Finance Committee Aug 18, 2026

you. Um, and we're open so you can start when you're ready. >> Good afternoon everyone. Today is the August 18th meeting of the finance committee. Uh, and seeing that we have a quorum, I will my first order of business is to make sure that everyone can hear and be heard since we're conducting this virtually. So, I'm just going to call out names as I see them on my screen. Jeffrey, >> yes, I can hear you. >> Lynn, present. Ethan >> present. >> Sam >> present. >> And Anna >> present. >> And Joe Brebeck told me she will not be able to come today. And if Joe told me, I I don't quite remember, but I knew he couldn't come last night. He was out at a meeting. So today's agenda is fairly straightforward. It's what we discussed last Oh, Joe is here. Hi, Joe. Can you let us know whether you can hear us? >> Yes, I can hear you. I'm sorry. I'm in California. I just to let you know I have about an hour before I see my next client. So, I'm going to have to cut off in about an hour. But it's great to be here. Thank you so much. >> Okay. So the agenda for the day is the the first one is we're going to go through financial policies and this is a standing document and Sean can it the link was shared with everybody but it's a standing document that has things in it like what percent is free cash what percent we're trying to keep in various reserve funds so we can talk about the origins of that it was updated um since I've been on the council but marginally you know so this is a longstanding document. Um, and we the updating included getting rid of the word select board, you know, and making sure it said council wherever appropriate. And then Sean is going to work us through OPEB and pension in terms of both how they work, funding and projections. And then Kathleen, I didn't give you a lot of notice, but you're chair of our little ad hoc committee. Just do a a brief where we are with the budget committee. Um, so that's the agenda. And I'm going to check to see if we have any. We do public comments at the beginning and I don't see any public. So right now I'm opening and closing to public comments because currently there are no people in attendance. So I'm going to turn it over to you Sean and then for this to be interactive. And I told Jill I will fill her in because she wanted to know where some of these policies came from and to what extent we can control them. So these are just these are guiding principles. Um so the first one is the financial policies. >> Okay. Um thank you. The nice thing about today's meeting is that it's we don't get a a lot of opportunity to um kind of do long range planning and high level planning at this committee. it's typically reacting to things that have timelines and deadlines or the upcoming fiscal year. And so this is probably one of the few meetings this year where where we can actually kind of think big picture about um financial policies and also some of the big um big liabilities of the town and there's some good news and um related to that. So uh so that's the positive piece for today. The negative piece is I have to bring you through these policies. So let's see let's share my screen. Um, I'm not going to go over every one, but obviously if there's questions as we go through, just raise your hand and um, we'll talk about them. But there are several that I'll highlight. Um, as Kathy mentioned, the sort of the origins of these uh, policies was the old finance committee for when we were um, a town meeting form of government. Um they worked closely with Sandy Per who was uh finance director twice removed or whatever it is is now. Um and then we took those policies and kind of modernized them for having a city form of government and also some of the new things that the council had adopted which I'll highlight around reserve policies and um um OPED things of that nature. So, so that's sort of how we got here, but and I think most of them will make sense to you and be sort of straightforward, but definitely let's have a discussion. So, the first one I wanted to highlight is um auditing which is on this page here. And so, the way this manual works is that there's a lot of words. The sort of action items are highlighted in green. So, as you go through the document, if you want to say just focus on what are what what are the policies actually telling us to do and from a decision-making standpoint, those are all highlighted in green throughout the document. So, for example, one of the decisions we made was that every five years um we would uh go out for auditing services um and solicit uh C proc uh applications from auditors. So our existing auditor, different auditors could bid on it. We did that a few years ago. Um at that time we ended up staying with the auditors that we've had for a while. Um but we did go out to see what's out there and get competitive uh bids on that. Another takeaway from that process was that we would if we do keep the same auditor, which we did, that we would at a minimum have the partner rotate that is assigned to our town. So there's sort of a fresh set of eyes and that was done. So we used to have Tanya Campbell who was sort of always the one who handled it. Um that's switched to Scott McIntyre over the last few years. Um so that has happened. And then the last p uh action item in this section is the audit committee which is all of you. So the finance committee doubles as the audit committee. So once a year the audit auditors Scott McIntyre will come. He'll walk you through the audit for that year. We're a little behind in audits. um we're working our way to catch up. So, our FY25 audit should be complete um in the next 30 days or so. We've given them all the information. I'm not aware of any issues to note. Um but we're just waiting on them now to actually generate the report and and let us know if there's any anything. Um, and then our goal is to get back on track with FY26, which means getting the auditors back out here in September or October so that we can have an audit report for 26 in the winter, which is what we're more accustomed to. And so those are the key key action items in this audit section. Any questions on that? All right, financial planning is the next one. Uh, a few things that may be familiar to you that come from this section of our policies is the five-year financial projection. So, every year in the budget document, we project out our revenues for 5 years. We project out our expenses for 5 years. One of the reasons we do that is it's just good practice, but we also do it because it's listed here as something uh that we will do uh for the council and for the community. Uh also in this section um we it talks about being conservative with our revenue projections. So essentially says that we're not going to budget revenues that exceed what we collected in the prior year unless there's some really really strong argument to do so. And so that's one reason we generally you won't ever see a revenue estimate that's higher than what we've received in the past. And then the last piece here talks about the financial indicators report which uh we will give in November where we go over different economic variables in town and the trends related to those variables and give a forecast for the upcoming year. Ju just a comment on the receipts one Sean >> in the last few years we've been even more conservative because we've receipts have been higher than we thought they would be sustaining so we haven't budgeted them at the prior year I just it's a you know we have a don't budget them at higher but I just wanted to for those who haven't been looking at budgets um you've I think rightfully so but investment income would be one of them. It's gone high. Um >> and I'm forgetting which else, but a few of the others because they're so cyclical. We we've taken more in average. Um >> so this is interesting to see. We shouldn't be overly optimistic, but we don't even um posted it last year. We we're really conservative. >> Yeah. So generally many of our accounts we look at an average of the prior three or five years depending on how much variability there is. Um but there's some accounts where if we see a spike, you know, we'll discount that spike. And so investment income, for example, is one um where, you know, we're more cautious when it comes to that because it was such a sharp spike uh based on, you know, many years prior. >> This year, for instance, this was also impacted by the fire at Olympia Place and therefore that building went offline. Therefore, we couldn't collect taxes and another building that was being built uh ended up being stalled because of the fire. So, there's a var various things that have to go into the estim >> Oh, you muted yourself, Lynn. >> Sean does a great job of juggling that. Thanks. >> Oh, I like that final part. Um but and just so every everyone knows um the way like Olympia for example every year you'll see in the budget we set aside an allowance for abatement and exemption. So we budget our revenues at 100 our property tax revenues at 100%. And then we take a half percent and it's like almost like a contra account where it assumes we're not going to collect all of that those property taxes due to either exemptions that we offer or abatements. and that money goes into basically a pot and then when exemptions and abatements are issued it comes out of that pot. Um we've always historically put more money into the pot than we've taken out because our you know our estimates were conservative. This was the first year in a long time where the amount of money we took out was much greater than what we put in. And so when you do that you take money from the prior years that has been freed up. Um but this is this was a unusual year because of that fire. All right, general fund expenditure. So uh the key piece takeaways here is that all operating expenditure should be paid with current year operating revenue. So um you'll see this in a couple different places, but the the main takeaway is one-time revenues are for onetime expenses. One-time uh recurring revenues can go for recurring expenses. And this is all to avoid um you know creating some type of fiscal cliff. Uh where you'll where I think the town did a and the the council did a good job uh is with ARPA. A lot of communities got themselves into tough situations with ARPA or with um CARES money or ESSER money the the big federal grants that we got through COVID. I think the town was very focused on not establishing you know these operate ongoing operating costs using ARPA money and as a result when ARPA went away there wasn't a ton of paying here to to kind of shift off and we were able to get a lot of good projects done at the same time. Uh so that's that's an example of how we would apply something like this when we get that type of money. So reserves is a good one because this comes up every year and it'll come up in a few months in October when uh free cash is set. So the town's reserve policies um which are been updated I would say in the last four or five years is that um we rem maintain a total of 15% in reserves for sort of um emergency needs or for economic downturns and that is comprised of oh sorry I took my camera um that is comprised of 5% for free cash or keeping 5% in our free cash balance and then 10% in our general stabilization fund. Um, anything beyond that 15% the policy says to put it into our capital stabilization fund which is uh currently being built up for a fire station. Once we eventually get that fire station, I think we would want to revisit this policy and decide if that's still the the approach that we want to take. But I think at the time it made sense given the capital needs of the town um to build up that reserve for capital. The other piece that comes out of there first is um we also are building up a reserve for reparations and the reparations stabilization fund. So any money we receive from cannabis taxes um an equivalent amount gets shifted into the stabilization fund um when we do these other free cash transfers. So um that is building a balance slowly. It built it kind of ramped up quickly and then cannabis taxes dropped off pretty quickly. So now it's taken, you know, it's taking steps every year, but it's not growing nearly as quickly as it did when it first started. Um, but that's those are our policies. And then I think the other thing that you'll see in the fall is there's