The Board of Finance held a regular meeting on Thursday, August 26, 2010 in the Council Chambers, 3 Primrose Street, Newtown, CT. John Kortze called the meeting to order at 7:35pm.
PRESENT: John Kortze, James Gaston, Joseph Kearney, Harry Waterbury and Michael Portnoy.
ABSENT: Martin Gersten.
ALSO PRESENT: First Selectman E. Patricia Llodra, Finance Director Robert Tait, Superintendent of Schools Dr. Janet Robinson, Director Business Ron Bienkowski, Board of Education members Bill Hart and Kathy Fetchick, three members of the public and two members of the press.
VOTER COMMENTS: none.
COMMUNICATIONS: An email from Bill Hart regarding enrollment (Att. A) will be discussed under the financial report.
MINUTES: Mr. Gersten moved to approve the minutes of July 12, 2010. Mr. Kearney seconded. All in favor.
FIRST SELECTMAN REPORT: First Selectman Llodra reported that 145 building permits were issued in July 2009 with a value of $1,768,903. In July 2010 153 permits with a value of $5,276,171 The anticipated revenue for budget year 2010-2011 is $375,000, to date $36,000 has been brought in; we are on track with that estimate. The Town/Education Consolidation of Business and other Services was shared with the board (Att. B). All concur on the importance of an outside consultant. A status report on capital projects was shared (Att. C). The Parks and Recreation Maintenance Facility Improvement includes three separate actions, one for the roof, one for the internal interior renovations and a third for finishing internal renovations. There are three sources for the Animal
Control Facility, up to $750,000 from the town, Canine Advocates and there is also a grant. Approximately $30,000,000 of the NHS addition bond has been spent. Treadwell pool building renovation won't start until the fall.
Dr. Robinson noted that at the beginning of the renovation organic material in the soil delayed the work by two weeks. The chiller was damaged on the trip to the site causing additional delays but no additional cost. Dr. Robinson said that it looks like the addition won't be ready to move into until October. Dr. Robinson said that at this point she doesn't see any financial impact from the project or operational prospective to the budget.
Mr. Kortze asked Mr. Tait to supply the month to date report for the town at the next meeting. He asked about the mechanics for the contingency fund for the Board of Education, saying this year arrangements will be made for any amount left over once the audit is complete. Public Act 10-108 is specific to the Board of Finance effecting a solution. First Selectman Llodra said that some of the language seems contrary to practices; there is no regulatory language that defines how to proceed. Mr. Gaston said the legal language of the statute gives authority to the Board of Finance and the Legislative body; this seems consistent to the way we do our budget. Mr. Kortze stated that there needs to be clarification on who has the authority to set up the fund. First Selectman Llodra will refer to
town council to language to apply locally.
FINANCE DIRECTOR REPORT: none.
UNFINISHED BUSINESS:
1. Board of Education Year End Financial Report & Budget Summary Report: Mr. Kortze asked Mr. Hart to see that the Board of Education posts the minutes to their meetings in a more timely manner. Freedom of Information requires motions to be filed within 48 hours and minutes (text) within seven days; the last Board of Education meeting was Aug. 17 and the minutes have not been filed to date. Mr. Hart reported there was only one small transfer in October as to not lose sight of the original budget for each line item.
Spending: Mr. Kortze referred to a memo from Lillian Bittman dated April 9 (Att. D) regarding spending and asked if the board had identified anything to be purchased this year at a cheaper price. Mr. Hart noted computers were purchased for the Reed School and referred to the Newtown Board of Education Monthly Financial Report dated June 30, 2010 (Att. E). The Board of Finance made and withdrew a motion in regards to spending at the 2/25/10 meeting waiting for the Board of Education to identify the excess grant scenario and the plan as a result; the
response was the 4/9/10 memo. Did the Board of Education direct the Superintendent to purchase non perishable items, such as paper or fuel? Mr. Hart said that fuel tanks were topped off and the board directed Dr. Robinson to come in at least $100,000 under budget at the end, as reflected in the minutes of June 15, as a requirement for buying the Reed computers. Mr. Kortze asked if the Superintendent notified the board on a case by case basis of the items purchased ahead of time at a savings, what the items were and what they added up to.
Insurance: Mr. Kortze asked First Selectman Llodra and Dr. Robinson what the cost of the single insurance consultant is, what was in the Selectmen budget when presented and what was in the Board of Education budget when presented to the Board of Finance.
Accounts in Deficit:
Early Retirements, $82,017 - Late retirement for the Head O' Meadow principal.
