Audit Committee 070908
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Audit Committee 070908

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Town of Nantucket  Ad Hoc Budget Committee Meeting    thMinutes – Ad Hoc Budget Committee Meeting January27 , 2009  thApproved February 10 , 2009  Present:  Ms. Jenny Garneau, Ms. Susan Genthner, Ms. C. Elizabeth Gibson, Mr. James Kelly, Mr. Michael Kopko, Ms. Connie Voges, Dr. Robert Pellicone, and Ms. Patricia Roggeveen.   Absent:  Mr. Matthew Mulcahy.  Also present: Mr. Rick Atherton, Mr. Malachy Rice, Mr. Glenn Field, Ms. Irene Larivee, Mr. Whiting Willauer, and Mr. Craig Abernathy  Call to Order:   Ms. Roggeveen called the meeting to order at 8:30 AM. Approval of Minutes 18 November 2008 and 3 December 2008:   Mr. Kopko and Mr. Kelly recused themselves from considering approval of the thminutes of November 18 , 2008, due to absence.  Ms. Genthner recused herself from rdconsidering approval of the minutes of December 3 , 2008, due to absence.  Ms. Roggeveen moved to approve the minutes of 18 November 2008 and 3 December 2008; seconded by Ms. Garneau.  So voted unanimously.   Review of Status of FY 2010 Budget:   Town Manager C. Elizabeth Gibson stated that the Town would be presenting its budget to the Finance Committee later that day, noting that the budget contains the recommendations of Town Administration presented to the Board of Selectmen on thJanuary 14 , 2009.  She added that the Board of Selectmen considered the budget in th st ndworkshops on the 20 , 21 , and 22  of January.  Ms ...

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TownofNantucketAdHocBudgetCommitteeMeetingth MinutesAdHocBudgetCommitteeMeetingJanuary 27,2009th ApprovedFebruary10 ,2009Present:Ms.JennyGarneau,Ms.SusanGenthner,Ms.C.ElizabethGibson,Mr.JamesKelly,Mr.MichaelKopko,Ms.ConnieVoges,Dr.RobertPellicone,andMs.PatriciaRoggeveen.Absent:Mr.MatthewMulcahy.Alsopresent:Mr.RickAtherton,Mr.MalachyRice,Mr.GlennField,Ms.IreneLarivee,Mr.WhitingWillauer,andMr.CraigAbernathyCalltoOrder:Ms.Roggeveencalledthemeetingtoorderat8:30AM.ApprovalofMinutes18November2008and3December2008:Mr.KopkoandMr.Kellyrecusedthemselvesfromconsideringapprovaloftheth minutesofNovember18 ,2008,duetoabsence.Ms.Genthnerrecusedherselffromrd consideringapprovaloftheminutesofDecember3 ,2008,duetoabsence.Ms.Roggeveenmovedtoapprovetheminutesof18November2008and3December2008;secondedbyMs.Garneau.Sovotedunanimously.ReviewofStatusofFY2010Budget:TownManagerC.ElizabethGibsonstatedthattheTownwouldbepresentingitsbudgettotheFinanceCommitteelaterthatday,notingthatthebudgetcontainstherecommendationsofTownAdministrationpresentedtotheBoardofSelectmenonth January14 ,2009.SheaddedthattheBoardofSelectmenconsideredthebudgetinth stnd workshopsonthe20 ,21 ,and22ofJanuary.Ms.GibsonstatedthattheBoardagreedtoforwardthebudgettotheFinanceCommitteewiththeunderstandingthatsomeitemsmayrequirefurtherreview.
Minutes – Ad Hoc Budget Committee th January 27, 2009Page 2 of 5 Inapositivedevelopment,Ms.Gibsonexplainedthatduetoacalculationerrorth inthebudgetprojectiondevelopedonDecember10 ,2008,thebudgetgapwasoverstatedbybetween$500,000and$600,000.Citingitemsthatstillremainuncertain,Ms.GibsonstatedthatthetotaldeficitintheSolidWasteEnterpriseFundisprojectedtobe$4.7million,requiringaGeneralFundsubsidyof$1.9milliontocovertheamountnotcoveredbypreviousoverridesubsidiesof$2.8million.Ms.RoggeveenstatedthatotheroptionsforclosingthegapbetweentheprojecteddeficitandtheoverridesubsidyincluderaisingfeesorrenegotiatingtheoperatingcontractwithWasteOptions,thecontractedoperatoroftheLandfill.Ms.VogesnotedthattherationaleforfundingtheSolidWasteEnterpriseFundfromtaxesinsteadoffeesisthattaxesrepresentadeductionforresidentsonincometax.Continuingwiththetopicofuncertainitemsaffectingbudgetprojections,Ms.Gibsonpointedoutthatanamountof$100,000assignedtopostemploymentbenefitsmaybereturnedtotheGeneralFund,andthatthisamountwouldbesubjecttothesixtyfortysplit.(ThesixtyfortysplitreferstoabudgetingtoolusedforthepurposeofassigningdeficitamountstobesplitbetweentheTownandtheSchool.)
