MIDDLEFIELD BOARD OF FINANCE
405 Main Street
Middlefield, Connecticut 06455
Minutes of the March 1, 2017 Special Meeting
Chairman Bob Yamartino called the meeting to order at 7:26 pm.
Attendance:
Members Others
X / Irish, Jim / X / Bailey, EdX / Lowry, David / A / Rusilowicz, Al
A / Malcolm, Alice
X / Nick, Joel
X / Wolak, Mary
X / Yamartino, Bob
A=Absent
X=Present
Ed Bailey suggested that line items for Chairman’s Report and Member Discussion be added to the agendas in the future.
The Pledge of Allegiance was recited.
Approval of the Agenda
Dave Lowry made a motion, seconded by Jim Irish, to approve the agenda as presented. Motion carried unanimously.
Public Comment
Ed Bailey reported that Al Rusilowicz did not have any financials to show the Board this evening as the accounting system was down for three solid weeks and it has been four weeks since checks have been produced. The vendor apparently moved the system to a server farm in Pittsburgh, making upgrades and changes at the same time. Mr. Bailey reported that Mr. Rusilowicz’s computer at the Town Hall was running Windows XP and therefore could not operate the accounting system. Bob Yamartino commented that the Board of Finance has consistently allocated money for computer upgrades. Once Al Rusilowicz’s computer was replaced, it was found that checks could not be printed. At some point, data seemed to have been lost, however Mr. Bailey feels it is all back now. This issue has affected several other towns as well.
Mr. Bailey did explain that the budget is not generated through the accounting system, but is done through spreadsheets. The accounting system has also submitted a proposal with new pricing. Mr. Bailey and Mr. Rusilowicz do feel a new accounting system is necessary. Mr. Bailey did say that they will be seeking compensation from the vendor for this debacle. Bob Yamartino commented that the Town could, in fact, get an Apple server and have ample storage.
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March 1, 2017
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Bob Yamartino also commented that many times, Joe Geruch had assured the Board that all computers are upgraded and Mary Wolak had questioned him many times about the computer consultant. Mr. Yamartino felt that this would be a good time for a complete technical assessment. Mr. Bailey explained that they did just do a complete inventory of all the computers which had not existed. He also commented that the Assistant Town Clerk needs a new computer because the operating system does not support new software.
Mr. Bailey explained that the Town is entertaining new computer support services and has been computer half the price by other vendors. Mr. Bailey stated that the server is almost due for replacement, but Mr. Yamartino thought that that was just done two years ago. Mr. Bailey asked Jim Irish if the server age was on the capital replacement sheet and Mr. Irish explained that the server was replaced in 2012, with a life expectancy of five years, so it would, in fact, be this year. Mr. Bailey did find out that the current server and its architecture are no longer available. Bob Yamartino suggested that Mr. Bailey talk to one of the experts at Apple which he will do. Jim Irish asked that Al Rusilowicz to provide an analysis of the computers and servers after the budget process is complete. Mr. Yamartino also suggested looking into cloud-based software.
Bob Yamartino asked about the status of the building inspector and Mr. Bailey reported that the building inspector has been terminated by the Board of Selectmen. The local union representatives voted not to send it to arbitration. Mr. Bailey does feel that legal fees in this area should be much more controlled from now on. Mr. Bailey did state that the Town is still waiting for a Labor Board decision regarding another employee and he has been told that the Labor Board doesn’t want to render a decision. Mr. Bailey did not want to say exactly where that leaves the issue at this point.
