Town Council Minutes: Town In Excellent Financial Shape and Chinmoy

NEW MILFORD TOWN COUNCIL
REGULAR MEETING MINUTES
MAY 23, 2011

Members    Mayor Patricia Murphy
Present:    Peter Bass
Walter Bayer
Cecilia Buck-Taylor
Thomas Esposito
Robert Guendelsberger
Mary Jane Lundgren
Peter Mullen
Raymond O’Brien
        Roger Szendy

Others    Tammy Reardon, Mayoral Aide
Present:    D. Randall DiBella, Town Attorney
    Raymond Jankowski, Director of Finance

6.    FINANCE
   
Update from the Director of Finance

Director of Finance Raymond Jankowski and Chief Financial Officer Gregory Miller of the Board of Education were present for the discussion.

Mr. Jankowski stated that the two organizations (Town and Board of Education) should not be pitted against one another.  They are one unit and one audit.  Both sides are responsible for what is in the audit with him having final responsibility.  He noted that the internal control points previously discussed are not taken lightly.

He stated that he and Mr. Miller are the only ones to give the real answers to questions and felt that the issues regarding the audit have been getting blown out of proportion.  This type of rhetoric (what he called “loose lips”) makes the municipal bond markets “jittery” as they too hear what is going on and it can end up costing the town more money.  These people don’t know the players or what is going on in town and it makes them less likely to want to invest in the town.

Why he went to RFP for auditors has nothing to do with the audit.  There are many things to take into account and he wondered why people take pleasure in criticizing.

He stated there are four problems that were identified by the auditors and there is a story for everyone.  He also noted that years ago there was an entry made by an auditor that could not be reconciled. 

First off, the GAZB-34 program requires the town to record items like material items like bridges and pipes, roads, etc that it has never had to do before.  These problems are not “material” issues.  He noted that any “material” findings would call for a “qualified” audit.  This was not the case here.  Reconciling the pension trust fund was mentioned twice.

In regards to questions concerning the Board of Education general ledger and Town reconciliation, he noted that balance sheet items for the Board of Education are different and require different ways of transferring money.  The important numbers were being monitored and the balance sheet numbers were left from the prior year (AP/AR, due to and due from).  This issue has been subsequently fixed.

Mr. Miller stated the new plan is very simple.  The Board of Education will give the Director of Finance a monthly reconciliation sheet for entries for the town’s books.  The audit company, Blum-Shapiro knows that these entries are being done and they will be addressed sooner in the audit so that they might be corrected in a timely manner if necessary.

The Capital Projects Activity line (the new ambulance facility) was addressed next.  Mr. Jankowski noted that there was no intention to having this capital project within the General Fund at the end of the year (June 30th).  He noted a “band” is a temporary liability whereas a “bond” is permanent revenue.  Although he had plans to finalize this and other debt, the plans changed as they do in this type of environment.  The funding changed because the sewer upgrade was moving faster than anticipated and more money was needed sooner than expected. 

This put him a bind so to speak.  If the ambulance money was handled in June, it would have cost the town $75,000 more than it did.  He combined both the sewer and ambulance in July, but when it was put in, it looked like a loss on paper. 

In regards to the General Fund budgetary control, he noted the Mayor has the authority to transfer up to $5,000 without going to the Town Council for approval. 

He added that Homeland Security grants (under many different names) are notorious for giving municipalities more money that they originally thought they would get.  The Federal grants also run on a different fiscal year cycle than New Milford.  The Town Council accepts the grants up front.  At this time funds cannot be accepted into the Undesignated Fund Balance before being signed off by the person who is running the grant that they have spent the money in the manner in which it was intended and the Federal or State government signs off. 

He, as Director of Finance, established that rather than bringing the issue back to the Town Council after it has been accepted and bring it back to the Board of Finance, he would get a request from the grantee requesting that money left over from last year would be transferred over to the next year’s budget; however, the auditors do not like anything not being approved by the Town Council and this is not possible.  He is currently working on other language with the Town Attorney.

In regards to the financial shape of the town, Mr. Jankowski stated that the town is in fine financial shape and its bond rating has never been better.