Mr.Kellyaskedifthereisanycriteriaforapplyingthesixtyfortysplit.Ms.Gibsonansweredthatalltaxreceiptsandlocalrevenuesaresubjecttothesplit,andexplainedthatthetotalmunicipalbudgetbreaksdownasfollows:School$21million,Town$24million,andotherentities$25million.(Note:theenterprisefundsmakeuptheremainderoftheTown’stotal$100millionbudget.)Continuing,Ms.Gibsonstatedthatforthesakeofbudgeting$25millionforotherentitiesisremovedfromthetotalnumberandtheremainderissubjecttothesixtyfortysplit.Sheaddedthatcertaintypesoflocalreceiptsarenotsubjecttothesplit,suchasliquorlicensefees,residentialparkingfees,or“paytoparticipate”fees.Ms.Vogescommentedthattheissuebecomessomewhatmurkywhenconsideringspecificrevenuesdesignedtotargetaspecificdeficit.Mr.Kellystatedthatheisstillnotclearontheuseofthesplit,andMs.GibsonexplainedthattherehasneverbeenanattempttoexplainthesixtyfortysplitwithahighdegreeofdetailandproposedthatherofficeworkwiththeBoardofSelectmentoclarifythematter.Ms.Roggeveenassertedherbeliefthatifanorganizationreceivesthenegativepoliticaleffectsofimplementingafeetheorganizationshouldenjoythepositiveeffectofenjoyingthefullmonetarybenefitofthefee.Mr.Kellyproposedthatinthecurrentyeara“KingsX”solutionbeused,allowingallpartiestokeepthefeestheycollectthisyearbutdevelopclearandtransparentmethodsofsplittingthefeesincomingyears.
Presentinganotheruncertainitem,Ms.GibsonstatedthatsomevariablesinMedicarePartDindicatethattheremaybeasavingsof$350,000to$400,000.Mr.KellynotedthattheamountoftotalsavingsfromtheuncertainitemscitedbyMs.Gibsontotals$1million.Ms.VogesexplainedthatthetotalisanaggregateamountthatwillaffecttheGeneralFund.Aftersomehesitationbymembershiptorelyoncurrentnumericprojections,Mr.Athertonstatedhisbeliefthatthereisnoreasontobeafraid
Minutes – Ad Hoc Budget Committee th January 27, 2009Page 3 of 5 ofthenumbersastheyareprojectionsthatwillchange.Ms.Gibsonaddedthatresolvingthemethodofassessingindirectcostswillresolveanotheruncertainitem.Mr.Kopkoagreed,statinghisdesiretoclarifythepolicy.Ms.VogesnotedthatshewillbepresentingapolicyinthenearfuturefortheBoardtoconsiderendorsing.Ms.Gibsoncontinuedwithanotheruncertainitem,statingthattheSepticSystemInspectionRevenueFundbalanceof$277,402maybeusedtofundapositionwithintheHealthDepartment.ShealsoaddedthattheStabilizationFundmaybeconsideredforaonetimesourceforacapitalexpenditure.
Dr.Pelliconeaskedifanincreaseinthepercentageofhealthinsurancepremiumpaidbyemployeesisunderconsideration.Ms.Gibsonansweredthatthisproposalisbeingconsideredasoneoption,butfortheproposaltoworkallunionswouldneedtoagree.Dr.PelliconethenaskedhowtheTownisapproachingthecutsitneedstomakeinordertocloseitsportionofthebudgetgap.Ms.GibsonstatedthatTownAdministrationislookingatwaystoincreaserevenues,andreduceoreliminateprogramstobringtheamountdowntoabout$933,000.Sheaddedthattheremainderwouldneedtocomefromeitherincreasingtheamountsemployeespayinhealthcarepremiumsorbylayingoffseventeenpositions.Dr.Pelliconepointedoutthathewouldbesendingoutfortypinkslipsthatweek.Mr.KopkocommentedthatthenumbercitedbyDr.Pelliconeissomewhattheoretical,astheissuanceofpinkslipsisanormalpartofpersonnelactiononthepartoftheSchool.Dr.Pelliconeresponded,statingthatthepinkslipsarenotnormallymadeuntilAprilandthatthisyearheissuedtheslipsforthepurposeofallowingstaffthetimetomakeappropriatearrangements.Mr.KopkostatedthattheSchoolhasachoice,andthattheSchoolhaschosentocutpeopleinsteadofprogramsorpay.Dr.Pelliconedisagreedandpointedtopreviouscutstoprogramsandpay,addingthatpayhasbeencutatalllevels,includingadministration.Mr.RiceremindedtheCommitteethattheTownhasmadecutsthatincludeAdultCommunityDayCare,MosquitoControl,andcutstostaffingthroughattrition,ahiringfreezeandlayoffs.
