Chairman Lorrianne Caprioli called the meeting to order at 7:01pm.
Roll Call
Chairman Caprioli noted that John Diesel, Rich Heidt and Phil LePage’s absences are excused.
Sue Caswell, School Budget Update
Sue Caswell explained that Mark LaRoche, the new superintendent is also present tonight. She explained that he had been hoping for an audit committee to review the school audit, but so far had no volunteers from the community. The narrative page would provide most of the information the Committee would want. Her response to the findings could be found on the back page. She noted that there would be approximately $50,000 being returned to the Town for due diligence for the analysis of the school from last year’s budget. As of June 26, 2008 there is $38,000 in the general fund and $109,000 of impact fees. These numbers would be updated as they were preparing documentation for the state.
Chairman Caprioli asked why the school audit took so long to get back.
Forrest Ransdell answered that this audit is the 2006/2007 audit. It takes six months after the fiscal year ends to close and reconcile the books before the audit can start.
Sue Caswell explained that March 30th is the state deadline. In light of the GASB changes, there have been several communities that have asked for extensions. A meeting had been held two weeks ago to discuss extension of the time line given the 15 new requirements by the Government Accounting Standards Board. The school would know better once all the hires have been done how the budget will go as nearly 80% of the school budget is salaries. Energy would impact the budget also as they had not budgeted for $4.89 for oil.
Superintendent Mark LaRoche noted that most districts had budgeted about $3.00 per gallon last May.
Sue Caswell explained that she had filled the tanks last May; this would get the schools through December. She has thought about lock in, but has decided to wait to see how low the price goes.
Vice-Chairman Hart asked how many more gallons the school would need to get them through the winter.
Sue Caswell noted that the school goes through about 60,000 to 70,000 gallons per year including the fill up in May. She anticipated locking in within the next month.
Michael LaBranche asked when the books close for the audit.
Sue Caswell noted the books would close within the next week. The MS25 is due September 1, 2008 for the State. Once that document is prepared, she would provide a new copy to the Committee members. Once closed, the numbers can still change; pre-audit numbers would be different than the final numbers.
Vice-Chairman Hart asked if the impact fees are considered as additional revenues and if what was captured last year would be available for future years.
Sue Caswell answered that the bottom line cannot be over expended. What was captured last year would be returned to the fund balance.
Forrest Ransdell explained that the strategy used by the School Board over the last few years has been not to put large outlays that are capital in nature into the budget, but rather to use identifiable expendable trust funds or Warrant Articles. He equated this thought to why use a credit card when there are funds available in a savings account.
Chairman Caprioli asked about the funds for the elevator.
Forrest Ransdell explained that the use of those funds is prescribed by law. They were unable to use those funds for any other use. The School Board would need to discuss what to do with those funds. He noted that hypothetically speaking, if a building project is approved prior to the expiration of the bond, those funds could be used because a new building would require an elevator.
Vice-Chairman Hart noted that if those funds were returned to the general fund, they would be split. He referenced a letter to the editor stating that it would not sit well with residents of the Town. He asked why these funds needed to be raised if they were not going to be spent.
SueCaswell explained that DRA has set the tax rate. The Warrant Article for the elevator, which had passed, added to that rate.
Forrest Ransdell noted that the School Board would need to take formal action at their next meeting.
Al Zink referenced the letter to the editor which asked that these funds be returned to the tax payers. He felt that in this tough economic situation that action should be taken. He hoped the School Board would look at that favorably.
Chairman Caprioli asked if a vote would need to be taken by the residents to return these funds to the tax payers as it had taken a vote by the residents to approve the warrant article.
Leo Filion answered that is typically how a situation like this would be handled.
Forrest Ransdell answered that the authority to buy an elevator has been granted; that elevator could be purchased tomorrow. If the funds are not used for the specific reason authorized, they needed to be returned. In order for a special meeting to be called, there would need to be an overriding legal reason; a judge would make that determination.
Administrator Wojnowski agreed that is the way this would work. He added that $1.00 on the tax rate was generated from every $714,000 within the budget.
Al Zink stated that he hoped this would be expedited; it will be a tough winter for everyone.