always a consideration of is there an urgent capital need that we should also um appropriate funds for when we look at do we have excess reserves before it goes into capital stabilization? Is there something else we should do? In the last couple years, you know, we've looked at roads. Um, we looked at the middle school roof this past past year. So, um, you know, if that money didn't go to those projects, it would have gone into that capital stabilization fund and it would be that much closer um to the to being able to fully fund the replacement of the fire station. I do think this year we should really be care um consider that balance in the fund and how quickly we want to be able to fund that fire station. Um, but that'll be up to the council. Uh Lynn >> Lynn has it and then I have >> Yeah. The only two >> Yeah. The only two times that I'm aware that we've had to go into our reserves and Sean correct me if I'm wrong was 2008 where the economy dipped and we got um uh orders from the state government in about February that we were supposed to return half of grant fund kinds of things. And obviously it was already more than six months into the fiscal year. uh and that allowed us to stabilize our workforce and the other time was and it we didn't do it as much as we might have but frankly it was fine was during co uh and those were really the two times but the one of the reasons that I think people um I I don't I just want to remind people that when the schools asked uh the regional school authority to look at the regional schools they basically came back and pointed out how much reserve reserves each of the towns have for the schools and they said reserves are not they're onetime money. Please don't spend them on regular operating budget items. So it it yes Sean is totally right. This issue comes up. Why do we keep so many reserves? Well, this year as we get past the election when several of the beautiful big bill items actually come to rest on the state and subsequently on the town, we may see ourselves having to dip into reserves for the first time in a while. Thank you. >> And it's important to note that those reserves are one of the big positives when we set get our bond rating and have allowed us to maintain a double A plus bond rating. If we did not have strong reserves, I I would venture to guess that we would still be at a double A. Um, and that would have impacted the interest rate that we've got received for the the bonds we've issued because there's a couple things that work against us and then there's a few strong positives and the strong positives are generally our reserves and our budget performance um that have really worked in our favor. >> So I does anyone else have I just have a couple comments on this. The 10% if you look is I'm not that many towns set a full 10% in their guidelines and not everyone maintains it. Some of our surrounding towns do and Sean when you modeled what might be possible if we were trying to stretch to multiple buildings at the same time. there was a could we live with going down to 8% and then build it back up again. Um that that's my memory of that modeling exercise that you know the effort was to not touch it but then to tap into some of and build it back up. So I don't know whether there's a source that all of it could could look like and it's kind of a town of our size rather than small towns. um how unusual is 10%, 5% is lots of groups, but steadily make making sure the 10 and I know our capital one is unusual, you know, to really and it was deliberately done because of these building projects. So that's sort of a comment and a question. >> Yeah, I mean there are um that information we can pull from the DLS website. I mean, we can look at reserve levels as a percentage of of um general fund operating revenues, and I think we I think there's a a table on that in the indicators report. So, we can talk about that when we do the financial indicators. I believe we um compare ourselves to our our neighbors um as well. So there's that definitely something that we review every year. >> And and just so people who are newish to our accounting system, our um enterprise funds also have reserves. This is the general reserve. You know, there's a separate one for water for sewer um in a in a separate a separate account. Yeah. Kathleen. >> Yeah. I just have a question about the capital stabilization fund. I know that the intention has always been for the big building projects, but I'm just curious, is there anything in terms of the way that fund is set up that restricts it to particularly a large building in in the event of a different kind of capital need you could draw down upon that. >> Yeah, absolutely. You could use that for any type of capital. I think our our approach has been for the fire station specifically because it's pretty clear we can't handle the debt for another building in our capital allocation. Um but let's but if the town, you know, let's say we did the fire station and the town wanted to keep that capital stabilization fund for other capital needs in the future to maybe reduce how much it needed to set aside from operating, it could um a lot of small towns do it that way. they put, you know, they set aside money in a capital stabilization fund, you know, and whatever they get one year, that's what they put towards the next year. Um, so no, you could use that for any type of capital project. >> Thank you, >> Lynn. Uh, Sean, does the uh five-year uh plan for roads call on the reserves? Um the five-year plan for roads likely will need additional contributions when free cash transfers are done. So in a way, yes. Um kind of like we did this year, we going to need somewhere between, you know, $2 to $3 million of additional contributions a year um to hit that $5 million target. And again, this is for the people that um are more new to the committee and to the council's workings. U the model that Kathy was referring to where the reserves might dip as low as eight. is because basically we were using reserves that would allow us to go above our borrowing limit and we became our own banker um to get through some of the first years where there was a huge hump of um borrowing uh for the four capital projects. I also might say that as we finish two of them, there are several people who are already saying here's what I want to see on the list and here's what else I want to see on the list. Thank you. Jeffrey. Um >> John, just a quick question. What what type of investments has the capital funds actually invested in? Is it a mix of investments? And and do you happen to know what returns have looked like over the last say 12 months or anything like that? >> Yeah, so we've had strong um returns. That's one of the reason why you know you see our interest rate revenue in other areas especially in our stabilization funds is very strong. Um, so we work with, we've had a longtime investment manager that we work with, um, Abbeby Capital. They're responsible for managing the investment of our, uh, stabilization funds, um, capital and our general stabilization fund. Um, so they, you know, they they have a, you'll see in our policy, we have an investment policy that governs give gives them the framework for what types of investments they can put um, our money into. And so there, you know, there's a split. There's there are some stocks, for example, that are on a legally allowed list. Um, one thing that we might we've actually been talking with our investment advisor that we would bring back to the finance committee, you know, maybe in the next 12 months for an initial conversation is that there's a a new home rule, I think it's a home rule type act that some communities have had approved that allows their investment advisors to access a broader range of investments than what they've traditionally been allowed to access. um and they've been able to do it and generate better returns for those their communities than uh what we've been able to generate because they just have broader access. Um it's it's like the prudent investment something. Um but I've been talking with our investment advisor Rich Rogers who works for Abby Capital um about potentially coming and giving a presentation to this committee about that and the committee could decide if it's something they were interested in. But while we have these reserves, now is the time to see if there's a a safe way to get a better return on those funds. But we do I'll go through the investment policy in a second that we'll talk about the different areas that we're invested in. >> And Jeffrey, you can see they report I mean he can Sean can send us after this. You can see the rate of return because from one year to the next you can see how much has been accumulated. We're getting that report. It's not in a over the last five years. So you can see it every year, but it's a it's been a uh have a a reasonable rate a good rate of return given what but the stock market has been yielding. >> Yeah. It's not it's not going to be your 10 or 12% like some have um received because again they just have broader access. A lot of our our um investments are in like T bills and things like that um based on our investment policy, but it is it's north of 5%. >> Is that in excess of what our debt costs are? Um it we right yes our I mean our interest rates are you know 4% or lower. Um so we're that's why right now you know we have some we have some funds that we've borrowed um we have some projects where we've borrowed money and we're able to get a return on that money as well while we've borrowed it before it goes out the door for the projects. And so while we might have a, you know, 3% interest rate on, let's say, short-term debt, we're able to potentially get north of that in terms of, you know, even like a simple uh money market account is paying higher than that. So our interest rate costs right now are really, really low because we're able to actually get a pretty hefty return. Now, you have to be careful. You can't um municipalities aren't allowed to make money on the deal, but you can come as close as possible. Um, and that's what we try to that's what we've been able to do um, you know, the last couple years. >> Thank you. >> All right. Uh, Sam, >> Sam, you're muted. >> Thank you, Sean. Uh, just in light of what you just said, uh, things are going to be changing soon relating to our, uh, surplus in the, uh, funds for investment. Correct. with uh obligations to pay out. >> Um yeah, we are not I would expect our interest uh investment income in the general fund. It won't necessarily impact our stabilization funds. Um but the investment income you see in the general fund, I think it'll still be strong, but I think it's going to start coming down as you know, we're continuing to pay out the um the bills for the school and for the um library. Uh yeah along with you know a year from now. Thank you. >> All right let me keep going. So that was reserves. Um revenues um talks again about onetime revenues for onetime expenses. Um you know especi especially when we think about grants. This highlights trying to have a strong collection rate so that we don't have a lot of money owed to us. uh seeking grants which all of our department heads have been pretty successful at doing. Um and then annually another thing we do is we look at our fees and we see if uh there's a increase in our fees warranted. Um and so for example we look at our parking fees. We look at our ambulance billing fees and town clerk fees. everything that gets looked at by department heads every year and they make a recommendation um whether they should be increased. Capital planning is pretty well established by the charter. So there's um not too much I think that the policy itself sets. A lot of it is set in the charter, but um this is the framework for the town manager capital improvement program which goes to JCPC every year um for review and feedback. And the nice thing we we've always the town of Ammeris has always had a uniquely um strong and collaborative capital process which I think is really positioned us well. Debt management. So, this one um gets a little bit at what we've talked about previously. The big thing here is that we try to or the the goal is to never let our debt service costs become so high that it essentially, you know, starts to affect our our budget. Uh we Moody's sets a Moody's and S&P they look at different percentages