April 10, 2006 update from Advisory Committee
ARTICLE 29 -- Adoption of Section 18 Retiree Medicare
This Article asks the Town to adopt the provisions of Massachusetts General Laws Chapter 32B Section 18. If adopted,
these provisions would require all eligible Town retirees to enroll in Medicare and a supplemental Medicare health-care
plan if and when they become eligible. Further details of the provisions are found in the Advisory Report to Town
Meeting, page 78.
It is important to note that these retirees would not lose medical benefits as a result of the Town’s adoption of Chapter
32B Section 18. Coverage under Medicare plus a Supplemental Medicare plan are comparable to the active plans. The
Town is required to certify this coverage as part of the Section 18 adoption.
The Town currently provides medical coverage to 883 active employees and 758 retirees.
|
Under 65 |
65 or Older |
Total |
Active Employee |
883 |
0 |
883 |
Retired On Retiree Plan |
0 |
483 |
483 |
Retired In Active Plan |
159 |
116 |
275 |
Total |
1,042 |
599 |
1,641 |
Some retirees are not eligible for Medicare and as such, stay in the active plan. Of the 116 retirees who are 65 or older
and in the active plan, 18 have provided certification that they are not eligible for Medicare. Of the remaining 98,
eligibility must be determined.
The primary purpose of this Article is to reduce the potential cost impact of the many retirees yet to reach age 65 and of
all future retirees, rather than current retirees who are 65 or older. While the Town could realize a small cost avoidance
in the next year, the real potential is in future years.
· For the 159 current retirees who have not reached 65, the savings will occur when they reach 65. Eventually,
assuming most are eligible for Medicare, the Town would have another potential annual cost savings of between
$318,000 and $1.1 million per year by the time that all reach the age of 65.
· In addition, there is the entire group of active employees. Currently 883 of these are in the Town medical plans.
They represent the bulk of the future OPEB liability and also the largest potential for cost savings. Assuming all retire
with eligibility for retiree medical benefits and are eligible for Medicare, the Town’s potential cost saving may be in the
range of $1.8 to $6.2 million per year at 2007 premium rates.
· Additional costs savings may also be realized for the active plan premiums. Because a number of retirees
participate in the active plans, the current rates reflect the increased costs associated with older participants. By shifting
those retirees age 65 to Medicare, the Town may reduce its premium costs.
In discussing this Warrant Article, Advisory explored not only the potential cost savings to the Town, but also considered
the financial impact to the retiree. We were assured that the coverage is comparable, and there is no loss of coverage
for a retiree moving from the active plan to the Medicare supplemental plan.
In the end, we were convinced that this is an important first step for the Town to be able to manage the costs associated
with retiree medical benefits.
Advisory recommends favorable action, 13 to 0.
ARTICLE 35 – Partridge Road as a Public Way
A motion on behalf of a citizen is expected at the Annual Town Meeting for the purpose of making Partridge Road a public way. The residents of Partridge Road, currently a private way, have requested that the Town accept this 370-foot long roadway as a public way and make the necessary improvements to the road.
Situation
Currently, the owner of 15 Partridge Road is building a new 3800 square foot home on the 21,312 square foot lot, which replaces the original 952 square foot home. In accordance with the Town building permit provisions explained in detail below, a review of the conditions of the road was required. Based on the results of the review, the Planning Department determined that improvements to the road would be required of the applicant in order to meet minimum standards for the building project on a private (unaccepted) way. These improvements were estimated to cost just under $50,000. They included 1) widening of road just in front of applicant’s property, 2) installing a drainage leaching basin, 3) replacing the 1-1/4 inch water main and adding a fire hydrant, and 4) restoring the corresponding
trench for that work. In accordance with the Town’s provisions, the owner/builder of the new home was required to give the Town a $50,000 bond to cover the minimum improvements recommended for this roadway.
In this case, the owner of the house #15 Partridge has indicated that he believes that the Town has a responsibility for fire safety and therefore should pay for the upgrades. The mechanism for the Town to absorb these costs would be to have the road accepted as a public way.
