Audit Committee 070908

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Español

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Town of Nantucket Ad Hoc Budget Committee Meeting stMinutes – Ad Hoc Budget Committee Meeting August 1 , 2008 Present: Ms. Libby Gibson, Ms. Jenny Garneau, Ms. Susan Genthner, Mr. James Kelly, Mr. Michael Kopko, Ms. Irene Larivee, Mr. Matthew Mulcahy, Robert Pellicone Ed. D., and Ms. Patricia Roggeveen, Absent: Mr. Glenn Field and Ms. Connie Voges Also present: Mr. Brian Chadwick, Mr. Malachy Rice, Mr. Whiting Willauer, and Mr. Craig Abernathy 1. Call to Order: Ms. Roggeveen called the meeting to order. 2. Fiscal Year 2010 Budget Timeline: Ms. Gibson stated that she is working on the FY 2010 budget timeline. At this point in the process she would like to invite comments on the timeline used last year. She asked all parties to share their likes and dislikes as well as their ideas about what items in the timeline should be adjusted. Ms. Gibson detailed the milestones of the FY 2009 schedule as follows: September ‐ budget instructions go out, October – budget requests are due back, November ‐ budgets are compiled by Town Administration and Finance, December – Board of Selectmen (BOS) and School Committee review and provide recommendations; and in January the budgets are presented to the Finance Committee. Ms. Genthner highlighted changes in the School budget planning process. This year the School has accelerated their budget planning schedule to fall more in line with the schedule used by the Town. Ms ...

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Extrait

Ms.Roggeveencalledthemeetingtoorder.

2.FiscalYear2010BudgetTimeline:

Ms.GibsonstatedthatsheisworkingontheFY2010budgettimeline.Atthispointintheprocessshewouldliketoinvitecommentsonthetimelineusedlastyear.Sheaskedallpartiestosharetheirlikesanddislikesaswellastheirideasaboutwhatitemsinthetimelineshouldbeadjusted.Ms.GibsondetailedthemilestonesoftheFY2009scheduleasfollows:September‐budgetinstructionsgoout,October–budgetrequestsaredueback,November‐budgetsarecompiledbyTownAdministrationandFinance,December–BoardofSelectmen(BOS)andSchoolCommitteereviewandproviderecommendations;andinJanuarythebudgetsarepresentedtotheFinanceCommittee.

Ms.GenthnerhighlightedchangesintheSchoolbudgetplanningprocess.ThisyeartheSchoolhasacceleratedtheirbudgetplanningscheduletofallmoreinlinewiththescheduleusedbytheTown.Ms.RoggeveenstatedthatlastyeartheSchool’sbudgetforecastcameinlate.SheaskedthatthisyeartheCommitteebegivenasmuchadvanceinformationaspossible.Shefeltthiswouldfacilitatethebudgetforecastingprocess.

Minutes – Audit Committee st August 1 , 2008 Page 2 of 8 Ms.GibsonstatedthattheBoardofSelectmenwillbegivenaninitialforecastforth theFY2010budgetonAugust13 ,2008.Theinformationpresentedwillincluderevenueprojections,expenseprojections,andsomeofthebackgroundinformationfortheforecast.Atthattime,theSelectmenwillbeabletobeginformulatingapolicyapproachtothebudgetforecastingprocess.SheremindedtheCommitteethatsomeitems,suchasfreecash,mightnotbeknownuntillaterintheprocess.However,shestatedthatfreecashhastraditionallybeenusedforcapitalandnotforongoingexpenses.

Mr.Kellyaskedifthereallocationofresourcestofocusonthe2008Auditwouldaffectthebudgetdevelopmentprocess.Ms.Gibsonmadearequestforpatienceduringthebudgetplanningprocess.ShestatedthatMs.Lariveewillbeallocatingsomeofhertimetotheaudit,andthuswillnotbeworkingonbudgetplanningfull‐time.Ms.GibsonpointedtoamoreconsistentapproachandformatthatwillallowtheFinanceCommitteetoseeinformationinaclearlypresentedmanner.

