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2023-03-08 1 TOWN OF BERLIN REGULAR BOARD OF FINANCE BUDGET MEETING Wednesday, March 8, 2023 Town Council Chambers or Remote Option 7:00 P.M. https://berlinct-gov.zoom.us/j/89482757055?pwd=TWxNbllpc0hLcUx3NzFDelg5VHNNUT09 Call-in Option: 1 929 205 6099 United States Toll Meeting ID: 894 8275 7055 Passcode: 946366 A. CALL TO ORDER Chairman Bordonaro called the meeting to order at 7:00 p.m. B. ROLL CALL ATTENDANCE: Members Present: Sal Bordonaro, Raul Fernandes, Tim Grady, Mark Holmes, George Millerd, Gerald Paradis Members Absent: None Staff Present: Kevin Delaney – Finance Director Arosha Jayawickrema – Town Manager Mark Kaczynski – Mayor Alea Piatek – VNA Director C. DISCUSSION OF DEPARTMENT BUDGETS a. Discuss and vote on adjustments to the General Government, Board of Education and/or Berlin Water Control budgets. Chairman Bordonaro said that he created a spreadsheet showing the average cost in FY23 per month. It is an annual forecast with 3% added for labor increases. I came up with $9M total and compared it with the FY23 and FY24 budget and the difference is $1.1M. My projection escalated in the FY23 and FY24 budget. I excluded the VNA category and there is a surplus of about $450k. We need to work through these labor categories and ask is there room for reduction? Town Manager Jayawickrema said the positions are funded, but the dollar amount is reduced. If the positions are filled or it goes over, then it needs to get funded. Chairman Bordonaro said we had surplus the last few years in the labor category. Mr. Paradis asked if there are any one-time payments done later in the year? Finance Director Delaney said school nurses get a payout at the end of June that is not included. Some positions were vacant earlier in the year, but then filled. The Police Department has 7 vacancies. Chairman Bordonaro said there is a requirement for 46 Police Officers in this budget, but what is the average number of vacancies in the next budget cycle? Finance Director Delaney said 2. Mr. Millerd added that when an opening (seat in the academy) comes up we usually miss it because we do not have anybody. Mr. Grady said we are good at 44 Police Officers and it takes 6 months in the academy per person. Chairman Bordonaro said he would keep the count of 46 Police Officers and have 4 vacancies. Chairman Bordonaro said not much has changed in the VNA budget from last year. Revenues are down and expenses are about the same. They will lose $867k for the year. We had a meeting with VNA 1 2 management regarding making progress towards improving. My opinion is to go back and see if we can knock off $300k. I don’t know whether you can change the approach on how the organization operates or focus just on Berlin residents. Mr. Fernandes asked for the numbers on how many clients are from Berlin vs. not from Berlin. Finance Director Delaney said it is about 75% residents and 25% non-residents. Mr. Fernandes asked if the Medicare numbers are in for January? Finance Director Delaney said VNA Director Piatek is tracking those numbers per patient in a spreadsheet. Mr. Paradis said I added up everything in the VNA budget that said reimbursed. It was speech therapists, occupational therapists, physical therapists, social workers, health aides and medical services. Those expenditure accounts total $421k. We are budgeting $700k for total revenue. Our biggest costs are with nurses and nurse’s expenses. That part of the budget is generating $280k worth of revenue and these reimbursable expenses are generating the rest. It doesn’t make sense and I don’t know how we could ever get this model to work close to breaking even, or work with a small loss. We should ask Town Manager Jayawickrema to come back with a revised budget for this department that reduces their net costs by about $300k. If it is reduced staffing, so be it. Mr. Paradis said I would be interested to see the spreadsheet that shows how VNA Director Piatek comes up with cost per client. When we are looking at figuring in overhead for each of these clients, you have $1M generating $280k of revenue. There is a huge loss in every single patient. That is something that we have been saying exists for a long time, but never got someone to tell us the cost of this particular service. If Medicare only reimburses so much, then we have to think about why we are providing so many of those services. Maybe we have to shrink this to the point where it is a manageable thing. We can’t close the whole thing down because there is a charter provision for it, but we have a responsibility to look at that budget just like any other budget. Mr. Grady said this comes back to their unwillingness to change the model and look outside the box. Mr. Paradis said we have been asking for changes all along and have to do something significant to move it in a direction where we can take a judgement as to whether it is savable or not. We are going up $190k in losses for the proposed budget. That is opposite of what we have been talking about with them. VNA Director Piatek said I want to refer back to previous meetings where Mayor Kaczynski had said that we believe it is a good thing for the town to have a VNA. We had the charter vote and the citizens voted that they want this service intact. I have worked on reducing our costs and haven’t been here a full year yet. When we spoke at the special meeting, I asked to