Audit Committee 070908

Uste - Craig Abernathy

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Town of Nantucket Ad Hoc Budget Committee Meeting rdMinutes – Ad Hoc Budget Committee Meeting December 3 , 2008 Approved January 27, 2009 Present: Ms. Jenny Garneau, Ms. C. Elizabeth Gibson, Mr. James Kelly, Mr. Michael Kopko, Ms. Irene Larivee, Mr. Matthew Mulcahy, Dr. Robert Pellicone, and Ms. Patricia Roggeveen. Absent: Ms. Susan Genthner. Also present: Mr. Rick Atherton, Mr. Brian Chadwick, Dr. Carlos Colley, Mr. Glenn Field, Mr. Jason Graziadei, Ms. Robin Harvey, Megan McNeely, Ms. Jane Miller, Mr. Malachy Rice, Mr. Whiting Willauer, and Mr. Craig Abernathy Call to Order: Ms. Roggeveen called the meeting to order at 11:33 AM. Approval of Minutes 29 October 2008: Mr. Kopko moved to approve the minutes of October 29, 2008; seconded by Mr. Mulcahy. So voted unanimously. December 8, 2008, Special Town Meeting Update: Town Manager C. Elizabeth Gibson stated that in a recent department head meeting participants discussed the ramifications of voters choosing not to support Articles 7 and 8 at the December 8, 2008, Special Town Meeting (STP). She reminded the Committee that Articles 7 and 8 are critical to the General Fund budget. In addition to the shortfall, Ms. Gibson noted the additional expense of borrowing to cover expenses due to the inability of the Town to send tax bills out until the Tax Recapitulation is certified. Irene Larivee estimated the expense associated with borrowing at $40,000 per month. Ms ...

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TownofNantucketAdHocBudgetCommitteeMeetingrd Minutes–AdHocBudgetCommitteeMeetingDecember3 ,2008ApprovedJanuary27,2009Present:Ms.JennyGarneau,Ms.C.ElizabethGibson,Mr.JamesKelly,Mr.MichaelKopko,Ms.IreneLarivee,Mr.MatthewMulcahy,Dr.RobertPellicone,andMs.PatriciaRoggeveen.Absent:Ms.SusanGenthner.Alsopresent:Mr.RickAtherton,Mr.BrianChadwick,Dr.CarlosColley,Mr.GlennField,Mr.JasonGraziadei,Ms.RobinHarvey,MeganMcNeely,Ms.JaneMiller,Mr.MalachyRice,Mr.WhitingWillauer,andMr.CraigAbernathyCalltoOrder:Ms.Roggeveencalledthemeetingtoorderat11:33AM.ApprovalofMinutes29October2008:Mr.KopkomovedtoapprovetheminutesofOctober29,2008;secondedbyMr.Mulcahy.Sovotedunanimously.December8,2008,SpecialTownMeetingUpdate:TownManagerC.ElizabethGibsonstatedthatinarecentdepartmentheadmeetingparticipantsdiscussedtheramificationsofvoterschoosingnottosupportArticles7and8attheDecember8,2008,SpecialTownMeeting(STP).SheremindedtheCommitteethatArticles7and8arecriticaltotheGeneralFundbudget.Inadditiontotheshortfall,Ms.GibsonnotedtheadditionalexpenseofborrowingtocoverexpensesduetotheinabilityoftheTowntosendtaxbillsoutuntiltheTaxRecapitulationiscertified.IreneLariveeestimatedtheexpenseassociatedwithborrowingat$40,000permonth.Ms.GibsonexplainedthatArticle8needstobeapprovedinordertohavetheSolidWasteEnterpriseFundbudgetcertified,andthatthecertificationisnecessarybeforetheDepartmentofRevenue(DOR)willapprovethe

Minutes – Ad Hoc Budget Committee rd December 3, 2008Page 2 of 5 Town’staxrate.SheremindedtheCommitteethatnoneofthearticlestobepresentedatSTMwillraisetaxes.

Inexaminingthepotentialconsequencesofvotersnotapprovingfinancerelatedarticles,Ms.GibsonpointedoutthattheTownandSchoolwouldberesponsibleforsharingtheburdenofreducedexpenses.ShestatedthattheTown’sportionoftheshortfallwouldbesixtypercentandtheSchool’sportionwouldbefortypercent.Ms.GarneauaskedifanyonehasspokentothemediainordertocommunicatethepotentialfalloutfortheSchool.Dr.PelliconeadvisedthathehasspokenwiththemediaandexplainedtheconsequencesofvotersnotapprovingthemoneyrelatedarticlesatSTM.

