I am James Palen, District 6 and Chair of the Finance and Budget Committee.
I move RTM Resolution (14-13) Authorizing and Approving the July 1, 2014 to June 30, 2015 Budget.
If there are no objections, I propose to waive the reading of the Resolution.
The F&B committee met twice during the last two weeks for regular meetings that were dedicated solely to discussing and taking action on the Town budget. Our first meeting was for three hours on Monday, April 28 with 12 of 15 members present and our second was for almost three hours on Monday, May 5 with 13 of 15 members present.
These meetings were in addition to the countless meetings that members of the committee attended during the past four months. Our committee was divided into two subcommittees – the Board of Education Budget Subcommittee chaired by Jack Davis and the Board of Selectman Budget sub committee chaired by Robert Cardone. Terry Duffy who serves as the F&B Clerk deserves a special thank you for his speedy turn of our minutes following numerous long and late meetings.
1st Selectman Stevenson Describes 2014-15 Spending
Ed Board Chair Hagerty-Ross on 2014-2015 Education Budget
RTM Education Committee Report on Darien Education Budget
Town Taxes up 5.8%, But with Reval Your Bill Likely Will Vary
I would like to take this time to thank the Board of Finance, Board of Education, Board of Selectman and the many town staff for their significant work over the past five months working to put together this year’s budget. Virtually all of our elected officials are volunteers and they each dedicate significant time and effort to the budget process.
Town Financial Situation
In summary, our town is in good shape. Our credit rating remains at Triple-A from Moody’s, our town delivers great services, has a strong police force, has wonderful parks, continues to invest in great facilities and in constantly recognized for its high quality of education.
We are further benefited from the many volunteer organizations in town including Post 53 and our three fire departments who serve our community and provide volunteer services that many other towns must pay for out of their budget.
That said, our budgets and taxes have continued to rise year after year as a result of a growing school population, increased wages and benefits for our employees, rising healthcare costs and substantial increases in the cost of delivering the necessary special education services to our town’s children.
Fiscal Year 2014-2015 Budget Overview
The budget proposed by the Board of Finance this year is $133.1 million, up $7.4 million (or 5.9 percent) over our $125.7 million budget last year which was up $5.5 million (or 4.5 percent) from the year prior.
Our proposed taxation to fund this budget is $121.8 million, up $6.6 million (or 5.8 percent) versus the prior year.
The $11.2 million difference between the $133.1 million that we spend and the $125.7 million that is proposed to be raised in taxes comes from a combination of sources including a $1.1 million drawn down in our cash balances and the remaining from revenues including licenses, permits, fines, charges for services, investment income and a host of other non-property tax sources.
To recap, spending is proposed to be up 5.9 percent and taxation is proposed to be up 5.8 percent.
Because of last October’s town-wide reassessment of all property, the grand list is down 7.2 percent and therefore the proposed mill rate would move from 13.17 to 15.01 under the proposed budget.
ANNOUNCEMENT ABOUT CHANNEL 79 REBROADCAST
[TV79, Darien's government television channel, sent out this message early Tuesday afternoon]
Dear TV79 Viewers:
We experienced some technical difficulties with our live coverage of last night's Representative Town Meeting debate and vote on the Town and Board of Education's proposed 2014-2015 budgets. Our gear is getting old and we apologize that it's proving unreliable.
Because we could not air the first 45 minute of last night's meeting live, we are airing the entire RTM meeting (all 2 hours and 50 minutes) continually today and tomorrow. We will also re-air the meeting starting this Friday, May 16.
We will carry tonight's Planning & Zoning Commission meeting LIVE at 8 p.m. as it hears about the proposed cell tower at the Ox Ridge Hunt Club.
Again, we apologize for last night's problems. We are working to keep our equipment operating as best as possible.
It is important to note that this is not just a mathematical adjustment that affect all residents equally because the percentage change in property values varied drastically due to factors such as the value of the house, the proximity to the water and neighborhood.
The result is that not all resident’s taxes will go up by 5.8 percent under the proposed budget -- some by much more and some by much less and in some cases a residents may see a decrease in taxes.
Contained in the proposed resolution before you tonight are 6 different items - A through F - the three most important items are:
- A. Selectman’s Operating Budget B
- Education Operating Budget D
- Appropriations for Capital Approved in A above
The remaining items (C, E & F) are more mathematical as they simply add other pieces or generate the necessary mill rate to raise taxes sufficient to fund what we have agreed to spend or allow us to borrow short term debt in there is a timing difference between the Town’s spending and receipt of tax revenues.
As with the past few years, we expect that the RTM will vote on the items in this resolution separately and as such I will deliver the F&B [Finance & Budget Committee] report on each item and then return the floor to the moderator for discussion and questions.