give me a number to have a goal to work towards and they said we can’t do that because we don’t know how you operate enough to decide that for you. You have to tell us that. It looks like we are up about $44k from revenue this time last year. I was told the goal is chipping away at it. It is not going to go away in a year. You offered me time to continue working to make things better. Commissioner Paonessa said no matter how the vote goes, we have to work together. I want to know how we went from we want to work with you and not cut the budget to looking to reduce the deficit by $300k. That would leave me with a staff that cannot adequately care for the patients. Our reimbursement is based on quality. When we have less staff the quality will drop and our revenue will drop between 3% to 5%. VNA Director Piatek said with the new model we have the possibility to increase our rates in revenue by 3% to 5% and I’m looking to grow our census by 25% to 50%. I have been re-doing the whole agency because it has been neglected and not kept up to date. I have not been able to do the marketing part yet because I’m doing the work of two people. I need you to follow through on what you told me that you are going to give me time to work on this and chip away. We might hit a reduction of $60-$70k and year over year we can continue to reduce it and do better. I have shown you results that I can turn it around. 2 3 Mr. Millerd said that Mayor Kaczynski never said that we would give you all the time. We said that we would put forth the charter revision change that we wanted to do where it would give us some resources and the ability to re-engineer the VNA. I don’t know the basic requirements of the Berlin VNA. It is not written anywhere whether we need speech therapists, physical therapists, etc. It says provide visiting nurses facilities. We need to look at the basic building blocks of how we provide that in a superior way to the citizens of Berlin. Also, your rules say that you can go and provide services to other towns. The charter does not say that. Legal opinion is that you are good to do that, but the town does not have to pay for that. The VNA advertises as a non-profit organization, but is paid for largely by the Town of Berlin. Mr. Millerd said we have to work through these differences and come up with a basic plan. What services are we going to provide, what should they cost and how are we going to do that. Also, it does not say in the charter that we have to have Town of Berlin employees provide these services. It says the town has to provide these services. It does not mean the whole thing can’t be outsourced. We have to work together. We can’t keep waiting forever to get this done. It needs to be accelerated to some degree because we are costing our tax payers a lot of money. VNA Director Piatek said it is frustrating that I have been lied to by Town Council, the Mayor and Chairman Bordonaro. I’m asking you to be accountable for what you said to me. Mr. Fernandes asked who said the Town Council, or Board of Finance wanted to eliminate the VNA? The town voted to keep the VNA. Chairman Bordonaro said I don’t think I or Mayor Kaczynski lied, but looking at your proposed budget, if you are chipping away, your losses are greater than last year’s budget. I’m asking you, Town Manager Jayawickrema and Finance Director Delaney to go back to the table and look at what you can do. VNA Director Piatek said the plan is that the revenue is going to increase and therefore decrease the deficit. I made cuts where I could and reduced costs month over month. Town Manager Jayawickrema said the Department of Public Health has a document on regulations and what services the VNA shall provide. Next year is going to be better compared to year to date actual. Mr. Fernandes said this year’s budget is slightly different because of what is going on. We are talking about $300k losses. Chairman Bordonaro said I project a loss of $864k in the current fiscal year. You are budgeting $860k, it is a flat loss. Town Manager Jayawickrema said we will look at it and come back to you. VNA Director Piatek added that if all you offer is nursing and PT, you will have a hard time getting patients to choose you because you do not offer a full spectrum of services. It is rare to have a patient who only needs nursing or one service. Mr. Millerd asked if it is possible to partner with others? VNA Director Piatek said I don’t know how that would work. Mr. Paradis said the other services are reimbursable. If you are getting 100% reimbursement on these other services, then that is not where the problem is. We could offer as many of those services that the nurses need to refer to. Mr. Paradis asked for clarification on the reimbursement of services. VNA Director Piatek said speech therapy is provided by a per diem staff member and they get a flat rate for each visit. Those are reimbursed by insurance providers. The insurance providers all pay different rates. For traditional Medicare you are just getting a lump sum for whatever services they need. Mr. Paradis asked if there are some in that category that will not pay for the full cost of the service. Are there some services that we don’t get reimbursed 100%? VNA Director Piatek said yes, we have some patients with insurance carriers that do not pay as well as others. I don’t have the ability to refuse service to a patient because their insurance isn’t going