NOTES OF JANUARY 14, 2015 RYE BUDGET COMMITTEE MEETING
Final Revision B – Provided by the Rye Civic League
Present (left to right at table): Rye Water District Representative Ralph Hickson, Jenness Beach Village District Representative Randy Crapo, School Board Representative Peggy Balboni, Jim Maheras, Chairman Paul Goldman, Ray Jarvis, Doug Abrams, Selectmen’s Representative Craig Musselman.
Others present: School Superintendent Salvatore Petralia; Rye Junior High School Principal Chris Pollet; School Board Members Jeanne Moynahan, Kate Hillman, Scott Marion, Mike Moody; Town Moderator Bob Eaton (left early).
Present from the public: Peter Crawford, Joe Cummins, Brian Early (Portsmouth Herald).
Editor’s note: For ease in finding particular sections using the archived video and audio on Vimeo, 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. You may also click on the bold times in the video description to step directly to a section. The video is available at https://vimeo.com/117013118/
The video begins at 6:29:34 p.m.
Summary
Introduction (0:00 elapsed)
After the pledge of allegiance, Chairman Goldman outlined the process and indicated that four warrant articles had not yet been voted on by the Budget Committee, although Article 1, the operating budget had been. He then turned the meeting over to Peggy Balboni, School Board Representative.
Peggy Balboni then indicated that the warrant article had not been brought to the Budget Committee earlier because the teachers’ contract had just been settled on Monday, the land article also was not ready until then, and Article 5 had first been seen five minutes earlier. Editor’s note: This is a petitioned warrant article relating to video streaming. It had been provided at the SAU office at approximately 2:00 p.m. the prior day. The School Board will need a work session to discuss that article, she said.
Article Two: Teachers’ Union Contract (3:15 elapsed)
Ms. Balboni read the text of the warrant article and then asked Mr. Moody who, along with Mr. Marion, had negotiated the contract, to address it.
Mr. Moody indicated that negotiations had begun in the summer, had taken many months, and that they had not been sure that agreement could be reached. The critical issue from the School Board’s perspective was health care. The teachers have very generous and expensive plans. Although less serious in the past two years, historically the cost escalation has been dramatic. Because a five year agreement was reached, they had to think closely about the impact of the Affordable Care Act and the Cadillac Tax, which is a 40 percent surcharge on plans deemed “very rich.”
Editor’s note: The “Cadillac Tax” applies to health care plans costing more than $23,000 for a family of four. This tax was in the news last year when Jonathan Gruber of MIT a key architect of Obamacare, i.e. the Affordable Care Act, was discovered on a video recording saying that the tax was a “clever exploitation of Americans’ lack of economic understanding.” In the video, he acknowledges that the tax falls on employees and is in an amount approximately equal to that which would apply if health insurance contributions above a certain level were made non-deductible. The argument is that there is overspending on health care because the plans are deductible to employers but not taxable to employees, which causes employees to prefer health care benefits to wages, which would be taxable. According to Mr. Gruber, elimination of the deduction would simply not be politically viable, so the same result was achieved in a circuitous manner. See http://www.foxnews.com/politics/2014/11/19/obamacare-whopping-cadillac-tax-under-fire/
Mr. Moody continued, explaining that the teachers have three plans:
1. The “JY” indemnity plan.
2. A point of service plan.
3. An HMO plan.
Most employees are on the second plan, although a number are on the first plan. As result of the negotiations, there will be immediate elimination of the JY plan and a one year phase out of the point of service plan. The HMO will be retained and new consumer-driven plan will be added which has a $5000 per family deductible. They School District will help to subsidize the high deductible.
The District’s contribution to cost sharing is being lowered to create an incentive for earlier switching to the HMO and consumer-driven plans. New employees will only be offered the consumer-driven plan, not the HMO plan. Incentives for those not needing any plan are being continued and changed somewhat.
Mr. Moody asserted that, based on his math, not Mr. Katkin’s, there would be $1 million in savings over five years. The first year savings would be $62,000, rising to $167,000 later. Mr. Moody stated that fairly modest rate increases had been assumed in arriving at these savings.
In response to a question from Selectman Musselman, Mr. Moody stated that the new plans are still generous and will be subject to the Cadillac tax. However, the amounts over the thresholds will be less so the District’s share should be around $79,000 under the current projections. Negotiations could be reopened on this issue alone. If an agreement could not be reached to reduce or eliminate the Cadillac tax the tax would be split 50/50 between the teachers and the district, providing an incentive for agreement. The numbers assume a worst case scenario based on no agreement being reached.
On the new plan, Mr. Moody stated that 75 percent of the $5000 deductible will be subsidized by the District. The consumer-driven plan, even with the higher subsidy, will cost the District and the teacher less. The consumer-driven plan is not projected to be subject to the Cadillac tax.
In response to a question from Selectman Musselman, Messrs. Moody and Marion stated that the assumption is that only one individual, one two-person and one family plan are assumed to be under the consumer-driven plan. All three agreed that this was a very conservative assumption. A lot more money can be saved if they can move more people to the consumer-driven plan.