Mr.KellycommendedtheSchoolfortheinvolvementofallofitsconstituentsinthebudgetplanningprocess.However,hestatedthathefeltthatmanyoftheirideasgoleftoutoftheprocessduetothefactthateveryonewassofarbehindlastyear.Ms.GenthnersaidthatnormallytheSchooldoeslagbehindotherdepartmentsinthebudgetdevelopmenttimeline,butthisyeartheSchoolhasbroughttheirscheduleinlinewiththescheduleusedbytheTown.

Ms.GarneauaskediftheSchoolwouldbepresentedwithdocumenttemplatesforsubmittinginformationtotheCommittee,andMs.Lariveesaidshehastemplatesforalloftheinformation,andthatshewillbeprovidingtemplatestotheSchoolandEnterpriseFunds.

Mr.MulcahycommentedthathefeltthetimelineusedlastyearworkedwellfortheFinanceCommittee.HethenaskedMs.RoggeveenaboutforecastnumbersdueinDecember.Ms.Roggeveenstatedthatsheexpectstoseeacontinueddecreaseinrevenue.TheCommitteemustconstantlychecktheexpectationsofdifferentdepartmentsagainsttherealitiesofthebudget.Shestatedthatgatheringandsharinginformationinthebudgetprocessandincorporatingthatinformationintoprojectionswillreducethechancesofdisappointment.

3.FiveYearForecast

Ms.LariveestatedthattheTown’sFY2009RevenueBudgetwillnotbefinaluntiltheStatecertifiestheTown’sTaxRecap.Oncerevenueiscertified,theTownwillbeabletoprovidearefinedrevenueprojectionforFY2010.ThiscertificationusuallyoccursinOctoberorNovember.

Minutes – Audit Committee st August 1 , 2008 Page 3 of 8 Ms.Lariveedirectedmemberstotherevenue&expenseforecastconcerningnewgrowth.ShestatedthatshehadobtainedthenewgrowthestimatefromDeborahDilworth,theTown’sAssessor.Thisrevenueforecastshowsthatnewgrowthisestimatedtobeapproximately$958,000.Ms.LariveecharacterizedthisasaconservativeprojectionbytheAssessor.Shealsostatedthatbaseduponadeclineinapplicationsforbuildingpermits,localrevenuehasfallenthirty‐fivepercentduringthethreeyearperiodfrom2005to2008.Shestatedthatalthoughlocalrevenuehadbeenreducedto$12.5millioninFY2008earlyyearendindicatorsshowitwillbeshortby$1.2million.Ms.LariveeaddedthatforFY2008“budgetaryturn‐backs”weresufficienttocovertherevenueshortfall.(Note:Theterm“budgetaryturn‐back”referstounusedfundsreturnedbydepartmentsattheendofthefiscalyear.)

Mr.PelliconeaskedMs.Lariveeifthedeficitswerebeingassumedinthebudgetplanningprocess.Ms.LariveesaidthatcurrentlytheTown’smodelusesanincreaseinsalariesattherateoffivepercent.Usingthismodel,theTownwillhaveaprojectedbudgetarydeficitof$6.2millionby2014.ShestatedthatthegoaloftheTownwastolookatsalariesandslowtherateofgrowth.Mr.Pelliconeaskedwhyemployeescouldnotbeheldtoathreepercentincrease,andMs.Lariveerespondedthatthreepercentwasnotrealistic,asthecurrenttrendsarefiveorsixpercentincreases.

Ms.GarneauaskediftheTownwasprojectingafivepercentincreaseduetocontractualobligations.Ms.Lariveestatedthatallofthecontractsthathavebeenratifiedthusfarhavecomeinbelowthefivepercentfigure.However,somecontractsarestillbeingnegotiated.Mr.KellyaskediftheassumptionsusedintheplanningprocesswereapprovedbytheBoardofSelectmen,orweretheyadministrativeassumptions.Ms.Lariveerespondedthattheassumptionsbeingusedareadministrative.Ms.Gibsonaddedthattheseassumptionsarerealisticforthepurposesofdiscussion.