Dr. Mullen asked about the monthly report for journal entries.  Mr. Miller stated it used to be done at year end, but it would now be done on a monthly basis.  The process would be the same but done more frequently.

Dr. Mullen then asked about the sewer money.  Mr. Jankowski stated that the project was being completed faster than anticipated and more money was needed to keep it going.  The borrowing package was not enough at that time.  He noted that funding for projects is normally borrowed on a timeline basis.

In regards to the grants, Mr. Jankowski stated the auditors want a motion and votes on any adjustments to the approved budget.  There is a procedure in place.  Mayor Murphy stated this was brought to the auditor’s attention the night of the Board of Finance meeting along with Attorney DiBella’s opinion on transfers and the auditors accepted it. 

Attorney DiBella will also draw up verbiage for the Town Council that states that if the Town Council accepts a grant that has a different fiscal year or one that has a different monetary amount other than anticipated, that in the motion would be satisfactory language for the auditors in regards to legislative intent.  The language will be given to the Town Council for review when it is ready.  The Mayor can approve a transfer of $5,000 or less without Town Council approval.  It was noted that funds cannot be transferred between departments in the town budget.

Mr. Jankowski then noted there was a question about line 6313 on page 14 regarding highway projects, more specifically Barker Road.  He stated that when the 2010-2011 budget was approved, the monies for this project were taken out of the budget for a Department of Public Works capital project and the Director of Finance and the Mayor were instructed to borrow that money for the project.  The project was completed but without the funding in place.  It will be borrowed for in July rather than taxing the public for it.

Mrs. Lundgren asked how many times the budget was adjusted.  Mr. Jankowski stated there was no count, but any time it happened (which was not that many times); the real problem was deferred revenue (grants) as there is no backup behind it.

He noted the Health Department gets most of the homeland security grants.  These grants have a year end of August and the town normally receives more than it anticipates.

Mrs. Lundgren stated she would like to see items come back to the Town Council for review if there are any changes.  Mr. Jankowski expressed concern for a breakdown in operations which could hamper when the time frame for when the money can be used.

Mr. Bass thanked both Mr. Jankowski and Mr. Miller for coming in to explain the issues as hand with the audit and for saving the town $75,000 by combining the borrowing.  He then asked about revenues.

Mr. Jankowski stated he would be providing projection in the near future; however, he does not harbor any bad feelings for this year.  Some lines will come in less than anticipated and some will come out with more.  He noted it is hard to determine because the numbers are always changing.

New Milford has very strong ratings in the investment community for the municipal market and it plans to remain strong.  The town is going out again in July to look at its funding needs.

Mr. Bayer thanked both Mr. Miller and Mr. Jankowski for their hard work and noted that he is not unhappy with the presentation.  He asked that they keep working to solve the issues and keep the town in good shape.

Mr. Guendelsberger stated he also appreciated their work and is not concerned because he does not think that any of the issues put forth are serious.

Mr. Jankowski stated the financial recording software that was approved in this upcoming budget will also help, but will also take a lot of work.  He and Mr. Miller’s staff are working on all of the issues.

Mr. Esposito thanked both men for their hard work and for working as one unit.  He believed that no audit can come out perfect, but agreed that the issues cited are not major ones.  He felt that as New Milford is strong, it will look more attractive to investors as other towns fail.  He felt that the “one team” effort should be carried out throughout the town.
Dr. Mullen disagreed with several members’ opinions and noted that there are things that could be fixed but everything is not wonderful.  He asked why Barker Road would be bonded in July.  Mr. Jankowski stated the next time that the town is mandated to borrow and roll over funding is July 26, 2011.  It is a decision to merge the two together.  When asked how it would affect this fiscal year, he stated it would be a “due from” in July and would be in the road project fund.

Ms. Buck-Taylor asked Mr. Jankowski if he thought the negativity caused by “loose lips” could cause financial harm to the town.  Mr. Jankowski stated it absolutely could because it can make the bond market jittery and if people have questions about town financing, they should come to him for the answers.

Mr. Esposito noted the bond market makes the final decisions and it looks like the bond market is comfortable with New Milford’s finances.  He would like to see it stay that way.  He felt the new software would help make the job a little easier for Mr. Miller and Mr. Jankowski.