Leo Filion explained that the budget gives the authorization to spend, but doesn’t mandate that those funds be spent. A warrant article gives a specific reason for the appropriation of funds. If those funds are returned to the general fund and split up, they would not be used for the intent for which they were raised. He felt this would not be keeping with the intent of the warrant article.
Sue Caswell explained that she had provided copies of the current year’s budget in detail along with an explanation of account structure and terminology used. She had also included a preliminary timeline. Over the last few years, the Budget Committee has been invited to attend the school budget work sessions. In the past, the School Board has sat with department heads, hashed out the budget between the Board members, and then presented their budget to the Budget Committee on a Saturday morning. Some districts have chosen to meet one day during the work week in lieu of meeting on a Saturday. School Board meetings are normally Thursday nights. The School Board would bring in the Elementary School Principle, High School Principle, Special Education Department and SAU. They would then discuss the budget as a whole. Once the Board has agreed on the budget, copies were distributed to the Budget Committee and an official meeting with the Budget Committee would be held. She explained that some of these dates are dictated by Senate Bill 2.
Chairman Caprioli asked if it would be helpful to the School Board for the Budget Committee to determine a not to exceed percentage increase. This increase would not include contract obligations or warrant articles.
Forrest Ransdell noted that he was not opposed to that but that he has reserve in doing that over the events of last year. The School Board had brought a budget to the Budget Committee that was within the percentage increase the Budget Committee had suggested and it didn’t work out. He felt that the Budget Committee needed to understand that the school district is good at doing a solid “0” based budget. By the time the budget is passed on to the Budget Committee, it has been reworked at least three times. He would like to see the Budget Committee come to the school work sessions. The Committee would be able to get the explanations in a different form that the way they appear on paper. Department heads are able to adequately explain their positions better verbally. Last year, the school had presented an operating budget increase of less than 1%. He was not confident that an increase ceiling would ultimately be helpful.
Mark LaRoche added that it would be difficult when balancing health insurance, which is up 11%. Most districts work within a 3% cap.
Chairman Caprioli understood Forrest Ransdell’s position but added that she felt the Budget Committee needed to be proactive. She understood that the economy was tough. She also understood that it was difficult for the school to begin planning their budget when school has not yet started. She had been impressed with the work that the School Board had done last year. They had worked hard under the demands of the Budget Committee.
Al Zink noted that the both the school and the town were buying large amounts of oil and asked if it would be beneficial to buy together. He suggested there could be a cost savings if the two entities bought in mass.
Sue Caswell noted that there is no supplier out there that is offering a fixed rate at this point.
Larry Pickering asked about the Kittery Coop purchase plan.
Sue Caswell explained that they had tried that for many years through Seacoast Education Services. This approach did not work well for fuel oil. They always sent this service out to bid.
Al Zink explained that he struggled with the school and town being two separate entities when it seemed there could be a benefit on consolidation of some items.
Sue Caswell explained that there is so much difference between what the school and town does. They have talked a lot about things that the school and town can do together. The school budget is primarily salaries. She has put a facilities manager position in the budget seven years in a row. She felt this was an important position as people in the buildings are struggling to keep them clean.
Mark LaRoche noted that the fiscal implication needed to be understood.
Sue Caswell explained that there are new rules and regulations affecting human resources.
Larry Pickering noted that it is important to shoot for a goal as the times we are living in are difficult. Each Board and Committee needed to have faith in each other and the boards and committees they represent that what is presented is reasonable. The budget would be scrutinized no matter what, but the ultimate goal is to be able to provide services needed while being fiscally responsible.
Michael LaBranche asked how the oil tanks were filled.
Sue Caswell explained that their contract had run out in May. They had filled the tanks then in order to carry them through to December at $2.39 per gallon. They call when they need oil, usually not letting the tanks get below 4,000 gallons. She suggested that it may not be worthwhile this year to fill the tank each time they are low because of the fluctuating oil costs.
Michael LaBranche noted that 80% of the budget is fixed due to wages. He noted it would be the 20% of the budget that the Budget Committee and School Board would need to pay close attention to.
Forrest Ransdell asked what the contractual increase was this year. He noted that this is a personnel heavy business.
Sue Caswell answered that it is 4%. They had been hit by the New Hampshire retirement systems increase.
