Pavement Management

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STRAW POLL TO BE CONDUCTED AT 900 P.M.
QuestionsPlease vote just once
1. Do you support the Town Managers budget as
proposed? Yes/No2. Do you support increasing
the Town Managers budget? Yes/No3. Do you
support decreasing the Town Managers budget?
Yes/No
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TOWN OF TOLLAND
FY 2011-2012 BUDGET PRESENTATION As Proposed by
Town Manager, Steven R. Werbner March 29, 2011
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BUDGET PROCESS
Development of the budget begins in October with
the preparation of the Board of Education request
and culminates in May with the Town Referendum.
Charter Mandated Process
Superintendent
Board of Education
Town Manager
Town Council
Voters
Referendum is May 3, 2011 and, if the budget is
defeated, votes are every two weeks until a
budget is passed.
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Public Meetings to Date on Budget
Joint Meeting of Town Council/Board of Education
February 10, 2011Capital Budget Public
Hearing February 17, 2011Community
Conversation on Budget February 24, 2011Joint
Meeting of Town Council/Board of Education
March 8, 2011Budget Review Sessions with Town
Council March 17, 22 23, 2011Public Hearing
on Managers Proposed Budget March 29, 2011
Upcoming Meetings
Town Council finalizes Budget April 5,
2011Annual Budget Presentation Meeting April
26, 2011Budget Presentations at Senior Center
April 27, 2011 _at_ 1230 p.m. Budget
Referendum -- May 3, 2011
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What is a Budget?

• A financial plan with sets of priorities and
  direction that the Town Officials, Town Council
  and residents believe accurately reflects the
  most important needs of the Town operations.

• In terms of the Board of Education, the Town
  Manager and Town Council, by State law, can only
  determine a bottom line number. The
  allocation of resources is the sole prerogative
  of the Board of Education.

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TOWN MANAGERS BUDGET GOAL FOR FY2011-12
Produce a budget that is realistic in light of
the economic times
THIS BUDGET WILL
Maintain important services
Continue to provide a quality education for our
children
Meet the budget objective of limiting an
increase in taxes to under 3.
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INTRODUCTIONBUDGET PREMISE

• The premise from which I am working in preparing
  this budget is as follows
• The Town and Board of Education have legitimate
  needs for which the associated cost exceeds our
  ability to pay.
• The Superintendent and Board of Education do an
  excellent job in identifying their needs which
  are incorporated into their budget request.? A
  quality education is extremely important for this
  generation and generations to come.
• Town and Board of Education Services are of the
  highest quality, yet our cost for such services
  are in most cases lower than other comparable
  municipalities.

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? No one wants to see existing programs in
either the Town or Board of Education
eliminated. ? At the local level, REALITY is,
that the property tax will only absorb a limited
amount of the increase necessary to address our
legitimate needs. While some are in a position
to pay more in taxes, many are not. Therefore,
the full amount of expenditures requested from
Departments, including the Board of Education,
are in my opinion not affordable.
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BUDGET PARAMETERS
How did I arrive at the financial plan I am
proposing?

• Analyzed revenues based on end of last year
  results as well as the first six months of this
  fiscal year.
• Monitored actions taken at the State level to
  reduce or at best keep municipal aid flat.
• Established in November of 2010 budget
  instructions for all departments with a goal of
  limiting any tax increase to under 3.

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BUDGET PARAMETERS (continued)

• Discussed in December of 2010 the budget
  parameters I established with the Town Council.
• In February of 2011 held a Community Conversation
  on the status of revenues and budget parameters
  to get public input.
• Have continued to monitor local, State Federal
  revenues and have continually tested my original
  expenditure assumption against potential tax
  impact.

Only after determining available resources do I
then establish what I believe to be appropriate
expenditure limits.
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BUDGET PARAMETERS (continued)

• While approval of the final budget amount at
  referendum is not the ultimate factor I use to
  establish budget parameters, I feel it is my
  Charter mandated responsibility to recommend a
  budget to the Town Council which can be supported
  from what I perceive to be a reasonable revenue
  perspective.

