MEMBERS PRESENT:

President Higgins, Councilors Dwyer, Ackerman, Lemois, Albuquerque, and Kirkpatrick    

Also present Daniel J. McKee, Mayor, Thomas E. Hefner, Town Solicitor, Thomas Bruce, Finance Director and Sandra M. Giovanelli, Town Clerk 

MEMBERS ABSENT:

Councilor Morris

OLD BUSINESS

A.  ORDINANCE FOR FIRST PUBLIC HEARING:

1.  #09-07 – An ordinance to Reopen and Amend the Existing Budget

President Higgins stated that the ordinance that was before them and has been advertised was going to have several substantial changes to it so he asked the Town Solicitor if that was alright.

Mr. Hefner replied that as long as the advertisement that was posted was reasonably worded in a way to give anyone who read it an idea of what they would be talking about.

President Higgins stated that he wasn’t questioning the advertisement instead he wanted to know if it was proper to amend this ordinance prior to the second hearing and vote.

Mr. Hefner responded that it was alright to amend as long as it was to amend an reopen the existing budget. 

President Higgins asked the Finance Director, Mr. Bruce, if the documents that he passed out this evening as pertained to the proposed budget was different from what he emailed them earlier.

Mr. Bruce replied that the documents distributed this evening were in fact different from what was previously sent; specifically, two items had changed. 

President Higgins asked Mr. Bruce to point out what two items in the ordinance were changed. 

Mr. Bruce explained that he distributed did not include or amend the ordinance.

President Higgins asked for a motion to replace #09-07 with #09-07A. 

Councilor Albuquerque motions to replace #09-07 with #09-07A and it was seconded by Councilor Lemois.

Mr. Hefner interrupted to ask what #09-07A was.

President Higgins asked Mr. Hefner if he had a copy of #09-07A.

Mr. Hefner replied that he only had #09-07 and that if there was any confusion about what was before them he would suggest that they not move forward with the hearing.

President Higgins asked Mr. Bruce if Mr. Hefner could get a copy of what was distributed to them.

Mr. Hefner explained that he had the handout but that it did not include an ordinance. 

Councilor Kirkpatrick explained that the handout was the proposed expenditure reduction. 

Mr. Bruce explained that the information in the packet handed out this evening was a direct response to the several questions from last night’s Finance Sub-Committee.  He further explained that he needed direction from the Council before the ordinance could be finalized. 

President Higgins informed that they would be working off the original ordinance.

Councilor Kirkpatrick asked as a point of order if they needed to withdraw their previous motion. 

Mr. Hefner replied yes.

MOTION BY COUNCILOR KIRKPATRICK, SECONDED BY COUNCILOR ACKERMAN AND IT IS UNANIMOUSLY VOTED TO WITHDRAW THE AMENDMENT.  VOTE 6/0.

President Higgins informed that he was going to only being reading line items that have a proposed amendment. 

Property Tax Revenue–from Council’s Adopted Budget of $51,118,827 to the proposed amended budget $50,730,475

Licenses, Permits & Fees–from Council’s Adopted Budget of $1,183,915 to the proposed amended budget $945,915

Investment Income–from Council’s Adopted Budget of $30,000 to the proposed amended budget $100,000

Mr. Bruce explained that the worksheet distributed reflected $120,000 instead of $100,000.

Miscellaneous Income – from Council’s Adopted Budget of $867,700 to the proposed amended budget $927,700

Total General Revenue – from Council’s Adopted Budget of $54,518,442 to the proposed amended budget $54,022,090

Councilor Kirkpatrick asked Mr. Bruce to please point out where the handout shows the change to the investment income from $100,000 to $120,000.

Mr. Bruce stated that it appeared on the sheet titled proposed expenditure reduction about three quarters of the way down the sheet listed at the bottom over total amount of $85,000 was the addition.

Councilor Kirkpatrick stated that the amount he has on page 10 of the proposed budget of $115,000 was correct, not $120,000.   

Mr. Bruce explained that all changes such as that have a yellow highlight over them which would be the difference between the originally submitted amendment and what they are examining that evening. 

Councilor Kirkpatrick pointed out that on ordinance #09-07 under Rescue Revenue showed $400,000 but on the proposed expenditure reductions the line item showed $130,000 but page 10 of the proposed budget the Rescue Revenue line item listed $545,000.  He asked Mr. Bruce if that number should be changed from $130,000 to $145,000.

Mr. Bruce agreed that the number should be $145,000.

President Higgins mentioned that it seemed that there were several other changes then were proposed so procedurally he didn’t know the best way to handle it and that having an amended ordinance drafted might have been helpful. 

