Category Archives: Budget matters

Treasurer/Collector’s status report

At selectmen meeting on Tuesday Georgia Colivas, the Treasurer Collector, reported on the status of the work of her to offices to the town as follows (MVE is for “motor vehicle excise”) -

Selectmen’s meeting Tuesday, September 02, 2014

Update of current items on the to do list for the Treasurer’s office:

*The town will be selling general obligation bonds amounting to $7.2 M on Wednesday, October 1st. This borrowing includes 2 authorized articles: first one is the $5,840,000 MSH Water Tower, and the $1,360,000 Red Gate Farm Land Acquisition.   As you may recall, the Red Gate Farm was previously authorized in June of 2014 with a BAN, a short term borrowing, that matures on October 17th. Once these borrowings are completed, the town will have no authorized and unissued debt…well until the next town meeting. Currently, as of the beginning of this FY, the town’s outstanding debt is approximately $46.1M with $37.8 M in principal and $8.3M in interest. The Town’s current bond rating by Moody’s is an AA1, and town will be subject to another rating call on September 23rd for the current borrowing.

*The month of September in the treasurer’s office will bring back the large biweekly payrolls now that school is back in session, and rather large weekly vendor warrants for all town and school departments. Millions of dollars of funds are disbursed each month- for example, in June of 2014, the last month of the FY, nearly $8.2M was expended. The beginning of each month to a municipal treasurer means a monthly cash reconciliation for all funds, town and school with bank statements including all revenue collected and expenditures paid. With school back in session, school revenues will make their way into the treasurer’s office- in fact, ALL types of revenue from all town and school departments must be deposited and accounted for by the treasurer. Currently, taxpayers may use the town’s online payment option to process RE tax bills, water bills and MVE bills. I am currently working with the new school business manager to implement many of the school user fees to the online payment system as well. We collect athletic fees, tuition, adult education fees, rents, all departmental revenues, including all revenues associated with student activity accounts.

*The management team will also begin preparing for the workers compensation audit, the town’s fy 2014 audit which will continue in Nov/Dec., and we will begin working to set the tax rate for fy 2015.   Our current tax rate is $16.12. In the winter of 2015, we plan on updating the OPEB actuarial valuation, and also begin to assess how to structure the OPEB liability in a protected trust fund as approved at the April town meeting.

*In late October, I plan to advertise any outstanding parcels whose real estate taxes are not current and are not on an approved payment plan with the town. The Treasurer currently has 4 parcels in tax title, and 3 parcels in the foreclosure process, 2 of which should be settled by the end of the calendar year. In addition, the treasurer has 10 parcels in tax deferral status whereby the owners defer their RE taxes until they sell the property or until the passing of the owner.

*October will also bring water/sewer bills to all users’ mailboxes. These bills cover the usage period of April 1, 2014 to October 1, 2014 – or as we have named them, the summer usage bills. But before those bills are processed, water and sewer liens are imposed on past due balances which are added to the 3rd quarter real estate tax bills for prompt and assured collection.

*And on an ongoing basis, I handle all unemployment issues, health insurance for retirees, act as the liaison to the NCRS, keep up to date w/ record retention, balance trust funds on a quarterly basis, update investment policies based upon market conditions and advice from auditors, work closely with DOR and Division of Local Services, monitor appropriation expenditures and revenue, and most importantly work with the public.


Now on to the second hat that I wear, the Tax Collector:

*as of 6.30.2014, for the 2014 tax levy, 99.3% of all real estate tax receivables have been collected. This %age is a reflection of the town’s solid tax base and the commitment of it’s’ taxpayers to the town.   In FY2014 the tax collector’s office prepared over 300 MLC’s which gives you an idea of the number of sales/refinances that occurred in town.