Mr.PelliconestatedthattheTownis“settingitselfup”byusingplanningforecaststhatincorporatefivepercentincreasesinsalaries.Ms.Lariveeagreed,statingthatfivepercentsalariescannotbesustained.Mr.Kellystatedhebelievesthatwhenassumptionsaremadeaboutrevenuethesameassumptionsshouldbeappliedtosalaries.Mr.KellywentontoaddthathewasconcernedaboutlistingfivepercentasagoalonaTowndocument.Ms.RoggeveenstatedthatshebelieveditwasnecessaryinformationforthepurposeofprovidinginsighttotheCommittee.Sheaddedthatnoneofthedocumentsareendorseddocuments;theyareaddedasanopportunitytoprovidewarningofpotentialproblemsinthefuture.

Mr.Mulcahyaskedifitwouldn’tbebettertouseahigherestimateforsalaryincreasesratherthanusealowerestimateandcomeupshort.Ms.LariveerespondedthattheTownhastodeliverabalancedbudget.Mr.KellysaidthatnotalloftheTown’slaborcontractshavebeennegotiated.HealsopointedoutthattheTowncouldlookat

Minutes – Audit Committee st August 1 , 2008 Page 4 of 8 itemssuchashiringfreezesandovertimereductioninordertoallowtheTowntohaveadequatefinancestomeetitscontractualobligations.

Mr.KopkoremindedtheCommitteethatafivepercentincreasewassignificantlylessthantheincreasesapprovedinthepast.HeaddedthathebelievedtheTownwasgraduallysteppingitswaytowardcreatingrealisticideasinregardtosalaryincreases.Ms.Roggeveenaddedthatlookingatsalarieswasonlyonewaytoapproachreducingcosts.ShestatedthatitmaybenecessaryfortheTowntolookatwaystoreducetheservicesitofferswhenfundingforthosebudgetsisnolongeravailable.

Dr.Pelliconeaskedwhythedocumentsdidnotshowanallowanceforincreasesinthecostsofutilities.Ms.Lariveerepliedthatincreasesinutilitycostshavebeenaccountedforunderoperatingexpenses.Operatingexpensesaretraditionallyincreasedbytwopercenteachyeartoaccountforutility,gasolineincreases,etc.

Mr.Kellyaskedwheneachdepartmentwouldbegivenbudgetassumptionstoworkfromindevelopingtheirbudgetprojections.Ms.GibsonansweredthattheBoardofSelectmenwillmeetandconsiderinputputforthbytheAdHocBudgetCommittee.Afterthedatafromthatmeetingisdigestedandorganized,informationwillgoouttoeachdepartmentinSeptember.TownAdministrationandtheFinanceDepartmentwillmeetwitheachdepartmenttoexplaintheinformationandthedocumentationrequirementsforanyincreasesand/orchangestothedepartmentalbudgets.

Mr.Kellyagainassertedhisbeliefthatitwasincorrecttocontinuewithsalaryincreasesoffivepercent.Ms.GibsonrespondedthatforFiscalYears2009,2010,and2011anassumptionofafivepercentsalaryincreasewasusedduetoadirectivebytheboard.Sheaddedthatgoingforwardwithfiscalyearsbeyond2011wouldbethetimetoaddresschangingthefivepercentassumption.

Ms.RoggeveenpointedtosomeoftheeffortsmadebytheBoardofSelectmeninaddressingsalaryincreases.ShestatedthattheBoardprovideddirectiontothenegotiationteamaboutwhatcouldbedoneandthentheBoarddemonstrateditsabilitytotakeaction.Mr.Kopkostatedthatthenextcontractnegotiationprocesswillbedifferent;addingthatovertheyearsprogresshasbeenmadeinaddressingwhatwasonceconsideredanuntouchableissue.