Selectman Musselman stated that the three entities with agreements with the Town have agreements that do not extend into the Cadillac tax years. He expressed concern about the precedent of paying the Cadillac tax. Mr. Moody stated that the 50 percent incentive is substantial. Mr. Moody stated that the cost per teacher could be over $1000.
Mr. Moody noted that they also have an increased ability to seek bids for the health plans during the course of the agreement than before. Ms. Balboni stated that a reason why they previously had trouble doing this was because of the JY plan. The elimination of that plan provides them with more options.
Mr. Moody stated that the number of available carriers has increased from one to four.
Ray Jarvis asserted that they were making the best of a bad situation. He has been whining about this for years and is glad that it’s getting better. But, they have big corporations dealing with Congress and few choices. This is not the way the other 25 democracies do it, he said.
In response to a question from Jim Maheras, Mr. Moody stated that the Cadillac tax becomes effective January 2018. The rates and applicability of the tax will be known the prior June. The tax is currently estimated to be $158,000, split between the teachers and the District if nothing changes. That is the total during the course of the agreement, and the tax is in effect for the last two and a half years of the agreement.
(21:44 elapsed)
Doug Abrams asked why they did not see a sizable increase in 2018 due to the Cadillac tax. Mr. Moody responded that 2018 was only half a year.
Selectman Musselman asked about the larger increases in the earlier years. Mr. Moody responded that this was due to people coming off of the JY plan. Although there are only five such employees, it is an expensive plan. The assumption is that these employees would go to the second most expensive plan, the point-of-service plan, which lasts another year. The difference between that and the HMO plan is not as great.
(24:10 elapsed)
Selectman Musselman asked about the salary increase. Mr. Moody stated that, due to the concessions on health care, the teachers were looking for very significant salary increases. Mr. Moody stated that the increases are substantial:
Year Percent
1 3.5%
2 2.4%
3 3.26%
4 2.91%
5 2.72%
The increases are not pegged to inflation. There was discussion about the steps and the tracks.
Mr. Moody stated that the days to be worked are increasing from 187 to 188 which will provide more opportunities for professional and curriculum development. Mr. Petralia stated that student contact days are set at 180.
Mr. Moody stated that, because of the prospect of declining enrollments, the reduction in force language was tightened to increase the District’s ability to make performance-based decisions. The recall rights after a layoff have been reduced from 24 months to 21 months. Although the difference is small, the change is significant due to the way that the cycle works.
Jim Maheras stated that the increases appeared to be high. He asked whether other Districts had been looked at. Mr. Moody responded that both the District and the teachers had presented competitive data, looking at things differently. The District believes that the teachers are paid exceptionally well. The Teachers provided data that showed that they could be paid better. Mr. Moody asserted that the compensation is neither at the top or the bottom, but in the middle or somewhat above. The starting salaries have been increased significantly to provide an opportunity to attract top talent when they have an opportunity to hire. Direct comparison of the numbers is difficult due to variations in degrees and years of experience, allowing the statistics to be manipulated.
(31:10 elapsed)
In response to a question from Ralph Hickson, Mr. Moody stated that currently all plans provide for 95 percent, 75 percent and 75 percent sharing of premiums for individual, couple and family plans, respectively. The point of service plan will have a five percent reduction in each of those categories for its one year remaining life. The HMO plan will stay at these rates. The consumer-driven plan, which provides significant savings, is structured to provide a greater incentive by reducing the percentages to 95, 85 and 85 percent respectively.
(33:18 elapsed)
Doug Abrams made a motion to recommend Article Two, which was seconded by Ray Jarvis. Selectman Musselman stated that he would abstain as the Town would be dealing with three union contracts in the future. All others were in favor.
Article Four: Land acquisition (34:33 elapsed)
Article Three was skipped as no Budget Committee recommendation was needed. Editor’s note: Article Three provides the ability to call a special meeting if Article Two is defeated.
Ms. Balboni then read Article Four. She asked Mr. Marion to speak to this article.
Mr. Marion stated that this is the Bush property. Several teachers and Principal Chris Pollet are discussing the sale of approximately 1.5 acres to the District. Alex Herlihy, who owns an adjacent piece of property, has offered to sell, for one dollar, an additional 1.5 acres. The teachers, largely led by Robin Ellwood, a phenomenal eighth grade science teacher, have come up with an interesting and persuasive vision for using the land for science and environmental education, as well as engineering, mathematics and arts.
The 1.5 acres would cost about $300,000. The warrant article does not ask for any of this money. The School District has no interest in using taxpayer funds to purchase the land. A donor has pledged $100,000. Tim Grant, who owns the adjacent property on Lang Rd., the yellow house, has offered to purchase about a third of the 1.5 acres, the frontage along Lang Rd., to protect his land and access. The price remains to be determined, but this could provide another $100,000. External fundraising would raise the other $100,000. The $10,000 is for the down payment, which would need to be made by June according to the warrant article. However, this would not be expended unless the District is 95 percent confident that the $100,000 could be raised.
