FINANCE CONTROL BOARD,     May 3, 2006 

 

Present:  Thomas Gloster, Chairman Alan LeBovidge, Mayor Charles V. Ryan, City Council President Jose Tosado, Jake Jacobson, City Clerk Wayman Lee.

 

Chairman LeBovidge:  ....-fully, I just want to indicate that after we have the public meeting, the control board will be going into executive session to discuss litigation, and, I guess, negotiation matters, and we will not be coming back from that executive session.  With that, the first item on the agenda is to approve the minutes of the February 28 meeting.  Does anybody have any changes or comments?

 

**        MINUTES APPROVED UNANIMOUSLY

 

OK, I’ll turn it over to executive director Phil Puccia.  We have several items on the agenda, and I’ll let you pick and choose which way you want to deal with them.

 

Small Personal Property Account Exemption

 

Phil Puccia:  I’ll try to stick to the order of the agenda we have here, sir.  Item II is the adoption of a small personal property account exemption.  It will really allow us to use our judgment on sending out tax bills that cost us more than more money to send out than we’ll ever receive, and for the presentation, I’d like to introduce the assessor, Ritchie Allen and Christine Solnier. 

 

AL:  Come on down.

 

PP:  You guys can sit here.

 

Ritchie Allen:  Just by way of introduction, our personal property total value is $412,000,000.  We have in excess of 4000 personal property accounts.  I would like to note that our top ten accounts comprise about 78% of the value of that $412,000,000.  It’s actually about $324,000,000 of that.  So we receive a lot of levy from those top ten, and then there’s the vast majority of smaller accounts yielding much smaller amounts.  Just by way of context, I just wanted to offer that, and Chris has a presentation.

 

Chris Solnier:  Well, in looking at the personal property accounts, the accounts that are below $500. in value generate a minimal amount of tax.  They generate $1,150 total in tax.  They take the same amount of time and attention from both the collector’s office and the assessor’s office.  And, for instance, a $20. value—the values are ranging from $490. down to $20.—a $20.value generates a $.66 bill. 

 

Thomas Gloster:  What’s the tax rate?

 

CS:  The Tax rate is $33.02 per thousand on the commercial rate, and personal property’s taxed...

 

AL:  Most of it’s commercial, right?

 

CS:  Yes.  So it doesn’t seem cost effective to send out bills.  And I had...the deputy collector has done an analysis of the cost of the bills, and this is strictly their department alone.  It does not include the computer operator’s time or the assessor’s clerical time, and the cost of each bill is approximately $.55 per bill for each mailing.  So we suggest that you waive this amount of tax.  If we take the $1,150 and subtract the cost of mailing, you’re actually waiving approximately $890. in taxation, but it also would make the taxpayers happy not to get a bill for $.99 and I’m sure it would make the CFO happy as well.

 

AL:  OK.

 

CS:  I’m prepared to answer any questions you may have.

 

Mayor Ryan:  I move we take that action.

 

**        MOTION PASSES UNANIMOUSLY

 

AL:  Go get ‘em.

 

CS:  One notation for the record, I believe, in the ordinance that was prepared, it should refer to Chapter 59, Section 5 and not Section 4.

 

AL:  Five?

 

CS:  Yes.  Section 5, Clause 54.

 

AL:  OK, fine.  OK.  Thank you very much.  With postage going up, you’ll save more.

 

CS:  Yes.

 

Purchasing Department Study

 

PP:  OK.  As you know, gentlemen, we’ve been in the process of reviewing all of the city departments by department.  Today, we would like to present to the board our review of the purchasing department in Springfield.  The City has again chosen Matrix to do this study.  Susanna Lee here is going to give the presentation on behalf of the firm.  And, at the risk of just telling a little bit about what she’s going to talk about, we see the same sort of theme over and over again in our reviews of all of the different departments which is the, you know, the requirement for investment in technology and being able to have a system of accountability.  So, having said that, Ms. Lee.

 

SL:  Thank you.  Good morning.  Let me just take a few moments to talk a little bit about what we were asked to do and how we did it before I talk about our findings and recommendations.  What we were asked to do was to come in and look at your purchasing department and its operations to get a good understanding for, you know, how you were staffed, how you were organized, what your workload is, what kind of issues that were associated with use of technology or lack of technology and really get an understanding for what was going on as of the moment we started the study of the department. 

 

We were also asked to compare the operations in the purchasing department to other municipalities as well as best practices which are comprised of industry standards as well as practices we’ve developed as a firm for 30 years.  We were also asked to, based on these issues or these stages, to look at what were the major issues or concerns based on your operations, again, compared to best practices in other municipalities, and we were asked to come up with alternatives or solutions to those key issues.

 

            How we went about the study is we came in and interviewed.  We did extensive interviews; we interviewed all staff in the purchasing department as well as other departments, key finance functions like the CFO’s office and the auditor to get an understanding of really how the process interfaced with other departments and how it operated and any issues or concerns from the step-back kind of big picture. We also, with the assistance of the purchasing department, collected data, and that included the plan of organization, your staffing rules and responsibilities, job descriptions, classifications, an understanding of various workload measures like your purchase orders, your informal bids, formal bids, emergency bids, things of that sort, also compliance activities.  Basically, anything the department was doing, we tried to be able to understand it and quantify it to the best that we could and at least be able to document that. 

 

Then our other big step after that was to basically do a comparative survey and a best practices assessment, again comparing the operations in the city of Springfield to these industry standards like use of technology:  Are you able to approve and pass on purchase orders on line?  Are you able to check vendors’ status on line?  Turn around times for purchase requisitions (purchase order requests), training both of staff as well as customer departments.  So we did that, and that was a good way for us to, at least, flush out what you’re dong well, what the department was doing well as well as what are opportunities for improvement.

 

            Based on that document or that assessment, we analyzed what the workload and staffing levels were based on what they should be in this best practice, and we developed recommendations based on these alternatives and these standards. 

 

So, before I talk about where your improvement opportunities are, let me just take a moment to tell you about what the department’s done recently to address some of the issues.  One, they’ve implemented some additional internal controls over the data base that purged about 30,000 or about 75% of the inactive vendors or vendors in the data base which is a phenomenal amount.  There were about 42,000 vendors in the data base, so they’ve purged about 75% of them.

 

CVR:  42,000??

 

SL:  Yeah, so 11,000 and they’re weeding through the rest. 

 

They’ve developed a policies and procedures manual which does a good job of presenting what the rules and regulations are, compliance with state law, state and federal laws, and as well as some policies and procedures, but, as I’ll mention later on, there are some opportunities to really expand that.  They’ve begun training staff.  I think, beginning in January, a couple people including the CPO, have gone to training sessions that are put on by the Inspector General’s Office.  And they’ve also taken some steps to increase your purchasing power through competitive bidding, use of state contracts, establishment of price agreements for things like office supplies, paper products, things of that sort, so they’ve taken some steps to increase the performance or the service level provided by the department .

 

            With that said, I’ll take a couple of moments to talk about our findings and recommendations.  Let me step back for a second and talk a little bit about what are the big picture issues were.  As Phil mentioned, you’ve got some issues with technology, not just in this department, but citywide, and that’s really caused the department to be process-oriented and really receiving paper, you know, checking it off, doing some manual checks for like if it’s meeting thresholds, things of that sort, but it’s really just paper oriented.  It’s really just processing the paper, moving it from one department to the next department and not really—and that’s really created an impact on staff time, so there’s not a lot of stepping back-- and there’s been because of that, there’s been limited analytical and technical support that’s being done in the department and provided to its customers, meaning the other city departments. 

 

            Because---those are two big issues, and another big issue you’ll see in the report is that talk a little bit about some of the management systems that are lacking.  Things like that should really be in place to really have the department step back and really be the brain for the city in terms of procurement, seeing what every department is spending money on and stepping back and looking at how the city’s spending dollars: Are there opportunities to consolidate price agreements or to consolidate purchasing power so you can buy more and cheaper?  Things of that sort and also, with internal controls, there are some weaknesses like on the vendor data base I’ll talk about a little bit.  So those are the big, the big picture issues.  I’ll talk a little bit about what some of the specific issues were or what we think or where we think the department should go.

