Wednesday, March 31, 2010

Live reporting - Financial Planning Committee

Present: Whalen, Hardesty, Nutting, Zollo, Sabolinksi, Mason, Rohrbach, Bartlett, Morrison, Cameron (late)
Absent: Roche, Trahan

Meeting opens

Agenda -

  1. Whalen update on his analysis with additional columns added
  2. Review forecast
  3. Override question
  4. Meeting schedule

    1 - Whalen added several columns to pull in the students and teacher populations for the communities already being compared to

    Teacher salary ranks higher than others but that is and has been a deliberate choice of the School Committee to ensure that the best teachers are here.

    Hiring teachers in specific subjects like Chemistry, Physics, Science, Math, Biology and Special Education have tended to be higher cost because of the demand and experience for their skill set.

    Still need to look into Wrentham, Southboro and other communities were they are not K-12 districts.

    According to the DESE numbers, Franklin is now under the State average in all 11 categories tracked at the state level for per pupil spending

    2 - Moving to the forecast numbers

    use 5% for the municipal interest rate for the model, 20 year term for the debt service for the high school
    might have some start in 2012 but realistically it should be 2014-2015

    We'd need to take say 5 million for the architect, there would be a small impact to the tax payers for that, then a year or so we'd take some for the construction schedule, maybe 20, then 30 and roll it all up. The shovels wouldn't go into the ground right away and then it would take time to finish.

    On the state aid forecast, there are three plans - best case, moderate, worst case. Discussion around assuming 0%, moderate a 3% drop, worst case a 5% drop (for 2013, with 2014 flat)

    Chapter 70 is formula driven

    Our purpose is to forecast what is reasonable and likely, it may not be accurate but who knows what it really will be.

    There is also the economic factor, it may simply continue down due to the state not figuring out their economic problems

    Will need to adjust the local receipts as they are primarily excise taxes and not likely to increase as drafted, more likely to remain flatter and then gradually increase

    Local receipts are income based - building permits, license fees, etc.
    likely to be flat this year, next and then increase gradually

    Property tax should be adjusted to show more of a difference between best case and worst case

    Discussion on how to handle the deferral, can't really change the number because it was forecasted and shown previously. Not changing the number so that it matches the prior report, should make it easier to handle the updates via footnotes or a reconciliation report.

    As a long-term planning group we want to provide a baseline and reasonable assumptions for the forecast, we can't be changing the numbers every time there is a new hunch or change in the numbers.

    2012 and beyond, salary assumption is for historical rate of growth
    There is virtue in picking the historical average, it is defensible and everyone can "get it". What other numbers could be used would be open to much more speculation.

    The bottom line in the whole report is that business as usual is not sustainable here in Franklin.

    When you weigh in Hopkinton, Medfield, Sharon and Hudson they are the only ones where their performance is close to our results. The teachers are compensated well. We are spending our bang for the buck on student performance (i.e. MCAS) which we will see in our housing values.

    Current contracts are running 2-3 percent over three years. Everybody seems to be getting at least one zero. In years past, everybody got 7-9 percent over three years. Not now.

    Even if we assume no raises, there is still a deficit to be dealt with. The problem is bigger than salary increases.

    Policy of Council is to spend 3.5% of the general fund revenues. So as the general revenues increase according to the forecast, then there would be a corresponding increase.

    Doug will update the numbers based upon the discussion and send around an update.

    3 - Override question
    2 councils have endorsed the long term plan
    The "O" word is such a sensitive issue
    The report has established credibility (the numbers this year are close to accurate)
    Spell it out that the prior recommendations have been unable to avoid further deficits.
    The alternative this year should be a consideration for the citizens to make a choice between cuts and an increase.

    Need to open the door for the discussion, presenting the facts
    Get to a multi-year strategy for 2011 and beyond
    Need to mitigate the financial risk of being #1 in State Aid and 28th in terms of local revenue generated amongst our peer communities.

    4 - Target for report update at Apr 28th Council meeting
    Jeff provides budget update at Apr 7th Council meeting
    When to schedule the Finance Committee review? Should include them as a preview on the report before going to the Council.

    Discussion on scheduling another meeting before the 28th, 14 or 21st possible, chose not to schedule a meeting for now. Can schedule one if necessary.

    Franklin, MA

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