to basically determine is a community's debt load, you know, strong, weak, so on. they look at 20% which um 20% of net operating revenues which if we had a debt service cost that was 20% of our net operating revenues we would be in big trouble. So we're nowhere close to that. Um we set a lower target of staying below 10% and I would say our actual our actual percentage right now is probably somewhere in the five or 6% range and and that's high compared to where it used to be. For many years we were less than a percent because we weren't doing anything. Um, and now that we've actually started paying on the library, we've started paying on the school project. Um, we have other, you know, uh, enterprise fund projects, uh, our percentage is probably closer to five or six. And we will be going probably at least one more big step up when the DPW debt comes online. And then the goal would be to, you know, ride that out for a little while to get it back down. Sean, just a a question on school debt. At one point when Sonia was still with us, school debt, >> she's still with us. I talked to her yesterday. >> Oh, so Sonia's she's still there. >> Oh, no. You mean like with the town? No, she's >> with the town. But in in one presentation, she said the school debt was treated differently in some way. And I And is that because we have to pay upfront and then we get reimbursed? They don't do this grant making? I mean, >> um, a couple of things. cuz I mean one it's I mean I think what she probably meant is that it's outside the debt limit. So there's a number of project >> Yeah. So enterprise funds so our debt limit is like $130 million. Um and we're >> but that's for things that are inside the debt limit and so the school project is not doesn't count against that. So, we have a pretty big buffer with our debt limit, our legal debt limit. Um, because most of our projects that are heavy debt are outside of it. Like any of most of the water fund debt is outside the debt limit. Uh, sewer fund debt can be outside of it. Um, and the school projects are outside of it. So, really the Jones Library, the DPW, and sort of the regular debt that you see us take out every year as part of the capital plan, th those are the ones that count against it. >> Okay. Yeah, that's exactly what she >> All right. And a section on enterprise funds. So, as Kathy mentioned earlier, they have their own um reserves and we set we've set higher targets for retained earnings or or which is the equivalent of free cash for enterprise funds for a couple reasons. One, um they're really supposed to be self- sustaining. Our water system, our sewer system are supposed to be completely self- sustaining. Um, and so they have relatively small operating budgets compared to if something were to break in one of those systems, it could be a very high cost. You know, if we had to replace a a whole water line or a whole sewer line, those can be a million, $2 million, you know, a piece. So, um, you'll see instead of like a 10 or 15% target, we put retained earnings at 30 to 50% of the budget in the enterprise fund, which those budgets are around, uh,6 or 7 million. Um, and that's because of the expensive nature of the of the stuff that the enterprise funds oversee. Um, but they are basically little self- sustaining business operations, mostly self-sustaining business operations. Um, and they do all they take care of their all their benefits, all their retirement capital, all of that is paid through the user fees that go into these funds. >> Lyn, >> was the grant for Centennial run through the enterprise fund? >> Yeah. >> Okay. >> Yeah, >> that that was the Yeah, that was a big increase. And one of the other things I realized at one point is because we've got enterprise funds, uh, our big nonprofits, UMass, Ammeris, and Hampshire, uh, if they were part of our general fund, they wouldn't be paying taxes, but they are they're paying into these funds at the same rate of the others. So, >> they're our biggest Yeah. biggest payers. >> They're they're big payers. Um, >> right. Um, this lays out some information on Community Preservation Act. Um, and really kind of the and this is maybe a conversation for another day. There's always a little bit of a friction of when there's a project that could be funded through Community Preservation Act, but it could also be funded through the town's general fund or capital plan. Um, where should it go first? And the approach we've sort sort of we've tried to take is that generally it should go to CPA first. Um but sometimes the CPA committee will push back and say, you know, we've got other projects. Why don't you bring that to the, you know, through the capital plan? And so there hasn't ever I don't think there's really ever been a definitive statement by the council or the finance committee to say one way or the other. Um we've tried to organize the timelines for those processes so that one goes first so that at least there's clear you know there's not two committees considering the same project at the same time. um which I think that has been helpful. But there still might be a point in time where the council or the or finance committee want to make a definitive statement one way or the other whether you know projects that can be funded through CPA should this the committee should consider those you know first. Um but I'll leave that up to you guys to decide if you want to do that. >> Ethine? >> Yeah. I just have a question about that. Do you do you mean that if there's a project that is there if there's a town project that would be eligible for CPA money that um that that should go to CPA to be considered first or are you saying that CPA should prioritize those projects? I think it would be helpful not necessarily prioritize them over non-Town projects, but that they should be um I guess I'll give you an example like uh there's a couple projects and Kathy brought this up earlier. There's a couple playgrounds on the town's capital plan. Those playgrounds could be funded through CPA and we have funded projects through CPA. um CPA has uh new members that frequently kind of go through the committee through e you know either being elect you know new appointees or new on their boards and so I think it requires a lot of education I think to just kind of make sure everyone understands how the full process works um but every so often we get push back on town projects like why is this coming to CPA isn't this just for outside groups and most I would I don't want to say all but many cities most cities and towns it is town projects by and large that go through CPA. Um so I think that's just what it is. Every now and then we hit a cycle where there's push back on town projects. Um and whether council finance committee wanted to say like no, we encourage town projects to go to CPA. I think I would say encourage is probably the right wording, not prioritize over other projects. Um just so it's not just so when the CPA committee gets town projects, they're not surprised why they're coming to them first and not through the capital plan. I think would be helpful. Yeah, that that makes a lot of sense to me. I was just curious about the distinction because I know that the CPA committee is really supposed to be the the body that analyzes and makes those decisions and determines the priorities within the community. So, I think the way you phrased it makes a lot of sense. Thank you. >> Yep. >> So, Lyn, I see your hand is up because I have a >> Sean, you might want to also talk about the some of the projects also go to the joint capital plan sometimes. So, and how that works. >> Well, if they don't go to CPA, they will go to joint capital planning um after that. Yep. >> So, and and JCPC, that's the short shortened name of joint capital planning, but that group has benefited a lot by having CPA go first. It the the first year we were on, they were simultaneous, so it was like we were both looking at the same projects. Um, but my my other comment, it's it's actually a question. A few years ago, under the Historic Preservation Act, there was a private property that had no public access whatsoever. So, not like the Women's Club and other nonprofits. And it wasn't a nonprofit, it was condos and offices. And uh, we ended up funding that. But there was a question on whether we should close the door on that type. And so my question my question is would that be the council writing into the community preservation act the the guidelines for it? Would it be CPA hearing about this and rewriting that for themselves? And we were told at that point that some towns had said no to that, you know, had actually put it. So avoided the stress point of, you know, I'm thinking of the number of historic homes we have where, oh, I need a new slate roof. Oh, I need a, you know, I mean, it's it's an open-ended. And this one was a bit like that where they they hadn't budgeted. >> It was multiple small offices and they hadn't budgeted enough to keep the building up at it historic, you know, the the cost of materials. Um, and uh they didn't have the resources. So, so I'm just a question of if we wanted to restrict that, where would that impetus? >> Yeah, it's a good question. I probably talked to Paul about it first. I think it definitely if the council is the one that feels that way. I think giving that guidance to CPA when they evaluate projects. I don't think you can prohibit them, but I don't think CPA committee is going to want to recommend projects that they think will then come to the council and fail because it goes against what the council said it wants. Um, so I I think it would probably be some sort of action by the council, but I want to talk to Paul to see if he's come across that at any point. We have a CPA plan that provides, you know, a framework for how we evaluate um, as Sam knows, how we evaluate projects. And so I could see that that plan is uh, created and, you know, reviewed by the CPA committee. And I could see maybe something going in there based on uh a statement from the from the council if it wanted to. >> Okay. Because that one I mean Lynn probably remembers it, but a few of us voted against it because we didn't think it was a good use of the funds and we were meeting we were meeting the 10%. So it wasn't >> was like you had to spend it. Yeah. >> It wasn't like we had to spend it. So Anna and then Sam. >> Yeah. I think Kathy, I just to what your point just was, I understand where you're coming from on that and I think it would be interesting to have a larger discussion because as we continue to put more historical restrictions on people's homes, they're going to need somewhere to go to help fix it to keep up with our codes. I feel like we can't have it both ways, but that's a separate conversation. Um, with this, I'm curious how and and if we're going to talk JCPC fully later, we can get to that and you can tell me to hold off. But I think this is one of CPA is one of the other avenues for that private kind of application for funding uh as is JCPC. And now with the creation of the parking and transportation commission, do you anticipate a change in how residents are able to seek funding for projects? Um and that might it's it's definitely more JCPC than than CPA, but I didn't want to forget to ask it, so I figure I'll say it now so that I don't forget. >> Yeah. I so I I think in terms of how the projects flow through the system, I know we have definitely set aside all the traffic related requests that come in to JCPC and um I don't know if that new group has actually started meeting yet, but the plan was to have some projects for the ones that came in this past year, have those queued up and ready for them to consider. Um the question is then if they do recommend any of them, how are we going to pay for them and whether that's a recurring line item in in the capital plan that is in the DPW section that Guilford has access to and he spends it on the recommendations from that committee. Um that ultimately get approved by the council or some other mechanism. I don't think we have that worked out yet. Uh but we do you know the process I've been following I think is the way it's uh Paul intended it is that those traffic related projects would go to that committee >> and then presumably DPW would get more money uh would feel that they had the liberty to uh request more money from JCPC to meet those needs. >> I think