Requirements for Acceptance as a Public Way
The improvements needed for making this road public include the widening the roadway to 18 feet in width (minimum for a public way) with full reconstruction of the road, replacement of the 1-1/4-inch water main with a 6-inch main, the addition of a fire hydrant, and the construction of storm water drainage.
The estimated cost of improvements for this roadway is $96,000. Of this cost, a total of $4,575 would be allocated to abutters for the cost of the top course of the pavement construction. (Each of the four property owners on the street would be assessed a betterment of $831.82; three partial abutters would be assessed another $415.91each.). These assessments are in accordance with the approach established by the Board of Selectmen for previous street acceptance projects. The total cost to the Town for this project would be $91,425.
If Partridge Road were to be accepted as a public way, the $50,000 bond would be returned to the owner, and the Town would assume the major cost of $96,000 less the betterments assessments as noted above, for upgrading the entire roadway.
Background on Unaccepted Street Building Regulations
In 1985 the Town Meeting adopted a provision requiring a review of the adequacy of an unaccepted street before issuing a permit for building a new house. In 1994 the Planning Board established the comprehensive regulations for unaccepted street review, which includes evaluation of 1) street conditions by the Department of Public Works Engineering Division, 2) electric service by the Municipal Light Plant, and 3) fire safety by the Fire Department. In 2003 Town Meeting passed a provision to extend this type of review to houses, on unaccepted streets, that increased in size by 50% or more. The builder of the applicable new house is required to pay for the cost of any required improvements.
The Board of Selectmen voted not to support this Article. Unlike many roads presented for acceptance as a public way, Partridge Road is a small dead-end road of three residences. It has driveways for two houses on Oakland Street and one on Putney Road. As it is not a through street used by any other Town residents, the Selectmen felt that the cost to the Town was not justified.
Advisory supports the Board of Selectmen’s decision not to have the Town fund the cost of making Partridge Road an accepted public way. Advisory verified with the Town Fire Department, that the nearest fire hydrant on Oakland Street, which is serviced by a 10” main, would provide fire safety for the three Partridge Road residents today and would have continued to serve had the construction not been undertaken at 15 Partridge.
Advisory felt that when the owner commenced his building project, he was fully aware of his obligations under the Bylaw to meet the minimum standards triggered by the size and scope of his project and that he knew what that cost would be. The applicability of the Bylaws are based on the size of the project, and do not distinguish between individuals privately developing their property, as in this case, and commercial developers. Advisory also believes, although costly to the property owner, these Bylaws have been applied elsewhere in Town and that there is no justification for making an exception, which would set a precedent for other construction projects on private ways.
Advisory recommends unfavorable action, 12 to 1.
MARCH 31 update from Advisory Committee
ARTICLE 17—Park/Highway Building Electrical Improvements
The background and description of this request in written up on page 66 of the Advisory Report to Town Meeting.
This Article requests authorization to borrow $1.2 million to fund the construction of electrical system improvements needed in the Park/Highway building. The cost is based on bids received.
Advisory believes that the proposed electrical improvements are necessary and an important part of overall efforts to rehabilitate and maintain the Town’s infrastructure.
Advisory deferred its recommendation until final bids were received. The amount of the accepted bid was slightly less than estimated.
Passage requires a 2/3 vote.
Advisory recommends favorable action, 13 to 0
ARTICLE 14 – Establishment of Revolving Funds
In past years, the Town has operated with a number of unofficial funds, similar to “revolving funds,” but not formalized as such. The purpose of these types of funds is to appropriate certain receipts and fees for departmental use, and to enable receipts for specific purposes in one fiscal year to be carried over for expenditures for those specific purposes in the subsequent fiscal year. Examples are: fees paid by athletic leagues in May-June for enhanced maintenance of playing fields, but not expended by the DPW until July-August; or donations made by local businesses in the spring for the Town’s “Summertime” concert series, but not expended by the Recreation Department on those concerts until July and August.
