Loading...
Financial Forecast 11-13-24 City of Beverly Financial Forecast Committee November 13, 2024 Meeting Minutes Board or Commission: City of Beverly Financial Forecast Committee Date: November 13, 2024 Location: Beverly City Hall, 191 Cabot Street, Beverly; Third Floor Chambers rni -� City Council Appointees: Chair Kathleen Feldman City Council Appointee Karen Fogarty School Committee Appointees: Guiliana DiGenova Lorinda Visnick Mayoral Appointee: Paul A. Manzo By Ordinance: City of Beverly Director of Finance Bryant Ayles Ex Officio: Gerard Perry Citizen Representative: Dominic Copeland Members Absent: Ward 4 Councilor Scott Houseman Others Present: Councilor at Large Hannah Bowen Councilor at Large Brendan Sweeney Ward 4 Councilor Danielle Spang 1. Opening Comments by the Chairperson and General Committee Discussion Chair Kathleen Feldman called the meeting to order at 5:15 pm. Ms. Feldman reminded the committee that the 3-meeting series would cover the following: • Municipal expenditures at tonight's meeting • School Funding at the November 19 meeting • Approval of the report at the December 4 meeting, in order to allow final submission prior to the 12/31/2024 deadline as per city ordinance. Ex-Off icio member Gerard Perry emphasized the importance of voting next week in order for him to prepare the report for Beverly City Council approval. Chair Feldman agreed, adding that there may be a $4.4M deficit, and that the committee needs to address this now rather than postpone this. 2. Approval of Minutes Members reviewed the December 12, 2023 draft meeting minutes. Mr.Ayles moved to accept meeting minutes as presented. Ms. Fogarty seconded the motion, which carried 7-0. 1 City of Beverly Financial Forecast Committee November 13, 2024 Meeting Minutes 3. Presentation by Finance Director Bryant Ayles on Proposed Municipal Expenditures Mr.Ayles explained that the process involves starting with the FY25 proposed budget numbers as a starting point. There is nothing drastic to report, he said, applying reasonable growth projections based on historical activity. Mr.Ayles proceeded to outline the budget projections, line item by line item, explaining that although the forecast is published through the city council each December, the document is a living one;Anytime there is a change with funding structure or policy, the document is updated. The budget is currently balanced but a deficit is projected for next year. It is hoped that between $650 and $7001K can be taken back from excess levy capacity and the roads and sidewalks proposed $1,250,000 fund would need to be put to $0. Other adjustments will be made to balance the budget and It remains to be seen what the financial repercussions from the current Beverly Teachers' strike will be. Salaries are complicated but Mr.Ayles built in reasonable increases where he could and left some areas blank pending conclusion from the Teachers' union strike. Capital Outlay ($744K) increases by 2.5% annually-this line item includes annual recurring major purchases, such as police vehicles, and equipment. Ms. Feldman and Ms. Fogarty questioned whether the item could be labelled, "Equipment" instead of"Capital"to avoid confusion. Committee members agreed that this would work. Each year, the forecast will differ from the actual figures, particularly with regard to contracts with external parties such as the Sanitation and Health Insurance. He said the rest of the city's insurance grows 3-4%with premiums increasing due to new vehicles, new buildings, etc. Beverly property owners pay $100 annually into the Sanitation Enterprise Fund, which pays for sanitation services. This is supplemented by the General Fund as needed, when trash removal costs increase, for example. The contract is up for renewal in 2 years, which adds a big variable into the mix. The 4% projected Health Insurance increase is due to ballooning premium costs. The average increase used to reflect a 3% increase, but now 14 and 15% increases are not uncommon. The city has a consultant who compares different reference points for plans and costs. This significant impact is not unique to Beverly but is industry-wide. The last 2 years have been similar, Mr.Ayles pointed out, adding that the city had to phase in needed premium increase costs with employees. A trust fund helps to supplement health insurance for city, employees, retirees and surviving spouses.Additionally, the city pays $1 M for reinsurance, which safeguards the city against overages in the event of catastrophic health insurance claims. He said that, 5 months into this fiscal year, the city recouped $800K of that expenditure. Mr.Ayles pointed out that health insurance costs $30M annually and that the reinsurance is the most prudent means of protection against being bankrupted by a catastrophe. The city brings in $185M annually and expends the same with minimal resources. The city, which is self-insured, pays for 80% of health insurance premiums, with the employee paying 20% toward the plan (currently Blue Cross Blue Shield or Harvard Pilgrim.) If a retiree 2 City of Beverly Financial Forecast Committee November 13, 2024 Meeting Minutes passes away, the surviving spouse assumes a higher responsibility.A small population is on this plan for surviving spouses. The schools handle their active employees' health insurance costs, but when school employees retire, the city takes over the costs. Bidding for reinsurance takes place annually, taking into consideration high pay-out scenarios, reduced premiums and different structures for 3 different health insurance plans. Mr.Ayles emphasized the importance of health insurance, as public employees typically balance out this benefit and retirement in exchange for a lower salary. Mr.Ayles described the total Debt line item of$9,043,723, from the Capital expenditure plan, as a moving target, taking this year's budget into account and attempting to level fund for next year. This line item contains expenditures for work done on City Hall, the High School, Middle School and Police station. Expenses for the elementary schools have fallen off. Roof work needs to be planned carefully so as to not spike the budget. The Centerville School roof is slated to be addressed first, along with replacing the oil heater. Mr.Ayles outlined the Retirement Assessment and OPEB items. Union employees contribute to the OPEB fund. State/County assessments, bookmarked for local aid expenses such as MBTA, Charter Schools, mosquito control, are covered here. Reserves to handle unforeseen expenses like early retirement, vacation time, sick time buyouts, are at $776,000 for FY26. Monies can only be paid out of this fund for retirement buyout or with city council approval. The roads and sidewalks budget will be left level funded for now at $1,250,000. Mr.Ayles said we will be examining this line item to fund collective bargaining agreements when we submit the FY26 budget. The policy to address this hasn't been drawn up yet, and Mr. Perry suggested leaving it in the narrative, that there will be no way to balance next year's budget without zero- ing this item out. This will not resolve the projected $4.39M shortfall. Ms. Feldman is concerned about the optics. Mr. Perry said the monies could be extracted in June. Grants, state monies also should be forthcoming so this seems like the best solution.An estimated $8M would be needed to repair city-side roads and sidewalks projects annually. Voke School Funding Mr. Manzo said that last year's total for Essex Tech enrollment was 198, whereas FY26 will bump to 206 students. Past years saw an average of losing 50 students per year per grade. Ms. Visnick said that an annual loss of 100 students to St. John's Prep and vocational school should be anticipated, adding that high school capacity is nowhere near full. The aging buildings, transportation and electric busses and their limits were also discussed. 4. Closing Commentary The Financial Forecasting Committee will be meeting and voting during the next meeting on November 19, in Conference Room A at City Hall at 6:30 pm. 3 City of Beverly Financial Forecast Committee November 13, 2024 Meeting Minutes The final meeting for the year will be held in City Hall Conference Room A on December 4 at 6:30 pm. There was discussion on how to officially start Dominic Copeland's citizen representative term on the committee as Guiliana DiGenova's term has ended. The School Committee is the appointing authority on this. Let the minutes reflect that the committee needs to vote on revenues and expenditures next week at the November 191" meeting. 5. Adjournment Ms. Feldman asked for a motion to adjourn. Ms. Fogarty made a motion, seconded by Mr. Manzo, which carried 7-0. 4