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LOCAL FINANCIAL CONCERNS GOING FORWARD

• Local government is limited by State law in
  regard to its ability to raise funds. Therefore,
  we are heavily dependent on property taxes and
  State revenues as sources of revenue to fund
  local programs.

• The level of State aid to municipalities is
  insufficient to meet the growing cost to towns
  and cities and places an unacceptable burden on
  the local property tax, in particular education.
• Local governments cannot continue to provide the
  same or an improved level of service unless
  property taxes increase for a sustained period of
  time.

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LOCAL FINANCIAL CONCERNS GOING FORWARD (continued)

• Senior citizens on fixed incomes and others in
  lower income brackets are finding it difficult to
  stay in their homes working people are
  continuing to lose jobs government workers in
  many communities including Tolland have in the
  recent past accepted wage freezes and other
  concessions to help reduce expenditures.

• The State of Connecticut continues to impose many
  unfunded mandates on towns and boards of
  educations. The Town of Bristol recently
  calculated that they are spending over 14
  million on unfunded or partial funded State
  mandates.

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The State of Connecticut is projected to continue
to have large deficits over the next several
years jeopardizing our level of State aid.
STATE OF CONNECTICUT BUDGET CONCERNS

• Future Projected Operating State Deficits

FY 2011/2012 FY 2012/2013 FY 2013/2014
3.3 Billion 3.1 Billion 3.1 Billion
Future Projected long-term State underfunded
obligations
Bonded Indebtedness 18.0 Billion
State Employee Pensions 9.3 Billion
Teacher Pensions 6.5 Billion
Post Retirement Benefits 26.8 Billion
GAAP Deficit 1.1 Billion
Total 61.7 Billion
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STATE OF CONNECTICUTBUDGET CONCERNS (continued)

• It is interesting to note that the State is
  projecting a positive balance at the end of this
  fiscal year in the amount of 57.2 million, but
  only as a result of one time windfalls from the
  Federal Government and significant borrowing
  authorized last year, use of all Rainy Day Funds
  plus an additional charge levied on our electric
  bills.
• Without these one time sources of revenue
  Connecticut would have had a 2 billion deficit
  at the end of the current fiscal year.
• The Governors budget going forward does not rely
  on this one time source of revenue or borrowing
  for operating expenses which necessitates either
  increased taxes, decreased expenditures or a
  combination of both.

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• Impact of Governors Budget on Tolland
• Most Education and Non-Education grants were
  funded at the same levels as in the current year.
  ECS, our largest State grant for education is
  currently budgeted at 10,759,283. State-wide
  prior to 2009, this grant was increasing
  approximately 5/year. For Tolland that was
  approximately 400,000-500,000 additional
  dollars annually. The grant has not increased
  the past two years and will not increase for the
  next two years.
• Notable exceptions are Pilot Grant for
  Manufacturing Machinery Equipment (MME). This
  grant was eliminated State-wide. The loss of
  revenue to the Town was estimated to be 80,000
  for the next fiscal year.
• Transportation Grant was reduced by 90,000.
• New forms of revenue recommended such as a
  portion of increased sales tax based on retail
  sales in the community, boat tax, tax on hotels,
  car rentals, planes and tax on cabarets will have
  only a minimal impact on Tolland.

