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2022-03-29 Forum TOWN OF BERLIN ANNUAL BUDGET FORUM MEETING MINUTES Tuesday, March 29, 2022 Berlin Senior Center 1:30 P.M. https://berlinct-gov.zoom.us/j/84817280113?pwd=QUdqSldCb0xHcmkzMFk0SjNhL0M0UT09 Phone Number: 929 205 6099 Meeting ID: 848 1728 0113 Passcode: 264590 1. Call to Order Chairman Bordonaro called the meeting to order at 1:30 p.m. 2. Pledge of Allegiance 3. Roll Call of Board of Finance ATTENDANCE: Members Present: Sal Bordonaro, Tim Grady, George Millerd, Members Absent: Raul Fernandes, Mark Holmes, Gerald Paradis Staff Present: Town Manager – Arosha Jayawickrema Kevin Delaney – Finance Director Gail Erickson – Assistant Finance Director Superintendent of Schools – Brian Benigni Mike Ahern – Town Engineer / Public Works Director Doug Solek – Facilities Director Matthew McNally – Police Chief Kate Wall – Town Clerk Chris Edge – Economic Development Director 4. Introductory Remarks To view the Board of Finance Annual Budget Forum PowerPoint presentation online, go to the town website under Finance/Budget: https://www.berlinct.gov/topic/index.php?topicid=324&structureid=16 Click on: Fiscal Year 2023 Budget Presentation - Annual Budget Forum/Hearing Chairman Bordonaro thanked everyone that came out and that was on Zoom. We went into this budget cycle keeping in mind that everyone is struggling with higher gas, heating, and food prices, just to name a few. I would have liked a zero tax increase for the third consecutive year, but the town and the Board of Education have also been impacted by these inflationary costs along with having to meet contractual obligations. The Board of Finance was given a proposed budget that would increase the tax rate by 1 5.8%. In collaboration with the town and Board of Education leadership, we found areas we could reduce expenses and increase revenues without impacting the quality of services that the town and the Board of Education provides. The result is a 1.1% tax increase, compared to the 5.8% proposed. The projected budget surplus for the current year allowed us to cover $1.1M of capital projects and equipment included in the proposed budget. The Board of Finance unanimously voted to give the Board of Education a 2.5% budget increase. They requested a 4.7% increase. I believe that the Board of Education can meet their contractual requirements and not impact any programs. Also, with the use of COVID grant monies, help pay for resources to deal with student learning loss throughout the pandemic. Education in Berlin has been adequately funded with annual budget increases despite a drop in student enrollment. Berlin education expenses are 60.2% of the total expense budget. Which accounts for 39.8%. Berlin per pupil expenditure in comparison to 6 nearby towns is second highest, with Glastonbury being the highest. Every year when you receive your motor vehicle tax bill, the value of the vehicle normally goes down, but unfortunately not this year. Supply chain issues combined with inflation is driving up the value of vehicles. We are looking at a book value increase on automobiles of 18%. Even without a tax increase, you will pay more taxes on your vehicle than last year. Every town is having to deal with this and Governor Lamont is trying to establish a mill rate cap on the motor vehicle tax which could help reduce motor vehicle tax. The grand list grew 2.9% in this proposed budget with a portion of that growth attributed to the motor vehicle book value increase. As we complete our major building projects and tax abatements drop off, grand list tax revenues will continue to grow. That increase along with continuing to decrease our debt will provide more financial flexibility in the future. I want to thank Town Manager Jayawickrema, Finance Director Delaney, Superintendent of Schools Benigni, Board of Education President Dennis and Board of Education Finance Director Dorsey for working with the Board of Finance and helping us develop what we believe is a fair budget. I also want to thank Mayor Mark Kaczynski and the Town Council for their guidance. Finally, I want to thank the Board of Finance members for their efforts. 