 Christine Deschler and I as chair that right to finance committee I'm calling the October 17th, 2023 meeting of the community order. First I want to confirm attendance and members and they can all hear me members when I call your name please respond in the affirmative starting with Jordan here. Shane. Yeah. Here Sophie. Here. Here Caroline here Rebecca here Josh. Grant. Here. Charlie. Here. John. Here. Darrell. Here. Here. Here. Here. Here. Here. Here. Here. Here. Here. Here. Here. Here. Here. Here. Here. Here. All right. On March 29th, 2023 governor Healy signed into law supplemental budget bill which among other things extends the temporary provisions of the open meeting. This further extension allows public bodies to continue holding meetings remotely without a formal body physically present at a meeting location so long as adequate alternative access to the deliberations of the meeting is provided to the public. Ensuring public access does not ensure public comment or public participation. This meeting will not feature public comment. Those wishing to provide comments may do so by emailing our executive secretary Tara Bradley at tbradleyattown.arlington.ma.us. This meeting is being recorded and some attendees are participating by video conference accordingly. Please be aware that other folks may be able to see you and take care of the screen share your computer for those attending remotely. Anything that you broadcast may be captured by the recording. All supporting materials that have been provided to members of this body are available on our town's website unless otherwise noted. I will recognize members wishing to speak whose hand is raised by calling upon them. Please hold until your name is called. For those attending remotely remember to mute your phone or computer when you're not speaking. All please remember to speak clearly in a way that generates accurate minutes. We are what we okay we're going to move on to agenda item number three reconsideration of the town meeting warrant article number two. Because of the language on the ballot the $400,000 appropriation that we were expecting to put into the schools the FY24 budget cannot happen. And Alex I will turn it over to you for brief explanation as to why we need to reconsider and re-vote. Great um had we taken the vote as it was sort of uh presented the town meeting it would have been null and void anyways that the ballot as written was written as such it would not take effect until fiscal year 25. When all along the anticipated plan was for this to happen in 2024 fiscal 24. So we are going to need to push for a no action on this ballot and with the understanding of the override money the schools were anticipating and were previously supported to be funded via some other avenue at the spring town meeting. That is the brief explanation. Um financially this uh we've had a number of things come into focus in the last probably about a week and a half or two weeks that have really made the our position it's not really going to have a detrimental impact on our financial position through the end of this uh anticipated override period through FY26. We had projected in the long-range planning a roughly 17 million dollar deficit in FY27 without the benefit of this override money we're projecting a deficit of around 17 million in 27 with a smaller deficit in 26 in front of it. Um that's sort of the brief that's the brief. Okay anyone have any questions as to what we need to do tonight and um I uh will say that once we take um we deal with what we have to do tonight then we can continue the conversation as to anything for about what we might do um and the next um in the spring town meeting. Any questions on um reconsidering reconsideration of article two? I have a question Christine. Jane. I'm sorry thank you Alex. Can you just explain that to me one more time so the vote that the select board took was for FY25 and where does it stay back because I'm just looking at article two right now which says FY24 so so make sure I'm looking in the right place. You're looking in the wrong place the vote is on on the ballot language that is going to go to the vote uh in November at the special election. Okay and so that's what the select board approved that they they approved that language. That is correct. Okay and so that was for FY25. Great. Okay thank you. Any other questions by anyone? Do I have a motion to reconsider and for a no action vote? Salute. Okay. All right. All right what I'll do now is I'm going to ask for hands raised and then I'm going to go through the roll call. All right all in favor of the motion please raise your hand. Any opposed? It is unanimous. All right I will go through the roll call now. Jordan. Yes. Shane. Yes. Jennifer. Yes. Sophie. Yes. Brian's not here. Carolyn. Yes. Rebecca. Yes. Josh. Yes. Grant. Yes. Charlie. Yes. John. Yes. Darrell. Yes. Annie. Yes. Yes. Peggy. Yes. Al. Tosti. Yes. I'm not here. Jay McCann. Yes. Did I miss you? All right. I'm Hal Jones. All right. Yes. Right. What I all I should have pointed out that Alex left the room to give the okay for the supplemental think on report to be distributed which we have here that's pretty basic where we considered no action. All right now with that done what questions do people have for Alex about what to do with the view is what what's going on what we can do with the projections are all be above any. Okay. So if I was going to correct you what this means is that we are collecting less money in this override because we are not raising taxes in 2024 we're raising them in 2025. Correct. And therefore you're thinking by 2026 we have some kind of a deficit. Do we know how big that happens? So it depends if the override does pass we will not have a we're not projecting a deficit in 2026. Okay. If the override does pass so say it takes effect in FY 25 as we anticipate if it passes we'll be facing a $15 million deficit in FY 27. Okay. Right. So we're being clear through 2026. Right. To give a little context to that when the long range planning committee sort of how they narrowed in on a three year override for $7 million which is roughly 5% of the levy the projections showed just under $17 million being our 20 set FY 27 deficit in that year. So the conditions on the ground have even with this