yeah over time I think we might see that start to >> um that to grow. Yeah. And I think the other piece is it'll be interesting when the committee reviews them all because the approach might be, well, we're not going to do these one-offs, you know, because it's not fair to the town to do one neighborhood. And I So, who knows? Maybe it, you know, kind of balances out the demand for it, too. >> Yeah. And so, does that also mean you're going to close down the resident request portal on JCPC, you know, or >> I don't think we'll close it down. Um but we this this year in particular, I think we'll have to have um discussion beforehand to see is that new commission going to have their own process where they want to solicit those types of requests directly and then that would kind of streamline the resident capital request for JCPC because we do still get requests that are not traffic related um and have funded them. Like for example, one we got this year, we didn't need to set aside extra money. We just told Jeremiah to do it within his allocation. I think it was like the sound deafening panels at the North Ammerst Library room. Um there was some storm erosion study that came through that we're still talking about um how we can do that. So I think it's still a good outlet for residents to submit their projects just um how we how we steer the trafficcom ones that we have to discuss still this year. >> Sam, you're muted. Sam, you're muted. >> Regarding the CPA, it seems to me that the committee needs to consider whatever applicants applications come before them, whether they be public or private. And uh uh Sean raises a good point that each year there are new members. Uh I recall the one Kathy's referencing. Uh I don't know if the town can say we're not going to enable you to consider these projects. Uh although the town council has the ultimate authority. Um just a comment in the past there hasn't been too many issues with um the majority of the projects that come to the committee are from the town. I mean that's just the nature of things because that's where most all the buildings are. um separate. I think Anna raises a a good inquiry uh regarding uh what's apt to occur going forward with transportation and parking of which I'm a sitting member. Uh we're in the process, Sean, of uh generating an application form that's open to whomever. It remains to be seen the final version of that. I have yet to go in and test it. Currently, it's going through open gov where you have to sign up. Uh but aside from that, the question uh is what happens if you get so many requests uh that it starts to uh get into the uh you know where the funding's going to come. Uh currently for non major redesigns, they go from that committee to the town manager to decide if there's adequate funding or not. So, uh we have yet to thoroughly discuss the prioritization process and I'm hoping that that will occur. Uh but uh it seems to me that they're going to go from you know the resident type requests if they're considered are apt to go to uh the town manager for and he may decide to go through DPW and others. I mean there's been about three projects that have been considered for a teaching concept to the committee but this is going to play out over the next uh over the course of this fall I think. And uh I anticipate it's going to have to be tweaked and there was discussion among some members of trying to go to a CPA process where type process where you have a fixed window of allocation but uh again Anna's uh inquiry or question uh I think highlights the key issue there. Jeffrey, >> just two seconds because I was not aware of this um resident capital request form or anything. So, I looked it up and there's actually a 404 error on the link already. So, I don't know if that's just a technical glitch of being down. >> It's not open, right? Yeah. So, the windows closed right now. It um it opens during the capital planning process, but it sounds like maybe we need to put a thing up that it's not open anymore. So, it opens up it opens up in January when we open up or actually it'll open up sooner. We open it up in September. Last year it was September. It's a something that was set up pre-consil and we've kept it, Jeffrey, to have up to $50,000 in something called capital. And over time, the majority of them have been like, I'd like a crosswalk from here to there, or um I need a blinking light um to warn people that it's a school zone, you know, school zone, slow down to remind them. So it's been mainly traffic related but as Sean said there are other pieces that have come in and uh they get considered as a group and the the big concern on them for the traffic related is they have to come out of a DPW budget and we're told every year that we don't have a policy and what to do with each of these. So you should you just take the one who raises a concern or should we have a policy on what do we do about here there and where are we putting the next sidewalks in? So as a result very few ever get done. Um and then my one favorite one Sean is we did fund a sidewalk study very su the first year very successful group of residents we funded the study no one has ever seen the results of it and we never did the sidewalk. So, that's a that's an extremely poor use of funds, you know. Um, and if we had no intention of it was installing a brand new one. It wasn't a repair a sidewalk. >> Was that on East Pleasant Street or was that a Okay. No, Guilford said that he did do the study and then one of the advocates of it every year has said, "Could she at least see the results, you know, on a So, it's it's been this tension because if it especially for a full street worth of a sidewalk that was going to be several hundred,000 to do something like that. >> Um, but Jeffrey, I'll make sure that if that link is still I got I'll go review that and um update it if it's um still up there. The next one I'll just quickly go through is the investment policy. So all cities and towns have an investment policy. This section up here just kind of gives you the the breakdown of what we can invest our funds in. So MMDT, which is the mass sort of a a Massachusetts um bank account for municipalities, actually has a very good interest rate right now. Used to always have a bad interest rate, but we can get upwards of three and a half% on our funds with MMDT. So even our um you know kind of regular cash that we keep on hand is getting a pretty good interest rate. Um then we look at US treasuries uh US agency obligations uh CDs. We do a lot of CDs with our treasur um has done a good job looking at what's out there and getting rates and going with the highest one. Um and then um you'll see a few other different things that we don't do a lot of. Um some of our funds, just so you all know, like um pension funds that goes to the Hampshire County Retirement and the pension system invests them and they're invested with the state through the pension reserve investment group. So there's a group of state investors have been very successful. They can earn the higher rates, the you know 10 12% return rates um on our pension funds and our oped funds are there as well. So, um the our local financial in uh financial manager is really just for our stabilization funds and our free cash, which we can't the state won't take those because they're they either have to be pension or oped to go to the state. All right, the next couple two more and I think we're done. um procurement I'm not going to spend a lot of time on, but we follow chapter 30B and chapter 149, which are the the general laws that out outline um supplies and services and construction. Uh where's the next one? Almost there. Okay, the last one I wanted to talk about was OP. So, we did add an OPED policy and essentially this is pretty broad. What it says is that every 5 years we're going to meet and review our OPED funding policy and decide if we need to change take any um action. That's one of the things we'll talk about today. I think have an initial conversation about what we should do as we look out over the next five years. our um bond rating agencies and our actuary who does our oped analysis, which we'll talk more about in a second, they like to see these policy like a a formal document that says what we're going to do that's been adopted. And so I'd like this year to have um either the council or this committee. I'll talk to see what how it's been done other communities sort of adopt something that although it's not going to be law doesn't mean we can't ever deviate from it. it just is really what are we going to try to do for the next you know when we look out to the future um around OPED and we'll talk more about that in a second. So that's what this more or less says. So those are our our major highle financial policies. There's a few more few in there that we didn't talk about but that governs most of um the areas of municipal finance and provides you know guard rails for our decision- making. So, I have a couple questions on OPED in terms of the flow. Um, and I know you're going to get to. So, um, until it's fully funded, each year we pay the expected actual, is that correct? >> So, each year we pay actual retiree health insurance costs, right? So, whatever we pay um uh either for our Hampshire County employees or our MTR um MTRS employees or our teachers, um we we pay the town share of those health insurance costs. And then on top of that, we're putting aside about $750,000 between the general fund and the enterprise funds into our OPED trust fund, which is being invested and has been growing over the years. Um, and so we're about, so the OPED actuary will come in and they'll look at our staff and our health insurance costs and medical inflation and all that and they will come up with a liability and they'll say, "This is how much you owe your current and your expected retirees based on um your composition of employees right now." And that number is usually in the 5060 $70 million range as a total liability. And then and it might be higher now. And then they look at how much we have set aside. And I think last time we looked at it, we're about 20% funded of our liability, which is not great compared to our retirement system, but it's not bad compared to what other municipalities are doing. I would say we're making regular contributions. Not all municipalities have have done that. >> So then if if we get to do we not draw on that until we get fully funded. So I'm just trying to understand the those so you you've got the thing that you shared with us suppose we're going for 100% for 50% you know how many years um and just so everyone who hasn't looked at this this is picking up we do supplements so we're paying for the Medicare subs we're also quite unusual but I don't know how unusual in the state of Massachusetts but I know from my time working with public employees health insurancees We not only pay the supplemental costs for Medicare part B, but we pay the part B premium which has been going up rapidly. For a while it was stable and then we're paying for the drug drug supplement, you know. So we it's become an ex it is an expensive benefit even though it has Medicare at its base. Um, so it's a if we got to 50% funded or we got to 70% funded, do we continue to pay the actual costs each year until we're 100? Is that how it works? >> So we and and this will this is similar to the retirement conversation. We will likely always pay the actual costs. The difference will be once we get 100% funded, I imagine that if we get better returns, um we don't need to be more than 100% funded. And so if we get better returns, that might be able to help us with our current year cost. But when we you'll see when we talk about the retirement system, the the portion of the pension cost that's going away is not the actual payments going out the door. It's the extra money above and beyond that that is going to go away. The money that they've been setting aside to get to 100% funded. And so similar here with OPED, what would go away when we get 100% funded is that 750,000 or whatever it grows to that we're setting aside as additional, that would go away. And then I also imagine if we're at 100% funded and we have, you know, $100 million in the bank and we have a really good year, um there might be other ways to, you know, help out the operating budget. But the the regular costs of the insurance I think will