MINUTES
BOARD OF FINANCE
MAY 23, 2006
A REGULAR MEETING of the Board of Finance, adjourned from May 16, 2006, was held on Tuesday, May 23, 2006 in the Council Chambers.
Those in attendance included Mayor Ryan J. Bingham, members of the Board of Finance Daniel Farley, Bruce Cornish, Mark Bushka, Joseph Nader, and James Zeller, Corp. Counsel Ernestine Yuille Weaver, Comptroller Alice Proulx, Superintendent of the Board of Education Dr. Susan O’Brien, and Chairman of the Board of Education Paul Cavegnaro. Absent was Board of Finance member James Nichol.
Mayor Bingham called the meeting to order at 4:05 p.m.
MINUTES #030
On a motion by Mr. Cornish, seconded by Mr. Farley, the board voted unanimously to approve the minutes of the regular meeting held April 18, 2006.
OPEN TO THE PUBLIC #035
On a motion by Mr. Nader, seconded by Mr. Cornish, the board voted unanimously to open the meeting to the public. There was no public participation.
AMEND 2005/2006 SCHOOL BUDGET #055
On a motion by Mr. Cornish, seconded by Mr. Zeller, a discussion was held in regard to the request from the Board of Education to amend their 2005/2006 school budget.
Chairman of the Board of Education Paul Cavegnaro stated that the administration was asking the Board of Finance for a supplemental increase of $143,543.00 to account for several deficits accrued over the fiscal years of 2005/2006. He explained that they were originally looking for $267,000.00, however, through careful deliberations, they were able to reduce that amount to $143,543.00. These funds are necessary to complete the school year.
Mr. Cavegnaro indicated that this number was related to the way the budget was built in years’ past and that, from this point on, with the new administration as well as the new accounting model, they should be better able in coming years to track expenditures in a much tighter way and anticipate shortfalls in a much better way. He and the rest of the board feel that there are steadier hands at this point and they’ll have much tighter controls in years to come. On behalf of the Board of Education, he asked the Board of Finance for their consideration in the matter.
Mr. Cornish said he appreciated the fact that the school board was able to cover part of the $267,000.00 deficit with resources from in-house. He inquired why large balances were left at the end of the school year.
Dr. O’Brien said it was clearly not the way they do business in school districts across the state. She reminded the board that she asked the Board of Finance for a transfer of approximately $284,000.00 from the capital budget into the operating budget at the beginning of the school year because the fiscal 2005 budget had several errors and omissions that caused the overage. At that point in time, they had enough funds in their capital budget that could be transferred over so they could end their year in the black. Unfortunately, the same sort of errors and omissions found in the fiscal 2005 budget were also found in the 2006 budget. When they went to implement it, she mentioned to the Board of Education on numerous occasions that they could anticipate at least a $250,000.00 shortfall right from
the start in August and September of 2005. The shortfall was attributed to several things, one of which was the flat lining of the special education budget from fiscal 2005 to fiscal 2006. This is just not standard operating procedure, because the spiraling cost for special ed is an increasing problem in all school districts. The increases are due to the number of children who are out placed, and the increase in the number of para professionals and/or tutors needed to assist handicapped children. This attributed initially to the anticipated deficit of $250,000.00. In order to accommodate that deficit, Nancy Haynes and Judith Babcock stripped all the money they could from all of their special education grants and put it into fiscal year 2006 to cover the anticipated shortfall.
Dr. O’Brien further stated that they were notified about the IRS audit at the beginning of the 2006 school year. The IRS had conducted an audit of the Board of Education’s procedures and processes in 2002. There were several audit exceptions that included a requirement of repayment and various penalties in excess of a quarter of a million dollars to the IRS.
Given their tenuous situation in special ed and the outstanding IRS audit, they tapped the brakes on this budget for the entire first semester. The direction was given to principals and all cost center administrators not to spend anything unless it was absolutely necessary because they didn’t have the money in their budget to accommodate the penalties or the audit exception. Through the skills of Nancy Haynes, they were able to reduce the amount they owed to the IRS to $26,000.00 and through careful budgeting, they found economies to accommodate the IRS.
Shortly after the first of the year, they became critically aware that their electricity and fuel accounts were going to skyrocket. They also came to the realization that they would have overages in special education of several hundred thousands of dollars.
Dr. O’Brien stated that, if this was a normal school year where they were implementing a budget that is really an accurate estimation of what you should spend over time, they would have ordered all of their textbooks and supplies in July and August in order to be ready for September. They were not able to do that because of the reasons stated above.
Mr. Cornish asked if it was fair to say that their revenue picture was not clear until just recently, keeping the Board of Education from approaching the Board of Finance any earlier.
Dr. O’Brien said an e-mail was sent to the board as soon as they found out that their anticipated revenue would be $645,893.00. They were hoping the Board of Finance would consider using some of the additional unanticipated revenue to apply to their $143,543.00 deficit, leaving the city with an unanticipated increase in revenue of $502,350.00.
Mr. Cornish said he noticed in the projections that the textbook line item was only showing a $24,000.00 surplus. He asked if it meant they have already accommodated those purchases in the $143,543.00 and that we will move forward in a whole way.
Dr. O’Brien said yes, that the $143,543.00 would make them whole and put them in a position where they have fulfilled all of their major obligations for this year and will be ready in anticipation of next year.
MOTION #490
Mr. Cornish made a motion to amend the Board of Education (2005/2006) budget by adding $143,543.00 to the expenditure side. Mr. Farley seconded the motion.
Mr. Bushka noted that the Charter states that any expense more than $100,000.00 requires a referendum and asked whether this motion was in order.
Corp. Counsel Weaver indicated that the motion was in order.
The vote was unanimous.
Dr. O’Brien and Mr. Cavegnaro thanked the Board of Finance for their indulgence.
AMEND REVENUE SIDE #565
On a motion by Mr. Cornish, seconded by Mr. Bushka, the board voted unanimously to amend the revenue side of the budget for the Board of Education by $143,543.00.
BUDGET TRANSFERS #585
Mr. Cornish made a motion to accept the budget transfers for fiscal year ending June 30, 2006. Mr. Nader seconded the motion.
Under a discussion, Mr. Farley noted a transfer of $72.19 from Telephone to Communications for Data Processing that should have been $180.00; a difference is $107.81. The total amount of the transfer should be $72,525.54.
On the same motion, the board voted unanimously to accept the budget transfers, as amended.
NORTHEAST TELECOM, LLC #640
On a motion by Mr. Cornish, seconded by Mr. Zeller, the board voted unanimously to waive the bid process and purchase a telephone recording system from Northeast Telecom, LLC for $16,250.00 from funds in the Police Department’s Capital Account earmarked for revamping the telephone system.
WRIGHT-PIERCE #665
On a motion by Mr. Farley, seconded by Mr. Cornish, the board voted unanimously to authorize the payment of $799.72 from Sanitary Sewer Capital Improvement Fund #490 to Wright Pierce for Invoice #44527 concerning the Evaluation of the South Main Street Sewers and Pumping Station.
BUS: MAYOR & MEMBERS #685
On a motion by Mr. Nader, seconded by Mr. Zeller, the board voted unanimously to consider business presented by Mayor Bingham and members of the Board of Finance. There was none.
ADJOURNMENT #710
On a motion by Mr. Cornish, seconded by Mr. Bushka, the board voted unanimously to adjourn at 4:26 p.m.
ATTEST: JOLINE LeBLANC
ASST. CITY CLERK
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