MINUTES
SPECIAL MEETING OF THE
BOARD OF FINANCE
MAY 23, 2006
A SPECIAL MEETING of the Board of Finance was held on Tuesday, May 23, 2006 in the Council Chambers to set the mill rate.
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 Schools, Dr. Susan O’Brien, Chairman of the Board of Education Paul Cavegnaro, and Director of Business Services Nancy Haynes. Board of Finance member James Nichol was absent.
Mayor Bingham called the meeting to order at 4:30 p.m.
Comptroller Alice Proulx stated that the Board of Education’s Operational Budget is $55,435,232.00, their Capital Budget was $1,094,050.00, and the city’s budget is $48,837,435.00.
BOARD OF EDUCATION: CAPITAL BUDGET
On a motion by Mr. Cornish, seconded by Mr. Zeller, a discussion took place in regard to the Board of Education’s Capital Budget for fiscal year 2006/2007.
Mr. Cornish recommended reducing the Board of Education’s Capital Budget by $154,000.00, which is related to the removal of the portables at Forbes not scheduled to be undertaken until the very end of fiscal year 2007. It was his understanding that a significant amount of the $154,000.00 could be covered by revenue which will not be accrued until 2007. The total Capital Budget would then be $940,050.00.
Mayor Bingham inquired whether the Board of Education should have already received Planning & Zoning approval for their proposal to pave their parking lots and do sidewalk improvements.
Dr. O’Brien indicated that the money would be set aside until they are ready to do the projects. She stated that they would work with Planning & Zoning for those projects mentioned.
Planning & Zoning Director, Martin Connor, offered to work with Dr. O’Brien and the Board of Education to share services on capital projects in order to save money by using city hall employees who have various backgrounds in engineering, etc. He invited Dr. O’Brien and the Board of Education to their weekly land use meetings held on Mondays at 1:00 p.m. to discuss their upcoming projects.
On behalf of the Board of Education, Paul Cavegnaro stated that they were very interested in finding areas to share services and would make it a point to attend their meetings.
MOTION TO APPROVE THE CAPITAL BUDGET #1115
Mr. Cornish made a motion to approve the Board of Education’s Capital Budget of $940,050.00. Mr. Bushka seconded the motion.
Dr. O’Brien said she was comfortable with the $154,000.00 cut concerning the portables at Forbes. She felt they could still accomplish their goal of removing those portables and having school start as usual at Forbes in August of 2007.
On a roll call vote, Mr. Bushka, Mr. Cornish, Mr. Farley, Mr. Nader, and Mr. Zeller voted in favor of the motion. The motion carried.
BOARD OF EDUCATION: OPERATING BUDGET #1160
On a motion by Mr. Cornish, seconded by Mr. Zeller, a discussion took place in regard to the Board of Education’s Operating Budget set at $55,435,232.00.
Mr. Cornish stated that he was inclined to recommend approval of the Board of Education’s Operating Budget as presented in the hope that they could apply not only the projected revenues from the state, but also any or a portion of the excess revenue they have approved for the Board of Education budget this year to offset the mill rate.
Mr. Zeller inquired about the difference of $353,912.00 between the budgeted and actual columns for education cost sharing revenue. He asked Mr. Cornish if he thought this revenue should be applied to the budget.
Mr. Cornish said yes. It was his opinion that excess revenue coming in from anywhere should be applied back to the program. In some cases, the state provides it to offset excess costs the city might have had, and in other cases, it’s formula driven according to the needs of the district and he thought it should go back to the district as much as possible. It was his belief that the city uses revenues from one year to offset tax increases in another year. However, he made it clear that these revenues have not been considered and are, in fact, validated, and he thought they should be used for the education program of this community.
Mr. Zeller noted that there were several other revenue sources totaling approximately $290,000.00 which may have already been included by Ms. Proulx in the $1.2 million surplus.
Mr. Zeller said there was roughly another half million dollars left on the table, minus the $143,000.00 which was applied to the Board of Education’s current year deficit. (The Board of Finance approved this appropriation during their regular meeting at 4:00 p.m. ) He asked if it was appropriate to use the remainder of these funds to reduce the mill rate.
Mr. Cornish said “For one year, yes.” He noted that there were many non continuing revenues in this budget that the Board of Finance will probably use to keep the mill rate low. They include the one-time grant from the state of $450,000.00, the projected surplus from the current year which totaled approximately $1.2 million, and there may be a surplus from our health insurance experience during the course of this year; however, there’s no guarantee that any of these items will be available in the future. Essentially, they were building a mill rate increase for the fiscal year 2008 budget process. Somewhere, they’ll have to find reductions in expenses or other revenue sources. There’s always a significant risk in using one-time revenues to bring the budget down.
Mr. Nader asked the Board of Education to furnish the Board of Finance with a monthly budget performance report.