Software, Medical & Office Supplies $34,715, Technology Equipment $249, 022 - The $249,022 included Enos, similar to Smartboards.
Accounts with Balances:
Unemployment: $133,907. Mr. Kortze said there was $196,000 in the line item last year. The budget presented this year was $290,000. The Board of Finance recommended a number to LC that was 75% of the $290,000. At budget time only $55,000 was expended; Dr. Robinson expected additional claims to come in. Mr. Bienkowski said the projection was more than it should've been. Mr. Hart said he would like to follow GAP, budget the full worst case, take the contingency to reduce the following years budget, recognizing that will hurt for a year or two. Mr. Hart noted that the $290,000 requested at budget time was purely based on the number of people expected to be laid off. When asked about the number of people expected to be laid off last year vs. the current year Dr. Robinson
explained the formula for calculating the unemployment number. Mr. Hart noted it boils down to an assumption of whether the teachers will be able to be rehired. Mr. Kortze the difference in the numbers is in excess of $100,000 saying we seem to get it grossly wrong. Mr. Kortze said that there needs to be more clarity on the issue based on what was portrayed as fact to the public. Mr. Portnoy suggested looking at a five year history, what has happened, what was projected, how it was projected and what the experience has been. Mr. Hart said that there was a very different economic climate five years ago and suggested taking advantage of the new contingency fund to take the risk out of it.
Building & Grounds: Mr. Kortze stated the 09-10 refuse budget was $155,000. There was a balance of $61,000 left over meaning $94,000 was spent. There is now a newer, lower contract yet $130,000 was budgeted. Mr. Kortze questioned if the new contract is substantially lower, why is there a number of $130,000. Mr. Bienkowski said he would take a look at the numbers; the recycling program gets billed differently.
Building & Site and Emergency Repairs: $46,030 in savings.
Building & Site Projects: $54,497 in savings. Mr. Kortze noted maintaining buildings is a budget topic every year. What projects were done in the prior fiscal year to realize the $54,000 and did the board of education have discussion on what might be improved on the capital plan. Mr. Hart said there were no projects added unless under emergency conditions, like the boiler at Hawley School because they were trying to come up with a surplus. Dr. Robinson said the last Special Ed payment was in May. Mr. Kortze said that the surplus was substantially greater than the $100,000 the Superintendent was directed to come in with. Did the Board of Education prioritize $230,000 worth of computers over the maintenance of the buildings? Mr. Hart said the buildings were maintained,
such as the boiler. All capital projects that didn’t get done in 2009 went into this year’s budget. Mr. Hart said the Board of Education traded off projects against the important need for reasonable technology.
Supplies: $108,239 surplus was due to restricted spending to cover deficits. Mr. Kortze questioned what makes up the $108,000. Mr. Bienkowski said there are 80 instructional supply accounts that cover all the different programs. Mr. Kortze noted that during the budget conversation of 2/25/10 Dr. Robinson had articulated that $400,000-$500,000 had been frozen, a large portion being supplies, while waiting on the excess cost figures. In the end a decision was made not to spend $108,000 on supplies.
Electricity: The difference in electricity in the schools was discussed. Mr. Kortze noted that none of it makes any sense. When taking unemployment, electricity and other issues into account there is $500,000-$600,000; big numbers given what we went through this past year. Mr. Portnoy suggested looking at the history and the experience of unemployment. Mr. Hart, speaking for himself, said he would go through the numbers with Mr. Bienkowski, go through the history and if all agree on a percentage it can be taken off the table. Mr. Kortze said that an assumption was made with a certain number of people year after year but the increase in the number doesn’t correlate to the actual. Eleven people took early retirement; Dr. Robinson said five or six were moved up to fill those
spots. Mr. Gaston said that the Board of Education errs on the high side while the Board of Finance looks at the reasonable expectation. A contingency fund would give the board somewhere to go if the percentage is underestimated. Mr. Tait confirmed that the money used this year for unemployment is going into the capital reoccurring account which is not used for operational expenses.
2. Board of Selectman Year to Date Financial Report & Budget Summary: not addressed.
NEW BUSINESS:
Discussion and possible action:
1. Discussion on meeting with rating agency regarding refunding bonds: Mr. Tait explained the meeting is for refinancing bonds and the hope is to save at least $300,000; it will be a question and answer session. They will look at the tax base and the taxable grand list; Ms. Stocker will update the group on commercial development. In January 2010 the major employers employed 3,510 people, that number has increased by 194 by August, gaining back what was lost a couple of years ago. The CIP process and controlling debt service will be discussed, along with the budget from last year.