5. Presentation of Town Budget Town Manager Jayawickrema introduced those in attendance from the town: Finance Director Delaney, Assistant Finance Director Erickson, Facilities Director Solek, Town Engineer / Public Works Director Ahern, Economic Development Director Edge, Town Clerk Wall, Superintendent of Schools Benigni and Chief of Police McNally. The first slide is a pie chart showing the big picture of the proposed budget. About half of the budget is for the Board of Education and General Government which includes Public Works, Town Planning, Town Manager, Town Clerk, Economic Development, Library and Community Center. About 8% of our budget is for debt service. In general, it is a 2.8% increase over last year, but for the Board of Education it is a 2.5% increase and for the town it is a 3.2% increase. We removed capital expenses out of fiscal year 2023 and it is about 1.132. Because we are expecting a surplus in fiscal year 2022 and we believe before the end of the year, we can take some of these funds and address the capital needs. None of the budgets are going lower than what we had last year, same for the town and the Board of Education. The reduction is from the proposed increase. Part of how we are going to fund this year’s budget is to take some money from the fund balance that is savings we have accrued over time. We have a healthy fund balance and can take a small amount like $300k to do that. We are setting aside $5M of the ARPA 2 funds to do some HVAC work at the elementary schools. That is not approved, but that is what we are thinking. The grand list is $2.438 billion (+2.9% vs. FY22). This growth generates $2.3M in additional tax revenue. We need to do better. About 60% of that comes from motor vehicle market value changes, 25% from real estate and about 15% from personal property. That 2.9% generates about $2.3M in new revenues. That is about 0.9 mill. We are pleased with that, but it something we continue to work on each year to try to improve our grand list increase. Almost 90% of our revenues come from taxes, real estate and personal property. One of the things that we are good at is the collection rate, 99.3% of our taxes are collected each year. There are 4 pillars that we focus on each year, Education, Public Safety, Financial Strength and Infrastructure. We need to replace or renovate all of the HVAC systems in the elementary schools and we will start with one, based on the pricing and then do more. The roads being done this summer are Deming Rd., Porters Pass and Christian Lane and that is a big project for the town. In addition, if things go well, we can replace the Kensington Rd. bridge. Under Operating Personnel, we are proposing a Dispatcher for the Police Department, a School Nurse, HR Director for the town staff, Assistant Planner and Facilities Superintendent. We made a $642k reduction, a big part of that was the removal of funding 2 Police Officers because there is a backlog in the academy as to when they can go in. When there is availability, the town will work with the Board of Finance and the Town Council to fund those 2 positions. Economic Development has a lot of things going on. There is progress being made next to the train station with mixed use apartments being made available. That is residential and commercial and the first building is almost done. Also, there is a development being built near the Acura dealership on the Berlin Turnpike with about 72 residential units. The retail building is complete and almost fully occupied. Also, Deming Ridge will have 88 units. Another development will be 404 Berlin Turnpike which plans to have residential, commercial, medical offices and a hotel. That will not happen this year, there is still more work to be done there. The state is looking to cap the motor vehicle rate at 29 mills and the idea is to account for the difference. The 34.31 mill rate might end up being 34.39 if the state passes the motor vehicle cap. The next budget actions to be taken are the Board of Finance will vote to recommend Board of Education and General Government budgets to the Town Council. The Town Council acts on the recommended budget on April 5 and can approve the budget as-is and the budget gets sent to referendum. They can also approve it with some reductions, or reject it and go back to a joint meeting of Town Council and the Board of Finance. The budget referendum is set for April 26. 6. Presentation of Board of Education Budget Superintendent of Schools Benigni presented his goals for the Board of Education for 2022-2023. A quick overview of the bar graph was reviewed showing areas to be cut to achieve the $1,040,000 reduction. A summary page was presented showing for reference what each line is increasing by. The Board of Education is decreasing by one Administrator next year, but adding a 0.2 for Human Resources. The new staff request summary page was reviewed. The Transportation cost is $61,078 with New Britain Transportation rates going up 3.45%. Also, the district intends to use a portion of Excess Cost funds to offset Special Education transportation. Tuition is $109,573 and tuition breakdown detail was 3 provided. Other expenditures are $27,175. Also, changes to the ESSER II Grant and changes to ESSER ARP grant were explained. Hartford Open Choice Enrollment numbers were provided and Superintendent of Schools Benigni explained how the process works and