Councilor Kirkpatrick explained that he might have misunderstood but he had thought that during the Finance Sub-Committee meeting they had requested revised numbers to #09-07 so it would reflect accurate numbers as they went through it.  He stated that he wasn’t sure what they best way to proceed but suggested going through each line item.

President Higgins stated that if Councilor Kirkpatrick preferred he could read them off; he would have no objection.  He added that in general his experience in the past has been with respect to revenue was that if they weren’t going to amended these lines then because they didn’t have an amended ordinance he didn’t see the point of it because they won’t have anything to follow.  He informed that the public had been handed a sheet that they received.

Councilor Kirkpatrick stressed that the Finance Sub-Committee at that point is not ready to make any suggestions but if there were any changes to be made they would prefer to make those changes at tomorrow evening’s second hearing.  

President Higgins went on record that the Council was operating on a very short time table.  He explained that they received the State’s budget changes last Tuesday since then the Council has already received 3 version of the proposed amendment to the budget and have had a Finance Sub-Committee that had produced some more changes.  He mentioned that all those efforts were for the purpose of reducing the pain as much as possible.  He pointed out that the he would like to have a meaningful hearing and in the past people have not spoken on revenue lines but would go back and point out the items that potentially could be considered at that stage of the proceeding. 

Amount approved for Interest on Taxes may be decreased from $310,000 to $281,000

Amount approved for Probate Fee may be decreased from $38,000 to $28,000

Amount approved for Municipal Court Fees may be decreased from $110,000 to $64,000

Amount approved for Investment Income may be increased from $100,000 to $115,000

Amount approved for Rescue Revenue may be increased from $400,000 to $545,000

Proposed additional line of Revenue titled, Proceeds on Land Sales generating $10,996

Councilor Kirkpatrick asked Mr. Bruce to review the Miscellaneous line item because in page 11 of their handout reads total miscellaneous $817,700 but it was carried over to ordinance 09-07 as $867,700.  He questioned whether that $50,000 difference was a mathematical error or was it a $50,000 difference.  He also questioned the amount of $927,000 for the proposed amended amount on ordinance #09-07 but again on page 11 of the handout for year end 6/30/2009 it is listed as $885,724.

Mr. Bruce addressed the question of the $817,700 versus the $867,770 by explaining that the document was a set of 3 levels and the ordinance in the budget book draws on any account that they define.  He added that in addition to miscellaneous it drew on account of payment in lieu of pilot with a budget for current fiscal year of $50,000 on page 10 of the detailed revenue sheet.  He pointed out that they would be changing that next year because Pilot is state aid related. 

Councilor Kirkpatrick asked Mr. Bruce if what he was saying was that the $885,724 total miscellaneous plus the payment in lieu of pilot of $37,478 combined made up the $927,000 in the ordinance 09-07 as the proposed amended number.

Mr. Bruce stated that he needed a moment to look at that.   

President Higgins asked if they had any idea at this point in terms of what the revenue total for the amended budget is going to be because under the initial ordinance the number was $54,022,090.

Mr. Bruce replied that he doesn’t have that calculated total at that time as it was they had scrambled all day just to get the main items that were requested as a result of the Finance Sub-Committee hearing which were valuable where over $200,000 was identified but over 25 accounts were affected.

President Higgins stated that then it was possible that the total revenue line is $54,222,090, and he is not holding Mr. Bruce to that number because he knows that they had a Finance Sub-Committee meeting that lasted until 10 p.m. last night and he had just today to put paperwork together in response to their questions.  He went on record to say that they reason for proceeding on this time table was because they would like to get the information to the billing agencies by Thursday so that they can get the bills out on time.

Mr. Bruce explained that Rescue Revenue would be increasing over $100,000 that alone along with the other highlighted number an increase to the total revenue of $200,000 would be a good approximation.

Councilor Kirkpatrick stated that he still didn’t comprehend where the $927,000 came from because the numbers that correlate on the proposed budget was $867,700.

Mr. Bruce stated that the original ordinance #09-07 as well as the original adopted budget does not have that $927,000.

Councilor Kirkpatrick confirmed with the rest of the Council that they had the same figures in front of him that he was referring to which they all did confirm they did. 

President Higgins asked Councilor Kirkpatrick of he could please show Mr. Bruce what documents they have before them.

Mr. Bruce explained that one of his staff had a $60,000 item that was moved from the School Department Miscellaneous back into their line item but the detail on any of these amendment sheets doesn’t show that $60,000.  He pointed out that he has gotten great help from his staff but needed to consult with them to find out why it is $927,000.

President Higgins asked if the $817,700 plus the pilot constitutes the $867,700 in the adopted budget.

Mr. Bruce confirmed that was correct.