Mr. Szendy pointed out that if there were bad material weaknesses with the town finances that there would be a qualified audit done.  There was not.  There may be some procedures that need to be improved upon, but nothing very serious.  He felt that no matter who the auditor is, there would be questions every year.  He is happy with the explanations.


9.    DEPARTMENT OF PUBLIC WORKS

Discussion and possible action on the request for supplemental appropriation of $183,890.83 to replenish the funds expended for the emergency repair, temporary access way, and temporary bridge for Chinmoy Lane as a result of the flood emergency of March 7, 2011.  These funds should be appropriated from the undesignated surplus to the highway construction line-6089-310-0002.

Mayor Murphy noted that Section 708 of the New Milford Town Charter states money can be appropriated for emergency purposes.  Although the agenda states a request for supplemental appropriation, Mayor Murphy stated one is not necessary at this time.  She said that an emergency was declared for this particular issue and there are signoffs for it.  She put it on the agenda as an update and does not need ratification by the Town Council until the amount goes over the limit.

Michael Zarba, Director of Public Works, stated on March 6th there were storms totaling more than four inches of rain and severe flooding throughout the town.  The culvert under Chinmoy Lane was washed out, causing the collapse of the bridge early that Monday morning.  A temporary roadway approximately 900 feet long at a 20% grade was constructed and a temporary bridge was borrowed from the State of Connecticut.  Thirty days after the washout the bridge was installed.  The cost was over $180,000 to complete all these activities.

The road project consisted of 90 tri-axel trucks of material and was completed within 36 hours after the road collapse.  Access was gained from a neighboring property.  There was still snow on the ground and it was still raining heavily during construction of the road.

Mr. O'Brien commended the Department of Public Works for a job well done.  He then asked about a new culvert and was told a new concrete culvert is in the engineering stages.

Mr. O'Brien then asked if the town would be reimbursed for the monies spent on this project.  Mayor Murphy stated the town would be reimbursed $140,000 for snow emergencies during the winter months; however it would not be reimbursed for the flooding.

Mr. Szendy thanked the Department of Public Works and felt it did an admirable job for a reasonable price under adverse conditions.

It was suggested that the Department of Public Works present certificates to its workers like the Police Department has done.  Mr. Zarba stated that is something he was thinking about.

Mr. Guendelsberger also commended the Department of Public Works on a great job, adding that a previous Mayor made an emergency appropriation to pay old legal bills.  He was happy to see Mayor Murphy did it for an actual emergency.

Mr. Bass asked if an arched culvert could decrease in capacity with age.  Mr. Zarba stated it would not, but it will deteriorate with age.  This is not normally the problem.  These culverts are built to last.  The Chinmoy Lane culvert lost is supports and therefore collapsed.

Mr. O'Brien asked what the water capacity was for this collapsed culvert.  Mr. Zarba stated it was approved by the Planning Commission and was sized within its regulations for a 50 year storm but is evaluated for a 100 year storm.  He also noted that there were a lot of conditions that contributed to the collapse including rain, frozen ground, snow melt and a large tree.  The new culvert would be the minimum capacity necessary but would need a larger opening.

Dr. Mullen asked about if this galvanized culvert was at its life expectancy and if there are others in town at this same stage.  Mr. Zarba stated that yes, it was at its life expectancy, however, the bridge and culverts in town have been inspected and are sound.  He noted there is a design life for any infrastructure.  The assumed deterioration curve is the number he is giving the Town Council this evening.  This is the life span if nothing was done to them at all.  Concrete does deteriorate faster and needs more maintenance.  There is a maintenance and inspection program in place.

Mr. O'Brien wanted to make it clear that the culvert did not fail; however, its supports did fail and collapsed the arch.

Mr. Szendy stated it was inspected in 2002 and found to be in good shape.

Mr. Zarba stated a consultant engineering company that the town works with on different projects is doing culvert inspections for the town at no cost and he would get a report that can be loaded directly into the Department of Public Work’s Asset Management System by December.  The company is half way through now.

