FINANCE CONTROL BOARD MEETING, September 22, 2004
Present: Domenic Sarno, Alan LeBovidge, Thomas Trimarco, Mayor Charles V. Ryan, Jake Jacobson, (Philip Puccia, executive director; Bill Metzger, clerk)
Public Officials and Citizens: Heads of firefighters’ police officers’ and teachers’ unions, Tony Basile, Mary Tzambazakis, Tim Connolly (DoR), Patrick Markey, Rose Marie Mazza Moriarty, Pedge Lynch, Mike Cass, Cheryl Rivera, Angelo Puppolo, Bob Demusis, Ritchie Allen, Gini White, and Marilyn Montagna among others.
Alan LeBovidge We have a lot to do today, and what we’re going to focus on is the budget and any new business that we have to discuss, and then we’re going to be adjourning into executive session to discuss some litigation and collective bargaining issues. We will not be returning from that executive session—just to put you on notice. We will have the appropriate roll call vote before we go into executive session.
The first item on the list, as always, is the approval of the minutes from our last meeting on August 30th. Hopefully, everyone on the board has had a chance to look at the minutes. Could I have a motion to accept them? Any discussion? Any changes, etc.?
**Minutes approved unanimously.
AL Let’s go right into the budget. As we all know, the law allows for a city to have one-month budgets while it’s developing its overall list of expenditures, but that cannot exceed three months. We’re in the last month, and so we have to have a vote which would be the 9/12 budget for the rest of the year. And technically what we’re voting on—when we get to vote--is the expenditures, the authorized expenditures. But I thought it would be beneficial for everyone and from an openness point of view if we went through the budget and see the work that’s been going on. And I’ve asked the CFO of the City, Mary Tzambazakis and Phil Puccia, the executive director, if they’d come up and walk us through the budget and so we can ask any questions and, hopefully, get to a vote.
Philip Puccia I think that what we would like to do is do a brief comparison between where the base was in 2004, where we are today and what the principal drivers of cost increases were. And after we make that presentation, then, I think, for the board’s consideration would be a discussion of the revenue collection rate that would be used to settle on what the final expenditure number should be. I think at this point I’d like to turn over the presentation to Mary T. who will walk us through some of the principal line items and other items should the board have questions.
Mary Tzambazakis The operating budget for last year 2004 was $392,834,677. That being said, we applied a level funded budget with some increases that we had to add which totaled a total of $437,680,415. Within that budget of the $437million, we have approximately $25,203,000 that are permanent on-going expenses that the City of Springfield needs to pay. Included in it is a health insurance increase of $5million, that is a 13% increase that was identified working with our current insurance carrier. We have increases in workmans compensation claims. We also have an increase of $3.8million in school appropriations which is required for us to meet our minimum spending level. We have school transportation increase in costs of $2.5million. We have increased debt payment of $5.1million. (I’d like to note on this one that, the prior year, the increase would have been $5.8 million. What had happened was that when the City of Springfield went out in the past and bonded and did an issuance, it would receive a premium and apply it and put the net number in the budget. We did not have such a premium this year, so we put the full amount into the budget.)
We have court settlements increased about $100,000, increased costs to the dog pound of $400,000.
AL Wow.
MT Our rubbish disposal contract has an increase in it of $362,000. Fire Department leases on apparatus is $200,000. (This expense was not incurred last year. What they had done was renegotiate the contract and deferred the costs to future years, and this is the year that it’s hitting us.) Accrued early retirement benefits of $107,000. (When the retirees left last they had accrued sick and vacation time; they did not receive the full amount of what they would have received in benefit. They had agreed to defer it and take it over a period of years, and this is the first such payment.)
AL How long will that go on?
MT It’s going to be, I believe, a four year period in total. So this is year one; we’ve got three more years of that. In addition, the new legislation requires that we set aside a percentage of our tax levy in order to reserve supplemental capital reserve fund requirements. Based on our taxes, that would be approximately $1.9million. It’s an forced savings account, if you will. And another increase in utility and fuel costs...
AL You say it’s a “forced savings,” but I’m assuming we’re going to need to use some of that. We certainly have a lot of deferred maintenance.
MT Correct. That is probably where we’re gong to pull money out for deferred maintenance. Then we have a list of additional one time expenses which total $19.6 million dollars.
AL Before you get to that, in every statement, it always is this way: the “other” number is a big number: $4.5million.
MT Yes, sir.
AL Can you give us some examples?
MT Well, that includes numbers like, for example, there is money included there for the demolition of the Gemini Building. There’s money included in there for the RFPs we’re going to have for the police and the other agencies, and it also includes the money for our legal services for labor relation contracts. In addition, it adds additional monies to several financial departments in order to level staff the departments in order to be able to collect the revenues and to accurately manage the city’s finances. Those increases would add staff to the finance department, the auditor’s department, the treasurer’s office, MIS, and some paralegal assistance in the Law Department.