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Major Concern for the Future Status of ECS Grant
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Town Revenues2011 - 2012
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Changes in State Aid and Other Sources of
Revenue for the Next Fiscal Year Over Current
Year Revenues

• State Aid for Education
  (104,253)

• ECS 0
• Public School Transportation (104,261)
• Adult Education
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• Aid to the Blind (0)

• Municipal State and Federal Grants
  (132,490)

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Changes in State Aid and Other Sources of
Revenue for the Next Fiscal Year Over Current
Year Revenues

• Other Non-Tax Revenue

? Charges for current services 6,216 ?
License, Permits and Fees (46,000) ? Interest
and other revenues (30,855)
TOTAL DECREASE IN REVENUE (307,382)
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Grand List Growth at 1.10
after adjustments for new
construction, elderly exemptions,
MVS and slight
decline in the mill rate and excluding the impact
of the State mandated revaluation 406,355
History of Grand List Growth Percentage
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Fund Balance
An increase in the use of Fund Balance by 30,000
to a total of 230,000 is recommended to be used
as a revenue in these difficult economic
times. Rating agencies recommend that Fund
Balance percentage for towns with a AA credit
rating be in a range of 10-15 of operating
expenditures. This is not a revenue source
that should be relied upon in the future. This
is a one time use of funds that may not be able
to be duplicated in future years.
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FUND BALANCE
2011 estimated 5,654,614 11.19
2010 5,884,614 11.60
2009 5,755,314 11.40
2008 5,175,165 10.9
2007 4,386,381 9.1
2006 4,336,381 9.7
2005 3,906,752 9.3
2004 3,516,564 9.0
2003 3,082,745 8.2
2002 2,521,653 7.0
2001 2,257,148 7.0
2000 2,164,504 7.2

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With less revenue than the prior year and limited
grand list growth, there is little room for
growth in the budget unless property taxes are
increased.

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Expenditures
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EXPENDITURE SUMMARY

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Magnitude of Recommended Expenditure Increases

• In the four years prior to FY2009/10 the Towns
  average expenditure increase was 487,046.
• In the same time period the Board of Educations
  average expenditure increase was 1,428,309.
• In the current year the Town reduced expenditures
  from the prior year by 5,570 while the Board of
  Education increased by 334,738.
• For the next fiscal year my recommended budget
  increases Town expenditures over the current year
  by 210,460 while the Board of Education is
  increased by 828,896.
• Neither the Town or Board of Education can, in my
  opinion, operate effectively in the next fiscal
  year with an increase or lack thereof at the
  levels of the last two fiscal years.

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2011/2012 EXPENDITURES BUDGET 50,527,427
Capital
Municipal Operating
Debt Service

Education
10,832,492
34,637,431
4,751,796
305,708
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Details of Town Expenditure Request

• Savings
• Negotiated changes to Town employees Health
  Insurance Plans have mitigated increases in
  health benefits. Whereas overall, health
  benefits were calculated to increase 18, the
  Towns costs actually decreased by 3.5 due to
  the benefit changes. These changes saved the
  Town 116,456.
• Elimination of Refuse Recycling Coordinator
  position for a savings of 25,750. These
  responsibilities have been absorbed by the
  Director of Administrative Services and other
  staff.
• Limited Adjustments
• 100 on-call stipend for Part-Time Animal Control
  Officers (5,200 annually split by days of the
  week worked). This is to recognize the two
  part-time employees who must be on call on off
  hours each day of the week. In addition, 5,000
  for actual hours worked that are currently taken
  from personnel contingency.
• Administrative Secretary in Fire Department
  increased from 35 to 40 hours to be in line with
  the operation of the Fire Office (4,988 in
  salary).