Town meeting has authorized these expenditures at Annual Town Meeting through various clauses in the Town’s budget appropriation Article.
Article 14 will bring the Town into compliance with Uniform Municipal Accounting Standards and Commonwealth finance laws, by having Town Meeting formally designate these funds as Revolving Funds under appropriate state statutes. Town Meeting’s authorization must designate the Board or Department that will expend the funds and must place a limit on the amount of funds to be spent in the subsequent fiscal year.
The proposed funds are:
Revolving Fund |
Dept |
Limit |
General Description |
Street Opening Maintenance |
DPW |
$150,000 |
Street opening permit fees and |
|
|
|
bonds used to inspect and repair |
|
|
|
utility trenches in public ways. |
Field Use Maintenance |
DPW |
$100,000 |
User fees to maintain playing fields |
Council on Aging-- Transportation |
Council |
$4,500 |
Bus fees to fund bus expenditures |
Council on Aging-- Social and Cultural Programs |
Council |
$27,000 |
Participant fees to fund programs |
|
|
|
|
Document Fees |
Building |
$50,000 |
Fees paid for production and |
|
|
|
copying of documents and maps. |
Teen Center Programs |
Recreation |
$31,500 |
Admission fees to fund Teen |
|
|
|
Center dances and events. |
Summertime Concerts |
Recreation |
$20,000 |
Business donations used for |
|
|
|
Summertime public concerts on |
|
|
|
Town green |
Controls that would be in place over these Revolving Funds are:
1) The Town’s Chief Financial Officer would approve each expenditure from the revolving funds through the regular weekly expenditure review process.
2) The Board of Selectmen and Advisory Committee may authorize increases to the above limits, should receipts exceed the levels anticipated. Any such increases must be reported to Annual Town Meeting.
3) Town Meeting must re-authorize the funds each year.
Passage of this Article establishing the revolving funds does not impact the Town’s taxes or reserves. However, Article 15 does request an initial transfer from Free Cash for two of the funds to restore amounts previously (incorrectly) transferred from the funds to Available Cash.
Advisory views this change in the Town’s accounting practice as appropriate and notes that control over expenditures from these funds is enhanced by the change.
Advisory recommends favorable action, 11 to 0.
ARTICLE 15 - Appropriations to Revolving Funds
Motions 1 and 2
This Article appropriates $53,300 from Free Cash (previously known as Revenue Surplus) to the Street Opening Maintenance revolving fund, and $69,600 from Free Cash to the Field Use Maintenance revolving fund.
As described in the write-up on Article 14, receipts for these purposes have previously been carried over from one fiscal year for expenditure in the following fiscal year. When the Town closed FY2005, which ended June 30, 2004, the receipts for these two funds were inadvertently transferred to Free Cash. Therefore, street opening maintenance and field use maintenance expenditures have had to be funded from FY06 receipts leaving a shortfall of receipts intended for FY07 expenditure.
This Article will restore the amounts, which were inadvertently removed from those carry-over funds, back to their respective revolving funds.
Advisory views this restoration from Free Cash as appropriate.
Advisory recommends favorable action, 11 to 0.
March 27, 2006 Additional Information to Update the Advisory Committee Report to Annual Town Meeting
ARTICLE 8, MOTION 1 (Page 9 in the Advisory Book)
The School Committee is seeking an FY06 appropriation from free cash (reserves) for $783,652, for unforeseen expenses primarily relating to Special Tuition and Transportation (STT), as well as heating and natural gas.
ST&T expenses in excess of FY06 budget $635,985
Utilities (primarily heating) in excess of FY06 budget $196,845
Spending below budget in other areas (net) ($49,178)
$783,652
The STT budget for the upcoming fiscal year is based on known students who have been identified as requiring out of district placements during the current fiscal year and the costs of those placements. Since the FY06 budget was finalized, 12 students have changed placements, increasing costs by $126,000; and 18 students have been newly placed out of district, increasing costs by $570,000. Offsetting these increases, 7 students who had previously been placed out of district returned to the Wellesley schools and 2 others moved out of the Town, reducing costs by $323,000. In addition, the programs, which house eight of the students placed out of district were granted extraordinary tuition increases (of up to 35%) by the Operational Services Division of the Mass Department of Education.