AL OK, but of the $4.5million, that’s the number, it can’t be that big on the RFPs and stuff like that, so it’s got to be recurring kinds of expenditures...
PP It’s approximately, I believe, 18 different line items.
MT Correct.
PP Specifically, the budget for RFPs and collective bargaining services is a total of $400,000, of which we may not use all of it, but it’s a...
AL OK, so the bulk of it is really recurring items that you want for the City....
MT Approximately $1million of it is for one-time expenditures, of the $4.5[million], which would be the law firm and the RFP contracts, also the tax title, demolition of Gemini, that would be a one-time expenditure.
AL How much is that, a couple hundred thousand, the Gemini?
MT Well, the demolition is $243,000. The legal firm to handle the law [labor?]contracts is $400,000,and in addition, I forgot to add, that we will reduce this number by $610,000. A new funding schedule was adopted by the retirement board which would reduce our expenditures for retirement by $610,000.
AL Reduce or defer?
MT It would reduce it, and they are adopting a new schedule...
AL So that means you’re just deferring it to the future.
MT No, what it would do is it would realign the payment period and the payment schedule out long-term and take advantage of some opportunities that they have in the investment area, I believe.
AL OK.
MT ...to my knowledge. But that would reduce this $4.5million by $610,000.
AL OK. [Writes.] Sorry. You started to say $19million was one time...?
MT Yes, sir. Of the $19.6million, the City of Springfield had a deficit in its health insurance account of $5.8million, and there’s an additional $400,000 in a contract we’ve had with BlueCrossBlueShield which is an administrative set-up fee. It appears that when the contract was initially entered into with BlueCrossBlueShield, it was backloaded: the fee was not collected up front which it would have been to set up the account, but it was put at the back end in the event of a termination of the contract or some type of new contract being drafted.
CVR Is it fair to say that this expense of $6.2million is really something that has been carried forward year by year for six or seven years?
MT I believe it started in 1998, so I think it’s a six-year carry over of a deficit that was never addressed.
AL OK
MT In addition, we’ve also factored in money for insurance run-out claims (should we make a change) and that run-out is estimated at $5million. In June we will be incurring health insurance expenses for our employees, and in December. Usually, it takes anywhere from one to three months to pay out a claim from the preceding period, so we’ve budgeted for that in addition in order to be conservative with the finances. The next component is the $4.2million wage increase for the collective bargaining contracts. We’ve included that into our number.
The next item is the IRS payment and penalties. It appears back a number of years ago that the City of Springfield deposited money for their wages in the federal taxes. There was an error made, and the City was returned approximately $217,000. Rather than checking into the situation, the City cashed the money and spent the money. As a result, we owe the $217,000 in federal taxes plus approximately $400,000 in penalties and fees. I’ve been in negotiations and discussions with the IRS. There is a definite $220,000 payment that will be due—I have received a letter on that. We are negotiating the $440,000. The current treasurer and Mr. Bob O’Brien are presently working through some documentation that was provided from our former treasurer to reconcile the accounts. And in the event we can reconcile, there is the possibility that we can waive the $400,000, but we’re not counting on it until we’ve actually been able to reconcile and negotiate that issue.
AL [Sighs.]
There’s $72,000 in here for a baseball bond expense. There was a bond issued for a building of a baseball stadium, it is my understanding, and $72,000 was expended from that account. It is my recommendation that we reimburse that account for the $72,000, and then go ahead and remove the bond, unauthorized the bond issuance, and release that from a possible long term debt.
I addition we have $3.5million of expenses for payroll. As the cycle goes from year to year, you add a day or two each pay period for the fiscal year. What appears to have happened is that the City was short about 1.8 weeks each year in fully funding the budget for payroll. This will allow us to be current, so that our operating budget for payroll will go July 1 to June 30.
AL So this was kind of lapping every year, they were just rolling over....
MT It builds up every year, so over several years you come up with the 1.8 weeks left. Normally, what you should do, is probably every other year or every two or three years...
AL Clean it up.
MT ...adopt a budget to clean it up, and this hasn’t happened, so this is basically a clean-up item.
CVR As I understand it, this is something that, this wasn’t a rotating thing, they just took it as advantage of this every single year.
MT Correct. So now we’re paying the piper.
CVR So now we’re paying the price this year.
MT So those are the total operating budget items for $437,680,415. There are several other items which I need to bring to your attention for a decision as to whether or not they would be included or not included as part of the budget, and there are different items.
The first item is $500,000 for the Massachusetts Career Development Institute which has run a deficit. It is my understanding from talking with Mr. O’Brien, who has been revising their financial operation along with their new director, that there were some grant monies that supposed to come forth, and they were reduced, and as a result of that reduction, they have this $500,000 deficit.
