NOTES OF JULY 30, 2014 RYE BUDGET COMMITTEE MEETING
Final Revision B – Provided by the Rye Civic League
Present (clockwise around table): School Board Representative Peggy Balboni, Jaci Grote (arrived late), Rye Water District Representative Art Ditto, Selectmen’s Representative Craig Musselman, Chairman Paul Goldman, Jim Maheras, Doug Abrams, Rye Beach Village District Representative Frank Drake (arrived late), Ray Jarvis.
Others present: School District Business Manager Jim Katkin, School Superintendent Salvatore Petralia, Town Administrator Michael Magnant, Town Finance Director Cyndi Gillespie.
Present from the public: Joe Cummins.
Editor’s note: For ease in finding particular sections using the archived video and audio on the Town website, the elapsed time is indicated. Use the slider and the elapsed time indicated at the bottom of the video window to fast forward to the desired section. Videos on the Town website may currently be accessed at www.town.rye.nh.us by clicking on “Town Hall Streaming” at the bottom left of the screen. Follow the link for “Town Hall Live Streaming,” then find the meeting by date under “Previous.”
The video starts at 6:30:03 (0:00 elapsed)
Summary
Election of officers (3:07 elapsed)
Paul Goldman was elected Chairman, Jim Maheras Vice Chairman. The discussion then turned to Clerk. Ray Jarvis had been serving in that role, but he stated that he could no longer do due to other things going on. Editor’s note: Mr. Jarvis, following the 2014 election, in which Zoning Board of Adjustment (“ZBA”) Chairman Frank Drake did not run, and Mr. Jarvis was elected Chairman of the ZBA. After Jaci Grote arrived it was decided that she would serve as Assistant Clerk and Mr. Jarvis would continue as Clerk.
Minutes (10:13 elapsed)
As the discussion of the minutes started, Joe Cummins objected to whispering between Peggy Balboni and Jaci Grote. Selectman Musselman stated that he was not sure that this was improper if they were not discussing the matter at hand. The minutes of the early-2014 meeting on District budgets was unanimously approved.
School Budget review (14:05 elapsed)
Peggy Balboni introduced the new Superintendent, Salvatore Petralia. There was applause.
Ms. Balboni summarized the results for the fiscal year ending June 30, 2014. The budget approved was $12,619,640. The unassigned fund balance at the end of the fiscal year was $411,322. That is much higher than it has been in previous years. There are two primary reasons.
First, the net tuition came out to $259,481. Editor’s note: Although referred to as such, this is apparently the amount by which the budget was underspent. A major reason was the high school tuition, which was $194,057 less than planned due to lower than expected attendance.
The second large number is due to a return from a settlement with LGC of $118,715 for 2010/2011.
These two items account for $378,196 of the $411,322.
Ms. Balboni explained that the School Board has now voted to retain a total of $297,202 of the unassigned fund balance, first voting to retain $117,380, and then $179,822. This is the maximum retention permitted of 2.5 percent of the District assessment. Editor’s note: In 2013, the voters approved, by a vote of 744-252, Warrant Article 4, which permitted this retention. Previously, the School District was required to return any amount in the unassigned fund balance (effectively the surplus from the prior year) to taxpayers in the form of reduced taxes the following year. Under N.H. Rev. Stat. Ann. (“RSA”) 198:4-b, II, as described in the warrant article, the retained unassigned fund balance may be used only for emergency expenditures approved by the State Department of Education, or to reduce the tax rate.
Ms. Balboni explained that, since such a large amount would have needed to be returned to taxpayers had the retention not been brought to the maximum of 2.5%, a “spike” would have otherwise resulted. Editor’s note: This is apparently a reference to the budget for 2015/2016 (affecting 2015 taxes) that will be presented to the voters in March 2015. Since the surplus from 2013/2014, absent the retention of an increased unassigned fund balance, would reduce the tax rate for 2014 inordinately, a comparison between the two tax rates would otherwise create the appearance of a “spike” the following year.
(19:02 elapsed)
Mr. Katkin then spoke. He explained that the $411,000 retention should “probably” not result in an increase in taxes. That assumes that the town valuation remains flat. He assumes that that should be increasing due to the economy.