Michael LaBranche suggested that the workshops be set up to discuss the 20% of the school budget that could be negotiated. He suggested that the Budget Committee make the effort to attend the school work sessions.
Forrest Ransdell agreed stating that if the Budget Committee focused on the operating budget rather than the salaries, which would not change short of a proposal for new or reduced staff, the process would go much smoother. He felt that October 9th and 23rd would be the important work sessions to attend. These are regular meetings and open to the public.
Sue Caswell added that October 30th would be an important meeting to attend also as they would be discussing the special education budget. The Special Education Director would explain the requirements as mandated by law.
Al Zink asked for the percentage of staff that is not covered by union contracts.
Sue Caswell answered that of the approximately 180 staff members, there are 104 full time equivalent teachers whose salaries are depicted within the teacher union contracts. The other 80 staff members are part of custodial or food service.
Al Zink asked if there were any students attending school that were not residents of Newmarket. He asked if students of teachers could attend the school.
Forrest Ransdell answered that last year was the last tuitioned graduate.
Sue Caswell noted the school did not offer teacher’s children to attend.
Larry Pickering asked what the process is to monitor whether students still live in town.
Sue Caswell noted the school was notified through reporting. Sometimes emergency numbers would give that away. This is hard to police.
Mark LaRoche explained that the school has purchased instant alert software. During data entry, it would become clear whether students live in town due to the numbers provided. Often former neighbors would report a move to the school.
Forrest Ransdell noted that schools sometimes receive requests for students to be able to finish the school year. Typically, these requests are granted unless there is a behavior issue. The requests are granted because at that late in the year, there is no loss of resources; the teacher is employed and books have been provided. There is no additional cost to allow a student to finish school for a limited time.
Sue Caswell noted that she would send an email with updates to all Committee members. Hard copies are available at the office. She would keep the Committee up to date with meeting times.
Ed Wojnowski, Town Administrator and Don Parnell, Finance Director
Update on Town Audit, last fiscal year
Chairman Caprioli noted that the audit has been published.
Finance Director Don Parnell explained that a copy of the audit has been provided. He had kept the Town Council and Budget Committee as the audit process progressed. A lot of the findings had been addressed prior to the completion of the audit; some would take longer to complete. This year’s audit would be a dramatic change from the 2006/2007 audit. The auditors are scheduled to come in September to begin work on the 2007/2008 audit. He explained that there appears to be approximately $530,000 in the fund balance currently. He expected there to be around $1 million this year due to more revenue than anticipated and under spending within the budget.
Leo Filion asked what the difference was between what was actually spent and what had been budgeted for 2008.
Finance Director Don Parnell noted that all but $400,000 has been spent. These are preliminary numbers and are subject to change. Revenue had been underestimated.
Vice-Chairman Hart was concerned that car registration revenue projection would not be met this year due to Becky Benvenuti’s report that not as many new cars or SUVs are being registered. He was cautious of expenses.
Administrator Wojnowski noted that he is asking department heads to look at the revenues and to make projections based on that. The revenue projections need to be fair and accurate. He found that prior to last year’s budget, department heads had little input on the revenue or budget side. Department heads typically start their budget using “0” based budgeting. There would be a $14 per ton increase in salt this year. Within the next few weeks he would begin the budget process with department heads and the CIP Committee. They would focus on scaling back expenses without allowing negative impacts to the community. The goal is to keep the bottom line as low as possible. He would be having a conversation with the Town Council in regards to the recreation department and town staff moving to four ten hour days. There are also new thermostats that allow auto settings which would regulate the building better. He is speaking with Clay Mitchell about cogeneration for this building. He is looking into the possibility of solar panels on the roof. PSNH wants to work with the Town; if the Town is able to produce more than 5 megawatts of energy, PSNH would buy that back. He acknowledged that it would be a tough budget.
Chairman Caprioli noted that Clay Mitchell had made a presentation to the Town Council on energy about four years ago.
Al Zink asked where the budget was significantly over in order to be in excess of $400,000.
Finance Director Don Parnell noted that fringe benefits, recruitment and adjustment, and the police department had been over. The Police Department had experienced turnover, allowing the department to hire new people at wages less than those who had left. He noted that there were some areas that could have been budgeted better. The overage was a result of an under expended budget and higher revenues than anticipated.