AL So this is just a carry-over?
MT It’s a one-time from 2004, $500,000 deficit, one-time for last year. Currently, there is work under way with Mr. Morton and Mr. O’Brien to have a balanced budget for this year. They are in the process of doing some creative renting of space in order to increase their revenue stream.
AL Good creative, not...
MT Good creative. No, sir, good creative; they have a lot of space up there, and they are trying to rent the space out to bring income in for the space that isn’t utilized.
The next item is $2million on Tapley Street/State grant. Now, this issue is a little bit confusing. It is my understanding that the City was to receive a $2million grant for Tapley Street renovations several years ago, and the money was not received, and it’s been carried as an audit deficit for several years. Mr. Puccia has contacted the department that was to issue the grant, and has had some initial discussions, and his belief is that the money will not be forthcoming. It does not appear to be that way.
What I have done is that I have passed the documentation over to our Law Department to see if there is legal recourse. There may or may not be, but we needed to add this to the list.
The last issue is an interesting issue. It has to do with a bond anticipation note that was authorized for the two golf courses, for Franconia Golf Course and Veterans Golf Course. It appears that rather than issuing a bond anticipation note, there was a bond anticipation issued like a grant anticipation note. The Park Department was to receive a million dollar grant as part of this project. Somewhere along the line, there was some misunderstanding, and I’m not actually sure where, that the $2.lmillion, rather than becoming a bond anticipation note, became a grant anticipation note, and the City thought they were going to get $2.1million, off-set with a grant, where in reality, they were going to get $1million, and the project was $2.1million. I’ve met with the park director, I’ve gone through his documentation, and he’s been able to show me that the project was really $3.1, and he’s baffled as to why this occurred. This summer when we went to do our roll-over of our bond anticipation notes for $3million, because of the way this authorization was drafted and approved, we had to pay down the bond of $2.lmillion, creating a deficit for the City. Technically, there are some components of the project that haven’t finished, there may be an opportunity to go out and bond in the future, but again, being fiscally prudent, we’ve added the $2.1million to the deficit number, and this, along with the Tapley Street issue need to be worked on over the next several months to see whether or not they come to fruition or not.
AL But these are not cash outlays that we have to have any money for right now.
MT No, sir.
AL This is money that has been spent in the past...
MT It’s already been expended, and it reduces our cash flow.
AL It’s effectively a clean-up, but for budgetary purposes, you have to recognize it. OK, you spent it, and you have to have an off-set someplace.
MT Yes, sir.
AL OK....Keep going.
MT Then we’ve added a few items that are not going to be part of the budget, but we felt that should be brought to the attention of the Board of some items. There is an estimated deferred maintenance number of approximately $50million that’s come up.
PP Mr. Chairman, this is simply an estimate, but, to establish maybe best practices in a perfect world, if we had the money to make the kind of maintenance improvements and investments that we should over time.
AL I’m sure if we found $50million, the Mayor could spend it on deferred maintenance.
MT My recommendation would be to—we put this number in here, but my recommendation would be to form a capitol improvement committee, and do a clean assessment of really what the true number would be—what really needs to be maintained and then come back to the board with a recommendation down the road.
AL OK.
CVR I would be in favor of that, because I think that the laundry list that gets you to the number that you have there is primarily if not exclusively, public buildings.
MT Correct.
CVR We have much beyond that where the infrastructure has been allowed to totally deteriorate. We have 2000 streets in Springfield. Last year only 11 were resurfaced; this year, we’ll probably do 70 or 80, but just in the whole field of highway and sidewalk improvements, you’ve got another box car figure. And I know that years ago, the City did have a capitol improvement committee with some discipline to it; I think that’s been long lost, and as long as we’re starting from scratch and trying to rebuild this city, I think that a capitol improvement committee which looks at all of our needs and, perhaps, it’s within our ability to create some sort of capitol improvement program would be a major step forward. One of the things that Mary talked about earlier, and the chairman commented on it, was this mandate in the legislation that we put aside 1 1/2 % of our levy into a capitol improvement program. I can remember talking to Mr. Kriss about this in May, and I told him I was very much in favor of that, because it’s almost forced savings to give us some money to do something in the way of capitol improvements. So I think this is a major step forward, and we ought to take advantage of that opportunity.
AL I agree. OK.
MT The last item here on the budget is the City employees unfunded sick and vacation time, and if everyone decided to leave, and we had to give them their money, this is how much the total would be....
AL So that would be $21million.
MT ...but it’s nothing we’re paying out currently, it’s just a liability that’s out there that’s...