*the next MVE commitment will be released in early October by MASSDOT (formerly known as the Registry of MV), and the largest MVE commitment will be released to the town in February. In FY14, MVE revenue was approx. $1.9M

*In a few weeks, 2nd quarter preliminary RE tax bills will be processed and mailed. These bills are due on or before November 3rd. We issue approx. 4600 RE tax bills and around 80 personal property bills each fiscal year.   In addition, water and sewer bills, which are collected by the Tax Collectors’ office, will be issued by the middle of October and due by the end of November

*Most importantly, the lines of communication between the Treasurer /Collectors office and ALL TOWN AND SCHOOL departments are healthy and clear- we work extremely well together, we respect one another, and this is all evident in our year-end financial statement s, bond ratings, and collection rates. It is my pleasure to work with such a dedicated team of professionals.








Town Accountant’s tasks

Joy Ricciuto, the Town Accountant, attended the selectmen meeting last night, and gave a great presentation that both summarized the essential functions of her position and provided the current status of her calendar tasks.  What follows are her notes for the presentation -

The fiscal year 2014 closing and reconciliation process is fully underway, FY14 cash is fully reconciled to the Treasurer, tax accounts (real estate + Excise) are reconciled, and school ac’s, grant, revolving funds are in progress,                 Water funds, Sewer funds, Trust & Stabilization funds are next.


Reconciliation and closing process occurs during August and September, around October for fixed assets.

Fixed assets purchased during the year are updated, deprecation for the year calculated., all this info go into the Town’s financial statements as per GASB (governmental accounting standards board) statement #34.

GASB 34 is accounting for fixed assets and was implemented back in 2003


After the reconciliation process, the Town Accountant looks carefully at reservations of fund balance as a part of the closing process.


In August we need to set aside a couple weeks to assist the School dept on the School End of Year report that is filed with the Dept of Elementary & Secondary Education (DESE formerly DOE). We calculate the costs the town spends on behalf of the School department that does not show up on the School’s operating budget in the town meeting warrant report,

those costs consists of health insurance, the 62% the town pays for each active employee, the 50% the town pays for the School retired employees, plus basic life insurance costs, prop+ liab insurance, unemployment claims, and school debt principal and interest payments, school employees share of the unfunded pension liability, and other costs incurred by town departments on behalf of the school department.


October/November is schedule A month, it takes approx a month to create worksheet schedules and record all town     spending and revenues by dept and to record each grant received in a report due to the State November 30th, which culminates in the final closing process in the financial software which moves the balance sheet account balances into the new   fiscal year, and ends with the Town Accountant’s calculation of the Town’s free cash.


November is also when the tax recap process (tax rate setting) begins which takes a couple of weeks, and when the annual budget process for the next fiscal year begins. Accountant’s office is responsible for the budget worksheet packets which include historical info that are distributed to the department heads.


The town’s independent Auditors are scheduled for two weeks of field work at the town hall in November beginning November 17th. A lot of prep work prior to their arrival. The firm name is Powers & Sullivan out of Wakefield.


The past fiscal year saw the conversion and integration of the School department’s financial records onto the town’s Munis financial software. Since early spring this has been an enormous project, with the School department    hiring an outside consultant to expand and create a newer, better revised chart of accounts with account numbers that                 mirror the State’s DESE account numbers and still retains the characteristics of the Town’s current State UMAS compliant g/l structures. (UMAS= unified mass muni accounting system). During the conversion process we were without a School Business Manager from mid April till June 30, the School staff were off during July and August and now with school back in session, the staff is back and still trying to log on to the new software for the first time and the new school Finance Director/Business Manager Michael LaFrancesca has been extremely responsive and proactive getting school staff on and training them as users himself.


We will need to engage a GASB 45 OPEB actuary to update/perform another study this January 2015.Bienniel requirement.

(OPEB = Other Post Employment Benefits) to determine the town’s current OPEB liability.


Guestimate- free cash to remain upwards of $2.m

$1.3 m in free cash appropriated at the April 2014 town meeting

$1m recovered

$541,000 departmental turnbacks, received $381k in local receipts over projections, FY14 snow deficit was $164,766 to be raised in FY15


Per the State, reserves are a necessary component of sound fiscal management and bond rating agencies expect the town to maintain reserves for good financial stability in order to prevent sharp fluctuations in the tax rate and to satisfy bond rating agencies and the investors.

he investors.