Jeff Mutter from 15 Kent Street was present and asked if there was a mistake on page 11 under meal tax because $212,102 was listed as actual and then there is an estimated $123,619 which if added together wouldn’t come to $270,000.

Mr. Bruce explained that he would correct that but pointed out that it didn’t affect the amendment.

Mr. Mutter also questioned page 9 of the property taxes for 2007 where they show that they projected $350,000 and budgeted $335,000 but by the audit there was $905,372 to collect so he wondered if that was a normal performance of a tax bill that is only a couple of years old.    

Mr. Bruce explained that he usually goes about a third of year three out except this year the collection efforts have been significantly different.  He added that the $350,000 was the amount before the tax sale, which will take place on Thursday and leading up to the tax sale is when they make all the money. 

Amount approved for General Revenue Sharing was decreased from $1,103,654 to $599,651

President Higgins asked Mr. Bruce how much the State took away from the Town. 

Mr. Bruce replied that the State took away $504,003.

Mayor McKee clarified that there was an excess of $700,000 reduction.  He further explained that after the budget closed last year, they lobbied for additional dollars in that General Assembly because they had calculated the reimbursement formula which he had them correct.  He added that as a result there was an additional $200,000 put back on so their actual numbers was $1,000,003 which was reduced below $600,000.  He mentioned that their net change there was $700,000 but in their budget that was based on it was $500,000.  He believed that the clarification was important in terms that money was in there and they anticipated some level of cut and they would have made those adjustments at some point when they amended the agenda.

Mr. Bruce informed them that all of the Towns/Cities in the State have lost some percentage of their total assessed motor vehicle in a range between 15 to 25 percent with Cumberland losing 20 percent.  He mentioned that the tax worksheet for the tax levy resolution shows $124 million, they were at $150 million, meanwhile they already know that motor vehicle phase out for next year will equal this year.  He clarified that meant that they will be losing revenue and are not getting compensated for it from the State.

Mayor McKee added that when we were reduced that $68,000 there would be no way to recover that so the State has reduced the allotment that they were going to reimburse which he argued was an unfair allotment back into their community where they are actually subsidizing property taxes in almost every community in the State.  He explained that they have asked the General Assembly that if they are going to reduce the amount of money they are going to give to the communities in a vehicle reimbursement then they should allow the communities to choose whether or not they want to collect that money.  He clarified that the $68,000 can’t be recovered inside the vehicle excise tax that they actually tax locally because they are restricted to increase that tax.

President Higgins announced that there was also a change in the School Housing Aid with the adopted budget amount of $1,385,226 was increased in the ordinance to $1,746,602.  He requested an explanation for the increase.

Mr. Bruce explained that the High School construction project was reported by the High School Business Manager to RIDE earlier and the substantial completion was captured in this year’s cycle which they didn’t expect.  He further explained that RIBEC, which has the school bonds, where more than half of their housing aid which comes directly from RIBEC not the State. 

President Higgins asked what RIBEC was.

Mr. Bruce explained that RIBEC is the Rhode Island Building and Education Corporation that is a State agency mandated with controlling and managing all public financed debt. 

Amount approved for Vehicle Phase Out was decreased from $2,856,038 to $2,787,441. 

School receipts stayed the same

Library receipts stayed the same

Amount approved for Total Revenue may be decreased from $77,962,229 to $77,254,653.

President Higgins asked if there was anyone who wanted to speak regarding revenues, hearing no one he moved on to the Expenses.

Amount approved for Mayor’s Office decreased from $162,700 to $161,566

Amount approved for Town Clerk decreased from $278,230 to $276,292

Amount approved for Town Council decreased from $37,900 to $37,636

Amount approved for Town Solicitor decreased from $198,817 to $197,432

Amount approved for Municipal Court decreased from $46,554 to $46,230

Amount approved for Board of Canvassers decreased from $64,294 to $63,846

Amount approved for Total Expenses General Government decreased from $806,127 to $800,634

President Higgins asked if there was some type of formula used in reducing these line items.

Mayor McKee explained that they reduced these lines by 1 percent across the board.

Amount approved for Planning decreased from $205,671 to $204,238

Amount approved for Zoning Board decreased from $54,544 to $54,164

Amount approved for Total Community Development decreased from $260,215 to $258,402

Amount approved for Finance Office decreased from $549,098 to $545, 272

Amount approved for Collections Department decreased from $179,367 to $178,117

Amount approved for Tax Assessor increased from $143,146 to $180,149

Mr. Bruce explained that the increase was related to acquiring legal engineering and appraisal services related to tax challenge cases primarily Pawtucket Water.

