 10,000 13.3% (10,000)
Misc. Recurring 6,100 10,000 3,900 63.9% 12,250 6,150 100.8% (2,250)
Misc. Non-Recurring 12,000 15,000 3,000 25.0% 10,000 (2,000) -16.7% 5,000
Other Available Funds 112,398 (112,398) 15,000 (97,398) -86.7% (15,000)
Total Local Receipts 2,664,948 2,517,865 (147,083) -5.5% 2,633,973 (30,976) -1.2% (116,107)
Other Available Revenue 111,046 0 (111,046) 0 (111,046) -100.0% -
TOTAL REVENUES 16,426,010 16,473,515 47,505 0.3% 16,695,662 2 69,651 1.6% (222,146)
Total FY09 Expenditures 16,473,515 16,995,662
Surplus/(Deficit) 0 (300,000)
SOURCE OF ADDED FUNDS
Stabilization Fund 0 300,000
Override 0 0
Free Cash ? ?
Other? ? ?
ATTACHMENT 1: FY 09 REVENUE FORECAST: 3/25 VS. 3/12 ESTIMATES
FY 2008 FY 2009
Account Name Budget Budget
Starting Estimate $ Change % Change
TOTAL GENERAL GOVERNMENT: 1,194,544.00 1,094,110.17 (100,433.84) -8.4%
Sub-Total Police: 1,197,368.00 1,230,178.04 32,810.04 2.7%
Sub-Total Fire: 504,580.00 504,591.40 11.40 0.0%
Sub-Total Regulatory: 155,362 148,837 (6,525) -4.2%
TOTAL PUBLIC SAFETY: 1,857,310 1,883,606 26,296 1.4%
TOTAL EDUCATION: 8,183,002 8,511,315 328,313 4.0%
TOTAL PUBLIC WORKS: 749,171 733,726 (15,445) -2.1%
TOTAL HUMAN SERVICES: 443,885 376,694 (67,191) -15.1%
TOTAL CULTURE & RECREATION: 397,875 326,106 (71,769) -18.0%
TOTAL DEBT SERVICE: 2,447,955 2,379,432 (68,523) -2.8%
TOTAL INTERGOVEMENTSAL: 0 0
TOTAL EMPLOYEE BENEFITS: 936,220 941,832 5,612 0.6%
Total Cherry Sheet 216,049 226,694 10,645 4.9%
TOTAL GENERAL FUND 16,426,011 16,473,515 47,504 0.3%
By Group
ATTACHMENT 2: CURRENT FY 09 EXPENDITURE FORECAST
ATTACHMENT 3: RESERVE FUND BALANCE
ITEM AMOUNT
Reserve Fund Budget $ 1 35,000.00
Salary Adjustments $ (11,385.82)
Town Hall ADA Compliance $ (7,500.00)
Building Department Computer $ (895.00)
Cost of Bonding $ (1,945.78)
Finance Department $ (11,010.00)
Police Detail $ (11,602.50)
Reserve Fund Balance $ 90,660.90
Potential Transfers Required
Police Department Expenses $ (5,000.00)
Legal Expense $ (25,000.00)
Public Building Maintenance $ (10,000.00)
Short-Term Debt Interest $ (13,400.00)
Snow and Ice Deficit $ (37,260.90)
Balance Remaining $ -
Indicates that the Reserve Fund Transfer is already completed
Transfers Completed
ATTACHMENT 2: April 2 Revenue Dashboard
Chuck, please add this table.
ATTACHMENT 3: RESERVE FUND BALANCE AS OF APRIL 9
ITEM AMOUNT
Reserve Fund Budget $ 1 35,000.00
Salary Adjustments $ (11,385.82)
Town Hall ADA Compliance $ (7,500.00)
Building Department Computer $ (895.00)
Cost of Bonding $ (1,945.78)
Finance Department $ (11,020.00)
Legal Expense $ (13,000.00)
Public Building Maintenance $ (10,000.00)
Police Detail $ (11,602.50)
Reserve Fund Balance $ 67,650.90
Potential Transfers Required
Police Department Expenses $ (5,000.00)
Legal Expense $ (12,000.00)
Short-Term Debt Interest $ (13,400.00)
Snow and Ice Deficit $ (37,250.90)
Balance Remaining $ -
Transfers Completed
ATTACHMENT 4
POLICE DETAIL QUESTIONS AND ANSWERS
• Is the Town responsible for uncovered costs associated with such private police activity,
when proper records on billing and collection are not kept?
I’d answer YES to #1. When the police are working in the capacity of the police department, case law
dictates that they are town employees and as such, are entitled to FLSA protection. We addressed the
issue of these past details and between us, no one could figure out who was at fault for the poor record
keeping. However, I feel quite comfortable that the measures are in place to never allow this to
happen again.
• Does Massachusetts General Law cover such services?
I believe that they are covered by case law and FLSA.
• Who is financially responsible for insurance coverage or liability claims?
The Town of Newbury is financially responsible for insurance coverage if the officer is hurt on a
detail. Recently, Topsfield Officer Scott Frost was hit by a car during a private detail and was out on
111F disability as a result.
• What are the rules on rates, hours and payments to Police Officers, and who sets them? Do
payments get added to retirement credits?
The rules, rates and hours are set by the Police contract and governed by Mass Law (i.e. the town
being able to charge a 10% administration fee—even though the Town does nothing to administer the
details).
• Who should be maintaining records of requests, assignment, billing, and collection of costs?
The police department should continue to maintain the records because it directly affects their
scheduling and contract. I’m confident that we have the measures in place to properly handle this
chore. Also, your office has instant oversight of this process.
• Do the fees collected adequately cover the overhead needed to process, administer, and
insure such service costs? If not, how should they be adjusted to cover all costs?
The fees collected are more than adequate to cover the overhead needed. It costs the Town nothing, as
Lt. Lucey handles this as part of his weekly duties. It is so streamlined now that it only takes Lt.
Lucey 20mins to 1 hour to do this. The Town still collects 10% of every detail worked. If the Town
put this money into an account, within a couple of years, there would be a tremendous amount in
reserve.
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