Medfield meals tax started 7/1/14

This article from the Massachusetts Municipal Associaiton -

192 communities have adopted local-option meals tax

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July 16, 2014

On July 1, eight communities joined the 182 that already assess a local-option meals tax, with at least two additional communities set to have the tax go into effect in October.

This brings the number of communities statewide that have adopted a local meals tax to 192, including the 19 communities that chose to enact a meals tax in the past year.

Though the meals tax is only three-quarters of 1 percent, it provides an opportunity for communities to bring in significant additional revenue. For example, revenue estimates from the Division of Local Services for fiscal 2013 show that Provincetown earned $518,320, Burlington earned $1.34 million, and Northampton earned $664,346.

Using revenue estimates from the Division of Local Services, the MMA calculated that the potential revenue that could have been collected by cities and towns if all communities had a meals tax was $110 million. Based on the number of communities that have adopted the tax so far, the MMA estimates that 90 percent of potential revenue is being collected and returned to cities and towns.

The towns of Dracut and Essex had the meals tax go into effect last October. Five communities – Grafton, Granby, Pembroke, Salisbury and Sharon – instituted the meals tax in January. Ashland and Marlborough had the tax go into effect in April.

Attleboro, Berlin, Bourne, Georgetown, Holyoke, Medfield, Plymouth, and Spencer had the tax go into effect on July 1. Carver and West Bridgewater will begin assessing the tax starting this October.

Using revenue figures from the DLS, the MMA calculated that 18 of these 19 communities are projected to collect more than $5 per capita from the meals tax, and 10 will collect more than $10 per capita, according to the Division of Local Services. Essex is expected to bring in $47 per capita, and Salisbury and West Bridgewater are projected to collect $28 per capita.

More than 260 communities in Massachusetts have the opportunity to collect at least $5 per capita from the meals tax. Out of these 263 cities and towns, 182 have adopted the meals tax, which means that 69 percent of cities and towns in Massachusetts that could collect significant revenue have taken advantage of the meals tax.

The local-option meals tax became law in 2009. Cities and towns that accept the provisions of Chapter 64L may levy a local meals tax of three-quarters of 1 percent, which takes effect on the first day of the calendar quarter following 30 days after acceptance.

Written by MMA Reasearch & Legislative Assistant Victoria Sclafani

CPA update

This summary update on the Community Preservation Act from the state Department of Revenue’s Division of Local Services’ e-newsletter:

CPA: Past, Present and Future
Zack Blake – Director of Technical Assistance

Nearly two years ago, Governor Patrick signed into law a number of changes to the Community Preservation Act (CPA). These amendments expanded the acceptable uses for CPA funds and offered communities more flexibility in how these funds are raised. Reflecting back, we thought we would reintroduce readers to CPA by briefly highlighting some of those changes and ways in which communities are taking advantage of them. We also delve into recent collection trends at the state level that impact the distribution of matching funds.

Enacted in 2000 as MGL c. 44B, the CPA enables adopting cities and towns to raise additional revenue beyond the tax levy for community preservation purposes that include providing community affordable housing, protecting open space, preserving historic resources and developing outdoor recreational opportunities.

Under the CPA an adopting city or town elects to implement up to a three percent surcharge on its real estate tax bills. The revenue is deposited into a special revenue fund along with an annual distribution of matching funds from a state trust derived from a surcharge on Registry of Deed recordings. At a minimum, the city or town must spend or reserve ten percent of its annual CPA revenue towards each of the community preservation purposes of open space, historic resources and community housing. Revenue can also be appropriated to a discretionary budgeted reserve, providing the flexibility to fund any CPA purpose until the end of the fiscal year.

Once the CPA is adopted, the community must establish a Community Preservation Committee (CPC). Whether elected or appointed, CPC members are selected from the community’s conservation, historical, planning, park and housing authority boards. The city or town can also choose up to four additional at-large members for a maximum total of nine. Overall, the committee’s role in administering the program locally involves studying the community’s needs, possibilities and resources as they relate to community preservation; accepting and reviewing project proposals; and making recommendations to the legislative body for spending, citing the reasoning behind each choice. Both an affirmative recommendation of the CPC and a legislative body appropriation vote are required to expend CPA funds on a project.