Vice-Chairman Hart noted that the previous administration budgeted higher because they always used $490,000 from the fund balance to reduce the tax rate.
Administrator Wojnowski noted that the overlay was the amount budgeted to pay for abatements. He spoke with Tax Assessor Andy Blaize who had indicated that the Town perhaps did $30,000 in abatements yearly. After having a conversation with the Town Council, the figure to be budgeted will be reduced.
Vice-Chairman Hart noted that the budgeting approach in past years has not been as transparent as it should have been. He noted that the fund balance was not too large.
Administrator Wojnowski noted that the Town Council determines how much of the surplus is kept and how much is used to reduce the tax rate.
Finance Director Don Parnell referenced his worksheet explaining that there is excess of $400,000 towards the fund balance as a result of overlay, over revenue and under expended budget. The health insurance deficit was also a factor.
Leo Filion asked about the $120,000 principle and interest payment for insurance and the over expenditure in legal expenses.
Vice-Chairman Hart noted that the principle and interest payment was a property liability and debt service payment to pay the Town back for the DPW building that had never been bonded. He explained that it had been set up so that payments were being made all along so when this was bonded there would be no increase in the tax rate.
Finance Director Don Parnell noted this process was effectively doing the same thing.
Leo Filion asked whether it was $1.6 million or $1.36 million to build the facility.
Administrator Wojnowski noted that the Town has spent $1.6 million to build the facility. The Town has been paying itself back since in payments of $120,000. The Council is holding a special meeting to bond the $1.36 million balance. The Town had taken money from the fund balance and budget to build the building. Two $120,000 payments have been made thus far.
Finance Director Don Parnell explained that the bond was voted on by the residents for $1.6 million, which is the actual amount it cost to build the facility. $1.36 million will be bonded.
Chairman Caprioli asked about the special town meeting.
Administrator Wojnowski explained that last year he had attended a meeting with Finance Director Don Parnell, Chair of the Town Council, Chair of the Budget Committee and the auditors to discuss what the findings were. The way the bond had been set up for the DPW Building had created a liability of the fund balance therefore making it necessary to reduce the fund balance by the amount of the building. The health insurance deficit is $240,000. The Town Council had asked that information be pulled together in order to speak with the bond council in the hopes of selling the bond to recoup the funds. Finance Director Don Parnell started the process; over the last month things have come together. The bond council had found through their research that the Town failed t adequately post the public hearing for the bond. The bond council was unable to provide a clear opinion to a financial institution to sell. If the Town had known about this earlier, they could have gone to the legislature to legalize and ratify the actions. Under state statutes there is a process to legalize and ratify the warrant article. This process has begun; a Special Town Meeting would be held August 27, 2008. The warrant article would be posted and noticed, there would be a public hearing including a debate and discussion. The polls would then open for one hour for voting. Two thirds majority vote is needed to pass. If the vote did not pass, the liability would remain on the fund balance. He felt it would be important to get residents to understand the importance of this process.
Vice-Chairman Hart asked if any capital reserve money had been used for the building.
Finance Director DonParnell answered that no capital reserve had been used for the building.
Leo Filion asked if Administrator Wojnowski would know roughly what the interest would cost when they met on August 27, 2008.
Administrator Wojnowski answered that he already knew the payment amount as it includes principle and interest. That amount had been budget for this fiscal year.
Finance Director DonParnell noted that the Town should have at least two months of operating expenses in the general fund in the event of a crisis.
Al Zink asked how the Committee could effectively communicate the importance of this process so that the residents would understand.
Administrator Wojnowski noted that the Town has paid for the building. There is $2.4 Million in the fund balance; part of that could have been used to reduce the tax rate. That money is spoken for now due to the liability of the building. The reserve needs to be built up so the Town has at least two months worth of operating expenses. They are asking the community to legalize and ratify the bond so the debt can be issued and paid over time. He agreed that this would be difficult to explain. The Town is already looking at how to deal with the additional expenses of paving, electric, salt and fuel.
Eric Botterman asked what the interest rate would be on this $1.3 Million bond.