Mr.KopkospoketoconcernsofmembersofthecommunityattemptingtomodifytheagendaoftheSTMduringthemeeting.Ms.Garneaustatedthatnormallywhensuchanattemptistobemadethereissomediscussioninthecommunitypriortotheattempt,andaskedifanyonehasheardanythingtosubstantiatesuchfears.Ms.GibsonreferredtoanewspaperarticlepublishedtheweekbeforewhichstatedtheSchoolhasplanstoseekfundingfromtheStabilizationFund.Ms.GarneaustatedthattheSchoolhasnoplanstoattempttosecurefundingfromtheStabilizationFund.Mr.Kopkoaskediftheteachershaveanyplanstoseekalternativefunding.MeghanMcNeely,NantucketTeacher’sAssociationCo‐President,answeredthattheteachershavenoplanstointroducearequestatSTM.SheaddedthattheSchoolislookingforwaystoaddresscurrentfinancialshortfallinternallyandhasnointentionofseekingfundingfromtheStabilizationFund.

InregardtodifficultyindisseminatinginformationabouttheSTM,Dr.Pelliconehighlightedtheimportanceoffindingnewmethodstocommunicatewiththepublic.HestatedthattheSchoolwillsendane‐mailtoparents,sendamessageusingthePACEphonesystem,placeanadvertisementinthenewspaper,andpostinformationonitswebsite.Ms.GibsonnotedthatanarticlepublishedintheIndependentdidagoodjobofexplainingthewarrantarticlesandtheconsequencesshouldtheynotbepassedbyvoters.

Ms.GibsonaddressedaquestionabouttheHealthInsuranceTrust(HIT)FundDrawdown,explainingthatthedrawdownwillreducetheTown’sexpensesrelatedtotheHITby$1.8million.SheaddedthattheremaybeanopportunitytoutilizeadditionalfundsfromtheHITinFY2010.GlennField,AssistanttotheSuperintendentforBusiness,askediftheproposeddrawdownwillresultinanincreaseinpremiumsinFY2010.Ms.LariveeansweredthatthedrawdownwillhavenoimpactontheamountofprojectedexpenseinFY2010.

Ms.GarneauaskedMs.GibsontoexplainthereasonfortheprojecteddeficitintheSolidWasteEnterpriseFund(SWEF).Ms.GibsonstatedthatwhentheFY2009SWEFbudgetwasbeingpreparedrevenuenumbersfromtheendofFY2008werenot

Minutes – Ad Hoc Budget Committee rd December 3, 2008Page 3 of 5 available.Sheaddedthatthesenumberswouldhaveshownthenegativeeffectsofdecliningconstructionanddemolitionwasterevenueandincreasingcostsrelatedtopermittingofanewlinedcell.Ms.Garneauthenaskedaboutplanstocompensateforsuchcontingenciesinfuturebudgeting.Ms.GibsonansweredthataworkgrouphasbeenformedtoworkwithWasteOptionstofindwaystoreduceexpenses.ShenotedthattheLandfillislikelytoexperiencemajorcutsandseenewfeesforservices.Ms.LariveeremindedtheCommitteethatthesubsidypaidtotheSWEFisaGeneralFundsubsidy,asnotonlyTownbutalsoSchoolfundspaythesubsidy.JasonGraziadei,InquirerandMirrorSeniorWriter,askedwhyreducedvolumesattheLandfilldidnotresultinlowerexpenses.Ms.Gibsonrepliedthatasageneralrulerevenuesareusedtosubsidizeexpensesandoffsetcostsinotherareas.Ms.McNeelyaskedabouttheimpactofadeficitintheSWEFontheSchool.Ms.GibsonexplainedthatanincreasedsubsidyfortheSWEFwouldcomefromtheGeneralFundandthereforedirectlyimpactbothTownandSchoolfinances.NetSchoolSpending:Ms.LariveepresenteddocumentationonnetSchoolspendingthroughFY2008whichdemonstratedtheTown’scontributionofdoubletheamountoffundingrequiredbyStatelaw.HighlightingtheperceptionthattheTowndoesnotprovideenoughsupportfortheSchool,shenotedthatpartofthetaxlevyisrequiredbuttheTownhastraditionallyexceededtherequiredamount.Ms.GarneaustatedheropinionthatmostSchoolCommitteemembersbelievetheTownisverygenerousinitssupportoftheSchool.Inlightofprojectionsofmajorbudgetcutsinthefuture,therewassomediscussionofreducingsalaryexpenses.Dr.PelliconestatedthatpreparingabalancedbudgetforFY2010mayrequirehimtocutstaffbytenpercent.Mr.KopkocommentedthattheTownisexperiencingasimilarscenarioinitsbudgetplanningprocess.Dr.CarlosColley,AssistantSuperintendentforCurriculumandInstruction,notedthatadjustmentstostaffingareaccomplishedmuchmoreeasilywithadvanceknowledge.FY2009&2010BudgetProjection:Ms.Lariveestatedthatoriginalprojectionsofaprojecteddeficitof$2.2millionfortheFY2010budgethavechanged,resultinginanincreaseofthedeficitto$3.8million.Shepointedtoadeclineinnewgrowthandexcisetaxrevenuesascontributingfactorsinthedeficitincrease.Ms.Lariveeaddedthatthecurrentbudgetprojectionsincludeatenpercentcutinoperatingcostsbuttheydonotincludeexpenseincreaserequests,statingthatifarequestisaddedtotheTown’sbudgettheTownwillneedtocutexpenseselsewhereinordertoaccommodatetheincreaseandthattheSchoolwillfollowthesameguidelines.Shenotedthatunderthetraditionalmethodofsharingthedeficit,thecurrentdeficitof$3.8millionwouldrequiretheSchooltomakecutsof$1.7millionandtheTowntomakecutsof$2.1million.