AL I view those as we’re taking a kind of snap-shot of the City...If everything stopped tomorrow, if you were a business and you were going out of business, these are all the liabilities you’d have. Very good. Let’s keep going then.
MT The deficit can range anywhere from $33.9million to $38.3million depending on the decisions that are made today regarding the tax levy and the amount of money that we’re going to be allowed to identify as our revenue for next year. Our total tax levy for ’04 is $125,000,000 approximately with an increase of $3.1million which is 2˝%. We are estimating our new growth at $1.5million, which brings us approximately to a subtotal of $130million for our gross tax levy. From that, what we would do is we would reduce approximately $6.8million from that number for our overlay account, which we are required to put aside for abatements and exceptions, and that brings us to a net of $123million.
Now in the past, the City of Springfield has funded 100% of that money as available revenues for budget.
AL It just assumed it was going to collect it.
MT ...and, based on prior collections, they have not come close to that number. Now, the board has discussed and identified that they want a more realistic picture on revenues and wants to appropriate a number somewhat less than 100% to more clearly reflect what we believe we’ll be getting in as revenues this year. At 94%, we would have a $38.3million deficit. The past collections of the City range anywhere from 92% to 93 to 94%....
PP If I may interrupt, 94% is pretty much the historical average for the past 3 to 4 years.
MT ...95% which would create a $37million deficit, and 97.5% which create a $33.9million deficit.
AL And that 97˝ % is based on ...?
MT 971/2% is based on a couple of things: Number one, In the time frame of December to June of this year, we have collected 97.5% in taxes. We’ve been very aggressive on that. In addition, I think that, at this point, given that the current media attention and the fact that there is a control board in place with legislation that gives it much stronger authority, I would feel very comfortable with a 97.5% or even a 98% collection rate.
AL Want to bet your house on it?
CVR Yes, I would.
MT [laughs] You know what? I’d bet my job on it.
CVR I would like to comment on that, because I think that Mary is correct that, while ordinarily you would look at the prior history for the past three or four years, I think that’s valid only if you’re going to do business the same way you did business the last three or four years. And I think it’s clear to everyone, the people of Springfield and the taxpayers specifically, that we have turned a corner, and that we’re going to have very aggressive tax collections, and I think that the 97 1/2 % is really something that’s been achieved only by jaw-boning, and, yet, that’s a very significant increase. As we all know, each percent higher that we go is worth about $1.2million, so this is a substantial decision to be made. I don’t know that it needs to be made today, and a lot is going to happen in the next two months. We set the tax rate in December, and that’s when we really have to lock into that figure. Tomorrow, the City’s financial leaders are meeting with Mr. Puccia to resolve finally the RFP to go out for collections. There was a full-page newspaper ad several days ago that some people were unhappy about, but it really was very provocative and produced some real attention.
We had a press conference a week ago with a list of all the bars and cafes who owe $1.5million. I tell you that there were results from that already. And so I think that, really we are changing the way we’re doing business, and I am certainly willing to vote, if we have to vote today, and, again, I think it’s a decision that can well be postponed until we get to tax rate setting time, but I feel very comfortable that we will meet the 97.5% figure, and that we may even do better than that. That’s my viewpoint of it, at any rate.
AL OK. I mean, look at, I hope you’re right. I hope you get higher than 97.5%...
CVR Sure...
AL ....and I’m glad you’re taking these other initiatives. My reaction to it is just that, you know, we’re trying to be conservative, and we want to make sure we don’t end up as has been done in the past, and I would personally feel more comfortable like maybe average it or do something that between historical and that’s why I think this 95% number you have in there hedges the bet a little bit, but let’s keep going.
CVR I guess my question is whether or not we have to make that decision today.
Jake Jacobson Well, Charlie, doesn’t it seem like if we’re clearly going to do everything possible to continue the efforts to collect as much of this as we can, and, hopefully, we’ll collect it at 97 or 98%, but, in this particular budget, we’re all clear that there is going to be a deficit that is going to result in borrowing from the trust fund, and so the only thing that’s in question is the ultimate amount of the borrowing. And so, since we’re obligated to adopt a budget today, regardless of the revenue assumption that we make, I think we’re all committed to collecting every dollar that the City is rightfully owed, and, if that results in us borrowing a couple million dollars less, we’ll all be delighted, but, I guess, just as a point of order, do we not need to adopt a budget today? Are we not legally bound to do so which means we have to pick a revenue assumption, but clearly we don’t need to borrow the money if it’s not required. We just are making assumptions here as is required in every budget.
Thomas Trimarco We borrow from the fund as needed, so that’s where it would come out. If we have collection rates, that you’re anticipating and hoping for, then we’d borrow less.
AL OK. Let’s keep going, and I’d like to have a budget that we’ll adopt today...
CVR I thought that what we’re really adopting today is an expenditure budget....
