STRAW POLL TO BE CONDUCTED AT 9:00 P.M. Questions:Please vote just once 1. Do you support the Town Manager’s budget as proposed? Yes/No2. Do you support increasing the Town Manager’s budget? Yes/No3. Do you support decreasing the Town Manager’s budget? Yes/No
TOWN OF TOLLAND FY 2011-2012 BUDGET PRESENTATION As Proposed by Town Manager, Steven R. Werbner March 29, 2011
BUDGET PROCESS Development of the budget begins in October with the preparation of the Board of Education request and culminates in May with the Town Referendum. Charter Mandated Process: Superintendent Board of Education Town Manager Town Council Voters Referendum is May 3, 2011 and, if the budget is defeated, votes are every two weeks until a budget is passed.
Public Meetings to Date on Budget Joint Meeting of Town Council/Board of Education – February 10, 2011Capital Budget Public Hearing – February 17, 2011Community Conversation on Budget – February 24, 2011Joint Meeting of Town Council/Board of Education – March 8, 2011Budget Review Sessions with Town Council – March 17, 22 & 23, 2011Public Hearing on Manager’s Proposed Budget – March 29, 2011 Upcoming Meetings Town Council finalizes Budget – April 5, 2011Annual Budget Presentation Meeting – April 26, 2011Budget Presentations at Senior Center – April 27, 2011 @ 12:30 p.m. Budget Referendum -- May 3, 2011
What is a Budget? • A financial plan with sets of priorities and direction that the Town Officials, Town Council and residents believe accurately reflects the most important needs of the Town operations. • In terms of the Board of Education, the Town Manager and Town Council, by State law, can only determine a bottom line number. The allocation of resources is the sole prerogative of the Board of Education.
TOWN MANAGER’S BUDGET GOAL FOR FY2011-12 Produce a budget that is realistic in light of the economic times THIS BUDGET WILL: Maintain important services Continue to provide a quality education for our children Meet the budget objective of limiting an increase in taxes to under 3%.
INTRODUCTIONBUDGET PREMISE • The premise from which I am working in preparing this budget is as follows: • The Town and Board of Education have legitimate needs for which the associated cost exceeds our ability to pay. • The Superintendent and Board of Education do an excellent job in identifying their needs which are incorporated into their budget request. A quality education is extremely important for this generation and generations to come. • Town and Board of Education Services are of the highest quality, yet our cost for such services are in most cases lower than other comparable municipalities.
No one wants to see existing programs in either the Town or Board of Education eliminated. At the local level, REALITY is, that the property tax will only absorb a limited amount of the increase necessary to address our legitimate needs. While some are in a position to pay more in taxes, many are not. Therefore, the full amount of expenditures requested from Departments, including the Board of Education, are in my opinion not affordable.
BUDGET PARAMETERS How did I arrive at the financial plan I am proposing? • Analyzed revenues based on end of last year results as well as the first six months of this fiscal year. • Monitored actions taken at the State level to reduce or at best keep municipal aid flat. • Established in November of 2010 budget instructions for all departments with a goal of limiting any tax increase to under 3%.
BUDGET PARAMETERS (continued) • Discussed in December of 2010 the budget parameters I established with the Town Council. • In February of 2011 held a Community Conversation on the status of revenues and budget parameters to get public input. • Have continued to monitor local, State & Federal revenues and have continually tested my original expenditure assumption against potential tax impact. • Only after determining available resources do I then establish what I believe to be appropriate expenditure limits.
BUDGET PARAMETERS (continued) • While approval of the final budget amount at referendum is not the ultimate factor I use to establish budget parameters, I feel it is my Charter mandated responsibility to recommend a budget to the Town Council which can be supported from what I perceive to be a reasonable revenue perspective.
LOCAL FINANCIAL CONCERNS GOING FORWARD • LocalgovernmentislimitedbyStatelawinregardtoitsabilitytoraisefunds. Therefore, weareheavilydependentonpropertytaxesandStaterevenuesassourcesofrevenuetofundlocalprograms. • The level of State aid to municipalities is insufficient to meet the growing cost to towns and cities and places an unacceptable burden on the local property tax, in particular education. • Local governments cannot continue to provide the same or an improved level of service unless property taxes increase for a sustained period of time.