Paul Goldman asked why the warrant article did not provide for a fund. Ms. Balboni stated that there was nothing in the budget for land acquisition. She also referred to the unanticipated revenues from the LGC.
Randy Crapo and Doug Abrams asked about zoning issues and whether a non-conforming lot would be created by subdividing the parcel to sell a portion to Mr. Grant.
Mr. Marion referred to an April 1 deadline to make a decision. Editor’s note: It was unclear whether this was 2015 or 2016. A survey is being done, thanks to grant from the Rye Educational Foundation, which also provides for an environmental assessment.
Doug Abrams said that he supported the warrant article but asserted that there were a lot of moving parts that had to come together. He moved to recommend the warrant article. Selectman Musselman seconded the motion. All were in favor.
Article Five: Video streaming (47:29 elapsed)
Ms. Balboni read the warrant article. She asked Peter Crawford whether he had submitted the warrant article. Mr. Crawford affirmed. Ms. Balboni then asked Mr. Crawford to speak to the warrant article.
Mr. Crawford passed out some supporting data that he had prepared which addresses the financial considerations.
Mr. Crawford provided an overview. He stated that, in 2013, the Town had voted to implement video streaming at the Town Hall. That passed fairly handily with the recommendation of the Board of Selectmen and the Budget Committee. It has been operational and is televising live and providing archived meetings of the Board of Selectmen, the Planning Board, the ZBA and the Budget Committee. The same year a warrant article was proposed for video streaming for the school. The School Board recommended that, but the Budget Committee did not. Despite the absence of that recommendation, the warrant article came within seven votes of passing, he said.
Mr. Crawford added that, this past year, the Library implemented video streaming in the basement meeting room, and the School Board’s all-day budget session conducted there was available by video streaming. It has been a fairly successful program which allows the residents to see what is happening with their town government. It provides an opportunity to go back in time to view meetings that have already occurred to see what happened, as the minutes are not always complete. We think this is a really good program which the residents will endorse given this experience, Mr. Crawford said. He asked for the support of the School Board and the Budget Committee.
Mr. Crawford summarized the financial implications using data that he obtained from Andy Richmond at the Library. He referred to an invoice for $1200 to Town Hall Streams to install a video camera and a microphone and wire them up. Mr. Richmond estimates that the cost could range from $1200 to $1500, he said. The Library’s ongoing cost is $100 per month for about five meetings per month, although there should be fewer meetings than that. After adding contingency of $300 to $600, the total is $3000 for the warrant article. That is the cost for the first year. Once the camera and microphone have been installed those costs would not be incurred again unless something is changed. The ongoing cost would be $1200 per year, he said.
(52:55 elapsed)
Ray Jarvis asked why this warrant article was being proposed. Mr. Crawford pointed to the successful implementation of streaming for the Town, including the ZBA and the Planning Board. Editor’s note: Mr. Jarvis is Chairman of the ZBA.
Ray Jarvis asked about the impact of the new Town Hall. Mr. Crawford stated that the plan for the Town Hall includes multiple meeting rooms. Mr. Jarvis questioned whether, with 2-3 places for meetings, the Junior High School Cafeteria was suitable due to people at the edge of the room and the inability to see other audience members.
Mr. Crawford stated that Mr. Jarvis was assuming that the Town Hall is going to pass. He stated that, last year, the architectural portion for $250,000 got 57 percent of the vote. It will need 60 percent of the vote this time as the Town will be seeking bond financing.
Mr. Jarvis asserted that Mr. Crawford was assuming that the Town Hall would not pass.
Mr. Crawford disagreed and stated that he was not sure that the School Board would want to meet at the Town Hall. The objection has been that the Great Hall is wonderful for large, large gatherings, but the acoustics are not going to be that good for smaller meetings. The cafeteria has fairly good acoustics and is suitable for this size of meeting.
Ms. Balboni stated that she doubted that the School Board would be meeting at Town Hall. It would probably want to meet at one of the schools. Mr. Marion referred to multiple boards and commissions wanting to meet at Town Hall. By meeting at one of the schools they can meet at times of their choosing. Ms. Balboni stated that the School Board used to meet in the Library upstairs, which has better acoustics than the cafeteria. However, the meeting was moved to the cafeteria due to attendance levels.
Jim Maheras asked whether the article needed to go to the School Board first.
(57:03 elapsed)
Doug Abrams asserted that it did not need to. Sitting with his arms crossed, he then made a motion to not recommend the warrant article. Ray Jarvis seconded the motion.
Jeanne Moynahan stated that her husband watches the streaming and that the acoustics are “horrible.” Kate Hillman asked about the measure of success. Mr. Crawford stated that Mr. Magnant had indicated a figure of 50 views per month. The Rye Civic League also has some statistics as the Civic News links to the videos. Those are sizable. In gathering signatures at the dump, he had absolutely no problem getting people to sign the article. They wanted to see what the Town governing bodies are doing.