Finance Director DonParnell explained that the because the Town had waited so long to bond, it has gone from being tax exempt to a taxable municipal bond. Tax exempt bond rates are about 5.5%; he expected taxable bond interest rates to be about 1% higher. If this had been bonded correctly years ago, the rate would probably have been about 3%.
Vice-ChairmanHart noted that it would be a good thing that the public would be in at 7:00pm to listen to the debate, ask their questions and get explanations before the polls opened. He hoped that everyone would understand the urgency and importance of getting this done.
Finance Director Don Parnell noted that last year’s budget was tough. He cautioned the Committee and community not to expect to see another $500,000 going into surplus; he would be surprised if $100,000 was deposited.
Al Zink was not sure whether getting a bond at a high rate would be a positive or negative. He would like it clearly spelled out what the consequences would be one way or the other. He suggested presenting it to the community that way and including what each option would cost overall.
Eric Botterman asked how many times in the past five years the surplus account was used to fund emergencies.
Administrator Wojnowski stated that he did not know.
Leo Filion answered that it had not been used in forty years.
Vice-Chairman Hart noted that was not an accurate representation. It was suggested that people have at least two to six months worth of bills in savings. He asked why the Town should be any different. He was interested in the cost differential in the interest from the first year to now.
Forrest Ransdell noted that it would be people’s perception not to see that as a cost differential.
Vice-Chairman Hart noted this would not change the tax rate. The building payment is already accounted for within the budget.
Administrator Wojnowski noted that the benefit with going with a private bank is that it can be paid faster.
Finance Director Don Parnell explained that the $120,000 bond payment was over a twenty year quote. The principle payment is $68,800 plus interest.
Michael LaBranche explained that the bond had not been taken out properly. The budget was passed last year without any funds available for emergencies. If the Town sells this bond, it would put the Town more in line with where it needs to be financially.
Finance Director Don Parnell explained that it would be a negative if the Town is not within DRA’s standards for surplus; this could cost the Town more money as bond agencies look at this.
Administrator Wojnowski noted that he would get the schedule so it can be meshed for the budget process. He agreed that it would be helpful for the Budget Committee to attend Town Council budget workshops so department heads did not have to duplicate their presentations.
Al Zink asked if the Budget Committee could recommend whether the warrant article be passed or not.
Administrator Wojnowski noted that it would be helpful if the Budget Committee would endorse the warrant article at the Special Town Meeting.
Vice-Chairman Hart noted that the Budget Committee could not vote whether or not to support the warrant article unless it was monetary.
Motion: That the Budget Committee endorse the warrant article at the Special Town Meeting and to have this printed on the warrant article if after legal review it is determined that is allowed.
Motioned: Al Zink
Seconded: Michael LaBranche
Vote: In favor: Chairman Lorrianne Caprioli, Vice-Chairman Brian Hart,
Erik Botterman, Michael LaBranche, Larry Pickering, Forrest
Ransdell, Al Zink
Opposed: Leo Filion
Abstained:
Leo Filion noted he did not vote for this motion because he wanted to know how much this would cost the Town before he supported the idea.
Vice-Chairman Hart asked if this would go out to bid.
Finance Director Don Parnell answered that it would.
Administrator Wojnowski added that if this was passed by the community documentation requesting bids would probably go out the next day.
Budget Law Discussion
Chairman Caprioli noted there would be a budget and finance workshop held in Bedford on September 23, 2008 from 9:00am until 4:00pm and in Lincoln on September 25, 2008 from 9:00am until 4:00pm. She highly recommended any available Budget Committee members to attend this workshop.
Vice-Chairman Hart noted there is money in the budget for Committee members to attend.
Leo Filion stated that the budget law discussion would benefit the newer members, most of which were not here tonight. He recommended postponing this discussion until they were present. He felt it was pretty cut and dry; money that was not appropriated within the budget could not be spent.
Vice-Chairman Hart noted that the question became how specifically mentioned each item needed to be. He gave the example that cleaning up the lead from the firing range he would put under maintenance of systems.
Leo Filion noted that there is a specific process in how money could be transferred from one account to another.
The Committee discussed the process, timelines and required costs.
Rules of Procedure Adoption
Chairman Caprioli noted that these had been read at the last Budget Committee meeting. Grammatical changes have been made. The Budget Committee has never had formal rules of procedure before.