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The position of Assistant Public Safety
Supervisor budgeted starting January 1, 2012 at a
cost of 39,444 with benefits for half a year.
During the current fiscal year, the consulting
firm of Field Services Inc. was engaged by the
Town of Tolland to perform a feasibility study of
the Tolland Fire Department and its ability to
provide the current level of service to the Town
in the coming years. The report stressed that
moving forward, the department focus should
primarily be personnel and staffing. Much focus
was placed on the Public Safety Supervisor
position which generally is considered a 40-50
hour position, but in reality works on a regular
basis in excess of 70 hours per week. The
demands of the position to supervise both paid
and volunteer staff are 24 hours a day. The
study concluded that there is considerable
concern that the Fire Chief may be
overstretched. The recommendation is to hire a
second in command who can mirror the
responsibilities of the Public Safety Supervisor
in terms of supervising staff and responding to
evening calls in a command capacity. In
addition, this position would serve as a Deputy
Fire Marshal and be in charge of the Towns
communication function. The Board of Directors
of the Tolland Fire Department Inc. concurs with
this recommendation and has stated The Board
heartily agrees with this conclusion. Volunteer
officers cannot be counted upon to reduce the
workload.
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• Included within the Fire, Public Safety,
  Emergency Management and Law Enforcement budgets
  are the cost of the administrative functions
  associated with the reverse 911 Everbridge
  System. This will allow for telephone messages
  to be sent to residents on general topics of
  importance (4,050).
• Adjust the pay grade level for the position of
  Public Safety Supervisor and Public Works
  Operations Manager by one grade and increase the
  base salary of each position by 5,000 to reflect
  increased responsibilities and work levels as
  well as hours worked at a cost of 9,000 (partial
  offset by State Grant).
• Implementation of a Health Wellness Initiative at
  a cost of 7,000 paid out of funds available in
  the Health Insurance account in the current year.
  Industry experts predict that the Town should
  see reductions in future health insurance
  expenditures at a rate of 3-5 times the
  investment made in the Wellness Program.
• Increase the cost share for Health Insurance,
  which unaffiliated employees of the Town will
  pay, from 14 to 16, except for those employees
  who participate in the Health Wellness
  Initiatives which would reduce the increase by
  1.

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• Re-title the positions of Working Foreman in the
  Parks Facilities Department and Highway
  Superintendent in the Highway Department to
  Public Works Supervisor. Along with the Public
  Works Operations Manager, these two supervisory
  positions provide oversight and direction for all
  Parks and Highway activities. The initial cost
  for this reclassification will be an increase of
  3,000 to the Working Foreman position however,
  there will be a future savings of approximately
  15,000 with the adjustment of the Highway
  Superintendents position to a lower wage group
  when the current employee retires.
• 27,000 for the connection fee to tie the Hicks
  Municipal Building into the Towns public sewer
  system.
• The Water Commission and Water Pollution Control
  Authority have each authorized the allocation of
  15,000 from their funds to hire a 24 hour per
  week, non-benefitted Engineering Assistant
  position to assist with the many technical
  responsibilities confronting the Commission.
  This position would work under the direction of
  the Town Engineer.
• A 38,103 increase in the contractual cost for
  Resident State Trooper services.

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Savings identified total 142,206. The cost for
new items listed is 135,785. Therefore, the
total savings to the Town is 6,421.
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Board of Education Request

• Board of Education request is reduced from 6.53
  to 2.45, which is a reduction of 1,328,676, but
  an increase of 828,896 over current year
  expenditures.
• When factoring in the Board of Education portion
  of debt service, the Board of Education-related
  expenditures are 71 of the overall Town budget.

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Basis for BOE Funding Recommendation

• Savings
• 95,060 can be saved based on excess funding of
  our OPEB Trust Account.
• 90,000 can be saved based on a direct payment in
  the same amount which will be made by the State
  Department of Education to the Board of Education
  for special education expenses.
• It is apparent that one could divide the Board of
  Education percentage request into two major
  components.
• Major Cost Components
• Operational Costs Employee Medical
  Benefits
• The percentage increase requested for operational
  expenses is 2.36 after factoring in the
  adjustments mentioned previously. My recommended
  budget increase for the Board of Education is
  2.45, which provides for the full cost of these
  expenses.