AL I agree.
CVR ....and that’s going to be the expenditure budget regardless of how successful we are in revenue
JJ That is correct.
CVR ...and, and, Mr. Jacobson’s question leads to a deliberation as to how much we’re going to ultimately borrow from the trust fund. And my guess is that’s a decision that’s going to be unraveling as the year goes on, and, by that time, we will know exactly what happened, so this is more of just a prediction that each one of us coping with right now, but doesn’t have a final effect.
AL That’s right. In fact, let me ask you about that, because I know you’ve been tying to do some analysis of that from a cash point of view. This is a budget. Now, let’s talk about cash for a second. In your projections of cash flow for the year: two issues, and I know I’m bringing something up that I’m not right in it, but one of the things that’s been in the newspapers or the media has been an issue of relating to this $10million, $13million of some school bonding issue which I am sure has some cash in place. Could you take us through what your cash flow projection is as it ties into a sense of where the budgets going?
PP Are you looking for a summary?
MT Or an explanation of the $13million?
AL Both. Well, give me an explanation of the $13. And then go to the Mayor’s point or Mary’s point about how much cash will we need from the state trust fund, I’d like to get a sense of that.
PP Just before Mary gives you an overview, what this cash flow that we have, it’s a prediction based on this piece of paper. It doesn’t assume that we either go from 95 to 97 and/or that we’ve reduced expenditures or picked up additional revenue in other places.
AL I understand that. It’s a snapshot based on today’s facts.
PP That’s exactly right.
MT This is what will happen with the cash flow. The cash flow number will be dependent on the decision made today. It will be either $38million, $37million or $33million. Now, once the decision is made today, we will input the numbers into the cash flow, but, given what’s decided on as what is decided on for expenditures and what’s decided on for revenue, at that point we would take those numbers and break them out over the course of every week for the fiscal year. There is a second borrowing that would take place, a different type of borrowing, which is the borrowing that would take place for cash flow purposes so that we do not go out...
AL But that you would pay back.
MT Right. That would be paid back within a week after we receive our money from our cherry sheet, and it actually saves the City $780,000 this year.
AL Before you get to that, the revenue is not just the tax revenue. And, thankfully, we did get, just recently, the additional lottery aid of $4.1million. Without that aid, these numbers would have been bigger. So, thankfully, the state came through with additional $4million dollars. OK, so, just to round off the picture. So give me the cash flow.
MT Well, the cash flow is going to be this, depending again on what budget is identified, cash flow would...
AL Use the, just for the sake of argument.
MT Well, at 95%, we’re going to borrow $37million this year from the trust fund for operating expenses. I think there are some potential things that we’re going to be doing internally that would reduce the amount of money we borrow.
AL Just assume we do nothing, that would be....
MT If we do absolutely nothing, it’s going to be $37million.
AL We’re going to try like heck to reduce it.
MT Right. And I think there are significant opportunities to get it down from $37million at this point from what I’m seeing.
AL OK. That’s what I wanted to understand.
MT And, in addition to the $37million, there will be the cash flow borrowing, but again that would be replenished as time goes on.
AL My concern is that ...the cash flow I’m not worried about, that’s you borrow for a couple of weeks and the City saves its interest cost so you pay it back. I’m concerned that in the long term for the City, anything we borrow that is really longer term borrowing, we have to pay back, so it’s kind of like we’re putting an albatross around the City’s neck. And starting in 2008 I think is the date that’s going to build in a repayment schedule to the state which means somebody’s going to have to come up with that money over “x” period of time.
MT Well, I will tell you this, that, based on these numbers, there are a number of items here, for example, the insurance run-out claim is listed at $5million—I’m not in total agreement with that number. I think the number is somewhat smaller; there’s going to be a meeting taking place next week to further define this number. I think it could go down $4million; the auditor thinks it could go up $1million. But the complexity of health insurance, you can’t tell. So let’s assume for the best case scenario, that it goes down to $4million. If we’re able to be successful on this grant, because I’m not giving up on that, and the law department is going to look into it, that’s another $2million, that’s $6million. If decide that we can go out and bond, like we should have done, for the golf courses under this temporary bonding, $2.1million might go down to $1.8million, because we’d have a $200,000 payment, let’s say.
AL I understand what...
MT So there’s a whole host of things, and I think that the worst case scenario would be $37million if we adopt the 95%, but we’re not including also the uncollected taxes of $52million when that starts coming in, and that kind of a thing.
AL Which clearly don’t effect the budget, but effects cash flow.
MT It does.
CVR Part of it does effect the budget, the interest and penalties are useable by us.
MT And that’s why we’re going to be very aggressive on the collections.
JJ Mary, does this include dealing with the $13million of unused bond proceeds as well?