Mr.Mulcahyagainstatedhispreferenceforafivepercentassumption.Headdedthatitwouldbedifficulttocutthefivepercentnumberfromacontractstandpointwithoutcuttingservices.Mr.KopkostatedthateveniftheTownmanagestokeepsalaryincreasesbelowfivepercentitwillbenecessarytocutservices,implementhiringfreezes,reduceorreallocatestaff,andbartheuseofovertime.

4.DiscussFiscalYear2010Development:

Minutes – Audit Committee st August 1 , 2008 Page 5 of 8 Ms.Lariveebeganthispartofthediscussionbyintroducingtwotypesofbudgets(LevelFundedandMaintenancebudgets).InthepasttheTownusedlevelfundedbudgets.Thesebudgetsreceivefundingbasedupontheamounttheyreceivedinthepreviousyear.Ms.LariveeproposedthattheTownmovetoamaintenancebudget.Thegoalofamaintenancebudgetistosupportthelevelofservicebeingprovidedtoday.Ms.LariveestatedthatthiswouldallowtheFinanceDepartmentandTownAdministrationtolookattheTown’sfinancesasawholeandreallocateresourceswheretheyareneeded.

Mr.KopkoaskedhowatransitionfromalevelfundedbudgettoamaintenancebudgetwouldimpactthevariousdepartmentsoftheTown.Ms.Gibsonrepliedthatitwouldrequiresomeeducation.SheaddedthatthistypeofbudgetwouldhelpachievetheTown’sgoalsoflookingatwhatservicestheTownisprovidinganddeterminetheirlevelofeffectiveness.Ms.GibsonwentontostatethatthistypeofbudgetwouldputtheTowninabetterpositiontoidentifytheplaceswherecutscanbemadeinordertomeetfinancialgoals.Ms.GarneaustatedthattheSchoolisalreadyusingthistypeofbudget.

Ms.GibsonstatedthatatsomepointtheAdHocBudgetCommitteewillneedsomepolicydirectionformtheBoardofSelectmen.Sheaskedthatthematterbeth presentedtotheBoardatitsmeetingonAugust13 ,2008.Shenotedthatafterthatthereisnotmuchtimetogetdocumentsandmeetingstogetherbeforebudgetplanninghasmovedintomoreadvancedstages.

Mr.MulcahyaskedifamaintenancebudgetwouldaffectFireDepartmentovertime.Hestatedthathebelievedthedepartmentusedlevelfundingtomovealargeamountoffundingfromyeartoyear.Ms.LariveestatedthatamaintenancebudgetwouldallowtheTowntolookattrendsandappropriatethefundsforovertimeforamountsconsistentwithpastyears.Sheaddedthatthiswouldallocatethenecessaryfundingatthebeginningofthebudgetaryprocessratherthancoveringbudgetaryshortfallslateinthefiscalyear.

Mr.KopkoaskedMs.Lariveeiftheneteffectofchangingbudgetstyleswouldresultinanincreaseordecreaseinthetotalamountbudgeted.Ms.LariveerepliedthatwhencreatingtheFY2009budget,shereviewedthistypeofbudgetingwithTownoperatingexpenses.Theprojectednetaffectwouldhaveresultedinadecreaseinthetotaloperatingexpense.

Ms.RoggeveenaskediftheCommitteeshouldexpecttolookatthesameth informationpresentedtotheBoardofSelectmenattheirmeetingonAugust13 .Ms.Gibsonstatedthatmuchoftheinformationwouldbethesame,buttheBoardwouldbeprovidedwithmoredetail.Ms.GibsonalsosuggestedthattheBoardbegindiscussinghowitwillapproachreductionsinrevenueandtheoptionsavailabletoagenciesexperiencingreductionsinrevenue.Ms.Gibsonadvisedthatshebelievestherewillbe