Mr. O'Brien moved the Town Council acknowledge and support the action taken by Mayor Patricia Murphy pursuant to Section 602 of the New Milford Town Charter to declare an emergency regarding Chinmoy Lane for repair, temporary access, and a temporary bridge as a result of the flood emergency of March 7, 2011.

The Town Council also acknowledges and supports an appropriation in the amount of $183,890.83 to replenish funds expended for the emergency repair, temporary access way, and temporary bridge for Chinmoy Lane as a result of the flood emergency of March 7, 2011.  These funds should be appropriated from the undesignated surplus to the highway construction line-6089-310-0002.  The motion was seconded by Mr. Bayer and carried unanimously.


Judilynn Ferlow
Recording Secretary
/jlf

Winter's Discontent: Management of Town Finances; Announces Mayoral Bid

Attacking Mayor Murphy's handling of the Town's finances, Jeff Winter announced that he is going to run for Mayor in November's election.

Here's a guy who supported Mayor Murphy's Budget/Spending Plan that includes both Board of Ed and Town and then turns around and criticizes it. 

It's going to be a long election season.

Pilla To Critics: 'Come Forward With Facts Not Fiction'

Recently, there has been some criticism of the Town’s Audit, its pension plan and the management of the Town’s finances.
This criticism is unfounded, politically motivated and fact-challenged.  The critics  wouldn’t understand the components of the Audit if they jumped up and bit them. Some are trying to rise to political stardom with the brilliance that exists only in their own minds. 

An Audit is the reconciliation of revenues over expenses at the end of each fiscal year.
 
Some fail to understand that the Audit includes both the Town side of the Budget and the School side of the Budget and that at the end of the year the two must be reconciled into one.  While each component operates independently during the year, the reporting and reconciliation of each has to come together as a marriage of one at the end of the year in the Town Audit.  If the BOE doesn’t report its reconciliation in a timely manner, that creates a problem for the Auditors.  The same would also be true for the Town side of the Budget.
 
In the same breath, some who are critical of the Town Audit and fiscal management also approve the Budget.  To me, this is disingenuous and hypocritical and typical of election-year fear when candidates talk out of both sides of their mouths in an attempt to appease all audiences.
 
If the critics really knew the facts, they’d know that the Town is in strong financial shape.  The Town’s Bond rating has never been higher and its Bond rate has never been lower.  The Town recently floated short-term bonds at a rate of .38%, one basis point higher than the Town of Greenwich.  With regard to the Town’s pension fund, an independent actuarial, Milliman Associates, stated that the fund is healthy.
 
The Town’s unreserved and reserved fund balances are at historical highs.  The Town is thus prepared for any drop in State revenue without compromising  services for both the BOE and the Town.
 
During the Murphy Administration, the Town has been able to accomplish many objectives with very little impact to the mill rate.  Every year, she has even given more funding to the School System.   So much has been accomplished and the Town of New Milford has never been in better financial condition than it is today thanks to strong management. Our Town budgets provide for youth and elders and everyone in between.   During her tenure, the Town has received more grants than in recent memory.
 
It is a testament to Republican Mayor Murphy’s skills that the Democrats on the Town Council, the Executive Committee of the Democratic Town Committee and the Democratic Members of the Board of Finance support her initiatives and the proposed Budget that was recently passed by the voters. 
 
It is clear that these few critics and political hacks are trying to create issues where issues do not exist and are doing so for their own political aspirations.  It is my wish that if they really want to help the Town that they come forward with facts, not fiction.
 
Election season is just around the corner and the political rhetoric has begun.  I call upon Mayor Murphy to continue her good work.

It's Official! Single Stream Recycling Starts Today

No more sorting your recyclables...they all go in one bag and are dropped into the "hopper" of one of the new compactors.  As a result of SSR, the Center will now accept all those items that it didn't take before like ALL plastics.  Read the flyer below for further information.

The first customer of the day was Earl Woodin who was delighted with the new setup.  "It makes everything really easy," he said, "And it looks like the Town will be saving a lot of money by compacting everything."  How true!

Budget Passes Handily

Votes:     2,689
Eligible: 17,721
Per cent voting: 15.17%
 
Town:  1695 to 986
School:  1561 to 1117