MT Well, what happened is, I’ve been instructed that the $13million is to be taken out of our cash pool. It will not effect the budget; it will effect our cash position. So the $13million will be taken out of cash as soon as we receive our cherry aid payment, and will impact our cash flow and set aside, as we’ve been instructed to do.
PP And that’s in about a week or so.
MT It’s in about a week. I would like for the board’s informational purposes to note that there are several communities, a number of communities, that do not separate their cash out that way, that have done it the way we’ve done it. There are also a few communities that do separate it out, and I believe that the trend may start to be the separation, but there’s nothing inappropriate about the way this was handled. I have a list of communities that are currently doing it the same way...
AL OK. It doesn’t sound like there isn’t any impropriety here. It’s just that money was spent on projects, and if we want to account for it, maybe it would be more conservative to separate it. But when, under this assumption, does the City need to borrow? When do you run out of cash? Or do you ever run out?
MT Well, I don’t think...
PP Our first borrowing, I believe, on 11/27. Is that what you have, Mary?
MT Yes.
AL So you don’t need to borrow...because, originally, when we had one of our earlier meetings, we talked in terms of needing money in September which has come and gone, and no one’s needed the money, so I just want to get a fix for when you think, because we have to apply for it....
PP I believe it’s the last week in November, and the date was moved back because of some increased collections, and because we’re going to get the cherry sheet money within that kind of time frame that will be in about 10 days or so.
CVR As a matter of fact, if you didn’t segregate the $13million, you might even be able to ride through late November.
MT Perhaps, yes.
CVR Because your analysis, as I understand it, is based upon a segregation of $13million.
PP That’s correct.
AL And that’s a legitimate point, but we have to think about whether we should just...as long as we know we have it, where it is, and if one of the objectives is to reduce the borrowing, OK, we’ll have to deal with we segregate it, but we use it
CVR I think that maybe under different ground rules, we could say, “Well, we want to make sure this is protected, so nobody messes it up.” But we’ve got to remember this board is controlling the finances for the next three years, and I don’t think we need to protect the board from itself.
AL No.
CVR So if we leave it unsegregated, it means that it helps us on the cash flow basis. It means we don’t have to borrow $13million and pay market rates to borrow it, and we all understand that the money is properly accounted for. And, by the way, I think that for the next several months, we’ll be making a decision as to how to approach this $13million. There’s 2 or 3 alternative options there, too.
AL And I think that’s still a work in process, as I understand it, because it was bond money that was borrowed for school projects, and then there are some “bans” that are coming due in July, and there may be some issues as to whether or not we must, at that point, reduce the ban borrowing by the excess amount. I think that’s a legal issue.
JJ So the $37million is a good estimate, because based on what we know now, the $13million is actually a cash outlay in July; just past the end of this fiscal year, we’re going to have to reduce our bans by $13million. That could change, but based on what we know right now, that’s what will happen.
MT That’s right. The last point I’d like to add to this is on the bonding issue. Philip and I have been in some discussions, and I think we’re in agreement that we would really like to take a more in depth look at all the bonding accounts and all the finances, and I’ve asked our CPA firm to do it, because there are instances when you authorize a bond, and you haven’t issued the bond, and you’ve used general fund cash, so we’ve started looking into that, because I’d really like to get my hands around the whole bonding situation, and feel comfortable with it. So we have started discussing how we’re going to approach that.
PP Yeah, and I think what we might do in the next, I don’t know if it’s in the next meeting or thereafter, but present some sort of outline for a plan to begin that and get the board’s approval.
AL Anybody else?
CVR As chairman of the school committee, I think that that’s a sensible way to approach it.
AL OK. We’re relying on you.
CVR Well, it’s a complex job at best, and again, under Chapter 70, the superintendent, not only in Springfield, but every community in Massachusetts has the unilateral power with respect to the appointment of principals. Now, I’m not saying that the control board couldn’t do it, but I think that this takes in a lot of value judgments as to the educational ability, leadership ability, and I’m not sure it would be very productive for the board to substitute itself for the superintendent’s judgment. And, I could say that I’m sure that from time to time, any one of us, including members of the school committee might disagree with his selections, but that’s the law, that’s the process. And in the long run, I think it makes sense. Otherwise, you’re going to so politicize the process, that it’s going to hurt the educational requirements of the City.
JJ I think it just makes sense that I’d like to have timely notice, and I guess I’ll define “timely notice” as same day notice for any appointment of a principal go to you, Phil, and you route that to us, and so that we’re aware of it. And if anything does come up, we have an opportunity to raise the issue with Dr. Burke, and/or we have our statutory authority to rescind anything within 14 days. So as long as we get timely notice, I’m completely OK with your recommendation. So, I guess my proposal is that I’d like to add to your recommendation, that, as it relates to principals, we get same day notice of the action that Dr. Burke is taking, and then, that’s fine.