Mr. Bailey did report that the Town is over budget on the legal line item, particularly for Labor Counsel. Mr. Irish explained that that line item is $13,000 over budget and Mr. Bailey added that it is probably another $10,000 more. It could be as much as $27,000 over budget on that one line item, but other legal line items are under budget. Mr. Bailey also mentioned that he would like to go through the Town’s ordinances for any problems areas and Mr. Yamartino asked if CCM could possibly help with that. Mr. Bailey will get a copy of the Book of Ordinances for the Board of Finance. Jim Irish asked how that review of the ordinances would differ from the codification work that was done. Mr. Bailey explained that the codification process took the ordinances and compared them to state statute. Mr. Bailey felt that those were more technical revisions, rather than policy, which the Board of Selectmen adopted. There is a line item in the capital budget for $1,000 for codification updates. Bob Yamartino asked about a maintenance contract for codification and Mr. Bailey thought that there was no maintenance contract and the Town pays any time a revision is made.
Ed Bailey also mentioned that there were two budget cuts made at the State level for this fiscal year, in educational cost sharing and $31,880 in capital and nonrecurring fund revenue from the LoCIP funding. He left it to the Board to decide how to replace that revenue, whether it be from the undesignated fund or some other budget account. Mr. Yamartino explained that any transfer from the operating budget to the capital and nonrecurring would require a town meeting. Mr. Yamartino also suggested that they could tweak the expense line items during the budget process to account for that loss.
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March 1, 2017
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Mr. Bailey also reported that DMIAAB would like to meet with the Boards of Finance from both towns. There had been a meeting scheduled for the Boards of Finance, both Boards of Selectmen and DMIAAB for the presentation of a report, but Dom DelVecchio requested that DMIAAB review the report ahead of time. Mr. Bailey and Laura Francis met with Mr. DelVecchio before the DMIAAB meeting, but it was very unproductive. Mr. Bailey had pointed out that the State of Connecticut requires 60 percent recycling by 2024 and the answer is that they’re doing a great job right now. The DMIAAB board then ripped the reports to shred and came up with a list of things that they had problems with that then went back to the engineering company. The joint meeting of the Boards of Finance and DMIAAB will be strictly about the budget, but has not yet been scheduled. The report raises issues mostly about capital items and other long-term issues. Mr. Bailey stated that DMIAAB tabled the discussion about the report (including tipping fees) at their last meeting. Dave Lowry felt that tabling that issue is unacceptable as it is part of the budget.
Mr. Bailey explained that the study was done to take a look at the operation as it has never had an audit done before. He also commented that DMIAAB has a high percentage of recycling (around 25 percent), but it is far away from 60 percent. Mr. Bailey did explain that it is a difficult site to operate. He described how other towns operate their recycling operation. Mr. Bailey will send the Board members an electronic copy of the engineering report.
Ed Bailey also told the Board members that they will be getting Town of Middlefield emails. He also reported that the budget should be out tomorrow and the Town’s expenditures will not change from the current budget, however it will need to include $551,000 for teachers’ pensions which includes the net loss of $942,416.
Approval of Minutes
Jim Irish pointed out that the last minutes are dated wrong and that the meeting was actually held on January12, 2017. Dave Lowry made a motion, seconded by Mary Wolak, to approve the minutes of January12, 2017 as amended. Motion carried unanimously.
Review of Current-Year Spending
Al Rusilowicz, Finance Director, was not available and, given the work he has been doing on budget, there was no report on current-year spending. Mr. Yamartino reviewed the items that Mr. Bailey had mentioned earlier.
2017-2018 Budget
a) Discussion of All State Changes to Revenue and Added Expenses
Ed Bailey stated that the proposed budget will hold expenses, but there is a hole of $942,416 that will need to be filled due to the Governor’s proposed budget. That number does include the teachers’ retirement contribution. The revaluation has been completed and will impact the budget by 1.1 mill, with a 3 percent decline in the Grand List. The loss of revenue from the State will result in a 2.58 mill increase, totaling a 3.77 mill increase. That ends up being a bit over a 10 percent increase.