Minutes – Ad Hoc Budget Committee rd December 3, 2008Page 4 of 5 Referringtohisbeliefsaboutthebestapproachtoachievingbudgetgoals,Mr.KellynotedthattheSchoolcameinaboveprojectedgoalswhiletheTowncameinbelowprojectedgoals.Hestatedhisbeliefthatonesidecominginabovegoalswhiletheothersidecomesinbelowgoalsdoesnotleadtothemostequitablebudgetingsituation.Mr.Riceassertedhisbeliefthatconservativefiscalpracticeimpliesaphilosophyofdeliveringbudgetsthatexceedbenchmarksforperformance.Mr.Kellyagreed,butagainstatedhisbeliefthatthesituationisnot“evenhanded.”Ms.GibsonnotedthatevenifboththeTownandSchoolcomeinunderguidelinesthetotalbudgetwillstillbeinadeficitsituation.Mr.Kellyacknowledgedthebudgetingchallenges,butaddedhisbeliefthatwhenanorganizationentersintobudgetingnegotiationswithalowerstartingpointitwillfinishwithalowerendingpoint.

Inanefforttoaddresschallengesinthebudgetingprocess,Ms.GibsonstatedthatshewillrecommendthattheBoardofSelectmenendorseanAdHocFinanceWorkGrouptolookatthestructureofthedeficitandhelpdefineessentialTowngovernmentfunction.Sheaddedthatthegoalsofthegroupwouldbefocusedandthatthegroupwouldmeetintheshorttermbeforeissuingareport.Mr.KellyaskedabouttheTown’sprogresstowardsmakingafinalrevenueprojectionforFY2010.Ms.Lariveeansweredthatprojectionsareabouttwo‐thirdscomplete,andthattheywillcontinuetoberefineduntil2009AnnualTownMeeting.

IdeasforPublicEngagementintheFY2010BudgetProcess:

Ms.Gibsonhighlightedeffortstoincreasepublicengagementinthebudgetprocessthatincluded:•“Piggybacking”onmeetingsofdifferentcivicgroups.•Meetingwithemployeegroups.•Televisingbudgetforums.SheaddedherbeliefthatitisimportanttoeducatethepubliconthechallengesfacingtheTown’sfinancesandcommunicatewiththepublicinamannerthatusesclear,consistentterminology.Ms.Garneauagreed,notingthatproposalsthatinvolvegoingtothepublicenjoymuchmoresuccess.ShestatedthataSchoolspecialadvisorygroupisworkinghardonbudgetingissues.

NewBusiness:

Ms.Gibsonstatedthatintheprocessofattemptingtobalancethebudgetmanynewfeeideashavesurfaced.Shecommentedthatshefeelsitwillbebesttoapplynewfeestooverallrevenuebeforeappropriationoffunding.Mr.FieldnotedthatmostSchoolfeesgeneratenegativerevenues,andassuchcouldnotmakeacontributiontotheGeneralFund.HeaddedthatthefeesbenefittheGeneralFundbyreducingtheamountofsubsidyrequiredfromtheGeneralFund.Ms.Roggeveenaddedherbelief

Minutes – Ad Hoc Budget Committee rd December 3, 2008Page 5 of 5 thatdecisionswillneedtobemaderegardingraisingtaxesorfeestoaddressfuturebudgetproblems.OldBusiness:DateofNextMeeting:Thedateofthenextmeetingistobedetermined.Adjournment:Ms.Roggeveenaskedforamotiontoadjournthatwas“somoved”byMr.Kelly.Themeetingwasadjournedat12:58PM. PreparedbyCraigAbernathy