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FINANCE COMMITTEE MINUTES-MAY 1ST 2017

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Finance Committee Minutes
May 1st, 2017

The meeting opened at 7:30 with all districts represented.

Also, represented and actively participating in a discussion of the financial issues facing the Town were delegates from the BOC (Dan Ozizmir, D-5 and Andy Duus III, D-5), representatives from the BET, (Jim Lash, Michael Mason, Bill Drake, Jeff Ramer and Tony Turner), representatives from Nathaniel Witherell led by Larry Simon, BOE representatives Lauren Rabin and Laura Erickson and the Town Commissioner of Public Works, Amy Seibert and Comptroller, Peter Mynarski. Many other interested citizens attended and participated.

All pertinent information needed was available either with documentation or from testimony by the individual budget proponents or BET representatives.

1. Nathaniel Witherell Budget be Approved: The Committee heard a presentation by Larry Simon on the details and rationale behind the proposed NW budget. He pointed out that NW, unlike other Town Departments, strives to “break even”, maximizing revenues as much as possible to offset fixed cost. He pointed out that NW is planning to partner with an outside provider to offer home health care services for the first time, suggesting that this is one of the enterprising strategies they are employing to achieve their “break-even” goal. When questioned about proposed cuts to the NW budget because of excess OT expenses, he explained that the number of FTE’s has remained about the same for the past four years. (A copy of Mr. Simon’s presentation is attached).

The Finance Committee vote in support of the proposed NW budget, without cuts, was 9-3-0. (Districts 7, 8, and 12 voting No)

Following that, was a discussion of the financial risks facing the Town in the upcoming year, as we consider the FY 17-18 budget, specifically the discussion centered on:

• The State is in serious financial turmoil and is confronted with potential revenue shortfall’s totaling about $1.2 billion in 2018 and $1.7 billion in FY ’19, and the deficits appear to be growing daily.

These projected deficits are being driven, in part, by lower-than-assumed tax revenues and newly required support of a $37 billion under-funded State employees’ pension plan. Therefore, the Town must consider the possibility of the State transferring some of this liability to cities and towns like Greenwich-such a transfer could result in $10 million in unplanned cost to the Town.
That said, there was general agreement that such transfer would be difficult for the State to accomplish because it would require a change in State statutes and significant political opposition from State employee groups. The position of the BET representatives is that we would likely know the outcome of these uncertainties about July 1, 2017.

In addition to the financial risk from State turmoil, there is an ongoing environmental risk the Town faces which must also be counted.

• The Town will realize @13 million windfall expense reduction in its employee medical premiums in the coming year, of which about $11 has been accounted for in the proposed budget, leaving about $2M unassigned dollars which could also could be included in the total savings, pending union approval.

• Fairfield County taxes support approximately 40% of State revenues. Greenwich supports about 12.5%.

• While the Greenwich Grand List continues to grow and increase citizen taxes, our Mill Rate this year is the lowest of any large city in CT, and the projected mill- rate increase, the lowest increase in memory, is projected. .
It was noted, however, that low mill rates did not necessarily translate into a low actual tax burden, because of the high value of the Greenwich Grand List.

• Supported by the BET Budget committee chair Jim Lash, the Town Comptroller testified that, with the proposed budget the Town will have ample reserves to cover the risks outlined above in the coming fiscal year. Mr. Lash further testified, that it was the following year, that could be problematical should the State make unfavorable decisions affecting the Town.

In weighing the information brought before it, the Finance Committee discussed the fundamental issue affecting the FY17-18 proposed budget;
Given the obvious yet unknown financial risks from Hartford, does this budget provide the reserves we need to offset any ensuing financial volatility while controlling unnecessary escalation in the mill rate and continuing to deliver necessary Town services?

The Finance Committee expressed its answer this question by its votes on the following on specific proposals to cut the budget in specific areas.
2. Fixed Charges: Proposal to cut the budget by $2 million. This amount, represents the anticipated savings to the Town not reflected in the proposed budget. The BET has designated these anticipated surplus dollars as part of the Town’s “reserve” to protect us radical intrusion by the State by transferring liabilities, like State underfunded pension liabilities, to the Town.
The FC vote was 3-9-0 against making this cut.
3. Fixed Charges: Proposal to cut the proposed budget by $1million. Related to Item #2 above this smaller cut reflected uncertainty about the amount of the savings the Town would receive, because the timing of bargaining unit “sign-off” of the State medical plan has not been completed.
The FC vote 5-7-0 in favor of this cut.
4. BOE: To reject a proposed cut to the Hamilton Avenue School of $270,270
This proposed cut generated little discussion because it require the FC to make “classroom” decisions on what’s best for Greenwich children, instead of the BOE.
The FC vote was 11-0-1

5. Retain full funding for the New Leb. School of $2,298,000.
This item led to a discussion of savings to be gained temporary trailers not using temporary trailers in addition to the politics of reducing or eliminating funding for the New Leb school.
It was brought to light by Mr. Lash that the New Leb. Proposal is in competition before the State and any change in our funding of the project would require notifying the State, an jeopardize our standing in the competition. Given the stakes, he and the BET recommended that the appropriation not be changed.
Mr. Lash also reminded the FC that the BET has made a firm commitment to the RTM, that if State funds are not forthcoming, the BET’s support for the project would be withdrawn, and no further dollars spent on the project without further review and vote by the RTM
The vote on this item was 11-0-0.
6. Retain full funding for the Oneida Bridge Project.