AL I think Jake’s point is good since we have a 14 days to react, we have to know when the 14 days starts, so, if there was anything that came up, we’d be on notice. That’s fine. Do we have a motion?
DS ...indicate on principals to react. A review from the control board or you’re reacting to?
AL No, it’s just notice. If we don’t do anything, we don’t do anything, but if there’s a real bell goes off, we have 14 days to react to it under the law.
DS So it’s not a review, it’s an outside bell that would go off. Thank you, Mr. Chairman.
AL All in favor?
**Motion passes unanimously.
AL Anything else?
PP Under new business, I’d just like to clarify the public record as it relates to MassMutual and their report. Obviously, we have (we being the control board and City staff) have reviewed it. We’re beginning the process of implementing some of its recommendations and are doing so quite aggressively, and we expect that those efforts will pay dividends over the course of this year. I could just list a couple of different departments where activities are taking place: we’re working aggressively in the assessor’s office, the city clerk, as well as the treasurer and collector’s office. so there is a great deal of activity. We expect more, and I just wanted to clarify that for the board.
AL Just for information, what is happening in the assessors office?
PP We’re beginning the process of moving from paper to a map data base; Bob O’Brien is helping us with the GIS system. We’re taking a hard look at the abatement reserve account to find out might there by money within there that the City should actually have available for its use. It was a recommendation made by MassMutual; it’s aggressively being pursued by the Mayor’s staff.
AL We have some people from MassMutual who are still helping us, its that right?
PP That’s correct. I could be in a better position to update the board at the next meeting, but I just wanted to assure them and the public that the report is taken seriously, that we’re moving on it aggressively, and we expect that it will bear fruit over the course of this fiscal year.
AL OK. Any other items before I open it up for the members of the board.
PP I have no other items.
CVR Mr. Puccia and I have had several discussions on this, but, as you know, we have been trying to, where it was feasible and appropriate, raise fees, whether they’re permit fees or license fees. And one of the areas of interest has been fines for parking violations.
The City’s traffic commission, which is charged with this responsibility, made an analysis of all of the City ordinances and recommended to the City Council some months ago appropriate raises in those fines. The matter went to the City Council, and many of the recommendations of the traffic commission were followed. However, in the instance of 5 different areas, they were not followed, but were tabled for 2 or 3 months and then very recently were acted upon. I have passed to the members of the board a copy of the ordinance, and I call your attention to the third page where you will see a series of references to certain articles of City ordinances indicating that the recommendation had been $25. in each instance, and the City Council, instead of fulfilling the recommendation went to $15. The two most important ones are the third and fourth items. And our understanding from the company that does the collections is that the third and fourth items, if fully implemented at $25., would produce about $400,000 annually of new income.
AL The third and fourth are?
CVR The meter signal displayed and the CDB (central business district) parking overtime. And, so the vote of the City Council really minimizes the opportunity to collect this additional revenue. I might point out that fundamental to this analysis by the traffic commission was all they did was compare our fines with surrounding communities, and this was their judgment, I think conservatively stated, as to how far we had fallen behind. And so the increase from $5. and $10. to $15. really, in my opinion, would probably produce $150,000 of new income maximum to $200,000, and I think we’re losing an opportunity for at least another $200,000 in parking meter activity.
It’s my recommendation that we’ve got a long ways to go to fill this tremendous hole, and I think that unless we do it on things like that are of some inconvenience and some pain to people who have overstayed their time—after all, this is not a permit or a license, this is a penalty—so I would recommend that for the board’s attention. And I think that by referring to this sheet which is from the City Clerk showing the activity, and obviously dealing with the five areas that are delineated on the middle of page 3, and so it would be a question of whether or not the board is willing to approve the fines at a $25 level in accordance with the traffic commission recommendation or do you want to stay where the City Council is on those five, which is at the $15. level. Mr. Puccia, Can you comment on that?
PP Yes, I’m comfortable with it because it’s consistent with what the other cities and towns are doing, and it is not an increase in fees, it is simply a fine.
AL All right, fine. Any questions or comments?
DS Yes, in all fairness to the City Council and all due respect to His Honor, this is something that we weighed the pros and cons of, and many of the fees we did triple in nature as far as the penalty fees, but we also tried to be cognizant of trying to business also downtown for our business people downtown, weighing the pros and cons of not trying to run people out of the downtown area also as far as...
AL Domenic, this is not raising a fee, this is if you violate: don’t feed the meter or don’t do something else, then you have the fine.
DS Right.
AL Otherwise, it’s cheaper to pay the fine than to pay parking.
