CITY OF NORTHAMPTON

SUSAN WRIGHT FINANCE DIRECTOR

Office of the Mayor 210 Main Street Room 12 Northampton, MA 01060-3199 (413) 587-1255 Fax: (413) 587-1275 swright@northamptonma.gov

MEMORANDUM
TO: City Council FROM: Susan Wright, Finance Director DATE: June 15, 2012 RE: Report to City Council for June 21, 2012 1. Borrowing Order Rescissions: As a matter of housekeeping, three orders for borrowing authorizations will be presented to council for rescission. Copies of the original order are attached to this report. They rescissions are as follows: a) September 2, 2010 - $757,576 Bean Allard CPA Project: The original order for the $910,000 Bean Allard project was voted in March 4, 2010. In September, another order, which broadened the scope of the original order, was passed but it was never intended to increase the total amount for the Bean Allard project. Ultimately, when the Bean Allard project was bonded in February 2012, the $910,000 that was bonded was done so under the March 4, 2010 order. Therefore Council can rescind the September 2, 2010 order. b) July 7, 2011 - $850,000 Mineral Hills Project: The project ultimately was funded via a state LAND grant, CPA project funding and fundraising. Therefore, the borrowing authorization can be rescinded. c) July 7, 2011 - $781,250 Florence Fields: This authorization was no longer needed once the Council voted a new authorization on December 15, 2011 for $1,957,000 for the Florence Fields project. The December 15, 2011 authorization was further reduced to a $1,200,000 authorization with the receipt of a PARC grant for $757,000. 2. Budgetary Transfers for FY12: a) The first set of transfers is to cover deficits in some FY12 budget line items with surpluses in other FY12 budget line items. The request to move $11,000 from Parking Maintenance permanent salaries to Parking Enforcement permanent salaries is due to additional Parking Enforcement staff being brought on to increase shift strength during critical

times such as Saturdays and to provide coverage during staff vacation and sick time. The surplus in the Parking Maintenance salaries line item was due to the retirement of the Parking Director. The request to move $33,000 from Interest on Notes to Repayment of Temporary Loans was due to a rearrangement of expenditures in different categories during the bonding in February. The request to move $35,000 from Workers Compensation and $15,000 from Police and Fire Accident to Medicare is due to additional unbudgeted Medicare costs being covered with surpluses in insurance accounts due to credits from the insurance company. b) The second set of transfers is to cover deficits in some FY12 budget line items with the Undesignated Fund Balance (Free Cash). The current balance in free cash is $734,490 and after these transfers, the balance will be $537,695. $500 to Mayors Office PS due to 26 pay periods being budgeted, not 26.1 $675 to Assessors Office PS due to 26 pay periods being budgeted, not 26.1 $2,500 to Treasurers Office PS coverage during FMLA leave $85 to License Commission PS due to 26 pay periods being budgeted, not 26.1 $2,200 to Building Inspectors PS majority due to 26 pay periods being budgeted, not 26.1 $6,300 to Building Inspectors part-time PS additional hours for part-time staff needed during emergencies and to provide necessary coverage $170 to Emergency Management PS due to 26 pay periods being budgeted, not 26.1 $14,000 Snow and Ice PS Overtime for snow removal $120 Arts Lottery PS due to 26 pay periods being budgeted, not 26.1 $350 Other Employee Benefits Social Security over budget by that amount $7,000 Other Employee Benefits Sick Leave Buyback exceeds original budget more separations than anticipated $35,722 Forbes Library PS reversal of earlier budget reduction due to ESCO funding see explanation below $3,473 Lilly Library PS reversal of earlier budget reduction due to ESCO funding see explanation below $8,000 Veterans Benefits benefits for veterans will total an estimated $628,000 for FY12 $30,000 Police Fuel higher fuel prices have impacted this department and left a shortfall $6,000 Treasurer Legal more tax title activity this year - $274,000 in tax title revenue has come in this year, which is $100,000 more than last year $700 Legal Judgments this is for mailbox and other claims $50,000 Legal Counsel estimated costs for remainder of the year $25,000 Snow and Ice Vehicular Supplies repairs to vehicles $4,000 Central Services Street Lights over budget The two transfers to the libraries - $35,722 to Forbes Library and $3,473 to Lilly Library are to return the funds that were transferred out in December when we set the tax rate. The original plan for the ESCO financing depended on departmental budgets turning back the estimated savings from the ESCO projects. When the city set the tax rate in FY12, the Department of Revenue did not accept the financing mechanism the city devised and therefore required that City Council reduce appropriations to various departments rather than relying on turn backs

from departments. This created a new problem for our libraries. In order to maintain certification and eligibility for state grants, both libraries must meet the Municipal Appropriation Requirement set by the Board of Library Commissioners, otherwise known as the MAR. Reducing the appropriation to the libraries in order to set the tax rate affects the MAR for FY12 and if left at the reduced amount, could result in decertification of the libraries in FY13. Therefore, we must return the reduced appropriation in FY12. This means the libraries did not contribute to the ESCO debt service in FY12. In discussions with the State Board of Library Commissioners, it has been clarified that debt service does not count in calculating the MAR and therefore this will continue to an issue in years going forward. c) Additional Transfers to close FY12: There will be additional orders and transfers for the July 12, 2012 meeting to close out Fiscal 2012 that will require two readings that evening. The auditor and I have done our best to identify as many transfers as we can up to this date.