Mr. Katkin stated that enrolment has declined by approximately 13 students. Over the past several years the reduction has been 48 students or over 8 percent. This is a concern for the School Board, although the declining enrolment should “trickle up” to reduce the high school enrolment, currently at 178 students this past year. He explained how the estimate of the percentage of students continuing on to Portsmouth High School has been increased from 15 to 25 percent.
The shortfall at Rye Junior High School is creating an issue with the cost per student, which is projected at $20,400 next year. The students had been as high as 220-230. At 150-160 students they will have to look at how the curriculum is delivered. Editor’s note: According to the 2013 School District annual report, there were 183 students, as of October 1, 2013, in grades 6-8, the grades for which instruction is at the Junior High School. Committee members had questions and comments about the cost per student.
There was then discussion about the revenues, the high school budget, and the percentage of the budget that is labor based.
Mr. Katkin explained that there are three more years of payments due on the 1995 building addition. Debt service is $341,000, although there is some building aid money received. The State covered much of the $3 million in interest. The original bond amount was $5.6 million.
There was further discussion about the health insurance, copiers, and an IT position budgeted at the SAU level that was not filled. An IST Systems Administrator is being added, which was not budgeted.
Although the per pupil cost increase this year is the smallest in ten years, there has been a 12.1 percent increase over the past few years.
(48:32 elapsed)
Mr. Katkin then provided addition explanation on how retaining more in the unassigned fund balance will prevent a spike in the tax rate.
The food service lost only $9000, compared to $28,000 the prior year, Mr. Katkin said. Mrs. Obama’s childhood obesity program has presented challenges. Frank Drake inquired as to whether it was a good idea to accept the $24,511 in child nutrition funding, the receipt of which was contingent on abiding by the federal regulations.
Mr. Katkin explained that the trend of medical cost increases is 6-8 percent. Ray Jarvis asked why that was the case when inflation is only 1 percent. Mr. Katkin cited expensive drugs, increased longevity and elective surgeries. That led to discussion about whether the District was exempt from ObamaCare. Mr. Katkin explained that health care must be offered to those working more than 30 hours a week. Also, a “Cadillac” tax will be effective in 2018. All premiums exceeding a threshold will be subject to a 40 percent tax on the insurer, but the insurer will pass these costs along. Selectman Musselman suggested high deductible policies with the deductible reimbursed by the School District. Mr. Katkin responded that that was possible, but there is a collective bargaining agreement in place that might preclude this. Editor’s note: This agreement with the teachers is up for renewal in the coming year.
(60:02 elapsed)
Mr. Katkin explained that the Cadillac tax cap is currently $24,500 for a family plan. Frank Drake quipped that there would be a wonderful opportunity in 2016 to fix the entire thing. Jaci Grote interjected that his comment was inappropriate.
(66:48 elapsed)
Selectman Musselman asked whether it might be possible to calculate the marginal cost of additional students. When looking at the tax impact of conservation land purchases he has a feeling that the tax revenues do not cover the costs. Mr. Katkin responded that a calculation like this had been done in Greenland. They arrived at a number of houses needed to pay for one high school student.
Mr. Goldman asked whether there were any big surprises coming for the 2014/2015 budget. Mr. Katkin replied that he was not aware of any, but that they would know more in December. Frank Drake asked whether any Honduran kids were anticipated.
The discussion then turned to the first half operating budget for the Town. Editor’s note: Unlike the school, which budgets based on a fiscal year ending in June, the Town budgets based on a calendar year.
There was a discussion about the warrant articles. Town Finance Director Cyndi Gillespie indicated that the Town Hall warrant article funds will be spent. The only item mentioned that would not be spent was the $15,000 for the fire truck. Editor’s note: This was contingent on receiving matching funds, which did not materialize.