Mr. Maheras questioned the need, given the number of views.
Mr. Crawford referred to people with kids being unable to attend School Board meetings as a lot of them start at 5:30. Those people work and cannot make it to the meetings. With respect to the School Board, even greater usage would be seen, Mr. Crawford asserted. Mr. Abrams asserted that the attendance at the ongoing hearing indicates a lack of interest.
Mr. Jarvis reiterated that the cafeteria is a poor venue for meetings.
Mr. Crawford stated that, with regard to audio quality in a meeting of this size there is no problem. He has video taped quite a few meetings in the cafeteria where there has not been amplification. It is fine for all except the most soft-spoken people. If the room is packed full of people there could be an issue, but typically microphones are used under those circumstances. That makes it easy to hear, he said.
Mr. Goldman stated that the financial impact would be on the school budget. He asked for a compelling voice in support from the School Board.
Ms. Balboni stated that she did not see any reason why they should not do streaming. Ms. Hillman stated that, if there is existing space that should be used, but she understands the space conflicts.
Mr. Marion stated that he uses the Rye Civic League website but uses the transcripts rather than the video as it is so much faster and efficient. He is not opposed. Fifty people is not a lot, but it is ten times as many as come to a meeting.
Ms. Hillman stated that she is not opposed to the streaming, but wondered whether a facility where it exists already could be used. She expressed privacy concerns. Mr. Crawford agreed and suggested that there be a way to pull the plug when it is not operational.
Mr. Goldman stated that, last time, the reason that the Town video streaming passed and the School did not was that the Town had done the due diligence and estimates had been obtained. He asserted that the material provided by Mr. Crawford did not represent a proposal based on the technical aspects of the facility. The financial information should be based on the facility where the streaming is to be installed, he asserted.
(66:35 elapsed)
Selectman Musselman said that he would be in favor of streaming if the Junior High School Cafeteria is to be used for School Board meetings. A handful watch it live and a handful of people watch it later but it is a modest investment. He added:
“But this is too late. This needs to be November. This needs to go before the School Board so that they can consider it, and we’ve said that Mr. Crawford for years. Don’t do this in mid-January because we have all these questions and we have no answers. It’s too late. I’ll vote no.”
Ms. Moynahan read from the warrant article, referring to the requirement that whenever possible, the meetings would need to be conducted in a facility with streaming capabilities. She objected to this requirement.
Mr. Marion stated that he likes the idea and that they would probably back the warrant article if given more time to conduct the necessary investigations, due diligence and addressing of the security and privacy issues.
Mr. Abrams asked whether the system could be converted to go both directions given that sometimes the audience is in the elevated location.
Randy Crapo stated that there were a lot better ways to spend $3000 than to satisfy a small minority of people. He suggested streaming at the stage in the auditorium to permit grandparents to view plays, musical presentations and graduations from home.
Mr. Crawford noted that the cost of the installation at Town Hall was $800. The camera is not going to be any different. The camera that the Library obtained is remotely controllable so it can accommodate the room being flipped, he said.
Mr. Goldman stated that the information would have a lot more credibility if it had come from an AV consultant. He asked where the compelling voice was.
Mr. Crawford stated that it sounded like three were in favor, one was opposed and one had not spoken. Kate Hillman stated that they had not voted and expressed concern about the lack of analysis of the room and engagement of the School Board.
Mr. Crawford noted that there was a proportionality issue. He said that the expenditure is only $3000. Ms. Hillman stated that they did not know that. Mr. Crawford stated that it could not be more, since if it is more, the School Board is off the hook in terms of implementing it.
Mr. Marion suggested that a question on video streaming be added to the parent survey.
Mr. Crawford indicated that there was already data from the vote last time, and the warrant article had only failed by seven votes. Now, there have been the successful implementations at the Town Hall and the Library and the warrant article is $1000 less.
Kate Hillman expressed concern that the appearance of a lack of support by the School Board and the Budget Committee might indicate to the public that they do not advocate video streaming. But, many of “us” are, she said, but she is not personally an advocate of how Mr. Crawford went about it.
Ms. Balboni asked Town Moderator Bob Eaton what could be changed at the Deliberative Session. Mr. Eaton responded, stating that the subject matter could not be changed nor could the warrant article be eliminated or zeroed out. The dollar amount could be changed and, based on some of his rulings in the past, it could be revised to say “shall the School Board study bringing video streaming to the schools.”
Mr. Crawford stated that, if the School Board is concerned as to whether this is the correct amount, there is still 2-3 weeks before the Deliberative Session to get Town Hall Streams in to study the facility and determine the amount. “They probably wouldn’t do that for me as a private citizen,” he said.
There was then discussion about the maximum possible increase. Mr. Crawford and Mr. Eaton agreed that the limit was 10 percent of the overall amount. Mr. Eaton stated that he would reflect further on the issue, but that anything except reducing it to zero could probably be done.