Discussion of this item centered mainly on two items; the rating system used by the State and the Town, which clearly indicated that the bridge indeed needed replacement the idea of offering the bridge to the private residents who live in the immediate area of the bridge.

The FC learned that there are complicated procedures and checks required before the Town can “give away” a bridge or a public roadway, further some questioned whether any homeowners association would want a bridge in need of replacement?

After an in-depth discussion on these and related matters,

The FC vote to maintain full funding for the bridge was : 8-4-0

7. Cut funding for Steamboat Road Jetty repair.
The Jetty is now off limits to pedestrian use because of it crumbling cement structure. After the vote below was taken, Mr. Lash of the BET asked, “What do you want us to do with it?” Chairman suggested that the FC vote indicated at least a 1 year delay.
The FC voted to cut funding for the Jetty 10-2-0

8. Reject any proposed cut to the Town’s auto Fleet.
The BET Budget committee chair explained this expenditure was simply a matter of arithmetic. When the maintenance costs of cars in designated categories exceed the cost of purchasing a new vehicle, the Town budgets buys new vehicles, saving taxpayers. The Fleet department updates this analysis periodically. Further, FC members asked why we, a committee would attempt to micro-manage the operations of our Town fleet department.
The vote to reject any cuts to the Town’s fleet was: 9-3-0

Following its votes on these major issues the FC then decided not to take up smaller budget items.
It should be not5ed that there was very strong sentiment on the Finance Committee that it was imperative that the BET, the BOE and the Selectmen begin contingency planning as soon as possible to deal with the adverse fiscal impact on the Town of Greenwich which results from the State of Connecticut’s fiscal crisis and the changes in taxes and policies at the state level which cannot be known at the time of the RTM Budget vote in May.

Further the FC, having received task-team reports on the operational audits of Town departments decided to accept these reports without a vote.
The meeting concluded about 11PM.

ATTACHMENT;
Nathaniel Witherell Presentation to the RTM Committees

1. 9.7 FTEs added to the Table of Organization
a. This was not an authorization to hire more staff but rather a conversion of PT hours into FTE.
b. If you look at our staffing levels for the last four years, the number of FTEs has not changed.

2. Revenues are holding steady at $27 million for the last two years and are expected to grow slightly to $27.8 million in FY18. We are running at 94% occupancy versus 87% for most Nursing Homes in CT. Revenue Growth will come from four different areas:
a. Finish improvements to the Tower renovation and the Auditorium will make TNW more physically appealing. This will attract more Private Pay patients (difference of $235,000 per year per patient).
b. Continue to upgrade and expand our marketing, branding and web site. Need to get TNW name and the great care we provide into the public.
c. Work with Hospitals to be their preferred referral source for Rehab services. Have solid relationship with GH but we are working to expand our relationship with Stamford Hospital and HSS.
d. Looking to brand a Home Health Service called Nathaniel at Home to keep track of our patients once they are discharged, increase our marketing presence within Greenwich and co-share the profits.

3. Costs are below budget this year as well as last year. We manage to our budget and expect to return money to the TOG every year.
a. Overtime costs in the FY18 budget reflect what we think we will need. In FY17, we will spend $975,000 in OT due to the factors below. The FY18 budget is designed to more accurately reflect what we need to run the facility and remember that OT expense is 67% regular salary and 33% premium. FY17 was very high for several reasons:
a. Matrix Training for Nursing as we converted to an electronic medical record system.
b. Unusually bad weather where staff had difficulty getting to our facility and we need to use OT.
c. Other factors include high number of admissions (374 in FY14 versus 650 projected for FY17)
d. State regulations including fingerprinting in Bridgeport make hiring both part-time and full-time people more onerous.
e. We think that a combination of Full time staff, Part-time staff and Overtime is the most economical way to staff Nursing. Similarly for Dietary, Housekeeping, and Laundry we use more than 50% part-time employees. Nursing overtime will diminish in FY18 as training is completed.

4. Overall Results
a. For FY17, we started the year with a projected operating budget deficit of $2.524 million (omitting capital).
a. This deficit included Debt and Interest of $1,960,145 and a General Fund contribution of $600,000 to account for the money raised by the Friends of TNW.
b. During the year, the bonds were refinanced and the proper credit was given to the almost $9 million raised by FNW. Total Debt and Interest decreased slightly to $1,893,951 and the General Fund credit for the $9 million raised was increased to $907,865.
c. The current projected operating deficit for FY17 is $2.097 million or an improvement of $425,000.
b. For FY18, we are showing an operating deficit of $1,304,411 or a $690,000 improvement over FY 17.
a. This includes an increase in Debt and Interest Service to $2,013,470 or an increase of $119,519. Over time, this amount will begin to decrease until completely paid off in FY34 (16years).
b. The operating deficit excluding debt and interest (which will remain an obligation of the Town regardless of whether or not Witherell is open is $300,000 this year and will continue to shrink).