impacting FY 25 instead of 24 the position has become a little better. Okay. In that sense. All right. And this is for a number of different reasons which we I'm sure we'll get into. So and in terms of the schools the money that they had requested for their strategic plan doesn't change except for the $400,000. Right. So that doesn't change it's not being appropriated today because of the language on the property. So there was no way to appropriate that without a funding source. And so that will be considered in the future at a future town meeting whether that's spring and what funding source that is all for question for FY 24. Correct. Okay. FY 25, $7 million kicks in their plan. Exactly. Right. And so that that included $3.1 million and funding additional funding for $25, $1.7 for $26, $600 for $27 and $300 for $28. Got it. I just want to confirm Alex to confirm the schools can't spend the $400 because they don't have the $400. Right. Right. So they're not their budget is not being increased by $400,000 as it's tonight. I just want to clarify. So fiscal obviously 24 is balanced fiscal 25. We're okay. Right. fiscal 26. We're okay. If the override passes, 26 is okay. So the override does not pass and 26 we're looking at a small deficit which candidly will I would imagine because of our conservative forecast thing that's built into this model that that deficit will close itself as well. Can't predict the future. So it's called 27 is that's the year. Yeah. Right. Right. So the deficit this reduced deficit in fiscal 26, which you said is small and it may be correct. Does that include the increased spending for the school? If the override doesn't pass, it does not include that. Right. So that that that's contingent funding. So that wouldn't include any if the override doesn't pass all of the school increases town and school funding. Right. They just go away and then we're looking at how to balance the budget in different ways. You know what how the school budget is doing right now versus plan. I know we're still early in the year. They're carrying a number of vacancies right now. So they're likely under spending to to their year to date. We're just over a quarter of a way through the fiscal year. They're likely under spending to that just over a quarter of the way because of the vacancies they're carrying. We're also in a similar position under spending. So the ripple effect of that is to likely be generating more free cash. This is one of the major reasons why we're in the strong sort of financial position we're in. We just last week certified a record free cash number a little over $18 million. So you guys on the yeah you guys on the committee know that that will be turned into a funding source for future fiscal years. It also marginally dragged up our trailing 10-year average which is projected into the five-year long-range plan. So does that make sense? So where did the 18 million I mean normally we're 11 to 13 million or something like that. Where did the extra five or six million free cash come from? Right. So the biggest sources were we had a major we had a huge outperformance on our interest bearing accounts. The main being our investment interest. We're carrying a ton of cash because of the high school building project. Interest rates have gone a little wonky over the last year. In turn we've seen a ton of interest revenues. We have budgeted for $200,000 and FY23 and we made just shy of $3 million. So that that's about a $2.8 million nugget that was in there which is unanticipated and frankly is probably temporary given the interest rates that we're seeing right now and the fact that we have a lot of money in the bank because of our high school project. Also we had we carried a number of vacancies both on the town and school side. It's very difficult to hire people right now the labor market's impossible. So any of those vacancies that were budgeted that we're trying to hire for couldn't that money closes the free cash as well. Additionally we had a couple other local receipts come in higher than anticipated. That is sort of part of a hallmark of our conservative local receipts budgeting. We budget conservatively knowing that we will likely beat our revenue targets and that's built into sort of our plan. So if I may have fallen. So on the interest income doesn't the federal government prohibit arbitrage like that on the part of municipalities? I don't know that it does. I don't have a good answer for you or the state. I recall multiple years ago that the town had to give money back or something like that when it was discovered that we were in the in the money market game. Yeah my understanding on the arbitrage is that it will arbitrage will kick in if we have borrowed for a specific purpose and we do not spend for that specific purpose within two years of borrowing. We are cash flowing properly on the high school project and so this money it's not like we borrowed it to park it in the bank to earn interest. It's part of our normal sort of cash flow projections at the beginning of the project and you know it's a 250 million dollar project. So we carry cash flows to get us through to our next anticipated borrowing which we do annually and we have another scheduled borrowing in February which we'll be having a ratings call coming up very soon. So we're not over borrowing to invest the money or anything like that. The money this is sort of this is a byproduct. It sort of happened without planning for it and in the sense it's a blessing disguise but it's a good good obviously it's good. Are we going to see the reverse happen when you do your next borrowing? Are we going to be paying higher interest rates than we normally do? Yeah we'll borrow at a slightly higher interest rate than we had in the past but you know we anticipate a very strong bond rating goal of access to the best to the cheapest money that we feasibly could have access to. We won't borrow more money from the project. How's our new growth running compared to budget? New growth came in about 17 percent over our budgeted number last year so we anticipated a million dollars. Just Friday was our finally baked number is $177,000 over that one. Any other questions? Yeah regarding the override you know as I understand it that was I think it's referred to as a