 

Because purchasing, again, is a centralized function for procurement, there are some really opportunities to make it, to enhance the level of service provided, to really centralize and standardize the way procurement is being done.  And they’ve done that to a certain extent, but there are some opportunities to improve upon it.  And that is expanding, for example, the customer departments’ understanding and purchasing’s understanding of how the process works and to really make sure that it’s standardized.  Because, right now, it’s being driven at the customer level, depending on the skill sets in the department, depending on what, you know, they decide to search the state contract or if they collect informal bids, it’s being initiated at the customer department and then purchasing is reacting to it and processing it as it needs to, ensuring compliance with state and federal laws.  So there are some opportunities to really step back and say “Here’s what purchasing needs to do.  Here’s where it should be, where the authority should be, have the authority to ensure compliance in the operating departments and really make sure it’s overseeing all procurement responsibilities and taking it a little bit away from the departments to make sure that it’s standardized.”

 

AL:  So it’s more a value added approach.

 

SL:  Yeah. It’s more, it’s more...they should be the technical, analytical brain behind procurement for all city departments. They should...they’re the ones with the knowledge.  They’re the ones who see what’s going on everywhere and have the advantage of understanding what the market’s like out there and what they can negotiate for and to really take in those dollars and expand buying power.

 

So another issue is some internal controls over the purchasing process, particularly the purchase orders.  There are a couple issues: one, at the beginning of the fiscal year, the purchasing department provides customer departments with a block of purchase orders and...purchase order numbers which creates an issue farther down the line with the pre-assigned (as I call them) pre-assigned purchase order numbers, because user departments are then able to take that number and go to a vendor and purchase an item; the vendor’s understanding is that they have a purchase order number that it’s gone through the approval process and that it’s, in fact, a legitimate purchase.  So the issue is to eliminate the pre-assigned purchase orders and to prevent them from circumventing the approval process and allowing the payment of “confirmation only purchase orders” is what they call them.

 

            One of the other issues, and I’ll talk a little bit more about it as we get into the staffing implications, is the use of blanket purchase orders.  There’s, their...they haven’t used them, I guess, to the fullest that they can.  I took a sample of about 350 purchase orders and just went through it, and I’ll talk about that in a little bit.  And just the number of reoccurring purchases, like monthly maintenance fees, things of that sort that should really be on a blanket purchase order both from a budgetary perspective and a financial planning perspective as well as the impact on staff time both in purchasing and city auditor and customer departments.

 

            And then again with the vendor data base, I mentioned they just started purging it.  They haven’t developed, but should develop, a routine purging program.  There’s also about four people in the department that have access to the system and can change vendor addresses, names, things of that sort, so it’s really restricting that and having some type of change reporting system so that you are periodically looking at the changes that are being made to make sure...just kind of an auditing process to make sure it’s in conformance with the rules.

 

            So going back to this kind of customer service approach, really think that the purchasing department can expand the level of services it’s providing to its customers, the city departments.   And that goes back to, again, really clearly defining what its role is.  And its role should be the technical, analytical procurement specialist in the city, and it’s providing the departments with the level of support and analysis that they need.  And that also, means the departments have some level of responsibility for procurement and they need to be held accountable for understanding and knowing what the rules are.  That includes the purchasing department should be providing training to the people, to customers, the customer departments, and the key personnel that are doing procurement so that they are held accountable to the for knowing what the rules and regulations are.  And it’s also providing them with the right tools and information to make good decisions; that’s increasing the information that’s available to them.  So rather than it just being on a per basis or per incident need that there’s the information there on, you know: What are the rules and regulations?  What are the codes of ethics for public procurement?  What are existing price agreements that I might have to buy one or two items off of or a small amount off of, but the city in another department has negotiated a good price and I might not know about it? 

 

So it’s putting that information out there for the departments to be able to access and to utilize.  And, again, improve service levels and that’s including using some of their professional staff and the buyers and whatnot to really provide analytical support to the departments, and that’s again, stepping back and understanding how the city’s spending their money and what they need to do and as well as doing vendor evaluations, making sure that the city’s getting their right level of service, that the quality of products that they’re buying is high, that their vendors are responsive.  It’s making sure that the customers, the departments and the city, are getting the right level of service for what they’re purchasing.  And again I’ve mentioned they’ve started doing some formal training and we talk a little bit about that in the report, they need to expand that and to really do (and it’s a typo; I apologize), but it’s Massachusetts Certified Public Purchasing Officials program and it has got a lot of resources out there to help staff professionalize their procurement knowledge and services.

 

            So, as I mentioned, there’s, when we look at the big picture issues (the lack of technology, the limited analytical issues, the management systems internal controls and things of that sort), we went through and we looked at, took a sample, a random sample, of some of the purchase orders.  Some of the issues were about 73% of our sample was under $1000. for purchase orders.  I mean, they’re issuing a purchase order for every single purchase, and that’s a lot of time, not just in the purchasing department, but in the auditor’s office and in the customer departments every time.  So one of the issues, we’re saying is “You can step back and look at it and you can create these policies that apply, that just don’t follow Chapter 30B, but follow your practices and things that delegate a proper authority to department heads to establish blanket purchase orders and to make those purchases against blanket purchase orders so that you’re not creating this excess work of paperwork.”  So we’re saying “Increase the number of blanket p.o.s that you use, increase, you know, reduce the number of blanket price agreements, and have them be multi-departmental agreements so that you’re again expanding your ability to purchase.”

 

One of the other issues is the department has a vacant position; it’s called contract compliance, and, you know, through our comparative survey and some of the research, we found there’s multiple approaches for it.  And one of the better approaches, given the fluctuations in construction and things of that sort, was to do a hybrid approach and really have, again, have your buyers and your procurement staff provide the pre-bid conference service, information and vendor support and then have your project manager managing the contract do the weekly audits of the payrolls that you’re receiving.  It’s not high volume and to do spot auditing from the from the procurement office purchasing department.  Sure.

 

CVR:  On your elimination of the compliance officer which is a position that was filled until recently...

 

SL:  Correct.

 

CVR:  ...what are the legal obligations, if any, to have a compliance officer?

 

PP:  If I might interrupt on this point, Mr. Mayor, in the presentation (of which Ms. Lee would not be familiar with) during the budget process this past week, based on the discussion which I was going to do in New Business related to the potential development of a capitol plan and spending, I think our need, which she would not have been aware, for additional compliance activities will be there in the foreseeable future, so we have left the compliance position in the budget as of today.

 

CVR:  OK.  But again there’d be maybe a different way of carrying out those responsibilities?

 

PP:  Yes.  Again, I have not had a discussion with Mr. Corbin or anyone in the department about it...

 

CVR:  Thank you.

 

PP:  ...but that’s my initial inclination.

 

SL:  And then, again, with the, the use of professional staff, the procurement staff, to again step back and analytical and technical support, you know, through the purchasing analysis, the customer services training, or the customer department training, compliance with the state laws and regulations, so that results in all the reduction of workload and results in elimination of four positions for approximate net savings in salaries and benefits of $180,000.

 

AL:  OK

 

PP:  Are we finished?

 

SL:  I’m done.  Yes.

 

PP:  Do we have questions from the board?

 

AL:  How difficult is it to implement a...these new systems or these new approaches?  I mean, can we do this, like, in a month or is it going to take...?

 

SL:  Well, our recommendations, with the exception of the training, are I think you can implement in three to six months.  I mean, it’s really just taking the time....part of the problem is your information system, it’s hard to extract data, but given just the couple hours I spent taking a sample, it’s clear that you have a high volume low collar amount of purchases, so you can eliminate that workload alone by creating blanket purchase orders.

 

PP:  In, in a kind of separate discussion for the 07 budget, the board will see that there is a significant investment in both software and hardware and to allow us to do some of these things over the next fiscal year. Our task will be making sure that not only appropriating the money, that we actually not only execute and execute well within the next year or two years on those items.