always be part of the operating budget. It's the extra money that would go away. >> Okay, that answers my question. Thank you, Lynn. >> When do we anticipate reaching that goal? >> So, why don't do we want to transition, Kathy? >> Yeah. So, you've got He gave us some OPED charts, Lyn, and we're looking at We won't be around when it happens. >> Hey, hey, hey, hey, hey. >> Speak for yourself, Kathy. >> Okay. 19 uh 205260. >> So some background on this. I'm going to pull this up. Um we asked our actuary a few years ago to come up with model some different options. And so these are a couple years old, but I think there's still a good basis for whatever we want to say our plan is going forward. And we basically gave different scenarios and said model these out. um what would it you know when would we get to full funding if we were to follow these assumptions going forward. So that's what you'll see on the screen in a second. So the first one is I'm going to make this a little bigger. The first one is if we were to continue putting $755,000 aside and we increase it $50,000 a year which has generally been our what we've said we were going to do is that we would keep increasing our oped contribution 50,000 every year. where we kind of do that and then we take it away when we find out that that's going to result in lots of cuts and we try to look for ways to soften that. Um but that's sort of what we have been trying to do and as you can see based on the actuarial analysis um we would never reach full funding because the cost is growing faster than that. Um the the liability is growing at a faster rate. Scenario B is um to do that and then when Hampshire County retirement system is fully funded, which we will talk about after this agenda item, uh in 2034 to take 100% of the savings from that full full funding and to put that in OPED um as an additional contribution to OPED. And if we were to do that, that would be the most rapid way for us to fully fund OPED and we would be able to do that by 2042. I'm not recommending that option. That's the most aggressive. I think my recommendation would be C or D. Um, which is sort of a middle of the road and balances needs of the operating operations versus funding these long-term liabilities. But I will say it is critical that we do get to full funding on OPED at some point because that is what has held us back. Um, one of the things that have held us back from getting a AAA bond rating is our OPED liability and not being uh having a higher funded funding ratio. Sam, do you want to jump in before you go through these? >> Uh, thank you, Sean. You referenced uh OPED and also the pension contribution. I recall our discussion in finance committee earlier on the budget. There was a $600,000 contribution this year. Can you >> So 6 600 from the general fund and then there's um water and sewer also contribute and parking I think contributes a little bit >> towards the 75592. >> That's how you get to the 75592 is when you add up all the different pieces. >> Yep. Okay. Thank you. Um, so option C is same as option B except for instead of doing 100% of the savings from the Hampshire County Retirement System um, assessment dropping, you do 50% that would delay it by five years to getting to full funding. Option D would be 25% of those savings. That would add another seven, eight years. Um, option E is if we actually dropped our contribution from where it is today and we went down to 500,000. I think this was a year where we maybe did cut there was one year where we cut OPED in half um and then we restored it the next year we would not fully fund um 500,000 if we just did kept it at 500,000 with no additional contribution so we cut it down didn't add anything to it but then in um when Hampshire County is fully funded at 34 we put 100% into retirement um that would still get us fully funded by 2043 which is not So the benefit of that one is we would see some short-term benefit because we wouldn't have pressure to increase our contribution to OPED and we'd actually be able to reduce our contribution right now to OPED. But it means when those savings became available, we would be putting them all uh towards that liability. >> Are the schools also elementary? >> They're in this number as well. Yep. >> They're in this number. >> Just the elementary schools, not the >> the reg regionals in its own world. >> Correct. And I imagine at some point the regional schools, like if we were to be fully funded, I imagine the regional schools would say, "Hey, what's up?" You know, because they don't have a funding source. You know, they're not asking for, you know, any extra money to fund their OPED. Um, so it's going to be challenging for regional schools to fund their OPED without asking for money from their municipalities. >> Jeffrey, >> are they at a similar 20% funding level already? >> They're lower. They're they're lower. Yeah, because they're they do, you know, we when I I think they're still doing this. When I was there, we started putting about $100,000 into OP a year. Um and I think they're still doing that, but it's um not growing as fast as doing, you know, what we're doing, which is $800,000 a year. >> But the unfunded liability for the school system is probably significantly less than what it what we're talking about here in terms of >> it's less, but they're it's probably like half as much as ours. not um because they have about 300 employees in the region and we have about when you look at our system we're about 600 or so. So it's about half of our liability maybe a little bit less. >> Thank you. >> Lynn, is your hand up again? Yeah, I think uh Sean and Kathy, we should make a little side note that when we um look at the regional budget in uh the coming year that we specifically start asking them to track this because to the best of my knowledge they don't. And um I'm not sure that we and the other towns are aware of this pending liability. >> Yeah, I think there's a small section in their budget somewhere near the back. at least that's where it was many years ago. Um that did show that. But you're right, I think it's good to get an update and see make sure they're still investing in it. Um and Jeffrey, just real quick, the other thing that might affect their liability um because this is all done by actuaries with lots of assumptions. You know, they make different assumptions based on are you, you know, actively funding the plan, is it growing every year, you know, you might get one discount rate um versus if you're not, you might get a higher discount rate. So, um, it should be about half of ours, but I don't know if they have a higher or lower discount rate based on, you know, what they've been doing there. >> Kathleen. >> Yeah. Um, I had a question about the um the projections and it it seems like they assume they assume some amount of like as Kathy was talking about the different levels of um health care plans and um what what coverage is included. Do they do these numbers assume that that stays consistent over time? I know at some sometimes negotiations bring things like that up and down in in in contracts. I don't know how >> how much that moves within um within Ammerst. >> Yeah. So there's a there's a lot of assumptions in in the number. um it does look at our current composition of plans and and um cost sharing associated and keeps that static. So whatever it is now that's what it projects forward. Um we could always ask them to like give us an analysis of what if we did this and how would that impact it. Um so we do have that ability but the our official liability that goes on our um financial statements every year that's based on our current composition of plans. Um, the one thing that they do, which, you know, gives me a little concern because I could see this increasing our OPED liability is they've they've always had a medical inflation rate that is much lower than what we've seen. Um, you know, it's been in the four four and a half, 5% range. And what we always say to them is, well, you know, we're seeing our premiums go up by like 12, 13, 14, 15%. And what they'll say is, well, we're looking at over 100 years. Um, and so, you know, we're looking at the long-term, this is a long-term liability, so it averages out. Um, but I do think there's starting to be a growing a large enough sample size over the last 20 years that medical inflation is probably greater than 4% a year, four and a half% a year. And that variable can really change the liability pretty substantially. So, um, so there's some things they do that I think kind of keep our liability lower than it might actually be, but it because it is such a long-term liability and such a big number, it's, you know, it's a best guess even by an actuary. >> Kathleen, do you have a followup on that? >> Yeah, just I was um not directly related, but these numbers also include library personnel. Yeah, anybody who's part of Hampshire County and we get a breakout um I don't know if we get the library broken out, but we get like water broken out, sewer, schools, um public safety. We get some different breakouts of the liability that make up our total. >> Okay. And do you happen to know for the library like I think we were talking last night about 20 hours being the threshold for that employee? Um do what like what's the benefited threshold for library employees? Um I so it's generally if they are a um kind of a permanent employee if they're temporary they typically will pay into a separate retirement system that the town doesn't have a um share of they pay into something called ORA >> um for so this would be that it would be for their part- timerrs that the job is consistent um >> okay >> throughout the throughout the year >> they have they have a classification called under 20 which is not >> your age, >> right? >> Yeah, I can I can look too because we have to So, the way we provide a report every year to Hampshire County that breaks down the different segments and people and how much they made that year. So, I can I'll I'll take a look after this and see what who's in there for the library. >> Thank you. when when we get the new actuary report on us, um you can also look at the last one we had. There's a whole section on these assumptions that Sean just talked about on medical inflation. And so in addition to them saying, you know, that they were going to stand by the percentages, it's something that in the world of healthc care, people said it can't continue to go up by 10. >> No way. And you know at one point it said we never get beyond 15% of GMPP and we got to 20 and they said at 20 it'll be disaster and now we're going you know it's been one of these how can we absorb one sector taking more and more of everything and so far we have you know so it's it's a uh it the last time I think we saw 4% was in the early 1970s when we in Canada were spending roughly the same amount per capita and then I have a great graphic on this where we just departed but but it's the numbers they have in here are very conservative on where this cost is going to be 20 or 30 years from now um >> and the number can swing pretty dramatically from study to study. So towns are uh required to get a full valuation update every other year and then in the in between year we get um just like a demographic update. So they'll take the new people and and the new um if there's any changes to your plans and they'll update it, but then they do a full update every other year. So we're actually going through a full update right now with a new actuary. We have to bid it out every three years. Um and but it's somebody that we've had in the past who's very good. So you'll be getting the actuarial report hopefully in the next month or two. We've given them all of the information. So now it's on them to put it into their system and generate it uh what they think it is for us. Um so as soon as we have that report, we'll post on the website and we'll have them come give a presentation to this committee. All right, any other questions on OPED? So, I want to start this conversation because I think it in one of the upcoming meetings, maybe around the time when the actuary comes out, um we've got a format for an OPED funding plan that I would I plan to bring to this committee with a recommendation and and see if the committee supports it. >> All right, >> Sam, we're we're moving on to pension. Sam Sam. >> Yeah. I just I just want to say I'm