Mr. Goldman called for a vote. All were in favor of not recommending the warrant article except Peggy Balboni who was opposed. She stated that she did not want her vote to reflect that the School Board was against video streaming.
Introduction of Public hearing (80:45 elapsed)
Mr. Goldman then closed the work session and opened the public hearing. He stated that the Budget Committee had now voted on each of the warrant articles that night and had previously voted on the operating budget. Officially, the Budget Committee has done its work, unless an issue comes up at the Deliberative Session and the Budget Committee needs to huddle.
There was a reference to only two members of the public being present. Mr. Eaton objected, stating that he was also a member of the public, but noted that he did not have any questions
Joe Cummins, 990 Washington Rd. asked the purpose of the public hearing. Mr. Goldman stated that it was to present to the public the final work product of the School or Town budget that has been jointly prepared between, with respect to the Town, the Board of Selectmen, the operating departments and the Budget Committee for examination and question. “We’ve done our work, we don’t anticipate doing anything else with regard to those budgets,” he said. He added:
“As we came out of that work session, we as a Budget Committee have done all of the work required to now have public examination of the final version of the budget and its warrant articles for public examination and question.”
Mr. Cummins asked what the purpose of the public examination and questions was. Mr. Goldman responded that it was for “public participation.”
Mr. Cummins stated that he was sympathetic to the reasons but that he is disappointed with the School Board, and has been cognizant of some of their deliberations or non deliberations about video streaming. He stated that he fundamentally feels that the unspoken reality in this room is that the School Board does not, in a full-blooded way, support video streaming. At the 30, 50 or 100 thousand foot level, in concept they support it but if the School Board wanted to they could do it in April or May if they wished. To hear questions about measurement, how many cubic feet and microphones is incredible minutiae. To raise those issues “exposes the fact that the heart of the School Board is not in it.”
Ms. Balboni stated that the Board had not had a discussion to address the warrant article. Mr. Cummins stated that his point was that the Board, in consultation with the Superintendent, at any time, could have decided to spend the money on video streaming. It’s been months, maybe even years, that the Board has been aware of this need.
Mr. Eaton asked whether the Budget Committee was going to go through the warrant in sequence. Mr. Cummins responded that that was not legitimate as there were only two members of the public present.
Mr. Cummins stated that the punitive recommendation of the Budget Committee in 2013 had acted as an albatross on the warrant article, which was why it had not passed.
(89:00 elapsed)
Mr. Goldman responded, saying that “if someone wants to come in here at 11:59:59 without data and present a warrant article that is within the budget of an organization that didn’t even see it until hours ago. You call that rigorous, due diligent process? That’s how we have to look at it. And, by the way, don’t minimize and call things minutiae when there really are technical aspects to getting a good solid answer.”
Mr. Cummins reiterated that the School Board’s heart was not in video streaming.
Kate Hillman said that she took issue with Mr. Cummins statement, and that if Mr. Crawford had done it right they could have, perhaps, taken action on it. “I’m a fan of video streaming. Do it correctly so we can take action on it,” she said.
Mr. Cummins said “I look forward to the same fastidiousness when we talk about the fuel oil budget.”
Heating oil budget (92:45 elapsed)
Mr. Eaton asked again whether the Budget Committee was going to go through the warrant in sequence. He stated that he had no questions.
Mr. Goldman asked whether there were any questions. Mr. Crawford passed out a presentation that addressed two issues that he had alluded to at the prior Budget Committee meeting on the School. Other than Peggy, everyone from the School District had left at that point, he said. As promised, he got in touch with Jim Katkin about two issues (1) the fuel oil budget and (2) the projected attendance at Rye Junior High. Editor’s note: As indicated later, he meant to say Portsmouth High School. The more serious issue is the oil, he said.
Mr. Crawford stated that he had become increasingly concerned about the budget after a Town tax rate increase of almost 18 percent, from $3.12 to $3.68. In 2014 the school was flat, but unfortunately the increase is expected to be $.32 prior to the warrant article for the collective bargaining agreement, which is another five, six or seven cents. We are looking at something approaching 40 cents on the School tax rate increase, he said. That is an increase of almost a dollar in the tax rate, assuming the Town remains the same this year. Without the collective bargaining agreement the increase is $160 for someone with a $500,000 house.
He compared the budget with that for 2014-2015. In 2014-2015 the fuel oil budget was estimated based on the average for the prior three years, or 2010-2013. That’s about 14,000 gallons at the Elementary School and 19,000 gallons at the Junior High, a total of almost 33,000 gallons for the two schools.
In 2013-2014 the fuel oil usage was up very significantly, especially at the Junior High, to almost 43,000 gallons. Those gallons are being used as the base for the 2015-2016 budget. He said that he does not understand how the gallons can be up by 30 percent when the degree days were only up by about 14 percent. The average degree days from 2010 to 2013 were 6159. The period 2013-2014 was a little bit colder, but only 7027 degree days. Usually, oil usage tracks the degree days very, very closely, he said.