DS Well, no, we’ve increased—those other fees have been increased from, rightfully so, increased from $5. to $15. They’ve all which were $5. or $10. at that point in time...I’m just echoing the sentiment of the Council and also the sentiment of the downtown business individuals also. I’m not trying to...they shouldn’t be rewarded for parking penalty, you should pay the penalty, and we just thought this would be a gradual increase at that point in time to entertain, moving from $5. to $15. which is a tripling, and we could look at ...
AL Do you know when the fine was set, how many years ago?
DS I believe it was set back some time in the early nineties or eighties...
AL The Mayor’s first time in office? I mean at an inflation- adjusted rate, $25 doesn’t seem unreasonable.
PP I have not done that research.
TT Mr. Clerk, is the recommendation of this parking company the levies, the levy itself is consistent. It’s that the penalties were inconsistent. Is that how I understand their point of view? In other words, the $5. fine is consistent, it’s just that the penalties in Springfield had fallen down.
CVR No, this is a case of where we’re recommending an increase in fines.
TT And that’s their recommendation.
CVR And that is the recommendation of the traffic commission.
TT Comparing Springfield with adjoining communities.
CVR With other surrounding communities, yes.
JJ Is it generally perceived that there’s a lack of parking downtown? Based how the downtown is metered that people actually have to violate....
CVR Well, that’s a complicated question. Sometimes yes, sometimes no. Some streets yes, some streets, no. So, I can’t say “yes” to you or “no” to you on that issue.
DS Well, if I may, Mr. Chairman, I would make a motion on the $5. ones to increase to $15. to stay as so. And so, in a spirit of compromise, if we could look at the question of the $10. ones that they be increased to $20. that would double it.
AL Well, before we deal with your motion, we have another one first. So let’s deal with that one first and see how that comes out. So, I guess the first one was to go to $25. on the enumerated 5 areas.
CVR I’m not sure whether there was a second on that, and even if there was, Mr. Sarno has a right to move to amend. Then we’ll see if there’s a second on that. I’ll make a motion on the $25; is there a second on that? [seconded by AL] All right fine. So, now Mr. Sarno gets to amend it.
DS My amendment would be that the current $5. ones, which have tripled to $15, stay as is, and, in the spirit of compromise, there was a question on the $10. ticket that could move, doubling, to a $20 ticket.
AL Any second? No second. OK, so let’s vote on that.
Bill Metzger (clerk) Just to clarify, that’s on items 3 and 4?
AL/CVR All five.
CVR What I said on 3 and 4, was that that’s where the bulk of the money comes from.
AL All in favor?
**Motion passes 4-1, DS voting no.
AL Any other items of new business that any of the board members want to bring up?
CVR We kind of had a rocky period—by “we” I mean the board—on or about September 1 with the preparation of a report which was called for in the legislation. And, I say this most respectfully to my colleagues on the board, that the legislation makes it clear that there are five of us. Two of us got here ex-officio, and three were appointed by Secretary Kriss, but I think it’s imperative that we work in a collegiate a manner as
we possibly can. And everything I’ve seen indicates that that is exactly where my colleagues want to be. There is another report, I think, due on October 1, and I would suggest that it would be better if Mr. Sarno and myself—and I would certainly make myself available to participate in the formation of that report. And if, in fact, depending on what the majority wants to say, there is a need for a dissent, that that be conveyed to the leaders of the House and Senate, because any body such as this which is a multi-member body almost presupposes there might be dissent. And, if there is dissent, it’s fundamental, not only in accurate reporting, but also courtesy to the members to reflect that. As we go forward over the life of this board, it’s impossible to predict right now who might be in dissent on any given vote, but if we have to make a report, I’d like to feel that that would be carried forward. And so if, in fact, you would agree with me after a reading the legislation that if there is a report due on or about October 1, I would like to, as I say in the spirit of friendship and openness and working together, say that I’d love to be a part of the preparation of that report and have the usual give and take that we would have, but in any event, that if there is a dissent that that be properly noted to the people that we’re sending the report to.
I’m not mad at anybody. I just felt that we should clarify, and in that spirit, I would not press forward with a formal dissent to the earlier report, because I think that’s yesterday’s business. It’s water over the dam, and we should focus on where we’re going, not where we’ve been.
AL I agree with that.
DS Just to indicate that we’re not looking to sugar coat anything at all either. We want to continue to work constructively with you. I feel it’s important at times that if there is a business disagreement that we’re able to clarify our point why we feel so strongly, but again, we shouldn’t sugar coat anything at all, but put everything on the table work cooperatively together.
AL Any other questions, comments? All right, we’re going to go into executive session. I guess we need a roll call vote...
CVR I make a motion we go into executive session for the purpose of discussing litigation and collective bargaining, and ask that the clerk call the roll. And that we will not return after the meeting.
Vote is taken and meeting is adjourned at 1:10pm.