glad that this topic is being discussed. I've wondered about it for years and uh I'm glad to see that proactively, you know, it's on the radar and a plan for uh moving in the right direction towards that uh dealing with that unfunded liability. Thank you. >> Yeah. The interesting thing is cities and towns are required to fully fund their pension obligations by 2040, but they've never required cities and towns to fund their OPED obligations. So everything we're doing is a decision. It's, you know, besides paying the cost we have to pay, all the extra is a decision. Um, and I've always heard that they'll never require OPED funding because they're so much worse than cities and towns are in terms of how big their liability is at the state level that they don't want to create a new, you know, a new restriction on the state budget that they would have to come up with. I don't know if that's true, but that's what I've always heard. So, we'll end with what's hopefully more positive news. And this is really just to start the discussion. This is a discussion that'll probably um you know be a five six year discussion but um our retirement system I'm going to pull this up. So this is a report that is uh created every year and it's publicly available. It's on the Hampshire County website. Um, and what it does is it tells cities and towns who are members of the Hampshire County Retirement System what their annual appropriation will be and it also provides a schedule for funding of the the pension obligation. So cities and towns kind of can see what's coming down the road. Um, similar to cities and towns, Hampshire Hampshire County retirement system has an actuary review their numbers every year, come up with assumptions that they spit out the liability for the pension system and then the funding schedule is basically adjusted to hit that liability. And since the retirement system is much much farther along in terms of funding, um, it's, you know, it's not as much variability from year to year because they're at about 80% funded for the pension system, which is really good. um definitely in the top half of retirement systems. Um but that's how this sort of works. So what I want to point out is so this screen here is this somewhat big enough to see? >> Yeah. >> Okay. So what this um table shows you is a few things. So the fiscal year is on the left. The normal cost is um in column two. So that's the cost we're going to pay no matter what. That's our costs for um uh for just like the B benefits that we owe retirees as they're out there. Um so this this is the pension payment now. So this would be the pension payments going out the door to active retirees. The amortization of the U. So that's the amount of money that cities and towns are assessed right now to fund the liability that's accured over time basically for all the present um and current employees and their retirement obligations. So that's the extra amount that's like when you look at our OPED liability that extra 700,000 we're setting aside. That's what this is the equivalent for the retirement systems but with much bigger numbers. Um and then and what you can see when you look at that column is that stops in 2033. Now the retirement system just adopted a new funding schedule. So this will change next year. They just adopted a new funding schedule. They adopt one every other year. And their new funding schedule pushed this out by two years. So no, it's now targeting 2034 as the year that the retirement system is fully funded. not 2032. And the reason the retirement board did that um was to there there was discussions around sort of smoothing this this transition. Not a lot of retirement systems have hit full funding. So there's a lot of discussions going on over the next few years with actuaries about how do you kind of glide into this full funding and not have like a cliff. Um from my standpoint, I like the cliff. I like just give us all the money back and we'll decide what to do with it. Um, but retirement systems are like, well, maybe we have smaller increases leading into that cliff. So that, uh, cities and towns start to see smaller increases year-toear, which we're already starting to see, right? Our retire, our pension assessments only been going up by, you know, 1% a year. Used to go up by eight or nine% a year. Um, and I think some of that too is also if there's some sort of economic recession in the next few years, this could all change. Um, so it pushes it off to 2034, but the funding schedule is updated every two years, as I said. So the next time the funding schedule's updated, it could go back to 2032. If if we continue to have two really strong years of returns, um the next board might adopt the funding schedule that's more aggressive. So it doesn't really matter until we get closer um to the, you know, a little bit closer to where we're fully funded, which is not that far away. Um but just so you know, they did push it out to 2034. Um, and so what you'll see if you go to column 7, so the total employer cost, it's going to drop, it's going to, you know, based on this, which is a little bit pushed out now, it's going to drop by about 2/3. Um, you it's going to go from 39 million is what the aggregate payments coming into the retirement system um from uh from cities and towns to about 12.5 million. Again, this is projected out into the future when we reach full funding. But, you know, I think we can safely assume that our pension is assessment is going to drop by at least half and and maybe more um based on these these figures. So, the question will be and that's down the road, what what do we do when that happens? Right? There's um we've talked about the the OPED um the need to fund OPED. We know there's pressure on operating budgets. We know there's pressures on taxpayers. Um, and we know there's pressure for capital. So, I think there's there's lots of uses out there. But, um, in talking with the town manager, I think over the next five years, again, we're starting this conversation early. Um that should be in our mind that there is this hopefully you know um safety net coming in five or 6 years um once the system is fully funded and again if there's a major economic recession that could change. Uh we've been kind of a little bit on borrowed time not having an economic recession in the last few years. So, you know, we just kind of keep seeing the the bar going up and up and up and sometimes you worry that the fall is going to be even greater when it just keeps going up and up and up. Um, but uh, you know, we are diversified in our investments. The state does a really good job with that. Um, so hopefully if there when there is a recession, it's you know, they'll manage it appropriately. So, yeah, that's where the retirements pension assessment's at. It's in a much better place. Again, it's at about 80% funded. Um, it's with the state. think they're doing a really good job. Uh we get I'm on the retirement board so we get you know quarterly reports from our um from our investment advisors um and uh we are the board itself is spending a lot of time talking about this now as well. >> So um are there questions because you also showed Ammeris versus the other towns and I know >> oh yeah I can show you that below so you can get a sense of how that works. Um, so some of these other charts in here. Um, so this is how the pension assessment gets divied up just so folks have a sense of it. And that's why when we add new employees, we don't really feel the we don't sometimes feel the impact of those new employees in terms of our retirement assessment until the year after. So the retirement assessment each year gets divied up based on aggregate salaries. So every member town in October calculates the aggregate salaries of all their Hampshire County eligible employees that goes to the retirement system. They then look at that split and they divvy up the assessment based on that. Um so if we were to hire four firefighters in September um of this year, we wouldn't start to feel the retirement impact of those employees until next the next pension cycle or until the next fiscal year. Um, but this shows you all the member towns, how many employees they have, their aggregate salaries. And an interesting thing here too is, you know, if one town gives out a big union contract and all the other towns don't, you know, the other towns maybe their their aggregate salaries stay the same, but they could drop in terms of a percentage if everybody else is going up or if one town is going up a lot, all the other towns could drop as a percentage. So, it's everybody's kind of relative to each other. And so we just have to be mindful of that. Um that's how it works. >> Jeffrey, >> got a question for you. Sean, speaking of that, like relative to each other, um, looking at some of the numbers here, when I do the average salary in the town of Amherst, just dividing the number of employees by the aggregate and I compare that to the overall average of the county. Amherst is about 16% higher than the average, the average salary is. And from the conversation we had before when Kathy was describing some of the health care and showing that we're funding Medicare part A uh excuse me part B the premium and also some of the other uh the drug costs on top of that. What are some of the factors that are driving our premiums from the aggregate expense side and and how does that how does that relate to some of the stuff that we're doing at the town level? Yeah, I mean I think one thing is many of the other towns are very small communities. So I think that's going to definitely put a downward pressure in terms of what the average is. Um we are between the town of Ammerst, the Ammerst Palm Regional Schools, you know, we're about a third, you know, of the system itself and we're um definitely the largest community in here in terms of the largest employer, I believe. Um, so I think there's a little bit of downward pressure on that average just because it's a lot of small communities that make up the the group. But I think your the larger point is definitely um a valid one that every our collective bargaining agreements and are directly impact our pension assessment. And so it's something that we need to be mindful of when we look at uh when we are in negotiations that it's not just the salaries that go up when we offer um increases there. There's a pension impact that will follow the year after. And so I think that all needs to be considered when we're having those discussions around what to offer um and and negotiations that there's this other impact that you know employees don't necessarily feel it directly right away but they are getting a benefit of a better you know higher retirement payment when they um do retire someday down the road. >> Thank you. >> Yep. >> Are the retirement terms similar across towns that you work x number of years? Yeah, there everyone in the system has the same I think statewide it's they're pretty much all the same. >> So I see Lynn and then Kathleen >> Sean what's the history of us being in this group? I mean again we are like the biggest town there. >> I don't necessarily know the history. Um I don't know if there's a lot of decision. I don't know if we made a decision or if the state grouped everybody. Um, I haven't heard of folks switching retirement systems. The one thing that did happen not too long ago was if you you probably remember um the COG when it dissolved, the Hampshire cog dissolved. Um, they were a member of this group >> and the the we were able to get the state to pick up that liability because they were no longer paying into it. Um, but there was definitely some math and some calculations that had to go on. So, I've seen groups dissolved, but I haven't seen communities switch. I don't know if that's even a choice. Um, but like Northampton, Northampton has their own. So, I think you either have to have your own or you have to be part of a county system. So, Northampton has its own retirement system. Holio has its own retirement system. They do it, they manage it themselves. I don't know if Ammerst decided someday it wanted to be in its own retirement system and manage it itself if we have that option or not. But um that's generally my experience. >> Thanks, >> Kathleen. >> Yeah, I'm just curious when we're adding positions to the municipal um budget and we're considering an alternate funding source such