While the state provides funding for 75% of those costs that exceed four times the statewide average for a regular education student (currently a threshold of about $30,000 per student), these payments are made with a one year lag and thus the FY06 reimbursement is based on FY05 costs. The School Department has applied for special relief funding of up to $100,000 due to the exceptional cost increases. No decision regarding such funding will be made by the State before the end of April at the earliest. The School Department has not counted on any special funding in calculating the above needs, but has agreed that if any such funding is received, it will go toward replenishing Town reserves.
With regard to heating and natural gas, since the School Department is responsible for over 50% of the space in Town buildings, they were particularly impacted by the run-up in heating costs during the summer and fall of 2005.
The relatively small amount of offsetting savings in other costs reflects
1) The cost structure of the Schools – 86% of FY06 budgeted costs were salaries (including for in-district Special Education), 3% were utilities costs, and 7% were ST&T non-salary expenses
2) A $41,719 negative variance in personal service costs driven by $151,000 in costs from lower than anticipated turnover.
3) Expense reductions of $90,897 in areas other than utilities and STT – this represents a savings of approximately 5% versus budget
When the School Department first identified these issues to the School Committee and Advisory in the fall of 2005, a deficit of approximately $1.1 million was projected. This has been reduced due to a reduced number of students placed out of district, some efficiencies in special education costs, a milder than average winter, and the net $49,718 of savings in other cost areas described above.
Advisory recognizes the lack of predictability with respect to the early identification of students who will require out-of-district placements in the upcoming year. We have reviewed the history of STT actual expenses compared to budget and note that it has been highly variable. In some years actual costs have been below budget and in some years higher than budget, but theses variances were not as high as the projected FY06 variance.
The majority of Advisory feels that it would have been difficult to find sufficient monies to cover these increases, particularly late in the fiscal year and that appropriation from reserves is the best available course of action. However, many members feel that Advisory and the Town Finance department should have received more detailed, quantitative information on a periodic basis, including more specifics on potential cost-saving programs. The minority feels that, in view of this lack of “cost consciousness,” the Town should not appropriate additional funds.
Advisory recommends favorable action, 13 to 1.
ARTICLE 8, MOTION 2
The Board of Assessors is requesting a transfer of $10,000 from expenses to personal services for FY 06, which will allow them to hire a new Assessor Technician as of May 1, 2006. This new position will replace the outside consulting firm, which has previously conducted the property reassessment process. Assessments have historically been conducted during the summer, and the transfer of these funds will allow the process to begin on schedule. The Assessors have requested, in their FY 07 budget, the addition of 1 FTE for this new technician position. The additional personal services cost will be offset by a reduction in consulting expenses.
Continuous consultant turnover has challenged the Board of Assessors. The Assessors believe this new position will provide more flexibility in performing assessments during the year, allow the Assessors’ office to be more readily available for assessment appeals, provide a more consistent assessment process and provide better customer service to the Town’s taxpayers.
The new position has been approved by the Human Resources Board. This transfer of funds has no tax impact.
Advisory recommends favorable action, 14 to 0.
ARTICLE 8, MOTION 3
This Motion authorizes the receipt and appropriation of funds paid by Eastern Development to the Town as part of the Linden Square development project.
June 2005 Special Town Meeting approved a Citizen’s Petition brought on behalf of Eastern Development to amend the Zoning Bylaws to establish the Linden Street Corridor Overlay District. The Town also signed a Development Agreement with various Eastern Development legal entities which documented what Eastern Development would provide to the Town, in exchange for the concessions reflected in the Zoning Amendment.
One such concession was that Eastern Development would provide to the Town: $1.2 million for the reconstruction of Linden Street from Rockland Street to Hilltop Road and from Everett Street to Weston Road; and $850,000 for the installation of a computerized traffic loop signal system to improve traffic flow on the loop to include Washington Street, Linden Street, Rockland Street and Crest Road and surrounding streets. The payment is due upon issuance of a building permit for the proposed new Roche Brothers store to be built within the development site.