Motion: To adopt the Budget Committee Rules of Procedure for the Town of Newmarket.
Motioned: Michael LaBranche
Seconded: Erik Botterman
Vote: In favor: Erik Botterman, Chairman Caprioli, Leo Filion, Vice-Chairman
Hart, Michael LaBranche, Larry Pickering, Forrest Ransdell,
Al Zink
Opposed:
Abstained:
Leo Filion explained that the Rules of Procedure are there to guide the Committee. Next year’s Budget Committee would need to review and/or revise these rules as this Committee could not bind a future Committee. Next year’s Budget Committee would need to adopt the Rules of Procedure. These Rules are guided by RSAs. The Chairman runs the meetings and makes certain decisions. Any member of the Committee that disagrees with a decision made by the Chairman can appeal that decision.
Forrest Ransdell noted that these are operating procedures and do not describe the job responsibility of the Budget Committee and its members.
Adopt Minutes June 30, 2008
Motion: To adopt the Budget Committee meeting minutes from June 30, 2008.
Motioned: Vice-Chairman Hart
Seconded: Leo Filion
Vote: In favor: Chairman Caprioli, Leo Filion, Vice-Chairman Hart, Al Zink
Opposed:
Abstained: Erik Botterman, Larry Pickering, Michael LaBranche, Forrest
Ransdell
Old Business
a. Appoint a Budget Committee Member to CIP Committee and Open Space Committee
Leo Filion noted that the CIP Committee consists of 2 Budget Committee members, 2 Planning Board Members, 1 Town Councilor, the Finance Director and Town Planner. The meetings are normally held between 3:00pm and 4:00pm. The Committee was supposed to start meeting in June or July, but has not yet met. He explained that the CIP Committee’s goal is to keep their recommendation between $900,000 and $1 Million. The Committee meets with various departments including recreation, water and sewer to decide how to appropriate the funds. He discussed last year’s recommendation and the process it takes to make the presentation to the Budget Committee. He explained that the Budget Committee then recommends the CIP plan as part of the Budget at the deliberative session.
Vice-ChairmanHart noted that the Town Council ultimately decided what is put out as a warrant article and what remains within the budget.
Erik Botterman noted that he has a background in construction and engineering and volunteered to be a representative.
Chairman Caprioli noted that the Open Space Commission also needed a representative from the Budget Commission.
Vice-Chairman Hart noted that there was a non-binding warrant article for $500,000 that could possibly be available for athletic fields. The Open Space Commission understood that recreation fields are a priority for the Town. He suggested the representative from the Budget Committee have some sort of connection with the athletic community. This Commission usually meets Mondays at 7:00pm quarterly.
Chairman Caprioli suggested asking John Diesel if he would be interested.
Michael LaBranche noted that if the Town Council representative to the Budget Committee is able to be the Budget Committee’s representative to the Open Space Commission, he would be interested.
Erik Botterman noted that if Michael LaBranche could not be the Budget Committee’s representative to the Open Space Commission, he would be interested.
New Business
Michael LaBranche noted that he had not been here for the first Budget Committee meeting as the Town Council representative. It had been discussed at the Council level that the Budget Committee was looking at streamlining the process. He asked what that would entail.
Leo Filion noted that the Budget Committee would work on scheduling the meetings better so that there would not be overlapping meetings.
Michael LaBranche agreed that would be helpful. The School timeline would be submitted in enough time to plan accordingly. He would ask the Town Council for their schedule also.
Chairman Caprioli noted that there would be School budget workshops on October 9th, 23rd and 30th. The Budget Committee would not meet until after these workshops. In January the Budget Committee would attend the Council budget workshops and meet in February. She strongly recommended that if Budget Committee members could not attend any of these meetings that they make arrangements to obtain a copy of the meetings.
Forrest Ransdell noted that by January 14, 2009 the Budget Committee should be finished with the School budget and be focused on the Town Council budget.
Next Meeting Date
Forrest Ransdell noted that the School Board would meet November 14th. It would be helpful if the Budget Committee could provide feedback prior to that meeting.
Leo Filion noted that if in the mean time any Budget member had something of concern, the Chair could call a meeting.
The Budget Committee set the next meeting date for November 10, 2008 at 7:00pm.