Throughout the last 14 years, CPA has been amended eight times. Early changes largely clarified various aspects of the law or added minor modifications. More recently, however, Chapter 139 of the Acts of 2012, Sections 69-83, contained several significant changes, including an expansion of the allowable CPA spending purposes and the creation of a new option for local CPA funding.

Before the 2012 amendment, communities could use CPA funding to rehabilitate recreational lands only if the recreational land was acquired or created with CPA funding. Today, however, because of the 2012 amendment, communities have the ability to appropriate funds towards previously prohibited recreational-related projects. In expanding the program, these new CPA funding purposes allow cities and towns to rehab existing outdoor recreational spaces and invest in capital improvements to make them more functional for the intended recreational use, including the replacement of playground equipment. Changes in the law also now credit spending on recreational projects towards meeting the annual ten percent open space spending (or reservation) requirements.

In exploring ways in which these changes are expanding CPA spending, we found funds being appropriated to purchase ADA accessible playground equipment, construct a new skate park, resurface outdoor basketball courts, install lighting for a multipurpose athletic field, rebuild a dock landing and create community gardens.

The second significant change in the law offers communities an alternative funding method to supplement the surcharge on real estate tax bills. A community may now adopt CPA, pursuant to MGL c. 44B, s. 3(b1/2), which allows it to approve at least a one percent surcharge on the levy and to appropriate additional revenues up to two percent of the levy from other general fund sources, such as meal and room occupancy taxes. The total surcharge and additional revenue cannot exceed three percent. To date, Somerville and Salem have adopted the CPA through Section 3(b1/2), sometimes referred to as the “blended” method. Quincy and Littleton recently amended its original CPA acceptance by adopting Section 3(b1/2) so that it can appropriate other local revenue into the Community Preservation Fund. Communities that have already adopted CPA, but wish to appropriate other general fund revenues to CPA as described above, must amend their CPA acceptance under MGL c. 44B, s. 16(a) and seek voter approval at a town-wide referendum.

Lastly, a new provision in the law added an optional surcharge exemption for commercial and industrial properties on the first $100k of property value to mirror the existing exclusion for residential property. To add this exemption, an existing CPA community must follow the CPA amendment process, MGL c. 44B, s. 16(a). The law also now requires that preservation restrictions be recorded as separate instruments regarding property acquired with CPA funds to better protect CPA long-term interests, MGL c. 44B, s. 12.

Future Outlook

As of May 2014, 155 communities have accepted CPA with over a billion dollars appropriated to more than 6,000 projects. It is also worth noting that CPA funds have allowed communities to leverage funds from other outside sources that might not otherwise have been available.

This year also marks a point where a larger number of communities are scheduled to vote on whether to adopt CPA than in the past. Several communities are even seeking to increase their levy surcharge, with at least one looking to reduce it. This renewed interest may be the result of the $25 million infusion of surplus state revenue from the Legislature last year along with the potential for more this year. Another motive could be the recent changes in the law expanding the recreational-related purposes cities and towns can fund.

Ria Knapp, Communications Director for the Community Preservation Coalition, says the combination of these two factors sparked the interest of communities that otherwise might not have considered CPA in the past. She adds that “many communities are embracing the new provision in the CPA legislation allowing the rehabilitation of existing parks, playgrounds, and athletic fields,” with “over $40 million in such projects approved recently, and many more proposals being voted on during this spring’s municipal budget process.”

Despite amendments to the law and renewed interest, local advocates are concerned that this year’s state match could be significantly less. Current Registry of Deed collection trends reported by the Department of Revenue are lagging collections of the previous three years. Concern in the real estate market over high home prices and low inventory levels could also continue to hamper buying over the coming months, creating further uncertainty. The rising number of new communities participating in the program also further dilutes the initial distribution of state matching funds.

