Financial Forecast Minutes February 28 2019Minutes of the
Financial Forecast Committee
February 28, 2019
7:OOpm
City Hall — Conference Room A
In Attendance
Chairperson and City Councilor Estelle Rand, School Committee Member Kelley Ferretti, Mayoral
Appointee Paul Manzo, City Council Appointee Karen Fogarty, Finance Director Bryant Ayles, Beverly
School Finance Director Jean Sherburne, School Committee Member Rachael Abell, and City Council
Budget Analyst Gerard Perry. Absent were School Appointee Medley Long and City Councilor James
Latter.
Also present were Mayor Michael Cahill, City Councilors Scott Houseman and David Lang, as well as
School Committee Member Lorinda Visnick.
Discussion
Chairperson Rand opened the meeting with introductory comments about the mission of the Financial
Forecast Committee and expressed the hope that the work of the Committee could be completed within
the next few months so as to assist in the FY20 budgetary process.
Motion made by Mr. Ayles, seconded by Ms. Ferretti, to approve the minutes of June 12, 2018. Ms.
Abell requested a modification to the spelling of her name, which was corrected. Motion passed
unanimously.
Finance Director Ayles made opening comments regarding the revenues and expenditures for the City
of Beverly, as well as other information. Mr. Ayles indicated that the revenues were softening
somewhat, especially with motor vehicles excise, which had been the "canary in the coal mine" in the
2006 -2007 time period. He further commented that it was his position that the committee should be
conservative in their revenue estimates, in an effort to protect both the undesignated fund balance, and
free cash. He indicated that the administration was considering an expenditure growth for the City in
FY20 in the area of 3% - 3.5 %, though this was a work in progress. Mr. Ayles stated he would assist the
Committee in any manner.
Jean Sherburne, Director of Finance & Operations for the Beverly Public Schools (BPS) made a
presentation regarding school matters. She supplied the Committee members with a memorandum of
information, which she discussed. She stated that the current FY19 budget was $57,768,704, and that
the BPS system were estimating a 3.25% growth from the FY19 appropriation, based upon preliminary
discussions with the administration. She informed the members that the BPS priorities were the
reduction or elimination of fees, social and emotional support, curriculum director support, an assistant
to the Director of Finance, Professional Development, and addressing Middle School staffing issues
due to increased enrollments. Ms. Sherburne advised that the School Committee and staff will be
reviewing these matters and others during the upcoming FY20 budget deliberations.
City Council BudgetAnalyst, and ex- officio member of the Forecast Committee, gave the third
financial presentation. Mr. Perry agreed with Mr. Ayles, that he saw a softening in future revenues, and
that the Committee should be conservative in their estimates. His concern was that new growth would
probably not continue to grow as in previous years, state revenues were down 2.5% from original
estimates, and that the undesignated fund balance dropped approximately $1.1M in the City from last
year. This in turn dropped the certified free cash by approximately $2.OM. He then discussed and
distributed the previous tax rate approvals for FY16 through FY19. The rates indicated an overall
growth of $4M - $5M in FY16 through FY18, which was in his opinion sustainable. However, the data
indicated an overall growth in FY19 of over $14M for the City of Beverly. Mr. Perry advised that this
was not sustainable moving forward on the expenditure side, and that in his opinion an expenditure
growth of 3% in FY20 was appropriate.
There was a general discussion regarding various financial matters. Ms. Abell discussed certain matters
regarding the softening of motor vehicle excise, and wondered about billing practices and whether
Uber, Lyft, or other transportation issues were impacting motor vehicle revenues, and whether other
revenue sources, such as AIRBNB type alternatives to rooms taxes might be explored.
Mayor Cahill discussed the efforts that he and Mr. Ayles were working on with department heads
returning appropriated funds to the general fund in an effort to bolster both the undesignated fund
balance and free cash. Several members discussed Payment in Lieu of Taxes (PILOT) funding sources,
specifically as it relates to Beverly Hospital and Endicott College. Ms. Fogarty recalled prior work of a
committee back a decade or so ago in this area after a failed Proposition 2 1 /z Override attempt, and
questioned if it might be time to take another look. Mayor Cahill committed to following up on this
area with the help of Mr. Ayles.
Several members wanted additional information on free cash and the undesignated fund balance, which
Mr. Perry volunteered to explain at the next meeting. Ms. Abell requested that this explanation include
more details about three (3) related areas, including: Pre - payments to the OPEB, infusions into the
Stabilization Fund, and disclosure of the Project Funds that sit off the General Ledger. Mr. Ayles
committed to providing more details in these three (3) areas.
Chairperson Rand summarized the meeting, and indicated that the Committee would begin reviewing
revenues, in particular future revenue sources and other means to off -set decreases including looking at
Enterprise Fund activities, at the next March 12" meeting.
Motion made by Ms. Ferretti, seconded by Mr. Ayles to adjourn at 8:25pm. Motion passed
unanimously.
Respectfully Submitted,
Gerard D. Perry
City Council BudgetAnalyst