,

Amount approved for Total Financial Administration increased from $871,611 to $903,538

Amount approved for Police decreased from $3,694,362 to $3,653,013

Amount approved for Telecommunication decreased from $295,768 to $295,269

Amount approved for Rescue Service decreased from $1,351,674 to $1,342,257

Amount approved for Animal Control decreased from $131,363 to $129,698

Amount approved for Total Public Safety decreased from $5,473,167 to $5,420,237

Amount approved for Inspections decreased from $156,041 to $154,954

Amount approved for Public Works decreased from $2,319,212 to $2,303,056

Amount approved for Highway decreased from $1,710,117 to $1,672,117

President Higgins asked if the Highway total include the snow removal.

Mr. Bruce replied that yes it does include snow removal and the Public Works includes trash pick up.

Amount approved for Town Hall decreased from $157,162 to $149,151

Amount approved for Recreation decreased from $284,227 to $246,246

Amount approved for Total Public Works decreased from $4,626,759 to $4,525,524

Mr. Bruce explained that the decrease in Recreation includes $36,000 that was money left over from summer camp at the beginning of the year. 

President Higgins stated that as far as snow removal he expected that there was a significant increase in their estimated cost so he asked Mr. Bruce if they were comfortable reducing that line item.

Mr. Bruce replied that they were comfortable with that.

Amount approved for Library decreased from $1,195,267 to $1,186,956

Amount approved for Senior Citizens decreased from $169,016 to $167,837

Amount approved for Transfer to Sewer $0 to $161,298

Mr. Bruce explained that the transfer to sewer is for debt related interest budgeted at zero in the current year and the proposed amendment calls for this year’s interest debt to be transferred from general fund to the sewer fund.

Amount approved for Total Other Departments increased from $1,434,183 to $1,585,991

Janet Levesque, the Library Director, was present and informed that they aren’t concerned so much with the issue of reduction that was being proposed in the revised budget for this year except for that it established a new benchmark for a level funded budget for next fiscal year.  She explained that if they had the opportunity to review the Library’s budget presentation for the next fiscal year they would have noticed that this line item that is being reduced by $8,311.00 was a line item which they hoped to effect $5,000 worth of savings in next year’s budget.  She added that if the reduction was approved as she anticipates it will instead of a realizing a savings of $5,000 they will have to increase that budget by $3,600 just to reach the reduced funding appropriation that was in their proposed budget.  She indicated that with that $3,600 they have to achieve level fund plus a reduction in State Aid next year in Library Grant and Aid of $6,300 which is $10,000 they would need to level fund if electricity wasn’t going up.  She updated that their electrical supply rate is going up 58.9 percent so they expect that although they anticipated reducing their electrical budget next fiscal year by $10,600 now they are going to have to increase it by $15,700 so in order to level fund their budget they need $26,000 next year if they need continue to light and heat this facility.  She stated that she wanted the Town Council to be aware of the impact of what is going to happen if they have to level fund their budget.  She pointed out that she has not had the opportunity to discussion with the trustees some of the options such as close the meeting facility, only operate it on a very limited time schedule during the week, or to charge every group who uses the facility. 

Jeff Mutter stated that he was obligated to speak against the transfer to sewer appropriation of $161,298 and asked them to affirm their previous votes for the 2007-2008 and 2008-2009 budgets which was to make it zero.  He explained that there was a betterment to the community for being sewered but the community had paid that betterment many times over. 

Mayor McKee explained that would become a negative because it would be a negative to sewer budget and historically the Town has paid the interest on all sewer debt.  He further explained that there was an adjustment a few years back but that is one way they were able to make an adjustment into a fund which they have already made adjustments to get them to this point.  He reminded the Council that they have made some substantial changes inside of the sewer assessment just to cover debt levels that have been borrowed from the general fund. 

President Higgins asked what the impact would be to the sewer fund in this fiscal year because when they proposed it originally at $132,480 and now it is up to $161,298.

Mayor McKee replied that this year they are running another deficit in the sewer department so this would add another $161,298 to the deficit.

President Higgins asked if the change in the rates consider the $161,298; in other words was that part of the formula.

Mayor McKee replied no but it was discussed the only problem would be that no one can figure out the final dollars needed into the sewer issue to retire a $1.4 million debt.

Mr. Mutter added that the sewer fund owes the general fund more than that and he wouldn’t have a problem with this payment if the assessment equaled principals on the debt service.  He clarified that if it is to pay the interest then the assessment should pay the principal but the assessments are no where near paying the principal so when the sewer fund lost money which it lost money over and over and it was picked up by those who do not have sewers.  He asked them to look at it as they own those people money and this would be a credit to what they owe them.  He stressed that there is a well know fact that there is a structural problem and this just adds insult to injury when they charge them again.