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Bob Yamartino plans to explain to the taxpayers that assessments are down 5 percent on average and the mill rate is up 5 percent and the net effect will be zero. Jim Irish explained that the mill rate will not up a full 5 percent. Mr. Irish would also split out the lost revenue for the taxpayers. Ed Bailey commented that the mill rate on the reval is $196 on the average home and, with the funding reduction, the total would be $622 on the average home. He also noted that the Governor is proposing eliminating the $200 property tax deduction on the taxpayers’ tax return, which then brings the total to $822. Mr. Yamartino would like to get this information into the newspaper quickly. Ed Bailey commented that he did have an article in the Town Times and explained that the amount of $622 is based on using $275,000 out of the undesignated fund which is what was used this year. Mr. Yamartino explained that that $275,000 was based on an anticipated surplus and the decline in overall expenditures. Mr. Bailey stated that there should be a surplus this year of approximately $225,000, and after taking the $275,000, there should be between 8 and 9 percent in the undesignated fund.
Multiple concurrent discussions went on regarding the mill rate, the school budget and the State.
Mary Wolak agreed with Bob Yamartino that the Board needs to make sure their presentation makes sense to the townspeople and that they understand where the money will come from.
Jim Irish had prepared a summary and reviewed it with the Board members. He had included fiscal years 17, 18 and 19 and showed the reduction in state aid to the Town. Mr. Irish had also included Durham’s numbers. He felt that Middlefield’s budget will live with whatever numbers come in from the State. Mr. Irish had also summarized changes including the school district budget with the new special ed fund from the State. Bob Yamartino reviewed that Durham’s ECS is down from $3.8 to $1.49 and Middlefield goes from $2 million to $1.2, with a net effect of $3.2 million to the school district. The special ed excess of approximately $12,000 would go to Durham and $5,700 to Middlefield. The district’s would go from $268,000 to zero.
Mr. Irish went on to review the teacher pension costs and explained that the District’s budget is currently up by $894,000 which includes the special ed money that will not be coming. Mr. Irish reviewed that the combination of the two towns are starting the budget process $3 million in the hole.
Ed Bailey also commented that the legality of transferring the teachers’ pensions to the towns is being challenged on a Constitutional basis. Discussion continued on teachers’ salaries and the towns finally knowing what the true total compensation is. There was also discussion about eliminating sales tax and increasing income tax.
Mr. Yamartino will post the notice of next week’s public hearing and would like to prepare some further information for the joint meeting with Durham.
Jim Irish asked about the likelihood of Durham moving forward with any activity on Korn School. He mentioned that if Korn School were totally shut down, the District would save $174,000 (which includes the money related to the transfer of Korn School to Durham). Ed Bailey didn’t understand why Durham wouldn’t be responsible for any money expended relating to the transfer. He also commented that Korn School was closed 16 months ago and nothing has happened with it. He felt that Durham should be paying $12,000 a month to maintain their exclusive negotiating position. The question then came up about whether the towns would owe the $700,000 to the State if the school were shut down and not transferred to Durham.
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Discussion continued about the possibility of selling Korn School commercially and how it is currently zoned. Bob Yamartino offered a copy of the District’s budget to all of the Board members and discussion continued about programs included in the District budget. Mr. Irish also mentioned that the ERC committee voted to forward a proposal for a shell and toilets to the full Board of Ed. Lights and locker rooms were not part of that proposal. The bond proposal will be approximately $750,000. Mr. Yamartino stated that he will vote no on that proposal as he does not want the project to go to referendum unless the lights are included. He reviewed that the court order states that bathrooms are required before lights can be installed. Mr. Yamartino felt that if the project were moved forward with just bathrooms, a group of people will come back next year looking for lights.
Bob Yamartino also commented that Dr. Veronesi had made the suggestion of replacing interscholastic sports at Strong School with an intramural program. Many parents came out against that proposal. Mr. Yamartino would be in favor of intramurals so that more students get the opportunity to participate. Dave Lowry felt that the parents could bear the cost of interscholastics at Strong with a pay-for-play option. Several members of the Board would support an intramurals program. Hannah Malcolm also commented that she would support an intramural program and has found it to be quite successful in the district she teaches in. Ms. Malcolm also commented that she had been invited to a meeting with the District and she felt that they were not given a good intramurals program.