LOCAL FINANCIAL CONCERNS GOING FORWARD (continued) • Senior citizens on fixed incomes and others in lower income brackets are finding it difficult to stay in their homes; working people are continuing to lose jobs; government workers in many communities including Tolland have in the recent past accepted wage freezes and other concessions to help reduce expenditures. • The State of Connecticut continues to impose many unfunded mandates on towns and boards of educations. The Town of Bristol recently calculated that they are spending over $14 million on unfunded or partial funded State mandates.
STATE OF CONNECTICUT BUDGET CONCERNS The State of Connecticut is projected to continue to have large deficits over the next several years jeopardizing our level of State aid. Future Projected Operating State Deficits: Future Projected long-term State underfunded obligations:
STATE OF CONNECTICUTBUDGET CONCERNS (continued) • It is interesting to note that the State is projecting a positive balance at the end of this fiscal year in the amount of $57.2 million, but only as a result of one time windfalls from the Federal Government and significant borrowing authorized last year, use of all Rainy Day Funds plus an additional charge levied on our electric bills. • Without these one time sources of revenue Connecticut would have had a $2 billion deficit at the end of the current fiscal year. • The Governor’s budget going forward does not rely on this one time source of revenue or borrowing for operating expenses which necessitates either increased taxes, decreased expenditures or a combination of both.
Impact of Governor’s Budget on Tolland • Most Education and Non-Education grants were funded at the same levels as in the current year. ECS, our largest State grant for education is currently budgeted at $10,759,283. State-wide prior to 2009, this grant was increasing approximately 5%/year. For Tolland that was approximately $400,000-$500,000 additional dollars annually. The grant has not increased the past two years and will not increase for the next two years. • Notable exceptions are: Pilot Grant for Manufacturing Machinery & Equipment (MME). This grant was eliminated State-wide. The loss of revenue to the Town was estimated to be $80,000 for the next fiscal year. • Transportation Grant was reduced by $90,000. • New forms of revenue recommended such as a portion of increased sales tax based on retail sales in the community, boat tax, tax on hotels, car rentals, planes and tax on cabarets will have only a minimal impact on Tolland.
Changes in State Aid and Other Sources of Revenue for the Next Fiscal Year Over Current Year Revenues • State Aid for Education (104,253) • ECS: 0 • Public School Transportation: (104,261) • Adult Education: 8 • Aid to the Blind: (0) • Municipal State and Federal Grants (132,490)
Changes in State Aid and Other Sources of Revenue for the Next Fiscal Year Over Current Year Revenues • Other Non-Tax Revenue: ● Charges for current services: 6,216 ● License, Permits and Fees: (46,000) ● Interest and other revenues: (30,855) TOTAL DECREASE IN REVENUE: (307,382)
Grand List Growth at 1.10 after adjustments for new construction, elderly exemptions, MVS and slight decline in the mill rate and excluding the impact of the State mandated revaluation= $406,355 History of Grand List Growth Percentage:
Fund Balance An increase in the use of Fund Balance by $30,000 to a total of $230,000 is recommended to be used as a revenue in these difficult economic times. Rating agencies recommend that Fund Balance percentage for towns with a AA credit rating be in a range of 10%-15% of operating expenditures. This is not a “revenue source” that should be relied upon in the future. This is a one time use of funds that may not be able to be duplicated in future years.
With less revenue than the prior year and limited grand list growth, there is little room for growth in the budget unless property taxes are increased.
Magnitude of Recommended Expenditure Increases • In the four years prior to FY2009/10 the Town’s average expenditure increase was $487,046. • In the same time period the Board of Education’s average expenditure increase was $1,428,309. • In the current year the Town reduced expenditures from the prior year by $5,570 while the Board of Education increased by $334,738. • For the next fiscal year my recommended budget increases Town expenditures over the current year by $210,460 while the Board of Education is increased by $828,896. • Neither the Town or Board of Education can, in my opinion, operate effectively in the next fiscal year with an increase or lack thereof at the levels of the last two fiscal years.
2011/2012 EXPENDITURES BUDGET $50,527,427 Capital Municipal Operating Debt Service Education $10,832,492 $34,637,431 $4,751,796 $305,708
Details of Town Expenditure Request Savings Negotiated changes to Town employees’ Health Insurance Plans have mitigated increases in health benefits. Whereas overall, health benefits were calculated to increase 18%, the Town’s costs actually decreased by 3.5% due to the benefit changes. These changes saved the Town $116,456. Elimination of Refuse & Recycling Coordinator position for a savings of $25,750. These responsibilities have been absorbed by the Director of Administrative Services and other staff. Limited Adjustments $100 on-call stipend for Part-Time Animal Control Officers ($5,200 annually split by days of the week worked). This is to recognize the two part-time employees who must be on call on off hours each day of the week. In addition, $5,000 for actual hours worked that are currently taken from personnel contingency. Administrative Secretary in Fire Department increased from 35 to 40 hours to be in line with the operation of the Fire Office ($4,988 in salary).