2. New England Association of Schools & Colleges, Inc. (NEASC): (Att. F) Dr. Robinson reported that we are on target to doing everything we need to do and should meet all qualifications in January. Principal Dumais has complied with all requests. Dr. Robinson explained a rubric is a standardized way of assessing work. Class levels are general, honors, college prep., etc. Mr. Tait confirmed access to the Board of Education system will take place soon. Mr. Kortze questioned a motion from the minutes of 8/17/10 where Mr. Gaines moved that future salary decisions for non-union employees be left to the discretion of the Superintendent based upon merit but capped by a total amount of this group not to exceed the total amount for equivalent Newtown School District union
positions or the budget item for these non-union personnel. Mr. Kortze said that there is a statute saying the Board of Finance is responsible to be involved in the discussion. When negotiating with unions, other unions should be looked at to see what is being done. Is the Board of Education legally able to delegate that authority to the Superintendent? Mr. Harts understanding is that they can. Mr. Kortze said the Superintendent was authorized to negotiate in the garbage and bussing situation; the Board of Education policies stipulate the board must approve expenditures above a certain level. Dr. Robinson stated that non-union people have received no raises last year and this year; several people opted to go into a union so they would be assured 3.4%.
3. Board of Education CIP: Kathy Fetchick presented the Board of Education CIP summary (Att. G) and an update on projects in progress (Att.H). It was important to do both the boiler and the ventilation at Hawley School. The Public Building and Site Commission has interviewed architects for the Middle School roof and expect to make a decision soon. Mr. Portnoy is in favor of patching and repairing the roof vs. spending 3-5 million dollars on a building whose use may be reevaluated. Mr. Kortze asked Mr. Tait to find out what the difference was between the better interest rate we were getting as a result of the market and where interest rates were and the difference between our rating and the marketplace.
4. Dr. Chung’s report on enrollment: We may want to consider town space and not just educational space. Parameters need to be established from the Council down; Mr. Kortze suggested a joint meeting during September. Mr. Hart said the report needs to be taken very seriously, it will effect the community. First Selectman Llodra noted there are proposals for a community center, police station, senior center at the same time there is talk of closing a school. All the data needs to be compiled. Mr. Kearney thinks any major capital expenditure should be on a complete full stop right now until a course of action is decided. He doesn’t want to spend multi million expenditures on buildings that may or may not be around or used for something else. This effects
the CIP and everything down the line. Mr. Gaston is not sold on the report but believes the issue merits discussion. The Boards of Education, Selectmen, Finance and the Legislative Council need to be involved in this. The needs of the town vs. the needs of the school system need to be looked at; putting one or two of the town functions in a school temporarily for three to five years and then expand later, there is no down side to that. Mr. Waterbury is concerned with the permanent damage done to the State of CT in the past 2-3 years that will effect Newtown specifically. He doesn’t believe that what’s happened in the state will drastically bring the student populations back up and thinks there is a lot of permanent damage to CT. Mr. Portnoy thinks Dr. Chungs report is a continuation of what Dr. Prowda told us three years ago - that enrollments were going down 16% in the next decade. If there were not 85 new homes a year those
numbers would be increased and enrollments would go down even further. Economic realities are that we haven’t built very many houses, people aren’t moving into town, the population is aging and birthrates are down. The addition to the high school will give us flexibility for the high school students and maybe some other grades as well. We have to come together as a town to discuss it. Mr. Kortze said he has to be cognizant of the roles in the process. He feels strongly about protecting the integrity of the role of the Board of Finance in the process. The board will participate in whatever way they can.
5. Transfer: Mr. Gaston moved to transfer $1,250 from 01570-2000 Contingency to 013750-0003 Tick Borne Disease Action Committee. Mr. Kearney seconded. All in favor.
ANNOUNCEMENTS: none.
ADJOURNMENT:
Having no further business, at the request of First Selectman Llodra, the Board of Finance adjourned their regular meeting at 10:20p.m. and entered into a non-meeting for the purpose of discussing negotiations.
_______________________________
Susan Marcinek, Clerk
Att. A: Bill Hart email re: enrollment
Att. B: Town/Education of Business and other Services
Att. C: Status Report on Capital Projects
Att. D: L. Bittman memo, 4/9/10
Att. E: Newtown BOE Financial Report, June 30, 2010
Att. F: NEASC letter, July 20, 2010
Att. G: BOE CIP Summary
Att. H: BOE Update on Projects in Progress
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