President Higgins stated that he believed that the Administration has acknowledged that by some of the proposals that they have implemented. 

Mayor McKee added that the Council has passed proposals such as the sewer lot development fee, a fee that relates to bumping up the user fee to offset deficits and this is one area that is more art than science.  He also stated that all the years that they have looked at this issue there is no definitive way to zero in on the perfect solution but he believed that the Council has passed appropriate legislation. 

Mr. Bruce explained that the assessment this year were billed out at $630,000 but next year it would be less than half at $300,000 so right now they are spiraling down as the 20 year assessments are being paid and coming to an end.  He indicated that they are ending at a very steep curve and with the ordinance that they passed they have gained traction except for the sewer use billing but hopefully next year there would be a rebound in the housing market. 

Councilor Lemois asked if his understanding is correct that for those ordinances they passed there is a five year estimate for pay off.

Mr. Bruce believed that it was seven years.  He also added that in spring of 2008 the sewer fund rating agency reports’ lead factor was that sewer and water funds are in trouble and need to be cleaned up.  He reported that Moody’s said that if they could clean up sewer and water the negative outlook they gave their A3 rating would go away.

President Higgins asked if that rating was for the whole Town.

Mr. Bruce replied that it was for the whole Town but it was the secondary credit outlook and rating.  He added that they went from stable to negative.  He explained that Moody’s and S&P stated that they have the sewer and water enterprise funds that are really going for a free lunch on the general fund because these funds owe them money.  He pointed out that they go for $2 million on emergency TANS last week, they are going for much higher TANS this coming July and last year was higher than the year before.  He stressed that the reason is because water and sewer’s deficits are grabbing their cash flow so if this current fiscal year’s budget outcome needs that $161,298 (which he believes it does need it) for that reason alone they will put this on notice that they were stable and now we’re negative. 

President Higgins stated that the cleaning up the bond rating agencies are referring to included the amendments to the sewers.  He asked if he understands correctly that if they took that $161,298 out of the surplus there is money reserved to pay that because he wasn’t sure he followed what that was about. 

Mr. Bruce simplified it by stating that it is either in the budget or not but if it is in the budget through this amendment then it transfers over to sewer. 

President Higgins asked if they could add a revenue item of $161,298 and transfer it from surplus.

Mr. Bruce replied that the amendment proposed is balanced and it is based upon all the overages of certain revenues, under spending of certain accounts and over spending certain accounts.

Councilor Kirkpatrick asked if the sewer fund would run a deficit if they were to take out the payment of $161,298. 

Mr. Bruce replied that was correct but it would help lessen the deficit.

President Higgins asked if doing so would solve the bond rating issue in the one month period.  He stated that he understands Mr. Bruce’s valid argument but the question is if it has to be done in this one month period.

Mr. Bruce replied that he can’t argue that it will solve the problem but he does want them to keep in mind and instead of having a $500,000 or $600,000 deficit they could just cut that down while watching the ordinances next year as they gain traction and hopefully they are successful with their revenue expectations.

Councilor Kirkpatrick indicated that is fine 2010 but for 2009 the ordinances they passed aren’t going to do much for 2008-2009. 

Mr. Bruce pointed out that Moody’s will only analyze them if there is a bond issue and right now there is nothing on the table for that.

Councilor Kirkpatrick stated that he knows that for fiscal year 2007-2008 the Council zeroed out the transfer to sewer amount but he asked Mr. Bruce if he knew what was originally proposed for that year.   

Mr. Bruce replied that he did not have that information with him.

President Higgins again asked if this payment has to be done in this amended budget or could wait until the adopted budget. 

Mayor McKee stated that all he can say is that the Council passed some legislation to address to the best of their ability the deficit that has preexisted and that they anticipate continuing to exist.  He added that historically when the Council decided that the sewer fund was going to pick up the interest expense when they had none of that legislation in place, philosophically he disagreed with it which he expressed at the time because they took a payment that historically has been paid by the general fund then it was switched.  He believed that the switch was made because the Council was tired of paying the interest when every year it is accumulating a huge deficit which exasperated the problem even more in terms of the deficit and as a result they passed the legislation.  He clarified that it would be a move of a line item but the bill will still have to be paid which will end up being the general fund because the deficit in the sewer fund will only increase. 

Mr. Mutter stated the difference is that no one wants to increase the assessments.

President Higgins pointed out that they did just increase the assessment.

Mr. Mutter argued that they did not; instead what they did is put in place a plan to pay back the accumulated deficit which has nothing to do with the new deficit that they are going to incur this year.  He pointed out that the difference is going to be how much money they are going to lose because no one wants to touch the root cause of it, that is, to send an extra bill out. 