Item A – The Selectman’s Operating Budget
The Selectman’s Operating Budget is $44.9 million, up 5.9 percent from the prior year. By way of background, this budget is comprised of four primary parts:
First - Town Services including public safety, human services, parks & recreation, public works and general government. This is the portion of the budget that the Board of Selectman and the town administrator are responsible for managing. This portion of the budget is $27.5 million, up $1.3 million (or 4.9 percent) from last year. The largest increases in this portion of the budget are the following:
- $350,000 – Police, Fire and Emergency (includes a civilian dispatcher for $90,000)
- $250,000 – Employee benefits (approximately 5 percent increase)
- $185,000 – Public Works (including outsourced building management services)
- $135,000 – Worker’s compensation and liability insurance
- $180,000 – Wage contingency to for union contracts which expire on June 30
Second – Library Operating Budget. The Library, although privately owned, has it’s operating budget paid by the Town. The Library’s proposed budget is $3.5 million, up $82,000 (or 2.4 percent) from last year.
Third – Debt Service. This debt service, which include that attributable to Town’s capital current and past projects as well as the Board of Education’s current and past capital projects is $11.5 million, up $685,000 (or 6.3 percent) from last year.
The allocation between the debt service here is 65 percent for the Board of Education and 30 percent to the Town and the remaining 5 percent to sewer projects. This debt service which is the result of our bonding of capital projects is fully under the control of the Board of Finance.
They determine the amount that is bonded and the amortization profile and maturity of the debt.
We currently have $87 million of debt outstanding and based on our current debt amortization schedules, we expect to repay approximately $8.6 million of debt this year, which, barring any new major projects, is our peak debt service level and is expected to decrease in the coming years.
Fourth – Capital Projects. These are the capital projects that are being funded as part of the proposed budget and include both Town projects and Board of Education Projects. Capital projects total $2.5 million and are up from $2.3 million (or 7.1 percent) last year.
This $2.5 million is broken down between Town projects and Education projects. Town projects of $1.7 million include capital for sidewalk rehabilitation, computer software to track land use and police vehicles and funding of reserves for emergency equipment replacement and fire commission equipment.
Board of Education capital projects of $800,000 include a generator for Ox Ridge, digital heating controls for Royle and Ox Ridge and masonry restoration at Middlesex [Middle School] among other things.
I would specifically note that the proposed upgrade to our emergency services broadcast equipment to cover certain so- called dead-spots in town has been removed from this budget.
In summary the Selectman’s Operating Budget is as follows:
Total - $44.9 million, up 5.8 percent
- Town Services & Public Safety - $27.5 million, up 4.9 percent
- Debt Service (including Town and Education) - $11.4 million, up 6.3 percent
- Library Operating Budget - $3.4 million, up 2.4 percent
- Capital Projects (including Town and Education) - $2.5 million, up 7.1 percent
At our meeting on Monday, May 5, the F&B Committee voted to approve the Selectman’s budget with a $200,000 reduction with 6 voting in favor, 5 opposed and 2 abstentions.
Common themes among those voting in favor of cutting the budget by $200,000: A general sense that members of the committee wanted to send a message to the RTM that they do not think the continued increase in spending and taxation that we have seen in recent years will be acceptable to our residents and could have a longer-term negative effect on the value of Darien real estate relative to other towns both in our area and nearby in Westchester.
Although the F&B committee did not specifically vote on any individual line items to be reduced, which is what would be necessary to actually reduce the proposed budget, it did discuss a number of items during it’s deliberations including the proposed single civilian dispatcher to be added to the police budget and overtime related to sick leave on the police force.
The other common theme among those that voted in favor of a reduction was that they thought the current technology and facilities plans needs to be better managed to control the growth of operations and software expenses going forward.
There was a view that a number of planned software and computer upgrades should be delayed until after the joint BOE/BOS [Board of Education/Board of Selectmen] technology and facilities program is completed this summer.
Common themes among those voting against cutting the budget by the $200,000: An arbitrary cut of $200,000 was the wrong way to bring about change to the budget as it would require cutting services or under budgeting certain departments before managerial or technological changes were made that could lower our spending.
The past practice of negotiating labor contracts that had lower increases in the early years and larger increases in the latter years are one of the items that is contributing to this year’s larger than expected budget increases.
Item B – The Education Operating Budget
Thank you Mr. Maroney and the Education Committee for a very thorough report on the Board of Education budget. I will try to be brief and repeat as little as possible.
The Board of Education Operating Budget is $88.3 million, up $4.9 million (or 5.9 percent) from the last year. The year before the budget increased $3.2 million (or 4.0 percent) from the prior year.
There are a handful of items driving this year’s record high increase in the Board of Education budget:
- Special Education –
RC24 accounts for 23 percent of our budget and is up $2.1 million excluding cost of benefits, or 10.5 percent versus the current years projected actual and 11.0 percent versus what was actually budgeted last year.
The majority of these costs are related to the hiring of consultants to fix many of the problems that uncovered in the special education system over the past year and the hiring next year of new “Special Education and Student Services Facilitators” who will be able to better manage the delivery of special education in our schools and insure a proper PPT process for children.