as the ambulance fund or you know the UMass strategic partnership that that funds some some positions. Are you are you considering the impact also on the retirement costs and OPED or are we really just looking at you know the the immediate costs of those positions? >> Um we've modeled it out. I mean when we we know you know again it's not a one for one because our assessment is relative to other member towns in the system. Um but we like for example when we costed out crests uh we factored in you know we looked at the most recent year our salaries versus our assessment and so like for every dollar of salaries what was the assessment per dollar um to kind of come up with an estimate of what the the retirement cost would be. So um we do think about it when we have you know add large numbers of employees. If it's one or two I don't you know it's I think the impact is diluted a little bit but when we if we're considering a large program um like we were back then when we added crest we look at it. >> Any other questions on this? I mean and Lyn, you're right. I mean, we're we're among a group where we're just the the next biggest number is Belure Town and then going all the way down South Hadley. Um >> uh and they they're half of the size of what we are in when you include the regional school. >> Yep. And remember, there's no teachers in this. So, it's all it's all non-teers, right, that are part of this system. And this one that the employee count it's all fully benefited people too. So to the extent we've got uh temporary folks. >> Yeah. I think that you have to be over the 50% level to be part of this. >> And just so counselors know the 13 counselors aren't counted because we're in this other bizarre little world. >> Yeah. I'll double check. I don't think you are. >> No. No. We're we're >> not. Okay. You would you would know. You would have to sign an enrollment form if you were. >> No. We're in this little thing called ORA and it's >> Yeah, that's the part-time temporary um >> and it it's uh it gives you back the money they took away from you. It doesn't have a rate of return. It's a and I mean they don't take that much away. >> You can invest it. It's just it's usually such a small amount of money that it's you don't usually even track it. Um, but they're they do like I I had Oprah from some small little things and it it can be invested, but it's again it's usually $50 or $60 that they take that you would rather just roll it into something else. >> Yeah. So, I think that that is the run through of these policies. I see Sam's hand is up and then next is going to be a report from Kathleen. Sam, you're muted, Sam. You're still muted. >> Thank you, Kathy. On the subsequent page, uh there's a reference to semianual payments and single payment expense. I'm curious. Uh do we make single payments or semianual? There's a single payment savings referenced kind of like yeah, >> you know, 142 grand or so. >> Yeah, we generally do the single payment. Um, I will say it's more of a discussion now, and I think we got them to push that single payment discount up. Um, it's more of a discussion now because interest rates are good. Um, historically when interest rates were bad, it it was a no-brainer to do the single payment. Now, it's more of a question of, you know, >> if we pay two payments, half, you know, can we make can we make back that discount with interests on $4 million? Um so it's something we've talked about more and more but generally we've gone with the single payment discount of you know to get that guaranteed savings. >> Thank you. >> And that's also why in the quarterly report when we get first quarter um we've always all of pension has been funded as opposed to just 25% you know. So some of these is a and then a few of the others are rearended that they haven't been p you know they're the timing the timing of them looks different in the quarterly reports. So I think we have a a segue into Kathleen giving a brief report. >> Yeah, we don't have a ton to report. We met in um July and went through a pretty long list of ideas, feedback in terms of potential changes to the budget. Um Sean took very very lengthy notes and was tasked with with a lot of the followup himself. Um, in the interim, Kathy reached out to town council again to see if folks had additional feedback, and I was in touch with Julian Hines and Andy Churchill from the charter review um to get a better sense from them if there were specific things that came up during those feedback sessions in terms of what people wanted to see. And I we've we've compiled what what they sent us back. So, our next um meeting is I think next Friday the 28th at 10:00 a.m. Um, and I wanted to double check in Sean with you to see do you feel like you've been able to you were going to go through a lot of what you took notes on. Um, you really had the you had the most work coming out of that meeting. So curious to see like how you feel, you know, you'll be able to bring some stuff back next Friday if that that timeline is still doable. >> Yeah. Um, so I think, you know, I we organized them into eight or nine sort of overarching recommendations. Um, and I think my task was to basically go through each of them and say, you know, how how could we make this? How could we do this? How much level of effort would it would it take? um and and what could we consider for next year. Um and so I've done that and I've also gotten Paul's feedback on on my feedback on those recommendations. So I've got I've got his feedback as well. Um so we're ready to, you know, when we meet again to go through each of those and kind of say here's what we think we can do, here's how much level of effort will be. Here are some things we're concerned about. Um but we're ready to do that. >> And Sam, your comments were sent to everybody. Mandy also made some comments. So we to the extent we've received anything um and one of the shared views is could there be something that's an executive summary at the beginning that provides the most important tables where you always want to go find those tables and you don't have to search for them. So and you know that was one of many pieces and then people were going to go take a look at Northampton which produces a very different format. Um, is there anything about that that um appeals? And it so as Kathleen as Kathleen said also the goal was or Sean, the goal was to produce something that's more useful uh to the public, but not to expend extraordinary staff time on it if it wasn't going to be uh broadly used. you know, in terms of some some balance of uh not not taking so and Kathleen is the chair of that. So, if if anyone didn't have a chance to look at the budget book that this tome that's produced every year and has additional comments, they should just send them through. I mean, this is we're we're due to report back by August 30th, but we can ask for an extension. you know, we don't have to other than we can say this is so far our thinking. Um, so it doesn't have to be more than a page if we're not done. So I even went back, Sean, and got the old what did what did the town's report look like before the council and this is the revenue part of it. There's an expenditure part and there was a school part of it. And these old pieces of paper where people um Jeffrey asked me, "Where do I find a library budget?" in the town budget there's one line that says $2 million and well the library budgets over here kind of thing. Um so people wanting uh to know sometimes it's just where do I find things? It's not even that it doesn't exist. Sam >> uh thank you Kathy. Yeah, I just think it's a great uh the budget book as it's titled is very informative, a ton of work. Uh the presentations of the information in the chart is great and uh stepbystep, you know, feedback for improvements is a great idea. Uh but it it's a wealth of resource. I can only imagine the volume of work that goes into it. hopefully less each year once you have the template, but uh glad to uh see that you're hearing feedback and making determinations on whatever might be achievable in a without too much work. Thank you. >> Yeah. No, I think it's it's been um you know, our goal. I mean, if we spend a lot of time on the budget book, we want it to be useful to the people that it's designed for. So, I think the feedback is welcome. Um you know, it's not necessarily for us uh here in the finance office or town manager. It's really meant to convey our financial position and what's being proposed to to the council to residents. So, we definitely want it to be useful. Um, the only thing I'll plug, Cath Kathy, is that that budget document back the one that you were looking at, there was a we had a budget position back then, a budget, uh, we don't have that. >> We don't have that anymore. So, just keep that in mind that we don't have a dedicated budget person anymore in town. But, um, but that's all right. >> That's you, Sean. >> Yeah, that's that's me. No, what was interesting other folks in here that'll help out. >> But Sean, what's interesting is I think almost everything that's in this is somewhere in the >> Well, that was definitely the basis. Um, and again, I just encourage folks as you look at it. The basis for our budget document. We we went to GFOA to the best practices and really kind of said how can we there's a really nice checklist and we really tried to say how can we hit this checklist of the information that GFOA says um should be in in a transparent budget document and maybe you know we've hit things but we haven't hit it in a way that is use is as useful to the community as possible. So, that's going to be our goal is how do we maintain hit checking that box for GFOA purposes, but if there's ways we can adjust that to also um also be more useful, then we'll we're going to do that. So, um I know that's Paul's priority is he wants to make sure our budget continues to stay aligned with GFOA to the extent we can. >> So, I think that concludes the agenda for today's meeting. And when we met in July, there was a maybe we'd see last quarter of the closing year. So that in September at some point, we'll see that and we'll see the actuary. You know, we don't have a what will the se the first meeting is the first Tuesday in September and then this the third Tuesday, you know. So Sean Sean will let us know what those are like right now. Um we just got through a bunch of financial orders. Um so this is the coming and so the other thing that is listed is begin the conversation of guidelines you know um and we don't do a lot on that other than to review what we have in the past done and we won't get an indicator report until the first week in November but then then it's you know so so sort of this is just a preview of of where we'll be going. Yeah. And Kathy, you could add we might want to add budget calendar to that. We have we've updated the budget calendar for 28. Um and there's a few little tweaks that we're considering to that um that we hope will um address some of the concerns we heard this year. Um in terms of the fourth quarter report, we're planning on putting it together next week, so it should definitely be good to go. It's mostly done. We're just wait on a few little um a few little adjustments here and there. Um, no major surprises. I think our revenues came in strong again. Our expenses were were uh lower than past years in terms of what's being turned back on the expense side. So, um, kind of similar to what we've were saying when we gave the prior reports that revenues were still strong, but expenses were tighter. Um, but we'll give you the the details in at our next meeting. and and what with this new transition um the other thing we're going to in the past we've been succeeded in get the materials in a packet that everyone can see before the meeting. >> Yeah. Yeah. We'll do better at that for um especially for the fourth quarter report. We'll do a better job of that. >> You know, so if it comes in in a way that it just can't like if if I get it at five o'clock the day before, it will at least forward it to you because you may not you look in the packet and you may not find it. And the just so the fourth quarter report if you look at the past several years is where you can get a loose sense of what free cash might look like. It's not be it's not the fully audited you know on on on where did we revenues versus expenses kind of bottom line um aside