Councilor Lemois stated that he understood that these ordinances they put in place were going to start paying the structural debt that they have had for the last 20 years.

Mayor McKee responded that there are no guaranties but they did the best that they could based on the numbers.   

President Higgins asked if over seven years their numbers accomplish what they seek to accomplish would they still need a little item in their general fund budget that reads transfer to sewer.

Mayor McKee responded that they will continue to have the transfer to sewer as long as they are not bringing in enough assessments to cover the principal.  He explained that the idea was to bring in enough revenue over a reasonable period of time so that the sewer fund was actually paying back.

President Higgins stated that ultimately it would never get resolved.

Mayor McKee clarified that if they collect the money from the ordinances established they are going to get a lot closer.  

Mr. Bruce interjected that yes it would get resolved and explained that it would be resolved in 2018.  He added that the annual debt service steadily decreases so if they assume there will be no more major sewer lines just with the existing lines that are being serviced with debt in would be resolved in 2018.

Mayor McKee pointed out that if it was an easy issue it would have been esolved years ago.

Amount approved for Contingencies decreased from $40,000 to $20,000

Amount approved for Capital Improvements decreased from $95,900 to $75,900

Amount approved for Total Other Expenditures decreased from $372,400 to $332,400

Amount approved for Debt Service Town decreased from $1,613,229 to $1,337,497

President Higgins asked for an explanation on how or why debt service for the town was reduced.

Mr. Bruce explained that the legal judgment bond that issued last year had an estimate going into the budget process and that estimate turned out to be much improved due to interest rates.  He added that also the fact that the Open Space Fund is bearing the cost of the final Gainsborough land acquisition.  He pointed out that now that they are now done with that loan they out right own it but it took that expense of the general fund where it was previously recorded. 

Amount approved for Total Other Financial Expenses decreased from $10,289,800 to $10,014,068

Amount approved for Total Town decreased from $24,134,262 to $23,840,795

Mr. Bruce noted that they saw several changes on the revenue side but for the expense side only two individual line items were changed. 

Councilor Albuquerque asked for an explanation of the Town Master Lease line item.

Mr. Bruce explained that the Town Master Lease line item of $213,000 pays for the Town’s portion of the 2008 lease.  He detailed that the Town’s portion of the lease is $177,036 and the School portion of this payment is $78,116 which will be accounted for in the school related lease account amount budgeted at $211,600.  He added that in terms of the $211,600 capital/lease account located in the school appropriation section of the Town’s general fund budget would fund the school portion of the lease payment as well as the first payment on the second lease that to date has not been executed.  He pointed out that it would really be up to the School Administration and School Committee what the remainder of the $211,600 would be used for because he doesn’t believe it is restricted to capital and it may or may not be spent.  He explained the School unrestricted fund has a fund balance designated item for the B.F. Norton School roof which was an encumbrance left over from last year’s funds.  He also explained that the payment in October on the Town side for $111,600 has been charged to the Liability Account (due to due from Account) to the School Department so Norton Roof has no relationship with either of these accounts. 

Councilor Albuquerque asked if that meant that the School Department has the $211,600 and $78,116. 

Mr. Bruce responded that was incorrect and actually he meant that $78,116 would come out of the $211,600.

President Higgins asked what the $213,000 was for because he just stated that $78,116 was for a school item that was accounted for in another account.

Councilor Albuquerque added to President Higgins question by stating that then they have another line item for $211,600. 

Mr. Bruce replied that the lease payment this year is $255,000. 

President Higgins asked what lease payment because they do not have these figures itemized. 

Mr. Bruce explained that it was the lease payment for the $3.5 million Elementary School project annual payment of $213,000. 

Councilor Albuquerque asked for a clarification of what the $78,116 is for.

Mr. Bruce replied that it was for the School’s portion which is a list of assets totaling approximately $398,000 for computers and other furnishings.

Councilor Albuquerque asked what that had to do with the $211,600.

Mr. Bruce responded that the school amount of the $211,600 funds that $78,116.

President Higgins asked if they split the cost of it.

Mr. Bruce stated that there wasn’t a split.

Dr. Morelle stated that they weren’t aware of that share until they arrived this evening and saw the budget document.  She pointed out that they heard the discussion of the two master leases last evening during the Finance Sub-Committee hearing but in terms of how something goes from a concept to an execution they are also just hearing for the first time that the $78,116 would be deducted from the $211,600.

Councilor Kirkpatrick stated that they received these documents this evening which are now showing favorable variances.