The position of Assistant Public Safety Supervisor budgeted starting January 1, 2012 at a cost of $39,444 with benefits for half a year. During the current fiscal year, the consulting firm of Field Services Inc. was engaged by the Town of Tolland to perform a feasibility study of the Tolland Fire Department and its ability to provide the current level of service to the Town in the coming years. The report stressed that moving forward, the department focus should primarily be personnel and staffing. Much focus was placed on the Public Safety Supervisor position which generally is considered a 40-50 hour position, but in reality works on a regular basis in excess of 70 hours per week. The demands of the position to supervise both paid and volunteer staff are 24 hours a day. The study concluded that “there is considerable concern that the FireChief may be overstretched”. The recommendation is to hire a second in command who can mirror the responsibilities of the Public Safety Supervisor in terms of supervising staff and responding to evening calls in a command capacity. In addition, this position would serve as a Deputy Fire Marshal and be in charge of the Town’s communication function. The Board of Directors of the Tolland Fire Department Inc. concurs with this recommendation and has stated “The Board heartily agrees with this conclusion. Volunteer officers cannot be counted upon to reduce the workload.”
Included within the Fire, Public Safety, Emergency Management and Law Enforcement budgets are the cost of the administrative functions associated with the reverse 911 Everbridge System. This will allow for telephone messages to be sent to residents on general topics of importance ($4,050). • Adjust the pay grade level for the position of Public Safety Supervisor and Public Works Operations Manager by one grade and increase the base salary of each position by $5,000 to reflect increased responsibilities and work levels as well as hours worked at a cost of $9,000 (partial offset by State Grant). • Implementation of a Health Wellness Initiative at a cost of $7,000 paid out of funds available in the Health Insurance account in the current year. Industry experts predict that the Town should see reductions in future health insurance expenditures at a rate of 3-5 times the investment made in the Wellness Program. • Increase the cost share for Health Insurance, which unaffiliated employees of the Town will pay, from 14% to 16%, except for those employees who participate in the Health Wellness Initiatives which would reduce the increase by 1%.
Re-title the positions of Working Foreman in the Parks & Facilities Department and Highway Superintendent in the Highway Department to Public Works Supervisor. Along with the Public Works Operations Manager, these two supervisory positions provide oversight and direction for all Parks and Highway activities. The initial cost for this reclassification will be an increase of $3,000 to the Working Foreman position; however, there will be a future savings of approximately $15,000 with the adjustment of the Highway Superintendent’s position to a lower wage group when the current employee retires. • $27,000 for the connection fee to tie the Hicks Municipal Building into the Town’s public sewer system. • The Water Commission and Water Pollution Control Authority have each authorized the allocation of $15,000 from their funds to hire a 24 hour per week, non-benefitted Engineering Assistant position to assist with the many technical responsibilities confronting the Commission. This position would work under the direction of the Town Engineer. • A $38,103 increase in the contractual cost for Resident State Trooper services.
Savings identified total $142,206. The cost for new items listed is $135,785. Therefore, the total savings to the Town is $6,421.
Board of Education Request • Board of Education request is reduced from 6.53% to 2.45%, which is a reduction of $1,328,676, but an increase of $828,896 over current year expenditures. • When factoring in the Board of Education portion of debt service, the Board of Education-related expenditures are 71% of the overall Town budget.
Basis for BOE Funding Recommendation • Savings • $95,060 can be saved based on excess funding of our OPEB Trust Account. • $90,000 can be saved based on a direct payment in the same amount which will be made by the State Department of Education to the Board of Education for special education expenses. • It is apparent that one could divide the Board of Education percentage request into two major components. • Major Cost Components • Operational Costs & Employee Medical Benefits • The percentage increase requested for operational expenses is 2.36% after factoring in the adjustments mentioned previously. My recommended budget increase for the Board of Education is 2.45%, which provides for the full cost of these expenses.