Mr. Crawford stated that Mr. Katkin is concerned that this winter is going to be another cold one, but Mr. Crawford stated that he does not understand how that is relevant to the 2015-2016 budget which does not start until July 1. Since it is unknown how cold that year is going to be, it is prudent to assume an average year.
Secondly, the budget assumes $3.44 per gallon. For the 43,000 gallons, that amounts to almost 147,000 gallons. Editor’s note: He meant dollars.
Mr. Crawford said that he suggests that the Budget Committee use a price of $2.50 which is the ongoing price. It should be kept in mind that the oil contract will be going out for bid in June or July. We are 5-6 months from getting the price locked in. The worry is not about what the price will be 18 months into the future, he said.
Mr. Crawford stated that he suggested going back to the 2010-2013 average usage. That multiplied by the $2.50 is $82,000, a savings of $65,000 in the budget which is very significant.
(99:45 elapsed)
Ray Jarvis questioned the willingness of someone to sell a lot of oil at today’s price. Mr. Crawford explained that the oil vendor hedges his risk by buying a futures contract to cover any variation in the price. That is typically based on the current spot price plus some minor differences.
Mr. Jarvis reiterated his prior concern. Mr. Crawford explained that the bid in July would be based on the current price at that time. If the price is $2.50 in July, the contract will not be bid at $3.25 out of a concern that the price could go up because the oil dealer would be hedging on the futures market. That market is based on the spot price, plus adjustments for the interest and the carrying cost of storing the oil. If it’s not, there’s an opportunity for speculators to take advantage of the discrepancy, he said.
Ms. Balboni stated that the tank might have been filled near the end of the year, which might account for the increase in the gallons. Mr. Crawford responded that he had asked Mr. Katkin about that, and he had responded that, every year they try to “sync it up” and they fill the tank in June, during which there is very little heating oil use, so it tracks with the School’s budget cycle.
Ms. Balboni read from Mr. Katkin’s e-mailed response to Mr. Crawford’s e-mail: “the price for oil is subjective. You ask in your e-mail how prices can climb 40%. I counter with whom (sic) a year ago, when I prepared this budget, and when we settled a contract this July for 3.14 would have ever thought that fuel oil or gasoline would drop to the current levels. If oil can drop 40% in six months, then oil can surely rise 40% in six months…. The gallonage that is in the budget is the actual gallons used during 2013-2014 and I feel confident that those usage amounts would be practical for 2015-2016.”
Mr. Goldman, sitting with his arms folded, noted that, following the interaction neither Mr. Katkin nor the School Board is proposing any changes to the budget.
Mr. Crawford responded that the price of the last bid was $3.14 while the current price is $2.50. That is a reduction of $.64, which is 20 percent, not 40 percent. While it is true that prices can go down and come back up, page four shows a graph of the oil price for the last ten years. The prices are for larger quantities, but smaller quantities track at a higher level. In 2008 the price fell, but it slowly came back, he said.
Ray Jarvis stated that anything could happen in ten years and that the graph is not proof. Mr. Crawford responded, saying that the budget needs to be based on a reasonable estimate not proof that it couldn’t possibly occur. Mr. Jarvis said “ten years oil prices put on a graph to make major decisions is not reasonable. You would need an inflation adjusted graph.”
Selectman Musselman held up the graph and noted that twice in the last eight years the price has risen significantly. He asserted that between December 2010 and June 2011 the price had gone up from about $2.00 to $3.16, far more than the budget differential being carried now, and between December 2007 to June 2008 it had gone up from $2.60 to $3.80. Editor’s note: The graph actually shows an increase from about $2.45 to $3.16 between December 2010 and June 2011, a difference of $.71 compared to the $.94 difference between $2.50 and $3.44. Rather than being “far more,” the differential is actually less. Furthermore, the two increases referred to by Selectman Musselman occurred in periods of rising, or at least steady, prices and were not abrupt reversals following closely on the heels of a substantial decline. Selectman Musselman argued that the graph made Mr. Katkin’s case. Secondly, he argued that, if the gallons used last year was 42,000, it would be “utterly imprudent” to budget for less than that unless it is known how that is going to happen. He asked whether there was an inefficiency that has been fixed or a more efficient system, particularly since it is not known how cold it will be. He stated that he found the entire discussion ludicrous.
Randy Crapo stated that he saw no error that would cause him to want to adjust the budget. Mr. Goldman agreed.
Mr. Goldman stated that he did not want to stay on the point. Mr. Crawford stated that he did not have any additional comments on the fuel oil and asked Mr. Cummins if he had any. Mr. Cummins stated that he had intended to make a comment, but after hearing the position of the Budget Committee he had nothing to say.
Mr. Crawford stated that, what would be prudent is to take the current price and add perhaps 10 percent, which is what has been done in the past.
(108:45 elapsed)
Mr. Goldman said “I think what’s really prudent is the fact that, at least with the Budget Committee, Jim Katkin has a lot of credibility. He’s done a thorough job. He does his research and we trust what he does and it’s been explained to us and we’ve made a vote on it.”
