MINUTES
BOARD OF FINANCE
OCTOBER 17, 2006
A REGULAR MEETING of the Board of Finance was held on Tuesday, October 17, 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, James Zeller, and Comptroller Alice Proulx. James Nichol arrived at 4:07p.m. Board of Finance member Joseph Nader, and Corp. Counsel Ernestine Yuille Weaver were absent.
Mayor Bingham called the meeting to order at 4:00 p.m.
MINUTES #015
On a motion by Mr. Cornish, seconded by Mr. Farley, the board, with the exception of Mr. Zeller who abstained, voted to accept the minutes of the regular meeting held September 26, 2006.
On a motion by Mr. Cornish, seconded by Mr. Farley, the board voted unanimously to accept the minutes of the special meeting held October 4, 2006.
OPEN TO THE PUBLIC #035
On a motion by Mr. Farley, seconded by Mr. Cornish, the board voted unanimously to open the meeting to the public. There was no public participation.
CHANGE IN POLICY: BOE CAFETERIA REVENUE #050
On a motion by Mr. Cornish, seconded by Mr. Zeller, the board voted unanimously to discuss a possible change in policy regarding cafeteria revenue
at the Board of Education.
Nancy Haynes, Director of Business Services from the Board of Education explained that a $75,000.00 payment was authorized last year from the Food Service account to the city for fiscal year 2004-2005. At that time, the budget committee authorized the payment with the understanding that it would be the last year that they would charge the account for the expense. She further explained that the cafeteria account is supposed to be self-sustaining for all revenues and expenditures. They make no other appropriations from the board’s budget for any of their operating expenses for the cafeteria fund because it’s self-sustaining and the major sources of income are reimbursements from the State of Connecticut for free and reduced lunches as well as the lunch prices that their students pay.
Previously, they assessed a fee that was supposed to be reflective of maintenance costs for the program and that’s what the $75,000.00 represented last year. The year before, it was $125,000.00. While maintenance fees are included under the guidelines of the federal school lunch program and can be charged to the account, they discovered that there was no justifiable basis for how they arrived at the dollar amounts they used. That dollar amount was not tied to specific expenses incurred by the cafeteria fund, so there was no justifiable audit trail, should that expense be audited.
More important, the regular replacement of equipment wasn’t being done. There wasn’t enough money in the fund to replace equipment and the board would have had to use funds from their own budget to replace any equipment. Raising lunch prices would have been the only mechanism to cover the expense of giving the revenue to the city for the electricity and the upkeep. The administration felt that raising lunch prices would penalize the students who had the ability to pay.
The budget committee accepted the administration’s recommendation to make the change last November. This is the reason the money has not been forthcoming.
Mr. Nichol arrived at 4:07 p.m.
Mr. Cornish asked if the revenues were included in the Board of Education’s current revenue side projections.
Ms. Proulx indicated that it was budgeted in the 05-06 budget, but not budgeted in the 06-07 budget because she didn’t know what the end result would be.
Mr. Cornish stated that, previously it was reflected in their budget process as a negative expenditure for budget purposes, so they were essentially paying themselves from this fund, and at the urging of the city and Ms. Proulx, that’s how it got into the revenue side projections. He felt they should try to continue their practice of gross budgeting versus allowing net outs in the expense side of the budget.
Mr. Zeller asked if it would be negatively budgeted as revenue on one side for the city with no expense on the part of the Board of Education.
Ms. Proulx indicated that eventually they will be eliminating the revenue side because the expenditures are already there.
Mr. Cornish pointed out that the change will not impact the budget. He requested reverting back to the current method should the board at some point in the future develop the ability to create an audit trail for that expense.
Ms. Haynes noted that this discussion was for information only since the Board of Education didn’t have a policy on this matter and they eliminated the practice last November.
There was no vote.
BUDGET TRANSFERS #345
On a motion by Mr. Cornish, seconded by Mr. Bushka, the board voted unanimously to authorize budget transfers for fiscal year ending June 30, 2006.
BUDGET TRANSFERS #360
On a motion by Mr. Cornish, seconded by Mr. Farley, the board voted unanimously to authorize budget transfers for 7/1/06 through 9/30/06.