CPA Trust Fund Collections as of May 2014
In FY2014, 148 participating communities were eligible for a state match that totaled $54.9 million. Funded through Registry of Deed revenue collections and a one-time infusion of $25 million in state budget surplus, these combined sources allowed for a first round state match of 52.2 percent. Without the additional $25 million appropriation added to the trust fund, cities and towns in the program would have received a first round match of less than 31 percent based on total state funding of $32.7 million.

Although the recent drop in collections at the state level is cause for concern, CPA advocates are applauding the Legislature’s inclusion and the Governor’s signing of the FY2015 budget, which transfers $25 million in state budget surplus to the CPA Trust Fund. Because this additional funding is coming from the state budget surplus, the amount will not be known until the state closes its books on October 31st.


MMA on state budget

The Massachusetts Municipal Association issued the alert below today with its summary analysis of the salient provisions of the state budget that the Governor signed this morning.  The major take away for towns is that their monies are up over $50m. from the Governor’s starting budget in January, and up over last year.

Friday, July 11, 2014


Approves Legislature’s Appropriations on Key Municipal and Education Aid Accounts

At 9:45 this morning, ten days after receiving the $36.5 billion fiscal 2015 state budget from the Legislature, Governor Patrick signed the budget into law, approving approximately $50 million more in overall funding for municipal and school aid accounts than the budget he originally filed in January.

The fiscal 2015 budget increases funding for several key municipal and education aid accounts, including a $25.5 million increase in Unrestricted General Government Aid (UGGA) and a $99.5 million increase in Chapter 70 funding – these are the same funding levels that were announced in the Legislature’s March local aid resolution.

The final budget plan supports full funding for the Special Education Circuit-Breaker Program, using the Legislature’s calculation to arrive at the full funding number of $260.4 million, a $5 million increase over fiscal 2014.  

The budget signed by the Governor includes the Legislature’s recommendation to increase regional school transportation reimbursements by $18.7 million, a 36% boost over the current year, raising the appropriation to $70.25 million.  This is a major victory that will bring the state to 90% of full funding, the highest level in a generation.  The budget also includes $2.24 million for transportation reimbursements for out-of-district vocational students.  This is down slightly from the fiscal 2014 budget, but is a significant improvement over the Administration’s initial budget, which would have eliminated the program.

The final fiscal 2015 budget signed this morning maintains funding for the payments-in-lieu-of-taxes (PILOT) program at the current $26.77 million level, which is $500K higher than the Administration’s original proposal.  

The Governor approved $8.25 million for the Shannon anti-gang grant program, a $1.25 million increase to a program that provides essential funding to help cities and towns respond to and suppress gang-related activities.
The Governor approved funding for the Safe and Supportive Youth Initiative at $4.6 million in fiscal 2015. The program seeks to reduce youth violence through wraparound services for those most likely to be victims or perpetrators of gun violence.

In recent years, the state’s match for the Community Preservation Act has been significantly underfunded.  The fiscal 2014 budget adopted last year included a provision to use end-of-the-year surplus revenues from fiscal 2013 to boost reimbursements by $25 million, breathing new life into the state’s CPA match.  Because of lagging deeds excise collections, this money was added to the CPA program to double the state match, from 26% to about 50%.  A similar step is required again this year, otherwise cities and towns that have adopted the CPA will see a much lower state match in fiscal 2015.

The Governor approved section 242 of the fiscal 2015 state budget, to transfer one-half of the “consolidated net surplus” left over from fiscal 2014, up to $25 million, into the Community Preservation Trust Fund.  This is a very positive development.  However, the state’s final fiscal 2014 surplus level will not be determined until September or October, because it will still take several months before the state’s CPA match is determined.

The Governor signed section 260 of the fiscal 2015 budget to establish equity in calculating net school spending under Chapter 70 by allowing, at local option, all communities to count health insurance costs for retired school employees in fiscal years 2016 and beyond, phased in over 4 years, and allowing DESE to waive penalties in the meantime.  This important MMA-supported provision is needed because the current rule excludes these costs from net school spending in some districts, but allows the costs to count in others.  Communities that have been prohibited from counting retiree health costs in net school spending have been forced to reduce spending municipal services or raise property taxes to make up the difference.