to pay that. Also, we can’t refuse patients based on their payer. We are tied by legal standards. I know which payers pay the best and which payers are not going to pay so good. My staff knows how to utilize visits the best that we can to be fiscally responsible. Some payers pay well over and above and some payers pay less. 3 4 Mr. Paradis said reimbursable does not mean fully reimbursable. It just means we are going to get part of that back. VNA Director Piatek said on traditional Medicare it is 100% reimbursable. Aetna, Anthem, Cigna are 100% reimbursable above and beyond what the cost is. For United Healthcare, Medicare, CCCI, or on a private pay patient who’s paying us to come out and provide a home health aide service we do lose money on those patients. Chairman Bordonaro said he went into the professional technical other category. I would like to challenge that category and see if you can come up with a $300k reduction in total across the board. I’m looking for ways to reduce the expenditures as much as possible because we can’t live with this kind of increase. The average reval went up 17.7% overall. We have to communicate to our taxpayers to let them know what is going on. Mr. Millerd asked to get a breakdown or grouping around that 17.5% increase, what groups are either lower or higher. Mr. Paradis said 10% was budgeted for health insurance. What are the projections for how we are actually doing related to that rate as adjusted for the existing year? If the 10% were reduced to 9%, what is that number? Finance Director Delaney said budgeting would be around $70-80k for the cost of health insurance with Board of Education and the town combined for a 1% reduction. Mr. Paradis asked if the claims in the health insurance fund this year to exceed the amount that we put in? Finance Director Delaney said it would be very close. Last year was a 7.1% total increase. It is worth about $30k for the town and about $50k for the Board of Education if the 10% went down to 9%. Mr. Paradis said I think we are going to look for smaller items wherever we can. There is a $280k amortization payment for prior service at 5 years. Do you see any problem going to 10 years? Finance Director Delaney said no because there is no lump sum provision. . Mr. Paradis asked about the $25k cost for Kensington Village Architectural review. What is it for and will it really be needed this year? Finance Director Delaney said I don’t know if it will be needed this year. Planning and Zoning established a Kensington Village group to build up the Kensington Village area. There is a statute requirement to hire an architect to review any plans for facades or building fronts that are visible from the main road. Mr. Paradis said the last item in the transfers account is $250k for grant match. We have $300k in contingent. I’m told we have to work at lightning speed for these grants. Have we ever lost a grant because we haven’t had match funds available? Finance Director Delaney said yes. Mr. Paradis said if we have it in contingency the Town Council could do a transfer. The Board of Finance and Town Council can act within a week. Finance Director Delaney said if the town is able to invest $250k here and secure $1.5M of grants, there is a lot that the Plan of Conservation and Development could do. Also, it could be 3 to 4 weeks after a Town Council meeting for the next Board of Finance meeting. You could appropriate fund balance and add it into the budget year and it wouldn’t tax residents and accomplish the same goal. Mr. Millerd asked if we would need the entire $250k of the grant? Finance Director Delaney said it will vary by grant. Mr. Grady added that you can also move transfers for grants. Town Manager Jayawickrema said the new grants need to be shovel ready quickly from the date of application. The grants are a great way to spend $.10 to $.20 cents on the dollar and get a $100 out of it. We just want to have the flexibility, if you think there is another way to get the matching funds, let’s look at that strategy. Mr. Paradis asked if the $72,500 in the transfer to revaluation funds is to start a new fund? Finance Director Delaney said yes, this is a sinking fund so you do not get hit all at once with the next required revaluation in five years. 4 5 Mr. Grady said he visited the pickle ball courts, Willard school and Little People’s playground. I walked around those sites and they are in at least good condition. The pickle ball court lines have been done recently. Finance Director Delaney said pickle ball is a growing sport and we tried to repurpose the current tennis courts at Hubbard. Temporary nets were purchased for about $300 that can be put away. It is not a long-term solution. The request is to replace all of the tennis courts and make it similar to the material that exists on the high school basketball courts. If you go low quality it tends to deteriorate very quickly and would cost the town more to replace and repair. This would be to replace that tennis court with a pickleball court. Mr. Grady added that it is a popular sport, but this year I don’t think it is the bulk of priorities. The Willard playground equipment is in really good shape. Everything is functional. Little People’s is a little older and more worn, but more than serviceable. It does not have much activity. Mr. Fernandes asked about the South Kensington Firehouse roof? Town Manager Jayawickrema said we received