 

Jose Tosado:  Quick question.  It probably wasn’t the purview of your review and probably something that maybe Phil can answer it in some point...

 

PP:  I’m sorry, councilor, what was the question?

 

JT:  I haven’t asked the question yet, but it may be something that you may be able to respond to at some later point, but was there any consideration in the review done relative to compliance with, with a local ordinances and state laws, specifically interested in, I mean there is, there is a law and local ordinances that govern who you contract with, for example, and also set asides for MBEs, for example, to do business, and I, I, I think, particularly around the area of MBEs that the city has not historically done a good job with that.  There’s also language there in terms of, of contracting with, with local vendors, I guess if you will, as, as, as, as appropriate, and so I’m just wondering will there be...if this review was part of that part that compliance with those sections?

 

SL:  No.

 

City CFO Mary Tzambazakis (from the audience):  Councilor, we are going to be looking at all state, federal and local laws through a study of the law department to determine what exactly we have to do in compliance and in the what has to be done and then developing a job and determining whose responsibility it would be.

 

PP:  We can provide you with a more fulsome response, you know, not today, but at a later date.

 

JT:  Thank you.

 

AL:  OK. Thank you very much, Susanna.

 

PP:  OK.  Mr. Pikula.  Oh, Kathy, are you here?  Oh great.  Ms. Breck will [unintelligible] for Mr. Pikula anyway.  Ms. Breck will talk to us about the delegation of authority this morning.

 

Delegation of Contract Authority

 

Assistant City Solicitor Kathy Breck:  On the agenda today is an order, an executive order asking the board to delegate to the Mayor the power to authorize the chief procurement officer to award contracts for more than three years under Chapter 30B, Section 12.  What Chapter 30B allows is that cities and towns can award contracts for any term they desire, but, if you want to award a contract for more than three years, there has to be a majority vote allowing the chief procurement officer to do that.  So rather than come to you on a piecemeal basis, we’re asking the board to consider authorizing the Mayor to give the procurement officer that power.  And some contracts, I understand from recent discussions, have already been awarded for more than three years, so we may need to make the order retroactive for a period of time.  I was just asking Mr. Corbin if he knew what the appropriate period of time would be...

 

PP:  I thought we had some contracts that were awarded with the intent of them going for three years, but they had options in them...

 

KB:  Right, and this would, the co--, the three-year limit includes options.

 

PP:  Oh, OK, I’m sorry.

 

KB:  ...so any options or extensions, so I don’t know what an appropriate time period would be, I...

 

AL:  Well, let me ask you a question.  Does this apply no matter what the size of the contract is, no matter, so...?  I’m just trying to understand the impact of doing this.

 

PP:  Well, let me just give you a “for example.”  In the...we have conducted a very extensive sort of year procurement process related to an energy services contract that will allow the city to reap a significant amount of savings in HVAC and, you know, air conditioning and other improvements in lighting and heating.  The only way for that type of contract to have any value to us or to the vendor is to be for a significant period of time so that both parties can kind of, you know, amortize their investment.  That, I think, is 15 to 20 years is what we’re...what we would need to do to make it work, so it is that type of, sort of contract vehicle...  It’s not buying paper clips, but establishing a long-term relationship with, which is the only way that the city can be competitive, can get a competitive bid, is to be in a position to go in at least five years and sometimes as many as ten.

 

AL:  So what’s the process today if we didn’t do this?  How would it get done today... with or without the Finance Control Board?  Say we didn’t exist.

 

KB:  Then, as individual RFPs or contracts come up where the department head would be asking for a longer term than three years?  That the department would have to go either before the city council or come before the control board on a case-by-case basis and say, “May we award a contract beyond three years?” 

 

It doesn’t effect the signature process in any way; that remains.  The signature process remains an independent requirement.  For example, contracts for more than $500,000 would still have to be signed by yourself, Mr. Chairman, as well as the Mayor, and for contracts under $500,000, it would still have to go through the regular signature process.  This is just: Can we offer out to bid for moe than three years.  It has nothing to do with the approval or signature process. It’s more we offer a service or ask folks to...

 

AL:  So this way negotiate a longer term contract, and it still has to be approved and... 

 

PP:  It still has to go through the normal approval process.

 

AL:  I didn’t get that the first time.

 

KB:  I apologize. 

 

PP:  We can’t even go out to bid and see what the market’ll bear, because we don’t have the authority of offer that longer period.

 

KB:  Such as the food service.

 

PP:  Such as the food service.

 

Thomas Gloster:  Do I understand that if you have enter into a multi-year contract that, after the first year that after the first year, the contract is subject to appropriations and, therefore, if the funds are not appropriated, the contract can be voided?

 

KB:  Under Chapter 30B, the...not all contracts are awarded under Chapter 30B, but goods and services contracts for the most part are.  And under Chapter 30B, there’s language right in the statute that the chief procurement officer may cancel the contract if, in future fiscal years, sufficient funds are not appropriated.  And we build that language into the contracts.

 

TG:  Yeah, I assume the vendors operate on the assumption that there’s to be a high, high probability that appropriations will be made.

 

PP:  Yes, they do.

 

TG:  I would assume the city would be very reluctant not to appropriate if there was an existing contract.  Is that right?

 

KB:  I believe the departments in good faith enter into the contracts.  The city auditor sets aside a certain amount of money for the first fiscal year, and then, in each fiscal year, it’s up to the departments to put into their respective budgets funds that would be sufficient to cover their contractual obligations, you know, ....

 

AL:  So this is like a fail safe if there’s a financial disaster, the city or the state has the same kind of issue.

 

TG:  When you go out fifteen years...

 

AL:   We have the right to say “We don’t have any money.  We can’t fulfill the contract;”

 

KB:  We tell the vendors that up front.  They understand; it’s right in the RFP.

 

JT:  That’s, I think, language I think in most city and state contracts to include that, leave an out now, because everything is depending on public dollars and funding.  But the question is the ability to put out for bid to RFP, to RFP or RFR whatever the mechanism may be for a longer period than the three years that’s the current standard.  And I guess the issue is really that, that it’s pretty open ended at this point; there’s no finite end to that, to that, to those terms.

 

KB:  If the board so chose, you could make limits or restrictions on which contracts; if you want to set a dollar amount, that’s your choice.

 

AL:  But the back-stop really is that it doesn’t change the approval process, this is just the negotiation.

 

PP:  The appropriating authority still has to say that we approve this contract, and we approve the spending of these monies.

 

AL:  Any other questions?

 

Jake Jacobson:  It covers the school district and the city?

 

KB:  For those contracts that are issued under Chapter 30B, yes, and a very large percentage of the school department contracts are issued for goods and services: consultants, supplies, books...

 

PP:  And of the 24,000 contracts we issue manually, the vast majority which are small dollars come out of the school department anyway.

 

JJ:  OK.

 

AL:  Any other questions?

 

**        MOTION PASSES UNANIMOUSLY

 

Urban Pioneer Ordinance

 

PP:  Mr. Panagore?  As the board may recall, there have been, I think, one or two previous discussions and a series of questions that the board has asked related to the concept of an urban pioneer ordinance.  Mr. Panagore has some additional update to your questions, and some graphical representations of what we’re trying to accomplish.

 

David Panagore:  Good morning Mr. Chairman, board members.  In your packet before you, you’ll see the ordinance as last presented to the board.  As you may recall, the board had asked...well, there had been some question to make sure that this proposed ordinance which utilizes the new state law passed last fall and would be another ordinance related to providing some tax relief, particularly for parcels that are under water where the greater than 50% of the value is in taxes.  Those, based on our research and with our consulting firm, JER Services, those are the parcels that we expect will not move on their own and we would proceed through foreclosure process.  This ordinance would provide another tool so that all the parcels don’t have to go through foreclosure.  And, as you may be aware, there are we have over about 3000 properties in foreclosure, in tax title, that is.  And we have over 690 properties in, actually in foreclosure in the Land Court.  We are filing still 200 cases every two months.

 

            The ordinance would require a 25% down payment.  The waiver of the 50% of interest would accrue to the seller so it would not be a tax burden on the buyer, but the buyer would have, would be obligated, to remain on the property for five years.  And in conversations with the city solicitor, we would assume the terms and conditions would be related to a action in contract if they moved out during that five years.