Mr. Mutter reminded them that the $211,600 was supposed to be two master leases; one for $111,600 and the other was for $100,000 which they combined the two to be B.F. Norton knowing that they were going to execute the master lease and not make a payment.  He explained that it was supposed to be a collaborated event where the School Department was going to pay the $100,000 of the B.F. Norton roof and they were going to pay $111,600 and they had kept it the same knowing that they had got that project done so the $100,000 was going to be the second master lease.  He pointed out that the error or the miscommunication was that Mr. Bruce put it in the Town master lease so the $213,987 was the Cumberland Hill and Ashton School projects.  He added that then Mr. Bruce put the first master lease there when it should have been in the $211,600 line item; as a result the $213,987 will be reduced by $78,116.  He summarized that the $78,116 was always meant to be in $211,600. 

Mayor McKee asked for clarification because he thought the $213,987 was for the first master lease for some $400,000 of computers plus the money they needed to complete Cumberland Hill and Ashton School.

Mr. Mutter stated that was incorrect, that was what was done but that was not what was intended.  He added that it was explained to them one way and executed another but execution is not the Council’s job.     

Mayor McKee asked why the number in the approved budget is $213,987.

Mr. Mutter stated that the budget the Council passed had the $211,600 and the $213,987 was the administration’s number.

President Higgins asked if they could get a clarification by tomorrow and if they don’t get one by tomorrow they would not be voting on the budget amendment.

Amount approved for School Department Town contribution decreased from $36,258,031 to $35,843,923

Amount approved for Total General Fund Expenses decreased from $77,962,229 to $77,369,684

Dr. Morelle started by thanking the Council for convening the joint meeting at the School Committee’s request and also for hearing them out last evening before the Finance Sub-Committee.  She stated that they have made their concern over the last couple weeks that with only a few weeks left in the 2009 fiscal year budget they are going to have to respond to whatever the Council makes that will have some kind of impact on the Fiscal Year 2009 School Department budget.  She added that they would have very little time to recover from the consequences of whatever decision they make.  She pointed out that they have seen budget amendments at this point and time that appear that they made a decision upwards of $414,000 with a negative impact on their budget which they have discussed in specific detail with the Council about what those consequences might be and the immediate upcoming weeks.  She stated that around the School Department budget the concern from a future perspective is a discussion around maintenance of effort which she asked that they take into consideration because there is a compounding problem.  Dr. Morelle indicated that for every dollar that they cut from their budget it effectively reduces maintenance of effort and they will have to reconsider their priorities for the 2010 budget which at this time the School Committee has approved based on certain assumptions they had about the state of the Town appropriation because by their perspective it was very late in the year for a budget amendment.  She also mentioned that by the Charter their budget was due to them quite a few weeks ago so those are some issues that they are all going to face.  She added that they have had a budget freeze in place since February and they have described to them what the consequences have been to instructional materials, textbooks, hiring, all of which they can not recover those impacts to students who have been in the school system this year.  She affirmed that all they can do is only try figure out looking towards the future how they might work together to put whatever damage is happening back in place.  She stated that she hated to describe as such so as to sound exaggerated but the fact of the matter is that the damage has been that whatever plans that they have had by taking a extraordinary conservative approach to their spending has mitigated their ability to put strategies in place that may have had more positive impact on students.  She specified that notwithstanding that fact, they have been able to put certain structures in place that the Council had assisted them with such as their assessment system and communication system with parents which are certainly having a positive impact.  She concluded by asking on behalf of the School Committee, the students in the district and their families that whatever considerations that they can make as they review their final budget recommendations that they be as thoughtful as they have always been. 

President Higgins stated that after the Council’s joint meeting with the School Committee he spoke with the Mayor in great detail about the content of that meeting and the impact on the Schools.  He also stated that they talked about the biggest issue in the State and in the Town as it relates to Schools and School funding. 

Mayor McKee added that the Superintendent made the same argument he made before the State Finance Committee in terms of these cuts for both the schools and the town.  He mentioned that were somewhat fortunate that some of the money was put back in which has been advantageous because if not they would have been dealing with $700,000 less.  He stressed that there are some really serious structural issues that face them but he reminded the Council that last year they were cut about $325,000 which was all absorbed on the municipal side of the ledger and they are reducing essential issues not unlike what the Superintendent just talked about in terms of their operation.  He mentioned that in a way they are dismantling the municipal side of the government as they absorb all the debt service which is problematic and as stated they are all in the same boat, but it is not acceptable to him, that somehow they need to spread the cuts across the entire budget but from a pragmatic point of view it was the only option they had.  He indicated that was the logic that he used and was not meant to come after any particular line item in the budget instead it was meant to try to figure out how to absorb the lose that they received 9 months into the fiscal year.  He explained that they are in the process of making a very strong effort, just as they have with several issues, with the General Assembly to make them aware that the way the money is distributed from the General Assembly into local government is flawed from the vehicle excise tax to the way their general revenue is distributed to the communities. 