BUS: MAYOR & MEMBERS #395
On a motion by Mr. Cornish, seconded by Mr. Zeller, the board voted unanimously to consider business presented by Mayor Bingham and members of the Board of Finance.
Mr. Nichol inquired about the joint meeting of the Boards of Trustees, and whether the city was going to hire a consultant to help the members understand the plans. He noted that there could be significant savings, especially when the actuarial methods come in to play, and how you accrue for things especially in the police retirement benefit area.
Mr. Zeller, who sat in on that meeting, informed Mr. Nichol that the boards interviewed different investment companies to take a look at the ongoing management of the assets. They didn’t look at pre and post retirement issues. The boards wanted to know how much the investment company would charge to manage the portfolio, and which investments they would recommend.
Mr. Nichol was delighted to hear that the actuarial work was being done by someone other than the company managing the funds. He also noted that significant savings can be realized depending on what kind of plans are being offered to the retirees.
Mr. Zeller informed the board that a representative from CRRA would be attending the Solid Waste Advisory Committee in December. He asked the board to jot down any questions or concerns they may have and he would pass them along for answers.
Mr. Cornish informed the board that the Board of Education’s expense for Out-Of-District Placements is running higher than budgeted by $700,000.00 or $800,000.00, and that he anticipated the Board of Education asking the Board of Finance to appropriate additional new revenues over the projected revenues to offset some of those deficiencies.
Mr. Cornish said there was a growing concern about the capital program and the fact that three, possibly four, items of major bonding are coming to light. He thought it would be a task for the administration to sell this bonding to the public. Personally, he’d like to see a plan on how to accomplish the goals of the infrastructure needs of the city while old debt is retired and new debt comes on board. He’d like to be in a position to feel more comfortable about the city’s ability to pay. In addition, the Board of Education will most likely propose a 4% budget increase in the upcoming year, and he suspects that the city will be adding $3 or $400,000.00 back to the Vehicle Replacement Program. The board should also keep in mind the fact that they used just
less than $2 million in one-time revenues in the current budget to support the 1.2 mill increase.
Mr. Cornish said that perhaps they need a global view of what’s coming down the pike on both, the Board of Education and the City side, and determine their goals and reasonable expectations for growth in the forthcoming budgets. He suggested starting the budget process early.
Mr. Bushka informed the board that he, Mike Michaud, a representative from the Board of Public Safety and the City Council, Alice Proulx, and Charlene Antonelli have been meeting in regard to the Vehicle Replacement Account to see how they could save money. The proposal they received from Mercury Associates has three phases. Phase one is to evaluate the financing practices to determine whether or not the fund is being sufficiently funded based on the needs of the city, Phase 2 is to evaluate the fleet size, composition and utilization, and Phase 3 is to conduct a fleet management practices review to see how the vehicles are being maintained.
The members of the committee recommended that the city go through all three phases, and a vote from the boards will be needed in the future.
Mayor Bingham said there was no way to tell if or when this board will be asked to go out to bond for the Downtown Redevelopment Project or the Fire Department Project. He explained that the overall plan in the fire protection of the city is to build four sub stations and the Police, Fire, and Ambulance would share a centralized dispatch center in a public safety headquarters. He could get a rough sketch together and schedule a presentation for the board if they so chose. They could include other budget concerns projected in the next couple of years as well as updates and trends in the building department and housing, etc.
Mr. Cornish asked Mayor Bingham if he knew whether the Torrington Development Corporation envisioned incorporating some of the issues with Main Street City Hall in their next task, and asked if City Hall, in the concept of the downtown revitalization, was adequate to meet the government needs of the city.
Mayor Bingham explained that the next phase for the Torrington Development Corporation will be the Municipal Development Plan and the infrastructure, including the Main Street Streetscape, the realignment of Water Street, etc. He stated that moving City Hall was considered, but the committee decided against it. He commended the Municipal Buildings Committee for making some very tough decisions and standing behind them.
ADJOURNMENT #1175
On a motion by Mr. Cornish, seconded by Mr. Zeller, the board voted unanimously to adjourn at 4:37 p.m.
ATTEST: JOLINE LeBLANC
ASST. CITY CLERK
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