 

AL:  Sue the...

 

DP:  You would sue the...if they moved out in the five-year period, you would sue them for the equivalent of the taxes that were unpaid, that 50% of interest, the buyer.  That way would not be a, they would not be carrying it as a current obligation so the relief of which would not accrue to them as income.  In that, in that regard, we were asked by the board to come back.  We had proposed the, what had been the, we’ll call them the Office of Commonwealth Development neighborhoods that ring the downtown. 

 

Our focus had been to create incentives in the areas of the city where there are no, where there are less natural incentives to move, the more difficult areas.  And we were asked to come back to expand that and analyze that further, particularly in relation to the vacant and blighted properties.  What you have before you in your packet and up on the board [refers to PowerPoint projection] are the blue dots in the city represent areas in the, properties in the city where there are taxes owed greater than 50% of the assessed value on residential property.  You see that sort of creates a spine across the city.

 

This chart you can see now, adding to it now in red, are the vacant properties.  What’s very interesting is that there is some overlap, but it is not extensive.  There are many properties, we are determining, that are vacant, but the taxes are paid.  We’re assuming that these are warehoused properties, assuming that the market will go up or, potentially, relatives have passed away, but there is not a one-for-one correlation. 

 

On that basis, we are proposing, and we come before you for your discussion and recommendation, these areas of the city, these areas of the city represent areas of the city where the number of properties where the taxes owed are greater than 50% of the value as a percentage of the overall number of properties in the neighborhood.  We’ve broken it down into census blocks to be able to be more tightly focused, and we’ve run from 8% in Old Hill (8% of the properties in Old Hill have a taxes owed greater than 50% of the value) to Indian Orchard and a small portion of the downtown where just under 2%. The remaining portions of the city have under 1% of their properties in tax title and greater than 50% of the value.

 

Again, we are recommending this approach to create incentives in those areas of the city where there may be less incentive to move while still capturing a larger percentage of the city than we came forward with before.  Open to any questions from the board.

 

CVR:  I’m kind of confused as to why the proposed ordinance by its terms clearly restricts this to only, let’s say, five neighborhoods or portions of neighborhoods, especially when you look at your chart here and some of those five neighborhoods are...have less of a problem along these lines than others who are not in here.  Unless I miss this totally, I think you’re restricting it to the...

 

DP:  Oh no. I apologize.  The ordinance that you should have before you does not have any neighborhood listed.  We pulled those out.  If you still have a copy of that, I apologize.

 

CVR:  I’ve got something that...

 

DP:  ... But should be...should be...the final page should be 4.36.50

 

CVR:  “...blighted property in Brightwood, Memorial and Old Hill...”

 

DP:  I apologize, Mayor, the, the you may have gotten an older version  It should be 4.36.50 has no properties listed.

 

CVR:  I’m looking at the so-called proposed ordinance, I guess.

 

PP:  Here you go.

 

CVR:  Oh, OK. I’m sorry.

 

DP:  The areas of the city we would suggest would be colored in green as it relates to the data that we have determined percentage of properties.

 

CVR:  So this would be anywhere in the city.

 

DP:  Anywhere in the areas marked in green.  I think you have it in your packet as well.

 

AL:  I think the Mayor’s asking “Why do you have any geographic restriction?”  You’re saying “We’ve taken it out of the ordinance, but...” and then you say on the chart it’s only in those areas that are in green.

 

DP:  We’ve taken it...I apologize...we’ve taken it out of the ordinance so that we could bring before you a proposed recommendation so we can come before you again with a final recommendation.

 

AL:  No, but if we pass this ordinance [holds up a sheet of paper], theoretically, you could do it any place in the city?

 

DP:  We’re not asking you to...

 

JJ:  He’s not asking us to pass the ordinance .  He’s saying “Here’s the ordinance.”  The last section, 4.36.050 is empty.  He’s making a recommendation as to how we fill in that last section, and now it’s open for discussion.  Do I have this right, David?

 

DP:  Yes, absolutely.

 

PP:  And the recommendation that we continue to make still proposes some sort of geographic representation based on the data that the board asked us to provide.  Now that...now it’s up to you folks to say whether you want to have some sort of restriction or you don’t, but the data would lead us to believe these are the target areas.

 

TG:  And the Mayor is suggesting that he sees no reason to limit it in any way.

 

PP:  That’s correct.

 

TG:  And, and, and is there some reason I think you said it before...do it again to remind...to target particular...?

 

DP:  Yes.  The...the...based upon, you know, upon our best management practices and all the research we’ve done, focusing to create incentives in areas of the city where there is a disincentive to move, is what we’re trying to focus on.  By...there are many of the neighborhoods that, that’re not shaded...there are some vacant and blighted properties in those areas which we need to solve by increasing our enforcement action for blighted properties, but as it relates to tax title properties, there’s less than 1%.  And when we look at, as well, areas of the city that have disincentives for various reasons for people to move into them, we’re hoping to be able to on an urban pioneer basis help people create incentive to move into the North End, to move into Old Hill, to move into Maple High Six Corners.  To move into those sections of the city where there may not be as many good reasons to move.

 

JT:  David, can you tell us again?  Can you just listing properties?  You just mentioned the North End, Old Hill.  Which are the properties?

 

DP:  All the areas shaded in green on your, on your hand-out.

 

JT:  I just can’t tell, can’t tell by, by...

 

JJ:  They’re saying all of these would be covered.

 

JT:  Well, I see the green, I just don’t see the name of the...

 

DP:  If you switch to the last page you’ll see the percentages in the neighborhoods listed.

 

PP:  Does that represent the recommendations?

 

DP:  Yes.  You’ll see the recommendations all the way through just capturing below 2%.

 

JT:  OK, so it’s basically all the neighborhoods on this page [holds up a sheet of paper].

 

DP:  No, those are all the neighborhoods of the city.  Those are all the neighborhoods of the city.  We have captured all the way down just below 2%.

 

AL:  So tell us just the name.  Is it Indian Orchard the last one or what?

 

DP:  It’s just on a census block basis...

 

AL:  No, on your list...it’s basi---

 

DP:  It is down to 1.7%

 

AL:  So it’s Indian Orchard up to Old Hill on this chart.

 

JT:  Thank you.

 

CVR:  Is there a recommendation or...?

 

DP:  The recommendation will be to be able to come back next month with a final proposal the meets and bounds are laid out.

 

PP:  Our recommendation will look pretty much like this.

 

AL:  OK and you’re still, and so...I assume, in a longer term view, if we could solve the problem for these 15 or 20 or whatever numbers, we then extend it down the others, but you want to focus your attention right now on these high....

 

DP:  Starting with the...starting with the more...with the more...the areas where there’s a high percentage of properties in tax title.

 

CVR:  But, if we look at this list here, that, really, if I look for a break-off point, I’d go at least half a page, maybe a little bit more.  I can understand the 0.1 and 0.2 as saying “Look at, that neighborhood perhaps doesn’t need it or 0.3 or 0.4.”  But, on these others, 1.1 and on up from there, to me, I see that really, on a pretty broad basis, this is a very helpful device for those neighborhoods.  And if it’s 1.1, it may be that without help, it’s going to all of a sudden become 3.1, so I would hope that it would be an expansive look at this rather than a restrictive look.

 

AL:  So, in other words, if you went for anything with more than 1%...

 

PP:  OK, that would take us down a little further on the page.

 

AL:  That would go down to South End.

 

CVR:  Through the South End before Sixteen Acres.

 

DP:  That would be very fine.  It’s all just data driven. We went down to just below 2%, but we would carry three more neighborhoods: portions of the Sixteen Acres, Pine Pint and the South End. I myself did find it surprising to see census block 8020 in the South End was not listed, but, clearly, if we go back—and I will take a second to the-- if I can get this [PowerPoint} to work—there’s a fair percentage of vacant and blighted properties, but not a fair percentage of tax title.

 

AL:   OK, so you’re saying it changes, and it kind of dilutes what we’re trying to do.