Dr. Morelle brought up the issue of transparency as they are trying to find out where the issue of fairness lays and looking at all of the various accounts there seems to be a perception of the figure of $414,000 as the valid to cut from the School Department’s budget.  She stated that she read a quote in one of the papers by one of the Council members that the School Department had a $346,000 surplus that they were predicting that the School Department only had a $65,000 problem so she wanted to go on record clarifying the budget summary.  She explained that it was a hypothetical scenario as to what they believe those accounts might look like which they could fall in line with that but it could be quite different.  She wanted them to be aware that in addition to the money that they are contemplating cutting from the budget there is another line item which is interest income which they had accrued to the revenue side of their budget in the amount of $70,000 that was transferred in essence from their ability of them balancing their budget to the Town’s side of the budget.  She also stated that they have had to bear the burden of the professional development money that did not come to the district this year and while there may be some opportunity to recover that through the fiscal stabilization money they do still have to apply and they are not certain how much of the funds the district will receive.  She stated that they are referring to $200,000 of expenditures that they are going to have to recoup through the general fund. 

President Higgins stated that they are all working with estimates because they still have over a month ahead of them in this budget.  He added that this is an efficient community on both sides and if either side ends up in a deficit it won’t be those particular departments’ fault but it is certainly their responsibility.

Donald Costa, the School Committee Chair, stated that they have been focusing on the State’s reduction but on the educational side they have been notified there was $199,507 that they had in the 2008-2009 budget for professional development.  He recalled that the Governor threw in the mix the Twin River contribution totaling $14 million that the Governor thought was it going to generate of which the Town’s portion was $261,000 that they included in their 2008-2009 budget.  He stated that historically on their budget side for 2008-2009 they have $460,507 in the budget as of February and they have encumbered $98,320 out of the $261,000 from Twin Rivers.  He explained that if they were to deduct $98,320 they still have to plug up $362,187 added to the $414,000 that is being discussed they are looking at three quarters of a million dollars that they are going to have to come up with by the end of the June 30^th fiscal year. 

Mayor McKee addressed Chairman Costa’s reference that the Twin River allocation was in their budget which he didn’t believe it was because that money came in after the budget was approved. 

Lisa Beaulieu, School Committee Chair, shared copies of the information that she provided to the Finance Sub-Committee who were very gracious with their time.  She highlighted on some of the goals that the district has worked on as the School Committee centering on achievement, communication and policies.  She explained that the summary she created indicates the improvements that they have seen in their academic programs one that she mentioned last evening was the A P Course work at the High School.  She elaborated that the High School is proposing an A P Statistics class this year based on student and staff input.  She recognized that they have seen a large increase in the tests administered in the High School.  She mentioned another important bench mark that they thought was a nice improvement which was in 2007-2008 they had 11 A P Scholars compared to 2 A P Scholars in 2004-2005 so they can see with the program changes that they were making over time they are seeing those incremental improvements.  She indicated that another achievement they had at the High School centered on improvements related to their NECAP scores with double digits improvements this fall showing a 23 percent increase in reading, 32 percent increase in writing and a 38 percent increase in mathematics.  She pointed out that they were the recipient of a physics first grant which will help them re-align their course work at the High School with the students beginning physics first then chemistry and then there is a great transition of students into AP biology as compared to the course of sequence now.  She mentioned some other grants that they received.  She concluded that when they had the chance to meet last year over many occasions they talked about the collaborative effort that they needed to have in order to see improvements like this which now they can see the incremental improvements so she hoped that they would be sympathetic to this budget. 

President Higgins asked for some clarification on the School Permanent Improvement Fund.

Alex Prignano, the Business Manager, spoke to the clarification of the School Permanent Improvement Fund by explaining that it was included in their budget.  He added that it wasn’t in the original budget that they transmitted in February because it was a last minute action that the General Assembly took when they added that money for schools at which time they included it and amended their budget with the School Committee in July or August. 

Councilor Lemois stated that in this collaboration they keep talking about he keeps asking and he keeps getting told that the Council will be getting this kind of information because he had no idea that they amended their budget to include another $260,000.

Mr. Prignano stated that he sends to the Town a budget report where it was clearly listed with a narrative.

ADJOURNMENT:

MOTION BY COUNCILOR KIRKPATRICK, SECONDED COUNCILOR DWYER AND IT IS UNANIMOUSLY VOTE TO ADJOURN AT 9:45P.M.  VOTE 6/0.