Basis for Recommendation • The original percentage increase requested for Employee Medical Benefits is 3.6%. This amount has been reduced by $125,000 based on a reduction in health insurance premiums from 22% to 18.66%. The remaining $1,095,525 increase cost could be absorbed without an increase in the health insurance line item if the vast majority of teachers and administrators elected the option currently existing in their contract to move from their current health insurance plan to a high deductible (HSA) plan. • A similar HSA plan is currently the only option for Town Hall, Fire Department and several non-union employees of the Board of Education. • HSA plans in the future may not be the ultimate answer to addressing health care inflation, but currently it is our only option. • The Town and Board of Education are investigating health insurance pooling and wellness programs as the primary means of reducing future medical costs. Such costs statewide are projected to increase in the 8-10% range for the foreseeable future.
WHAT IS AN HSA? A high deductible Health Insurance Plan with Health Savings Account (HDHP/HSA): The first $1,500 for an individual or $3,000 for a family in medical expenses is paid for by the employee via a deductible. Once deductible has been met, coverage is then paid in full in accordance with plan provisions. Contributions are put into a Health Savings Account pretax which remains with the employee for life to be used for eligible expenses and can be carried over year to year. To encourage employees to enroll in the Plan, the Town and non-unionized BOE employees initially have the deductible subsidized by the employer in the amount of 75%. Therefore the employees cost for the deductible are $375 for an individual or $750 for a family. The amount of any subsidy is a negotiable item.
The benefits of the HDHP/HSA plan are the same as the traditional Town Point of Service plan with the same network for physicians. Example of POTENTIAL cost savings: Expected premium cost for typical BOE family plan: $26,892 per year. Expected premium cost for HSA plan based on Town family plan: $16,152 per year. Difference is $10,740 per year, per person.
In the BOE budget there are 308 certified employees out of a total of 382 employees. If 252 or 81% certified employees chose this option the approximate savings would be as follows: Cost for current plan - $5,062,462 Cost for HSA plan - $2,964,930 Difference - $2,097,532 Cost for BOE covering 75% of high deductible assuming 252 BOE employees - $473,625. You must subtract the $473,625 from the $2,097,532 as well as 20% for employee contributions ($418,706) resulting in a total potential savings of $1,205,201 to the BOE.
WHAT DOES THE EMPLOYEE GET OUT OF THIS? They pay their cost share amount on a lower premium base: Assume a 20% cost share for employees on an HSA base vs. traditional plan. Savings to the employee is $2,148 per year for a family plan. Employees are responsible for the $750 of the deductible which must come off the $2,148 cost share savings for a total savings of $1,398 per year. Summary: The potential is for a million dollar plus savings in health insurance expenses for the BOE. Employees could save some $1,398 per year in addition to having the BOE put $2,250 into their health savings account. This could be a win-win situation under present pricing scenarios for all involved without significantly impacting the health insurance coverage for BOE employees.
POSSIBLE FUTURE BOE FUNDING CONCERNS • Elimination of the BOE Federal Jobs Grant which provided approximately $600,000 over two years. • Any jobs covered under the grant will have to be absorbed with local funds or lost. • Teachers’ salaries will have to be budgeted at contract rates for FY-2012 and FY-2013. • Health Insurance rates may increase at a rate of 8-10%. • Fuel costs may continue to escalate.
Town’s Commitment to Education The Town has a strong ongoing Commitment to Education 68.55% of every tax dollar spent goes toward funding education. More of our limited dollars are each year spent for education.
The Town since 1998 has committed substantial capital dollars to school improvements. Debt service for the next year is $4,751,796 of which 71% is for schools, particularly the addition to Birch Grove School and the new High School. This cost is not included as part of the Education budget. • The Town spends approximately $300,000 per year in staff salaries and materials to maintain all outside grounds of Board of Education facilities as well as snow removal services for Board of Education parking lots. This cost, as well as any yearly increases is not included in the Education budget, but rather the Town’s Parks Department.
FY11-12: SIGNIFICANT CAPITAL PROJECTSFUNDED BY THE GENERAL FUNDTotal Amount: $305,708 • Town Administration: • Reserve for current year depreciation for municipal vehicle replacement - $21,789. • Board of Education – Tolland Intermediate School: • Sidewalk Paving - $15,000. • Skylight Replacement - $26,000.
FY11-12: SIGNIFICANT CAPITAL PROJECTSFUNDED BY THE GENERAL FUNDTotal Amount: $305,708 • Capital Equipment: • Dump Truck #36 Replacement – Parks & Facilities replacement of 1992 one ton Dodge dump truck with a new one ton truck with plow and all season body -$76,819. • Fire Department: • 7th and last payment for replacement of Engine #340 - $70,000.