 

DP:  But we would of course be focusing on these blighted properties through code enforcement, through our legal actions, and through the use of the blight ordinance.

 

PP:  Yeah, I mean, there’s two separate strategies: there’s a blighted strategy and there’s the tax title strategy.

 

AL:  OK.

 

CVR:  OK great.  Thank you.

 

PP:  So we’ll come before the board next month with a specific recommendation.

 

DP:  From 1% and above.

 

AL:  Right.

 

DP:  Thank you very much.

 

AL:  Thank you.

 

Park Facility Revolving Fund

 

PP:   Mr. Chairman, I’d like to turn the next item over to Mayor Ryan to talk about the park facility.

 

CVR:  OK.  Thank you.  Mr. Chairman...

 

AL:  You may have to sit over there. [laughs]

 

CVR: [laughing] No, I’ll stay over here for a while.

 

            Some years ago, probably seven or eight years ago, the city administration at that time saw fit to take several of its desirable properties in which the city invested several million dollars of its own funds, namely the Barney Carriage House, King Philip’s Stockade, and then Camp Wilder, and turned over the operation to a non-profit 501c3.  This is a situation where, frankly, the revenue that is garnered from these operations—because these are banquet facilities or outing facilities--can be well-utilized by the city government.  And I would like to a) capture that stream of revenue and b) make sure that the operation and the policies of these properties, the administration of these properties, is consistent with what the city government wants.  And all this really means...I have not seen fit to extend the license which existed, and I have tremendous confidence in Mr. Sullivan who, right now, I think is administering close to a billion dollars worth of property to easily take this on under his wing and do an outstanding job.

 

            In order to do this, however, we, according to the law department and the city auditor, Mr. Ianello, we have to get the authority to create a revolving fund.  And the revolving fund, of course, would have income coming in and then some expenses going out.  It being under the control of the city government would really mean that I would think at budget time that we would make sure, at least under the present leadership, that the, essentially, virtually all of the net revenue on an annual basis would come in for the benefit of the park department going forward rather than being accumulated under private hands.  And so we do need to come before the board today to have authorization to create this revolving fund and then the administration would go on just in the normal course of business.

 

AL:  So just so I can understand it, under today’s, we have the liability, they get the income?  Is that what...I mean, the income goes one way, but the cost of maintenance goes another way?

 

CVR:  No, the maintenance of these particular facilities comes out of the revenue they get. That would continue; there’d really be no change. 

 

By the same token, they have been able to accumulate a significant amount of money of which, some day, hopefully, it will be...go for the parks itself.  That’s a little bit murky.  But I don’t think we really need to go through this.  I think we should operate everything that we have the capacity to operate.  I’m not sure why this ever started seven or eight years ago, but, certainly, we’ve made a tremendous act of faith which has been well-founded in Mr. Sullivan’s ability and administration, and, to me, it’s a pretty simple decision to bring these properties in under his operation and administration.  He’s got the people, he’s got the skill, and this is just one more small piece of business that he can administer very well.

 

AL:  OK.

 

TG:  What is the role of the 501c3 currently and what happens when, when this...?

 

CVR:  Well, they have...they received a license from the city government to, to operate these facilities on a banquet basis, and so they would advertise to the general public...you might have weddings there or fund raisers of some sort.

 

TG:  [unintelligible] the licensee...

 

CVR:  That’s right, the licensee, and I saw fit not to extend that, and finally, catching up with a lot of things, it seemed to me this was the appropriate time to move forward.

 

AL:  That’s the only thing they do...that this charity does is run banquets?

 

CVR:  That’s right, and, and care for these particular properties—you know, the cutting of the grass and making repairs.

 

AL:  It’s an interesting charitable purpose, if you think about it.

 

JJ:  Only in Springfield.

 

CVR:  Only in Springfield.  Right.

 

AL:  I think it’s called “unrelated business income” or something.  I don’t know what it is.

 

PP:  Unrelated business income.

 

[laughter]

 

**        MOTION PASSES UNANIMOUSLY

 

AL:  We just cost the state revenue.  I think we could have taxed it, but leave it is the way it is now.  [laughs]

 

Potential Purchase of Our Lady of Hope Convent

 

PP:  Just as a matter of brief introduction of the next item for the board, Dr. Burke will talk about the educational need for the purchase of this facility and how it will not only improve the delivery of service, but save the school department and the city money.  And Mr. Sullivan will talk about the actual sort of mechanics of getting this done.

 

What we are asking the board today, when this presentation is over, is to authorize the Mayor and I to go about finding a way to buy this facility.  And, again, this gets back to my earlier statement related to some sort of capitol program which we would like to present to you when we offer the Fiscal 07 budget.  Dr. Burke.

 

AL:  Welcome.

 

Superintendent of Schools Joseph Burke:  Thank you.  Let me start out by creating some context for this.  In December of 2004, we were operating a very extensive program for alternative school students who were principally students who had very severe emotional needs, and that program was being run at the old Chestnut Street building.  At that time, there was a determination made that that building needed to be closed.  And as a consequence of that, we have been continuing to go through phases of finding appropriate spaces to serve those students throughout the city. 

 

            Last year, for example, the control board authorized the purchase of St. Matthew’s School in Indian Orchard which gave us an opportunity not only to get out of some leases that were...would have been an on-going expense against the budget and not counting against net school spending, but, in addition to that, it gave us an opportunity to utilize the space more appropriately.  As a consequence of the history of that process (this is in essence the next phase of it), we are proposing to purchase the convent at Our Lady of Hope School which the diocese has been trying to sell.

 

            The over-arching reason for this is that we have a continuing escalation of costs in the area of out-of-district placements of high need special education students.  This has been an on-going issue in the district for a number of years.  It’s been that that cost has been escalating on an annual basis.  It is principally due to students moving into the district from a variety of other communities who have existing IEPs [Individual Educational Plans] that specify very restricted placements and high needs.  It’s also accelerated by the fact that there’s been a fairly, over the history of the Commonwealth, fairly liberal laws with regard to placement of students and a strong advocacy for very high needs students who have to be given very specific kinds of educational programming, because of the emotional needs that they have. 

 

So, as a consequence of that, we have been behind a curve in terms of meeting the, the, the financial issues coupled with the programmatic issues that are necessary to serve these types of students.  In the year that we closed the old Chestnut building, we had actually staffed an additional 50 students into that building who were high needs students who ordinarily would have been placed in out-of-district placements.  And, consequently, we’ve been trying to sort of do the catch-up since that, since that particular time.  Overall, we have about 500 students that are on out-of-district placements.  The anticipated cost for those students for their education for this year is about $20million; projected cost for next year if we do some cost containment and controls would be about $21million.  But this has been a major budgetary challenge for the city and for the school district over the past several years.

 

The building that we’re proposing to buy would increase our capacity to serve a total of 158 additional students who have tremendous emotional needs.  Now, that’s not totally accomplished by purchasing OLH [Our Lady of Hope convent]; we’re going to actually increase the capacity there to serve an additional 54 elementary students.  But as we move...as we reconfigure the assignment of students out of the existing St. Matthew’s  facility, what we will end up with is an elementary program at Our Lady of Hope, a middle school program at the current Bridge Academy which is the Eastern Avenue site, and the senior high school students at St. Matthew’s.  And it’ll give us the opportunity to expand the delivery of services to more students who would ordinarily cost us about $50,000 per student per year in out-of-district placement costs.  So it’s a, it’s an attempt, actually, to not only meet a specific programmatic need, but to try to do some cost avoidance by having a sufficient number of seats to serve these students.

 

I might add that, that while, while the projected savings of having this capacity is about $4million a year in budgetary savings for avoiding having these students being served outside of the district, the other part of what we will need to do is: we will need to add some positions within the district for emotionally handicapped students.  And we’re projecting that we’ll need about 10 or 11 additional positions, so that we have, across the continuum of services, an additional way to provide locally services in our, in our home schools for that...for those students. 