The Legislature’s final budget (in sections 124 and 278) included an MMA-backed provision to re-establish the Foundation Budget Review Commission in order to examine the adequacy of Chapter 70 funding, and the Governor signed these provisions this morning.  The foundation budget school spending standard that guides Chapter 70 funding was first enacted as part of the landmark 1993 education reform law and has largely remained unchanged since that time.  In addition to the need to adjust the foundation budget to reflect the many substantial changes that have occurred in public education over the past 20 years, the current foundation budget structure clearly understates many key education expenses, and does not fully reflect the cost of operating modern school systems, as evidenced by the fact that cities and towns spend $2.1 billion more to run their schools than the amount called for in the foundation budget, and a majority of districts are slated to only receive less-than-adequate minimum aid increases in the future.  This language will provide a much-needed review of the foundation budget framework, and includes municipal representation in the process.   
The final fiscal 2015 state budget plan underfunds the charter school reimbursement program and the McKinney-Vento homeless student transportation mandate.  The charter school reimbursement program will be fully funded in fiscal 2014, thanks to the recent $27.6 million supplemental budget that the Legislature passed several weeks ago.  However, the fiscal 2015 budget would provide only $80 million, which will create a $33 million shortfall that must be addressed in the very near future.  In addition, the final budget provides only $7.4 million for the McKinney-Vento requirement to transport homeless students back to their most recent school district, which is $7.5 million below the amount needed to fully fund this state mandate.  The MMA will continue to prioritize these programs and call for full funding this year in all supplemental budget proposals.

As expected, the Governor approved sections 76 and 77 of the fiscal 2015 budget to extend the existing 3-year freeze on changing retiree health insurance contribution percentages by an additional 2 years, until July 1, 2016, for those communities that made plan design changes or joined the GIC under the 2011 municipal health reform law.  

Before today, any city or town that used sections 22 or 23 of Chapter 32B (the 2011 municipal health insurance reform law) to implement plan design changes or join the GIC was prohibited from changing retiree health insurance contribution percentages until July 1, 2014.  Sections 76 and 77 of the fiscal 2015 budget would unilaterally extend that freeze for two more years, until July 1, 2016, for any municipality that adopted or is planning on adopting provisions of the 2011 municipal health insurance reform.  Under this change, any community that has used or plans on using Chapter 32B to make plan design updates or join the GIC would be prohibited from changing retiree contribution percentages for two more years unless the municipality voted to change the contribution rate prior to May 1, 2014.  The provisions signed by the Governor would delay the ability of up to 70 communities to take action on retiree contribution percentages.

The Governor approved increases in the thresholds for the use of competitive sealed bidding in the municipal procurement of good and services from $25,000 to $35,000 (in sections 61-66).  Below this threshold, cities and towns are required to solicit three written or oral quotes, or use sound business practices for the smallest procurements of less than $10,000.  It is important to make regular adjustments to the specific dollar amounts listed in state statute to keep pace with inflation, and help cities and towns save time and money for small procurements.

BoS goals (draft)

The selectmen annually designate their goals, and to that end about a month ago the three selectmen each individually penned his goals for our board for the next year.  Richard DeSorgher then took the three versions and combined them into this composite.

Draft Board of Selectmen Goals for 2014-2105

I. Communications

  1. Promote and encourage a collegial and supportive atmosphere for all volunteer committees and boards, ensure that their voices are heard and their work recognized. Promote and encourage supportive atmospheres with the Board of Selectmen and our Town Administrator, Superintendent of Schools and all department heads and employees
  2. Implement a push system to get residents town government information
  3. Improve the town’s web site


II. Planning

  1. Develop a town master plan, and review and/or expand what was called for in the Vision and Action Plan for the Downtown, adopted in 2006 by the Downtown Study Committee
  2. Work with the Town Administrator and Assistant Town Administrator to look at the future make-up of the management staff of the town
  3. get a five-year plan from department heads and committees
  4. Implement an affordable housing plan
  5. Get by-laws concerning future development of the former Medfield State Hospital
  6. Adopt Green Community Act
  7. Install solar PV sites, issue RFP’s to buy solar power and look at ways to develop power purchase agreements for PV power
  8. Work with the Solid Waste Committee to explore ways to increase recycling rates


III. Medfield State Hospital

  1. Continue to provide direction and leadership as the town and the re-development committee move forward with the clean-up and redevelopment of the former Medfield State Hospital.