Ms.GenthnerstatedthattheSchoolacceptedthechallengetocreateabalancedbudgetandexploredeveryoptioninitseffortstocutcosts.Sheaddedthatintheenditwasnecessarytoputtheneedsofthestudentsbeforetheneedtocreateabalancedbudget,andassuchtheSchoolwillbepresentingabudgetthatincludesanoverride.Ms.GarneaupointedoutthatinthecurrentbudgetprocesstheSchoolhasaddednewlevelsofdiscussiontodeterminetheprioritiesforanoverride.Asapartofthisprocess,Ms.GarneaustatedthattheHighSchoolandtheMiddleSchoolmadenorequestsforadditionalfunding.SheexplainedthatinsteadtheMiddleSchoolandtheHighSchoolproposedthatanyadditionalfundsbereservedfortheElementarySchoolinordertoaddresscorrectiveactionissuesmandatedbytheState.Ms.Roggeveenremindedmembershipthatotherboardsandcommitteeshaveclearlyindicatedabeliefthatanoverrideisnotthebestcourseofactionatthistime.Mr.Kopkoagreedandpointedoutthatadditionalfeescanbeusedtobalanceabudget.HecommentedthatiftheSchool
Minutes – Ad Hoc Budget Committee th January 27, 2009Page 4 of 5 chosetoimplementsportsparticipationfeesitcouldraiseanamountcommensuratewiththepayofateacher.Mr.KellyquestionedtheSchoolsrationaleinchoosinganoverrideinsteadoftheimplementingorincreasingfees.Ms.GenthnerassertedthatitisimportanttoletthevotersdecidewhetherornottheycanaffordtoappropriatemoremoneyfortheSchool.Mr.Kellyspokeoftheimportanceofhonoringtheresponsibilityplaceduponmembersbythevoters,statingthattheytrusteachmunicipalentitytodevelopabalancedbudget.ReferencinghisroleasChairmanoftheFinanceCommittee,Mr.KellyaddedthattheFinanceCommitteecan’ttelltheSchoolwhattodobutalsoaskedtheSchooltorevisititsattemptstoachieveabalancedbudgetratherthanresortingtoanoverride.Ms.Genthnercommentedthatasnumberschangeitmaybeabletoreducetheamountoffundinginexcessofabalancedbudget,andastheamountshrinksitmaybepossibletoclosethegaptoalevelwhereadequatefundingcanbefoundtodeliverabalancedbudget.Mr.Kellyreiteratedhisbeliefindemonstratingresponsibilitytovotersbydeliveringabalancedbudget,statingthatthemindsetofanoverridecreatesanatmosphereinwhichitisdifficulttoachievefiscalgoals.Ms.Roggeveennotedthatinthepreviousyearvotersoverwhelminglydeniedanoverrideattemptandpointedoutthateconomicconditionshavedeterioratedsincethattime.ShealsostatedthatoverrideattemptshurttheTown’soverallabilitytoachieveitsgoals.Mr.Kopkoagreed,cautioningSchoolrepresentativestolookatthelongtermeffectsofanoverride.Ms.GibsonnotedthatontheSchoolleveloverrideproposalsreceiveapositiveresponse,butontheTownlevelsuchnewsaddstotheperceptionoffuturefinancialdifficulties.SheaddedthatshebelievesrelianceonanoverridetofundtheSchool’sneedsisamistake.Lookingforward,Ms.GibsonpointedtoeffortstodevelopanAdHocMunicipalFinanceReviewWorkGrouptodevelopstrategiesforhandlingfinancialdifficultiesinFY2011andlateryears.Mr.KopkoaskedSchoolrepresentativestoconsiderotherfactorsaffectingtaxpayers,suchassewerrateincreases,whenconsideringanoverride.HeencouragedtheSchooltohavecontingencyplansinplaceshouldtheBoardofSelectmenandtheFinanceCommitteemakenegativerecommendationsonitsbudget.Mr.KellyvoicedhopethattheSchoolwillreconsideritsoptionsandputforwardabalancedbudget.NewBusiness:None.OldBusiness:None.
Minutes – Ad Hoc Budget Committee th January 27, 2009Page 5 of 5 DateofNextMeeting:th ThedateofthenextmeetingisTuesday,February10 ,2009,at8:30AMintheTownHallConferenceRoom.
Adjournment:
Ms.Roggeveenaskedforamotiontoadjournthatwas“somoved”byMr.Kelly.Themeetingwasadjournedat9:58AM.
”””””””””””””””””””””””””””””””””””””””” PreparedbyCraigAbernathy