 

In addition to the $4million in potential savings, there’s also a potential savings in transportation costs.  When we place a student in an out-of-district placement in one of the community facilities—whether it’s a residential facility or it’s a day school facility—if those facilities are outside of Springfield (and many of them are), then we have to pay for the transportation costs of those students to and from those sites on a daily basis.  That hits directly on the city budget, as you’re well aware, because of the laws as they relate to transportation costs. 

 

So, overall, we believe that the purchase of this building and the necessary renovations that will be attendant to that process will give us an opportunity to have a net savings in the cost of out-of-district placements .  It’ll increase our capacity to control that cost going forward, and it’ll give us an opportunity to provide locally the kinds of services that are typically provided in out-of-city, out-of district programs that are very, very high cost, not only in terms of the educational program, but in terms of the actual transportation costs.

 

AL:  Can I ask just two questions?

 

JB:  Absolutely.

 

AL:  One is: Will this eliminate the need to send people out...students outside the city?  Will we be able to take care of 100% of our needs?

 

JB:  The...I think the straight answer to that is no, because, unfortunately, we are not able to totally control what happens in the MTeam meeting where a parent comes in with a student that has a particular set of needs.

 

AL:  So maybe a unique need that you can’t handle.

 

JB:  Yes. There’re going to continue to be some circumstances where, because of the specific needs of that student, the advocacy of the parent, maybe an attorney representing the family need, that there will...there will still be some students that will be placed in out-of-district placements that we won’t be able to handle locally.

 

AL:  The second question is:  Besides the purchase price, is there a significant amount of money needed to be spent on refurbishment or up-grading or...?

 

JB:  Yes.  Yes, there is.

 

AL:  So the saving up front...you’re going to need all the money you have to take care of the transition I’ll call it, and...

 

JJ:  To clarify, is the $4million of savings baked into the draft budget submission that you’ve made already or are you making the assumption that this is approved in the budget submission that you’ve made?  Or, if we approve this, would we be able to assume that your costs are going to go down by $4million vs. the budget that you’ve submitted?

 

JB:  Well, the answer is that projected savings of $4million is not in the current budget that we prepared.  Essentially what we’ve done with the current budget is we have anticipated a very modest increase in out-of-district placements, and we are looking at a potential cost savings across next year into the following year based on more or less of a cost-avoidance scenario where we will be able to serve more students locally and not have them go out of district.  The predictability issue of how many students are going to move into the district that has...that have this need is predicated on historically what’s happened over the last three or four years.  Now, whether we will realize the full, you know, potential of savings in, in first year is...is not...is not totally controllable.

 

AL:  I’m trying to focus on the cost of improving this facility.

 

Superintendent of Public Buildings Patrick Sullivan:  It’s about $3.4 million.  In here [indicates a thick binder] is a detailed analysis from both departments on the purchase of this property.  It’s been estimated at $3.4million; it’s about $180. per square foot to renovate this to school purposes.

 

CVR:  That includes the purchase price in the $3.4million?

 

PS:  No, it doesn’t.

 

AL:  That’s above and beyond the purchase price.

 

CVR:  $800,000 plus $3.4million.

 

PS:  $850,000; and that’s with 2 acres of land. 

 

CVR:  Plus $3.4million.

 

PS:  Plus the $3.4 million.

 

AL:  OK. 

 

JT:  Dr. Burke, a quick question.  So, basically, the net gain is that we’ll be able to serve another 158 students in-house.  I mean that...special needs students in that.  That 158 is not our students that are going to be brought back.  I mean they’re not...they’re not... subtracted from the 500 current out-of-district; that number will remain the same number, but we’ll have the ability to prevent most of the students from, from leaving the district.  Is that...is that accurate?

 

JB:  It’s...it is accurate although there are some students that we will, that we may recapture from out-of-district placements.  We have had some students return to the city programs this year who were in out-of-district placements.  The net has been still an outflow, but we did have some students come back.  We do anticipate that some students will prefer, and their families will prefer, for them to be served locally when, when we have the capacity to do that.

 

AL:  It’s a choice?  I mean people can say.... If we can service the people locally, the families locally, then aren’t they required to come to the school locally?

 

JB:  It depends, it depends on the outcome of the staffing conference when, when all of the professionals meet and talk about all of the unique and specific IEP [Individual Educational Plans] needs of the student.  If we can provide appropriate program...

 

AL:  Yeah.

 

JB:  ...to meet that student’s needs locally, then we will offer that and that IEP will be our offer to the family.  On, on most occasions, the family will accept that, but there are some circumstances—and, and they do occur—with, with a fair amount of frequency, where parents say, “No, I want my child to be in this out-of-district placement,” particularly if it’s a, if it’s a residential setting where the family gets some respite care for not having to deal with that youngster at home.

 

JJ:  The simple answer is you cannot force them back in the district.

 

AL:  Yeah. I don’t see...

 

JB:  You can’t force them back.

 

AB:  I’m assuming that we can provide the ...a quality service in asking the question.  So even if you provide a quality service, we can’t say “This is more beneficial to the city from a cost point of view.”

 

JJ:  We can say it, but we can’t force them back into the district.

 

JT:  There are students that are cost-shared with other departments, I mean the .5 or .6 where the school department picks up the education and then the residential piece gets picked up by another state...

 

JB:  Oh sure.  Our obligation is for the educational cost.

 

JT:  But even in the you talked about the initial level FTEs to provide special needs services...I mean, the kids who go into these kinds of programs are very needy kids and they’re...they do require specialized services, clinical services, for example...

 

JB:  Yes.

 

JT:  ...and the system has not been able to provide that level of care, and that’s why they’ve gone out to, to, to a specialized programs out-of –district, so if we’re looking...

 

JB:  Well, we have been contracting, for example, with BHN.  They have provided us with very excellent services under contract for high needs students that we’re servicing locally, and been expanding those programs every year in an effort to try to keep the students in the district.

 

JT:  Well, the question was going to be that, in terms of increasing the FTEs, in terms of specialized providers, specialized teachers, will they require more than 11 FTEs, I guess, would be the question.  We’re talking about bringing another 158 students, special needs students, but only...only 11 FTEs to meet their needs?  I mean...

 

JB:  Well, the 158 is a projection over time.  It’s...I don’t think that we’re suggesting that we’re going to fill 158 seats next year.  Well...I ..you know, predictably, the numbers of students that would have these needs—and that would be staffed into this type of program---I don’t think the number in Year One would be 158.  So that’s why we were saying the $4million savings is really a cost-avoidance that could be...you know, that  we could actually realize over maybe two or three years as we basically staff those students into programs locally and avoid spending $50,000 per student.

 

            We can provide the services locally at a cost of about $20,000 in annual FTE for those students.  If we put them out into, into an out-of-district program, the average cost is $50,000.  Some are more.  We have some students that are costing us $90,000 and $100,000 a year, you know, in specialized programs.

 

TG:  Dr. Burke, how does the out-of-district community... I assume it’s the neighboring towns for the most part we’re talking about...

 

JB:  Most of these programs are private programs that are located in different towns, but they’re not part of the public school system of those towns.

 

TG:  So, are these profit-making institutions, charging more to us than it’s costing them to educate the child?

 

JB:  Yes.

 

AL:  Yes.

 

JT:  Well, I think that’s debatable...I think it’s probably non-profits for the most part.

 

JB:  Well, be interesting to look at their books...

 

AL:  I think we’re getting beyond the scope of this... [laughter]

 

JJ:  Joe, it would be helpful to the board to just take a step back, and I know you didn’t prepare these numbers in detail so....  In round numbers, explain to us what’s in the budget, what might show up as a actual cost savings in the budget, what will show up as cost increases in the budget.  I think, I think that we’ve got the picture that, that whether it’s cost-avoidance or students returning to the district, this can save $4million a year.  I, at least, am still confused about what the...what the implications are for the up-coming fiscal year compared to the draft budget that’s been submitted to the, to the board.

 

JB:  Well, essentially, what, what has been submitted at this point in time is a budget projection of out-of-district costs that would go from $20million to $21million.  The amount of savings that we could realize by having the capacity to serve the additional 158 students maxes out at $4million.  In Year One, if we, if we are able to provide services for X number of students--let’s say, let’s say 60 students—that we wouldn’t have to put out-of-district, there’s a net savings amount that would not go against the budget to, to exceed $21million that we’re projecting.  Whether or not...