The building permit and subsequent payment is anticipated within the next several months. This motion is necessary for the funds to be spent for the purposes reflected above.
Advisory recommends favorable action, 12 to 0.
ARTICLE 8, MOTION 4
Motion 4 reflects a FY07 budget deficit of $3,006,761. The Board of Selectmen proposes bringing two ballot questions to the voters for approval of this total amount: an override of $2,961,718 to fund the FY07 operating budget and an additional $45,043 to fund Sunday openings of the Town Recycling and Disposal Facility.
Advisory has reviewed and analyzed the Town departmental budgets in extensive detail and has summarized this analysis in its Report to Annual Town Meeting (The “Pink Book”). Since publication of that report, the budget deficit has been reduced from $4.4 million to $3.0 million through additional expenditure reductions, increased revenue assumptions and a debt exclusion proposal, which would exclude principal and interest payments on borrowings for six infrastructure projects from the restrictions of Proposition 2 ½.
Based on its budget analysis, public commentary and internal discussions, the following summarizes briefly the opinions and recommendations on the FY07 Budget. Further commentary will be provided at Town Meeting.
The majority of Advisory agreed that in general, individual boards and departments have made a good faith effort to come in with responsible budgets and have made additional expenditure cuts in response to the large FY07 deficit situation. If reasonable opportunities for further cuts have been missed, they are not large; or they would require cuts in services and/or major structural changes.
Advisory’s FY07 budget guidelines, consistent with last year’s Town-wide Financial Plan for FY07, seemed unattainable due to unanticipated and unavoidable increases in utilities and Special Education Tuition and Transportation costs, as well as larger-than-forecasted salary expenses for the Schools. The latter effect was the result of a lower turnover of experienced teachers and a restoration of certain previous reductions in response to parental pressures.
Advisory recognizes that Town building projects funded inside the levy limit in past years have forced inappropriate reductions in normal expenditures for operating budgets and annual “cash capital.” Consequently, Advisory strongly supports the proposal to exclude debt service on six infrastructure bonded projects.
In addition, Advisory supports the proposal to commence funding the Town’s post-retirement medical (OPEB) liability as soon as possible. The $600,000 included in the FY07 budget is a small, but incomplete, first step. The majority of Advisory favors an additional override question in the reasonably near future to reflect the true cost of our annual obligation to current and future retirees, and to bring the funding to the full amount necessary to address the liability over 30 years.
The minority does not support the proposed budget and resultant override. They view the FY07 4.2% increase in taxes and current revenues as adequate to accommodate normal spending growth and one-time unpredictable costs. Structural problems with the Town’s economics--including health care costs for active and retired employees; contractual increases in personal service costs, which exceed inflation; and the need to fund previously deferred investments in infrastructure and OPEB liabilities--will generate override pressure for many years. As a result the minority believes that the Town must immediately find efficiencies and further reductions in its annual operating budgets.
Advisory members are supportive of those efforts initiated to address some of the structural budget issues, to look for opportunities to consolidate functions, and to begin the daunting task of reducing health care costs and managing the costs of the Special Education programs.
Advisory recommends favorable action, 12 to 2.
ARTICLE 8, MOTION 5
The School Committee requests authorization to borrow $4,382,735 to fund various infrastructure projects over the next three years contingent upon the passage of a debt exclusion. The funds will be used primarily for repair and renovation needs at the five unrenovated elementary schools.
In response to concerns raised in the past by Town Meeting, the School Committee hired Symmes, Maini and McKee Associates (SMMA) in June 2005 to evaluate the existing conditions at the five unrenovated elementary schools (Fiske, Hunnewell, Schofield, Hardy and Upham). The task of SMMA was “to develop an overall master plan for renovations and/or upgrades to address the space needs, enrollments, and building infrastructure needs of the Town.” SMMA recommended a list of short-term capital repairs and improvements to be undertaken over a five-year period, during which time a longer-term plan for these buildings could be developed based on more certain enrollment projections.