from the 5% in free cash and the x% in our reserve funds. Um so it's it's a very useful report um for the end of the year. Lynn, >> uh, two things. Will the documents that we looked at today be put into the packet for the public? >> Yeah, I'll check with Athena. She has them. I think I know she I think she's off today, which is um, but I think I'll talk with her about making sure they get posted after she gets back. And the other thing is um I know that there is this concept that the boards of the school committee and uh the library and the town would meet more like in the beginning of October and or middle of October prior to um the release of the fiscal indicators. Has any more conversation gone into what that meeting actually looks like? Yeah, I mean I think I don't know if that's 100% decided, but we were hoping to have an extra presentation this year um to address a couple different questions that have been raised. So, one question was how can the council support revenue growth? You know, what are the things that the council can control that can help um grow revenues in town? And that kind of directly relates to, you know, what we've seen over the last several years, which is a structural imbalance between how much our revenues grow one in a year to how fast our expenses are growing, right? And that's created a lot of tension um when we develop operating budgets because there's not enough money to to keep up. And so I think the plan was earlier kind of you know not really even necessarily connected to the FY28 budget just more as a standalone where are we fiscally kind of review what are the drivers of that imbalance you know why are our revenues growing at 4% but our expenses are growing at 5%. Um, and then knowing that, what what are some different ways the council can help close that gap either on the expense side or on the revenue side, right? What are things that can reduce how fast our expenses are growing? Um, and what are some things that can help our revenues grow faster to try to close that gap? And that'll ultimately long-term help um make our budget cycles more productive. I think they've been obviously challenging the last several years. So, that's one thing we're hoping to do. But then I think we're also hoping maybe get BCG started a little earlier this year I think um and have a more a more um defined role for BCG and process for BCG this year. Have them weigh in before finance finance committee off finalizes its recommendation so that finance committee can consider um input from BCG. So we're um we're trying to have a more defined process for BCG and we'll we'll talk about that in the budget calendar. Um and then also this separate presentation which I think was you know going to be a September early October um date. >> Thank you Sam. >> You you are unmuted. You can talk. >> I I didn't hear what I didn't hear you uh say my name. Thank you. Uh so Sean, you indicated there weren't too many surprises coming uh at present. Uh is it the guidelines discussion where if there are areas of potential future concern where as a committee we talk about it. I write down things through varying meetings. I remember the joint school >> schools meeting. There was discussion of the school issues with capital for uh some large expenses. I think it was roofs not just a middle school. uh you know DPW were aware of state implications and of course uh the potential library situation uh coming sometime between next March and a year thereafter. Um is is it the guidelines time period where those types of discussions come up? >> Yeah. So I said no surprises. I mean, just in the closeout of FY26 and that final quarter report, um, you know, it's not you're not going to see something drastically different than what you saw in the fir, you know, the Q2 and Q3 in terms of, you know, what we said the trajectories were. Um, in terms of going forward and budgeting and different pieces that will impact the budget. um you know, I'm sure we'll start that conversation when we do the financial indicators um presentation and definitely during the development of guidelines and possibly even earlier this year because as I mentioned um one of the things we want to do is is maybe start BCG earlier and you know before numbers are even out there um just kind of have a conversation around what are the concerns of the budget before we you know even are talking about how much each you know operating budget's going to get for the upcoming here um just know you know what is what are those concerns or what are those potential pitfalls around the budget that are people are worried about both from the town the library and the school perspective um so you know maybe even October we might start that conversation >> my observation as somebody who was new to the finance committee this year was that uh there's a heavy workload in the spring and a compre which is fine and a compressed time period from May through final uh town council uh approval of budgets and I don't know if that's an I assume that's typically the case. Uh it seemed to me to be a tight uh window. Uh perhaps because there were uh discussions of changes that were significant this year that may not have occurred in the past. So when I hear earlier rather than later, >> I said I think to myself, well that's probably a good idea. Yeah, I think there's ways we can decompress it a little bit. There will always be some pressure because of the the charter and the way the charter is set up that May 1st the town manager presents a budget and then the finance committee has 30 days to make a recommendation on that budget and it's a um you know it's a big document and a lot of a lot of departments and so on. So, I think there's always going to be May is always going to be a big month because that's when the finance committee has to review the budget and make a recommendation to the council um before before June. So, >> and and this last year, we didn't see the final elementary school budget until much later than normal. It was right down to the wire. You know, it it looked very different in February than it did in March. Um and that that's where the big stress point came from. So I just there a couple other at least one other I talked with Sean already about um the Jones library debt. Um we are carrying the town of Ammeris is carrying the gap between the various grant funing part until the library is due to pay theirs. And so Sean said he would be prepared to do an update on the financing for the short-term debt. And there was some good news about that that they recently sent 600,000 in. So Sean, I wanted to add um the middle school roof where we gave the chunk of money for the auditorium and at least initially it looked like it was going to be less than we thought it would. So whenever you're ready with that, I mean because that would be it was a free cash gift to the the region whether they did they end up needing all of it not needing it and >> yeah they they haven't actually asked us for any I know it's on the agenda but they haven't requested any funds yet and I think that's because they haven't started um last I talked to Shannon they hadn't started the auditorium phase yet. They've been focused on the classroom >> uh >> phase as you would expect. Um, so I think that will be coming soon. Um, but I haven't they haven't requested money. I haven't seen, you know, the when they request funds, they have to give us a breakdown of the budget and everything like that. Um, and I haven't seen anything come through yet. So, >> it won't be it won't be done when the school opens then. >> Uh, not the whole not the auditorium piece. I don't believe unless >> Okay. So, >> misunderstood. It was a big enough piece of money and the bid came in enough lower that it was potentially returning. And so this is also all laid out in in addition to everything else that happens in the Novemberish December is this free certified priest cash time and the Wildwood school just ate up a bunch of it. you know that would have been closing down those older um >> articles >> articles and they would have been available and they were available they will would have been available even more so so this is I'm just asking in terms of you know money flows that we might be able to be looking at >> yeah I'll check with Shane on a timeline to see if maybe we'll know by October November if money's coming back to us um my guess is it might unfortunately might be a next year thing. Um, but if if we can know that money's coming back to us by then, then then we'll obviously >> again that that arrangement we hold the money so we're not put no money goes to them and then we have to wait for it to come back to us. We hold it and only make payments as as they have expenses. So, um, but but I but I can at a minimum I can provide an update once I get that breakdown from Shannon of you know what the >> cost just not forgetting about it and you know we haven't ever done this but we can potentially ease Lynn will cringe while I say this but this 10 and a half we're trying to put aside for capital to the extent there's capital available in the late fall that can go toward that 10 and a half we did that one year with JCPC where it had a transfer over available not with a designated what to spend it on um you know rather than allocated in November December. So you know that was a decision point and there was actually a recommendation by Mandy that that be a more regular process instead of out of cycle just pick we're going to buy this vehicle you know shunt it over. Um so so just that was just all I'm asking. Um, and that debt schedule for the library was put together for the short-term debt um, a while ago. >> So, people haven't seen I can make sure that uh, Jeffrey Robert gets the most current of the debt schedule because that's that's where some of these things interact um, with the operating budget. So, so that's the somewhat sometime in September, October, several things will happening. And then the last one I wanted to ask about and then I will let everyone go is in our finance report we recommended reaching out to the other three towns for a potential visit to Desi a joint on would there be an advantage to all of us if the sixth to 8th grade was a general sixth through 8th grade middle school and we would go um first talk to select people you know the people finance people so we wouldn't be going in as just Ammerst with a um an assessment method that said if you don't want to bring your sixth graders in, fine, but this is how we would pay for it. So, we could avoid what's going on now where uh if you wanted to take an order music class where there's plenty of classroom size in the middle school, you can't. They're they're really separate entities. Um so, trying to think through a mutual advantage. So, Sean, you had you had indicated you were potentially interested in doing that. So, I just that would probably have to happen sometime. Yeah. Well, you know, it's it's a set up a formal meeting um do some outreach and figure out how we want to go in with some analysis. >> Yeah. And I think I mean that would have to be council reaching out to select boards. I think if if that's something the council wanted to do, but the the benefit to that is um you might not have a third elementary school, right? You would have a six through eight region. Um and it would just streamline the management of that. But but I haven't I haven't taken any additional steps other than you know when we talk about things you know when we talk about that presentation October and things we can do to have our expenses grow less. That's an example of one of those things that would um make our system more streamlined. >> Okay. So I just wanted to not for we actually made it one of those verbal not verbal written recommendations within buried in the report. It wasn't like in in neon lights. So So I think we're done at 246. Unless anyone has any questions or comments, I make a motion to adjurnn. >> Second. >> And I will put it to a vote. Jeffrey >> support. Kathy's a yes. Kathleen, >> yes. >> Lynn, >> hi. >> Sam, >> hi. >> Anna, >> hi. >> And Joe, as he said, left early. So, uh, goodbye everyone and thank you for last night. By the way, the active participation was great. And we'll see you again on September 1st. >> Thanks, Sean, for a great presentation today. >> Thank you all. Good conversation. Have a good day. >> Thank you.