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Basis for Recommendation

• The original percentage increase requested for
  Employee Medical Benefits is 3.6. This amount
  has been reduced by 125,000 based on a reduction
  in health insurance premiums from 22 to 18.66.
  The remaining 1,095,525 increase cost could be
  absorbed without an increase in the health
  insurance line item if the vast majority of
  teachers and administrators elected the option
  currently existing in their contract to move from
  their current health insurance plan to a high
  deductible (HSA) plan.
• A similar HSA plan is currently the only option
  for Town Hall, Fire Department and several
  non-union employees of the Board of Education.
• HSA plans in the future may not be the ultimate
  answer to addressing health care inflation, but
  currently it is our only option.
• The Town and Board of Education are investigating
  health insurance pooling and wellness programs as
  the primary means of reducing future medical
  costs. Such costs statewide are projected to
  increase in the 8-10 range for the foreseeable
  future.

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WHAT IS AN HSA? A high deductible Health
Insurance Plan with Health Savings Account
(HDHP/HSA) The first 1,500 for an individual
or 3,000 for a family in medical expenses is
paid for by the employee via a deductible. Once
deductible has been met, coverage is then paid in
full in accordance with plan provisions. Contribu
tions are put into a Health Savings Account
pretax which remains with the employee for life
to be used for eligible expenses and can be
carried over year to year. To encourage
employees to enroll in the Plan, the Town and
non-unionized BOE employees initially have the
deductible subsidized by the employer in the
amount of 75.  Therefore the employees cost for
the deductible are 375 for an individual or 750
for a family. The amount of any subsidy is a
negotiable item.
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The benefits of the HDHP/HSA plan are the same as
the traditional Town Point of Service plan with
the same network for physicians. Example of
POTENTIAL cost savings Expected premium cost
for typical BOE family plan 26,892 per
year. Expected premium cost for HSA plan based
on Town family plan 16,152 per
year. Difference is 10,740 per year, per
person.
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In the BOE budget there are 308 certified
employees out of a total of 382 employees. If
252 or 81 certified employees chose this option
the approximate savings would be as
follows Cost for current plan -
5,062,462 Cost for HSA plan -    
2,964,930 Difference -                 
2,097,532 Cost for BOE covering 75 of high
deductible assuming 252 BOE employees -
473,625. You must subtract the 473,625 from
the 2,097,532 as well as 20 for employee
contributions (418,706) resulting in a total
potential savings of 1,205,201 to the BOE.
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WHAT DOES THE EMPLOYEE GET OUT OF THIS? They
pay their cost share amount on a lower premium
base Assume a 20 cost share for employees on an
HSA base vs. traditional plan. Savings to the
employee is 2,148 per year for a family plan.
Employees are responsible for the 750 of the
deductible which must come off the 2,148 cost
share savings for a total savings of 1,398 per
year.  Summary The potential is for a million
dollar plus savings in health insurance expenses
for the BOE. Employees could save some 1,398
per year in addition to having the BOE put 2,250
into their health savings account.  This could be
a win-win situation under present pricing
scenarios for all involved without significantly
impacting the health insurance coverage for BOE
employees.  
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POSSIBLE FUTURE BOE FUNDING CONCERNS

• Elimination of the BOE Federal Jobs Grant which
  provided approximately 600,000 over two years.
• Any jobs covered under the grant will have to be
  absorbed with local funds or lost.
• Teachers salaries will have to be budgeted at
  contract rates for FY-2012 and FY-2013.
• Health Insurance rates may increase at a rate of
  8-10.
• Fuel costs may continue to escalate.

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Towns Commitment to Education
The Town has a strong ongoing Commitment to
Education 68.55 of every tax dollar spent goes
toward funding education. More of our limited
dollars are each year spent for education.
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? The Town since 1998 has committed substantial
capital dollars to school improvements. Debt
service for the next year is 4,751,796 of which
71 is for schools, particularly the addition to
Birch Grove School and the new High School. This
cost is not included as part of the Education
budget.

• The Town spends approximately 300,000 per year
  in staff salaries and materials to maintain all
  outside grounds of Board of Education facilities
  as well as snow removal services for Board of
  Education parking lots. This cost, as well as
  any yearly increases is not included in the
  Education budget, but rather the Towns Parks
  Department.