Portsmouth High School attendance (110:15 elapsed)
Mr. Crawford referred to page five of his presentation. He said that Mr. Katkin had confirmed that the figures were correct. There are 53 eighth graders now, seven of those are from New Castle, meaning 46 eighth graders are from Rye. Some percentage of those will continue to Portsmouth High School. Looking at page 117 of the budget, Mr. Katkin has presented the progression ration, which he actually has at 70 percent, Mr. Crawford said. However, that is based on the Portsmouth High School students divided by the total eighth grade attendance not the attendance of the Rye students. Adjusting for that, it’s actually 80 percent. You can see there 53 eighth graders and 37 attendees at Portsmouth High School on page 117, he said.
Mr. Crawford said that Mr. Katkin has projected that six students would not be attending Portsmouth High School but it should be nine based on the data in his own budget which is a progression ratio of 80 percent. That was what he said at the last Budget Committee meeting. Mr. Crawford read what Mr. Katkin had said:
“When we look at the eighth grade and that’s where we got burned this year to some degree. What we do is we look at our progression ratio, that is on pages 117-120 at the back and what we’re seeing is they have a ratio of about 70 percent to about 74 percent if I remember right. And, so what I do is I take 20 percent of the eighth grade. I eliminate all New Castle students, because you don’t pay those, then I look at that and I believe I took 20 percent less of the eighth grade, 80 percent of the eighth grade and added them in.”
Mr. Crawford continued, saying that the 80 percent was the figure used in the 2013-2014 budget and the projection was within one student.
Ray Jarvis stated that the numbers were so small that the probabilistic variation could be substantial. Mr. Crawford agreed, and stated that this is a small number as a percentage of the total attendance. However, it is more of a process issue. There is a methodology in place to do the projections and it is not being used.
Ms. Balboni stated that the response of Mr. Katkin was that he stood by his numbers. She asserted that the charts that Mr. Crawford is referring to have been wrong and more kids have been attending Portsmouth High School. Kids show up in the summer. Those are not budgeted for. The only estimate is for the eighth graders and they are comfortable with that. She also stated that there is an agreement with the Budget Committee not to transfer or spend excess appropriations for the high school but rather to use that as a credit against the next year’s District Assessment.
Ms. Balboni pointed out that they are underbudgeted this year as there are 204 students attending while only 203 were budgeted and the actual tuition rate is $14,823 vs. $14,658 budgeted, a deficit of $48,318. Editor’s note: It is unclear what this point proves, other than that the assumptions in the budget can be inaccurate. The fact that 2014-2015 may have been underbudgeted does not, standing alone, indicate a need to increase the 2015-2016 budget. Rather, the important issue is whether the most recent actual data indicate a need to change assumptions regarding the future.
Jeanne Moynahan pointed out the difficulty of making estimates and the fact students may come back from private school as the parents cannot afford to keep them there.
Mr. Crawford acknowledged the agreement with the Budget Committee. He summarized, saying that the issue is not that it couldn’t increase by three kids. The issue is that he had thought it was 20 percent, it was 20 percent last year and the chart shows 20 percent. The process should be followed. It shouldn’t be the case that this year a few more are going to be added, he said.
(120:45 elapsed)
Mr. Goldman that “we are micromanaging aspects of this budget that we have already tested in multiple sessions with Jim Katkin and others…”
Mr. Crawford stated that he Mr. Katkin is one of the most competent financial guys that he had seen. Mr. Goldman asked why Mr. Crawford was challenging him. Mr. Crawford stated that the budgets in prior years had been “pretty darned good” and the School Board has done a great job of keeping the tax increases low. But this year, for whatever reason, perhaps things coming together on the revenue side, there is a significant increase and there have been some mistaken assumptions made. For the benefit of taxpayers the Budget Committee needs to look at where there are things that appear to be wrong. There are easy cuts that don’t affect the educational quality that should be looked at, he said.
(123:00 elapsed)
Joe Cummins asked about the CBA, saying that he had come late. There was discussion about this having been addressed earlier. Mr. Crawford said that the meeting was being recorded and that he could watch the video.
Mr. Cummins stated that the fuel, from his perspective, is a clear error. Although the School Board has constraints as to when a contract could be entered into, the fact is that an oil supply contract could be entered into now for $2.25 or $2.35 for the entire year. It is not right to say that Mr. Crawford’s numbers are wrong or speculative.
Mr. Cummins said that the end product is the education. While improvements have been made in the math program, he was told by someone recently that the Math Trailbrazer program is a “crucifixion” of his kid. The kid cannot calculate the tip on a bill. It is a very sad thing that people like Mr. Crawford who are trying to bring a redeployment of the resources have their voices squelched.
(127:22 elapsed)
Mr. Goldman raised his voice and referred back to the video streaming warrant article and stated that it had been “ill prepared” and that this made Mr. Cummins defense of Mr. Crawford invalid.
Mr. Cummins said “oh, okay, he doesn’t have credibility because his warrant article was ill prepared.”