pricing and it was way off the charts and that put it on hold. There was a new bid received and we are scheduled to do it this summer. The roofing materials are expensive and we are trying to be fiscally responsible. Finance Director Delaney said the $75k listed is for additional planning modifications and will require architectural work to figure out what can be done. Mr. Paradis asked if the 4 categories are prioritized on the capital improvement list. Mr. Grady said the list is done by highest to lowest priority. For the Willard ballast block replacement project, the solar panel project is not on for more than 5 or 6 years old. Do we need to replace the blocks already? Finance Director Delaney said we are trying to replace them before they break down. The solar panels could move around and potentially come off the roof. They were completed around 2017. Chairman Bordonaro said we will take a look at this list and decide if we want to go all or partial, or add something. We are dealing with some huge costs. Mr. Grady added that Fleet Manager/Fire Administrator Simmons did a great job with the dump trucks by being able to buy just the bodies and not replacing the entire truck (the truck beds had rotted). That saved the town millions of dollars. Chairman Bordonaro asked how are we doing with the Willard HVAC project? Finance Director Delaney said we are finishing up the bid documents and hired a Project Manager. They are confident the work can be done this summer. Chairman Bordonaro asked if we have the resources to take on two schools? Finance Director Delaney said we have two schools listed because the town authorized the Superintendent to apply for a state grant that we are waiting to hear back on. The state requires the town to be able to fund the work and the completion date needs to be by the end of 2024. Mr. Grady asked if will find out soon? Finance Director Delaney said yes, any day now. Also, each school is considered its own project. Chairman Bordonaro asked for an update on the Police Station renovation project. Finance Director Delaney said they had a meeting and are changing the scope of the project. It will be the characteristics of Phase 1, but it would be the entire project. The numbers are $3.5M to $4M. Mr. Millerd asked if we have done any bidding yet? Finance Director Delaney said no. Mr. Paradis asked if the $300k to do part of the project is inadequate now? Finance Director Delaney said there is no indication. Mr. Paradis asked about the new Extra Duty Special Revenue fund that will generate income to purchase police cruisers. Finance Director Delaney said this would be for this year and then some or all of it could come out of the General Fund to be funded in Special Revenue. Chairman Bordonaro asked about the Supplemental Motor Vehicles. Through January of this year we are over $1M, is there some wiggle room there? Finance Director Delaney said that number is deceiving because we just issued a refund of $193k due to a DMV registration error. 5 6 Mr. Paradis said looking at the actuarial report, our investments are generating 1%. Should we be looking at moving those to something else? Finance Director Delaney said that we only go with the most conservative approach. Also, the retirement beneficiary average age has increased. Mr. Paradis said he is surprised that the Board of Education budget increased by about $400k. The unspent money gets returned to the General Fund. I would like them to spend their monies on capital items during the year. They are entitled to spend it according to state law. We have done well with the Board of Education over the years. I was seeing somewhere in the 2.8% to 3% range for the Board of Education. Chairman Bordonaro said I looked at the last 5 years and the Open Choice program grant carryovers show they don’t need more than 2% to operate without an impact to quality of service to our kids. I don’t see giving them much more than 2%. Mr. Fernandes said he was thinking 3.5%. Mr. Grady said last year we were at 2.6% and still turned back surplus. They are adding a kindergarten teacher and adding 150 new students from the Open Choice program. The breakdown is very heavy towards mostly kindergarten students. Are we using this program to maintain our staff? Mr. Millerd said he is still concerned with the logistics of the revaluation and a 3.5% increase is not affordable. We have to be as prudent as we can. Mr. Grady said he is in the low 2% range. Mr. Millerd said he is there too. Mr. Holmes said he wants to re-look at capital to figure out what we are actually going to put into the budget and piece it all together. The problem is that everything is going up for everyone. We have gone 0, 0 and less than 1 for 3 years. I don’t think another town in this state could say that. We have done really good work and we will again. b. Possible vote to send budgets to the Annual Budget Hearing: i. Move to send the Board of Education budget of $____________________ to the Annual Budget Hearing. ii. Move to send the General Government budget of $____________________ to the Annual Budget Hearing. iii. Move to send the Berlin Water Control budget of $____________________ to the Annual Budget Hearing. D. ADJOURNMENT Mr. Grady moved to adjourn at 8:50 p.m. Seconded by Mr. Holmes. Those voting in favor: Mr. Bordonaro, Mr. Fernandes, Mr. Grady, Mr. Holmes, Mr. Millerd, Mr. Paradis Vote being 6-0 Submitted by, Alina Brown 6