impacts the Board of Education budget. Also, Superintendent of Schools Benigni explained was how the Open Choice money is being spent. A budget funding history overview was shown with what was requested and what was received over the last few years. Followed by a budget comparison slide showing where Berlin is compared to what other towns in close proximity received. Berlin’s 5-year average increase is right in the middle of those towns which is excellent and the same goes for per pupil expenditure. The state provides the town with almost $6M of revenue for having the educational system. There are things typically that the town would fund under capital paving and such nature and the Board of Education works well with the town. When there is additional monies left at the end of the year, say you have 2% extra, a portion of the money is given back to the town. There are things on the capital improvement list that have not been funded in years that we look to prioritize. Technology is always a priority, but there is a long list of additional items. In closing, Superintendent of Schools Benigni said a school districts budget reflects the commitment of the community to invest in the future of our children. 7. Audience of Citizens Donna Bovee, 85 Steepleview Dr. Ms. Bovee asked about ending at $74.6M at the end of June. Based on this budget in June 2023, what do you expect that number to be? Finance Director Delaney said it will be about $8M lower than that number, assuming no additional borrowing. Ms. Bovee asked so you will decide the additional borrowing throughout the year? Finance Director Delaney said yes, and a lot of that would depend on the projects. Chairman Bordonaro added that a few years ago, we were over $100M in debt and for a town our size, our normal debt should be around $40M. So that is the challenge that we are having. If we get down to $40M, we cut our debt payments in half. That means having $5M a year to do whatever we want which would be tremendous for the town, but we do have some major projects that are coming forward. Just to sustain our facilities, we have $300M of facilities and buildings. We need to put a new roof on the Town Hall and a new roof on the library. So have some pretty substantial capital projects, you are looking annually at maybe $5M-$8M of capital projects. We will need to re-look at our debt situation and maybe bond what we didn’t want to bond, but still drop the debt overall. Ms. Bovee asked while you are having repairs and things as mentioned, does the town still have the $5M set aside from the federal government that could help you? Chairman Bordonaro said there are 3 schools that are having HVAC upgrades and you are talking about $15M-$20M, so we would use that first $5M for the first school. June Daly, 67 Homecrest Dr. Ms. Daly said thanks to everyone for working so hard to make some of our goals possible. I do appreciate that the Board of Education came in with a certain percentage increase after being told to reduce that as a recommendation and I want to thank our Board of Finance for suggesting that change. I’m still a little bit concerned for the cost per pupil. You mentioned something about the adjoining towns that might be a good comparison model. I see where Superintendent of Schools Benigni could provide is his materials many more school districts. I’m kind of new to the area, but they look a lot 4 closer to the kind that are in the Long Island sound area, where the possibility might be quite a bit higher. What do you think about the cost per student and how do you think it is working? Superintendent of Schools Benigni said based on the economics, if you look at DERA grants, which the state does not use that much anymore, we were always right in the middle and that is where we are. Another thing to look at is the wealth ranking of Berlin vs. what we pay, so Berlin is ranked 60 out of 169 towns, but what we spend per pupil is ranked at 100, so that is how it is looked at. The per pupil expenditure, you are talking maybe a couple hundred dollars either way. I don’t think that is the only part to look at. I think the part to look at is you are looking at a 1% increase, the contractual obligations year to year are over 2%. So, if you don’t have at least 2%, ours is over 3%, then you start cutting staff. We are making cuts already this year to several positions. Superintendent of Schools Benigni said I think when you look at the overall budget, we are reducing staff. We are constantly looking at other ways to reduce and also want to stay competitive for the students that do go to school in Berlin. 8. Adjournment Mr. Millerd moved to adjourn at 2:40 p.m. Seconded by Mr. Grady. Those voting in favor: Mr. Bordonaro, Mr. Grady, Mr. Millerd Vote being 3-0 Submitted by, Alina Brown 5