Mr. Goldman raised his voice and said “no because he has something to say continually about everything when in fact the action this evening was one of the most ill-prepared warrant articles I’ve ever seen. By the same person.”
Mr. Goldman continued, saying
“You want to defend what’s going on, I’m going to defend the honor of the process and the work of the people on the various committees in this town and this Budget Committee. And this is the kind of thing we have to stand up to all the time. You know what, you want credibility, say your piece with facts, with brevity. Make your point and don’t occupy two thirds of the time of the meeting.”
Mr. Goldman stretched out his arms towards Mr. Crawford, raised his voice and said to Mr. Crawford “Put that in your minutes, Peter. Put it in your minutes.”
Public input on warrant articles (129:45 elapsed)
Mr. Cummins stated that he was very supportive of Mr. Marion’s efforts with respect to the land purchase.
Mr. Goldman said that he wanted to end the meeting by 9:00 p.m. Mr. Crawford stated that he only needed about five minutes to address his points on the warrant articles, not the 20 minutes remaining.
“Capture it on video if you want, but I expect when all of this, with it’s supporting editorial comments appears in whatever publications it’s going to be in, that it’s fair and proper, Peter, and unbiased. That’s what I expect.”
Mr. Crawford stated that he did not believe that the time that he occupied was unreasonable relative to the $12 million budget. He believes that he represents the views of a lot of the residents who don’t have the skill or inclination to attend. Steven Borne had told him that he found these sessions to be a waste of time and he specifically asked him to tell Mr. Goldman that.
(132:48 elapsed)
Mr. Crawford asserted that Mr. Borne knew that this Budget Committee is never going to change its mind. It has gone through an entire process and has reduced the Heritage Commission by $500. That is the net result of all of these people’s time, which is ridiculous that they cannot come up with more of a reduction. He cited the tax increase for the Town and the pending tax increase for the School.
Mr. Jarvis pointed out that the Town tax rate had actually gone down significantly the prior year. He complained about Mr. Crawford’s graphs showing increases without the figures having been adjusted for inflation.
Mr. Crapo stated that the Budget Committee was not there to “reduce” the budget, but that the budgets have backing and logic and that it is adequate. The School Committee and the Town use the scrutiny of the Budget Committee in their negotiations with the departments to only put in what is needed. Just because a line item wasn’t adjusted when presented does not mean that savings were not influenced, he asserted.
Mr. Crawford stated that he had done a graph, that Mr. Jarvis had probably seen. Notwithstanding the one year decline, the Town has been up 5 or 6 percent over the past 5-7 years. Inflation has been 2-3 percent.
Mr. Crawford stated that he supports Mr. Marion on the land purchase and applauds them for raising additional funds. Whenever adjacent land can be acquired it is a good idea. He said that he hopes that there will be an independent appraisal at the behest of the School Board that supports the value, however $300,000 doesn’t seem completely out of the ballpark.
With regard to the collective bargaining agreement, Mr. Crawford said that, with all of the information presented tonight its impossible to figure out whether this is a good deal without delving into it a lot more. He said that he is surprised that the Budget Committee acted so quickly. “Talk about things presented at the eleventh hour…,” he said.
Mr. Goldman interrupted and asked whether the people who presented had any credibility. Mr. Crawford agreed that they do. The Budget Committee is there to perform reviews, not that to pass on the credibility of the people. Mr. Goldman said that more people need to come out and voice their opinions. He asked where the Town was tonight.
Mr. Crawford stated that he had already told Mr. Goldman what one person thinks, which is that it is a waste of time because the Budget Committee never listens to the public. Mr. Abrams interjected that that was an insult and left. He pointed out that the public had been present to provide input on the warrant articles on the land and the collective bargaining agreement and no input was requested. That could have been requested prior to the vote, he said. He added that it’s not a good idea to get everyone’s opinion on the record and then ask for public input because the opinions are cast in stone for most people at that point.
Mr. Crawford asked whether a copy of the collective bargaining agreement would be available for review. Ms. Balboni indicated that it would be available once it had been signed. Someone added that it should be available prior to the Deliberative Session.
Mr. Crawford stated that he wanted to compliment Mr. Moody and Mr. Marion. It sounds like some major improvements had been made on health care, an issue that he had been raising for a long time, he said.
Mr. Marion stated that he hopes that Mr. Crawford is right and that the oil price and the high school attendance are less than projected. Editor’s note: The video shows that Mr. Abrams’ chair is empty at this point.
Ms. Balboni stated that this would be her last budget as she will not be running for reelection.
Mr. Goldman referred to the meeting the next evening on the Town budget and that there would need to be a work session on certain issues. Selectman Musselman pointed out that there was a collective bargaining agreement to be considered. “At the last minute,” he added with a smile.
Mr. Goldman stated that he feels good about the working relationship with the School Board and the SAU.
Adjournment (147:10 elapsed)
All were in favor of the motion to adjourn, but there were forms to be signed afterwards.