Dr. O’Brien said she would do so. In addition, she will see to it that the board gets a monthly report on special education costs so they can see the variations from one month to the next, as to the kind of challenges the Board of Education face in terms of families moving in and out, placements from DCF and the Judicial Branch, etc.
Mr. Bushka asked if the excess cost reimbursements are received in the same fiscal year that the additional agency placements are made.
Mrs. Haynes stated that anything after March will come next year and be adjusted in next year’s budget or in an ECS adjustment. She noted that the final payment should be received by May 31, 2006.
MOTION TO APPROVE THE OPERATING BUDGET #1530
On the previous motion, by roll call vote, Mr. Farley, Mr. Cornish, Mr. Bushka, Mr. Nader, and Mr. Zeller voted to approve the Board of Education’s Operating Budget of $55,435,232.00.
CITY BUDGET #1570
Mr. Cornish made a motion to approve the city budget in the amount of $48,837,435.00. Mr. Nader seconded the motion. Mr. Farley, Mr. Cornish, Mr. Bushka, Mr. Nader, and Mr. Zeller voted to approve the motion by roll call vote.
SET THE MILL RATE #1600
On a motion by Mr. Cornish, seconded by Mr. Zeller, a discussion took place in regard to setting the mill rate.
Ms. Proulx noted that her calculations at the present time included the following: $1.2 million for surplus and a transfer of $850,000.00 from the Health Insurance Fund. The grand total for both the city and the Board of Education budgets was $105,212,717.00. The estimated income was $39,191,286.00. With those adjustments and the grand list, the mill rate will be 34.11, an increase of 1.35 mills over the prior year.
Mr. Zeller asked to what extent did the $39,191,286.00 incorporate the additional revenue for the Board of Education as noted in the memorandum they had just received.
Ms. Proulx stated that she didn’t receive a copy of the memo Mr. Zeller was referring to. She indicated that she hadn’t incorporated the receivables for the capital projects, which was $145,000.00. She also noted that she hadn’t incorporated into the surplus the additional ECS money, because she expected the Board of Education to come forward with a larger request in the current year for their overdraft. If you reduce the ECS money of $353,912.00 by $143,000.00 which was appropriated by the Board of Finance at an earlier meeting today for their deficit, you could have another $210,000.00. Therefore, another $355,000.00 could be added into the surplus calculation.
Mr. Cornish said he would feel comfortable using $300,000.00 for additional surplus as a lump sum. He noted that he was a believer in using everything that could be used to offset future taxes. However, they will be working with a fairly large issue when they start the next year’s process which may require a look into the Undesignated Fund Balance to fund parts of whatever programs the city and the Board of Education determine to put forward. There is a level on how much savings is needed for a $105,000,000.00 budget, which is likely to grow by 3% each year in the coming years.
Mr. Zeller agreed on using $300,000.00 for additional surplus. However, he believed the Board of Education’s budget was increasing by a 5%+ mode rather than a 3% in order to provide the educational and accompanying social services that the schools have to provide.
Mr. Zeller said it wasn’t the Board of Finance’s responsibility to second guess the Board of Education on how they were providing for the needs of the district. He said he was going in good faith with the Superintendent and the Board of Education in terms of approving a dollar amount which they felt was absolutely necessary for fiscal year 2006/2007.
He was looking for any additional funds that could be applied to the bottom line while still keeping a comfortable margin of error because he believed there were a large number of people who would find the budgets unpalatable.
Ms. Proulx stated that, with the additional surplus of $300,000.00, bringing it to $1.5 million, the mill rate would be 33.96, an increase of 1.2 mills over the prior year.
Mr. Bushka agreed with Mr. Cornish. He noted that they will be looking at a 3/4 mill increase next year just to maintain the same level of spending with no increase if they don’t have a large surplus to apply to their budget. He didn’t think they should use too much surplus in any one year.
Mr. Zeller asked Mr. Bushka if he felt they were using too much surplus this year.
Mr. Bushka said he didn’t think so because it was an operating surplus from the current year. So far, they weren’t digging into accumulated surplus from prior years. It may get to that point if they don’t have another operating surplus, and the Board of Finance should keep that in mind.
MOTION TO SET THE MILL RATE #2130
Mr. Cornish made a motion to approve the mill rate of 33.96 (an increase of 1.2 mills over last year). Mr. Zeller seconded the motion. On a roll call vote, Mr. Farley, Mr. Cornish, Mr. Bushka, Mr. Nader, and Mr. Zeller voted to approve the motion. Motion carried.
ADJOURNMENT #2160
On a motion by Mr. Bushka, seconded by Mr. Cornish, the board voted unanimously to adjourn at 5:04 p.m.
ATTEST: JOSEPH L. QUARTIERO, CMC
CITY CLERK
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