 

JJ:  It would reduce it...

 

JB:  It wouldn’t reduce $21million unless we were phenomenally successful in bringing students back and who are currently in out-of-district placements.

 

JJ:  So let me make a simple assertion and see if I’ve got it.  The $21million that’s budgeted, in effect, does assume we’re going to do this, because if we don’t do this, that number could be $25million.

 

AL:  Right.

 

JB:  Well, we...we...we would, under norm—under normal budgeting processes without this, we would have budgeted $23million for out-of-district costs for next year.

 

CVR:  When do you anticipate or Mr. Sullivan, both of you, anticipate that this would be ready for occupancy?

 

PS:  I think it would be January...December, January.

 

CVR:  And that might even be ambitious, right? I mean...well...

 

PS:  And that’s if everything goes...

 

CVR:  We’re at least a month away from identifying the funds to buy it, and then, you...this is all public contracts, right?

 

PS:  That’s correct.

 

CVR:  And you’re talking $3.5million worth of repairs...OK, you’ll do well if you’re in there in January.  But, if so, then that’s when you start... then maybe over the last six months of the year, under Mr. Sullivan’s time table, you might be able to get 60 or 75 children in there, right?

 

JB:  We should...well, we...we typically have more placements in the second half of the year, so, you know, if there were some way that we could figure out a, you know, a place to put the students...

 

CVR:  Yeah.

 

JB:  ...starting in the fall, that would be the best thing.

 

CVR:  Certainly if, in the second year, 08, Fiscal 08, then we should be looking at pretty much realizing the full tuition savings.

 

JB:  Oh, I would...that would be our...that would be our hope.

 

CVR:  And then of this proposed savings, I think you indicated you were going to have to add positions here.  In other words, you’re going to have more staff.

 

JB:  Yes.

 

CVR:  And so it’d take 10 or 11 people?

 

JB:  That’s...that...that’s...there’s...this is, this is a net savings.

 

CVR:  That’s a net?

 

JB:  That’s a net savings.

 

CVR:  OK, fine.

 

AL:  All right

 

JJ:  Are the 10 or 11 people in the budget?

 

JB:  Ten or eleven people are additional positions that would serve students that are at the .4 level, not the .5 students that we’re talking about here.  That would be, that would be additional positions that would be serving students that that wouldn’t normally go out-of-district.  So it’s part of the continuum.

 

JJ:  But at some point $6million dollars of cost--which I know you’ve netted out to get to the $4million in savings-- but is the $1.6million in the current budget submission to the finance control board or is it not?

 

JB:  ....No.  It’s not.

 

JJ:  OK.  So we have a $1.6million hole in the budget.

 

JB:  [Nods]

 

AL:  Right.

 

CVR:  Is it fair to say that many of these out-of-district placements result in almost taxi service, in other words, there might be one child or two going to a school in a certain location?

 

AL:  Custom...

 

JB:  There have been a couple of students that we have actually provided taxi service to the site where they’re being provided the service, and it cost the city about $25,000 or $30,000 a year.

 

AL:  It sounds to me from a long-term—if we put our long-term hat on, this is a good deal for the city.  We...you know...and then the question is, for us, is: How do we pay for it?  So that we should go on the road, I’d say, to me it’s we go on a line to see if we can buy this, and do it.  The savings is going to come several years down the road, you need it for the school population that you have, the mix of students, and the challenge is: Can we find the money to do it?

 

JB:  Well, that clearly is the challenge.  I mean it’s certainly less of a challenge to make the initial purchase than to do all of the renovation work. 

 

AL:  Well, you can’t use it without the renovations.

 

JB:  I mean...you know...I mean the work is going to have to be done.  Can it be brought in at a somewhat lower cost than, you know, than what Pat’s talking about?  You know ...maybe.

 

AL:  Could be higher, too.

 

PS:  Could be a little bigger.  I think you’ve hit the nail on the head, though.  Right now, we serve a lot of this population at Bridge Academy; it’s over 100 years old, the facility.  So there’s a lot of work that needs to be done with our current stock, so I think, moving forward, these are the type of things we need to look at for the city.

 

JT:  So what action needs to get done?  What action do we need to take now?

 

PP:  Just...

 

CVR:  None.  Information, isn’t it?

 

PP:  I would just like the board for informational purposes, and then you don’t really need to take any action.  I will come back to the board at the next meeting on how we propose to finance this.

 

AL:  I mean if you want to do it in stages, you could say all you have to find the money for is $800,000 to buy it, and then we have to then come up with the $3.5million to refurbish it.  I mean, but we’d like to go down that road of....

 

JB:  Yeah.

 

PP:  [unintelligible]...until next for the next several weeks until we meet again on which recommendation that we suggest.

 

JB:  Well, I think it might be helpful for you to get a sense from Patrick of what the quality of the building is that we’re actually purchasing.  I mean what we’re proposing to get for this is really...

 

JJ:  And, Pat, if you would also cover...I mean this building is for sale, right?  So can we just lollygag around and take as much time as we want, or do we need to give an answer?

 

PS:  They have an offer on the table.  We were contacted by Colebrook back in January.  We were contacted again in March when they received the offer, I met with the Mayor and then met with Phil and then met with Dr. Burke and we put this presentation together.

 

And I would suggest that it’s a great facility. It’s a masonry building, two stories, full basement, two acres of property.  It abuts existing city property, both adjacent to the Boy’s Club and the playing fields at the Boland Elementary School, so there’s already fields for these kids to be able to recreate during the school day.  And the diocese just has a history of taking very good care of their buildings, so I’m very comfortable being able to retrofit this building into a school facility.

 

CVR:  It’s only about 30 years old, isn’t it?

 

PS:  1964, yeah.

 

JB:  It’s in very good shape.  The building is in good shape.  I mean that there are some things that we need to do, but...

 

PS:  But I would like, hopefully, if you agree with the concept is maybe direct Phil to start the process with the realty company and report back to the board.

 

AL:  Yeah.  Jake?

 

JJ:  I think that, given that we have no control over the diocese and they could elect to go with another buyer and that would be their prerogative, I think it would be a prudent thing for us to do to at least say, since we’re exploring multiple financing vehicles for our capitol needs, and that isn’t going to be done over the next couple of weeks or next couple of days, we should give the executive director the authority to enter into the negotiations and secure the building.  And, if he needs to use the $850,000 or whatever it is, from the general fund in the interim in order to secure the building, I think it’s important to give him that authority so that we don’t loose the opportunity.

 

AL:  I agree with that. I absolutely agree with that.  Do you have any objection?

 

TG:  What’s the number you used?  $850,000.  Is that the asking price?

 

JJ:  Is that the negotiated price or the asking price?

 

PS:  Yeah, they threw in an extra acre of land in for the $850,000.

 

JJ:  So the negotiated price would be the $850,000.

 

AL:  No, I agree with that I...absolutely.  Does anybody object to doing that?

 

**        MOTION PASSES UNANIMOUSLY

 

AL:  Do it.

 

School Repair Update

 

PP:  Pat, if you could just give the board a brief update on...relative to the facilities, work orders.

 

PS:  Sure.  I met with you last time and promised you an update.  We’re at the 16 month mark with our new department. 

 

We’ve completed the $700,000 window replacement at Lincoln School.  All of our life safety equipment in all city buildings have been tested and operational.  All buildings have been inspected and have permanent, or at least temporary, occupancy permits (which is probably the first time in 12 years).  We’ve had a successful transition of outsourcing our grounds maintenance on the school.  (I think we had a very good soil[?] removal program under that contract.)  We’ve completed 5500 work orders this fiscal within the school district.  We’ve had a significant increase in work order requests, because, now that we’re doing work, people are reporting more which is a good, good thing.  So we’re now at the 3000 mark.  When we took over, we were in the 8000 range so we’ve made significant progress there. 