The discussion turned to the Wallis Rd. culvert and whether that project would proceed. Town Administrator Michael Magnant indicated that an abutter had raised a concern, and that there is a potential legal action on this issue. Editor’s note: 2014 Warrant Article 11, which passed 1075-534, appropriated $150,000 to replace the box culvert under Wallis Rd. near the beach. Very little of the water presently flows through this culvert, which is the easternmost one, the water having been directed under a more recently constructed culvert approximately 50 meters to the west in conjunction with work on the marsh. The redirection of Parson’s Creek is alleged to have diminished the value of the property of the Beliveaus at 21 Wallis Rd. and is the subject of a suit currently pending in U.S. District Court, District of New Hampshire, case 1-13-cv-00402. That case is scheduled for trial in June 2015. The suit seeks an injunction ordering the Town of Rye to have Parson’s Creek restored to its original condition, raising the issue of whether the replacement culvert would be of sufficient size if the court grants the injunction. At the 2014 Deliberative Session, Town Attorney Donovan asserted that there would be no impact from the suit, which is inconsistent with what Mr. Magnant appears to now acknowledge. Ms. Gillespie indicated that the design had been completed using an encumbrance from the prior year.
Ms. Gillespie indicated that the final payment on the Public Safety Building was being made this week, along with the final payment on the 2004 Conservation Bond. Only two Conservation Bonds are left to be paid off.
Ray Jarvis noted that 58 percent of the budget remained. He asked how that compared to the last five years. Ms. Gillespie indicated that she could obtain that data. Selectman Musselman stated that they are usually tight at year end. Ms. Gillespie indicated that there is a huge difference with regard to the cash flow. Cash is tight just before the tax bills go out. Selectman Musselman stated that the budget had been tightened. There is not much fat. He was referring to tightness relative to the budget, not cash flow.
(88:27 elapsed)
Ms. Gillespie stated that first half revenues are up $116,199 over last year. Primarily, that is in vehicle registrations, which are up $46,307, and building permits, which are up $33,600. Ambulance is up $20,428 and $31,000 was received from a health trust.
The Committee then went through each department’s budget and compared expenditures through June with the overall budget.
There was discussion regarding the records project. Ms. Gillespie stated that the inventory of the records at the Public Safety Building is all done. She spoke about the possibility of scanning and microfilming. Software is in use for indexing, and is working well. Upcoming years will not be an annual expenditure of $30,000. Eventually scanning will be in place, she said.
With regard to the ambulance budget, Selectman Musselman stated that another firefighter/paramedic had just been hired, which will reduce the call wages. Editor’s note: As reported in the September 2014 Town Newsletter, David Kornechuk retired from the Fire Department in August. Although he was a Firefighter/EMT, he was not a paramedic. Jessica Downing, a full Firefighter/Paramedic, replaced Mr. Kornechuk, providing paramedic coverage on all four working shifts.
(110:35 elapsed)
When the subject of the Fire Department budget arose, Selectman Musselman indicated that the Board of Selectmen believes that certain shifts need not be filled. This is the subject of a dispute.
Selectman Musselman stated that, for the transfer station, a reduction of tipping fees (i.e. waste disposal fees) from $74 to $61-62 per ton is anticipated. Bids went out yesterday, he said.
With regard to the Library budget, Selectman Musselman stated that the budget had been frozen for several years. The Library had been the most expensive in New Hampshire, now it is the second or third most expensive.
(140:37 elapsed)
When the discussion turned to the warrant articles, Selectman Musselman indicated that Paul Goldman is the new Chairman of the Town Hall Committee and he has done a great job. Mr. Goldman stated that the architecture firm retained is a great organization. Selectman Musselman agreed. However, they have had to endure wide-ranging discussion and they are trying to close in, Mr. Goldman said. They are making good progress, he said. As he said that, Selectman Musselman cautioned him to be careful.
There was then discussion about the outside detail accounting and use of the funds to purchase cruisers.
There was then discussion about the $10,000 parking study. Mr. Magnant stated that results are expected in the fall; data collection is being done during the summer months.
The discussion of beach cleaning raised the issue of increased expenditures on environmental testing. Editor’s note: Discussion at recent Selectmen’s meetings indicates that this is occurring near Concord Point in an area known as “stinky creek.” Selectman Musselman said that they are trying to get a handle on the contamination. It is probably not from Peteys but probably from seeping from the west side of Parson’s Creek. Frank Drake stated that he had heard that Peteys has the highest consumption of any Rye Water District customer. He attributed it to lots of customers and use of the bathrooms.
Adjournment
There being no public questions, the meeting adjourned at approximately 9:02 p.m.