single question override of said you know will the town will the voters approve seven million towards the operating budget? Right. So I was just maybe just looking for a little bit of clarification on on these appropriations to the school committee I mean to the school's budget like where do they exist are they official or will they not be official when do they become official when like because I hear you talk about you know $17 million budget deficits a couple years from now you know should those be reconsidered or are they already locked in? Those are well in a sense they're locked in by the commitments that the select board makes in anticipation of pursuing the override and so the select board makes a series of commitments where they're going to fund these certain programs with this much money they'll seed them in these different years as part of the override and so that is where those get baked into sort of our projections and the sort of the long-range plan for the schools and also the town will benefit from that and FY25 should have passed. So just to confirm so it sounds like the selectmen approve the additional funding but is that the proper procedure? I'm just you know like generally is that how it goes that select when it's responding to the schools? Generally well generally the school committee develops the budget but the the select board it needs to be who sponsors a valid question like this so sorry to interrupt so I understand that the selectmen approves this the $7 million override you know and I know that's very official it says you know we approve the voters to come and vote on whether or not you know they're going to pay an additional $7 million for taxes so that's perfectly crystal clear in my head the the funding for the school and I'm still learning I'm still trying to figure out so right I think traditionally when the town does overrides this left board but traditionally I don't know politically for the voters this is this is how this is the money we're going to raise this is how it's going to be spent right so traditional but the the money has to be appropriated in a normal way thank you okay thank you yeah through finance committee and then town meetings by department of revenue has taken the position that the first year you're bound by what you have told the people uh legally year two and on you're you're doing you wish but you're at least bound you know if the override uh says we're going to spend x for schools and y for town and the first year you're legally bound by that yep thank you thanks so much I'll have that's all right and I just wonder maybe I'm on you know I'm still somewhat new here is because I do see that there are such things as contingent overrides and there's also things where like you can have an override for specific fire truck right and you say you know will the voters pay for this fire truck I don't think that this was a contingent override and I don't think this was an override where we are paying for like a fire truck right this is an operating override so this adds seven million dollars to the base to the base so like we have a we've a new high watermark right how that is spent um commitments have been made at different various boards um like the select board being the main one to fund it in a certain specific way so like Al said um in out years I mean who knows what's going to happen like we could get it by a comment and then like things are going to change but uh that is the plan for this money the plan okay okay I'm just trying to follow the you know the legalities of thank you that's a quick point of word to confirm that I missed something the hand vote was to reconsider and the roll call was to confirm the no action a hand vote was to reconsider and move for no no action on our roll call was a no action okay that's want to make sure it was one one vote involving both reconsider and for no action just want to make sure just as long as we have you here what's the um difference in how much we got in chapter 70 money from what we were projecting I don't know okay um I don't think that it was much different okay in in 23 and I don't anticipate I mean those the state budgets but once they have a holy baked number like that's basically what you get right right okay um what percentage were we giving towards schools versus the town budget uh so out of the so I knew you a number as a ratio so six hundred thousand dollars was out of the the total of the override was for the town and the schools were all the others different and the the the town money is programmed into f y 25 and we are right now we are in we're in f y 24 all right we will have to wrap it up so that we can be at start telling does anyone have any questions one quick one what are the other two areas that you said they're increasing the revenue um okay so um are we finished with votes actually yes great um best ones vacancies oh we also had so the reserve fund that you guys managed we had a very light winter last year we all went through so uh nearly all of that money closed the freakash as well um that money traditionally has been spent you know to cover winter deficits um also school enrollment for f y 25 has projected to increase at a slower pace than it had been previously we had carried 42 additional students in f y 25 and that number is likely to be somewhere between zero and 10 so in the plan we're carrying 10 as sort of a a likely worst case scenario at this point but that moved the needle to the tune of about 300 k l so that's a decrease in new growth to the school right right so so what and that that ripples through four years so that's a meaningful impact okay thank you um i think we'll uh hold off on doing minutes for future meeting we won't be meeting on thursday and i don't anticipate meeting to meet again but we'll keep it posted okay can i mention something on that yes i don't want to jinx things we likely won't be there but there is a small glimmer of hope that we can consider the rain we've had some surprise um movement in that negotiation we'll keep our fingers crossed getting this out of the way would be nice i think but just just throwing that out on the radar so that would be a reason that we would meet again it's that but it's all in favor of adjourning thank you for an official meeting