These new positions that will cost approximately $600,000 are designed to better manage the special education program and allow other administration to concentrate on the day-to-day management of the school and other new mandates such as teacher evaluations and Common Core.
The positions will insure children are receiving the appropriate services; and to get all parties back on the proper track.
- Health Insurance –
This is up $1.1 million or 9.7 percent versus last year. This projected increase includes the fact that a majority of teachers and administrators have transitioned to an HSA program, which actually generally provides lower costs.
- Teachers Salaries –
We are in the third year of the teacher’s contract that included an effective 3.36 percent salary increase after accounting for wage and step adjustment.
You may recall that the first two years of the contract included a 1.3 percent and 2.0 percent increase and only a half-step increase in each year.
Part of this year’s large increase is simply the result of the collective bargaining agreement reached with the teacher’s union.
- Excess Cost Grants -
The budget assumes that the Excess Cost Reimbursement for special education expenses from the State of CT will be $1.8 million which is approximately 72 percent of the projected expense (the same as which was budgeted last year), although this year initial expectations are that we will be receiving almost $2.3 million representing 82 percent of our excess costs.
The board continues to use the 72 percent funding rate given the historical performance and because the current increase may simply be the result of an election year bump.
- Human Resources Director –
The budget includes $140,000 for a new HR director that will insure that all positions have proper job descriptions, work to better allocate and track staff among the different departments and in the long run look for more efficiencies in delivering our services.
Although a minor expense, but one that F&B believes should have significant future impact, the cost for developing a strategic vision for the District is included in this budget.
This vision should address not only the District’s educational direction but also the District’s organizational structure and the tools, metrics and measurements required to ensure the monies and resources allotted to the District are maximized and managed efficiently and effectively.
At our meeting on Monday, May 5, with 13 members present, the F&B Committee voted to approve the Education Operating budget with 7 in favor, 5 opposed and 1 abstention.
Item D – Appropriations for other funds
This item includes 6 different appropriations from different funds. All but one of the appropriations are “self-funding” which means the fund that collects the revenues or taxes automatically feeds the expenses for the services which it provides.
The only items that affects our property taxes is the transfer related to the “Reserve Fund for Capital and Non-Recurring Expenditures” of $2.5 million.
This amount includes the Board of Education and Town Capital items that were approved in Item A of the resolution earlier tonight. To summarize, capital projects in the proposed budget total $2.5 million this year, up from $2.3 million last year (a 7.1 percent increase).
These projects are broken down between Town projects of $1.9 million that include capital for infrastructure rehabilitation, emergency communication equipment, police vehicles and fire commission equipment replacement.
The Board of Education capital projects of $800,000 include a generator for Ox Ridge, digital heating controls for Royle and Ox Ridge and masonry restoration at Middlesex among other things
At our meeting on Monday, May 5, the F&B Committee voted unanimously to approve the six appropriations including the $2.5 million for capital projects.
Item E – Mill Rate
This item sets the mill rate that is used for collecting taxes during the coming fiscal year. Assuming no changes to the proposed budget, the mill rate will be 15.01 based on the $8.2 billion Grand List and a 98.9 percent tax collection assumption.
The current grand list is 7.2 percent lower than the prior year’s Grand List of $8.8 billion.
At our meeting on Monday, May 5, the F&B Committee voted to approve the mill rate that would be necessary to fund the budget at a level that was $200,000 less than the originally proposed budget. The votes were 6 in favor, 2 against and 4 abstentions. Generally, those that voted to reduce the budget voted to approve the lower mill rate associated with the lower budget.
Those that were against decreasing the budget generally voted against changing the mill rate. To reiterate, the mill rate is the result of dividing the adopted budget, less non- property tax revenues that the town expects to collect by the assumed grand list, reduced by certain abatements and adjusted for the expected collection rate. That number is then multiplied by 1,000.
The numerator is $133.1 million budget less $11.2mm or non-property tax revenues leaves $121.2 million of property taxes that the town will collect.
The denominator is a $8.25 billion grand list, less $43 million of tax abatements for a net grand list of $8.20 billion.
This is then multiplied by 98.9 percent to adjust for the assumed collection rate which produced an adjusted grand list of $8.12 billion.
Divide $121.2 million by $8.12 billion and then multiply by 1,000 and you have the 15.01 proposed mill rate.
Item F – $5 Million Bonding Resolution
This is authority is party of each annual budget Resolution. It authorizes the Town to make short term borrowings up to $5 million without the need of RTM approval.
This allows the Town to fund the budget in the event that there is a timing difference between tax collections and expenditures. Although the Town has not needed to utilize this authority in recent history, it gives them the necessary flexibility.
The Committee met on May 5, 2014 with 13 of 15 members present, comprising a quorum and unanimously approved Item F.
James Palen Chair, Finance & Budget Committee May 12, 2014