 

We’ve added new software thanks to Shawn Phelan on vandalism tracking and also on surplus equipment tracking.  We’re utilizing the old warehouse where purchasing [unintelligible] and we’re taking the old equipment that the school department had in basements and so forth.  It’s being bar-coded, and we have an inventory system.  So now, when the school district needs furniture, we have it in place. and we’re not purchasing new equipment, we’re utilizing what we have.

 

We’re working with a group to address the vandalism in the schools, and it’s in-house.  Dr. Burke has assembled a team on his side, and we’ve transferred Pete Krupsack from personnel to work with me on that issue.  So we’ll have some recommendations in June for Phil on that issue and how to get it under control. We’ve held a tour with the local state delegation. They’re well aware of the district needs, and they’ve invited Phil and the Mayor by early June to give the full delegation an up-date on the accomplishments and how we’re going to move forward on making the necessary repairs to the $45million in need for the school district.

 

We’re doing very well with our utility consumption. We’ve entered into an agreement with Siemens.  This is their initial report [holds up a heavy, thick binder].  After one month, they’ve done 76, 86 buildings, so we’re very comfortable with, by the end of June, we’ll have some strong recommendations for the board of how we’re going to manage the utilities coming up and the improvements for improved utilities at all of our buildings. 

 

Completing the sewer retrofit program:  This is where a lot of the buildings didn’t have backflow preventers or the gate valves were original to the buildings.  The Sewer Department is invested $900,000 and we’ve invested $300,000 from the city side, so we’ve done $1.2million in up-grades in those school buildings. We’ve replaced four roofs, and we’ve completed 13 projects with Northeast Utilities this year on energy savings, so that’s the latest.

 

AL:  What a difference a year makes.

 

CVR:  I, I think I want to get a reaction from Phil Puccia on this.  But, clearly, and we’ve talked about it before, this and enormous inventory of unmet school building needs.  I would hope that within a month as we come back on Our Lady of Hope, we’d also be in  position to crystallize some more thinking as to where we’re going and how we can recommend how we can fund...

 

PP:  I think we should be in that position when we present the 07 budget.

 

CVR:  The 07 budget.  Yeah.

 

JJ:  Pat, I want to make sure you didn’t get your fast ball by me.

 

PP:  Yeah, I heard that, too, Mr. Jacobson.

 

JJ:  The last time you were here, I’m pretty sure you said something like $32million for capital needs in the school budget, and if I’m not mistaken, you just slid in a number of $45million.

 

PS:  It is growing.

 

JJ:  It has, indeed it has grown.  Do you want to elaborate on that for a second?

 

PS:  As we find more roof problems basement problems... Unfortunately, we have a stock that has not been maintained, and everyday we, unfortunately, find new problems with our school facilities.  And I can give you an update..

 

JJ:  Which is a very fair statement.  We recognize the base from which you began, and we think we all applaud the progress that you’ve made and all of that.  I think, for our purposes as we try to get our arms around the capital needs in Springfield, however, let me put you on the spot a little bit and say “How comfortable are you that you, at this point, that the next time we ask you for an update, you won’t slide like a $57million number in there?  How close are we getting to this being really the number? “

 

PS:  We’re getting very close, and I, I’m...we have a new architect that we’ve just hired in the last month; she’s reviewing the numbers.  So I would suggest by June you should know a good number that if $45million, if it’s going to be a little less or a little more than that, but I’d say we’re at a good point now with our numbers.

 

JJ:  But so we can work with the $45million.

 

PS:  You can work with $45million, yes.

 

JJ:  And the $45million includes Putnam or not?

 

PS:  No.

 

JJ:  And the $45million includes the exam high school or not?

 

PS:  No.  It does not.  The $45million is just my needs to operate...

 

AL:  ...the existing...

 

JJ:  The $45million includes what we talked about today in the upgrading of this purchase or it does not?

 

PS:  No, it does not.

 

JJ:  That’s very clear then.

 

PP:  Does that represent all the city buildings or just the school footprint?

 

PS:  Just school footprint.

 

AL:  So just existing buildings and existing operations.

 

JJ:  So we need $68million for the schools. More or less.

 

PP:  More or less.

 

CVR:  You know I have a memory that when Pat gave us that big book maybe three months ago that there was $32million or whatever it was, but then there was another column of $12million in that vicinity of...and I never understood why it wasn’t in the capital needs as opposed to, but $12million of unfinished maintenance, so I’ve always been adding the $32million and the $12million together.

 

PS:  I think it was after that meeting you kind of called me in the office , and...

 

CVR:  Yeah well, I ...it’s really going in the same place.  It’s to meet the unmet agenda of the condition of our schools.

 

JJ:  So just let me make sure you I understand your comment then.  There’re not another $10million maintenance dollars on top of this?

 

PP:  When you, me and the Mayor talked about the $10million, that’s in this number that’s between $45million and some other number.

 

PS:  Yes.

 

JJ:  Got it.  OK.

 

AL:  OK.  Any other questions of Pat?

 

JJ:  Thank you, Pat.

 

CVR:  Putnam’s on top of this, the special high school (exam school) is on top of this and Our Lady of Hope’s on top of this.

 

JJ:  Yeah.

 

AL:  Any new business?

 

Voting Rights Lawsuit (Ward Representation Lawsuit)

 

JT:  I’d like to bring up some new business, and I’ll be very brief on it.  I know it’s an item that we’ll probably have to address in executive session, because it’s an item that’s currently in litigation, but I refer to the Voting Rights lawsuit commonly known as the Ward Representation lawsuit.  I think it’s an appropriate item for this control board to grapple with, because there’s a definite mplications for the city of Springfield that could possibly go into the hundreds of thousands of dollars, so I’d like to have a discussion that involves...want an update in terms of the act and two the possibility of a negotiated settlement relative to the lawsuit.  And I’ll just leave it at that for now.

 

State of FY 06 Budget

 

AL:  OK.  I think you’re right that’s in executive session.  Before we go to executive session, could you spend like one or two minutes on the financial state for 06.  What’s your current view of things?

 

PP:  My view of things is that we have, through the management of the health care program that was implemented last year, have achieved some additional beneficial experience in the management of claims this year that will accrue some positive effects to the budget.  We have also, based on the board’s recommendation of budgeting, the...our experience in collecting taxes vs. the actual levy has produced some additional benefit to the budget.  I would also say that the management of the budget itself, now that we have a new budget director on board since November, have all... have allowed us to pick up items that we had not previously known of, for example, how we managed Workers’ Compensation and how it was allocated in the budget.  It’s a small item not really paying attention, but would allow us to achieve a savings this year of $650,000 in the budget.

So, a whole variety of things that have taken place, continuing to manage.  We are making progress.  What I’m not prepared to tell the board today is whether that number will be the 6.5 we budgeted or some number below that.  I believe we’ll certainly be at 6.5.  Hopefully, we’ll be something a little better, but I’m not prepared to say.  While there have been, certainly, good trends; there have been some items that we’ve had significant challenges on, and, like everyone in American right now, we’re all facing an energy challenge that has had an impact of $2million to $3million on our budget which has not been easy to manage.  But I do feel that we’ve made a significant amount of progress.

 

            As it relates to the 07 budget, we are in budget meetings—the Mayor and I and, actually, Councilor Rooke attends many of them—to figure out what our budget will be for next year.  There is a significant amount of progress in eliminating accounts that haven’t been used, that no one had tracked.  Sometimes it’s only $1000, but sometimes, it’s as much as $15,000, $20,000 or $35,000 and that adds up over the course of hundreds of line items.  I’m not prepared to say today to say exactly what our deficit projection will be.  It is our goal to try to get the numbers to match.  I don’t know that we can do that yet.  We have obviously baked into the 06 budget and to the 07 a certain amount of raises for all employees whether they’re contracts are settled or not.

 

            The short answer is that we continue to make progress.  We’ve made significant progress since this board was established in August of 04, and I think I’ll have a reasonably good story to tell you in June.

 

AL:  OK.  Any other questions or comments?

 

**        MOTION TO GO INTO EXECUTIVE SESSION PASSES UNANIMOUSLY.