IV.  Finances

  1. create a business office for the town
  2. Support the annual budget process and implement a three-year financial forecast
  3. Implement property tax relief for senior citizens
  4. Explore financial saving potential and pro and cons of ways to increase additional revenue including adopting the Community Preservation Act, selling town water and encouraging the Economic Development Committee to work towards bringing clean industry, business and housing (Old Medfield Square example)to the town, including development of Lot #3/Hinkley Lot off Ice House Road.
  5. Complete union contract negotiations before contracts expire and analyze all overtime expenditures.


V. Downtown

  1. Work to develop a robust, business-friendly and pedestrian-friendly downtown
  2. Meet with and review all boards overseeing downtown development and analyze and combine if necessary similar committees.
  3. Explore with the Planning Board the formation of a Design and Review Committee.
  4. Work with the Chief of Police on traffic and parking issues concerning
    1. Traffic and lights along RT 109 and RT 27 (RT 27 at both RT 109 and at South Street)
    2. Sidewalk expansion
    3. Upham Road
    4. Potential future parking sites


VI. Support for the new public safety building, through, hearings and town meeting action until final completion

Cheshire, CT pensions move to 401k

This is an article from -

Arbitration Decision Delays Cheshire Pension Move to 401k


What Happened?
The Cheshire Town Council in Connecticut recently ruled on a pension dispute that created a divide between local unions and officials. The tension arising from the decision is representative of conflicts seen nationwide as cities try to reform failing pension systems.

The Town Council’s arbitration panel ruled in favor of the city’s local patrolman union concerning a defined pension benefits debate. The decision prohibits Cheshire officials from ending enrollment of new police officers in the department’s defined benefit pension plan until the end of the year. The maximum pension benefit as a percentage of final average compensation for members was also increased to 72 percent up from 68 percent.

The decision angered local officials who felt it stopped the local government from doing what is necessary to curb increasing pension liabilities that directly impact taxpayer dollars.

The town council originally tried to end enrollment in the defined benefits pension plan of new police hires in July 2013. The ruling moved the enforcement date back to January 1, 2014. From July of 2013 and January 2014, the Cheshire police department brought on eight new officers, half of which will be covered under the old defined benefits plan. The police union was the last union in Cheshire to remain on the old defined benefits plan after all public employee unions were moved to a municipal employees’ 401(k)-type investment account a few years ago. Prolonged negotiations between police union and council members delayed the transition, which forced the arbitration panel to step in.

Fresh Blood
Because pension problems and reform efforts nationwide are resulting in negotiations and disputes similar to those in Cheshire, many governments are bringing in new investment professionals to make better decisions and support a more sustainable pension system in the future.

New York City’s $150 billion pension system recently hired a new chief investment officer to offer guidance to 58 pension trustees. The role of the chief investment officer is becoming increasingly complex as pension reforms are altering how benefits will be delivered to public employees in retirement, The New York Times reported.

The investment advisor will work with trustees of five funds, each operating as unique entities with their own board and voting structure. Previous efforts to consolidate the five pension boards for more efficient operations failed to reach fruition. Luckily, the city has passed several measures to increase investment performance and stability, and the new investment advisor will continue to push for more reforms.

In Detroit, proposed cuts to pension benefits are facing weekly protests. The state-appointed emergency manager is calling for:

  • 4.5 percent cut in pensions
  • Elimination of the 2 percent yearly cost-of-living adjustment for the next 10 years for nonuniformed retirees
  • Recovering interest payments from the pension fund on annuities of retirees
  • Full payment for police and firefighters

The proposed cuts will be voted on by Detroit public retirees.

Pension Troubles
EfficientGov has monitored the debates between governments and public employee unions as necessary reforms are negotiated at the local levels.