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FY11-12 SIGNIFICANT CAPITAL PROJECTSFUNDED BY
THE GENERAL FUNDTotal Amount 305,708

• Town Administration

• Reserve for current year depreciation for
  municipal vehicle replacement - 21,789.

• Board of Education Tolland Intermediate
  School

• Sidewalk Paving - 15,000.
• Skylight Replacement - 26,000.

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FY11-12 SIGNIFICANT CAPITAL PROJECTSFUNDED BY
THE GENERAL FUNDTotal Amount 305,708

• Capital Equipment

• Dump Truck 36 Replacement Parks Facilities
  replacement of 1992 one ton Dodge dump truck with
  a new one ton truck with plow and all season body
  -76,819.

• Fire Department

• 7th and last payment for replacement of Engine
  340 - 70,000.

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FY11-12 SIGNIFICANT CAPITAL PROJECTSFUNDED BY
THE GENERAL FUNDTotal Amount 305,708

• Public Facilities

• Upgrade of Base Station Repeaters located at
  Highway, Parks Facilities and the Tower Site
  are mandated by FCC to be licensed and operating
  in narrowband emissions before 1/1/13 - 20,000
  second of three payments.
• One additional gas pump and flow fuel part for
  recently installed above ground fuel tanks at the
  Highway Garage plus removal of the old tank -
  25,500.

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FY11-12 SIGNIFICANT CAPITAL PROJECTSFUNDED BY
THE GENERAL FUNDTotal Amount 305,708

• Drainage

• Infrastructure Drainage designs for Weigold Road,
  Baxter Street and Sugar Hill Road systems -
  50,600.

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TOLLAND DEBT SCHEDULE 2011-12 THROUGH 2015-16
change FY11/12 - 4,751,296 1.87
FY12/13 - 4,797,741 .97 FY13/14 -
4,724,537 (1.53) FY14/15
- 4,676,459 (1.02) FY15/16
- 4,691,778 (0.33)
Both Moodys Fitch Financial rating agencies
have indicated thatthe Towns debt is moderate
and manageable and in line with Communities that
have similar credit ratings.
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DEBT SERVICE FOR BUDGET YEAR 4,751,796
Debt Service Breakdown
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MILL RATE IMPACT OF THE FINANCIAL PLAN
Mill rate 29.99 An increase of 0.84 mills
compared to the current mill rate of 29.15.
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TAX IMPACT

Property Tax Impact of the Town Managers Recommended Budget for Three Average Assessments Property Tax Impact of the Town Managers Recommended Budget for Three Average Assessments Property Tax Impact of the Town Managers Recommended Budget for Three Average Assessments Property Tax Impact of the Town Managers Recommended Budget for Three Average Assessments Property Tax Impact of the Town Managers Recommended Budget for Three Average Assessments
2009 Assessment Equivalent Value Taxes at 29.15 Taxes at 29.99 Difference
121,972 174,246 3,555 3,658 103
196,130 280,186 5,717 5,882 165
375,384 536,262 10,942 11,258 316
Formula to determine tax impactCurrent
assessment x current year mill rate
(29.15) Compared against Current assessment x
Town Managers proposed mill rate
(29.99) Difference equals tax impact
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APPROVED TAX INCREASE/DECREASE OVER THE PAST 6
YEARS FOR THE AVERAGE RESIDENTIAL HOME
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CONCLUSIONSustainability is the key to any
financial plan Can the investments we make
today be sustained over time knowing what we know
about the current and upcoming financial
concerns? It is not just I can absorb a tax
increase this year to improve a desired program,
it is can you absorb a tax increase, in an
increasing amount, over a prolonged period of
time, to maintain/improve a program? That is the
budget realities of our economic times, made only
more of a reality by current actions at the State
and Federal levels.
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Budget Schedule Important Upcoming Dates
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