The total amount being sought under this Article would address infrastructure needs, other than the high school, that the School Committee has prioritized and identified to be undertaken in FY08 and FY09. The capital needs for infrastructure repairs in FY07 are covered in their capital portion of FY07 budget. In general, the infrastructure items relate to the repair and/or replacement of the building envelope (roof, windows, doors, ceilings, floors) and building components (electrical, plumbing, hot water systems, ventilation, boilers) at the five identified elementary schools. With the exception of $250,000 to cover short-term repairs to the roof, identified repairs and renovations at the high school will be addressed as part of the larger high school project.
FY08 Request $4.404 million
FY09 Request 1.669
Subtotal FY08 and FY09 Infrastructure 6.073
from Five Year Capital Plan (page 151 of Advisory Report)
Less high school items,
except for $250,000 contingency for roof repairs (1.690)
TOTAL $4.383 million
Advisory commends the School Committee for responding to Town Meeting and defining a comprehensive five-year infrastructure plan for the elementary schools. Advisory supports moving forward with the first three years of this program through the items included within the FY07 budget and the inclusion of the FY08 and FY09 programs within the proposed debt exclusion.
Passage requires a 2/3 vote.
Advisory recommends favorable action, 14 to 0.
ARTICLE 8, MOTION 6
(formerly Article 9; more detailed write-up on Page 50 in the Advisory Book)
This motion, introduced by private citizens, seeks an appropriation of $75,603 to keep the Hills and Fells branch libraries open for FY07. The citizens have expressed the intention to raise private funds in order to reduce and eventually eliminate the public funding necessary to support the branch libraries in the future. The total cost of operating the Branches for FY07 is projected to be $102,301. Contingent on the successful appropriate of the requested $75,603, the Library Trustees would be willing to supplement that amount by using FY 07 funds ($26,698) that are currently budgeted to close the branches.
The majority of Advisory recommending unfavorable action does not believe that the Branches can be considered a priority worthy of continued Town funding. They note that the Branches provide only limited hours and services to a small percentage of total patrons and that the Library Trustees have determined that providing adequate services at the Main Library is a higher priority than funding for the Branches. They believe it is imprudent to continue Town funding on a year-to-year basis while awaiting the possibility that an adequate endowment may be established. They are also concerned that the endowment is only intended to cover operating costs – leaving the Town responsible for future capital expenses.
The majority of Advisory recommending unfavorable action does not believe that the Branches can be considered a priority worthy of continued Town funding. They note that the Branches provide only limited hours and services to a small percentage of total patrons and that the Library Trustees have determined that providing adequate services at the Main Library is a higher priority than funding for the Branches. They believe it is imprudent to continue Town funding on a year-to-year basis while awaiting the possibility that an adequate endowment may be established. They are also concerned that the endowment is only intended to cover operating costs – leaving the Town responsible for future capital expenses.
The minority believe that the Branches are beloved by many and that the voters should have an opportunity to decide whether to continue Town funding, particularly if it increases the likelihood of being able to raise an endowment.
Advisory recommends unfavorable action, 10 to 4.
ARTICLE 8, MOTION 7
This Motion specifies that $185,216 of FY07 School Committee capital, appropriated under Article 8 Motion 4, be funded from unencumbered funds. This Motion does not increase the Town’s appropriation to School Committee capital or increase the FY07 deficit. It simply designates that the Source for the above amount be unencumbered funds.
Unencumbered funds are prior Town Meeting appropriations, which are not needed and are returned to the Town as a source of funds, reflected in the Town’s Sources and Uses statement. In this case, certain prior appropriations for compensated absences, primarily unused vacation time for departing Town employees, are not needed. The Town has followed the accounting practice of transferring unencumbered funds, when they occur, to a specific use in the annual operating budget. In this case, the specific use is School Committee capital.
Advisory will make its recommendation at Town Meeting.
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